Intelligent Energy

The beginning of the end for coal plants?

The beginning of the end for coal plants?

Posting in Finance

The EPA proposed today national pollution standards that limit greenhouse gas emissions from new power plants.

The Environmental Protection Agency proposed today stringent limits on greenhouse gas emissions from new power plants, a standard that will effectively ban conventional coal-fired operations. The proposed regulations will not effect existing power plants or permitted facilities that will be built over the next 12 months. The rules would only apply to new power generation plants built in the future.

UPDATE: EPA Administrator Lisa Jackson said in a conference call with reporters today, that she has no plans to pursue regulations for existing plants.

Keep in mind, that coal plants already aren't getting built for economic reasons. The low-cost of natural gas has undercut coal. And lenders have been unwilling to provide financing for coal plants in anticipation of greater regulations, including the long-since-dead cap-and-trade legislation. Still, the proposal is hardly being welcomed by many utilities.

A range of power plants burning different fossil fuels, including natural gas and coal with technologies to reduce carbon emissions, can already meet the proposed standards, the EPA said in an emailed release. The EPA said it doesn't project any additional cost for the industry to comply with this standard because even without today's action the power plants projected to be built would already abide by the proposed standard. The EPA says 95 percent of all natural gas combined cycle power plants built since 2005 would meet the standard.

The proposed rule would set a limit of 1,000 pounds of carbon dioxide emissions per megawatt hour.  Coal plants currently emit about 1,800 pounds of carbon emissions per megawatt hour.

The proposed rules would apply to new fossil fuel-fired electric utility generating units, including boilers, integrated gasification combined cycle units and stationary combined cycle turbine units that generate electricity for sale and are larger than 25 megawatts, the EPA said in its pollution standard fact sheet.

This means, future coal power plants will have to incorporate some kind of carbon capture and storage technology or other method to reduce emissions in order to meet the new standard. CCS technology isn't cheap. An analysis several years ago from Harvard's Belfer Center, found that first generation carbon capture technology would add between 8 and 12 cents per kilowatt hour to the cost of coal plants.  The national average electricity price (for all sectors) is about 10 cents per kilowatt hour. Once the technology developed, costs would fall and would add an extra 2 to 5 cents per kilowatt hour.

Coal plants will be given a lot of time to meet those standards. According to the EPA, new power plants that add CCS would have the option to use a 30-year average of CO2 emissions to meet the proposed standard. The means, a company could build a coal-fired plant and add CCS later. Of course, adding CCS to an existing plant is more expensive.

The proposed rules have been anticipated for some time. In 2007, the U.S. Supreme Court determined the EPA had a legal obligation to regulate greenhouse gas emissions under the Clean Air Act. Two years later, the agency ruled that current and projected concentrations of greenhouse gas emissions were a threat to public health and welfare, thereby setting the stage for a new carbon pollution standard. The more controversial regulations for existing power plants most likely won't be proposed until after the November election. (In an update added that the top, EPA chief Lisa Jackson said she doesn't plan to regulate existing plants. We'll see.)

Photo: Flickr user squeaks2569, CC 2.0

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Kirsten Korosec

Contributing Editor

Kirsten Korosec has written for Technology Review, Marketing News, The Hill, BNET and Bloomberg News. She holds a degree from Northwestern University's Medill School of Journalism. She is based in Tucson, Arizona. Follow her on Twitter. Disclosure