Peter Folger
Specialist in Energy and Natural Resources Policy
On September 20, 2013, the U.S. Environmental Protection Agency (EPA) re-proposed standards for carbon dioxide (CO2) from new fossil-fueled power plants. As re-proposed, the standards would limit emissions of CO2 to no more than 1,100 pounds per megawatt-hour of production from new coal-fired power plants and between 1,000 and 1,100 (depending on size of the plant) for new natural gas-fired plants. EPA proposed the standard under Section 111 of the Clean Air Act. According to EPA, new natural gas-fired stationary power plants should be able to meet the proposed standards without additional cost and the need for add-on control technology. However, new coal-fired plants only would be able to meet the standards by installing carbon capture and sequestration (CCS) technology. The proposed standard allows a seven-year compliance period for coal-fired plants but would require a more stringent standard for those plants that limit CO2 emissions to an average of 1,000-1,050 pounds per megawatt-hour over the seven-year period.
The EPA had first proposed a standard limiting CO2 emissions from new power plants in April 2012 but received more than 2.5 million comments and never finalized the rule. Both the April 2012 and the September 20, 2013, proposed rule have sparked increased scrutiny of the future of CCS as a viable technology for reducing CO2 emissions from coal-fired power plants. The proposed rule also places a new focus on whether the U.S. Department of Energy’s (DOE’s) CCS research, development, and demonstration (RD&D) program will achieve its vision of developing an advanced CCS technology portfolio ready by 2020 for large-scale CCS deployment.
Congress appropriated $3.4 billion from the American Recovery and Reinvestment Act (Recovery Act) for CCS RD&D at DOE’s Office of Fossil Energy in addition to annual appropriations for CCS. The large influx of funding for industrial-scale CCS projects may accelerate development and deployment of CCS in the United States. Since enactment of the Recovery Act, DOE has shifted its RD&D emphasis to the demonstration phase of carbon capture technology. However, the future deployment of CCS may take a different course if the major components of the DOE program follow a path similar to DOE’s flagship CCS demonstration project, FutureGen, which has experienced delays and multiple changes of scope and design since its inception in 2003.
To date, there are no commercial ventures in the United States that capture, transport, and inject industrial-scale quantities of CO2 solely for the purposes of carbon sequestration. However, CCS RD&D has embarked on commercial-scale demonstration projects for CO2 capture, injection, and storage. The success of these projects will likely influence the future outlook for widespread deployment of CCS technologies as a strategy for preventing large quantities of CO2 from reaching the atmosphere while U.S. power plants continue to burn fossil fuels, mainly coal. One project, the Kemper County Facility, has received $270 million from DOE under its Clean Coal Power Initiative Round 2 program, and is slated to begin commercial operation in May 2014. The 583 megawatt capacity facility anticipates capturing 65 percent of its CO2 emissions, making it equivalent to a new natural gas-fired combined cycle power plant. Cost overruns at the Kemper Plant, however, have raised questions over the relative value of environmental benefits due to CCS technology compared to construction costs of the facility and its effect on ratepayers.
Given the pending EPA rule, congressional interest in the future of coal as a domestic energy source appears directly linked to the future of CCS. In the short term, congressional support for building new coal-fired power plants could be expressed through legislative action to modify or block the proposed EPA rule.
Alternatively, congressional oversight of the CCS RD&D program could help inform decisions about the level of support for the program and help Congress gauge whether it is on track to meet its goals. A DOE Inspector General Audit report identified several weaknesses in the DOE management of awards made under the Industrial Carbon Capture and Storage (ICCS) program funded by the Recovery Act. The audit report noted that addressing these management issues would be important to future management of the program, given that DOE had only obligated about $623 million of the $1.5 billion appropriated for the ICCS program under the Recovery Act as of February 2013.
Date of Report: September 30, 2013
Number of Pages: 28
Order Number: R42496
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