Wednesday, October 9, 2013

Addressing the EPA’s New Carbon Emission Standards for New Power Plants

by Jason Roma, Partner, Huddleston Bolen LLP

On September 20, 2013, the Environmental Protection Agency (“EPA”) proposed Clean Air Act standards to cut carbon emission from new power plants.[1]  This action was taken as part of President Obama’s Climate Action Plan as outlined in the President’s June 2, 2013 Memorandum to the EPA.  According to President Obama’s Climate Action Plan the power industry accounted for 33% of the total greenhouse gas emissions in the United States in 2011, and 84% of the total greenhouse gas emissions comes from Carbon Dioxide.[2]  Until the recent EPA proposal, carbon dioxide emissions were not regulated.  This new proposal applies to newly built power plants.  A separate carbon dioxide emission proposal applicable to existing power plants is set to issue on June 1, 2014.

The West Virginia power and coal industries have reason to be concerned about these new EPA regulations.  Most of the power plants in West Virginia are coal-fired.  The current proposal for new coal-fired units limits CO2 emissions to 1,100 pounds of CO2 per megawatt-hour.  To put this into perspective, according to data collected by Carbon Monitoring for Action (CARMA), the John Amos coal-fired power plant in St. Albans, West Virginia produced 2358 pounds of CO2 per megawatt hour in 2009, which is more than twice the newly proposed limit of CO2 emissions from new power plants.[3] 

Compliance with the new proposal will likely be very burdensome and expensive for power companies, and may not even be economically feasible. The first project to capture and store CO2 from an existing coal-fired power plant occurred at Mountaineer Power Plant in New Haven, West Virginia.  Chilled ammonia technology was employed to trap the CO2[4]by creating a “slipstream” of the plant’s exhaust “flue gas.”[5]  The gas was then chilled and combined with ammonium carbonate to absorb the CO2.  The ammonium bicarbonate solution was then pressurized and heated to separate the CO2.  The liquid CO2 was then pumped 1.5 miles underground for storage.[6] 

The Mountaineer project was scheduled to take 10 years. The total costs were estimated to be $668 million dollars, with the Department of Energy (“DOE”) paying half the bill and Alstom (the company that patented the carbon capture technology employed at the plant) and AEP paying the other half.[7]  During the initial phase of the project the DOE contributed $7.2 million and Alstom and AEP contributed $1.4 million combined.  50,000 metric tons of CO2 were captured and 37,000 metric tons of it were stored during the project validation period of September of 2009 to May of 2011.[8]   Alstom reported the project to be a success, as they were able to capture between 75% and 90% of the CO2 emitted from the unit.[9]  Nevertheless, AEP halted the project due to the “uncertain status of the U.S. climate policy and the continued weak economy.”[10]

The Mountaineer pilot project has been the largest carbon-capture project to date.  According to Nicholas K. Akins, AEP’s Chairman and Chief Executive, equipping the whole plant with the carbon capture technology would have cost $1 billion, which would have increased the commercial costs of electricity by 60% to 80% per kilowatt-hour .[11]  Furthermore, the injection of carbon dioxide into the earth was only possible because the project was classified as a research project.  According to Revis W. James, director of the Energy Technology Assessment Center at the Electric Power Research Institute, this type of carbon capture technology could not be competitive unless natural gas prices jump by 100 to 150% and building new nuclear plants was off the table.[12] 

The Mountaineer pilot project demonstrated the extreme costs and difficulties associated with Carbon capture technologies.  The soon to be implemented EPA carbon emission requirements for new coal-fired power plants are unrealistic and will likely make the construction of new coal-fired power plants economically infeasible.  As a result, it is not likely that any new coal-fired power plants will be built unless they are pilot projects like the Mountaineer project and receive considerable federal funding to support the exorbitant costs.  The hope from here is that the EPA will be less stringent when proposing recommendations for existing coal-fired power plants in June of 2014.  If not, the coal and power industries will be scrambling for solutions and reprieves from the courts. 

[1] See, Environmental Protection Agency, Regulatory Impact Analysis for the Proposed Standards of
Performance for Greenhouse Gas Emissions for New Stationary Sources: Electric Utility Generating Units Publication No. EPA-452/R-13-003 (September 2013)
[2] See, President’s Memorandum of June 25, 2013 for the Administrator of the Environmental Protection-Power Sector Carbon Pollution Standards, 78 Fed. Reg. 126 (July 1, 2013).
[3] Id. 
[4] Id.
[5] See, Alstom, Alstom Announces Successful Results of Mountaineer Carbon Capture and Sequestration (CCS) Project, (January 31, 2012) <>.
[6] Id.
[7] See, Massachusetts Institute of Technology, Mountaineer Fact Sheet: Carbon Dioxide Capture and Storage Project (visited September 30, 2013) <>.
[8] See. AEP, Carbon Capture & Storage (visited September 30, 2013) <>.
[9] See, Alstom, Alstom Announces Successful Results of Mountaineer Carbon Capture and Sequestration (CCS) Project, (January 31, 2012) <>.
[10] See. AEP, Carbon Capture & Storage, (visited September 30, 2013) <>.
[11] Wald, Matthew L. and Shear, Michael D., Challenges Await Plan to Reduce Emissions, N.Y. Times, September 20, 2013 <>.
[12] Id.