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Energy & Climate

Unpacking EPA’s newly proposed power emissions rule

Rhodium partner John Larsen joined the Catalyst podcast to discuss the new regulations.

Last year, the Supreme Court struck down the Environmental Protection Agency’s first attempt to limit greenhouse gas emissions from existing power plants. But it also preserved the EPA’s authority to regulate greenhouse gas emissions. The agency just needed to find the right approach. The challenge facing the EPA was figuring out which legal tools would pass the scrutiny of the court.

Last week, Biden’s EPA came out with its answer. The proposed plan requires new and existing power plants to meet emission standards. The agency estimates that the rule would reduce GHG emissions by up to 617 million metric tons through 2042, a small but meaningful fraction of the total. Right now, the U.S. power sector emits about 1.5 billion metric tons per year.

It’s an approach that dovetails with the Inflation Reduction Act, which is expected to dramatically bring down the cost of key emissions-reducing technologies, such as hydrogen and carbon capture and storage. If the IRA was the Biden administration’s carrot for reducing climate emissions, then the new rule is the stick.

In this episode of Catalyst, Shayle Kann unpacks the proposal with John Larsen, who leads U.S. climate policy research at Rhodium Group. In March, Rhodium modeled the impact of hypothetical power emissions standards on the U.S. power fleet, finding that many coal plants might shut down rather than install carbon capture and storage.

Shayle and John dig into specifics, including:

  • The four main options available to power plant operators under the proposed rules: shut down, install carbon capture and storage, co-fire with hydrogen or operate less often.
  • The differences in rules for new and existing plants.
  • How the standards become more stringent with higher capacity factors.
  • The role of states in the rules and the ​off-ramps” they could use to get around some of the rules.
  • The power plants that would be exempt from the rules, such as gas peaker plants with low capacity factors.
  • What the changing economics of hydrogen and carbon capture and storage could mean for the effect of the regulations.
  • The legal gauntlet that the plan is sure to face, including lawsuits from Republican states.

Recommended resources:

Rhodium Group: Pathways to Paris: Post-IRA policy action to drive U.S. decarbonization
Rhodium Group: Has the Supreme Court blocked the path to the 2030 climate target?

Listen to the episode