May 11, 2004
The Environmental Law Institute has published an article by CIEL attorney Greg Foote, pointing out how the U.S. Clean Air Act can be used to limit CO2 emissions from new coal-fired power plants. The article, “Considering Alternatives: The Case for Limiting CO2 Emissions from New Power Plants Through New Source Review,” appeared in the July 2004 issue of Environmental Law Reporter
— News and Analysis. The article is available here.
Greg Foote is on a detail to CIEL from his position as Assistant General Counsel at the U.S. Environmental Protection Agency, where he has worked for many years on legal issues regarding power plants and other sources of air pollution. The views expressed in the article are those of Mr. Foote and do not represent the position of EPA or CIEL.
For the first time in decades, power companies are planning to build large numbers of new coal-fired plants in the United States. Under business as usual, these plants – the largest emitters of greenhouse gases (they make up 1/3 of total U.S. CO2 emissions) – will emit hundreds of millions of tons over their lifetime. This will add to already-unacceptable levels of CO2 emissions. The United States’ greenhouse gas emissions are 12% higher than at the time of adoption of the United Nations Framework Convention on Climate Change and are expected to increase by another 30% in the next 20 years. These new plants would come at a time when several reports from the Bush Administration acknowledge the need for drastic reductions in CO2 in order to stabilize greenhouse gases at a level that might avoid the worst environmental consequences of climate change. In the wake of the Administration’s rejection of the Kyoto Protocol and any comprehensive program to limit greenhouse gases, it is necessary to look to all available mechanisms to make progress on climate change.
Against this backdrop, Considering Alternatives begins by outlining the Clean Air Act’s “new source review” (NSR) program governing construction permits issued by states for major new sources of air pollution. These sources must minimize their emissions and prevent adverse impacts on air quality. NSR also requires states to take a “hard look” at alternatives before allowing construction of a company’s proposed new source. In addition, states must make reasonable decisions; the Supreme Court recently struck down a NSR permit because the state arbitrarily refused to require the best pollution control technology. The article explains that, contrary to assumptions held by some, power companies cannot as a matter of right build new power plants using a design of their choosing. Instead, NSR requires states to consider energy efficiency, renewable
energy, and other reasonable alternatives before deciding to allow any new power plants. The law also requires that states undertake an environmental impact analysis, similar to that required under the National Environmental Policy Act (NEPA), before making any NSR decision. The article points out that unlike environmental impact analyses under NEPA, which can be ignored in making substantive decisions even if environmentally preferable alternatives are available, NSR requires states to justify their decisions taking account of the full range of environmental impacts. In this respect, new source review is “NEPA with teeth.”
Considering Alternatives makes clear that the analysis of environmental impacts under NSR must take into account emissions of “unregulated pollutants,” including carbon dioxide (CO2) and toxic mercury. The article further points out that once a decision has tentatively been made to proceed with a coal-fired plant, the law expressly requires states to seek out the least-polluting production process available. The views of some states that they need not consider any process other than the one proposed by the company seeking a construction permit is contrary to both the statute and case law. In addition, the efficiency of different production processes must be taken into account in determining whether a company has reduced its emissions to the maximum extent feasible considering costs, as the law requires it to do.
Following its outline of the general legal framework, Considering Alternatives describes how those concepts apply to proposals to construct new coal-fired power plants. First, states must consider the true costs and environmental impacts of such a plant. Once they have done so, a state may reject a new plant and instead rely on energy efficiency, renewable energy, or less-polluting alternatives to meet a specific energy need. The article then suggests how a state should proceed if it has properly considered and rejected less-polluting alternatives, and decided that a new coal-fired plant should be built. The law requires these plants to be constructed using the best available pollution control technology, and this decision must take climate change impacts into account. Integrated Gasification Combined Cycle (IGCC) is a commercially available production technology with lower emissions of conventional pollutants (sulfur dioxide, nitrogen oxides, particulates) than older processes. IGCC is also at least 10% more thermally efficient. That is, it produces the same amount of electricity with less fuel. This thermal advantage reduces all pollutants — including CO2 emissions and toxic mercury – by that same amount compared to older processes. Unlike the older processes, IGCC can also be configured in a way that can separately capture CO2 emissions at a reasonable cost, making it possible to store virtually all of the CO2 emissions in geologic formations in coming years if that technology is shown to be safe and effective.
Considering Alternatives points out that although IGCC has not been frequently used to date because it is perceived as being somewhat more expensive than older technologies, states have excluded important factors from their cost calculations. In particular, states have failed to take account of reduced CO2 emissions when weighing environmental impacts from new coal-fired plants – and in many cases have wrongly failed to consider IGCC at all. IGCC technology also enables use of highly effective mercury controls at 1/10th the cost of conventional plants, and states should consider this as well. States likewise have failed to consider the risks posed to states and ratepayers if utilities proceed to build new coal-fired plants that last 50 years or more without taking into account the probability that CO2 restrictions will come into place early in the lifetime of those plants, very possibly saddling citizens with unexpected costs for outmoded plants. The article also points out that even using IGCC as the best technology, coal-fired plants have enormous CO2 emissions. It recommends that states require “offsets” – CO2 reductions from other sources of emissions – to address this concern. The article explains that some states already have programs to require offsets, and that these and many other mechanisms are available, including purchasing emissions credits from recognized CO2 markets.
Considering Alternatives concludes that once states have considered the full range of environmental impacts from coal-fired plants and the full cost of those emissions, including the costs and impacts of CO2 emissions,
they may choose less-polluting alternatives. If they properly decide to proceed, they are likely to conclude that IGCC should be used and that remaining CO2 emissions should be offset by reductions elsewhere.
The issues addressed in Considering Alternatives are of interest to CIEL’s Climate Change Program for several reasons, and CIEL agrees with many of the points outlined in the article. Common sense alone dictates that, as a threshold matter, states should take a hard look at nonpolluting and less-polluting alternatives before building any new coal-fired power plants. As the laws of some states now provide, coal should be the least-favored fuel for electricity generation. CIEL also agrees that if a state has for good reason rejected less harmful alternatives, and lawfully concluded polluting technologies available, and CO2 and mercury emissions should be part of this calculus.
CIEL understands that minimizing CO2 emissions from new power plants in the United States or even eliminating them altogether is not a substitute for a comprehensive regulatory program on climate change. Far greater reductions from the inventory of existing power plants and other sources of greenhouse emissions are absolutely necessary to meet climate change goals. A concerted government policy that fosters much greater reliance on energy efficiency and renewable energy resources is also critical. Nevertheless, at least until a comprehensive regulatory regime is in place, a piecemeal approach using existing legal tools is appropriate. New coal-fired plants are obvious targets of scrutiny. As Considering Alternatives points out, they are the biggest emitters, and cost-effective measures can be taken to limit their CO2 emissions. Focusing on these plants also helps to draw public attention to broader climate change issues.
Considering Alternatives refers to world energy forecasts predicting construction of large numbers of new coal-fired plants outside the United States, particularly in China and other developing countries. A concerted effort to increase energy efficiency and renewable resources would reduce the number of plants that are built in developing countries, as would international agreements limiting greenhouse gas emissions in those countries. Coal, however, is an abundant and inexpensive fuel in many of those countries, particularly compared to imported oil and natural gas. Coal’s low cost is in significant part due to the failure to take account of environmental costs entailed in its use, including climate change impacts from CO2 emissions. That is wrong, and should change. Nevertheless, it is prudent to assume that for many years to come, developing countries are likely to rely heavily
on coal to fuel economic development. Using IGCC as a more efficient production technology would significantly reduce CO2 emissions from those plants compared to continued reliance on older, less efficient processes. In addition, an inherent part of the IGCC process is vast reduction in emissions of conventional pollutants such as sulfur dioxide, nitrogen oxides, and particulate matter. In the United States, even if older production technologies are used, new plants can be expected to use add-on control devices to achieve emissions reductions comparable to those achieved with IGCC. In developing countries, however, add-on controls are often lacking in new plants, and the resulting emissions have direct, adverse effects on human health and the environment. For these reasons, CIEL believes the world community – and developing countries in particular – would benefit significantly if IGCC were to become the industry standard as a production process for coal-fired power plants. As Considering Alternatives points out, more extensive use of IGCC in the United States could stimulate advances in the technology to bring about that result.