Strengthen Power Plant Carbon Standards for Greater Climate Benefit

This blog is authored by Sophia Ahmed, Policy Analyst, at NRDC

The U.S. Environmental Protection Agency recently proposed new rules to curb carbon pollution from power plants. The rules provide long-overdue emissions rate limits for coal plants, new natural gas plants, and some existing gas plants. 

Read more about how the standards work here.

The proposal comes at a time of significant opportunity to reduce emissions from the power sector, with favorable policy and market conditions led by the Inflation Reduction Act (IRA). EPA projects that the IRA can help reduce CO2 emissions by 10.8 billion tons over the next 20 years compared to EPA's pre-IRA modeling. The proposal will help support and accelerate this reduction. 

The EPA projects that the proposed rules covering coal and new gas plants would yield an additional 617 million metric tons (MMT) of reductions beyond the IRA baseline through 2042. EPA estimates that these reductions will result in $85 billion in net climate and health benefits–equaling seven dollars in benefits for every dollar spent – between 2024 and 2042, compared to the IRA baseline. EPA separately analyzed the existing gas rule, finding it would cut another 214-407 MMT of cumulative CO2 by 2042.   

This is an important step forward in cleaning up the power sector. However, the EPA has the opportunity to strengthen the rules. The power sector represents the biggest opportunity to cut climate pollution this decade. And decarbonizing other sectors hinges on access to clean and affordable electricity. The urgency of the climate crisis and the potential to achieve additional reductions mean that EPA can and should strengthen the final rules.

Opportunities to Strengthen the Carbon Pollution Standards

Making these standards more comprehensive in scope by covering more existing gas plants and accelerating compliance timelines can achieve better climate outcomes.

Expand the Scope of the Existing Gas Standard

• The current proposed emissions limits for existing gas units are restricted to the largest, baseload gas plants – defined as units that are larger than 300 MW and run more than 50% of the time. Based on NRDC analysis, this would cover only 7% of natural gas units, accounting for less than 30% of the CO2 emissions from gas-fired units in the power sector.

The narrow coverage provided by the current gas proposal is inadequate to meet climate goals and risks substantial negative public health consequences. Natural gas powers 40% of the grid, leaving power plant operators with too much leeway to shift generation to smaller and currently less-frequently run gas plants that are not covered by the standard. This shifts pollution rather than reduces it: many of these smaller, less-frequently run plants may be dirtier, less efficient, and produce greater rates of air pollution like NOx emissions. Exacerbating these consequences is that a portion of these smaller plants are located in or near environmental justice communities. Beyond increased coverage, additional regulatory action to address these other forms of air pollution will help ensure that all communities will benefit from these rules. 

EPA has requested comment on revised thresholds for existing gas plants as low as 100 MW and a 40% capacity factor. NRDC performed an analysis to assess the different potential outcomes that a revision may have. The results indicate that moving to a threshold between 100-150 MW and a 40% capacity factor would result in much broader coverage with far fewer units available for operators to shift generation to and would cover more emissions, jumping from less than 30% of gas-fired carbon emissions under the proposal to over 80% of emissions. 

Accelerate the Timeline for Compliance

• The rules also offer substantial flexibility and lead-time for power plant operators to comply with the rules. In many cases, affected units will not need to achieve significant emission rate reductions before 2032. These lead-times are overly generous and do not reflect the importance nor capabilities of the power sector to address pollution quickly. EPA can move up the timelines for compliance without impacting costs or reliability.

Expanded and Accelerated Standards Can Have Large Climate Benefits

NRDC modeled the potential impacts from expanding and accelerating compliance. This modeling was completed before EPA’s proposal was released, but is illustrative of the potential benefits from strengthening the rules. NRDC will be conducting new modeling based on EPA’s proposal and will make specific recommendations in public comments.

In one scenario, we covered all plants that have a capacity factor of at least 50% and no size threshold, with standards taking effect in 2030. In another scenario, we start with this 50% threshold in 2030, but gradually expand coverage to other “intermediate” gas plants (e.g., those operating 20 – 50% of the time) starting in 2035.

Our illustrative stronger standards demonstrated additional emissions cuts of 120 to 260 MMT by 2030, with an additional hundreds of millions of tons of pollution reductions annually after 2030 compared to standards similar to EPA’s proposal. Paired with the IRA, power sector carbon emissions could fall to 74-79% below 2005 levels by 2030 – within striking distance of the Biden Administration’s goal of an 80% clean grid.

EPA has the Tools to Tackle Power Pollution

Power plants have operated without accountability for their carbon emissions for too long. The proposal represents a good first step, however, the EPA should seize the opportunity to strengthen the standards in both scope and speed. This approach will help spur investments to clean up our power plants while addressing the risk of a generation shift to uncovered plants. Doing so will ultimately drive greater climate action, improve public health, and create new economic opportunities.