On June 2, the U.S. Environmental Protection Agency is expected to release guidelines aimed at cutting carbon emissions from existing power plants. The new rules could have powerful implications in Pennsylvania, one of the country’s top electricity producers and sources for fuels like natural gas and coal.
“This is a significant issue,” said Jacob Smeltz, president of the Electric Power Generation Association, a Harrisburg trade group.
“Pennsylvania is the second largest power producer in the nation. Only Texas makes more electricity than we do,” Mr. Smeltz said. “To the extent that electric power generators are given options to comply, that will enhance the ability for them to maintain operations.”
The EPA guidelines are expected to be finalized in June 2015. Then it will be up to individual states to craft plans based on those guidelines that would reduce greenhouse gas emissions by June 2016.
Until the details are released next week, it’s unclear what impact the proposal could have on the industry, said Stephanie Walton, spokeswoman for First Energy Generation. Akron-based First Energy has nearly 18,000 megawatts of generating capacity in six states, including Pennsylvania.
“There are some elements of the rule we hope to see when it comes out,” Ms. Walton said. “We think the state should be allowed flexibility when reducing emissions, such as allowing plant retirements and allowing states to take credit for past emission reduction programs.”
From First Energy’s perspective, coal must play a role in future electricity generation.
“From a reliability perspective, coal-fired units provide reliable baseload generation within a fleet of diverse fuel sources,” Ms. Walton said. “It needs to be part of the plan to meet current and future energy needs.”
A glut of natural gas supply from shale drilling in the Marcellus and other U.S. shale plays has meant increased competition with coal generation, due to natural gas’ competitive price and cleaner emissions.
By 2015, First Energy expects to see a 25 percent reduction in greenhouse gas emissions compared to 2005 levels as a result of equipment upgrades and plant retirements. The company is retiring 11 plants in the region and will have one plant in Pennsylvania, two in Ohio and three in West Virginia.
The reduction will exceed President Barack Obama’s goal of a 17 percent reduction in greenhouse gases by 2020, according to Ms. Walton.
While the EPA’s guidelines on existing power plants will be the first at the federal level, it’s not the only time the agency has looked at carbon emissions. In September, the agency proposed emission limits for new power plants.
Under that proposal, new large natural gas-fired turbines would need to meet a limit of 1,000 pounds of carbon dioxide per megawatt-hour. New small natural gas-fired turbines would need to meet a limit of 1,100 pounds of carbon dioxide per megawatt-hour.
New coal-fired units would need to meet a limit of 1,100 pounds of carbon dioxide per megawatt-hour, “and would have the option to meet a somewhat tighter limit if they choose to average emissions over multiple years, giving those units additional operational flexibility,” according to the EPA.
The public comment period on new power plants closed on May 9.
Both federal proposals targeting new and existing power plants are critical components of Mr. Obama’s climate action plan announced last June. Nationally, the electric power sector accounted for 33 percent of total U.S. greenhouse gas emissions and 60 percent of U.S. stationary source greenhouse gas emissions in 2011, according to EPA data.
“Fossil fuel-fired power plants are the largest source of U.S. CO2 emissions,” EPA said.
As for Pennsylvania, the state is in a good position to meet “moderately ambitious” future emissions standards for existing power plants by using policies and resources already in place, according to the World Resources Institute, a Washington, D.C.-based research organization.
In addition, the state can increase usage of existing natural gas-fired generation and increase the efficiency of coal-fired plants, the World Resources Institute said.
In a joint conference call on May 19, the World Resources Institute and PennFuture, a Harrisburg environmental advocacy group, said the industry has seen the rules coming for a while.
“How an individual plant will respond when [the rules are] released in June will be determined by their ability to comply,” said Christina Simeone, energy center director, PennFuture. “A rational business would want maximum flexibility in their options to comply with the rule so each individual plant can chose what they want from an economic and technical perspective.”
The state has made progress in slashing emissions, the organizations said. Carbon dioxide emissions from Pennsylvania’s power sector were 10 percent below 2005 levels in 2011, the World Resources Institute noted.
And carbon emissions in 2016 are expected to be 20 to 25 percent lower than 2005 levels in the electric generation sector due to plant retirements, reduced use of coal-fired generation and more build out of natural gas-fired plants, according to Vince Brisini, deputy secretary for the state Department of Environmental Protection’s office of waste, air, radiation and remediation.
The DEP has urged the EPA take the diversity of each state into account while crafting the guidelines.
“That becomes important when you consider that Pennsylvania operates in competitive market and Kentucky is a rate-based state,” said Mr. Brisini. “What we decide to do in Pennsylvania may not be what Maryland or Delaware will do.”
In a paper submitted to the EPA, the Pennsylvania DEP said, “The EPA should develop emissions guidelines that provide for maximum flexibility to the states in meeting those guidelines. The emissions guidelines should establish targets, not mandate how to achieve the established targets.”
Stephanie Ritenbaugh: email@example.com or 412-263-4910