Powering Strong Communities
Environment
Issue Brief

Federal Efforts to Address Climate Change

PDF: Federal Efforts to Address Climate Change Issue Brief.

Summary

Public power utilities are reducing their greenhouse gas (GHG) emissions through a variety of means, including increased use of renewable energy resources, the development of new nuclear power, the addition of distributed energy resources and storage, the adoption of energy efficiency programs, and the promotion of transportation electrification.
The American Public Power Association (APPA) supports congressional efforts to address climate change through a statutory framework that provides electric utilities with regulatory certainty for the clean energy transition while keeping electricity affordable and reliable for all customers.
Congress should continue to fund federal research, development, and deployment of clean energy technologies and infrastructure that increases the resilience of the grid, reduces emissions, and helps keep electricity affordable.
The Environmental Protection Agency's (EPA) rules to consider GHG emissions from new and existing power plants must be cost-effective, practically achievable, and incorporate future market trends. 

Background

Following the U.S. Supreme Court’s landmark decision in Massachusetts v. Environmental Protection Agency in 2007, which held that EPA has the authority to regulate tailpipe emissions of GHGs under the Clean Air Act (CAA) because GHGs are pollutants that potentially “endanger” public health and welfare, Congress and EPA have sought to address climate change through legislation and regulations. In 2009, the House of Representatives passed the American Clean Energy and Security Act of 2009 by a vote of 219-212. The legislation would have established an economy-wide GHG cap-and-trade system. The Senate did not consider the House bill; nor did it consider its own comprehensive climate bill due to the lack of sufficient support among senators.
With Congress failing to enact climate change legislation in 2010, the Obama administration’s EPA issued proposed New Source Performance Standards for new fossil fuel-fired power plants in 2012. Just over three years later, in August 2015, EPA issued final rules to regulate carbon dioxide (CO2) emissions from new power plants and existing power plants (“Clean Power Plan” or CPP).

The CPP set final emission guidelines in the form of nationally uniform CO2 emission performance rates for coal-fired and natural gas-fired power plants. It also set CO2 emissions-reduction goals for each state and allowed for emissions reductions through energy efficiency upgrades at power plants and fuel switching from coal to natural gas or renewables.

In October 2015, the CPP was challenged in the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit). The case was subsequently dismissed in September 2019, with the court noting that challenges to the rule were moot due to the repeal of the CPP and replacement of the rule with the Trump administration’s Affordable Clean Energy (ACE) rule. The ACE rule sought to establish the “best system of emissions reduction” (BSER) for limiting CO2 emissions from affected electric generating units in the form of heat rate improvement measures that could be applied to or at an affected unit (i.e., “inside the fence-line”). In September 2019, the ACE rule was challenged in the D.C. Circuit, where the court vacated and remanded the rule back to EPA. Subsequently, the D.C. Circuit’s decision was appealed to the U.S. Supreme Court. The court ruled in West Virginia v. EPA et al. (No. 20-1530) that EPA’s conclusion in the CPP that an “outside the fence” approach, including a cap-and-trade system, that resulted in a shift of electricity production from coal plants to other sources of lower GHG emissions exceeded EPA authority under section 111(d) of the CAA. Thus, the court reversed and remanded the case to the D.C. Circuit. 

Administrative Action

In May 2023, EPA issued its long-awaited proposal to regulate GHG emissions from new, modified, reconstructed, and certain existing power plants under section 111 of the CAA. The proposed rules, if finalized, would impose stringent NSPS on power plants fueled by natural gas and impose strict limits on GHG emissions from existing fossil-fired generators. Specifically, EPA proposed to take five regulatory actions: update the NSPS for fossil fuel-fired stationary combustion turbines (CTs); update the NSPS for GHG emissions from fossil fuel-fired steam generating units that undertake large modifications; create emission guidelines for fossil fuel-fired steam generating EGUs; create emission guidelines for GHG emissions from certain stationary CTs; and repeal the ACE rule. CAA section 111 requires EPA to determine performance standards and emission limitations by applying the BSER, which considers the cost of achieving such reduction and any non-air quality health and environmental impacts and energy requirements EPA determines have been adequately demonstrated. Once BSER is determined for new plants, EPA must also address existing sources and establish emission guidelines as the baseline for states to develop state implementation plans for their existing sources. The proposal relies on the use of highly efficient generation practices, carbon capture and storage (CCS), and co-firing natural gas with low GHG-hydrogen as BSER, depending on the type of affected facility. The proposed rules aim to significantly reduce GHGs in the electric generation sector by requiring certain new and existing fossil fuel generation to use CCS by 2035 or co-fire with hydrogen by 2032.

The proposed rules would allow for various technology options and compliance timelines that are intended to account for an individual facility’s lifespan. The proposed standards vary based on whether an EGU is new or existing, coal-fired or gas-fired, and how often it is used. EPA’s reliance on CCS and co-firing with low GHG hydrogen as BSER assumes these technologies are “adequately demonstrated” and “economically achievable.” Many of the proposal’s assumptions are based upon changes in the electric power sector, technology developments, the passage of the Infrastructure Investment and Jobs Act (IIJA) (P.L. 117-58) and Inflation Reduction Act (IRA) (P.L. 117-169), state support for investment in CCS, and hydrogen co-firing projects. While CCS may fit within the U.S. Supreme Court’s interpretation of “inside the fence line,” questions remain about whether EPA’s approach will survive legal challenges once the rules are issued in final form. 

In August 2023, APPA submitted comments on the proposed rules and urged the agency to analyze how its proposals would affect the reliability and affordability of electricity. The comments explained that while public power utilities are playing a leading role in the development and deployment of CO2 emission reduction technologies, APPA believes the proposed BSER for certain subcategories of coal-fired and natural gas-fired EGUs does not meet the legal threshold to be considered adequately demonstrated and achievable under the CAA. The comments recommended that EPA raise the size and capacity factor threshold for existing natural gas-fired CTs to ensure electric reliability, as these large CTs are necessary to support grid reliability. The comments explained that the compliance timelines as proposed are unrealistic and would force EGUs to retire or curtail operations, further compounding grid reliability concerns. APPA’s comments called on the agency to not restrict the ability of states to make determinations based on the remaining useful life of generation plants and encouraged it to use a model trading rule for existing sources that states could readily adopt. A final rule is expected in the spring of 2024.

Congressional Action 

Climate and energy infrastructure issues were a key legislative focus during the 117th Congress. In November 2021, President Biden signed the IIJA into law, which provided federal funding for a host of programs to promote clean energy, energy efficiency, grid resilience, and electrification of the transportation sector. APPA believes many of these programs will help public power utilities further reduce their GHG emissions or facilitate their ability to reduce emissions from other sectors, such as transportation. Further, the IRA, signed into law in August 2022, expanded existing energy tax credits and created new ones, including for nuclear power and
carbon capture, among other technologies, with the purpose of promoting clean energy technologies to reduce emissions to address climate change. The IRA also for the first time made these credits available to public power utilities through elective pay, which will help them make further investments in clean energy technologies.

The 118th Congress has primarily focused on oversight, not only of federal agencies, such as the Departments of Energy, Transportation, and Treasury, which are tasked with implementing the energy tax credits and grant programs created by the IRA and IIJA, but also of executive actions to address climate change, including EPA’s proposed power plant regulations. Congress held several hearings on the proposed rule, with Republicans largely focusing on the rule’s impact on electric reliability and Democrats predominantly focusing on its impact on public health. In December 2023, Republicans on the House Energy & Commerce Committee passed the Guaranteeing Reliable Infrastructure Development (GRID) Act (H.R. 6185), which would require the Federal Energy Regulatory Commission (FERC) to review and comment on federal agency actions that are likely to have a significant, negative impact on the reliability of the bulk-power system. APPA supports H.R. 6185. In addition to the GRID Act, Republicans in both the House and Senate have sent letters requesting FERC weigh in on the reliability impact of EPA’s proposed rule. The proposed power plant regulations and their impact on electric reliability will likely be a major focus for Congress in 2024.

APPA Contact 

Sarah Mathias, Senior Government Relations Director, 202-467-2959 / [email protected]
Carolyn Slaughter, Senior Director of Environmental Policy, 202-467-2943 / [email protected]