UBS analyst expects ‘vehement opposition’ to CCS requirement

UBS Investment Research Analyst Julien Dumoulin-Smith expects “vehement opposition” to the EPA’s designation of carbon capture and storage (CCS) as a commercially viable technology to help future coal plants comply with greenhouse gas standards.

In issuing its Sept. 20 proposed carbon rule for new plants EPA determined that partial CCS was indeed the ‘Best System of Emission Reduction’ (BSER). EPA has used the example of several ongoing integrated gasification combined-cycle (IGCC) plants domestically.

In his analysis, issued hours after the EPA announced its greenhouse proposal, Dumoulin-Smith said the move merely “starts the fight” on carbon emissions from electric generation.

The UBS analyst also questioned if the United States can make much headway on carbon given the uncertain future of several nuclear plants. Nuclear is the largest source of carbon-free generation in the nation.

Dumoulin-Smith also noted that the Supreme Court’s 2007 endangerment finding prompted EPA to address carbon emissions.

“We reiterate the decision today (as well as with the issuance of existing sources in June, 2014), will have little practical effect on the power sector this decade,” the UBS analyst said.

The effective limit for coal plants would require a ~50% reduction in CO2 emissions, to the same limit gas combined-cycle gas turbines (CCGTs) are subject to of 1,100lb/MWh (0.55 tons/MWh). Larger CCGTs would be permitted a rate of 1,000 lbs/MWh. The definition of large vs. small CCGT appears to be ~120 MW (850 MMBtu/hr). Meanwhile, peakers would be largely exempted if it provides less than one-third of its potential electric output (33% capacity factor) or less than 219 GWh output per year, the UBS official said.

Stakeholders weigh in on EPA carbon proposal


Arch Coal: (NYSE:ACI) “We believe that coal plants with near-zero greenhouse gas emissions will be achievable in time, but such technology is simply not available today,” said Arch Coal Senior Vice President of Strategy and Public Policy Deck Slone.

Edison Electric Institute (EEI) President Tom Kuhn: “EEI continues to support an explicit exemption for combustion turbines, which are not efficient or economic to operate except when needed … As proposed, this rule would hinder efforts to develop cost-effective CCS—a critical technology for mitigating greenhouse gas emissions going forward—because it effectively prevents the building of new clean coal plants. We cannot afford to take generation sources out of the mix,”

National Mining Association (NMA) President Hal Quinn: “By forcing power plants to abandon the use of the nation’s largest and most reliable source of affordable electricity, EPA is recklessly gambling with the nation’s energy and economic future. The risk will be raised if this new source standard is applied to existing power plants next year.”

Peabody Energy (NYSE:BTU) Peabody believes the rule “would cause consumers’ power bills to skyrocket over time and cause more pain at the plug than Americans have experienced at the pump.”

Sierra Club: “While public health safeguards against mercury, arsenic, soot and other dangerous pollution from power plants exist, there are no federal limits on the carbon pollution that is responsible for climate change and fuels extreme weather. That’s wrong. … With this action, the President and the EPA are ensuring that no future power plants can dump unlimited carbon pollution in the air.”

Sen. Barbara Boxer (D-Calif.) “Every day across the nation we see the harmful impacts of climate change, and we must reduce carbon pollution to protect public health and safeguard future generations. EPA’s proposed standard for new power plants is a critical and appropriate step forward in addressing the biggest source of carbon pollution.”

Sen. David Vitter (R-La.)Today’s proposal maintains EPA’s pie in the sky standard-setting mentality despite the Agency’s admission that unilateral regulations would have no impact on global emissions levels,” said Vitter. “In 2010, GAO found that commercial deployment of CCS was possible in 10 to 15 years contingent upon overcoming economic, technical, and legal challenges that have yet to be met.”

GOP House Energy and Commerce Committee Chairman Fred Upton (R-MI) and Energy and Power Subcommittee Chairman Ed Whitfield (R-KY) said the rule would essentially end construction of new coal plants by requiring use of expensive CCS technology that is not yet commercially viable.

Southern (NYSE:SO) “Instead of encouraging the development of all of America’s energy resources, the revised new source performance standards essentially eliminate coal as a future generation option and potentially restrict the operation of new natural gas combined-cycle units.”

World Resources Institute: “While the new standards are relatively stringent, they provide power plants with options for compliance, including phasing in carbon capture and storage. While not yet used on a wide scale, CCS is technically feasible and could be further deployed under the right conditions.”

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at