Coal use won’t go away under Clean Power Plan, says EPA’s McCabe

Coal-fired power generation won’t go away under the Obama administration’s Clean Power Plan to cut carbon dioxide from existing plants — but some coal issues remain to be worked out, EPA Acting Assistant Administrator Janet McCabe said July 17 in Washington, D.C.

McCabe, the acting assistant administrator for the EPA Office of Air and Radiation, made her comments to a policy briefing sponsored by ICF International (NASDAQ:ICFI).

EPA has said in its 600-page rule proposal issued June 2 that greater use of combined-cycle natural gas power plants built in the past 15 years could reduce CO2 emissions from the power sector.

“We know that across the country there are some coal plants that are expected to retire,” McCabe said. She later added that EPA expects coal will still account for about 30% of national power generation in 2030.

“The efficient coal plants will get invested in; they will continue to run,” McCabe said. EPA hopes many coal plants will become more efficient by making investments to improve their heat rate.

During the question-and-answer session, McCabe was asked if coal-fired utilities would need to get New Source Review permits before making efficiency upgrades to existing plants. In the past decade many power companies were sued by EPA, and most ultimately settled, over the issue of allegedly making significant modifications to coal plants without getting NSR permits in advance. The Allete (NYSE:ALE) Minnesota Power utility is only one recent example.

“The New Source Review provisions are pretty clear and specific upon when they are triggered. “So I can’t say right now whether any given activity at a power plant” would require an NSR permit,” McCabe said.

EPA is talking with companies now about how to manage workability issues surrounding heat rate improvements at coal plants, McCabe added.

EPA is calling upon states to draft implementation plans to cut power sector CO2 emissions 30% below 2005 levels by 2030. In the run-up to the rule proposal, a number of companies and states said they wanted recognition of steps they have already taken, McCabe said of the starting point.

“This rule will be different, but no different” from past EPA power plant rules that slashed pollutant levels while keeping the industry economic. Past rules have helped spur adoption of sulfur dioxide scrubbers and selective catalytic reduction (SCR) systems at coal plants, McCabe said.

The rule is different in that EPA is not necessarily expecting “some incredible technology to emerge” soon, McCabe said.

Instead EPA is looking to harness existing technology and existing practices that are already meeting some success on curbing CO2. The 30% figure is what EPA believes can be attained with existing methods and technology, McCabe said.

The CO2 rule is a much different sort of program than the Mercury Air Toxics Standard (MATS), for example, in that it considers a much longer time horizon.

EPA has elected not to draft a “model rule” for states to base their individual compliance plans upon, McCabe told ICF Vice President Steve Fine, who moderated the event. EPA Administrator Gina McCarthy believes it’s fine if the federal agency receives 50 different state plans.

As a result states are free to fashion individual programs through a variety of means, including adjusting their generating portfolio; squeezing CO2 reductions out of existing plants; stressing energy efficiency and embracing multi-state solutions, such as cap-and-trade.

EPA has received a lot of questions since the proposed rule was issued June 2.

There are a lot of questions about how EPA will treat the nuclear fleet. “We factored in some reliance on nuclear,” McCabe said.

McCabe said EPA intentionally took a different approach to tackling CO2 from new power plant sources and existing sources. For new sources, it makes sense for the government to set a standard for new power plants to meet.

Existing power plants, however, are already based in their existing sites and own peculiar circumstances, McCabe said. As a result, they need more flexible compliance regimes.

EPA is currently sorting through comments submitted on the new power plant standards.

McCabe: States ‘need to get going’ by 2020

EPA is particularly interested in the “pollution-to-power ratio,” when deciding how to measure the impact of the rule. This involves an evaluation of CO2 related to power generated in the state, McCabe said.

Between 2020 and 2029 states “should be on a glide path” toward compliance. “But they need to get going,” McCabe said.

About 1,600 people are expected to testify during the upcoming public hearings in Atlanta, Denver, Pittsburgh and Washington, D.C., McCabe said. Comments on the existing plant rule are due in October.

A final rule should be announced in June 2015, McCabe said.

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 wayneb@pennwell.com.