In May 2023, the Environmental Protection Agency (EPA) proposed a package of regulations to limit greenhouse gas emissions from fossil fuel-fired power plants under Section 111 of the Clean Air Act. This proposal included revisions to strengthen the limits for new gas fired-plants and to establish limits for existing coal-fired plants and some of the largest, existing gas-fired plants. To determine the stringency of these limits, EPA identified “best systems of emission reduction” (BSERs).
In our comments we explain how EPA’s has selected BSERs that are traditional in scope and consistent with the legal pathway left intact by the Supreme Court’s decision in West Virginia v. EPA. In particular:
-
If larger economic trends, independently or in conjunction with the regulations, drive sources to retire or meet these emissions limits through compliance pathways different from the BSER, that is consistent with a cost-reasonable BSER. Reflective of these trends, EPA appropriately exercises its authority to subcategorize regulated sources in a manner informed by their costs to the regulated entities. EPA also appropriately considers the effects of a BSER at the local, regional, and national levels, as it has long done for the consideration of energy requirements and other environmental effects.
-
The Proposed Rule lacks the indicators of history and breadth to trigger the major questions doctrine.
In our comments, we recommend that EPA strengthen the design of the rule to ensure it best fulfills its goal to reduce GHG emissions, which endanger public health and welfare, in a manner that avoids creating perverse incentives. In particular:
-
EPA should (1) specify that the hydrogen co-firing BSERs require units to fire low-GHG hydrogen and (2) define low-GHG hydrogen to mean hydrogen that was specifically produced via electrolysis powered by zero-emissions resources (e.g., solar, wind, nuclear, and hydro) and include limitations on hydrogen leakage. EPA should also develop its own compliance protocols for measuring the emissions intensity of hydrogen production if Treasury’s relevant protocols underestimate associated emissions.
-
EPA should expand the coverage of its proposed emissions limits to more of the existing gas fleet to avoid (1) shifting generation to smaller, less-frequently operated plants, which can have higher emission rates of GHGs and other air pollutants, and (2) incentivizing the “old plant effect,” which occurs when the imposition of differentially stringent standards for new and existing sources inadvertently extends the existing sources’ economically useful life.
We also suggest how EPA could improve its proposal by conducting additional analysis and clarifying certain assumptions. In particular:
-
EPA should conduct additional sensitivity analysis using climate-damage valuations and social discount rates from draft guidance documents that reflect the best available science and economics.
-
EPA should consider separately identifying and quantifying any increases or decreases in federal subsidy payments that will result from the Proposed Rule and contextualizing those amounts within the size of the relevant government subsidy programs.
-
EPA should update the data underlying its baseline analysis and explain how its choices around modeling Inflation Reduction Act (IRA) implementation best reflect its projections about the anticipated state of the world.
-
EPA should continue to refine its SAGE modeling of social costs and conduct additional sensitivity analysis to provide a more comprehensive accounting of the Proposed Rule’s social costs. Where such modeling is not possible, EPA should explain why and highlight what those limitations mean for its estimated social cost figures.
-
EPA should further update and strengthen the environmental justice analysis and provide guidance to states regarding opportunities to conduct distributional analysis and mitigate negative impacts on environmental justice communities.
We also submitted joint comments with a coalition of other environmental groups on EPA’s use of the social cost of greenhouses gases in the Proposed Rule. In those comments, we offer extensive justification for the inclusion of global damages and the use of low discount rates. We also affirm that the Proposed Rule’s climate-damage valuations represent lower-bound estimates and recommend that EPA conduct additional analysis using draft updated valuations that it released late last year.