Much-anticipated CO2 Emissions Rule Renders Zero Benefits or Costs in Agency Analysis Open Access
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On September 20th, the Environmental Protection Agency released a much-anticipated proposed rule that would limit the emissions of CO2 by new coal- and natural gas-fired power plants, or electric utility generating units (EGUs). This proposal is one of many regulatory actions being undertaken by the Obama administration to curb carbon emissions, and is the first uniform federal limit on CO2 production for new power plants. Carbon emissions from existing power plants are currently regulated by state implementation of federal guidelines, and next year EPA will propose federal standards for existing plants. Interestingly enough, EPA’s analysis suggests that the proposed rule doesn’t exert any meaningful requirement on emissions from new power plants: “Because these [proposed] standards are in line with current industry investment patterns, these standards are not expected to have notable costs and are not projected to impact electricity prices or reliability.” In other words, EPA is projecting that, even without the proposed standards, emissions would have fallen by a comparable amount due to shifts from investment in coal plants to natural gas-fired plants, which have lower CO2 emissions. EPA makes the same point even more clearly in its regulatory impact analysis (RIA): “the proposed EGU New Source GHG [greenhouse gas] Standards are not expected to change GHG emissions for newly constructed EGUs, and are anticipated to yield no monetized benefits and impose negligible costs, economic impacts, or energy impacts on the electricity sector or society.” According to the agency’s analysis, EPA presumes that any costs incurred by power plants will be at least partially recovered through sale of captured carbon.