In late May, the Electric Power Supply Association submitted comments to the U.S. Environmental Protection Agency (EPA) in the EPA’s non-regulatory docket exploring the possibility of additional emissions regulation on existing natural gas power plants. EPSA members own and operate roughly 1/5 of the United States’ installed capacity, including (but not limited to) natural gas, wind, solar, and energy storage, and remain committed to playing a vital role in the United States’ clean energy expansion.
To begin, EPSA members wanted to provide the EPA with some general background as to three significant variables and trends affecting the generation community.
- Emissions: The confluence of competitive markets and the shale gas revolution has driven down emissions from the power sector over the last two decades – declines in emissions have continued as more efficient natural gas plants have displaced other less efficient fossil generation and as renewables grow as a share of our generation mix. EPSA highlights data from the EPA, the U.S. Energy Information Administrations and ISO/RTOs to illustrate the emissions reductions.
- Energy Demand: There is widespread and unified agreement that load growth is expected to rise substantially in the coming years, and the electric grid needs to prepare for a significant increase in electricity demand. There are numerous contributing factors to the projected load growth, but all signs point to substantial quantities of additional generating capacity being needed by the end of the decade.
- Electric Reliability: Finally, organizations charged with electric grid reliability (FERC, NERC, and the ISOs/RTOs) are sounding the alarm over the too-rapid retirement of dispatchable, flexible, ramping assets. Given the need for additional capacity, EPSA asks if this is an appropriate time to further limit output from (or the existence of) natural gas generation.
Barriers to CCS Deployment
EPSA recognizes that the EPA has traditionally focused on emissions regulations occurring at the source of electricity generation – in other words, inside the fence line of a power plant. However, EPSA continues to voice its concerns about the barriers to the successful completion of holistic, beginning-to-end carbon capture and sequestration regimes (CCS). EPSA highlights a 2023 analysis by the EFI Foundation, led by former Energy Secretary Ernie Moniz, which estimates that the U.S. would need roughly 50,000 miles of CO2 pipeline to successfully meet the requirements of an (eventually modified) Notice of Proposed Rulemaking released by the EPA in 2023 rooted in CCS deployment on existing and new natural gas power plants. Carbon pipelines are investments taking place “outside the fence line” of a power plant that are not jurisdictional to the EPA and not built or operated by independent power producers.
Perhaps the largest hurdle is the predictable opposition to CO2 pipelines during the impenetrable permitting and siting process. Combine the permitting challenges with the difficulties in acquiring the physical materials to construct tens of thousands of miles of pipeline, the lack of an adequate trained and skilled workforce, and concerns about how such projects would be financed, and the prospect of even a fraction of the necessary infrastructure being completed by a regulatory deadline appears incredibly unlikely.
EPSA believes that assuming the successful completion of 50,000 miles of CO2 pipeline is a bridge too far to rely on CCS as a primary (or sole) Best System of Emissions Reduction. That assumption does not even begin to account for the lack of repositories for the Class VI wells – wells that can only be built in geologically appropriate locations. These wells exist in only very specific areas of the country and presently do not exist in meaningful quantities. While granting state primacy for Class VI well permitting is a positive step, only a few states have received the designation, and the federal permitting process remains sluggish and certainly not at a pace required to meet a massive buildout of CCS technology that would be required under the rule.
CCS Holds Promise, but Expectations Must Be Realistic
It is entirely consistent to point out the real-world hurdles to building out holistic CCS infrastructure while being supportive of carbon capture technology and the clean energy expansion. One can be both encouraged and supportive of CCS investments, pilot and demonstration projects, R&D, and the potential for significant growth in CCS while still noting that a nationwide, commercial scale buildout of CCS within a decade is grossly unrealistic. There is absolutely no inconsistency in being committed to the clean energy expansion and investment in technologies like carbon capture while being clear eyed about the myriad of reasons why a federal mandate directing a massive coast-to-coast buildout by the early 2030s isn’t reasonable.
Dispatchable Resources Continue Important Role Amidst Renewable Buildout
Supporters of regulations to further lower emissions from natural gas plants note that renewable energy will continue to comprise a greater share of the nation’s energy production, and thus natural gas will be producing less electricity on an annual basis. While quite likely, this trend does not diminish the importance of flexible resources capable of ramping up and down to account for the variable output of weather-dependent resources. Far from diminishing, the importance of dispatchable resources will increase as volatility on the grid increases due to higher penetration of non-dispatchable assets. Natural gas will be a critical balancing resource for decades and can’t be dismissed simply because renewable resources increase their output. Further, with increasingly large amount of new demand on the system, the importance of dispatchable resources will only grow in importance.
Aggressive Mandates may Drive Retirement of Needed Plants
EPSA members maintain their strong support for competitive wholesale markets to enable the deployment of all power resources. In a properly functioning market, where independent power producers invest without a guaranteed rate of return, markets must deliver adequate compensation. There is no financial safety net that protects EPSA members from inefficient or unnecessary investment. If owners and operators of natural gas power plants cannot be sure that sufficient transportation infrastructure (pipelines) and repositories (Class VI wells) exist to remove and store capture carbon, it would be irresponsible and financially imprudent of them to invest in CCS technology at the point of energy production. If power plant owners are unable to comply with a rulemaking, they are forced to either modify their output to ensure that the rule is not applicable to that asset or retire the power plant. These options exacerbate the coming reliability crisis.
Leveraging Competitive Markets to Drive Results
EPSA also provided feedback to the EPA on the importance of establishing a model trading rule in any future rulemaking and expressed continued support for harnessing competitive markets to incentivize behaviors or attributes by capacity assets valuable to electric grid operators.
The Bottom Line
EPSA concludes its comments by noting that “the use of CCS to address emission reductions goals must be considered holistically with all of the required parts of the value chain, including pipelines and storage challenges, to ensure the Rule can be effectively implemented to achieve the desired policy outcomes.” We encourage the EPA to ensure that good intentions and laudable aspirations don’t get ahead of the operational realities of the electric grid.
