Group: EPA’s Coordinated Regulatory Assault on Coal Power Could Push Retirements Beyond 86 GW by 2030

The Environmental Protection Agency (EPA) is readying a regulatory sweep targeting more stringent limits on traditional pollutants that could accelerate coal power plant closures. A coal trade group estimates that even without new rules, 86 GW of coal generation is slated to retire by 2030.

While the U.S. Supreme Court in June curtailed the EPA's ability to regulate carbon emissions from existing power plants, the EPA is working on other rules in an integrated and coordinated approach" that will allow the agency to tackle threats" posed by power plants to clean air, safe water, and healthy land, EPA Administrator Michael Regan has said.

The EPA chief recently told Reuters the agency remains undeterred by the Supreme Court's constraints. We want to present the industry with a suite of regulations so that they can make the best long-term investments possible," the news agency quoted Regan as saying on July 29. The power sector will ... look at the cost benefit of complying with those and more than likely stay with the conclusion that ... clean energy is more cost effective for them and for their customers," he reportedly said.

The EPA's Integrated and Coordinated Approach

According to the agency's spring 2022 Unified Agenda and Regulatory Plan, the EPA plans to issue a final rule regulating the disposal of coal combustion residuals (CCR) from electric utilities in October 2022. In December 2022, meanwhile, it is expected to roll out a final action revoking its May 2020 finding that it is not appropriate and necessary to regulate hazardous air pollutants, including mercury, from power plants after considering cost. The EPA in June issued a proposed rule that would ensure that fossil-fuel fired power plants continue to control emissions of toxic air pollution, including mercury."

Among the agency's suite of proposed rules is the Effluent Limitations Guidelines and Standards (ELG). The EPA expects to issue a notice of proposed rulemaking in November 2022. A year ago, the agency announced its decision to conduct rulemaking to potentially strengthen ELG rule. The agency has suggested the rulemaking process could result in more stringent ELGs for waste streams than addressed in the 2020 final rule, as well as waste streams not covered in the 2020 rule.

The EPA will meanwhile also work on proposed narrower rules to regulate greenhouse gas (GHGs) emissions. Joseph Goffman, principal deputy assistant administrator for the Office of Air and Radiation in July told the New York Timesa rule addressing existing plant GHGs may come early next year, accompanied by a possible rule to cut emissions from new gas-fired power plants.

The Target: Coal Power

The Supreme Court's 6-3 decision West Virginia v. EPA on June 30 held that the generation shifting" provisions and associated emissions caps in the EPA's Clean Power Plan-a rule that had not been codified-exceeded the agency's authority under Section 111(d) of the Clean Air Act. Writing for the majority, Chief Justice John Roberts highlighted the major questions" doctrine, stating that an agency must point to clear congressional authorization" when seeking to regulate a significant portion of the American economy." All the EPA can offer, Roberts wrote, is an authority to establish emissions caps at a level reflecting the application of the best system of emission reduction'." Such a vague statutory grant is not close to the sort of clear authorization required by precedent," he wrote.

As significantly, the court concluded that while capping carbon emissions at a level that will force a nationwide transition away from the use of coal to generate electricity may be a sensible solution to the crisis of the day' . . . it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme."

While the coal power industry celebrated the high court's decision to curb the EPA's authority, the agency's recent statements appear to have prompted new concerns. America's Power, a partnership of industries involved in producing power from coal, in a statement issued on July 30 strongly rebuked the agency's regulatory targeting of coal power.

EPA must carefully consider the impact of its environmental regulations on the nation's already vulnerable electricity grid," wrote America's Power President and CEO Michelle Bloodworth in a statement to POWER. Impartial grid officials and regulators responsible for keeping America's lights on have been warning of potential grid reliability problems, citing the retirement of coal-fired power plants as a main reason," she noted.

Paul Bailey, who has served as a leader at America's Power since 2009, offered clarification. The situation we are describing in the press statement is that literally no one doubts that new EPA regulations will cause more coal retirements. EPA knows that," he said. We just don't know exactly how many retirements because EPA will be implementing these regulations over the next two to three years. These regulations are an indirect way to force the retirement of coal plants and decarbonize the power sector," he said.

86 GW of Coal Retirements Estimated Through 2030

Even without new EPA rules, about 86 GW of coal retirements have been announced and could be implemented between now and 2030, America's Power estimates. Considering EPA's schedule for all of these rules and our experience with how long it takes before compliance would be required (i.e., comply or retire), we estimate that the collective impact of these rules will cause coal retirements to increase dramatically in the 2026-2028 timeframe," Bailey said.

The group has highlighted risks that accelerated coal retirements-and closures of other large dispatchable generators-pose to the nation's precarious power supply profile. Reliability entities like the North American Electric Reliability Corp. have warned that massive losses of resource capacity, including unconfirmed coal retirements, raise the risk of capacity shortfalls in some regions, including in the Midcontinent Independent System Operator and the West.

According to the Energy Information Administration (EIA), at the end of 2021, the U.S. had 1,144 GW of total utility-scale electricity generating capacity. About 18% (206 GW) was coal-fired, accounting for about 22% of total utility-scale electricity generation. The EIA estimates that 15 GW of new utility-scale electric generating capacity came online in the U.S during the first half of 2022, and another 29 GW will be added in the second half of the year. More than a third of new additions were wind generators, followed by natural gas, solar, and battery storage.

However, about 15.1 GW of electric generating capacity is also scheduled to retire during 2022, and 8.8 GW was already retired in the first half of the year. The bulk of these-76%-are coal-fired power plants, followed by natural gas (12%) and nuclear (9%). The largest U.S. coal power plant retirements in 2022 include the 1,305-MW William H. Zimmer plant in Ohio, which retired in May, and the 1,205-MW Morgantown Generating Station in Maryland, which retired in June. In addition, the 769-MW Palisades nuclear power facility in Michigan retired in June," the EIA noted.

Rules That Could Accelerate Coal Closures: Transport, ELG, MATS, CCR

Bailey told POWERamong EPA rules that could have a pronounced effect on future coal retirements is the proposed Transport Rule, a sweeping rule the EPA proposed this April that establishes new nitrogen oxide (NO_x) emissions budgets and will require fossil fuel-fired power plants in 25 states to participate in an allowance-based ozone season trading program starting in 2023.

According to EPA, the proposed Transport Rule will cause the retirement of 23,000 MW of coal-fired generation. That's because the Transport Rule will force many coal plants to install selective catalytic reduction technology (SCR) to reduce NOx emissions," Bailey said. SCR costs $150 million to $160 million for an average coal plant, so you can see why the plant would retire rather than spending that much. Just this one regulation alone will cause the retirement of more than 10% of the existing fleet."

Other rules poised to cause renewed regulatory hurdles for coal power include the ELG rule, the Mercury and Air Toxics Standard reconsideration action, and the pending Affordable Clean Energy replacement rule. In the near-term, coal plants will need to be ready for the CCR rule, though that rule continues to be shrouded in uncertainty, he suggested.

Right now, EPA is considering whether to extend the deadlines for closing CCR impoundments. So far, EPA has conditionally granted requests from only three out of more than 40 coal plants," Bailey said. If EPA does not extend deadlines for all of these plants (totaling 42,600 MW), some will be forced to idle or retire prematurely," he said. We refer to these as at risk' plants, meaning they are at risk of retiring or idling if EPA does not approve the extension requests."

-Sonal Patelis a POWER senior associate editor (@sonalcpatel,@POWERmagazine).

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