The importance of upcoming EPA regulations on power plants

Various options are at play in the EPA’s planned greenhouse gas
standards for new and existing power plants. In this episode,
Lissa Lynch of NRDC discusses the implications.


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transcript)


(Active
transcript)


Text transcript:


David Roberts


A couple of weeks ago, the policy analysts at the Rhodium Group
put out a new report showing that the Biden administration's
legislative achievements are not quite enough to get it to its
Paris climate goals. But those goals could be reached if the
legislation is supplemented with smart executive action.


Some of the most important upcoming executive actions are EPA's
greenhouse gas standards for new and existing power plants. The
Supreme Court famously struck down Obama's Clean Power Plan — his
attempt to address existing power plants — judging it
impermissibly expansive. So now EPA has to figure out what to ask
of individual plants.


The agency's decisions will help shape the future of the US power
sector and determine whether the Biden administration gets on
track for its climate goals.


To talk through those decisions in more detail, I contacted Lissa
Lynch, who runs the Federal Legal Group at the NRDC’s Climate
& Clean Energy Program. We discussed the options before the
EPA, the viability of carbon capture and hydrogen as systems of
pollution reduction, and whether Biden will have time to complete
all the regulatory work that remains.


Alright. With no further ado, Lissa Lynch from NRDC. Welcome to
Volts. Thank you so much for coming.


Lissa Lynch


Thank you for having me.


David Roberts


This is a subject that I used to spend a lot of time thinking
about back in the day, and it's sort of receded for a while, and
now it's back. So it's very exciting for a nerd like me. So I
want to just quickly walk through some history with this and then
sort of hand it off to you so you can tell us where things stand
now, because I don't want to assume that listeners have been
obsessively following this now nearly two decade long saga. So
let me just run through some history really briefly. So listeners
will recall in 2007, there's a big Supreme Court case,
Massachusetts vs. EPA, in which the Supreme Court ruled that CO2
is eligible to be listed as a pollutant under the Clean Air Act
if EPA determines it is a threat to human health.


And then shortly thereafter, Obama's EPA officially determined
that it is a threat to human health via the endangerment finding.
So this is one thing I'm not sure everybody understands, and I
just want to get it on the table up front. So for context, the
combination of those two things, Mass vs. EPA, plus the
endangerment finding, means that EPA is lawfully obliged to
regulate greenhouse gases. This is not a choice. This is not
something it can do or not do, depending on how it feels or who's
president. They have to do it. So then that triggers the
obligation, three separate obligations.


You have to regulate mobile sources, which Obama did with his new
fuel economy regulations, which are still in place, as far as I
know. Then you have to regulate new stationary sources of
greenhouse gases, which Obama did. And as far as I know, we can
come back to this in a second, but as far as I know, those new
power plant regulations that Obama passed are still in effect.
And then thirdly, you have to regulate existing stationary
sources of greenhouse gases, which mainly means power plants. And
so Obama's effort to regulate existing power plants is called the
Clean Power Plan.


People may remember the fuss and ado about the Clean Power Plan
as it was under development. Lawsuits were immediately launched.
Of course, the Supreme Court took the extremely unusual step of
putting the law on hold, basically not letting it go into
implementation until it had heard this case. And then it heard
the case, rejected the Clean Power Plan on the basis of the newly
dreamed up, rectally, extracted Major Questions Doctrine. So
that's where we stand now is we've got the mobile regs in place,
although Biden is updating those too. I think we've got the new
power plant regs in place, although Biden is also updating those.


But as for existing power plant regulations, there are basically
none. It's been a legal mire and so Biden's got to do those too.
So let's talk about what Supreme Court said about the Clean Power
Plan in their ruling and how that constrains the sort of solution
space that we're looking at now.


Lissa Lynch


So in West Virginia vs. EPA, that was the Supreme Court decision
from last summer. The Supreme Court held that this section of the
Clean Air Act that we're talking about here, section 111, does
not clearly provide authority for the approach that EPA took in
the Clean Power Plan. And what they did there we sort of refer to
as generation shifting. In the Clean Power Plan, EPA looked at
the power sector as a whole and they concluded that the best
system for reducing fossil-fuel-fired power plant emissions was a
combination of measures including shifting generation away from
dirtier fossil power toward cleaner power.


So essentially retiring dirtier power plants and replacing them
with renewables.


David Roberts


Right. So the unit of analysis here was a state's whole power
fleet, not the power plant individual, but the whole power fleet.


Lissa Lynch


Right. And the reasoning for that in the Clean Power Plan context
was supported by the companies themselves, the power companies
themselves and the states who said, yes, this is the way that we
are dealing with decarbonizing our fleets. We are looking out
across our whole fleets, retiring the dirtiest sources and
replacing them with cleaner generation. That's how the existing
RGGI program in California cap-and-trade programs work. That's
how many of the power companies that have emission reduction or
clean energy targets are doing that.


David Roberts


And let's just say Republicans have been saying for decades that
regulations are too restrictive and they're not flexible enough
and states and power companies need flexibility. And this was
perfectly flexible. This is absolutely as flexible as you could
make a system. It just said to the state, do whatever you want to
do to lower the average emissions of your power plant fleet. And
then conservatives got what they wanted and hated it for other
reasons.


Lissa Lynch


One of the things that's important about what is left on the
table after this decision is there is still a considerable amount
of flexibility on the compliance side. So what the Supreme Court
was really dealing with was the method EPA uses for setting the
level of the standard, basically setting the target that industry
has to meet. So the Supreme Court explicitly took that generation
shifting approach off the table for purposes of setting the level
of the standard itself. And so after this decision, EPA can still
set standards, in John Roberts words, "Based on the application
of measures that would reduce pollution by causing the regulated
source to operate more cleanly."


David Roberts


Right? So the idea here is EPA, by interpreting the Clean Air Act
in such a way as to apply to the power plant fleet overall, and
sort of telling states how they have to shape their overall power
plant fleets. EPA was assuming too much authority, basically.
Like doing something major, despite too major for the words in
the Clean Air Act, which I don't want to dwell on this too long,
but let's just pause here to acknowledge that. No one then in the
ruling, now in the subsequent ruling, since then in all
scholarship knows what the hell "major" means or when it is that
an agency has crossed the line from proper regulatory
interpretation into "Oops, too major."


It really just kind of sounds like and seems that major means
anything bigger than John Roberts is comfortable with.


Lissa Lynch


Right? I mean, this is one of the really concerning things about
the Major Questions Doctrine, just generally is that it is murky
and it does have this sort of paralyzing effect on ...


David Roberts


Yes, intentionally.


Lissa Lynch


Exactly. It is explicitly anti-regulatory and explicitly sort of
intended to stop agencies in their tracks and make them question,
oh, is this too major?


David Roberts


And there's no answer. Right. So naturally you're going to be
cautious because there's no definition of major. It's just
whatever irritates John Roberts when he wakes up one day. So this
was the opening salvo, I think, in a longer Supreme Court effort
basically to brow-beat agencies into being timid. So anyway,
point being EPA can't use the overall power fleet as a sort of
benchmark through which to set this standard. So what does that
leave? What's the sort of range of motion that we think we still
can act in here when we're talking about these new standards?


Lissa Lynch


So now that we have this Supreme Court decision in place. EPA's
got some guidelines, and they can base the next round of
standards on, as Justice Roberts put it, measures that make the
plants operate more cleanly. So what they're looking for now is a
rule that looks more like what traditional pollution regulations
of the past looked like based on scrubbers, bag houses, the stuff
that you can physically attach onto the plant or do at the plant
itself to reduce that plant's emissions. When it comes to
reducing CO2 emissions, the options are limited.


David Roberts


Well, let me pause there. Before we get into that, I just want to
say one thing that I learned from your writing that I had not
known, and I don't know that it's widely known. So there's been
talk ever since Mass vs. EPA that bugged conservatives, and they
would love to undo that, right? Because they would just love to
moot this whole thing by undoing that ruling and saying that CO2
is outside the context of the Clean Air Act and have been
muttering about doing that. So the Inflation Reduction Act
statutorily locks into place that ruling.


Right. It says explicitly CO2 qualifies under the Clean Air Act,
and it instructs EPA to develop new standards. So there's no
ambiguity about that. And it says EPA needs to set standards that
are going to reduce emissions relative to baseline, where the new
baseline is taking the Inflation Reduction Act itself and all its
subsidies into account. So it's telling EPA calculate what all
these subsidies are going to do, what the new sort of business as
usual trajectory of emissions would be, and then develop
regulations that reduce it further. I didn't know any of that.


Lissa Lynch


Yeah, no, this is huge. And I mean, obviously the Inflation
Reduction Act is enormous. It is going to accelerate the clean
energy progress that we've seen in the last decade or so by many
fold. It is a huge, huge deal. And one of the provisions in this
quite large law essentially reaffirms EPA's not only statutory
authority, but its obligation to go ahead and set CO2 emission
standards for fossil-fuel-fired power plants. And so that's a
clear statement from Congress last year.


David Roberts


Clear enough even for John Roberts.


Lissa Lynch


Right. So we have always thought that that authority and
obligation under the statute was quite clear, but now it's
crystal clear, and they need to move.


David Roberts


And I think it's also important to absorb this new baseline idea,
because the IRA itself and all the historical progress since the
last round of these regs, the new expected baseline for power
plant emissions is much lower now than it was when Oobama's EPA
was calculating these things. Which commensurately means you're
going to need tighter standards if you want to reduce further
than that new baseline.


Lissa Lynch


Yeah. And it is kind of wild to look back on ten years ago. So it
was ten years ago, 2013, that President Obama announced in his
big climate change speech that he was directing his EPA to go
ahead and set carbon pollution reduction standards under Section
111 for fossil-fuel-fired power plants. The first time that was
being done. So much has changed in ten years in the power sector.
And I think anyone listening to this podcast knows we are smack
in the midst of a clean energy transition in the power industry.
Industry itself says so.


The Edison Electric Institute says we are, quote, "In the middle
of a profound long term transformation in how energy is
generated, transmitted and used." Lazard, the investment firm,
estimates that wind costs have fallen by 46%, solar has fallen by
77% over the past decade. So we're just in a totally different
world now than we were ten years ago. And so we passed the Clean
Power Plan's 2030 emission reduction targets in 2019 without the
Clean Power Plan ever having gone into effect.


David Roberts


Which in retrospect makes all the Republican arguments about how
this is an economy killing regulation and it's too strong and
it's unrealistic and there's no way we can move that fast look
utterly ludicrous, which we all said at the time, but we had to
pretend that it was a real live argument. So they're saying it's
too stringent, it's going to destroy the economy. And here we
rocketed past it in 2019 without any regs.


Lissa Lynch


Right? And that is part and parcel with each time. There are new
ambitious pollution standards set ...


David Roberts


Every time.


Lissa Lynch


Under the Clean Air Act, industry claims the sky is going to
fall. This happened with the acid rain program back in the
American Electric Power predicted that it was going to destroy
the economy of the Midwest. Like the lights are going to go out,
the sky is going to fall.


Every time and we never learn. We never learn from those previous
examples. It's crazy, right?


And so the actual costs of complying with the acid rain program
and reducing sulfur dioxide ended up being, I think, around a
10th of what industry had estimated. Sulfur scrubbers are now
widely used. The program has been a great success. It is this
great example of how we can set pollution standards and then
innovate to meet them cost effectively and quicker than anyone
expects. We do it over and over again.


David Roberts


Over and over again.


Lissa Lynch


And we can do it in this context.


David Roberts


Right? One more thing. Before we get to what's available for the
new standards, we should mention I should mention that when the
clean power plant got shut down, the legal obligation to pass
regulations on existing power plants then passed to the Trump
administration, which did that sort of passed a ... what was it
called? The clean America ...


Lissa Lynch


The Affordable, Clean Energy Plan.


David Roberts


Yes, Affordable Clean Energy, the ACE Plan, which several
analyses showed would on net have raised emissions in the power
plant sector. So those got shut down in court, too. They were
just completely a joke. Ludicrous so that's all the history. So
here we are Biden's EPA has got to regulate existing power plants
and new power plants. And it can't take this so called outside
the fence line holistic approach that the clean power plant took.
So it's got to set standards based on what you can do at the
individual power plant level inside the fence line, as they say.


So what are the options? Actually, I'm talking way too much, but
let me get one more thing out of the way and then I'll let you
talk. But one of the things that faced the reason I just want
people to understand this too, the reason Obama took this
approach, the reason Obama's EPA took this outside the fence line
holistic approach, is that if you're just restricting yourself to
the individual power plant, you're stuck with either marginal
improvements, right? You get the boiler to work more efficiently,
you tighten up efficiency, and you can sort of marginally 3% to
5%, reduce emissions.


Or on the other side, there's carbon capture and sequestration,
which especially ten years ago when Obama's EPA was contemplating
it, was not very well tested, not very well proven, super
expensive. So you either had sort of like a fly swatter or a nuke
when it comes to the individual power plant, which is why they
went with the holistic approach. So now the holistic approach is
off the table. We're back to the fly swatter or nuke problem. So
just tell us sort of like, what are the available options here?


Lissa Lynch


Yeah, so you kind of covered the two ends of the range, right? On
one end, the very low ambition end, you can make minor
improvements to the operating efficiency of the plant, the way
the plant operates. That was the basis for the standards that the
Trump administration issued. And as you noted, improving the
efficiency of the plant makes it run better and it can be called
upon to run more and therefore can end up increasing its overall
emissions. That sort of rebound effect. That's a possibility. You
can still reduce emissions through operating efficiency
improvements. And I think there's more options that could achieve
greater reductions than the ones that the Trump administration
included in their rule.


But still, we're talking the very low-end, single percentage
reductions in the middle, there's this option of cofiring with a
lower carbon fuel. So if you're talking about coal plants, you
can co-fire that coal plant partially with gas. In a gas plant,
you could co-fire partially with hydrogen and you're going to
bring the emissions rate of the plant down somewhat. In some of
our analysis, we've estimated that a 40% cofiring coal with gas.
So cofiring a coal plant with 40% gas gets you about a 20%
emission reduction. So it's not nothing, but it also involves
additional fossil infrastructure to get gas to a coal plant or
additional infrastructure to get hydrogen to a gas plant.


And on top of several other issues with hydrogen that we can talk
about a little later.


David Roberts


Well, a legal question, I guess all of this in some respect is
arbitrary, but where is the line between forcing fuel-switching,
which I think Supreme Court said was out of bounds, and too far,
versus a rule that requires cofiring, which is like kind of like
halfway to fuel switching? Is there a legal distinction there
between those two?


Lissa Lynch


There's absolutely precedent for requiring cleaner fuels or fuel
processes. What the Supreme Court mentioned, at least in dicta,
was we don't want to see standards that would force a plant to
stop existing. And so essentially, if EPA were to base the
standard on total conversion from coal to gas, which some coal
plants have undertaken with cheap gas prices, that I think, based
on our reading of the decision anyway, would probably be too far.
So full conversion probably off the table along with generation
shifting. But partial cofiring is actually one of the
technologies that the Obama administration considered for their
Clean Power Plan, as was carbon capture.


And as you noted, the approach that they took in the Clean Power
Plan, they selected because it was the most cost effective. So
they ruled out carbon capture and cofiring, not because they
weren't adequately demonstrated or available, they were just more
expensive than the approach that EPA ended up going with.


David Roberts


But now we're forced back basically to that more expensive
approach.


Lissa Lynch


Right, as I mentioned before, but want to keep reiterating, this
is all about setting the level of the standard, finding it's a
math problem. EPA looks at the options, and so the options as we
see them are efficiency improvements, getting very little
cofiring, getting somewhere in the middle, or carbon capture and
storage, getting the most amount of emission reductions. They
look out at that and they select the best system. Then they apply
it to the plant and essentially do a math problem and come out
with a number, a numerical limit for the amount of CO2 emission
reductions that the plants need to achieve.


Then they hand the baton off to the states for existing sources
and to the companies for new sources. So this is not a
requirement to install that specific technology. It's a way to
derive the level of the standard and then pass that off to the
states and the companies to comply with.


David Roberts


Right. EPA sets the standard and then says to states and
companies, do what you want.


Lissa Lynch


Right, as long as you can meet this number. Be creative,
innovate.


David Roberts


The central question is what upon what technology is the number
going to be based on exactly? This low-end, this something in the
middle, and this high-end, which is carbon capture and
sequestration. So here I want to talk about what the sort of
arguments are around this. It says in the text of the Clean Air
Act that EPA should set the standard based on the best available
system. That has to be adequately demonstrated so I just want to
dig in a little bit on the technical legal language here. Like
what exactly or what have courts interpreted that language to
mean exactly?


What is required to be adequately demonstrated? A single
demonstration plant somewhere? like some good charts and graphs
in a lab? Or do you have to be commercial, or does price and, you
know, financial viability come into that? Like, what is EPA
thinking about when it thinks about what is adequately
demonstrated or best?


Lissa Lynch


Yes. Okay, so I'm a Clean Air Act lawyer. This is my favorite
part. I love the Clean Air Act, and I love to talk about the
language of the statute because that's actually what we're really
fighting over here. EPA is tasked with establishing the standard
of performance, and so that definition is in the statute. They
have to determine the degree of emission limitation that can be
achieved through the application of the best system of emission
reduction that is adequately demonstrated considering cost,
energy factors and essentially other factors. And so there's this
really defined set of criteria that EPA needs to go through as
they're determining what's the best system of emission reduction.


So we've been talking about adequately demonstrated that it can't
be a made up technology, but it also doesn't have to be widely
used by everyone. Already, the Clean Air Act is technology
forcing it's forward looking.


David Roberts


Right.


Lissa Lynch


It requires the regulated source to reduce its emissions
commensurate with the best control systems that are available,
not the ones that are already sort of out there in use, that
plants are choosing to use of their own accord. So again, in a
lot of ways, this is analogous to so SO2 scrubbers which were not
in widely used, they were not widely produced in the 90s, and
there were all these doom and gloom predictions of how much it's
going to cost.


We're not going to be able to do this. So right now, there's no
limit at all on CO2 emissions from power plants. There's been no
reason to innovate on carbon capture for power plants, and there
is not a ton of projects out there in the world, but there are
plenty to serve as an adequate demonstration for purposes of the
Clean Air Act. There's essentially three parts here of carbon
capture. There's capture, there's transport, and there's storage.
And each part of that process is well established and has been in
use for decades, especially the capture part. We've been
capturing carbon for decades.


And so there's plenty of demonstration in both pilot projects and
at commercial scale to be applied in the power sector. It doesn't
have to be something that's already widely out there.


David Roberts


So it's sort of a holistic consideration. And EPA is sort of
attempting to apply something like wisdom here. There's a balance
of considerations. And I assume, and tell me if I'm wrong, that
the usual suspects are arguing to EPA that that would be too
strict, that a standard based on CCS would be too strict. And
presumably the way they're making that argument is by saying CCS
is not the best or adequately demonstrated. So what is their
argument? Have you read, like, their briefs, or do they have a
specific argument here?


Lissa Lynch


They do, and they're familiar. It's the same set of arguments
that we've seen over and over. It's too costly, we can't do it
yet. We're getting there. Just let us do this at our own pace.
One of the concerning things is the argument that we need gas
now, and we're okay with standards that are based on something we
might do in the future. So set the standards only at a level that
were ready for CCS, that were ready for hydrogen sometime in the
future.


David Roberts


CCS ready.


Lissa Lynch


CCS ready. Hydrogen ready.


David Roberts


I love that phrase.


Lissa Lynch


It's just kicking the can down the road.


David Roberts


Like your own David Hawkins once said, it's like saying, my
driveway is Ferrari ready.


Lissa Lynch


Exactly. And I think what's at the heart of this industry
estimates that CCS can achieve 90% capture and emissions data
from the projects that have been built back that up. That is not
to say that EPA needs to go ahead and require a 90% emission
reduction from every single coal and gas plant in the country.
Right. We think it makes the most sense for EPA to draw some
distinctions based on the role that the plants perform on the
grid. Right. So there's a big difference between ...


David Roberts


Oh, really?


Lissa Lynch


Yes, there's a big difference between plants that are used for
baseload power that are running constantly all the time, and
those that are used intermittently for reliability as backup
power during times of high demand.


There does not need to be the exact identical standards on those
two types of plants. So plants that are running full time are
emitting the most, and they should be required to reduce their
emissions to the greatest degree. So we think it makes sense to
have a 90% capture based standard for plants that are going to
serve as baseload, that are going to run all the time. And it's
the most cost effective for those types of plants to install CCS,
especially when you consider the tax credit. Plants that are
operating intermittently as backup are already emitting less
pollution simply by running less.


And those plants can face a less stringent standard, stay on the
grid as backup, and serve that really important reliability
function without being required to install CCS, they can meet a
lesser standard.


David Roberts


Is there a distinction between those two kinds of plants that is
clean enough and clear enough to set legal limits around them
because there are some fuzzy edge cases? And then, number two,
are we sure that EPA like that's within EPA? Sort of. That's not
major for EPA to be thinking to be sort of specifying which
standards applied based on function based on operations.


Lissa Lynch


Yes. So this is the kind of detailed analytical and technical
decision making that is well within the expert agency's
wheelhouse. This is exactly the type of thing that the experts at
the agency are normally tasked by the statute to do. They're the
ones who run the numbers and figure out what's most appropriate
for the specific type of plant that they're regulating. And in
fact, the existing standards for new sources do include these
sorts of subcategorization based on the use type of the plant. So
this is not something complex and mysterious. This is based on
true and visible distinctions between types of plants based on
the way that they're used.


And I think it really is yet another layer of the sort of
flexibility that EPA can and should build into this program.
Again, none of this is a particular mandate. And so the states
and the companies then have that additional choice. Well, they
can run a plant full steam and install controls, or they can run
intermittently, keep that plant online and face a lesser limit,
or they can retire it and make their own choices about what to
replace it with. This is providing more and more levels of
choices to the regulated industry to comply in the way that makes
sense for them.


David Roberts


Yeah. And something you mentioned in passing, I want to just
highlight and put a pin in here, which is that a big argument
here on your side is CCS is now being showered with subsidies.
Like there are huge subsidies coming down from the Inflation
Reduction Act for captured hydrogen, enough to make them economic
in some cases or certainly a lot closer. So these are
synergistic. I'm saying like the Biden administration's
legislation is bolstering the case for these tighter standards
because CCS is not just on its own now. Now it's explicitly being
helped and shaped and stood up by government grants.


Lissa Lynch


That's right. And at the same time, the Inflation Reduction Act
also contains a ton of money for renewables. And so that level of
investment across these types of technologies really changes the
overall cost of the regulations. And that's one of the things
that EPA has to consider, is the overall cost of compliance to
the system. And so again, when these standards are in place and
states and companies are looking out across their fleet and
saying, oh, what should we do? All of those incentives are going
to come into that consideration for them. And it makes renewables
really cheap to replace your older dirtier generation with.


David Roberts


I got one more question about the standard setting before I want
to get into the politics a little bit, but some energy heads out
there may be familiar with a company called NET Power, which has
come up with a new, I guess it's a couple of years old now.
They've built one demonstration plan, a new technology that
without getting into the technological details, it's really
fascinating. I might do a whole pod on it, but basically it burns
natural gas. Emits no particulate pollution at all and captures
100% of the CO2 emissions as a purified stream of CO2.


So you have in NET Power a natural gas power plant with zero
particulate emissions and 100% carbon capture. They've built one,
it's running and working. So has there been any talk about using
that as a standard? Because that would be 100% carbon reduction.
Has NET Power's tech come up in these discussions?


Lissa Lynch


Yeah, for sure. I mean, it's very cool, right? It was included,
the EPA put out a white paper last year asking for input, sort of
preregulatory input on the technologies that are available to
reduce emissions, specifically from gas plants. And they took
comment on the NET Power approach, which I cannot remember the
name of. Allam something.


David Roberts


Allam Cycle, I think is right. I was trying to think of that.


Lissa Lynch


And it is really cool and innovative and I hope that that is a
direction that we're going to see any remaining fossil generation
go in. And I think we may see that in the proposal. Again, all of
what I'm talking about here is we have not seen a proposal from
EPA. This is sort of NRDC's perspective on what is possible,
justifiable achievable and legally defensible in court. And this
is what we've been advocating for before the agency, and then
we'll have to see what they come up with. We're expecting a
proposal relatively soon, probably within a month or so.


David Roberts


What's really interesting to me about this, just from a political
perspective, is it's a sort of weird inversion here of the
typical roles. So you've got the power sector, which has been
touting CCS for years, to sort of like defend the ongoing
existence of fossil power plants. They sort of wave their hands
at CCS and say, no, we can go clean too. So they've got Joe
Manchin out up there saying, I want to go clean, but I want to do
it with fossil. I literally think they've convinced him that they
can eliminate their carbon emissions. And traditionally you've
had sort of greens and climate people saying that's big and
overly complicated and overly expensive and stupid and nobody's
ever really going to do it and it's just going to make more sense
to switch to clean generation.


And so now we've got this odd political inversion where the power
companies are saying, whoa, whoa, whoa, CCS is not really ready.
We didn't mean "ready ready," we meant just over the horizon is
what we meant. That's where they like it. They like CCS just over
the horizon. And all of a sudden this is like calling their
bluff. Like, oh, you've been talking about this for decades.
Well, how about you use it? And then on the green side, on the
climate side, you have a similar inversion where now greens and
green groups like yours are arguing like CCS.


Oh, it's great. Yeah, it's right there, it's ready to go,
absolutely ready to serve. As the basis for a standard. It's just
odd and funny and I just wonder if you have any comment on the
politics of trying to herd the cats in the climate community
around this message of like CCS is ready and viable, which I
don't think comes naturally to a lot of factions, let's say,
within the climate community.


Lissa Lynch


Well, that's well phrased. We're walking a fine line. I think our
vision for the power sector and the power industry is one of net
zero. And in order to get to net zero, that means a heck of a lot
of renewables and a heck of a lot less fossil.


David Roberts


Right.


Lissa Lynch


For the purposes of setting pollution limits, we need a
technological basis and by far and away CCS is the most effective
of the options that we've got.


David Roberts


That the Supreme Court left us.


Lissa Lynch


Exactly. And I think it is very important to have limits on the
CO2 emissions from power plants. I think that is sort of the
baseline, most important thing from our point of view.


David Roberts


Right, well, lots of, I mean, reports, we should just say lots of
reports have been done saying the legislative progress is great,
but it's not enough to reach Biden's stated goal. And to reach
Biden's stated goal, you need a whole of administration approach,
including these standards.


Lissa Lynch


Exactly. And just to put some actual numbers on that, if we want
to meet our international and domestic greenhouse gas emission
reduction targets for 2030, we need to get our power sector
emissions down by 80% from the 2005 sort of peak emissions. We're
already about a third of a reduction, 33% -ish reduction since
2005. Our analysis and RDCs of the Inflation Reduction Act puts
us now on track to cut our power sector emissions by about 65% by
2030. So that is massive and also not enough.


David Roberts


Right.


Lissa Lynch


And our estimate there is somewhere in the middle there's a
really wide range of modeling of the Inflation Reduction Act and
a lot of work is going to need to be done in order to get those
emission reductions that we're sort of showing in that modeling.
It's not a foregone conclusion.


David Roberts


Yeah, one of the wildest things going on right now is just the
incredible range of projections about what the IRA will do.
Right. Like the sort of government came up with, oh, that it's
going to spend $370 on these tax credits and then Credit Suisse
is like, actually it's more like a trillion. And then I think
there was another one last week, it was like actually it's more
like a trillion five. So the range of amounts of money that could
come out of this bill are just huge. It's so opaque.


Lissa Lynch


It is. And a lot still remains to be written in all the guidance
for these tax credits. But that sort of uncertainty aside, I
think the Inflation Reduction Act is going to accelerate a bunch
of clean energy and it's going to get us a bunch of emission
reductions in the power sector. And at least based on our
analysis, that's not quite enough. And we absolutely are going to
need limits on the CO2 emissions in addition to investments in
clean energy.


David Roberts


So maybe the way to summarize is just to say endorsing CCS as the
basis of a performance standard is different than endorsing CCS,
full stop.


Lissa Lynch


Yeah, well put. And I think what we see in the modeling reflects
what I've been saying about the decision making that comes once
EPA sets the standard. So when we model standards that are based
on CCS and we've included the Inflation Reduction Act in the
baseline, we overall get to around between 70% and 77% CO2
emission reduction by 2030. And what we're seeing in the actual
generation results, there is some CCS deployment and also a ton
of clean energy.


David Roberts


This is my next question, actually, and you're here answering it
before I even ask it, but I just wanted to ask, as a matter of
curiosity, has someone modeled what would happen if EPA sets the
standards where you are endorsing and what does the modeling say
about the decisions power companies are going to make? Like how
many fossil fuel plants will shut down versus installing CCS? I
don't know if there's like an easy answer to that.


Lissa Lynch


Well, so we have done lots of modeling and we've been doing it
for quite a while because even before this Supreme Court decision
last summer, we were anticipating that EPA was going to be
constrained and in this sort of inside the fence line way. And so
we've really been looking for ways to get the most ambition and
the most emission reductions out of these sort of source specific
basis for the standards. That range that I gave you is based on
CCS and partial CCS runs. So 70% to 77% overall emission
reductions depending how much you crank the dial on the ambition.


But still with some of those sort of flexibilities that I talked
about in terms of the type of use of the plant and what we see in
those runs is renewables and energy storage capacity tripling
from now to 2030 and quadrupling by 2035. And I think that is in
large part based on these new Inflation Reduction Act tax credits
being just so much more cost effective. And we still do see some
retrofits with carbon capture and storage and some new builds of
gas with carbon capture, but not a massive amount. And so there
is some uptake of the technology and there's also some
reinvestment in clean energy and that kind of tracks with what
you would expect, right?


And that kind of goes back to that was essentially what EPA was
counting on and basing their standards off of in the Clean Power
Plan and that's why they did it that way. I think we can do it
this way. And that carbon capture and storage based best system
of emission reduction can be shown to be available to the plants
that could use it. And not all plants are going to make that
choice. It's going to be up to the states and the companies to
look at their options and choose whether they want to keep that
plant online, and that should work.


David Roberts


So NRDC is recommending a CCS based standard for both
existing-source regs and new-source regs. Is there any difference
between those two that's worth sort of pulling out here?


Lissa Lynch


Yeah, so I think industry estimates that CCS can achieve 90%
capture. And so given that that technology exists, we think it
should be used to set the standard for at least the plants that
are operating at full bore, both new and existing. When you're
building a new plant, you have much greater options in terms of
where you're sighting it, how you're building it. You should be
required to use the latest and greatest technology on a brand new
plant. So that's pretty straightforward for existing plants
because they're all over the place. We rely on them already for
power.


There needs to be more flexibility, there needs to be more of a
phase-in sort of glide path to compliance and some flexibility
for how you're going to comply and some exemptions for those
plants that are going to commit to retire. You don't want to make
them retrofit right before they're expected to retire, you want
to just let them plan to retire at the natural end-of-life of the
plant. And so giving that flexibility on the existing source side
is going to be really important and has long been part of the way
that the section 111 standard setting has worked to differentiate
between new and existing plants.


David Roberts


So, CCS based standard in both cases, but maybe more flexibility
and implementation for the existing plants.


Lissa Lynch


Exactly.


David Roberts


If EPA does use CCS or hydrogen, something like that, as the
basis for its performance standard, does it have any say at all
in the details of sort of how CCS or hydrogen are used or
measured? Because Volts listeners just got an hour and a half
earful of discussion of the clean Hydrogen Tax Credits last week,
and the details are many, and they make a big gifference in how
clean hydrogen is used, how it's measured sort of how its carbon
intensity is assessed, how much end users are allowed to claim
reductions from using it, et cetera, et cetera. Does EPA get into
any of that? Or is this purely just, we're using this tech as a
way to set the numerical standard, but the details of how a power
plant might implement this is somebody else's problem.


Lissa Lynch


So they absolutely have some authority over how it gets used to
comply with this standard. So for purposes of standard setting,
they're looking kind of broadly at what the technology is capable
of achieving, how it's been used in the past, how it could apply
to power plants that exist now in terms of compliance, though,
they've got the authority over CO2 essentially in this
rulemaking. And so if a plant is going to demonstrate compliance
using carbon capture and storage or hydrogen, they can absolutely
include the types of rigorous monitoring and verification
requirements they would need to see in order for a plant to be
demonstrating compliance using one of these technologies.


David Roberts


Right? So they can get into saying, here's what does and doesn't
qualify as full CCS like measured every so often, or this kind of
geographical storage. They can't get into that?


Lissa Lynch


I absolutely think so. I think they have authority to say you
need to have rigorous monitoring and verification from the point
of capture to the point of sequestration. And that needs to be
part of your demonstration of compliance for using carbon
capture. For hydrogen ... It's a little trickier.


David Roberts


I'm very aware at the moment.


Lissa Lynch


To the extent that there is going to be a pathway for hydrogen to
be used for compliance, it's got to take into account where that
hydrogen comes from, how it's made in order to avoid net
emissions increases. And I think they absolutely have that
authority. Given that the purpose of this is for the best system
of emission reduction, they've got to ensure that it is truly
reducing emissions.


David Roberts


Maybe they can just borrow whatever treasury comes up with for
the hydrogen.


Lissa Lynch


Assuming it's good.


David Roberts


Yes, true. If EPA doesn't go with CCS, doesn't go with the high
end here, what do you think it will do? Will it fall back to
something medium, something in the fuel blending sort of range?
And just more broadly, do we have any sense at all of what EPA is
thinking or which direction it's going or what to expect?


Lissa Lynch


I think in terms of publicly facing tea leaves, what we've got to
look at really is that white paper from last year where they had
laid out the options and said, hey, give us some comments on what
you think of these options for reducing CO2 emissions from
combustion turbines. From everything that we have seen from this
administration, we are hoping that they're going to be ambitious.
They know that this is a critical moment. They know that this is
an important wedge of emissions, that the power sector is still a
really significant percentage of our emissions, roughly a
quarter, and that we need standards on those CO2 emissions and
they need to be strong.


And it's not going to be worth all this work, honestly, if they
don't make them strong. And so that has been our message to the
administration, is, look, if you're going to go through the
trouble of doing this all over again, let's make it worth it.


David Roberts


Is Manchin he's like the monster under my bed at this point. Is
there some way Manchin could burst out of the closet and screw
this up somehow? Or is he ...


Lissa Lynch


I hesitate to even speculate.


David Roberts


Can I just not think about him in this respect, or does he have
some way that he could theoretically muck this up, or is this
something that's finally just sort of beyond his reach?


Lissa Lynch


I think for now, the ball is in EPA's court to come out with a
proposal and to take public comments and to consider them. And so
for right now, this is an EPA project. Once it's finalized, it
will presumably be subject to a Congressional Review Act
resolution, and it will depend on who is in charge as to what
happens there. And so that's when Congress gets to have its veto
opportunity over regulations, which is unfortunate, but it is the
world we're living in.


David Roberts


And does that just require a majority or a supermajority?


Lissa Lynch


I believe it's just a majority, but it can be blocked by the
President.


David Roberts


Right. And by the time there's a new president, it'll be too
late. We're coming in under the deadline that the Congressional
Review Act, if it's going to happen at all, would happen under
Biden and thus would be vetoed. So that's not really ...


Lissa Lynch


And so that takes place at the final rule. So we're only at the
proposal stage. We've got a long way to go.


David Roberts


Is it going to get done under the Congressional Review Act just
to just explain to listeners? Congressional Review Act says
basically Congress can undo or veto a regulation basically within
a certain window of it being finalized which is 60 ...


Lissa Lynch


60 working days, which does not equal the calendar days.


David Roberts


Right. So what you want to do is get your regulations on the
books more than 60 working days prior to the next presidential
election.


Lissa Lynch


Exactly.


David Roberts


Just so you're sure your guys in charge, if it happens.


Lissa Lynch


The date that we are looking at is next April, roughly a year
from now, for all of these regulations. Right. Like it's not just
...


David Roberts


There's a lot these are not the only ones. There's a lot of
there's a big backlog.


Lissa Lynch


It is. And we are seeing the use of the Congressional Review Act
right now as we speak in this Congress with attempts to
invalidate the rules that the administration has recently
finalized. It is a terrible tool. It is not a good thing.


David Roberts


It's a Newt Gingrich special, isn't it? Am I right about the
history? Of course, like so many malignant things in our
government treat.


Lissa Lynch


But it is the world we're living in, and I think the
administration is aware of the timeline that's facing them next
year.


David Roberts


Interesting. So you think a proposed rule is going to show up in
the next month or two?


Lissa Lynch


Yeah, we're expecting a proposed rule maybe by the end of April.
And then when ... you know what happens, that gets published in
the Federal Register. There's an opportunity for public comment.
There's public hearings. And so there will be sort of a flurry of
activity as everybody gets their comments in, and then the agency
has to review those comments and address them in the final rule.
That's part of the sort of Administrative Law 101. And then they
have to issue the final rule and demonstrate yeah, we heard all
your comments, and this is why we made the decisions that we
made.


David Roberts


And that's when the lawsuits kick off.


Lissa Lynch


And that's when the lawsuits start. Exactly. We do it all over
again. It's the circle of life.


David Roberts


Yes. And what do you think of the chances that this Supreme Court
ends up hearing a case on this again? Do you think the
conservatives can mount a legal case plausible enough to get it
back into the Supreme Court?


Lissa Lynch


I would never speculate about what this Supreme Court will do,
because who knows, right? Our job is to make this thing as
airtight as possible. And Chief Justice Roberts gave us some
guidelines and a roadmap in the West Virginia decision. He told
us what he's looking for, and it's this sort of traditional
looking approach to pollution control. And so that's what we're
operating under. And we are urging EPA to follow those guidelines
and do the most that they can within those constraints, and we'll
be there to defend it with them if it comes down to that.


David Roberts


All right, awesome. Lissa Lynch of NRDC, thank you for coming and
forecasting and explaining all this with us. Maybe we'll talk
again in that distant future day when these things are actually
on the books and the lawsuits have started. We'll talk again.


Lissa Lynch


Thank you so much for having me.


David Roberts


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