Client Alert

U.S. EPA Proposes CO2 Emissions Standard for New Power Plants

March 28, 2012

By Paul Hastings Professional

On March 27, 2012, the United States Environmental Protection Agency (EPA) proposed for the first time a New Source Performance Standards (NSPS) for emissions of carbon dioxide (CO2) from new electric utility generating units (EGUs) of greater than 25 megawatts (MW) capacity. The proposed standard would be set at what is achievable by the best performing natural gas-fired combined-cycle power plants today. As such, it would essentially preclude construction of new coal-fired power plants, unless, within the first 10 years of operation, they could be equipped with costly carbon capture and storage (CCS) technology, which is far from commercialization.

The proposed rule would mark another step in the long slide of coal from its position as the primary fuel source for baseload power in the U.S. Although this shift is due to market forces, including the low price of natural gas and the costs of compliance with other pollution regulations, EPA's proposal is nevertheless significant because if finalized and not overturned by an act of Congress, it would provide regulatory certainty that coal can play no role in meeting new demand in the U.S. prior to advancements in CCS technology.

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