Daily on Energy: What the Biden EPA could still do to regulate power plants

But the agency still has authorities under the Clean Air Act at its disposal to target emissions broadly, and emissions from power plants in particular, as the Biden administration crafts its own rule for existing stationary sources.

Whether EPA can develop “outside the fence” regulations to regulate existing power plants with a view to reshape the sector, as the Obama-era Clean Power Plan sought to do, was at the heart of the case.

While SCOTUS ruled that EPA can’t go the CPP route and issue grid-level standards based on “generation shifting” to effectuate emissions reductions, it doesn’t rule out the promulgation of rules to regulate emissions at the level of individual sources.

Back inside the fence: EPA could go back “inside the fence line” and issue standards that target existing plants on a more individual basis, said Nathan Richardson, a law professor at the University of South Carolina.

“The decision doesn’t say EPA can’t regulate climate. It doesn’t say EPA can’t regulate power plants. It doesn’t even say EPA can’t regulate carbon emissions from power plants,” Richardson told Jeremy. “A more technical, narrow, inside-the-fence-line [Clean Air Act Section 111(d)] climate rule that says coal plants get more efficient — they could do that. At least, the opinion seems to suggest they could do that.”

The Clean Air Act charges EPA with regulating stationary sources based on the “best system of emissions reduction” and best technologies. The agency could also target fossil fuel-fired plants by determining the best available technology to be gas, Richardson said.

“You could do something more radical like saying, ‘If you want to run a fossil fuel power plant, you have to meet the best technology, and the best technology is gas,’” he said. “So, if you’re coal, you’ve got to shut down or switch to gas.”

Jay Duffy, an attorney who represented the American Lung Association and other groups in the case, said EPA could determine carbon capture and sequestration to be the “BSER” in setting its standard for existing plants.

EPA regulations already require any newly-built coal plant to be equipped with CCS technology.

When it’ll come: The Biden administration had said to expect a proposed rule this calendar year, but EPA’s unified regulatory agenda identifies March 2023 as the current timeline. There is no legal deadline for the rule.

There’s always Congress: Congress could return to the matter of regulating power plants and give EPA a clearer directive, as the court’s majority would have it, although the proverbial old-fashioned way has a number of barriers to that, not least of which is its to narrow, gridlock-inducing majorities and sharp ideological differences.

Duffy, who presented arguments before the D.C. Circuit Court during the appellate stage of the case, suggested that writing “hyper specific” laws on complex matters like environmental regulation isn’t how Congress typically works.

“Congress writes laws and makes kind of the major policy decisions and then they rely on the technical experts at the agency to apply their knowledge to evolving problems and solutions,” he told Jeremy. “Unless laws are written hyper specifically, the court told us today that they’re going to look skeptically at any regulation that seems too important or major or novel.”

Richardson was more cynical: “Congress doesn’t pass laws, especially environmental laws, anymore.”

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

Programming note: Daily on Energy will not publish Monday, July 4, but will be back in your inboxes Tuesday. Enjoy the holiday weekend!

OFFSHORE LEASING PLAN DELAYED: The Biden administration failed to meet its deadline yesterday to publish a five-year offshore leasing proposal, when the former five-year program officially expired.

Briefings with administration officials that were meant to take place ahead of Interior’s five-year announcement yesterday were “unexpectedly delayed,” Reuters reports. Nor did the Interior Department say when it plans to publish the new draft plan, which lays out when and where the department’s Bureau of Ocean Energy Management suggests holding new oil and gas lease sales in a given year.

Interior Secretary Deb Haaland had vowed in May to publish the draft proposal before the Obama-era program expired at the end of June. That program provided for 11 potential offshore lease sales between 2017 and 2022 — 10 in the Gulf of Mexico and one in Alaska. News of the delay comes as the administration is under pressure by green groups and some Democrats to exclude new lease sales altogether in their new five-year program to help avoid additional greenhouse gas emissions and to abate climate change.

But others had urged the administration to finalize a program that authorized more lease sales, arguing that more domestic oil and gas development is necessary to increase supply and help bring down high energy costs. Until a new plan is finalized, the department will be unable to hold any offshore oil and gas lease sales. Read more from Reuters here.

CALIFORNIA WEIGHING USE OF FOSSIL FUELS TO AVOID GRID SHORTFALL: Gov. Gavin Newsom introduced new legislation to allow California to purchase power from gas-fired plants if needed to prevent blackouts, a move opposed by environmentalists and in tension with his clean energy goals.

The new effort would grant new powers to the California Department of Water Resources allowing it to reimburse utilities for the purchase of additional power this summer, including from diesel generators and aging gas-fired plants along the state’s southern coast.

In addition, the bill gives DWR authority to “construct, own and operate” power plants—a detail that has sparked concern from environmental groups, who note that these decisions would not be subject to the normal public input processes, or approval from local air quality management districts.

California energy officials warned earlier this year that the state is at heightened risk of an energy shortfall this summer, due to severe heat and drought.

Roughly two dozen environmental groups, including the Sierra Club, the National Parks Conservation Association, and the California Coastal Protection Network, signed a letter Tuesday opposing the bill, which they said gives DWR “blanket exemption” to finance and construct new energy projects without compliance with existing local, state, or federal laws. Read more from Breanne here.

RUSSIA PREPARING ‘BLOCKADE’ OF NATURAL GAS TO EU? German Vice Chancellor Robert Habeck said yesterday that Russia could be preparing for a total cutoff of natural gas supplies delivered via its Nord Stream 1 pipeline, warning that Moscow could be using planned maintenance work to the line as a “pretext” to block gas delivery to Europe for the foreseeable future.

Habeck told reporters he believes a full “blockade” of Nord Stream 1 is possible beginning July 11, when Russian state-owned gas giant Gazprom is slated to shut down the line for planned work. Such repairs typically take around 10 days, he said, “but given the pattern we have seen, it wouldn’t be so super surprising if some little technical detail is found and then they say, ‘We can’t switch it on again. Now we found something during maintenance, and that’s it,’” Habeck said.

His remarks come just weeks after Gazprom announced a 60% reduction in natural gas deliveries to Germany, which it blamed on Western sanctions—a claim that has been sharply refuted by Habeck and others, who have characterized it as a political strategy.

Motivations aside, officials and analysts warn that a prolonged shutoff would likely have “seismic” ramifications for Europe, which relies heavily on Russian gas supplies, and could put the EU’s winter storage targets at risk. Read more from Breanne here.

GERMANY PREPS FOR EXTENDED DISRUPTION: Meanwhile, the German parliament is scrambling to enact a levy on gas bills for all its consumers as early as next week—an eleventh-hour effort that comes as the country seeks to offset rapidly spiking import costs and protect against possible long-term natural gas outages before the July 11 maintenance work begins on Nord Stream 1.

The levy, first reported by Reuters, could be passed by the Bundestag as early as July 8. Additional costs would be shared among all gas customers, though the price could be raised in the event of a “significant disruption” to gas imports. The levy is seen by many as a preferable alternative to a general price adjustment clause, which would allow suppliers to onpass their price hikes directly to their consumers.

Read more about the levy here.

NY NIXES BITCOIN-MINING POWER PLANT: The New York Department of Environmental Conservation denied a permit to the Greenidge Generation natural gas plant in Torrey, set up to power computer processors to mine bitcoin, saying that it would hurt the state’s climate goals.

“Among the factors considered was the dramatic increase in greenhouse gas emissions from the facility since the passage of the Climate Act, driven by the change in the primary purpose of its operations,” the agency said in a press release yesterday. “Rather than solely providing energy to the state’s electricity grid, the power plant now primarily provides energy behind-the-meter to support the demands of Greenidge’s energy-intensive proof of work cryptocurrency mining operations.”

The company said it would continue operating the plant under an existing permit and appeal the decision, which it called “absurd.”

The background: Gov. Kathy Hochul is determining whether to sign a two-year moratorium on new and renewed air permits for fossil fuel plants that power proof-of-work mining. Environmental groups praised the decision regarding Greenidge, the Associated Press reports.

“Governor Hochul and the DEC stood with science and the people, and sent a message to outside speculators: New York’s former fossil fuel-burning plants are not yours to re-open as gas-guzzling Bitcoin mining cancers on our communities,” said Yvonne Taylor, vice president of the advocacy organization Seneca Lake Guardian.

FREEPORT EYES OCTOBER FOR PARTIAL RESTART: Freeport LNG announced yesterday that it expects to partially restart operations at its Gulf coast terminal in October, tacking on another month to its earlier estimate for a partial reopening following the June 8 explosion that shut the facility down.

The company said it still expects full production to return at the end of the year. It did not provide any updates as to the cause of the explosion at the 2 billion cubic feet per day liquefaction terminal, which is under investigation.

Freeport’s updates followed a proposed safety order from the Pipeline Hazardous Materials Safety Administration, which requires the company to bring in third-party investigators to assess the damage to the terminal and to review the state of its LNG storage tanks, Reuters reported.

The monthlong outage has sent U.S. natural gas prices falling due to the reduction in demand for feedgas at the terminal, while adding upward pressure to European gas prices.

The Energy Information Administration most recently forecasted U.S. LNG exports to average 11.7 bcf per day during the second and third quarters and 11.9 bcf per day for all of 2022, but those latest estimates were completed at the beginning of June, before the blast at Freeport, and will surely fall.

The Rundown

New York Times As federal climate-fighting tools are taken away, cities and states step up

Reuters Russia seizes control of Sakhalin gas project, raises stakes with West

Politico EU UK to use climate and aid cash to buy weapons for Ukraine

Washington Post India imposes ban on single-use plastics. But will it be enforced?

Calendar

MONDAY | JULY 4 

Holiday weekend — enjoy!