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THE NEW POWER PLANT RULES: EPA’s new proposed power plants regulations just supercharged the political debate over the swift green energy transition the Biden administration wants to advance and, amid the praise from proponents, are already facing veiled threats of legal action and explicit threats of a challenge under the Congressional Review Act.
What’s been proposed: The proposed rules provide performance standards for new fossil fuel-fired plants and emissions guidelines for existing gas and coal plants based on several different “best systems of emissions reduction,” including carbon capture, low-emissions hydrogen co-firing, and natural gas co-firing, for different categories of plants.
The bottom lines: New baseload and existing gas plants using carbon capture to comply are looking at requirements that they capture 90% CO2 by 2035, while those gas plants that elect to use a hydrogen co-firing pathway would be required to burn 96% hydrogen by 2038.
Remaining coal plants operating between the effective date of the regulations and 2040 would be required to co-fire with natural gas or operate less frequently to reduce emissions, while any coal units operating beyond 2039 would be subjected to 90% carbon capture and sequestration requirements.
Climate and health: President Joe Biden set a target to achieve 100% carbon-free power by 2035 in a bid to slow climate change. The proposed rules’ timelines and emissions allowances don’t align perfectly with that, but Administrator Michael Regan expressed confidence that the administration’s regulatory and legislative achievements in total would make the goal attainable.
“We recognize that this is one proposal in a suite of actions that are being taken by the entire government,” Regan told reporters yesterday in a preview, where he emphasized EPA’s estimate that the rule would avoid 1,300 premature deaths in 2030. “We feel very confident that we’re going to be there by 2035.”
Democratic lawmakers and environmental organizations praised the new proposed rules this morning for enabling decarbonization of the electric grid and jump-starting decarbonization in other sectors using electricity, such as transportation, which will increasingly need power to fuel electric vehicles.
“A cleaner grid also means other sectors of the economy can reduce their emissions as well by joining in the economy-wide push for electrification,” members of the House Sustainable Energy and Environment Caucus said in a statement.
Jobs and reliability: For opponents, the new proposed rules opened the old wounds of the Clean Power Plan, threatening jobs tied to coal-fired generation and grid reliability.
“Nine states experienced rolling blackouts last December as the demand for electricity exceeded the available supply,” said Jim Matheson, CEO of the National Rural Electric Cooperative Association. “Those situations will become even more frequent if EPA continues to craft rules without any apparent consideration of impacts on electric grid reliability.”
EPA’s high-end estimate for compliance costs associated with the proposed rules for new combustion turbines and for existing coal units was projected at $14 billion, a number it said is “lower than it would be absent the [Inflation Reduction Act incentives].”
High costs of regulatory compliance have been a key factor driving coal retirements in recent years, according to utilities and the Energy Information Administration.
What’s coming: Regan expressed confidence that the new proposals would withstand legal scrutiny and the new case law established in West Virginia v. EPA.
One of the legal brains behind that case, West Virginia Attorney General Patrick Morrisey, criticized the new rules this morning as in violation of the limitations SCOTUS sketched out in the case: “We plan on ensuring that those limits are upheld, and we expect that we would once again prevail in court against this out-of-control agency.”
His fellow West Virginian, Sen. Shelley Moore Capito, pledged to level a Congressional Review Act resolution against the proposed rulemaking.
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NEW MEXICO SUED OVER POLLUTION IN ‘FIRST-OF-ITS-KIND’ SUIT: Residents and environmental groups leveled a constitutional challenge against the state of New Mexico, asking a state court to rule that its oil and gas permit approvals violate a pollution control clause in the state’s constitution.
The clause states that New Mexico’s “beautiful and healthful environment is hereby declared to be of fundamental importance to the public interest” and that the state legislature shall “provide for control of pollution and control of despoilment of the air, water and other natural resources … consistent with the use and development of these resources for the maximum benefit of the people.”
Emissions of methane, waste disposal, and oil and gas producers’ use of chemicals to frack enabled by the state’s drilling permits and related infrastructure run counter to the pollution clause, the complaint argues.
No previous lawsuit has targeted the 1971 amendment in this way, according to the Center for Biological Diversity, one of the plaintiff groups.
Oil and gas in New Mexico: The state, which shares the Permian Basin with Texas, is an oil and gas powerhouse, ranking no. 2 among states for oil production. It’s also in the top 10 for gas production among states, and the industry is a critical revenue source for the state’s budget.
OPEC RAISES CHINESE DEMAND FORECAST AHEAD OF JUNE MEETING: The world’s largest oil producers said they expect global oil demand to hold steady for the rest of 2023, even amid a resurgent China, which is expected to up its demand as it continues to reopen its economy.
In its new monthly report, OPEC said it expects Chinese oil demand to rise by 800,000 bpd—up from the 760,000 it forecast last month—helping contribute to a global growth figure of 2.3%.
“Minor upward adjustments were made due to the better than expected performance in China’s economy, while other regions are expected to see slight declines due to economic challenges that are likely to weigh on oil demand,” OPEC said in its report.
Their optimistic view on Chinese demand recovery was somewhat blunted by other economic factors, such as inflation and the looming U.S debt ceiling, which it warned could have “consequences” if not resolved.
The report is the last from OPEC before the cartel and Russia gather for its policy meeting on June 4.
FED GOVERNOR SAYS CLIMATE CHANGE IS NO THREAT TO FINANCIAL SYSTEM: Federal Reserve Governor Christopher Waller this morning issued a broadside against the idea that regulations are needed to address the threat of climate change to the financial system.
“Climate change is real, but I do not believe it poses a serious risk to the safety and soundness of large banks or the financial stability of the United States,” Waller said in a speech prepared for a conference in Madrid, Spain.
Waller dismissed the idea that climate change could upend the financial system through physical risks, such as increased floods and fires, saying that such events are of the kind that the system regularly handles. He also downplayed “transition” risks – that the financial system could be collateral damage as society leaves fossil fuels – saying that the financial system weathers major disruptions in other industries all the time.
The background: The Fed has taken incremental steps to incorporate climate change into regulatory decision-making – a trend that critics say amounts to indirect climate policy-making.
Notably, it issued guidance in December to big banks for managing climate risks. Waller dissented at the time. It also launched a climate analysis pilot program that six big banks participated in.
Biden signed a climate financial risk executive order in 2021. In addition to the Fed’s efforts, the most significant climate-related regulation is the Securities and Exchange Commission’s climate disclosure requirement proposal.
SENATE COMMERCE ADVANCES RAILWAY SAFETY BILL: The Senate Commerce, Science, and Transportation Committee advanced the bipartisan Railway Safety Act of 2023, which lawmakers introduced in the wake of the Norfolk Southern train derailment in East Palestine, Ohio.
The legislation, led by Sens. Sherrod Brown and J.D. Vance, would create a permanent requirement for railroads to operate with at least two-person crews and increase fines for wrongdoing committed by rail carriers.
It would also require rail carriers to provide advance notification to state emergency response officials about what kind of cargo they’re transporting under the bill.
Supporters of the legislation ranged across political ideologies to include Sens. Josh Hawley, Ed Markey, and Tammy Baldwin.
TVA TURNING 90: The Tennessee Valley Authority will mark its 90th birthday next week.
The largest public power supplier in the nation, TVA was born after President Roosevelt signed the TVA Act on May 18, 1933.
TVA circulated its latest generation resource activities ahead of the anniversary, which include active construction on some 3,800 megawatts of new generation from combustion turbines, solar projects and energy storage, and combined-cycle natural gas, as well as planned reviews of 6,000 megawatts of solar energy and energy storage.
MASSIVE WIND TURBINE CATCHES FIRE IN SWEDEN: A 220-foot wind turbine in southern Sweden caught fire early this morning, torching several of the blades and causing them to fall to the ground and start a fire on the land nearby, according to authorities.
The fire was originally reported at around 2:45 a.m. By the time responders extinguished the blaze on the ground, at around 5 a.m., another still-intact turbine remained on fire, sending flames and plumes of black smoke into the early morning air, according to images shared by local news affiliates on Twitter.
Swedish officials said it is unclear what caused the fire, and did not immediately disclose the manufacturer who built the turbine.
The Rundown
Wall Street Journal Driving an EV is getting greener, especially in the U.S.
E&E News EPA’s rule would steeply cut pollution. But not this decade.
Washington Post To meet EV demand, industry turns to technology long deemed hazardous
