US EPA proposes new emissions rule

The CPP was issued in August 2015 by the EPA to curb greenhouse gas emissions from existing fossil fuel-fired power plants under section 111(d) of the Clean Air Act and to reduce CO2 emissions by 32% from 2005 levels by 2030. The plan was to have been implemented by the end of 2015, but in February 2016 the US Supreme Court stayed its implementation pending judicial review.

The EPA in October 2017 took steps to repeal the CPP - which it now describes as "overly prescriptive and burdensome" - after determining that the Obama-era regulation exceeded the Agency's statutory authority. The agency issued an advance notice of its new proposed rulemaking in December that year, and the proposed ACE Rule is informed by over 270,000 public comments received by the EPA since then.

The ACE Rule would work to reduce greenhouse gas emissions through four main actions: defining the "best system of emission reduction" for existing power plants as on-site, heat-rate efficiency improvements; providing states with a list of "candidate technologies" that can be used to establish standards of performance and be incorporated into state plans; incentivising efficiency improvements at existing power plants; and giving states time and flexibility to develop their state plans.

The EPA's regulatory impact analysis, which considers a variety of scenarios, projects that replacing the CPP with the ACE Rule could result in USD3.4 billion in net benefits, with avoided compliance costs under some scenarios totalling USD6.4 billion compared to the CPP. All four scenarios considered - one modelling the full repeal of the CPP, and three policy scenarios in which the CPP is replaced by the ACE Rule with different levels of heat rate improvements at coal-fired plants - will reduce CO2 emissions from their current level, EPA said.

The CPP set emissions standards for power plants and customised goals for states to cut carbon pollution, and was strongly supportive of the role of renewables and natural gas in achieving this. Although allowing credit for new nuclear power plants and uprates to existing units, the CPP did not recognise the role of existing nuclear capacity and did not credit nuclear licence extensions on the same basis as new capacity.

"The ACE Rule would restore the rule of law and empower states to reduce greenhouse gas emissions and provide modern, reliable, and affordable energy for all Americans," EPA Acting Administrator Andrew Wheeler said. "Today's proposal provides the states and regulated community the certainty they need to continue environmental progress while fulfilling President Trump's goal of energy dominance."

Nuclear plant operators in the USA's deregulated markets, where generators compete against each other to sell power to suppliers through auctions, have faced competition from low-cost gas, particularly from shale gas developments, and subsidised wind power, leaving well-performing nuclear units at risk of closure for economic reasons. Some states, including New York and Illinois, have now passed legislation specifically recognising the attributes of nuclear plants, particularly for their contribution to emissions reduction targets.

New York is aiming to close all the state's coal-fired power plants by 2020. State Governor Andrew Cuomo on 20 August wrote to Wheeler, urging him to abandon the EPA's proposed replacement of the CPP. He subsequently announced that the state is joining the Powering Past Coal Alliance, an international coalition of governments, businesses, and other organisations committed to leading the rest of the world in ending the use of traditional coal power.

"The future of our environment, our economy and our children is at stake, and New York will not let President Trump take us backward ... With our bold mandate to close all coal-fired power plants by 2020 and our nation-leading commitment to renewables, we are already at the forefront of the clean energy revolution and we will not go back," he said.

New York's Clean Energy Standard, which aims for half of its electricity to come from renewable sources by 2030, explicitly recognises the zero-carbon contribution of nuclear power plants and has ensured the continued operation of four of the state's nuclear power plants that had been at risk of premature closure for economic reasons.

In June, Trump directed Secretary of Energy Rick Perry to take immediate action to stop the loss of "fuel-secure power facilities" from the country's power grid, including nuclear power plants that are facing premature retirement. The US Federal Energy Regulatory Commission in January launched a new proceeding to examine the resilience of the system after terminating a proposed rulemaking on on grid resilience and reliability, which would have recognised the attributes of generation sources able to store fuel on site.

The proposed ACE Rule will be open to public comments for 60 days after its publication in the US Federal Register. The EPA will also hold a public hearing on the proposal.