Greenhouse Gas Regulations
President Obama announced a Climate Action Plan in May 2013 that included a schedule for the U.S. Environmental Protection Agency (EPA) to develop CO2 emissions standards under the Clean Air Act. In December 2010, the EPA had previously announced its intention to establish emission standards for new and existing power plants, and had already issued a proposal for new sources.
AEP’s John W. Turk Jr., Plant is one of the most efficient coal plants and the only ultra-supercritical coal plant in the nation.
In January 2014, the EPA re-proposed New Source Performance Standards (NSPS) for GHG emissions from new electric generating units under Section 111 of the Clean Air Act. These include separate performance standards for new fossil-fueled steam generating units and new combustion turbines. The standard for coal-fueled steam generating units is based on the use of partial carbon capture and storage systems. The EPA based its standard on demonstration projects and plants currently under construction that intend to supply CO2 to enhanced oil recovery operations. Each of the plants under construction has received substantial government assistance, and project costs have escalated dramatically. New efficient natural gas combined cycle units can meet the proposed standard without any additional carbon controls.
We believe AEP’s John W. Turk Jr., Plant, one of the most efficient coal plants in the nation and the only ultra-supercritical coal plant, should be considered in the EPA’s rule-making process. The Turk Plant represents a technology that has been “adequately demonstrated” through its use at a number of commercial-scale electric generating units throughout the world. Instead, in the re-proposed rule, the EPA relies upon academic studies and demonstration projects (none of which is in operation) in its defense that carbon capture and storage (CCS) technology is the technology of choice. We believe our own experience with CCS suggests there is much to be learned before the technology can be commercially or economically viable.
AEP is not currently planning to build new coal-fueled capacity, but economics, the need to maintain fuel diversity, and other factors could lead us down this path in the future. We strongly believe that the EPA should not dictate energy policy, and that over-dependence on a single fuel with a history of price volatility has inherent risks. Moreover, without greater harmonization of the natural gas and electricity markets and significant investments in pipelines and infrastructure, gas dependency exposes the electricity grid to new reliability risks.
The President has directed the EPA to issue guidelines for CO2 emissions from existing electric generating facilities by June 1, 2014. Such guidelines are intended to establish procedures so that states can develop and implement the standards through their state implementation plans.
We continue to work with the federal government as it develops these rules for existing fossil-fuel-based power plants. As the regulatory process moves forward, we will continue to seek to achieve the right balance between environmental protection, impact on company operations and the cost to our customers. We recognize the actions and positions we take are not always well-received by some stakeholders, but we remain committed to having open dialogue.