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EPA Wants to Limit Greenhouse Gases from New Power Plants

Election year proposal, which exempts existing plants, expected to stir up storm of controversy.

The federal government yesterday proposed limits on emissions of greenhouse gases from new power plants. But the rules will not apply to existing generating units -- the single biggest source of climate-changing pollution other than the transportation sector.

The rules, the first major step by the Obama administration to deal with climate change, will likely make it difficult to build new coal plants, which currently provide nearly half of the country's electricity.

Even though the proposal exempts existing power plants, it is expected to generate enormous controversy in an election year from critics who say it will raise energy prices and from clean energy advocates who argue it will do little to reduce emissions that are a big source of global warming.

But Environmental Protection Agency Administrator Lisa Jackson defended the proposal. "We're putting in place a standard that relies on the use of clean, American-made technology to tackle a challenge that we can't leave to our kids and grandkids,'' she said in a press release.

For the most part, environmental groups praised the move as a good beginning, but one that needs to be backed up by steps to regulate greenhouse gases from current plants.

"Given the political climate, it would have been difficult to do more,'' said Jeff Tittel, director of the New Jersey Sierra Club. "It's the first time EPA is regulating carbon as a pollutant.''

Others were more critical. Bill Wolfe, director of the New Jersey chapter of Public Employees for Environmental Responsibility, called the action irresponsible. "All the science says you have to get dramatic reductions from existing power plants,'' he said. "The proposal will have no impact on current carbon emissions and will allow future carbon emissions from the power sector to grow unconstrained by any regulatory limit, Wolfe said. "This is a prescription for cooking the planet.''

How coal power plants will fare under the new rule is a matter of dispute. In the past few years, they have struggled to compete in electricity markets as prices of natural gas have declined steeply. Typically, coal plants are the largest source of greenhouse gases, but due to the drop in prices of natural gas, a gas-fired plant owned by PSEG Power is the largest source of greenhouse gas in the state.

Christine Tezak, an analyst for Robert W. Baird & Co., said in a research note that the proposal is good news for today's coal plants, which already face major investments due to other EPA regulations to curb mercury and toxic emissions.

"The Environmental Protection Agency explicitly stated that these new standards would not apply to existing power plants that have increases in carbon dioxide resulting from upgrades related to conventional pollutants,'' Tezak wrote.

Some industry executives were not so certain.

"EPA says that it has no current plans to regulate existing power plants for GHGs (greenhouse gases),'' noted Scott Segal, executive director of the Electric Reliability Coordinating Council. "We have little confidence that the administration will adhere to this view, particularly after the election is over.''

Public Service Enterprise Group Chief Executive Officer and Chairman Ralph Izzo viewed the action more positively, saying the agency took an important first step in addressing the significant environmental threat posed by climate change.

"The agency's action establishes a logical and modest standard for new electric power plants and provides the industry with much needed certainty,'' Izzo said. "The EPA provides a framework for the industry to confront this problem in a cost-effective manner.''

In New Jersey, the rule is not expected to have much of an impact. PSEG Power, a subsidiary of PSEG, has two coal plants, which have spent more than $1 billion installing new pollution controls to address tough new standards adopted by the EPA.

A new natural gas-fired plant expected to be built in West Deptford would be grandfathered in under the proposed rule.

Glen Thomas, president of the P3 Power Providers Group, a coalition of energy suppliers, said the rule does provide some clarity to anybody weighing major investments to comply with tougher pollution standards.

"Overall, if you are an operator of a coal facility, it doesn't get rid of that uncertainty,'' Thomas predicted.

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