On Friday, September 20, 2013, the U.S. Environmental Protection Agency (USEPA) re-proposed a New Source Performance Standard (Section 111(b) of the Clean Air Act) for carbon dioxide emitted by new power plants. The proposal would set the first national limits on greenhouse gas emissions from fossil-fuel-fired electric generating units (EGUs) constructed in the future. The rule was originally proposed on March 27, 2012, and reconsidered due to the volume and intensity of comments received. USEPA indicated it received over 2.5 million comments, the most it had ever received on any proposal. On June 25, President Obama had issued a Presidential Memorandum directing USEPA to establish a flexible carbon pollution standard for new power plants by September 20, 2013.

The proposed rule would require new EGUs to meet an output-based standard of between 1000 and 1,100 pounds of CO2 per megawatt-hour (lb CO2/MWh gross), depending on the type of fuel combusted and the technology to be constructed.

The proposal reflects USEPA's belief that the industry is moving toward lower-carbon technologies, specifically, the widespread use of natural gas, even without agency regulation.

Significantly, the proposal would not apply to:

• Existing EGUs, including those that are "modified" or "reconstructed"; or

• New units that do not burn fossil fuels (e.g., burn biomass only or nuclear fuel).

These exceptions are intended to provide much needed regulatory relief to the existing power plant base as well as a specified planning target for power companies as they consider modernizations and diversification of their power generation fleets.

The proposal does not include a "transitional" unit provision. The "transitional" provision was included in the 2012 proposal because several coal fired units were in the process of permitting.

Currently, most of those units have been removed from consideration by their owner/operators. Only one of those units is potentially viable, and USEPA is taking comment on how to address that unit specifically.

New EGUs that fall under the proposed rule could burn any fossil fuel to generate electricity, including natural gas, coal, and petroleum coke. For fuels with naturally higher GHG emissions, like coal, which has an uncontrolled emission rate of about 2,250 lb CO2/MWh, meeting the proposed standard would require the use of technologies that reduce carbon emissions, such as carbon capture and storage (CCS), according to the proposal. USEPA has indicated that, to meet the new standard, coal-fired EGU operators would have to sequester only a portion of the combustion gases. The owner can choose whether to design for a higher emission rate with a 12-month averaging time or a lower emission rate with a longer averaging time. This will allow owners to provide specific targets to design engineers, who can then review the array of fuels, technologies and costs in designing any new power generation.

USEPA will accept comment on the proposal for 60 days after publication in the Federal Register (the date of publication has not yet been announced). Comments should be identified by Docket ID No. EPA-HQ-OAR-2013-0495. Comments previously submitted will not be considered in this rulemaking so interested parties will need to file comments in this proceeding, even if they are substantially the same as previously submitted. USEPA will also hold public hearings on the proposal. The dates, times, and locations should be available soon in the Federal Register and on www.epa.gov/carbonpollutionstandard.