U.S. CHAMBER OF COMMERCE

An Overpromise, Demonstrated

An Overpromise, Demonstrated

Written by energyxx1 On the 0 Comments

By: Dan Byers

My three year old son is nothing if not confident. Wanting to hold serve with his older brother, he backs down from nothing. No matter the task at hand, “I can do it!” is his starting proposition. Successfully put a straw in his juice box? Count to 30? Put on his socks? “I CAN DO IT,” he promises, without a doubt in his mind.

More often than not, though, his valiant efforts fail and frustration gets the best of him. We’ll of course keep working on it, but you might say that he has yet to, ahem, “adequately demonstrate” that he can open his juice box.

In this sense, EPA is not unlike my three year-old.

An important provision of the Clean Air Act requires that emission reduction technologies be “adequately demonstrated” before EPA can mandate them. This makes obvious sense—Congress wanted to ensure regulations were practical and achievable, and prevent unreasonably stringent requirements from blocking investment in and use of the best available emissions control technologies.

Despite this straightforward legal requirement, in 2013 EPA proposed a sweeping new regulation mandating that new coal-fired power plants in the U.S. would be illegal to build and operate unless they installed carbon capture and sequestration (CCS) technology that takes CO2 emissions and transports it via pipeline to deep underground reservoirs.

There was one small problem, however: no power plant had ever successfully demonstrated CCS on an operational scale, so the regulation fell far short of the law’s logical prohibition on unachievable mandates. Unmoved, EPA plowed ahead with the regulation, arguing that the technology was imminent and citing a number of first-of-a-kind projects in development around the world.  

However, as my son is learning, a prediction is not an achievement. Central to EPA’s case for the CCS mandate was a fledgling coal-CCS project in Saskatchewan known as Boundary Dam. The plant, which began operation in late 2014, was cited heavily by EPA in the final regulation (40 times to be precise) as proof of the viability of CCS. Boundary Dam would soon operate at “full capture” (90% of CO2), EPA noted, adding that “[t]he plant started by capturing roughly 75 percent of CO2 from the plant emissions and its operators plan to increase the capture percentage as they optimize the equipment to reach full capacity.” [Emphasis added]

About 18 months have passed since finalization of the rule, so we now have a much longer track record to compare against EPA’s assertions. Unfortunately for EPA, that track record is mixed at best. The last 12 months of data show the plant capturing CO2 at an average rate of 59%—well below the 90% initially predicted by EPA and Boundary Dam’s operators (see graphic). Moreover, in February 2017 the plant was taken offline for maintenance, and the capture rate plummeted to just 24%. The prospects for a turnaround at Boundary Dam remain unclear, particularly since the plant is expected to be closed for additional maintenance the entire month of June.

To be clear, the fault here is not with CCS, or with the Boundary Dam project specifically.  We strongly support continued advancement in CCS technologies, and we want to see Boundary Dam and other projects like it succeed. The technology remains promising, but it needs time and further investment to continue advancing. In fact, some in industry have argued that EPA’s premature mandate could reduce investment in CCS. For example, Babcock and Wilcox, a leading power plant design and construction company, has warned EPA that its CCS rule “will inevitably discourage industry from further investment in R&D of Carbon Capture, Utilization and Storage (CCUS) technologies, and in the end will eliminate coal as a future energy option for the U.S.”

While EPA’s CCS mandate is less stringent than the full capture design of Boundary Dam, the bottom line is that EPA has a responsibility to back up its claims, and it has simply failed to do so. This matters not just because it could further damage the agency’s credibility; it could matter to its legal defense of the rule as well. In fact, as recently as December 2016, EPA dismissed claims filed by those contesting EPA’s rule (including the Chamber) that Boundary Dam’s performance is too unreliable to show that CCS is demonstrated. EPA even asserted that Boundary Dam’s performance remains on an “upward trajectory”—a highly questionable assertion based on any objective look at the performance data above.

Ultimately, the problem is that EPA set up CCS to fail by pushing too hard, too fast with a mandate that virtually anyone in the field could see was not demonstrated.  Of course, that raises the question—did EPA really wish for CCS to succeed…or did it intend to set up a mandate it knew couldn’t be met, knowing full well that it would effectively serve as a ban on new coal-fired power plants?  With such an ideologically driven agency for the past eight years, it is a fair question. 

So what’s next in this saga? On March 28th, President Trump issued executive order directing EPA to consider revising or withdrawing the rule.  That same evening the agency asked the court to place its review of the case on pause until the regulatory review is complete. Within 48 hours the court granted this request, so the immediate path forward will now be up to EPA under the leadership of new Administrator Scott Pruitt. Time will tell, but we are optimistic that Mr. Pruitt will take a more sensible approach to technology mandates such as this and make sure EPA can open the regulatory juice box before imposing unachievable standards on the utility industry.