The proposal is the Biden administration’s take on reducing carbon emissions from power generation sources, and would replace the Trump administration’s less-stringent Affordable Clean Energy Rule enacted in 2019. The Trump rule itself was a replacement of the Obama administration's Clean Power Plan, which was only briefly enacted in 2015 before being caught up in legal challenges that culminated in a U.S. Supreme Court ruling last year.  

The Biden rule would require carbon reduction technologies such as carbon capture and sequestration (CCS) to be installed on units at the highest-emitting fossil-fuel-fired power plants beginning in 2032.

Nathaniel Keohane, president of the Center for Climate and Energy Solutions, described the Biden rule as a “no-brainer” from an economic standpoint, and said it would help address the climate crisis. 

“Already, the power sector has reduced emissions by over 35% since 2005, and many power companies have committed to achieve net-zero emissions by 2050. What businesses need most is regulatory clarity and certainty, so that they can make the investments in clean energy technology to meet those commitments and strengthen them further,” he said. 

Environmental groups generally praised the proposed standards, although some noted they would recommend strengthening them. Construction and power sector groups were more critical. 

Energy infrastructure projects, including CCS projects, can and have been held up for years because they are unable to get the permits necessary to move forward. 

The proposed air standards, if enacted, would make getting permits for these projects even more difficult, said Brian Turmail, Associated General Contractors of America’s vice president, said in an email, also noting supply chain issues. “As with most developments in the energy sector, AGC’s concerns lay with impacts to the supply chain and the availability and reliability of affordable energy, especially as more pressure is applied to electrify transportation and other key industries,” he said. 

What’s in the Proposal?

The Biden rule zeroes in on power plants that contribute the most to carbon emissions. It would also strengthen current New Source Performance Standards for all new gas-fired stationary combustion turbines; establish emissions guidelines for states to follow in limiting carbon pollution from existing fossil fuel-fired steam generating units (including those that are coal, oil and natural gas-fired); and establish emission guidelines for large, frequently used existing fossil fuel-fired stationary combustion turbines, which are generally natural gas-fired. 

The rule relies heavily on CCS and low-carbon hydrogen or natural gas co-firing as the most cost-effective technologies. 

EPA says the proposal is the result of input from a variety of stakeholders, including firms and representatives from the power sector. The proposal gives power plant owners and utilities time and flexibility in how they comply, Regan said. Starting in 2030, the proposals would generally require more CO2 emissions control at fossil-fuel-fired power plants that operate more frequently and for more years, and would phase in increasingly stringent CO2 requirements over time.

Power sector sources say they are still reviewing the rule. Scott Blake, a spokesman for Ohio-based American Electric Power Co (AEP), said in an email, “Any greenhouse gas regulations should consider available technologies and offer flexibility in developing plans that recognize the importance of reliable electric service. The development of clean, dispatchable generation resources and storage technology will be critical in determining how quickly our industry can achieve its decarbonization goals.” 

Blake said AEP has reduced emissions by 66% since 2005 and plans to be net-zero by 2045. Over the years, AEP, like many other energy companies, has diversified its portfolio to include more renewables while shutting down or retrofitting coal facilities as a response to changes in the market and regulatory drivers. 

Legal Challenges Ahead

The proposed rule is certain to face a bitter legal fight. 

“The U.S. Supreme Court has placed significant limits on what the EPA can do,” said West Virginia Attorney General Patrick Morrisey in a May 11 statement. Morrisey, who argued for the Obama rule's challengers in West Virginia v. EPA, added, “We plan on ensuring that those limits are upheld, and we expect that we would once again prevail in court against this out-of-control agency.”

Environmental groups say that EPA’s proposal could avoid the same fate as the Clean Power Plan because it stays within the limits outlined by the high court in the West Virginia case. Although that ruling said that EPA had exceeded its authority when it developed the Clean Power Plan, which called for broader shifts in the types of power generation across the U.S., the new rule aligns with earlier agency regulations that focus on using emissions reduction technologies at power plants, and is therefore considered to be “inside the fence line.” 

That distinction makes the plan legally defensible, says Dan Lashof, World Resources Institute U.S. Director. “By only regulating based on what is feasible within power plants' fence line, the EPA rule avoids some of the legal obstacles erected by the Supreme Court when it rejected the Clean Power Plan introduced by the Obama administration. This approach makes it more likely that the rule will survive judicial review,” he said.

Lissa Lynch, federal climate legal director for the Natural Resources Defense Council, said on a May 11 call with reporters, “We've already gotten a decision now from the Supreme Court that outlines the parameters of what EPA cannot do, and suggests what they can. So we're going into this round in a very different place, in terms of the definition of EPA as legal authority, and the way that the industry has progressed since 2015.”

Others disagree. 

Scott Segal, co-chair of Bracewell LLP’s Policy Resolution Group, said in an emailed statement the argument could be made that EPA still exceeded its authority by favoring CCS technology. “Carbon capture to be effective as a control system must be attached to a pipeline and ultimately to a sequestration site, both of which are well outside the fence line,” he said. 

Moreover, Segal and others noted that CCS technology has not been “adequately demonstrated”—a key phrase in the Clean Air Act provisions governing how EPA can regulate air pollution—at commercial scale. That could leave EPA on the losing side of legal battles that could ultimately lead to the Supreme Court. 

“Since the West Virginia case, the Supreme Court has agreed to consider overturning the Chevron doctrine, another important source of agency flexibility.  So EPA may have its work cut for it in front of an increasingly skeptical judiciary,” Segal said.

Jay Duffy, litigation director for the Clean Air Task Force, counters that viewpoint. 

“A pollution control technology need not be on every street corner in order to be the basis of standards. If it was, the Clean Air Act wouldn't be necessary,” he said on a May 11 press call, adding that now-standard scrubber technology to reduce sulfur dioxide emissions was largely driven by enactment of technology-based standards very similar to the ones EPA is currently proposing for CO2.  

EPA will accept input on the proposed rule for 60 days after it is published in the Federal Register and hopes to finalize the rule some time in 2024.