New Carbon Emissions Standards Protect Rural Americans

This spring, the US Environmental Protection Agency (“EPA”) announced two final rules to regulate the greenhouse gas emissions of coal-, oil-, and gas-fired power plants in the US. Using its authority under the Clean Air Act, the EPA established these long-awaited new rules to limit carbon pollution, improve air quality, and prompt the power sector to confront the climate crisis, reducing carbon emissions by an estimated 1.4 billion tons over the next two decades. The rules will stimulate utilities and power plant owners to implement a Best System of Emissions Reduction (“BSER”) approach that will ensure a reliable power supply while also protecting public health and the environment. The EPA finalized the new rules, which were first proposed in 2023, with input from environmental groups and power industry stakeholders. The Rural Power Coalition is pleased to see the EPA’s continued commitment to public health and environmental justice, especially for rural communities across the US.

What The New Carbon Pollution Standards Do (& What They Don’t Do)

Essentially, the new Carbon Pollution Standards attempt to limit carbon pollution from fossil-fuel power plants through the establishment of carbon emissions standards that coal, oil, and gas plants must meet in order to operate in compliance with the rules. These standards are based on four primary factors:

• the type of power plant (e.g., whether it is coal-, oil-, or gas-fired), 

• whether the plant is existing or planned,

• the horizon over which the plant will operate, and 

• how much power the plant generates in a given period of time (e.g., the capacity factor).

Importantly, the new Carbon Pollution Standards apply differently to different types of power plants, with notable compliance exceptions. For example, existing coal plants with a retirement planned by 2032 will not be required to comply with the new rules, while those with a retirement planned by 2039 must co-fire with gas to meet a 16% emissions reduction target. Coal plants that are planned to operate beyond 2039 must meet a 90% emissions reduction target. Meanwhile, existing oil and gas plants and new gas-fired combustion turbines must meet different emissions reductions standards based on whether those plants provide base-load, intermediate, or peaking power generation. Compliance deadlines for existing coal plants set to retire by 2039 begin in 2030, but compliance deadlines for others begin in 2032.

However, the EPA has given the power industry leeway to determine how these standards will be met, depending on the factors detailed above. Capturing and storing carbon, co-firing with gas, using “lower-emitting fuels”, implementing operational efficiencies, or retiring fossil plants are all on the table. EPA took this regulatory approach in order to give the electric sector the flexibility to respond to the regulations while meeting reliability imperatives during the transition to an all-renewable fleet. For example, new peaker gas plants (which operate at less than 20% their capacity and would typically be used only during critical periods of very high demand) are not required to capture and store carbon; rather, such facilities must use the BSER available to them, including the use of “lower-emitting fuels”. Meanwhile, new base-load gas plants must operate efficiently and capture and store 90% of their carbon emissions, starting in 2032.

Clean Energy Funding Can Help The Power Industry Comply

These rules are vital for reducing harmful air pollution, improving public health, and ultimately achieving the cost savings resulting from a clean energy transition over the long-term. The good news is that the Biden Administration has authorized billions of dollars for the clean energy transition that will help make the sector’s response to the EPA’s rules more affordable. Additionally, programs like New ERA, PACE, and the clean energy project tax credits are leveraging public and private investment in the transition to non-polluting energy resources.

For example, the USDA programs New ERA and PACE made roughly $10 billion available to rural electric cooperatives, other rural utilities, and clean energy project developers for projects that reduce electric-sector greenhouse gas emissions in rural America. The investment tax credit (“ITC”), production tax credit (“PTC”), and  new “direct pay” tax credits for clean energy investments can be stacked onto New ERA and PACE projects to bring the cost of new wind, solar, and battery storage investments down even more. Recognizing the need, RPC, Tri-State Generation & Transmission, and the National Rural Electric Cooperative Association (“NRECA”) were strong advocates for the New ERA and PACE financing tools especially.

What Does This Mean For Rural America?

These rules will protect clean air and water in communities that host coal, oil, or gas power plants, including in rural areas. Carbon dioxide emissions are the primary cause of anthropogenic climate change, and the power sector is the second-most carbon-intensive industry in the US, according to the EPA. But fossil fuel power plants also emit dozens of other toxins that pollute proximate air and water sources, threatening the well-being of those who live nearby. Requiring such plants to seek carbon pollution controls or to operate more efficiently will reduce the cumulative negative environmental and public health impacts on host communities.

Yet, despite the many economic, environmental, and public health benefits of reducing its carbon emissions, the power sector is pushing back against the rules. Twenty-three states have joined a suit against EPA over the new standards, contending the agency has overstepped its authority. Among these are 11 states that RPC member organizations work in: Alaska, Georgia, Kentucky, Mississippi, Missouri, Montana, North Dakota, South Dakota, Tennessee, Virginia, and Wyoming. NRECA has also been critical of the new pollution reduction standards. Broadly, the electric power sector has claimed that the rules will kill the coal industry and hamper construction of new gas plants, imperiling the reliability of the grid. However, as has been demonstrated time and again, diverse clean energy resources, including wind, solar, battery storage, energy efficiency -- and combinations of these technologies -- can supply consumers with cost-effective, reliable power.

Call To Action: More Funding Needed For Rural Clean Energy

What can’t be contested here is that a massive amount of funding is needed to effect the transition to clean energy resources, especially for non profit utilities like rural electric co-ops. While the $10 billion for the USDA programs described above is a step in this direction, the interest in these funding sources far outstripped the grant- and loan- financing that is currently available and funds only a fraction of what is needed. For example, rural co-ops proposed more than 750 projects in applications for New ERA funding -- yet only a small percentage of the applications will be awarded. Worse, New ERA and PACE were the subject of negotiations in the 2024 Farm Bill, although the latest iteration of the bill includes full funding for both programs.

This is why we need YOU to help us advocate for fully-funded clean energy programs in the 2024 Farm Bill, and to ask your representatives in the US Congress to support an allocation of $100 billion for a clean energy transition in rural America!