US: California expects little impact from EPA rule

10 January 2014 16:56 Source:ICIS

California’s Air Resource Board (ARB) said it does not expect any significant impact arising from the US Environmental Protection Agency’s (EPA) rules that will limit emissions from new power plants.

The rules, which were finalised this week, will limit emissions to 1,100 pounds (499 kilograms) of CO2e/MWh for new coal-fired power plants, according to the EPA. Large natural gas plants will be limited to 1,000 pounds of CO2e/MWh. Small natural gas power plants will be limited to 1,100 pounds of CO2e/MWh.

“We don’t expect any impact here,” said David Clegern, an ARB spokesman.

According to the California Energy Commission, a few power plants are slated to be built in the state, but most are combined-cycle stations, natural gas-fired or utilise renewable energy. Those projects should be able to easily adhere to the EPA’s new standards.

One proposed project – the Hydrogen Energy California Project (HECP) – was highlighted by EPA as an innovative way to reduce emissions. The HECP, which is slated to be operational by 2017, turns petroleum coke and coal into hydrogen that is then used to create low-carbon fertilizer and produce 300 MWhs of electricity. The project also uses carbon capture technology to minimise the carbon emissions.

The EPA’s rules would only apply to new power plants being built in the US. The regulatory agency is still working on draft rules for existing power plants that could have a significant impact on California’s cap-and-trade programme.

Traders believe the rules for existing power plants, or the 111(d) rule for the Clean Air Act, could force states to adhere to the EPA regulations or join a regional cap-and-trade, such as California’s programme.

Market participants believe states could see the EPA’s rules as too onerous and could be enticed to join California’s programme or the Regional Greenhouse Gas Initiative (RGGI), the US’s first cap-and-trade programme. Dan X. McGraw

By Dan X. McGraw