EPA Releases Rules Targeting Pollution by Power Plants
Update provided by Meguire Whitney
The Environmental Protection Agency released a series of regulations targeting fossil fuel power plants on April 25, including a final rule on greenhouse gas emissions from power plants. The greenhouse gas rule requires existing coal-fired power plants and new natural gas plants to adopt carbon-capture technology by 2032 to reduce emissions by 90%. Those that do not adopt the technology (or find a comparable means of reduction) must retire by 2039.
In addition to removing existing natural gas plants from this regime, as EPA had previously indicated, the final rule drops the option to co-fire with clean hydrogen and reduces the threshold for plants to be considered “baseload.” With the new threshold, plants that run 40% of the time are now considered baseload plants, rather than those that run 50% of the time, as initially proposed. Other final rules issued April 25 include power plant mercury standards, wastewater limits, and coal ash controls—all of which will contribute to pressures on coal plants in particular. EPA estimates that the rules, alongside Inflation Reduction Act investments, will cut the power sector’s greenhouse gas emissions to 62% below 2022 levels by 2035.
Efforts to overturn the rules have already begun, with Senate Environment and Public Works Committee Ranking Member Shelley Moore Capito (R-W.Va.) announcing she will be introducing a Congressional Review Act resolution to overturn the rules, which she criticized as “threaten[ing] access to affordable, reliable energy.” If passed, President Joe Biden will more than likely veto the resolution.
FERC Sets Date to Consider Transmission Rule
Update provided by Meguire Whitney
On April 19, the Federal Energy Regulatory Commission announced plans to hold a special meeting on May 13 to consider its long-awaited rule on regional transmission planning and cost allocation. FERC published its notice of proposed rulemaking for the rule back in April 2022. Since then, the commission has held multiple technical conferences and received several letters from lawmakers urging final action on the proposal.
The rule is seen as essential by the Biden administration to meet its renewable energy transition goals of a nearly carbon-free electric grid by 2035, which the Department of Energy said hinges on expanding the electric transmission system by two-thirds or more. The vote comes as FERC has just three of its five commissioner seats filled, so the rule will only need two votes to be finalized. If finalized, the rule is expected to face legal challenges.
Democrats Introduce New Batch of Energy Transmission Bills
Update provided by Meguire Whitney
Several lawmakers on energy committees introduced transmission bills this week, continuing Democrats’ emphasis on transmission policy. On April 17, Sens. Martin Heinrich (D-N.M.), Ron Wyden (D-Ore.), and Alex Padilla (D-Calif.) introduced the Grid Reliability and Integrated Data (GRIData) Act to require FERC to share detailed reliability data, and the Grid Modeling of Dynamic Energy Loads and Resources (Grid MODEL) Act to mandate new reliability standards with probabilistic modeling to account for “key uncertainties” in long-term resource planning.
In addition, Sen. Catherine Cortez Masto (D-Nev.) and Rep. Kathy Castor (D-Fla.) introduced the Expediting Generator Interconnection Procedures Act on April 18 to require modeling for each generation type in the interconnection process. The legislation joins other prominent transmission bills—such as the BIG WIRES Act and the Clean Energy Transformation Act—as Democrats lay the groundwork for comprehensive legislation in 2025.
House GOP Tax Teams to Examine TCJA Provisions Ahead of Tax Law Negotiations
Update provided by Meguire Whitney
On April 24, House Ways and Means Chair Jason Smith (R-Mo.) and Tax Subcommittee Chair Mike Kelly (R-Pa.) announced 10 separate “tax teams” of five to six members tasked with taking a deep dive on specific provisions from the 2017 Tax Cuts and Jobs Act, which was the largest overhaul of the tax code in decades and is set to expire at the end of next year. In the TCJA, public power successfully maintained the tax-exempt status of municipal bonds used to finance infrastructure projects. However, public power lost the ability to issue tax-exempt advance refunding bonds that can make projects more affordable through refinancing when rates are favorable.
The 10 teams will have some overlap in their subject matter focus. Issue areas including community development, manufacturing, the new economy, and supply chains, among others. Some teams may potentially look to repeal various Inflation Reduction Act energy tax credits and programs or undo the tax exemption of municipal bonds to help offset costs and pay for a major tax package. The tax team negotiations may also present an opportunity to add new tax credits that were not included in the Inflation Reduction Act and restore tax-exempt advance refunding bonds.
Congress attempted to pass tax reform legislation earlier this year, but legislators were unable to reach a consensus before the end of this year’s filing season. Negotiations will likely resume toward the end of the year—when Congress usually considers a tax extenders package—although lawmakers expect intense negotiations ahead and will likely not reach an agreement on a major tax package until 2025.
National Petroleum Council Releases Reports on Hydrogen, Natural Gas Supply Chain Emissions
Update provided by Meguire Whitney
The National Petroleum Council released two reports on April 23—one on the hydrogen industry and the other on reducing U.S. natural gas supply chain emissions. Department of Energy Secretary Jennifer Granholm had requested NPC conduct studies on these topics.
The reports highlighted concerns about the slow growth of the clean hydrogen industry, indicating the industry won’t grow and generate enough supply and demand without federal support. The reports also found that current policies can achieve a 59% reduction in methane emissions from the U.S. natural gas supply chain, but they are headed toward achieving a 25% increase in carbon dioxide emissions. NPC provided several recommendations to help facilitate hydrogen production and sales and to reduce U.S. natural gas supply chain emissions. These included recommendations for policymakers to extend the 45V hydrogen production tax credit beyond 2032 and support the build-out of infrastructure for emissions-reductions projects.
DOE officials emphasized the need to address greenhouse gas emissions.
“In five years or 10 years, 20 years, the energy status quo is going to be obsolete,” Granholm said.
Industry leaders also indicated readiness to work on the practical, pragmatic solutions available in adopting emissions-reducing technologies.