Analysis | How the EPA is bolstering its second try at power plant regulations

Below, we report that Amos Hochstein, President Biden’s longtime “energy whisperer,” will be assuming a new role in the White House as a presidential adviser for energy. But first: 

How the EPA is trying to bolster its new power plant rule against legal challenges

The United States doesn’t have a plan to limit greenhouse gas emissions from existing power plants. But that could change as soon as this week, as the Biden administration readies a proposal it hopes won’t run afoul of the Supreme Court. 

What we know: The Environmental Protection Agency is preparing to release a proposal to require power plants to significantly reduce their greenhouse gas emissions by 2040. Under the plan, fossil-fuel-burning facilities would be forced to either use technology to capture carbon dioxide emissions from their smokestacks or switch to cleaner fuels, our colleague Timothy Puko previously reported. 

To be clear, the EPA has not yet released a final version of the proposed regulations, and details could change. But if the regulations were enacted, it would mark the first time the federal government has successfully moved to tamp down pollution from existing coal- and natural-gas-burning power plants, the country’s second-largest contributor to climate change. 

Take two for the EPA: The Supreme Court ruled last year in West Virginia v. EPA that an Obama-era program known as the Clean Power Plan exceeded the agency’s authority by pushing state power companies to lower emissions by shifting their entire fleets to renewable energy without an explicit directive from Congress. That plan never took effect; the high court had first stayed its implementation in 2016. 

Since then, the Biden administration has been trying to craft a set of rules that can survive the conservative-majority court while still being ambitious enough to avert a climate catastrophe — and fulfill President Biden’s big climate promises before he faces reelection.

“Everything EPA does on climate change is challenged in court,” Michael Gerrard, an environmental law professor at Columbia Law School, told the Climate 202. “Obviously, EPA has been working very, very carefully to come up with as bulletproof a plan as it can.” 

Under the Clean Air Act, the EPA has the authority to set emissions reductions requirements for all sorts of emitters, including new power plants. But in West Virginia, the Supreme Court ruled that the Clean Power Plan exceeeded EPA’s authority by requiring states to make plans to phase out coal power plants and replace them with clean energy.

With that ruling in mind, many environmental lawyers say the agency can’t require that utilities use a particular technology to cut emissions or mandate an entire power system to switch its fuel generation (from coal to nuclear, for example).

Rather, to regulate existing operations, the EPA can only require changes at individual power plants — an approach known as “inside the fence line.” But it can set limits that are so stringent that those operations will have to either install carbon capture to comply — or shut down altogether. 

To achieve this kind of in-house technology shift, the Biden administration is expected to ask utilities to use on-site carbon capture technologies to reduce emissions, rather than explicitly requiring power plants to change their fuel. But the administration will need to “adequately demonstrate” there are tools power plants can feasibly use to comply with the emissions targets.

“It’s not as ambitious as the Clean Power Plan, it’s definitely a step back from there,” Jennifer Rushlow, dean of the Vermont School for the Environment at Vermont Law and Graduate School, told the Climate 202. “But I think it’s probably about as ambitious as they could do with what they’re working with.” 

This is where the Inflation Reduction Act tax credits for carbon capture and sequestration technology come into play. Rushlow said the Biden administration will also have to point to the new climate law to prove it’s making such technology more accessible and affordable. 

“I think they’re trying to thread the needle by picking a technology that can still be ambitious in emissions reduction while not explicitly requiring fuel switching,” she said. 

Yet none of the nation’s roughly 3,400 coal- and gas-fired plants currently use carbon capture technology in a significant way, raising questions about whether the administration will be able to sufficiently demonstrate the technology’s economic and technical viability. 

“If the rule is as described and declares a technology that is not in use as ‘adequately demonstrated’ to the industry, then that is a very risky strategy on their part,” said Scott Segal, a partner at Bracewell. “It’s supposed to be what the market has embraced, not what the government is subsidizing.” 

The proposed rules are almost certain to face legal action from Republican-led states and industry leaders, who have recently taken aim at a raft of new environmental rule proposals from the Biden administration, including plans to tackle water pollution. 

Rushlow said one other obstacle facing the EPA is that the agency is still planning to base its authority on a particular provision in the Clean Air Act that ultimately led to the Clean Power Plan’s demise.

On the other end of the spectrum, Biden will probably face criticism from environmental groups, who argue that carbon capture does not do enough to significantly reduce air pollution from power plants because it still extends the life of existing and polluting structures. 

Amos Hochstein heads to the White House after State Department stint

Amos Hochstein, a longtime energy and climate confidant of President Biden’s, is moving to the White House in an elevated role.

Hochstein will be senior adviser to the president for energy and investment and deputy assistant to the president, according to two people familiar with the move who spoke on the condition of anonymity to discuss a decision not yet made public. He was previously a presidential coordinator at the State Department, and will now be reporting to both national security adviser Jake Sullivan and National Economic Council Director Lael Brainard. His recent work has focused on making the country’s mineral supply chain less reliant on China, which will be a continued point of emphasis in his new role, the people said.

Hochstein has been a high-profile Biden adviser since Biden’s time as vice president, and he has worked for the Houston-based natural gas exporter Tellurian and on the supervisory board of Naftogaz, the Ukrainian state-owned oil and gas company. One of the few administration officials with experience working for fossil fuel companies, Hochstein joined the administration several months into its first year when rising energy prices were threatening to derail its political agenda and international stability.

He has been the point man for efforts to get more natural gas to European allies, visited Saudi Arabia and negotiated oil-supply policy with OPEC leaders, and helped lead administration meetings with U.S. oil executives. Former NEC director Brian Deese credited Hochstein for being one of the architects of the White House’s plan last year to release crude from the nation’s Strategic Petroleum Reserve to beat back soaring fuel prices largely triggered by Russia’s invasion of Ukraine.

“Amos has earned the president’s trust as a key part of the team navigating some of the most complicated developments in global energy markets in decades,” Deese said Sunday via text.

Many thanks to our colleague Timothy Puko, a national climate reporter for The Washington Post, for writing this item.

As EPA preps tougher rules, this power plant offers a peek at the future

Entergy is building a facility in Texas that will run on “green hydrogen” to help lower greenhouse gas emissions, Timothy reports. 

The $1.5 billion project, just a few miles from where the modern oil and gas industry was born, will burn both gas and hydrogen, a net-zero fuel. It is meant to help the company kick-start fleetwide efforts to cut emissions before the Biden administration unveils stringent regulations this month that are expected to require utilities to install carbon capture tools or shut down entirely. 

However, one big thing stands in Entergy’s way. Hydrogen power and other technologies that could help lower a power plant’s carbon footprint are a long way from large-scale deployment. 

Despite Inflation Reduction Act tax credits for carbon capture and hydrogen, some industry analysts say that the still-developing tools may not be a viable business solution for some companies because of their size and cost. And hydrogen can have significant climate impact depending on how it is produced, stored and transported, even though it releases no pollution when burned.

The House is in recess this week. Here’s what we’re watching in the Senate: 

On Tuesday: The Senate Energy and Natural Resources Committee will meet to discuss President Biden’s budget request for the Interior Department for fiscal 2024. Interior Secretary Deb Haaland will testify. 

• The Senate Appropriations Subcommittee on State, Foreign Operations, and Related Programs will hold a hearing to discuss maintaining national security and prosperity by focusing on conservation globally.
• The Senate Banking, Housing, and Urban Affairs Committee will meet to discuss the reauthorization of the National Flood Insurance Program, focusing on improving community resilience as flooding intensifies with climate change.
• The House Natural Resources Subcommittee on Energy and Mineral Resources will hold a field hearing in Minnesota titled “Examining the Mineral Wealth of Northern Minnesota.” It will assess the local and national benefits of critical mineral mining in the region. 

On Wednesday: The Senate Environment and Public Works Committee will meet to discuss the Biden administration’s budget request for the Army Corps of Engineers for fiscal 2024. The committee will also examine progress in implementing the 2022 Water Resources Development Act. 

• The Senate Appropriations Subcommittee on Energy and Water Development will meet to examine Biden’s proposed budget for fiscal 2024 for the Energy Department, focusing on the National Nuclear Security Administration. Energy Secretary Jennifer Granholm and National Nuclear Security Administration Undersecretary Jill Hruby will testify. 
• The Senate Appropriations Subcommittee on Interior, Environment and Related Agencies will meet to review the Biden administration’s proposed budget for the Environmental Protection Agency for fiscal 2024. EPA Administrator Michael Regan will testify. 
• The Senate Budget Committee will hold a hearing to assess the societal costs of fossil fuels. 

On Thursday: The Senate Energy and Natural Resources Committee will hold an oversight hearing to examine the Federal Energy Regulatory Commission, which is charged with managing interstate energy transmission.