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A comprehensive study by Princeton University sheds light on the potential effects of the Environmental Protection Agency’s (EPA) finalized regulations for fossil fuel power generators in 2024. The findings suggest that while these regulations could significantly reduce emissions, they might also overlook additional opportunities for cost-effective reductions.
Published on March 12 in One Earth, the analysis examines how the EPA’s power plant regulations would impact the electricity system in the United States amid an environment of regulatory uncertainty, particularly with expectations of potential rollbacks under the current administration. These regulations place limits on carbon dioxide emissions for new gas-fired combustion turbines and outline procedures for existing coal, oil, and gas-fired steam generating units.
The study indicates that if these regulations remain in place, they could lead to a near doubling of emissions reductions in the power sector by 2040, resulting in a decrease of 51% from the 2022 emission levels, compared to a mere 26% reduction without these regulations.
A significant driver of these reductions is expected to be the accelerated retirement of coal-fired power plants. The regulations incentivize these plants to close before the 2039 deadline rather than invest in expensive carbon capture and storage technology.
However, researchers noted that the regulations might inadvertently create inefficiencies in the energy system by extending the operational life of existing natural gas plants. “The current EPA rules impose emissions limits on new gas power plants but have postponed rules for existing gas generators,” explained Jesse Jenkins, who leads the research as an assistant professor at the Andlinger Center for Energy and the Environment. “This results in an uneven competitive landscape and may lead to increased reliance on less efficient older gas plants, mitigating some of the anticipated emissions reductions.”
The research team explored various options for additional regulations targeting existing gas plants. Their findings suggested that implementing similar emissions limits across all gas generators, regardless of age, could achieve reductions of up to 88% below 2022 levels, potentially at lower costs than the current framework allows.
This modeling was part of a broader effort captured in a recent study published in Science, which compared data from nine different power systems models to assess the emissions impacts of the EPA regulations.
“Our research not only quantifies potential uncertainties around these impacts but also pinpoints the most effective elements of the regulations for reducing emissions and where enhancements could be made,” remarked Qian Luo, the study’s first author and a postdoctoral researcher at the Andlinger Center.
Coal Retirements as a Key Emissions Reduction Strategy
The analysis revealed that regulations related to coal plants significantly drive emissions reductions, contributing nearly 70% to the overall cuts linked to the regulations. These rules are contingent upon the retirement timelines of the plants. For a facility slated to close after 2039, it must adopt technology capable of capturing at least 90% of its carbon emissions starting in 2032. Conversely, plants anticipated to retire before then must achieve emissions reductions by co-firing coal with at least 40% natural gas beginning in 2030.
Modeling outcomes indicated that the coal regulations encouraged earlier closures of coal plants, which might have otherwise continued operating well into the 2040s. Out of an operational capacity of 28.3 gigawatts of coal in 2035, only a fraction (0.3 gigawatts) was expected to adopt carbon capture technology, with the remaining plants opting for co-firing with natural gas before their scheduled retirements.
Jenkins emphasized that while coal-fired power plants have been progressively retiring, the absence of emissions constraints could have allowed over a hundred gigawatts of coal capacity to operate into the next decade. “Reducing emissions from these plants is critical and represents one of the most economical strategies to decrease U.S. greenhouse gas emissions.”
Challenges and Inefficiencies in Natural Gas Regulations
Despite the effectiveness of coal regulations, the researchers flagged potential inefficiencies associated with the rules governing natural gas. The current regulations, which primarily target new natural gas facilities, could lead to additional emissions reductions at a higher cost and create inefficiencies in the overall energy system.
Under the current policy, new natural gas plants that serve as baseload sources (operating over 40% of the time) must capture at least 90% of their carbon emissions starting in 2032. Plants operating at lower capacities face different standards, either needing to meet performance benchmarks or refraining from using high-emission fuels.
However, since these regulations focus solely on new plants and leave existing facilities unregulated, the study found minor enhancements in emissions reductions overall, at the cost of efficiency within the system.
“Investing in carbon capture technology is notably expensive, while it is relatively straightforward for operators to reduce their plant’s capacity factor to below 40%,” Luo stated. “Without equivalent regulations for existing plants, the strategy shifts towards operating newer, more efficient natural gas plants at lower capacities while increasing reliance on older, less efficient facilities.”
The potential shift toward lower-capacity operation of new natural gas plants could result in overbuilding within the sector. While more natural gas capacity would be integrated into the system, its infrequent use could elevate costs associated with newer facilities while furthering dependence on existing, less efficient generation sources.
Prospects for Enhanced Emissions Reductions
In light of the identified limitations of EPA’s power plant regulations, Luo and Jenkins presented several recommendations to enhance the rules governing natural gas plants. They advocate for immediate alignment of standards for both new and existing plants. Doing so could drastically lower emissions by 62% below 2022 levels, as more new plants with carbon capture technology come online and incentives to run older plants intensively are curtailed.
“The critical action for emissions reduction is retiring older, less efficient facilities, whether coal or natural gas,” asserted Luo. “Newer natural gas facilities not only emit less but also possess capabilities such as enhanced hydrogen co-firing potential that can facilitate future emissions reductions.”
The researchers further considered expanding carbon capture requirements for any generator operating above 20% capacity (as opposed to the current 40% threshold) utilized under the finalized EPA regulations. Such an adjustment could see even broader adoption of carbon capture technology, allowing a reduction of emissions by as much as 81% compared to 2022 levels.
They concluded with a compelling scenario where emissions could decrease by up to 88% from 2022 levels if additional mandates necessitate natural gas plants operating below 20% capacity to co-fire with at least 30% hydrogen.
These proposed regulations are projected to achieve superior emissions reductions efficiently, both in terms of effectiveness and cost. However, Jenkins cautioned that while these suggestions may present a more economically viable regulatory framework, they would undoubtedly require significant investments from power plant developers and could spark further contentious debates.
“Given the current administration’s intentions to weaken these EPA power plant regulations, this independent analysis comes at a crucial time,” remarked Jenkins. “It underscores the implications of existing regulations, the potential impact of their rollback on U.S. emissions, and assesses the overall efficiency of emissions reductions attainable under the current rules.”
Luo emphasized that the findings also “provide guidance for future administrations aiming to enhance the effectiveness of these regulations to achieve more profound and cost-efficient emissions reductions from the U.S. power sector.”
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