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EO12866EGUGHGNSPSRIA2060-AQ9120111104ES.DOCX

EXECUTIVE SUMMARY

This Regulatory Impact Analysis (RIA) discusses potential benefits, costs, and economic 

impacts of the proposed Standards of Performance for Greenhouse Gas Emissions for New 

Stationary Sources for Electric Utility Generating Units (herein referred to as EGU GHG NSPS or 

GHG EGU NSPS).

ES-1 Background and Context of Proposed Rule

The proposed GHG EGU NSPS will limit greenhouse gas emissions (GHG) from new fossil 

fuel fired electric generating units (EGU) constructed in the United States in the future. This 

rulemaking will apply to carbon dioxide (CO2) emissions from new electric generating sources 

that exceed 25 megawatts in capacity. The United States Environmental Protection Agency 

(EPA) is proposing requirements for these sources because CO2 is a greenhouse gas (GHG) and 

power plants are the country’s largest stationary source emitters of GHGs. As stated in the 

EPA’s Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 

202(a) of the Clean Air Act (74 FR 66,518; Dec. 15, 2009) and discussed more fully in this 

document, the anthropogenic buildup of GHGs in the atmosphere is very likely the cause of 

most of the observed global warming over the last 50 years. This action is taken in response to 

a proposed settlement agreement entered into on December 23, 2010 to issue rules that will 

deal with greenhouse gas emissions from certain fossil fuel-fired electric generating units.

The statutory authority for this action is the Clean Air Act (CAA) section 111(b) that 

requires EPA to regulate new and modified sources. A modification is any physical change in, or

change in the method of operation of, a source that increases the amount of any air pollutant 

emitted by the source or results in the emission of any air pollutant not previously emitted. 

The CAA section 111(d) requires EPA to regulate existing sources that are not regulated under 

other parts of the CAA (i.e., pollutants regulated under NAAQS requirements or NESHAP 

requirements) and to which an NSPS would apply if such existing source were a new source. 

This rulemaking affects CAA section 111(b) new sources of GHG emissions from fossil fuel-fired 

EGUs and does not address GHG emissions from existing sources. In a subsequent separate 

action, the EPA will issue a notice of proposed rulemaking for establishing emission guidelines 

for States to develop plans to reduce CO2 emissions from existing fossil-fuel-fired EGUs

The Clean Air Act Section 111 (b) requires that this standard be reviewed every eight 

years, thus this regulatory requirement will likely be reviewed and potentially revised after the 

2020 timeframe. Therefore, this economic analysis focuses on benefits and costs of this 

proposal for the years through 2020.
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ES-2 Summary of Proposed Rule

This proposal requires that all new fossil-fuel fired units of 25 megawatt or greater 

capacity be able to meet an emission rate standard of 1000 pounds of CO2 per megawatt hour 

(lbs CO2/MWh). It also proposes an alternative standard that would allow units to meet the 

1000 lbs CO2/MWh standard using a 30 year averaging period. These standards could be met 

either by natural gas combined cycle generation or coal-fired generation using carbon capture 

and sequestration technology (CCS). Both the base case modeling that EPA performed for this 

rule (as well as base-case modeling that EPA has performed for other recent air rules) project 

generation that will be built out through 2020 as either combined cycle generation or coal-fired 

generation with CCS built with support from federal grants. Analysis performed both by EPA 

and the U.S. Energy Information Administration (EIA), as well as, statements and actions of a 

number of major utilities demonstrate that generation technologies other than coal (including 

natural gas and renewable sources) are likely to be the technology of choice for new sources 

due to current and projected economic market conditions. This means that technologies 

planned for new sources currently envisioned by owners and operators of EGSs will meet the

regulatory requirements of this NSPS.

ES-3 Key Findings of Economic Analysis

As explained in detail in this document, energy market data and projections support the 

conclusion that the power sector will choose technologies that meet the proposed standards 

due to existing and anticipated economic conditions in the marketplace, even in the absence of 

this rule. Therefore, this analysis does not anticipate that the proposed EGU GHG NSPS will 

result in notable CO2 emission changes, energy impacts, monetized benefits, costs, or economic 

impacts by 2020. Accordingly, we believe this rule will not have any impacts on the price of 

electricity, employment or labor markets, or the US economy. Nonetheless, this rule will have 

several important beneficial effects.

This NSPS provides legal assurance that any new coal-fired plants must limit CO2

emissions. Rather than relying solely on changeable energy market conditions to provide low 

emissions from new power plants in the future, this rule provides an important safeguard 

against possible construction of uncontrolled, high-emitting new sources that might continue to 

emit at high levels for decades, contributing to accumulation of CO2 in the atmosphere. In 

addition, the power sector has advocated reducing regulatory uncertainty. The rule will reduce 

regulatory uncertainty by defining section 111(b) requirements for limiting GHG from new EGU

sources. The availability of the NSPS also will reduce uncertainty concerning Prevention of 

Significant Deterioration (PSD) Best Achievable Control Technology (BACT) determinations. 
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This proposed rule is consistent with the President’s goal to ensure that “by 2035 we 

will generate 80% of our electricity from a diverse set of clean energy sources - including 

renewable energy sources like wind, solar, biomass and hydropower, nuclear power; efficient 

natural gas and clean coal.”1The rule will send a clear signal about the future of CCS 

technology that, in conjunction with other policies such as Department of Energy financial 

assistance, will support development and demonstration of CCS technology from coal-fired 

plants at commercial scale. The lack of GHG regulatory requirements has hampered utilities 

pursuing such projects and in July was cited as a key reason for cancellation of an American 

Electric Power CCS power plant project. Carbon capture also can help to improve U.S. energy 

production through enhanced oil recovery, as highlighted by a series of regional assessments 

conducted for DOE.2

Internationally, this rule will help demonstrate to other countries that the United States 

is taking action to limit greenhouse gases from its largest emissions sources. U.S. action 

supports ongoing programs and efforts in other countries to reduce greenhouse gas emissions.

 

1 “Blueprint for a Secure Energy Future”, March 30, 2011

2

 DOE web page, “Ten Basin-Oriented CO2-EOR Assessments Examine Strategies for Increasing 

Domestic Oil Production,” 

http://www.fossil.energy.gov/programs/oilgas/eor/Ten_Basin-Oriented_CO2-

EOR_Assessments.html