EPA wants power plant CO2 emissions cut to slow climate change. What that means in NC

Duke Energy is still figuring out how proposed Environmental Protection Agency rules intended to limit carbon dioxide emissions from coal- and natural gas-fired power plants could affect its North Carolina operations.

Carbon capture and green hydrogen play a key role in the EPA’s proposed rule, with the agency requiring the technology to come online at new coal and natural gas plants in the 2030s. It’s part of an effort to limit emissions of carbon dioxide, a common greenhouse gas that is contributing to climate change.

The proposed rule replaces 2015’s Clean Power Plan, which was struck down by the Supreme Court’s decision in the West Virginia v. EPA case. But while some hope the rule will push utilities toward more solar and wind power, others are concerned that complying with the proposal would require an almost impossible scaling up of still-new technologies.

Greenhouse gas emissions aren’t the only thing that would be limited under the proposed rule. Tomás Elias Carbonell, an EPA deputy assistant administrator, said during a recent webinar that the agency thinks it will cut down on other pollutants, including nitrogen oxides and fine particulate matter.

The EPA estimates the annual benefit of the new rule at $5.4 billion to $5.9 billion through 2042.

“These standards are ambitious and comprehensive and really reflect the kind of reductions that we think we can get through employment of the CO2 reduction technologies,” said Carbonell, a graduate of N.C. State University. “But they also build in lead time that we think is necessary for power companies and grid operators to plan for compliance and to plan for the installation of controls.”

The EPA hopes to finalize the rule in early 2024, Carbonell said.

EPA standards and the Carbon Plan

Venu Ghanta, Duke Energy’s vice president of regulatory affairs and policy in North Carolina, said in an email that the state’s largest utility must put new clean energy sources on the grid as quickly as possible while keeping the power supply reliable for its customers.

Duke has long anticipated that new natural gas plants will play a role in that. The utility is still evaluating how the EPA’s new proposal could shift its approach.

“The key to a workable rule is to align with technology development and maintain the unique role of natural gas so we can retire coal and add an unprecedented amount of solar over the next decade,” Ghanta wrote.

In North Carolina, Duke provides about 34% of its power with natural gas, 22% with nuclear and 17% with coal. Renewable sources like wind, solar and biomass combine to make up about 10% of Duke’s power mix in the state.

Solar and wind coming online will cut down on the use of natural gas, Duke officials believe. But the fact that those technologies aren’t available when the sun isn’t shining or the wind isn’t blowing means energy sources like gas that can be quickly called upon when usage is high on hot days or cold nights could assume increased importance.

The company is exploring both carbon capture and green hydrogen technologies, with a U.S. Department of Energy grant funding a carbon capture design study at a natural gas plant in Indiana. Duke is also part of a consortium seeking a Department of Energy hydrogen hub in the Southeast.

Duke’s choices about energy sources are shaped in part by the Carbon Plan written into bipartisan energy legislation in North Carolina. That legislation requires the N.C. Utilities Commission to approve a plan every two years that targets a goal of a 70% reduction in carbon dioxide emissions from Duke Energy’s 2005 levels by 2030, with the utility reaching net zero by 2050.

Under the state Carbon Plan, the Utilities Commission must consider both affordability and reliability when it directs Duke to build certain power generating resources. With the EPA’s carbon dioxide requirements, energy advocates in North Carolina believe it could ultimately be cheaper to push ahead with new solar and batteries or other carbon-free energy sources instead of building either carbon capture or hydrogen at new natural gas plants.

“It may be that if and when Duke files for those certificates to build this additional generation, based on having to foreseeably comply with these standards, the cost of this generation versus other resources to meet the emission reductions in the state doesn’t pencil out anymore,” Luis Martinez, the director of Southeast energy at the Natural Resources Defense Council, told The News & Observer.

Andrew Whelan, the communications manager for CleanAIRE NC, said penalties under the proposed rule could help push utilities toward cleaner energy generation, the same technologies that are being supported through grants and tax incentives via the Bipartisan Infrastructure package and Inflation Reduction Act.

“Duke Energy has publicly pledged to shift toward clean energy and to meaningfully cut its emissions, and we believe that these new standards are an opportunity to help them live up to that pledge,” Whelan told The News & Observer.

Duke officials expect to finish an analysis of the proposed rule in August, shortly before the EPA’s public comment period is complete.

Relying on unproven technology?

Manufacturers argue the EPA’s proposed regulation relies much too heavily on technologies that aren’t yet available at scale, imperiling the availability of critical energy.

Brandon Farris, the National Association of Manufacturers’ vice president of energy and resources policy, said his group would like to see a longer off-ramp than about 10 years for utilities nationwide to meet the requirements. While manufacturers support both carbon capture and green hydrogen, Farris said, it will be difficult to require utilities to either install them over roughly the next decade or shutter plants that provide critical energy.

“That’s not a safe bet,” Farris told The News & Observer.

About 60% of the nation’s energy comes from coal or natural gas, Farris said. He also added that adding carbon capture or green hydrogen technology could require a lengthy environmental review process, even if that process is limited to two years by the recent debt ceiling agreement.

“There has to be a medium ground. Essentially their proposal is deploy hydrogen nationwide, deploy carbon capture nationwide or shut down,” Farris said.

Duke has announced that it plans to retire its six remaining coal-fired power plants in North Carolina by 2035. Additionally, Duke operates 16 natural gas-fired plants in North Carolina, with two more in South Carolina.

It is widely expected that Duke will ask the N.C. Utilities Commission later this year to find necessary about 2,000 megawatts of new natural gas facilities. Per the commission’s Carbon Plan order, that application will need to include a cost analysis, as well as an analysis of where natural gas could come from if the proposed MVP Southgate project doesn’t come to fruition.

Clean energy advocates in North Carolina are hoping the Utilities Commission considers how the EPA’s proposed rule would affect the cost of new gas plants if Duke advances that proposal.

In planning exercises, Martinez said, green hydrogen makes sense when it’s applied to sectors that have limited options to cut down on greenhouse gas emissions. Hydrogen often proves too expensive for use in a sector like power generation, particularly when more affordable technology like solar exists.

“We’re hoping they’ll realize it might not be worth it, or if it’s worth it they’ve fully evaluated the cost of these plants with the emission control technology,” Martinez said. “But we’ll see what happens this fall.”

The EPA is accepting public comments on its proposal until Aug. 8. To submit a comment, interested people or representatives of organizations can visit https://www.regulations.gov/commenton/EPA-HQ-OAR-2023-0072-0001 and write their comment or submit documents.

This story was produced with financial support from 1Earth Fund, in partnership with Journalism Funding Partners, as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work.