New regulations could force southern IL power plant to install new technology or shut down

With a few notable exceptions, Illinois appears well on its way to meeting the Biden administration’s proposed limits on climate-changing pollution emitted by power plants.

The biggest outlier is a coal-fired plant in southern Illinois owned by dozens of municipalities in Illinois and across the Midwest and Mid-Atlantic states.

Only seven other coal plants nationwide emitted more heat-trapping carbon dioxide last year than the 12.4 million tons released into the atmosphere by the Prairie State Generating Station — a sum equivalent to the tailpipe emissions from 2 million cars.

If regulations unveiled Thursday by the U.S. Environmental Protection Agency survive political and legal challenges, Prairie State’s owners will soon face a critical decision: Either shut down the coal burner or upgrade it with carbon capture and storage technology that has yet to be utilized at the scale necessary for the country’s largest power plants.

Operators of gas-fired plants would get more options depending in part on how often they are used. Most would either need to install carbon capture equipment or begin switching to low-carbon hydrogen during the next decade.

Greenhouse gas emissions from the power sector are declining, but it remains the nation’s second largest source of climate-changing pollution. The proposed regulations are part of a sweeping package of rules and incentives Biden is pushing to speed up the ongoing transition to cleaner forms of energy and transportation — changes that promise new jobs while reducing lung-damaging pollution and potentially blunting the impacts of a changing climate.

“Not only would the proposal improve air quality nationwide, but it would bring substantial health benefits to communities all across this country, especially communities that have unjustly borne the burden of pollution,” EPA Administrator Michael Regan said Wednesday during a call with reporters.

Between 2012 and last year, carbon dioxide emissions from Illinois power plants declined by 41%, compared with a decrease of 24% nationwide, EPA records show.

Even without a government mandate to reduce carbon dioxide emissions, most of what is left of the state’s once-robust coal fleet is scheduled to close by the end of the decade. But the Chicago Tribune reported in 2021 that three new gas-fired plants would wipe out climate gains from the closure of four coal plants the previous year.

Companies behind the new gas plants weren’t required to demonstrate their projects are necessary to meet demand for electricity.

Instead, private investors financing the projects are betting gas prices will remain low enough for them to profit as dirtier, less-efficient coal and gas plants are retired. Another way the companies can make money is through annual capacity auctions held by the regional grid operator to guarantee enough electricity is available during hot days when demand is highest.

Like the municipal owners of the Prairie State coal plant, gas plant owners will need to decide if the cost of installing carbon capture equipment or switching fuels is worth the added investment should the Biden proposal take effect.

The administration isn’t just proposing to require new technology at power plants, it is offering generous incentives to do so.

Tax credits in the Inflation Reduction Act approved last year by Congress include up to $85 for every ton of carbon dioxide captured and injected deep underground. As a result, government officials estimate technology to keep heat-trapping pollution out of the atmosphere would cost roughly the same amount as it did for utilities to install other equipment to reduce emissions of smog- and soot-forming sulfur dioxide and nitrogen dioxide.

“The cheapest thing to do is to keep dumping stuff into the atmosphere for free,” said David Doniger, a senior strategic director at the nonprofit Natural Resources Defense Council who has worked on clean air issues for decades. “But the whole point of the Clean Air Act is to raise the cost of operating a dirty plant.”

If the Biden regulations take effect, Doniger said, “many of these companies will decide a better approach is to switch to a cleaner way of generating electricity. Some that want to keep running their coal or gas plants at a big scale will take the incentives and install (carbon capture and storage).”

Illinois is among two dozen states that have set goals for 100% clean energy or enacted legislation requiring such a transformation by 2050. Mostly led by Democrats, the states began taking more aggressive action after the U.S. Supreme Court in 2016 blocked the Obama administration’s climate plans for power plants.

Coal companies and Republican-led states are expected to challenge the Biden version as well, though Doniger and others said it appears to have been tailored to address a 2022 Supreme Court decision that restricted how the EPA could address climate change.

Rather than require certain pollution-control equipment or sources of electric generation, the Biden proposal relies on a well-tested strategy of setting caps on pollution rates, which effectively does the same thing.

States generally have more leeway. For instance, the clean energy legislation Gov. J.B. Pritzker signed into law during 2021 outlaws most coal- and gas-fired electricity by 2045.

The Prairie State plant is the most conspicuous exception.

As investors began abandoning coal projects during the late 2000s, St. Louis-based Peabody Energy persuaded Chicago-area communities of Batavia, Geneva, Naperville, St. Charles, Winnetka, metro-east communities Carlyle, Highland, Mascoutah, Freeburg, Breese, Red Bud and Waterloo and dozens of other municipalities to collectively borrow more than $5 billion to build a massive power plant in the Lively Grove community of Washington County.

Peabody later sold its 5% stake in Prairie State for a fraction of what it spent to help build it. Municipal investors, though, are locked into long-term contracts to buy electricity from the power plant and pay off the construction debt.

Investors in Prairie State did not account for the environmental cost of emitting more carbon dioxide into the atmosphere. Instead, some joined Peabody in lobbying against efforts to confront climate change.

It remains unclear if carbon capture and storage would work at Prairie State or other big power plants.

A University of Illinois study funded largely by the Department of Energy concluded an improved version of the technology could capture 95% of the carbon dioxide emitted from one of Prairie State’s two generating units.

Other research found the now-closed Petra Nova plant in Texas — once the largest coal-plant carbon capture project in the United States ― only prevented 55% of its emissions from escaping into the atmosphere.

“There’s just no evidence this stuff is useful,” Mark Jacobson, a professor of civil and environmental engineering at Stanford University, recently told the Tribune. “And all the evidence suggests it’s just a boondoggle and we could have spent all that money on actual emissions reduction.”

With new federal tax credits on the table, Petra Nova’s owners are planning to restart the plant. But wind and solar power are increasingly cost-competitive and becoming more efficient. Industrial-scale batteries can store energy for times when the wind isn’t blowing or sun doesn’t shine.

In 2021, a team of energy experts at Princeton University concluded the U.S. could affordably slash greenhouse gas emissions to zero in all sectors of the economy by 2050. Meeting that goal, the researchers said, will require a monumental commitment to clean transportation, electricity and home heating.

The regulations proposed Thursday by the EPA are one step toward getting there.

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