A Review of Air Quality Rules and a Look at 2024

Federal regulators in 2023 proposed a variety of new air quality rules, and 2024 is likely to see these proposals become final and enforceable. Here’s a look at the past year, and a look ahead at the major air regulations that will impact power generation in 2024.

The U.S. Environmental Protection Agency (EPA) in May 2023 unveiled its proposed greenhouse gas (GHG) rule, likely to be the most impactful new regulation for electric power generators. The measure establishes new source performance standards (NSPS) for fossil fuel-fired stationary combustion turbines (CTs) as well as emission guidelines (EGs) for large, frequently used existing fossil fuel-fired stationary CTs and existing fossil fuel-fired steam generating electric generating units (EGUs).

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The emission reductions required would be achieved through implementation of the EPA’s proposed Best System of Emission Reduction (BSER), which relies primarily on a combination of carbon capture and sequestration (CCS) and co-firing hydrogen to encourage low-GHG fuel sources, improving EGU efficiency, and reducing GHG emissions. The proposed standards would be phased in as follows:

■ New and reconstructed fossil fuel-fired stationary CTs would be subject to a BSER based on unit capacity (such as low load, intermediate load, and baseload). Low-load units would be required to use low-emitting fuels such as natural gas. Intermediate-load units, in addition to adopting highly efficient simple cycle generation, would be required to generate with 30% low-GHG hydrogen co-firing beginning in 2032. Baseload units, in addition to highly efficient combined cycle generation, would be required to either generate with 30% low-GHG hydrogen co-firing beginning in 2032 and ratcheting up to 96% by 2038, or generate with CCS with 90% capture by 2035.

■ Large, frequently used existing fossil fuel-fired stationary CTs (that is, larger than 300 MW with a capacity factor greater than 50%) would be required to either adopt highly efficient generation coupled with CCS with 90% capture by 2035, or adopt highly efficient generation coupled with 30% low-GHG hydrogen co-firing by 2032, ratcheting up to 96% by 2038.

■ Existing fossil fuel-fired steam generating EGUs would be subject to a BSER based on the unit’s federally enforceable retirement date. Units retiring prior to 2032, and units retiring prior to 2035 that commit to operating at a capacity factor of less than 20%, may maintain routine operations, as long as there is no increase in emission rates. Units retiring prior to 2040 would be required to generate with 40% low-GHG hydrogen co-firing, achieving a 16% reduction in emissions by 2030. Units retiring after 2040 are required to generate with CCS with 90% capture, achieving an 88.4% reduction in emissions by 2030.

■ Modified coal-fired units would be required to generate with CCS with 90% capture, achieving an 88.4% reduction in emissions, immediately upon modification.

While the proposed rule’s compliance deadlines are years away, and despite the lengthy lawsuits certain to follow its finalization, the regulated community needs to make important investment decisions soon, while planning for future generation demand.

The EPA in April 2023 released an update to the Mercury and Air Toxics Standards (MATS) for coal- and oil-fired EGUs. Notable is the proposed change to the emissions standard for filterable particulate matter (fPM), employed as a surrogate for non-mercury metals, to 1.0E–02 lb/MMBtu, down from 3.0E–02 lb/MMBtu. Units would have three years from the final effective date to comply. The EPA also proposes to require that all coal-fired EGUs comply with the new fPM emission standard by mandating the use of particulate matter (PM) continuous emission monitoring systems (CEMS) for the roughly two-thirds of the national fleet not currently employing it.

The EPA announced other initiatives not limited to power generation. The agency in August released an updated Air Emission Reporting Requirements (AERR) rule that includes dozens of proposed changes, small and large, to Hazardous Air Pollutants (HAPs) emission reporting. Significantly, major sources would be required to report “all HAP” emissions directly to the EPA, unless the state regulatory agency chose to report HAPs on behalf of the state’s HAP sources. The AERR also includes a per- and polyfluoroalkyl (PFAS) emission reporting proposal.

In September, the EPA released an updated proposal for Reclassification of Major Sources as Area Sources, better known as the Once-In, Always-In (OIAI) rule. OIAI provides for reclassification to area source status, but only through federally enforceable safeguards that would effectively allow for no increase in the HAP standard at the time of reclassification. Meanwhile, the PM National Ambient Air Quality Standard (NAAQS) is likely to be revised downward, and litigation about state regional haze plans continues.

In addition to new air regulations, power generators are grappling with the proposed Coal Combustion Residuals (CCR) rule that would expand the existing CCR to inactive impoundments at inactive facilities, as well as the new Effluent Limitation Guidelines, proposing zero discharge as the best available technology for flue-gas desulfurization wastewater and bottom ash transport water. While each of these regulations is significant on its own, their cumulative impact is sure to shape the power generation industry for decades to come.

—Greg Munson is a shareholder with Gunster and represents regulated industries in areas of state and federal environmental law. Phil Sliger is an associate in Gunster’s Orlando, Florida, office, and a member of the firm’s Environmental & Land Use Law practice group.