0:10

Hey everybody, this is Volts for

0:13

May 6th, 2024. What

0:17

you need to know about the new EPA

0:20

power plant standards. I'm

0:23

your host, David Roberts. Researchers

0:27

may remember that about a year ago

0:29

I did an episode with Lisa Lynch

0:31

of NRDC about

0:34

EPA's development of carbon

0:36

pollution standards for power

0:38

plants. Well, at

0:40

long last, EPA has

0:43

finalized those standards. What's

0:46

in them? What's new? What

0:48

effect will they have to get into

0:50

these and other questions? Today I have

0:52

with me two guests from

0:55

the Center for Applied Environmental Law

0:57

and Policy. Grace

0:59

Van Horn, its Director of

1:02

Policy Analysis, and Jonas

1:04

Monast, its Executive Director.

1:08

After a little stage setting with the

1:10

history of these rules, we're

1:13

going to get into how they've changed

1:15

since the initial proposal last year. What

1:18

they require of power plants, what kind

1:20

of power plants aren't covered, and

1:23

what the rules' legal fate may

1:26

be when they inevitably reach the

1:28

Supreme Court. With

1:41

no further ado, Jonas Monast

1:43

and Grace Van Horn, thank you so

1:45

much for coming to Volts. Your

1:48

pleasure. Thanks for having us. I

1:51

hate to do this, but this story

1:53

that we're dealing with today has quite

1:56

a back story. And

1:58

unfortunately, I feel like... We

2:00

do have to run through that backstory for

2:02

people to properly understand what's going on today.

2:05

And I know that regular listeners of Volts

2:07

have probably heard this backstory now two or

2:09

three times, but I know we have some

2:11

new listeners and some people who are not

2:13

familiar with. So just to begin

2:16

with, the two of you please bear with me

2:18

as I spend three to five minutes quickly

2:21

rehearsing the history of this

2:23

benighted rule that we are

2:25

once again attempting to pass. So

2:28

way back in the mists of time in

2:30

the 1970s, the U.S. passes the Clean Air

2:32

Act. The Clean Air

2:34

Act says, among other things, if

2:37

EPA determines that substance X, whatever

2:40

it is, is a

2:42

dangerous air pollutant, then EPA

2:44

must regulate that air pollutant.

2:47

So in 2005, the

2:49

state of Massachusetts sues

2:52

EPA and says, hey, EPA, it

2:54

sure looks like carbon dioxide is

2:56

a dangerous air pollutant that is

2:58

harming us. Seems like you ought

3:00

to regulate it under

3:02

the Clean Air Act. That case

3:04

was fought all the way up

3:07

to the Supreme Court, which issued

3:09

a fateful ruling, Mass versus EPA,

3:11

which said, yes, carbon

3:14

dioxide can qualify as a pollutant

3:16

under the Clean Air Act if

3:18

the EPA determines that it is

3:20

a danger. The George

3:22

W. Bush administration famously

3:25

did nothing with this information.

3:27

There's an episode where EPA

3:30

emailed the White House and the White House quite

3:33

literally refused to open

3:35

the email for years.

3:37

So the George W. Bush

3:40

administration ran out the clock without doing

3:42

anything about this. In comes Obama. Obama

3:44

spends first term doing health care, trying

3:46

and trying to get climate through the

3:48

legislative process, which, as

3:50

we all remember, was a spectacular

3:52

failure. So late in his second

3:55

term, fatefully late, the

3:57

EPA set about crafting some of these rules.

4:00

So they faced a difficulty, they

4:02

faced a dilemma, which is for

4:04

a big coal plant, say, you

4:06

can reduce emissions a little bit

4:09

with, say, efficiency improvements or

4:11

sort of heat rate, you

4:14

know, tweaks. There are tweaks you can

4:16

do to a coal plant to marginally reduce

4:19

emissions. But if you

4:21

want to reduce emissions substantially to

4:23

levels that are safe, say, for

4:26

humans, there are not a lot of options.

4:29

Reduce carbon capture and sequestration, which

4:32

back in 2014 or whatever, 10

4:34

years ago, was

4:37

nowhere and not really plausible to

4:39

force on people. Or

4:42

you could switch coal to natural gas, even

4:44

that doesn't get you a ton. So you

4:46

either are approaching on an individual coal

4:49

plant level, you're either using a BB

4:51

gun or a bazooka. And

4:54

that was a difficult dilemma. Also the way

4:56

the Obama administration got around this dilemma is

4:59

they said, states, consider

5:02

your power plant fleet as

5:04

a unit. And we are going

5:06

to ask you to bring down the average

5:08

emissions rate of that fleet.

5:11

And you can do that in any number

5:13

of ways. You can add renewable energy, you

5:16

can retire coal plants, you can do fuel

5:18

switching, you can do efficiency, blah, blah, blah.

5:21

This is for states the

5:23

maximum flexibility that EPA possibly could have

5:26

offered. It said you can treat your

5:28

whole fleet as a unit and you

5:30

can even trade emissions across states.

5:33

It could not have possibly been more

5:35

flexible, which you would

5:37

think a conservative

5:40

would greet with gratitude.

5:44

That did not happen. Instead, there were lawsuits.

5:46

So this was the Clean Power Plan. This

5:48

was the Obama administration's Clean Power Plan. There

5:50

are three amusing things to

5:52

know about the Clean Power Plan.

5:55

First, it was never implemented. When

5:58

the case reached the Supreme Court, they... put a

6:00

stay on the rule. They basically

6:03

suspended the rule going into effect

6:05

until they considered the case. Very

6:07

unusual and unprecedented thing to do.

6:10

One of the last things Scalia

6:12

did before he croaked.

6:15

So it never, this plan never went

6:18

into effect and that stay ran out

6:20

the Obama administration and then Trump became

6:22

president. And then so the second crazy

6:24

thing about the clean power plan is

6:27

that the Supreme Court heard

6:29

the case against it even

6:31

though it had not gone into

6:33

effect and would never go into

6:36

effect because Trump became president

6:38

and promised not to put

6:40

it into effect. So the

6:42

Supreme Court took the bizarre

6:44

step of considering a rule

6:47

that had not and would not be implemented

6:50

and then found that

6:52

it's unconstitutional. Why? Well,

6:54

the rationale was Clean

6:56

Air Act gives you authority to regulate

6:58

individual power plants and here you are

7:01

trying to regulate power fleets. Regulating

7:04

whole power fleets is major.

7:06

It's a major thing to

7:09

do. It's big and the

7:11

idea was with this newly

7:14

dreamed up major questions

7:16

doctrine is if Congress wanted you

7:19

to do something major, it

7:21

would have said so in

7:23

the law explicitly. Now

7:25

this left legal scholars with

7:28

lots of questions like for

7:30

instance every rule is

7:32

underwritten in some way or

7:34

another and requires agency discernment

7:37

judgment on some level and

7:39

how to enforce it. What

7:41

level of judgment, what level

7:43

of interpretation is major?

7:46

John Roberts, could you give us say a

7:49

metric, some objective description,

7:51

something? No, there

7:53

is no such thing. What is major

7:55

is what strikes John

7:58

Roberts as major. So,

8:00

that's the second crazy thing about the Clean

8:03

Power Act. And the third crazy thing to

8:05

know about the Clean Power Act is that

8:07

its targets were met despite

8:10

the fact that it did not

8:13

pass. Meaning the

8:15

power sector was headed in

8:17

that direction anyway. Meaning

8:19

passing the law would have had

8:21

almost no effect. It would

8:24

have just had the power sector doing

8:26

what it was going to do anyway,

8:28

which you might think is

8:30

by definition not major.

8:33

But nonetheless, that's where we are. So

8:35

in comes the, I'm almost done guys.

8:39

In comes the Obama administration, or by

8:41

the administration, they said, all right,

8:43

we can't regulate power fleets. We've got

8:46

to return inside the fence line, as

8:48

they say. We got to come

8:50

up with a rule that applies to

8:52

individual power plants. And

8:56

we need a rule that applies to

8:58

individual power plants that

9:00

isn't major. That

9:03

is, I don't know, minor

9:05

or normal. Again,

9:08

writing this rule in a complete fog

9:10

of information about what might count as

9:12

major or not. But they are

9:15

attempting to be as strictly

9:17

within the guidelines of the Clean Air

9:19

Act as possible. That my

9:22

now bored audience and my now bored

9:24

guests is the history of EPA

9:27

attempts to regulate carbon

9:29

dioxide as a pollutant. So

9:32

with all that history under our

9:34

belt here, one

9:36

question I wanted to ask by way of

9:38

kind of preface before we get into the

9:40

specifics of what the Biden administration has come

9:42

up with, and Grace, maybe you can tackle

9:44

this. I wanted to just

9:46

briefly ask what effect

9:49

on this rules formation

9:51

and development has

9:53

been played by the passage of

9:55

IRA, the passage of the Inflation

9:57

Reduction Act, because I Think.

10:00

Part of the thinking of the people

10:02

who wrote in past Ira was. They.

10:04

Had these rules. In

10:06

the back of their mind. So maybe

10:08

Greece you can explain that connection.

10:11

Is. Still are so under that

10:13

and say send us an

10:15

act Of course there were

10:17

numerous incentives for in place

10:19

for clean energy, for carbon

10:21

capture and sequestration. For all

10:23

of these. Things that are

10:25

really hoping to drive further:

10:27

A carbon reductions in the

10:29

electric power sector. And.

10:32

They. Are continuing and accentuating

10:34

those trends that you mentioned earlier

10:37

that led to us. Meeting those

10:39

Clean Power Plan targets Eleven years.

10:41

Ahead of him which is that

10:44

were noble energy is increasingly cost

10:46

effect is it certainly out of

10:48

his whole in many cases outcompete

10:51

gas it's leading toward. Carbon capture.

10:53

And. Sequestration being very cost effective. In

10:55

fact, if he is, analysis in

10:57

the final roles shows that coal

10:59

plants that make money by installing

11:01

Ccs easier than Forty Five Q

11:03

expanded carbon capture and sequestration credits.

11:05

And so all of these things

11:07

really underpin where the market is

11:10

going in there, for where the

11:12

electric sector is going an Iep.

11:14

Yea and Jonas can talk about

11:16

this. that under the Clean Air

11:18

Act which is the statue of

11:20

under which Bta is setting these

11:22

regulations, Eighty Eight does

11:24

have to consider things like whether

11:26

or not technologies are adequately demonstrated,

11:28

whether or not that costs are

11:31

reasonable. And so when thinking about

11:33

Ccs in particular, the Ira had

11:35

a huge impact. It really is

11:37

helping to. I think he probably

11:39

could have made the case anyway,

11:41

but it's made it so incredibly

11:43

clear that Ccs is cost effective

11:46

and can be applied in the

11:48

way that Eat A is proposing

11:50

that some plants might do. I

11:52

think it's also. and we can

11:54

talk about this a little that but

11:56

it also means that the specific impacts

11:59

us these rules are

12:01

not enormous, right? Compared

12:03

to the baseline, which does now

12:05

include the IRA, there's

12:08

not an enormous incremental impact,

12:10

but that's because of these changes

12:12

happening anyway. And so you could view these 111, these

12:14

new power plant rules

12:17

as helping to ensure that we take full

12:19

advantage of the IRA and that we really

12:21

maximize those benefits and that the, you know,

12:23

the incentives that are offered there are really

12:25

taken full advantage of. And that's, of

12:27

course, setting aside all of the R D and D

12:30

and all the other good stuff that's happening through the

12:32

IRA that is going to push us even further. Right,

12:34

right. So there's just an immense

12:36

amount of funding of carbon capture and sequestration,

12:38

I think, in anticipation of the very legal

12:40

fights that are going to break out over

12:42

this rule, which we can get into later.

12:45

But one other factoid, which I wasn't

12:47

even aware of until months after the

12:50

IRA passed, which is that buried in

12:52

IRA, Congress said, yes,

12:55

CO2 is a pollutant under the

12:57

Clean Air Act, right? Because there

13:00

was this nagging concern in the

13:02

background that this newly conservative Supreme

13:04

Court would undo mass versus EPA

13:07

would reverse that decision. So all

13:09

that ambiguity was removed. So at the

13:12

very least, any EPA, even

13:14

Trump's is going to be under

13:16

legal obligation to do something that

13:18

qualifies as regulating CO2.

13:21

So all that preface

13:23

aside, let's talk just briefly about exactly

13:25

what the rule says,

13:28

what kinds of plants it divides power

13:30

plants up into a couple of categories,

13:33

and specifically is regulating a particular kind of

13:35

category. So maybe, Grace, you can just run

13:37

through just sort of what

13:39

the letter of the law is here. Yeah,

13:41

so EPA has set carbon

13:44

emission standards for new gas

13:46

fired power plants and existing

13:48

coal fired power plants. New

13:50

coal fired power plants are already

13:52

subject to a 111 standard. And

13:55

for a variety of reasons that we can

13:57

get into, EPA has postponed existing gas fired

13:59

power plants. Yeah, when a guy later. Has

14:01

cells in the Israel's finalized last week.

14:04

we've got new gas fired power plants

14:06

and insisting coal fired power plants for

14:08

new gas plants. He be a

14:11

recognized that these plans run at different

14:13

capacities, actors and play different roles and

14:15

our electric sector. So maybe as just

14:17

a brief aside, a capacity factor right

14:19

is the ratio of how much electricity

14:22

a power plant produces compared to how

14:24

much it could produce if it ran

14:26

just all out for every hour of

14:28

the yourself you know as if you

14:30

present classy factor means that a plant

14:32

rata half output for the whole year

14:35

or full output for half the year

14:37

or like some combination there and so.

14:39

He p A said look, if you're

14:42

running at lower capacities actors, your operations

14:44

are different types of technologies used to

14:46

do that are different and so it

14:48

makes sense to set the standards separately

14:51

for this different sub categories. So they

14:53

divide is natural gas plants into three

14:55

categories: low load or peter plants that

14:57

run up to capacities actors a twenty

15:00

percent that intermediate which is between twenty

15:02

percent in forty percent capacity factor and

15:04

and be slowed plants which operate at

15:07

capacity factors as of more than forty

15:09

percent and. For pizza an intermediate

15:11

plants the standard essentially is less

15:13

businesses to operations based on the

15:15

fuels use them. Deficiencies that appear

15:17

determined are currently being achieved by

15:19

in other types of plants will

15:21

fall into the sub categories. For

15:23

Baseload plants he be a set

15:25

a standard that in the new

15:27

term based on kind of assistance

15:29

and race and but starting and

15:31

twenty thirty two the standard is

15:33

based on capture and ninety percent

15:36

of the plants carbon emissions with

15:38

Ccs So that's a you know.

15:40

An eight year lead time between now

15:42

and twenty thirty two that new glass

15:44

plants have to kind of atheists. If

15:46

they're going to go that route, determine how

15:48

they'll meet. That emissions limits.

15:51

A couple questions. so if I build a

15:54

new just plant before twenty thirty two. Doj.

15:56

Skippy Standards or does or does I just

15:58

mean if I building. Square before to

16:00

thirty. Do I have to have Ccs on

16:03

it by Twenty thirty? Two. Yeah, so

16:05

that difference between what classified as new

16:07

and existing under the Clean Air act

16:09

is cute to actually win. The rules

16:11

were proposed which was. May have Twenty

16:13

Twenty Three. So any gas tax bills

16:15

after may have Twenty Twenty Three is

16:17

a new gas plant charter. That plant

16:19

will have to meet this kind of

16:21

efficiency of a standard until Twenty Thirty

16:23

Two and then if it's going to

16:25

continue to operate in in the base

16:27

load capacity factor A will have to.

16:29

Meet says lower emissions standards As

16:31

a traitor. And. So

16:34

are coal plant. Has

16:36

to buy twenty thirty to.

16:39

Be. Capturing ninety percent of emissions isn't the

16:41

Arab and out for that like it's a

16:43

coal plant closing before. Some days, it doesn't

16:45

have to do this. Yeah, So that

16:47

was hurt. What? we just walk the

16:50

earth for gas plants And now for

16:52

coal plants. You're right. the sub categories.

16:54

Again, he p a split the fleet

16:56

in two different sub categories, this time

16:59

not be such as the actor but

17:01

instead based on operating horizon like you

17:03

to send. So plants that have a

17:06

retirement date planned between twenty thirty two

17:08

and twenty thirty nine doses are subject

17:10

to a less stringent standards after me,

17:12

a standard that's commensurate with coal firing

17:15

of forty percent natural gas. So. That's

17:17

around us sixteen percent decrease in emissions.

17:19

so they have to start hitting that

17:21

standard by twenty thirty and then they

17:24

have to commit to retiring. Between basically

17:26

before Twenty Thirty Nine, there's a plant

17:28

plans I'm retiring after Twenty Thirty Nine

17:30

or has no plans for at higher

17:32

than you're exactly right. Then again, the

17:35

standard is based on and ninety percent

17:37

capture of carbon emissions and and any

17:39

plant that for time before Twenty Thirty

17:41

Two is just not. At all subject to

17:43

these roles, this is exempt from them. He

17:46

interesting. So this is mostly going

17:48

after plants that are being built

17:51

to run a lot. Basically like

17:53

the workhorses, the be slowed plants

17:55

is mostly the the target of

17:57

this rule. Yeah, that's exactly right. A

18:00

couple of things changed since the initial

18:02

proposal of the rule, which was I

18:05

don't know how many months ago a

18:07

year ago, it's all a blur are.

18:09

Almost exactly what's changed. So.

18:12

Unfair gas side am. One of

18:14

the big differences was Can is

18:16

expanding what would be covered under

18:18

that baseless that category that sub

18:20

category that subject to this stricter

18:22

emissions standards than been census Yes!

18:24

So originally in the proposal it

18:26

with plants running at sixty percent

18:29

or a bus capacity factor is

18:31

now it's forty percent or above

18:33

so more plants are going to

18:35

be potentially facing that standard or

18:37

having to make decisions about whether

18:39

or not they want to keep

18:41

operating at. Those they slowed levels. Are

18:44

seen. People make a kind of a

18:46

semi big deal out of this that

18:48

the sort of standard for what counts

18:50

as be slowed as dropped from fifty

18:53

percent capacity for to forty percent capacity

18:55

factor and I just have no conception

18:57

whatsoever. How. Many extra plants

18:59

that symbols are. There are a lot

19:01

of natural gas plants sort of operating

19:03

in that space between forty and fifty

19:05

percent. Yeah, so there's a

19:07

little bit of a difference here

19:09

when thinking about the new gas

19:11

fleet and the to Think athlete,

19:13

but in general part of this

19:15

is also really cute to wear

19:17

and the fleet is going over

19:20

time and Ek looks really closely

19:22

at that sells as we're in

19:24

this environment. With again, more renewables

19:26

coming on being very cost effective,

19:28

gas plants are in general moving

19:30

more towards this renewable integration. Operating

19:32

profile, you know it's not. We're

19:34

not in a scenario where we

19:36

need a ton of he slowed

19:38

generation in the same way and

19:40

so when we look at our

19:42

modeling by, you know the mid

19:44

thirties the average capacity factor for

19:46

a natural gas combined cycle plat

19:48

was in the thirties. You know

19:50

that thirty seven percent or something.

19:52

if i'm remembering that correctly interests and

19:54

i'm for peters for just simple cycle

19:57

com bust into rent it was way

19:59

lower than that and sell part of

20:01

this is just reflecting with what base

20:03

load means going forward. There's

20:05

a calculation about what

20:07

sort of plants it is

20:10

reasonable and cost effective to assume could

20:12

install CCS and could make

20:14

back their money or kind of

20:17

operate at a reasonable cost. So that had to do

20:19

with it. And EPA's calculations show

20:21

that even running at a 40% capacity

20:24

factor, it's still

20:26

very cost reasonable to install CCS. Part

20:29

of me is just wondering how

20:31

many of these base load

20:33

gas plants that would be

20:35

subject to this, do utilities really want to

20:37

build? That's sort of part of what I

20:39

was wondering about. As you note, we're

20:41

sort of moving to a world

20:43

where most gas plants are kind of serving

20:46

as peekers or quasi-peakers, sort of filling in

20:49

the gaps for renewables. And I just wonder,

20:52

are there a lot of these base

20:54

load-ish gas plants being proposed? Do utilities

20:57

want a lot of these or do we expect

20:59

this to apply to a relatively small handful of

21:02

plants? I think the answer to those questions

21:04

might actually be slightly different. So are utilities

21:06

proposing them and are they actually going

21:08

to be run this way? I think there may be two

21:10

different questions. I think, yes, utilities

21:13

are proposing a lot of new

21:15

gas right now. And I think

21:17

one of the really important roles

21:19

that this role can

21:22

play is to make

21:24

them think about that choice. And

21:27

I know you've talked about with previous guests

21:29

and many listeners will know, I mean, the

21:32

reliance on gas as new

21:35

capacity is somewhat just based

21:37

on what utilities have already

21:39

done and what utilities are comfortable with. And

21:42

there are a lot of other

21:45

options that once you take carbon into

21:47

account and once you are thinking about

21:49

carbon when you're doing your least-cost

21:52

decision making at a regulator or at a utility, I

21:55

think that could look really different. And so that, I

21:57

think, is going to be one of the big impacts

21:59

of these roles. In terms

22:01

of whether or not utilities will then how they'll

22:03

run these plants, I think that remains to be

22:05

seen. I mean the modeling shows that most

22:08

new natural gas plants that are

22:10

added after these standards go into

22:13

effect choose to operate at the

22:15

lower capacity factors rather than installing

22:18

CCS. And that's

22:21

you know that's a model but

22:23

that is what we're seeing in those projections.

22:26

One question that's come up a couple times

22:28

is what's to stop a utility who doesn't

22:30

want to install CCS on a new gas

22:32

plant to just build two

22:35

gas plants and run them

22:37

both at low capacity factors rather

22:40

than building one and running it at a high

22:42

capacity factor? Yeah well cost

22:44

really. You know they'll have to

22:46

take that to you know

22:49

either their boards if they're a public utility

22:51

or their regulator if they're an

22:53

investor on utility and justify that decision.

22:55

And of basically running an asset that

22:58

you're saying you're going to

23:00

intentionally not use as much as

23:02

you otherwise could. And that you are

23:05

you know thumbing your nose at

23:07

incredibly rich 45Q credits. I mean

23:09

you know among other things. So

23:11

I think in

23:13

this era of very cheap and still

23:15

highly subsidized renewables and energy efficiency and

23:18

all sorts of other alternatives I would

23:20

hope that regulators would kind of look

23:22

at that and say are you really

23:24

making the best choice for

23:26

your your customers here? Okay

23:28

another change since the original rule

23:31

proposal is that hydrogen has fallen

23:33

out as a best source

23:35

of emission reduction

23:40

or whatever the heck the term is. Maybe

23:43

Grace you can address technically

23:46

why that's the case and maybe Jonas if you

23:48

want to pipe in I'm sort of curious what

23:50

the legal significance is

23:54

of hydrogen being

23:56

removed. So yeah originally EPA

23:58

in a Standard for

24:01

actually both new and existing gas be

24:03

slowed plants. had said lucky you have

24:05

two different pathways you could follow hear

24:07

you could reach this emissions limits. It's

24:10

based on Ccs by a certain timeline

24:12

or followed a separate pathway on a

24:14

study. different timeline but getting to the

24:17

same emissions limits eventually by doing the

24:19

hydrogen co firing and in the final

24:21

rule as he meant and they kind

24:23

of took out that duel pathway. Now

24:26

they did have the single emissions limits

24:28

that hits and twenty thirty. Two, when

24:30

u p I was describing why

24:33

did this, it essentially said look,

24:35

we're just not super confident about.

24:37

How the market will develop

24:39

for producing. Low Thc hydrogen.

24:42

So they actually said multiple phones that

24:44

they still believe that hydrogen co firing

24:46

is technically feasible based on, you know,

24:48

combustion turban technology. it's just more on

24:50

the supply side. They're not sure about

24:53

quantities and cost on that and so

24:55

they didn't feel like they could finalize

24:57

as. Registered was just kind

24:59

of ironic words about to

25:02

plow forty two trillion dollars

25:04

subsidizing the production of green

25:06

hydrogen. A we still can't

25:08

say com for a that

25:10

it's gonna be affordable. Yeah,

25:12

I know if you did say you

25:14

know look we this Odysseus losing really

25:16

quickly and we believe that these considerations

25:18

may change and so we're going to

25:20

keep an eye on it and we'll

25:22

reevaluate our findings and establish different standard.

25:24

This. We. Need to enter. The

25:27

one thing I know is that hydrogen

25:29

still remains a perfectly acceptable compliance pathway,

25:31

right? So the way that the second

25:33

one eleven worth is that he p

25:35

I have to use what you said

25:38

that the best system of emission reduction

25:40

to identify what the standard as. Which

25:43

is essentially one hundred pounds per megawatt

25:45

hour under this war and then power

25:47

plants can choose to meet that center

25:49

however they lot so they can install

25:51

Ccs or they could call fire hydrogen.

25:54

Road. This is so important to emphasize: I

25:56

wanted really comfortable in this order, because if

25:58

there's one thing that. The popular

26:01

press and whining industry

26:03

people. Get. Wrong about this

26:05

all the time or lie about is

26:07

that if he is forcing them to

26:09

do these things would he be a

26:11

does is use Ccs to determine the

26:13

level but then it says meet that

26:15

level however you want self other than

26:17

Ccs What other compliance. Roots.

26:20

Are there is hydrogen? The only

26:22

alternative? Are there others that you

26:24

think utilities might use? There's

26:26

also that and of Net Power Allen

26:28

Cycle apps, and I suppose I. Say

26:31

rhinos, forget about that. He.

26:33

Had that Ccs and hydrogen? or the. Main

26:36

ones for your typical new natural

26:38

gas. Them. And

26:41

embark on gets here modeling later and

26:43

isn't what it says about those, but

26:45

I'm. You. Know right now

26:47

as a previous by get into their

26:49

a lot of utilities especially in the

26:51

south east lining up to build new

26:53

gas based on these projections of. Rising.

26:56

Energy Demand specifically. How do you

26:58

think this rule is going to

27:00

affect that fight? Are those plants

27:03

that those utilities are proposing plants

27:05

that are going to be subject

27:07

to this? And do you think

27:09

this will dissuade them from that.

27:12

For. The plants are deathly subject to the rule now

27:14

and I think it were and where we're going

27:16

to see a big impact that may not be

27:18

reflected in the modeling. that race or talk about

27:20

later is. No public utilities

27:22

commissions are gonna take a different view

27:24

of utility proposals at this point. The

27:27

in of with some some of that

27:29

projections about a I and data centers

27:31

are new this year that that idea

27:34

that we're going to be plenty more

27:36

into the ball and electricity demand is

27:38

gonna go up as you don't he

27:40

said. been planning for that for quite

27:43

some time. As you've already noted, these

27:45

rules don't require them to install Ccs

27:47

if they're building a new natural gas

27:50

fired power plants and running. Above forty

27:52

percent capacity factor, but they can, that's certainly

27:54

an option that's available to them and the

27:56

tax credits make. Cost. Effective So

27:58

their number of options that you. What are you

28:00

may not like? Utilities haven't been planning on

28:03

the toadies won't do unless you know there's

28:05

a regulation as forcing them to make a

28:07

choice they might not have other was done

28:09

but I think it's. Completely. False

28:12

to suggest that they can't meet electricity demand

28:14

because he's rules are now in place. Now.

28:16

Whoa! Look into modeling in a second

28:19

that says more about that. But the

28:21

other question was do of address about

28:23

the changed between the proposal In this

28:26

is is it by the most notable

28:28

change is in the original proposal. There

28:30

were some separate regulations for existing gas

28:32

plants and existing gas plants are sort

28:35

of just have to state the obvious

28:37

kind of. The big

28:39

problem like icy cold kind of

28:41

going away pulls on it's way

28:44

out. And existing gas

28:46

is I think gonna be the subject

28:48

of the biggest fights. So it's significant

28:50

that they took those out So many

28:53

Gracie to tell us what those previous.

28:56

Rules said and and why why they

28:58

were dropped in what you're sort of

29:00

take on kind of The valence of

29:03

that is is that is that we

29:05

view that as like a retreat out

29:07

of caution or possibly stronger rule. Better

29:09

rules coming or what's the what's the

29:12

tea leaves on why that happened. Yeah

29:14

so in the for father he play

29:17

had included standards that are in essence

29:19

that I that would have applied to

29:21

a subset of the to think athletes

29:24

Cel. Not the whole thing. Not.

29:26

The whole thing so only those those

29:28

units that were three hundred megawatts or

29:30

larger which is a fairly and besides

29:32

units and running as city percent or

29:35

higher. so again kind of focusing on

29:37

the large. A thirty minutes and ultimately

29:39

was a fairly. Small portion of the sleep.

29:42

So. under the proposal those units would

29:44

have been subject to as ccs a

29:46

standard similar to have they said new

29:49

gaseous and like he said as few

29:51

months ago now the start of march

29:53

eap yeah announced that it would not

29:56

be finalizing standards and and it's data

29:58

committed his and forward this

30:00

spring and summer on a more comprehensive

30:02

approach that could cover a larger portion

30:04

of the fleet or even the entire

30:06

fleet. And it's also

30:08

looking to coordinate this GHG

30:11

regulatory approach through section

30:13

111 with standards through

30:15

other aspects of the Clean Air Act

30:18

to provide additional protections on other pollutants,

30:20

you know, which is particularly important for

30:22

frontline communities. And so they're

30:24

looking at this hopefully, you

30:27

know, more holistic approach both in

30:29

terms of, units that are covered and

30:31

pollutants that are covered. And do

30:33

we have any indication whatsoever

30:36

what that might look like or is this is this just a

30:38

total black box at this point? You think

30:40

they just have not gotten started or? So

30:43

they've kicked off a process

30:45

to dig into this. I

30:48

assume that SaaS has been very focused on finalizing

30:50

the rules that were released last week, but they

30:53

have initiated a what's called

30:55

a non-regulatory docket, basically an

30:58

open call for input

31:00

and released a series of

31:02

framing questions around that to ask folks

31:04

about, you know, different approaches

31:06

that they thought could be useful both

31:08

on this greenhouse gas side and on

31:10

other pollutants. They're holding the

31:12

only announced, but I'm sure the first of many

31:15

stakeholder meetings at the end of this month to

31:18

start having discussions around that. And

31:20

so with the feedback that they're getting in writing

31:22

at the end of the month and the

31:25

meeting, which I guess is next

31:28

week already or in two weeks,

31:30

then they'll be able to move

31:32

forward at looking at a more

31:34

comprehensive approach. And in that document,

31:36

those framing questions, they did

31:38

tee up a number of possible

31:41

technological BSCRs, possible

31:44

things that could be used to

31:46

determine an emissions reduction. So CCS

31:48

absolutely still on the table, energy

31:50

efficiency, and then a

31:52

suite of kind of on-site solutions

31:55

integrating things like fuel cells or

31:57

renewables or battery storage. with

32:00

the operations of the natural

32:02

gas plant. We are still limited

32:05

by that legal framework. You mentioned at the

32:07

top of the call, right? Yeah,

32:09

yeah, yeah. Inside the

32:11

fence line. Exactly. Is staying inside the fence line

32:13

on that, but hoping to take a broader approach. That

32:16

will be so interesting to follow. And

32:18

I guess it's worth saying, although I guess this

32:21

is obvious to everybody, but it's worth stating explicitly,

32:23

there is no way in hell that's getting done

32:25

before the end of Biden's terms. So those

32:28

rules happening at all

32:31

entirely depend on Biden getting

32:33

reelected. So one

32:35

other thing, which I forgot to ask

32:37

about the coal plants. Besides CCS and

32:40

hydrogen, isn't co-firing with

32:42

natural gas also an option

32:45

for coal plants? And are any of

32:47

them going to take that? Or

32:49

am I making that up? Yeah, so that's

32:52

an option for these kind

32:54

of mid-term operating plants. For

32:57

the plants that are retiring before 2039,

32:59

but after 2032. So

33:03

if you're planning to operate through the 30s, but

33:06

commit to a retirement date before 2039, then

33:09

you're subject to this standard

33:12

that is a 40% natural gas co-firing

33:14

standard, which is

33:16

a fairly easy retrofit. And

33:18

so EPA felt like that was

33:21

justifiable even for those units who

33:23

might not be operating very long.

33:26

So you couldn't use co-firing

33:29

to meet the CCS-based standard. There's

33:31

just you'd have to fully repower

33:33

to be a gas-fired unit in order to meet that

33:35

standard. Yeah. Is

33:38

that a thing? Has

33:40

that happened to any coal plant? Would it be

33:42

worth it even doing that to a coal plant,

33:44

just switching it entirely to natural gas? Or would

33:46

that be you might as well just build a

33:48

new plant? It is something that happens,

33:50

coal to gas conversion. You still

33:52

have a steam boiler. So it's

33:55

a lot less efficient than a combustion

33:57

turbine. And so the economics.

34:00

of it don't always

34:02

pan out, but that is something that we've seen

34:04

a lot of in the last couple decades and

34:06

will certainly happen going forward. Interesting,

34:08

interesting, interesting. If between

34:11

now and 2032 you have a

34:14

bunch of power plants scrambling to

34:16

capture all their emissions, what

34:19

are they going to do with all that

34:21

CO2 and does this rule have anything to

34:23

say about that at all? Like, is there

34:25

anything in here about CO2 pipelines or burial

34:27

or anything or is all that just like

34:30

you figure it out, utilities figure

34:32

that out? Yeah, so

34:34

EPA does include in its

34:37

determination that carbon capture

34:39

and sequestration can be

34:41

set as the basis for the standard. It

34:44

does include both transportation and

34:46

sequestration in that. So it

34:48

looks at the capturing part,

34:51

the transferring part and the

34:53

storage part all independently and

34:55

notes that each one of those at

34:58

each step, the technology is adequately demonstrated

35:00

and is cost reasonable. And

35:02

EPA does point also to development in

35:04

pipeline networks as something, as you note,

35:07

that will be really important to making all of this happen. It's

35:10

also worth noting that part of the

35:12

way that these standards for existing coal

35:14

plants work is that EPA

35:16

sets the standard and then it

35:18

basically gives that standard to the states

35:21

and says, you come up with a plan. Right,

35:23

right. These are all state administered. So you come up

35:25

with a plan for how each of the units or

35:28

plants in your state who will be

35:31

subject to the standard, how each of them are

35:33

going to meet that standard. And

35:35

so it's possible through that

35:37

that states could look at specific

35:39

plans and say, you know what,

35:42

this plant is just very,

35:44

very different than the

35:46

average and the set of data that

35:49

EPA used to set this standard. We're

35:51

very outside the norm here. So one

35:53

example they gave is you're on a

35:56

remote island, right? And so it's not

35:58

really feasible. to build a CO2 pipeline

36:00

from that island or something like that.

36:02

And so if, you know, states

36:05

have a pretty strong burden of proof there, but

36:07

if states can demonstrate that, look, they're very,

36:09

very far from sequestration or something

36:12

like that, that those standards

36:14

shouldn't apply. So there's some flexibility,

36:16

a little bit of flexibility for states here. Yeah.

36:19

And there is actually a mechanism that EPA built in in

36:21

this final rule that states

36:24

can issue a one-year kind

36:26

of extension of compliance for coal

36:28

plants if they're having kind

36:31

of demonstrated trouble permitting CCS

36:34

or that sort of thing. They've got to prove it

36:36

essentially, but that is an added flexibility

36:38

that was put into this final rule. You

36:41

know, it's important to appreciate that these rules

36:43

are dealing with the power plants themselves. The

36:46

rule that the EPA issued last week

36:48

is not about sequestration. There

36:50

will be other rules and regulations that

36:53

deal with that part of it. The

36:55

tax credits, in order for this to, you

36:57

know, have a financial incentive here, the tax

37:00

credits do require the sequestration part.

37:02

So the utilities will have an incentive to get

37:04

it right, but EPA is not

37:06

using this section of the Clean Air Act

37:08

and this set of rules to govern the

37:10

sequestration side, which also gets to the question

37:12

you were asking earlier from the legal side

37:14

about hydrogen. I think the

37:16

EPA in the end

37:19

didn't, I think this is smart, they

37:21

didn't end up saying anything in this

37:23

rule about hydrogen and how it's produced.

37:26

And that's why Grace was talking about some

37:29

of the market dynamics. Will there be enough

37:31

supply? That's critical. But in

37:33

terms of a 111 standard for the

37:35

category of sources of existing coal plants

37:37

or new gas plants, EPA

37:39

is not using this rule to govern

37:41

other aspects of the energy system. Right,

37:44

right, right. OK, I have a bunch of other legal

37:46

questions, Jonah, but I have one final one for Grace,

37:48

which is just predictably,

37:50

you know, as predictably as

37:52

anything in the world is

37:55

predictable, energy companies are responding to

37:57

this rule proposal by... just

38:01

retiring to their fainting couches and

38:03

saying how on earth could we

38:05

ever we could never do this

38:08

this is gonna crush

38:10

the reliability of the power

38:12

system this technology is

38:14

not ready yet we're doomed

38:16

etc etc which I'll

38:19

just say I'm gonna try to not get on

38:21

this rant because I've already wasted too much time

38:23

here with rants but I'll just say they

38:25

say this literally every

38:28

time an air rule is proposed

38:30

going all the way back five

38:33

six decades now they

38:35

see the same thing every time

38:38

and they are wrong every

38:40

time every time the rule passes

38:42

and they meet the requirements fine

38:45

and the economy is fine and

38:47

the sectors fine and power reliability

38:49

is fine but for some reason

38:51

this six decade record

38:54

of 100% failure prediction

38:59

doesn't ever seem to inform the latest

39:02

debate for some reason we just have

39:04

to have it all over again so

39:06

here we are having it all over

39:09

again grace they say this is gonna

39:11

ruin reliability you've done some modeling of

39:13

compliance of this rule what

39:15

is the modeling show right well I

39:17

mean I sympathize

39:20

with the argument to a very small

39:22

extent which is that it's important to

39:24

get this right you know we all

39:26

do rely on this system but I

39:29

completely agree with you that these

39:32

arguments are overblown and not in

39:34

good faith I mean as

39:37

we've talked about already the energy system

39:39

is changing I mean as anyone tracking

39:41

the electric sector knows and

39:44

as EPA's own modeling bears out you

39:46

know there are significant changes projected for

39:48

the coming decade due to things completely

39:50

independent of these rules right

39:52

economic factors IRA incentive state policies

39:54

customer preferences you name it and

39:57

so these are issues that have to be

39:59

addressed by utilities by grid operators by some

40:01

of the ones who are making a lot of

40:03

noise here. If you

40:05

aren't expecting load growth, you haven't been paying attention. It's

40:08

just that some of these things are

40:11

happening. So there are changes. I think

40:13

it also creates some incredible opportunities, but

40:15

these changes have to be managed no

40:18

matter what EPA does or doesn't do.

40:20

Well, what they're saying is that the

40:22

rise of data centers and the rise

40:24

of electricity demand and all this new

40:26

demand is precisely why they can't do

40:28

this right now. We'd

40:30

love to clean up, but we

40:32

can't do it in this time of rising demand.

40:35

We'll never be able to keep up. That's their

40:37

whole excuse. Yeah.

40:39

And I mean, so EPA did do

40:41

some modeling of higher demand scenarios. So

40:43

I think there's

40:45

some aspect to which the claims that demand

40:48

is going to be rising are absolutely correct.

40:50

I don't think it's because of AI and

40:52

data centers. There's been

40:54

some good research that's come out

40:56

recently that shows just how

40:59

computational data

41:01

needs or energy needs are

41:04

highly unlikely to reach the what, 5%

41:06

or 10% annual growth rates

41:09

that utilities are

41:11

claiming. But at the same time, EPA

41:14

just finalized some vehicle rules that have

41:16

some strong electrification components. We want to

41:19

electrify some parts of industry and buildings.

41:21

So I think it's

41:23

right to assume that we're not going to

41:25

be in this flat demand world anywhere. But

41:28

that said, this is exactly what utilities do and

41:30

they can handle it. So EPA

41:32

looked at a couple different

41:34

scenarios in their modeling that

41:36

actually integrated the vehicle rules.

41:39

They also looked at an even higher demand scenario.

41:41

So these scenarios got to about 2% year

41:45

over year annual growth, which is

41:47

pretty in line with electrification scenarios

41:49

that third parties have put out

41:51

as reasonable. And in

41:53

those cases, we see that the

41:56

standards under the rules can still be met

41:58

by and have enough capacity

42:00

online and at very limited

42:03

cost. So that's just kind of

42:05

one way of looking at this for the EPA modeling,

42:07

but it definitely tells an

42:09

encouraging story. So we

42:12

anticipate a lot of CCS going

42:14

in, as a result of this rule. Because

42:16

some people, I think, have it in the back of

42:18

their heads that CCS is

42:21

too expensive and will never work. And everyone's

42:23

kind of playing a game of chicken here,

42:27

not to admit it. But

42:30

you think the models show lots

42:33

of CCS being installed, basically? I

42:36

wouldn't say lots. It shows some.

42:39

It doesn't show much for natural gas plants. The

42:42

economics are a little harder there. You've

42:44

got net less CO2 per megawatt hour

42:46

that you create. And so the 45Q

42:48

credit doesn't get you quite as much.

42:51

But on the coal side, we actually

42:53

see a fair amount of

42:55

CCS being deployed in the baseline, again,

42:58

because the model sees those credits and

43:00

sees if they can actually make money,

43:03

even without the proposal.

43:05

So I think it's 10 gigawatts under the baseline

43:08

by 2035 and about 19 gigawatts

43:11

under the final rules. So it's

43:13

a doubling, but that's compared to

43:16

over 100 gigawatts of coal on

43:18

the system right now. So

43:21

it's definitely not the majority of the fleet.

43:24

Right, right. Well, it'll be so interesting.

43:27

And presumably, there are mechanisms for

43:29

EPA to enforce this, right? I mean, because

43:31

we've seen lots of CCS projects sort of

43:34

make a lot of big claims and then never reach

43:37

anywhere close to that 90% threshold. Presumably,

43:39

EPA is going to be on it, requiring

43:42

that they actually demonstrably meet

43:44

this and not just

43:46

spend a bunch of money on something that's called

43:49

CCS. Yeah, so as part

43:51

of the state process, all coal plants

43:53

will have to meet what

43:55

are called increments of progress, basically to

43:57

demonstrate on a set timeline. that

44:00

they'll agree to with the states that

44:02

they're conducting their feed study and then

44:04

they're established getting their permits and that

44:06

they're entering into contracts and that sort

44:08

of thing. So ensuring that they keep

44:10

on track and then the emissions

44:13

limit will be part of their permit going forward

44:15

to operate. So they'll have to ensure that they

44:17

actually run the CCS at that 90% capture rate.

44:20

Interesting. All right, Jonas, I

44:23

knew this would take more time than I thought.

44:25

I've left less time than I wanted for legal

44:27

stuff, but I have a couple of questions. One

44:29

to start with is one of the sort of

44:31

extraordinary things that happened around the Clean Power Plan,

44:33

and I went and I touched on this in

44:35

my PODIS history, is the Supreme

44:38

Court put a stay on it while

44:40

it was considering the case, meaning

44:43

the rules did not go into effect.

44:45

This was highly

44:47

unusual. Usually, I think

44:50

the legal regime or the legal

44:52

sort of precedent is that courts

44:54

give agencies wide

44:56

latitude and the

44:58

default assumption is that agencies know

45:01

what they're doing. And

45:03

so generally, agencies are

45:05

allowed to go ahead doing their thing

45:08

while the courts mull over the rules.

45:10

The court broke that precedent and

45:13

put a stay on the Clean Power Plan much

45:15

to everyone's sputtering outrage back

45:17

then. Do you anticipate

45:20

them doing it again? And

45:22

is there any, I mean, I don't

45:25

know, I'm asking you to predict. These

45:28

people, but what do we

45:30

know about whether they're gonna put a stay on it

45:32

or not? Well, you're asking me to predict it at

45:35

a time when it's particularly hard to predict what the

45:37

court might do. What was

45:39

particularly unprecedented in 2016 with

45:42

the Clean Power Plan is not just

45:44

that there was a stay, it was that the Supreme

45:46

Court issued the stay as opposed to the DC Circuit.

45:49

Usually, the litigation goes through the process to the

45:51

DC Circuit. If the DC Circuit believed there needed

45:54

to be a stay, that's one thing. For

45:56

it to go to the Supreme Court and the Supreme Court

45:58

to make that decision, essentially overruling the. DC circuit,

46:01

that's completely another. Did

46:03

they just briefly, did they

46:06

justify that? I

46:09

mean what was the, I don't want to

46:11

spend too much time on this, but did

46:13

they just do it or did they pretend

46:15

to have reasons? No, they just did it

46:18

and they

46:20

don't have to explain themselves as a Supreme

46:22

Court, right? They're

46:25

currently considering doing the same thing right

46:27

now with the Good

46:30

Neighbor Rule. This is dealing with a wind

46:32

and downwind transport of ozone, so ozone

46:35

emissions that go from one state to

46:37

another. Right, right. Surprisingly,

46:39

the Supreme Court heard arguments for whether a

46:42

stay is appropriate there and we're waiting

46:44

for a decision. What the Supreme

46:46

Court does on that stay

46:48

petition will probably be a pretty powerful

46:50

sign about what they would do with

46:53

this suite of rules. You

46:55

know, in normal times, I would

46:57

say they've, Walter, at least they

47:00

shouldn't. These are not normal times, so I'm not going to

47:02

predict where this is going to end up in terms of

47:04

the stay petition. Yeah, they, I mean, they

47:06

have not, I don't

47:08

know, with the Supreme Court, I

47:10

kind of think if they can do

47:12

something to stick their thumb in Biden's

47:14

eye, they are going to, but I

47:17

guess we'll see. So then we get to

47:19

the major legal question of the case. So

47:22

EPA very carefully stayed

47:24

inside the fence line this time. So

47:27

insofar as going outside the fence line

47:30

is a major, they're not major

47:32

this time, but the

47:36

beauty of the major questions doctrine

47:38

is that it has no friggin'

47:40

definition or limits or specifics

47:43

attached to it at all. So what

47:45

is the legal strategy this time

47:48

for the states, West Virginia

47:50

and all the states that are suing? My

47:52

understanding is basically now they're saying that CCS

47:55

is major. Is that right? So

47:57

The legal arguments are going to break down into

47:59

two broad categories. The first is

48:01

gonna be focusing on this narrative

48:03

of Here Goes Eve Yea again

48:05

they're trying to reverse engineer the

48:07

electricity sector that are going where

48:09

I live. In regards to do

48:12

is Jonesy isn't part of the.

48:14

Last. Hope

48:16

that the court agrees with you David to

48:19

have been a better place as they did

48:21

that perhaps one and that that's in are

48:23

some of the stuff red State attorneys General

48:25

he recognizes good politics to sue and an

48:28

Iep yea as use any regulation stats can

48:30

be one of the arguments that they're making

48:32

as it is that this is. This

48:35

is easy a not doing that the narrow

48:37

thing the Congress sold it to do under

48:39

section One eleven the Clean Air Act as

48:41

as ie be a trying to serve reengineer

48:43

everything. That. Bucket of

48:45

arguments. That's where the major questions doctor

48:48

in is gonna come and us where

48:50

the other kind of anti regulatory decisions

48:52

that the Supreme court has been handed

48:54

down and recent years that's where that

48:56

will commence. That's one bucket of arguments.

48:59

The other bucket of arguments will be

49:01

more kind of boring run of the

49:03

know Administrative Procedure Act arguments. Did ie.

49:05

Ph do what the statute tells it

49:07

to do So Grace already mentioned some

49:10

of the key language and section one

49:12

eleven. Now that you case as the

49:14

Emission standards. Based on the best system

49:16

of a missing production the best Us

49:18

on a Mission production is determined based

49:21

on determination that the system is adequately

49:23

demonstrated so they'll be challenges the Ccs

49:25

is not adequately demonstrated I can say

49:27

and a minimizing to those said sale

49:30

but that will be one on one

49:32

line of argument. Another line of argument

49:34

will be that it's too costly because

49:36

when setting the buses on the Mr.

49:38

Murdoch's and he be as to consider

49:41

costs if he also has to consider

49:43

energy requirements and that's where the reliability.

49:45

Arguments will come in necessary. The second

49:47

bucket of legal arguments will be as

49:50

the he played just didn't do what

49:52

the statute tells it to do is

49:54

this is new again as is arbitrary

49:56

and capricious. right? So in the

49:58

second bucket of our. Comments: This is

50:00

where typically the Chevron doctrine would come

50:03

in and right? I mean, typically. The.

50:05

Court: Like: why would

50:07

the Court think that

50:09

Like Sam Alito. Is.

50:12

Better positioned to make the determination

50:14

of what is the best system

50:16

of emission reductions for certain sizes

50:18

of natural gas power plants. Than.

50:21

The P A like. Typically

50:23

that second bucket they would lose

50:25

those arguments according to precedent. According

50:27

to tradition, like the court generally

50:29

is, defers to agencies. does it

50:31

not? Yeah. So this is the

50:34

several doctor and they say boils down to

50:36

as if the statute is clear that agency

50:38

esa do with the statue says if the

50:40

statute isn't clear than the agency can make

50:42

of of reasonable interpretation of the ambiguous language

50:45

and as long as an interpretation is reasonable

50:47

course will differ. right? Not necessarily

50:49

We The court agree with the interpretation

50:51

miss that it's reasonable. Yep, and as

50:54

as you've narrowed mm previous five, there's

50:56

a case pending before the court that

50:58

is questioning whether Chevron are still good

51:00

law by the end of June. I

51:03

will say that he runs a on

51:05

their my Second Bucket kind of the

51:07

the ball and run of the bill

51:09

statutory interpretation questions. I don't think so.

51:12

They need to rely on Chevron order

51:14

to win on an argument about whether

51:16

Ccs is adequately demonstrated. There's decades of.

51:18

Court decisions interpreting white adequately demonstrated

51:21

means in the one Eleven context

51:23

and standards have been upheld on

51:25

the basis of past programs, pilot

51:27

scale technologies operating at one plant,

51:29

vendor information and Us importance of

51:31

the performance of of how the

51:33

system worked in other industries so

51:35

that even have to be installed

51:37

as in the type of sources

51:39

that are subject to the rule

51:41

there's a there's a lot of

51:43

latitude and courts have recognize this

51:45

everly since the beginning of the

51:48

Clean Air. Act. Seasick,

51:50

Legally speaking, Whether Ccs qualifies

51:52

as the best system of

51:54

emission reductions, you think legally

51:56

speaking, the cases pretty overwhelming.

51:59

That. it is. I think that if

52:01

the court does a record-based decision,

52:04

right, did the EPA

52:06

reasonably conclude that this is

52:08

adequately demonstrated and supported in the record? I think

52:11

the EPA has done that. I

52:13

think the bigger risk, the far bigger risk, is

52:15

if a conservative court accepts the kind of the

52:18

broader narrative, here goes the EPA, again,

52:20

that becomes much harder for the EPA to win.

52:23

Yeah, well, let's talk

52:25

about this then because it's pretty

52:28

easy to stray into Kafkaesque

52:30

characterially discussing when you're discussing

52:32

this, but how is

52:34

the EPA supposed to argue against

52:36

it? Like, what exactly is the

52:38

substance, the legal substance of the

52:41

claim that EPA needs

52:43

to refute here? First

52:45

off, to say it's obvious, what's

52:48

happening at the Supreme Court is far bigger than the

52:51

impact on any climate rule or any environmental

52:53

regulation. The Supreme Court is

52:55

making it harder for the federal government

52:57

to govern. It's making it harder for

53:00

Congress and agencies to deal with big,

53:02

complex problems, particularly those that are likely

53:04

to change over time. Like

53:06

climate change. So what does an agency do,

53:09

like the EPA? One

53:11

option is they still do

53:13

their job. They craft the rules based on

53:15

what the Supreme Court has told them. I

53:17

think one of the best ways to understand

53:19

why the EPA did what it did in

53:22

these power sector rules is

53:24

it's a direct response to West Virginia BEPA. That's

53:28

one approach, right? And it

53:30

takes the risk. Those decisions might

53:32

be overturned, but the agency is doing its

53:34

job. It is using the statutory authority that

53:36

Congress has given it, and it is doing

53:38

what Congress told it to do. Another

53:41

approach, another response to where we

53:43

are right now, and this is where

53:45

I think the major questions doctrine is

53:47

so nefarious for being as ambiguous as

53:49

it is, as you've noted. Another

53:52

response that an agency could take is be overly

53:55

cautious, do far less than it should,

53:57

or think it's the right thing to

53:59

do, because it is worried that whatever it

54:02

does will get it returned. The EPA's credit

54:04

here, EPA did its job. Right. And

54:08

now we're reaching the stage where the courts are

54:10

gonna have their say. Yeah, and

54:12

it's worth saying, and I think

54:14

maybe people will get this instinctively, but

54:17

it's worth saying anyway, that part of

54:19

the purpose of these

54:21

vague, ambiguous rulings, part

54:24

of the purpose of

54:26

any capricious exercise of

54:28

state authority is

54:31

to scare people

54:33

in advance, to get people to

54:35

comply in advance, to get agencies,

54:37

for instance, in this case, to

54:39

tone down or scale back their

54:41

efforts in advance, because you

54:43

just don't know. And it's like, whatever

54:47

they say about casinos, you know, it's

54:49

sort of the irregular feedback that really

54:51

makes an impression. Like if you get

54:53

randomly smacked down by the court, you're

54:55

gonna get leery about this. So I

54:57

do think it's creditable

55:00

that the EPA just went

55:02

ahead and did this as though

55:04

we have a normal court, as though

55:06

we live in normal times. But I wonder

55:09

how many times we can

55:11

expect EPA to do that. You know what I

55:13

mean? Like if this gets smacked down again for

55:15

another arbitrary reason, like how

55:18

many times can you expect the agency to just

55:20

do all this work all over again? You

55:23

know, over time, I

55:25

don't see how this effect

55:27

doesn't eventually sort of erode

55:29

agency ambition or autonomy, et

55:31

cetera. I think it's certainly,

55:34

you've had a toll on a lot of people that

55:36

are working at EPA, but I will

55:38

say the agency is

55:40

gonna keep doing its job as long

55:42

as we have a president that allows the agency to keep

55:45

doing its job. I do think,

55:47

you know, partly, David, I think the

55:49

response to this is doing what you've

55:52

done a number of times, which is shine a

55:54

light on the fact that this is

55:56

happening and that it's not normal. I think

55:58

this is bigger than just, you know, an agency responds

56:00

to it. Yeah, I wonder if

56:03

the Supreme Court cares at all. We'll

56:05

see if they care at all about

56:07

being exposed or care at all about

56:09

public criticism. It doesn't seem like they really do. But

56:11

I want to get back to this first legal question,

56:13

which is, well, what

56:15

is it? I can't even really

56:18

summarize what it is, which is why I'm

56:20

baffled how the EPA is supposed to respond

56:22

to it. Like the Clean

56:24

Air Act says if it's

56:27

an air pollutant and it's dangerous, you

56:30

have to, by law, regulate

56:32

it. And so they found

56:34

that it's an air pollutant and

56:37

it's dangerous. So now by law, they

56:39

have to regulate it. That much,

56:41

at least, is

56:43

clear and understood by all

56:45

parties, right? So what is

56:48

the legal charge exactly?

56:51

So the EPA, I think, did

56:54

an admirable job justifying its statutory

56:56

authority. Again, it's clear they are

56:58

doing this with an eye towards

57:00

West Virginia VEP. They are rooting

57:03

what they're doing in statutory language. They're

57:05

doing what they're doing, rooting it in

57:08

the history of how this section of

57:10

the Clean Air Act has been applied.

57:12

And they have developed the technical record

57:14

to justify the decisions that they've

57:17

made. Just to rephrase what you're

57:19

saying, this is a very normal, if you just strip

57:21

away all the circumstances

57:23

around it, just the rule itself,

57:25

this is a very normal EPA

57:27

rule. It absolutely is along the

57:29

guidelines and the template of

57:32

many past rules, even

57:34

Clean Air Act 111 rules.

57:36

It is not ambitious

57:38

like the Clean Power Plan was. Well,

57:41

it also is

57:43

not unheralded. This is some of

57:45

the language from West Virginia VEP. It is

57:48

not a departure from past interpretations. This is

57:50

using Section 111, the way that they've used

57:52

Section 111 the best. I will say, you

57:54

noted before some of the hysteria

57:57

around the impacts here.

58:00

of that is that a lot of the groups

58:02

that are being so hysterical now are also those

58:04

groups that fought the Clean Power Plan and

58:07

insisted that the standard should be based

58:09

on an inside defense line standard.

58:11

They won. Now they're living with the

58:13

consequences and they don't like it. Yes.

58:16

Well, this is kind of something I

58:18

wanted to get to, which is if John

58:20

Roberts hears this argument and

58:22

says, well, this is also

58:24

major, whatever the

58:28

that means, if he decides this is

58:30

major to and shuts

58:32

it down, then basically the

58:35

court has said EPA cannot

58:37

substantially reduce carbon emissions from these power

58:40

plants. Like there's no they've

58:42

eliminated the fleet wide option. They've

58:44

eliminated the only reasonable inside

58:47

the fence line power plant option. There's

58:50

no options left. So so there's

58:52

no substantial emission reductions left

58:54

possible if they knock this down, too.

58:56

Right. I mean, and I just wonder,

58:59

like, is that is

59:01

there a legal case there? Like if the

59:03

Clean Air Act says you have to regulate

59:05

it and then the

59:07

Supreme Court eliminates all the

59:09

actual ways of regulating it,

59:11

where does that leave us?

59:14

So I'm not willing to accept that that's

59:17

the future that we're living in. I hope

59:19

that we end up with a different outcome.

59:21

I think another way of saying what

59:24

you're getting at this, David, I mean, there's

59:26

a clear tension that the Supreme Court has

59:28

just absolutely ignored, which is Massachusetts

59:30

EPA is still good law. The

59:32

definition of pollutant covers greenhouse

59:35

gases. And that's not the Supreme Court

59:37

said that. And this Supreme Court hasn't

59:39

overturned it. And as you noted, the

59:41

Inflation Reduction Act now codifies

59:43

that. So there's an obligation

59:45

to act. There's language

59:48

that Congress wrote that is designed to

59:50

deal with exactly this kind of situation,

59:52

a new pollutant. You've got to craft

59:55

the regulations. So this is why you know, I

59:57

don't want to maybe

59:59

not use the word hopeful, but

1:00:01

I'm also not willing to accept that the

1:00:03

court is just going to strike this down.

1:00:05

This should be a record-based administrative

1:00:08

procedure act case. And

1:00:10

if the court goes that way, I think the

1:00:12

EPA has done a really good job of crafting

1:00:14

a strong role that should survive the courts. We'll

1:00:17

see where they go. Just if,

1:00:19

if they knock it down and Trump comes

1:00:21

in, it will

1:00:23

still be the case that the

1:00:26

Trump EPA is lawfully obliged to

1:00:28

regulate carbon dioxide. Is that not

1:00:30

the case? They're lawfully

1:00:33

required to regulate carbon dioxide.

1:00:35

It would also be the case, these

1:00:37

are final rules. So if, you know,

1:00:39

these are regulations, a future president can,

1:00:41

can change direction, but there's

1:00:44

a long, arduous process that,

1:00:46

that requires to go through that process. So

1:00:48

these are the law. Power

1:00:52

plants have to comply with them. We'll see if

1:00:54

a court issues a stay and we'll see where

1:00:56

the, you know, the Supreme Court ultimately ends up

1:00:59

if they take this case. So it may be

1:01:01

a couple of years from now before we know

1:01:03

where the courts are on this. I

1:01:05

was going to ask, is this the case where

1:01:07

we probably again are not going to get a

1:01:09

final ruling until after the presidential election? Oh,

1:01:12

almost certainly. I mean, it will, we

1:01:14

probably won't even have arguments before the DC

1:01:16

circuit, before the presidential election. It

1:01:18

would be, both of you have to admit, it

1:01:21

would be truly hilarious if

1:01:24

they once again put a stay on these rules

1:01:26

and then crump one, and then

1:01:28

once again, scrap the rules. And then they

1:01:30

once again took up the rules and ruled

1:01:33

them unconstitutional, even though they're never going to

1:01:35

pass. I mean, just in terms of like

1:01:38

historical ironies, that would just be

1:01:40

a little too much. Yeah, I'll

1:01:43

grant you ironic. Yeah. If that

1:01:45

happens, I look forward to the

1:01:48

next iteration of your quick run through

1:01:50

of the entire history. Oh my God.

1:01:52

It'll just be me with Edward Monk's

1:01:55

screen face. That's a screen from now

1:01:57

to eternity. Okay, well, we got

1:01:59

to wrap up. on it too long. Maybe, Grace, just

1:02:01

final question. One of the things I think that

1:02:03

people noted about the Clean Power Plan was the

1:02:06

very prospect of it seemed

1:02:09

to kind of jolt utilities

1:02:11

into action. That's one

1:02:13

of the reasons you could argue why

1:02:15

they ended up complying with the

1:02:18

dang thing, even though it never went into

1:02:20

effect. Do you think that

1:02:23

even if this rule is, even

1:02:26

if a stay is put on it and it

1:02:28

doesn't go into effect, do you think that's going

1:02:30

to have similar effects on

1:02:32

utilities? I think there's certain

1:02:34

to be a market signal. Like Jonas said,

1:02:37

now we know that utilities and

1:02:42

their regulators and power plant

1:02:44

operators should be incorporating

1:02:47

carbon into their decision making.

1:02:51

That is a real signal. I

1:02:53

think there's a regulatory certainty

1:02:55

aspect too that power

1:02:57

companies and utilities who support this rule

1:02:59

and have supported it along are grateful

1:03:02

for. A

1:03:04

lot of the investments that utilities

1:03:06

have to make in general are really

1:03:09

long term. It's good to

1:03:11

not have this back and forth every

1:03:13

four years of Willaire, Wompe. I

1:03:16

think there, at least for now,

1:03:18

there's a strong market signal and some

1:03:20

good regulatory certainty. Hopefully we'll see that

1:03:22

continue into the future. All

1:03:24

right. Well, you two, I've really enjoyed this and

1:03:27

I'm really grateful to you for coming on the

1:03:29

pod. I hope you will not be offended if

1:03:31

I say, I really hope

1:03:33

we don't have to do this again. It's

1:03:35

always a joy, but anything too much is

1:03:38

too much. Let's just regulate these

1:03:45

damn things and move on to something else. All right. Well,

1:03:47

thank you guys for coming on. Thanks for walking us through

1:03:49

this and we'll see in the next couple

1:03:51

of years where this all goes. Thank

1:03:54

you. Thank

1:04:01

you for listening to the Volts Podcast.

1:04:04

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1:04:16

that's Volts.wtf so that I

1:04:19

can continue doing this work.

1:04:22

Thank you so much, and I'll see you next time. Thank

1:04:30

you.