ACE has been Repealed – What Does That Mean for New and Existing Fossil Fuel-Fired Electric Generating Units?

On May 9, 2024, the U.S. Environmental Protection Agency (U.S. EPA) published final regulations addressing greenhouse gas (GHG) emissions from fossil fuel-fired electric generating units (EGUs or EGs).

The rulemaking includes changes to the current Standards of Performance [or New Source Performance Standards (NSPS)] for GHG Emissions from EGUs (40 CFR Part 60, Subpart TTTT), a newly issued subpart – Standards of Performance for GHG Emissions for Modified Coal-fired Steam EGUs and New Construction and Reconstruction Stationary Combustion Turbine EGUs (40 CFR Part 60, Subpart TTTTa), and Emissions Guidelines (EG) for GHG Emissions for EGUs (40 CFR Part 60, Subpart UUUUb). Additionally, the Affordable Clean Energy (ACE) rule, or Subpart UUUUa, has been repealed. The following includes a brief overview of the changes that U.S. EPA has issued.

Revised NSPS TTTT

Subpart TTTT regulates GHG emissions from fossil fuel-fired EGUs and was initially promulgated in October 2015. U.S. EPA has made several editorial amendments and changes to update incorrect or outdated information and to add compliance flexibility. Specifically, they have added a compliance option for EGUs serving a common electric generator to have alternate compliance methods approved by the Administrator. For EGUs using a common stack but subject to different emissions standards, they are allowing for either separate monitoring prior to mixing or using an F-factor to apportion each unit’s contribution to carbon dioxide (CO₂) mass emissions. U.S. EPA also added a requirement to maintain records of electric sales to demonstrate that a stationary combustion turbine meets the conditions for the heat input-based standard, along with maintaining documentation for any system emergencies that may have occurred. Finally, a few definitions listed within the Subpart have also been clarified to align with other Subparts, including annual capacity factor and base load rating. No emissions standards have been revised as a part of this rulemaking.

New NSPS TTTTa

The required 8-year review of Subpart TTTT was completed, and U.S. EPA determined there have been developments in available control measures for stationary combustion turbines. As a result, U.S. EPA promulgated Subpart TTTTa. The Subpart regulates emissions from new and reconstructed stationary combustion turbines and modifications to fossil fuel-fired steam generating units. A modification must result in greater than a 10% increase in hourly emissions of CO₂ to cause an EGU to be subject to this Subpart.

New and reconstructed stationary combustion turbines (defined as constructed or reconstructed after May 23, 2023) have been subcategorized based on the “load” of the turbine and a best system of emissions reduction (BSER) was determined for each subcategory. There are three subcategories that have been identified: (1) low load; (2) intermediate load; and (3) base load. The BSERs identified for the low load and intermediate load subcategories have a single implementation phase, while the BSER identified for the base load subcategory has two implementation phases with an extended timeline for demonstrating compliance. The extended compliance deadline for 90% Carbon capture and storage (CCS) was finalized as January 1, 2032 – three years earlier than originally proposed. The low-GHG hydrogen co-firing as a BSER pathway originally proposed for intermediate and base load units was removed from the final rule, but EGUs can choose to meet the standard by co-firing hydrogen instead of using CCS. The standards are included in the following table.

¹ Must be met on both a 12-operating month and a 3-year rolling average basis.

In addition to regulating new and reconstructed stationary combustion turbines, Subpart TTTTa specifies a standard for fossil fuel-fired steam generating units that undergo a modification. This approach is like the existing Subpart TTTT, which defines a modification that results in greater than a 10% increase in hourly emissions of CO₂ as subject to the standard. For these modified sources, U.S. EPA determined the CO₂ emissions standard as an 88.4% reduction in the unit’s best historical annual CO₂ emissions rate (from 2002 to the date of the modification).

Repeal of UUUUa (ACE) and New UUUUb

When the U.S. EPA establishes an NSPS for new sources within a specific category, it must also specify EG for existing sources, unless the pollutant is regulated under the National Ambient Air Quality Standards (NAAQS) program, Clean Air Act (CAA) section 108-110, or the National Emission Standards for Hazardous Air Pollutants (NESHAP) program. Individual state and tribal authorities then utilize the EGs to develop a state plan that must be reviewed and approved by U.S. EPA. When the original NSPS for GHG from EGUs was promulgated, the EGs for existing sources were proposed as Subpart UUUU. This Subpart is also referred to as the Clean Power Plan (CPP). Subsequently, the U.S. EPA repealed the CPP and replaced it with the ACE rule (Subpart UUUUa). Although a series of District of Columbia (D.C.) Circuit Court and U.S. Supreme Court decisions impacted both the CPP and ACE rules and their embedded provisions, the result of the litigation was that the CPP remained repealed with the ACE rule in effect. U.S. EPA has since determined that the heat rate improvements required by ACE on their own do not qualify as BSER for existing sources, and additional standards are required. Therefore, with this action, they have repealed the ACE rule and created a new Subpart, Subpart UUUUb.

Although the proposed rule included standards for existing stationary combustion turbines, they have not been finalized as a part of this rulemaking (U.S. EPA will take separate action on those standards at a later date). The final standards in Subpart UUUUb are only for existing fossil fuel-fired steam generating units. For existing fossil fuel-fired steam generating units (those constructed prior to January 8, 2014) that meet the general applicability criteria, U.S. EPA has finalized standards for subcategories of these units based on the fuel type and operating time horizon for coal-fired units and load level for oil- and natural gas-fired units. The proposed rule included four categories for existing coal-fired units; however, the final rule only includes two categories: long-term and medium-term. An applicability exemption that was not included in the proposed rule is provided for units that plan to permanently cease operation by January 1, 2032. These affected steam generating units must comply with the applicable standard by January 1, 2030, with the exception of a January 1, 2032 compliance date for existing coal-fired steam generating units that will meet 90% CCS. A summary of the proposed standards is included below.

U.S. EPA is also requiring that the plans include an annual demonstration of compliance. States may include a mechanism in their plans to extend the compliance date by no more than one year for certain EGUs that cannot meet the date in the rule due to factors outside of the owner’s control. Further, for sources that are medium-term steam generating units that will be shutting down and EGUs that invoke remaining useful life and other factors (RULOF), the EGs require establishment of milestones to hold owners and operators accountable to their shutdown plans. Documentation and reports on state plans and milestones will be made publicly available on websites established by owners and operations of affected EGUs.

Resources for Development of Plans for Existing Sources

State, tribal, and federal authorities are responsible for creating and submitting plans to establish emissions standards that align with the EGs for existing sources in the newly created Subpart UUUUb. The EGs include information that must be included in a plan submission. U.S. EPA has established criteria (presumptive standards) to determine whether plan requirements are equivalent to the proposed standards in the EGs. There are also guidelines for the types of information and evidence states must provide if they would like to apply a less stringent standard to a particular facility or type of facility, based on the RULOF. These include the source’s age or physical limitations on installing emissions control equipment. Additionally, other options for state plans, including emissions averaging and trading, are allowed.

U.S. EPA also has added two optional reliability-related mechanisms that states may choose to incorporate into their plans. One is a short-term reliability mechanism for units responding to declared grid emergencies (this mechanism is also available to new units). The other is a reliability assurance mechanism for units with cease operations dates that may be needed to stay online longer than anticipated due to documented reliability needs. Meaningful engagement with relevant stakeholders is required for plan development, including consideration of potential impacts and benefits to communities most affected by emissions from affected EGUs. The final plans are required within 24 months after the final EGs are published in the Federal Register, with a mandated compliance deadline of January 1, 2030. The compliance deadline is based on consideration of how long U.S. EPA anticipates it would take for operators to assess their affected EGUs and bring them into compliance.

What do I need to do?

There are various applicable compliance deadlines associated with the new rules, depending on whether the affected EGUs are new or existing, and whether they are steam generating units or combustion turbines. Therefore, affected entities should be reviewing their fleet inventories and considering how different compliance timelines will impact their long-term operational plans. In addition, if you recently submitted a permit application for a new stationary combustion turbine, you will need to review the final rule to see how changes from the proposal impact your plans for the new turbines.

As stated earlier, U.S. EPA has not yet finalized the EGs that were proposed in May 2023 for existing combustion turbines. There is a non-regulatory docket open through May 28, 2024 where they are accepting input from stakeholders on that topic.

This article only provides an overview of some of the key changes associated with the final rules and is not a complete inventory of all of the requirements or revisions. If you have additional questions or would like to gain an understanding of how the new rules could affect your facility’s compliance program, please reach out to me at arichardson@all4inc.com. ALL4 is monitoring all updates published by U.S. EPA on this topic, and we are here to answer your questions and assist your facility with any aspects of regulatory compliance.