New Source Review and coal plant efficiency gains: How new and forthcoming air regulations affect outcomes

Abstract

Forthcoming carbon dioxide (CO2) regulations for existing power plants in the United States have heightened interest in thermal efficiency gains for coal-fired power plants. Plant modifications to improve thermal efficiency can trigger New Source Review (NSR), a Clean Air Act requirement to adopt of state-of-the-art pollution controls. This article explores whether existing coal plants would likely face additional pollution control requirements if they undertake modifications that trigger NSR. Despite emissions controls that are or will be installed under the Mercury and Air Toxics Standards (MATS) and Clean Air Interstate Rule (CAIR) or its replacement, 80% of coal units (76% of capacity) that are expected to remain in operation are not projected to meet the minimum NSR requirements for at least one pollutant: nitrogen oxides or sulfur dioxide. This is an important consideration for the U.S. Environmental Protection Agency and state policymakers as they determine the extent to which CO2 regulation will rely on unit-by-unit thermal efficiency gains versus potential flexible compliance strategies such as averaging, trading, energy efficiency, and renewable energy. NSR would likely delay and add cost to thermal efficiency projects at a majority of coal units, including projects undertaken to comply with forthcoming CO2 regulation.