EPA may sideline hydrogen in its final rule to limit power plant pollution amid industry pushback and legal uncertainties.
The move — expected by both industry advocates and environmentalists — probably won’t weaken the rule. But it remains unclear what technology will replace hydrogen to underpin EPA’s final standard for new intermediate gas plants.
“With the intermediate [standard] for new gas, what we’ll be looking for is: How does EPA define the subcategory, and what pollution control measures are they using to set the emissions rate?” said Frank Sturges, an attorney with the Clean Air Task Force.
In its May draft rule, EPA took the unusual step of identifying two benchmark technologies — carbon capture and “green” hydrogen — to be the basis of its standard for new large, frequently operated gas plants. That means the final rule will likely fall back on carbon capture to underpin a strong pollution standard for such “baseload” facilities.
But EPA’s proposal only picked one “best system of emissions reduction,” or BSER, for intermediate units: hydrogen. Specifically, the draft rule would require those plants to slash emissions by 2032 in line with what they could achieve by burning 30 percent “low-greenhouse gas” hydrogen alongside natural gas.
But green hydrogen is not yet a cost-effective option, and a new lucrative production tax credit may do less to jump-start the industry than originally thought.
If that drives the administration to finalize a rule that doesn’t depend on green hydrogen — as is widely expected — EPA is going to have to choose something new. And with the final rule due out next week, that something new remains a mystery.
A cadre of environmentalists say there is an easy solution: EPA can just demand that new intermediate gas plants use combined-cycle technology.
They argue that EPA left easy emissions reductions on the table when it proposed that new intermediate gas plants meet a standard based on simple-cycle technology and 30 percent hydrogen.
“The weird thing about that was that the actual emission rate that you get from that formula is higher in terms of emissions than you would get if you just had a combined cycle with no hydrogen at all,” said Andres Restrepo, a senior attorney with the Sierra Club.
‘Really a no-brainer’
EPA’s draft rule defines intermediate plants as those that produce at least 20 percent of the power they could each year — but less than 50 percent, which is the threshold for baseload plants. They are the middle children of the gas plant fleets, which also include peaker units that ramp up quickly to add power to the grid at times of peak demand.
Most gas plants that run at EPA’s intermediate level already use combined-cycle technology, which captures and reuses waste heat to make electricity.
The Sierra Club’s comments to EPA last year — filed jointly with other green groups including Earthjustice — said combined-cycle units were approximately half again as efficient as simple-cycle combustion turbines. That means they can produce more power with fewer emissions.
But in last year’s draft rule, EPA said it had “considered but is not proposing” a combined-cycle standard for new intermediate gas plants because they cost 150 percent more than simple-cycle units, while the greenhouse gas savings were “unclear.”
The draft argued that intermediate units stop and start frequently and thus might not produce enough steam to operate turbines to produce power more efficiently.
In their comments, the Sierra Club and its partners called those assumptions “dramatically off the mark.” They pointed to a June 2023 report by the National Renewable Energy Laboratory that put a 10 or 14 percent price premium on running a new combined cycle overnight — a far cry from EPA’s estimates.
Restrepo said combined-cycle units that run more than 5 or 8 percent of the time would have better efficiency and less pollution than a simple-cycle turbine.
“When you take into account the emission reduction benefits, for us, it was like really a no-brainer,” he said.
Restrepo said EPA was “receptive” to the suggestion, but he was unsure whether the agency would build combined-cycle turbines into next week’s rule.
“I think they’re interested at some point — hopefully soon — in strengthening whatever they finalize,” he said.
Sierra Club and its partners didn’t ask EPA to drop hydrogen as a control pathway and even used their comments to argue that the agency has the legal authority to broadly define what qualifies as climate-friendly hydrogen.
But some environmentalists have expressed concern about using hydrogen as a BSER for gas. If EPA tries to set criteria for green hydrogen, that would extend the rule beyond individual power stations to include upstream emissions from hydrogen production — a move that might make the rule legally vulnerable.
The clean hydrogen industry also is not yet off the ground. The Biden administration is pouring billions of dollars into a national network of low- or no-carbon hydrogen, as part of its efforts to achieve a net-zero emissions economy by 2050. The 2022 climate law also included a new generous production tax credit.
EPA relied heavily on the tax credit to argue that the fuel will be a cost-effective option for power plants and thus a suitable benchmark technology for the Clean Air Act rule. But last December — months after EPA released its draft power plant rule — the Treasury Department proposed strict guidance for the kinds of hydrogen that would be eligible for the tax credit.
That included a requirement that hydrogen producers use new low-carbon energy sources to ensure that power demand from electrolysis doesn’t boost fossil fuel energy on the grid. The hydrogen industry argues that could hobble the nascent industry, all but ruling out the use of nuclear power and increasing costs for new projects.
Scott Segal, a partner with Bracewell LLC, said EPA should formulate its own definition for low-emission hydrogen.
Treasury, he said, did EPA a “disservice” by making it “difficult for a responsible regulatory agency to use hydrogen as the basis of a regulatory standard.”
This story also appears in Energywire.
