Last year, the US Environmental Protection Agency finalized regulations that would limit emissions from certain power plants. New research shows that the regulations would yield major benefits—but the fate of these regulations is uncertain now.
Last week, the head of the US Environmental Protection Agency (EPA) announced the reconsideration of many environmental regulations, including the Biden administration’s regulation of greenhouse gas emissions from electric power plants under Section 111 of the Clean Air Act. A recent analysis by multiple modeling groups (including us), published in the journal Science, shows that these regulations would yield significant emissions reductions.
Legal Background of the Regulations
Section 111 of the Clean Air Act gives EPA the authority to regulate greenhouse gas emissions from new and existing power plants. EPA designs these regulations by identifying an “adequately demonstrated” best system of emission reduction (BSER) and requiring states to submit plans so that power plants in those states meet the emissions rate that the BSER deems possible (or achieve an even lower rate). During both the Obama and the Trump administrations, EPA wrote regulations under the authority of Section 111—the Clean Power Plan and the Affordable Clean Energy Rule, respectively—but neither survived challenges in court.
Following these court decisions, the Biden administration issued new regulations under Section 111, finalized in May 2024, that relied on BSERs that are based on operational changes that can be made “inside the fence line” of power plants. This formulation means that the emissions reductions must be due to activities at a given power plant; in this case, through the use of carbon capture and storage at new and existing plants. This approach contrasts with the approach proposed in the Clean Power Plan, which aimed to shift electricity generation from coal-fired power plants to renewables and natural gas–fired power plants. Notably, the Clean Power Plan was rejected by the Supreme Court in West Virginia v. EPA.
In the Biden administration’s regulation for existing coal plants, power plants that retire by 2032 have no obligations, those that retire by 2039 have to cofire with 40 percent natural gas by 2030 (an idea originally explored by Resources for the Future in 2021), and those that retire after 2039 have to capture and store 90 percent of on-site emissions by 2032. New natural gas plants that plan to operate more than 40 percent of the time must capture 90 percent of on-site emissions by 2032, and plants that plan to operate less than 40 percent of the time just have to operate with a certain efficiency. Although EPA during the Biden administration originally proposed a regulation that required existing gas plants to meet similar standards as new gas plants, this part of the rule was never finalized. And, as is always the case with regulations under Section 111, states do not have to require power plants to be retrofitted with the BSER, but states do have to require that plants meet the level of emissions reductions that is possible with the BSER (or even lower).
Immediately after the regulation was finalized, a group of state attorneys general and electricity generators sued EPA, arguing that carbon capture and storage is not an adequately demonstrated technology and so cannot serve as the basis of the regulation. The US Court of Appeals for the District of Columbia Circuit heard arguments from this group in December 2024. But the Trump administration asked the court to put the case into abeyance while the administration decided what to do with the regulation. Now the Trump administration has announced that it will reconsider the regulation along with many of EPA’s other climate actions.
Projected Effects of the Regulations
Our article in Science evaluates the greenhouse gas emissions that may result from these regulations. The article examines results across nine economic models of the power sector that mostly share the same assumptions. Looking at policies with multiple models allows us to learn more about the range of possible outcomes of a policy, including which outcomes are robust across models and which outcomes could be quirks of particular models. Given the recent discussions about increased electricity demand from the electrification of the economy, industrial development in the United States, and new data centers, the article includes projections of scenarios with extra-high electricity demand. The article also examines how a potential regulation for existing gas plants could affect emissions in the future.
The emissions reductions in the electricity sector that result from these regulations occur more quickly and are less uncertain than in a world without the regulations, according to our modeling. Without the regulations (but including the provisions for clean energy in the Inflation Reduction Act), the US electricity sector achieves carbon dioxide emissions that are 60–83 percent below 2005 levels by 2040. With the regulations, emissions reach 73–86 percent below 2005 levels. These emissions reductions are accompanied by 84–94 percent reductions in nitrogen oxide emissions and 88–98 percent reductions in sulfur dioxide emissions by 2035 relative to 2015 levels. These reductions lead to substantial health benefits.
Nevertheless, these emissions reductions would not achieve current US climate goals for 2030, nor would the emissions reductions exceed the threshold (25 percent of 2022 emissions levels) at which the tax credits for clean electricity in the Inflation Reduction Act are set to phase out. We also find that the addition of a regulation that covers existing gas plants does not greatly impact emissions.
Credit: James Marvin Phelps / Shutterstock
The additional emissions reductions from the regulations, relative to the scenarios with only the provisions in the Inflation Reduction Act, are achieved through emissions reductions from coal plants, largely due to plant closures. To compensate for this loss of electricity generation, renewable energy resources and gas plants increase in capacity and generation, and these increases are larger for gas than for renewables. Nevertheless, less electricity would be generated with natural gas than in the present. The deployment of carbon capture and storage, either at new plants or by retrofitting existing plants, is not projected to increase much due to the regulations; most existing coal plants comply with the regulations by retiring early, and most new gas plants comply by operating less than 40 percent of the time. Because the rules do not cover existing gas plants, existing plants generate more electricity in the scenarios with the regulations than in the scenarios without the regulations.
The emissions reductions from the regulations are achieved at a relatively low cost across a variety of cost metrics. Total costs for the power sector rise 0.5–3.7 percent relative to scenarios without the regulations. Wholesale electricity prices are projected to increase by less than 2.2 percent by 2040 as a result of the regulations. Most emissions reductions come from the retirements of coal plants, which is a low-cost way to reduce emissions, so reducing one tonne of carbon dioxide through the regulations costs only $6 to $44—well below the social cost of carbon, the cost to society of emitting an additional tonne of carbon dioxide.
The regulations also lock in lower emissions levels despite large growth in electricity demand. In the absence of the regulations, the electricity generation that is needed to meet the additional demand comes from a mix of renewables, gas, and coal. With the regulations, the additional generation comes from renewables and gas. The scenario with both extra-high demand growth and regulations still produces large emissions reductions relative to 2005 levels (69–84 percent). The regulations thus seem to prevent emissions “backsliding” (and coal-fired electricity generation) that might occur under high demand.
Uncertainty is Certain
Many factors could lead the US electricity sector to behave differently than what’s indicated by the models collected in this analysis—the cost of renewables, natural gas prices, the development of pipeline infrastructure for carbon capture and storage, the timing and level of growth in electricity demand, and new federal policies, among others. Although the Trump administration has announced its reconsideration of these regulations, this process still must proceed via a rulemaking, which itself could be subject to lawsuits. Ultimately, the most prevalent form of uncertainty for the power sector may be this ever-changing landscape of regulation and litigation, repeal and reconsideration.
