May 18, 2023 · 55m · catalyst
Unpacking EPA’s newly proposed power emissions rule
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Catalyst, host Shayle Kann and Rhodium Group partner John Larson analyze the EPA's proposed power plant emissions regulations, exploring compliance mechanisms, legal precedents, and their interaction with Inflation Reduction Act incentives.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Shayle holds 41.1% of the talking time here. How this is scored →
Shayle as informed peer 5.3 Guest teaching 3.8 Guest disagreement 0.2 Shayle pushing back 1.5
speaking balance: gold is Shayle, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 41:50 Larson adds missing operating threshold option
Larson directly intervenes to adjust Kann's high-level three-option framing by pointing out that plants can simply run below a 50% capacity factor to avoid major retrofit mandates.
Hardest push from Shayle ▶ 20:01 Kann challenges adequately demonstrated cost standardKann pushes back on the EPA's statutory criteria of adequately demonstrated technology at reasonable cost, noting that utility-scale CCS and high-blend hydrogen gas plants remain largely speculative.
Biggest teaching moment ▶ 43:00 Larson shares Rhodium data on plummeting gas capacity factorsLarson educates Kann on Rhodium Group's grid modeling, revealing that the IRA will drive average combined-cycle gas capacity factors down from 55% to the 20s, making CCS retrofits largely unnecessary for compliance.
Shayle holds their own ▶ 24:51 Kann points out peaker plant media oversightKann demonstrates deep domain knowledge by identifying that existing gas peaker plants are entirely exempt from the proposal, debunking widespread media narratives about imminent grid reliability crises.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Shayle as informed peer | Guest teaching | Guest disagreement | Shayle pushing back | Why |
|---|---|---|---|---|---|---|
| Event Announcements for Boston and Seattle Climate Tech Gatherings | 1 | 0 | 0 | 0 | Introductory housekeeping and live event announcements for Boston and Seattle climate gatherings, followed by a brief teaser clip. | |
| Sponsor Break: Bloom Energy, Engie, and EnergyHub | 0 | 0 | 0 | 0 | Sponsor read and solo host monologue setting up the EPA power plant regulations topic. Because this is a monologue/ad read, host interactive scores are zero. | |
| The Strategic Lack of Branding for the New EPA Proposal | 6 | 4 | 0 | 1 | Kann opens by asking whether the lack of branding is a strategic political choice and later provides a clear synthesis of the historical legal lineage from the Clean Power Plan to West Virginia v. EPA. Larson walks through the statutory context under the Clean Air Act. | |
| Mandates and Thresholds for New Fossil Fuel Power Plants | 7 | 5 | 1 | 3 | Larson details the new gas standards, including 90% CCS or hydrogen blending for units over 300 MW running above 50% capacity factor. Kann immediately drills into unit-level versus plant-level loopholes and questions the speculative nature of adequately demonstrated technologies. | |
| Regulations Governing Existing Coal and Gas Fleets | 7 | 4 | 0 | 2 | Kann notes the critical media oversight that existing peaker plants are excluded from the rules, which counters typical grid reliability alarmism. Larson explains the tiered timelines for existing coal and large baseload gas units. | |
| State Implementation Dynamics and Potential Compliance Off-Ramps | 5 | 4 | 0 | 2 | Kann asks whether red states will exploit state implementation plan off-ramps to dilute the rule's enforceability. Larson confirms this risk is more pronounced for existing gas than coal. | |
| Rulemaking Timelines, Litigation Pathways, and Political Risks | 6 | 5 | 0 | 2 | Larson maps out the Federal Register timeline, public comment windows, and D.C. Circuit and Supreme Court litigation paths. Kann synthesizes the timeline friction and asks how developers navigate this prolonged regulatory uncertainty. | |
| Developer Strategies and Interaction with the Inflation Reduction Act | 7 | 4 | 0 | 2 | Kann and Larson explore how the regulatory stick interfaces with the Inflation Reduction Act's 45Q and 45V tax credit carrots. Kann highlights the 12-year window for carbon capture credits and assesses the risk of Congressional Review Act nullification. | |
| Shifting Roles of Gas: Peaking vs. Carbon Capture Retrofits | 6 | 6 | 1 | 2 | Kann lays out three developer compliance options (shut down, CCS, or hydrogen), but Larson adds a crucial fourth: de-rating plants below 50% capacity factor. Larson shares Rhodium modeling showing gas capacity factors naturally declining into the twenties due to renewable buildout. | |
| Grid Decarbonization Impacts and Remaining Emissions | 6 | 4 | 0 | 1 | Kann questions the actual emissions impact if gas simply runs uncontrolled at lower utilization. Larson explains that power sector emissions will drop significantly via the IRA, leaving only modest incremental reductions from this rule. | |
| Technology Cost Surprises and Clean Baseload Competition | 7 | 4 | 0 | 2 | Kann proposes an alternative scenario where rapid cost reductions in carbon capture and hydrogen mirror historical solar cost curves, prompting CCS deployment rather than plant down-rating. Larson agrees and weighs interactions with nuclear and geothermal. | |
| Industry Signposts: Net Power, Coal Trends, and State Carbon Pricing | 6 | 5 | 0 | 1 | Kann asks what market signposts to monitor, immediately identifying Net Power's technology as an oxy-combustion cycle with inherent capture. Larson adds coal retirement announcements and state carbon pricing conflicts in blue states. |
Statements from this episode (18)
Larson says Trump power plant rules achieved almost no pollution reduction
“There's a little detour in between where the Trump administration revoked the Clean Power Plan and tried a different approach, which was basically like, we're only going to regulate
[637] John Larson: New and existing plants through efficiency improvements wh…”
Larson: Zero new coal power plants have been proposed in US
“Not even not building a lot, not building any, period. Like, there are, there have not been any proposed coal plants even before that proposed rule went in place.”
EPA rule mandates 90% CCS or 96% hydrogen for large gas units
“The basics are the really big plants, meaning 300 megawatt nameplate units or larger, running at 50% capacity factor or more, need to meet a Standard equal to carbon, 90% carbon capture by 2035, or 96% hydrogen co-firing by 2038.”
Larson: Carbon capture only makes economic sense on high-utilization power plants
“Carbon capture in particular only really makes sense if you're running a plant a lot. You know, if you're going to install all that carbon capture equipment and then only run the plant 10% of the time, that's a very, very, you know, the cost of that on a per m…”
Larson: About 200 gigawatts of coal power operate on the US grid
“And there's, you know, about 200 megawatts Sorry, gigawatts of coal currently on the system today, all of which would be subject to new standards under this proposal”
Larson: At least 70 gigawatts of US coal capacity will retire before 2032
“When we look at this every year as part of our baseline construction for U.S. Greenhouse gas emissions, and at least 70 gigawatts is scheduled to leave the market between now and then, from our account.”
Larson: EPA power plant rule poses very low risk to grid reliability
“Just the fact that peakers and you know, load following combined cycle units aren't touched at all says to me that that, that should be a very, very low concern, right, from a reliability perspective, because you've, all the stuff you're using to balance on th…”
Larson: State EPA Off-Ramps Will Impact Gas Plants More Than Coal
“I think probably more for gas than for coal. I mean, coal's on its way out. You know, I mean, and there might be a handful of plants that end up getting tied up into the scenario you just described, but compared to existing gas plants, it's a relatively small …”
Larson: EPA power plant rule faces immediate lawsuits and Supreme Court challenge
“And then as soon as that's in the federal register, then the lawsuits are going to start Flying. And they will presume they all, almost all will go to the D.C. Circuit, which will then eventually, you know, one, everybody expects something, some challenge on t…”
Larson: Inflation Reduction Act tax credits are politically durable
“Like, you know, those rules are in place, those reg sorry, incentives are in there for 10 years, and although Congress has tried to repeal them, they're pretty, you know, politically durable.”
Larson: EPA intends to finalize power plant rule by summer 2024
“Yeah, I mean, the EPA is signaling that they intend to finalize this by summer of next year, right?”
Larson: US combined cycle gas plant average capacity factor is 55%
“The average capacity factor of combined cycle unit today is 55%. National average.”
Larson expects gas plant capacity factors to plummet by the mid-2030s
“We see that going down into, like, the twenties. Because wind and solar are coming on at such huge volumes in their variables. So you're running these gas plants in a much different way by the mid-twenty-thirties.”
Larson: Most gas plants will reduce capacity factors instead of installing CCS
“Most of the gas is just going to ramp down instead of installing carbon capture.”
Larson: IRA will cut US power emissions to ~500M tons by mid-2030s
“With our IRA analysis, we see... Power sector CO two emissions dropping potentially quite a large amount, like from like the one and a half billion tons or so from last year. Down to maybe half a billion tons, even lower in some instances, depending on the eco…”
Larson: EPA power rule provides only incremental cuts beyond the IRA
“The EPA analysis of the rule suggests something, a similar outcome, basically, with only, like, a small increment of additional emission reductions From the proposal. So, it does show that, yes, you were actually getting some incremental gain above and beyond …”
Larson: Power plants already announced carbon capture projects post-IRA
“I mean, there's already been a handful since the IRA got passed because 45 Q is helpful. They're the carbon capture tax credit. And I think you could see more.”
Larson: Coal plant retirement announcements increase year over year
“Every year more coal operators announce more retirements than they did the year before, right? And if we see that trend continue or accelerate in response to this regulation, I think that's going to be another important place to watch”