The Environmental Protection Agency (EPA) had a deadline of April 13 to impose the first-ever greenhouse gas limits on new power plants, but they did not finalize the proposal on time. EPA is in the process of altering the rule to make sure it can withstand any legal challenges that may come its way. The rule if implemented as it was written would require new power plants to emit no more than 1,000 pounds of carbon dioxide per megawatt hour of electricity produced. EPA is debating the possibility of establishing separate standards for coal-fired power plants and gas-fired power plants. There is no timetable for when EPA will announce their next move.

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The House Energy and Power Subcommittee of the Energy and Commerce Committee will hold a hearing on September 20, 2012 to discuss H.R. 6172. The bill would prohibit the EPA Administrator from finalizing any rule that would put a performance standard for CO2 emissions on an existing or new source that is a fossil fuel-fired electric generating unit until carbon capture and storage is deemed technologically and economically feasible. The hearing will begin at 9:45 a.m. at 2123 Rayburn.

In the wake of a recent spate of RIN fraud cases involving a reported 140 million invalid RIN (renewable identification number) credits, EPA is considering revisions to the Renewable Fuels Standard (RFS2) program that would provide greater clarity for obligated parties (oil companies that refine and import gasoline and diesel). Although EPA has taken aggressive enforcement action against fraudulent RIN producers, EPA's current "buyer beware" policy also penalizes oil companies that are victims of RIN fraud by imposing civil penalties and requiring replacement of fraudulent RINs, thus adding insult to injury.

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On Monday, the Department of Energy (DOE) issued more than $51 million in clean coal grants to  university, state and industry partners. One of the beneficiaries of the grant is the University of Kentucky, who will receive $14.5 million. The university will use its funding to test its clean coal technology at the 700MW E.W. Brown plant. The project’s main goal is to capture 90 percent of the CO2 emissions from the plant without increasing the cost of electricity by more than 35 percent. Other beneficiaries of the grants include Linde LLC (NJ), Neumann Systems Group (CO) and Southern Co.

President Obama unveiled his 2011 fiscal year budget today. Unlike last year’s budget, which assumed an amount of revenue from a cap-and-trade program, this year’s budget contains only a place holder for such revenue. Of couse, the establishment of the cap-and-trade program faces a tough road in Congress.

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Late Friday, Senate Environment and Public Works Committee Chairman Sen. Boxer (D-CA) released the Chairman’s Mark of the Clean Energy Jobs and American Power Act (S. 1733).  The Chairman’s Mark includes key information that wasn't included when the original bill was released.  The updated version of the Kerry-Boxer legislation now includes the plan for distribution of emissions allowances, new provisions for clean coal technology, increased investments in energy efficiency and renewable energy, and promotion of advanced renewable fuels. 

Regarding to the allocation of allowances to the electric utility industry, the Chairman's Mark essentially mirrors the House version of the bill.  Thirty percent of allowances would be given to state regulated local electric-distribution companies.  Additionally, natural gas companies would initially receive nine percent of allowances, and the auto industry would initially receive three percent of allowances before dropping to one percent by 2018. 

As mentioned, the Chairman’s Mark also includes new incentives for clean coal technology.  As advocated for by a group led by Sen. Carper (D-DE), the bill now includes a provision that would allow for advanced distribution of allowances for carbon capture and storage plants to serve as financial assistance for plant construction.  A key restriction is that the funding must go to the portions of the plant related to CCS. 

Also released on Friday was an EPA analysis of the Chairman's Mark.  The EPA estimates that the legislation would cost a U.S. household approximately $100 per year, which is on par with the House legislation.  However, as EPA acknowledges, the accuracy of its conclusions regarding household-level conclusions may be limited by the difficulty of precisely modeling micro-economic activity.

Hearings on the legislation are scheduled this week. 

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