Stark choice for coal plants east of Waco: Capture carbon or shut down (2024)

Three coal-fired power plants east of Waco face an uncertain future under a new Environmental Protection Agency rule that would force them to start capturing nearly all their carbon emissions in the next decade or shut down.

The federal agency issued the rule in April, heralding it as a way to encourage a transition to clean energy while also reliably supporting the country’s long-term energy needs.

In practice, the new rule may accelerate the trend of coal divestment around the world and cause the dwindling number of coal plants in the United States to eventually shut down. However, the long-term impact of the rule is still uncertain as 27 states, including Texas, have sued the Environmental Protection Agency to block it.

Cyrus Reed, legislative and conservation director for the Sierra Club’s Lone Star Chapter, said the new rule does not automatically close any coal plants but does give facilities an opportunity to install carbon capture technology or shut down over a long compliance period.

“One of the major concerns about coal is when you burn coal you produce lots of carbon dioxide, and carbon dioxide is the main gas that is causing the climate extremes that we are witnessing,” Reed said. “All the plants in the Waco area are major contributors of carbon dioxide and other gases that cause global warming.”

NRG’s Limestone Electric Generating Station, located in Limestone County 47 miles east of Waco, emitted 7.2 million. Luminant’s Oak Grove Power Plant, a lignite plant 42 miles southeast of Waco in Robertson County, emitted 14 million tons.

Under the new rule, coal power plants intended to operate past 2039 will have until 2032 to start capturing 90% of their carbon pollution. Plants that commit to shut down by a 2039 deadline will be required to limit emissions by 2030 at a reduced rate. Plants targeted for closure before 2032 will have no emission reduction obligations under the new rule.

All new baseload gas-fired plants — those operating more than 40% of the time — will be required to reduce their emissions equivalent to 90% carbon capture and sequestration by 2032. Intermediate gas plants, which operate 20% to 40% of the time, will be required to limit emissions to 1,150 pounds of carbon dioxide per megawatt hour. Peaker gas plants, which operate less than 20% of the time, will be required to use lower-emitting fuels.

The Environmental Protection Agency may regulate existing gas-fired power plants in the future. The federal agency opened a nonregulatory docket to gather information on the topic in March.

The power sector emitted 25% of the overall domestic emissions of greenhouse gases in 2022, making it the largest stationary source of such emissions. The Environmental Protection Agency estimates carbon capture efforts per the new rule could cause a reduction of 1.38 billion metric tons of carbon dioxide through 2047.

As of Friday, none of the plants east of Waco have committed to cease operations before the 2039 deadline. Luminant, the parent company of Oak Grove in Robertson County, did not respond to multiple requests for comment on the impact the new rule would have on the plant.

Ann Duhon, senior manager for generation communications at NRG Texas Power, which operates the Limestone plant, said on Friday over email the company was continuing to evaluate the impact of the new rule on their operations.

“Regarding the new EPA rules, NRG takes protecting the environment and complying with all environmental requirements very seriously,” Duhon stated in the email. “We are proud of our environmental record and committed to delivering on our vision for a more sustainable energy future by targeting a 50% reduction of our greenhouse gases by 2025 (based on a 2014 base year) and net-zero emissions by 2050.”

Bryon Kohls, project director for the Sandy Creek Energy Station in McLennan County, said in a May 21 email the energy station did not have any comment on the EPA rule and its impact to the facility.

McLennan County Judge Scott Felton said regardless of whether the new rule causes Sandy Creek to close, the county has already felt the effects in the last decade as the plant has been devalued on the tax rolls.

“It’s already affected us,” he said. “It would continue to drop in value if they’re not selling power into the grid.”

The coal plant was originally valued at $884.5 million by the McLennan County Appraisal District’s appraisal review board, but Sandy Creek officials contested the values and filed multiple lawsuits against the district to lower their tax value. The plant is now valued at $318 million on the tax rolls.

In appraisal review board hearings and district court, attorneys for Sandy Creek cited unfavorable industry conditions as cause for the devaluation and said the era of cheap natural gas had made coal energy uncompetitive.

“You’ve heard a lot about this coal plant being new, with a lot of pollution control equipment, but it’s still going to be a coal plant,” attorney Bill Sullivan said in a 2016 trial as part of the Sandy Creek devaluation case, speaking on behalf of Sandy Creek. “It’s never going to be a gas plant, a wind turbine or a solar plant. Clean energy and natural gas are the future. This is never going to be.”

As of this year, over 200 global financial institutions have divested from coal or have committed to divest in the near future by establishing coal exit policies, according to the Institute for Energy Economics and Financial Analysis. Divestment from coal has also had an effect on jobs. The 2023 U.S. Energy and Employment Report stated coal industry employment in Texas fell by nearly 500 positions from 2021 to 2022.

To stay open, coal plants will be required to invest in new technologies to capture carbon emissions. Energy analysts from the International Energy Agency have said the cost of carbon capture technology can vary greatly, as there are costs associated with capture, transportation and storage, but are generally considered to be expensive.

The agency estimates carbon capture for power generation could cost anywhere from $40 to $120 per ton of carbon dioxide, which would mean up to $1.7 billion a year for Oak Grove. Direct air capture is the most expensive process, costing anywhere from $134 to $342 per ton of carbon dioxide.

Companies may receive subsidies or a tax credit from the federal government for implementing carbon capture and storage technologies. The 2021 Infrastructure Investment and Jobs Act provided $8.2 billion in advance appropriates for carbon capture and storage programs through 2026. Companies that use these technologies are eligible for the 45Q tax credit, which the Joint Committee on Taxation estimates will reduce federal revenue by $5 billion through 2027.

There could be additional costs incurred from other regulations the Environmental Protection Agency announced in April. Along with the new carbon emission standards, the federal agency released three other rules that would require plants to reduce toxic wastewater, toxic metal pollution and coal ash waste. The other rules reduce the mercury emission limits by 70% for lignite-fired units such as Oak Grove and reduce the emission limits for other toxic metals by 67% for all coal plants. Plants will be required to use continuous emission monitoring systems to provide real-time data.

The EPA estimates these limits will result in the reduction of 1,000 pounds of mercury, at least 7 tons on non-mercury metals classified as hazardous air pollutants, 770 tons of fine particulate matter and 280 tons of smog-forming nitrogen oxides. Human exposure to these substances can cause serious adverse health effects.

For example, mercury exposure has been linked to vision loss, as well as speech and hearing impairment. Oak Grove, a large plant that burns lignite coal, emitted 298 pounds of mercury last year, more than any other in the country. Lignite produces less energy per pound than the coal most plants burn, and lignite-burning plants had less-stringent mercury limits before the update in April.

Felton said the new carbon dioxide rule is a good indication of the federal government’s effort to make rapid changes to the country’s energy supply, but it could ultimately impact the county’s tax base and the state’s energy grid.

Reed said the long compliance period gives Texas ample time to transition to other forms of reliable energy.

“If you were to remove all the coal plants tomorrow it would be problematic but if you’ve got a transition where you’re saying we’re going to, between now and 2030, be retiring coal plants, that is plenty of time to replace the megawatts of coal with cleaner forms of energy,” he said.

Wind and solar generation already provide more energy than coal in the grid operated by the Electric Reliability Council of Texas, which covers most of the state including Waco.

A 2022 study from Rice University found that Texas could replace nearly all its coal output with solar and wind if projects were placed strategically in sunny and windy parts of the state. For example, the study found that if wind power plants were placed in West and South Texas, where wind peaks happen at different times of day, those plants could provide power throughout most hours of the year.

To ensure reliable energy during times when it is not sunny or windy, Reed said Texas can invest in batteries to store excess power or alternative forms of energy generation, such as geothermal power.