Comment from the R Street Institute on the Proposed Repeal of GHG Standards for Fossil Fuel-Fired Electricity Generating Units

U.S. Environmental Protection Agency
EPA Docket Center – Mail Code 28221T
1200 Pennsylvania Ave. NW
Washington, D.C. 20460

Public Input from the R Street Institute on the Proposed Repeal of
Greenhouse Gas Emissions Standards for Fossil Fuel-Fired Electric Generating Units
(Docket ID No. EPA-HQ-OAR-2025-0124)

Dear Administrator Zeldin,

The R Street Institute respectfully submits this public comment related to the proposed regulatory action titled “Proposed Repeal of Greenhouse Gas Emission Standards for Fossil Fuel-Fired Electric Generating Units.” Here, we offer our insight and particular expertise in greenhouse gas (GHG)-related regulation to inform policymakers as to the impacts of policy actions. We respectfully request your consideration of our included comment.

I. Summary of R Street Institute

The R Street Institute (RSI) is a nonpartisan public policy institute with a focus on free market solutions to public policy issues. Founded over 10 years ago, RSI originated with a focus on identifying free market policy solutions to environmental issues, paying particular attention to climate change and its considerable risk to insurance markets. RSI has leveraged its expertise to help policymakers across the political spectrum identify the least-cost policies to achieve the best environmental outcomes.

II. Introduction

Promulgated in 2024 as part of the Greenhouse Gas Standards and Guidelines for Fossil Fuel-Fired Power Plants, the Carbon Pollution Standards (CPS) aimed to mandate that fossil fuel-fired power plants utilize carbon capture and sequestration (CCS) technology to reduce carbon dioxide (CO2) emissions.^[1] In evaluating the CPS, we believe the U.S. Environmental Protection Agency (EPA) erred in its determination of CCS as the Best System of Emission Reduction (BSER). As such, we believe the CPS costs are likely higher than estimated—potentially significantly so. Additionally, we find cause to believe the EPA did not properly compare CPS benefits to domestic costs. Given these issues, we believe the CPS should be repealed (or substantially modified) to better fit with regulatory standards that ensure net benefits to the American public.

This public comment also addresses a question contained in the proposed repeal of the CPS: Should the EPA reconsider GHGs as pollutants or focus on repealing requirements only? We emphasize that litigation uncertainty and the risk of market confusion should lead to a preference for rectifying the EPA’s errors on the CPS formulation rather than exploring the underlying question of whether CO2 is a pollutant.

III. Problems with the Formulation of the CPS

While there are several problems with the assumptions in the initial formulation of the CPS, we focus on three here in hopes of guiding the most appropriate modification to the standards.

A. The EPA’s Assumptions for CCS Were Not Demonstrably True

The CPS centered on the idea that CCS was the BSER, based on the estimated capital costs of carbon capture equipment and sequestration costs. While this approach may seem reasonable, it ignores the challenges that have impeded growth in the CCS industry—notably, limited pipeline access. Additionally, the lack of CCS growth, even in areas with pipeline access, indicate that the EPA likely overestimated the economic feasibility of CCS. While the EPA may have assumed that additional capital costs for CCS and power generation were minimal, such assumptions are unlikely to reflect realistic commercial conditions. The lack of evidence for successful commercialization of CCS undermines its credibility as the BSER.

CCS for power plants requires that the captured carbon be sequestered underground; however, not all geologic sites are fit for sequestering CO2. Especially in cases of existing power plants that would need modification and are not sited near any existing sequestration sites or CO2 pipelines, new pipelines would have to be constructed to facilitate sequestration. But the problem with this seemingly reasonable assumption is that it has been nearly impossible to permit new CO2 pipelines to date.

As detailed in a recent RSI analysis, the level of CO2 pipeline mileage has remained relatively flat since 2013, and even decreased in 2023.^[2] This happened despite the establishment of subsidies for carbon sequestration via the 45Q tax credit, expanded significantly as part of the Bipartisan Budget Act of 2018.^[3]

There are several reasons for the difficulty in permitting new CO2 pipelines, but the salient datum is that not even one of the four currently proposed large CO2 pipelines has secured a permit—and three were outright denied.^[4] The CPS’ BSER relied on infrastructure that has not been feasible to build thus far. In addition to challenges with the commercialization of CCS, there is a considerable permitting barrier to the market entry of CO2 pipelines. There is no federal backstop authority for permitting CO2 pipelines, and states often have mismatched permitting frameworks that make long interstate CO2 pipelines difficult to approve.^[5]

Ultimately, we at RSI disagree with the CPS’ assertion that it was a suitable BSER. Quite simply, as RSI pointed out in response to the CPS, the idea that CCS is a BSER for coal when only one coal power plant in the country has utilized it is suspect.^[6] Consequently, the EPA likely significantly underestimated the importance of barriers to market entry and market conditions governing CCS costs and erred in its assertion that CCS was a low-cost, readily available solution to power plant emissions.

B. The EPA’s Modeling of Costs and Benefits Had Problems

To determine if a regulation carries a net benefit to the U.S. public, we must weigh the estimated domestic costs of a regulation against domestic benefits. Without delving too deeply into the regulatory impact analysis (RIA) that supported the CPS, some aspects of the modeling call into question the EPA’s conclusion that the rule presented net benefits.

The most obvious and potentially problematic issue concerns the benefits estimates. In calculating the CPS’ benefits, the EPA constrained itself to a social cost of carbon (SCC) value of approximately $220 per metric ton (in 2019 dollars).^[7] This value was reliant upon a 2 percent discount rate and represents a global value. There are good reasons to doubt the accuracy of this figure, but conventional guidance for regulators estimating benefits is to utilize a range of discount rates to account for economic uncertainty. While we at RSI acknowledge rationales for utilizing lower discount rates in estimating climate-related benefits, we note that the purpose of discount rates in regulatory estimates is to enable regulators to account for economic uncertainty utilizing a range of discount rates. By constraining climate-benefit estimates to extraordinarily low discount rates, including global benefits, and refusing to consider higher discount rates, the EPA’s estimated climate benefits for the CPS demonstrate the high end of a range without proper comparison to domestic costs. Thus, estimates fail to approximate the net costs or burdens of the rule to the U.S. public accurately.

For example, the CPS estimated the present value of the regulation’s climate benefits at $270 billion ($14 billion annualized).^[8] If they had instead used an earlier SCC value that considered only domestic benefits and relied on the more conventional discount range of 3 to 7 percent,^[9] the climate benefit would have ranged from $1.23 billion ($63 million annualized) to $7.3 billion ($382 million annualized). These values fall below the estimated cost of the regulation, suggesting the CPS may be net harmful to the U.S. economy.

Additionally, methodological explanations in the CPS’ RIA reveal that the EPA did not accurately consider the regulation’s economy-wide costs. Notably, pages 18 and 19 of Section 3 state that estimates show a negative cost in select years.^[10] This is due to the modeling of power plants retiring rather than incurring the cost to comply with the regulation.

Unfortunately, the EPA failed to appreciate the broader effect. If a power plant retires in response to a regulation to avoid incurring new capital costs, the effect is that electricity demand has shifted to a higher cost generator (since we would assume the retired plant was in operation to supply the least cost electricity, and its retirement shifts demand to the next highest marginal cost supplier).

While this select modeling error had only marginal impact on the EPA’s overall estimated regulatory cost, it hints at broader reasons to doubt the credibility of the modeling exercise altogether. If the EPA failed to understand how the regulation would increase electricity costs in this instance, are we sure they have modeled other aspects correctly? There are further reasons to doubt this—for example, while modelers assumed renewable electricity costs would fall, a 2025 report on energy costs shows that electricity costs for wind and solar have increased since 2021.^[11]

If the EPA failed to accurately model how the regulation would affect electricity prices, then it may have substantially underestimated the overall economic costs of the regulation. To wit, alternative methodologies of estimating the economic impact of regulations typically yield higher cost estimates. Notably, the U.S. Energy Information Administration (EIA) in their modeling of the proposed Clean Power Plan in 2015 found that the regulation would reduce cumulative GDP by 0.17-0.25 percent—a far higher cost than that estimated by the EPA.^[12]

Ultimately, the modeling of the CPS seemed to minimize assumptions of cost while maximizing assumptions of benefits. Given the regulation’s high potential costs, additional scrutiny of its impact on electricity prices is warranted.

C. The Rule’s Design Made Climate Benefits Uncertain

As noted in an RSI response to the rule, the CPS’ design would have permitted activities to comply with the regulation that would have raised CO2 emissions overall.^[13] While this may seem unusual, it hinges upon the exemption of small electricity generating units from the regulation. RSI notes:

While the EPA’s final rule for the existing gas fleet remains to be seen, the key is how much the new rule deters new gas development overall or simply morphs its configuration. For example, if a firm planned to build a “baseload” natural gas plant with a utilization of 80 percent, it could instead build twice that capacity and operate it half as much to comply with the rule. This strategy would shift investment patterns to lower efficiency gas plants—specifically more combustion turbines than combined cycle facilities—which would increase per unit emissions.^[14]

Simply, the EPA’s CPS assumed an unreasonably high level of confidence in the cost-feasibility and viability of growth of the BSER. Even modest errors in that regard would result in far less emission abatement—and consequently, less benefit—than anticipated by the EPA.

D. Overall Problems with the CPS

In general, we note that the CPS as proposed was based on problematic assumptions that give good reason to doubt its cost-benefit claims. Regulators should be held to a high analytical quality standard and should accurately calculate the totality of benefits and costs while appropriately acknowledging uncertainty through the application of a range of discount rates. The CPS’ methodology did not appropriately account for uncertainty, and its compliance requirements should be repealed until a more appropriate assessment of the regulation’s impacts can be considered.

Additionally, the Supreme Court of the United States (SCOTUS) decision in West Virginia v. EPA explicitly rejected the idea that the EPA has the authority under Section 111 of the Clean Air Act to go beyond reasonable pollution controlling regulation.^[15] In other words, while the EPA might regulate pollution from power plants, it cannot dictate what sources of power Americans are permitted to use. It is highly likely that the CPS exceeded this authority, given the lack of evidence that the proposed BSER would be commercially viable at the anticipated cost.

IV. How the EPA Should Proceed with the Repeal of the CPS

As noted in the proposal, the EPA has two potential avenues for repealing the CPS: 1) Deny that CO2 is a pollutant that must be controlled under Section 111 of the Clean Air Act (CAA) or 2) Repeal the CPS requirements discretely due to their failure to meet appropriate requirements of reasonable attainability. We consider the latter option more appropriate and able to restore the EPA to a higher standard of rulemaking, while the former engages in legally vulnerable policymaking that exacerbates market uncertainty.

Put simply, there is a strong case that the CPS’ requirements were improperly developed. While our specific critiques of the CPS were outlined earlier, the fact that compliance relies on technologies that are not yet demonstrated to be economically and technically feasible for industry is substantive enough to demonstrate the need for repeal. Notably, the lack of commercial-scale power plant CCS demonstration and the inability to permit supporting infrastructure for CCS expansion in and of itself makes it improper for the EPA to mandate CCS utilization across the nation.

The alternative approach outlined by the EPA, which challenges the idea that CO2 is a pollutant, is more problematic and could create industry uncertainty for two key reasons.

The first is that the EPA’s proposed application of this standard is inconsistent with its consideration of the benefits from avoiding other pollutants. In the proposed rulemaking, EPA noted that because the contributions of the U.S. power sector to global emissions can only potentially have a slight impact on temperatures that the value of any GHG controlling regulation is too small to be worthwhile.^[16] However, this is not consistent with our economic appreciation for the marginal benefits of reducing pollutants.

In estimating the impacts of abating a pollutant, low levels of current air pollution diminish the marginal benefit of additional pollution abatement. In other words, there are diminishing returns to further pollution reduction once a safe level of air quality is achieved. Inversely, this means that the marginal benefit of abating one ton of emission of a pollutant is greatest when the atmospheric concentration of the pollutant is at its peak. But the EPA’s logic regarding CO2 is the opposite of this, arguing that the larger the atmospheric concentration of CO2, the smaller the abatement benefit.

If the EPA held to this position, it could open the door to increasingly large benefit estimates supporting regulatory burdens wherein regulators find greater benefit when pollution levels are lowest and, ironically, could justify increasingly high burdens from regulation despite diminishing benefit. We believe such a position is inconsistent with a conventional appreciation for environmental economics, and should be rejected by the EPA so as to avoid onerous future regulation that would have costs exceeding benefits.

The second is that the assertion that CO2 is not a pollutant is legally ambiguous and creates uncertainty in energy markets that must make long-term investment decisions. While there is a defensible argument that the current SCOTUS would overturn the 2007 decision in Massachusetts v. EPA, which determined that CO2 was a pollutant to be regulated under the CAA, this legal debate cannot occur in a vacuum. While SCOTUS may decide that the 2007 determination was improper, any new challenge of the question of CO2’s status as a pollutant will also come with nearly two decades of additional related policy debate and evidence to consider.

The argument that SCOTUS erred in 2007 may seem reasonable given the circumstances of the time, but an argument that SCOTUS would rule that CO2 is not a pollutant in 2025 is more tenuous. Penned by Chief Justice John Roberts, the dissenting opinion in Massachusetts v. EPA did not dispute the nature of CO2 as a pollutant; rather, it disagreed with the idea that regulators should supplant the role of Congress and challenged the standing of Massachusetts to bring forth such a case. Roberts writes:

Apparently dissatisfied with the pace of progress on this issue in the elected branches, petitioners have come to the courts claiming broad-ranging injury, and attempting to tie that injury to the Government’s alleged failure to comply with a rather narrow statutory provision. I would reject these challenges as nonjusticiable. Such a conclusion involves no judgment on whether global warming exists, what causes it, or the extent of the problem [emphasis added]. Nor does it render petitioners without recourse. The Court’s standing jurisprudence simply recognizes that redress of grievances of the sort at issue here “is the function of Congress and the Chief Executive,” not the federal courts. . .^[17]

Roberts’ opinion was largely that it was up to Congress to settle how to address climate change. The idea that a state could argue that its residents hypothetically might be harmed by climate change and thus EPA should regulate CO2 was what Roberts took issue with, since the plaintiff had not sufficiently demonstrated harm.

Should SCOTUS be presented with a narrower question, such as “Is CO2 a pollutant as defined under the CAA?” it is entirely reasonable to anticipate that the judges may decide in the affirmative. To reject the idea that CO2 is a pollutant—with a broad definition of potential qualities and impacts under the CAA—would require an especially convincing argument, particularly when considering that the EPA regulates other pollutants with similar indirect, international, and speculative human health impacts like ozone-depleting substances.

In the interim, inviting a broad legal question as to the defining criteria of CO2 as a pollutant could chill investment in energy and emission-intensive activities, as uncertainty creates additional financial risk. Notably, power plant development occurs on an investment horizon spanning multiple administrations, such that the potential for heavy regulation under future administrations will stymie investment today.

Rather than exacerbate regulatory uncertainty, the most likely path to reduce regulatory costs and maximize net benefits in the long term is to replace CPS with a legally defensible and durable rule. For example, requiring power plant efficiency levels (known as heat rates) would establish a reasonable, low-cost BSER that would yield positive net benefits even using a credible domestic SCC, as was done under the Affordable Clean Energy Rule in 2018.^[18]

V. Conclusion

Repealing the CPS is appropriate because the quality of the rulemaking fell considerably short and would entail substantial market interventions that are not demonstrably cost-feasible to achieve. Additionally, the updated methodology for calculating climate benefits utilized by the CPS enabled the EPA to estimate extraordinarily high climate benefits without properly weighing them against domestic costs. The EPA is on solid footing to assert that the earlier finalization of the CPS was problematic, particularly in its assumed availability of CCS supporting infrastructure.

However, repealing the CPS based on assertions that GHGs are not pollutants would force the EPA to engage in a speculative legal exercise that creates uncertainty. Therefore, we suggest that the EPA discretely repeal those CPS elements reliant on flawed assumptions of feasibility. Additionally, the negative economic impact of regulatory uncertainty surrounding potential future regulation could be mitigated by pursuing an alternative BSER. Notably, in 2018 the EPA utilized heat rate improvement to produce a net-beneficial BSER that was attainable, and a similar approach would again be appropriate in replacing the CPS.

RSI respectfully requests your consideration of the information provided in this public input.

Respectfully submitted,

Philip Rossetti
Senior Fellow
Energy and Environment
R Street Institute
prossetti@rstreet.org
(202) 525-5717

[1] 89 Fed. Reg. 39798 (May 9, 2024). https://www.federalregister.gov/documents/2024/05/09/2024-09233/new-source-performance-standards-for-greenhouse-gas-emissions-from-new-modified-and-reconstructed.

[2] Philip Rossetti, “Carbon Dioxide Removal Will Face Mixed Permitting Challenges,” R Street Institute, Sept. 30, 2024. https://www.rstreet.org/commentary/carbon-dioxide-removal-will-face-mixed-permitting-challenges.

[3] Angela C. Jones and Donald J. Marples, “The Section 45Q Tax Credit for Carbon Sequestration,” Congressional Research Service, Aug. 25, 2023, p. 1. https://www.congress.gov/crs_external_products/IF/PDF/IF11455/IF11455.4.pdf. 

[4] Paul W. Parfomak, “Siting Challenges for Carbon Dioxide (CO2) Pipelines,” Congressional Research Service, Nov. 30, 2023, pp. 1-2. https://www.congress.gov/crs_external_products/IN/PDF/IN12269/IN12269.9.pdf.

[5] Rossetti. https://www.rstreet.org/commentary/carbon-dioxide-removal-will-face-mixed-permitting-challenges.

[6] Devin Hartman, “Market Gateways, Not the EPA, Determine Power Sector Decarbonization,” R Street Institute, April 25, 2024. https://www.rstreet.org/commentary/market-gateways-not-the-epa-determine-power-sector-decarbonization.

[7] Office of Air Quality Planning and Standards, Regulatory Impact Analysis for the New Source Performance Standards for Greenhouse Gas Emissions from New, Modified, and Reconstructed Fossil Fuel-Fired Electric Generating Units; Emission Guidelines for Greenhouse Gas Emissions from Existing Fossil Fuel-Fired Electric Generating Units; and Repeal of the Affordable Clean Energy Rule, U.S. Environmental Protection Agency, April 2024, p. 4-14. https://downloads.regulations.gov/EPA-HQ-OAR-2025-0124-0035/content.pdf. 

[8] 89 Fed. Reg. 39798. https://www.federalregister.gov/d/2024-09233/p-2578.

[9] Jason Bordoff, “Trump vs. Obama on the Social Cost of Carbon—and Why It Matters,” The Wall Street Journal, Nov. 15, 2017. https://www.wsj.com/articles/trump-vs-obama-on-the-social-cost-of-carbonand-why-it-matters-1510769071.  

[10] Office of Air Quality Planning and Standards, pp. 3-18–3-19. https://downloads.regulations.gov/EPA-HQ-OAR-2025-0124-0035/content.pdf.

[11] “Levelized Cost of Energy+,” Lazard, June 2025, p. 14. https://www.lazard.com/media/uounhon4/lazards-lcoeplus-june-2025.pdf. 

[12] U.S. Energy Information Administration, “Analysis of the Impacts of the Clean Power Plan,” U.S. Department of Energy, May 2015. https://www.eia.gov/analysis/requests/powerplants/cleanplan/pdf/powerplant.pdf.  

[13] Hartman. https://www.rstreet.org/commentary/market-gateways-not-the-epa-determine-power-sector-decarbonization.

[14] Ibid.

[15] Chief Justice John Roberts, “Opinion of the Court: West Virginia et al. v. Environmental Protection Agency et al.,” Supreme Court of the United States, June 30, 2022, pp. 24-28. https://www.supremecourt.gov/opinions/21pdf/20-1530_n758.pdf.

[16] 90 Fed. Reg. 25752 (June 17, 2025), p. 120. https://www.federalregister.gov/d/2025-10991/p-120. 

[17] Chief Justice John Roberts, “Opinion of the Court: Massachusetts et al. v. Environmental Protection Agency,” Supreme Court of the United States, April 2, 2007. https://supreme.justia.com/cases/federal/us/549/497/#tab-opinion-1962181.

[18] “Fact Sheet: The Affordable Clean Energy Rule (ACE),” U.S. Environmental Protection Agency, June 19, 2019. https://www.epa.gov/sites/default/files/2019-06/documents/bser_and_eg_fact_sheet_6.18.19_final.pdf.