New standards for climate change-causing greenhouse gas emissions from power plants and oil refineries were announced by the U.S. Environmental Protection Agency on Thursday. Collectively the nation's roughly 500 fossil fuel-fired power plants and 150 oil refineries emit some 2.4 billion metric tons of carbon dioxide (CO2) and other greenhouse gases per year—nearly 40 percent of total U.S. emissions. The EPA proposes to set standards for both existing and new facilities under the nation's clean air law for greenhouse gas pollution in July and December of 2011 under the new plan, with such standards to take effect in 2012.

"We are following through on our commitment to proceed in a measured and careful way to reduce [greenhouse gas] pollution that threatens the health and welfare of Americans, and contributes to climate change," EPA administrator Lisa Jackson said in a prepared statement to announce the effort.  "These standards will help American companies attract private investment to the clean energy upgrades that make our companies more competitive and create good jobs here at home."

Now, starting January 2, new annual permits for refineries and power plants will cover greenhouse gas emissions for the first time as well. EPA will directly award such permits in Arizona, Arkansas, Florida, Idaho, Kansas, Oregon, Texas and Wyoming while the remaining states will incorporate greenhouse gas standards into their existing permitting process.

The new plan, developed as part of the settlement of a lawsuit regarding EPA efforts to reduce greenhouse gas pollution, proposes to include CO2 standards as part of so-called New Source Performance Standards, which set pollution limits for new facilities while addressing ongoing emissions from existing facilities. Such standards have addressed air pollution from cement plants to diesel engines in the past and will now expand in the case of fossil fuel-fired power plants and oil refineries to include greenhouse gas emissions.

"The agency has adopted 75 [new source performance standards] covering 95 industries, including utilities and refineries" in the past, says Gina McCarthy, EPA Assistant Administrator for Air and Radiation. "We set a standard and industry figures out the most cost-effective way of meeting that standard."

It remains unclear exactly what that standard might be, whether a limit for greenhouse gas emissions per kilowatt-hour of electricity produced, pollution per amount of fuel burned, or a requirement for all coal-burning power plants to achieve a certain level of efficiency, for example, according to the agency.  Nor is it clear how burning natural gas might factor into these standards—though natural gas units will be covered under the plan, according to EPA. Burning that fossil fuel results in roughly half the CO2 emissions of burning coal.

"I have no specifics on the rules other than to tell you that they will be done," McCarthy says. The agency will attempt to identify technologies, such as carbon capture and storage, that can reduce greenhouse gas pollution without imposing too steep of a cost. "They will have a payback range of anywhere from three months to three years," McCarthy says. "It will all be driven by technologies that come to our attention through public comment and early listening sessions."

But it is clear that this is neither a cap-and-trade program nor an economy-wide effort to reduce greenhouse gas emissions. "This is not a cap program," McCarthy says. "We are looking at a sector, identifying what that sector can achieve and setting an emission standard that would apply to individual facilities." The EPA estimates that existing power plants—as long as they make no major upgrades to their equipment—would not face the new standards before 2015 and state governments will play a large role in determining the standards that apply in their territory as well as the timing of its implementation.

"If they really do something that is sensible, like efficiency upgrades, it won't accomplish very much" in terms of greenhouse gas pollution reduction, says Jeff Holmstead, head of the environmental strategy group at the industry lobbying firm Bracewell & Giuliani and former head of the EPA's Office of Air and Radiation, which just announced the new effort. "On the other hand, if they force down CO2 emissions that would be really expensive. You can't do that without [carbon capture and storage] or fuel switching [to natural gas]."

The greenhouse gas rules will also have to interact with other rules to reduce air pollution, such as meeting required reductions with new technology to reduce emissions of smog-forming nitrogen oxides or acid rain-causing sulfur dioxide. Adding those technologies to a coal-fired power plant, for example, results in increased emissions of CO2. "From a public health perspective, the trade-off you get in reducing SO2 is worth increasing your CO2 by a few percentage points," Holmstead says.

And the 112th Congress has already made it clear that it does not support EPA efforts to reduce greenhouse gas pollution. "Today's announcement marks a crescendo in the EPA's long regulatory assault against America's energy producers.  The EPA has its foot firmly on the throat of our economic recovery," said Rep. Fred Upton: R-Mich., incoming chairman of the House Energy and Commerce Committee, in a statement. "We will not allow the administration to regulate what they have been unable to legislate—this Christmas surprise is nothing short of a backdoor attempt to implement their failed job-killing cap-and-trade scheme."

Regardless, "greenhouse gases are now pollutants," McCarthy says. "There will be overall greenhouse gas pollution reductions from both the utility and refinery sector that will be achievable and measurable….This is the beginning of a process that will help decrease greenhouse gas pollution in the U.S."