Santa arrived a few days early for environmentalists, but the coal industry is getting Scrooge.
The Environmental Protection Agency released its Utility MACT rule on Wednesday, issuing a controversial order to slash mercury and other hazardous emissions from coal-fired power plants. By 2016, all plants must emit as little mercury as the best 12% do today, lowering national emissions 90%.
EPA estimates compliance will annually cost the industry $9.6 billion and provide health benefits of at least $37 billion – figures that rule opponents dispute.
The rule, first authorized in the 1990 Clean Air Act amendments, is a win for environmentalists who were furious with the White House for dropping EPA’s review of ozone limits in September.
For coal, the rule essentially ends the Clean Air Act grandfathering that has made it economic to keep running aging coal plants. The expected rule has already been cited in utility decisions to shut old units. Oil-fired plants are also affected, but they produce less than 1% of US electricity while coal produces 43%.
Here Come The Lawyers
The rule is expected to give lawyers a busy holiday as they digest the final text and, probably, head to the federal courthouse. Opponents including 27 states were already asking a court to delay the rule, charging EPA did not take needed time to consider its real-world impacts.
EPA Administrator Lisa Jackson stressed, as she rolled out the rule at Children’s National Medical Center in Washington, DC, that EPA will be reasonable in setting compliance schedules but is firmly behind a rule EPA believes will prevent more than 11,000 premature deaths annually and prevent 130,000 cases of childhood asthma.
Rule opponents protest those and other claimed health benefits actually come from a side effect, as mercury controls also lower fine particulates. Almost no benefits can be attributed to controlling mercury, they contend.
The final rule sticks with a three-year compliance schedule for most plants. Under the Clean Air Act, state air permitting authorities can allow up to one more year for technology installation, and EPA can tap separate authority to grant a fifth year to “reliability critical” installations. EPA said it expects little need for that provision.
The Edison Electric Institute negotiated till the final hours last week trying to get more compliance time. EPA estimates about 600 plants with 1,100 coal and 300 oil units are affected. The North American Electric Reliability Council (NERC) warned in November that EPA’s three-year timeline means hundreds of units shutting at once – either for months for retrofits, or permanently.
NERC said that could endanger electric reliability in some coal-dependent regions, raising the spectre of blackouts.
Sue Tierney with Analysis Group, a former assistant energy secretary in the Clinton administration, said the rule provides flexibility in multiple ways: in compliance technologies, in how multiple units at a station are handled, and for grid reliability. She said ensuring reliability is the reason EPA took extra time to craft a roadmap for needed time extensions, including allowing units slated for shutdown to operate until other units can be backfit.
Bringing Down The Hammer
Estimates of plant shutdowns caused by the rule have varied wildly, from 10,000 to 110,000 megawatts of some 320,000-plus MW of coal capacity in the US. But analysts say many old coal plants are inefficient, and can’t compete with low-cost natural gas anyway. That complicates distinguishing MACT’s impacts.
The rule has split the utility industry. Companies such as PSEG, which has invested in anticipation of the rule, and Exelon, with heavy nuclear investment, have back the rule, while coal-dependent companies like Southern Co. and American Electric Power are fighting it.
Scott Segal, Director of the Electric Reliability Coordinating Council, representing fossil-heavy companies, said neither the scope nor the timing of the rule is legally justified. He said the rule will force replacement of coal plants with less labor-intensive generation, costing the US 1.44 million jobs by 2020.
Mary Gade, EPA Region 5 head during the Bush administration, said where plants have been upgraded, the substantial investment has created jobs. She said the rule has been in the works 21 years and opposition is coming from “hell no we won’t go” utility companies.
And there’s another complication. The MACT rule is hitting utilities at the same time as the Cross-State Air Pollution Rule is tightening limits on sulfur and nitrogen oxides from coal plants. That rule was issued in July and takes effect next month unless opponents get the court stay they are seeking. Like MACT, CSAPR is an Obama administration rewrite of a Bush-era rule found legally defective by the courts.