-----

Resources



Market News

 December 21, 2011
EPA Finalizes Air Toxics Rule

 The Environmental Protection Agency (EPA) today issued its final Mercury and Air Toxics Standards (MATS), which will require about 40% of all coal-fired power plants in the U.S. to deploy pollution control technologies to curb emissions of mercury and other air pollutants such as arsenic and cyanide within three years. The regulation has been called the "most expensive order" aimed at companies that has been considered by the Obama administration.

The EPA also signed revisions to the new source performance standards (NSPS) for fossil fuel--fired electric generating units that revise the standards that new coal- and oil-fired power plants must meet for particulate matter (PM), sulfur dioxide (SO2), and nitrogen oxides (NOx).

A Mostly Unchanged Rule
The MATS rule was designed to reduce emissions of heavy metals---including mercury, arsenic, chromium, and nickel---and acid gases, including hydrochloric acid and hydrofluoric acid.

The final MATS rule is mostly unchanged from its March-issued proposal. The EPA said it "used new information from the public comment process to adjust some aspects of the rule," but the approach remains the same. Key changes: some emission limits are adjusted, including using filterable particulate matter (PM) as a surrogate for the metal toxics limit; a revised definition of coal subcategories; improved monitoring provisions for clarity; and an alternative compliance option for sources that plan to comply by averaging across multiple units.

Under the rule, all power plants will have to limit their toxic emissions, preventing 90% of the mercury in coal burned from being emitted into the air. Numerical emission limits are also set for PM (as a surrogate for toxic non-mercury metals) and hydrochloric acid (a surrogate for all toxic acid gases). The standards set work practices, instead of numerical limits, to limit emissions of organic air toxics, including dioxin/furan, from existing and new coal- and oil-fired power plants. The work practice standards essentially require an annual performance test program for each unit that includes inspection, adjustment, and/or maintenance and repairs to ensure optimal combustion.

The revisions to the NSPS for fossil fuel--fired units include revised numerical emission limits for PM, SO2, and NOx.

The EPA claims that the standards can be met with a "range of widely available and economically feasible technologies, practices and compliance strategies [that] are available to power plants to meet the emission limits, including wet and dry scrubbers, dry sorbent injection systems, activated carbon injection systems, and fabric filters."

Compliance in Four Years
All coal- and oil-fired electric generating units with a capacity of 25 MW or more will be required to comply with MATS within the standard three years. But the EPA left the door open for extensions, saying it was "encouraging permitting authorities to make a fourth year broadly available for technology installations---and if still more time is needed, providing a well-defined pathway to address any localized reliability problems should they arise."

Heeding concerns about unrealistic compliance timelines, the EPA said that it had maximized "flexibilities under the law" when promulgating the standards, ensuring that they abide by a Presidential Memorandum that directs the EPA to use tools provided in the Clean Air Act to implement MATS in "a cost-effective manner that ensures electric reliability."

Costs and Reliability
The EPA said that "power plants are the largest remaining source of several toxic air pollutants," including arsenic, cyanide, and dioxin, and are responsible for half of the mercury and over 75% of the acid gas emissions in the U.S. About 1,100 coal-fired and 300 oil-fired power units at 600 power plants emit these pollutants in the U.S., the agency estimates.

"Today, more than half of all coal-fired power plants already deploy pollution control technologies that will help them meet these achievable standards. Once final, these standards will level the playing field by ensuring the remaining plants---about 40 percent of all coal fired power plants---take similar steps to decrease dangerous pollutants."

In a March 2011 analysis released when the rule was proposed, the EPA estimated 11,440 MW of coal-fired capacity (.xls) would be required to retire. In revised figures, the agency (and the DOE) analysis shows about 4.7 GW would retire---"less than one half of one percent," of all coal plants, it says. The EPA says the standard would save lives and create 9,000 more jobs as plants invest billions to install pollution controls. It has also emphasized public health benefits, stating that the rule could prevent 17,000 premature deaths from toxic emissions.

EPA estimates show that electricity rates are projected to stay "well within normal historical fluctuations." The standards will result in relatively small changes---about 3%---in the average retail price of electricity, primarily due to increased demand for natural gas, the agency says.

Earlier this year, the EPA estimated the rule would cost $11 billion per year, but in a new "Regulatory Impact Analysis for the Final Mercury and Air Toxics Standards," the agency finds that the projected annual incremental private costs of the final MATS rule to the power sector are $9.6 billion in 2015 (in 2007 dollars).

Industry estimates have been much steeper: American Electric Power (AEP), for example, this June claimed the rules would force it to shut down 11 power plants and cost the Ohio-based generator alone more than $8 billion. According to White House records, industry trade groups had met with White House officials as recently as Dec. 14 to address cost concerns and secure utilities more time to comply with the rule.

More Rules on the Horizon
The agency signed off on the final rule on Dec. 16 as was required by a Feb. 8, 2008 order by the U.S. Court of Appeals, D.C. Circuit. That decision removed power plants from the Clean Air Act list of sources of hazardous air pollutants. At the same time, the court vacated the Clean Air Mercury Rule (CAMR), requiring the EPA promulgate a new rule governing mercury emissions from power plants by Nov. 16, 2011. The agency proposed the Mercury Air Toxics Standards on March 16 to replace CAMR.

In October, the EPA opposed a motion filed by the Utility Air Regulatory Group and 25 states, which urged a federal court to delay finalization of the rule by one year. In a statement on its website, the agency said it had received 900,000 comments regarding the proposed rule, including about 20,000 unique comments. To review those comments, the EPA eventually agreed to a 30-day extension, making Dec. 16 the last date to sign off on the rules.

The EPA this year finalized the Cross-State Air Pollution Rule, which the power sector has bemoaned will result in coal plant closures and derail electric reliability. According to its most recent Action Initiation List, next year---an election year---the agency plans to finalize its controversial "Tailoring Rule," which could require new and modified facilities that emit greenhouse gases to implement a "best available control technology" to mitigate emissions. Other actions include an update to the EPA's 1977 standards for radiation protection at nuclear plants and updated mercury emission standards for electric arc furnaces