The Utility MACT: Fighter of Green Energy’s Battles

by Jackie Moreau on January 4, 2012

in Blog, Features

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The question of whether the green energy industry can fight its own battles within the competitive energy market was answered Wednesday with the release of U.S. EPA’s Utility MACT rule.  The unsurprising answer is no, it cannot.  This rule, dressed with the façade of an earth-friendly health-protecting mandate, is a regulation intended to fade out the coal industry—one of the renewable industry’s strongest competitors.

The Utility MACT rule, announced by EPA Chief Lisa Jackson on December 21, 2011 at the choice location of the Children’s National Medical Center in D.C., has two rules for coal-fired power plants.  The first rule curbs air pollution in states downwind from “dirty” coal-fired power plants.  The second would set the first standards for mercury and other pollutants from power plant smokestacks, requiring plants to install “maximum achievable control technology” to reduce emissions of pollutants.  EPA estimates this rule will cost $9.6 billion while the industry approximates the cost of $100 billion; between the two, this rule is one of the most expensive regulations to date.   An analysis done by AP stated that these rules eliminate more than 8 percent of coal-fired energy nationwide.  AP also found that more than 32 mostly coal-fired power plants in a dozen states will be forced to shut down and an additional 36 might have to close because of new federal air pollution regulations; together, those plants produce enough electricity for more than 22 million households.

Though President Obama issuedpresidential memorandum intended to provide flexibility for the compliance of plants, North American Electricity Reliability Corporation and other power plant operators have pressed for  more time to comply with the rules so as to avoid too many plants from retiring all at once.  In addition to probable retirements, about 500 units will need to be idled temporarily to set up the new pollution controls. A number of of those units are at vital junctions on the grid and are critical to restarting the electrical network in case of blackouts.  Though it has been stated that “the lights will stay on,” the cost of keeping them on will proliferate electricity rates considerably.

The options for coal-fired plant owners tend to be: switch to a lower sulfur coal, install additional pollution controls, or retire the boiler and perhaps build a new source of generation.  For many plants, retirement is the cheapest option.  It is much more costly to retrofit these plants than retire them and build new generation.  With retirement being the cheapest option under EPA’s new rule, it is clear that the EPA wishes to handicap this industry rather than reduce pollution emissions.  The impact will be heaviest among the towns that speckle of the coal belt states — Kentucky, West Virginia and Virginia — where numerous units will most likely be retired and entire towns could be wiped out due to the overwhelming drop in tax revenues.

The Wall Street Journal stated, “The EPA also took the extraordinary step of issuing a pre-emptive ‘enforcement memorandum,’ which is typically issued only after the EPA determines its rules are being broken. The memo tells utilities that they must admit to violating clean air laws if they can’t retrofit their plants within the EPA’s timeframe at any cost or if shutting down a plant will lead to regional blackouts. Such legal admissions force companies into a de facto EPA receivership and expose them to lawsuits and other liabilities.”

Jackson contends that the return on this rule is worthwhile, saving billions of dollars in health benefits.  The Wall Street Journal points out, however, that these skewed “purported benefits—to be precise, 99.99%—come by double-counting pollution reductions like soot that the EPA regulates through separate programs and therefore most will happen anyway. Using such “co-benefits” is an abuse of the cost-benefit process and shows that Cass Sunstein’s team at the White House regulatory office—many of whom opposed the rule—got steamrolled.”  The coal industry, demonized as the “dirtiest” source of energy by the green-eyed environmentalist, could be the first of many victims to be assaulted in the energy market.

far2right January 10, 2012 at 8:49 am

Theoden King of Rohan lamented, “How did it come to this?”

This is how. GHWB signed the CAAA of 1990 into law. Title III of these amendments required a precise regulatory framework for reduction of specified “hazardous air pollutants” for industry sectors to be defined by EPA, one of which was utilities. The WJC Admin. said only Hg needed to be regulated from utilities. The GWB Admin. said that regulation for utilities under Title III was not reasonable and appropriate, opting for a CAMR approach instead. The D.C. Court b-slapped GWB, vacating and remanding CAMR. The court, being the public health and environment experts that they are (they know everything there is to know about any thing), also told EPA that utilities and industrial boilers must be regulated under Title III. The BHO Admin. then started the MACT process all over determining the best 12% performing sources and thereby setting MACT limits for all existing sources based on brand new emissions data measurements collected after years of technological improvements since 1990. So, by kicking the can down the road by WJC and GWB (at industry’s prompting), the lobbyists shot themselves in the foot. Had utilities accepted Title III back in the 90’s, the NESHAP would not have been nearly as aggressive. Industry would also have been in a much better position to fight against residual risk claims by EPA.

BobRGeologist January 10, 2012 at 10:03 pm

I speak with many years of experience as a geologist in the coal industry and I know that the condemning of the use of coal in power generation is equivalent to “cutting off your nose to spite your face.” We are in a glacial climate with iced up polar areas and need a robust (plenty of CO2 in our greenhouse gas) to stave off the next continental glaciation,
#6 in the series of 100,000 year Pleistocene glaciations. Besides it will do wonders in the growing of food for our burgeoning world population

CB January 12, 2012 at 10:23 am

Eternal Vigilance… or…?

Once shut down for only a few years, those stations will be dead. Getting them running again will take years. Years.

Of course, nobody will blame those who are to blame: the hippies. And as children die in winter cold, predictably, the hippies will frolic in California, predictably. And in Congress, of course. And in the media. Etc. Etc. Etc. Etc. Etc. Etc. Etc. Etc. Etc. Etc. Etc. Etc. Etc. Etc. Etc. Etc. Etc.

This then is the real world: if you are too stupid to keep your children alive… then you will watch them die. If you are too pathetic to fight for your children’s future, to stand against their enemies… then they will have NONE, and their enemies will… frolic, in the sunshine.

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