Manual EPA’s Regulation of Coal-Fired Power: Is a “Train Wreck” Coming?

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Viewed separately, they argue, a particular rule may have limited economic impact, while the second, third, or fourth rule that takes effect more or less simultaneously may drive the power plant operator to decide to retire a given facility. As discussed in this report, such decisions are highly case-specific, involving unique considerations and potentially mitigating factors. The following sections of this report describe seven rules or categories of rules that are the core of the "train wreck" debate, with background on the rule, information on its requirements for those rules that have been proposed or promulgated , and where possible, a discussion of the rule's potential costs and benefits.

We also examine two of the studies—those of the electric industry's trade association EEI and the North American Electric Reliability Corporation—that have attempted to estimate their cumulative economic impacts. CAIR was promulgated in , but was vacated and remanded to the agency by the D.

Circuit Court of Appeals in The agency proposed the replacement August 2, , 6 and it finalized the rule July 6, Both CAIR and its replacement, the Cross-State Rule, are designed to control emissions of air pollution that cause air quality problems in downwind states. The replacement rule, finalized July 6, , is a modified cap-and-trade rule. Limiting interstate trading would address the D. Circuit's ruling, which found CAIR's interstate allowance trading program unlawful. The and requirements place particular emphasis on SO 2 —emissions of which would decline to 2.

States may develop their own State Implementation Plans and may choose to control other types of sources if they wish, but the federal plan will take effect until the state acts to replace it. In August , EPA reported that emissions of SO 2 had declined sharply in both and in the latter year, emissions from fossil-fueled power plants in the lower 48 states at 5.

NOx emissions from the same sources declined to 1. The Cross-State Rule would build on these reductions. The most important benefit would be 13, to 34, fewer premature deaths annually. Avoided deaths and other benefits would occur throughout the East, Midwest, and South, according to EPA, with Ohio and Pennsylvania benefitting the most. Both EEI and NERC included the Cross-State Rule in their analyses, and their estimates of the rule's cost and the impact on coal-fired power do not appear to differ greatly from those of EPA, particularly in the "train wreck" years, from now until EPA, by comparison, projects that 4.

Although these are significant costs, the industry has already complied with Phase 1, which was the most ambitious of the rules' requirements.

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Prompted by the ability to generate tradable allowances, the industry complied well ahead of schedule. The final version of the Cross-State Rule allows additional allowance trading as compared to the proposed rule, giving EGUs additional flexibility in determining how to comply and lowering compliance costs. In , EPA promulgated regulations establishing a cap-and-trade system to limit emissions of mercury from coal-fired power plants.

Coal-fired electric generating units EGUs account for about half of U. Mercury is a potent neurotoxin that can harm health principally delayed development, neurological defects, and lower IQ in fetuses and children at very low concentrations. The mercury cap-and-trade rules promulgated in were a change in policy by EPA. The cap-and-trade rules addressed only mercury, and would have allowed many power plants to avoid control provided they obtained allowances from others who achieved lower pollution levels than required, or reduced emissions sooner than required.

The ability of plants to avoid emission control by purchasing allowances could lead to the continuation of "hot spots," areas where mercury concentrations in waterbodies are greater than elsewhere. Whether the agency could substitute cap-and-trade rules for the MACT requirements was challenged by the State of New Jersey and others, and, in a decision, the D.

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Circuit Court of Appeals vacated the cap-and-trade rules in Under the statute, delisting would have required a finding that no EGU's emissions exceeded a level adequate to protect public health with an ample margin of safety, and that no adverse environmental effect would result from any source. Thus, the standards are expected to level the playing field, bringing older, poorly controlled plants up to the standards being achieved by a majority of the existing units.

In this respect, the proposed standards reflect the statute's requirement that existing sources of HAPs should meet standards based on the current emissions of the best performing similar sources. The agency also concluded that some plants, representing less than 10 GW of coal-fired capacity, will be retired by , rather than invest in control technologies. EPA estimated that by the time the rule requires compliance, GW will already have installed scrubbers anyway, as a result of other regulations.

More than half of the coal-fired EGU capacity GW are expected to add fabric filters because of the rule, while 77 GW would have them whether or not there were a rule. In most cases, the fabric filters will be coupled with activated carbon injection or dry sorbent injection. This is not complicated or new technology. As a result of state-level pollution control regulations, a growing percentage of coal-fired power plants do the same.

Of the proposed EPA rules, the Utility MACT is probably the most costly and most likely to affect older coal-fired plants that have not yet installed current pollution control technology. EPA's proposal does allow averaging of emissions from multiple units at a single location, which may allow some older units that are operated infrequently to remain in service, but the absence of broader allowance trading provisions in the law and the stringency of the emission requirements mean that most units will not be able to escape regulation.

Compared to EPA's projections, it concluded that five times as much scrubber capacity, nearly three times as much ACI, and about one and one-half times as much baghouse capacity would need to be added, making the rule substantially more costly and far more difficult to comply with in the limited time provided by the statute. The NERC analysis assumed wet scrubbers would be added to all coal-fired plants that don't already have them, that selective catalytic reduction SCR will be added to all bituminous coal-powered facilities, and that activated carbon injection and baghouses would be added at all facilities burning other types of coal.

If fewer units need controls and less expensive pollution control equipment is needed on those that do, the retirements and deratings would be fewer. Following promulgation of these standards, existing power plants will have three years, with a possible one-year extension, to meet the standards. The three-to-four-year timeframe is mandated by the statute. Many in industry argue that three or four years is not enough time to complete the required pollution control equipment installation, and as a result that the reliability of the nation's electric power supply could be affected by the rule.

NERC did not say this directly, in part because its analysis combines the effects of four rules, making it difficult to disaggregate the Utility MACT's effect. What it did say was:. To comply, owners of the remaining capacity need to retrofit from to units with added environmental controls. The "hard stop" compliance deadline proposed by the MACT Rule makes retrofit timing a significant issue and potentially problematic. In part, whether or not there is sufficient time to implement the rule without threatening electric system reliability will depend on the number of units that require retrofits.

EPA is the only one of the three sources discussed herein that analyzed the actual proposal. If EPA is correct in its analysis, the number of retrofits appears to be within the range of what the industry has accomplished in the past as a result of earlier regulations. This point is discussed below in more detail, under "Train Wreck? On December 23, , EPA released the text of a settlement agreement with 11 states, two municipalities, and three environmental groups, under which it agreed to propose New Source Performance Standards NSPS to address greenhouse gas emissions from power plants by July 26, , and take final action on the proposal by May 26, The agency recently announced that it will delay proposal until September 30, , but it expects to retain the May 26, date for final action.

Electric generating units are the largest U. New Source Performance Standards are emission limitations imposed on designated categories of major new including substantially modified stationary sources of air pollution. The statute provides authority for EPA to impose such standards directly in the case of new or modified sources Section b , and through the states in the case of existing sources Section d. The authority to impose performance standards on new and modified sources refers to any category of sources that the EPA Administrator judges "causes, or contributes significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare" Sec.

In establishing these standards, Section gives EPA considerable flexibility with respect to the source categories regulated, the size of the sources regulated, and the particular gases regulated, along with the timing and phasing in of regulations. This flexibility extends to the stringency of the regulations with respect to costs and secondary effects, such as non-air-quality, health and environmental impacts, along with energy requirements.

This flexibility is encompassed within the Administrator's authority to determine the control systems that have been "adequately demonstrated. Assuming EPA promulgates the greenhouse gas NSPS on schedule, how quickly such standards would be applied to existing sources is an open question. EPA must first propose and promulgate guidelines, following which the states would be given time to develop implementation plans. Thus, it is likely to be several years before existing power plants are subject to emission limits for GHGs. This assumption would impose a larger burden on coal-fired power plants than any of the other rules considered in EEI's report.

In , coal-fired electric power plants emitted 1, million tons of CO 2. This cost, which appears to have been based on its analysis of legislation not enacted in the th Congress, dwarfs every other projected regulatory cost in the regulatory impact analyses that CRS examined.

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Inclusion of this requirement leads, in EEI's analysis, to an additional 23 GW of retired capacity in and 40 GW of incremental retirements in , accounting for more than half of all retirements in the latter year. NAAQS do not directly regulate emissions. Rather, the primary NAAQS identify pollutant concentrations in ambient air that must be attained to protect public health with an adequate margin of safety. Secondary NAAQS identify concentrations necessary to protect public welfare, a broad term that includes damage to crops, vegetation, property, building materials, and more. Their importance stems from the long and complicated implementation process that is set in motion by their establishment.

Once NAAQS have been set, EPA, using monitoring data and other information submitted by the states to identify areas that exceed the standards and must, therefore, reduce pollutant concentrations to achieve them. State and local governments then have three years to produce State Implementation Plans which outline the measures they will implement to reduce the pollution levels in these "nonattainment" areas.

Nonattainment areas are given anywhere from three to 20 years to attain the standards, depending on the pollutant and the severity of the area's pollution problem. EPA also acts to control many of the NAAQS pollutants wherever they are emitted through national standards for certain products that emit them particularly mobile sources, such as automobiles and emission standards for new stationary sources, such as power plants. When it gave EPA the authority to establish NAAQS, Congress anticipated that the understanding of air pollution's effects on public health and welfare would change with time, and it required that EPA review the standards at five-year intervals and revise them, as appropriate.

The agency is currently conducting the required reviews of these standards: it has already completed reviews for five of the six standards, but two of them have been remanded by the D. Circuit Court of Appeals for further agency action, and others are being challenged in court. The electric power industry and others are following this process closely, because more stringent standards could begin a process that would lead to more stringent emission standards. The three standards most likely to affect power plants are those for SO 2 , ozone, and particulate matter PM.

The prior standards for hour and annual concentrations , which were set in , were revoked as part of the revision. However, following the last of these reviews, in , the D. Circuit Court of Appeals remanded the SO 2 standard to EPA, finding that the agency had failed adequately to explain its conclusion that no public health threat existed from short-term exposures to SO 2. The new short-term standard is substantially more stringent than the previous standards: it replaces a hour standard of parts per billion ppb with a 1-hour maximum of 75 ppb.

This means that there could be an increase in the number of SO 2 nonattainment areas especially since there were no nonattainment areas under the old standards , with additional controls required on the sources of SO 2 emissions in any newly designated areas. The timing and extent of any additional controls is uncertain, however, for several reasons. First, the monitoring network needed to determine attainment status is incomplete and is not primarily configured to monitor locations of maximum short-term SO 2 concentrations.

Since three years of data must be collected after a site's startup to determine attainment status, it may be as late as before some areas will have sufficient data to be classified. Even if the areas can be designated sooner based on modeling data, it would be at least before State Implementation Plans with specific control measures would be due, and actual compliance with control requirements would occur several years later. The agency assumed for purposes of analysis that none of these rules was in effect, because none of them was in effect in , the base year used for analytical purposes.

As the agency's RIA states:. The baseline for this analysis is complicated by the expected issuance of additional air quality regulations. We thus expect that EGUs will apply controls in the coming years in response to multiple rules. Therefore controls and costs attributed solely to the SO 2 NAAQS in this analysis will likely be needed for compliance with other future rules as well. As noted above, NAAQS do not directly limit emissions, but they set in motion a process under which "nonattainment areas" are identified and states and EPA develop plans and regulations to reduce pollution in those areas.

Ozone is not directly emitted by coal-fired power plants or most other sources. It forms in the atmosphere as the result of a chemical reaction between nitrogen oxides NOx , volatile organic compounds VOCs , and carbon monoxide CO in the presence of sunlight. Power plants emit one of these precursor emissions, NOx. Thus, the setting of a more stringent ozone standard might lead to tighter controls on their NOx emissions. The proposed revision would lower the primary health-based standard from 0. EPA has identified at least counties that would violate the proposed ozone NAAQS if the most recent three years of data available at the time of proposal were used to determine attainment compared to 85 counties that violated the standard in effect at that time.

The proposal would also, for the first time, set a separate standard for public welfare, the principal effect of which would be to call attention to the damage by ozone to forests and agricultural productivity. As with other NAAQS, the standards, when finalized, would set in motion a long implementation process that has far-reaching impacts. The first step, designation of nonattainment areas, is expected to take place within a year of the new standards' promulgation; the areas so designated would then have 3 to 20 years to reach attainment. EPA is prohibited by the statute from considering costs in setting NAAQS, but it does prepare cost and benefit estimates for information purposes.

Although the ozone NAAQS revision is one of the most expensive EPA rules under development, it is unlikely to have major impacts on electric generating units. Thus, other sources account for most of the emissions and are likely to be the main focus of the emission controls necessary to reach attainment of the standard. Furthermore, to the extent that utility NOx emissions are targeted, it will likely be through the Cross-State Rule, or a successor to it, whose impacts were discussed above.

The D. Circuit Court of Appeals remanded the PM 2.

Report: No ‘train wreck’ from EPA utility rules

Circuit decision. The agency expects to propose revised standards for both PM 2. Fuel combustion by electric utilities is the source of 8. Power plants withdraw large volumes of water for production and, especially, to absorb heat from their industrial processes. Water withdrawals by electric generating plants, used primarily for cooling, are the largest water use category by sector in the United States— billion gallons per day BGD in Although water withdrawal is a necessity for these facilities, it also presents special problems for aquatic resources.

Cooling water intake structures CWIS can cause two types of environmental harm. First, impingement occurs when fish, invertebrates, and other aquatic life are trapped on equipment on intake screens at the entrance to the CWIS. Second, entrainment occurs when small organisms pass through the intake screening system, travel through the cooling system pumps and tubes, and then are discharged back into the source water.

Impingement and entrainment injure or kill large numbers of aquatic organisms at all life stages. Regulatory efforts by EPA to implement Section b have a complicated history over 35 years, including legal challenges at every step by industry groups and environmental advocates. Currently most new facilities are regulated under rules issued in , while rules for existing facilities issued in were challenged and remanded to EPA for revisions. In response to the remand, in March EPA proposed national requirements expected to affect existing electric generators; are fossil-fuel facilities.

Even before release, the proposed regulations were highly controversial among stakeholders and some Members of Congress who questioned whether a stringent and costly environmental mandate could jeopardize reliability of U. Many in industry feared, while environmental groups hoped, that EPA would require installation of technology called closed-cycle cooling that most effectively minimizes the environmental damage of CWIS, but also is the most costly technology option.

In its proposed rule, EPA evaluated four regulatory options expected to minimize the harm to aquatic species of CWIS at existing facilities, each with varying environmental benefits and costs. EPA's recommended approach would essentially codify current CWIS permitting procedures for existing facilities, which are based on site-specific determinations and have been in place administratively for some time because of legal challenges to previous rules.

The agency based the conclusion to not mandate closed-cycle cooling on four factors: additional energy needed by electricity and manufacturing facilities to operate cooling equipment, and threats to reliability of energy delivery i. EPA estimates that more than 90 of the affected electric generators already have the technology required to demonstrate compliance with the proposed rule. Compliance with the rule, when promulgated in , will be required as soon as possible.

For individual facilities, specific compliance deadlines will be set when the facility next seeks to renew its existing CWA discharge permit; such permits are issued for five-year periods and then must be reissued by the permitting authority state or EPA. Permitting agencies often allow facilities some time to come into compliance with new requirements. As proposed by EPA, for facilities already in compliance with the rule or needing to install technologies other than cooling towers, the compliance period is assumed to be a five-year period from to EPA expects that facilities required to install cooling towers for entrainment mortality control will require a longer period of time.

Fossil-fuel electric power generating facilities would achieve compliance from to Industry groups generally view the March proposal favorably at least in comparison with what had been anticipated , although they favor still more flexibility, while environmental advocates are critical that the proposal does not mandate stricter technological options to provide greater protection of aquatic resources.

States will be responsible for most permitting actions to implement the rule.

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  • Since many states are coping with constrained budgets, some of them favor a regulatory approach that requires them to make fewer case-by-case decisions, thus imposing less administrative cost. Prior to release of the EPA proposal, industry assumed that the agency would propose a more stringent rule with a more rapid timeline for compliance. However, NERC also concluded that only 2. According to NERC, the largest impact of such a CWIS rule would be on older oil- and gas-fired units, with units totaling 30 GW of capacity expected to be economically vulnerable and thus likely to be retired.

    Under authority of CWA Section , EPA establishes national technology-based regulations, called effluent limitation guidelines ELGs , to reduce pollutant discharges from industries directly to waters of the United States and indirectly to municipal wastewater treatment plants. EPA has issued ELGs for 56 industries that include many types of dischargers, such as manufacturing and service industries. These requirements are incorporated into discharge permits issued by EPA and states. The current steam electric power plant rules, 58 which were promulgated in , apply to about 1, nuclear- and fossil-fueled steam electric power plants nationwide, of which are coal-fired.

    In a study, 59 EPA found that the current regulations do not adequately address the pollutants being discharged and have not kept pace with changes that have occurred in the electric power industry over the last three decades, specifically the increase of flue gas desulfurization FGD systems, or scrubbers, at coal-fired power plants to control air pollution. While scrubbers dramatically reduce emissions of harmful pollutants into the air, some create a significant liquid waste stream especially wet scrubbers. In addition, discharges from coal combustion waste CCW ash impoundments at steam electric power plants have a potential to degrade water quality.

    EPA believes that many current CWA permits for power plants do not fully address potential water quality impacts of these discharges through appropriate pollutant limits and monitoring and reporting requirements. EPA had been studying the effluent limitations for the steam electric power generating category since the mids and on several occasions indicated that a preliminary study of discharges from this category was necessary. In , environmental groups sued EPA to compel the agency to commit to a schedule for issuing revised guidelines.

    Pursuant to a November 8, consent decree that it entered into with environmental litigants, EPA agreed to propose the revised power plant ELG by July 23, , and to finalize the rule by January 31, The rulemaking will address wastewater discharges from CCW ash storage ponds and FGD air pollution controls, as well as other power plant waste streams. Until EPA proposes a regulation, the substance, cost, and impact of a rule are speculative. Still, even before EPA proposes a new ELG for power plants, the agency has launched an effort to scrutinize state-issued CWA discharge permits for power plants as an interim measure to address longstanding concerns that the permits need to be strengthened.

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    In a June letter to environmental groups, EPA committed to reviewing at least 35 CWA permits for power plants before the end of and simultaneously provided EPA regional offices with interim guidance to assist state and EPA permitting authorities to establish appropriate requirements for power plant wastewater discharges. EEI included an ELG rule in the timeline shown in Figure 1 , but did not analyze or project what a rule would look like, or what its impact might be.

    Coal combustion waste CCW is inorganic material that remains after pulverized coal is burned for electricity production. Disposal of CCW onsite at individual power plants may involve decades-long accumulation of tons of dry ash in a landfill or wet ash slurry in a surface impoundment deposited at the site. On December 22, , national attention was turned to risks associated with managing such large volumes of waste when a breach in a surface impoundment pond at TVA's Kingston, TN, plant released 1.

    Beyond the potential for a sudden, catastrophic release from a surface impoundment, a more common threat associated with CCW management is the leaching of contaminants likely present in the waste, primarily heavy metals, resulting in surface or groundwater contamination.

    This risk is particularly high at unlined surface impoundments which are likely in common use today. The Kingston release also brought attention to how the waste is managed and regulated. CCW management is largely exempt from federal regulations and is regulated by individual states. State requirements generally apply to two broad categories of CCW management—its disposal in landfills, surface impoundment, or mines, and its beneficial use e. Inconsistencies and deficiencies in state regulatory programs have been identified by EPA as one reason that national standards to regulate CCW are needed.

    More recently, EPA called into question the effectiveness of some state regulatory programs for protecting human health and the environment. As discussed below, to establish a national standard necessary to address potential threats of improper management of CCW to human health and the environment, on June 21, , EPA proposed two regulatory options. However, in the determination EPA stated that national regulations under Subtitle D applicable to non-hazardous solid waste were warranted for CCW disposal in landfills and surface impoundments for reasons including new data about potential risks to human health and the environment and concerns about the adequacy of state regulatory programs.

    EPA stated that it would revise its determination that regulation under Subtitle C was not needed if it found that a need for such regulation was warranted. EPA cited several reasons for determining that regulation under Subtitle C was needed based on new data which showed that disposal in unlined landfills and surface impoundments presents substantial risks to human health and the environment from releases of toxic constituents, that a large amount of waste is still being disposed in units that lack necessary protections, and state programs have not been sufficiently improved to address gaps that EPA had previously identified.

    The final proposal, published on June 21, , stated that the determination to revise the regulatory determination had not yet been made. It proposed two regulatory options for consideration. Under the first option, EPA would draw on its existing authority to list a waste as hazardous and to regulate it.

    The second option would keep the Subtitle C exclusion in place, but would establish national criteria applicable to landfills and surface impoundments under RCRA's Subtitle D non-hazardous solid waste requirements. Instead, EPA would rely on states or citizen suits to enforce the new standards.

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    However, in support of the Subtitle D option, EPA cited industry's concern that labeling CCW as hazardous waste would stigmatize beneficial uses of the material and ultimately increase the amount that must be disposed. The public comment period for EPA's proposal ended on November 19, It is unclear when, or if, EPA will ultimately promulgate a final rule. On March 3, , EPA Administrator Lisa Jackson testified that she does not anticipate a final rule to be promulgated in , due to the large number of public comments received. Their concerns about potential Subtitle C regulations relate primarily to the potential impacts those requirements may ultimately have on coal-producing states, state regulatory agencies, energy prices, and CCW recycling opportunities.

    On the other hand, concerns expressed by other Members regarding the Subtitle D option generally relate to concerns that human health and the environment would not be sufficiently protected given EPA's lack of authority to enforce Subtitle D requirements. EPA also estimated annualized "regulatory benefits. The EEI report estimated that if the Subtitle C option were adopted, costs would be considerably higher than projected by EPA, based largely on two costs that were not considered by EPA—costs of retrofitting existing disposal units to meet new standards, and the costs of sending the waste to an offsite commercial hazardous waste disposal facility.

    With regard to the first cost, neither of EPA's regulatory options would require existing landfills to be retrofitted to meet new regulatory standards as long as they install groundwater monitoring systems and implement corrective action, as needed, while existing surface impoundments would be required to be retrofitted. However, based on its past experience with surface impoundment regulations, EPA assumed that facilities would choose to close rather than retrofit. EEI assumed that some portion would retrofit. With regard to the second cost, EEI assumes that under potential Subtitle C requirements, siting or zoning restrictions and state or local ordinances would affect a facility's decision to open a new CCW landfill.

    However, these factors are difficult to evaluate. Electric utilities currently operate CCW landfills on-site; no data have been presented that indicate that future landfills could not meet EPA's proposed location restrictions or design requirements or that additional restrictions would prohibit or limit the potential for on-site disposal. Further, according to industry statements, new CCW landfills are already built with liners and groundwater monitoring systems.

    Thus, there is little evidence to suggest that new Subtitle C standards would differ greatly from what has, up until now, been common industry practice. Army Corps of Engineers are developing a series of actions and regulatory proposals to reduce the harmful environmental and health impacts of surface coal mining, including a practice called mountaintop removal mining, in Appalachia. Nevertheless, numerous critics have included actions by EPA, the Corps of Engineers, and the Interior Department regarding mountaintop removal mining in Appalachia in what they term a "War on Coal.

    Virtually all the analyses agree that coal will continue to play a substantial role in powering electric generation for decades to come. There will be retirements of coal-fired capacity, however, as all of the analyses conclude. The number of these retirements, and the role of EPA regulations in causing them, are matters of dispute. As noted in the discussion of the individual regulations, in many cases EEI's analysis assumed regulations far more stringent than EPA actually proposed.

    As noted in Figure 5 , there are GW of coal-fired plants about one-third of all coal-fired capacity that began operating between and , and two-thirds of these plants do not have scrubbers. These are the prime candidates for retirement. Figure 5. Coal Plants by Age and Emission Controls. In many cases, these older plants are not base-load plants, so their significance as a percentage of coal-fired generation is less than one might assume from adding up their nominal capacity.

    Some of these units will be replaced by new capacity, of which some will be coal-fired, but most replacements are likely to be natural gas combined cycle units. Even before the advent of the "train-wreck" rules, very few coal-fired plants were being built. These plants are highly efficient; they are cost-competitive with coal; and they emit no SO 2 , no mercury, and no other hazardous air pollutants.

    Without scrubber sludge to manage, they also do not need to meet effluent guidelines. Natural gas-fired power plants also have an advantage with regard to greenhouse gas GHG emissions: for the same amount of electric generation, they emit only half the GHGs of coal-fired units. Since most of America's utilities have the ability to employ natural gas fired power plants in lieu of coal fired power plants when natural gas is priced advantageously, utilities have been ramping up natural gas consumption and reducing their usage of coal.

    Is there a train wreck coming for coal-fired power? The answer depends on the individual facility. Older, smaller, less efficient units already face a train wreck. In , 48 of them with a combined capacity of 12 GW were retired, according to one source. Figure 6. The chart is based on EIA Form data. But this does not mean that the newer post coal-fired facilities that have invested in pollution controls over the years will be shuttered.

    Most of them already comply with many of the proposed rules, or if not, they can do so with modest modifications to their pollution control equipment. A train wreck for this group seems unlikely. In between the two ends of the spectrum are facilities that are efficient enough or play a sufficiently vital role in meeting regional demand that the economics likely would justify their retrofit.

    For these facilities, the key questions are whether there will be sufficient time to act, and whether the reliability of the electric grid will be affected as they are taken off-line for modification. It is difficult to generalize about the timing and system reliability issues. Several utilities state that they will have difficulty meeting the deadlines. In congressional testimony, April 15, , Thomas A. The reliability of the nation's electric generating system is at risk because of the number of new rules and regulations applicable to power plants.

    The stringency of these regulations, the lack of flexibility likely to be provided within these regulations, and, above all, the compliance schedules that will be required put reliability at risk. Accelerated plant retirements and shutdowns triggered by the Utility MACT rule will cause reserve capacity to plummet, increasing the likelihood and severity of service disruptions.

    Morris, in a press release, stated:. We support regulations that achieve long-term environmental benefits while protecting customers, the economy and the reliability of the electric grid, but the cumulative impacts of the EPA's current regulatory path have been vastly underestimated, particularly in Midwest states dependent on coal to fuel their economies.

    We have worked for months to develop a compliance plan that will mitigate the impact of these rules for our customers and preserve jobs, but because of the unrealistic compliance timelines in the EPA proposals, we will have to prematurely shut down nearly 25 percent of our current coal-fueled generating capacity, cut hundreds of good power plant jobs, and invest billions of dollars in capital to retire, retrofit and replace coal-fueled power plants.

    Others, however, cite historical experience and available indicators to argue that timing and system reliability will not be a problem. Michael Bradley, representing the Clean Energy Group, a coalition of electric power companies with over GW of electric generating capacity, including GW of fossil-fuel fired capacity, testified that:. The Utility Toxics Rule provides the business certainty the electric sector needs to move forward with capital investment decisions;.

    The Institute of Clean Air Companies, which represents the pollution control industry, states that utilities installed 60 GW of scrubbers and 20 GW of selective catalytic reduction SCR between and See Figure 7. Figure 7. Source: David C. If necessary, as shown in Figure 6 , the industry is capable of adding new generating capacity in a short time. From , electric companies added over GW of new capacity, far more than any of the analyses suggest will be needed in the timeframe. Other studies suggest that proper planning can prevent a train wreck, even in worst-case scenarios.

    Much depends on whether individual utilities have already begun planning for the implementation of the rules, including lining up engineers to design modifications, and conducting preliminary discussions with permitting authorities and grid operators regarding the required steps.

    This point is stressed by analysts on all sides of the issue. For example, Sue Tierney, after reviewing several studies, states:. The studies' results do not mean that there will be resources gaps; they make it clear that action needs to be taken soon. NERC's study is one of those to which Tierney refers. NERC concluded that, "Regulators, system operators, and industry participants should employ available tools to ensure Planning Reserve Margins while forthcoming EPA regulations are implemented. FERC stated that its " Of particular note, despite the August 1 date, FERC's analysis was not based on information available at that time.

    It assumed that once-through cooling water systems would have to be replaced with closed-loop systems, 92 for example, which is not what EPA had proposed in March The analysis also did not take into account EPA's July finalization of the Cross-State Air Pollution Rule, which, in comparison to the earlier proposed version of the rule, provided additional flexibility for compliance. The Chairman's letter concluded: " From one perspective, the train wreck debate appears to be a coal-vs. The debate is not entirely that simple, however, because gas-burning power plants will be subject to some of the new rules, too.

    EPA's Regulation of Coal-Fired Power: Is a 'Train Wreck' Coming? [July 11, ]

    Some rules may affect coal-fired power plants disproportionately compared with other plants, while other rules, such as the cooling water intake proposal, may affect non-coal-fired power plants to a greater extent. The primary impacts of many of the rules discussed here will be on coal-fired plants more than 40 years old that have not, until now, installed state-of-the-art pollution controls. Many of these plants are inefficient and are being replaced by more efficient combined cycle natural gas plants.

    In EEI's analysis and perhaps in the others that use the Integrated Planning Model 94 , a key variable is the assumed price of natural gas. The low prices apparently reflect recent reports that future supplies of gas are projected to be abundant. In the other scenarios modeled by EEI i. The higher prices presumably are the result of increased demand as some EGUs switch from coal to gas as a compliance strategy.

    These prices would also be below prices in most cases. What the model showed in most of EEI's scenarios, then, is that, because the price of gas was projected to remain low, coal-powered units would be retired or converted to natural gas as EPA imposes the regulatory requirements under consideration. What these scenarios tell us is that utilities will look at the impending regulations and decide what to do largely based on their assumptions regarding the cost of the alternatives—natural gas where it's available being the most often discussed, but others include conservation, wind, and other renewable resources.

    If they expect the price of gas to remain low or the cost of other alternatives to be competitive, their primary method of compliance likely will be to retire old coal plants and switch to gas or the alternatives. If they expect the price of gas or other alternatives to be high, they'll invest the money in retrofitting the coal plants to reduce their emissions. Unit retirement is assumed when the generic required cost of compliance with the proposed environmental regulation exceeds the cost of replacement power For the purpose of this assessment, replacement power costs were based on new natural gas generation capacity.

    EPA estimates that electric generators would be affected by the proposed rule, representing about 45 percent of total U. Since 40 percent of the fresh water withdrawn from U. Some older nuclear plants may be ordered to build cooling towers, in order to reduce the flow of cooling water through their reactors. Some plant owners may opt to retire the plants instead, as Exelon Corp. Faced with a state order to build a cooling tower, Exelon negotiated an agreement to close the plant on Dec. But other nuclear plant owners may be able to show state permit writers that their water intake systems aren't pushing marine life mortality above regulated limits; that less expensive changes could serve the purpose, such as extending a water intake pipe farther into a lake or bay; or that modified operations could protect organisms during the most critical spawning periods, Tezak said.

    Significantly, the EPA proposal would not require cooling tower installation when existing nuclear power plants are uprated or modified to increase their power output. Nuclear plant operators are seeking approval to add 3, megawatts of uprates by And the rule does not affect new nuclear plants, which already are required to provide cooling towers. It puts implementation analysis in the hands of the permit writers, where requirements can be tailored to the particular facility," said Nancy Stoner, acting assistant administrator for EPA's Office of Water, in a statement last week.

    NEI, the nuclear industry's chief trade association, kept its alarms ringing after EPA released the proposed rule.

    Enviros accuse EPA of 'caving in' to industry. But Exelon, the largest U. EPA has done a good job listening to the industry and moving the ball forward. The Edison Electric Institute, representing major utilities, also saw pluses and minuses based on its first look at the proposal: "We are pleased that EPA has chosen not to establish a blanket requirement that cooling towers be installed at all existing facilities. We're also encouraged that the agency appears not to be mandating cooling tower retrofits on existing facilities when modified.

    The result could be "premature plant retirements," power shortages and higher consumer costs, EEI said. The environmental organizations that have fought for a strong water intake rule say EPA knuckled under to industry pressure, producing a policy that falls far short of the need. Steve Fleischli, senior attorney in the Natural Resources Defense Council's water program, said, "EPA has chosen the path of least resistance by caving into industry pressure and punting this issue to state agencies that too often lack the resources and the will to stand up to industry on this issue.

    Reed Super, attorney for Riverkeeper, a New York environmental organization, who represents environmental organizations in litigation over the issue, said EPA has the authority to set national standards but abdicated its responsibility, leaving it to the states. Energy companies "make it enormously difficult" for EPA and the states to effectively regulate water use, he said.