EPA unveils 'historic' air pollution rules. Can power industry cope?

Environmentalists and health advocates received an early Christmas present Wednesday when the US Environmental Protection Agency announced new federal clean-air regulations that promise to vastly reduce emissions of mercury and other toxic pollutants from the nation's power plants.

The limits, which come two decades after Congress ordered the EPA to control toxic air pollutants, have been hailed as historic by supporters. But industry groups say they unduly harm the economy.

The new Mercury and Air Toxics Standards (MATS) are expected to cost utilities about $10 billion a year as they install emissions-control equipment between now and 2016, the EPA estimates. Several dozen elderly coal-fired power plants also might have to be shut down.

But the EPA estimates at least $59 billion in annual financial savings from reduced health-care costs. 

"The Mercury and Air Toxics Standards will protect millions of families and children from harmful and costly air pollution and provide the American people with health benefits that far outweigh the costs of compliance," EPA Administrator Lisa Jackson said at its unveiling.

The standards will be the first nationwide limits on the amount of mercury and other toxics – such as arsenic, nickel, and cyanide – released from power-plant smokestacks. But the wheels of regulation began grinding in 1990 with the passage of the Clean Air Act Amendments. 

Since then, the EPA has targeted mercury emissions from all high-emitting sources except power plants. When fully implemented, MATS rule reduce mercury emissions from coal-fired power plants by 91 percent. 

Environmentalists and health advocates were giddy.

"This is truly historic," says Frank O’Donnell, president of Clean Air Watch, in an e-mail interview. "After two decades of evading the law, the coal-burning power industry is finally going to clean up. The health benefits will be tremendous. There is no question in my mind that this will prove to be the signature clean-air accomplishment of the Obama administration."

The new rules apply to about 1,200 coal-fired units at 450 facilities that generate about 48 percent of electricity nationwide, the EPA says. Because new emissions controls are costly, utilities that own older coal-fired power plants may face some financial pressure.

To offset these pressures, the EPA gave utilities until 2016 to upgrade – with an added year if a company can show it deserves more time. Still, some business groups were upset.

“The EPA is out of touch with the hard reality facing American families and businesses," said Steve Miller, president of the American Coalition for Clean Coal Electricity (ACCCE), an industry lobbying group, in a statement. "This latest rule will destroy jobs, raise the cost of energy, and could even make electricity less reliable."

An economic analysis for ACCCE by the National Economic Research Associates found that the new mercury rule – combined with other pending EPA regulations –would chop 183,000 jobs annually from 2012 to 2020 and raise electricity and other energy prices by $170 billion.

ACCCE also contends that proposed EPA air- and water-quality regulations would shutter scores of power plants, making the reliability of the electricity grid a concern.

Other studies, including the EPA's own peer-reviewed analyses, have contradicted these findings.

For instance, an analysis by the Economic Policy Institute, a Washington think tank that studies policy effects on low- and middle-income workers, suggests the new mercury rule "would have a modest positive net impact on overall employment, likely leading to the creation of 28,000 to 158,000 jobs between now and 2015."

Meanwhile, on the issue of grid reliability, a new Associated Press analysis concludes that more than 32 mostly coal-fired power plants in a dozen states would likely be forced to close because of the MATS rule and another new EPA rule that limits emissions drifting into other states. Another 36 plants are at risk of closing, AP said.

The US Department of Energy says such closures would not be a problem. In an analysis released earlier this month, it found that the new rules "should not create resource-adequacy issues."  

Eleven of the top 15 largest coal fleet owners in the US say they are basically in position to meet the EPA’s clean-air rules because of years of investments to upgrade their power plants, according to an industry study by M. J. Bradley & Associates last month.

In the "40-year history of the Clean Air Act, the EPA has never let the lights go out, and it is committed to upholding this record. Our industry is well-positioned to comply with these rules,” Calpine CEO Jack Fusco wrote recently in a rebuttal to a Wall Street Journal editorial warning of grid instability flowing from the rules.