EPA releases finalized Utility MACT

The U.S. Environmental Protection Agency (EPA) has released the finalized Mercury and Air Toxics Standards, EPA’s mandate to limit mercury emissions from coal-fired units. The rule will also curtail a number of hazardous air pollutants, including lead, arsenic, hydrogen chloride, hydrogen fluoride and dioxins/furans.

The finalized standards will require the power industry to reach compliance by 2015. However, EPA is also encouraging permitting authorities to make a fourth year broadly available for technology installations and providing a well-defined pathway to address any localized reliability problems should they arise.

The standards establish “maximum achievable control technology” (MACT) limits for many substances; therefore adopting the nickname “Utility MACT.” A number of reports have been released estimating that Utility MACT, along with EPA’s Cross State Air Pollution Rule (CSAPR), will cause anywhere from 10 to 80 GW of fossil-fired generation in the U.S. to be retired from 2014 to 2016.

The Associated Press recently conducted a survey entailing interviews with 55 power plant operators. The AP found that 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 Utility MACT and CSAPR. The AP estimates that the final rule would cost $10 billion to implement.

Scott Segal, director of the Electric Reliability Coordinating Council, said the rule will cost more than just jobs and coal generation.

"It will increase the cost of power, undermining the international competitiveness of almost two dozen manufacturing industries," Segal said. "While some jobs are created by complying with the new rule, the number and quality of those jobs is far less than those destroyed."

With several thousand gigawatts of coal-fired retirements expected, Utility MACT has brought the future of electric reliability into question. In an effort to ensure electric reliability and protect jobs, Senators Joe Manchin (D-W.Va.) and Dan Coats (R-Ind.) have formed the “Fair Compliance Act,” which would extend the Utility MACT and CSAPR compliance dates until Jan. 1, 2017.

"The bottom line is this: when it comes to these very costly regulations, we need to reach a middle ground that achieves a balance between our economy and environment,” Manchin said.

In addition, Senator Jim Inhofe (R-OK) has filed a joint resolution disapproving Utility MACT.  The Congressional Review Act (CRA) provides that once the resolution has 30 supporters, the resolution may be discharged from the committee of jurisdiction (Environment and Public Works) and placed on the calendar. At that time, the resolution can be considered under “privileged motion” status (i.e. not subject to amendment, or to a motion to proceed to other business) and passed by a simple majority vote. If passed by both chambers and signed into law, the joint resolution would effectively overturn Utility MACT.

Jane Montgomery, partner at Schiff Hardin, said that Congress will “likely step in” to make changes to Utility MACT. While most of EPA’s environmental regulations are released under consent decree – companies reach a unit-specific compromise with EPA – Utility MACT is a Title 5 approach. This approach entails a strict compliance schedule that can be overturned only by the federal government.

Montgomery said it will be “massively difficult” for utilities to get the level of control necessary for Utility MACT compliance if they haven’t already started the control selection process. “Planning these projects takes three to six years minimum,” Montgomery said. “If a utility is looking at not only doing three to six years for a single project, but they have 20 projects, then good luck.”

Both capital and resources for compliance are limited, Montgomery said. “We don’t have enough high quality steel to build the FGDs (flue gas desulfurization units) that will be needed.”

Technology solutions should be explored as soon as possible, said John Buschmann, technology manager for Alstom Technology. “The time is short. In order to get the work done in the required amount of time, you need to start early.”

Mercury control regulations already are enforced by 17 states, requiring 80 to 95 percent mercury capture rates. According to a study by the Northeast States for Coordinated Air Use Management (NESCAUM), emissions controls that significantly reduce mercury emissions from coal-fired power plants have been installed, demonstrated and put into operation at a “significant number of facilities in the U.S.” The report said that about 25 units representing some 7,500 MW are using commercial technologies for mercury control.

John Hanger, president and CEO of Hanger Consulting LLC, said that even though 10 to 80 GW is expected to be retired by 2016, the power industry is predicted to build 55 GW of new generation by 2013. This will provide ample generation for the retiring fleet, Hanger said. “EPA is moving forward in a responsible manner and has adjusted as necessary,” he said.

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