Air Pollution Control Equipment Services, Coal, Emissions

Surging U.S. Market Predicted For Pollution Control

Issue 11 and Volume 107.

U.S. multi-pollutant air emission regulations would increase output levels and improve profitability for many coal producers while stimulating a market surge for pollution control vendors, according to a recently released report by ICF Consulting.

“Air emissions regulations will actually give a boost to some coal producers and air pollution control manufacturers will see an explosion in their business opportunities,” says John Blaney, senior vice president in ICF Consulting’s Energy Markets practice, which published the report — SO2 Emissions and Mercury Market Outlook 2003.

“New, more stringent air pollution regulations are inevitable,” says Blaney. That’s because President Bush has begun a major push to enact his Clear Skies Act (CSA), which calls for major reductions in SO2, NOx, and mercury emission reductions.” He also notes that the Environmental Protection Agency is under court order to pass new mercury regulations and has announced plans to proceed with a fine particulates rulemaking that will likely lead to cuts in SO2 and NOx similar to those included in the President’s proposal.

The ICF report projects that new air regulations such as CSA will lead to capital expenditures for pollution control equipment in excess of $30 billion by 2020. These investments will enable the owners of coal-fired power plants to continue to burn coal and in some instances even increase generation levels.

The study results show that the immediate aftermath of the announcement of new air emissions regulations will include a production increase for low sulfur coal producers in 2005-2009. This is because coal plant owners will initially switch to lower SO2 emitting coals to build a bank of emission allowances to allow a longer transition to lower emission levels in the years prior to the implementation of the first phase of reductions. “Powder River Basin coal production in Wyoming and Montana will see an initial increase in production of over 50 million tons, or about 13 percent” says Blaney.

As the second, more stringent, phase of air emission reductions is implemented, the coal producing regions likely to experience the biggest boost are the currently depressed Midwest regions that produce high sulfur coal. Lastly, if a market-based approach to mercury emissions regulation is adopted, as envisioned in CSA, coals with low mercury levels will also see an increase in value.

Canada Plans More Hydro for Sale to U.S.

Hydro-Quebec has announced plans to build new dams and increase power exports to the U.S. The company says it will spend $13.4 billion through 2008 on expansions, emphasizing its intentions to keep Quebec as energy independent as possible in order to avoid crises such as the blackout, which hit much of the eastern United States and Canada in August.

The Canadian province, which has a largely separate power grid, was not affected by the blackout. “The goal is to ensure our independence from the neighboring production networks,” said Hydro-Quebec’s president and CEO Andre Caille. He said the utility’s strategic plan will add 10 TWh of annual electricity production to cope with a projected rise of 1.3 percent in Quebec electricity demand each year for the next five years.