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Coal to Remain Viable, says EPA’s McCarthy at COAL-GEN Keynote

“Coal will continue to provide more of America’s electricity than any other fuel source, producing nearly 40 percent of generation in 2035,” said Gina McCarthy during the keynote session of COAL-GEN in Louisville, Ky. on Aug. 15. McCarthy, assistant administrator for the Environmental Protection Agency’s (EPA’s) Office of Air and Radiation, remained positive about the future of coal as it transforms into a cleaner source of generation in order to comply with several proposed or finalized EPA regulations.

The other keynote speakers who spoke on the future of coal generation were John Voyles Jr., vice president of transmission and generation, Louisville Gas & Electric; Pierre Gauthier, president & CEO, Alstom U.S. and Canada; and Greg Graves, president & CEO, Burns & McDonnell Engineering Co.

The Electric Power Research Institute estimates that the coal-fired power industry will invest $275 billion in retrofits through 2035. The need for upgrades is driven by several EPA regulations, including the Mercury and Air Toxics Standard (MATS), the Cross State Air Pollution Rule (CSAPR) and the proposed New Source Performance Standard for greenhouse gases.

The potential greenhouse gas standard has been met with heated debate among power generators, who would have to install carbon capture and storage (CCS) technology in order to reach compliance. The EPA has received over 2 million comments from the industry as a result of the proposed rule-making, McCarthy said.

“While it’s a significant economic lift, (the proposed standard) will provide investment for new technologies,” McCarthy said. “CCS is technologically viable.”

However, Gauthier said that technology to comply with the proposed carbon limit “is not waiting in the wings. Efforts to develop CCS in the U.S. have largely ground to a halt.” Without regulatory certainty, he said, a price on carbon will not be established and investments in CCS technology will be non-existent.

Voyles said the proposed carbon standards are a big concern for LG&E, a fleet that is over 90 percent coal-fired. “We don’t agree that CCS can be a proven technology. Certainly we can capture it. But we have great deal of concerns about where to store it.”

Voyles noted that the 640 MW natural gas combined-cycle plant LG&E is currently planning would not be able to operate without CCS technology, under the proposed standard. The proposed rule would require any new power plant to emit no more than 1,000 pounds of carbon dioxide (CO2) per megawatt-hour of electricity produced. On the surface, the new plant, which would be built at the existing Cane Run site in southwestern Louisville, could operate on less than 1,000 pounds of CO2 per MWh.

“Unfortunately, when you apply production standards to start-ups and shut downs at the plant, we will not be able to comply.”

MATS, the first national standard to limit mercury emissions from power plants, is also of concern to coal generation. Power plants are the only major source of mercury that has yet to adopt a national standard, McCarthy said, and industries like municipal and medical waste combustors have already come under EPA compliance for mercury.

McCarthy said that MACT requires most facilities comply within a three-year window. However, states are allowed flexibility with the application of the fourth year on a case-by-case basis, and a fifth year may even be considered in some cases, she said. The majority of plants, though, will come into compliance in 2015.

An additional concern for coal power is CSAPR, which was granted a stay by the U.S. District Court of Appeals at the end of 2011. The rule, which was originally scheduled to be effective starting Jan. 1, is set to limit sulfur dioxide (SO2) and nitrogen oxide (NOX) emissions from power plants in 27 states.

“CSAPR was the most complicated rule-making I’ve ever been engaged in,” McCarthy said. “We had to look at two years of air modeling to understand where the pollution was coming from.”

McCarthy addressed the complaints of many in the power industry regarding CSAPR’s seemingly swift compliance targets. “The reason for the quick reductions was that a lot of reductions had already been made under Clean Air Interstate Rule.”

The Court has yet to release any revisions to CSAPR, but McCarthy said EPA is “confident of the legal underpinnings of the rule. It’s legally and technically sound.”

Another obstacle threatening the sustainability of coal power is the low price of natural gas. “For the first time, we find ourselves in a situation where regulation has put coal in a competition with natural gas,” Gauthier said. However, he reminded attendees of natural gas’ unstable history over the last decade. “In 2002, the price of natural gas fell to $2. Since then, it twice spiked to $10. Coal has remained the steady, reliable foundation of American electricity.”

McCarthy pointed to the large number of small, older coal units – anywhere from 25 GW to 30 GW – that will either need to either install emissions controls or consider switching to natural gas. “How competitive will they be against natural gas?”

While the speakers remained positive about coal’s existence in the future of American power generation, Graves stressed the importance of diversification. “I used to tell everyone, ‘North America is the Saudi Arabia of coal.’ We’re also the Saudi Arabia of gas and nuclear as well. Let’s be honest, we can’t just say, ‘It must be coal.’ We have to differentiate who we are.”

Voyles said that between now and 2016, LG&E will invest about $2.25 billion in emission controls. The utility is certainly not giving up on coal. “In 2016, 90 percent of our energy will still be generated by coal.”

“This is a captivating moment in the long history of America’s coal history,” Gauthier said. “Coal can and must play a role in meeting future energy needs.”

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