Released October 21, 2014 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--The power regulatory picture in the U.S. is complicated and affects different industries in different ways. This article is the first of a series that summarizes the impact of federal environmental regulations on the power generation industry. In addition to the regulations that are already in place, there are a number of hotly contested proposals.
In this first article, Industrial Info looks at two ongoing regulatory battles regarding the Clean Power Plan and the regulation of coal combustion residuals (CCRs).
The Clean Power Plan
The Environmental Protection Agency (EPA) issued proposed rules under Section 111 of the Clean Air Act (CAA) for existing power plants in June. Known as the Clean Power Plan, the proposed rule would establish new mandatory emission limits in pounds (lbs) of carbon dioxide (CO2) per megawatt-hour (MWh). The rates would vary by state because of regional differences in the power mix, as well as variations in electricity consumption. The rule would target a 30% cut in emissions from 2005 to 2030.
States could achieve their reduction targets by making fossil-fuel plants more efficient; generating more power from natural gas as instead of coal; using more "zero- and low-emitting sources," like nuclear and renewables; and reducing demand by increasing efficiency at the consumption end of the equation.
For new power plants, the EPA's proposed rule falls under section 111 (b). This section calls for an emissions standard that "reflects the degree of emissions limitation achievable through the application of the best system of emissions reduction, which (taking into account the cost of achieving such reduction and any non-air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated."
The proposed rule would cover new coal and natural gas-fired plants with generation capacities of 100 megawatts (MW) or more. Natural gas plants would be allowed to emit no more than 1,000 lbs of CO2/MWh, while coal-fired plants would be allowed to emit 1,100 lbs of CO2. The limit for natural gas-fired plants is within the scope of the exiting technology used in those facilities.
However, existing emissions reduction technology for coal-powered plants falls short of the proposed requirements. Using current technology, the plants can limit emissions to 1,700 lbs of CO2/MWh. New technology has not yet been demonstrated to be commercially viable. Carbon capture and storage (CCS) technology is still under development, but is seen as the only way for new coal-fired plants to meet the proposed standards.
New coal-fired plants would have two options to meet the emissions goal: they could either use CCS technology close to startup, or reach a range of 1,000 to 1,050lbs CO2/MWh within seven years of startup.
Obama Administration officials aim to have a final rule in place by June 2015. The target date for states to inform the EPA of their proposed emissions plans is June 2016, although states can apply for a one-year extension.
The outcome of the conflict between the EPA and power producers (not to mention the coal industry) will be determined by the legal rulings related to section 111 of the Clean Air Act. At the heart of the issue is whether CO2 is a hazardous air pollutant (HAP). The EPA contends that CO2 is a pollutant and falls within the scope of the CAA.
Section 111(d) was designed to deal with HAPs that were not covered by sections 107-110 of the national ambient air quality standards (NAAQS) program and the hazardous air pollutants (HAPs) program. Section 111(d) was supposed to include pollutants that were not emitted by "numerous or diverse mobile or stationary sources," but were also not hazardous enough to require application of maximum achievable control technology (MACT).
Coal Combustion Residuals (CCR)
The EPA is considering two rules for dealing with CCRs. Under the first, the agency would list CCRs as "special wastes." These would be subject to regulation under subtitle C of the Resource Conservation and Recovery Act (RCRA). This designation would significantly impact the costs of disposal in landfills or surface impoundments, which would be paid by the companies that produce the ash. The costs would eventually be passed on to their customers and lead to an increase in the price of electricity. This rule, if approved, would mean that the EPA would have direct oversight of disposal and inspections.
Under the second rule, the EPA would regulate CCRs under subtitle D of the RCRA, which is the section for non-hazardous wastes. Under this rule, the EPA would have no oversight over CCRs; the matter would be left up to individual states. Both proposals would mean increased regulation, but the EPA estimates the first rule would cost about $1.4 billion per year and the second would cost about $587 million per year. However, the Electric Power Research Institute says the costs would be close to triple the EPA's estimates.
A decree filed with the U.S. District Court for the District of Columbia in January requires the EPA to publish notice of a final action by December 19.
The EPA estimates that there are more than 2,000 storage sites in the U.S., and American Coal Ash Association estimates that 110 million tons of coal ash were produced in 2012.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
In this first article, Industrial Info looks at two ongoing regulatory battles regarding the Clean Power Plan and the regulation of coal combustion residuals (CCRs).
The Clean Power Plan
The Environmental Protection Agency (EPA) issued proposed rules under Section 111 of the Clean Air Act (CAA) for existing power plants in June. Known as the Clean Power Plan, the proposed rule would establish new mandatory emission limits in pounds (lbs) of carbon dioxide (CO2) per megawatt-hour (MWh). The rates would vary by state because of regional differences in the power mix, as well as variations in electricity consumption. The rule would target a 30% cut in emissions from 2005 to 2030.
States could achieve their reduction targets by making fossil-fuel plants more efficient; generating more power from natural gas as instead of coal; using more "zero- and low-emitting sources," like nuclear and renewables; and reducing demand by increasing efficiency at the consumption end of the equation.
For new power plants, the EPA's proposed rule falls under section 111 (b). This section calls for an emissions standard that "reflects the degree of emissions limitation achievable through the application of the best system of emissions reduction, which (taking into account the cost of achieving such reduction and any non-air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated."
The proposed rule would cover new coal and natural gas-fired plants with generation capacities of 100 megawatts (MW) or more. Natural gas plants would be allowed to emit no more than 1,000 lbs of CO2/MWh, while coal-fired plants would be allowed to emit 1,100 lbs of CO2. The limit for natural gas-fired plants is within the scope of the exiting technology used in those facilities.
However, existing emissions reduction technology for coal-powered plants falls short of the proposed requirements. Using current technology, the plants can limit emissions to 1,700 lbs of CO2/MWh. New technology has not yet been demonstrated to be commercially viable. Carbon capture and storage (CCS) technology is still under development, but is seen as the only way for new coal-fired plants to meet the proposed standards.
New coal-fired plants would have two options to meet the emissions goal: they could either use CCS technology close to startup, or reach a range of 1,000 to 1,050lbs CO2/MWh within seven years of startup.
Obama Administration officials aim to have a final rule in place by June 2015. The target date for states to inform the EPA of their proposed emissions plans is June 2016, although states can apply for a one-year extension.
The outcome of the conflict between the EPA and power producers (not to mention the coal industry) will be determined by the legal rulings related to section 111 of the Clean Air Act. At the heart of the issue is whether CO2 is a hazardous air pollutant (HAP). The EPA contends that CO2 is a pollutant and falls within the scope of the CAA.
Section 111(d) was designed to deal with HAPs that were not covered by sections 107-110 of the national ambient air quality standards (NAAQS) program and the hazardous air pollutants (HAPs) program. Section 111(d) was supposed to include pollutants that were not emitted by "numerous or diverse mobile or stationary sources," but were also not hazardous enough to require application of maximum achievable control technology (MACT).
Coal Combustion Residuals (CCR)
The EPA is considering two rules for dealing with CCRs. Under the first, the agency would list CCRs as "special wastes." These would be subject to regulation under subtitle C of the Resource Conservation and Recovery Act (RCRA). This designation would significantly impact the costs of disposal in landfills or surface impoundments, which would be paid by the companies that produce the ash. The costs would eventually be passed on to their customers and lead to an increase in the price of electricity. This rule, if approved, would mean that the EPA would have direct oversight of disposal and inspections.
Under the second rule, the EPA would regulate CCRs under subtitle D of the RCRA, which is the section for non-hazardous wastes. Under this rule, the EPA would have no oversight over CCRs; the matter would be left up to individual states. Both proposals would mean increased regulation, but the EPA estimates the first rule would cost about $1.4 billion per year and the second would cost about $587 million per year. However, the Electric Power Research Institute says the costs would be close to triple the EPA's estimates.
A decree filed with the U.S. District Court for the District of Columbia in January requires the EPA to publish notice of a final action by December 19.
The EPA estimates that there are more than 2,000 storage sites in the U.S., and American Coal Ash Association estimates that 110 million tons of coal ash were produced in 2012.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
