Experts in Government and Industry Call Their Bluff
Natural gas plants have considerable capacity to increase generation to offset the loss of coal capacity. Efficiency can offset even more at lower cost. Even so some utilities and coal companies want to water down new mercury emissions reductions.
By Daniel J. Weiss, Jackie Weidman
The December 16 deadline approaches for the Environmental Protection Agency to issue its final rule to reduce airborne toxic chemicals from coal-fired power plants. Mercury and Air Toxics Standards would require the first reductions of dangerous emissions of mercury lead, arsenic, and acid gases. The EPA notes these safeguards will prevent 17,000 premature deaths annually, as well as avoid 12,000 hospital visits and 120,000 cases of aggravated asthma every year. The economic benefits could outweigh the costs by up to $14-to-$1.
Even though plants would have until 2015 before the rule is enforced, some vocal utilities and coal companies—coal-fired power plants are the largest source of mercury pollution in the United States—want the Obama administration to delay and weaken these health safeguards before they are finalized. These companies erroneously claim that the safeguards as written will affect the reliability of the electricity supply, particularly during peak demand periods. But clean air defenders have analysis on their side, as we see over and over again in government and independent studies.
Reliability of our electricity supply is vital to our economy and security, and we must not take it for granted. But while reliability is a serious issue, ample evidence proves that the EPA’s air toxics rule will not affect it. On the contrary, many reliability problems are caused by falling trees, extreme weather, human error, and other such events. Any reliability issues that do arise over plant closures due to the rules will be offset by increased capacity in coal and natural gas plants over the next few years.
All this is on top of the fact that many utilities will be able to comply with the rules without much hardship. The small number of vocal utilities and coal companies that are complaining about the rules are proven wrong by a number of sources, including a firm statement from a December 2011 Department of Energy study.
On December 1 the Department of Energy released its own comprehensive in-depth study about reliability concerns over the air toxics rule. DOE deliberately analyzed a worst-case scenario admittedly more severe than what is anticipated for the EPA rules. DOE found that even in the worst-case scenario:
… the overall supply-demand balance for electric power in each region examined would be adequate [and furthermore,] mechanisms exist to address such reliability concerns … on a plant-specific or more local basis
This is the latest in a long line of energy assessments that determine an air toxics rule will have little or no impact on reliability.
Industry critics argue that coal plants will be forced to shut down due to overly expensive compliance with the new rules, affecting reliability. But the Edison Electric Institute—the lobbying arm of the utility industry—identified only 34,000 megawatts of closures over the next decade, roughly just 5 percent of total electricity generation for 2022. The EEI also notes that “retirements [for old coal power plants] are taking place for a variety of reasons, including plant age, fuel price drop from low natural gas prices, and decreased demand, among other reasons.”
Even in the cases where plants do close, unused capacity in natural gas plants could offset some coal plant closures. In November 2010 the U.S. Energy Information Administration conducted an analysis of “Potential for Displacing Coal with Generation from Existing Natural Gas Plants.” It found that in 2007, a study group of coal plants were utilized an average of 72 percent, while the study group of natural gas plants was utilized an average of only 42 percent.
An earlier version of this analysis concluded:
Because gas-fired combined cycle plants [a specific type of natural gas plant that is the industry standard for new installations] are technically capable of running as often as coal plants, this comparison indicates that combined cycle plants could be used, in principle, to generate significantly more gas-fired power.
The analysis included some caveats based on fuel availability, pipeline capacity, and access to transmission. Nonetheless, it is clear that natural gas plants have capacity to increase generation to offset the loss of some coal capacity [see figure above].
In addition, the Energy Information Administration reports that there are substantial plans for new plants, ensuring capacity needs will be met during summer months. Meeting statewide peak electricity demand is particularly important during summer months, especially as hotter-than-average temperatures occur due to climate change and people needing air conditioning. EIA estimates that there will be nearly 43,000 MW of new coal and natural gas capacity added alone between now and 2015, with total capacity growth of 72,000 MW from all generators over this timeframe, which would meet demand.
Furthering the point that reliability will not be affected by the rules, the North American Reliability Corporation, an international regulatory authority established to evaluate reliability of the bulk power system in North America, released a report on November 28 showing that toxic pollution reductions would have “manageable impacts” on U.S. electric generation infrastructure.
The new report decreases the number of plants expected to shut down. And though its projections are made for worst-case scenarios that describe extreme outcomes that may arise, overall EPA rules “do not threaten capacity reserve margin targets either nationally or regionally.”
Business Wire sums up the report’s findings:
The NERC report makes clear that EPA’s proposed regulation of mercury and other toxic air emissions from power plants will have manageable impacts on the nation’s electric grid and will not jeopardize reliability.
Another report, released on November 28, again demonstrates that reliability fears are unlikely to occur. “Ensuring a Clean, Modern Electric Generating Fleet while Maintaining Electric System Reliability,” by M.J. Bradley Associates LLC and the Analysis Group, found that the electric utility industry is well-positioned to comply with the EPA’s rules on time in 2015.
The report highlights that 11 of the top 15 largest coal fleet owners indicated that they will be able to comply with the EPA air toxics rules. These companies provide half of the nation’s coal capacity.
Thirty other major companies, including Duke Energy, Edison International, PSEG, and Northeast Utilities, agree with this assessment. Duke—which owns 14 coal plants with a capacity of 7,846 MW of power—noted that “three years [to comply in 2015] is doable.”
Other evaluations found that many plants will easily comply. The Clean Energy Group—an electric company coalition that has nearly 100,000 MW of the United States’ total fossil-fuel electricity-generation capacity—conducted an analysis that found that nearly 60 percent of all coal-fired boilers that submitted stack test data—a procedure for sampling a gas stream from a single sampling location at a facility, unit, or pollution control equipment—to the EPA are currently achieving the proposed mercury emissions standard.
Many utilities believe that electric companies can comply with the proposed rule, and they expect compliance will “promote economic growth, innovation, competitiveness, and job creation, all without compromising the reliability of our electric system.”
A Ceres analysis of industry earnings also found that compliance with the new health protections will not be very burdensome. Author Dan Bakal found that 85 percent of the nation’s electricity-generating fleet is either ready to comply or unaffected by the air toxics rule because of reliance on other low- or no-pollution energy sources. The large number of plants that already installed pollution controls explains the recent finding that many coal-fired power plants are already meeting the proposed mercury reduction standard.
This finding confirms a CAP analysis, “Mercury Falling,” which found that many power plants in the 17 states with their own mercury-control programs already installed equipment to slash this pollutant. More than half the electricity-generating capacity in these states has scrubbers, which can remove most or all mercury. One-sixth of this capacity has installed “activated carbon injection” technology that can further reduce mercury pollution.
Meanwhile, government officials investigated the potential impact of air toxics reductions on reliability, and they determined that the new safeguards would have little impact on it.
Department of Energy Assistant Secretary for Electricity Delivery and Energy Reliability Patricia Hoffman said as much at a 2011 Federal Energy Regulatory Commission conference on November 30:
Generally speaking, the new EPA rules will not create widespread resource adequacy issues.
Assuming prompt and responsible action by regulators and generators, the timeliness associated with the construction of new generation capacity and installation of pollution control retrofits would generally be comparable to EPA’s regulatory compliance timelines.
Federal Energy Regulatory Commission Chairman Jon Wellinghoff agrees with this assessment. He told a House panel in September that “with sufficient information and time, the electric industry can plan to meet both its reliability and environmental obligations.”
Unlike these government and utility experts, Edison Electric Institute believes that power plants that intend to reduce their pollution should have an additional year to install pollution controls.
It commented to EPA:
EEI urges EPA to authorize a categorical extension of an additional one year for compliance except for those units that will shut down (without causing a reliability problem). … to provide certainty and ease a tremendous administrative burden, EPA should grant a fourth year for compliance for those units installing controls or taking other actions to comply in the final rule.
Because some owners or operators of units may require more than four years to achieve compliance, EEI separately plans to urge the President to issue an executive order using the CAA [Clean Air Act]―exemption authority provided by CAA section 112(i)(4) to allow additional time. Section 112(i)(4) provides that the President may grant a two-year―exemption (i.e., extension) on finding that ―the technology to implement such standard is not available and it is in the national security interest of the United States to do so.
At the November 30 FERC conference, EEI Chair Thomas Farrell continued to urge that the EPA “grant an additional fourth year and should do so categorically for plants undertaking such investments” to comply with the toxics reduction standards. He also urged the president to employ a two-year national security delay, which has never been used before. Every year of delay would allow up to 17,000 premature deaths.
Some utilities, such as Southern Company and Dominion Resources Incorporated, insist that they need until at least 2018 to reduce their pollution. This happens to be nearly 30 years after President George H.W. Bush signed these mercury reduction requirements into law in 1990, and 14 years after President George W. Bush began efforts to set reduction standards.
Some major utilities disagree that such a long delay is warranted, and instead believe that air toxics rules provide adequate time to reduce their pollution.
Exelon has “one of the industry’s largest portfolios of electricity generation capacity.” It determined that “EPA’s clean air rules can be implemented on time without threatening reliability.”
In September Exelon Senior Vice President Joseph Dominguez added:
The rules have been in the works for about a decade, and the electric utility industry is well-positioned to respond, with more than 60 percent of coal-fired power plants already equipped with pollution controls. Those companies that have done little or nothing to improve or update antiquated, inefficient plants should start planning for compliance now, instead of lobbying for categorical extensions or legislative delays.
The American Coalition for Clean Coal Electricity is another leading voice against these overdue health standards. A recent CAP report found that the 22 ACCCE member companies have nearly $18 billion in cash reserves. Ceres conducted a similar analysis that found that the top 20 electric generators in the United States have combined cash reserves exceeding $35 billion. These billions of dollars of cash should substantially ease coal utilities’ and companies’ ability to withstand any economic impact of cleanup.
Utilities truly concerned about reliability should invest more in renewable energy sources, including wind, solar, and geothermal power.
During Texas’s freeze-induced February blackouts, Electric Reliability Council of Texas CEO Trip Doggett said that no wind turbines were shut down due to icing, and that they “put out a special word of thanks to the wind community because they did contribute significantly [to meet energy demands] through this time frame,” helping meet peak demand.
This crisis would have been much worse without available wind energy resources.
The real solution to our reliability issues, therefore, lies in investing in infrastructure and diversifying our energy portfolio with renewable sources, all of which create jobs.
As is usual in Washington, the closer the deadline to government safeguards loom, the more vocal the opposition from the responsible industries. The reliability scare tactics some utilities are using are designed to delay or undermine public health protections from mercury and cancer-causing chemicals. These pleadings must be ignored by President Barack Obama and Congress to protect lives, invest in clean jobs, and reduce pollution.
Thanks to Richard Caperton, Senior Policy Analyst at the Center.