On December 21, 2011, the U.S. Environmental Protection Agency (EPA) announced its final rule requiring power plants to reduce emissions of mercury and other air toxics. The final rule, which EPA is calling the Mercury and Air Toxics Standards (MATS), replaces the Clean Air Mercury Rule that was promulgated by the Bush Administration using a cap-and-trade system predicted to reduce mercury emissions by 70% over thirteen years. The D.C. Circuit, however, vacated the Bush rule, and the new MATS will require coal-fired power plants to reduce mercury emissions by 90% in four years. Coal-fired power plants, the coal industry, coal states like West Virginia, and others dispute EPA’s claims that the presumed health and economic benefits of MATS outweigh its costs and have raised concerns over the impact of MATS on the supply of electricity. Unless successfully challenged, MATS will be the first national air standards on power plant mercury emissions.
Earlier this year, the American Coalition for Clean Coal Electricity released an initial analysis by National Economic Research Associates (NERA) of the combined impacts of EPA’s Cross-State Air Pollution Rule (CSAPR) that goes into effect in January 2012 and MATS, then known as the Utility Maximum Achievable Control Technology or MACT Rule. NERA used the government’s own data and found that these two proposals would: increase coal unit retirements by about 48 gigawatts (GW); increase electricity sector costs by $17.8 billion per year; decrease coal-fired generation in 2016 by about 13%; decrease electricity sector coal demand in 2016 by about 10%; increase natural gas-fired generation in 2016 by about 26%; increase natural gas prices in 2016 by about 17% which would increase natural gas expenditures by residential, commercial, and industrial sectors by $8.2 billion per year; increase average U.S. retail electricity prices in 2016 by about 12%, with regional increases as much as about 24% in some areas of the United States that rely on coal for electricity; and reduce net employment in the U.S. by more than 1.4 million job-years over the 2013-2020 period, with sector losses outnumbering sector gains by more than 4 to 1. The NERA estimates are significantly higher than EPA’s numbers. For more information on the NERA initial analysis, click here.
The final MATS rule applies to coal- and oil-fired electric generating units (EGUs) with a capacity of 25 megawatts (MW) or greater. EPA estimates that there are approximately 1,100 existing coal-fired units and 300 oil fired units for a total of 1,400 affected units at about 600 power plants. According to EPA, about 60% of coal-fired units already comply with the final standards while 40% lack state-of-the-art controls. The 40% are older plants and will likely be shut down resulting in a loss of utility worker jobs and tax revenue. EPA projects retirements of 4.7 GW out of more than 1,000 GW that make up the nation’s electric generating capacity or less than one half of one percent of the nation’s generating capacity.
The final rule sets standards for all hazardous air pollutants (HAPs) emitted by coal- and oil-fired EGUs with a capacity of 25 megawatts or greater. Under the final rule, affected power plants must reduce emissions of mercury and other heavy metals, including arsenic, chromium, and nickel, and acid gases, including hydrochloric acid and hydrofluoric acid. In addition to reducing emissions of mercury and other air toxics, the final rule will reduce emissions of sulfur dioxide 41% beyond the reductions expected from CSAPR and fine particulate matter that is directly emitted from power plant stacks.
The final rule will take effect 60 days after publication in the Federal Register. EPA states in a Fact Sheet on its website that the final rule will be published in January or early February 2012. See Fact Sheet: Clean Air and Reliable Electricity. However, it has been reported that during a stakeholder call conducted on December 21, 2011, Assistant Administrator for the Office of Air and Radiation Gina McCarthy informed participants that EPA anticipates the rule will be published in the Federal Register in late February or early March 2012.
Existing sources will then generally have up to four years or until early 2016, if they need it, to comply with MATS. This includes the standard three years provided to all sources by the Clean Air Act, and an additional fourth year that EPA is “encouraging permitting authorities to make…broadly available for technology installations.” If more time is needed, EPA has issued an enforcement policy document that provides a pathway for units critical to reliability to obtain, on a case-by-case basis, a schedule with up to an additional fifth year to achieve compliance. Further, EPA states that if there are still “other situations where sources cannot come into compliance on a timely basis,…EPA will address individual noncompliance circumstances (if there are any) on a case-by-case basis, at the appropriate time, to determine the appropriate response and resolution.” See Fact Sheet: Benefits and Costs of Cleaning Up Toxic Air Pollution from Power Plants and Fact Sheet: Mercury and Air Toxics for Power Plants.
For coal-fired EGUs, both new and existing, the rule establishes numerical emission limits for mercury, PM (a surrogate for toxic non-mercury metals), and HCl (a surrogate for all toxic acid gases). MATS also sets numerical emission limits for oil-fired EGUs. The standards set work practices, instead of numerical limits, to limit emissions of organic air toxics, including dioxin/furan, from existing and new coal- and oil-fired power plants. The work practice standards require an annual performance test program for each unit that includes inspection, adjustment, and/or maintenance and repairs to ensure optimal combustion. When fully implemented, EPA projects MATS will reduce emissions of mercury from coal-fired power plants by 90% and emissions of acid gases from power plants by 88%.
EPA expects power plants will comply with MATS through a range of strategies including the use of existing emission controls, upgrades to existing emission controls, installation of new pollution controls, and fuel switching. EPA emphasizes that the final standards are based on “existing, commercially proven technologies” that are “widely available” and “frequently used” in the electric utility industry, including electrostatic precipitators, fabric filters (baghouses), flue gas desulfurization (scrubbers), or dry sorbent injection. To install and maintain these controls, EPA estimates that MATS will create 46,000 short-term construction jobs and 8,000 long-term utility jobs. According to EPA, the total national annual cost of the final rule will be $9.6 billion, which is about a billion dollars less than the proposed standards.
EPA estimates that when fully implements in 2016 MATS will prevent 4,200 to 11,000 premature deaths, 2,800 cases of chronic bronchitis, 4,700 heart attacks, 130,000 asthma attacks, 5,700 hospital and emergency room visits, 6,300 cases of acute bronchitis, 140,000 cases of respiratory symptoms, 3.2 million restricted activity days, and 540,000 missed work or “sick” days per year. EPA estimates the health benefits associated with meeting the standards for air toxics are $37 billion to $90 billion in 2016 (2007$).
As for electricity rates, EPA projects they stay within normal historical fluctuations. EPA states its modeling indicates that MATS will result in relatively small changes in the average retail price of electricity (approximately 3 percent). EPA concludes that the increased demand for natural gas will keep electricity prices below 1990 levels.
For EPA’s Fact Sheets that accompanied MATS, see (1) Fact Sheet: Benefits and Costs of Cleaning Up Toxic Air Pollution from Power Plants; (2) Fact Sheet: Mercury and Air Toxics for Power Plants; (3) Fact Sheet: Clean Air and Reliable Electricity; and (4) Fact Sheet: Adjustments from Proposal to Final.
For a discussion of EPA’s proposed rule, known as the Utility Maximum Achievable Control Technology or MACT rule, see articles titled “EPA Proposes 91% National Reduction for Mercury As Well As Reductions of Other Toxics from Power Plants And Claims That Program Will Reduce Future Cost Of Power,” and “EPA Proposed Emission Standards for Hazardous Air Pollutants from Fossil Fuel-Fired Power Plants,” posted on March 16, 2011, and May 16, 2011, respectively, on the Jackson Kelly PLLC Energy & Environment Monitor.
This article was authored by Gale Lea Rubrecht, Jackson Kelly PLLC. For more information on the author, see here.