Mercury Rules Thrown Out

Location: New York
Author: Ken Silverstein, EnergyBiz Insider, Editor-in-Chief
Date: Friday, February 29, 2008

Coal plants are taking even more shots. The latest salvo is coming from a U.S. Court of Appeals that says that the U.S. Environmental Protection Agency illegally removed those facilities from a list of hazardous pollution sources that must comply with air rules to cut mercury emissions.

Environmentalists hailed the court ruling, saying that it is part of a broader trend that is putting pressure on utilities to install the best available technologies in their power plants or to build more sustainable facilities. The EPA now has two choices, which are to either appeal the ruling or to go back to the drawing board. The most likely path will be to take two years to rewrite the rules -- obviously in a way that makes mercury reductions mandatory and not voluntary.

The recent decision by the U.S. Circuit Court of Appeals for the District of Columbia invalidates the 2005 Clean Air Mercury Rule that would have created a free-market system to cutting mercury emissions. The "cap-and-trade" approach would have given utilities the right to exceed national limits on mercury emissions if they were buy credits from those that had been able to comply with the standards -- a methodology that the Bush administration says would have cut mercury pollutants by 70 percent by 2018.

The latest court ruling comes atop a U.S. Supreme Court decision delivered last year that says that carbon dioxide is a pollutant that can be regulated by EPA. Just recently, three major investment banks said they have written new underwriting guidelines that take into account utilities' carbon dioxide releases -- and the expected future costs to mitigate them to deal with climate change -- when granting loans.

"The technology exists to dramatically reduce toxic mercury pollution, and it is years past time to put that technology to work," says the Chesapeake Bay Foundation's Litigation Director Jon Mueller. The group participated in the lawsuit against EPA along with several other environmental and health organizations and 14 different states. All argue for mandatory rules that they say will cut mercury releases by 90 percent.

While cap-and-trade is used to curb sulfur dioxide emissions and is under discussion with respect to carbon dioxide, the groups say that it won't work with mercury. That's because mercury has a greater potential to fall back to earth, some scientists say, which places prospective "hot spot" communities at risks.

Approximately 1,100 coal-fired units at more than 450 existing power plants emit 48 tons of mercury into the air each year, with 11 tons of that deposited on to U.S. soil, says EPA. They also release arsenic, lead and other heavy metals, all of which are considered hazardous and are therefore subject to clean air laws that require coal facilities to use the best available technologies. The three-judge appeals panel unanimously ruled that EPA's logic was "not persuasive" and that coal plants must comply with the law.

Policymakers and utilities are under pressure to do something about mercury, which has helped foster the development of new technologies. Modern generating facilities can limit mercury emissions but the older plants that are far less efficient are the ones with the biggest problems. Such advances have pushed 21 states to go beyond what the federal government has tried to do, requiring their utilities to make 90 percent reductions in mercury in accelerated time frames.

While utilities argue that the technologies to allow for such rapid reductions are not yet commercially available, critics say that that they are. They point to WE Energies and the Department of Energy, which are involved in a mercury removal program that began operating in January 2006. The test case has worked to reduce mercury emissions by 90 percent -- something that the green groups say can be replicated around the country.

The utility sector is disappointed by the federal appeals court ruling, saying that the Bush administration's proposal was reasonable. They add that the legal infighting has only served to delay effective mercury reductions. "Ironically, with their aggressive litigation posture, the environmental community and their state allies have again caused uncertainty and delay in regulating mercury," says Scott Segal, director of the Electric Reliability Coordinating Council, adding that the EPA must essentially start from scratch.

When asked what should be done, environmental advocates say that the focus must be on modernizing older coal-fired power plants. Such "outdated" plants are the single largest source of air pollution, releasing the preponderance of sulfur dioxide, nitrogen oxide and mercury -- all of which helps contribute to "thousands" of premature deaths each year.

As such, Congress has two possibilities, they add. One includes a specific law to force power generators to comply with tough mandatory reductions in mercury and a second would be broader law that applies to all power plant releases, including carbon dioxide. Congress could write legislation that uses a previous proposal called the "Clean Air Planning Act" as a model. While comprehensive, that measure has long been criticized by opponents as expensive and hurried.

"We'd like to see the EPA go back to work quickly and fix this mess by setting tough Maximum Achievable Control Technology standards," says Frank O'Donnell, head of Clean Air Watch. "Since that appears most unlikely in the Bush administration, we'd like to see Congress enact the Clean Air Planning Act."

Environmental prudency long-advocated by American industry and the Bush administration is giving way to more aggressive policies. With both the legal and regulatory structures advancing stricter new controls on coal-fired power plants, utility planners have to rethink their growth strategies and how they will fuel the generation facilities of the future.