Air Emission Regulations and the Coal-Fueled Power Industry

While coal is the least expensive and most abundant fuel source for electric power generation, its combustion produces four primary air pollutants of concern for public health and the environment: sulfur dioxide (SO2), nitrogen oxide (NOX), mercury (Hg) and particulate matter (PM). In addition, power generation accounts for 40% of total U.S. energy-related carbon dioxide (CO2) emissions which, along with other greenhouse gases (GHG), are recognized contributors to global warming.

A significant event in the CO2 emission regulation debate was the U.S. Supreme Court's April 2, 2007 decision in Massachusetts vs. the Environmental Protection Agency (EPA) which ruled that the EPA has authority under the Clean Air Act to regulate GHG emissions from automobiles, and that the agency cannot abdicate its authority to regulate unless it can provide a scientific basis for its refusal. While the ruling doesn’t force the agency to regulate GHG emissions, it would certainly face further legal action if it failed to. The case has impacted the debate over governmental efforts to address global warming. Some industry sources argue that the decision is ambiguous about states’ ability to create their own climate change rules. Currently, many states have CO2 emission rules in the proposal or final stage and several have pending lawsuits arguing in favor of a state’s ability to force utilities to reduce their GHG emissions (Source: Institute of Clean Air Companies Executive Update, April 6, 2007). Regardless of whether it is on a state or federal level, it is a widely-held belief that CO2 emissions from power plants will be restricted in the coming years.

Following is an overview of current legislation of these pollutants as well as an historical recount of past regulatory activity.

Current Regulations

In 1970, the Clean Air Act authorized the U.S. EPA to establish National Ambient Air Quality Standards (NAAQS) to protect public health and the environment.  Since then, the Act has been amended twice, once in 1977 to set new goals for attainment of NAAQS and again in 1990 to address additional air quality problems, including acid rain, ground-level ozone, stratospheric ozone depletion, and toxic air pollution. 

The Clean Air Act Amendments (CAAA) of 1990 produced many regulations that limit emissions from coal-fueled power plants.  In particular, the Acid Rain Program requires major reductions of SO2 and NOX emissions: The NOX program set emission rates based on boiler type, and the SO2 program established a nationwide cap-and-trade program. The NOX limits were largely met through installation of combustion modifications. Switching to lower sulfur fuels and installation of FGD systems (or scrubbers) were tactics used to comply with the SO2 limits.  As the nationwide SO2 cap is reduced in 2010 as specified in the CAAA, additional SO2 control equipment is being installed to ensure continued compliance.

The CAAA created an Ozone Transport Commission to study NOX control in regions with high concentrations of ground-level ozone.  After the study, the U.S. EPA finalized the NOX SIP Call rule requiring annual NOX emissions reductions from 22 states and the District of Columbia during the May-to-September ozone season beginning in May 2004.  The rule also established a NOX trading program.  To comply, power plants have typically installed selective catalytic reduction (SCR) systems.

Regulatory History

In March 2005, the U.S. EPA issued the Clean Air Interstate Rule (CAIR), a rule designed to achieve the largest reduction in air pollution in more than a decade, and the Clean Air Mercury Rule (CAMR), which would have permanently capped and reduced mercury emissions from coal-fueled power plants for the first time ever.

According to the EPA, by 2015 CAIR would have provided health and environmental benefits across 28 eastern states and the District of Columbia valued at more than 25 times the cost of compliance.  It would have reduced SO2 emissions by 70% and NOX by 60% from 2003 levels.

CAMR would have permanently capped mercury emissions from coal-fueled power plants, the largest remaining sources of mercury emissions in the country. It would have reduced utility emissions of mercury nearly 70%, from 48 tons per year to 15 tons by 2018.

More commonly known as the regional haze rule, the Clean Air Visibility Rule (CAVR) applies to primarily Western non-CAIR states and affects 26 industrial sectors with the potential to impact visibility, fine particles, acid deposition, and ozone in certain areas of the country.  CAVR places Best Available Retrofit Technology (BART) on many coal-fueled units outside of the CAIR region in 2013/2014.  This rule is designed to reduce the pollution that causes visibility impairment.

In 2008, the U.S. Court of Appeals vacated (voided) the Clean Air Mercury Rule (CAMR) on February 8th, and it vacated the Clean Air Interstate Rule (CAIR) on July 11th. In the non-CAIR states the regional haze rule is continuing to move forward.

Looking Forward

Many believe that CAIR and CAMR will be replaced with more stringent ones in the 111th Congress. In the meantime, to facilitate future CO2 emission reduction dialogue, Congressmen John D. Dingell (D-Michigan), Chairman of the Committee on Energy and Commerce and Rick Boucher (D-Virginia), Chairman of the Subcommittee on Energy and Air Quality submitted a discussion draft of climate change legislation in 2008.  Generally, the draft will spur dialogue on various options for greenhouse gas regulation, while laying out a framework for a federal climate program. It specifically aims to establish an economy-wide cap-and-trade program that would reduce covered greenhouse gas emissions to 80% below 2005 levels by 2050.