EPA Regulations and Electrical System Reliability

Recently, the U.S. Environmental Protection Agency (EPA) announced that today there will be two public hearings, on the proposed carbon pollution standard for new power plants. The hearings will be all day and held in Washington DC and Chicago. Under the new rule, new power plants will have to emit no more than 1,000 tons of carbon dioxide per megawatt-hour of energy produced. All existing plants and currently permitted and built in the next 12 months will be grandfathered and exempt from this new rule for now. According to the EPA, a coal plant currently produces about 1,800 pounds of carbon dioxide per megawatt-hour of electricity. EPA says the rule creates “a path forward for new technologies to be deployed at future facilities that will allow companies to burn coal, while emitting less carbon pollution.” There is no commercially available technology for carbon sequestering that can meet this carbon standard for coal fired plants. EPA intends that carbon sequestering technology will be developed and can then be deployed on all future and existing coal burning plants or that the current crop of coal fired power plants will be the last.

The North American Electric Reliability Corporation’s, NERC, whose mission is to ensure the reliability of the North American bulk power system, recently released their 2011 Reliability Assessment. NERC develops and enforces reliability standards; assesses the projected adequacy of the power generation capacity in the United States and Canada, and educates trains and certifies industry personnel. In 2007 the U.S. Federal Energy Regulatory Commission (FERC) granted NERC the legal authority to enforce Reliability Standards with all U.S. users, owners, and operators of the bulk power system, and made compliance with those standards mandatory and enforceable.

The annual assessment of power generation capacity is intended to provide an independent view of the long term reliability of the North American power generation capacity while identifying trends, emerging issues, and concerns. NERC’s primary goal in their assessments is to make recommendations to ensure the reliability and adequacy of the electrical power supply. The most recent assessment found that the reliability of the power system remains adequate, though existing and proposed environmental regulations in the U.S. may significantly affect power system reliability. How significant an impact would depend on the scope, interpretation and timing of the rule implementation.

NERC identified potential impacts of recent environmental regulations as impacting the reliability of the U.S. power system. During the past year, EPA finalized four regulations that were specifically targeting coal fired power plants. The last was the carbon pollution standard that EPA is holding hearing for today, the others were in the news at various times throughout the past year. The Mercury and Air Toxics Standards (MATS) regulates mercury, arsenic, acid gas, nickel, selenium, and cyanide. MATS was finalized on December 21. 2011. The Cross-State Air Pollution Rule, CSAPR, which requires reductions of sulfur-dioxide and nitrogen-oxide emissions in coal fired plants, was made final in July 2011 but at the end of last year, the U.S. Court of Appeals District of Columbia Circuit granted a stay to the implementation of the CSAPR pending resolution of the legal challenges. In addition, EPA finalized the expanded Cooling Water Intake Structures Rule under Section 316(b) of the Clean Water Act that requires that National Pollutant Discharge Elimination System (NPDES) permits for facilities with cooling water intake structures ensure that the location, design, construction, and capacity of the structures reflect the best technology available to minimize harmful impacts on the environment, effectively expanding the current regulation to cover existing electrical generation facilities.

NERC 2010 Special Reliability Scenario Assessment

According to the NERC, the Cooling Water Intake Structures Rule and MATS could potentially have the most significant and negative impact on electric system reliability. The degree of impact depends on how strictly the EPA implements these and the other rules. A tight compliance schedule with limited or no flexibility could take electrical capacity out of the system and that could impact reliability. Because industry plans for complying with these rules are not yet finalized, NERC was forced under its charter to identify the potential impact based on a modeling approach that was used in the October 2010 Special Reliability Scenario Assessment to identify potential failures in the power supply. Their analysis showed that while 2013 capacity impact would be negligible it was anticipated that between 40 and 69 gigawatts of existing coal fired electrical capacity would be removed by 2018, and between 6.5 and 7.4 gigawatts of capacity would be eliminated due to the operation of the additional environmental equipment needed for compliance. This is an anticipated impact of about 3%- 7% of the total electrical system capacity which NERC warns could threaten system reliability if the regulations are implemented too quickly and too strictly. The Federal Energy Regulatory Commission now questions NERC's focus and statutory responsibilities, concluding that it "may have exceeded the functions" Congress intended for a reliability organization by evaluating electrical reliability impacts of these regulations and  other threats to the electrical capacity.

Coal Production, the EPA and Atmospheric Pollution

Some of the nation's coal-fired power plants were originally built as petroleum fired. Both types of electrical power plants were built as the nation grew and industrialized in the first half of the 20th century when coal and oil were the most abundant and cheapest available fuel. However, by 2009 coal burning power plants supplied 45% of the electricity produced, and petroleum supplied about 1%. After the end of World War II the use of coal for rail and water transportation and for heating declined. Coal demand grew starting growing again in the 1960’s with the post-War growth in American industry and increased use for electricity generation. In 1950, U.S. coal production was 508 million metric tons. In 2010, U.S. coal production was 1,050 million metric tons, but what appears as a smooth steady rise did not happen that way.

The use of coal rather than petroleum for electrical generations is a direct result of the 1973 Oil Embargo. In an attempt to regain energy independence after the gas rationing, and oil shortages of the Embargo, the nation turned to its vast coal reserves. Between 1973 and 1976, coal production increased by 14.4%. In 1978, the Power Plant and Industrial Fuel Use Act mandated conversion of most existing oil-burning power plants to coal or natural gas. Thirty years later our point of view has changed.

The coal burning power plants emit 48 tons of mercury annually as well as particulates and other pollutants. In addition, coal combustion adds a significant amount of carbon dioxide to the atmosphere per unit of heat energy, more than does the combustion of other fossil fuels. According to a combined report from the U.S. EPA and the Department of Energy, coal generates 2.1 pounds of CO2 per kWh while natural gas generates 1.3 pounds of CO2 per kWh. The U.S. Environmental Protection Agency, EPA, launched the Greenhouse Gas Reporting Program in October 2009, requiring the reporting of carbon dioxide, CO2, data from large stationary emission sources, as well as suppliers of fuel that would emit GHGs if used. EPA intends to promulgate CO2 regulations in the coming year based on the data collected, but in the meantime has guidance on CO2 emissions permitting.

In the past year, EPA finalized two regulations that were specifically targeting coal fired power plants. The Mercury and Air Toxics Standards (MATS) regulates mercury, arsenic, acid gas, nickel, selenium, and cyanide. MATS was finalized on December 21. 2011. The Cross-State Air Pollution Rule, CSAPR, which requires reductions of sulfur-dioxide and nitrogen-oxide emissions in coal fired plants was made final in July but at the end of last year, the U.S. Court of Appeals District of Columbia Circuit granted a stay to the implementation of the CSAPR pending resolution of the legal challenges. CSAPR, if eventually implemented will reduce SO2 emissions by 73% from 2005 levels and NOx emissions by 54% at the approximately 1,000 coal fired electrical generation plants in the eastern half of the country. It should be clear that EPA’s goal is to reduce if not eliminate the use of coal for power generation.

The composition and total of the net summer generating capacity for electricity in the U. S. has changed in the past decade. Since 1999 the generating capacity for natural gas has more than doubled while the generating capacity for coal fired electrical generators has remained constant. In 2010 natural gas was used to produce 24% of U. S. electricity. Coal was used to product 45 % of electricity. However, the summer net generating capacity of natural gas now exceeds coal. With the tightening and expansion of regulations by the EPA under the Clean Air Act of coal powered generating plants for carbon emissions, mercury, arsenic, acid gases and the Cross-State Air Pollution Rule the federal government looks likely to end electrical generation from coal as a fuel source. This will only be accelerated by the recent fall in natural gas prices.

In 2010, U.S. coal production was 1,050 million metric tons with 92.5% of the coal used to generate electricity. Without electrical generation there is little demand for coal. The EPA’s MATS and CSPAR regulation and the forthcoming greenhouse gas regulations will eliminate the economic feasibility of coal fired electrical generation plants and all but end coal mining in the United States (at least for this generation). However our nation requires power, and in the foreseeable future that is not going to change. Regulation can also be used to limit other sources of energy- the Keystone XL pipeline and Hydraulic Fracturing (fracking) bans. The cost of power is a key factor in determining the cost of production, and the cost of living. To a large extent we have exported manufacturing to China and other emerging economies. China’s use of coal for electricity generation was 1.29 billion metric tons last year, but their pollution control was weak.

The earth’s atmosphere is interconnected. That is accepted when it comes to carbon dioxide or the chemicals that erode the ozone layer, but it also applies to industrial pollutants. The EPA has estimated that just one-quarter of U.S. mercury emissions from coal-burning power plants are deposited within the contiguous U.S. The remainder enters the global cycle. Conversely, current estimates are that less than half of all mercury deposition within the United States comes from American sources. According to the Mount Bachelor Observatory, other Chinese exports include acid rain that falls in China, Korea, and Japan, and pollutants that enter the air stream including sulfates, NOx, black carbon, soot produced by cars, stoves, factories, and crop burning. It seems that EPA can reduce our economic growth without actually reducing the air pollution we experience.