by Bob Shively, Enerdynamics’ President and Lead Instructor

In late 2011, the electric industry was prepared for the implementation of new EPA emissions rules called the Cross-State Air Pollution Rule (CSAPR) designed to reduce the amount of sulfur dioxide (SO₂) and nitrous oxides (NO_x) that upstream states send across state borders.

On December 30, 2011, just two days before the new rules were to take effect, the United States Court of Appeals for the D.C. Circuit issued its ruling to stay the CSAPR pending judicial review. The Court of Appeals instead left in place the 2005 Clean Air Interstate Rule (CAIR). Subsequently the D.C. Court vacated the new CSAPR rule.

But on April 29, 2014, the U.S. Supreme Court reversed the district court ruling and reinstated EPA’s right to implement the rule as proposed. Coupled with a recent D.C. District Court ruling in favor of the proposed EPA Mercury and Air Toxics Standards (MATS) that limits mercury and other toxic emissions from power plants plus earlier rulings supporting EPA’s regulation of greenhouse gas emissions, the message is clear – any coal unit that is to continue in service will have to strictly limit its emissions[1].

Reminder of what the CSAPR rule means
The CSAPR rule implements more stringent limits on emissions using four separate and distinct cap and trade programs[1]:

• an annual SO2 program covering 16 “Group 1” states in parts of the Midwest and Northeast[2]
• a separate annual SO2 program covering 7 “Group 2” states in the Southeast, parts of the Midwest and Texas[3]
• a se asonal NOx program covering covering 25 states
• an annual NOx program covering 23 states

(For a more thorough discussion on CSAPR allowances and how they can be traded, read the related article from our Q4 2011 issue of Energy Insider.)

The various programs are applied to different states depending on the EPA’s evaluation of where environmental issues exist.  The following map indicates where each program applies:

(source: www.epa.gov)

Overall, the new regulations cover 28 states in the East, Southeast, Midwest and in Texas.  Western states are not covered. When implemented, the new limits will significantly reduce the amount of emissions allowed in covered states:

What will the impact be?
The impacts of the Supreme Court ruling are still uncertain. Most owners of coal units had already assumed that they will need to either install state-of-the-art emissions control equipment or shut their units down. So whether the Supreme Court ruling will cause more movement to shut-down coal units is uncertain.  It is not even clear when or if the EPA will move forward with implementing CSAPR. As of May 5, the EPA website says the agency “is reviewing the opinion. At this time, CAIR remains in place and no immediate action from States or affected sources is expected.”[2]

And the court did leave open the possibility for individual states to challenge whether they should be part of the program or whether circumstances have changed.

What does seem likely is that the EPA will feel more confident in moving forward with implementing the various emissions[3] rules that impact the electric generation business. Expect to hear more news about coal units being retired and no slowdown in the growth of gas-fired generation and renewables.

References:
[1] For more background see our prior blogs and Energy Insider covering the rules see: https://blog.enerdynamics.com/2012/01/09/court-halts-implementation-of-new-csapr-power-plant-emissions-rules/ and http://marketing.enerdynamics.com/Energy-Insider/2011/Q4Electricity.html

[2] See http://www.epa.gov/airtransport/CSAPR/

[3] These include CSAPR and MATS as mentioned above, Carbon Pollution Standards (see http://www2.epa.gov/carbon-pollution-standards) and National Pollutant Discharge Elimination System (NPDES) rules affecting discharge of cooling water (see http://cfpub.epa.gov/npdes/stormwater/swbasicinfo.cfm)