US EPA MACT Attack

To ring in the New Year, your friends at the US EPA issued the final Utility MACT rule. At 1, 117 pages it might take you a while to get through it. So conveniently, EPA prepared measured doses of the MACT medicine for you in four separate fact sheets:

  1. Benefits and Costs
  2. Summary of the Rule
  3. Clean Air and Reliable Electricity
  4. Adjustments from Proposal to Final.

So what is the MACT rule?  First, some jargon to help you navigate the rules.  MACT is the ‘nickname’ for this rule.  It stands for Maximum Available Control Technology which is what the rules practical effect will require utilities to use to remove the pollutants from their exhaust gasses and emissions.  You may also see the acronym MATS which EPA prefers to use as the moniker for this rule.  It stands for Mercury and Air Toxins Standards which, I suppose, is used to make you more sympathetic to the onerous provisions of the rule.

As the EPA says MATS is a rule to reduce emissions of toxic air pollutants from power plants.  These emissions include heavy metals, including mercury (Hg), arsenic (As), chromium (Cr), and nickel (Ni); and acid gases, including hydrochloric acid (HCl) and hydrofluoric acid (HF) that are known or suspected of causing cancer and other serious health effects.

This MATS rule for power plants is intended to require MACT to assure that the plants reduce emissions from new and existing coal- and oil-fired electric utility steam generating units (EGUs).  But just to make sure EPA also revised the new source performance standards (NSPS) for fossil-fuel-fired power plants for particulate matter (PM), sulfur dioxide (SO2), and nitrogen oxides (NOx).

In fairness, the power industry and EPA have been fighting over rules for coal plant emissions including mercury for years both in the regulatory process and in court.  Each side has won and lost battles in this long war.  That mercury and toxin reduction rules were coming was no surprise, but the price the power industry is paying for resisting EPA all these years and besting them in court a time or two to frustrate mercury regulation is that EPA is imposing a relatively short timeline for compliance.  Three years, maybe four if local environmental regulators agree—and in the case of critical power plants a fifth year to assure the lights stay on.

Sounds like a long time to you?

This is where the allegations of a deliberate war on coal are raised because the timeline given to utilities to attempt to retrofit their older plants to meet MATS using MACT is about half the usual and customary time required to go through the various regulatory environmental review, permitting and state regulatory approvals necessary to even start the retrofit work let alone bid it out and complete it.  GOTCHA!  

But EPA says to utilities if you cannot comply in time you must confess that you are in noncompliance thus subjecting the utility to environmental lawsuits, potential fines and injunctions even as it methodically goes through the required regulatory process.

The practical result of this regulatory GOTCHA is utilities will be prudent and take the path of less torment and cost.  Many will shut down their coal plants by the compliance deadline.  Some will replace them with natural gas combined cycle plants.  Merchant generators will rush in to fill any gaps revving up existing underutilized power plants or making plants to build new ones—probably gas.  It isn’t a bad outcome long term except for the huge cost, short timelines and risk to resource adequacy from trying to do it so fast in every regional market.