Trump administration proclamations celebrating the repeal of pollution regulations have become a common occurrence in Washington. The list includes a rule to prohibit coal companies from polluting streams, a cap on power plant carbon emissions and lifting a moratorium on new federal coal leases. All this is being done to free up the U.S. energy sector from burdensome regulations that hamper job growth.
Now, a 2012 rule on power plant mercury emissions is on the chopping block. Late Tuesday, U.S. EPA filed a motion with the U.S. Court of Appeals for the District of Columbia Circuit asking for a pause in a case brought by Murray Energy Corp., a coal company, and other opponents of the standards. EPA said yesterday it needs more time to reconsider its position.
Perhaps a larger question is whether overturning the rule would help struggling coal plants or the politicians who offer them.
The Mercury and Air Toxics Standards (MATS), as the rule is officially known, played a far larger role in coal plant closures than the better-known Clean Power Plan, which sought to impose carbon limits on power plants. Of the 20 gigawatts of coal capacity retired between 2015 and 2016, roughly a quarter was shuttered by MATS’s initial April 2015 compliance date, according to the U.S. Energy Information Administration.
But it is unclear how a repeal of the standards would help ailing coal plants today, according to analysts. Most utilities have already complied with the rule, investing in pollution controls, converting coal units to natural gas or shuttering facilities powered by the black stuff altogether. Sixty-four percent of plants had met the standard by the end of 2012, while another third were in compliance by last year, according to EIA. The last plants to comply, representing less than 1 percent of U.S. coal capacity, were given until this April to meet the standard.
"All affected facilities must now be operating with controls, switched fuels or ceased operations," said Chris Van Atten, senior vice president at MJ Bradley & Associates, a consultancy.
The rule’s repeal could still have some benefit for coal plant operators, he said. The activated carbon injections used to scrub mercury and other heavy metals from power plants’ emission streams are costly and could be turned off.
Environmentalists would certainly object, but overturning MATS won’t solve coal’s larger problem: low wholesale power prices.
Weak demand, increased energy efficiency and the low cost of alternatives like natural gas and renewables have combined to weigh down power prices. The dynamic was on display last week when the Midcontinent Independent System Operator announced the price needed to lock up power plant capacity in its 15-state territory. This year’s systemwide clearing price of $1.50 per megawatt-hour was down from $72 per MWh in six of the grid operator’s 10 pricing zones last year.
"The risk to coal plants is more related to the low cost of natural gas, and maybe the low cost of renewables, not any specific regulation," said Moody’s Investors Service analyst Swami Venkataraman.
Taken in combination, Trump’s regulatory rollback could help coal’s long-term outlook, Venkataraman said. Tax incentives for wind and solar expire at the end of the decade. Combine that with the repeal of the Clean Power Plan and it could remove a driver of growth for renewables and relieve some of the retirement pressure on remaining coal plants, he said.
Others are more doubtful, saying state requirements and market developments will continue to press coal even if Washington eases up.
"Renewable energy and natural gas generation are here to stay and will continue to take market share from coal and nuclear," said Travis Miller, director of utilities research at Morningstar.
Just meeting existing state renewable portfolio standards will require a significant build-out in renewables, he said, adding, "Given that wind is free and the sun is free, that makes it much more challenging for power generation sources that require a fuel cost, such as coal."
EPA’s request in the MATS case doesn’t concern the actual standards. The Supreme Court rejected a challenge to the rule in 2015 but said EPA needed to revise the cost-benefit analysis it used to develop the standards.
The case now before the D.C. Circuit concerns the updated cost-benefit analysis.
