Do the costs of U.S. EPA's recent toxic emissions rules for power plants outweigh the benefits? During today's OnPoint, Michael Bradley, executive director of the Clean Energy Group, reacts to the "Utility MACT" proposal and explains why he believes the rules are within EPA's regulatory authority. He also discusses how Utility MACT will fit in with other air rules coming out of EPA in the short term.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Michael Bradley, executive director at the Clean Energy Group. Michael, thanks for joining me.
Michael Bradley: Thanks for having me.
Monica Trauzzi: Michael, EPA recently signed its Utility MAC Proposal, which seeks to regulate hazardous air pollutants from power plants. Does EPA overstep its regulatory authority with this rule?
Michael Bradley: Not at all. I think EPA has been very, very careful to stay within the bounds of what's required in the Clean Air Act in its approach to this. And, on top of that, they did very, very extensive data collections to base the rule soundly on emissions data, like the act requires.
Monica Trauzzi: Specifically, what does this rule do?
Michael Bradley: It sets limitations on coal power plants for mercury, for acid gases and for particulate matter. And it's been a rule that's been anticipated for 20 years and the industry is well on its way to being prepared to comply with it.
Monica Trauzzi: Well, there's some controversy about whether they have enough information about benefits. It seems that they did a lot of work on mercury, but not on other pollutants.
Michael Bradley: Right.
Monica Trauzzi: Is there enough information for this rule?
Michael Bradley: It seems to me that EPA, in its proposal, has made a good case to proceed with particulate matter and acid gases. I think EPA is obligated under the requirements of the law to regulate all hazardous air pollutants, unless they can find a reason not to. And that's why they've included particulate matter as a surrogate for heavy metals and other pollutants and acid gases for HCL and other acid gases.
Monica Trauzzi: This is said to be one of the most expensive proposals in the agency's history. Is it too costly?
Michael Bradley: I think it's going to be a lot less expensive than a lot of experts have been estimating. I think up until now, prior to the proposal, most of the estimates have been based on sort of the worst case situation when it came to control levels and flexibility. Now, EPA has introduced one major piece of flexibility and it's called facility wide averaging, which allows multiple stacks at one site to average together so you don't have to control each stack, which is going to substantially reduce the cost and the time it takes to comply.
Monica Trauzzi: But there's no doubt this will be expensive for utilities.
Michael Bradley: This will be expensive for these utilities, especially utilities that haven't taken steps in the last five or 10 years to begin to clean up their fleet.
Monica Trauzzi: Do you think these regulations will sort of stimulate investment in new technologies and could we see job growth out of that?
Michael Bradley: We'll definitely see job growth substantially. I think we'll see somewhere between two or 300,000 temporary jobs per year for five years for constructing all the retrofits in the new plants that are going to happen and many new operating jobs as well to operate the emission control systems. When it comes to technology innovation, another driver for lowering the cost has been the emergence of dry scrubbing versus wet scrubbing. Dry scrubbing is 20 to 30 percent less expensive in terms of capital costs and less time intensive in terms of retrofitting. So I think that's going to help us dramatically.
Monica Trauzzi: So should we look at this as a burdensome rule for utilities?
Michael Bradley: It is somewhat of a burden for facilities, for companies that have a tremendous amount of coal in their fleet. But, again, think about the fact that 60 percent of the coal capacity out there has already put on scrubbers, which is going to be the most expensive piece of technology to put on these plants to comply. Another 10 percent have other forms of advanced controls, either for particulates or for NOX emissions. So, it isn't like we're starting from scratch. We're starting with a huge head start here and I think the time, the three-year time, plus another fourth year in case certain situations develop, will be adequate to retrofit and comply.
Monica Trauzzi: How does this fit in though with all the other regulations that EPA has coming online in the short term? I mean one of the concerns is it's too much.
Michael Bradley: It is a lot, there's no doubt about it. But these are mostly driven by court cases that basically said the prior administration's approaches to these rules were not consistent with the law. So, EPA is kind of in a bind where they have to proceed. I think they've done one of the most extensive outreach programs to get input and data in from the industry to assess about just how to go about this in the most feasible way, less cost way. It's going to be a huge step in terms of cleaning up all these coal facilities. But, again, I think we're well on our way.
Monica Trauzzi: Industry says plants will be shutting down as a result of these regulations. What's your take?
Michael Bradley: Oh, certainly. There's already been about 10 gigawatts, which is less than 1 percent of the capacity the U.S. already announced to retire and we're talking about old coal facilities, generally 40, 50 or more years old, that are small, inefficient and have passed their useful life. And they can be replaced within the window of gov compliance, either through purchase agreements, utilizing a lot of natural gas capacity that's out there that's underutilized or building new gas or doing demand-side management strategies. There's a whole host of tools that are there to adequately replace any of the shutdowns.
Monica Trauzzi: Does industry make a sound argument when they say that they can't keep pace with all of these regulations?
Michael Bradley: Again, I think these regulations have been coming for a long time, especially the air quality regulations. And the other driver that we've seen out there for long time is states have taken the lead and so many states already have mercury limitations required of coal plants. Other states have even more aggressive requirements of coal plants. So it isn't like we're starting from scratch.
Monica Trauzzi: Okay, we'll end it there on that note. Thank you for coming on the show, nice to see you.
Michael Bradley: Thank you very much.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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