Overview of the New Mercury Regulations and the Interstate Air Quality Rule and Implications for Coal-Fired Utilities

Clean Air Act Mercury Emissions
The Clean Air Act Amendments of 1990 required the United States Environmental Protection Agency (USEPA) to complete two studies related to mercury and report their findings to Congress. The results and findings of those two studies would be the basis for any determination if USEPA would regulate emissions of mercury from electricity generating utility plants using MACT, or Maximum Available Control Technology, as required by section 112 of the 1990 Clean Air Act. MACT standards generally require industries to meet limits that are currently being demonstrated by a number of existing facilities. However, there are no current, adequately demonstrated, control technologies specifically designed to reduce mercury emissions from coal-fired utilities. There are available data that indicate controls for reducing emissions of SO₂ and NOx also are effective, in some cases, at reducing mercury emissions from coal-fired utilities.

In December 2000, EPA announced that it would regulate emissions of mercury and other air toxics from coal- and oil-fired electric utilities under section 112 of the Clean Air Act. While this announcement did state that it was necessary and appropriate to control mercury emissions from utilities, it did not specify what those levels of control would be. On December 15, 2003, the United States Environmental Protection Agency (USEPA) proposed two alternatives for controlling emissions of mercury from utilities. The alternatives include:

Under Option 1, USEPA would rescind its December 2000 finding that it is “appropriate and necessary” to regulate utility hazardous air emissions using the section 112(d) MACT standards provision and proposes a rule establishing “standards of performance”. The proposed rule would set limits on mercury emissions from new and existing utility plants based on the rank of coal fired (see Table 1). This proposal, under section 111 of the Clean Air Act, would also create a market based “cap-and-trade” program that, if implemented, would reduce nationwide utility emissions of mercury in two distinct phases similar to the proposed “Clear Skies” bill.

Under Option 2 and consistent with the December 2000 position, USEPA proposes a rule requiring all utilities to install “maximum achievable control technologies” (MACT) under section 112(d) of the Clean Air Act. If implemented, this proposal would reduce nationwide emissions of mercury by 43 tons (90 %) by the end of 2007. Emissions limits for new sources are shown in Table 2. Option 2 would allow for “emissions averaging” as a compliance option, allowing plants with more than one unit at a site to pool those units and meet an overall mercury emissions limit.

Table 1. Proposed Mercury Emissions Limits for Coal-Fired Plants under Cap-and-Trade Option.

Table 2. Proposed Mercury Emissions Limits for Coal-Fired Plants under MACT Option.

Compliance for either option would be based on a 12-month rolling average.

Under both options plants firing coal blends would have mercury emission limits determined by a weighted-average, based on thermal input, of the fuels fired. An existing plant burning 75 % PRB / 25 % bituminous would have a mercury emission limit of 4.85 lb/TBtu.

Under Option 1 mercury emissions will be reduced by taking advantage of “co-benefit” controls – achieved by reducing SO₂ and NOx emissions through separate emissions regulations, including the Interstate Air Quality Rule discussed below. USEPA states that when fully implemented in 2018, mercury emissions will be reduced by 33 tons, or by 70 % from 1999 levels. The interim emissions cap is not as clearly defined but is expected to be somewhere from mid-20 to mid-30 tons per year.

Also proposed in the rule is a “cap-and-trade” approach to controlling mercury emissions from utilities. It is believed that the “cap-and-trade” approach will yield much greater health and environmental benefits than could be achieved through a traditional MACT standard. Under “cap-and-trade”, each state would be allocated a specified number of mercury emission allowances. The states would then allocate those allowances to utilities. A utility must hold sufficient allowances to cover its emissions each year, so the limited number of allowances ensures that the required reductions are achieved.

Inherent in any emissions regulation is a requirement for accurate and reliable emissions monitoring and reporting. In a “cap-and-trade” program this requirement will also make trading possible. Under a “cap-and-trade” approach, many utilities will pursue redundant mercury measurement techniques or systems, understanding that even the cost of redundant measurements will be returned several fold if small discrepancies can be avoided and turned into sellable allowances. Additionally the flexibility of allowance trading should create financial incentives for utilities to look for new and low-cost ways to reduce emissions and improve the effectiveness of pollution control equipment.

These actions would give USEPA the flexibility to consider a more efficient and more cost effective way to control mercury emissions. USEPA will take comment on this action for 60 days after publication in the Federal Register. USEPA intends to hold two public hearings on this proposed rule.

Interstate Air Quality Rule
The United States Environmental Protection Agency (USEPA) announced on December 4, 2003 a proposal to require coal-burning power plants to make the steepest emissions cuts in over a decade. This proposal, entitled the “Interstate Air Quality Rule”, will require power plants in 30 Eastern and Midwestern states to upgrade their facilities to reduce emissions of sulfur dioxide (SO₂) and nitrogen oxides (NOx). The affected states are shown in Figure 1³ and Figure 2⁴, along with representative reductions in SO₂ and NOx emissions.

Figure 1. ITAQ SO2 Emissions Reductions

Figure 2. ITAQ NOx Emissions Reductions

The goals of the proposed rule are to reduce sulfur dioxide emissions by 3.7 million tons by 2010 and by another 2.3 million tons by 2015; these reductions would reduce emissions from present levels by 40 % and 65 %, respectively. Additionally, emissions of nitrogen oxides would be reduced by 1.4 million tons by 2010 and limited to 1.7 million tons by 2015. Moreover, emissions of these oxides will be capped and cannot increase as generating capacity is increased.

The driving force behind this rule is to improve air quality in up-wind states by reducing the emissions of sulfur oxides and nitrogen oxides in the central US. SO₂ and NOx are transported by the wind, causing environmental and health problems hundreds of miles away. SO₂ and NOx emissions contribute to the formation of fine particles, which can pose serious health risks, especially for people with heart or lung disease (including asthma) and older adults and children. NOx emissions also contribute to the formation of ground-level ozone, which poses risks for people with lung diseases and children and adults who are active outdoors.

A public comment period will be held before the USEPA issues a final rule in 2005.

Summary
A summary of the new EPA initiatives compared to “Clear Skies” is shown in Table 3.

Clearly the Interstate Transport Air Quality will force installation of SCR and FGD systems on additional plants in the eastern and midwest US. The installation of these units and their affect on mercury reductions is not as clear; USEPA does not have a definitive number for the reduction in mercury emissions that will be achieved through these actions.

USEPA used as a basis for Option 1 the average “co-benefit” control possible with addition of SCR and FGD to coal-firing plants. Adequate control of mercury emissions will depend on obtaining sufficient conversion of mercury from elemental to the oxidized form. However, not all plants will be able to meet the emissions limits. Table 1 shows the mercury control efficiency needed to meet the mercury emissions limit based on the average mercury content in the fuel. By definition, half the fuel in that class will have higher mercury concentrations than the average value, requiring those plants that are burning fuels with above-average mercury concentrations to achieve above-average mercury reductions. This may not be possible. For example, the average value for bituminous coal is approximately 10 lb/TBtu, with a range from 8 to 13 lb/TBtu (+/- 2 standard deviations). If the utility unit is burning a 13 lb/Tbtu coal, their system has to get 85 % mercury removal reliably, or would have to rely on obtaining emissions allowances from other units. For small utilities, cooperatives and municipal power organizations with a single coal-fired unit, emissions averaging would not be possible. Utility units burning high-mercury fuels will probably look for fuel sources that have a lower-than-average mercury content to avoid having to install a marginal control technology to meet the emissions limit.

Another implication of the new rules is that there may not be any advantage for a plant presently burning subbituminous PRB to switch back to Eastern bituminous coal. Reverse fuel switching would require installation of a wet FGD system, and although it seems that mercury control for bituminous coals would be more easily accomplished than for subbituminous coals, the level of control required neutralizes that. After reverse fuel switching and installation of the FGD system, the plant would not be assured that it could meet mercury emissions compliance without installation of a marginal control system. Because of that risk it will be interesting to see how many plants presently firing subbituminous coals will install wet FGDs and switch back to high-sulfur bituminous coal.

Oddly enough, the one thing utility planners wanted in a mercury rule – certainty – is the one thing that they didn’t get. Instead, utility planners got an “either / or” scenario, which will not get them out of the difficult decision that they will need to make. If USEPA had provided a rule without alternatives, utility planners could have used the comment period to start making arrangements for necessary financial commitments for equipment installation. Instead, they are still left without knowing which direction will be required and forced to head down two paths at the same time. Although utility planners like the “cap-and-trade” alternative because it takes advantage of reductions achievable through installation of SO₂ and NOx control devices, they still must be ready for the MACT rule and its requirements.

Table 3. U.S. Policy Initiatives for Multipollutant Control.

Footnotes:
¹ Average fuel content and needed percent removal are misleading, as waste coal has a very large distribution of mercury content, much larger than for the other fuels.

² Calculated values – these values were not given in proposed rule but are determined from the 10-⁶ lb/MWh values.

³ http://www.epa.gov/air/interstateairquality/so2emissions.html

⁴ http://www.epa.gov/air/interstateairquality/noxemissions.html

⁵ http://www.epa.gov/air/clearskies/basic.html

⁶ Western region has a 0.538 million ton cap on NOx, for a 42 % reduction from present emissions total. Eastern region has a 1.562 million ton cap on NOx, for a 63 % reduction from present emissions total. In 2018, Eastern cap is reduced to 1.162 million tons, resulting in a 72 % reduction. Trading is not allowed between regions.