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| Position: |
| NMA supports multi-emissions legislation that incorporates a market-oriented, cap-and-trade approach to reduce emissions of SO2, NOx and mercury from coal fired electric generators. Legislation is needed to replace current inconsistent and overlapping regulatory requirements imposed on these generators. NMA supports a cap and trade approach that would: provide reasonable, technically and economically feasible emissions reduction targets and compliance deadlines consistent with the availability of technology; eliminate duplicative clean air programs; provide for fair distribution of emission allowances among affected sources on a fuel input basis; not place any coal type at a disadvantage to other coal types; and offer compliance flexibility through market based approaches. Legislation is preferable to regulation, but the same principles outlined above should guide new emissions control regulations. NMA opposes any proposal that would include the mandatory control or reduction of CO2. |
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| Background: |
| Emissions from coal based electric generators have been reduced significantly as demand for electricity has increased. Since 1980, coal use for power generation in the United States has increased by over 75%, from 570 million to just over 1 billion tons per year. At the same time, emissions of SO2 and NOx have collectively declined by 40%. Existing pollution control equipment — installed to remove SO2 and NOx — have provided a "co-benefit" — that has reduced mercury emissions by approximately 40% from uncontrolled levels. Mercury emissions will continue to decline as SO2 and NOx emissions are further controlled to meet new requirements. Despite progress made and progress expected, the coal based electric generating industry faces many air quality issues, including those that concern mercury and fine particulates, ozone, haze, permitting and siting. The current piecemeal, duplicative, and costly regulatory approach to emissions control creates enormous uncertainty for future investments. As a result, very little coal fired generating capacity has come on line in the past decade. Several new coal fired units have been proposed over the past three years because at least 100 GW of new coal fueled capacity will be needed to meet the anticipated 50% increase in the demand for coal-fueled electricity expected by 2025. These generators need greater certainty in the regulatory environment as they compete for scarce investment dollars.
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Issue: |
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Multi-emissions reductions can be addressed either through legislation or regulation. Regulations covering all three emissions have recently been issued by EPA. However, legislation would avoid lengthy litigation that often accompanies environmental regulation. Indeed, various parties already have stated they will challenge the recently released EPA regulations on mercury.
Legislation: Legislation to implement the Administration's Clear Skies proposal was first introduced in both the House and Senate in early 2003. This legislation would require a 70% reduction of SO2, NOx and mercury from current levels by 2018 in two phases. An interim target would be met by 2010 with the final target achieved in 2018. All three emissions would be subject to a cap and trade program. The legislation was reintroduced at the beginning of the 109th Congress (S. 131) and has been the subject of hearings and a Senate Environment and Public Works Committee markup, where the legislation failed to be reported on a 9-9 vote. It is still possible the Senate could agree to consider multi-emissions legislation on the floor this year as part of a comprehensive energy legislation or some other legislative vehicle. The House Energy and Commerce Committee will begin to hold hearings on the measure in April of this year.
Regulation: In the absence of legislative action, the Environmental Protection Agency (EPA) initiated two regulatory proceedings, one on mercury, and one that combines new regulations on SO2 and NOx. Together they are intended to achieve emissions reductions results similar to the "Clear Skies" legislation.
Mercury: On January 30, 2004, EPA published a proposed rule for the regulation of mercury that included three alternative methods of regulation: a traditional MACT (Maximum Achievable Control Technology) under Section 112(c) of the Clean Air Act (CAA), which would require that each electric generating unit meet a set standard (the traditional command and control option); regulation under Section 112(n)(1)(a) of the CAA whereby EPA would regulate mercury under a national cap and trade program; and, regulation under Section 111 of the CAA, under which EPA would regulate mercury under State Implementation Plans (SIP) thus giving the states the option of whether or not to participate in a cap and trade program. On March 15, 2005, EPA issued a final rule selecting a cap and trade program under Section 111. Several organizations have expressed their intention to challenge this rule in court thus confirming the need for legislation.
SO2 and NOx: EPA issued a proposed Clean Air Interstate Rule (CAIR) simultaneously with the mercury rule on January 30, 2004. CAIR is designed to reduce SO2 by approximately 70% from current levels and NOx by 50% from current levels. As with the Clear Skies proposal, this reduction would occur in two phases. The proposed rule was not, however, nationwide as it would apply only to 29 eastern states that, according to EPA, "significantly contribute to ozone and/or fine particulate non-attainment in down wind states." The final rule was issued on March 9, 2005. The rule will require each affected state to revise its state implementation plan to include control measures to meet specific statewide emissions reduction requirements. The current Title IV SO2 trading program will continue, although banked allowances would be devalued over time. NOx emissions are subject to the cap and trade program, but states can choose whether or not to opt into the program.
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Impact: |
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The mining industry has joined the electric utility industry, railroads, electricity consuming industries, and major labor organizations to urge Congress to pass Clear Skies legislation as the preferred path to achieve reductions in SO2, NOx and mercury. NMA opposed issuing a MACT regulation to reduce mercury because it is the most expensive option and would have the most dilatory effect on coal markets. The ability of utilities to use coal would be compromised under the short time frames of the MACT. The cap and trade regulatory proposal as issued is preferable. NMA's strong effort to pass legislation that will not be subject to lengthy litigation will continue so that coal - the nation's most abundant domestic energy resource - remains the mainstay of the electric generating sector.
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