Legislative ‘will’ versus the legislative ‘how’

There are a lot of changes happening at the moment in terms of impending and proposed emission legislation around our planet. Even China, previously often regarded as the location of the dirtiest power sector, now has among the tightest emission standards in the world and hosts the youngest and most efficient fleet of coal-fired power plants. Coal is still king in China and so the announcement that coal use in the most populated nation in the world is to be capped within the decade comes as a shock to most, inducing the almost knee-jerk response of “… how?”. But it is often the case that where there is a will there is a way. And there is no denying that the Chinese are a nation that can make things happen.

And so, when reconsidering the potential replacement for the position of “dirtiest power sector”, India will likely come to mind. But India is preparing to launch emission standards of its own. These standards, to be announced at the Lima Climate Change Conference this month, will be “comparable with Europe” (for particulates at least) and will include emission limits for NOx and even mercury. This is extremely exciting and I, personally, can’t wait to see what they plan to commit to and how they plan to achieve the reductions with available control technologies. The coal sector in India is huge and growing, the coal quality is often challenging and many of the plants are old and inefficient. The current size and growth rate of the power sector in India will mean that emissions will likely take years, maybe decades to stabilise, never mind start to decline. But this move towards legislation and action is very encouraging.

Meanwhile, back in the USA, the MATS legislation (controlling emissions including fine particulate precursors and mercury), which appeared to have passed hurdles that the previous CAMR (Clean Air Mercury Rule) could not, has hit a brick wall. A group of utilities and industry have managed to have MATS raised at a DC circuit appeal and won, resulting in the reconsideration of the rule by the Supreme Court. Theoretically, this could mean that the rule has to be re-written or even scrapped. However unlikely this may seem, the US EPA is taking the situation very seriously. MATS had cleared all the previous legislative hurdles unanimously except for a 2 to 1 split decision on an issue relating to cost and the affordability of compliance. It is on this issue that the Supreme Court appeal is based. The “Chevron Doctrine”, which relates to the difference in interpretation of the wording of a rule is being cited as relevant – where part of a rule is open to different interpretations, the US EPA SHOULD have final say on the applicable interpretation. However, as the cost of MATS compliance is considerable, leading to retirement or fuel switching for many plants, the utility sector, and the US EPA even more so, are waiting with some trepidation for the final Supreme Court ruling result next year.

Supreme Court Agrees to Consider MATS Case

Another potentially contentious US EPA rule is the new Carbon Emission Regulation, part of the Clean Energy Plan. Within this new regulation, the EPA plan to:

– set achievable, enforceable state goals to cut carbon pollution per megawatt hour of electricity generated; and

– lay out a national framework that gives States the flexibility to chart their own, customised path to meet the goals in their state plans.

The State goals, to be reached by 2030, are set in terms of lbs/MWh of CO2 for each state based on the existing rate of fossil fuel use in 2012. This value can be converted to a mass based standard (that is a “cap”) but it will not be called a cap as the idea of a cap seems to be regarded as controversial. The EPA is producing a technical support document to give guidance on how to calculate the appropriate mass based standard. State plans are to be submitted by June 2016.

Each State must determine the Best System of Emission Reduction (BSER) which will include measures to make coal plants more efficient, increased use of high efficiency natural gas combined cycle units, generating electricity from low- or zero-emitting facilities, and increasing demand-side energy efficiency.

For defining BSER for each plant, the EPA has listed 4 key decision factors:

– feasibility (technically);

– cost (not “exorbitant”);

– size of reductions to be achieved;

– technology (designed to promote implementation and further development).

Of these, the determination of “exorbitant” in terms of cost could lead to much debate and haggling. As always, the legislation differs for existing, new and modified or reconstructed plants. The limits for natural gas combined cycle units (1,000 -1,100 lb CO2/MWh, depending on plant size) are achievable at most efficient gas-fired units. Whilst the emission limits are the same or similar for coal-fired units and IGCC facilities, the target is much more challenging for coal, being based on the performance of a new efficient coal unit with CCS – roughly equivalent to 30-50% CO2 capture. Plants such as Kemper, Great Plains (Synfuel) and Boundary Dam, all CCS units, meet or will meet the new standard once fully operational. The EPA is quite honest when it admits that this regulation will mean that most plants to be built in the US in the foreseeable future will now be fuelled by natural gas or renewables.

This new Carbon Rule has still to pass through the court system and, if it is anything like MATS, it faces many challenges and appeals along the way. Ideally the EPA would like to have the rule signed and sealed early, to be sure that it is passed before a new president arrives, who could well take a different stance on the issue.

And so, for the USA at least, new coal power will pretty much stall until CCS is commercial and not “exorbitant” in cost. China will see a peak in coal use by 2020 with continued extensive clean-up of the power sector. Although coal use in India is expected to continue to increase, the associated emissions could start to come under control within the next few years, assuming the new standards to be announced are similar to those in the USA or China. And so we are entering a new era for coal – where almost all nations are uniting to control and, where feasible, reduce emissions from the coal utility sector and where the long term future of coal as in the energy mix is becoming more and more reliant on the rapid development and deployment of CCS.