On March 15, 2005, the United States Environmental Protection Agency (USEPA) issued the Clean Air Mercury Rule, the nation’s first-ever rule to regulate mercury emission from coal-fired power plants. The new regulations requires reductions in mercury (Hg) for new or existing coal-fired power plants and nickel (Ni) for new or existing oil-fired power plants. USEPA predicts that the new rule would cut mercury emissions forty percent by 2010 and seventy percent by the year 2018.

Outlined below is a brief summary of the rule prepared by the staff of the Adirondack Council. Readers are encouraged not to rely solely on this summary. More information and links to the text of the rule as published in the Federal Register and the technical documents upon which it relies are all accessible through USEPA's website at http://www.epa.gov.

Background

Coal and oil-fired utilities emit a wide variety of metal, organic, and inorganic Hazardous Air Pollutants (HAP) depending on the type of fuel combusted. Exposure to mercury (Hg) and Nickel (Ni), both of which are HAP, above certain thresholds has been demonstrated to cause adverse health effects.

In 1998, USEPA issued a Report to Congress on its study of HAP from electric utilities. The Utility Report had examined 67 of the 188 HAP listed in the Clean Air Act, which USEPA believed to have the greatest potential for adverse health effects from utility emissions. Mercury was identified to be of greatest concern. In December 2000, USEPA issued findings that major coal-burning utilities are the single largest source of man-made emissions of Hg in the United States, and that there was a plausible link between methyl mercury concentrations in fish and Hg emissions from coal-fired utilities. The Agency further found that it was appropriate and necessary to regulate those emissions as hazardous air pollutants under Section 112 of the Clean Air Act (CAA).

The Clean Air Mercury Rule

Under the new rule, USEPA revised its earlier finding that it was necessary to regulate mercury emissions under Section 112. USEPA contends that decision was based, in part, on the assumption that there was no other appropriate means to regulate these emissions, but for the standards found in section 112. USEPA now asserts that Hg emissions can be effectively reduced by a cap and trade approach under section 111(CAA) , and it is not necessary to employ the Maximum Achievable Control Technology (MACT) approach in section 112, which would have required EPA to set plant by plant emission standards for existing and new plants.

The distinctions between section 111 and 112 of the Clean Air Act and the Agency's authority under each section consume a considerable portion of USEPA analysis in the posted regulatory notice. In the alternative, USEPA argues that it has the authority to adopt a cap and trade approach for existing plants, even if they do not revise their earlier finding that it is necessary to regulate these emissions under the authority of Section 112. In a lengthy analysis, USEPA determines that a cap and trade approach is acceptable even under the language of section 112. One benefit from that approach -according to USEPA-is that a cap and trade program under section 112 would allow a national program that would not be dependent on each state modifying its own state implementation plan. USEPA states that a national program cap and trade program would be more predictable and economical to administer as well.

Regardless of how it proceeds on existing coal-fired facilities, USEPA intends to regulate nickel emissions from all oil-fired utilities and nickel and mercury emissions from new coal-fired utilities on a plant by plant basis, using an output-based standard. The regulation of nickel emissions will be based, for example, on a floor of the average performance of a particular pollution control device-- the electrostatic precipitator (ESP).

USEPA defends its decisions in part, on the finding that the Agency cannot currently quantify whether adverse health effects occur in communities around these facilities, nor can it quantify the relative contribution of these facilities to any health problems or to the concentrations of mercury in fish. USEPA estimates that U.S anthropogenic Hg emissions account for 3% of the global total and that coal-fired utilities account for 1% of total global emissions.

USEPA also considered the fact that existing coal-fired utilities combustion units are usually designed to specifically burn one coal rank (type), which is usually dictated by what type of coal is readily and economically available in the region. Within the specific coal ranks, the Hg content can vary significantly. The differences in facility design, according to USEPA, make a retroactive output-based emission standard more difficult.

USEPA also finds that there will be a co-benefit from a separate new rule regulating sulfur and nitrogen emissions from coal-fired plants, in that the same pollution control devices that are effective on those pollutants are also somewhat effective for mercury. USEPA is basing its first phase of mercury cuts on the assumption that the use by coal-fired utilities of fabric filters and ESP's (the most common pollution control equipment) to control sulfur and nitrogen emissions will result in approximately a 40% reduction in mercury emissions as well. USEPA proposes that the first cap for mercury reductions in 2010 would be equivalent to a 40% reduction from current emission levels.

The Agency also maintains that the technology for more efficient mercury removal is not readily available at this time. USEPA specifically takes issue with a 2003 report from the environmental organization, Environmental Defense, that the experience gained from the regulation of municipal waste incinerators and medical waste incinerators indicates that coal-fired utilities can achieve 90% mercury emission reductions. USEPA says that the report underestimates the variability of Hg in different coals and the technical differences between the types of facilities. USEPA therefore asserts that a second phase of controls, which it proposes to be a 70% reduction from existing levels, should be delayed until 2018. The Agency believes that 2018 is a reasonable target date that will be technology-forcing as companies seek early controls that can free up credits to sell to other plants.

The Agency does not expect "hotspots" to develop from trading. The forms of mercury that are most likely to fall close to the stack, and thus create local pollution problems according to USEPA, are also the mercury types that are most readily captured by pollution equipment commonly used for the control of sulfur and nitrogen emissions.

USEPA is proposing a cap and trade program for Hg in which one pollution credit would equal the right to emit one ounce of mercury. As in the acid rain program, mercury allowances would be distributed among major coal-fired utilities based on their output for a baseline year. Hg emissions would be counted on a rolling 12 monthly average. Each of these allowances will have a discrete serial number and all coal-fired facilities will be required to install continuous emission monitoring (CEM) devices.