• EPA Points to Greenhouse Gas Emission Reductions to Support New Utility Standards
  • February 10, 2012 | Author: Casey F. Bradford
  • Law Firm: Jones Day - Atlanta Office
  • On December 21, 2011, U.S. EPA released final Mercury and Air Toxics Standards ("MATS Rule") under Section 112 of the Clean Air Act for emissions of mercury, acid gases, and other "hazardous air pollutants" (or "HAPs") from coal- and oil-fired electric generating units, reflecting what EPA believes is the maximum achievable control technology for regulated HAP emissions from such sources.

    EPA believes the MATS Rule can be met by various methods, including the installation of new control technology, fuel switching, and, in some cases, the curtailment or retirement of coal-fired units. Existing units have three years to comply with the new standards, although (as discussed in the following article) the period can be extended up to five years in certain cases.

    U.S. EPA estimates that compliance with the MATS Rule will cost $9.6 billion, with health benefits in the range of $37 billion to $90 billion (in 2007 dollars). However, almost all of EPA's estimated benefits ($36 billion to $89 billion) are attributable to the rule's coincidental reduction in emissions of fine particles smaller than 2.5 microns in diameter, known as "PM2.5," regardless of whether such fine particles contain a HAP. Another $360 million of EPA's estimated benefits are based on reductions in greenhouse gas emissions caused by the curtailment or retirement of coal-fired units that EPA expects the MATS Rule to produce. EPA believes that lowering such emissions will reduce climate-related costs, such as decreased agricultural productivity and property damage caused by flooding. However, like PM2.5, greenhouse gases are not regulated as HAPs under the Act.

    This has led some to question the validity of EPA's cost-benefit analysis of the MATS Rule. Notwithstanding the debate over EPA's reliance on PM2.5 and climate-related "co-benefits," the imposition of significant new compliance costs on the use of coal-fired electric generating units under a non-climate related program could result in the reduced use or early retirement of these units, an outcome that EPA seems to view as a welcome benefit of additional regulation.