Scraping the “Bottom of the Barrel” for Power: Why there is No Need to Relax Clean Air Safeguards on Dirty Power Plants to “Keep the Lights On”

In May 2001, the National Coal Council, an organization little-known outside Washington, D.C. energy circles, released a report claiming that:

• Approximately 40,000 megawatts of electrical production capacity is readily available from existing coal-fired power plants and could be recovered in about 36 months; and
• Relaxation of the requirements of the Clean Air Act’s New Source Review (NSR) program would be necessary in order to recover that capacity.

The report, “Increasing Electricity Availability from Coal-Fired Generation in the Near- Term” received extensive news coverage in the weeks preceding release of the Bush Energy Plan. While ostensibly constituted as a neutral stakeholder advisory group under the Federal Advisory Committee Act (FACA), a review of the membership of the Coal Council makes clear that it is dominated by pro-coal interests and the authorship of the report demonstrates that it was simply another phase in the concerted coal industry campaign to influence the Bush Administration to relax environmental protections in order to favor increased coal use.

Bush Administration officials initially rushed to embrace the claims of the report. While addressing the National Association of Manufacturers, Environmental Protection Agency (EPA) Administrator Whitman echoed the report’s findings and characterized the NSR program — without substantiation — as having the unintended consequence of obstructing energy efficiency improvements that could yield significant environmental gains at older plants. Department of Energy Secretary Abraham, for whom the Coal Council report was prepared, has stated that the report provided important information and recommendations and has requested a follow up study. In fact, important anti-clean air recommendations from the Coal Council report were incorporated in that portion of the Bush Administration’s National Energy Policy devoted to addressing what the Administration has characterized as a nationwide electricity reliability “crisis”:

• A 90-day review by the EPA and DOE of the Clean Air Act’s New Source Review (NSR) program to determine its impact on electric generating capacity; and
• Review by the Attorney General of the legal basis for pending Clean Air Act enforcement actions brought against the 13 corporate owners of over 50 older, coal-fired power plants for making life-extending capital investments in the plants without upgrading their emission controls.

Given the statements of Administration officials denigrating the value of the NSR program, these reviews are widely seen as the initial step in rolling back environmental safeguards applicable to old, dirty coal-fired plants under the guise of meeting the nation’s electricity needs.

With the EPA 90-day NSR review process currently stalled, efforts to revive the Administration attack on clean air protections will undoubtedly rely again on the claims of the Coal Council report. However, a critical review of the report and the assumptions on which it is based reveals a number of serious flaws:

• First, the underlying premise of the report — that the recoverable capacity from old, coal-fired power plants is desperately needed because of an electricity shortage — is unfounded. There is no nationwide electricity reliability crisis that justifies relaxation of clean air safeguards in order to allow greater utilization of old, coal-fired plants. In fact, the U.S. is in the midst of an unprecedented power plant building boom. Plant developers have announced the intent to build over 400,000 megawatts of new capacity between 2000 and 2005 — ten times the generating capacity from old plants the Coal Council claims could be recovered. A more realistic estimate of likely increased capacity is about 260,000 megawatts — an increase of approximately 30 percent above the current U.S. installed capacity. Almost all of this new capacity will be fueled by cleaner-burning natural gas that will be required to meet modern air emission standards.
• Clean air safeguards, such as the NSR program, are not blocking any significant potential environmental gains. An analysis of the potential emission reduction benefits of aggressive heat rate improvements demonstrates that there is no “treasure trove” of environmental benefits in potential efficiency upgrades at the nation’s existing coal plant fleet. In fact, simply pursuing to successful completion the current NSR enforcement actions against the 13 companies charged with Clean Air Act violations would yield an order of magnitude more environmental benefits than aggressive heat rate improvements at all of the nation’s coal-fired plants.
• Recovery of capacity from old, coal-fired plants would lead to thousands of tons of unnecessary pollution each year. The documented boom in new gas plant construction demonstrates that if the old, coal-fired capacity identified by the Coal Council report is not recovered, that demand for electricity will be met by relatively cleaner gas generation that complies with new source emission standards. Thus, it is possible to quantify the increase in emissions if incremental energy demand is met in the way the Coal Council proposes — i.e., through the recovery of lost capacity and old, dirty coal-fired plants. Assuming that this recovered capacity is utilized during the period of peak summer demand, the resulting emissions would be about 20,000 tons of sulfur dioxide, over 9,000 tons of nitrogen oxides, and nearly 4 million tons of carbon dioxide. If that same demand was met through new, combined cycle natural gas plants, the respective emissions would be 0 tons of sulfur dioxide, 3,000 tons of nitrogen oxide, and 1.3 million tons of carbon dioxide.
• The fundamental finding of the study — that recovery of a large amount of “lost” capacity at old, coal-fired plants is readily available — also cannot withstand scrutiny. First and foremost, the Coal Council report used flawed methodology, making gross assumptions about recoverable capacity and then doubling them without support to reach its 40,000 megawatt claim. A closer examination of the Coal Council’s claims reveals that any such capacity will be difficult and expensive to recover. An independent analysis was able to confirm only 35,000 megawatts of existing potential capacity lost to deratings or shutdowns (about 28,500 MW in deratings and about 6,500 MW in shutdowns). The capacity in shutdown mode constitutes only about 1 percent of the nation’s total capacity. The capacity lost to deratings, while not an insubstantial amount of power, exists only in very small increments (an average of 24 megawatts per unit) at over 1,200 units, which would make recovery difficult and monumentally expensive.

In summary, when the U.S. is awash in new, relatively cleaner natural gas generation, we do not need to throw out clean air safeguards and scrape the “bottom of the barrel” for power from old, coal-fired power plants in order to “keep the lights on”.