EPA officially releases Utility MACT rule

Ah, transparency. Clearly concerned to achieve maximum visibility, the Environmental Protection Agency officially released a whopper of a rule the Wednesday before Christmas. How kind of environmental officials!

This afternoon, the EPA announced regulations that will require power plants to reduce emissions of mercury and other toxics within the next three years. In other words, the rule targets coal-fired power plants. Sure, coal is a “dirty” form of energy and, yes, it is a fossil fuel, but, unfortunately, these regulations will cost the country too much to justify.

According to Scott Segal, the director of the Electric Reliability Coordinating Council, this rule — commonly known as the Utility MACT rule (MACT stands for “maximum achievable control technology”) — is the most expensive air rule the EPA has ever proposed in terms of direct costs.

“Utility MACT will undermine job creation in the United States in several different ways,” Segal explained. “It will result in retirement of a significant number of power plants and either fail to replace that capacity or replace it with less labor-intensive forms of generation.  It will increase the cost of power, undermining the international competitiveness of almost two dozen manufacturing industries, and it will reduce employment upstream in the mining sectors.  All told, it is anticipated that the rule will result in the loss of some 1.44 million jobs by 2020.  While some jobs are created by complying with the new rule, the number and quality of those jobs is far less than those destroyed.  We estimate that for every one temporary job created, four higher-paying permanent jobs are lost.”

The EPA has tried to mitigate the outcry against this rule by including a so-called “safety valve” provision in the rule. Ordinarily, the Clean Air Act (under which the Utility MACT rule falls) mandates that plants comply with the regulations within a three-year time frame. Understandably, some plants might not be able to upgrade within that allotted span — and too many shutdowns could affect electricity reliability. The “safety valve” provision allows up to five years for compliance.

But this doesn’t actually address the reliability question. Why? Plants won’t know up front whether they qualify for the extra year or two. Instead, they’ll have to attempt to upgrade in the first three years — and then, if their best attempts to meet the requirements fail, they can apply for extra time to comply. In the process, they’ll spend millions of dollars and still potentially face a shutdown. It wouldn’t be surprising if plenty of plants opted to shut down right away, rather than risk wasting three years attempting to meet the requirements only to be denied extra time and shut down in the end. Whether a plant qualifies for extra time will be solely up to the discretion of EPA officials, anyway.

Look, we all want clean air and we all want affordable, reliable energy. The two don’t have to be mutually exclusive, but EPA officials need to be cognizant of what’s feasible for industry. The Utility MACT rule has been delayed and delayed because industry representatives have legitimate concerns about the industry’s ability to comply. The timing of the imposition of the rule doesn’t change that it’s unrealistic. The EPA would be better served by going back to the drawing board and writing a realistic rule in the first place, rather than continually attempting to impose these ill-advised and costly regulations.