By Brett Rosenberg
January 12, 2004

The U.S. Environmental Protection Agency (EPA) last month proposed new regulations aimed at reducing air pollution from power plants. According to a December 17 press release, the EPA's Interstate Air Quality Rule would reduce emissions from electric utilities in 29 Eastern and Midwestern states and the District of Columbia over two phases.

Sulfur dioxide emissions, a key component of particulate matter (soot) and ground level ozone, would drop by 3.6 million tons in 2010, representing a cut of approximately 40 percent from current levels, and by another 2 million tons per year when the rules are fully implemented, amounting to a total cut of approximately 70 percent from today's levels. Nitrogen oxides emissions, which also contribute to soot and ozone formation, would be cut by 1.5 million tons in 2010 and 1.8 million tons annually in 2015 — a reduction of approximately 65 percent from today's levels. Emissions will be permanently capped and cannot increase.

A major component of the Interstate Air Quality Rule includes a cap-and-trade provision, based on the EPA's Acid Rain Program. In this approach, the EPA would allocate sulfur dioxide and nitrogen oxides emission caps, or allowances, to participating states. The states would distribute allowances to affected sources, which would then be able to choose among different compliance alternatives, such as updating pollution controls, buying allowances from cleaner sources, or switching fuels. Limited numbers of allowances along with strict penalties for non-compliance would lead to the desired reductions in air toxins.

In a related set of proposals, the EPA also announced its plans to reduce mercury emissions from electric utilities for the first time. The first alternative of what the EPA calls the Utility Mercury Reduction proposal calls for a more traditional command-and-control approach to mercury reductions, calling for utilities nationwide to install what is known as the maximum achievable control technology, or MACT. This proposal, if implemented, would reduce mercury emissions in the US by 14 tons, or 29 percent, by 2007. The other approach closely resembles the cap-and-trade provision of the Interstate Air Quality Rule. Utilities would be allowed to trade mercury emissions credits, which, according to the EPA, would lead to a 70 percent reduction in overall mercury emissions by 2018. This approach, however, would require important revisions to the Clean Air Act due to a December 2000 finding that it is "appropriate and necessary" to regulate utility hazardous air emissions using MACT standards. Mercury, which can cause serious health problems at very low concentrations, falls within this standard.

These proposed regulations amount to an administrative, rather than a legislative, means of achieving the President Bush's Clear Skies Initiative. In its efforts to integrate regulations addressing several pollutants, EPA Administrator Mike Leavitt expressed that "These actions represent the largest air pollution reductions of any kind not specifically mandated by the Congress." Clear Skies, known as multi-pollutant legislation, is meant to address concurrent reductions in emissions of sulfur dioxide, nitrogen oxides and mercury, much like the Interstate Air Quality Rule and the Utility Mercury Reduction proposals. The EPA is also obligated under a legal mandate to regulate mercury emissions from power plants. Each proposal is currently open for public comment.