By the Financial Times ( Financial Times) -- The U.S. power industry is facing its biggest shake-up since the Three Mile Island accident of 1979.
That incident killed off investment in new nuclear plants for a generation. This time, it is coal-fired power stations that are under threat.
New regulations governing pollution from coal plants that have been proposed by the U.S. government's Environmental Protection Agency could force up to 20% of those plants to shut down, according to analysts and industry executives.
The American Legislative Exchange Council, a free market campaign group, has described the impending upheaval as a "train wreck" that will cost jobs, send power prices soaring and lead to blackouts.Concern over these effects has led to several pieces of legislation being put forward in Congress to curb the EPA's powers and stop the new rules. Whether the pollution limits will in fact have such a devastating impact is debatable. The non-partisan Congressional Research Service argued in a report circulated last week that the most alarming forecasts were based on exaggerated assumptions about the EPA's plans. Nevertheless, the financial impact on U.S. power companies could be significant. The new regulations, intended to reduce the damage to public health from industrial pollution, include tighter restrictions on toxic chemicals in power plants' waste gases, on water use and on the disposal of coal ash. The first to take effect is the Cross-State Air Pollution Rule (CSAPR), which cuts the permitted emissions of sulfur dioxide and nitrogen oxides, the gases that cause acid rain. It was set out in detail in July and will be enforced from the start of 2012. There are several ways that generators can meet the CSAPR's requirements.
- They may be able to buy more pollution permits in the trading scheme for acid gas emissions.
- They can burn more low-sulfur Powder River Basin coal from Wyoming.
- They can invest in more flue gas desulfurization equipment, or make more use of the equipment that is fitted already, or run their plants without it less often.