The Impact of Environmental Regulations on Power Generation

Environmental rules dating back 40 years or more have spawned new rules, which cover different operating parameters in power plants. For example, there have been several rules and regulations based on the Clean Air Act Amendment of 1990 that required coal-fired plants to install flue gas desulfurization (FGD) systems. Most of these FGD systems were of the wet design (see opening image), which resulted in a significant increase in synthetic gypsum being made available to the market. This created a profitable new commercial industry and made for more affordable housing. For example, a dedicated wall board plant was built in North Carolina specifically to handle the gypsum produced by Duke Energy’s FGD program.

However, in 2015 the U.S. Environmental Protection Agency (EPA) finalized a rule revising the regulations for the Steam Electric Power Generating Effluent Limitation Guidelines (ELGs), regulating mercury and other constituents (such as selenium, arsenic, and nitrates) in wastewater discharges from FGD systems. FGD systems are a technology that removes mercury from the flue gas of coal-fired plants, but the mercury and other constituents end up in the FGD wastewater, which is regulated under the ELG rule. The treatment requirements under these additional wastewater regulations add a significant cost to operations of wet-FGD systems. In addition, the EPA finalized the Coal Combustion Residuals (CCR) rule in 2015, which included changes to the specifications for gypsum storage.

When the original SO2 regulations were adopted, few people anticipated the boom in the synthetic gypsum market or the co-benefits that FGD would play in reducing mercury emissions. Furthermore, it was unknown what effect the ELG or CCR rules would have in the future.

Fractured Regulation Increases Costs

In the U.S., there is a fractured system of environmental laws. There is the Clean Air Act, the Clean Water Act, and the Resource Conservation and Recovery Act (RCRA), which covers the disposal of solid waste. Congress and the EPA, in their respective roles in regulations, tend to concentrate on a single issue, such as SO2reduction, in a segmented manner. For example, they often regulate air emissions without considering the resulting long-term impact on water and solid waste issues. This piecemeal approach has resulted in many units closing before end-of-life due to the continuing, accumulating, and often speculative environmental costs of complying with each regulation in turn.

The costs for ongoing retrofitting for compliance and/or the stranded costs for early closure are frequently passed on to electricity consumers. For units that continue to operate, the regulations have significantly reduced profit margins as retrofitting and increased operations and maintenance (O&M) costs mount up. Additionally, the ambiguity in many of the regulations has led to a plethora of court cases, which have spread speculation throughout utilities that must question or re-evaluate compliance strategies.

In the European Union (EU), the current Industrial Emissions Directive (IED) is based on an integrated approach, which embraces the use of best available techniques and plant-specific permits for operation. These permits consider the whole environmental performance of plants, covering emissions to air, water, and land; generation of waste; use of raw materials; energy efficiency; noise; prevention of accidents; and restoration of sites upon closure.

Individual EU member states must transpose EU legislation into national legislation and, in doing so, must create legislation which is as stringent as, or more so than, the EU legislation. The broad nature of the IED gives national regulators and plant owners a comprehensive overview of the options for compliance. This approach allows utilities to estimate a holistic cost for the entire suite of control systems required and can significantly reduce costs when designing a system that can utilize newer, multi-pollutant systems, and which can address air, water, and solid waste issues simultaneously.

Read more of this Power Magazine article by Anthony Licata by clicking here.