To reduce the downwind impact of out-of-state pollution, the final rule requires 28 states in the eastern half of the U.S. to reduce power plant emissions that contribute to cross-border air pollution of both ozone and fine particles. CSAPR will mandate reductions of sulfur dioxide (SO2) emissions by 73% and reductions in nitrogen oxides (NOx) emissions by 54% from 2005 levels by 2014. The rule mandates that Louisiana reduce the summer NOx emissions from electric generating units by over 40% from 2010 levels and that compliance with the rule begin May 2012, just nine short months from now.
No matter how badly they want to comply, no companies can accomplish the installation of required emission control technologies in such a short time frame. Even if these controls, now in very high demand, are available, utilities cannot realistically finance, engineer, permit and build them in the allotted time. Some Louisiana utilities that spent $20 million to install combustion controls under the original version of the rule will in effect be penalized for having reduced their emissions early.
To make matters worse, EPA’s allowance trading program under the rule limits the number of allowances which can be purchased under a budget which is woefully too small. If the state’s utilities cannot reduce their emissions enough to fall within the legal limit, they can either purchase allowances or curtail their operations. But other states have likewise expressed grave concern over a lack of sufficient state allowance budgets. If other states have no allowances to sell, then what? And at what price?
In Louisiana, 92 generating units at 32 locations receive a severely limited number of allowances under the rule. Last year, a total of 22,869 tons of NOx was emitted. CSAPR budgets only 13,432 tons per year for Louisiana, including new generating unit set-asides. Louisiana’s utilities must somehow find a way to reduce emissions by 9,437 tons almost overnight. And for a double whammy, Louisiana utilities can only purchase 2,821 allowances without triggering “allowance penalties” in the subsequent year. This means we’d have to surrender two allowances from the subsequent year for every excess ton of NOx emitted.
Utility company management teams have said they will not violate their permits and will not pay the huge penalties associated with doing so. Rolling blackouts in Louisiana and a number of other states could well become the unintended consequences of this rule next summer. Thought you were hot this summer and your utility bill was high? Wait till next year. And when the lights go out, you’ll be able to see that goblin called CSAPR lurking in the shadows.