Energy and
Environmental
Policy
Regulatory Changes:
Threats and opportunities
Mark Spurr, IDEA Legislative Director
Increasingly stringent environmental regulations bring both threats and opportunities to the district energy
industry. Within our industry, we have
focused on the U.S. Environmental Protection Agency’s industrial, commercial and
institutional “Boiler MACT” (maximum
achievable control technology) rules,
which will have a direct effect on district
energy systems as regulated entities.
IDEA has participated in the debate
about the Boiler MACT rules, submitting
extensive comments in 2010 (see http://
tinyurl.com/7argabh). In December 2011,
EPA proposed significant changes due to
widespread industry concern over high
compliance costs and unrealistic emissions
standards. EPA expects to finalize the rules
in April 2012. It is expected that existing
sources will have to comply by March
2014, and new sources must comply
immediately.
electricity in 2010, as illustrated in figure 1.
Long-term risks related to greenhouse gas
regulation cloud the future of coal. Regardless of the potential for greenhouse gas
regulation of existing plants, which is yet
to be enacted, existing regulatory pressures are expected to result in significant
retirements of coal capacity in the coming
10 years, with certain regions hit particularly hard.
Figure 1. U.S. Electricity Generation by Fuel
Source in 2010.
Renewable: 10%
Other: 0%
Nuclear: 20%
Coal: 45%
Natural Gas: 24%
Petroleum: 1%
Source: Data from U.S. Energy Information Administration, Annual Energy Outlook 2011, Electricity Supply,
Disposition, Prices, and Emissions Reference Case.
Retirements Ahead in the
Power Sector
Less obvious regulatory pressures are
the indirect impacts of tightening regulation in the electric utility industry, which
will increase power prices – particularly in
certain regions – and increase combined
heat and power opportunities. The impacts
of increased power plant regulations will
be strengthened by price trends for coal
and natural gas, which are supported by
the long-term supply/demand pictures for
these fuels.
Coal remains the dominant source of
U.S. electricity, providing 45 percent of
Impending air-quality, water-quality
and solid waste disposal regulations,
summarized in table 1, will make it difficult
for some coal-fired power plants (both
utility- and merchant-owned) to remain
profitable.
