Bush administration’s mercury proposal could lead to disaster for coal industry, consulting firm says

ANNAPOLIS, Md., June 5, 2002 — Mercury could be poison to coal if the Bush administration continues on its current regulatory path. In fact, mercury regulation might be a threat rivaling that posed by a carbon tax, according to an industry consulting firm.

The conclusion is found in Annapolis, MD-based Hill & Associates’ latest study, “The Outlook for U.S. Steam Coal: Long-Term Forecast to 2021.”

Mercury regulation is most poisonous to Powder River Basin coal, one of the nation’s cleanest fuel sources.

Where the impact of the current regulatory climate is concerned, “mercury seems to be the key,” the study says.

“We believe that the Bush administration has made a critical mistake in allowing hard-line policymakers to drag over a ‘last gasp’ mercury thrust from the Clinton-Gore administration and force it into the new multi-pollutant strategy,” Hill & Associates says. “Annual readers of the Hill & Associates long-term coal forecasts may remember our past reports highlighting the fact that even inside the Clinton administration, only Vice President Al Gore seemed to be pushing deep mercury cuts — the issue simply did not have widespread backing, even within the environmental community.

“However, the Clinton administration did succeed in officially declaring mercury emissions to be a ‘hazard,’ resulting in a call for mercury emission reductions from power plants, even though the science behind this issue is very ‘soft’ or even non-existent.”

Now coal finds itself under siege.

Because there is no technology available that will allow coal to meet the extremely strict limit being proposed, we may wreck two of the fundamental pillars of the U.S. economy (electricity generation and coal mining) and, in the process, degrade the security of the United States by sharply reducing the usefulness of our most abundant non-foreign energy resource.”

Mercury is tough because it hardly exists inside coal.

“As a beginning point in understanding mercury removal, it is important to clearly focus on just how small are the emissions of mercury from power plants,” Hill & Associates says. “They are so small that there is dispute over whether they can be (and are being) measured accurately.

“By contrast with SO2 and NOX which are measured in the total range (from power plants) of roughly 2-9 million annual tons each, mercury emissions total only about 50 tons annually. Mercury content by specific coal is measured in terms of pounds of mercury per trillion Btu (as compared to pounds per million Btu for the other pollutants — i.e., one millionth the level of the other pollutants).

“Of course, the less frequent the occurrence of any species is, the more expensive it becomes to isolate or ‘trap’ it for removal.”

Simple economics have created an atmosphere in which more than half of the electricity generated in the United States year after year has come from coal- fired plants.

“In fact, the cost of coal-fired electricity has been so much lower than the cost of other fossil-fired electricity that it has been able to absorb layer after layer of environmental regulatory costs for decades and still maintain or increase its share of electricity generation,” Hill & Associates says.

“Eventually, however, coal’s ability to absorb economic penalties of usage reaches a limit,” and “coal has finally run out of room to absorb more and more economic cleanup penalties, particularly when mercury limitations become involved.”

Mercury is most difficult to remove from PRB coal.

“It turns out that the level of the hardest-to-remove mercury (elemental) is much higher in exhaust gases from burning PRB coal than in the resulting gases from burning non-PRB coal,” Hill & Associates says.

The clear fact is that many coal-fired plants simply cannot absorb the costs of mercury removal and still have enough money left to buy the coal, to run the plant (at competitive dispatch costs).

The study, “The Outlook for U.S. Steam Coal Long-Term Forecast to 2021,” can be purchased by contacting Lloyd Kelly, vice president of Hill & Associates at (410) 263-6616, extension 104.


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