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Supreme Court Ruling, MATS & the Clean Power Plan

On Friday, the U.S. Supreme Court of Justice made an interesting ruling. One that, I think, a lot of people had a tough time understanding, myself included.
By Anna Simet | July 01, 2015

On Friday, the U.S. Supreme Court of Justice made an interesting ruling. One that, I think, a lot of people had a tough time understanding, myself included.

For the case Michigan vs. EPA, which is focused on the U.S. EPA’s limits on mercury, arsenic and acid gases emitted at coal-fired power plants, known as mercury and air toxics (MATS) under the Clean Air Act, the Supreme Court sided against the EPA. Without getting into the weeds, it means it ruled that EPA did not take associated costs into consideration, and sent the rules back to the agency for fixing.

It did not vacate the law, contrary to the headlines.

First, let’s talk about what this means. EPA Press Secretary Melissa Harrison told me that the agency is reviewing the decision and will determine any appropriate next steps when the review is complete. “EPA is disappointed that the Court did not uphold the rule, but this rule was issued more than three years ago, investments have been made and most plants are already well on their way to compliance.”

That’s exactly what Environmental and Energy Study Institute policy associate Jessie Stolark told me when I asked.  “Some are speculating that the MATS decision is fairly meaningless, because most power plants have already complied with them…”

Harrison said that the decision was about how and when the agency considered costs in its decision that mercury and air toxic emissions from power plants threaten public health and the environment, not its authority to limit those pollutants, and that EPA would continue to ensure appropriate standards to regulate these emissions are in place and complied with.

She added that, on cost, for every dollar spent by these power plants to comply with these toxic air pollution standards, EPA estimates the American public would see up to $9 in health benefits, per person.

So that’s that.

Now, moving on to the Clean Power Plan. I think the biggest misconception was that this decision was relevant to, or negatively affects, the CPP. 

Simply said, it does not.

I recently put together a (free!) webinar that will be held July 16, focused on that topic. As soon as I finished it up and was ready to launch, I saw this news, and some reports that said the CPP had been struck down.

So I had to dig further into this.  

Said Harrison, “The Court’s conclusion that EPA must consider cost when determining whether it is “appropriate” to regulate toxic air emissions from utilities will not impact the development of the Clean Power Plan under section 111.  Cost is among the factors the Agency has long explicitly considered in setting standards under section 111 of the Act.”

 Stolark, who is a panelist on the aforementioned webinar, weighed in on this for me, too. She said:

“As for implications for CPP, the court did not make a determination on the use of co-benefits in rule making (like also reducing soot while reducing mercury)—these co-benefits make the rule much less costly, and weaken the cost-prohibitive argument.  By not attacking co-benefits, the court has potentially left more space for CPP to succeed…The real question for biomass is: Will the biogenic carbon language be finalized at the same time?  If not, I believe it could really hamstring the industry, depending on how late it is.  If it is so late and states are already writing their compliance plans, it could be very bad.” 

So the question of the hour—or more like year—is, will the EPA’s Scientific Advisory Board have completed its framework on biogenic carbon emissions? It has huge implications on our industry, but, it’s important to note, that isn’t important to the agency. Their concern is getting the science right, not getting it out in time for policymaking and compliance plans. And there are rumors that it will not be ready.

We’ll speculate more about all of this on July 16th.

Finally, I checked in with my friend Bill Strauss of FutureMetrics, author of paper “Why the Clean Power Plan is Not a War on Coal.”

He said, on costs of complying with the CPP (which again, Harrison said the costs of which have long been factored in to the rule writing process, so we won't see a ruling like what just happened with MATS), “I am confident that a proper scientific analysis of the benefits of lowering carbon pollution will far outweigh the costs. Power plants do not experience the costs of pollution.  Those are external costs.  Internalizing external costs requires laws and regulation and, of course, raises the cost of production…the external costs mattered for regulation of NOx, SOx, regulation of refrigerants, water discharge, etc. all of which harm society.  Industry would, if unregulated, emit all kinds of pollution to find the lowest cost of production.

“So as long as the impacts of increasing concentrations of CO2 and the effect on climate are recognized, which they should be if science has anything to say, then the benefits to society of mitigating rising sea levels, ocean acidification, extreme weather, drought, etc. will far outweigh the costs of carbon emissions regulation.”

 He added that co-firing wood pellets in coal plants doesn’t cost that much—in fact, it’s a low-cost solution. For a coal power station to hit 30 percent reduction in CO2 in 2030 by co-firing wood pellets, with some assumptions on how the rest of the power in the state is produced, according to Strauss, it works out to much less than a penny per kilowatt-hour for the ratepayer.

For more about all of the above, make sure you don’t miss Biomass Magazine’s July 16th webinar, “Readying for the Clean Power Plan.”

Hope those of you celebrating have an enjoyable holiday weekend.