US air standards: a study in carbon control

WASHINGTON (Reuters) New US limits on mercury and other toxic pollution from coal power plants may prove a back door to carbon emissions cuts and show visible local benefits win support.

Beijing and Washington are locked in stalemate on international curbs on carbon emissions while the United States is also deadlocked domestically on a climate bill.

Both are taking action on local air pollution, however, which in the United States will shut smaller, older, more idle coal plants and slow growth in carbon dioxide emissions (CO2).

The Environmental Protection Agency (EPA) standards are already biting, say utilities planning power plant closures.

The controls have progressed partly because of a legislative short-cut: as an EPA ruling (under the existing 1970 Clean Air Act) rather than a new law which needs majority approval in Congress, where a climate bill fell.

But curbing mercury, a neurotoxin which harms unborn babies and children, commands public buy-in given obvious and visible health benefits – eating fish from some US waterways is banned.

The lesson is that environmental controls with more visible, easily understood benefits win more support – not lost on green groups like the US Sierra Club which pursued mercury limits.

The trouble for carbon controls is that clarity on local impacts may be years off, given the chaotic drivers behind rainfall and temperature: a clearer picture exists only at the global level including more heatwaves and gradual sea level rise.

In addition, the benefits of carbon curbs are shared worldwide and with future generations – voters most benefiting from a carbon tax haven't been born.

STANDARDS

The EPA in December announced the "Mercury and Air Toxics Standards", or "MATS Rule", to limit dangerous pollutants including mercury, arsenic and other toxins from coal- and oil-fired power plants.

That provoked a backlash among Republicans and from utilities more dependent on coal power and may still face Congress efforts to quash it.

The ruling will force the closure of older, less efficient plants where the cost of applying controls doesn't pay.

US power company FirstEnergy Corp last week said it would retire six, older coal-fired power plants on account of the ruling.

Energy analysts estimate the standards could help shut tens of gigawatts (GW) of coal-fired generation over the next several years, out of more than 300 GW US coal fired generation.

New clean air standards would help drive a US shift from coal and keep CO2 emissions below 2005 levels in the medium-term, the Energy Information Administration (EIA) said last week.

Additional problems facing US coal include more pollution controls, competition with cheap US shale gas and slower growth in power demand.

GLOBAL VERSUS LOCAL

Both clean air and a safe climate are public goods, meaning it is difficult to exclude people from enjoying them.

As a result, it is difficult to charge for consumption in the same way as conventional goods like food or energy. Government intervention works best for example funded by taxation.

But there is an important difference: clean air has a mostly regional benefit while a safer climate can be enjoyed by anyone.

Taxpayers in a region or country paying a carbon levy will collectively only get a slice of the global climate benefit, and so may expect every other large, carbon-emitting country in the world to do their bit.

Only international cooperation can ensure everyone pays – according to their ability and responsibility, a phrase which opens a can of worms in deadlocked UN climate talks.

By contrast, taxpayers, or in this case energy consumers (generators will try to add the clean-up cost on utility bills), capture the full benefit of the clean air laws they pay for.

The benefits are clear enough: the EPA estimates health savings worth $37 billion-$90 billion annually by 2016 compared with costs of nearly $10 billion per year.

Analysts have attempted the same maths for climate change but it is more difficult to monetise these benefits by region.

So measures targeting correlated, local pollutants will help curb CO2 emissions, but meeting the full scale of the climate problem will still need extra, international effort.

EXPORTING POLLUTION?

There's also a catch: world trade can make local air pollution a global problem.

At least a fraction of the US-produced coal no longer burned in America following the standards will be exported along with carbon and pollution to countries with laxer controls.

Some coal will be left in the ground given the economics of US mining, said one coal trader.

And environmental groups will attempt to block port capacity expansion, and possibly force exporters to think twice given possible delays.

Nevertheless, analysts say exports could reach about 20 per cent of US production (from an historical 4-14 per cent), if trends hold, as exporters execute ramp-up plans.