Transformation:
Battling past the confusion

New strategies for new realities

By Jeff Wallace, ACC President & Vice President Fuel Services, Southern Company

As we have moved through the past few years, it seems that the legislative and regulatory world surrounding the coal industry has become increasingly murky. These issues continue to slow industry attempts to update aging infrastructure and build new generation and transmission resources.

Bowed, but not beaten, we’re using this edition of American Coal to discuss how the industry is moving beyond the roadblocks to remain a primary source of American energy.

We need to stay educated on these issues, so it is worth highlighting some of the challenges we face. As Janet Gellici noted in her CEO’s message in the last issue, there are numerous legislative, regulatory, and judicial challenges being aimed at the industry. The majority of those issues continue to hang over us.

Clean Water Act-related permitting issues continue to threaten coal mining, and along with it tens of thousands of jobs and an essential energy supply in the Central and Northern Appalachian regions.

Pending coal ash regulations are still pending and could see ash regulated as “toxic” waste. Such a designation could potentially destroy a $6 – $11 billion per year recycling and clean building products industry.

EPA’s moves to replace the Clean Air Interstate Rule (CAIR) with the new Transport Rule have effectively nullified the market rules underpinning the SO2 cap and trade program. That change has caused the price of SO2 allowances to plunge to near zero, all but killing what has been an effective market-based means of controlling SO2 emissions.

Energy and climate legislation, long stalled in Congress, finally made it through a Senate committee. However, this energy bill ignored Green House Gas (GHG) emission caps and focused instead on regulating off-shore drilling, subsidies to encourage efficiency-related home improvements, and subsidies to push transportation toward the use of natural gas. Threats are now circulating through Washington that a lame-duck Congress, effectively freed from further voter reprisals, could ram through a far stricter GHG bill after the November elections.

Congress has not yet acted to address GHG emissions, or to restrict EPA jurisdiction over GHG emissions. So, as we learned in presentations at the ACC’s Fuel Flexibility Conference in Chicago (July 20-21), the implementation of the new EPA tailoring rule, aimed at limiting greenhouse gas (GHG) emissions, will be a legal nightmare. Legal experts, utilities, engineers, elected officials … pretty much everybody is struggling to understand what the Best Available Control Technologies (BACT) for GHG will be and how to apply the National Ambient Air Quality Standards (NAAQS) to GHGs, along with a host of other legal and environmental questions. No one can be sure what control equipment they will need to install to control which emissions, or in what quantities. Meanwhile, the lawyers on all sides of the issue are sharpening their pencils.

We are looking at the proactive moves being proposed and implemented by the industry, and tying them in with the themes being considered at the Coal Market Strategies Conference in Tucson, AZ (October 5 – 7).