Ongoing litigation over EPA rules raises compliance risks and costs. North Carolina utilities, however, benefited from the state’s forward thinking.
Mercury: Much Ado About Nothing?
How the Clean Air Mercury Rule will affect coal prices.
Coal west of the Mississippi River typically has very low concentrations of chlorine and other halogens. The presence of halogens increases the formation of oxidized forms of mercury. To enhance the mercury capture efficiency in plants that burn subbituminous or lignite coals, halogenated sorbents can be added to the flue gas.
In addition to adding halogenated sorbents to the flue gas stream, coals with higher halogen concentrations can be blended with subbituminous or lignite coals with low halogen concentrations. Eastern bituminous coals with higher chlorine and bromine concentrations can be blended with western subbituminous coal to mimic the benefits of halogenated sorbent injection.
Besides blending fuels, there are developing technologies such as K-Fuel that use heat and pressure to lower the mercury concentration in subbituminous coal. According to initial reports, KFuel has reduced mercury concentrations by up to 70%.
How Will the Mercury Rule Affect Coal Prices?
Under the Clear Skies proposal which is currently in legislative limbo, mercury allowance emissions were intended to be capped at $35,000/pound. Assuming that 1 billion tons of coal is consumed by electric plants and mercury allowances reach the maximum price level set under the proposed Clear Skies price, the maximum cost of complying with the 10 ton reduction required by CAMR in 2010 would have added a maximum $0.70/ton of coal. The actual added cost to coal likely will be much lower.
Directly controlling mercury emissions with sorbent injection is estimated to add the equivalent of between $1.00 and $2.00/ton of coal burned, depending on plant size. For a 300 MW plant, for example, capital equipment costs are roughly $1 million and operating costs add another $1-2 million per year.
There may be a slight premium added to coals with higher halogen concentrations that then can be blended with subbituminous and lignite coals. Subbituminous and lignite coals with naturally high halogen concentrations may enjoy a higher premium on the market. Coal derived from KFuel technology ultimately will be priced by what the market will bear, but if mercury emissions are a factor at some plants then the reduced mercury concentration in KFuel may add to its value.
Additional state and local mercury emissions rules intended to reduce localized hotspots will create further incentive to control mercury emissions. In states such as Minnesota, Wisconsin, and Mississippi where a higher percentage of consumed fish come from local waters, stricter mercury legislation may be necessary. For plants that must comply with stricter local regulations, mercury-specific capture devices may be installed. As plants in these regions comply with the stricter local rules, plants outside these local areas will find it less expensive to comply with CAMR. Why? Because the local plants will “overcomply” with CAMR requirements due to the added local regulations, freeing more mercury emissions allowances for the rest of the market.
The impact CAMR will have on the cost of burning coal will be minimal until 2018. It is unlikely that any utility will install SO 2, NO x, or particulate matter control equipment solely to capture mercury. However, the co-benefit created from mercury capture may push some plants to invest in these emissions-control