Sarah Noecker is a consultant in the coal practice of RDI Consulting, now a part of Platts Research and Consulting.
The Clear Skies Initiative proposes to cut emissions of sulfur dioxide, nitrogen oxide and mercury by about 70 percent from current levels by 2018. What does the proposal mean for the coal industry? RDI Consulting believes it is a mixed bag. In other words, it depends on who you are. Are you a high-sulfur coal producer who has just been through a decade of mine closures and WARN notices? Or, are you a coal producer in the Powder River Basin supplying low-sulfur coal to an increasing number of coal-fired plants subject to Phase II of the Acid Rain Program? The answer may be counter-intuitive.
A potential impact of the Clear Skies Initiative would be the eventual closing of many smaller coal units, especially those with a capacity of less than 150 MW. Those plants likely will find that installing expensive emissions control equipment will not be economical. Those plants could continue to burn low sulfur coal as long as the plant's operator is over-complying at another unit or it is economical to buy emissions credits. However, at that point where sufficient allowances are not available, many of the smaller plants run the risk of becoming too expensive to operate if control equipment becomes necessary.