How we got here and what to expect.
Jean Agras is vice president of the Ventyx Advisors environmental markets practice. Contact her at firstname.lastname@example.org.
Over the past few years, new regulatory requirements from the United States Environmental Protection Agency’s (EPA) Clean Air Act (CAA) and recently the Cross-State Air Pollution Rule (CSAPR) have led U.S. electric generators to make substantial investments in emission control upgrades to reduce emissions of sulfur dioxide (SO2) and nitrogen oxides (NOx). Continued EPA activity, including anticipated regulation of mercury, toxins, cooling water and ash residue, is leading to even more significant action, such as the cancellation and delay in construction of new coal generation.
Understanding the current and forthcoming emission regulations—and accurately forecasting emissions prices and energy prices—will help electric generators make the correct investment decisions today.
Clean Air Past and Present
In emission markets, as with anything, to fully comprehend our current situation and accurately forecast the future, one must understand the past. Therefore, let us cast a backward glance over the last few years to outline the process that has led to today’s circumstances.