EPA Opts for Pollution Trading Over Emissions Controls in Texas

Eight Texas coal-fired power plants can join an air pollution trading program instead of installing expensive new sulfur dioxide controls, the EPA said as part of a rule aimed to improve visibility in the state.

Joining the trading program could prove to be a boon for utilities such as Luminant Generation Co. LLC that said installing the required pollution controls would have been cost-prohibitive and would have forced some of the power plants to close. The companies that own the eight affected coal-powered power plants include Luminant, Xcel Energy, and Dynegy.

Instead, the plants may participate in a still-to-be-finalized intrastate emissions trading program, the agency said in its final rule approving portions of Texas’s plan to improve visibility in national parks and wilderness areas, including Big Bend National Park.

The regulation, signed by Environmental Protection Agency Administrator Scott Pruitt Sept. 29, was released by environmental advocates Oct. 3.

Many coal plants nationwide have already updated their pollution controls and the new trading program will not ensure a decrease in emissions, Elena Saxonhouse, senior attorney for the Sierra Club, told Bloomberg BNA. The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg, founder of Bloomberg L.P. Bloomberg BNA is an affiliate of Bloomberg L.P.

Saxonhouse said it’s all just “smoke and mirrors,” which won’t help reduce pollution, and she expects the environmental group will challenge the final rule in court.

A spokeswoman for the Texas Commission on Environmental Quality said it is still reviewing the rule and has no comment at this time. Bloomberg BNA couldn’t reach the Texas Attorney General’s Office.

New Administration

The EPA originally imposed sulfur dioxide limits on eight Texas coal-fired plants in December 2015 after disapproving portions of the state’s regional haze plan.

Energy companies, power plants, Texas, and industry filed a suit against the rule. The U.S. Court of Appeals for the Fifth Circuit in July 2016 stayed the federal plan for the Texas regional haze rule because the petitioners “could suffer irreparable injury in the absence of a stay,” the court said in its order.

After the 2016 presidential election, the Obama administration’s EPA filed a status report asking the court to remand the federal plan to address regional haze in Texas. In August 2017, the Trump administration asked the U.S. District Court for the District of Columbia to extend the deadline from Sept. 9 to Dec. 31 to issue the final visibility rule for Texas, citing a breakthrough in talks with state regulators.

The court later denied the agency’s request to extend the deadline.

Cost Savings

Luminant, a subsidiary of Vistra Energy Corp., which owns several power plants that would be covered by the regulation, projected the Obama administration proposal would require utilities to spend more than $3 billion dollars on emissions controls.

The rule will affect several Luminant plants including those at Big Brown, Martin Lake, Monticello, and Sandow; NRG’s Limestone plant; Dynegy’s Coleto Creek plant; Xcel Energy’s Tolk plant; and the San Miguel Electric Cooperative plant. Luminant declined to comment to Bloomberg BNA.

Prior to the final rule, NRG Energy had already decided to switch fuel used at its Limestone power plant from lignite to coal that has a lower sulfur content, David Knox, a company spokesman, told Bloomberg BNA.

Under the final rules, the normal attrition of older sources will likely create an allowance pool big enough for the other covered sources without any new expenditures on end-of-pipe controls, Eric Groten, a partner at Vinson& Elkins’s Environmental and Natural Resources practice, told Bloomberg BNA in an email.