Coal-Fired Power in a Restructured Electricity Market

Article excerpt

The last decade has seen a series of fierce, protracted battles over the regulation of air pollution from coal-fired power plants in the United States. These battles have been (and are being) waged by electric utilities, environmental groups, and the last two presidential administrations, among others, before courts, agencies and Congress. They involve the regulation of at least five different pollutants, by at least as many different provisions of the Clean Air Act. This same decade has also seen fundamental changes in the way electricity markets are regulated in the United States. The concurrence of these events is no accident. In fact, the restructuring of electricity markets-the incremental movement away from close economic regulation of licensed monopoly suppliers and toward market competition-has stoked fears that price competition in the electricity industry will bring increased reliance on cheap, dirty, coal-fired power. These fears have been exacerbated by the transition from the Clinton Administration's relatively aggressive approach to regulating pollution from coal combustion to the Bush Administration's less aggressive approach. In this essay I will attempt first to explain these doctrinal and policy battles over the application of the Clean Air Act to coal-fired power plants, and to place them in their historical, legal and political context. Second, I will argue that the restructuring of electricity markets does not necessarily imply increased reliance on coal-fired power, and that the combination of restructured markets and a second Bush Administration does not portend quite the air pollution disaster that some fear.


Coal-fired power generation has always been a high-profile source of air pollution. Coal combustion produces an impressive list of potentially harmful pollutants. Particulate matter (fine dust) is a source of respiratory problems, heart and lung disease, and haze. (1) Particulates from coal combustion can also contain mercury, a toxic metal that can enter the food chain through deposition of combustion particulates into waterways. (2) Sulfur dioxide ("S[O.sub.2]") mixes with moisture in the upper atmosphere to form sulfuric acid, which falls as acid rain, damaging vegetation and changing the pH of aquatic environments. (3) Nitrogen oxides ("N[O.sub.x]") are a precursor to both acid rain and ground-level ozone (smog), which triggers respiratory problems in some humans. (4) Carbon dioxide ("C[O.sub.2]"), another byproduct of coal combustion, is the earth's most plentiful greenhouse gas, and human contributions of carbon dioxide into the atmosphere are widely believed to be hastening global warming. (5)

The link between coal combustion and some of these pollution problems has long been understood. Coal combustion powered the industrial revolution, and the combination of domestic and industrial use of coal to produce heat and power created evident air pollution problems in many industrial cities. (6) The lethal "London Fog," or "black fog," of 1952 killed approximately 4,000 Londoners, (7) and prompted a Parliamentary ban on the combustion of soft coal within the city limits in 1956. (8) Despite episodes like this one, coal became the fuel of choice for electric power generation in much of the industrialized world, including the United States, and remains so in nations where coal is plentiful. (9)

The United States Congress responded to concerns about the effects of pollution from coal-fired plants when it drafted the Clean Air Act of 1970, (10) noting specifically the effects of particulates, sulfur dioxide, and nitrogen oxides on human health. (11) That statute placed all three pollutants on the list of conventional air pollutants for which EPA promulgates national ambient air quality standards ("NAAQS"). (12) Since the Act's passage, more and more air quality control regions (13) in the United States have come into attainment (14) with the NAAQS for particulates, ozone and sulfur dioxide, (15) as ground level concentrations of these pollutants have declined steadily. …