Mercury Emissions from Electric Power Plants: An Analysis of EPA's Cap-and-Trade Regulations

Publication Date: April 2005

Publisher: Library of Congress. Congressional Research Service


Research Area: Environment



EPA studies conclude that at least 7.8% of American women have blood mercury levels sufficient to increase the risk of adverse health effects (especially lower IQs) in children they might bear. Thus, there was great interest in the agency's March 15, 2005, announcement that it was finalizing new regulations to control mercury (Hg) emissions from coal-fired electric power plants -- power plants account for 42% of total U.S. mercury emissions, according to EPA.

In announcing the regulations, however, EPA stated that most mercury in the atmosphere comes from non-U.S. global sources. Thus, even if regulations could reduce power plant mercury emissions to zero, the agency concluded, there would be little change in the mercury health effects it has identified. Instead of more stringent requirements, EPA promulgated "cap-and-trade" standards that rely heavily on cobenefits from sulfur dioxide and nitrogen oxide controls installed under a separate agency rule, the Clean Air Interstate Rule (CAIR). This approach minimizes costs for electric utilities: by 2015, less than 1% of coal-fired power plants will have installed equipment specifically designed to control mercury, according to EPA. By 2020, only 4% of plants will have such equipment. Ten states have filed suit to overturn the agency's action, arguing that EPA is required by the Clean Air Act to impose more stringent Maximum Achievable Control Technology standards at each individual plant.

Beginning in 2010, the cap-and-trade standards limit total power plant mercury emissions to 38 tons annually (a 21% reduction vs. 1999 levels). A second phase caps annual emissions at 15 tons, starting in 2018. According to the agency, trading and banking of emission allowances will result in lower than required emissions in the early years, but will delay achievement of the 15-ton cap to at least 2025. Thus, the net effect of the rule appears to be to postpone until the 2020s direct regulation of mercury (except as a co-benefit achieved from regulating other pollutants).

EPA has sent contradictory signals regarding the importance of controlling mercury emissions. Its January 2004 analysis of the proposed rule estimated that the indirect benefits of more stringent regulations ($15 billion annually) would outweigh compliance costs by a factor of at least 16 to 1. Direct benefits (although unquantifiable) were said to be "large enough to justify substantial investment in Hg control." The analysis of the final rule, by contrast, concludes that quantifiable direct and indirect benefits of mercury control are just $43 million per year, with annual costs as high as $896 million. EPA's calculations did not include consideration of an academic study that it had funded, a factor contributing to the calculation of smaller benefits. This decision was one of several irregularities in the regulatory process alleged by the agency's Inspector General, GAO, and critics of the rule.

In addition to EPA's regulatory effort, five bills that would regulate these emissions have been introduced so far in the 109th Congress, with more expected. S. 131, the Clear Skies Act, has many points in common with the EPA regulatory approach. This report will be updated.