Construction spending on environmental-compliance projects for U.S. coal-fired generators has slowed in recent years, but is poised to increase in 2010 and beyond, according to Britt Burt, Industrial Info Resources Vice President of Research - Power Industry.
"Environmental-compliance spending has been a little slow recently. I'd say the glass is half-full now, and I'm very optimistic that it will be filling over the next two to three years," Burt said in an interview. Some forecasters predict environmental compliance spending could hit USD6 billion annually, he said.
The construction slowdown is largely attributable to regulatory uncertainty following last year's federal court ruling that vacated two environmental rules from the U.S. Environmental Protection Agency (EPA). In vacating the Clean Air Interstate Rule (CAIR) and the agency's Clean Air Mercury Rule (CAMR), the court instructed the EPA to toughen the agency's proposed regulatory standards, Burt said.
The EPA proposed CAIR and CAMR in 2005. As originally proposed, CAIR required 28 eastern and Midwestern states and the District of Columbia to reduce sulfur-dioxide and nitrogen-oxide emissions by 70 per cent.
The CAMR, as originally proposed, would reduce aggregate mercury emissions from new and existing coal-fired power plants to 38 tons in the first phase, while in the second phase, aggregate emissions would be lowered to 18 tons by 2018, according to the EPA. The federal court that vacated CAIR allowed the rule to remain in place while the EPA developed a replacement.
The agency is expected to issue revised, tougher CAIR and CAMR standards during the next 12 to 24 months, Burt said. But in the meantime, states could enact emissions standards independently of the federal government. Several states have attached environmental emissions projects to applications to build new power plants, he noted.
A total of USD10.6 billion was spent on environmental-compliance construction at U.S. power plants in projects that started from 2006 through 2008, according to Industrial Info's data. An additional USD17 billion of projects is slated to begin in the 2009-14 period. The data covers projects at power plants that control emissions of sulfur dioxide, nitrogen oxides, and/or mercury. Most of this spending is for retrofit construction projects, Burt said.
Flue-gas desulfurisation devices (scrubbers), which capture a power plant's sulfur-dioxide emissions, account for the lion's share of projected environmental-remediation construction spending in the 2010-14 period, according to Industrial Info's data. Projects that involve sulfur-dioxide emissions controls account for about 70 per cent of estimated project spending.
Projects controlling nitrogen-oxide emissions account for 23 per cent of projected construction spending, while mercury-control projects, which are far less capital-intensive that SO2 and NOx projects, account for 7 per cent of environmental compliance spending in 2010-14.
A typical new 500-megawatt (MW) coal-fired power generator would cost about USD750 million to construct, Burt estimated. Of this sum, about USD80 million would be spent on flue-gas desulfurisation, USD35 million on selective catalytic reduction technology to reduce NOx emissions, and another USD5 million on mercury controls.
Retrofitting these technologies onto existing coal-fired generators would cost significantly more – perhaps double the comparable greenfield costs – because of site constraints and the need to construct the project using the available land, Burt observed.
Environmental-compliance spending for coal-fired power plants would be more robust, but environmental groups like the Sierra Club have aggressively opposed construction of new coal-fired generators in recent years, Burt said.
The Sierra Club claims credit for killing more than 100 new coal-fired generators during the last two or three years, he noted, adding that some of these projects were greenfield construction of new power plants, while others represented the addition of a new generating unit at an existing power plant.
All new coal-fired generators will need compliance-control projects to control emissions of sulfur dioxide, nitrogen oxides, and mercury, Burt said. "Power plant operators won't install this equipment unless they are required to do it," he said. Although all signs point to an uptick in environmental-compliance spending, further delays in issuing new EPA rules could cause some projects to be delayed.
Continued success by the Sierra Club and other environmental groups in targeting new coal-fired generators could also reduce future spending on power plant environmental compliance. Coal-fired generation construction activity has fallen about 18 per cent in the past two years. U.S. generators had proposed beginning construction activities on about 70,000 MW of new coal-fired capacity from 2008 through 2012, but this number has fallen to 57,000 MW in 2010-14, according to Industrial Info's database.
A significant portion of proposed construction activity has been shifted to renewables, natural gas, and nuclear power since Industrial Info conducted a construction activity survey in September 2007.
"Environmental-compliance spending has been a little slow recently. I'd say the glass is half-full now, and I'm very optimistic that it will be filling over the next two to three years," Burt said in an interview. Some forecasters predict environmental compliance spending could hit USD6 billion annually, he said.
The construction slowdown is largely attributable to regulatory uncertainty following last year's federal court ruling that vacated two environmental rules from the U.S. Environmental Protection Agency (EPA). In vacating the Clean Air Interstate Rule (CAIR) and the agency's Clean Air Mercury Rule (CAMR), the court instructed the EPA to toughen the agency's proposed regulatory standards, Burt said.
The EPA proposed CAIR and CAMR in 2005. As originally proposed, CAIR required 28 eastern and Midwestern states and the District of Columbia to reduce sulfur-dioxide and nitrogen-oxide emissions by 70 per cent.
The CAMR, as originally proposed, would reduce aggregate mercury emissions from new and existing coal-fired power plants to 38 tons in the first phase, while in the second phase, aggregate emissions would be lowered to 18 tons by 2018, according to the EPA. The federal court that vacated CAIR allowed the rule to remain in place while the EPA developed a replacement.
The agency is expected to issue revised, tougher CAIR and CAMR standards during the next 12 to 24 months, Burt said. But in the meantime, states could enact emissions standards independently of the federal government. Several states have attached environmental emissions projects to applications to build new power plants, he noted.
A total of USD10.6 billion was spent on environmental-compliance construction at U.S. power plants in projects that started from 2006 through 2008, according to Industrial Info's data. An additional USD17 billion of projects is slated to begin in the 2009-14 period. The data covers projects at power plants that control emissions of sulfur dioxide, nitrogen oxides, and/or mercury. Most of this spending is for retrofit construction projects, Burt said.
Flue-gas desulfurisation devices (scrubbers), which capture a power plant's sulfur-dioxide emissions, account for the lion's share of projected environmental-remediation construction spending in the 2010-14 period, according to Industrial Info's data. Projects that involve sulfur-dioxide emissions controls account for about 70 per cent of estimated project spending.
Projects controlling nitrogen-oxide emissions account for 23 per cent of projected construction spending, while mercury-control projects, which are far less capital-intensive that SO2 and NOx projects, account for 7 per cent of environmental compliance spending in 2010-14.
A typical new 500-megawatt (MW) coal-fired power generator would cost about USD750 million to construct, Burt estimated. Of this sum, about USD80 million would be spent on flue-gas desulfurisation, USD35 million on selective catalytic reduction technology to reduce NOx emissions, and another USD5 million on mercury controls.
Retrofitting these technologies onto existing coal-fired generators would cost significantly more – perhaps double the comparable greenfield costs – because of site constraints and the need to construct the project using the available land, Burt observed.
Environmental-compliance spending for coal-fired power plants would be more robust, but environmental groups like the Sierra Club have aggressively opposed construction of new coal-fired generators in recent years, Burt said.
The Sierra Club claims credit for killing more than 100 new coal-fired generators during the last two or three years, he noted, adding that some of these projects were greenfield construction of new power plants, while others represented the addition of a new generating unit at an existing power plant.
All new coal-fired generators will need compliance-control projects to control emissions of sulfur dioxide, nitrogen oxides, and mercury, Burt said. "Power plant operators won't install this equipment unless they are required to do it," he said. Although all signs point to an uptick in environmental-compliance spending, further delays in issuing new EPA rules could cause some projects to be delayed.
Continued success by the Sierra Club and other environmental groups in targeting new coal-fired generators could also reduce future spending on power plant environmental compliance. Coal-fired generation construction activity has fallen about 18 per cent in the past two years. U.S. generators had proposed beginning construction activities on about 70,000 MW of new coal-fired capacity from 2008 through 2012, but this number has fallen to 57,000 MW in 2010-14, according to Industrial Info's database.
A significant portion of proposed construction activity has been shifted to renewables, natural gas, and nuclear power since Industrial Info conducted a construction activity survey in September 2007.
