Huge Legal Ruling Blocks All US Coal Development

Cross-posted from WattHead - Energy News and Commentary

BREAKING NEWS: The Sierra Club just won a HUGE legal victory in a coal permitting case at the Environmental Protection Agency's Environmental Appeals Board.

The ruling in the Bonanza coal plant permitting case (pdf) ruled with the Club's lawyers that since the Mass. v EPA Supreme Court ruling said Carbon Dioxide is a pollutant under the Clean Air Act, new coal-fired power plants must implement "Best Available Control Technology" (BACT for short) for CO2.

While the Sierra Club's legal team and other lawyers are still determining the full implications of the decision, it appears that this decision will essentially stop all new coal plant permitting dead in it's tracks for at least a year as EPA decides what BACT means in the context of CO2.

The BACT provision of the Clean Air Act requires that new power plants must employ the most effective, readily available pollution control technologies for regulated pollutants in order to receive air quality permits required for development, ensuring that new power plants are progressively cleaner as new technologies become readily available. Until this ruling, BACT has only applied to NOx, acid rain-forming SO2, particulate matter, mercury and other noxious pollutants, but not carbon dioxide, which spewed freely from permitted power plants.

What BACT means for CO2 is therefore undefined, and the process of defining it will take time - time during which no new coal plants can receive permits. BACT for CO2 is unlikely to mean carbon capture and storage (yet), since it's not readily available, but it will probably mean some combination of co-generation (making use of waste heat from electricity generation), efficiency improvements, and/or fuel switching/co-firing with biomass. Ultimately, President-elect Obama's EPA gets to decide how BACT is defined for CO2, a process which will take at least a year.

In the meantime, 30 permits for new coal-fired power plants in the seven state directly regulated by the EPA's permitting process, plus projects on all Indian Reservations will immediately die because of this ruling. Other states that do their own permitting under devolution of authority from EPA will have to start their permitting processes over from scratch. They can either decide on a case by case basis what BACT means for CO2, or they can wait for EPA to rule on nationwide basis. The Environmental Appeals Board ruling says that decision is best made on a national basis.

In short, with this new regulatory uncertainty, it's highly unlikely anyone will want to invest a dime in a new coal plant for the foreseeable future.

Of course, this will also leave President Obama with an interesting ruling to make with some real political ramifications. But I'd say Obama has plenty of cover since the coal industry has been so avidly touting how clean it is these days. The real bold move would be to require all new coal plants to meet an emissions performance standard that essentially means they'd have to sequester at least half their emissions (as in CA or WA state's emissions performance standards), put an end to mountain top removal coal mining, and really tell the coal industry, "it's time to put up or shut up" and make this "clean coal" thing they keep talking about a reality.

The Club will have a press release out later today, and I'd refer you to the Warming Law blog for more detailed legal analysis no doubt coming soon. This was an unexpected ruling, so they're still sorting out all the ramifications.