Mercury Rising

How will the EPA's rulemaking affect U.S. energy markets?

With President Bush's Clear Skies program stalled in Congress, it is increasingly unlikely that a multi-pollutant regulatory package will receive congressional approval in the near future. In addition to providing another source of frustration for the Bush administration, the delay also forces the Environmental Protection Agency (EPA) to propose regulations controlling mercury emissions.

Constrained by an April 1998 court decision forcing the establishment of mercury emissions for utilities, the EPA was required to propose regulation by Dec. 15, 2003, setting emissions limits for mercury for all coal-fired and oil-fired units. Until recently, the EPA was expected to propose regulations that set emissions limits at a level that can be achieved through the installation of Maximum Achievable Control Technology (MACT). As such, compliance under a MACT command-and-control standard likely would be considerably more difficult and expensive for some than it would be under Clear Skies, which would allow for trading of mercury emissions credits between generating units. However, on Monday Dec. 15, right at the deadline, EPA Administrator Mike Leavitt issued a proposed rule that features a cap-and-trade provision similar to that proposed in Clear Skies.