Hatfield’s Ferry Power Station, a Pennsylvania coal-fired power plant, stopped producing electricity in 2013. Its closure came in a wave of coal-plant shutdowns triggered by competition from cheaper, cleaner natural gas and incentives in the U.S. Clean Air Act.
That’s because a loophole in clean-air regulations allowed Hatfield’s Ferry to collect emissions allowances under a cap-and-trade program for five years after it shut down. The plant’s owner then sold those credits to other plants, which can use them to stay in compliance when they exceed their own regulatory budget of allowances. Among the beneficiaries: the biggest emitter of smog-causing gas in America’s power sector.
The Environmental Protection Agency last month moved to reduce the impact of closed-plant allowances by reducing the number of years a retired facility can collect them from five to two. But the previous policy had already injected the market with a huge volume of credits that will take years to work their way through the system: Between 2017 and 2020, for instance, the ratio of allowances available to comply with NOx-pollution regulations during the peak ozone season surged.
In response to questions from Reuters, the EPA said the credits for closed plants had no effect on the total number of credits given to all U.S. plants or the nation’s overall coal pollution. Overall pollution is capped, the agency said, by “the total volume of available allowances each ozone season and other design components.”
The issue persisted last year, EPA data show, when a third of the 121 coal plants with the most advanced pollution controls produced NOx above what the agency calls an optimal level. New Madrid cut back its pollution controls and chuffed out NOx at a high rate during that period, using credits to maintain compliance. During the 2021 ozone season, New Madrid’s pollution was five times higher than average among coal plants participating in the NOx-reduction program, EPA data show. Over the past five years, New Madrid has produced more NOx than any other U.S. power plant.
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