A report released last week by Energy data provider Genscape (and reported by Reuters) says that between January and June of this year, U.S. power plant emissions of sulfur dioxide dropped sharply. Emissions dropped 24 percent compared to the first half of 2008. So what caused the sharp drop? Some would argue that the nation's recession has led to lower electricity demand. Others however point to pending power emission legislation crawling through the U.S. House and Senate.
Narrowly passing the U.S. House of Representatives last month, the so-called "cap and trade" bill came to a standstill in the U.S. Senate days ago. After just 48 hours of hearings, Democratic leaders agreed to mothball the measure until September, blaming health care reform and the nomination of Sonia Sotomayor for the delay. Genscape believes that the emission reduction figures signal preparations by the U.S. power industry for tighter industry regulations.
"The industry is clearly going through a dress rehearsal for the implementation of the Clean Air Interstate Rule (CAIR) in 2010, and judging by allowance prices as well as the fundamental data, it is a stellar performance," Genscape said.
The report also details that nitrogen oxide emissions fell 5% in May and 11% in June, this year versus last. Carbon dioxide emissions dropped 10% in the second quarter (in the Regional Greenhouse Gas Initiative service area). RGGI is a cooperative effort by Northeastern and Mid-Atlantic states to reduce carbon dioxide emissions. Participating states include; Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Hampshire, New York, Rhode Island and Vermont. Genscape theorizes that carbon dioxide emissions were down due largely to cooler weather in the RGGI.
Due to lack of demand and subsequent emission reductions, U.S. power generators have relied less on oil-fired generation and more on nuclear plants and hydroelectric power. Natural gas and coal reserves are at exceptionally high levels, also contributing to power generation decisions.
According to Genscape, many of the nation's power generators have already installed equipment to remove SO2 from emissions. "It makes sense to start cutting emissions early if the equipment is in place since pre-CAIR vintage allowances will retain their full face value of a ton of SO2, while from 2010 onward, each permit will be worth only half a ton," Genscape said.