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How the U.S. Clean Air Act lets closed coal plants keep polluting for years

Reuters) - 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.

But the facility’s legacy of smog pollution continued long after it closed.

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.

Under the federal program, states distribute a certain number of allowances to power plants annually. Each one permits one ton of nitrogen oxide (NOx) emissions. NOx contributes to smog, which causes respiratory problems and premature death.

If a plant doesn’t use all of its allowances, it can sell them to other plants. The credits are valuable because they can provide plants a cheaper alternative to buying and operating hugely expensive pollution-control equipment.

The provision grants closing plants a credit windfall: They can sell all of their allowances because they are no longer generating smog themselves.

A Reuters review of federal data shows the owner of Hatfield’s Ferry, FirstEnergy Corp (NYSE:FE), sold most of the credits it received after closing the plant or transferred them to other FirstEnergy-owned facilities. One batch, worth an estimated $1.2 million, helped Missouri’s New Madrid Power Plant in 2021 comply with emission regulations while generating the most smog-producing NOx in the nation. Reuters found dozens of other examples of coal plants using credits from closed facilities to help comply with pollution rules over the past five years.

FirstEnergy Corp declined to comment.

As the climate-change fight intensifies, governments worldwide have struggled to phase-out coal, among the dirtiest fossil fuels, without harming reliability and affordability of electricity. That issue and other environmental challenges are getting heightened attention today, April 22, on International Earth Day.

The issue highlights an unintended consequence of the U.S. EPA’s latest revision of the Cross-State Pollution Rule (CSAPR), first enacted in 2011 as a provision of the Clean Air Act. The measure is aimed at cutting air pollution from upwind states that harms air quality in downwind states.