Fewer coal plant closures may result from pending Environmental Protection Agency (EPA) rules than previously estimated, says a new analysis from ICF International.

Combined with delays in federal greenhouse gas regulation and new expectations of rising natural gas prices, the latest estimates cut ICFI’s projection of forced coal closures from 50 gigawatts to 39 GW. Of that, 17 GW are coal plant closures already announced by operators.

That could mean lower costs for the power industry–and consumers–for retrofit and replacement generating units in the coming decade. EPA has estimated the industry’s cost for just one rule, to abate mercury and other hazardous pollutants, at $10.9 billion annually.

Narrowing The Retirement Range

Estimates of coal capacity made too costly to operate by the new requirements have ranged from 10 GW to 110 GW. ICFI figures show the US has about 317 GW of coal, 122 GW of it 40 years old or more. Half of all capacity has no controls for sulfur dioxide, and 62% of capacity has none for nitrogen oxide emissions.

In its quarterly Integrated Energy Outlook released July 11, ICFI analysts said the latest versions of EPA’s draft rules for coal air pollutants and generating plant water intakes offer more flexibility than previously anticipated.

ICFI Senior Vice President John Blaney told Breaking Energy one big factor lowering the estimate was EPA’s acceptance of dry sorbent injection as an alternative to flue-gas desulfurization for reducing pollution from coal burning. DSI costs more to operate but far less to install, he said, so it may be an attractive option for older plants that are not run full-time and would no longer be profitable to run if FGD were required.

The Technology Advantage

DSI is a new technology involving injection of chemicals in the flue to precipitate out elements like sulfur and mercury. Attorney Scott Segal of Bracewell Giuliani, director of the Electric Reliability Coordinating Council, has contended that DSI is not proven ready for widespread commercial use, and so EPA should not count on it. Michael Bradley, executive director of the Clean Energy Group, argues the process is already being installed and used successfully by utilities including NRG, Duke and GenOn.

Blaney said another factor was EPA’s draft proposal to give the states more flexibility in deciding whether water intake rules to protect fish could be met with better screening, rather than requiring all larger generating plants to build costly cooling towers.

All new plants need cooling towers, which use 95% less water than the traditional once-through systems, but adding them to old plants may not be economically justified by remaining plant life. Some older plants also lack land for the huge towers. Giving states alternatives could mean fewer forced shutdowns, Blaney said.

Kicking The Carbon Can Down The Road

The latest ICFI analysis also delayed effects of expected federal carbon restrictions from 2018 to 2020, Blaney said, giving coal plants two more years to run before that requirement bites.

David Gerhardt, ICFI principal in wholesale power, said another factor is the belief that “volatility may be creeping back” into natural gas prices in the coming decade. Those prices have been kept historically low in the last two years by growing supply from shale exploration, and projections of continued ample supply are keeping forward prices low.

But Gerhardt said producers are shifting to shales producing natural gas liquids and oil, just as generators respond to low prices by shifting more capacity to gas, which will combine to raise prices in coming years. He said increasing gas prices will reduce the economic case for retiring coal.

The impact of EPA rules is magnified by timing: several were delayed by court cases, so coincidentally, the revised rules for air toxics, tightened sulfur and nitrogen limits, and water intakes are all coming out at once. Analysts expect 2015 to be the crunch time, when the rules’ combined costs will hit home, especially in broadly coal-dependent regions like the mid-Atlantic, upper Midwest and the Southeastern states.

Photo Caption: A man takes a picture of a screen showing a counter constantly updating the greenhouse gases in the Earth’s atmosphere during sideline activities of the United Nations Framework Convention on Climate Change (COP-16), at the Business Action for Climate venue in Cancun, Mexico on December 4, 2010.