EPA Rule Would Incrase Gas Demand From Power 35% By 2014

Wednesday, August 24, 2011

The Cross-State Air Pollution Rule (CSAPR) could lead to operational problems on power and gas pipeline networks, exceed $20 billion in new emissions equipment costs and drop domestic coal demand 15% by 2014.

EVERGREEN, CO (August 24, 2011) – On July 7, 2011, the Environmental Protection Agency (EPA) released the Cross-State Air Pollution Rule (CSAPR), an addendum to the Clean Air Act, with the goal of reducing sulfur dioxide (SO2) and nitrogen oxide (NOX) emissions from power plants. EPA estimates that the emissions reductions would result in significant health benefits. The required reductions would take effect in 2012 and impact power plants in 27 states across the eastern half of the U.S. According to a new Market Alert from BENTEK Energy, EPA Rule Would Stress Power, Gas Grids, the ruling could lead to a 35% increase (7.0 Bcf/d) in gas demand from power by 2014 and would force 50 GW of coal-fired power units to either be retired or converted to burn natural gas, resulting in a 15% drop in coal demand during the same period.

BENTEK reports that emissions from power plants in the affected states would need to be substantially reduced to comply with the CSAPR. By 2014, SO2 and NOX emissions would have to drop 55% and 31% respectively when compared to 2010 levels. In order to comply with the CSAPR, the EPA is suggesting that power plant operators either switch to lower-emission fuel sources or install state-of-the-art emissions reduction equipment. Overall, new emissions equipment costs could exceed $20 billion.

“The magnitude of this rule has the potential to be quite significant and would create a number of consequences across energy markets,” noted BENTEK Vice President E. Russell (Rusty) Braziel. “The dramatic ramp up in gas plant utilization due to the EPA’s ruling would lead to substantial gas demand increases and could exacerbate longstanding gas pipeline capacity constraints. Ultimately, this ruling could lead to much higher natural gas prices in a number of regional markets, assuming the rule stands in its current form.”

The EPA Rule Would Stress Power, Gas Grids Market Alert is based on data from BENTEK’s power database, GenCast, which relies heavily on actual data from the EPA’s Continuous Emissions Monitoring System (CEMS). BENTEK’s GenCast database refines actual emissions and fuel consumption data from CEMS into a query-optimized format that enables hourly emissions, fuel usage and generation data analysis at every power plant boiler over 25 MW in the United States, including fuel switching. Analysis of the BENTEK GenCast database reveals that substantial coal plant shutdowns, curtailments or emissions equipment additions would be required in the Northeast, Midwest, Southeast, Texas and Midcontinent regions.

For more information about BENTEK’s EPA Rule Would Stress Power, Gas Grids Market Alert, go to or call 1-888-251-1264. Purchase this Market Alert online on or before August 30, 2011 and receive a complimentary BENTEK webinar covering the EPA ruling.