The McIlvaine Company

Big Mercury Reduction in Illinois and Other States Achievable With Cost Certainty


Source: The McIlvaine Company

Illinois has announced an ambitious mercury reduction plan which will meet a great deal of resistance because of the cost uncertainty. The McIlvaine Company believes there is a way that the reduction can be accomplished with cost certainty and, therefore, widespread support.

Governor Rod Blagojevich of Illinois on January 5th called for new state rules to require a 90 percent reduction of mercury from Illinois coal-fired power plants by July 2009. Thus Illinois joins Connecticut, Massachusetts, Minnesota, New Jersey, North Carolina and Wisconsin who are demanding deeper and faster cuts than required under the new federal Clean Air Mercury Rule.

The McIlvaine Company says that cost certainty can be achieved by a combination of technology and legal initiatives.

Several technology initiatives stem from the recent proof that the best way to remove mercury is first to react it with chlorine to form a soluble compound.

One technology based initiative would allow the state to benefit from ambient particulate reduction as part of the mercury program. In fact, the presence of coal-fired power plants in the state could result in a net reduction of ambient particulate. This would happen if coal-fired power plants produced calcium chloride as a byproduct of mercury reduction and this chemical were applied to unpaved roads in the state. Here are the facts and logic:

(1) Unpaved roads generate five times more ambient dust particles than power plants.

(2) Calcium chloride applied twice per year will greatly reduce road dust generation.

(3) States cannot afford the high priced calcium chloride.

(4) Coal plants could make cheap calcium chloride as a byproduct.

(5) Chlorine is the secret to mercury capture.

(6) Illinois coals are high in chlorine.

(7) The use of a separate scrubber to capture hydrogen chloride is proven in hundreds of plants.

(8) Mercury can be stripped from the hydrochloric acid solution and calcium added to make the product for unpaved roads.

So, one initiative is for the state to set up a program for calcium chloride purchase and application on unpaved roads. Another initiative is to spear head a program for greater use of Illinois high chlorine coals for the manufacture of hydrochloric acid. The technology, experience and costs are provided at: .

The legal initiatives involve the route by which the mercury goals are achieved. These goals are both 90 percent removal and the avoidance of hot spots. The Illinois Environmental Protection Agency says this can be accomplished by boosting the average residential electric bill by $1.25/month.

However, this estimate is hotly disputed by the utility industry. The argument is that while this cost may be ultimately realistic, it could be far too low for 90 percent removal in 2009. What if the cost for 90 percent reduction in 2009 is $15/month per residential bill, but 85 percent reduction is only $4/month and 80 percent reduction is only $2. What if 90 percent reduction can be achieved at $1.25/month by 2013 but not 2009? A rigid plan could result in costs so high as to alienate rate payers.

What is needed is a flexible plan with high incentives for maximum mercury removal at the earliest possible date. “Create and Trade” is just such a plan. Those utilities which move forward with mercury reduction programs faster than other utilities in Illinois are paid handsomely by the others. If Ameren achieves 85 percent mercury reduction in 2008 while Dynegy achieves only 50 percent, Dynegy would pay Ameren enough to make Ameren's investment very attractive. On the other hand, if Ameren invests a great deal of money and does not make the mercury reductions, it receives no outside payment. The source of the payments is ultimately the allowable rate increase. This rate increase in one sense becomes a poker pot with the aggressive players potentially making wind fall profits.

“Create and Trade” would make it very attractive for third party investors to fund mercury reduction projects. This could move the reduction program ahead at the fastest possible pace. The solution to the “hot spots” problem is that environmentalists could become investors in mercury reduction programs at “hot spots” to insure that these projects move ahead quickly. Details on this program are found at: .

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