Clearing the air: North Carolina's Clean Smokestacks Act 2002 N.C. Sess. Laws Chap. 4.

ONE YEAR LATER

North Carolina's air pollution control law is arguably one of the toughest in the nation--state or federal. So what's happened with the law one year later?

It looks like compliance is on target. The North Carolina Department of Environment and Natural Resources (DENR) and the utilities commission told the legislature in May that Progress Energy and Duke Energy (the two utilities regulated under the law) appear to be meeting the requirements of the Clean Smokestacks Act.

To illustrate how the utilities will meet the NOx limits, Duke Energy plans to install selective catalytic reduction equipment on three of its generating units, and selective noncatalytic reduction technology with low NOx burners on its remaining 24 units.

For SO2 reduction, the company will install "scrubbers" on its 12 largest units. Duke projects that these measures will reduce NOx emissions to below the 35,000-ton limit in 2007. For SO2, the company expects to meet the 80,000-ton limit in 2013.

Duke Energy spent $3.6 million last year to comply with the act, and expects to spend $1.5 billion over 10 years. No small amounts, but as a company official noted, the law requires the company to reduce emissions to specific levels and builds in a way to finance those reductions through a freeze on electricity rates that should generate enough revenue to cover the compliance costs.

Progress Energy will likewise employ technology fixes to a number of its facilities. Its Asheville plant will be the first in the state (by fall of 2005) to install scrubbers to comply with the SO2 reduction levels.

"Everything seems to be right on schedule," said Garrick Francis, a Progress Energy spokesman. "While the timeframe for reaching reductions is challenging, it is realistic given the technology we propose to use." The company spent $830,000 in compliance costs in 2002, and expects to spend $823 million over 10 years to reach emission reduction levels.

Environmental groups, which sought to ensure that actual emission reductions were achieved in the state and not merely transferred to power plants in other states in the region, have also expressed general satisfaction with the act's early implementation schedule. Michael Shore, southeast air quality manager for Environmental Defense in North Carolina, notes that both Duke and Progress Energy held meetings with environmental groups to discuss their strategies before filing their plans--"the process was quite open."

Since one of the act's objectives is to ensure that emission reductions in North Carolina are not transferred out of state, it is worthwhile examining one other feature in the law. Section 10 encourages officials to "use all available resources and means" to persuade other states to reduce their emissions so North Carolina does not become the recipient of pollution from other places. One option is Section 126 of the federal Clean Air Act, which gets the U.S. Environmental Protection Agency (EPA) involved in limiting pollution from other states.

The DENR, the governor and the attorney general are working with neighboring states to encourage them to adopt similar laws. In addition, the department has met with the Tennessee Valley Authority--a major electricity generator--and Tennessee air officials to support their plans to reduce emissions. Still, Environmental Defense's Michael Shore wonders why the Section 126 petition process has not been used as it has successfully in northeastern states.

While acknowledging that "North Carolina is its own worst polluter," he points out that four upwind states--Georgia, Ohio, South Carolina and Tennessee-exceed North Carolina's contribution to fine particulate matter pollution by SO percent."

Although 2003 represents just the first year in a 10-year process of significantly reducing SO2 and NOx emissions in North Carolina, the early returns are promising.

Representative Joe Hackney, the House Democratic leader and a co-sponsor of the legislation, is pleased about compliance to date. The landmark legislation "not only removes a future troublesome problem for utilities," he says, "but it will improve air quality and the health of our citizens."

THE ACT'S GOALS

* Significantly reduce air emissions from power plants that contribute to smog, soot and acid rain in the state.

* Help power plants pay for the costs of pollution control measures to achieve emission reductions that are more stringent than federal requirements.

* Ensure that federal "pollution allowances" earned through compliance with the act are not sold to power plants in upwind states whose emissions may drift back into North Carolina.

WHAT THE ACT DOES

* Requires coal-fired power plants to reduce annual emissions of nitrogen oxides (NOx) by roughly two-thirds by 2007, and sulfur dioxide (SO2) by the same amount by 2013.

* Allows power plants to recover the costs of reducing emissions by freezing electricity rates charged to consumers--which were anticipated to go down--for five years to generate sufficient revenue.

* Empowers the governor to enter into annual agreements with electric utilities to voluntarily transfer to the state, the federal pollution allowances that they earn through compliance with the act. The state then retires the allowances, which reduces overall emissions (the governor and utilities signed contracts to this effect the day after the bill was signed).

THE TECHNOLOGY

* Selective catalytic reduction separates NOx into harmless nitrogen and water.

* Scrubbers remove SO2 by injecting a mixture of limestone and water into emissions after they leave the boiler.

Larry Morandi is the director of NCSL's Environment, Energy and Transportation Program.