Emission Standards for Thermal Plants

What is the issue?

• Thermal power plants failed to comply with new emissions standards notified in 2015, by December 2017 deadline.
• Implementation remains unclear, even with the new opportunity to comply over a five-year period that ends in 2022.

Why is it significant?

• Air quality is no longer a seasonal irritant as a public health crisis is looming.
• It may adversely impact public and private spending on health care.
• The health cost borne by society, if the standards are not implemented, far exceeds the implementation cost.
• It could make India’s cities less attractive for investment.
• It may also weaken long-term productivity, due to an unhealthy population.  
• So it is crucial that the emission standards are implemented by the power plants.

What are the directions?

• The Central Pollution Control Board issued an order in December 2017.
• It lays out a clear implementation plan for

1. electrostatic precipitator (ESP) retrofits (components) aimed at particulate matter
2. flue-gas desulfurisation (FGD) units for reducing sulphur oxides (SOx) emissions from power plants

• A successful reduction in emissions from power plants will depend on:

1. plant operators investing in retrofits
2. regulators permitting a full price revision for additional costs
3. decline of bulk procurement costs for utilities

What are the concerns and challenges?

• Power Utilities currently incur losses to the tune of Rs 700 billion a year from their operations.
• This is because consumers are either subsidised or given free electricity, due to political pressures. 
• Utilities are thus unable to recover even the cost of supplying power.
• So they are unlikely to recover higher costs resulting from plant retrofits.  
• The installation and operation of these retrofits could increase the cost of procuring from coal-fired power stations.
• It could result in an increase of 20% on the average costs of procurement today.
• In turn, plant operators are concerned about their capital investment if utilities do not pay up.
• The pace of implementation of the standards is thus well off the mark and there could be further delays.

• Another challenge is that India has followed a command and control approach.
• It does this by setting almost a uniform standard for all plants.
• The United States had addressed an earlier acid rain issue through a comprehensive cap-and-trade mechanism for SOx emissions.
• But India has many challenges in rolling out a cap-and-trade regime including:

1. low levels of monitoring of emissions
2. low capacity within state pollution control boards
3. lack of a cadre of administrators to monitor

What is the way forward?

• Bearing the additional costs of implementation is the first best outcome.

• Having a cadre of monitors in place to monitor emissions standards is essential.
• Another way is to implement emissions control in tandem with increasing the efficiency of power plants.
• Meanwhile, a greater share of renewable electricity will demand a more flexible power system.
• Some of the older plants could be renovated and modernised.

Source: Business Standard