By December 16 the Environmental Protection Agency will promulgate its final rule requiring coal-fired power plants to reduce their emissions of mercury, arsenic, acid gases, and other toxic chemicals. The EPA notes that these safeguards will reduce premature deaths by 17,000 people annually as well as prevent 12,000 hospital visits and 120,000 cases of aggravated asthma. The economic benefits could outweigh the costs by up to $14-to-$1.
Yet a concerted cadre of big dirty utilities and coal companies are doing everything in their power to scuttle or delay these essential safeguards 21 years after the Clean Air Act required them.
The American Coalition for Clean Coal Electricity, or ACCCE, is a coal industry coalition leading the charge to block the mercury and air toxics reduction rules. These efforts include spending $35 million on misleading television ads. Its members include major utilities such as Southern Company and DTE Energy. Huge coal companies are also major ACCCE supporters, including Arch Coal and Peabody. Other members include railroads that haul coal.
ACCCE is a vocal opponent of the air toxics rule for utilities. They even have a “countdown clock” for the days until the safeguards are issued. Its members are primarily concerned that the air toxics rule “is the most expensive rule the EPA has ever written for coal-fueled power plants.”
But this claim ignores the fact that the 22 ACCCE companies have nearly $18 billion in cash reserves, which should substantially ease their ability to withstand any economic impact of cleanup.
A Federal Reserve report released this month documented the massive cash reserves held by American corporations. The Wall Street Journal reported:
Corporations have a higher share of cash on their balance sheets than at any time in nearly half a century, as businesses build up buffers rather than invest in new plants or hiring.
The ACCCE companies are part of this cash-rich phenomenon. An analysis of the ACCCE member companies’ 10K forms filed with the Securities and Exchange Commission determined that they had $17.8 billion in “cash and cash equivalents” on hand at the end of the last reporting period on September 30, 2011. (Two companies’ last reports were from earlier dates.)
The nine ACCCE utilities that would have to reduce their emission of mercury, arsenic, and other cancer-causing pollutants have combined cash reserves of nearly $7 billion. The cash reserves of these nine companies is not much less than the $11 billion that the EPA estimates that all coal-fired power plants will spend to meet these new pollution-reduction standards. Seven of these companies are just a small portion of the 220 investor-owned utilities that produce nearly three-quarters of America’s electricity. The other two companies are cooperatives.
Companies hold cash for various purposes. But whatever the reason these companies hold large reserves, they strongly suggest that the utilities possess ample financial resources available to invest in pollution-reduction equipment essential to protect public health.
And investing cash in pollution control will create jobs. An analysis by the University of Massachusetts determined that the air toxics utility rule combined with reductions of acid rain and smog pollutants from power plants under the cross-state air pollution rule would create 1.5 million jobs over five years.
Coal producers and railroads, too, are sitting on mountains of cash reserves to cushion any dip in coal consumption as some utilities rely more on cleaner fuels after the mercury rules take effect. Our analysis found that the ACCCE companies in these industries held a total of $5.4 billion and $5 billion in cash reserves, respectively. These resources are from seven coal companies and four railroads.
Coal-fired power plants are one of the largest sources of uncontrolled harmful air pollution in the United States. The EPA determined that:
Power plants are the largest source of several harmful pollutants. They are responsible for 50 percent of mercury emissions, over 50 percent of acid gas emissions, and about 25 percent of toxic metal emissions in the United States.
Yet ACCCE’s member companies want to continue jeopardizing the public’s health with this unfettered pollution. They have ample cash reserves to easily withstand any economic impact of pollution reductions. ACCCE and its companies are furiously pressuring Congress to block or delay the air toxics reduction rules. Congress must ignore their pleadings and allow these long-overdue health protections to take effect next month.
Daniel J. Weiss is a Senior Fellow and the Director of Climate Strategy and Matthew Kasper is an Energy intern at American Progress.
The positions of American Progress, and our policy experts, are independent, and the findings and conclusions presented are those of American Progress alone. A full list of supporters is available here. American Progress would like to acknowledge the many generous supporters who make our work possible.
Daniel J. Weiss