The consulting firm’s prediction in their recently published SO2 Emissions and Mercury Market Outlook 2003 runs contrary to other forecasts.

"The conventional view has been that air emissions regulations will increase the cost of electric generation from coal-fired plants, thereby placing these

units at a competitive disadvantage to cleaner and therefore less costly,

natural gas, nuclear, and renewable power plants,” said ICF senior vice president John Blaney.

“However, air emissions regulations will actually give a boost to some coal producers and air pollution control manufacturers will see an explosion in their business opportunities," he said.

New air emissions regulations look increasingly likely due to the Clear Skies Act (CSA) enacted this year. Legislative proposal calls for major reductions in SO2, NOX, and mercury emission reductions.

"New, more stringent air pollution regulations are inevitable," he said.

CSA, and several other competing bills in Congress, calls for a two-phase

implementation of emission reductions. If CSA is passed, the first phase of

reductions are targeted for 2008-2010, with the second phase occurring in

2018.

ICF said new air regulations such as CSA would lead to capital expenditures for pollution control equipment in excess of 30 billion dollars by 2020. These investments will enable the owners of coal-fired power plants to continue to burn coal and in some instances even increase generation levels.

ICF’s results show the immediate aftermath of the announcement of new air emissions regulations will include a production increase for low sulfur coal producers in 2005-2009. This is because coal plant owners will initially switch to lower SO2 emitting coals to build a bank of emission allowances to allow a longer transition to lower emission levels in the years prior to the implementation of the first phase of reductions.

"Powder River Basin coal production in Wyoming and Montana will see an initial increase in production of over 50 million tons, or about 13 percent" said Blaney.

The report concluded as the second, more stringent, phase of air emission reductions is implemented, the coal producing regions that are likely to experience the biggest boost are the currently depressed mid-west regions which produce high sulfur coal.

Lastly, if a market-based approach to mercury emissions regulation is adopted, as envisioned in CSA, coals with low mercury levels will also see an increase in value.