Coal-fired plants that have not already begun to invest in back-end emission controls won’t be able to operate economically for too long into the future, but for plants already equipped with state-of-the-art controls the upcoming federal regulations to reduce carbon emissions will have a gradual impact taking up to a decade, according to NRG Energy Inc. CEO David Crane.
Crane made the comments Wednesday during a quarterly earnings conference call in response to a question regarding future U.S. Environmental Protection Agency (EPA) rules for lowering carbon emissions.
“From our perspective [at NRG] a considerable amount of work has been done, particularly in terms of back-end controls [on coal-fired plants] at the newly acquired GenOn unit,” said Crane. “Frankly, where we are in the coal-fired side of the conventional power industry is that the plants that have put on the back-end controls have a medium- to long-term future while the ones that haven’t at this point, it doesn’t make a huge amount of economic sense to put more controls on.”
Noting that it is unlikely that Congress will pass anything regarding carbon controls, Crane said he assumes the path the industry is on now runs right through EPA.
“Obviously, there is more talk again about climate change with the reelection of President Obama, but I don’t see any sort of legislation passing through Congress, so I think the EPA will take more action, but the nature of the action will be so slow moving once it works through the process that it is not even in our short- to medium-term planning horizon,” Crane said.
He called the EPA rules something that will take the next decade to unfold.
“In that sense, I don’t think there has been any fundamental change since the results of the last national election cycle,” said Crane, who said he thinks there is no chance for another proposal on climate change and carbon rules similar to one a few years ago that was put forward by Reps. Henry Waxman (D-CA) and Ed Markey (D-MA).
He predicted that NRG is “in a pretty good place” and that his independent power plant operations will be “pretty well set” in the immediate years ahead.
NRG reported 4Q2012 earnings of $516 million, versus a loss of $109 million in 4Q2011. For 2012, earnings totaled $559 million, compared with profits of $197 million in 2011.
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