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
- electrostatic precipitator (ESP) retrofits (components) aimed at particulate matter
- 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:
- plant operators investing in retrofits
- regulators permitting a full price revision for additional costs
- 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:
- low levels of monitoring of emissions
- low capacity within state pollution control boards
- 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
