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March 15, 2005
CONSOL Energy Comments on Clean Air Rules
by HNN Staff
Pittsburgh, Pa. (HNN) — CONSOL Energy Inc. (NYSE: CNX), a producer of high Btu bituminous coal and of coalbed methane gas, released the following comment today on recent United States Environmental Protection Agency (EPA) air quality rules, including the Clean Air Interstate Rule (CAIR) related to sulfur dioxide (SO2) and nitrogen oxides (NOx) and the Clean Air Mercury Rule (CAMR):
"The CAIR rule issued last week and the mercury rule issued today, taken together, will make electricity produced from coal-fired power plants a very clean source of low-cost, reliable energy. Although the company would have preferred the statutory approach to these issues that was embodied in the President's Clear Skies Initiative, we believe the actions by EPA over the last week will continue to drive down emissions from coal-fired power plants, ensuring that all of America's abundant coal resources can be used to generate the power upon which we all depend.
"We expect that the two rules, when taken together, will result in a significant increase in the use of modern pollution control technologies to meet the lower standards for SO2, NOx, and the first-ever standards for mercury. As the CAIR rule progressively reduces emissions over the next ten years, most generators in the 28 affected Eastern and Midwestern states will achieve compliance through the use of technologies retrofitted to existing power plants. As these technologies are deployed, we expect the current disparity between so-called compliance and non-compliance coals to be eliminated. No coal will be clean enough to be burned without emissions reductions achieved with retrofitted modern pollution control equipment or the purchase of emission allowances from units that do install technology. As a coal's sulfur content becomes less a concern (because of technology), high-Btu coals in the Eastern United States should become more attractive as a fuel source to eastern power plants because of those coals' lower delivered cost per Btu.
"When fully implemented, the CAIR rule will result in a reduction in SO2 and NOx of 73% and 61% respectively in the 28 Eastern and Midwestern states (and the District of Columbia) affected by the rule. It is important to note that the expected use of flue gas desulfurization equipment (FGD scrubbers) and selective catalytic reduction (SCR) equipment to reduce SO2 and NOx in power plants could result in a "co-benefit" mercury removal of about 80 percent. This added benefit of reducing mercury emissions should provide generators with an additional incentive to install FGD and SCR equipment for SO2 and NOx compliance on units burning bituminous coal.
"In evaluating the mercury rule just released, the company applied the principle of a level playing field with regard to mercury reduction requirements from the combustion of various U.S. coals. We are concerned that the current rule does not adhere fully to that principle and we will continue to evaluate the mercury control program as the rule is implemented. It is important that all of America's abundant coal resources be available to generate electricity. No coal-type should be given an artificial regulatory or legislative advantage over another. By keeping all of America's coal resources available for use, this country can take an important step toward energy independence.
"The company believes that the proposed rules will benefit the higher population areas east of the Mississippi River. Our expectation is that the widespread deployment of scrubbers and other pollution control equipment on existing power plants will create more mining jobs in the eastern coal producing areas, create demand for skilled labor necessary to install the pollution control equipment, and keep overall energy costs low, thereby encouraging further economic growth.
"Finally, the company continues to urge all branches of government to work together to reduce uncertainty with regard to environmental regulations affecting coal-fired power plants. Consistent, predictable, and uniform rules allow companies to develop appropriate plans and to make investments in technology at the lowest cost to their investors or ratepayers."
CONSOL Energy Inc. is the largest producer of high-Btu bituminous coal in the United States. CONSOL Energy has 17 bituminous coal mining complexes in six states. In addition, the company is one of the largest U.S. producers of coalbed methane, with daily net gas production of approximately 139.6 million cubic feet from wells in Pennsylvania, Virginia and West Virginia. The company also has a joint-venture company to produce natural gas in Virginia and Tennessee, and the company produces electricity from coalbed methane at a joint-venture generating facility in Virginia.
CONSOL Energy Inc. has annual revenues of $2.8 billion. The company was named one of America's most admired companies in 2005 by Fortune magazine. It received the U.S. Department of the Interior's Office of Surface Mining National Award for Excellence in Surface Mining for the company's innovative reclamation practices in 2002 and 2003. Also in 2003, the company was listed in Information Week magazine's "Information Week 500" list for its information technology operations. In 2002, the company received a U.S. Environmental Protection Agency Climate Protection Award.
Forward-looking statements: CONSOL Energy is including the following cautionary statement to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, CONSOL Energy. With the exception of historical matters, any matters discussed are forward-looking statements (as defined in Section 21E of the Exchange Act) that involve risks and uncertainties that could cause actual results to differ materially from projected results. These risks, uncertainties and contingencies include, but are not limited to, the following: our ability to have qualified people to meet replacement and expansion needs; the continued incurrence of losses in future periods; our ability to comply with restrictions imposed by our senior credit facility; a loss of our competitive position because of the competitive nature of the coal and gas markets; a decline in prices we receive for our coal and gas affecting our operating results and cash flows; the inability to produce a sufficient amount of coal to fulfill our customers' requirements which could result in our customers initiating claims against us; reliance on customers extending existing contracts or entering into new long-term contracts for coal; reliance on major customers; the creditworthiness of our customer base declining; the risks inherent in coal mining being subject to unexpected disruptions, including geological conditions, equipment failure, fires, accidents and weather conditions which could cause our results to deteriorate; uncertainties in estimating our economically recoverable coal and gas reserves; risks in exploring for and producing gas; the disruption of rail, barge and other systems which deliver our coal, or pipeline systems which deliver our gas; the effects of government regulation; obtaining governmental permits and approvals for our operations; coal users switching to other fuels in order to comply with various environmental standards related to coal combustion; the effects of mine closing, reclamation and certain other liabilities; excessive lump sum payments made to retiring salaried employees pursuant to our defined benefit pension plan; increased exposure to workers' compensation and black lung benefit liabilities; the outcome of various asbestos litigation cases; our ability to comply with laws or regulations requiring that we obtain surety bonds for workers' compensation and other statutory requirements; results of one or more purported class action lawsuits against us and certain of our officers alleging that the defendants issued false and misleading statements to the public and seeking damages and costs; the anti-takeover effects of our rights plan could prevent a change of control; and our ability to service debt and pay dividends is dependent upon us receiving distributions from our subsidiaries.
