US environmentalists needed something to celebrate. Having watched their climate agenda fall apart last year, they spent this year on the defensive against angry House Republicans. President Barack Obama himself delivered a major setback in September by cancelling a major new smog regulation. But the administration stepped up with a welcome holiday gift to its environmental supporters on Wednesday: a new air-quality regulation that promises to sharply curb emissions of mercury and other toxins from some 600 power plants across the country.

The rule would for the first time set limits on mercury emissions across the entire power sector, requiring a 90% reduction from present levels at an estimated — and disputed — cost of US$9.6 billion (an earlier regulation under George W. Bush set looser requirements but was thrown out by the courts). Many power plants probably comply with at least some parts of the present regulation because they have already been forced to install modern pollution controls, but many of the older and more inefficient power plants that were grandfathered from earlier requirements will suddenly find themselves in need of an upgrade if they want to continue operating. Already, companies have announced plans to shutter many such plants (read more about the broader regulatory pressures on coal-fired power).

“This is truly history in the making. … After more than two decades of delay, dirty coal-fired power plants are going to be cleaned up in short order. The dirty, soot-spewing coal plant will soon become a relic of the past – a dirty industrial dinosaur.”

That’s a quick assessment from one of Washington’s top air-quality watchdogs, Frank O’Donnell of Clean Air Watch in Washington DC. The American Lung Association called the rule “a huge victory for public health”, and other science and environmental groups weighed in with similarly strong endorsements. For her part, Environmental Protection Agency (EPA) administrator Lisa Jackson (one of the Nature 10 for 2011) called the ruling two decades in the making and said that it will provide the American people with “health benefits that far outweigh the costs of compliance”. Overall, the EPA estimates that the rule could save some 11,000 lives and reduce health-care costs by $37 billion–$90 billion each year.

For industry, it was like Santa Claus delivering — what else? — a lump of dirty coal for Christmas. Electric utilities and other industries concerned about electricity prices had unleashed a massive lobbying campaign in an effort to block or weaken the rule, accusing the EPA of massively overestimating the benefits and underestimating the costs of compliance. On Wednesday the Edison Electric Institute said that the EPA is underestimating both the cost and complexity of complying with the mercury rule “in such a short period of time, which can create reliability challenges and even higher costs to customers.”

These issues took centre stage on Capitol Hill this year as House Republicans attacked the administration’s environmental agenda. The House even passed legislation that would have preemptively delayed implementation of this very rule. That bill never passed the Senate, but the debate won’t end there. In fact, things are likely to heat up in the new year as the official election season gets going — and as industry attorneys prepare their legal challenges.

Graphic: US Environmental Protection Agency