Clear Skies and Other Multi-Pollutant Bills

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Clear Skies and Other Multi-Pollutant Bills
Outlook for the West
Sam Napolitano Clean Air Markets
Division Presentation to Westar Business
Meeting September 18, 2003
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Regional Haze
Despite Progress, Air Quality Problems Persist

• Smog and fine particles associated with lung and
  heart effects, including
• Premature death
• Bronchitis
• Asthma attacks

Air Toxics, Especially Mercury Deposition
Acid Rain and Nitrogen Deposition
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Power Plants Are Significant Contributors to
These Public Health and Environmental Challenges
Nitrogen Oxides
Sulfur Dioxide
Electric Power (22)
Electric Power (63)
Mercury
Electric Power (37)
Electric power
Industrial Processing
Transportation
Other stationary combustion
Other stationary combustion includes
residential and commercial sources.
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Current Clean Air Act Requirements for Power
Sector
Further progress under the Clean Air Act is
complex, burdensome and uncertain
NSR Permits for new sources modifications that
increase emissions
Note Dotted lines indicate a range of possible
dates. 1 Further action on ozone would be
considered based on the 2007 assessment. 2 The
SIP-submittal and attainment dates are keyed off
the date of designation for example, if PM or
ozone are designated in 2004, the first
attainment date is 2009 EPA is required to
update the new source performance standards
(NSPS) for boilers and turbines every 8 years
1-hr Severe Area Attainment Date
Designate areas for 8-hr Ozone NAAQS
Assess Effectiveness of Regional Ozone Strategies
Marg-inal 8-hr Ozone NAAQS Attain-ment Date
Moderate 8-hr Ozone NAAQS Attainment Date
8-hr Ozone Attain- ment Demon- stration SIPs
due
Ozone
1-hr Serious Area Attainment Date
NOx SIP Call Red-uc-tions
Possible Regional NOx Reductions ? (SIP call II)1
OTC NOx Trading
NOx SIPs Due
Serious 8-hr Ozone NAAQS attainment Date
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Compliance for BART Sources
Mercury Determination
Proposed Utility MACT
Final Utility MACT
Compliance with Utility MACT
Compliance for BART sources under the Trading
Program
Second Regional Haze SIPs due
New Fine PM NAAQS Implementation Plans
Designate Areas for Fine PM NAAQS
Latest attainment date for Fine PM NAAQS 3
Phase II Acid Rain Compliance
Interstate Transport Rule to Address SO2/ NOx
Emissions for Fine PM NAAQS and Regional Haze
In developing the timeline of current CAA
requirements, it was necessary for EPA to make
assumptions about rulemakings that have not been
completed or, in some case, not even started.
EPAs rulemakings will be conducted through the
usual notice-and-comment process, and the
conclusions may vary from these assumptions.
Regional Haze SIPs due
Acid Rain, PM2.5, Haze, Toxics
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Why Multi-Pollutant Legislation?

• Air quality has improved, but our best science
  says health and environmental problems persist.
• Current path to improved air quality is complex.
• Multi-Pollutant approach addresses power industry
  pollution with a proven approach emissions cap
  and trade
• Simpler and more certain -- for regulators,
  industry, and citizens.
• More flexible and cost effective -- allows for
  strategic planning of capital (i.e., avoided
  stranded investment) and cobenefits from control
  technologies (i.e., mercury removal).
• Greater environmental improvement sooner via
  faster emission reductions than under current CAA
  regulations.
• For good reasons, Clear Skies remains one of the
  highest environmental priorities of the President.

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Many Issues Addressed Along the Way

• Program Objectives
• Air Quality Improvement
• Attainment
• Public Health
• Environment
• Reasonable Impacts
• Production Cost
• Fuel Use
• Effective Implementation
• Installation Pace
• Technology Improvement
• What Can Pass?

• Program Elements
• What to Control
• Timing
• Level
• Type of Control

Aim To Strike the Right Balance
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Why Is Multi-Pollutant Legislation Important to
the West?

• The West Will Continue to Grow...
• Population is projected to grow more than 20
  from current levels by 2020
• Electricity demand is expected to grow more than
  the national average
• More than 10 over national average in the
  Pacific States
• More than 30 over national average in the
  Mountain States
• ...While the Environment Is Protected
• Legislation would protect air quality by lowering
  or halting increases in air emissions throughout
  the West from todays levels
• Prevent degradation of visibility in parks.
• Help counties remain in attainment with
  health-based air quality standards, reducing the
  burden on state and local governments.
• Ensure nitrogen deposition does not increase and
  reduce mercury deposition.

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Clear Skies Caps and Timing
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Recognition of Western Programs and Concerns
WRAP States included in SO2 Emissions Target

• Clear Skies Act (CSA) supports and codifies the
  Western SO2 emission target established by the
  Western Regional Air Partnership (WRAP).

• Clear Skies creates two trading zones for NOx
• States in Zone 1 have ozone/PM2.5 non-attainment
  issues or contribute to other States problems.
• Zone 2 includes
• WRAP States AZ, CA, CO, ID, MT, NM, ND,
• OR, SD, UT, WA, WY.
• NV,OK, KS, and NE
• Western portion of TX

Zone 1
Zone 2
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SO2 Emissions Reductions under Clear Skies in 2020
Note The base case in IPM includes Title IV, the
NOx SIP Call, NSR settlements, and state-specific
caps in CT, MA, MO, NC, NH, TX, and WI. It does
not include mercury MACT in 2007 or any other
potential future regulations to implement the
current Clean Air Act. Base case emissions in
2020 will likely be lower due to state and
federal regulatory actions that have not yet been
promulgated. Emissions projected for new units in
2020 are not reflected.
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NOx Emissions Reductions under Clear Skies in 2020
Note The base case in IPM includes Title IV, the
NOx SIP Call, NSR settlements, and state-specific
caps in CT, MA, MO, NC, NH, TX, and WI. It does
not include mercury MACT in 2007 or any other
potential future regulations to implement the
current Clean Air Act. Base case emissions in
2020 will likely be lower due to state and
federal regulatory actions that have not yet been
promulgated. Emissions projected for new units in
2020 are not reflected.
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Western Impacts of Clear Skies
2020 At-A-Glance

• Costs Other Impacts
• Annual cost of 1.2 billion
• Electricity price increases of
• Rocky Mountain, Pacific NW and TX 1
• CA .4
• OK and KS 2.1
• Northern Tier and Plains States 3.5
• Two coal-fired units at different plants may
  close
• Coal production at 2000 levels with new mix in
  the West
• Small natural gas impacts

• Benefits
• Quantifiable benefits of about 9.5 billion (8.6
  billion for health)
• Additional unquantified health environmental
  benefits
• Flexibility and certainty
• Fuel diversity preserved
• Room for growth
• Includes states in Clear Skies Zone 2 for NOx--
  ND, SD, NE, KS, OK, TX, MT, WY, CO, NM, AZ, NV,
  UT, ID, WA, OR, and CA.

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National Picture CSA Controls and their Economic
Impact
Coal- Fired Capacity with ACTss Ssmall (GW)
Coal- Fire Capacity with Scrubbers Increases (GW)
Coal- Fire Capacity with SCR Increases (GW)
Small Changes in Generation Mix
Annual Costs Gradually Rise
National Electricity Price Increases Modestly
Natural Gas Coal Prices Do Not Change Much
Shift Occurs in Coal Production
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National Picture Air Quality, Health,
Environmental Gains
Counties likely to Exceed the Annual Ozone
standard with Clear Skies in 2020
Remaining Counties Likely to Exceed the Annual
Fine Particle Standard with Clear Skies in 2020

• 2020 Benefits that EPA Can Value in Dollars
• Health benefits are approximately 110 billion
  annually .
• An alternative estimate is 21 billion.
• Each year, there are
• 14,100 fewer premature deaths
• An alternative estimate 8,400 fewer premature
  deaths.
• 8,800 fewer cases of chronic bronchitis
• 23,000 fewer non-fatal heart attacks
• 30,000 fewer hospitalizations/emergency room
  visits for cardiovascular respiratory symptoms
• includes 15,000 fewer hospital and emergency
  room visits for asthma.
• 12.5 million fewer days with respiratory
  illnesses and symptoms,
• includes work loss days (1.6 million), restricted
  activity days (10.3 million), and school absences
  (200,000).
• Includes hundreds of thousands fewer respiratory
  symptoms and 180,000 fewer asthma attacks.
• Annual visibility benefits of 3 billion in
  selected Natl Parks and Wilderness areas.
• Significant decreases in fine particles and ozone
  occur before the existing Clean Air Act can
  provide them.

Visibility Improves
Sulfur Deposition Drops

• Many benefits are not valued in dollars, but are
  important
• -Other visibility improvements
• - Mercury deposition reduction
• - Sulfur deposition reduction
• - Nitrogen deposition reduction
• - Other health improvements

Nitrogen Deposition Drops
Mercury Deposition Drops
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Comparison of Caps and Timing Clean Air
Planning Act, Clear Skies Act, and Clean Power Act
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Comparison of Other ProvisionsClear Air
Planning Act, Clear Skies Act, and Clean Power
Act
Senator Carper Clean Air Planning Act Presidents Bill Clear Skies Senator Jeffords Clean Power Act
Trading Program Cap-and trade for NOx , SO2, Hg and CO2 Initially requires facility-specific Hg reductions. National trading of all pollutants Largely uses existing Acid Rain Program ground rules WRAP recognition No Opt-In Cap-and trade for NOx, SO2, and Hg National trading of SO2 and Hg East/West Zones for NOx Refined ground rules of Acid Rain Program Safety valve Excess emission penalties WRAP recognition Opt-In for Industrial Boilers and Turbines Cap-and trade for NOx, SO2, and CO2 Hg MACT National NOx and Carbon Program East/West SO2 trading Details to be developed in rules No safety valve No WRAP recognition Special ozone targeted weighted trading for NOx No Opt-In
Allocation Allowances Allocation of NOx, Hg and CO2 on updating output-based based methodology of recent energy use SO2 has similar approach as Acid Rain Program NOx allowances to all fossil units Hg allowances to coal units, and CO2 allowances to all generation units New unit set aside Initial allocations to owners of fossil units on an input basis - SO2 Existing ARP approach NOx East/West Zones use historical fossil energy use to divide up allowances proportionately Hg Coal only historical coal generation weighted by differences in difficulty of pollution control Phase in a total auction of allowances over 52 years No new source set aside Allocation of most allowances to harmed groups, existing sources, renewables, biological carbon sequestration, geological sequestration, and households (via agent) Small declining share of allowances goes to affected sources Offset program for Carbon
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Comparison of Other ProvisionsClean Air
Planning, Clear Skies Act, and Clean Power Act
(cont.)
Senator Carper Clean Air Planning Act Presidents Bill Clear Skies Act Senator Jeffords Clean Power Act
Applicability Units greater than 25 MW selling power Units greater than 25 MW selling power cogenerator selling more than one-third of capacity Units greater than 15 MW selling power
Interactions with other CAA Provisions NSR/NSPS/visibility rule exemption for 20 years Hg MACT exemption NSR covers new units and boiler replacement where hourly emission rate increase occurs Grandfathering provisions that apply performance standards in 2020 to units operating before August 1971 No NSR offsets Creation of transitional areas for SIP Compliance Interstate transport petition decisions are not effective before 2012 Exemption from Hg MACT evaluation of other HAPS oil-based units address nickel emissions Narrower NSR coverage of units in trading programs BART exemption Revised NSPS Codifies NOx SIP Call and converts it to annual program in 2008 No grandfathering provision Hg MACT in effect in 2009 other HAPS addressed in rules by 2006 Retains NSR, NSPS NOx SIP Call, BART, and visibility requirements Add grandfathering provision applying BACT to units over 40 years old or by 2014
Other Secretary of Commerce issues air quality forecasts and warnings Mid-Course correction study ends NAPAP Expands NAPAP includes acid deposition study and rule to protect sensitive positions EPA has facility specific override of trading programs to prevent impact
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Graphic Comparison of Proposed Multi-Pollutant
Control Levels Sulfur Dioxide
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Graphic Comparison of Proposed Multi-Pollutant
Control Levels Nitrogen Oxides
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Graphic Comparison of Proposed Multi-Pollutant
Control Levels Mercury
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The Opportunity before Us

• Enactment of the Clear Skies Act has many
  advantages to all stakeholders
• Immediate and long-term health and environmental
  benefits
• Less burden on State and local governments
• Lower costs for industry and consumers
• The 108th Congress has a unique opportunity to
  reduce the electric power industrys emissions
  and improve the cost-effectiveness of
  environmental policy.
• The Administration is committed to working with
  Congress to pass the Clear Skies Act.

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For Additional Information SeeClear Skies
Websitewww.epa.gov/clearskies