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zyxwvutsrqponmlkjihgfedcbaYXWVUTSRQPONMLKJIHGFEDCBA Benefits of Reduced Air Pollution in the United States Dallas Burtraw Resources for the Future Presentation to EMEP Conference October 8, 2003 Background materials at

  1. zyxwvutsrqponmlkjihgfedcbaYXWVUTSRQPONMLKJIHGFEDCBA Benefits of Reduced Air Pollution in the United States Dallas Burtraw Resources for the Future Presentation to EMEP Conference October 8, 2003 Background materials at http://www.rff.org/rff/news/features/making­sense­of­multipollutant­legislation.cfm

  2. Roadmap • Integrated Assessment Approach • 1990 CAAA • NOx SIP Call • Multi-pollutant legislation − Efficient Emission Fees for SO2, NOx − Proposal Targets, Benefits − Errors and Uncertainties in Benefit Estimates − Guidelines for Hg − Architecture for Carbon Benefits of Reduced Air Pollution

  3. Integrated Assessment: Meaning and Method • Integration of full­form models with “internal” validity • Emphasis on “external” integrity • Account for correlated uncertainty • Include assessment • Value of additional information NYSERDA played a path­breaking role in the application of integrated assessment in the early 1990s with co­sponsorship of the ESEERCO externality study. Benefits of Reduced Air Pollution

  4. TAF Findings: Benefits and Costs of Title IV Mort alit y $1 00.00 $1990 per Affected Person per Resid. Visibilit y $ 10.0 0 Co Cost sts s Year Rec. Visibilit y $1. 00 Morbidit y Rec. Lake $0.10 Fishing 1995 2000 2005 2010 2015 2020 2025 2030 Projections to 2030 “Integrated Assessment” ( NAPAP, 97) and “Benefits and Costs of Title IV” ( CEP , 98) Benefits of Reduced Air Pollution

  5. The Weak Links Expect ed Short-Term Value Benefit : of Addition al Information: Health: Mortality Health: Morbidity Visibility Materials and Cultural Resources Nonuse Values: Ecosystem Health Aquatics: Recreation Forests: Recreation Ag / Commercial Forestry Radiative Forcing Benefits of Reduced Air Pollution

  6. Spatial Effects of Trading • In 1993, the NY AG sued EPA to restrict allowance sales. • NY Assembly, later Senate, voted to constrain trades. • 1998 agreement with Long Island Lighting Company (LILCO). • 1998 Senator D’Amato likened long-range transport of acid rain to “airborne terrorism.” • 2000 Governor Pataki signed into law legislation to monitor and control sale of SO 2 allowances. • 2003 Appeals court strikes down NY law. Benefits of Reduced Air Pollution

  7. g on Emissions Effect of Tradin Percent Change in Title IV Baseline Utility Emissions Attributable to Trading for 2005 Percent Change in Emissions <-25 -25 to -10 -10 to -0.01 0 0.01 to 10 10 to 25 >25 “Regional Analysis of SO2 Allowance Trading” ( EST, 99) Benefits of Reduced Air Pollution

  8. g on Health Effect of Tradin Percent Change in Title IVBaseline Benefits Attributable to Trading for 2005 Percent Change in Benefits <-15 -15 to -10 -10 to -0.01 0 0.01 to 10 10 to 15 >15 Benefits of Reduced Air Pollution

  9. g on Deposition Effect of Tradin Percent Change in Title IV Baseline Sulfur Deposition Attributable to Trading for 2005 Percent Change in Deposition <-8 -8 to -4 -4 to -2 -2 to -0.01 0 0.01 to 2 4 2 to 8 4 to >8

  10. Baseline Emissions, with Phase I Allocations and Emissions of SO 2 by Region 6,000,000 1980 Emissions Phase I Allowances Annualized 5,000,000 Phase I Emissions Annualized 4,000,000 SO2 (tons) 3,000,000 2,000,000 1,000,000 0 Northeast Midwest Southeast Swift, in preparation, 2003 Benefits of Reduced Air Pollution

  11. Allowances Allocated and Emissions of NO x Under OTC Program 120,000 1999-2002 Allocations Annualized 100,000 1999-2002 Emissions Annualized 80,000 60,000 40,000 20,000 0 Maryland and Delaware P ennsylvania New J ersey New York Connecticut Rhode Island Massachusett s New DC Hampshire Benefits of Reduced Air Pollution

  12. 8­hour Ozone change and state shares for 30% NOx Reduction Bene fits of Reduced Air Pollution Krupnick et al. in preparation, 2003

  13. The Second Grand Experiment: NOx SIP Call • NO x emissions contribute to multiple problems: – ozone, particulates, nitrogen deposition, visibility • Nonattainment of ozone standard provides regulatory handle for EPA NO x SIP Call • Policy aimed at ozone, a seasonal problem • But, other NO x ­related effects are realized throughout the year • Costs of NO x control are largely fixed and capital costs. Annual vs. Seasonal NOx Controls” ( JAWMA 01; Land 03) Benefits of Reduced Air Pollution

  14. Question: What is the most cost-effective way to achieve NO x reductions given full set of NO x related problems? Three NO x reduction scenarios: – Summer cap in 19 state SIP Call region – Annual cap in the same SIP Call region – National Annual cap Benefits of Reduced Air Pollution

  15. Major Uncertainties • Market Structure • Epidemiology / Mortality • Valuation / Mortality Benefits of Reduced Air Pollution

  16. RFF “Haiku” Electricity Model • Intra­regional market modeling – Market equilibrium in 13 regions – Demand: 3 customer classes, 4 time periods, 3 seasons – Supply constructed using model plants • Defined by technology, fuel type, vintage • Investment and retirement • Emission compliance • Fuel market prices adjust • Inter­regional power trading – Equilibrates regional prices, transmission constraints Benefits of Reduced Air Pollution

  17. Net Benefits for the Nation, 2008 6 Net Benefits (1997 Billion $) 5 4 3 SIP Annual 2 1 0 ­1 ­2 SIP Seasonal ­3 National Annual ­4 HLL HLM LLL HML HLH LLM LML LLH HMM LMM HHL LHL HMH LMH HHM LHM LHH HHH Combinations of assumptions in scenario analysis characterizing market structure, epidemiology and valuation. Benefits of Reduced Air Pollution

  18. Main Findings Favor Annual NOx Controls • Under all scenarios SIP Annual policy yields greater net benefits than current policy; Ohio Valley included. • National annual policy is slightly less cost­effective than current under preferred assumptions …but it is more cost­effective under majority of scenarios. • SIP region always realizes greatest net benefits under National Annual policy. • Omitted benefits do not change ranking for SIP Annual Benefits of Reduced Air Pollution

  19. State Actions in SIP Call region Connecticut, Massachusetts, New Hampshire, North Carolina and New Yo rk have moved to annual contro ls on NO x and SO 2 . State actions amplify the challenges to resource planning for electricity generators. Benefits of Reduced Air Pollution

  20. The Clean Air Act’s Requirements NSR Permits for new sources & modifications that increa se emissions Note : Dott ed lines indicate a range of possible dat es. Designate 1-hr Severe Marg- 8-hr Assess Moderate 1 Further action on oz one would be considered b ased Ozone on the 2007 assessment. areas for Area inal 8-hr Ozone Effectiveness 8-hr 2 The SIP-submittal and attainment dates are keyed off Ozone Attain- 8-hr Ozone Attainment of Regional Ozone 1-hr Seriou s the dat e of designation; fo r example, if PM or ozone ar e NAAQS Date NAAQS ment Oz one NAAQS Area Attainme nt designat ed in 2004, the first attainment dat e is 2009 Attain- Demon- Strategies Attainment Date EPA is required to update the new source performance ment stratio n Date standar ds (NSPS) for boilers and turbi nes ever y 8 years SIPs due Date Possible OT C Regional NO NO x x NO NO x x Reductions ? Serious 8-hr Ozone SI Ps Trading SIP (SIP call II) 1 Due NAAQS attainment Call Date 08 00 01 02 03 04 05 06 07 09 10 11 12 13 14 15 16 17 18 99 Compliance for Mercury Proposed Final Compliance Compliance fo r BA RT BART Sources Determination Utility Utility with Utilit y sources unde r the MACT MACT MACT Trading Program Second Regional New Fine P M NAAQS Designate Areas Latest attainment Phase II PM NAAQS Haze SIPs due for Fine Implementation Plans date for Fine PM Acid Rain Compliance NAAQ S 3 Interstate Transport Rule to Address In developing the timeline of current CAA requirement s, Regional Haz e SIPs due it w as necessary fo r EPA to make assumpti ons ab out SO 2 / NO x Emissions fo r Fine P M rulemakings that ha ve not been completed or , in some NAAQS and Region al Haze case, not even started. EPA’s rulemakings will be conducted through t he usual notice-and-comm ent Acid Rain, PM , Haze, Toxics process, and the conclusions may vary from t hese 2.5 assumptions. Benefits of Reduced Air Pollution

  21. EIA forecasts over time for 2010 118 4200 116 4100 Energy Consumption (QBtu) 114 4000 Electricity Sales (BkWh) 112 3900 110 3800 108 3700 Total Energy Quadrillion Btu 106 3600 Electricity BkWh 104 3500 1997 1998 1999 2000 2001 2002 2003 Benefits of Reduced Air Pollution

  22. zyxvutsrponmljihgfedcbaYWVTSRPONMHGFECBA Total Generation Percent of in the Baseline Coal Gas Toda y 54% 15% Forecast for 2020 48% 25% 20% 106% Growth Benefits of Reduced Air Pollution

  23. Old generating units have highest emission rates… Average NOx Emission Rates for Coal-Fired Boilers by Vintage 8. 8.0 00 0 7.44 7.44 7. 7.0 00 0 5.97 5.97 5.95 5.95 6. 6.0 00 0 5.37 5.37 5.0 5. 00 0 4.09 4.09 Wh Wh 4. 4.0 0 0 0 3.55 3.55 s./M s./M 3.0 3. 0 0 0 x lb x lb 2.0 2. 0 0 0 NO NO 1.0 1. 00 0 0.0 0. 00 0 pre pre- -19 195 50 0 1950- 1 950-195 1959 9 1960 1960-19 -196 69 9 1970 1 970-197 -1979 9 198 1980-1 0-1989 989 1 1990- 990-1999 1999 Vintag Vinta ge e Benefits of Reduced Air Pollution

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