Clean Air Interstate Rule

1. Clean Air Interstate Rule Presentation to the Southeastern States Air Resources Managers, Inc. By the U.S. Environmental Protection Agency Office of Air and Radiation September 2, 2005

2. Benefits of the Clean Air Interstate Rule (CAIR) • Reduces sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions which contribute to fine particle pollution (PM2.5) and ground level ozone. • Provides substantial human health and environmental benefits – the largest benefits for any Clean Air Act rule in the last 10 years. • Helps cities and states in the East meet new, more stringent national ambient air quality standards for ozone and fine particles. • Emission reductions occur while economic strength is preserved. U.S. maintains both low electricity prices and fuel diversity. The most important step EPA can take now to improve air quality.

3. CAIR Approach • Analyze sources of SO2 (for PM2.5) and NOx (for PM2.5 and ozone). • Determine if a significant contribution is projected from individual states on ozone and PM nonattainment in 2010, to define geographic boundaries covered by the rule. • Allow cost-effective approach for regional reductions, propose an optional cap-and-trade program similar to current Acid Rain Program for SO2 (Title IV) and the NOx SIP call. • EPA develops an emissions budget for each state based on application of highly effective controls on electric generating units in a cap and trade program, that includes all affected states. States have discretion in deciding which sources to control to meet the budget. • Provide the most timely reductions; propose a two-phase program with declining compliance caps for NOx in 2009 and 2015, and for SO2 in 2010 and 2015.

4. States controlled for fine particles (annual SO2 and NOx) States controlled for ozone (ozone season NOx) States controlled for both fine particles (annual SO2 and NOx) and ozone (ozone season NOx) States not covered by CAIR CAIR: Affected Region and Emission Caps Emission Caps* (million tons) 2009/20102015 Annual SO2 3.6 2.5 (2010) Annual NOx 1.5 1.3 (2009) Seasonal NOx .58 .48 (2009) *For the affected region.

5. Emission Reductions from CAIR Annual Reductions in the CAIR Region

6. 20 SO2 15 10 Million Tons NOx Projected, w/ CAIR 5 0 1980 1985 1990 1995 2000 2005 2010 2015 2020 National NOx and SO2 Power Plant Emissions:Historic and Projected with CAIR Source: EPA

7. CAIR and Other Major Air Pollution Rules Since 1990: Annual Emission Reductions at Full Implementation SO2 NOx Full implementation for mobile source rules is 2030. Full implementation for the CAIR is sometime after 2020. Full implementation for the Acid Rain Program is 2010.

8. Nonattainment areas for 8-hour ozone pollution only Nonattainment areas for fine particle pollution only . Nonattainment areas for both 8-hour ozone and fine particle pollution Ozone and PM Attainment Forecast with CAIR and with Other Clean Air Programs – Eastern U.S. -- 2010 Ozone and Fine Particle Nonattainment Areas* (April 2005) Projected Nonattainment Areas* in 2010 after Reductions from CAIR and Existing Clean Air Act Programs 108 ozone nonattainment or early action areas 36 PM2.5 nonattainment areas 16 ozone nonattainment areas* 19 PM2.5 nonattainment areas *Although tallies include all eastern nonattainment areas, the maps show only the nonattainment areas in States covered by CAIR requirements. Four current ozone nonattainment areas in New England are not pictured. Rhode Island (not colored blue) is the 16th area projected to be nonattainment for ozone in 2010. Projections concerning future levels of air pollution in specific geographic locations were estimated using the best scientific models available. They are estimations, however, and should be characterized as such in any description. Actual results may vary significantly if any of the factors that influence air quality differ from the assumed values used in the projections shown here.

9. Nonattainment areas for 8-hour ozone pollution only Nonattainment areas for fine particle pollution only Nonattainment areas for both 8-hour ozone and fine particle pollution Ozone and PM Attainment Forecast with CAIR and with Other Clean Air Programs – Eastern U.S. -- 2015 Ozone and Fine Particle Nonattainment Areas* (April 2005) Projected Nonattainment Areas* in 2015 after Reductions from CAIR and Existing Clean Air Act Programs 6 ozone nonattainment areas 14 PM2.5 nonattainment areas 108 ozone nonattainment or early action areas 36 PM2.5 nonattainment areas *Although tallies include all nonattainment areas in the eastern U.S., maps show only those areas in States covered by CAIR. Four current O3 nonattainment areas in New England are not pictured. Projections concerning future levels of air pollution in specific geographic locations were estimated using the best scientific models available. They are estimations, however, and should be characterized as such in any description. Actual results may vary significantly if any of the factors that influence air quality differ from the assumed values used in the projections shown here.

10. CAIR: Counties Closer to Attainment w/ NAAQS Remaining Fine Particle Nonattainment (Annual Fine Particle Standard) Remaining Ozone Nonattainment (8-Hour Ozone Standard) NAAQS NAAQS

11. CAIR: SESARM Counties Closer to Attainment w/ NAAQS in 2010 Remaining Fine Particle Nonattainment (Annual Fine Particle Standard) Remaining Ozone Nonattainment (8-Hour Ozone Standard) NAAQS NAAQS

12. CAIR Health and Environmental Benefits: Benefits over 25 Times Greater than Costs • By 2015, CAIR will result in $85-100 billion in health benefits each year, preventing: • 17,000 premature deaths • 22,000 non-fatal heart attacks • 12,300 hospital admissions • 1.7 million lost work days • 500,000 lost school days. • Almost $2 billion in improved visibility benefits each year. • Other non-monetizable benefits – reductions of mercury emissions, acid rain, nitrification, eutrophication, and more. • In 2015, CAIR will cost about $3.6 billion a year. Implementation beyond 2015 leads to higher annual benefits and costs.

13. Clean Air Interstate Rule and Other Major Air Pollution Rules Since 1990: Annual Benefits Benefits of CAIR will continue to increase post-2015 2015 2030 2030 2030 2030 2004 Notes: NOx SIP Call benefits are inflated from 1990 dollars and represent the higher range of projected final rule benefits. A discount rate of 3% is used for the benefits calculation. For CAIR, an alternative 7% discount rate would yield roughly $86 billion of benefits in 2015.

14. Projected Annual SO2 Emissions for Power Plants Under CAIR -12% -17% -69% -49% -74% -78% -84% -40% -46% -34% -34% -80% -76% -57% -24% -35% -92% -35% -80% -29% -40% -49% -28% -39% -33% -24% -37% -58% Current programs in 2010 -5% -16% -37% -37% Clean Air Interstate Rule in 2010 Current programs in 2015 Clean Air Interstate Rule in 2015 -1% -24%

15. Projected Ozone Season NOx Emissions for Power Plants under CAIR -37% -54% -46% -54% -17% -43% -12% -22% -6% -32% -11% -20% -18% -32% -27% -24% -16% -12% -2% -23% -32% -27% -28% -17% -5% -28% -67% Current programs in 2010 -30% -41% Clean Air Interstate Rule in 2010 Current programs in 2015 Clean Air Interstate Rule in 2015 -53% -58%

16. Projected Annual NOx Emissions for Power Plants Under CAIR -50% -51% -34% -54% -25% -30% -16% -22% -42% -52% -46% -65% -62% -59% -48% -53% -64% -70% -65% -75% -44% -51% -39% -56% -78% -38% -36% -72% -66% -74% -16% -20% -24% -29% -51% -63% -44% -17% -68% -53% -30% Current programs in 2010 -41% Clean Air Interstate Rule in 2010 Current programs in 2015 -55% Clean Air Interstate Rule in 2015 -59%

19. CAIR: Capacity w/ Advanced Pollution Controls 2015 2030 2030 2030 2004

20. Annualized Private Cost of CAIR • The net present value of CAIR for the years 2007-2025 is $41.1 billion. • The present value of the capital investment in pollution controls for CAIR, beginning in 2009/2010 when the program begins, is estimated to be approximately $16.8 billion. Note: From IPM, for the affected region.

21. CAIR 2003 2000 2010 2015 275 Appalachia 299 306 306 135 Interior 131 165 191 526 West 475 607 586 National 905 1,078 1,083 936 Other Projected Impacts Natural Gas Prices Regional Retail Electricity Prices $/mmBtu Note: Henry Hub prices Generation Mix Coal Production for Electricity Generation (million tons) Other 2020 Renewables 2015 2010 Hydro Nuclear Gas/Oil Coal Note: Retail prices for 2000 are from AEO2003. Natural Gas prices for 2000 are from Platts GASdat. All other data is from EPA’s Integrated Planning Model.

22. Clean Air Visibility Rule (CAVR) • Covers 26 industrial sectors, including the power industry. • CAIR determined better than Best Available Retrofit Technology (BART) controls of CAVR in the CAIR region; therefore, States are allowed to use CAIR in lieu of source-specific BART requirements in the CAIR region. • Mandatory BART guidance for power plants >750 megawatt (MW) • Guidelines contain presumptive control levels for coal-fired electric generation units > 200 MW (about 50 units in non-CAIR states) • For electric generating units >200 MW at plants 750 MW or less (about 20 units in non-CAIR region) - encourage use of presumptive controls • Guidance only for all other source categories • Presumptive control levels: • SO2: 95% control or 0.15 lbs/MMBtu for uncontrolled units. (Recommend States consider upgrades to existing controls if removal rate is 50% or greater. Recommend States consider replacement if removal rate is less than 50%. Recommend oil-fired units have 1% sulfur limit for fuel). • NOx: Current combustion controls on all coal-fired units except cyclones which require SCR, and annual operation of existing SCR and SNCRs.

23. There Have Been Two Ways to Address Transported Emissions • The President’s Clear Skies legislation is the preferred approach to achieving multi-pollutant emission reductions: • Multipollution caps apply to entire country. • Legislation can provide more certainty, coordination, and less complexity. • Use of existing Clean Air Act authority to address interstate transport of pollution: • Until legislation passes, our attainment deadlines and other problems related to power plant emissions demand we act now. • CAIR will provide very significant air quality attainment, health, and environmental improvements in a cost-effective manner.

24. Summary on CAIR CAIR significantly cuts emissions of SO2 and NOx from power plants and: • Helps cities and States in the East meet new, more stringent national ambient air quality standards (NAAQS) for ozone and fine particles. • Guarantees substantial benefits for public health and the environment. • Achieves the largest reduction in air pollution in more than a decade (since the highly successful Acid Rain Program). • Provides one of the largest investments in pollution control technology in history. • Serves as the single most important step to take now to improve air quality in the U.S.

25. To Learn More….. Clean Air Interstate Rule www.epa.gov/cleanairinterstaterule Clean Air Mercury Rule www.epa.gov/mercury Clean Air Visibility Rule http://www.epa.gov/visibility/actions.html#bart1

26. CAIR Allowance Prices NOx SO2 Note: Data is from EPA’s Integrated Planning Model. All dollar values are $1999.

27. CAIR and Other Major Air Pollution Rules Since 1990: Annual Private Compliance Costs at Full Implementation CAIR represents a substantial investment in cleaner air, and projected benefits are over 25 times greater than the projected costs. Notes: Annual Costs are EPA projections. NOx SIP Call costs were inflated from 1990 dollars. Full implementation for mobile source rules is 2030.