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Chicago, Illinois

Chicago, Illinois. Proposed Illinois CAIR. Clean Air Interstate Rule - CAIR. CAIR. USEPA published CAIR on May 12, 2005 Regional Cap and Trade Program = Annual SO 2 & NOx reductions in 23 states and District of Columbia; Ozone season NOx reductions in 25 states and District of Columbia

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Chicago, Illinois

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  1. Chicago, Illinois Proposed Illinois CAIR Clean Air Interstate Rule - CAIR

  2. CAIR • USEPA published CAIR on May 12, 2005 • Regional Cap and Trade Program = Annual SO2 & NOx reductions in 23 states and District of Columbia; Ozone season NOx reductions in 25 states and District of Columbia • Air Pollution can travel hundreds of miles and cause health and environmental impacts on regional or national scales • Air Pollution must be addressed in recognition of interstate pollution transport

  3. Overview • Reduces sulfur dioxide (SO2) and nitrogen oxide (NOX) emissions • Both SO2&NOx contribute to fine particulate pollution (PM2.5) • NOx contributes to ground level Ozone • Provides substantial human health and environmental benefits. • Affected States must comply with the federal CAIR

  4. SO2 & NOX Negative Environmental Effects • Air quality impairment • Impact on public health • Acidification of lake & streams • Damage to forest ecosystems • Visibility degradation • Acceleration of the decay of building materials and statues

  5. Health Effects • Increased respiratory symptoms, such as irritation of the airways (e.g., coughing or difficulty breathing) • Decreased lung function • Aggravated asthma • Development of chronic bronchitis • Irregular heartbeat • Nonfatal heart attacks • Premature death in people with heart and lung disease

  6. Defining the Problem in Illinois • In Illinois, electric generating units (EGUs) are largest source of SO2 and one of largest sources of NOx • 59 coal-fired boilers and 170 oil/gas-fired boilers and turbines affected

  7. Illinois EGUs identified as significantly contributing to downwind States’ ability (or inability) to attain National Ambient Air Quality Standards (NAAQS) • Transported Illinois pollution interferes with other States’ ability to maintain compliance with NAAQS • Substantial reductions in NOx and SO2 needed in Illinois to attain the 8-hour and PM2.5 NAAQS

  8. CAIR Helps Illinois and its Neighbors • Because air emissions travel across state boundaries, reducing the emissions from sources in Illinois also will reduce fine particle pollution and ground-level ozone pollution in other areas of the country. • Illinois sources significantly contribute to fine particle pollution in other states including:Pennsylvania, Ohio, West Virginia, Indiana, Tennessee, Kentucky, Alabama & Michigan • Illinois sources significantly contribute to ground-level ozone pollution in other states including:Ohio, Wisconsin & Michigan • Illinois’ fine particle air quality will improve because of reductions of SO2 and NOx in:Illinois, Iowa, Kentucky, Michigan, Minnesota, Missouri, Ohio, Texas & Wisconsin

  9. 8-Hour Ozone Nonattainment Areas Cook, DuPage, Kane Lake, McHenry, Will, Grundy (partial), Kendall (partial) Jersey, Madison, Monroe, St. Clair

  10. PM2.5 Nonattainment Areas Cook, DuPage, Kane Lake, McHenry, Will, Grundy (partial), Kendall (partial) Madison, Monroe, St. Clair, Randolph (partial)

  11. USEPA Estimates CAIR Reduces Illinois’ Emissions • By 2015, CAIR will help Illinois sources reduce emissions of SO2 by125,000 tons or 34% • By 2015 CAIR will help Illinois sources reduce emissions of NOx by81,000 tons or 55%.

  12. CAIR in Illinois *Illinois opting-in to federal cap and trade programs * Capping emissions through three separate emissions trading programs: PM2.5 • Annual SO2 Trading Program • Annual NOX Trading Program Ozone • Ozone Season NOX Trading Program

  13. CAIR in Illinois (cont.) • SO2 – follow USEPA’s “Model Rule” • Cap & Trade based on Acid Rain Program • NOx – USEPA allows more flexibility • Cap & Trade based on NOx SIP Call • Seasonal & Annual Caps • Flexibility: • Allocation Methodology • Set-asides

  14. CAIR in Illinois (cont.) Use of NOx Flexibility • Output based allocations (instead of using heat input) • Allocations occur 3 years in advance of date to be used (instead of 6 years in advance) • Update allocation annually (instead of establishing single, continuing baseline) • Set-aside 5% of allowances for New Sources in both phases (instead of reducing to 3% in phase 2) • Set-aside 25% of allowances for Clean Air Set-Asides (CASA)

  15. CAIR in Illinois (cont.) CASA - NOx Purpose: Encourage energy efficiency, renewable energy, clean technology, and early control • EE/RE (Energy Efficiency/Renewable Energy) set-aside of 12% • Clean Technology projects – 11% • Includes Clean Coal and Pollution Control Upgrades • Above related projects that commence operation early (Early Adopters) – before 2012 – 2%

  16. CAIR in Illinois (cont.) • The more NOx reduced, the greater the benefits • The NOx CASA expected to result in additional NOx reductions through promotion of EE/RE & clean technology • Retirement of the NOx Compliance Supplement Pool should result in additional NOx reductions • USEPA modeling in support of CAIR shows that CAIR will not be sufficient for all of Illinois to attain the PM2.5 & Ozone NAAQS

  17. CAIR in Illinois (cont.) Economic Modeling • ICF Consulting modeled incremental impact of Illinois’ proposed CAIR with set-asides versus model federal CAIR • Used conservative assumption that all 30% of set-asides were retired – which is not the case • Principal Findings include: • “Overall, the implementation of the NOx budget reduction policy has minimal effects, both in Illinois and across the nation…” • “The retail electricity prices and costs across all sectors (residential, industrial and commercial) remain unchanged as a result of the NOx budget reduction.”

  18. CAIR in Illinois (cont.) Results • Cleaner air & improved health for Illinois and other States • Meet federal requirements – including satisfaction of Illinois’ obligation under Section 110(a)(2)(D)(i) of CAA for transport • Assist Illinois and downwind states in achieving and maintaining PM2.5 and 8 hour Ozone NAAQS • Provide incentives for EE/RE, clean technology, and early controls

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