Reducing Pollution from Power Plants

1. Reducing Pollution from Power Plants Joe Bryson US EPA Office of Air and Radiation November 16, 2010 National Association of State Utility Consumer Advocates Annual Meeting Atlanta, Georgia

2. Topics • Background • Power sector emissions and sources • Health impacts • Costs and benefits of reducing emissions • Characteristics of remaining uncontrolled sources • Overview of EPA’s forthcoming power sector rules • Detail on Transport Rule 1 & 2 and Utility MACT • Managing impacts on power sector • Summary • For more information • Appendix • Additional detail on power sector regulations

3. The US Power Sector and Air Pollution • Much of EPA’s clean air agenda over the past decade was declared inconsistent with the Clean Air Act, and so EPA must revisit those regulations. • EPA now must promulgate a series of regulations that will require that the electricity generating industry become much cleaner. • These rules will require decisions by power plant owners and state utility commissions: • For example, whether to make large investments in emissions controls for existing facilities or choose alternative cleaner resource options (e.g. new generation, demand response, energy efficiency).

4. NOX and SO2 Emissions Affect the Health of Millions of Americans and Our Environment Health impacts NOX contributes to the formation of PM2.5 and ground-level ozone. SO2 contributes to the formation of PM2.5. PM2.5 has been linked to premature death, serious illnesses such as chronic bronchitis and heart attacks, and respiratory problems. Ozone has been linked to premature mortality, lung damage, respiratory symptoms, aggravation of asthma and other respiratory conditions. Environmental impacts Sulfur deposition acidifies surface waters, and damages forest ecosystems and soils. Nitrogen deposition acidifies surface waters, damages forest ecosystems and soils, and contributes to coastal eutrophication. SO2 and NOX impair visibility, including at national parks and wilderness areas. 4 4 4

5. Air Quality in the United States Population Living with Unhealthy Air Quality

6. Toxic Pollutants and Greenhouse Gases also Raise Health and Environmental Concerns Hazardous air pollutants emitted by power plants include mercury, non-mercury metallic HAPS, acid gases, dioxin/furans, non-dioxin organics, and radionuclides. Mercury risks include: Main exposure to people in U.S. comes from eating fish and other marine species containing methyl mercury. This form of mercury can impair neurological development in fetuses, infants and children and may cause heart disease in adults. Methylmercury accumulates in fish at levels that may harm the fish and other animals that eat them, including birds and mammals and their predators. Other HAPs are human carcinogens (arsenic) and probable human carcinogens (lead, cadmium, nickel and dioxin/furans). HAPs also have other health and environmental effects. EPA has determined, based on numerous current and anticipated impacts, that CO2 and other greenhouse gases endanger public health and welfare.

7. Power Sector: A Major Share of US Air Emissions Sulfur Dioxide (SO2), 2009 9.5 Million Tons Nitrogen Oxides (NOx), 2009 15.3 Million Tons Carbon Dioxide (CO2), 2008 6.5 Billion Tons 3.8 Million Tons 40% 5.7 Million Tons 60% 13.3 Million Tons 87% 2.0 Million Tons 13% 2.6 Billion Tons 40% 3.9 Billion Tons 60% Electric Power Other Sectors Other Sectors Coal 85% Coal 97% Electric Power Coal 83% Other Sectors Electric Power Mercury (Hg), 2005 114 Tons Particulate Matter(PM10), 2005 14.8 Million Tons 52 Tons 46% Coal-fired power plants: vast majority of power sector air emissions 14.3 Million Tons 96% 0.5 Million Tons 4% Other Sectors Electric Power Coal >99% Other Sectors Electric Power Coal 95% 62 Tons 54% 7 Sources: SO2 and NOx - NEI Trends Data and NEI 2005 Version 2 (2009) and CAMD Data & Maps (2010); PM10 - NEI Trends Data (2009); Hg - NEI 2005 Version 2 (2009); CO2 - Inventory of U.S. GHG Emissions and Sinks: 1990-2008 (2010) and 1990-2007; “Other” sources include transportation, other mobile sources, and industrial sources

8. Cleaner Air and a Growing Economy

9. Benefits of Reducing Power Sector Emissions Will Far Exceed Costs We cannot predict the costs – or the benefits - with certainty before we have established the regulations themselves. Achieving a much cleaner power industry will impose costs to the industry and to ratepayers. The value of the benefits to the public will be much greater than the costs. Benefits include prevented illness and death as well as ecological benefits. Expect that the sum of these regulations will prevent thousands of premature deaths, and hundreds of thousands of episodes of respiratory illness each year.

10. Health Benefits for Millions of Americans Benefits Greatly Exceed Costs • EPA estimates the annual benefits from the proposed transport rule range between • $120-$290 B (2006 $) in 2014 with annual compliance costs of $2.8 billion in 2014. • EPA estimates 2014 prices for electricity, natural gas, and coal prices increase 1 to 2%. Estimated Number of Adverse Health Effects Avoided Due to Implementing the Proposed Transport Rule* * Impacts avoided due to improvements in PM2.5 and ozone air quality in 2014

11. Billions of Dollars of Health Benefits in 2014 Proposed Transport Rule Ranges of Benefits Maine, New Hampshire, Vermont, Rhode Island, North and South Dakota receive benefits and are not in the Transport Rule region. Transport Rule RIA, Table A-4 and A-5; mortality impacts estimated using Laden et al. (2006), Levy et al. (2005), Pope et al. (2002) and Bell et al. (2004); monetized benefits discounted at 3%

12. Public Health Protection Delayed • The American public has suffered avoidable deaths and illnesses as important Clean Air Act-required power plant controls have been delayed more than a decade. • The Act required states by 2000 to adopt rules as needed to control interstate pollution to help meet health-based air quality standards issued in 1997 • NOX SIP Call Rule (1998) partially addressed ozone transport by 2004, but did not address fine particles. • Previous Administration finalized Clean Air Interstate Rule (CAIR) in 2005 but court found legal flaws and ordered EPA to replace it. CAIR remains in place in the interim. • New Transport Rule to replace CAIR and address 2006 PM NAAQS is to be completed in June 2011. • The Act required studies in the early 1990s and, if appropriate and necessary, control of hazardous air pollutants from power plants. • Positive determination in 2000 meant final rule due by 2002. • Previous Administration issued Clean Air Mercury Rule for power plants in 2005 but court found rule legally flawed and vacated it in 2008. Also, rule failed to address all air toxics. • Consent decree requires EPA to propose rule to control toxic air pollutants from EGUs by March 2011 and finalize by November 2011.

13. Many Coal Plants Remain Uncontrolled for SO2 &/or NOXMany are > 40 years old

14. Many Coal Plants Remain Uncontrolled for SO2 &/or NOXMany are > 40 years oldMany are < 250 MW Out of 300+ GW of existing coal capacity, roughly 100 GW will remain unscrubbed (after installation of currently planned retrofits) Data Sources: 2007/2008 EPA IPM, ARP, NBP Databases & Commercial Sources, MJB&A Analysis

15. Upcoming CAA Power Plant Rules • Interstate Pollution Transport Rule(#1) for existing PM and ozone NAAQS • Proposed rule unveiled in July, published August 2, 2010 • Final rule planned June 2011 • Transport Rule (#2) for 2010 reconsidered ozone NAAQS • Proposed rule in 2011, final rule in 2012 • Utility MACT (section 112/hazardous air pollutants) • Propose March 2011, finalize November 2011 • Utility NSPS (section 111/criteria pollutants) • Propose March 2011, finalize November 2011 (i.e., same schedule as MACT) • 2006 utility NSPS is under reconsideration and subject to pending litigation • Section 111(b) for new and modified/reconstructed sources • Response to court remand on Utility NSPS (section 111) for GHGs • EPA is considering substance and timing of its response.

16. EPA is proposing one approach and taking comment on two alternatives. All three approaches would cover the same states – 31 states and the District of Columbia, set a pollution limit (or budget) for each state and obtain the reductions from power plants. EPA’s preferred approach – allows intrastate trading and limited interstate trading among power plants but assures that each state will meet its pollution control obligations. To meet this proposed rule, EPA anticipates power plants will: Operate already installed control equipment more frequently, Use lower sulfur coal, or Install pollution control equipment such as low NOX burners, Selective Catalytic Reduction (SCR), or SO2 scrubbers (Flue Gas Desulfurization). CAIR remains in place until this rule is finalized. Final rule is expected in late spring 2011. Transport Rule

17. Transport Rule Counties with Violating PM and/or Ozone Monitors (55) Counties with PM and/or Ozone Maintenance Problems (28) States covered by the Transport Rule (31 + DC) Counties with Monitors Projected to Have Ozone and/or PM2.5 Air Quality Problems in 2012 Without the Proposed Transport Rule • In 2012, EPA projects that: • Some communities will still not meet the air quality standards. • Millions of people will continue to breathe unhealthy air. • Many upwind states will still contribute significantly to downwind nonattainment areas. • The Transport Rule will affect power plants because their emission reductions are most cost-effective. • Other actions by EPA and the states must be taken before all areas will attain the current and future National Ambient Air Quality Standards (NAAQS). This analysis assumes that the Clean Air Interstate Rule is not in effect. It does reflect other federal and state requirements to reduce emissions contributing to ozone and fine particle pollution that were in place as of February 2009. 17

18. Four Separate Control Regions • Proposal includes separate requirements for: • Annual NOx reductions (2012) • Ozone-season NOx reductions (2012) • Sets emissions budgets for each state • Proposal includes separate requirements for: • Annual SO2 reductions • Phase I (2012) and Phase II (2014) • Two Control Groups • Group 1 – 2012 cap lowers in 2014 • Group 2 – 2012 cap only • Sets emissions budgets for each state

19. Transport Rule 2 • Will address CAA responsibility of upwind states to downwind state ozone problems • Emissions reductions needed for all states in the nation contributing to nonattainment/interfering with maintenance of upcoming 2010 ozone standards • Any emissions reductions needed for states contributing to nonattainment/interfering with maintenance of 1997 ozone standard in Baton Rouge, Houston, New York City • Will analyze both EGU and non-EGU sources for available controls • Transport Rule 1 provides framework for addressing transport under future standards

20. Utility MACT: Coal and Oil-Fired Power Plants Will likely drive significant investment in upgrading plants with modern pollution control. To be proposed March 2011 and finalized November 2011 (per court order) In response to court vacating (2008) EPA’s “Clean Air Mercury Rule” (2005) Will reduce emissions of mercury, other metals such as arsenic and lead, dioxin/furans, acid gases, etc. The standard: maximum reduction achievable for sources taking into consideration costs, energy requirements and non-air quality health and environmental impacts. Must be at least as stringent as: Existing sources: the average emissions reduction achieved by the top performing 12 percent of sources within the category New sources: the emissions reduction achieved by the best single performing source within the category Compliance: Existing: 3 years from final rule + 1 year allowable extension by State/EPA New: upon final rule

21. Non-CAA Rules Affecting Power Plants(See Appendix) Resource Conservation and Recovery Act (RCRA) Coal Combustion Residuals (CCR) Proposed: June 2010 Clean Water Act (CWA) Cooling Water Intake Structures (CWIS) Currently taking comments on Information Collection Request (ICR)

22. Toolbox of Emissions Reduction Technologies for Power Plants Many Have Multi-pollutant Benefits • Pollution reduction controls at utilities are well-understood and available now • SO2 reduction technologies • Reduce HAPs to meet requirements of upcoming Utility MACT • Help in-state areas attain the existing and upcoming PM2.5 NAAQS and 2010 SO2 NAAQS • Help downwind states attain PM2.5 NAAQS • Address visibility (regional haze) improvement goals • NOx reduction technologies • Help in-state areas attain the existing and new ozone NAAQS • Help downwind states attain the existing and new ozone NAAQS • Address visibility (regional haze) improvement goals • Mercury reduction technologies • Reduce mercury emissions to meet requirements of upcoming Utility MACT • Direct PM reduction technologies: • Help attain PM2.5 NAAQS and visibility program requirements • Reduce HAP emissions to meet requirements of upcoming Utility MACT

23. Industry Capacity to Add New Emissions Controls Added 20+ GW of SO2 scrubbers per year 2008 - 2010 Source: David C. Foerter, Executive Director Institute of Clean Air Companies (ICAC), October 22, 2010

26. Industry Capacity to Add New Generation Between 2001 and 2003 the electric industry built over 160 GW of new generation Capacity (MW) U.S. Power Plant Capacity Added By In-service Year Source: Ceres, et al., Benchmarking Air Emissions of the 100 Largest Electric Power Producers in the United States, June 2010.

27. The Role of Energy Efficiency & Demand Response • Multiple benefits of supplementing our rules with actions to reduce electricity demand by increasing use of EE and DR • Reduce costs to power sector of controlling conventional pollutants • Avoid or defer need for new generation • Reduce conventional air pollutant emissions, including on high electricity demand days (which coincide with poor air quality) • Reduce concerns about reliability of electricity supply • Lower consumer bills • Achieve reductions in CO2 through idling or retirement of inefficient fossil-fuel-fired generating stations that would no longer be economic • EPA can encourage but cannot mandate or fund energy efficiency in residential or commercial sectors. We encourage state regulators, system operators, and utilities to take action to cost-effectively reduce demand for electricity.

28. LBNL forecasts a 250% to 400% increase (Med/High cases) in EE program funding by 2020Cumulative savings by 2020 equal 6.1% (med) to 8.6% (high).of EIA’s forecast 2020 electricity demand Energy Efficiency Program Funding and Electricity Savings Projected to Grow Substantially Source: LBNL’s The Shifting Landscape of Ratepayer-Funded Energy Efficiency in the U.S. (October, 2009) by Galen Barbose, Charles Goldman, and Jeff Schlegel

29. National Demand Response Potential

30. Role for State Utility Commissions, Generation Owners, Utilities and Other Stakeholders • EPA is now promulgating a series of regulations that will require that the electricity generating industry become much cleaner. • These rules will require decisions by power plant owners, utilities, state utility commissions and other stakeholders • For example, whether to make large investments in emissions controls for existing facilities or choose alternative cleaner resource options (e.g. new generation, demand response, energy efficiency). • These entities have tools and processes to manage these and other uncertainties to ensure reliable electricity service at reasonable rates • Other significant uncertainties include fuel prices; construction costs for new generation; potential federal legislation addressing RES, GHGs, Transmission, and tax policies; pace of economic recovery and impacts on load growth; and the scale, pace, and impacts of Smart Grid investments. • Like all uncertainty that utilities and state commissions face, good information is necessary to make informed decisions which best account for and manage risk appropriately

31. Key Points Cutting power plant pollution is required by the Clean Air Act and essential to protecting public health. Power plants are among the largest U.S. emitters of air pollutants with serious health effects including premature death. Avoidable deaths and illnesses continue to occur because important Clean Air Act-required power plant controls have been delayed more than a decade. Courts have determined that key rules issued by EPA over the past decade were inconsistent with the Clean Air Act, which contributed to delays. EPA now must meet legal obligations to issue new rules that will require that the power sector become much cleaner. Forty years of experience under national environmental laws shows that we can pursue a clean, healthy environment while maintaining economic growth and reliable electricity. Improved efficiency in electricity use can cut air pollution control costs, help ensure reliability of electricity supply, and reduce emissions of GHGs and other air pollutants. EPA has been considering reliability as it develops these new rules, and will continue to do so. EPA, FERC, DOE and state utility regulators, both together and separately, have tools at their disposal to ensure the continued reliability of our electricity supply. NASUCA members play a key role through engagement with state utility commissions

32. For More Information Clean Air Act (CAA) Transport Rule http://www.epa.gov/airtransport Utility MACT http://www.epa.gov/ttn/atw/utility/utilitypg.html Utility NSPS http://yosemite.epa.gov/opei/rulegate.nsf/byRIN/2060-AQ37 Resource Conservation and Recovery Act (RCRA) Coal Combustion Residuals (CCR) http://www.epa.gov/wastes/nonhaz/industrial/special/fossil/ccr-rule/index.htm Clean Water Act (CWA) Cooling Water Intake Structures (CWIS) http://www.epa.gov/waterscience/316b/ GHG Permitting http://www.epa.gov/nsr/ghgpermitting.html NARUC Climate Task Force Webcasts on EPA Power Sector Rules http://www.naruc.org/committees.cfm?c=58# Joe Bryson bryson.joe@epa.gov 202.343.9631

33. APPENDIX • Additional information for EPA rulemakings • Utility New Source Performance Standards (NSPS) • §316(b) Cooling Water Intake Structure (CWIS) • Coal Combustion Residuals (CCR) • Safeguards for addressing reliability challenges • Announced coal retirements

34. Utility New Source Performance Standards Clean Air Act, Section 111, New Source Performance Standards (NSPS) Authority to set emissions performance standard for new and modified sources (EPA directly), and existing sources (through the states) Standards must reflect the emission limitation achievable through the application of the best system of emission reduction which the Administrator determines has been adequately demonstrated. Must consider: cost of achieving such reduction any non-air quality health and environmental impact, and energy requirements Standards are based on demonstrated performance andmay not require use of any particular technology. NSPS for Utility Boilers (NOx, SO2, PM) To be proposed with Utility MACT - March 2011 and finalized November 2011 NSPS for Utility Boilers (GHGs) Schedule and approach still under deliberation NSPSs are to be reviewed at least every 8 years.

35. §316(b) Cooling Water Intake Structure (CWIS) Regulation • Original rule issued in 2004 • Portions remanded to EPA by 2nd Circuit • Portions upheld by Supreme Court in Entergy decision • 1,260 existing facilities collectively withdraw 226 billion gallons of water per day • Main environmental impacts • Impingement and entrainment • Thermal discharges may also be significant for some waters

36. Cooling Water Basics Traveling Screens Fixed Bar Racks Larger fish unable to swim away are impinged against the screen and usually die. Smaller organisms that pass through the screens are entrained in the cooling system and also die. Once through cooling uses water only once as it passes through a condenser to absorb heat and is then discharged. Closed-cycle cooling reuses water by recycling it through recirculating systems or towers.

37. Schedule for §316(b) Rule • Agency’s intent is to issue final rule by July 2012 • Also effected through NPDES permits and 5 year cycle

38. Proposed Rule for Coal Combustion ResidualsThe Basics • Coal Combustion Residuals (CCRs) are byproducts from the combustion of coal – fly ash, bottom ash, boiler slag, and flue gas desulfurization materials. • Currently (2008) more than 136 million tons generated per year:34 % (46 million tons) landfilled • 22% (29.4 million tons) disposed of in surface impoundments • nearly 37% (50.1 million tons) beneficially used • nearly 8% (10.5 million tons) placed in mines • 75 % of impoundments are greater than 25 years old; 10% greater than 50 years old • Approximately 300 CCR landfills and 584 surface impoundments in use at approximately 495 coal-fired power plants

39. CCRs – The Proposal • On June 21, 2010, EPA proposed 2 approaches for regulating disposal of CCRs under the Resource Conservation and Recovery Act (RCRA): • Subtitle C approach • Subtitle D approach • Proposal covers CCRs generated from the combustion of coal at electric utilities and independent power producers. • Does not cover coal-fired electric plants used captively by industries or universities.

40. CCRs – The Proposal • Engineering requirements (e.g., liners, groundwater monitoring) of the two options are very similar; differences are primarily in enforcement and implementation. • Bevill exemption from regulation remains in place for beneficial uses of CCRs. • Minefilling is not covered by the proposal.

41. Regulation under Subtitle C • Listed as a “special waste subject to subtitle C” – S001. • Subject to existing Subtitle C requirements, e.g., generator, transporter, permitting, ground water monitoring, corrective action, and financial assurance. LDRs and treatment standards apply. • Single composite liner • [5 years for surface impoundments to comply with requirements; no requirement for annual dredging] • Structural Stability Requirements • Existing landfills must install groundwater monitoring within 1 year of effective date of rule, but do not need to install composite liners. • New landfills or lateral expansions of existing landfills must install composite liners and groundwater monitoring before landfill begins operation. • Surface impoundments must meet LDRs and liner requirements within 5 years of effective date of rule or close within an additional 2 years. • LDR requirements have the practical effect of phasing out surface impoundments

42. Regulation under Subtitle D • CCRs would remain classified as a “non-hazardous” waste. • National minimum criteria governing facilities disposing of CCRs. • Many of the engineering requirements are very similar to the Subtitle C option, e.g., groundwater monitoring, liner and structural stability requirements. • Requirements are self implementing. • Owner/operator required to: • obtain certifications by independent professional engineers/minimum qualification requirements for those who make certifications. • document how various standards are met. Must be kept in the operating record and the State notified. • maintain a web site available to the public that contains the documentation that the standard is met.

43. Key Differences: Subtitle C versus Subtitle D

44. Costs of CCR Regulation EPA has estimated regulatory costs and regulatory benefits (groundwater protection avoided cancer cases, avoided future cleanup costs, increased beneficial use) for the next 50 years. • Subtitle C (assuming no reduction in beneficial uses): • Cost: up to $1.5 billion / year • Benefit: up to $7.4 billion / year • Subtitle D (assuming no reduction in beneficial uses): • Cost: up to $587 million / year • Benefit: up to $3 billion / year • If the full regulatory costs of Subtitle C were passed on from utility companies to consumers, our estimates indicate that electricity prices nationwide could increase by 0.8%, on average. • For Subtitle D, the potential full cost pass-thru nationwide increase in electricity prices is estimated at 0.2%.

45. Providing Relief in Extreme CasesStatutory, Regulatory, and Market Safeguards Assorted risk management procedures under the Clean Air Act (CAA), Federal Power Act (FPA), and other statutes provide the EPA, DOE, FERC, and the President an array of tools to moderate, when and where necessary, potential impacts on electric system reliability.

46. Announced Coal Retirements