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EPA Proposes Rule to Cut Smog and Soot Pollution From Power Plants in the Eastern & Midwestern U.S.

John Walke

Posted July 6, 2010 in Curbing Pollution, Health and the Environment, U.S. Law and Policy

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Today the Environmental Protection Agency proposed a Clean Air Act rulemaking to reduce sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions from power plants in 31 eastern and midwestern states plus the District of Columbia.  The proposal targets smog and soot pollution from fossil fuel-fired power plants in these upwind states, protecting citizens and air quality in downwind states in the east and midwest.

This rule represents an important and necessary step to cut the harmful air pollution that forms smog and deadly soot pollution, from the industrial sector most responsible for these emissions.

The proposal comes in response to a 2008 court decision by the U.S. Court of Appeals for the D.C. Circuit, which overturned EPA’s 2005 Clean Air Interstate Rule (CAIR).  CAIR had established cap-and-trade programs for SO2 and NOx air pollution from power plants in 28 eastern and midwestern states plus the District of Columbia.  Today’s proposed Transport Rule adds Kansas, Nebraska and Oklahoma to the original 28 states covered by CAIR.  

Here are the highlights of today’s proposal:

  • EPA summarizes the following impressive conclusions about the proposed rule’s expected benefits and costs: “Today’s action would yield more than $120 billion in annual health benefits in 2014, including avoiding an estimated 14,000 to 36,000 premature deaths, 23,000 nonfatal heart attacks, 21,000 cases of acute bronchitis, 240,000 cases of aggravated asthma, and 1.9 million days when people miss school or work due to ozone- and particle pollution-related symptoms. These benefits would far outweigh the annual cost of compliance with the proposed rule, which EPA estimates at $2.8 billion in 2014.”  Indeed, this $120 billion in projected annual benefits is the low end of the benefits range, insisted upon by the economists at the White House Office of Management and Benefit Budget.  The high end of the projected annual benefits range is a remarkable $290 billion (in 2006 $) in 2014. The vast majority of these benefits are health-related, with $3.4 billion attributed to visibility improvements in national parks and wilderness areas.  And these figures do not even capture the huge benefits that EPA was unable to quantify, including “reductions in mercury contamination, acid rain, eutrophication of estuaries and coastal waters, and acidification of forest soils.”
  • EPA projects today's proposal will reduce covered power plant emissions in 2012 to 4.1 million tons of SO2 and 1.6 million tons of NOx.  By contrast, the prior administration’s CAIR had been expected by 2012 to reduce power plant emissions to 5.1 million tons of SO2 and 1.7 million tons of NOx.
  • EPA projects the proposal will reduce power plant emissions in 2014 to 3.3 million tons of SO2 and 1.6 million tons of NOx.  CAIR had been expected by 2014 to reduce covered power plant emissions to 4.6 million tons of SO2 and 1.7 million tons of NOx.  EPA indicates that these 2014 emissions levels would reflect reductions in power plant SO2 emissions by 71 percent over 2005 levels, and reductions in power plant NOx emissions by 52 percent over 2005 levels.
  • The architecture for the rule is what one might call a hybrid cap-and-trade program: the rule establishes SO2 and NOx emissions budgets for each upwind state; allocates emissions allowances to power plant sources in each state; then allows full trading to occur intrastate (within a given state’s borders); and finally allows limited interstate trading (across state borders), with constraints on the amount and location of permissible trading.  EPA explains its preferred approach thusly: “[t]his remedy option would allow unlimited intrastate trading and limited interstate trading to account for variability in the electricity sector, but also includes assurance provisions to ensure that the necessary emissions reductions occur within each covered state.”
  • Today’s proposal accelerates cleanup of power plant air pollution by taking the form of a so-called “federal implementation plan” regulation – committing states to their emissions budgets and requiring power plants to meet these obligations by as early as 2012 directly under federal law.  This welcome step allows regulators to avoid the time-consuming delay of intervening state rulemakings.
  • The proposal establishes a new regulatory and policy framework for addressing transported air pollution, in the words of EPA, “a new approach that can and will be applied again as further pollution reductions are needed to help areas meet air quality health standards.”  This should assist EPA in addressing the following acknowledged shortcoming in the NOx reduction demands.

EPA’s proposal recognizes the need to achieve additional NOx reductions after 2014 to enable states to meet both the existing ozone standards and forthcoming ozone standards.  The air pollution modeling underlying today’s proposal is linked to EPA’s outdated and unprotective 1997 ozone air quality standards.  So EPA was operating under an undesirable constraint that did not take into account the ozone standard that EPA is widely expected to strengthen in August, to between 60 and 70 parts per billion (ppb).  Based on the strength of the science and clear public health imperatives, NRDC, the American Lung Association and others have supported an ozone standard set no higher than 60 ppb. 

But the agency recognizes this shortcoming in the NOx levels and commits  to seeking deeper NOx reductions as needed to meet the upcoming ozone standard: “EPA has already started the required analyses to determine the responsibility of upwind states for ozone problems projected to remain after today's rule. We anticipate proposing a determination to address pollution transport for any upcoming ozone standard in 2011 and finalizing it in 2012.  EPA plans to identify any needed emissions reductions from upwind states in time to help downwind states attain the reconsidered ozone standards.” 

Today’s proposal includes a schedule committing EPA to propose a second transport rule seeking any deeper NOx reductions in the summer of 2011 with a final rule in the summer of 2012.   

EPA expects to issue today's important proposed rule in final form in June or July of 2011.  NRDC will submit comments on the proposed rulemaking with a coalition of public health and environmental organizations.

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Comments

James H.Jul 6 2010 05:12 PM

Isn't it slightly ironic that the EPA has effectively killed the acid rain program? Following the release of the Transport Rule, SO2 and NOx derivative prices plummeted to near zero. At these prices, there is effectively no punishment for emitting these pollutants, much less incentivizing utilities to scrub existing coal fleets.

The EPA's freshly minted transport rule will be met with a flurry of litigation upon its implementation - leaving the utilities to emit freely and excessively. McCarthy herself even admitted that the rule will be swiftly litigated against, and such litigation will leave existing markets markets mired with uncertainty.

Further, the existing banked allowances held by utilities - amounting to billions of dollars - are now to be considered worthless. That's a great way to drive support for future market-based mechanisms crafted by the EPA. Carbon anybody? Good luck!

Supporting the EPA's transport rule is like patting yourself on the back for discovering lead paint tastes delicious. Instead of showing unflagging support for anything the EPA crafts, why not support efforts that actually make a positive impact?

Senator Carper's multi-pollutant legislation provides more stringent emissions targets than the EPA''s transport rule, allows for unimpeded interstate trading, covers the entire US, and would retain the value of existing banked allowances. Did I mention that it is not as susceptible to litigation? So why are are respectable environmentalist groups such as the NRDC not getting behind legislation such as Carper's multi-pollutant bill?

Mike P.Jul 6 2010 08:44 PM

Congratulations to the EPA. With this proposal they not only practically guarantee that power pollution will be essentially free until the Transport rule becomes effective in 2021 but also probably completely undermined the use of cap-and-trade as a policy tool for any other pollutant.

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