Clear Skies in Florida

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Highlights of Clear Skies in Florida

• Florida sources would reduce emissions of SO2 by 25%, NOx by 68%, and mercury by 50% by 2020 due to Clear Skies.
• The health benefits in Florida would total $6.9 billion ($1.3 billion under an alternative estimate) and include 900 fewer premature deaths (500 under an alternative estimate) and 2,000 fewer hospitalizations/emergency room visits for asthma.
• In addition, Florida would receive environmental benefits including reductions in mercury deposition and reduced nitrogen deposition to coastal waters.
• Clear Skies does not significantly impact electricity prices. With or without Clear Skies, electricity prices in the electricity supply region that includes Florida are expected to remain near 2000 prices.

Clear Skies: An Innovative Approach to Improving Human Health and the Environment

Why Clear Skies?

• Air quality has improved, but serious concerns persist
• Florida's citizens suffer ill effects from air pollution, including asthma attacks and premature death
• Electricity generation sector remains a major emissions source
• Very cost-effective to control the power sector, relative to other sources
• Sources are concerned about upcoming complex and burdensome regulations

Advantages of the Clear Skies Approach

• Guarantees significant nationwide emissions reductions - beginning years before full implementation
• Florida sources would substantially reduce emissions of SO2, NOx, and mercury
• Delivers dramatic progress towards achievement of critical health and environmental goals
• Uses proven, market-based flexible approach with incentives for innovation
• Recognizes environmental needs as well as industry constraints, allowing industry to better manage its operations and finances while lowering risks to the public
• Sources are projected to install pollution controls to enable continued reliance on coal
• Increases certainty across the board for industry, regulators, and consumers

Under Current Clean Air Act Power Plants Would Face a Complex Set of Requirements

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Clear Skies Sets a Firm Timeline for Emission Reductions

2004: The NOx SIP call (summertime NOx cap in 19 Eastern States + D.C.)

2008: Clear Skies NOx Phase I (2.1 million ton annual cap assigned to two Zones with trading programs)

2010:

• Clear Skies Hg Phase I (26 ton annual cap with a national trading program)
• SO2 Phase I (4.5 million ton annual cap with a national trading program)

2018:

• Clear Skies NOx Phase II (1.7 million ton annual cap assigned to two Zones with trading programs)
• Clear Skies Hg Phase II (15 ton annual cap with a national trading program)
• Clear Skies SO2 Phase II (3.0 million ton annual cap with a national trading program)

Emissions in Florida under Clear Skies

Emissions: Current (2000) and Existing Clean Air Act Regulations (base case*) vs. Clear Skies in Florida in 2010 and 2020

Note: The base case using IPM includes Title IV, the NOx SIP Call, NSR settlements, and state-specific caps in CT, MA, MO, NC, NH, TX, and WI. It does not include mercury MACT in 2007 or any other potential future regulations to implement the current ambient air quality standards or other part of the Clean Air Act. Base case emissions in 2020 will likely be lower due to state and federal regulatory actions that have not yet been promulgated.

SO2 and NOx Emission Reductions under Clear Skies

Note: The base case in IPM includes Title IV, the NOx SIP Call, NSR settlements, and state-specific caps in CT, MA, MO, NC, NH, TX, and WI. It does not include mercury MACT in 2007 or any other potential future regulations to implement the current ambient air quality standards or other part of the Clean Air Act. Base case emissions in 2020 will likely be lower due to state and federal regulatory actions that have not yet been promulgated. Emissions projected for new units in 2020 are not reflected.

Clear Skies Health and Air Quality Benefits in Florida

Improve Public Health

• Reduced ozone and fine particle exposure by 2020 would result in public health benefits of:
• approximately 900 fewer premature deaths each year (see note 1)
• approximately 500 fewer cases of chronic bronchitis each year
• approximately 1,300 fewer nonfatal heart attacks each year
• approximately 2,000 fewer hospital and emergency room visits each year
• approximately 84,000 fewer days workers are out sick due to respiratory symptoms each year
• approximately 23,000 fewer school absences each year

• Reduced mercury emissions would reduce exposure to mercury through consumption of contaminated fish, resulting in additional, unquantified benefits to those who eat fish from Florida's lakes, streams, and coastal waters.

Help Maintain Health-Based Air Quality Standards (see note 2)

• All Florida counties currently attain the annual fine particle standards; all but two currently attain the 8-hour ozone standard.
• Escambia and St. Lucie counties (population approximately 600,000) are expected to come into attainment with the 8-hour ozone standard by 2010 under existing programs.
• Clear Skies would also reduce concentrations of ozone and fine particles in other counties throughout Florida.

Clear Skies Environmental Benefits in Florida

Clear Skies Would Provide Substantial Environmental Benefits in Florida

In comparison to existing programs,

• Visibility would improve perceptibly.
• The value of this benefit for Florida residents visiting National Parks and Wilderness areas around the country is $230 million.
• Sulfur deposition, a primary cause of acid rain, would decrease 15-30% in most of the state, and up to 15% in the southeastern portion of the state.
• Nitrogen deposition, a cause of damage in nitrogen-sensitive coastal waters, would decrease 5-20% throughout most of Florida and more than 20% in some coastal portions of northern Florida.
• Mercury deposition would decrease up to 15% in some parts of northern Florida.*

* These results are based on modeling the Clear Skies mercury cap without triggering the safety valve.

Electricity Generation in Florida under Clear Skies

Current and Projected Generation by Fuel Type in Florida under Clear Skies (GWh)	Florida's electricity growth is projected to be met by increases in gas-fired and coal-fired generation. Clear Skies does not significantly alter this projection. Electricity from coal-fired generation will increase by 12% from 1999 to 2020.

Electricity Prices in Florida under Clear Skies

* Retrofit was installed under Clear Skies by 2010

Note: Capacity and retrofit data apply to coal and IGCC units greater than 25 MW

Electricity Prices in Florida under Clear Skies

Note: Retrofits and total coal-fired capacity apply to coal and IGCC units greater than 25 MW.

Note: The base case using IPM includes Title IV, the NOx SIP Call, NSR settlements, and state-specific caps in CT, MA, MO, NC, NH, TX, and WI. It does not include mercury MACT in 2007 or any other potential future regulations to implement the current ambient air quality standards or other part of the Clean Air Act. Base case emissions in 2020 will likely be lower due to state and federal regulatory actions that have not yet been promulgated.

Costs and Benefits in Florida under Clear Skies

Benefits Outweigh the Costs

• In Florida, Clear Skies is projected to cost approximately $320 million annually by 2020 while providing health benefits totaling approximately $6.9 billion annually.
• The increases in production costs under Clear Skies represent only a small percentage of total retail electricity sales revenue in Florida.
• Retail electricity sales revenue in Florida was over $13.5 billion in 2000.
• Adjusting these sales revenues by the same growth rate used for the modeling of costs would result in revenues of almost $20.8 billion annually in 2020.

• Nationwide, the projected annual costs of Clear Skies (in $1999) are $4.3 billion in 2010 and $6.3 billion in 2020; the nationwide benefits of Clear Skies are expected to be over $113 billion annually by 2020.
• An alternate estimate projects annual health benefits totaling $23 billion.

Note: Costs include capital costs, fuel, and other operation and maintenance costs (both fixed and variable) associated with the achievement of the emissions caps in the legislation (for example, the installation and operation of pollution controls). These state-level production costs are estimates; they do not account for the costs associated with the transfer of electricity across regions, nor the costs or savings that could be associated with allowance movement between sources.

Notes on EPA's Analysis

• The information presented in this analysis reflects EPA's modeling of the Clear Skies Act of 2003.
  • EPA has updated this information to reflect modifications:
  • Changes included in the Clear Skies Act of 2003.
  • Revisions to the Base Case to reflect newly promulgated rules at the state and federal level since the initial analysis was undertaken.
  • The Clear Skies modeling results presented include the safety valve feature
• This analysis compares new programs to a Base Case (Existing Control Programs), which is typical when calculating costs and benefits of Agency rulemakings.
• The Base Case reflects implementation of current control programs only:
  • Does not include yet-to-be developed regulations such as those to implement the National Ambient Air Quality Standards.
• The EPA Base Case for power sector modeling includes:
  • Title IV, the NOx SIP Call, NSR settlements, and state-specific caps in Connecticut, Massachusetts, Missouri, New Hampshire, North Carolina, Texas, and Wisconsin finalized before March 2003.
• For air quality modeling, the Base Case also includes federal and state control programs, as well as the Tier II, Heavy Duty Diesel, and Nonroad Diesel rules.

1. An alternative methodology for calculating health-related benefits projects approximately 500 premature deaths prevented and $1.3 billion in health benefits each year in Florida by 2020.

2. Based on 1999-2001 data of counties with monitors that have three years of complete data.

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