Clear Skies in Illinois

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Highlights of Clear Skies in Illinois

• Illinois sources would reduce emissions of SO2 by 62%, NOx by 58%, and mercury by 53% by 2020 due to Clear Skies.
• The health benefits in Illinois would total $5.9 billion annually ($1.1 billion under the alternative estimate) and include approximately 800 fewer premature deaths (500 under the alternative estimate) and 2,000 fewer hospitalizations/emergency room visits each year.
• In addition, Illinois would receive environmental benefits, including reductions in mercury deposition and visibility improvements throughout the state and visibility benefits valued at $120 million for Illinois residents who visit America's National Parks and Wilderness Areas.
• Clear Skies does not significantly impact electricity prices. With or without Clear Skies, electricity prices in the electric supply region that includes Illinois are expected to remain near or below 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
  • Illinois'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
• Illinois 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

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 Illinois under Clear Skies

Emissions: Current (2000) and Existing Clean Air Act Regulations (base case*) vs. Clear Skies in Illinois 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 air quality standards or other parts 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 Emissions Reductions under Clear Skies

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 parts 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.

Clear Skies Health Benefits in Illinois

• Reduced ozone and fine particle exposure by 2020 would result in public health benefits of:
  • approximately 800 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 93,000 fewer days workers are out sick due to respiratory symptoms each year
  • approximately 14,000 fewer school absences each year

• Reduced mercury emissions would reduce exposure to mercury through consumption of contaminated fish, resulting in additional, unquantified benefits for those who eat fish from Illinois' lakes and rivers.

Counties Projected to Remain Out of Attainment with the PM2.5 and Ozone Standards in Illinois

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

Note: Based on 1999-2001 data of counties with monitors that have three years of complete data. The base case includes Title IV, the NOx SIP Call, the Tier II, Heavy-Duty Diesel, and Nonroad Diesel rules, final NSR settlements as of early spring 2003, and state-specific caps in CT, MA, MO, NC, NH, TX, and WI. It does not include mercury MACT or any other potential future regulations to implement the current ambient air quality standards or other parts of the Clean Air Act.

Clear Skies Would Help Illinois Meet Air Quality Standards

• Currently there are 5 counties exceeding the annual fine particle standards and 2 counties exceeding the 8-hour ozone standard.
  • Two of these counties are expected to be brought into attainment with the fine particle standards under existing programs.
    
  • One county would be brought into attainment with the ozone standard.
    
    
• Clear Skies would significantly improve air quality in Illinois beyond what is expected from existing programs.
  .
• By 2010, Clear Skies would bring Will County (population approximately 500,000) into attainment with the annual fine particle standard.
  
• By 2020, Clear Skies would bring Madison and St. Clair counties (population approximately 450,000) into attainment with the annual fine particle standard.
  
• By 2020, Clear Skies would bring Cook County (pop. 500,000) into attainment with the ozone standard.
  
  
• In addition, Clear Skies would reduce ozone and fine particle concentrations in counties throughout the state and move the remaining non-attainment county (Cook County) in Illinois closer to attainment.
  

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

Clear Skies Environmental Benefits in Illinois

In comparison to existing programs,

• Fine particle concentrations would decrease 10-25% across most of the state.
  
• Visibility would improve perceptibly. The value of this benefit for Illinois residents who visit America's National Parks and Wilderness Areas is $120 million.
  
• Sulfur deposition, a primary cause of acid rain, would decrease 15-30% throughout most of Illinois and 30-60% in southeastern portions of the state.
  
• Nitrogen deposition, another significant contributor to acid rain, as well as a cause of damage to nitrogen-sensitive coastal waters, including the Gulf of Mexico hypoxia zone, would decrease 5-20%.
  
• Mercury deposition would decrease by up to 15% throughout most of the state and up to 30% in some small areas.*
  

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

Electricity Generation in Illinois under Clear Skies

Current and Projected Generation by Fuel Type in Illinois under Clear Skies (GWh)

Illinois'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 38% from 1999 to 2020.

Emission Controls in Illinois under Clear Skies

Units in Illinois Projected to Be Retrofitted Due to Clear Skies by 2020

* Retrofit was installed under Clear Skies by 2010

Note:

1. Retrofits and total coal-fired capacity apply to coal units greater than 25 MW.

2. Meredosia units 1- 4, Marion units 1- 3, Lakeside units 7 & 8, Hennepin unit 1, Vermilion unit 1, and Hutsonville units 5- 6 are projected to be removed from operation by 2005 with Clear Skies due to excess gas-fired capacity in the marketplace, unless otherwise needed for voltage purposes. The recent overbuild of gas-fired generation reduces the need for less efficient units operating at lower capacity factors. These units are inefficient compared to other coal- fired plants and newer gas-fired generation. Less conservative assumptions regarding natural gas prices or electricity demand would create a greater incentive to keep these units operational.

Electricity Prices in Illinois under Clear Skies

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 parts 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 Illinois under Clear Skies

Benefits Outweigh the Costs

• In Illinois, Clear Skies is projected to cost approximately $496 million annually by 2020 while providing health benefits totaling approximately $5.9 billion annually.
  

Clear Skies.... Guarantees significant emissions reductions – beginning years before full implementation Uses a proven and flexible market-based approach with incentives for innovation Increases certainty across the board for industry, regulators, and consumers

• The increases in production costs under Clear Skies represent only a small percentage of total retail electricity sales revenue in Illinois.
  • Retail electricity sales revenue in Illinois was over $9.0 billion in 2000.
  • Adjusting these sales revenues by the same growth rate used for the modeling of costs would result in revenues of $13.9 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 alternative 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 $1.2 billion in health benefits each year in Illinois by 2020.

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