Clear Skies in Louisiana

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Highlights of Clear Skies in Louisiana

• Louisiana sources would reduce emissions of SO2 by 72%, NOx by 74%, and mercury by 60% by 2020 due to Clear Skies.
• The health benefits in Louisiana would total $1.7 billion annually ($320 million under the alternative estimate) and include approximately 200 fewer premature deaths (100 under the alternative estimate) and 500 fewer hospitalizations/emergency room visits each year.
• In addition, Louisiana would receive environmental benefits including reduced sulfur and nitrogen deposition and visibility benefits valued at $31 million each year by 2020 for Louisiana residents who visit National Parks and Wilderness Areas nationwide.
• Clear Skies does not significantly impact electricity prices. With or without Clear Skies, electricity prices in the electric supply region that includes Louisiana are expected to remain 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
• Louisiana'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
• Louisiana 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 Louisiana under Clear Skies

Emissions: Current (2000) and Existing Clean Air Act Regulations (base case*) vs. Clear Skies in Louisiana 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 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 and Air Quality Benefits in Louisiana

Improve Public Health

• Reduced ozone and fine particle exposure by 2020 would result in public health benefits of:
• approximately 200 fewer premature deaths each year (see note 1)
• approximately 100 fewer cases of chronic bronchitis each year
• approximately 300 fewer nonfatal heart attacks each year
• approximately 500 fewer hospital and emergency room visits each year
• approximately 23,000 fewer days workers are out sick due to respiratory symptoms each year
• approximately 4,800 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 Louisiana's lakes, streams, and coastal waters.

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

• All Louisiana parishes currently meet the fine particle standard; Ten parishes currently exceed the 8- hour ozone standard.
• All ten parishes (population approximately 1.5 million) that exceed the ozone standard are expected to come into attainment by 2010 under existing programs.
• Clear Skies would further reduce concentrations of ozone and fine particles throughout Louisiana.

Clear Skies Environmental Benefits in Louisiana

Clear Skies Would Provide Substantial Environmental Benefits in Louisiana

In comparison to existing programs,

• Visibility would improve perceptibly in northern Louisiana.
  • The value of improved visibility for Louisiana residents who visit National Parks and Wilderness areas throughout the country would be $31 million each year by 2020.
• Oxidized nitrogen deposition, a cause of damage to nitrogen-sensitive coastal waters, including the Gulf of Mexico hypoxia zone, would decrease by up to 20% throughout most of the state.*
• Sulfur deposition, a primary cause of acid rain, would decrease by 15-30% in northern Louisiana and by up to 15% throughout much of the remaining portions of the state.
• Mercury deposition would decrease by up to 5% across much of the state and up to 15% in some areas.**

* The increases in nitrogen deposition in Louisiana occur under both the Base Case and Clear Skies and are the result of increases in emissions from manufacturing and refining sources.

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

SO2 and NOx Emissions 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 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. Emissions projected for new units in 2020 are not reflected.

Electricity Generation in Louisiana under Clear Skies

Current and Projected Generation by Fuel Type in Louisiana under Clear Skies (GWh)	Louisiana's sources are projected to reduce their emissions through the installation of emission controls, rather than from a switch from coal to natural gas. In 2010, 18% of Louisiana's coal-fired generation is projected to come from units with advanced SO2 and/or NOx control equipment that also substantially reduce mercury emissions; in 2020, the percentage is projected to increase to 80%.

Emission Controls in Louisiana under Clear Skies

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

**Retrofit was installed under Clear Skies by 2010

Notes:
1. Retrofits and total coal-fired capacity apply to coal units greater than 25 MW.
2. Dolet Hills unit 1 is 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 or owner decides to receive by rail rather than minemout. The recent overbuild of gas-fired generation reduces the need for less efficient units operating at lower capacity factors. This unit is 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 this unit operational.

Electricity Prices in Louisiana 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 Louisiana under Clear Skies

Benefits Outweigh the Costs

• In Louisiana, Clear Skies is projected to cost approximately $32 million annually by 2020 while providing health benefits totaling approximately $1.7 billion annually.
• The increases in production costs under Clear Skies represent only a small percentage of total retail electricity sales revenue in Louisiana.
• Retail electricity sales revenue in Louisiana was almost $5.3 billion in 2000.
• Adjusting these sales revenues by the same growth rate used for the modeling of costs would result in revenues of almost $8.2 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.

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 100 premature deaths prevented and $320 million in health benefits each year in Louisiana by 2020.

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

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