Clear Skies in Montana

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Highlights of Clear Skies in Montana

• Montana sources would reduce emissions of SO2 by 4%, NOx by 19%, and mercury by 11% by 2020 due to Clear Skies.
  
• The health benefits in the West would total $8.6 billion annually ($1.6 billion under the alternative estimate) and include approximately 1,100 fewer premature deaths (600 under the alternative estimate) and 2,500 fewer hospitalizations/emergency room visits each year.
  
  Note: For the purposes of this analysis, the West includes all states that would be affected by the Zone 2 cap for NOx under Clear Skies. These states are WA, OR, CA, UT, AZ, ID, MT, WY, CO, NM, TX, OK, KS, NE, ND, and SD.
  
  
• In addition, Western states would continue to enjoy good visibility and the other benefits of a clean environment even in the face of increasing demand for electricity.
  
• Clear Skies does not significantly impact electricity prices. With or without Clear Skies, electricity prices in the electricity supply region that includes Montana 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.
  • Montana'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
  • Montana sources would 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

For a larger image, click here.

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)

Clear Skies Builds Upon the Work of the WRAP

Note: Yellow states are states involved in the WRAP voluntary emissions reduction program.

• Clear Skies is designed to support the WRAP goals and process; in addition to a national constraint on SO2, the bill ensures that the WRAP's emissions reduction goal for nine states is achieved:
  • If for any reason the regional reduction goal set by the WRAP for 2018 (271,000 tons for the power sector) is not achieved, a separate WRAP cap-and-trade program is triggered to ensure that the regional reductions are preserved.
  • This special cap-and-trade program is based on the framework established in the WRAP process.
  • This special cap can also be triggered by 2013 if States determine there is sufficient evidence that the target will not be met by 2018.

The West Faces Unique Challenges

• Environmental effects of power plant emissions - including visibility impairment and acid deposition - are broadly distributed
• Increasing ground-level ozone concentrations in national parks
• Particle-related haze in national parks and wilderness areas
• Nitrogen deposition in high elevation ecosystems (e.g., Colorado Front Range)
• Brown clouds in major cities
• Few western non-attainment areas are due to stationary source emissions

As the West Grows, Clear Skies Protects Human Health and the Environment

The West Will Continue to Grow...

• Population is projected to grow more than 20% from current levels by 2020
• Electricity demand is expected to grow more than the national average
  • More than 10% over national average in the Pacific States
  • More than 30% over national average in the Mountain States

...While the Environment Is Protected

• Clear Skies would protect air quality by lowering or halting increases in air emissions throughout the West from today's levels:
  • Prevent degradation of visibility in parks.
  • Help counties remain in attainment with health-based air quality standards, reducing the burden on state and local governments.
  • Ensure nitrogen deposition does not increase and reduce mercury deposition

Emissions in Montana under Clear Skies

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

Clear Skies Health and Air Quality Benefits in the West

Improve Public Health

• Reduced ozone and fine particle exposure by 2020 would result in public health benefits of:
  • approximately 1,100 fewer premature deaths each year (see note 1)
  • approximately 800 fewer cases of chronic bronchitis each year
  • approximately 1,800 fewer non-fatal heart attacks each year
  • approximately 2,500 fewer hospital and emergency room visits each year
  • approximately 150,000 fewer days workers are out sick due to respiratory symptoms each year
  • approximately 19,000 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 lakes and streams in the West.
  

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

• All counties in Montana are currently expected to meet the 8-hour ozone and fine particle standards.
• Lincoln County would be brought into attainment with the fine particle standards by 2020 under existing programs.
• Clear Skies would reduce fine particle concentrations throughout the state.
  

Clear Skies Would Provide Important Environmental Benefits in the West

• Quantifiable visibility benefits in just 5 parks (Grand Canyon, Rocky Mountain, Zion, Bryce Canyon, and Mesa Verde National Parks) total over $300 million.
• Visibility benefits in the Grand Canyon alone are estimated to be $100 million annually by 2020.
• Visibility improvements are also projected to improve tourism.
• In comparison to existing programs, nitrogen deposition would decrease by 5-20% in the inter mountain West, and in some areas, such as the Four Corners region, by up to 35%. Sulfur and mercury deposition would not increase despite growth in electricity demand.

Click here for a larger image

Electricity Generation in Montana under Clear Skies

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

Emission Controls in Montana under Clear Skies

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

* Retrofit was installed under Clear Skies by 2010

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

Electricity Prices in Montana under Clear Skies

With or without Clear Skies, retail prices in the North American Electric Reliability Council (NERC) WECC region (the electricity supply region that contains Montana) are projected to increase between 2005 and 2020. With Clear Skies, retail prices are projected to be approximately 0.6 - 2.6% higher between 2005 and 2020 than in the absence of the legislation.

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.

Costs and Benefits in Montana under Clear Skies

Benefits Outweigh the Costs

• In Montana, Clear Skies is projected to cost approximately $21 million annually by 2020, and $1.2 billion throughout the West, while providing health and visibility benefits in Montana totaling approximately $39 million annually and totaling approximately $9.5 billion annually region wide.
• The increases in production costs under Clear Skies represent only a small percentage of total retail electricity sales revenue in Montana.
  
• Retail electricity sales revenue in Montana was over $0.6 billion in 2000.
• Adjusting these sales revenues by the same growth rate used for the modeling of costs would result in revenues of over $0.9 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 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 rule makings.

  • 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 Non-Road Diesel rules.

1. An alternative methodology for calculating health-related benefits projects approximately 600 premature deaths prevented and $1.6 billion in health benefits each year in the West by 2020.

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

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