Clear Skies in Vermont

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Highlights of Clear Skies in Vermont

• Vermont sources would emit no SO2, NOx, or mercury by 2020.
• The health benefits in Vermont would total $170 million. In the broader New England region, benefits would be approximately 500 fewer premature deaths (290 under the alternative estimate) and 860 fewer hospitalizations/emergency room visits each year.
• In addition, Vermont would receive environmental benefits, including reduced sulfur and nitrogen deposition and improved visibility for Vermont residents who visit National Parks and Wilderness Areas nationwide valued at $5 million each year by 2020.
• Clear Skies does not significantly impact electricity prices. With or without Clear Skies, electricity prices in the electricity supply region that includes Vermont 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.
  • Vermont'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
  • Vermont would benefit from regional reductions of SO2, NOx and mercury emissions
  • Delivers dramatic progress towards achievement of regional 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 Vermont under Clear Skies

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

Clear Skies Health and Air Quality Benefits in Vermont

Improve Public Health

• Throughout the New England region, reduced ozone and fine particle exposure by 2020 would result in public health benefits of:
  • approximately 500 fewer premature deaths each year (see note 1)
  • approximately 320 fewer cases of chronic bronchitis each year
  • approximately 1,100 fewer non-fatal heart attacks each year
  • approximately 860 fewer hospital and emergency room visits each year
  • approximately 57,000 fewer days workers are out sick due to respiratory symptoms each year
  • approximately 4,600 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 Vermont’s lakes and streams.

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

• All counties in Vermont currently meet the 8-hour ozone and fine particle standards.
• Clear Skies would further reduce concentrations of ozone and fine particles throughout Vermont.

Clear Skies Environmental Benefits in Vermont

Clear Skies Would Provide Substantial Environmental Benefits in Vermont

In comparison to existing programs,

• Visibility would improve perceptibly in much of the state.
• The value of improved visibility for Vermont residents who visit National Parks and Wilderness areas nationwide would be $5 million each year by 2020.
• Sulfur deposition, a primary cause of acid rain, would decrease by 15-30% across the state.
• Nitrogen deposition, another significant contributor to acid rain as well as a cause of damage in nitrogen-sensitive forests, would decrease by up to 20% throughout Vermont.
• Mercury deposition would decrease by up to 5% across the state.

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

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 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 Vermont under Clear Skies

Electricity Prices in Vermont 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 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 Vermont under Clear Skies

Benefits Outweigh the Costs

• In Vermont, Clear Skies is projected to cost less than $1 million annually by 2020 while providing health benefits totaling approximately $170 million annually.
• The increases in production costs under Clear Skies represent only a small percentage of total retail electricity sales revenue in Vermont.
• Retail electricity sales revenue in Vermont was almost $600 million in 2000.
• Adjusting these sales revenues by the same growth rate used for the modeling of costs would result in revenues of almost $900 million 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 Vermont, Massachusetts, Missouri, Vermont, 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 290 premature deaths prevented throughout New England and $32 million in health benefits in Vermont each year by 2020.

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

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