Clear Skies in Alabama

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Highlights of Clear Skies in Alabama

• Alabama sources would reduce emissions of SO2 by 29%, NOx by 58%, and mercury by 40% by 2020 due to Clear Skies.
• The health benefits in Alabama would total $3.1 billion annually ($570 million under the alternative estimate) and include 200 fewer premature deaths (100 under the alternative estimate) and 500 fewer hospitalizations/emergency room visits each year.
• In addition, Alabama would receive environmental benefits including improved visibility. The value of this benefit for Alabama residents who visit National Parks and Wilderness areas throughout the country would be $44 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 Alabama 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
• Alabama 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
• Alabama 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 Alabama under Clear Skies

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

Clear Skies Health Benefits in Alabama

Improve Public Health

• Reduced ozone and fine particle exposure by 2020 would result in public health benefits of:
• approximately 400 fewer premature deaths each year (see note 1)
• approximately 200 fewer cases of chronic bronchitis each year
• approximately 500 fewer nonfatal heart attacks each year
• approximately 800 fewer hospital and emergency room visits each year
• approximately 40,000 fewer days workers are out sick due to respiratory symptoms each year
• approximately 4,400 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 Alabama's lakes, streams, and coastal waters.

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

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

Clear Skies Would Help Alabama Meet Air Quality Standards

• Currently there are 12 counties exceeding the annual fine particle standards and 4 counties exceeding the 8-hour ozone standard.
• Some of these counties are expected to be brought into attainment with the fine particle standards under existing programs.
• All of these counties are expected to be brought into attainment with the ozone standard under existing programs.

• Clear Skies would significantly improve air quality in Alabama further and more quickly than what is expected from existing programs.
• By 2010, Clear Skies would bring 4 remaining non-attainment counties (DeKalb, Shelby, Montgomery, and Houston--population approximately 500,000) into attainment with the annual fine particle standards.
• By 2020, Clear Skies would bring Morgan, Russell and Talledega counties (pop. 240,000) into attainment with the fine particle standard.
• By 2020, all counties except Jefferson County are projected to be in attainment with both the annual fine particle and 8-hour ozone standards.

• In addition, Clear Skies would reduce ozone and fine particle concentrations in counties throughout the state and move the remaining non-attainment county for fine particles in Alabama (Jefferson County) 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 Alabama

Clear Skies Would Provide Substantial Environmental Benefits in Alabama

In comparison to existing programs,

• Visibility would improve perceptibly. The value of improved visibility for the Sipsey Wilderness area is $1.6 million.
• The value of this benefit for Alabama residents who visit National Parks and Wilderness areas throughout the country would be $50 million each year by 2020.
• Sulfur deposition, a primary cause of acid rain, would decrease 15-30% throughout the state.
• Nitrogen deposition, a cause of damage in nitrogen-sensitive coastal waters, would decrease 5-20% throughout Alabama.
• Mercury deposition would decrease up to 15% in most of the state.*

* 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 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.

Electricity Generation in Alabama under Clear Skies

Current and Projected Generation by Fuel Type in Alabama under Clear Skies (GWh)	Alabama'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 13% from 1999 to 2020.

Emission Controls in Alabama under Clear Skies

Units in Alabama 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 Alabama 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 Alabama under Clear Skies

Benefits Outweigh the Costs

• In Alabama, Clear Skies is projected to cost approximately $287 million annually by 2020 while providing health benefits totaling approximately $3.1 billion annually.
• The increases in production costs under Clear Skies represent only a small percentage of total retail electricity sales revenue in Alabama.
• Retail electricity sales revenue in Alabama was almost $4.7 billion in 2000.
• Adjusting these sales revenues by the same growth rate used for the modeling of costs would result in revenues of over $7.2 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.

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 200 premature deaths prevented and $570 million in health benefits each year in Alabama by 2020.

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