# Addressing the Environmental **Impacts of the Power Sector 2011 EIA Energy** **C onference**  **April 26, 2011**  Sam Napolitano U.S. EPA

# Context

• EPA has recently proposed regulations governing air emissions, coal ash handling, and cooling water intakes for power plants. • The regulations address years of uncertainty (in some cases decades) and are designed to address harmful pollution and other impacts under existing law

a nd mandates established by Congress. • Several rules respond to Court direction. • The overall goal is to provide positive environmental outcomes for the public and provide industry wi th greater certainty using common sense and flexible solutions that are reasonable and achievable. • The benefits to public health are very substantial. For instance, air rules alone are anticipated to provide at least $180 to $430 billion in annual benefits by 2015. 2

# Overview of Proposed Rules **Cov erage**  **Proposed Final**  Transport Rule SO 2 & NOx (for PM and

ozone), Eastern half of U.S. July 2010 June 201 1

3 ozone), Eastern half of U.S. Mercury and Air Toxics Rule Hazardous Air Pollutants,

Nationwide March 201 1 November 201 1 Coal Combustion Residues Rule Coal Ash Storage &

Disposal, Nationwide June 2010 July 2012 Cooling Water Intake Rule Water Intake Structures,

Nationwide March 201 1 Summer 2012

# Transport Rule Overview **Scope:** Addresses nonattainment and regional transport of air emissions across State borders (SO 2 

### and NOx

### ) **Cov erage:**  Fossil -fuel fired units > 25 MW in Eastern half of the U.S.

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### Compliance: Phase I in 2012, Phase II in 2014 **Other:** • Designed to replace the Clean Air Interstate Rule (CAIR) • Preferred option is a flexible market- based mechanism • 2012 compliance builds largely off controls already in place and under construction

# Transport Rule Impacts Annual Cost : $2.8 billion * 

# in 2014 Other Impacts:

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# • Electricity price increase: 2% in 2014 • Coal retirements: 1.2 gigawatts (could occur as early as 2012, mostly smaller and less efficient units) * In 2006 dollars.

# Mercury and Air Toxics Rule Overview **Scope:** Addresses emissions of hazardous air pollutants (mercury, lead, acid gases, arsenic, etc.) **Cov erage:**  Coal and oil steam electric units > 25 MW, nationwide

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### Cov**erage:** Coal and oil steam electric units > 25 MW, nationwide **Compliance:** 2015, with possible 1 -year extension **Other:** • Provides flexibility through facility- level compliance • Uses surrogates to control for certain HAPs • Emission limits b ased upon engineering performance standards

# Mercury and Air Toxics Rule Impacts Annual Cost : $10.9 billion * 

## in 2015 Other Impacts:

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## • Electricity price increase: 3.7% in 2015, 2.6% in 2020 • Will result in s ubstantial upgrading of coal -fired units that have not yet installed advanced pollution controls • Coal retirements: 10 gigawatts in 2015 (mostly smaller, less efficient units) * In 2007 dollars.

# Coal Combustion Residues Rule Overview **Scope:** Addresses the storage & disposal of coal combustion residuals (CCR; aka coal ash) by the

electric utility industry. **Coverage:** Existing and new CCR surface impoundments and CCR landfills (about 500 coal -fired power

plants) **Compliance:** Co- proposed options under Subtitle C and D that have varying compliance dates

• Subtitle C: States must adopt the rule, which could take 3-5 years to be effective.

8 • Subtitle C: States must adopt the rule, which could take 3-5 years to be effective. Existing fa cilities must meet land disposal restrictions and retrofit within 5 years; if a facility chooses not to retrofit, they have an additional 2 years to close (up to 7 years total from the effective date to close). • Subtitle D: Self- implementing and effective 6 months after promulgation. Existing facilities must remove solids and retrofit or cease receiving waste within 5 years. **Other:** • Compliance costs vary depending on option (RCRA Subtitle C or Subtitle D). • However, the requirements for the CCR disposal units (e.g. ground -water monitoring & bottom liners) are similar under both options. • Rule will not apply to CCR "beneficial uses" by other industries, only to CCR disposal. • Rule will not apply to non - utility electricity plants operated by other industries (e.g., universities, manufacturing facilities, etc.)

# Coal Combustion Residues Rule Impacts Annual Cost : $600 million to $1.5 billion * 

# Other Impacts:

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# • Electricity price increase: 0.2 to 0.8% • Coal retirements: None anticipated

* In 2009 dollars.

# Cooling Water Intake Rule Overview **Scope:** Requires additional technology to reduce impacts to aquatic life **Cov erage:**  Any facility (power sector or industrial) capable of drawing over 2

million gallons of water per day, using at least 25% of that water for cooling purposes

10 **Compliance:** by 2020 **Other:** • Requires relatively inexpensive screens on affected facilities to protect aquatic life • Requires significant study prior to determining need for more costly cooling systems for additional protection (e.g., cooling towers), and determination is case- by-case • Does not prescribe technologies – uses environmental performance standards

# Cooling Water Intake Rule Impacts Annual Cost : $400 million * 

# Other Impacts:

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# • Electricity price increase: less than 1% • Total Retirements: 9 gigawatts (almost all are oil and gas steam units)
* In 2009 dollars.

# There is a “Train -wreck” of Analyses Over a dozen studies have been released that attempt to assess the impacts of EPA rules. • Speculative: All of them are based upon subjective judgments concerning EPA policy, since the Mercury and Air Toxics and Water Rules had been only recently proposed.

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### • Pessimistic: The analyses tend to either be static in nature (NERC), or have limited and expensive technology representation for HAP reductions (almost all studies). Some assume an overly aggressive compliance schedule or do not account for different categories of facilities. • The few studies that include less stringent alternate scenarios and improved technology representation show less overall impact. 

### • Compliance Flexibility Missing: Analyses often did not include the flexibility that EPA has incorporated into proposed rules.

# Moving Forward • The studies show a lot of stakeholder interest and the desire to focus on compliance. • EPA’s primary rules covering the power sector over the next several years are now proposed and out for public comment. • EPA is pursuing a reasonable approach to provide ample flexibility where possible.

13 • EPA’s recent analysis indicates reserve margins are quite large in many parts of the U.S. • To ensure a smooth path towards compliance , stakeholders need to engage sooner, rather than later, and begin to prepare for these rules now. • EPA will work closely with state and local officials, industry, and other stakeholders to ensure that the suite of tools needed to respond are fully utilized. • These measures include harnessing energy efficiency, ensuring that new sources of cleaner energy are brought online smoothly, supporting the timely addition of pollution controls, and identifying and dealing with potential challenges early in the process . These tools, like energy efficiency, can also help mitigate the costs and improve effectiveness.