### CHAPTER 16. ENVIRONMENTAL IMPACT ANALYSIS

TABLE OF CONTENTS

16.1 INTRODUCTION ................................................................................................ 16-1
16.2 AIR EMISSIONS ANALYSIS ............................................................................. 16-1
16.2.1 Air Emissions Descriptions.................................................................... 16-1
16.2.2 Air Quality Regulation ........................................................................... 16-3
16.2.3 Global Climate Change .......................................................................... 16-5
16.2.4 Analytical Methods fo r Air Emissions .................................................. 16-8
16.2.5 Effects on Power Plant Emissions ....................................................... 16-10
16.2.6 Effects on Upstream Fuel-Cycle Emissions ........................................ 16-15
16.2.7 Economic Valuation of Emissions Reductions .................................... 16-16
16.3 WETLAND, ENDANGERED AND THRE ATENED SPECIES, AND CULTURAL
RESOURCES ..................................................................................................... 16-24
16.4 SOCIOECONOMIC IMPACTS ......................................................................... 16-24
16.5 ENVIRONMENTAL JUSTICE IMPACTS ....................................................... 16-25
16.6 NOISE AND AESTHETICS .............................................................................. 16-25
16.7 SUMMARY OF ENVIRONMENTAL IMPACTS ............................................ 16-25

LIST OF TABLES

Table 16.2.1 Impact of the PTAC and PTHP Efficiency Standard on Cumulative EnergyRelated Emissions of CO 2 

### Between 2012 and 2042 by Trial Standard Level (Millions of Metric Tons CO 2 

### ) .............................................................. 16-8
Table 16.2.2 Emissions Forecast for AEO 2008 Reference Case ............................. 16-11
Table 16.2.3 Emissions Impact Forecasts for Standard Size PTACs ....................... 16-12
Table 16.2.4 Emissions Impact Forecasts for Non-Standard Size PTACs ............... 16-13
Table 16.2.5 Emissions Impact Forecasts for Standard Size PTHPs ........................ 16-14
Table 16.2.6 Emissions Impact Forecasts for Non-Standard Size PTHPs ................ 16-15
Table 16.2.7 Estimated Upstream Emissions of Air Pollutants as a Percentage of Direct
Power Plant Combustion Emissions .................................................... 16-16
Table 16.2.8 Estimates of Savings from CO 2 

### Emissions Reductions under PTAC and PTHP
Trial Standard Levels at 7% Discoun t Rate and 3% Discount Rate .... 16-18
Table 16.2.9 Estimates of Savings from Reductions of NOx and Hg under PTAC and PTHP
Trial Standard Levels at a 7% Discount Rate ...................................... 16-21
Table 16.2.10 Preliminary Estimates of Savings fr om Reductions of NOx and Hg under
PTAC and PTHP Trial Standard Leve ls at a 3% Discount Rate ......... 16-21
Table 16.4.1 Mean Life-Cycle Cost Savings for All Customers and Sub-Group, Standard
Size PTACs and PTHPs ....................................................................... 16-24
Table 16.7.1 Environmental Impact Analysis Results Summary, Standard-Size PTACs and
PTHPs .................................................................................................. 16-26
Table 16.7.2 Environmental Impact Analysis Results Summary, Non-Standard PTACs and
PTHPs .................................................................................................. 16-2716-ii

### CHAPTER 16. ENVIRONMENTAL IMPACT ANALYSIS

16.1 INTRODUCTION

This chapter describes potential envir onmental effects that may result from amended energy conservation standards for packaged terminal air conditioners (PTACs) and packaged terminal heat pumps (PTHPs). The U.S. Department of Energy (DOE)’s proposed energy conservation standards are not site-specific, and would apply to all 50 States and U.S. territories. Therefore, none of the proposed standards would impact land uses, cause any direct disturbance to the land, or directly affect bi ological resources in

any one area.

All of the potential trial standard leve ls (TSLs) are expected to reduce energy consumption in comparison to a baseline efficiency level. These changes in the demand for electricity and the costs of achieving these savings are the primary drivers in analyzing environmental effect s. Estimates of source energy savings can be found in the utility impact analysis in Chapter 14 of this technical support document (TSD). Detailed discussion on TSLs can be found in Chapter 9 of this TSD.

The primary impact of the TSLs is in ai r quality resulting from changes in power plant operations and capacity additions. Theref ore, much of this chapter describes the air quality analysis. The latter part of the chapter describes poten tial impacts to other
environmental resources.

16.2 AIR EMISSIONS ANALYSIS

The primary focus of the environmental an alysis is the impact on air quality of amended energy conservation standards for PT AC and PTHP equipment. The outcomes of the environmental analysis are driven by changes in power plant types and quantities of electricity generated under each of the alternatives. Changes in generation are described in the utility impact analysis in Chapter 14.

16.2.1 Air Emissions Descriptions

For each of the TSLs, DOE calculated total power-sector emissions based on output from NEMS-BT model (see Chapter 14). Th is analysis considers three pollutants: nitrogen oxides (NOx), mercury (Hg), and sulfur dioxide (SO 2 

### ). An air pollutant is any
substance in the air that can cause harm to humans or the environment. Pollutants may be natural or man-made (i.e., anthropogenic) and may take the form of solid particles (i.e., particulates or particulate matter), liquid droplets, or gases a 

### . This analysis also considers carbon dioxide (CO 2 

### ).

a More information on air pollution characteristics and regulations is available on the U.S. Environment Protection Agent (EPA)’s website at www.epa.gov.

### Sulfur Dioxide (SO 2 

### )

In addressing SO 2 

### emissions, the Clean Air Act Amendments of 1990 set an SO 2 

### emissions cap on all power generation, but permitted flexibility among generators through the use of emissions allowan ces and tradable permits. This SO 2 

### trading process (sometimes called “cap and trade”) implies that the standard will have virtually no affect on total physical emissions because emissions will always be at, or near, the allowed emissions ceiling. Consequen tly, there is no direct SO 2 

### environmental benefit from a reduction in electricity use due to the proposed energy conserva tion standards, as long as there is enforcement of the emissions ceiling. But to the extent reduced power generation demand decreases the demand for and price of emissions allowance permits, there is an environmentally related economic benef it from the proposed energy conservation standards reducing SO 2 

### emissions allowance demand. Furthermore, over time, if emissions decline, there is greater flex ibility in reducing the ceiling amount.

Nitrogen Oxides (NO x 

### )

Nitrogen oxides , or NO x 

### , are the generic term for a group of highly reactive gases, all of which contain nitrogen and oxygen in varying amounts. Many of the nitrogen oxides are colorless and odorless. However, one common pollutant, nitrogen dioxide (NO 2 

### ), along with particles in the air can ofte n be seen as a reddish-brown layer over many urban areas. NO 2 

### is the specific form of NOx reported in this document. NO x 

### is one of the main ingredients involved in th e formation of ground-level ozone, which can trigger serious respiratory problems. It can contribute to the formation of acid rain, and can impair visibility in areas such as national parks. NO x 

### also contributes to the formation of fine particles that can impair human health.

Nitrogen oxides form when fossil fuel is burned at high temperatures, as in a combustion process. The primary manmade sources of NO x 

### are motor vehicles, electric utilities, and other industrial, commercial, a nd residential sources that burn fossil fuels.
NO x 

### can also be formed naturally. Electric utilities account for about 22 percent of NO x 

### emissions in the United States.

Mercury

Coal-fired power plants emit mercury f ound in coal during the burning process. While coal-fired power plants are the largest remaining source of human-generated mercury emissions in the United States, they contribute very little to the global mercury pool or to contamination of U.S. waters. U. S. coal-fired power plants emit mercury in three different forms: oxidized mercury (lik ely to deposit within the United States); elemental mercury, which can travel thousands of miles before depositing to land and water; and mercury that is in particulate form. Atmospheric mercury is deposited on land, lakes, rivers, and estuar ies through rain, snow, and dry deposition, Once there, it can transform into methyl mercury and accumulate in fish tissue through
bioaccumulation.

### Americans are exposed to methyl mercur y primarily by eating contaminated fish. Because the developing fetus is the most sensiti ve to the toxic effect s of methyl mercury, women of childbearing age are regarded as the population of great est concern. Children exposed to methyl mercury before birth may be at increased risk of poor performance on neurobehavioral tasks, such as those meas uring attention, fine motor function, language skills, visual-spatial abili ties, and verbal memory.

Carbon Dioxide (CO 2 

### )

Carbon dioxide (CO 2 

### ) is not a regulated or criteria pollutant (see below), but it is
of interest because of its cl assification as a greenhouse ga s (GHG). GHGs trap the sun’s radiation inside the Earth’s atmosphere and e ither occur naturally in the atmosphere or result from human activities. Naturally occurring GHGs include water vapor, CO 2 

### , methane (CH 4 

### ), nitrous oxide (N 2 

### O), and ozone (O 3 

### ). Human activities, however, add to
the levels of most of these naturall y occurring gases. For example, CO 2 

### is emitted to the atmosphere when solid waste, fossil fuels (oil, natural gas, and coal), wood, and wood products are burned. During the past 20 year s, about three-quarters of anthropogenic (i.e., human-made) CO 2 

### emissions resulted from burning fossil fuels.

Concentrations of CO 2 

### in the atmosphere are naturally regulated by numerous processes, collectively known as the “carbon cycle.” The movement of carbon between the atmosphere and the land and oceans is dom inated by natural proces ses, such as plant photosynthesis. While these natural processe s can absorb some of the anthropogenic CO 2 

### emissions produced each year, billions of me tric tons are added to the atmosphere annually. In the U. S., CO 2 

### emissions from both energy generation and industrial processes account for 84.6 percent of total U.S. GHG emissions. 7



### 16.2.2 Air Quality Regulation

In 1990, EPA amended Title VI section to the Clean Air Act to phase out in 2010 hydrochlorofluorocarbons (HCFC) refriger ants, which are comm only used in air conditioning systems. The only refrigera nt currently used by PTACs and PTHP equipment is R-22, a HCFC refrigerant and th erefore included in the refrigerant phaseout regulations b 

### . Chapter 5 of this TSD, engineeri ng analysis, discusse s an analysis to characterize the performance and cost implicat ions of using an alternative refrigerant (i.e., R-410A) in PTAC and PTHP equipment. Manufacturers interviewed confirmed that the industry is planning to switch to R-410A as a substitute refrigerant for R-22 in PTAC and PTHP equipment. This conversion is not an impact of this rulemaking. Therefore, the effects of this conversion are outside the scope of this environmental analysis. All later chapters assume costs and performan ce of PTAC and PTHP equipment based on R410A refrigerant.

The Clean Air Act Amendments of 1990 list 188 toxic air pollut ants that EPA is required to control. EPA has set national ai r quality standards for six common pollutants (also referred to as “criteria” pollutants), two of which are SO 2 

### and NO
x 

### . Also, the Clean

b EPA’s R-22 phase-out regulations can be found at the EPA home website: http://www.epa.gov/ozone/title6/pha seout/hcfcfaqs.html#why_epa.

### Air Act Amendments of 1990 gave EPA the au thority to control acidification and to require operators of electric power plants to reduce emissions of SO 2 

### and NO
x 

### . Title IV
of the 1990 amendments establishe d a cap-and-trade program for SO 2 

### intended to help control acid rain. This cap- and-trade program serves as a model for more recent programs with similar features.

In 2005, EPA issued the Clean Air Intersta te Rule (CAIR) under sections 110 and 111 of the Clean Air Act (40 CFR Parts 51, 96, and 97). c 

### CAIR would have permanently capped emissions of SO 2 

### and NOx in eastern States of the United States. CAIR was
intended to achieve additi onal large reductions of SO 2 

### and/or NOx emissions across 28
eastern states and the District of Columbia. States were to achieve the required emission reductions using one of two compliance options: 1) meet an emission budget for each regulated state by requiring power plants to pa rticipate in an EPA-administered interstate cap-and-trade system that caps emissions in two stages, or 2) meet an individual state emissions budget through measures of th e state’s choosing. Phase 1 caps for NO x 

### were to be in place in 2009. Phase 1 caps for SO 2 

### were to be in place in 2010. The Phase 2 caps for both pollutants were due in 2015.

Also in 2005, EPA issued the final rule entitled “Standards of Performance for New and Existing Stationary Sources: Electric Steam Generating Units,” under
sections 110 and 111 of the Clean Air Act (40 CFR Parts 60, 63, 72, and 75). This rule, also called the Clean Air Mercury Rule, was cl osely related to the CAIR and established standards of performance for mercury emissions from new and existing coal-fired electric utility steam generating units. The Clean Ai r Mercury Rule regulat ed mercury emissions from coal-fired power plants. On February 8, 2008, the U.S. Court of Appeals for the
District of Columbia Circuit (D.C. Circuit) issued its deci sion in State of New Jersey, et al. v. Environmental Protection Agency

, d 

### in which the Court, among other actions, vacated the Clean Air Mercury Rule.

On July 11, 2008, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) issued its decision in North Carolina v. Environmental Protection Agency, which vacated the Clean Air Interstate Rule (CAIR) issued by the U.S. Environmental Protection Agency on March 10, 2005. e 

### CAIR was the basis under which NOx emissions were capped

. f 

### However, Even though the D.C. Circ uit vacated the CAIR, DOE notes that the D.C. Circuit left intact a voluntary program set in place by EPA's 1998 NO X 

### SIP Call rule, which provided 23 jurisd ictions with an option to implement a cap and trade emission program for NO X 

### emissions. See 63 Fed. Reg. 57356, 57359 (Oct. 27, 1998). g

c See http://www.epa.gov/cleanairinterstaterule/.

d No. 05-1097, 2008 WL 341338, at *1 (D.C. Cir. Feb. 8, 2008).

e See http://www.epa.gov/cleanairinterstaterule/.

f Case No. 05-1244, 2008 WL 2698180 at *1 (D.C. Cir. July 11, 2008).

g In the NO

x SIP Call rule, EPA found that sources in the District of Columbia and 22 “upwind” states (States) were emitting NO

x (an ozone precursor) at levels that significantly contributed to “downwind” states not attaining the ozone NAAQS or at levels that interfered with states in attainment maintaining the ozone NAAQS. In an effort to ensure that “downwi nd” states attain or continue to attain the ozone NAAQS, EPA established a region-wide cap for NO

x emissions from certain large combustion sources and
set a NO

x emissions budget for each State. In order to comply with the NO

x SIP Call Rule, States could elect to participate in the NO

x Budget Trading Program. Under the NO

x Budget Trading Program, each

### 16.2.3 Global Climate Change Climate change has evolved into a matter of global concern because it is expected to have widespread, adverse effects on natural resources and systems. A growing body of evidence points to anthropogenic sources of greenhouse gases, such as carbon dioxide (CO 2 

### ), as major contributors to climate chan ge. Because this Rule, if finalized, will likely decrease CO 2 

### emission rates from the fossil fuel sector in the United States, the Department here examines the impacts and causes of climate change and then the potential impact of the Rule on CO 2 

### emissions and global warming.

Impacts of Climate Chan ge on the Environment

Climate is usually defined as the aver age weather, over a period ranging from months to many years. Climate change refers to a change in the state of the climate, which is identifiable through changes in the m ean and/or the variability of its properties (e.g., temperature or precipitation) over an ex tended period, typically decades or longer.

The World Meteorological Organizati on and United Nations Environment Programme (UNEP) established the Intergove rnmental Panel on Climate Change (IPCC) to provide an objective source of informati on about climate change. According to the IPCC Fourth Assessment Report (IPCC Repor t), published in 2007, climate change is consistent with observed changes to the worl d’s natural systems; the IPCC expects these changes to continue.

Changes that are consistent with warmi ng include warming of the world’s oceans to a depth of 3000 meters; global average sea le vel rise at an aver age rate of 1.8 mm per year from 1961 to 2003; loss of annual averag e Arctic sea ice at a rate of 2.7 % per decade, changes in wind patterns that affect extra-tropical storm tracks and temperature patterns, increases in intense precipitation in some parts of the world, as well as increased drought and more frequent heat waves in many locations worldwide, and numerous ecological changes.

Looking forward, the IPCC describes con tinued global warming of about 0.2°C per decade for the next two decades under a wide range of emission scenarios for carbon dioxide (CO 2 

### ), other greenhouse gases (GHG)s, and aer osols. After that period, the rate of increase is less certain. The IPCC Repor t describes increases in average global temperatures of about 1.1°C to 6.4°C at the e nd of the century rela tive to today. These increases vary depending on the model and emissions scenarios.

The IPCC Report describes incremental im pacts associated with the rise in temperature. At ranges of incremental incr eases to the global average temperature, IPCC reports, with either high or very high confidence, that there is likely to be an increasing

emission source is required to have one allowance for each ton of NO

x emitted during the ozone season. States have flexibility in how they allocate allowances through their State Implementation Plans but States must remain within the EPA-established budget. Em ission sources are allowed to buy, sell and bank NO

x allowances as appropriate. It should be noted that, on April 16, 2008, EPA determined that Georgia is no longer subject to the NO

x SIP Call rule . 73 FR 21528 (April 22, 2008).

### degree of impacts such as cora l reef bleaching, loss of wildlife habitat, loss to specific ecosystems, and negative yield impacts for major cereal crops in the tropics, but also projects that there likely will be some be neficial impacts on crop yields in temperate regions.

Causes of Climate Change

The IPCC Report states that the world has warmed by about 0.74°C in the last 100 years. The IPCC Report finds that most of the temperature in crease since the mid20th century is very likely due to the increase in anthr opogenic concentrations of CO 2 

### and other long-lived greenhouse gases (GHGs) su ch as methane and nitrous oxide in the atmosphere, rather than from natural causes.

Increasing the CO 2 

### concentration partially blocks the earth’s re-radiation of captured solar energy in the infrared band, inhi bits the radiant cooling of the earth, and thereby alters the energy balance of the pl anet, which gradually increases its average temperature. The IPCC Report estimates that currently, CO 2 

### makes up about 77% of the
total CO 2 

### -equivalent h 

### global warming potential in GHGs emitted from human activities, with the vast majority (74%) of the CO 2 

### attributable to fossil fuel use. For the future, the IPCC Report describes a wide range of GHG emissions scenarios, but under each
scenario CO 2 

### would continue to comprise abov e 70% of the total global warming potential.

Stabilization of CO2 Concentrations

Unlike many traditional air pollutants, CO 2 

### mixes thoroughly in the entire atmosphere and is long-live d. The residence time of CO 2 

### in the atmosphere is long compared to the emission processes. Therefore, the global cumulative emissions of CO 2 

### over long periods determine CO 2 

### concentrations because it takes hundreds of years for natural processes to remove the CO 2 

### . Globally, 49 billion metric tons of CO 2 

### –equivalent of anthropogenic (man-made) greenhouse gases are emitted every year. Of this annual total, fossil fuels contribute about 29 billion metric tons of CO 2



### . i



### Researchers have focused on considering atmospheric CO 2 

### concentrations that likely will result in some leve l of global climate stabili zation, and the emission rates associated with achieving the “stabilizing” concentrations by particular dates. They
associate these stabilized CO 2 

### concentrations with temperatur e increases that plateau in a defined range. For example, at the lo w end, the IPCC Report scenarios target CO 2 

### stabilized concentrations range between 350 ppm and 400 ppm (essentially today’s

h GHGs differ in their warming influence (radiative fo rcing) on a global climate system due to their different radiative properties and lifetimes in the atmosphere. These warming influences may be expressed through a common metric based on the radiative forcing of CO 2 , i.e., CO 2 -equivalent. CO 2 equivalent
emission is the amount of CO 2 emission that would cause the same- time integrated radiative forcing, over a given time horizon, as an emitted amount of other long- lived GHG or mixture of GHGs.

i Other non-fossil fuel contributors include CO 2 emissions from deforestation and decay from agriculture biomass; agricultural and industrial emissions of methane; and emissions of nitrous oxide and
fluorocarbons.

### value)—because of climate inertia, concentra tions in this low end range would still result in temperatures projected to increase 2.0°C to 2.4°C above pre-industrial levels j 

### (about
1.3 o 

### C to 1.7 o 

### C above today’s levels). To achieve concentrations between 350 ppm to 400 ppm, the IPCC scenarios present that there w ould have to be a rapid downward trend in total annual global emissions of greenhouse gase s to levels that are 50% to 85% below today’s annual emission rates by no later than 2050. Since it is assumed that there would continue to be growth in global populati ons and substantial in creases in economic production, the scenarios identify required reductions in greenhouse gas emissions intensity (emissions per unit of output) of more than 90%. However, even at these rates,
the scenarios describe some warming and some climate change is projected due to already accumulated CO 2 

### and GHGs in the atmosphere.

The Beneficial Impact of the Rule on CO 2 

### Emissions

If finalized, it is anticipated that the Rule will reduce energy-related CO 2 

### emissions, particularly those associated with energy consumption in buildings. In the United States, the U.S. Energy Informati on Administration reports in its 2008 Annual Energy Outlook (AEO 2008) k 

### that U.S. annual energy-related emissions of CO 2 

### in 2005 were about 5.98 billion metric tons (a bout 20% of the world energy-related CO 2 

### emissions and about 12% of total global gree nhouse gas emissions), of which 2.32 billion
tons were attributed to re sidential and commercial buildi ngs sector (including related energy–using equipment such as PTACs a nd PTHPs). Most of the greenhouse gas
emissions attributed to residential and comme rcial buildings are emitted from fossil fuelfired power plants that generate electricity used in this se ctor. In the AEO2008 reference case, EIA projected that annual energy-related CO 2 

### emissions would grow from 6.0
billion metric tons in 2005 to 6.85 billion metr ic tons in 2030, an increase of 14.5% (see
Table 16.2.2 , based on AEO 2008), while emissions attributable to buildings would grow to 2.92 billion tons, an increase of 26.1%.

As computed for the AEO 2008 reference case, the cumulative U.S. energyrelated CO 2 

### emissions between 2012 and 2042 are desc ribed at about 209 billion metric
tons. The estimated cumulative CO2 emi ssion reductions from a PTAC and PTHP Efficiency Standard (shown as a range of a lternative Trial Standard Levels) during this same 30-year period are indicated in Table 16.2.1 . The estimated CO 2 

### emission
reductions in Table 16.2.1 are calculated usi ng NEMS-BT model.

j IPCC Working Group 3 Table TS 2

k www.eia.doe.gov/oiaf/archive/aeo08/index.html

### Table 16.2.1 Impact of the PTAC and PTHP Efficiency Standard on Cumulative Energy-Related Emissions of CO 2 

### Between 2012 and 2042 by Trial Standard Level (Millions of Metric Tons CO 2 

### )

TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 TSL 6
Standard Size PTACs and
PTHPS* - 0.49 - 0.81 - 1.05 - 1.06 - 1.09 - 1.68 - 2.34

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
Non-Standard PTACs
and PTHPs - 0.12 -0.14 - 0.18 - 0.20 - 0.29

* All results in metric tons, e quivalent to 1.1 short tons and negative values refer to a reduction compared with the Ba se Case



### The estimated savings shown in Table 16.2.1 , which are at most 0.001 percent of U.S. energy-related emissions of CO 2 

### (TSL 6 for Standard Size PTACs and PTHPs), comprise an even smaller fraction of U.S. emissions of greenhouse gases and of world emissions of greenhouse gases. However, th e savings would likely reduce overall U.S.
CO 2 

### emissions, as compared to U.S. CO 2 

### emissions absent an increase in the required efficiency of PTACs and PTHPs.

The Incremental Impact of th e Rule on Climate Change

It is difficult to correlate specific emi ssion rates with atmos pheric concentrations
of CO 2 

### and specific atmospheric concentrations with future temperatures because the IPCC Report describes a clear lag in the clim ate system between any given concentration
of CO 2 

### (even if maintained for long periods) an d the subsequent average worldwide and regional temperature, precipitation, and extrem e weather regimes. For example, a major determinant of climate response is “equilibri um climate sensitivity”, a measure of the climate system response to sustained radioac tive forcing. It is defined as the global average surface warming following a doubling of carbon dioxide concentrations. The IPCC Report describes its estimated, numeric va lue as about 3°C, but the likely range of that value is 2°C to 4.5°C, with cloud f eedbacks the largest s ource of uncertainty. Further, as illustrated above, the IPCC Re port scenarios for stabilization rates are presented in terms of a range of concentra tions, which then corre lates to a range of temperature changes. Thus, climate se nsitivity is a key uncertainty for CO 2 

### mitigation scenarios that aim to meet sp ecific temperature levels.

Because of how complex global climate syst ems are, it is difficult to know to what extent and when particular CO 2 

### emissions rates will impact global warming. However, as Table 16.2.1 indicates, the Rule will likely reduce CO 2 

### emissions rates from
the fossil fuel sector.

16.2.4 Analytical Methods for Air Emissions

NEMS-BT incorporates capabilitie s to assess compliance with SO 2 

### restrictions specified in the Clean Air Act and its amendm ents. Clean air act pr ovisions include New

### Source Performance Standards, and Revised New Source Performance Standards. The version of NEMS-BT in 2008 also included prov isions for the Clean Air Interstate Rule (CAIR), which imposes stricter restrictions on SO 2 

### and NO x 

### for some states, and the Clean Air Mercury Rule CAMR), which imposed a national mercury (H g) constraint. On July 11, 2008, the U.S. Court of Appeals for the District of Colu mbia Circuit (D.C. Circuit) issued its decision in North Carolina v. Environmental Protection Agency

, vacating the CAIR. 531 F.3d 896 (D.C. Cir. 2008). Although the constraints on NOx in CAIR and mercury in CAMR have since b een vacated by a court decision, the AEO 2008
reference case assumes that emissions of NOx and mercury would decline over time as
shown in Table 16.2.2.

Because the courts vacated CAIR and CAMR, the 2008 version of NEMS-BT could not be used directly to estimate em issions impacts for NOx and mercury. Instead, DOE established a range of NOx reductions due to standards. DOE’s high estimate was
based on the use of a nationwide NOx emi ssion rate for electrical generation. DOE
derived a current NOx emission rate for the power sect or based on data from the AEO
2008. DOE based the emission rate on the tons of NO X 

### emitted per TWh of electricity generated in 2006. Use of such an emission ra te assumes that future energy conservation standards would result in displa ced electrical generation mix th at is equivalent to today’s mix of power plants (i.e. , future power plants displaced are no cleaner than what are being used currently to generate electric ity). In addition, under the high estimate assumption, energy conservation standards w ould have little to no effect on the generation mix. Based on AEO2008 for a recen t year (2006) in which no regulatory or non-regulatory measures were in effect to limit NO X 

### emissions, DOE multiplied this emission rate by the reduction in electricity generation due to the standards considered. For 2006, the NOx emission rate was 0.843 kt/T Wh. DOE’s low estimate was based on
the use of an emission rate for new combined -cycle gas plants as provided in the NEMSBT. This emission rate equals 0.0341 kt/TWh and represents the lowe st emission rate of fossil-fuel based generation that might be displaced under standards. To estimate the
reduction in NO X 

### emissions, DOE multiplied this emission rate by the reduction in electricity generation due to the stan dards considered. The range in NO X 

### emission changes calculated using the low and high estimate scenarios are shown by TSL for
standard-sized and non-standard size PT ACs and PTHPS in Table 16.2.3, Table 16.2.4, Table 16.2.5 and Table 16.2.6 for the period from 2012 to 2042.

DOE also is able to report an estimate of the physical quantity changes in mercury (Hg) emissions associated with an energy c onservation standard. As opposed to using the NEMS-BT model, DOE establishe d a range of Hg reductions due to standards. DOE’s high estimate used a mercury emission ra te based on the AEO 2008. Because virtually all mercury emitted from electricity generation is from coal-fired power plants, DOE
based the emission rate on the tons of me rcury emitted per TWh of coal-generated electricity. Because power plant emission rates are a function of local regulation, scrubbers, and the mercury content of coal, it is extremely difficu lt to come up with a precise high-end emission rate. Therefore, DOE believes the most reasonable estimate is

### based on the assumption that all displaced coal generation would have been emitting at the average emission rate for coal generation as specified by AEO2008.

DOE based the emission rate on the av erage value reported in the AEO 2008 for 2006. This emission rate is 0.0255 tons per TWh. DOE’s low estimate was based on the use of an emission rate for new combined-cycle gas plants as provide d in the NEMS-BT. The emission rate for this generation tec hnology is 0.000 tons per TWh. To estimate the reduction in mercury emissions, DOE multipli ed the emission rate by the reduction in coal-generated electricity due to the standard s considered as determined in the utility impact analysis. The estimated changes in Hg emissions are shown in by TSL for
standard-sized and non-standard size PT ACs and PTHPS in Table 16.2.3 through Table 16.2.6 for the period from 2012 to 2042.

Coal-fired electric generation is the singl e largest source of electricity in the
United States. Because the mix of coals used significantly affects the emissions produced, the model includes a detailed re presentation of coal supply. The model
considers the rank of the coal as well as th e sulfur contents of the fuel used when determining optimal dispatch.

Within the NEMS-BT model, planni ng options for achieving emissions
restrictions in the Clean Air Act Amendm ents include instal ling pollution control equipment on existing power plants and build ing new power plants with low emission

rates. These methods for reducing em ission are compared to disp atching options such as fuel switching and allowance tr ading. Environmental regula tions also affect capacity expansion decisions. For instance, new plants are not allocated SO 2 

### emissions allowances according to the Clean Air Act Amendments. Consequently, the decision to build a particular capacity type must consid er the cost (if any) of obtaining sufficient allowances. This could involve purchasing allo wances or over complying at an existing
unit.

Modeling of SO 2 

### trading tends to imply that the physical emissions effects will be zero, as long as emissions are at the allowed ce iling. Because SO 2 

### has been regulated with emissions caps for more than a decad e, and no emissions reductions are reported from the NEMS-BT forecast model, DOE does not report SO 2 

### results here. This assumption is consistent with previous DOE environmental assessment documents. 1



### As noted in Chapter 14, NEMS-BT model forecasts end in year 2030. Emissions impacts beyond 2030 were extrapolated for this rulemaking in Table 16.2.3 through
Table 16.2.6

.

16.2.5 Effects on Power Plant Emissions

Table 16.2.2 shows reference power plant emi ssions in selected years. The Annual Energy Outlook (AEO) 2008 Reference ca se emissions are the emissions shown by the NEMS-BT model to result if none of the TSLs are promulgated. Table 16.2.3 through Table 16.2.6 show estimated changes in emissi ons in selected years for all the PTAC and PTHP equipment under each of seven TSLs, grouping for standard size

### PTACs and PTHPs and five TSLs for non-sta ndard size PTACs and PTHPs. Changes in
NO 2 

### and mercury emissions from power plants are shown in these tables. Changes in
CO 2 

### emissions from all sources are also shown in these four tables.

Table 16.2.2 Emissions Forecast for AEO 2008 Reference Case

NEMS-BT Results:

2005 2010 2015 2020 2025 2030

CO 2 (Million metric tons/year) 

### *

, ** 2,397 2,413 2,519 2,627 2,771 2,948
NO X (Thousand tons/year)† 3,639 2,338 2,112 2,112 2,142 2,169 Hg (tons/year)† 51.72 37. 24 24.19 18.48 16.69 15.41
* Metric tons, e quivalent to 1.1 short tons ** Emissions from all energy-related sources † Emissions from electric generation .



### Compared to the anticipated reference case emissions impacts forecast shown in
Table 16.2.2 , changes in emission levels shown in Table 16.2.3 through Table 16.2.6 are extremely small. In general, the NEMS-BT model results show a general trend toward slightly reduced emission levels over time for most if not all the equipment types.

### Table 16.2.3 Emissions Impact Foreca sts for Standard Size PTACs

NEMS-BT Results: Difference from Reference Case

Extrapolation

2015 2020 2025 2030 2035 2040 2042

Trial Standard Levels 1,2,4

CO 2 (Million metric tons/year) -0.006 -0.009 -0.009 -0.005 -0.005 -0.005 -0.005
NOx (Thousand tons/year)

High -0.0043 -0.0084 -0.0113 -0.0129 -0.0129 -0.0129 -0.0129

Low -0.0002 -0.0003 -0.0005 -0.0005 -0.0005 -0.0005 -0.0005 Hg (tons/year) High -0.0002 -0.0003 -0.0003 -0.0002 -0.0002 -0.0002 -0.0002

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Trial Standard Level 3

CO 2 (Million metric tons/year) -0.013 -0.021 -0.021 -0.012 -0.012 -0.012 -0.012

NOx (Thousand tons/year) High -0.0095 -0.0188 -0.0252 -0.0288 -0.0288 -0.0288 -0.0288

Low -0.0004 -0.0008 -0.0010 -0.0012 -0.0012 -0.0012 -0.0012
Hg (tons/year) High -0.0005 -0.0008 -0.0007 -0.0004 -0.0004 -0.0004 -0.0004

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Trial Standard Level A

CO 2 (Million metric tons/year) -0.008 -0.014 -0.014 -0.008 -0.008 -0.008 -0.008 NOx (Thousand tons/year)
High -0.0062 -0.0122 -0.0163 -0.0186 -0.0186 -0.0186 -0.0186

Low -0.0002 -0.0005 -0.0007 -0.0008 -0.0008 -0.0008 -0.0008 Hg (tons/year)
High -0.0003 -0.0005 -0.0005 -0.0003 -0.0003 -0.0003 -0.0003

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Trial Standard Level 5
CO 2 (Million metric tons/year) -0.023 -0.037 -0.037 -0.022 -0.022 -0.022 -0.022 NOx (Thousand tons/year) High -0.0169 -0.0333 -0.0447 -0.0509 -0.0509 -0.0509 -0.0509

Low -0.0007 -0.0013 -0.0018 -0.0021 -0.0021 -0.0021 -0.0021 Hg (tons/year) High -0.0008 -0.0013 -0.0013 -0.0007 -0.0007 -0.0007 -0.0007

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Trial Standard Level 6

CO 2 (Million metric tons/year) -0.035 -0.057 -0.057 -0.033 -0.033 -0.033 -0.033 NOx (Thousand tons/year)

High -0.0259 -0.0512 -0.0686 -0.0782 -0.0782 -0.0782 -0.0782

Low -0.0010 -0.0021 -0.0028 -0.0032 -0.0032 -0.0032 -0.0032 Hg (tons/year) High -0.0013 -0.0021 -0.0020 -0.0011 -0.0011 -0.0011 -0.0011

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 * Negative values refer to a re duction compared with the Base Case

### Table 16.2.4 Emissions Impact Forecasts for Non-Standard Size PTACs

NEMS-BT Results: Difference from Reference Case

Extrapolation

2015 2020 2025 2030 2035 2040 2042

Trial Standard Levels 1&2

CO 2 (Million metric tons/year) -0.002 -0.003 -0.003 -0.002 -0.002 -0.002 -0.002
NOx (Thousand tons/year)

High -0.0013 -0.0026 -0.0035 -0.0040 -0.0040 -0.0040 -0.0040

Low -0.0001 -0.0001 -0.0001 -0.0002 -0.0002 -0.0002 -0.0002 Hg (tons/year) High -0.0001 -0.0001 -0.0001 -0.0001 -0.0001 -0.0001 -0.0001

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Trial Standard Level 3

CO 2 (Million metric tons/year) -0.003 -0.005 -0.005 -0.003 -0.003 -0.003 -0.003
NOx (Thousand tons/year) High -0.0022 -0.0043 -0.0057 -0.0065 -0.0065 -0.0065 -0.0065

Low -0.0001 -0.0002 -0.0002 -0.0003 -0.0003 -0.0003 -0.0003
Hg (tons/year) High -0.0001 -0.0002 -0.0002 -0.0001 -0.0001 -0.0001 -0.0001

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Trial Standard Levels 4

CO 2 (Million metric tons/year) -0.002 -0.003 -0.003 -0.002 -0.004 -0.004 -0.004 NOx (Thousand tons/year)
High -0.0013 -0.0026 -0.0035 -0.0040 -0.0100 -0.0100 -0.0100

Low -0.0001 -0.0001 -0.0001 -0.0002 -0.0002 -0.0002 -0.0002 Hg (tons/year) High -0.0001 -0.0001 -0.0001 -0.0001 -0.0001 -0.0001 -0.0001

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Trial Standard Level 5

CO 2 (Million metric tons/year) -0.004 -0.007 -0.007 -0.004 -0.0043 -0.0043 -0.0043 NOx (Thousand tons/year) High -0.0033 -0.0066 -0.0088 -0.0100 -0.0100 -0.0100 -0.0100

Low -0.0001 -0.0003 -0.0004 -0.0004 -0.0004 -0.0004 -0.0004 Hg (tons/year) High -0.0002 -0.0003 -0.0003 -0.0001 -0.0001 -0.0001 -0.0001

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

### Table 16.2.5 Emissions Impact Forecasts for Standard Size PTHPs

NEMS-BT Results: Difference from Reference Case

Extrapolation

2015 2020 2025 2030 2035 2040 2042

Trial Standard Levels 1,2,4

CO 2 (Million metric tons/year) -0.010 -0.016 -0.015 -0.006 -0.006 -0.006 -0.006
NOx (Thousand tons/year)

High -0.0866 -0.1716 -0.2308 -0.2642 -0.2642 -0.2642 -0.2642

Low -0.0035 -0.0069 -0.0093 -0.0107 -0.0107 -0.0107 -0.0107 Hg (tons/year) High -0.0003 -0.0005 -0.0005 -0.0003 -0.0003 -0.0003 -0.0003

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Trial Standard Level 3

CO 2 (Million metric tons/year) -0.021 -0.034 -0.031 -0.013 -0.013 -0.013 -0.013

NOx (Thousand tons/year) High -0.1812 -0.3591 -0.4830 -0.5530 -0.5530 -0.5530 -0.5530

Low -0.0073 -0.0145 -0.0195 -0.0224 -0.0224 -0.0224 -0.0224
Hg (tons/year) High -0.0006 -0.0010 -0.0010 -0.0006 -0.0006 -0.0006 -0.0006

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Trial Standard Level A

CO 2 (Million metric tons/year) -0.027 -0.043 -0.039 -0.016 -0.016 -0.016 -0.016 NOx (Thousand tons/year)
High -0.2297 -0.4552 -0.6123 -0.7009 -0.7009 -0.7009 -0.7009

Low -0.0093 -0.0184 -0.0248 -0.0284 -0.0284 -0.0284 -0.0284 Hg (tons/year)
High -0.0008 -0.0013 -0.0013 -0.0007 -0.0007 -0.0007 -0.0007

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Trial Standard Level 5

CO 2 (Million metric tons/year) -0.031 -0.049 -0.045 -0.019 -0.019 -0.019 -0.019 NOx (Thousand tons/year) High -0.2648 -0.5247 -0.7058 -0.8080 -0.8080 -0.8080 -0.8080

Low -0.0107 -0.0212 -0.0286 -0.0327 -0.0327 -0.0327 -0.0327 Hg (tons/year) High -0.0009 -0.0015 -0.0015 -0.0008 -0.0008 -0.0008 -0.0008

Low 0.0000 0.0000 0.0000 0.0000

Trial Standard Level 6

CO 2 (Million metric tons/year) -0.039 -0.062 -0.057 -0.023 -0.023 -0.023 -0.023

NOx (Thousand tons/year)

High -0.3351 -0.6641 -0.8933 -1.0227 -1.0227 -1.0227 -1.0227

Low -0.0136 -0.0269 -0.0361 -0.0414 -0.0414 -0.0414 -0.0414 Hg (tons/year) High -0.0011 -0.0019 -0.0018 -0.0010 -0.0010 -0.0010 -0.0010

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

### Table 16.2.6 Emissions Impact Forecast s for Non-Standard Size PTHPs

NEMS-BT Results: Difference from Reference Case

Extrapolation

2015 2020 2025 2030 2035 2040 2042

Trial Standard Level 1
CO2 (Million metric tons/year) -0.002 -0.003 -0.003 -0.001 -0.001 -0.001 -0.001
NOx (Thousand tons/year)

High -0.0180 -0.0357 -0.0480 -0.0549 -0.0549 -0.0549 -0.0549

Low -0.0007 -0.0014 -0.0019 -0.0022 -0.0022 -0.0022 -0.0022 Hg (tons/year) High -0.0001 -0.0001 -0.0001 -0.0001 -0.0001 -0.0001 -0.0001

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Trial Standard Levels 2&3
CO2 (Million metric tons/year) -0.003 -0.005 -0.004 -0.002 -0.002 -0.002 -0.002
NOx (Thousand tons/year) High -0.0247 -0.0489 -0.0657 -0.0753 -0.0753 -0.0753 -0.0753

Low -0.0010 -0.0020 -0.0027 -0.0030 -0.0030 -0.0030 -0.0030
Hg (tons/year) High -0.0001 -0.0001 -0.0001 -0.0001 -0.0001 -0.0001 -0.0001

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000

Trial Standard Levels 4&5
CO2 (Million metric tons/year) -0.005 -0.008 -0.007 -0.003 -0.003 -0.003 -0.003 NOx (Thousand tons/year)
High -0.0416 -0.0824 -0.1109 -0.1269 -0.1269 -0.1269 -0.1269

Low -0.0017 -0.0033 -0.0045 -0.0051 -0.0051 -0.0051 -0.0051 Hg (tons/year) High -0.0001 -0.0002 -0.0002 -0.0001 -0.0001 -0.0001 -0.0001

Low 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000



### 16.2.6 Effects on Upstream Fuel-Cycle Emissions

Fuel-cycle emissions refer to the emissi ons associated with the amount of energy used in the upstream production and downstr eam consumption of electricity, including energy used at the power plant. Upstream processes include the mining of coal or extraction of natural gas, physical preparator y and cleaning processes, and transportation to the power plant. The NEMS-BT does a t horough accounting of emissions at the power plant due to downstream energy consump tion, but does not account for upstream emissions (i.e., emissions from energy losse s during coal and natural gas production). Thus, this analysis report s only power plant emissions.

However, previous DOE environmental assessment documents have developed qualitative estimates of affects on upstream fuel-cycle emissions. These emissions

### factors provide the reader with a sense of the possible magnitude of upstream effects. These upstream emissions would be in additi on to emissions from direct combustion. Relative to the entire fuel cycle, estimates based on the work of Dr. Mark DeLuchi, and reported in earlier DOE environmental a ssessment documents, find that an amount approximately equal to eight percent, by mass, of emissions (including SO 2 

### ) from coal production are due to mining, preparation that includes cleaning the coal, and transportation from the mine to the power plant. 1, 2 

### Transportation emissions include emissions from the fuel used by the mode of transportation that moves the coal from the mine to the power plant.

In addition, based on Dr. DeLuchi’s work, DOE estimated that approximately an amount equal to 14 percent of emissions from natural gas production result from upstream processes. Emission factor es timates and corresponding percentages of contributions of upstream emissions from co al and natural gas pr oduction, relative to power plant emissions, are shown in Table 16.2.7 for CO 2 

### , and NOx. The percentages are relative to power plant emissions and pr ovide a means to estimate upstream emission savings based on changes in emissions from power plants. The percentage effects presented in Table 15.2.6 provide a qualitative approach to viewing effects on fuel cycle emissions. The previous section indicat es slight overall reductions in CO 2 

### , and NOx. Thus, very small reductions in upstream emissi ons of air pollutant could be expected. This approach does not address mercury emissions.

Table 16.2.7 Estimated Upstream Emissions of Air Pollutants as a Percentage of
Direct Power Plant Combustion Emissions

Pollutant Percent of Coal
Combustion Emissions Percent of Natural Gas
Combustion Emissions
CO 2 

### 2.7 11.9
NOx 5.8 40



### 16.2.7 Economic Valuation of Emissions Reductions

In addition to the estimation of reductions in physical emissions from an energy conservation standard, the analys is also considered the monetary benefits associated with
these reductions.

Carbon Dioxide (CO 2 

### )

During the preparation of its most recent review of the st ate of climate science, the Intergovernmental Panel on Climate Change (IPCC) identified various estimates of the present value of reducing carbon dioxide emi ssions by one ton over the life that these emissions would remain in the atmosphere. The estimates reviewed by the IPCC spanned a range of values. In the absence of a cons ensus on any single estimate of the monetary
value of CO 2 

### emissions, DOE used an estimate id entified by the study cited in Summary for Policymakers prepared by Working Group II of the IPCC’s Fourth Assessment Report

### to calculate the potential monetary value of the CO 2 

### reductions likely to result from the
standards under considera tion in this rulemaking.

To put the potential monetary benefits from reduced CO 2 

### emissions into a form that is likely to be most useful to decisi on makers and interested parties, the estimated year-by-year reductions in CO 2 

### emissions were converted into monetary values and these resulting annual values were th en discounted over the life of the affected appliances to the present using both 3 percent and 7 percen t discount rates. DOE applied an annual growth rate of 2.4% to the value of S CC, as suggested by the IPCC Working Group II (2007, p. 822), based on estimated increases in damages from future emissions reported in published studies. As a result, DOE is assigned a range for the SCC of $0 to $20 ($2007) per ton of CO2 emissions. These es timates were based on an assumption of no benefit to an average benef it value reported by the IPCC as the Social Cost of Carbon (SCC). l 

### The resulting estimates of the potential range of the presen t value of benefits
associated with the reduction of CO 2 

### emissions are reflected in Table 16.2.8.

l During the preparation of its mo st recent review of the state of c limate science, the Intergovernmental Panel on Climate Change (IPCC) identified various es timates of the present value of reducing carbondioxide emissions by one ton over the life that thes e emissions would remain in the atmosphere. The estimates reviewed by the IPCC spanned a range of values. In the absence of a consensus on any single estimate of the monetary value of CO 2 emissions, DOE used the estimates identified by the study cited in Summary for Policymakers prepared by Working Group II of the IPCC’s Fourth Assessment Report to estimate the potential monetary value of CO 2 reductions likely to result from standards finalized in this rulemaking. According to IPCC, the mean social cost of carbon (SCC) reported in studies published in peer-reviewed journals was $43 per ton of carbon. This translates into about $12 per ton of carbon dioxide. The literature review (Tol 2005) from which this mean was derived did not report the year in which these dollars were denominated. However, we understand this estimate was denominated in 1995 dollars. Updating that estimate 1995 estimate to 2007 dollars yields a SCC of $15 per ton of carbon dioxide.

### Table 16.2.8 Estimates of Savings from CO 2 

### Emissions Reductions under PTAC
and PTHP Trial Standard Levels at 7% Discount Rate and 3% Discount Rate

Trial Standard
Level Estimated
Cumulative CO 2 (Million metric tons)
Emission Reductions Value of Estimated
CO 2 Emission
Reductions Based on IPCC Range (Million 2007$) at 7%
Discount Rate Value of Estimated
CO 2 Emission
Reductions Based on IPCC Range (Million 2007$) at 3%
Discount Rate

Standard Size PTACs and PTHPs

TSL 1 0.49 $0 to $4.8 $0 to $9.0

TSL 2 0.81 $0 to $8.0 $0 to $14.9

TSL 3 1.05 $0 to $10.4 $0 to $19.4

TSL A 1.06 $0 to $10.5 $0 to $19.5

TSL 4 1.09 $0 to $10.8 $0 to $20.0

TSL 5 1.68 $0 to $16.5 $0 to $30.9

TSL 6 2.34 $0 to $22.9 $0 to $43.0

Non-Standard Size PTACs and PTHPs

TSL 1 0.12 $0 to $1.2 $0 to $2.2

TSL 2 0.14 $0 to $1.4 $0 to $2.7

TSL 3 0.18 $0 to $1.8 $0 to $3.4

TSL 4 0.20 $0 to $2.0 $0 to $3.7

TSL 5 0.29 $0 to $2.9 $0 to $5.4



### The IPCC estimate used as the upper bound va lue was derived from an estimate of the mean value of worldwide impacts fr om potential climate impacts caused by CO 2 

### emissions, and not just the effects likely to occur within the United States. DOE considers that in estimating a monetary value for CO 2 

### emission reductions, the values should be restricted to a repres entation of those costs/benefits likely to be experienced in the United States and expects that such valu es would be lower than comparable global values. There currently are no consensus estima tes for the U.S. benefits likely to result
from CO 2 

### emission reductions. However, DOE belie ves it is appropriate to use U.S. benefit values, where available, and not world benefit values, in its analysis. m



### Given the uncertainty surrounding estimat es of the SCC, relying on any single study may be inadvisable since its estimate of the SCC will depend on many assumptions made by its authors. The Working Group II’s contribution to the Fourth Assessment

m

In contrast, most of the estimates of costs and bene fits of increasing the effici ency of PTACs and PTHPs include only economic values of impacts that would be experienced in the U.S. For example, in determining impacts on manufacturers, DOE generally does not consider impacts that occur solely outside
of the United States.

### Report of the IPCC notes that:

The large ranges of SCC are due in the large part to differences in assumptions regarding climate sensitiv ity, response lags, the treatment of risk and equity, economic and non-ec onomic impacts, the inclusion of potentially catastrophic losses, and discount rates. n



### DOE believes that the most appropriate m onetary values for consideration in the development of efficiency standards are those drawn from studies that attempt to estimate the present value of the marginal economic benefits likely to result from reducing greenhouse gas emissions, rather than estimate s that are based on the market value of emission allowances under existing cap and trad e programs or estimates that are based on the cost of reducing emissions - both of wh ich are largely determined by policy decisions that set the timing and extent of emission re ductions and do not necessarily reflect the
benefit of reductions. DOE also believes th at the studies it relie s upon generally should be studies that were the subj ect of a peer review process and were published in reputable journals.

The upper bound of the range used by DOE is based on Tol (2005), which reviewed 103 estimates of the SCC from 28 published st udies, and concluded that when only peerreviewed studies published in recognized jour nals are considered, “that climate change impacts may be very uncertain but [it] is unlikely that the marginal damage costs of carbon dioxide emissions exceed $50 per ton carbon [comparable to a 2007 value of $20 per ton carbon dioxide when expressed in 2007 U.S. dollars with a 2.4% growth rate.]”

In setting a lower bound of $0, DOE ag rees with the IPCC Working Group II (2007) report that “significant warming across the globe and the loca tions of significant observed changes in many systems consistent with warming is very unlikely to be due solely to natural variability of temperatures or natural variab ility of the systems” (pp. 9), and thus tentatively concludes that a globa l value of zero for reducing emissions cannot be justified. However, DOE also believes that it is reasonable to allow for the possibility that the U.S. portion of the gl obal cost of carbon dioxide emissi ons may be quite low. In fact, some of the studies looke d at in Tol (2005) reported ne gative values for the SCC. As stated in the NOPR, DOE is using U.S. benefit values, and not world benefit values, in its analysis and, further, DOE believes that U.S. domestic values will be lower than the global values. Additionally, the statutory crit eria in EPCA do not require consideration of global effects. Therefore, DOE is using a lower bound of $0 per ton of CO2 emissions in estimating the potential benefits.

Nitrogen Oxides (NO x 

### ) and Mercury

DOE also investigated the monetary impact of efficien cy standards on NOx,

n Climate Change 2007 – Impacts, Adaptation and Vulnerability Contribution of Working Group II to the Fourth Assessment Report of the IPCC, 17. Available at http://www.ipcc-wg2.org (las t accessed Aug. 7, 2008).

### mercury (Hg), and SO 2 

### ,. National SO 2 

### emissions are currently subject to a national cap and trade system by regulation while NOx and Hg are not. For the range of NO X 

### reduction estimates (and Hg reduction estimat es), DOE estimated the national monetized
benefits of emissions reductions based on environmental damage estimates from the
literature. The effect of the SO 2 

### caps is that equipment efficiency standards will have almost no effect on physical emissions of SO 2 

### , but if large enough, could cause incremental changes in the prices of emissi ons allowances in cap-and-trade emissions
markets.

Because of the court ruling discussed in Section 16.2.2, emissions of NOx from electricity generation are not controlled by the regulatory caps. For these emissions,
DOE estimated the national monetized benefits of emissions reductions based on environmental damage estimates from the liter ature. Available estimates suggest a very wide range of monetary values for NOx emissions, ranging from $370 per ton to $3,800 per ton of NOx from stationary sources, measured in 2001 dollars o 

### or a range of $432 per ton to $4,441 per ton in 2007 dollars

.

DOE conducted research and determined that the basic science linking mercury emissions from power plants to impacts on humans is considered highly uncertain. However,
DOE located two estimates of 

### the environmental damages of mercury based on two estimates of the adverse impact of childhood exposure to methyl mercury on IQ for American children, and subsequent loss of lif etime economic productivity resulting from these IQ losses. The high-end estimate is based on an estimate of the current aggregate cost of the loss of IQ that results from expos ure of American children of U.S. power plant origin of $1.3 billion per year in year 2000$, which works out to $32.6 million per ton emitted per year (2007$). p 

### The low-end estimate is $664,000 per ton emitted in 2004$ or $729,000 per ton in 2007$), which DOE derived fr om a published evaluation of mercury control using different methods and assumpti ons from the first study, but also based on the present value of the lifetime earnings of children exposed. q 

### The resulting estimates of the potential range of the presen t value benefits associated wi th the national reduction of NOx and Hg emissions are reflec ted in Table 16.2.9 and Table 16.2.10.

o 2006 Report to Congress on the Costs and Benef its of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities. Office of Management and Budget Office of Information and Regulatory Affairs, Washington, D.C.

p Trasande, L., et al., “Applying Co st Analyses to Drive Policy that Protects Children” 1076 ANN. N.Y. ACAD. SCI. 911 (2006).

q Ted Gayer and Robert Hahn, Designing Environmental Policy: Lessons from the Regulation of Mercury Emissions, Regulatory Analysis 05-01. AEI-Brookings Joint Cent er For Regulatory Studies, Washington, D.C., 31 pp., 2004. A version of this paper was published in the Journal of Regulatory Economics in 2006. The estimate was derived by back-calculating the annual benefits per ton from the net present value of benefits reported in the study.

### Table 16.2.9 Estimates of Savings from Reductions of NOx and Hg under PTAC
and PTHP Trial Standard Levels at a 7% Discount Rate

Trial
Standard

Level Estimated
Cumulative NOx

(kt) Emission

Reductions Value of Estimated
NOx Emission

Reductions (Thousand 2007$) Estimated Cumulative Hg (tons) Emission

Reductions Value of Estimated Hg Emission
Reductions (Thousand 2007$)

Standard Size PTACs and PTHPs
TSL 1 0.04-0.94 $4-$1,091 0-0.017 $0-$182

TSL 2 0.07-1.64 $7-$1892 0-0.028 $0-$299

TSL 3 0.08-2.02 $9-$2,335 0-0.037 $0-$392

TSL A 0.09-2.13 $10- $2,462 0-0.037 $0-$393

TSL 4 0.09-2.25 $10-$2,599 0-0.038 $0-$403

TSL 5 0.13-3.17 $14-$3,658 0-0.059 $0-$624

TSL 6 0.18-4.34 $20-$5,014 0-0.082 $0-$871

Non-Standard Size PTACs and PTHPs
TSL 1 0.01-0.23 $1-$263 0-0.004 $0-$45

TSL 2 0.01-0.28 $1-$319 0-0.005 $0-$54

TSL 3 0.01-0.34 $2-$390 0-0.006 $0-$69

TSL 4 0.02-0.40 $2-$463 0-0.007 $0-$75

TSL 5 0.02-0.55 $2-$631 0-0.010 $0-$110



### Table 16.2.10 Preliminary Estimates of Savi ngs from Reductions of NOx and Hg
under PTAC and PTHP Trial Standard Levels at a 3% Discount Rate

Trial
Standard

Level Estimated
Cumulative NOx

(kt) Emission

Reductions Value of Estimated
NOx Emission

Reductions (Thousand 2007$) Estimated Cumulative Hg (tons) Emission

Reductions Value of Estimated Hg Emission
Reductions (Thousand 2007$)

Standard Size PTACs and PTHPs
TSL 1 0.04-0.94 $9-$2,250 0-0.017 $0-$331

TSL 2 0.07-1.64 $15-$3,903 0-0.028 $0-$544

TSL 3 0.08-2.02 $19-$4,815 0-0.037 $0-$712

TSL A 0.09-2.13 $20- $5,079 0-0.037 $0-$714

TSL 4 0.09-2.25 $21-$5,362 0-0.038 $0-$732

TSL 5 0.13-3.17 $30-$7,545 0-0.059 $0-$1,135

TSL 6 0.18-4.34 $41-$10,341 0-0.082 $0-$1,582

Non-Standard Size PTACs and PTHPs
TSL 1 0.01-0.23 $2-$542 0-0.004 $0-$83

TSL 2 0.01-0.28 $3-$659 0-0.005 $0-$98

TSL 3 0.01-0.34 $3-$805 0-0.006 $0-$125

TSL 4 0.02-0.40 $4-$954 0-0.007 $0-$136

TSL 5 0.02-0.55 $5-$1,301 0-0.010 $0-$200

### Sulfur Dioxide (SO 2)



### Unlike the other pollutants considered in this TSD, SO2 emissions have for some time been subject to a national cap with co rresponding annual allowa nces openly traded; therefore, considerable market experience with these instruments has already been accumulated. It has been argued that imposition of any standard that lowers U.S. national electricity consumption creates beneficial downward pressure on the prices of these allowances, and this cost reduction benefit s hould be considered in any analysis of a proposed standard. While this assertion is fundamentally sound, i.e. reduced electricity
demand should ceteris paribus bring about lower SO2 allowance prices, there are a myriad of complications impeding any mean ingful quantification of any associated benefit. While complexity of analysis alone clearly cannot ju stify disregarding a potential consequence of a standard, the Department additionally believes these benefits
to be both volatile and de minimis when compared to the direct effects of a standard as
estimated in this TSD.

Some of the problems to be confronted in an allowance price effect forecast are:

1. Only any net lowering of the total allowance bill to generators free of transfers is the potential source of a bene fit. Any such compliance cost saving would need to be accurately estimated, and this effect is no different from the benefit derived from a cost reduction for other inputs, such as fuel. When the SO2 allowance
market that was created in 1995 under the Clean Air Act Amendments (CA3) began, initial allowance allocations were directly granted to large affected units based on their historic (1985-87) use of fuel. For 30 years, allowances for the following year are issued every spring at a declining rate to these entitled parties, and thereafter can be freely used, traded, or banked. Some additional allowances
are allocated in diverse wa ys, e.g. as rewards to gene rators installing control equipment. In other words, the entitle d generators holding emission rights are
losers when the value of allowances dec lines, while the buyers of allowances are gainers. Before they are used, allowan ces may be traded many times at prices reflecting the marginal not average cost of compliance.
2. The trading system allows for allowan ce banking. Consequently, any observed change in a forecast year could repr esent the manifestation of market fundamentals but could similarly just indicate deposit or withdrawal of allowances. In general, used allowances have fallen short of the cap so emissions may exceed the specified cap for future years.
3. Control efforts could further reduce the SO2 cap for some jurisdictions, creating regulatory uncertainty that perturbs the allowance market. The issuance of the proposed and final CAIR rules were likely contributing factors to allowance price increases leading to a dramatic 2005 allo wance price spike. While prices had already fallen far below their historic hi ghs by the time CAIR was vacated in the summer of 2008, spot allowance prices nonetheless made a further precipitous drop following the D.C. Circuit Court ruling.

### 4. Because allowances can be traded freely by generators, brokers, and investors, they can serve as financial instrument s, and, especially since 2003, allowance prices have been volatile. Between 2000, when a tightened CA3 cap came into force, and 2007, allowances traded betw een a low of about 120 $/short ton in 2002 and a high of about 1600 $/short ton, with the 2005 spike being particularly
dramatic r 

### . Since there is no reason to believe that these conditions will alter over the life of a proposed standard, the challe nge of forecasting prices is much more complex than a simple supply-demand bala nce might suggest. Also, note that any quantification of the benefit likely depends on the level of prices as well as their net change. To believe that a simple delta in the prices could be used to estimate
the benefit is to believe that the same numerical reduction in price would result from the standard whether the prevaili ng trading price were $100 or $1,000 per
short ton.

The forecasting tool used for this TSD is the AEO2008 version of NEMS-BT and generates forecasts of both SO2 emissions and allowance prices. Unfortunately, this
model was released before CAIR was overtur ned so its forecast enforces the tighter CAIR cap in the affected east of country, and does not represent current conditions. Given the timing of the CAIR ruling relative to the progress of this analysis, attaining projections without CAIR has not been possibl e. Nonetheless, as an indicative bounding case, the net changes in the average price were computed for the period 2012 to 2030 for standard size equipment at TSL 6 (the mo st stringent energy conservation standard considered in this analysis). The estimates represent an average of the various model simulations with different impact multipliers (see Appendix J for explanation of multipliers used) s



### .

For both PTAC and PTHP equipment, the specific results indi cated about a -0.01 percent change in the allowance price in th e East region defined within the Electricity Market Module (EMM) of NEMS-BT. The De partment considers this effect to be inconsequential relative to other elements in the benefits analysis, and given the significant effort that would be required to develop a refine d estimate, the SO2 allowance price effect is not considered in this TSD. If future an alysis suggests that the SO2 allowance price effect is both significant a nd estimable using NEMS-BT, it may be added to supporting material.

r sources of the historic SO2 allowance prices are http://www.epa.gov/airmarkets/progress/alprices.html

, http://camddataandmaps.epa.gov/gdm/

s To be specific with regard to the method, for each simulation the arithmetic cha nge in the allowance price between the standards case and the reference was first computed over the period 2012 to 2030. The percentage change was computed as this average change divided by the average allowance price in the reference case over the same period. After scaling to take into account the specific values of the impact multipliers across simulations (“100X”, “200X”, and “300X” values discussed in Appendix J), the resulting percentage changes were subsequently averaged over the simulations. The percentage change in the allowance price for the 200X case for PTAC equipment wa s slightly positive; this case was not used in the averaging in order to better reflect a bounding case for this equipment.

### 16.3 WETLAND, ENDANGERED AND TH REATENED SPECIES, AND
CULTURAL RESOURCES

DOE’s proposed action is not site-specific, nor would it affect land disturbance or use due to PTACs and PTHPs being installed in commercial buildings. Therefore, none of the proposed TSLs is expected to affect the quality of wetlands, or threatened or endangered species. Further, this action is not expected to im pact cultural resources such as historical or archaeological sites.

16.4 SOCIOECONOMIC IMPACTS

DOE's analysis has shown that the increase in the first cost of purchasing a more efficient PTAC or PTHP at the proposed standa rd level is completely or nearly offset by a reduction in the life-cycle cost (LCC) of ow ning a more efficient piece of equipment. In other words, the customer will pay less operating costs over the life of the equipment even through the first cost increases. The complete analysis and its conclusions are presented in Chapter 8 of the TSD.

For the sub-group of customers that are in dependent hotels, DOE determined that the average LCC impact is similar to that fo r the full sample of customers. Therefore, DOE concludes that the proposed action w ould have no significant socioeconomic impact. For a complete discussion on th e LCC impacts on independent hotels, see Chapter 12 of the TSD.

Table 16.4.1 shows the mean LCC savings for both the full sample of customers and independent hotels as the sub-group for standard-size and non-standard size PTACs
and PTHPs.

Table 16.4.1 Mean Life-Cycle Cost Saving s for All Customers and Sub-Group,
Standard Size PTACs and PTHPs

Trial Standard Level
Standard-Size
PTACs and PTHPs TSL 1 TSL 2 TSL 3 TSL A TSL 4 TSL 5 TSL 6

All Customers $6 $12 $11 $14 $14 $11 $7 

### Independent Hotels $4 $9 $7 $10 $9 $6 $1



### Non-Standard Size
PTACs and PTHPs TSL 1 TSL 2 TSL 3 TSL 4 TSL 5

All Customers $42 $43 $46 $50 $52 

### Independent Hotels $36 $37 $38 $42 $43

### 16.5 ENVIRONMENTAL JUSTICE IMPACTS

According to Executive Order 12898 of February 11, 1994, “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations,” DOE is required to examine the effect of more stringent en ergy-efficiency standards on (1) small businesses that either manufacture or use PTAC or PTHP, (2) manufacturers of niche products related to PTAC or PTHP, and (3) small businesses operated by disadvantaged or minority populations.

DOE identified small businesses as a sub-group that possibly could be disproportionately affected by PTAC and PT HP energy conservation standards. As described in the Life-Cycle Cost Subgroup An alysis, Chapter 11 of the TSD, DOE found that there was no disproportionately high a nd adverse human health or environmental
effects on small businesses that would re sult from the propose d energy conservation
standards. DOE believes that above conclu sion also applies to minority populations.

16.6 NOISE AND AESTHETICS

Improvements in efficiency of PTAC and PTHP equipment is expected to result from changes in the choice of components a nd other design features. These changes are described in Chapter 5 of this TSD. Effici ency improvements result from improved heat exchanger designs using increased levels of coppers, and more efficient compressors. These design changes are not expected to change noise levels in comparison to equipment in today’s market. Equipment that is currently manufactured in the existing market that would meet the proposed st andards is no louder than less efficient equipment. Changes to the design to improve the efficiency levels are not anticipated to affect the equipment’s aesthetics.

16.7 SUMMARY OF ENVIRONMENTAL IMPACTS

Table 16.7.1 and Table 16.7.2 summarize anticipated environmental impacts for each of the TSLs across all equipment types. Air quality impacts were modeled for each of the TSLs. The summary table shows cumulative changes in emissions for CO 2 

### , NOx, and mercury over the period 2012 to 2042. Cumulative CO 2 

### , NOx and Hg emissions show a decrease compared to the reference case.

Upstream fuel cycle emission of CO 2 

### and NOx are described but not quantified in
section 16.2.6 . The text describes potential reduc tions in fuel cycle emissions as percentage of decreases in power plant em issions. This qualitative approach suggests that upstream fuel cycle emissions would decrease and provides a sense for the magnitude of effects, however DOE does not repo rt actual estimates of the effects. This approach does not address mercury emissions.

Socioeconomic impacts are presented as changes in life cycle costs. No impacts are anticipated in the area of environmental justice; wetla nds, endangered and threatened species, and cultural resources; or noise and aesthetics.

### Table 16.7.1 Environmental Impact Analysis Results Summary, Standard-Size
PTACs and PTHPs

Environmental Effects Referenc
e Case* Trial Standard Level

1 2 3 A 4 5 6

Cumulative Emission
Reductions**

CO 2 (Million metric tons) 208,728 -0.049 -0.081 -1.05 -1.06 -1.09 -1.68 -2.34

NO X (Thousand tons) 67,178 -0.04 to
-0.094 -0.07 to
-1.64 -0.08 to
-2.02 -0.09 to
-2.13 -0.09 to
-2.25 -0.13 to
-3.17 -0.18 to
-4.34

Hg (tons) 547.9 0 to
-0.017 0 to
-0.028 0 to
-0.037 0 to
-0.037 0 to
-0.038 0 to
-0.059 0 to
-0.082

Fuel-Cycle (Upstream)
Emissions NA *** *** *** *** *** *** ***

Wetlands, Endangered and Threatened Species, Cultural
Resources NA None None None N one None None None

Socioeconomic Impacts - Weighted Mean LCC Savings†

All Customers NA $6 $12 $11 $14 $14 $11 $7 Independent Hotels NA $4 $9 $7 $10 $9 $6 $1
Environmental Justice NA None N one None None None None None
Noise and Aesthetics NA None N one None None None None None

* The reference case values reflect total cumulative emissions and life cycle cost s in the abse nce of an energy conservation standard. ** Cumulative total is over a time period from 2012 to 2042. Negative values refer to emission reductions. *** DOE does not report actual estimates of the effects of sta ndards on upstream emissions, but section 16.2.5 provides a sense for the possible magnitude of effects. † Values refer to life-cycle cost savings over the equipment lifetime.

### Table 16.7.2 Environmental Impact Analysis Results Summary, Non-Standard
PTACs and PTHPs

Environmental Effects Reference
Case* Trial Standard Level

1 2 3 4 5

Cumulative Emission
Reductions**

CO 2 (Million metric tons) 208,728 -0.012 -0.014 -0.018 -0.020 -0.029

NO X (Thousand tons) 67,178 -0.01 to
-0.23 -0.01 to
-0.28 -0.01 to
-0.34 -0.02 to
-0.40 -0. 02 to
-0.55

Hg (tons) 547.9 0 to
-0.004 0 to
-0.005 0 to
-0.006 0 to
-0.007 0 to
-0.010

Fuel-Cycle (Upstream)
Emissions NA *** *** *** *** ***

Wetlands, Endangered and Threatened Species,
Cultural Resources NA None None None None None

Socioeconomic Impacts - Standard Size PTHP, 9000 Btu/h Cooling Capacity, Mean LCC Savings†

All Customers $42 $43 $46 $50 $52 $42 Independent Hotels $36 $37 $38 $42 $43 $36
Environmental Justice NA N one None None None None
Noise and Aesthetics NA N one None None None None

* The reference case values reflect total cumulative emissions and life cycle cost s in the abse nce of an energy conservation standard. ** Cumulative total is over a time period from 2012 to 2042. Negative values refer to emission reductions. *** DOE does not report actual estimates of the effects of sta ndards on upstream emissions, but section 16.2.5 provides a sense for the possible magnitude of effects. † Values refer to life-cycle cost savings over the equipment lifetime.16-28 

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< http://www.eia.doe.gov/oiaf/aeo/ >

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### >

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