EA-i ENVIRONMENTAL ASSESSMENT FOR PR OPOSED ENERGY CONSERVATION STANDARDS FOR SMALL ELECTRIC MOTORS

TABLE OF CONTENTS

EA.1 INTRODUCTION ........................................................................................................EA-1
EA.2 METHODOLOGY .......................................................................................................EA-2
EA.3 RESULTS ................................................................................................................... ..EA-3EA-1 ENVIRONMENTAL ASSESSMENT FOR PR OPOSED ENERGY CONSERVATION

STANDARDS FOR SMALL ELECTRIC MOTORS

EA.1 INTRODUCTION

The U.S. Department of Energy (DOE) will conduct an environmental assessment as part of the notice of proposed rulemaking. DOE will assess the impacts of proposed energy conservation standards for small electric motors on certain environmental indicators using a variant of the U.S. DOE/Energy Information Administration (EIA)’s National Energy Modeling System (NEMS). a EIA uses NEMS to produce the Annual Energy Outlook (AEO). 1 DOE will use a variant known as NEMS-BT to provide ke y inputs to the analys is, based on the 2008 version of the AEO ( AEO2008 ). Results of the environmental assessment will be similar to those provided in AEO2008

.

DOE intends the environmental assessment to provide emissions results to policymakers and other stakeholders, and to fulfill requirement s that the environmental effects of all new Federal rules be properly quantified and consid ered. The environmental assessment considers three criteria pollutants—sulfur dioxide (SO 2 ), nitrogen oxides (NO
x ), and mercury—as well as carbon emissions. The only form of carbon emi ssions tracked by NEMS-BT is carbon dioxide (CO 2 ), so the carbon discussed in this report is only in the form of CO 2 . For each of the trial standard levels, DOE will calculate total emissi ons using NEMS-BT, using additional, external analysis as needed.

Although DOE intends to consider only SO 2 , NO
x , mercury, and CO 2 in its environmental assessment, there are other air poll utants that are of c oncern. Specifically, the Clean Air Act requires the Environmental Protection Agency (EPA) to set National Ambient Air Quality Standards for the following six common air pol lutants, also know as “criteria pollutants”: (1) ozone, (2) particulate matter (PM), (3) carb on monoxide (CO), (4) nitrogen dioxide, (5) SO 2 , and (6) lead. 2 EPA recently added mercury to this list. Some of the “criteria pollutants” (i.e., ozone, PM, CO, and lead) are not dr iven significantly by either electric utility power plants or fuel-fired appliances. Therefore, DOE does not intend to address them in the environmental assessment. In the case of ozone and particulat e matter, other pollutants are precursors to their formation and atmospheric conditions are the driving force behind their formation. Also, SO 2 and NO
x are the primary precursors to ozone and PM, respectively, and will already be addressed by the environmental assessment. In the case of CO, electric utilities and fuel-fired appliances are not significant sources. For electric power pl ants, almost all carbon emissions are in the form

a For more information on NEMS, please refer to th e U.S. Department of Energy, Energy Information Administration documentation. A useful summary is National Energy Modeling System: An Overview 2000

, DOE/EIA-0581(2000), March 2000. See http://tonto.eia.doe.gov/bookshelf/SearchResults.asp?title=modeling . EIA approves use of the name NEMS to describe only an official version of the model without any modification to code or data. Because this analysis entails some minor code modifications and the model is run under various policy scenarios that are variations on EIA assumptions, DOE refers to the model as NE MS-BT (BT is DOE’s Building Technologies Program).EA-2 of CO 2 as the combustion process is lean enough not to yield CO in significant amounts. For fuel-fired appliances, proper appliance maintenance, installati on, and use can prevent dangerous levels of CO. A well-designed and properly func tioning heating or cooking appliance should not produce toxic or lethal levels of CO, as, most often, CO poisoning occurs in the home as a result of malfunctioning appliances. Fina lly, with regard to lead, the ba n on the use of leaded gasoline
has resulted in a dramatic decrease in lead emi ssions since the mid 1970s. In general, industrial processes (not electric utilities) , particularly primar y and secondary lead smelters and battery manufacturers, are responsible for most of lead emissions and all vi olations of the lead air quality standards.

EA.2 METHODOLOGY

DOE will conduct the environmental asse ssment as a policy deviation from the
AEO2008 , using the same basic set of assumptions. For example, the emissions characteristics of an electricity generating plant will be exactly those used in AEO2008 . The NEMS reference case and alternative growth scenarios are as de scribed in the utility impact analysis (see preliminary Technical Support Document (TSD) chapter 13).

The NEMS-BT model tracks carbon emissions using a detailed carbon module; this approach provides good results because of its broa d coverage of all sectors and inclusion of interactive effects. Past e xperience with carbon results from NEMS suggests that the NEMSgenerated emissions estimates are somewhat lo wer than estimates based on simple average factors. One of the reasons for this divergence is that NEMS te nds to predict that conservation displaces renewable generating capac ity in the later years of its fo recast. On the whole, NEMSBT provides carbon emissions results of reasonabl e accuracy, at a level consistent with other published Federal results.

The NEMS-BT model reports the two airborne pollutant emissions that DOE has reported in past analyses: SO 2 and NO
x . The Clean Air Act Amendments of 1990 set an SO 2 emissions cap on all power generation. 3 The attainment of this target, however, is flexible among generators through the use of emissions allowan ces and tradable permits. The NEMS-BT model includes a module for SO 2 allowance trading and delivers a forecast of SO 2 allowance prices. Accurate simulation of SO 2 trading tends to imply that physical emissions effects will be zero, as long as emissions are at th e ceiling. There is an SO 2 benefit from conservation in the form of a lower allowance price but, since the impact of any one standard on the allowance price is likely small and highly uncertain, DOE does not plan to monetize the SO 2 benefit.

Also, the NEMS-BT model has an algorithm for estimating NO X emissions from power generation. The impact of these emissions, however , will be affected by th e Clean Air Interstate Rule (CAIR), which the U.S. Environmental Protection Agency (EPA) issued on May 12, 2005. 4 CAIR will permanently cap emissions of NO
x in 28 eastern States and th e District of Columbia. As with SO 2 emissions, a cap on NO X emissions means that equipment efficiency standards may have no physical effect on these emissions. When NO
x emissions are subject to emissions caps,EA-3 DOE’s emissions reduction estimate corresponds to incremental changes in the prices of emissions allowances in cap-and-trade emissi ons markets rather than physical emissions reductions. Therefore, while th e emissions cap may mean that physical emissions reductions will not result from standards, standards could produce an environmental-related economic benefit in the form of lower prices for emissi ons allowance credits. However, as with SO 2 allowance prices, DOE does not plan to monetize this benefit because the impact on the NO
x allowance price from any single energy conser vation standard is likely small and highly uncertain.

With regard to mercury emissions, NEMS has an algorithm for estimating these emissions from power generation. However, the impact on mercury emissions will be affected by the Clean Air Mercury Rule (CAMR), which the EPA issued on May 18, 2005. 5 CAMR will permanently cap emissions of mercury for new and existing coal-fired plants in all States. As with SO 2 and NO
x emissions, a cap on mercury emissions means that equipment efficiency standards may have no physical effect on these emissions. When mercury emissions are subject to emissions caps, DOE’s emissions reduction es timate corresponds to incremental changes in the prices of emissions allowances in cap-and -trade emissions markets rather than physical emissions reductions. Therefore, while the em issions cap may mean that physical emissions reductions will not result from standards, sta ndards could produce an environmental-related economic benefit in the form of lower prices for mercury emissions allowance credits. However, as with SO 2 and NO
x allowance prices, DOE does not plan to monetize this benefit because the impact on the mercury allowance price from any single energy conservati on standard is likely small and highly uncertain.

EA.3 RESULTS

The results for the environmental assessmen t are similar to a complete NEMS run, as published in the AEO2008 . These include emissions for SO 2 , NO
x , mercury, and CO 2 in fiveyear forecasted increments, extrapolated to th e year 2045. DOE will report the outcome of the analysis for each trial standard level as a deviation from the AEO2008 reference case results.EA-4 REFERENCES

1 U.S. Department of Energy- Energy Information Administration. Annual Energy Outlook 2008 with Projections to 2030 , June, 2008. Washington, DC. DOE/EIA-0383(2008).

2 U.S. Environmental Protection Agency. Six Common Air Pollutants . Washington, DC.

< http://www.epa.gov/air/urbanair/ >

3 U.S. Environmental Protection Agency. Clean Air Act . Washington, DC.

< http://www.epa.gov/air/caa/ >

4 U.S. Federal Register. Rule To Reduce Interstate Transport of Fine Particulate Matter and Ozone (Clean Air Interstate Rule); Revisions to Acid Rain Program; Revisions to the NO X SIP Call, Final Rule , May 12, 2005. 70 FR 25162.

5 U.S. Federal Register. Standards of Performance for New and Existing Stationary Sources: Electric Utility Steam Generating Units, Final Rule , May 18, 2005. 70 FR 28606.