ENVIRONMENTAL ASSESSMENT FOR PROPOSED ENERGY CONSERVATION

STANDARDS FOR FLUORESCENT LAMP BALLASTS

TABLE OF CONTENTS

EA.1 INTRODUCTION

............................................................................................................. .. 1

EA.2 METHODOLOGY

.............................................................................................................. 1

EA.2.1 Carbon Dioxide

........................................................................................................ 1

EA.2.2 Sulfur Dioxide

......................................................................................................... . 1

EA.2.3 Nitrogen Oxides

....................................................................................................... 2

EA.2.4 Mercury

................................................................................................................ .... 3

EA.2.5 Particulate Matter

..................................................................................................... 3

EA.2.6 Monetization of Emissi ons Reduction Benefits

....................................................... 3

EA.3 RESULTS

.................................................................................................................. .......... 4

REFERENCES

.................................................................................................................... ............ 5

EA-iENVIRONMENTAL ASSESSMENT FOR PROPOSED ENERGY CONSERVATION

STANDARDS FOR FLUORESCENT LAMP BALLASTS

EA.1 INTRODUCTION

The U.S. Department of Energy (DOE) will conduct an environmental assessment as part of the notice of proposed rulemaking for fluorescent lamp balla sts. DOE will assess environmental effects by using a variant of the Energy Information Administration’s National Energy Modeling System (NEMS) known as NEMS -Building Technologies (BT) to provide key input to the analysis. The environmental assessm ent produces results in a manner similar to those provided in the Annual Energy Outlook (

AEO ).

The primary environmental effects of these standards would be reduced power plant emissions resulting from reduced consumption of electricity. DOE will assess these environmental effects by using NEMS-BT to provi de key inputs to its analysis. The portion of

the environmental assessment that NEMS-B T will produce considers carbon dioxide (CO 2 ), nitrogen oxides (NO

x ), and mercury (Hg). The environmen tal assessment also considers impacts

on SO 2 emissions. For each trial standard level (T SL), DOE will calculate total undiscounted and discounted power plant emissions using NEMS-BT.

EA.2 METHODOLOGY

DOE will conduct each environm ental assessment performed in this rulemaking as an incremental policy impact ( i.e. , a standard for the products under evaluation; in this case, fluorescent lamp ballasts) of the AEO2009 forecast, applying the same basic set of assumptions

used in AEO2009

. 1 For example, the emissions characteristics of an electricity generating plant will be exactly those used in AEO2009 . Also, forecasts conducted with NEMS-BT consider the supply-side and demand-side effects on the elec tric utility industry. Thus, the analysis will account for any factors affecting the type of el ectricity generation and in turn the type and amount of airborne emissions the utility industry generates.

EA.2.1 Carbon Dioxide

In the absence of any Federal emissions cont rol regulation of power plant emissions of

CO 2 , a DOE standard is likely to result in reductions of these emissions. The CO 2 emission reductions likely to result from a standard will be estimated using NEMS-BT and national energy savings estimates drawn from the national impact analysis spreadsheet model. The net benefit of the standard is the difference between emissions estimated by NEMS-BT at each standard level

considered and the AEO reference case. NEMS-BT tracks CO 2 emissions using a detailed module that provides results with broad coverage of all sector s and inclusion of interactive

effects.

EA.2.2 Sulfur Dioxide

DOE has preliminarily determined that SO 2 emissions from affected electric generating units (EGUs) are subject to nationwide and regional emissions cap and trading programs that are likely to eliminate the standards’ impact on SO 2 emissions. The costs of meeting such emission

EA-1cap requirements are reflected in the electricity prices and forecasts used in DOE’s analysis of

the standards. Title IV of the Clean Ai r Act sets an annual emissions cap on SO 2 for all affected

EGUs. SO 2 emissions from 28 eastern States and the District of Columbia (DC) are also limited under the Clean Air Interstate Rule (CAIR, published in the Federal Register on May 12, 2005, 70 FR 25162), which creates an allowance-based trading program that will gradually replace the Title IV program in those States and DC. (The recent legal history surrounding CAIR is discussed below.) The attainment of the emissions caps is flexible among EGUs and is enforced through the use of emissions allowances and tradable permits. Under existing U.S. Environmental Protection Agency (EPA) regulations, any excess SO 2 emission allowances resulting from the lower electricity demand caused by the imposition of an efficiency standard could be used to permit offsetting increases in SO 2 emissions by any regulated EGU. However, if the standard resulted in a permanent increase in the quantity of unused emission allowances,

there would be an overall reduction in SO 2 emissions from the standards. While there remains some uncertainty about the ultimate effects of efficiency standards on SO 2 emissions covered by the existing cap and trade system, the NEMS-BT modeling system that DOE plans to use to

forecast emissions reductions curre ntly indicates that no physical reductions in power sector

emissions would occur for SO 2

.

Even if there is no significant redu ction in the overall emissions of SO 2 that results from the standard, there may still be some ec onomic benefit from reduced demand for SO 2 emission allowances that is not fully reflected in the co st savings experienced by individual consumers. Electricity savings that decrease the overall demand for SO 2 emissions allowances could lower allowance prices and thereby result in some econo mic benefits for all electricity consumers, not just those that reduced their electricity use as a result of an efficiency standard.

EA.2.3 Nitrogen Oxides

NEMS-BT also has an algorithm for estimating NO

x emissions from power generation. The impact of these emissions, however, will be affected by CAIR, which the EPA issued on May 12, 2005. CAIR will permanently cap emissions of NO X in 28 eastern states and DC. 70 FR 25162 (May 12, 2005).

Much like SO 2 emissions, a cap on NO

x emissions means that the amended fluorescent lamp ballast standards may have little or no physical effect on these emissions in the 28 eastern States and DC covered by CAIR. Although CA IR has been remanded to the EPA by the DC Circuit, it will remain in effect until it is replaced by a rule cons istent with the Court’s July 11, 2008 opinion in North Carolina v. EPA , 531 F.3d 896 (DC Cir. 2008); see also North Carolina v.

EPA , 550 F.3d 1176 (DC Cir. 2008). Because all Stat es covered by CAIR opted to reduce NO

x emissions through par ticipation in cap-and-trade progr ams for electric generating units, emissions from these sources are capped across th e CAIR region. DOE also plans to use NEMS

BT to estimate the emissions reductions from possible standards in the 22 States where emissions are not capped.

Standards may produce an envir onmental-related econo mic benefit in the form of lower prices for emissions allowance credits. As with SO 2 allowance prices, DOE does not plan to monetize this particul ar benefit because the effect on the NO

x allowance price from any single energy conservation standard is lik ely small and highly uncertain.

EA-2EA.2.4 Mercury

Similar to emissions of SO 2 and NO

x , future emissions of Hg would have been subject to emissions caps. In May 2005, EPA issued th e Clean Air Mercury Rule (CAMR). 70 FR 28606 (May 18, 2005). CAMR would have permanently capped emissions of mercury for new and existing coal-fired power plants in all States by 2010. However, on February 8, 2008, the DC

Circuit issued its decision in New Jersey v. Environmental Protection Agency , in which the DC Circuit, among other actions, vacated th e CAMR. 517 F.3d 574 (DC Cir. 2008). EPA has decided to develop emissions standards for pow er plants under the Clean Air Act (Section 112), consistent with the DC Circuit’s opinion on the CAMR. 2 Pending EPA’s forthcoming revisions to the rule, DOE is excluding the CAMR from its environmental analysis. In the absence of CAMR, a DOE standard would likely reduce Hg emissions, and DOE plans to use NEMS-BT to

estimate these emission reductions.

EA.2.5 Particulate Matter

DOE acknowledges that particulate matter (PM) impacts are of concern due to human exposures that can impact health. Impacts of PM emissions reduction, however, are much more difficult to estimate than other emissions reductions due to the complex interactions between PM, other power plant emissions, meteorology, and atmospheric chemistry that impact human exposure to particulates. Human exposure to PM us ually occurs at a significant distance from the power plants that are emitting particulates and particulate precursors. When power plant emissions travel this distance, they undergo highly complex atmospheric chemical reactions. Although the EPA does keep inventories of direct PM emissions of power plants, in its source attribution reviews, the EPA doe s not separate direct PM emissions from power plants from the sulfate particulates indirectly produced through complex atmos pheric chemical reactions. The great majority of PM emissions from power plan ts are of these seconda ry particles (secondary sulfates). Thus, it is not useful to examine how the amended standard impacts direct PM emissions independent of indir ect PM production and atmospheric dynamics. Therefore, DOE is not planning to assess the impact of these standa rds on particulate emissions. Further, even the cumulative impact of PM emissions from power plan ts and indirect emissions of pollutants from other sources is unlikely to be significant.

EA.2.6 Monetization of Emissi ons Reduction Benefits

For those emissions for which real nationa l emission reductions are anticipated (CO 2 , Hg,

and NO

x for 22 States), only ranges of estimated economic values base d on environmental damage studies of varying quality and applicability are available. Therefore, DOE plans on reporting estimates of monetary benefits derived using these values and plans to consider these benefits in weighing the costs and benefits of each of the standard levels. In accordance with

U.S. Office of Management and Budget (OMB) guidance, DOE will conduct two calculations of the monetary benefits derived for each of the eco nomic values, one using a real discount rate of 3 percent and another using a real discount rate of 7 percent. 3

In order to estimate the monetary value of benefits resulting from reduced emissions of

CO 2 emissions, it is DOE’s intent to use in its an alysis the most current social cost of carbon (SCC) values developed a nd/or agreed to by interagency reviews. The SCC is intended to be a monetary measure of the incremental damage resulting from greenhouse gas (GHG) emissions,

EA-3including but not limited to net agricultural productivity loss, human health effects, property damage from sea level rise, and changes in ecosy stem services. Any effort to quantify and to monetize the harms associated with climate change will raise serious questions of science, economics, and ethics. With full regard for the limits of both quantifica tion and monetization, the SCC can be used to provide estimates of the so cial benefits of reductions in GHG emissions.

At the time of this notice, the most recen t interagency estimates of the potential global benefits resulting from reduced CO 2 emissions in 2010 were $4.7, $21.4, $35.1, and $64.9 per

metric ton in 2007 dollars. These values are th en adjusted to 2009$ using the standard GDP deflator value for 2008 and 2009. For emissions (or emission reductions) that occur in later years, these values grow in real terms over time. Additionally, the interagency group determined that a range of values from 7 percent to 23 per cent should be used to adjust the global SCC to calculate domestic effects, although preference will be given to consideration of the global benefits of reducing CO 2 emissions. See Appendix A of the a nnex to chapter 15 of the technical support document for the full range of annual SCC estimates from 2010 to 2050.

DOE recognizes that scientific and economic kno wledge continues to evolve rapidly as to

the contribution of CO 2 and other GHG to changes in the fu ture global climate and the potential resulting damages to the world economy. Thus, these values are subject to change.

DOE also intends to estimate the potential monetary benefit of reduced NO

x , and Hg emissions resulting from the standard levels it considers. For NO

x emissions, available estimates suggest a very wide range of monetary values for NO

x emissions, ranging from $370 per ton to $3,800 per ton of NO X from stationary sources, measured in 2001$ (equivalent to a range of $442 to $4,540 per ton in 2008$). 4

For Hg emissions reductions, DOE has previ ously determined that the impact of Hg emissions from power plants on humans is c onsidered highly uncertain. However, DOE identified two estimates of the environmental damage of Hg based on two estimates of the adverse impact of childhood exposure to methyl mercury on intelligence quotient (IQ) for American children, and subsequent loss of life time economic productivit y resulting from these IQ losses. The high-end estimate is based on an estimate of the current aggregate cost of the loss of IQ in American children that results from ex posure to Hg of U.S. power plant origin ($1.3 billion per year in 2000$), which works out to $33.3 million per ton emitted per year (2008$). 5
The low-end estimate is $0.66 million per ton em itted (in 2004$) or $0.745 million per ton in 2008$. DOE derived this estimate from a published evaluation of mercury control using different methods and assumptions from the first study but also based on the present value of the lifetime earnings of children exposed to Hg. 6 The estimate was derived by back-calculating the annual benefits per ton from the net present value of benefits reported in the study.

EA.3 RESULTS

The results for the environmental assessment are similar to a complete NEMS run as published in the AEO2009 . These results include power-sector emissions for SO 2 , NO

x , CO 2 , and Hg in five-year forecasted increments extrapolated to 2044. The outcome of the analysis for each TSL is reported as a deviation from the AEO2009 reference (base) case.

EA-4REFERENCES

1. U.S. Department of Energy–E nergy Information Administration. Annual Energy Outlook 2009: With Projections to 2030 . March 2009. Report No. DOE/EIA-0383 (2009). (Last accessed March 11, 2010.) < http://www.eia.doe.gov/oiaf/a rchive/aeo09/pdf/0383(2009).pdf >

2. Environmental Protection Agency v. State of New Jersey, et al. 2009. Supreme Court of the United States No. 08-512. February 6. (Last accessed March 11, 2010.)

< http://www.epa.gov/air/mercuryr ule/pdfs/certpetition_withdrawal.pdf >

3. Office of Management and Budget. 2003. Circul ar A-4: Regulatory Analysis. September 17. (Last accessed March 11, 2003.) < http://www.whitehouse.gov/om b/circulars/a004/a-4.pdf >

4. Office of Management and Budget, Office of Information and Regulatory Affairs. 2006 Report to Congress on the Costs and Benef its of Federal Regu lations and Unfunded Mandates on State, Local, and Tribal Entities. January 2007. Unavailable online.

5. Trasande, L., C. Schechter, K. A. Haynes, and P. J. Landrigan. Applying Cost Analyses to Drive Policy that Protects Childre n: Mercury as a Case Study. Annals of the New York Academy of Sciences . 2006. 1076 (September): pp. 911–923.

6. Gayer, T. and R. Hahn. Designing Environmental Policy: Le ssons from the Regulation of Mercury Emissions . 2005. American Enterprise Institute-Brookings Joint Center for Regulatory Studies: Washington, DC. Regulatory Analysis 05-01. A version of this paper was published in the Journal of Regulatory Economics in 2006.

EA-5