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...................................................................................... 16-4 

16.2.4 Analytical Methods for Air Emissions .............................................................. 16-8 

16.2.5 Effects on Power Plant Emissions ................................................................... 16-10 

16.2.6 Effects on Upstream Fuel-Cycle Emissions .................................................... 16-10 

16.2.7 Economic Valuation of Emissions Reductions................................................ 16-11 

16.3 WETLAND, ENDANGERED AND THREATENED SPECIES, AND 

CULTURAL RESOURCES ........................................................................................... 16-18 

16.4 SOCIOECONOMIC IMPACTS..................................................................................... 16-18 

16.5 ENVIRONMENTAL JUSTICE IMPACTS................................................................... 16-19 

16.6 NOISE AND AESTHETICS .......................................................................................... 16-19 

16.7 SUMMARY OF ENVIRONMENTAL IMPACTS........................................................ 16-19 

REFERENCES ........................................................................................................................ 16-22 

LIST OF TABLES 

Table 16.2.1 Summary of Emissions Reductions for Beverage Vending Machines 

(cumulative reductions, 2012–2042) ................................................................. 16-7 

Table 16.2.2 Emissions Forecast for AEO 2009 Reference Case......................................... 16-10 

Table 16.2.3 Estimated Upstream Emissions of Air Pollutants as a Percentage of Direct 

Power Plant Combustion Emissions................................................................ 16-11 

Table 16.2.4 Estimates of Savings from CO2 Emissions Reductions at All TSLs at a 7-

Percent Discount Rate and 3-Percent Discount Rate for Class A 

Equipment........................................................................................................ 16-12 

Table 16.2.5 Estimates of Savings from CO2 Emissions Reductions at All TSLs at a 7-

Percent Discount Rate and 3-Percent Discount Rate for Class B 

Equipment........................................................................................................ 16-12 

Table 16.2.6 Estimates of Savings from Reducing NOx and Hg Emissions at All TSLs 

at a 7-Percent Discount Rate for Class A Equipment...................................... 16-15 

Table 16.2.7 Estimates of Savings from Reducing NOx and Hg Emissions at All TSLs 

at a 7-Percent Discount Rate for Class B Equipment ...................................... 16-16 

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Table 16.2.8 Estimates of Savings from Reducing NOx and Hg Emissions at All TSLs 

at a 3-Percent Discount Rate for Class A Equipment...................................... 16-16 

Table 16.2.9 Estimates of Savings from Reducing NOx and Hg Emissions at All TSLs 

at a 3-Percent Discount Rate for Class B Equipment ...................................... 16-16 

Table 16.4.1 Mean Life-Cycle Cost Savings for All Customers and Sub-Group, BVM 

(2008$)............................................................................................................. 16-19 

Table 16.7.1 Environmental Impact Analysis Results Summary, Class A BVM 

Equipment........................................................................................................ 16-20 

Table 16.7.2 Environmental Impact Analysis Results Summary, Class B BVM 

Equipment........................................................................................................ 16-20 

EERE-2006-STD-0125 COMMENT 46
CHAPTER 16. ENVIRONMENTAL IMPACT ANALYSIS 

16.1 INTRODUCTION 

This chapter describes potential environmental effects that may result from amended 

energy conservation standards for refrigerated beverage vending machines (BVMs) 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 biological resources 

in any one area. 

All of the potential trial standard levels (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 effects. 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 air quality resulting from changes in power plant 

operations and capacity additions. Therefore, much of this chapter describes the air quality 

analysis. The latter part of the chapter describes potential impacts to other environmental 

resources. 

16.2 AIR EMISSIONS ANALYSIS 

The primary focus of the environmental analysis is the impact on air quality of amended 

energy conservation standards for BVM 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). This analysis considers two pollutants: nitrogen oxides (NOx) 

and mercury (Hg). 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

 DOE 

does not report sulfur dioxide (SO2) emissions reduction from power plants because reductions 

from an energy conservation standard would not affect the overall level of SO2 emissions in the 

United States due to emissions caps for SO2. This analysis also considers carbon dioxide (CO2). 

Sulfur Dioxide (SO2) 

In addressing SO2 emissions, the Clean Air Act Amendments of 1990 set an SO2 

emissions cap on all power generation, but permitted flexibility among generators through the 

 

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. 

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EERE-2006-STD-0125 COMMENT 46
use of emissions allowances and tradable permits. This SO2 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. 

Consequently, there is no direct SO2 environmental benefit from a reduction in electricity use due 

to the proposed energy conservation 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 benefit from the 

proposed energy conservation standards reducing SO2 emissions allowance demand. 

Furthermore, over time, if emissions decline, there is greater flexibility in reducing the ceiling 

amount. 

Nitrogen Oxides (NOx) 

NOx is the generic term for a group of highly reactive gases, all of which contain nitrogen 

and oxygen in varying amounts. Many of these gases are colorless and odorless. However, one 

common pollutant, nitrogen dioxide (NO2), along with particles in the air can often be seen as a 

reddish-brown layer over many urban areas. NO2 is the specific form of NOx reported in this 

document. NOx is one of the main ingredients involved in the 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. NOx also contributes to the formation of 

fine particles that can impair human health. 

NOx form when fossil fuel is burned at high temperatures, as in a combustion process. 

The primary manmade sources of NOx are motor vehicles, electric utilities, and other industrial, 

commercial, and residential sources that burn fossil fuels. NOx can also be formed naturally. 

Electric utilities account for about 22 percent of NOx emissions in the United States. 

Mercury (Hg) 

Coal-fired power plants emit mercury found 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 (likely 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 and in lakes, rivers, and estuaries 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 mercury primarily by eating contaminated fish. 

Because the developing fetus is the most sensitive to the toxic effects of methyl mercury, women 

of childbearing age are regarded as the population of greatest concern. Children exposed to 

methyl mercury before birth may be at increased risk of poor performance on neurobehavioral 

tasks, such as those measuring attention, fine motor function, language skills, visual-spatial 

abilities, and verbal memory. 

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Carbon Dioxide (CO2) 

Carbon dioxide (CO2) is not a regulated or criteria pollutant (see below), but it is of 

interest because of its classification as a greenhouse gas (GHG). GHGs trap the sun’s radiation 

inside the Earth’s atmosphere and either occur naturally in the atmosphere or result from human 

activities. Naturally occurring GHGs include water vapor, CO2, methane (CH4), nitrous oxide 

(N2O), and ozone (O3). Human activities, however, add to the levels of most of these naturally 

occurring gases. For example, CO2 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 years, about 

three-quarters of anthropogenic (i.e., human-made) CO2 emissions resulted from burning fossil 

fuels. 

Concentrations of CO2 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 dominated by natural processes, such as plant photosynthesis. While these 

natural processes can absorb some of the anthropogenic CO2 emissions produced each year, 

billions of metric tons are added to the atmosphere annually. In the U. S., CO2 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 its regulations implementing Title VI of the Clean Air Act to 

phase out in 2010 hydrochlorofluorocarbons (HCFC) refrigerants, which are commonly used in 

refrigeration systems. 

The Clean Air Act Amendments of 1990 list 188 toxic air pollutants that EPA is required 

to control. EPA has set national air quality standards for six common pollutants (also referred to 

as “criteria” pollutants), two of which are SO2 and NOx. Also, the Clean Air Act Amendments of 

1990 gave EPA the authority to control acidification and to require operators of electric power 

plants to reduce emissions of SO2 and NOx. Title IV of the 1990 amendments established a capand-trade program for SO2 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 Interstate Rule (CAIR) under sections 110 and 111 of 

the Clean Air Act (40 CFR Parts 51, 96, and 97).b

 CAIR would have permanently capped 

emissions of SO2 and NOx in eastern states of the United States. CAIR was intended to achieve 

additional large reductions of SO2 and 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 

participate 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 the state’s choosing. 

Phase 1 caps for NOx were to be in place in 2009. Phase 1 caps for SO2 were to be in place in 

2010. The Phase 2 caps for both pollutants were due in 2015. 

 

b

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

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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 closely 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 Air 

Mercury Rule regulated 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 decision 

in State of New Jersey, et al. v. Environmental Protection Agency,

c

 in which the Court, among 

other actions, vacated the Clean Air Mercury Rule. With CAMR vacated, new or amended 

energy conservation standards would reduce Hg emissions. 

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,

d which 

vacated the Clean Air Interstate Rule (CAIR) issued by the U.S. Environmental Protection 

Agency on March 10, 2005.e

 On December 23, 2008, the D.C. Circuit decided to allow CAIR to 

remain in effect until it is replaced by a rule consistent with the court’s earlier opinionf

. If left in 

place, or replaced by an equivalent program, CAIR would have permanently capped emissions of 

NOx in 28 eastern states and the District of Columbia. As with the SO2 emissions cap, a cap on 

NOx emissions would have meant that energy conservation standards would not likely have a 

physical effect on NOx emissions in states covered by the CAIR caps. While the caps would have 

meant physical emissions reductions in those States would not have resulted from the energy 

conservation standards that DOE is establishing, the standards might have produced an 

environmental-related economic impact in the form of lower prices for emissions allowance 

credits, if large enough. DOE notes that the estimated total reduction in NOx emissions, 

including projected emissions or corresponding allowance credits in States covered by the CAIR 

cap, was insignificant and too small to affect allowance prices for NOx under CAIR. In contrast, 

new or amended energy conservation standards would reduce NOx emissions in those 22 States 

that are not affected by CAIR. 

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 CO2, as major contributors to 

 

c New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008), Case No. 05-1097, 2008 WL 341338, at *1 (D.C. Cir. Feb. 8, 

2008). 

d North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008), Case No. 05-1244, 2008, WL 2698180 at *1 (D.C. Cir. 

July 11, 2008). 

e

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

f North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008). The court noted in part that environmental equivalence of 

the CAIR rule is sought: “...This court has further noted that it is appropriate to remand without vacatur in particular 

occasions where vacatur “would at least temporarily defeat...the enhanced protection of the environmental values 

covered by [the EPA rule at issue].” Envtl. Def. Fund, Inc. v. Adr’r of the United States EPA, 898 F.2d 183, 190 

(D.C. Cir. 1990). Here, we are convinced that, notwithstanding the relative flaws of CAIR, allowing CAIR to remain 

in effect until it is replaced by a rule consistent with our opinion would at least temporarily preserve the 

environmental values covered by CAIR. Accordingly, a remand without vacatur is appropriate in this case...” 

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EERE-2006-STD-0125 COMMENT 46
climate change. Because this Rule, if finalized, will likely decrease CO2 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 CO2 emissions and global warming. 

Impacts of Climate Change on the Environment 

Climate is usually defined as the average 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 mean and/or the variability of its properties (e.g., temperature or 

precipitation) over an extended period, typically decades or longer. 

The World Meteorological Organization and United Nations Environment Programme 

(UNEP) established the Intergovernmental Panel on Climate Change (IPCC) to provide an 

objective source of information about climate change. According to the IPCC Fourth Assessment 

Report (IPCC 2007), climate change is consistent with observed changes to the world’s natural 

systems; the IPCC expects these changes to continue. 

Changes that are consistent with warming include warming of the world’s oceans to a 

depth of 3000 meters; global average sea level rise at an average rate of 1.8 mm per year from 

1961 to 2003; loss of annual average Arctic sea ice at a rate of 2.7 percent 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 continued global warming of about 0.2 °C per 

decade for the next two decades under a wide range of emission scenarios for CO2, other 

greenhouse gases (GHG)s, and aerosols. After that period, the rate of increase is less certain. The 

IPCC Report describes increases in average global temperatures of about 1.1 °C to 6.4 °C at the 

end of the century relative to today. These increases vary depending on the model and emissions 

scenarios. 

The IPCC Report describes incremental impacts associated with the rise in temperature. 

At ranges of incremental increases to the global average temperature, IPCC reports, with either 

high or very high confidence, that there is likely to be an increasing degree of impacts such as 

coral 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 

beneficial 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 increase since the mid-20th century is very 

likely due to the increase in anthropogenic concentrations of CO2 and other long-lived 

greenhouse gases (GHGs) such as methane and nitrous oxide in the atmosphere, rather than from 

natural causes. 

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Increasing the CO2 concentration partially blocks the earth’s re-radiation of captured 

solar energy in the infrared band, inhibits the radiant cooling of the earth, and thereby alters the 

energy balance of the planet, which gradually increases its average temperature. The IPCC 

Report estimates that currently, CO2 makes up about 77 percent of the total CO2-equivalentg

global warming potential in GHGs emitted from human activities, with the vast majority (74 

percent) of the CO2 attributable to fossil fuel use. For the future, the IPCC Report describes a 

wide range of GHG emissions scenarios, but under each scenario CO2 would continue to 

comprise above 70 percent of the total global warming potential. 

Stabilization of CO2 Concentrations 

Unlike many traditional air pollutants, CO2 mixes thoroughly in the entire atmosphere 

and is long-lived. The residence time of CO2 in the atmosphere is long compared to the emission 

processes. Therefore, the global cumulative emissions of CO2 over long periods determine CO2

concentrations because it takes hundreds of years for natural processes to remove the CO2. 

Globally, 49 billion metric tons of CO2 –equivalent of anthropogenic (man-made) greenhouse 

gases are emitted every year. Of this annual total, fossil fuels contribute about 29 billion metric 

tons of CO2.

h

 

Researchers have focused on considering atmospheric CO2 concentrations that likely will 

result in some level of global climate stabilization, and the emission rates associated with 

achieving the “stabilizing” concentrations by particular dates. They associate these stabilized 

CO2 concentrations with temperature increases that plateau in a defined range. For example, at 

the low end, the IPCC Report scenarios target CO2 stabilized concentrations range between 350 

ppm and 400 ppm (essentially today’s value)—because of climate inertia, concentrations in this 

low end range would still result in temperatures projected to increase 2.0 °C to 2.4 °C above preindustrial levelsi

 (about 1.3 oC to 1.7 oC above today’s levels). To achieve concentrations 

between 350 ppm to 400 ppm, the IPCC scenarios present that there would have to be a rapid 

downward trend in total annual global emissions of greenhouse gases to levels that are 50 to 85 

percent below today’s annual emission rates by no later than 2050. Since it is assumed that there 

would continue to be growth in global populations and substantial increases in economic 

production, the scenarios identify required reductions in greenhouse gas emissions intensity 

(emissions per unit of output) of more than 90 percent. However, even at these rates, the 

scenarios describe some warming and some climate change is projected due to already 

accumulated CO2 and GHGs in the atmosphere. 

 

g

 GHGs differ in their warming influence (radiative forcing) 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 CO2 (i.e., CO2-equivalent). CO2 equivalent emission is the amount of CO2

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. 

h

 Other non-fossil fuel contributors include CO2 emissions from deforestation and decay from agriculture biomass; 

agricultural and industrial emissions of methane; and emissions of nitrous oxide and fluorocarbons. 

i

 IPCC Working Group 3 Table TS 2 

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The Beneficial Impact of the Rule on CO2 Emissions 

If finalized, it is anticipated that the Rule will reduce energy-related CO2 emissions, 

particularly those associated with energy consumption in buildings. In the United States, the U.S. 

Energy Information Administration reports in its 2008 Annual Energy Outlook (DOE/EIA 2008)j

that U.S. annual energy-related emissions of CO2 in 2006 were about 5.9 billion metric tons 

(about 20 percent of the world energy-related CO2 emissions and about 12 percent of total global 

greenhouse gas emissions), of which 2.32 billion tons were attributed to residential and 

commercial buildings sector (including related energy-using equipment such as BVM). Most of 

the greenhouse gas emissions attributed to residential and commercial buildings are emitted from 

fossil fuel-fired power plants that generate electricity used in this sector. In the AEO 2008 

reference case, EIA projected that annual energy-related CO2 emissions would grow from 

5.9 billion metric tons in 2006 to 6.4 billion metric tons in 2030, an increase of 8.5 percent (see 

Table 16.2.1, which is based on AEO 2008), while emissions attributable to electricity 

consumption by the commercial sector would grow from 0.8 to 1.1 billion tons, an increase of 

26.1 percent. 

Table 16.2.1 Summary of Emissions Reductions for Beverage Vending Machines 

(cumulative reductions, 2012–2042) 

TSLs for Class A 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7

Emissions Reductions 

CO2 (Mt*) 0.23 1.01 2.27 3.56 4.19 4.61 5.59 

NOx (kt**) 0.03 0.14 0.31 0.48 0.57 0.62 0.75 

0 0 0 0 0 0 0 

Hg (t†) 

Low 

High 0.004 0.017 0.038 0.059 0.069 0.076 0.093 

Trial Standard Levels for Class B

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 N/A 

Emissions Reductions 

CO2 (Mt) 0.07 0.11 0.53 0.61 1.64 1.83 - 

NOx (kt) 0.01 0.01 0.07 0.08 0.22 0.25 - 

0 0 0 0 0 0 - 

Hg (t) 

Low 

High 0.001 0.002 0.009 0.010 0.027 0.030 - 

* Mt = million metric tons 

** kt = thousand tons

† t = tons 

Negative values indicate emission increases. Detail may not sum to total due to rounding. 

As computed for the AEO 2008 reference case and extrapolated to 2042, the cumulative 

U.S. energy-related CO2 emissions between 2012 and 2042 are described at about 209 billion 

metric tons. The estimated cumulative CO2 emission reductions from a BVM Efficiency 

Standard (shown as a range of alternative Trial Standard Levels) during this same 30-year period 

are indicated in Table 16.2.1. The estimated CO2 emission reductions in Table 16.2.1 are 

calculated using NEMS-BT model. 

 

j

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

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The estimated savings, which are at most 0.001 percent of U.S. energy-related emissions 

of CO2 (TSL 6 for BVMs), comprise an even smaller fraction of U.S. emissions of greenhouse 

gases and of world emissions of greenhouse gases. However, the savings would likely reduce 

overall U.S. CO2 emissions, as compared to U.S. CO2 emissions absent an increase in the 

required efficiency of BVMs. 

The Incremental Impact of the Rule on Climate Change 

It is difficult to correlate specific emission rates with atmospheric concentrations of CO2 

and specific atmospheric concentrations with future temperatures because the IPCC Report 

describes a clear lag in the climate system between any given concentration of CO2 (even if 

maintained for long periods) and the subsequent average worldwide and regional temperature, 

precipitation, and extreme weather regimes. For example, a major determinant of climate 

response is “equilibrium climate sensitivity”, a measure of the climate system response to 

sustained radioactive forcing. It is defined as the global average surface warming following a 

doubling of CO2 concentrations. The IPCC Report describes its estimated, numeric value as 

about 3 °C, but the likely range of that value is 2 °C to 4.5 °C, with cloud feedbacks the largest 

source of uncertainty. Further, as illustrated above, the IPCC Report scenarios for stabilization 

rates are presented in terms of a range of concentrations, which then correlates to a range of 

temperature changes. Thus, climate sensitivity is a key uncertainty for CO2 mitigation scenarios 

that aim to meet specific temperature levels. 

Because of how complex global climate systems are, it is difficult to know to what extent 

and when particular CO2 emissions rates will impact global warming. However, as Table 16.2.1

indicates, the Rule will likely reduce CO2 emissions rates from the fossil fuel sector. 

16.2.4 Analytical Methods for Air Emissions 

NEMS-BT incorporates capabilities to assess compliance with SO2 restrictions specified 

in the Clean Air Act and its amendments. Clean air act provisions include New Source 

Performance Standards, and Revised New Source Performance Standards. The version of 

NEMS-BT in 2008 also included provisions for the Clean Air Interstate Rule (CAIR), which 

imposes stricter restrictions on SO2 and NOx for some states, and the Clean Air Mercury Rule 

(CAMR), which imposed a national mercury (Hg) constraint. 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, remanded the CAIR (531 F.3d 896 [D.C. Cir. 

2008]). On December 23, 2008, the D.C. Circuit decided to allow CAIR to remain in effect until 

it is replaced by a rule consistent with the court's earlier opinion.k

 If left in place, or replaced by 

an equivalent program, in addition, DOE notes that the D.C. Circuit left intact EPA’s 1998 NOx

 

k

 North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008). The court noted in part that environmental equivalence 

of the CAIR rule is sought: “...This court has further noted that it is appropriate to remand without vacatur in 

particular occasions where vacatur “would at least temporarily defeat . . . the enhanced protection of the 

environmental values covered by [the EPA rule at issue].” Envtl. Def. Fund, Inc. v. Adm’r of the United States EPA, 

898 F.2d 183, 190 (D.C. Cir.1990). Here, we are convinced that, notwithstanding the relative flaws of CAIR, 

allowing CAIR to remain in effect until it is replaced by a rule consistent with our opinion would at least 

temporarily preserve the environmental values covered by CAIR. Accordingly, a remand without vacatur is 

appropriate in this case.” 

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SIP Call rule, which capped seasonal (summer) NOx emissions from electric generating units and 

other sources in 23 jurisdictions, and gave those jurisdictions the option to participate in a cap 

and trade program. 63 FR 57356, 57359 (Oct. 27, 1998).l

 The SIP Call rule may provide a 

similar, although less extensive, regional cap and may limit actual reduction in NOx emissions 

from revised standards occurring in states participating in the SIP Call rule. 

Therefore, DOE established NOx emissions specified by NEMS-BT as the basis to 

estimate the reduction in NOx emissions. These are the national emissions of NOx emissions 

remaining with the CAIR rule in place, and would be the amount that could be reduced by the 

reduction of energy consumption in the non-CAIR states. Table 16.2.1 shows the NOx emission 

reductions calculated by TSL. 

DOE also is able to report an estimate of the physical quantity changes in mercury (Hg) 

emissions associated with an energy conservation standard. Because the CAMR was not 

temporarily left in place by the court (as CAIR was) and has no backup rule like the SIP, DOE 

did not use the NEMS-BT model to estimate mercury emissions. DOE established a range of 

mercury rates to estimate the mercury emissions that could be reduced through standards. DOE’s 

low estimate assumed that future standards would displace electrical generation from natural gasfired power plants, resulting in an effective emission rate reduction of zero. The low-end 

emission rate reduction is zero because natural gas-fired power plants have virtually zero 

mercury emissions associated with their operation. 

DOE’s high estimate was based on a nationwide mercury emission rate from AEO2008. 

Because power plant emission rates are a function of local regulation, scrubbers, and the mercury 

content of coal, it is extremely difficult to identify a precise high-end emission rate. Therefore, 

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. As 

noted previously, because virtually all mercury emitted from electricity generation is from coalfired power plants, DOE based the emission rate on the tons of mercury emitted per TWh of 

coal-generated electricity due to the standards considered in the utility impact analysis. 

Table 16.2.1 shows the estimated reduction in mercury emissions from 2012 to 2042. 

Coal-fired electric generation is the single largest source of electricity in the United 

States. Because the mix of coals used significantly affects the emissions produced, the model 

includes a detailed representation of coal supply. The model considers the rank of the coal as 

well as the sulfur contents of the fuel used when determining optimal dispatch. 

 

l

 In the NOx SIP Call rule, EPA found that sources in the District of Columbia and 22 “upwind” states were emitting 

NOx (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. To ensure that 

downwind states attain or continue to attain the ozone NAAQS, EPA established a region-wide cap for NOx

emissions from certain large combustion sources and set a NOx emissions budget for each state. Unlike the cap that 

CAIR would have established, the NOx SIP Call rules cap only constrains seasonal (summertime) emissions. To 

comply with the NOx SIP Call rules, states could elect to participate in the NOx Budget Trading Program. Under this 

program, each emission source is required to have one allowance for each ton of NOx 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. Emission sources are allowed to buy, sell, and bank NOx

allowances as appropriate. On April 16, 2008, EPA determined that Georgia is no longer subject to the NOx SIP Call 

rule. 73 FR 21528 (April 22, 2008). 

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Within the NEMS-BT model, planning options for achieving emissions restrictions in the 

Clean Air Act Amendments include installing pollution control equipment on existing power 

plants and building new power plants with low emission rates. These methods for reducing 

emission are compared to dispatching options such as fuel switching and allowance trading. 

Environmental regulations also affect capacity expansion decisions. For instance, new plants are 

not allocated SO2 emissions allowances according to the Clean Air Act Amendments. 

Consequently, the decision to build a particular capacity type must consider the cost (if any) of 

obtaining sufficient allowances. This could involve purchasing allowances or over complying at 

an existing unit. 

Modeling of SO2 trading tends to imply that the physical emissions effects will be zero, 

as long as emissions are at the allowed ceiling. Because SO2 has been regulated with emissions 

caps for more than a decade, and no emissions reductions are reported from the NEMS-BT 

forecast model, DOE does not report SO2 results here. This assumption is consistent with 

previous DOE environmental assessment documents.1

16.2.5 Effects on Power Plant Emissions 

Table 16.2.2 shows reference power plant emissions in selected years. The Annual 

Energy Outlook 2009 (AEO 2009) Reference case emissions are the emissions shown by the 

NEMS-BT model to result if none of the TSLs are promulgated. 

Table 16.2.2 Emissions Forecast for AEO 2009 Reference Case 

NEMS-BT Results: 2006 2010 2015 2020 2025 2030

CO2 (Million metric tons/year) *,** 2,364 2,388 2,437 2,495 2,568 2,720 

NOx (Thousand tons/year)† 3,412 2,370 2,087 2,097 2,096 2,115 

Hg (tons/year)† 49.04 45.18 29.65 29.46 29.74 30.09 

* Metric tons, equivalent to 1.1 short tons 

** Emissions from all energy-related sources 

† Emissions from electric generation 

16.2.6 Effects on Upstream Fuel-Cycle Emissions 

Fuel-cycle emissions refer to the emissions associated with the amount of energy used in 

the upstream production and downstream consumption of electricity, including energy used at 

the power plant. Upstream processes include the mining of coal or extraction of natural gas, 

physical preparatory and cleaning processes, and transportation to the power plant. The NEMSBT does a thorough accounting of emissions at the power plant due to downstream energy 

consumption, but does not account for upstream emissions (i.e., emissions from energy losses 

during coal and natural gas production). Thus, this analysis reports 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 addition 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 assessment documents, find that an amount approximately equal to eight percent, 

by mass, of emissions (including SO2) from coal production are due to mining, preparation that 

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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 estimates and corresponding percentages of contributions of upstream emissions 

from coal and natural gas production, relative to power plant emissions, are shown in 

Table 16.2.3 for CO2, and NOx. The percentages are relative to power plant emissions and 

provide a means to estimate upstream emission savings based on changes in emissions from 

power plants. The previous section indicates slight overall reductions in CO2, and NOx. Thus, 

very small reductions in upstream emissions of air pollutant could be expected. This approach 

does not address mercury emissions. 

Table 16.2.3 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 

CO2 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 analysis also considered the monetary benefits associated with these 

reductions. 

Carbon Dioxide (CO2) 

During the preparation of its most recent review of the state of climate science, the 

Intergovernmental Panel on Climate Change (IPCC) identified various estimates of the present 

value of reducing CO2 emissions 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 consensus on any single estimate of the monetary value of CO2 emissions, DOE used an 

estimate identified 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 CO2 reductions likely to result from the standards under consideration in this rulemaking. 

To put the potential monetary benefits from reduced CO2 emissions into a form that is 

likely to be most useful to decision makers and interested parties, the estimated year-by-year 

reductions in CO2 emissions were converted into monetary values and these resulting annual 

values were then discounted over the life of the affected appliances to the present using both 3 

percent and 7 percent discount rates. DOE applied an annual growth rate of 2.4 percent to the 

value of SCC, 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 estimates 

were based on an assumption of no benefit to an average benefit value reported by the IPCC as 

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the Social Cost of Carbon (SCC).m The resulting estimates of the potential range of the present 

value of benefits associated with the reduction of CO2 emissions are reflected in Table 16.2.4

and Table 16.2.5 for Class A and Class B equipment, respectively. 

Table 16.2.4 Estimates of Savings from CO2 Emissions Reductions at All TSLs at a 

7-Percent Discount Rate and 3-Percent Discount Rate for Class A Equipment 

TSL 

Estimated Cumulative 

CO2 (Mt) Emission 

Reductions 

Value of Estimated CO2

Emission Reductions (Million 

2007$) at 7% Discount Rate 

Value of Estimated CO2

Emission Reductions (Million 

2007$) at 3% Discount Rate 

1 0.23 0 – 2.2 0 – 4.3

2 1.01 0 – 9.7 0 – 18.9

3 2.27 0 – 21.9 0 – 42.5

4 3.56 0 – 34.3 0 – 66.6

5 4.19 0 – 40.4 0 – 78.5

6 4.61 0 – 44.5 0 – 86.4

7 5.59 0 – 53.9 0 – 104.7

Table 16.2.5 Estimates of Savings from CO2 Emissions Reductions at All TSLs at a 

7-Percent Discount Rate and 3-Percent Discount Rate for Class B Equipment 

TSL 

Estimated Cumulative 

CO2 (Mt) Emission 

Reductions 

Value of Estimated CO2

Emission Reductions (Million 

2007) at 7% Discount Rate 

Value of Estimated CO2

Emission Reductions (Million 

2007$) at 3% Discount Rate 

1 0.07 0 – 0.7 0 – 1.3 

2 0.11 0 – 1.0 0 – 2 

3 0.53 0 – 5.1 0 – 10 

4 0.61 0 – 5.9 0 – 11.4 

5 1.64 0 – 15.8 0 – 30.8 

6 1.83 0 – 17.6 0 – 34.2 

The IPCC estimate used as the upper bound value was derived from an estimate of the 

mean value of worldwide impacts from potential climate impacts caused by CO2 emissions, and 

not just the effects likely to occur within the United States. DOE considers that in estimating a 

monetary value for CO2 emission reductions, the values should be restricted to a representation 

of those costs/benefits likely to be experienced in the United States and expects that such values 

would be lower than comparable global values. There currently are no consensus estimates for 

the U.S. benefits likely to result from CO2 emission reductions. However, DOE believes it is 

 

m During the preparation of its most recent review of the state of climate science, the Intergovernmental Panel on 

Climate Change (IPCC) identified various estimates of the present value of reducing carbon-dioxide emissions 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 consensus on any single estimate of the monetary value of CO2

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 CO2 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. 

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appropriate to use U.S. benefit values, where available, and not world benefit values, in its 

analysis.n

 

Given the uncertainty surrounding estimates of the social cost of carbon, DOE previously 

concluded that relying on any single estimate may be inadvisable because that estimate will 

depend on many assumptions. Working Group II’s contribution to the “Fourth Assessment 

Report” of the IPCC notes the following: 

The large ranges of SCC are due in the large part to differences in assumptions regarding 

climate sensitivity, response lags, the treatment of risk and equity, economic and noneconomic impacts, the inclusion of potentially catastrophic losses, and discount rates.o

 

Because of this uncertainty, DOE previously used the SCC value from Tol (2005), which 

was presented in the IPCC’s “Fourth Assessment Report” and provided a comprehensive metaanalysis of estimates for the value of SCC. Tol released an update of his 2005 meta-analysis in 

September 2007 that reported an increase in the mean estimate of SCC from $43 to $71 per ton 

carbon. Although the Tol study was updated in 2007, the IPCC has not adopted the update. As a 

result, DOE previously decided to continue to rely on the study cited by the IPCC. DOE notes 

that the conclusions of Tol in 2007 are similar to the conclusions of Tol in 2005. In 2007, Tol 

continues to indicate that there is no consensus regarding the monetary value of reducing CO2

emissions by 1 ton. The broad range of values in both Tol studies are the result of significant 

differences in the methodologies used in the studies Tol summarized. According to Tol, all of the 

studies have shortcomings, largely because the subject is inherently complex and uncertain and 

requires broad multidisciplinary knowledge. Thus, it was not certain that the values reported in 

Tol in 2007 are more accurate or representative than the values reported in Tol in 2005. 

DOE uses the range of values based on the values presented in Tol (2005). Additionally, 

DOE applied an annual growth rate of 2.4 percent to the value of SCC, as suggested by the IPCC 

Working Group II (2007, p. 822). This growth rate is based on estimated increases in damage 

from future emissions that published studies have reported. Because the values in Tol (2005) 

were presented in 1995 dollars, DOE calculated more current values, assigning a range for SCC 

of $0 to $20 (2007$) per ton of CO2 emissions. 

The upper bound of the range DOE used is based on Tol (2005), which reviewed 103 

estimates of SCC from 28 published studies. Tol concluded that when only peer-reviewed studies 

published in recognized journals are considered, “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 percent growth rate].” 

In setting a lower bound of $0, DOE agrees with the IPCC Working Group II (2007) 

report that “significant warming across the globe and the locations of significant observed 

 

n

 In contrast, most of the estimates of costs and benefits of increasing the efficiency of BVMs include only economic 

values of impacts that would be experienced in the U.S. DOE generally does not consider impacts on manufacturers 

that occur solely outside of the United States. 

o

 “Climate Change 2007—Impacts, Adaptation and Vulnerability.” Contribution of Working Group II to the “Fourth 

Assessment Report” of the IPCC, Available at www.ipcc.ch/ipccreports/ar4-wg2.htm (last accessed April, 2009). 

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changes in many systems consistent with warming is very unlikely to be due solely to natural 

variability of temperatures or natural variability of the systems” (p. 9), and thus tentatively 

concludes that a global value of zero for reducing emissions cannot be justified. However, DOE 

concludes that it is reasonable to allow for the possibility that the SCC for the United States may 

be quite low. In fact, some of the studies looked at in Tol (2005) reported negative values for the 

SCC. DOE assumes that it is most appropriate to use U.S. benefit values rather than world 

benefit values in its analysis, and U.S. values will likely be lower than the global values. As 

indicated above, DOE, together with other Federal agencies, is now reviewing whether this 

previous analysis should be modified. However, it is very unlikely that possible changes in this 

methodology would affect the conclusions reached in this rulemaking. 

Nitrogen Oxides (NOx) and Mercury 

DOE also investigated the potential monetary benefit of reduced SO2, NOx, and Hg 

emissions from the TSLs it considered. As previously stated, DOE’s initial analysis assumed the 

presence of nationwide emission caps on SO2 and Hg, and caps on NOx emissions in the 28 

States covered by CAIR. In the presence of these caps, DOE concluded that no physical 

reductions in power sector emissions would occur, but that the lower generation requirements 

associated with energy conservation standards could put downward pressure on the prices of 

emissions allowances in cap and trade markets. Estimating this effect is very difficult because of 

factors such as credit banking, which can change the trajectory of prices. DOE has further 

concluded that the effect from energy conservation standards on SO2 allowance prices is likely to 

be negligible, based on runs of the NEMS-BT model. 

Because the courts have decided to allow the CAIR rule to remain in effect, projected 

annual NOx allowances from NEMS-BT are still relevant. In DOE’s analysis, NOx emissions are 

controlled by the CAIR regional regulatory system, where the reduction of energy consumption 

through this rulemaking is too small to have any net effect on either the physical emissions of 

NOx or the price of emissions in the cap-and-trade system covering the 28 CAIR states. For 

Class A Equipment, NOx emission reductions range from 0.03 to 0.75 kt for the TSLs 

considered. These changes in NOx emissions (from the non-CAIR states) are extremely small, 

ranging from approximately 0.000045 to 0.001 percent of the national base case emissions 

forecast by NEMS-BT, depending on the TSL. For Class B Equipment, NOx emission reductions 

range from nearly 0.01 to 0.25 kt for the TSLs considered. These changes in NOx emissions are 

extremely small, ranging from 0.00014 to 0.00037 percent of the national base case emissions 

forecast by NEMS-BT, depending on the TSL. Even if the CAIR-state savings were significantly 

larger than this, they would be too small to have any noticeable impact on price or total 

emissions. 

DOE estimated the national monetized benefits of NOx in the non-CAIR states and 

national Hg emissions reductions from the proposed standards based on environmental damage 

estimates from the literature. Available estimates suggest a very wide range of monetary values 

for NOx emissions, ranging from $370 per metric ton to $3,800 per metric ton of NOx from 

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EERE-2006-STD-0125 COMMENT 46
stationary sources, measured in 2001$,p

 or a range of $432 per ton to $4,441 per metric ton in 

2008$. 

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 identified two estimates of the environmental damage 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 lifetime economic productivity resulting from these IQ losses. The highend estimate is based on an estimate of the current aggregate cost of the loss of IQ that results 

from exposure of American children of U.S. power plant origin of $1.3 billion per year in year 

2000$, which is $32.6 million per metric ton emitted per year (2007$).q The low-end estimate is 

$664,000 per metric ton emitted in 2004$ or $739,000 per metric ton in 2007$), which DOE 

derived 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.r

 The resulting estimates of the potential range of the present value benefits associated 

with the national reduction of NOx and Hg emissions are reflected in Table 16.2.6 through 

Table 16.2.9 for Class A and B Equipment. 

Table 16.2.6 Estimates of Savings from Reducing NOx and Hg Emissions at All TSLs at a 

7-Percent Discount Rate for Class A Equipment 

TSL 

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$) 

1 0.03 5 – 50 0 – 0.004 0 – 44 

2 0.14 21 – 221 0 – 0.017 0 – 196 

3 0.31 48 – 497 0 – 0.038 0 – 441 

4 0.48 76 – 778 0 – 0.059 0 – 690 

5 0.57 89 – 918 0 – 0.069 0 – 814 

6 0.62 98 – 1010 0 – 0.076 0 – 896 

7 0.75 119 – 1224 0 – 0.093 0 – 1086 

 

p

 2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, 

Local, and Tribal Entities. OMB Office of Information and Regulatory Affairs, Washington, D.C. q

 Trasande, L., et al., “Applying Cost Analyses to Drive Policy that Protects Children” 1076 ANN. N.Y. ACAD. 

SCI. 911 (2006).

r

 Ted Gayer and Robert Hahn, Designing Environmental Policy: Lessons from the Regulation of Mercury 

Emissions, Regulatory Analysis 05-01. AEI-Brookings Joint Center 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. 

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EERE-2006-STD-0125 COMMENT 46
Table 16.2.7 Estimates of Savings from Reducing NOx and Hg Emissions at All TSLs at a 

7-Percent Discount Rate for Class B Equipment 

TSL 

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$) 

1 0.01 2 – 16 0-0.001 0 – 14 

2 0.01 2 – 23 0-0.002 0 – 21 

3 0.07 11 – 116 0-0.009 0 – 103 

4 0.08 13 – 133 0-0.010 0 – 118 

5 0.22 35 – 359 0-0.027 0 – 319 

6 0.25 39 – 400 0-0.030 0 – 355 

Table 16.2.8 Estimates of Savings from Reducing NOx and Hg Emissions at All TSLs at a 

3-Percent Discount Rate for Class A Equipment 

TSL 

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$) 

1 0.03 8 – 85 0 – 0.004 0 – 76 

2 0.14 37 – 377 0 – 0.017 0 – 338 

3 0.31 83 – 849 0 – 0.038 0 – 761 

4 0.48 129 – 1330 0 – 0.059 0 – 1192 

5 0.57 153 – 1568 0 – 0.069 0 – 1405 

6 0.62 168 – 1726 0 – 0.076 0 – 1547 

7 0.75 203 – 2092 0 – 0.093 0 – 1874 

Table 16.2.9 Estimates of Savings from Reducing NOx and Hg Emissions at All TSLs at a 

3-Percent Discount Rate for Class B Equipment 

TSL 

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$) 

1 0.01 3 – 27 0-0.001 0 – 24 

2 0.01 4 – 40 0-0.002 0 – 36 

3 0.07 19 – 199 0-0.009 0 – 178 

4 0.08 22 – 227 0-0.010 0 – 204 

5 0.22 60 – 614 0-0.027 0 – 550 

6 0.25 67 – 684 0-0.030 0 – 613 

Sulfur Dioxide (SO2) 

Unlike the other pollutants considered in this TSD, SO2 emissions have for some time 

been subject to a national cap with corresponding annual allowances 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 

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EERE-2006-STD-0125 COMMENT 46
should 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 meaningful 

quantification of any associated benefit. While complexity of analysis alone clearly cannot 

justify 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 benefit. 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 ways (e.g., as rewards to generators 

installing control equipment). In other words, the entitled generators holding emission 

rights are losers when the value of allowances declines, while the buyers of allowances 

are gainers. Before they are used, allowances may be traded many times at prices 

reflecting the marginal not average cost of compliance. 

2. The trading system allows for allowance banking. Consequently, any observed change in 

a forecast year could represent 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 allowance price spike. While prices had already fallen far below their 

historic highs 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 instruments, and, especially since 2003, allowance prices have been 

volatile. Between 2000, when a tightened CA3 cap came into force, and 2007, allowances 

traded between a low of about 120 $/short ton in 2002 and a high of about 

1600 $/short ton, with the 2005 spike being particularly dramatics. Since there is no 

reason to believe that these conditions will alter over the life of a proposed standard, the 

challenge of forecasting prices is much more complex than a simple supply-demand 

 

s

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

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

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EERE-2006-STD-0125 COMMENT 46
balance 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 prevailing 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 overturned 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 

possible. Nonetheless, as an indicative bounding case, the net changes in the average price were 

computed for the period 2012 to 2030 for standard equipment at TSL 6 (the most 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) t

. 

For both classes of BVM equipment, the specific results indicated about a -0.01 percent 

change in the allowance price in the East region defined within the Electricity Market Module 

(EMM) of NEMS-BT. The Department 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 refined estimate, the SO2 allowance price effect is not considered in this TSD. If future 

analysis suggests that the SO2 allowance price effect is both significant and estimable using 

NEMS-BT, it may be added to supporting material. 

16.3 WETLAND, ENDANGERED AND THREATENED SPECIES, AND CULTURAL 

RESOURCES 

DOE’s proposed action is not site-specific, nor would it affect land disturbance or use 

due to BVM 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 impact 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 

BVM at the proposed standard level is completely or nearly offset by a reduction in the life-cycle 

cost (LCC) of owning 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. 

 

t

 To be specific with regard to the method, for each simulation the arithmetic change 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 (“20X”, “30X”, 

and “40X” values discussed in Appendix J), the resulting percentage changes were subsequently averaged over the 

simulations. The percentage change in the allowance price for the 30X case for BVM equipment has a somewhat 

smaller response. However, the regression-based average takes all three cases into account. 

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For the sub-group of customers that are manufacturing facilities, DOE determined that 

the average LCC impact is similar to that for the full sample of customers. Therefore, DOE 

concludes that the proposed action would have no significant socioeconomic impact on a subgroup of customers. For a complete discussion on the LCC impacts on manufacturing facilities 

sub-group, see chapter 12 of the TSD. 

Table 16.4.1 shows the mean LCC savings for both the full sample of customers and 

manufacturing facilities as the sub-group for BVM. 

Table 16.4.1 Mean Life-Cycle Cost Savings for All Customers and Sub-Group, BVM 

(2008$) 

Trial Standard Level 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 

All Customers- Class A $154 $204 $245 $307 $322 $316 ($1,194)

Manufacturing sub-group-Class A $103 $136 $150 $184 $186 $171 ($1,326)

All Customers- Class B $47 $56 $49 $39 ($525) ($2,216) NA 

Manufacturing sub-group-Class B $28 $28 $10 ($1) ($576) ($2,227) NA 

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 energy-efficiency standards on (1) small businesses that 

either manufacture or use BVMs, (2) manufacturers of niche products related to BVMs, and 

(3) small businesses operated by disadvantaged or minority populations. 

DOE identified manufacturing facilities as a sub-group that possibly could be 

disproportionately affected by BVM energy conservation standards. As described in the LifeCycle Cost Sub-group Analysis, chapter 12 of the TSD, DOE found that there was no 

disproportionately high and adverse human health or environmental effects on manufacturing 

facilities that would result from the proposed energy conservation standards. 

16.6 NOISE AND AESTHETICS 

Improvements in efficiency of BVM equipment is expected to result from changes in the 

choice of components and other design features. These changes are described in chapter 5 of this 

TSD. Efficiency improvements result from improved heat exchanger designs using increased 

levels of copper, 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 standards 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. 

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EERE-2006-STD-0125 COMMENT 46
The summary table shows cumulative changes in emissions for CO2, NOx, and mercury over the 

period 2012 to 2042. Cumulative CO2, NOx and Hg emissions show a decrease compared to the 

reference case. 

Upstream fuel cycle emission of CO2 and NOx are described but not quantified in section 

16.2.6. The text describes potential reductions in fuel cycle emissions as percentage of decreases 

in power plant emissions. This qualitative approach suggests that upstream fuel cycle emissions 

would decrease and provides a sense for the magnitude of effects, however, DOE does not report 

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; wetlands, endangered and threatened species, 

and cultural resources; or noise and aesthetics. 

Table 16.7.1 Environmental Impact Analysis Results Summary, Class A BVM Equipment 

TSL 

Environmental Effects 

Reference 

Case* TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 

Cumulative Emission 

Reductions** 

CO2 (Million metric tons) 208,728 0.23 1.01 2.27 3.56 4.19 4.61 5.59 

NOx (Thousand tons) 67,178 0.03 0.14 0.31 0.48 0.57 0.62 0.75 

Hg (tons) 547.9 0 to 

0.004 

0 to 

0.017 

0 to 

0.038 

0 to 

0.059 

0 to 

0.069 

0 to 

0.076 

0 to 

0.093 

Fuel-Cycle (Upstream) 

Emissions 

NA *** *** *** *** *** *** *** 

Wetlands, Endangered and 

Threatened Species, Cultural 

Resources 

NA None None None None None None None 

Socioeconomic Impacts – 

Weighted Mean LCC 

Savings† 

NA 

All Customers NA $154 $204 $245 $307 $322 $316 ($1194) 

Manufacturing Facilities NA $103 $136 $150 $184 $186 $171 ($1326) 

Environmental Justice NA None None None None None None None 

Noise and Aesthetics NA None None None None None None None 

* The reference case values reflect total cumulative emissions and life cycle cost s in the absence of an energy conservation standard. 

** Cumulative total is over a time period from 2012 to 2042. Negative values are in parenthesis. 

*** DOE does not report actual estimates of the effects of standards 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, Class B BVM Equipment 

TSL 

Environmental Effects 

Reference 

Case* TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 

Cumulative Emission Reductions** 

 CO2 (Million metric tons) 208,728 0.07 0.11 0.53 0.61 1.64 1.83 

 NOx (Thousand tons) 67,178 0.01 0.01 0.07 0.08 0.22 0.25 

 Hg (tons) 547.9 0 to 

0.001 

0 to 

0.002 

0 to 

0.009 

0 to 

0.010 

0 to 

0.027 

0 to 

0.030 

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

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EERE-2006-STD-0125 COMMENT 46
Wetlands, Endangered and 

Threatened Species, Cultural 

Resources 

NA None None None None None None 

Mean LCC Savings† NA 

All Customers NA $47 $56 $49 $39 ($525) ($2216) 

Manufacturing Facilities NA $28 $28 $10 ($1) ($576) ($2227) 

Environmental Justice NA None None None None None None 

Noise and Aesthetics NA None None None None None None 

* The reference case values reflect total cumulative emissions and life cycle cost s in the absence of an energy conservation standard. 

** Cumulative total is over a time period from 2012 to 2042. Negative values are in parenthesis.. 

*** DOE does not report actual estimates of the effects of standards 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.

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EERE-2006-STD-0125 COMMENT 46
 16-22 

bvm_nopr_tsd_chapter16.doc 

REFERENCES 

1. DOE. 2006. Environmental Assessment for Proposed Energy Conservation Standards for 

Distribution Transformers. DOE/EA-1565. Washington, D.C. 

2. DeLuchi, M. A. Emissions of Greenhouse Gases from the Use of Transportation Fuels and 

Electricity, Volume 2: Appendixes A-S. November, 1993. Argonne National Laboratory. 

Argonne, IL. Report No. ANL/ESD/TM-22-Vol.2. 

3. Energy Information Administration, Annual Energy Outlook 2008 (Revised Early Release) 

with Projections to 2030. 2008: Washington, DC. <http://www.eia.doe.gov/oiaf/aeo/> 

4. Intergovernmental Panel on Climate Change (IPCC). Climate Change 2007 – Impacts, 

Adaptation and Vulnerability, Contribution of Working Group II to the Fourth Assessment 

Report to the IPCC. < http://www.ipcc.ch/ipccreports/ar4-wg2.htm> 

5. Office of Management and Budget, Office of Information and Regulatory Affairs, 2006 

Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded 

Mandates on State, Local, and Tribal Entities, 2006. Washington, DC. 

 <http://www.whitehouse.gov/omb/inforeg/2006_cb/2006_cb_final_report.pdf> 

6. Ted Gayer and Robert Hahn, “Designing Environmental Policy: Lessons from the 

Regulation of Mercury Emissions,” Regulatory Analysis 05-01 (AEI-Brookings Joint 

Center For Regulatory Studies) p. 31 (2004). A version of this paper was published in the 

Journal of Regulatory Economics in 2006. 

7. Tol, Richard S.J. The marginal damage costs of carbon dioxide emissions: An assessment 

of the uncertainties, Energy Policy 33 (2005) 2064-2074. 

8. Trasande, L., C. Schechter, K.A. Haynes, and P.J. Landrigan, “Applying Cost Analyses to 

Drive Policy that Protects Children,” 1076 ANN. N.Y. ACAD. SCI. 911 (2006). 

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