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3 - 1 

## MEMO **: EMISSION REDUCTIONS,**  **COSTS, BENEFITS AND ECONOMIC**  **IMPACTS ASSOCIATED W ITH BUILDING BLOCKS**  **1 AND 2 1**  **Introduction** This memo provides estimates of the costs, energy impacts, and the monetize d climate benefits and air pollution health co -benefits associated with emission reductions for two illustrative compliance scenarios associated with building blocks 1 and 2 only . It also includes estimates of the labor impacts on the regulated sector. The methods applied to generate these estimates are described in detail in Chapter 3 , 4 , and 6 of the Regulatory Impact Anal ys is (RIA). For brevity, this memo just reports the results of these analys es. EPA used the Integrated Planning Model (IPM) , developed by ICF International, to conduct this anal ys is. Itprovides forecasts of least cost capacity expansion, electricity dispatch, and emission control strategies while meeting energy demand and environmental, transmission, dispatch, and reliability constraints. This analysis also evaluates the climate benefits associated with emission reductions of CO 2 

### and the air pollution health co -benefits associated with reduced emissions of SO 2 

### , NOx , and PM 2.5 

### , which would lead to lower ambient concentrations of PM 2.5 

### and ozone. Unlike the anal ys is of health co -benefits in Chapter 4 of the RIA, estimates of emissions reductions of directly emitted particles available are not available for this anal ys is. Similar to Chapter 4 of the RIA, unquantified co -benefits include exposure to several HAP s ( including mercury and hydrogen chloride ) , carbon monoxide, SO 2 

### , and NO 2 

### , as well as ecos ystem effects and visibility impairment. **2 State Goals for Building Blocks 1 and 2**  This analysis includes state - specific rate -based goals that reflect a two -building block approach. It is also based upon the same modeling framework, assumptions and calculations as presented in the RIA. The two -blocks incorporated in the following state goals include efficiency improvements at existing c oal steam electric generating units (EGUs) and use of lower emitting power sources (increased utilization of existing NGCCs) and are identical to the proposed levels,

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3 - 2 included for purposes of establishing state - specific goals, associated with Option 1 (6% efficiency improvement and no more than 70% redispatch). **Table 1**  **. State -**  **specific Goals for Two -** **Block Approach for Existing Sources**  **State Rate**  Alabama 1,329 Alaska 1,252 Arizona 900 Arkansas 1,115 California 838 Colorado 1,521 Connecticut 809 Delaware 1,013 Florida 910 Georgia 1,296 Hawaii 1,751 Idaho 858 Illinois 1,865 Indiana 1,834 Iowa 1,846 Kansas 2,186 Kentucky 1,986 Louisiana 1,099 Maine 848 Maryland 1,868 Massachusetts 886 Michigan 1,511 Minnesota 1,369 Mississippi 843 Missouri 1,784 Montana 2,295 Nebraska 1,941 Nevada 882 New Hampshire 878 New Jersey 905 New Mexico 1,447 New York 927 North Carolina 1,329 North Dakota 2,226 Ohio 1,714 Oklahoma 1,186 Oregon 852 Pennsylvania 1,480 Rhode Island 918 South Carolina 1,514 South Dakota 1,456 Tennessee 1,798 Texas 1,083 Utah 1,559 Virginia 1,135 Washington 811 West Virginia 1,933 Wisconsin 1,619 Wyoming 2,151

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3 - 3 **3 Emissions and**  **Power Sector Impacts** Tables 2 through 16 report the emissions and power sector impacts of the two -block approach . **Table 2. Projected CO 2**  

### Emission Impacts **CO 2**  **Emissions (MM Tonnes)**  **CO 2**  **Emissions**

**Reductions from Base**  **Case (MM Tonnes)**  **CO 2**  **Emissions Reductions:**

**Percent Change from Base** 

**Case 2020**  **2025 2030**  **2020 2025**  **2030 2020**  **2025 2030**  Base Case 2,161 2,231 2,256 Two - Block Regional 1,930 1,973 1,997 231 258 258 11% 12% 11% Two - Block State 1,908 1,947 1,963 252 284 292 12% 13% 13% Source: Integrated Planning Model run by EPA, 2014 

### Table 3. Projected Non **- CO**  **2** 

### Emissions Reductions, 2020 **- 2030**  **Base Case Two Block**  **Two Block**

**Reg ional**  **State Regional**  **State** 2020 SO 2 (thousand tons) 1,476 1,243 1,199 - 15.7% - 18.8% NO X (thousand tons) 1,559 1,319 1,286 - 15.4% - 17.5% Hg (tons) 8.3 7.2 7.1 - 12.8% - 13.9% HCl (thousand tons) 8 8 8 2.9% - 1.3% 2025 SO 2 (thousand tons) 1,515 1,228 1,171 - 19.0% - 22.7% NO X (thousand tons) 1,587 1,317 1,272 - 17.0% - 19.9% Hg (tons) 8.7 7.4 7.3 - 14.9% - 16.2% HCl (thousand tons) 8 9 9 0.8% 3.0% 2030 SO 2 (thousand tons) 1,530 1,188 1,134 - 22.3% - 25.9% NO X (thousand tons) 1,537 1,274 1,224 - 17.1% - 20.4% Hg (tons) 8.8 7.4 7.3 - 15.2% - 16.8% HCl (thousand tons) 9 9 9 0.0% - 5.1% Source: Integrated Planning Model run by EPA, 2014 

### Table 4. Annualized Compliance Costs (billions of 2011$) **2020 2025**  **2030** Two Block Regional 3.2 3.0 6.8 Two Block State 4.4 4.6 9.8 Source: Integrated Planning Model run by EPA, 2014

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3 - 4 **Table 5 1**  **. Generation Mix (thousand GWh) Base Case**  **, Generation Two Block** **, Generation Two Block** **, Percent Change Regional**  **State Regional**  **State** 2020 Pulverized Coal 1,665 1,435 1,395 - 14% - 16% NG Combined Cycle (existing) 1,003 1,178 1,170 17% 17% NG Combined Cycle (new) 85 153 199 81% 134% Com bustion Turbine 19 34 31 79% 63% Oil/Gas Steam 52 25 26 - 51% - 50% Non- Hydro Renewables 299 300 300 0% 0% Hydro 280 283 283 1% 1% Nuclear 817 819 819 0% 0% Other 8 8 9 11% 17% **Total** 4,227 4,235 4,232 0% 0% 2025 Pulverized Coal 1,702 1,420 1,377 - 17% - 19% NG Combined Cycle (existing) 919 1,176 1,144 28% 24% NG Combined Cycle (new) 280 310 385 11% 37% Com bustion Turbine 27 42 38 57% 42% Oil/Gas Steam 37 20 20 - 47% - 46% Non- Hydro Renewables 335 335 335 0% 0% Hydro 280 282 282 1% 1% Nuclear 817 819 819 0% 0% Other 6 7 8 15% 22% **Total** 4,404 4,411 4,408 0% 0% 2030 Pulverized Coal 1,668 1,372 1,321 - 18% - 21% NG Combined Cycle (existing) 810 1,144 1,099 41% 36% NG Combined Cycle (new) 599 551 644 - 8% 7% Com bustion Turbine 23 43 40 92% 78% Oil/Gas Steam 23 15 17 - 34% - 29% Non- Hydro Renewables 350 352 353 1% 1% Hydro 280 282 282 1% 1% Nuclear 797 797 797 0% 0% Other 6 7 8 23% 31% **Total** 4,557 4,565 4,560 0% 0% Note: “Other” mostly includes MSW and fuel cells. Source: Integrated Planning Model run by EPA, 2014 

### In 2020, incremental coal retirements relative to the base case are 24 GW in the regional scenario , and 32 GW in the state scenario . **Table 6. Total Generation Capacity by 2020**  **- 2030 (GW)**  Base Case Two Block Two Block

Reg. State Reg. State 2020

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5 Pulverized Coal 244 219 211 - 10% - 13% NG Combined Cycle (existing) 219 221 221 1% 1% NG Combined Cycle (new) 12 23 30 93% 153% Com bustion Turbine 146 148 149 1% 2% Oil/Gas Steam 83 80 79 - 3% - 5% Non- Hydro Renewables 93 93 93 0% 1% Hydro 101 101 101 0% 0% Nuclear 103 103 103 0% 0% Other 5 5 5 2% 2% Total 1,005 994 992 - 1% - 1% 2025 Pulverized Coal 243 219 211 - 10% - 13% NG Combined Cycle (existing) 219 221 221 1% 1% NG Combined Cycle (new) 39 49 59 25% 52% Com bustion Turbine 149 160 160 8% 7% Oil/Gas Steam 82 80 79 - 2% - 4% Non- Hydro Renewables 103 104 104 0% 1% Hydro 101 101 101 0% 0% Nuclear 103 103 103 0% 0% Other 5 5 5 2% 2% Total 1,044 1,042 1,043 0% 0% 2030 Pulverized Coal 240 217 209 - 10% - 13% NG Combined Cycle (existing) 219 221 221 1% 1% NG Combined Cycle (new) 84 88 101 6% 20% Com bustion Turbine 156 174 172 12% 10% Oil/Gas Steam 82 80 79 - 2% - 4% Non- Hydro Renewables 107 108 109 1% 1% Hydro 101 101 101 0% 0% Nuclear 101 101 101 0% 0% Other 5 5 5 2% 2% Total 1,095 1,095 1,096 0% 0% Source: Integrated Planning Model run by EPA, 2014 

### Table 7. Projected Capacity Factor of Existing Coal Steam and Natural Gas Combined **Cycle Capacity Existing Coal Steam**  **Existing Natural Gas Combined**  **Cycle 2020**  **2025 2030**  **2020 2025**  **2030** Base Case 78% 80% 79% 52% 48% 42% Option 2 Regional 75% 74% 72% 61% 61% 59%

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6 Option 2 State 75% 74% 72% 60% 59% 57% Source: Integrated Planning Model run by EPA, 2014



### Table **88 . Projected Capacity**  **Additions, Gas (GW) Cumulative Capacity Additions: Gas** 

**Combined Cycle Incremental Cumulative Capacity**  **Additions: Gas Combined Cycle 2020**  **2025 2030**  **2020 2025**  **2030** Base Case 11.9 38.9 83.8 Two Block Regional 23.1 48.7 88.5 11.1 9.8 4.7 Two Block State 30.2 58.9 100.7 18.3 20.0 17.0 Source: Integrated Planning Model run by EPA, 2014 

### Table **9 . Projected Capacity Additions, Non**  **- hydro Renewable (GW)**  **Cumulative Capacity Additions:**

**Renewables Incremental Cumulative Capacity Additions:**  **Renewables 2020**  **2025 2030**  **2020 2025**  **2030** Base Case 17.8 28.4 32.7 Two Block Regional 18.1 28.8 33.6 0.3 0.4 0.8 Two Block State 18.3 29.0 33.7 0.5 0.6 1.0 Source: Integrated Planning Model run by EPA, 2014 

### Table **10 .**  **Coal Production for the Electric Power Sector, 2020 Coal Production (MM Tons)**  **Percent Change from Base Case** 

**Two Block Two Block**  **Base Case Reg** **ional State**  **Regional State**  Appalachia 140 110 111 - 22% - 21% Interior 249 230 224 - 8% - 10% West 446 324 308 - 27% - 31% Waste Coal 9 11 11 20% 20% Im ports 0 0 0 Total 844 675 654 - 20% - 22% Source: Integrated Planning Model run by EPA, 2014 

### Table **11 . Power Sector Gas Use**  **Power Sector Gas Use (TCF) Percent Change in Power Sector Gas Use**  **2020 2025**  **2030 2020**  **2025 2030**  Base Case 8.35 8.88 9.89 Two Block Regional 9.90 10.90 12.14 18.7% 22.7% 22.6% Two Block State 10.14 11.14 12.42 21.5% 25.5% 25.6% 

### Table **1 2**  **. Projected Average Minemouth and Delivered Coal Prices (2011$/MMBtu) Minem** **outh Delivered**  **- Electric Power Sector**  **2020 2025**  **2030 2020**  **2025 2030**  Base Case 1.73 1.88 2.06 2.62 2.80 2.98

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7 Two Block Regional 1.55 1.69 1.81 2.32 2.47 2.59 Two Block State 1.55 1.69 1.83 2.31 2.47 2.62 

### Table 1 **3 . Projected Average Minemouth**  **and Delivered Coal Prices: Percent Change from**

**Base Case Projections Minem** **outh Delivered**  **- Electric Power Sector** 

**2020 2025**  **2030 2020**  **2025 2030**  Two Block Regional - 10.6% - 10.5% - 12.1% - 11.5% - 11.8% - 13.0% Two Block State - 10.5% - 10.4% - 11.0% - 11.7% - 11.9% - 12.2%

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8 **Table 1 4**  **. Projected Natural Gas Prices (2011$/MMBtu)**  Henry Hub Delivered - Electric Power Sector 2020 2025 2030 2020 2025 2030 Base Case 4.98 5.68 6.00 5.36 6.11 6.39 Two Block Regional 5.53 6.06 6.62 5.90 6.42 6.94 Two Block State 5.56 6.10 6.73 5.93 6.45 7.05 

### Table 1 **5 .**  **Projected Natural Gas Prices: Percent Change from Base Case Projections**  Henry Hub Delivered - Electric Power Sector 2020 2025 2030 2020 2025 2030 Two Block Regional 10.9% 6.7% 10.3% 9.9% 5.0% 8.6% Two Block State 11.5% 7.3% 12.2% 10.6% 5.5% 10.3% 

### Table 1 **6 . 2020 Projected Contiguous U.S. and Regional Retail Electricity Prices**  **(cents/kWh)** 2020 Projected Retail Price (cents/kWh) Percent Change from Base Case

Base Case Two Block

Regional Two Block State Two Block Regional Two Block State ERCT 9.9 10.3 10.4 4.8% 5.1% FRCC 10.6 11.0 11.2 3.6% 5.1% MROE 10.4 10.5 10.5 0.6% 0.5% MROW 9.2 9.2 9.3 0.0% 1.8% NEWE 13.8 14.2 14.5 2.5% 5.0% NYCW 18.0 18.3 18.5 1.9% 2.6% NYLI 14.7 15.1 15.2 2.5% 3.3% NYUP 12.7 13.0 13.1 2.1% 2.8% RFCE 12.2 12.6 12.7 3.2% 3.6% RFCM 10.7 10.7 10.8 0.3% 1.1% RFCW 10.1 10.3 10.4 1.7% 2.5% SRDA 9.0 9.2 9.2 2.8% 2.6% SRGW 9.3 9.5 9.6 1.9% 2.9% SRSE 10.4 10.4 10.5 0.5% 0.7% SRCE 8.2 8.2 8.2 - 0.9% - 0.9% SRVC 10.7 10.6 10.7 - 0.3% - 0.1% SPNO 10.6 10.5 10.5 - 1.0% - 1.3% SPSO 8.3 8.8 8.8 5.0% 5.3%

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9 AZNM 10.5 10.7 10.8 1.7% 2.9% CAMX 14.3 14.6 14.6 2.2% 2.4% NWPP 7.3 7.4 7.4 1.3% 1.4% RMPA 8.9 9.0 9.2 0.7% 2.9% Contiguous U.S. 10.4 10.6 10.7 1.9% 2.5% 

### Table 1 **7 . 202**  **5 Projected Contiguous U.S. and Regional Retail Electricity Prices**  **(cents/kWh)** 2025 Projected Retail Price (cents/kWh) Percent Change from Base Case

Base Case Two Block

Regional Two Block State Two Block Regional Two Block State ERCT 11.2 11.5 11.5 2.5% 3.0% FRCC 10.9 11.2 11.3 2.6% 4.0% MROE 10.5 10.5 10.4 0.3% - 0.8% MROW 9.2 9.4 9.6 1.9% 4.2% NEWE 14.2 14.6 14.9 2.2% 4.4% NYCW 18.8 19.2 19.3 2.0% 2.3% NYLI 15.6 16.0 16.1 2.9% 3.3% NYUP 13.2 13.5 13.6 2.0% 2.3% RFCE 12.6 12.8 12.9 1.6% 2.0% RFCM 10.7 10.8 10.9 0.7% 1.8% RFCW 10.9 11.0 11.1 0.7% 1.0% SRDA 9.3 9.6 9.6 2.7% 3.0% SRGW 10.1 10.3 10.3 1.3% 1.9% SRSE 10.3 10.5 10.5 1.1% 1.1% SRCE 8.2 8.1 8.1 - 1.5% - 1.7% SRVC 10.6 10.6 10.6 - 0.1% 0.1% SPNO 10.3 10.3 10.3 - 0.2% - 0.3% SPSO 8.8 9.3 9.2 4.9% 4.4% AZNM 10.8 11.1 11.3 2.7% 4.7% CAMX 13.9 14.1 14.1 1.0% 1.0% NWPP 7.4 7.4 7.5 0.7% 1.7% RMPA 9.4 9.5 9.7 0.9% 3.3% Contiguous U.S. 10.8 10.9 11.0 1.4% 2.0% 

### Table 1 **8 . 20**  **3 0 Projected Contiguous U.S. and Regional Retail Electricity**  **Prices (cents/kWh)** 

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10 2030 Projected Retail Price (cents/kWh) Percent Change from Base Case Base Case Two Block

Regional Two Block State Two Block Regional Two Block State ERCT 11.6 12.1 12.1 4.0% 4.8% FRCC 10.9 11.5 11.6 5.0% 6.3% MROE 10.5 10.7 10.7 2.3% 1.6% MROW 9.4 9.6 9.8 2.1% 4.9% NEWE 15.1 15.4 15.4 2.0% 1.8% NYCW 19.9 20.3 20.3 1.7% 1.6% NYLI 16.9 17.2 17.1 1.8% 1.3% NYUP 14.2 14.5 14.5 1.7% 1.6% RFCE 12.4 12.8 12.8 2.8% 3.4% RFCM 10.8 11.0 11.1 1.8% 2.9% RFCW 11.2 11.4 11.4 1.3% 1.8% SRDA 9.5 9.9 10.0 4.5% 5.0% SRGW 10.4 10.5 10.6 0.9% 1.6% SRSE 10.4 10.6 10.7 2.4% 2.6% SRCE 8.1 8.1 8.1 - 1.2% - 1.2% SRVC 10.4 10.4 10.5 0.6% 1.1% SPNO 10.2 10.2 10.2 - 0.1% 0.2% SPSO 9.1 9.7 9.6 6.3% 6.1% AZNM 11.5 11.8 12.0 2.7% 4.4% CAMX 14.1 14.4 14.5 1.9% 2.3% NWPP 7.4 7.5 7.6 1.2% 2.6% RMPA 9.9 10.1 10.4 2.1% 5.7% Contiguous U.S. 10.9 11.2 11.3 2.3% 2.9% 

### 4 **Estimated Climate Benefits from CO**  **2** 

### Emission Reductions Table s 1 9 through 21 report the climate benefits estimated in three anal ys is years (2020, 2025, and 2030) for the two illustrative compliance scenarios (i.e., state and regional) evaluated.

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11 **Table 1**  **9 .**  **Estimated Global Climate Benefits of CO 2**  

### Reductions for **Building Blocks 1 and**

**2 in 2020 (billions of 2011$)** * **Discount Rate and Statistic State**  **Regional** Million metric tonnes of CO 2 reduced 252 231

5% (average) $3.2 $3.0 3% (average) $12 $11 2.5% (average) $17 $16 3% (95 th percentile) $34 $31 * The SCC values are dollar- year and emissions - year specific. SCC values represent only a partial accounting of climate impacts. 

### Table **20 .**  **Estimated Global Climate Benefits of CO 2**  

### Reductions in 2025 (billions of 2011$)*

**Discount Rate and Statistic State**  **Regional** Million metric tonnes of CO 2 reduced 284 258

5% (average) $4.2 $3.9 3% (average) $14 $13 2.5% (average) $21 $19 3% (95 th percentile) $43 $39 * The SCC values are dollar- year and emissions - year specific. SCC values represent only a partial accounting of climate impacts. 

### Table **21 .**  **Estimated Global Climate Benefits of CO 2**  

### Reductions in 2030 (billions of 2011$)*

**Discount Rate and Statistic State**  **Regional** Million metric tonnes of CO 2 reduced 292 258

5% (average) $5.0 $4.4 3% (average) $16 $14 2.5% (average) $23 $21 3% (95 th percentile) $50 $44 * The SCC values are dollar- year and emissions - year specific. SCC values represent only a partial accounting of climate impacts. 

### 5 **Estimated Human Health Co**  **- Benefits**  Tables 22 through 24 provide the emiss ion reductions estimated to occur in three analysis ye ars (2020, 2025, and 2030) for two illustrative compliance scenarios (i.e., state and regional) by region (i.e., East, West, and California). Tables 25 through 27 report the health co -benefits estimated in three analysis years (2020, 2025, and 2030) for the two illustrative compliance scenarios (i.e., state and regional) evaluated. **Table 22**  **. Emission Reductions of Criteria Pollutant** **s in 2020 (thousands of short tons)** 

**Region SO**  **2 All** **- year NOx**  **Ozone -**  **Season NOx** State East 253 233 96 West 23 40 17 California 0 0 0

Total 277 273 113

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12 Regional 216 209 86 East 15 29 12 West 1 2 1 California 232 240 98

Total 216 209 86 

### Table **23 .**  **Emission Reductions of Criteria Pollutants in 2025 (thousands of short tons)**

**Region SO**  **2 All** **- year NOx**  **Ozone -**  **Season NOx** State East 318 265 111 West 26 41 17 California 0 9 1

Total 344 315 128 Regional East 265 237 97 West 22 26 11 California 1 8 1

Total 287 270 109 

### Table **24 .**  **Emission Reductions of Criteria Pollutants in 2030 (thousands of short tons)**

**Region SO**  **2 All** **- year NOx**  **Ozone -**  **Season NOx** State East 365 265 108 West 31 48 21 California 0 0 0

Total 396 313 128 Regional East 316 233 92 West 26 29 12 California 1 1 0

Total 342 263 105

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13 **Table 2**  **5 .**  **Summary of Estimated Monetized Health Co -** **benefits in 2020 (millions of** 

**2 011$)**  ***** **Pollutant 3% Discount Rate**  **7% Discount Rate** S tate SO 2 $10,000 to $23,000 $9,300 to $21,000 NOx (as PM 2.5 ) $1,600 to $3,600 $1,400 to $3,200 NOx (as Ozone) $450 to $1,900 $450 to $1,900

**Total $12,000**  **to $29,000**  **$11,000 to**  **$26,000** Regional SO 2 $8,900 to $20,000 $8,000 to $18,000 NOx (as PM 2.5 ) $1,500 to $3,300 $1,300 to $3,000 NOx (as Ozone) $410 to $1,700 $410 to $1,700

**Total $11,000**  **to $25,000**  **$9,800 to**  **$23,000** * All estimates are rounded to two significant figures so numbers may not sum down columns. The estimated mo netized co -benefits do not include climate benefits or reduced health effects from direct exposure to NO 2 , SO 2 , ecosystem effects, or visibility impairment. All fine particles are assumed to have equivalent health effects, but the benefit -per-ton estimates vary depending on the location and magnitude of their impact on PM 2.5 levels, which drive population exposure. The monetized co -benefits incorporate the conversion from precursor emissions to am bient fine particles and ozone. Co -benefits for PM 2.5 precursors are based on regional benefit-per -ton estimates. Co -b enefits for oz one are based on ozone season NOx emissions. Ozone co -benefits occur in analysis year, so they are the same for all discount rates. Confidence intervals are unavailable for this analysis because of the benefit -perton methodology. In general, the 95 th perc entile confidence interval for monetized PM 2.5 benefits ranges from approximately - 90 percent to +180 percent of the central estimates based on Krewski et al. (2009) and Lepeule et al. (2012). 

### Table **2 6**  **. Summary of Estimated Monetized Health Co**  **- benefits**  **in 2025 (millions of** 

**2011$)** ***** **Pollutant 3% Discount Rate**  **7% Discount Rate** S tate SO 2 $14,000 to $32,000 $13,000 to $29,000 NOx (as PM 2.5 ) $2,100 to $4,800 $1,900 to $4,300 NOx (as Ozone) $680 to $2,900 $680 to $2,900

**Total $17,000**  **to $40,000**  **$15,000 to**  **$36,000** Regional SO 2 $12,000 to $27,000 $11,000 to $24,000 NOx (as PM 2.5 ) $1,900 to $4,200 $1,700 to $3,800 NOx (as Ozone) $600 to $2,600 $600 to $2,600

**Total $14,000**  **to $34,000**  **$13,000 to**  **$30,000** * All estimates are rounded to two significant figures so numbers may not sum down columns. The estimated mo netized co -benefits do not include climate benefits or reduced health effects from direct exposure to NO 2 , SO 2 , ecosystem effects, or visibility imp airment. All fine particles are assumed to have equivalent health effects, but the benefit -per-ton estimates vary depending on the location and magnitude of their impact on PM 2.5 levels, which drive population exposure. The monetized co -benefits incorporate the conversion from precursor emissions to am bient fine particles and ozone. Co -benefits for PM 2.5 precursors are based on regional benefit-per -ton estimates. Co -benefits for ozone are based on ozone season NOx emissions. Ozone co -benefits occur in analy sis year, so they are the same for all discount rates. Confidence intervals are unavailable for this analysis because of the benefit -perton methodology. In general, the 95 th percentile confidence interval for monetized PM 2.5 benefits ranges from approximately - 90 percent to +180 percent of the central estimates based on Krewski et al. (2009) and Lepeule et al. (2012).

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14 **Table 2**  **7 .**  **Summary of Estimated Monetized Health Co -** **benefits in 2030 (millions of** 

**2011$)** ***** **Pollutant 3% Discount Rate**  **7% Discount Rate** State SO 2 $17,000 to $39,000 $16,000 to $35,000 NOx (as PM 2.5 ) $2,100 to $4,700 $1,900 to $4,200 NOx (as Ozone) $700 to $3,000 $700 to $3,000

Total $20,000 to $47,000 $18,000 to $43,000 Regional SO 2 $15,000 to $34,000 $14,000 to $31,000 NOx (as PM 2.5 ) $1,800 to $4,100 $1,700 to $3,700 NOx (as Ozone) $600 to $2,600 $600 to $2,600

Total $18,000 to $41,000 $16,000 to $37,000 * All estimates are rounded to two significant figures so numbers may not sum down columns. The estimated mo netized co -benefits do not include climate benefits or reduced health effects from direct exposure to NO 2 , SO 2 , ecosystem effects, or visibility impairment. All fine particles are assumed to have equivalent health effects, but the benefit -per-ton estimates vary depending on the location and magnitude of their impact on PM 2.5 levels, which drive population exposure. The monetized co -benefits incorporate the conversion from precursor emissions to am bient fine particles and ozone. Co -benefits for PM 2.5 precursors are based on regional benefit-per -ton estimates. Co -benefits for ozone are based on ozone season NOx emissions. Ozone co -benefits occur in analysis year, so they are the same for all discount rates. Confidence intervals are unavailable for this analysis because of the benefit -perton methodology. In general, the 95 th percentile confidence interval for monetized PM 2.5 benefits ranges from approximately - 90 percent to +180 percent of the central estimates based on Krewski et al. (2009) and Lepeule et al. (2012). 

### 6 **Combined Climate Benefits and Health Co**  **- benefits**  Table s 28 through 30 provide the combined climate and health benefits for each compliance scenario s evaluated for 2020, 2025, and 2030 .

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15 **Table 2**  **8 .**  **Combined Climate Benefits**  **and Health Co**  **- Benefits in 2020 (** **billions of 2011$)** * **SCC Discount Rate Climate**  **Benefits Only**  **Climate Benefits**  **and Health Co**  **- Benefits** 

**(Discount Rate Applied to Health Co -**  **Benefits) 3%**  **7%** State 252 million me tric tonne s CO 2 5% $3.2 $16 to $32 $14 to $29 3% $12 $24 to $40 $23 to $38 2.5% $17 $30 to $46 $28 to $43 3% (95 th percentile) $34 $47 to $63 $46 to $61 Regional 231 million me tric tonne s CO 2 5% $3.0 $14 to $28 $13 to $26 3% $11 $21 to $36 $20 to $33 2.5% $16 $27 to $41 $26 to $39 3% (95 th percentile) $31 $42 to $57 $41 to $54 *All estimates are rounded to two significant figures. Climate benefits are based on reductions in CO 2 emissions. Co -benefits are based on regional benefit -per-ton estimates. Co -benefits for ozone are based on ozone season NOx emissions. Ozone co -benefits occur in analysis year, so they are the same for all discount rates. The health co benefits reflect the sum of the PM 2.5 and ozone co -benefits and reflect the range based on adult mortality functions (e.g., from Krewski et al. (2009) with Bell et al. (2004) to Lepeule et al. (2012) with Levy et al. (2005)). The mo netized health co -benefits do not include reduced health effects from direct exposure to NO 2 , SO 2 , and HAP ; ecosystem effects ; or visibility impairment. 

### Table **2 9**  **. Combined Climate**  **Benefits and Health Co -** **Benefits in 2025 ( billions of**  **2011$)*** **SCC Discount Rate Climate**  **Benefits Only**  **Climate Benefits and Health Co -**  **Benefits**

**(Discount Rate Applied to Health Co -**  **Benefits) 3%**  **7%** S tate 284 million metric tonnes CO 2 5% $4.2 $21 to $44 $20 to $40 3% $14 $31 to $54 $30 to $50 2.5% $21 $38 to $61 $36 to $57 3% (95 th percentile) $43 $60 to $83 $59 to $79 Regional 258 million metric tonnes CO 2 5% $3.9 $18 to $37 $17 to $34 3% $13 $27 to $46 $26 to $43 2.5% $19 $33 to $52 $32 to $49 3% (95 th percentile) $39 $54 to $73 $52 to $70 *All estimates are rounded to two significant figures. Climate benefits are based on reductions in CO 2 emissions. Co -benefits are based on regional benefit -per-ton estimates. Co -benefits for ozone are based on ozone season NOx emissions. Ozone co -benefits occur in analysis year, so they are the same for all discount rates. The health co benefits reflect the sum of the PM 2.5 and ozone co -benefits and reflect the range based on adult mortality functions (e.g., from Krewski et al. (2009) with Bell et al. (2004) to Lepeule et al. (2012) with Levy et al. (2005)). It is im portant to note that the monetized health co -benefits do not include reduced health effects from direct exposure to NO 2 , SO 2 , and HAP ; ecosystem effects ; or visibility impairment.

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16 **Table 30**  **. Combined Climate Benefits and Health Co**  **- Benefits in 2030 (** **billions of 2011$)** * **SCC Discount Rate Climate**  **Benefits Only**  **Climate Benefits and Health Co -**  **Benefits**

**(Discount Rate Applied to Health Co -**  **Benefits) 3%**  **7%** S tate 292 million metric tonnes CO 2 5% $5.0 $25 to $52 $23 to $48 3% $16 $36 to $63 $35 to $59 2.5% $23 $44 to $70 $42 to $66 3% (95 th percentile) $50 $70 to $97 $68 to $92 Regional 258 million metric tonnes CO 2 5% $4.4 $22 to $45 $20 to $41 3% $14 $32 to $55 $30 to $51 2.5% $21 $38 to $62 $37 to $58 3% (95 th percentile) $44 $61 to $85 $60 to $81 *All estimates are rounded to two significant figures. Climate benefits are based on reductions in CO 2 emissions. Co -benefits are based on regional benefit -per-ton estimates. Co -benefits for ozone are based on ozone season NOx emissions. Ozone co -benefits occur in analysis year, so they are the same for all discount rates. The health co benefits reflect the sum of the PM 2.5 and ozone co -benefits and reflect the range based on adult mortality functions (e.g., from Krewski et al. (2009) with Bell et al. (2004) to Lepeule et al. (2012) with Levy et al. (2005)). It is im portant to note that the monetized health co -benefits do not include reduced health effects from direct exposure to NO 2 , SO 2 , and HAP ; ecosystem effects ; or visibility impairment. 

### 7 **Net B enefits**  Tables 31 through 33 summarize the benefits, costs, and net benefits for 2020, 2025, and 2030 for the two illustrative compliance scenarios evaluated for building blocks 1 and 2 only.

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17 **Table 31**  **. Summary of Monetized Benefits, Compliance Costs, and Net Benefits**  **in 2020**  **(billions of 2011$) a**  **State 3% Discount Rate**  **7% Discount Rate** Climate Benefits b 5% discount rate 3% discount rate 2.5% discount rate 95 th percentile at 3% discount rate $3.2 $12 $17 $34 Air pollution health co -benefits c $12 to $29 $11 to $26 Total Compliance Costs d $4.4 Net Benefits e $20 to $36 $18 to $33 Non- Monetized Benefits Direct exposure to SO 2 and NO 2 1. 1 tons of Hg Ecosystem Effects Visibility impairment **R egional**  **3% Discount Rate 7% Discount Rate**  Climate Benefits b 5% discount rate 3% discount rate 2.5% discount rate 95 th percentile at 3% discount rate $3.0 $11 $16 $31 Air pollution health co -benefits c $11 to $25 $9.8 to $23 Total Compliance Costs d $3.2 Net Benefits e $18 to $32 $17 to $30 Non- Monetized Benefits Direct exposure to SO 2 and NO 2 1. 1 tons of Hg Ecosystem Effects Visibility impairment a All estimates are for 2020 and are rounded to two significant figures, so figures may not sum. b The climate benefit estimates in this summary table reflect global impacts from CO 2 emission changes and do not account for changes in non - CO 2 GHG emissions. Also, different discount rates are applied to SCC than to the other estimates because CO 2 emissions are long - lived and subsequent damages occur over many years. The SCC estimates are year- specific and increase over time. c The air pollution health co -benefits reflect reduced exposure to PM 2.5 and ozone associated with emission reductions of directly emitted PM 2.5 , SO 2 and NO X . The range reflects the use of concentration-response functions from different epidemiology studies. The reduction in premature fatalities each year accounts for over 90 percent of total monetized co -benefits from PM 2.5 and ozone. These models assume that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality beca

use the scientific evidence is not yet sufficient to allow differentiation of effect estimates by particle type. d Total costs are approximated by the illustrative compliance costs estimated using the Integrated Planning Model and a discount rate of appro ximately 5%. This estimate includes monitoring, recordkeeping, and reporting costs and demand side energy efficiency program and participant costs. e The estimates of net benefits in this summary table are calculated using the global SCC at a 3 percent dis count rate (model average). T ables 10 - 12 in this memo present combined climate and health estimates based on additional discount rates.

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18 **Table 32**  **. Summary of Monetized Benefits, Compliance Costs, and Net Benefits**  **in 2025**  **(billions of 2011$) a**  **S tate**  **3% Discount Rate 7% Discount Rate**  Climate Benefits b 5% discount rate 3% discount rate 2.5% discount rate 95 th percentile at 3% discount rate $4.2 $14 $21 $43 Air pollution health co -benefits c $17 to $40 $15 to $36 Total Compliance Costs d $4.6 Net Benefits e $27 to $49 $25 to $46 Non- Monetized Benefits Direct exposure to SO 2 and NO 2 1.4 tons of Hg Ecosystem Effects Visibility impairment **R egional**  **3% Discount Rate 7% Discount Rate**  Climate Benefits b 5% discount rate 3% discount rate 2.5% discount rate 95 th percentile at 3% discount rate $3.9 $13 $19 $39 Air pollution health co -benefits c $14 to $34 $13 to $30 Total Compliance Costs d $3.0 Net Benefits e $24 to $43 $23 to $40 Non- Monetized Benefits Direct exposure to SO 2 and NO 2 1. 3 tons of Hg Ecosystem Effects Visibility impairment a All estimates are for 2025 and are rounded to two significant figures, so figures may not sum. b The climate benefit estimates in this summary table reflect global impacts from CO 2 emission changes and do not account for changes in non - CO 2 GHG emissions. Also, different discount rates are applied to SCC than to the other estimates because CO 2 emissions are long - lived and subsequent damages occur over many years. The SCC estimates are year- specific and increase over time. c The air pollution health co -benefits reflect reduced exposure to PM 2.5 and ozone associated with emission reductions of directly emitted PM 2.5 , SO 2 and NO X . The range reflects the use of concentration-response functions from different epidemiology studies. The reduction in premature fatalities each year accounts for over 90 percent of total monetized co -benefits from PM 2.5 and ozone. These models assume that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality because the scientific evidence is not yet sufficient to allow differentiation of effect estimates by particle type . d Total costs are approximated by the illustrative compliance costs estimated using the Integrated Planning Model and a discount rate of approximately 5%. This estimate includes monitoring, recordkeeping, and reporting costs and demand side energy efficiency program and participant costs. e The estimates of net benefits in this summary table are calculated using the global SCC at a 3 percent discount rate (model average). Tables 10 - 12 in this memo present combined climate and health estimates based on additional discount rates.

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19 **Table 33**  **. Summary of Monetized Benefits, Compliance Costs, and Net Benefits**  **in 2030**  **(billions of 2011$) a**  **State 3% Discount Rate**  **7% Discount Rate** Climate Benefits b 5% discount rate 3% discount rate 2.5% discount rate 95 th percentile at 3% discount rate $5.0 $16 $23 $50 Air pollution health co -benefits c $20 to $47 $18 to $43 Total Compliance Costs d $9.8 Net Benefits e $27 to $53 $25 to $49 Non- Monetized Benefits Direct exposure to SO 2 and NO 2 1.5 tons of Hg Ecosystem Effects Visibility impairment **Regional 3% Discount Rate**  **7% Discount Rate** Climate Benefits b 5% discount rate 3% discount rate 2.5% discount rate 95 th percentile at 3% discount rate $4.4 $14 $21 $44 Air pollution health co -benefits c $18 to $41 $16 to $37 Total Compliance Costs d $6.8 Net Benefits e $25 to $48 $23 to $45 Non- Monetized Benefits Direct exposure to SO 2 and NO 2 1. 3 tons of Hg Ecosystem Effects Visibility impairment a All estimates are for 2030, and are rounded to two significant figures, so figures may not sum. b The climate benefit estimates in this summary table reflect global impacts from CO 2 emission changes and do not account for changes in non - CO 2 GHG emissions. Also, different discount rates are applied to SCC than to the other estimates because CO 2 emissions are long - lived and subsequent damages occur over many years. The SCC estimates are year- specific and increase over time. c The air pollution health co -benefits reflect reduced exposure to PM 2.5 and ozone associated with emission reductions of directly emitted PM 2.5 , SO 2 and NO X . The range reflects the use of concentration-response functions from different epidemiology studies. The reduction in premature fatalities each year accounts for over 90 percent of total monetized co -benefits from PM 2.5 and ozone . These models assume that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality because the scientific evidence is not yet sufficient to allow differentiation of effect estimates by particle type . d Total costs are approximated by the illustrative compliance costs estimated using the Integrated Planning and a discount rate of approximately 5%. This estimate includes monitoring, recordkeeping, and reporting costs and demand side energy efficiency program and participant costs . e The estimates of net benefits in this summary table are calculated using the global SCC at a 3 percent discount rate (model average). Tables 10 - 12 in this memo present combined climate and health estimates based on additional discount rates.

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20 **8 Labor**  Table 34 presents the labor changes estimated in job - ye ars associated with the illustrative building blocks 1 and 2 analysis. **Table 34**  **. Engineering** **- Based**  **a** 

### Changes in Labor Utilization, **Building Blocks 1 & 2 (** **Number of Job**  **- Years**  **of Em ploym** **ent in Year) Category**  **Regional Com pliance**  **State Com pliance**  **2017 -**  **2020 2021**  **- 2025**  **2026 -**  **2030 2017** **- 2020**  **2021 -**  **2025 2026**  **- 2030**  Construction-related (One -time) Changes* Heat Rate Improvement: Total **37,400 0**  **0 35,300**  **0 0**  Boilermakers and General

Construction 26,000 0 0 24,500 0 0 Engineering and Management 6,900 0 0 6,500 0 0

Equipment-related 3,300 0 0 3,200 0 0 Material -related 1,200 0 0 1,100 0 0 New Capacity Construction: Total **7,700 7,300**  **1,600 11,000**  **9,400 1,000** 

Renewables 0 500 1,600 - 700 500 1,600 Natural Gas 7,700 6,800 0 11,700 8,900 - 600 Recurring Changes** **2020 2025**  **2030 2020**  **2025 2030**  Operation and Maintenance: Total **- 10,970**  **- 9,500**  **- 8,300**  **- 14,100**  **- 12,200**  **- 10,600** 

Changes in Gas 1,330 1,500 1,100 2,200 2,400 2,100 Retired Coal - 11,800 - 10,700 - 9,200 - 15,600 - 14,100 - 12,300 Retired Oil and Gas - 500 - 300 - 200 - 700 - 500 - 400 Fuel Extraction: Total **- 1,900**  **- 1,000**  **- 700**  **- 1,500**  **- 1,000**  **- 800**  Coal - 9,700 - 11,100 - 12,000 - 10,500 - 12,400 - 13,500 Natural Gas 7,800 10,100 11,300 9,000 11,400 12,700 Supply Side Employment Im pacts

– Quantified **32,230 -** **3,200 -**  **7,400 30,700**  **- 3,800**  **- 10,400**  a Job -year estimates are derived from IPM investment and O&M cost estimates, as well as IPM fuel use estimates (tons coals or MMBtu gas) bAll job -year estimates on this are Full Time Equivalent (FTE) jobs. Job estimates in the Demand - Side energy efficiency section (below) include both full time and part time jobs *Construction -related job -year changes are one - time impacts, occurring during each year of the 2 to 4 year period during which construction and HRI installation activities occur. Figures in table are average job - years during each of the years in each range. Negative job - year estimates when additional generating capacity must be built in the base case, but is avoided in the Guideline implementation scenarios due to HRI or Demand- side energy efficiency programs. **Recurring Changes are job -years associated with annual recurring jobs including operating and maintenance activities and fue l extraction jobs. Newly built generating capacity creates a recurring stream of positive job - years, while retiring generating capacity, as well as avoided new built capacity, create a stream of negative job - years. In addition, there are recurring jobs pri or to 2020 to fuel and operate new generating capacity brought online before 2020; the recurring jobs prior to 2020 are not estimated.

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21 **9 References**  Bell, M.L., et al. 2004. “Ozone and Short- Term Mortality in 95 U.S. Urban Communities, 1987 - 2000.” Journal of the American Medical Association, 292(19): pp. 2372 - 8. Krewski D; M. Jerrett; R.T. Burnett; R. Ma; E. Hughes and Y. Shi, et al. 2009. Extended Fo llow Up and Spatial Anal ys is of the American Cancer Society Study Linking Particulate Air Pollution and Mortality. HEI Research Report, 140, Health Effects Institute, Boston, MA. Lepeule, J.; F. Laden; D. Dockery and J. Schwartz. 2012. “Chronic Exposure to Fine Particles and Mortality : An Extended Follow-Up of the Harvard Six Cities Study from 1974 to 2009.” Environmental Health Perspectives, July, 120(7): pp. 965 - 70. Levy, J.I.; S.M. Chemerynski and J.A. Sarnat. 2005. “Ozone Exposure and Mortality : An Empiric Bayes Meta- regression Analysis.” Epidemiology, 16(4): pp. 458 - 68.