### Technical Support Document for the Proposed Utility Air Toxics Rule



## Employment Estimates of Direct Labor in Response to the Proposed Toxics Rule in 2015

EPA Docket Number: EPA-HQ-OAR-2009-0234 March 2011

U.S. Environmental Protection Agency Clean Air Markets Division

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Employment Estimates of Direct Labor in Response to the Proposed Toxics Rule in 2015

Table of Contents

Page

1. Introduction 2

2. Overall Approach 3

3. Employment Changes due to New Pollution Control Equipment 3

4. Employment Changes due to Coal Retirements 7

5. Employment Changes due to Changes in Fuel Use 8

6. Conclusion 10

Appendix 11

References 16



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Introduction

This technical support document (TSD) presents the short-term employment estimates of the proposed Utility Air Toxics Rule (Toxics Rule). The focus of the employment analysis in this study is only on the first order employment impa cts related to the compliance actions of the affected entities within the power sector. It does not include the ripple effects of these impacts on the broader economy (i.e., the “multiplier” effect), nor does it include the wider economy-wide effects of the changes to the energy markets (such as higher electricity prices). 1 Moreover, this study provides only a static snapshot of the impacts for 2015 and does not account for the dynamic adjustments of the affected entities as they adapt to the Toxics Rule, such as those arising from technological innovation and learning-by-doing.

The estimates of the employment impacts are divided into several categories: job gains due to the increased demand for pollution control equipment; job losses due to retirements of coal capacity; and job shifts due to changes in demand for fuels. Results indicate that the Toxics Rule has the potential to provide significant sh ort-term employment opportunities, primarily driven by the high demand for new pollution cont rol equipment. The employment gains related to the new pollution controls are likely to be tempered by some losses due to certain coal retirements, although, as discussed below, some of these workers who lose their jobs due to plant retirements could find replacement employment operating the new pollution controls at nearby units. Finally, job losses due to reduced coal demand may be partially offset by job gains due to increased natural gas demand, resulting in small negative (less than a thousand) net change in employment due to fuel demand changes. Overall, the preliminary results indicate that the Toxics Rule could support a net of about 35,000 job-years in 2015. These results are
summarized in Table 1 below.

Table 1: Net Employment Changes (Job-years in 2015)

New Pollution Control Equipment 41,600

Retirements of Generating Units (5,630)
Changes in Fuel Use (810)

Net Effect 35,160

The job-years estimated here is a snapshot of the first order employment effect of the Toxics Rule in 2015. While there is no temporal dimension to this study, most of these jobs are likely to last over an extended time period, some more than the others. Most of the construction related labor demand, for example, is expected to provi de a short-term, temporary boost to employmentthat could last a few years, along with any multiplier effects that are not included in these jobyear estimates. Most of the operational labor needs are likely to be longer term. Thus, in terms of the impacts of the Toxics Rule on economy-wi de employment over time, this study shows there could be a significant temporary spurt to employment levels starting before 2015, which would likely recede thereafter as the construction phases for the needed pollution controls wind

1 For more detail on the economic impacts of the proposed rule, see Chapter 8 of the Regulatory Impact Analysis accompanying the proposed Toxics Rule.



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down. Over time, the operational jobs will contin ue to provide a small boost to employment over “business as usual” baseline employment levels. Note that this synopsis does not account for other employment impacts of the Toxics Rule, such as those resulting from higher energy prices.

Overall Approach

The estimates for the near-term employment effects of the proposed rule utilize basic methodologies to estimate these job impacts relying on approaches used in prior EPA studies on similar issues. The basic approach involved using power sector projections and various energy market implications under the Toxics Ru le from the Integrated Planning Model (IPM), along with data from secondary sources, to estimate the first order employment impacts for 2015. Throughout this analysis, incremental employm ent is measured in job-years, since there is no temporal dimension to this analysis. 2 Also, this TSD does not include estimates of total employment impacts over time , though there is a distinction between short-term construction related labor needs and more long-term operational labor needs for new pollution controls (though these operational labor requirements ar e also measured in 2015 job-years only).

Employment Changes due to New Pollution Control Equipment

IPM projections for the proposed Toxics Rule policy case were used to estimate the incremental pollution control demand. These are shown in Table 2 below: 3

Table 2: Increased Pollution Control Demand due to the Toxics Rule, 2015 (GW)

Pollution Control Type IPM Projected Additional
Pollution Control
Scrubbers (FGD) 21
Selective Catalytic

Reduction (SCR) 2

Activated Carbon

Injection (ACI) 93

Dry Sorbent Injection (DSI) 56

Fabric Filter (FF) 107

The employment impacts due to increased pollution control demand are divided into four categories, two of which are associated with the construction and installation related labor

2 A job-year is defined as the amount of work that can be performed by the equivalent of one full-time individual for one year (or FTE).

3 According to IPM, there is some overlap between the different types of pollution control equipment demand at individual facilities. To the extent that t here could be some efficiency gains at plants installing multiple controls due to economies of scale, t he job estimates presented here could overstate the impacts.



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requirements, while the remaining two are associated with the resources required for the ongoing operation of these equipment. The two categories of labor needed for constructing and installing these controls are for construction-related sectors, such as boilermakers, engineers, and other installation labor; and for the labor needed to manufacture the steel used in the control equipment. The two categories of l abor needs for resource requirements include employment in sectors that supply resources needed to run these pollution controls (such as reagents and catalysts); and utility sector jobs to operate these control equipment. The following sections discuss the approach for each:

• For the installation related construction labor, per-unit labor needs were taken from an extensive 2002 EPA resource analysis for multi-pollutant strategies that analyzed the resource requirements for installing various pollution control equipment (FGD, SCR, and ACI). 4 For those controls that were not included in the 2002 EPA study (DSI and FF), additional information was supplied by Andover Technology Partners (ATP), which was also one of the contributors of the 2002 EPA study. Using the same resource requirement approach as done in the 2002 EPA study, ATP provided estimates of unit labor needs based on scaling the labor requirements for ACIs (to derive estimates for DSI) and SCRs (to derive estimates for FFs). 5 Thus, all of the unit labor needed for different pollution control installations can be traced back to the 2002 EPA study, with appropriate engineering adjustments. The installation labor was sub-divided into different labor categories, such as boilermakers, engineers and a catch-all “other installation labor”, using information from the 2002 EPA study, adjusted for the new pollution controls (FFs and DSIs).

• In addition to construction labor, it was assumed that installing the pollution controls requires labor for steel as the primary raw material, leading to employment in the steel manufacturing industry. Again this approach is consistent with the 2002 EPA study. The increased steel demand is estimated using the per-MW steel demand from the EPA study along with the estimated increases in pollution controls. For DSI and FF, the same proportionality assumption is taken from ATP for installation labor to estimate the steel
needed for installation.

• For the longer term labor associated with operating the pollution controls, per-unit estimates of the main resources needed for these equipment (see Table 3 below for a list of the resources) are taken from the 2002 EPA study, augmented by DSI resource
use estimates from ATP. Resources needed for FF were estimated from the incremental Variable Operation and Maintenance (VOM) costs from IPM. 6 These were then multiplied by the incremental GW for each pollution control to obtain the total (physical) quantity of resources needed. 7 Total tonnage (or volume for SCR catalyst) for

4 “ Engineering and Economic Factors Affecting the Installation of Control Technologies for Multi-pollutant Strategies ”. EPA/ORD, 2002.

5 DSI and Fabric Filter System Installation Labor Estimate. Memorandum by Andover Technology Partners to ICF International. January 26, 2011.

6 Because FF requirements are not endogenously determi ned in IPM, it required a different approach than the other controls.

7 Except for Ammonia, where the usage was calc ulated based on the total predicted NOx reduced, consistent with the 2002 EPA study approach.



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each resource was then converted to dollars of increased economic output for these resources using price estimates obtained from publicly available sources (see Table 3). Finally, the labor productivity for each particu lar sector was used to estimate the number of job-years these would likely create in 2015. Labor productivities for each sector were adjusted to account for increased worker productivity in 2015. Data for baseline worker productivity and corresponding growth rates to account for future productivities came from the Economic Census and the Bureau of Labor Statistics (BLS) estimates. 8

• The final employment vector estimated was for the utility sector labor needed to operate these pollution control equipment. This estimate was based on the incremental Fixed Operation and Maintenance (FOM) costs from IPM outputs, excluding costs due to retirements. The assumption in this TSD was that the FOM costs – which, in IPM, are defined as the maintenance costs incurred by the utility irrespective of whether the equipment is operated (such as those for payroll) – are a good proxy for estimating the incremental labor demand to operate these pollution controls. The FOM costs were then translated into employment based on estimates of payroll per worker for the power
sector taken from the 2007 Economic Census and BLS estimates. 9

Table 3: Estimated Pollution Control Resource Needs (Quantity and Prices Used)

Amount of Resource Used Price Used ($/unit)

Steel (tons) 360,287 $ 550
Limestone, FGD (tons) 6,780,477 $ 75 10

Ammonia, SCR (tons) 55,868 $ 150 Catalyst, SCR (m3) 2,912 $ 8,475

Activated Carbon, ACI (tons) 51,126 $ 1,120

Sodium Bicarbonate, DSI (tons) 12,498,334 $ 120 Price Sources: Steel: Platts, Steel Markets Daily, Vo l 3 Issue 209, October 29, 2009. Limestone: FGD Tech Evaluation, March 2007. Ammonia: Development of Supply Curves for Abat ement of GHG from Coal-fired Utility Boilers, Air Pollution Prevention and C ontrol Division, US-EPA, RTP and NC State University, 2009. Catalyst: EPA Air Pollution Control Cost Manual, Sixth Edition, January 2002. ; Activated Carbon: Preliminary Cost Estimate of ACI fo r Controlling Hg Emission, US DOE, NETL, November 2003. Sodium Bicarbonate: Communication with Andover Technology Partners, Feb 7, 2011.

8 Total value of shipments in 2007 and total employees were taken from 2007 Economic Census, Statistics by Industry for Mining an d Manufacturing sectors. The average annual growth rate of labor productivity was taken from the Bureau of Labor Stat istics. Average growth rate calculated for years 1992-2007, applied to 2007 productivity to determine 2015 estimates of productivity. For steel, limestone, ammonia, and SCR catalyst, the value of shipment s and employment estimates were taken from the 2000 Survey of Manufacturers. See the Appendix fo r more details about the data used for these calculations.

9 Same sources as other productivity estimates (2007 Economic Census and BLS), however, uses employees and total payroll rather than revenue or value of shipments.

10 The limestone price used is for a dry FGD. This pr ice is significantly greater than the wet FGD price. This price was used because IPM predicts only 1 GW of incremental wet FGD compared to 24 GW of dry FGD.



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Results

Table 4 presents the estimated employment im pacts in 2015 resulting from the additional pollution controls needed to meet the Toxics Rule requirements. The Toxics Rule is estimated to lead to a total capital investment of about $45 to $50 billion in order for the regulated entities to meet the limits under the proposed rule (this capi tal cost will be amortized over many years). According to this analysis, these investments could provide the opportunity to support almost 42,000 job-years to design, construct, and oper ate the needed pollution control equipment in 2015. Note, some of these jobs are expected to start before, and continue beyond 2015 (such as the resource related job-years), but this analysis only provides a snapshot for 2015.

Table 4: Jobs Due to Pollution Control Equipment under the Toxics Rule (Job-years in 2015)

Jobs for Construction Incremental Employment

1. Boilermakers 13,400

2. Engineers 3,270

3. General Construction 13,770

4. Steel Manufacturing 430

Sub-Total: 30,870 Jobs for Operation
Jobs from Increased Operating
Resource Use

1. Limestone (FGD) 2,020

2. Ammonia (SCR) 20

3. Catalyst (SCR) 100

4. Activated Carbon (ACI) 90

5. Sodium Bicarbonate (DSI) 2,940

6. Baghouse material (FF) 60

Sub-Total: 5,230
Jobs for Pollution Control Operation 5,500

Total Labor: 41,600 Note: Totals may not add due to rounding

The number of job-years estimated for pollution control installation is driven in large part by the demand for new FFs used in IPM. As shown in Table 2, up to 107 GW of new stand-alone FF capacity is projected to come online in 2015 due to the Toxics Rule, which is over 10 GW more than ACI, the next highest. The demand for new FFs is estimated to contribute about 67 percent of the new employment resulting from the installation of pollution controls. Moreover, of the labor needed due to increased resource use, the sodium bicarbonate required for DSI is estimated to support higher number of jobs than the other resources. This is because the DSI technology requires significantly higher quantities of reagents than the other pollution controls,



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according to the ATP report. The second highest resource-related employment gains would likely come from the limestone requirements for the scrubbers in response to the Toxics Rule.

Of the roughly 42,000 job-years estimated in Table 4, about 5,500 job-years, or less than 15 percent, are estimated to occur within the utility sector for labor needed to operate the pollution controls (referred to as “Jobs for Pollution Control Operation” in Table 4). The rest of the labor demand will benefit the pollution control industry and other economic sectors. The increased demand for resources and chemicals needed to operate the pollution controls will provide a boost to employment in sectors such as mining, chemicals, and other manufacturing sectors. The majority of these first order employment needs, however, are likely to benefit constructionrelated sectors, such as construction, boilermaker, heavy engineering, and other heavy construction sectors, due to the needs for constructing and installing the new pollution controls at affected sources throughout the country.

Employment Changes due to Coal Retirements

Employment changes due to plant retirements were estimated by first identifying the retiring
coal units 11 from IPM results (for the base and the Toxics Rule policy cases). EPA projects that there will be roughly 9.9 GW of additional coal retirements by 2015 with the Toxics Rule in place. 12

In order to convert the retired coal capacity in to potential employment losses, it was assumed that changes in the operating costs for the retired coal units can be used as a proxy for the lost economic output due to fossil retirements. Thus, the changes in the O&M costs (both FOM and VOM) for these particular retiring units were derived using IPM outputs, and converted to lost jobs using data from the Economic Census and BLS output/worker estimates for the utility

sector. 13

Note that the lost economic output due to fossil retirements is likely to affect not just the utility sector, but others as well. Employment losses due to plant retirements will not only affect those that are directly working at the plant (i.e., plant operators), but would also affect administrative and other “back-office” workers for those utilities and their support organizations. This TSD assumes that the FOM costs related to retiring plants are a good proxy for these types of job losses. Moreover, because the VOM costs represent the variable costs of operating the plant, including costs of materials needed to run any installed pollution control equipment (such as cost of reagents, etc.), this TSD assumes that the VOM costs can be used as an indicator of the employment effects on the resource suppliers to these plants and units. Thus, the retirement related employment losses shown below are assumed to include losses directly affecting the

11 Oil and gas steam unit emissions requirements, and pot ential retirements, were not directly included in IPM modeling under the Toxics Rule policy scenario. An analysis of these units was conducted separately, and to the extent that there may be some retirements of oil and gas units, then the estimates of potential job losses due to retirements provi ded here will understate the employment losses.

12 Retirement estimates are based on IPM System Summary Reports. Where applicable, data from IPM parsed outputs were adjusted to account for partial retirements reported in the parsed outputs.

13 The same specific sources as cited befo re, however, used workers and total payroll.



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utility sector as well as other “upstream” sectors that provide material inputs needed to operate these plants. Table 5 shows those results.

Table 5: Job Losses due to Coal Capacity Retirements

O&M Decrease from Retirements ($MM) 648

Workers Per Million$ in payroll 8.7

Workers lost due to retirements (job-year): 5,630

Results indicate there could potentially be about 5,600 job losses (measured in job-years for 2015, but any net job losses under this category are likely to be permanent), due to coal retirements. However, two mitigating factors could reduce the negative employment impacts due to retirements. First, many of the retiring units are at plants that are likely to have other units operating under the policy scenario. In such cases, some of the excess labor pool at the retiring units could well be absorbed at other units within the same firm. 14

Second, as Table 4 indicates, utilities are ex pected to have the need to fill over five thousand additional job slots to operate the pollution controls needed to meet the requirements of the Toxics Rule. If workers with experience at existing coal facilities become available through plant retirements, it would seem logical for many of these workers to be absorbed in operating these new pollution controls. While it is not possible to determine how many of these workers from particular coal retirements could be employed to oper ate the new pollution controls, it is likely that a significant portion of them could find gainful employment at nearby units.

Employment Changes due to Changes in Fuel Use

Two types of employment impacts due to projec ted fuel use changes are estimated from IPM. First, employment losses due to reductions in coal demand were estimated using an approach similar to EPA’s coal employment analyses under Title IV of the Clean Air Act Amendments. 15 Using this approach, IPM projected coal demand changes (in short tons) for various coal supplying regions were converted to job-years using EIA data on regional coal mining productivity (in short tons per employee hou r), using 2008 labor productivity estimates. 16 17

14 According to the IPM results, approximately 70 percent of the coal retirements (in terms of capacity) occur at plants with other operating units under the Toxics Rule policy case. 15 Impacts of the Acid Rain Program on Co al Industry Employm ent. EPA 430-R-01-002 March 2001.

16 From US Energy Information Administration (EIA) Annual Energy Review, Coal Mining Productivity Data. Used 2008.

17 Unlike the labor productivity estimates for various equipment resources which were forecasted to 2015 using BLS average growth rates, we used the most recent historical productivity estimates for fuel sectors. In general, labor productivity for the fuel sectors (both coal and natural gas) showed a significantly higher degree of variability in recent years than the manufacturing sectors, which would have introduced a high degree of uncertainty in forecastin g productivity growth rate s for future years.



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Results of the coal employment impacts of t he Toxics Rule are presented in Table 6 below.

Table 6: Employment Due To Changes in Coal Use

Coal by Region Change in Coal Demand (MM Tons) Labor Productivity Job-year Change

Appalachia (15.1) 2.91 (2,490)

Interior 5.6 4.81 560

West (8.7) 19.91 (210)

Waste Coal (0.7) 5.96 (60)

Net Total (18.9) -- (2,200)

Notes: Used US national coal productivity for waste coal Totals may not add due to rounding

For natural gas demand, labor productivity per unit of natural gas was unavailable, unlike coal labor productivities used above. Most secondary data sources (such as Census and EIA) provide estimates for the combined oil and gas extraction sector. This TSD thus uses an adjusted labor productivity estimate for the combined oil and gas sector that accounts for the relative contributions of oil and natural gas in the total sector output (in terms of the value of energy output in MMBtu). This estimate of labor productivity is then used with the incremental natural gas demand for the Toxics Rule to estimate the job-years for 2015. In addition, the projected capital cost estimates for new pipeline capacity needed to meet the 2015 demand levels from IPM were also used, and translated into employment using worker productivity estimates for the pipeline construction sector. 18 These results are summarized in Table 7
below.

Table 7: Total Employment Impact due to Changes in Fuel Use (2015)
Fuel Type Employment

Coal Job Years Lost (2,200)

Natural Gas

Incremental Natural Gas Use (MMBtu) 284,967,600 Labor Productivity (MMBtu/job-year) 261,840

Job-years gained 1,090

Gas Pipeline Capital Cost for New Pipeline Capacity (US total: MM $/year) 59.2

18 Same Economic Census 2007 source as used prev iously. Because BLS does not have growth rate data for the construction sector, and to maintain cons istency with coal and natural gas data, we did not forecast this productivity but used the most recent available 2007 value.



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Workers/million $ in Pipeline Construction 5.1

Job-years gained 300

Net Employment Effects of Fuel use changes (810) Note: Totals may not add due to rounding

Thus, about 2,200 job losses in the coal mining sector are likely to be partially offset by about 1,400 job gains in the production and transportation-related jobs in the natural gas related sectors, for a net effect of less than a thousand job losses due to changes in fuel use.

Conclusion

Overall, the Toxics Rule is expected to prov ide a notable boost to short-term employment resulting from substantial investments in new pollution control equipment. The Toxics Rule is estimated to lead to a total pollution control-related capital investment of about $45 to $50 billion, and results for 2015 indicate this could support or create around 35 thousand job-years, driven primarily by the need to design and cons truct the needed equipment. While there could be some employment losses due to coal retirem ents that will likely have a negative effect on some utilities and the coal mining sector, employment gains in pollution control operation activities and the natural gas sector are likely to partially offset some of those losses. As previously discussed, this assessment does not account for the long-run economy-wide effects of the proposed Toxics Rule.

The employment impacts estimated in this st udy are mostly based on approaches in prior EPA studies on similar topics. The main source fo r resource estimates used here is the 2002 EPA multi-pollutant resource analysis, which was also the basis for subsequent EPA labor analyses, such as the 2005 Clean Air Interstate Rule (CAIR) TSD on boilermaker labor. 19 Thus, results presented here are consistent with EPA’s assessment from the 2002 and the 2005 studies.

19 CAIR Technical Support Document. Boilermaker Labor Analysis and Installation Timing. March 2005.



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Appendix

This Appendix provides further details on the inputs and methodology used in the labor calculations presented above. The Appendix begins with the pollution control labor section, presenting the inputs for the four primary sections of equipment labor and describing the process by which the labor estimates were obtai ned from the available data, followed by similar discussions for coal retirements and fuel use change employment analysis.

Pollution Control Equipment Labor

• Installation Labor

Table A-1: Installation Labor Requirement Pollution Control

Type Incremental GW Installed Manhours/MW Boilermakers (%) Engineers (%) Others (%)

FGD 21 760 40 20 40

SCR 2 700 45 7 48

ACI 93 10 50 17 33

DSI 56 44 50 17 33

FF 106.7 398 45 7 48
Source: EPA Multi-pollutant Strategies 2002 report; DSI and FF adjustm ents based on Andover Technology Partners.

Installation labor is estimated by using the incremental GW installed for each pollution control type from IPM. This was then converted into total man-hours needed for installation using estimates of man-hours/MW from the 2002 EPA study , supplemented by information from ATP. Total man-hours for each pollution control type were then converted into man-years assuming 2,080 working hours per year.

Total man-years for each pollution control type were then broken down into various sectors using the percentages, shown in Table A-1. These percentages were estimated from the 2002 study and supplemented by ATP information for DSI and FF.

• Installation Resource Labor

Table A-2: Installation Resource Needs

Pollution Control Type Steel (Tons/MW)

FGD 2.25

SCR 2.5



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ACI 0.35

DSI 2.2

FF 1.42
Sources: Steel and Catalyst Usage: EPA Mult i-pollutant Strategies 2002 report; Steel Price: Platts, Steel Markets Daily , Vol 3 Issue 209, October 29 2009; Productivity: 2000 Annual Survey of Manufactu rers:Iron and Steel Pipes and Tube Manufacturing, BLS for Productivity Growth Rate.

For installation resource labor, steel is the primary resource input used for new pollution control installations, consistent with the 2002 EPA multi-pollutant study. The first step used the incremental installed pollution control capacity and estimates of steel usage (tons/MW), as shown in Table A-2 above, to calculate the total steel needed in tons, by pollution control type. Steel usage estimates were used from the 2002 EPA study, supplemented by ATP information for DSI and FF. The total amount of steel was then converted into a dollar value for steel expenditure using an average steel price ($550/ton), using data from Platts Steel Markets Daily (see notes to Table A-2 above). Resulting total steel expenditure was then converted to labor using the productivity estimates calculated from the Economic Census data using workers per $ Million in total output for the iron and steel manufacturing industry (= 2.1 workers/$Million). 20

• Operating Resource Labor

Table A-3: Resources Needed for Operation

Pollution Control

Type Incremental Total GW (Includes Existing

Units) Resource (Units in parenthesis) Usage Estimates Price ($/unit) Industry Assumed for Productivity Calculations Productivity*

FGD 25 Limestone (Tons/MWh) 0.036 75 Lime Manufacturing 4.0

SCR 4 (NOx reduction: 286,512,800 lbs) Ammonia (lbs/lb NOx Reduced) 0.39 150 All Other Basic Inorganic Chemical Manufacturing 2.1

Initial Catalyst (m3/MW) 1.2

8,475 Combined: Other Nonferrous Metal Primary and Secondary Smelting and Refining 3.2 Operational Catalyst (m3/MWh) 0.00002

ACI 93 Activated Carbon (Tons/MWh) 0.000074 1,120 Other Chemical Product Manufacturing 1.6

20 In general, the productivity estimates for various sectors were derived using data from the 2000 Annual Survey of Manufacturers or 2007 Economic Cens us. These were then forecasted to 2015 using corresponding average growth rates estimated usi ng data from the Bureau of Labor Statistic (BLS) information on productivity growth rates.



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DSI 56 Sodium Bicarbonate (Tons/MWh) 0.03 120 Potash Soda and Borate Mineral Mining 2.0

FF 106.7 Bag-house Resources *Resource Labor determined Using VOM cost for FFs Plastics Material and Resin Manufacturing 0.6

*Workers/$Million in Output, Forecasted to 2015 Sources: Usage: EPA Multi-pollutant Strategies 2002 report, DSI from Andover Technology Partners; Prices: Limestone: FGD Tech Evaluation, March 2007 Ammonia: Development of Supply Curves for A batement of GHG from Coal-fired Utility Boilers, Air Pollution Prevention and Control Division, US-EPA, RTP and NC State University, 2009 Catalyst: EPA Air Pollution Control Cost Manual, Sixth Editi on, January 2002. Activated Carbon: Prelim. Cost Estimate of AC I for Controlling Hg Emission. NETL. November 2003 Sodium Bicarbonate: Communication with Andover Technology Partners, Feb 7 2011; Productivity: 2000 and 2007 Economic Census , Productivity Growth rates from BLS.

Labor related to resources used in operating pollution control equipment was estimated using the total incremental GW of pollution control capacity which was first converted to total MWh of incremental capacity assuming 85 percent capacity factor. For each pollution control type, the next step involved choosing the primary operating resource, except for SCRs for which two resources – ammonia and catalyst – were chosen. 21 This approach is consistent with the 2002 EPA study. The next step involved estimating th e resource needs by each control type, generally in tons of material (cubic meters (m3) for catalyst), using the resource usage estimates as shown in Table A-3. 22 Using the total usage for each pollution control input (in tons or m3) and associated average prices, total expenditure by each resource type was then calculated. This total expenditure was then converted to labor using workers per $Million in total output for the industry associated with producing each respective input material. 23

• Operating Labor

Table A-4: Operating Labor Assumptions
Incremental FOM from IPM Parsed ($ Billion) 3.19

FF Capital Cost Included in FOM ($ Billion) 1.83

FGD Improvement included in FOM ($ Billion) 0.73

Remaining FOM used to find O&M Labor ($ Million) 632.4

Productivity* 8.7
*Workers per $Million in Payroll for Electr icity Generating Sector , Forecast to 2015 Sources: Productivity from 2007 Economic Census and Growth Rate from BLS.

21 SCRs have an operational input of catalyst as well as an initial input needed when the unit is first installed. While the initial value is calculated using only the installed new control capacity, that number and the associated labor needs are included to estimate the total volume of catalyst required.

22 Ammonia has a usage rate based on lbs of NOx reduced, so we estimated our ammonia usage using the total NOx reduced between the base and policy cases.

23 Fabric filters follow a different pattern. Instead of a resource usage estimate, we used the VOM cost for FFs and converted this to jobs us ing the workers per million dollars out put for the relev ant manufacturing industry sector.



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Labor requirement to operate the controls is estimated for all equipment types combined, using the incremental FOM costs from IPM. The IPM in cremental FOM cost estimate included capital costs for fabric filters and scrubber improvement costs, which were first subtracted to obtain the true FOM costs ($632.4 million). Resulting FOM cost estimate was then converted to labor needs using the workers/$ Million in total payroll for the Electric Generating Sector.

Retirement Labor

Table A-5: Inputs to Labor from Retirements

Capacity of Incremental Retirements in SSR (MW) 9,868

O&M Decrease scaled to SSR Retirements ($MM) (To account for Partial Retirements) 647.9

Workers Per $Million in payroll, forecast to 2015 8.692
Sources: Productivity from 2007 Economic Census and Growth Rate from BLS.

Retirement labor was estimated by first identifying the retiring units from IPM parsed outputs (using incremental retirements in the policy case). The next step involved estimating the capacity of incremental retirements as well as the change in the O&M costs due to these retirements. Because of the discrepancies between partial retirements in IPM parsed outputs and System Summary Reports (SSR), O&M costs were scaled proportionately to reflect the lower SSR-based estimates, as shown in Table A-5 above. O&M cost decreases were then converted to job-years lost due to retirement s using workers per $Million in payroll.

Fuel Use Labor

Table A-6: Inputs to Labor for Fuel Use Coal by Region 2015 Incremental Fuel USE (Tons) 2008 Short Tons/Employee hour
Appalachia (15,060,000) 2.9

Interior 5,610,000 4.8

West (8,690,000) 19.9

Waste Coal (720,000) 6.0

Natural Gas

EIA Total Natural Gas Production 2007 (TCF) 24.664

EIA Total Crude Oil Production 2007 (Barrels) 1,848,450,000

EIA Natural Gas Heat Content 2007 (Btu/cf) 1,027

EIA Petroleum Heat Content (MMBtu/Barrel) 6.151



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Total Crude Oil and Natural Gas Production (MMBtu) 36,699,744,000

Economic Census 2007 Oil and Gas Extraction Employees 140,160

MMBtu per Man-year for Oil and Gas Extraction 261,842

Incremental Natural Gas from IPM (TCF) 0.277

Incremental Natural Gas from IP M (Converted to MMBtu) 284,967,573

Pipeline Capital Cost of New Pipeline ($MM) Productivity *

59.2 5.1
*Workers per $Million in Payroll for Electr icity Generating Sector , Forecast to 2015 Note: Heat Contents from EIA are assumed to be for fuels used in Electric Power Sector Sources: Short Tons per hour from US EIA, Coal Industry Annual. Total Production from 2009 EIA Annual Energy Review. Heat Contents from EIA, Heat Content of Natural Gas Consumed and 2009 Annual Energy Review. Employment Data from 2007 Economic Census.

Fuel use related employment impacts were estimated by using IPM results for incremental changes in coal and natural gas use (policy case over the base case). For coal, estimates of coal use in tons by region from IPM were used in conjunction with labor productivity estimates from the EIA for each region (in short tons/ employee hour), to calculate the change in job-hours needed. These were then converted to job-years, assuming 2,080 working hours per year. As discussed in the main report above, because of the high variability in coal mining labor productivity in recent years, no attempt was made to forecast coal (and natural gas, for consistency) productivities, instead the most recent historical estimates were used in this TSD (which was the 2008 labor productivity for coal).

For natural gas, the first step was estimating labor productivity since such information was not available directly from any reliable source. EI A production data from the Annual Energy Review for natural gas and crude oil (in TCF and barrels, respectively), along with EIA heat content estimates were used to find total crude oil and natural gas production in MMBtu for 2007. Labor productivity in MMBtu per job-year for the O il and Gas Extraction sector was then estimated using data from the Census on oil and gas extraction employment. Then, incremental natural gas demand from IPM (in TCF) was converted to MMBtu of natural gas demand using EIA data on natural gas heat content. This was then used with the labor productivity estimated above to calculate the total job-years needed for increased natural gas demand for the Toxics Rule.

For pipeline capacity, a similar approach was applied, using the capital cost of new pipeline (from IPM) and labor productivity for the pipeli ne construction sector to estimate the labor needs. For both cases, to be consistent with coal and again because of the variability, most recent confirmed productivity estimates from 2007 were used in the job-year calculations.



### 15

### DRAFT

16 References

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