## DOE/EA-1774

Environmental Assessment

for

10 CFR Part 431 Energy Cons ervation Standards: Energy Conservation Standards for Resi dential Water Heaters, Direct Heating Equipment, and Pool Heaters

March 201016-i CHAPTER 16. ENVIRONMENTAL IMPACTS 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 ................................................................................. 16-4 16.2.3 Global Climate Change ................................................................................ 16-5 16.2.4 Analytical Methods fo r Air Emissions ........................................................ 16-9 16.2.5 Effects on Power Plant Emissions ............................................................. 16-10 16.2.6 Effects on Site Emissions........................................................................... 16-13 16.2.7 Effects on Upstream Fuel-Cycle Emissions .............................................. 16-17 16.3 SOCIAL COST OF CARBON DIOXIDE EMISSIONS ............................................ 16-18 16.3.1 Monetizing Carbon Dioxi de Emissions ..................................................... 16-19 16.3.2 Social Cost of Carbon Values Used in Past Regulatory Analyses............. 16-21 16.3.3 Approach and Key Assumptions ............................................................... 16-22 16.4 WETLAND, ENDANGERED AND THREATENED SPECIES, AND CULTURAL RESOURCES ........................................................................................ 16-23 16.5 SOCIOECONOMIC IMPACTS .................................................................................. 16-23 16.6 ENVIRONMENTAL JUSTICE IMPACTS ................................................................ 16-23 16.7 NOISE AND AESTHETICS ....................................................................................... 16-24 16.8 SUMMARY OF ENVIRONMENTAL IMPACTS ..................................................... 16-24

LIST OF TABLES

Table 16.2.1 Impact of Residential Heating Products Efficiency Standards on Cumulative Energy-Related Emissions of CO 2 between 2015 and 2045 (Million Metric Tons of CO 2 ) ............................................................................ 16-8 Table 16.2.2 Power Sector Emissions Forecast from AEO2009 Reference Case ................. 16-10 Table 16.2.3 Power Sector Emissions Impact Forecasts for Water Heaters ......................... 16-11 Table 16.2.4 Power Sector Emissions Impact Forecasts for Direct Heating Equipment ...... 16-12 Table 16.2.5 Power Sector Emissions Impact Forecasts for Pool Heaters ........................... 16-13 Table 16.2.6 Change in Site Emissions for Water Heaters ................................................... 16-15 Table 16.2.7 Change in Site Emissions from Direct Heating Equipment ............................. 16-16 Table 16.2.8 Change in Site Emissions from Pool Heaters .................................................. 16-17 Table 16.2.9 Estimated Upstream Emissions of Air Pollutants as a Percentage of Direct Power Plant Combustion Emissions ................................................................ 16-18 Table 16.3.1 Social Cost of CO 2 , 2010 – 2050 (in 2007 dollars) ......................................... 16-19 Table 16.8.1 Environmental Impact Analysis Resu lts Summary for Water Heaters ............ 16-25 Table 16.8.2 Environmental Impact Analysis Re sults Summary for Direct Heating Equipment ........................................................................................................ 16-25 Table 16.8.3 Environmental Impact Analysis Resu lts Summary for Pool Heaters .............. 16-2616-1 CHAPTER 16. ENVIRONMENTAL IMPACTS ANALYSIS

16.1 INTRODUCTION

This chapter describes potential environmen tal effects that may result from amended energy conservation standards for residential heating products. The U.S. Department of Energy (DOE)’s energy conservation standards are not site-s pecific, and would apply to all 50 States and U.S. territories. Therefore, none of the standa rds would impact land uses, cause any direct disturbance to the land, or di rectly affect biological re sources in any one area.

All of the trial standard levels (TSLs) are expected to reduce energy consumption in comparison to the base case. These changes in energy consumption are the primary drivers in analyzing environmental effects. The estimates of source energy savings th at serve as inputs to the environmental assessment (EA) can be found in the utility impact analysis in chapter 13 of this technical support document (TSD).

The primary impact of the TSLs is on air emissions resulting from power plant operations and from the residential heating products themselv es. Therefore, much of this chapter describes the air emissions analysis, and the latter part of the chapter describes pot ential impacts to other environmental resources.

16.2 AIR EMISSIONS ANALYSIS
A primary focus of the environmental analysis is the impact on air emissions of amended energy conservation standards for residentia l heating products. The outcomes of the environmental analysis are largely driven by ch anges in power plant t ypes and quantities of electricity generated under each of the alternativ es. Changes in generation are described in the utility impact analysis in chapter 13.

16.2.1 Air Emissions Descriptions
For each of the TSLs, DOE calculated total power-sector emissions based on output from the NEMS-BT model (see chapter 13 for description of the model). This an alysis considers three pollutants: sulfur dioxide (SO 2 ), nitrogen oxides (NO X ), and mercury (Hg). An air pollutant is any substance in the air that ca n cause harm to humans or the environment. Pollutants may be natural or man-made (i.e., anth ropogenic) and may take the fo rm of solid particles (i.e., particulates or particulate ma tter), liquid droplets, or gases. a This analysis also considers carbon dioxide (CO 2 ).

Sulfur Dioxide. Sulfur dioxide, or SO 2 , belongs to the family of sulfur oxide gases (SOx). These gases dissolve easily in water. Sulf ur is prevalent in all raw materials, including

a More information on air pollution characteristics and regul ations is available on the U.S. Environment Protection Agent (EPA)’s website at www.epa.gov.16-2 crude oil, coal, and ore that c ontains common metals like alumin um, copper, zinc, lead, and iron. SOx gases are formed when fuel containing sulfur , such as coal and oil, is burned, and when gasoline is extracted from oil, or metals are extracted from ore. SO 2 dissolves in water vapor to form acid, and interacts with othe r gases and particles in the air to form sulfates and other products that can be harmful to people and their environment. 1

DOE has determined that SO 2 emissions from affected Electric Generating Units (EGUs) are subject to nationwide and regional emissions cap and trading programs that create uncertainty about the st andards’ impact on SO 2 emissions. Title IV of the Clean Air Act sets an annual emissions cap on SO 2 for all affected EGUs. SO 2 emissions from 28 eastern States and the District of Columbia (D.C.) are also limite d under the Clean Air Interstate Rule (CAIR, published in the Federal Register on May 12, 2005. 70 FR 25162 (May 12, 2005), which creates an allowance-based trading program that will gr adually replace the Titl e IV program in those States and D.C. (The recent legal history surr ounding CAIR is discussed below.) The attainment of the emissions caps is flexible among EGUs and is enforced through the use of emissions allowances and tradable permits. Under exis ting EPA regulations, any excess SO2 emission allowances resulting from the lower electricit y demand caused by the imposition of an efficiency standard could be used to permit offsetting incr eases in SO2 emissions by any regulated EGU. However, if the standard resulted in a perm anent increase in the quantity of unused emission allowances, there would be an overall reduction in SO 2 emissions from the standards. While there remains some uncertainty about the ultim ate effects of efficiency standards on SO2 emissions covered by the existing cap and trad e system, the NEMS-BT modeling system that DOE plans to use to forecast emissions reduction s currently indicates th at no physical reductions in power sector emissions would occur for SO 2.
Even if there is no significant reduction in the overall emissi ons of SO2 that results from the standard, there may still be some economic benefit from reduced demand for SO 2 emission allowances that is not fully reflected in the cost savings experienced by individual consumers. Electricity savings that decr ease the overall demand for SO 2 emissions allowances could lower allowance prices and thereby result in some econom ic benefits for all elec tricity consumers, not just those that reduced their electricity use as a result of an efficiency standard. DOE does not plan to monetize this particular benefit because the effect on the SO 2 allowance price from any single energy conservation standard is likely to be small and highly uncertain.

Nitrogen Oxides. Nitrogen oxides , or NO X , is the generic term for a group of highly reactive gases, all of which contain nitrogen and oxygen in varying amounts. Many of the nitrogen oxides are colorless and odorless. Ho wever, one common polluta nt, nitrogen dioxide (NO 2 ), along with particles in the air can often be seen as a reddish-brown layer over many urban areas. NO 2 is the specific form of NO X reported in this document. NO X 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 forma tion of acid rain, and can impair visibility in areas such as national parks. NO X also contributes to the formation of fine particles that can impair human health. 1

Nitrogen oxides form when fossil fuel is bur ned at high temperatures, as in a combustion process. The primary manmade sources of NO X are motor vehicles, electric utilities, and other16-3 industrial, commercial, and residentia l sources that burn fossil fuels. NO X can also be formed naturally. Electric ut ilities account for a bout 22 percent of NO X emissions in the United States. 2

Mercury. Coal-fired power plants emit mercury (H g) found in coal during the burning process. While coal-fired power plants are the largest remaining source of human-generated Hg emissions in the United States, they contribut e very little to the global Hg pool or to contamination of U.S. waters. 1 U.S. coal-fired power plants emit Hg in three different forms: oxidized Hg (likely to deposit within the Unite d States); elemental Hg, which can travel thousands of miles before depositing to land and water; and Hg that is in particulate form. Atmospheric Hg is then deposited on land, lake s, rivers, and estuarie s through rain, snow, and dry deposition. Once there, it can transform into methylmercury and accumulate in fish tissue through bioaccumulation.

Americans are exposed to methylmercury pr imarily by eating contaminated fish. Because the developing fetus is the most sensitive to the toxic effects of methylmercury, women of childbearing age are regarded as the population of greatest concern. Children exposed to methylmercury before birth may be at increased risk of poor performa nce on neurobehavioral tasks, such as those measuring attention, fine motor function, language skills, visual-spatial abilities, and verbal memory. 3

Carbon Dioxide. Carbon dioxide (CO 2 ) is not a criteria pollutant (see below), but it is of interest because of its classi fication 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, CO 2 , methane (CH 4 ), nitrous oxide (N 2 O), and ozone (O 3 ). Human activities, however, add to the levels of most of these naturally occurring gases. For example, CO 2 is emitted to the atmosphere when solid waste, fossil fuels (oil, natural gas, and coal), wood, and wood products are burned. In 2007, over 90 percent of anthropogenic (i.e., human-made) CO 2 emissions resulted from burning fossil fuels. 4

Concentrations of CO 2 in the atmosphere are naturally regulated by numerous processes, collectively known as the “carbon cycle.” The move ment of carbon between the atmosphere and the land and oceans is dominated by natural proce sses, such as plant photosynthesis. While these natural processes can absorb some of the anthropogenic CO 2 emissions produced each year, billions of metric tons are a dded to the atmosphere annually. In the United States, in 2007, CO 2 emissions from electricity generation accounted for 39 percent of total U.S. GHG emissions. 4

Particulate Matter . Particulate matter (PM) also known as particle pollution, is a complex mixture of extremely sm all particles and liquid droplets. Particle pollution is made up of a number of components, incl uding acids (such as nitrates a nd sulfates), organic chemicals, metals, and soil or dust particles.

PM impacts are of concern due to human e xposures that can impact health. Particle pollution - especially fine particles - contains microscopic solids or liqui d droplets that are so small that they can get deep into the lungs and cause serious health problems. Numerous scientific studies have linked particle polluti on exposure to a variety of problems, including:16-4 increased respiratory symptoms, such as irrita tion of the airways, coughing, or difficulty breathing, for example; decreased lung function; aggravated asthma; de velopment of chronic bronchitis; irregular heartbeat; nonfat al heart attacks; and premature death in people with heart or lung disease.

Power plant emissions can have either direct or indirect impacts on PM. A portion of the pollutants emitted by a power plant are in the form of particulates as they leave the smoke stack. These are direct PM emissions. Meanwhile other pollutants such as SO 2 and NO X interact with other elements in the atmosphere to produce PM at some distance from the power plant.

In general, the relative impacts of direct PM emissions reduction compared to other pollutants on PM exposures are much more difficu lt to estimate than other emissions reductions. This is due to the complex interactions betw een PM, other power plan t emissions, meteorology and atmospheric chemistry that impact human e xposure to particulates. Human exposure to PM usually occurs at a significant distance from th e power plants that are emitting particulates and particulate precursors. When power plant emi ssions travel this distance they undergo highly complex atmospheric chemical reactions a nd the proportion of impacts and exposures attributable to different emissions can vary dramatically for different emissions sources and types of particulate precursors. Thes e variations in emissions impact s depend on the distance to the source, land use and land cover, and the local and regional meteorology responsible for pollutant transport, deposition and atmospheric chemistry.

The Environmental Protection Agency (EPA) has compiled and summarized technical studies regarding PM source apportionment. 5 In this compilation of studies, sources are classified into seven categories: (1) Secondary sulfate/coal, (2) Secondary organic matter/mobile sources, (3) Nitrate dominated sources, (4) Biom ass burning, (5) Industrial, (6) Crustal and salt (7) Other. In these studies, the PM exposures attributed to coal power plants are not disaggregated between direct particulate emissions and SO 2 emissions from these power plants. This is because both SO 2 and direct PM emissions aggregate and interact with water droplets and emissions from other sources to create final particulates that ar e a complex mixture of different constituents. Both the SO 2 and direct PM are emitted from th e power plant at the same time and if the final aerosol particle contains both su lfur compounds and other PM components it is not possible to attribute that aerosol particle to one source or the other. Therefore, DOE is not currently able to perform modeling that can make reliable estimates of the impact of direct PM emissions on air quality at this time.

16.2.2 Air Quality Regulation

The Clean Air Act Amendments of 1990 list 188 toxic air pollutants that EPA is required to control. 6 EPA has set national air quali ty standards for six common pollutants (also referred to as “criteria” pollutants), two of which are SO 2 and NO X . Also, the Clean Air Act Amendments of 1990 gave EPA the authority to cont rol acidification and to require operators of electric power plants to reduce emissions of SO 2 and NO X . Title IV of the 1990 amendments established a capand-trade program for SO 2 intended to help control acid rain. 6 This cap-and-trade program serves as a model for more recent programs with similar features.16-5 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). 7 b CAIR will permanently cap emissions of SO 2 and NO X in eastern States of the United Stat es. CAIR achieves large reductions of SO 2 and/or NO X emissions across 28 eastern States and the Di strict of Columbia. States must achieve the required emission reductions using one of two compliance options: 1) meet an emission budget for each regulated state by requiring power plan ts to participate in an EPA-administered interstate cap-and-trade system th at caps emissions in two stages, or 2) meet an individual state emissions budget through measures of th e state’s choosing. Phase 1 caps for NO X have been in place since 2009. Phase 1 caps for SO 2 are to be in place beginning in 2010. The Phase 2 caps for both NO X and SO 2 are due in 2015.

Also in 2005, EPA issued the final rule en titled “Standards of Performance for New and Existing Stationary Sources: Electric Steam Ge nerating Units,” under sections 110 and 111 of the Clean Air Act (40 CFR Parts 60, 63, 72, and 75) 8 . This rule, called the Clean Air Mercury Rule (CAMR), was closely related to the CAIR and established standards of performance for Hg emissions from new and existing coal-fired elec tric utility steam gene rating units. The CAMR regulated Hg emissions from coal-fired power plants.

On February 8, 2008, the U.S. Court of App eals for the District of Columbia Circuit (D.C. Circuit) issued its deci sion in State of New Jersey, et al. v. Environmental Protection Agency
, c in which the Court, among other actions, vacated the CAMR referenced above.

On July 11, 2008, the U.S. Court of Appeals fo r the District of Columbia Circuit (D.C. Circuit) issued its decision in North Carolina v. Environmental Protection Agency

, which vacated the CAIR issued by the U.S. Envi ronmental Protection Agency on March 10, 2005. d CAIR was the vehicle for capping NO X emissions

. 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 opinion. North Carolina v. EPA , 550 F.3d 1176 (D.C. Cir. 2008) (remand of vacatur). f

16.2.3 Global Climate Change
Climate change has evolved into a matter of gl obal concern because it is expected to have widespread, adverse effects on natural resour ces and systems. A growing body of evidence points to anthropogenic sources of gree nhouse gases, such as carbon dioxide (CO 2 ), as major contributors to climate change. Because this Rule, if finalized, will likely decrease CO 2 emission rates from the fossil fuel sector in the United St ates, the Department here examines the impacts

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

c 517 F.3d 574, 583 (D.C. Cir. 2008).

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

e See id. at 903.

f State of North Carolina, et al. v. Environmental Protection Agency, 550 F.3d 1176 (D.C. Cir. 2008).16-6 and causes of climate change and then the potential impact of the Rule on CO 2 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 iden tifiable through changes in the mean and/or the variability of its properties (e.g., temperature or precipitation) over an ex tended period, typically decades or longer. 9

The World Meteorological Organization a nd United Nations E nvironment Programme (UNEP) established the Intergovernmental Pa nel on Climate Change (IPCC) to provide an objective source of information about climate change. According to the IPCC Fourth Assessment Report (IPCC Report), published in 2007, climate cha nge is consistent with observed changes to the world’s natural systems; the IPCC expects these changes to continue. 9

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 a nd more frequent heat waves in many locations worldwide, and numerous ecological changes. 9

Looking forward, the IPCC describes contin ued global warming of about 0.2 °C per decade for the next two decades under a wide range of emission scenarios for carbon dioxide (CO 2 ), other greenhouse gases (GHGs), and aerosols. After that period, the ra te of increase is less certain. The IPCC Report describes increases in average global temperat ures of about 1.1 °C to 6.4 °C at the end of the centu ry relative to today. These increases vary depending on the model and emissions scenarios. 9

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 increas ing degree of impacts such as coral reef bleaching, loss of wild life habitat, loss to specific ecosystems, and negative yield impacts for major cereal crops in the tropics, but al so projects that there likely will be some beneficial impacts on crop yiel ds 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 th e increase in anthropogeni c concentrations of CO 2 and other long-lived greenhouse gases such as me thane and nitrous oxide in the atmosphere, rather than from natural causes.

Increasing the CO 2 concentration partially blocks the earth’s re-radiation of captured solar energy in the infrared band, inhibits the radiant cooling of the earth, and ther eby alters the energy balance of the planet, which gradually increases its average temperature. The IPCC16-7 Report estimates that currently, CO 2 makes up about 77 percent of the total CO 2 -equivalent g global warming potential in GHGs emitted from hu man activities, with th e vast majority (74 percent) of the CO 2 attributable to fossil fuel use. 10 For the future, the IP CC Report describes a wide range of GHG emissions scenarios, but under each scenario CO 2 would continue to comprise above 70 percent of the total global warming potential. 10

Stabilization of CO 2 Concentrations. Unlike many traditional air pollutants, CO 2 mixes thoroughly in the entire atmosphere and is long-lived. The residence time of CO 2 in the atmosphere is long compared to the emission processes. Therefore, the global cumulative emissions of CO 2 over long periods determine CO 2 concentrations because it takes hundreds of years for natural processes to remove the CO 2 . Globally, 49 billion metric tons of CO 2 – equivalent of anthropogenic (man-made) greenhous e gases are emitted every year. Of this annual total, fossil fuels contribute about 29 billion metric tons of CO 2 . 11 h

Researchers have focused on considering atmospheric CO 2 concentrations that likely will result in some level of globa l climate stabilization, and the emission rates associated with achieving the “stabilizing” concentrations by part icular dates. They associate these stabilized CO 2 concentrations with temperature increases that plateau in a defined range. For example, at the low end, the IPCC Report scenarios target CO 2 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 levels i (about 1.3 °C to 1.7 °C above today’s levels). To achieve concentrations between 350 ppm to 400 ppm, the IPCC scenarios pr esent that there would have to be a rapid downward trend in total annual gl obal emissions of greenhouse gase s 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 population and substantial increases in economic production, the scenarios identify required re ductions in greenhouse gas emissions intensity (emissions per unit of output) of more than 90 pe rcent. However, even at these rates, the scenarios describe some warming and some climate change is projected due to already accumulated CO 2 and GHGs in the atmosphere. 12

The Beneficial Impact of the Rule on CO 2 Emissions. It is anticipated that the Rule will reduce energy-related CO 2 emissions, particularly those asso ciated with energy consumption in buildings. The U.S. Energy Information Admini stration (EIA) reports in its 2009 Annual Energy Outlook ( AEO2009 ) 13 that U.S. annual energy-related emissions of CO 2 in 2006 were about 6.0 billion metric tons, of which 1.2 billion tons were attributed to the reside ntial buildings sector

g GHGs differ in their warming influence (radiative forci ng) on a global climate syst em due to their different radiative properties and lifetimes in the atmosphere. Thes e warming influences may be expressed through a common metric based on the radiative forcing of CO 2 , i.e., CO 2 -equivalent. CO 2 equivalent emission is the amount of CO 2 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 CO 2 emissions from deforest ation 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 216-8 (including related energy–using products such as residential heating pr oducts). Most of the greenhouse gas emissions attributed to residentia l buildings are emitted from fossil fuel-fired power plants that generate electric ity used in this sector. In the AEO2009 Reference Case, EIA projected that annua l energy-related CO 2 emissions would grow from 5.7 billion metric tons in 2010 to 6.2 billion metric tons in 2030, an increase of 8 percent (see AEO2009 ), while residential emissions would grow to from 1.2 billion metric t ons to 1.3 billion metric tons, an increase of 5 percent.

The estimated cumulative CO 2 emission reductions from a residential heating product efficiency standard (shown as a range of alte rnative TSLs) during this same 30-year period are indicated in Table 16.2.1. Estimated CO 2 emission reductions in Table 16.2.1 come from two sources: electricity generation (i.e ., power plants) and fossil fuel-f ired appliances. The estimated CO 2 emission reductions from electricity generation are calculated usi ng the NEMS-BT model. The estimated CO 2 emission reductions from fossil fuel-f ired appliances (i.e., gas heating products) are derived from emissions factor s for residential natural gas combustion.

Table 16.2.1 Impact of Residential Heating Products Efficiency Standards on Cumulative Energy-Related Emissions of CO 2 between 2015 and 2045 (Million Metric Tons of CO 2 ) Trial Standard Levels TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 TSL8

Water Heaters* -74.30 -121.67 -130.54 -137.25 -154.2 -209.5 -608.8 -1,001

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

Direct Heating Equipment* -8.25 -8.84 -9.31 -17.95 -20.24 -49.94

Pool Heaters* -0.41 -0.75 -1.72 -2.38 -3.61 -8.89
Total* -82.96 -131.3 -141.6 -157.6 -178.0 -268.3
Percent of Total Cumulative Emissions Reduction compared with the AEO2009 Reference Case in 2015-2045 -0.108 -0.171 -0.184 -0.205 -0.231 -0.349

* All results in million metric tons, equivalent to 1.1 short tons; negative values refer to a reduction compared with the base case.

The Incremental Impact of the Rule on Climate Change. It is difficult to correlate specific emission rates with atmo spheric concentrations of CO 2 and specific atmospheric concentrations with future temperatures becau se the IPCC Report describes a clear lag in the climate system between any given concentration of CO 2 (even if maintained for long periods) and the subsequent average worldwide and regi onal temperature, precipitation, and extreme weather regimes. For example, a major determinant of climate response is “equilibrium climate sensitivity”, a measure of the climate system re sponse to sustained radioactive forcing. It is defined as the global average surface wa rming following a doubling of carbon dioxide16-9 concentrations. The IPCC Report describes its es timated, 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 IP CC 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 CO 2 mitigation scenarios that aim to meet specific temperature levels.

Because of how complex global climate systems ar e, it is difficult to know to what extent and when particular CO 2 emissions reductions will impact global warming. However, as Table 16.2.1 indicates, the rule is expected to reduce CO 2 emissions associated with energy consumption in buildings.

16.2.4 Analytical Methods for Air Emissions
NEMS-BT incorporates capabilit ies to assess compliance with SO 2 restrictions specified in the Clean Air Act and its amendments. Cl ean Air Act provisions include New Source Performance Standards, and Re vised New Source Performance St andards. The version of NEMS-BT in 2008 included provisions for the CAIR , which imposes stricter restrictions on SO 2 and NO X for some states, and the CAMR, which impos ed a national Hg constraint. As discussed earlier is section 16.2.2, 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. Carolina v. Environmental Protection Agency , 550 F.3d 1176 (D.C. Cir. 2008) (remand of vacatur). But , EPA has not promulgated a rule to replace CA MR, which the D.C. Circuitvacated in 2008 . Thus, the version of NEMS-BT used in this an alysis does not include provisions for the CAMR.

Coal-fired electric generation is the single largest source of electricity in the United States. Because the mix of coals used signifi cantly affects the emissions produced, the model includes a detailed representation of coal suppl y. The model considers the rank of the coal as well as the sulfur contents of the fuel used when determining optimal dispatch. 14

Within the NEMS-BT model, pl anning options for achieving em issions restrictions in the Clean Air Act Amendments include installing pollution control equipment on existing power plants and building new power plants with lo w emission rates. These methods for reducing emission are compared to dispatching options such as fuel switching and allowance trading. Environmental regulations also a ffect capacity expansion decisions . For instance, new plants are not allocated SO 2 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 involv e purchasing allowances or over complying at an existing unit.

DOE’s analysis assumed the presence of nationwide emission caps on SO 2 and caps on NO X emissions in the 28 States covered by th e CAIR. The NEMS-BT m odeling system that DOE plans to use to forecast emissions reduction s currently indicates th at no physical reductions in power sector emissions would occur for SO 2. However, remaining uncertainty prevents DOE from estimating or reporting SO 2 reductions from energy conserva tion standards at this time. It16-10 should be noted that the standard s could put slight downward pressu re on the prices of emissions allowances in cap-and-trade markets.

In contrast to the modeling forecasts of NEMS-BT that SO 2 emissions reductions will remain at the cap, during the years 2007 and 2008, SO 2 emissions have been below the trading cap. The difference between the emissions levels that NEMS-BT forecasts and those that EPA forecasts is an indicator of the uncertainties as sociated with long-range energy sector forecasts. Because of such uncertainties, DOE is unable to estimate the economic and physical benefit from SO 2 emissions reductions at this time.

As noted in chapter 13, NEMS-BT model fo recasts end in year 2030. Emissions impacts beyond 2030 were assumed to be equal to the impacts in 2030.

16.2.5 Effects on Power Plant Emissions

Table 16.2.2 shows AEO2009 reference case power plant emissions in selected years. The Reference Case emissions are the emissions shown by the NEMS-BT m odel to result if none of the TSLs are promulgated (the base case).

Table 16.2.2 Power Sector Emissions Forecast from AEO2009 Reference Case NEMS-BT Results*
2005 2010 2015 2020 2025 2030
CO 2 (Million metric tons/year)** 2,397 2,343 2,381 2,466 2,535 2,636
NO X (Million metric tons/year) † 3.30 2.08 1.87 1.88 1.88 1.91 Hg (metric tons/year) † 51.5 43.8 29.5 28.9 29.3 28.7 * All results in metric tons, equivalent to 1.1 short tons and negative values refer to a reduction compared with the Base Case ** Comparable to Table A17 of AEO2009 : Electric Generators
† Comparable to Table A8 of AEO2009 : Emissions

Table 16.2.3 through Table 16.2.5 show the esti mated changes in power plant emissions in selected years for each of the TSLs. Changes in CO 2 , NO X, and Hg emissions from power plants are shown in these tables.16-11 Table 16.2.3 Power Sector Emissions Impa ct Forecasts for Water Heaters

NEMS-BT Results* Difference from AEO2009 Reference Case

Total 2015 2020 2025 2030 2035 2040 2044 2015-2045 Standard Level 1
CO 2 (Mt/a) -0.112 -0.804 -1.368 -1.474 -1.474 -1.474 -1.474 -37.2 NOx (kt/a) -0.088 -0.612 -1.013 -1.065 -1.065 -1.065 -1.065 -27.3 Hg (t/a) 0.000 0.000 -0.003 0.002 0.002 0.002 0.002 -0.056

Standard Level 2
CO 2 (Mt/a) -0.182 -1.294 -2.195 -2.359 -2.359 -2.359 -2.359 -59.6 NOx (kt/a) -0.143 -0.985 -1.626 -1.705 -1.705 -1.705 -1.705 -43.7 Hg (t/a) 0.000 0.000 -0.005 0.003 0.003 0.003 0.003 -0.090

Standard Level 3
CO 2 (Mt/a) -0.207 -1.479 -2.512 -2.699 -2.699 -2.699 -2.699 -68.2 NOx (kt/a) -0.163 -1.126 -1.861 -1.951 -1.951 -1.951 -1.951 -50.0 Hg (t/a) 0.000 0.000 -0.006 0.004 0.004 0.004 0.004 -0.103

Standard Level 4
CO 2 (Mt/a) -0.227 -1.624 -2.760 -2.965 -2.965 -2.965 -2.965 -74.9 NOx (kt/a) -0.178 -1.237 -2.044 -2.143 -2.143 -2.143 -2.143 -54.9 Hg (t/a) 0.000 0.000 -0.007 0.004 0.004 0.004 0.004 -0.113

Standard Level 5
CO 2 (Mt/a) 0.985 -2.026 -4.192 -4.769 -4.769 -4.769 -4.769 -111 NOx (kt/a) 0.773 -1.543 -3.105 -3.447 -3.447 -3.447 -3.447 -81.0 Hg (t/a) -0.010 -0.016 -0.026 -0.009 -0.009 -0.009 -0.009 -0.553

Standard Level 6
CO 2 (Mt/a) 1.27 -2.59 -5.34 -6.07 -6.07 -6.07 -6.07 -141 NOx (kt/a) 0.99 -1.97 -3.96 -4.39 -4.39 -4.39 -4.39 -103 Hg (t/a) -0.013 -0.020 -0.033 -0.012 -0.012 -0.012 -0.012 -0.704

Standard Level 7
CO 2 (Mt/a) 4.08 -8.46 -17.60 -20.10 -20.10 -20.10 -20.10 -467 NOx (kt/a) 3.20 -6.44 -13.04 -14.53 -14.53 -14.53 -14.53 -341 Hg (t/a) -0.042 -0.067 -0.110 -0.039 -0.039 -0.039 -0.039 -2.32

Standard Level 8
CO 2 (Mt/a) 6.38 -13.13 -27.21 -31.01 -31.01 -31.01 -31.01 -721 NOx (kt/a) 5.00 -10.00 -20.16 -22.41 -22.41 -22.41 -22.41 -526 Hg (t/a) -0.066 -0.103 -0.171 -0.061 -0.061 -0.061 -0.061 -3.59

*All results in metric tons (t), equivalent to 1.1 short tons Extapolation16-12 Table 16.2.4 Power Sector Emissions Impact Fo recasts for Direct Heating Equipment

NEMS-BT Results* Difference from AEO2009 Reference Case

Total 2013 2014 2015 2020 2025 2030 2035 2040 2042 2013-2043 Standard Level 1
CO 2 (Mt/a) 0.003 0.024 0.024 0.043 0.107 0.139 0.139 0.139 0.139 2.93 NOx (kt/a) 0.003 0.021 0.019 0.033 0.080 0.100 0.100 0.100 0.100 2.15 Hg (t/a) 0.001 0.000 0.001 0.001 0.000 0.001 0.001 0.001 0.001 0.012

Standard Level 2
CO 2 (Mt/a) 0.004 0.026 0.026 0.046 0.116 0.149 0.149 0.149 0.149 3.15 NOx (kt/a) 0.003 0.023 0.020 0.035 0.086 0.108 0.108 0.108 0.108 2.31 Hg (t/a) 0.002 0.000 0.001 0.001 0.000 0.001 0.001 0.001 0.001 0.013

Sandard Level 3
CO 2 (Mt/a) 0.004 0.028 0.027 0.049 0.122 0.158 0.158 0.158 0.158 3.32 NOx (kt/a) 0.003 0.024 0.022 0.037 0.090 0.114 0.114 0.114 0.114 2.43 Hg (t/a) 0.002 -0.001 0.001 0.001 0.000 0.001 0.001 0.001 0.001 0.014

Standard Level 4
CO 2 (Mt/a) 0.005 0.054 0.065 0.090 0.263 0.329 0.329 0.329 0.329 6.84 NOx (kt/a) 0.004 0.047 0.051 0.069 0.195 0.237 0.237 0.237 0.237 5.01 Hg (t/a) 0.003 -0.001 0.000 0.000 -0.004 0.001 0.001 0.001 0.001 -0.029

Standard Level 5
CO 2 (Mt/a) 0.005 0.061 0.074 0.102 0.297 0.369 0.369 0.369 0.369 7.69 NOx (kt/a) 0.005 0.053 0.058 0.078 0.220 0.267 0.267 0.267 0.267 5.63 Hg (t/a) 0.003 -0.001 0.000 0.000 -0.005 0.002 0.002 0.002 0.002 -0.033

Standard Level 6
CO 2 (Mt/a) 0.013 0.155 0.188 0.260 0.754 0.939 0.939 0.939 0.939 19.6 NOx (kt/a) 0.012 0.134 0.148 0.198 0.559 0.679 0.679 0.679 0.679 14.3 Hg (t/a) 0.008 -0.003 0.000 0.000 -0.012 0.004 0.004 0.004 0.004 -0.084

*All results in metric tons (t), equivalent to 1.1 short tons Extapolation16-13 Table 16.2.5 Power Sector Emissions Impact Forecasts for Pool Heaters

16.2.6 Effects on Site Emissions
For residential heating products, DOE also accounts for impacts from household emissions at the site (i.e., the residentia l building). NEMS-BT does not account for these emissions at the site. The estimates given he re are based on exogenous emissions factors for residential natural gas combusti on derived by the EPA’s AP-42 re port, in conjunction with the site energy savings predicted by the na tional impacts analysis (NIA) model. 15

The emissions factors DOE used are derive d from what is reported in the AP-42 for residential water heaters because no explicit lis ting was provided for the other heating products. Given that emissions rates from end-use com bustion are small compared to other emissions NEMS-BT Results* Difference from AEO2009 Reference Case

Total 2013 2015 2020 2025 2030 2035 2040 2042 2013-2043 Standard Level 1
CO 2 (Mt/a) 0.000 0.001 0.003 0.005 0.006 0.006 0.006 0.006 0.133 NOx (kt/a) 0.000 0.001 0.002 0.004 0.005 0.005 0.005 0.005 0.098 Hg (t/a) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

Standard Level 2
CO 2 (Mt/a) 0.000 0.002 0.005 0.009 0.011 0.011 0.011 0.011 0.241 NOx (kt/a) 0.000 0.002 0.003 0.007 0.008 0.008 0.008 0.008 0.177 Hg (t/a) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 -0.001

Sandard Level 3
CO 2 (Mt/a) 0.000 0.005 0.010 0.020 0.025 0.025 0.025 0.025 0.540 NOx (kt/a) 0.000 0.004 0.008 0.015 0.018 0.018 0.018 0.018 0.396 Hg (t/a) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 -0.001

Standard Level 4
CO 2 (Mt/a) 0.000 0.006 0.009 0.020 0.027 0.027 0.027 0.027 0.570 NOx (kt/a) 0.000 0.005 0.007 0.015 0.019 0.019 0.019 0.019 0.418 Hg (t/a) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

Standard Level 5
CO 2 (Mt/a) 0.000 0.009 0.014 0.031 0.041 0.041 0.041 0.041 0.869 NOx (kt/a) 0.000 0.007 0.010 0.023 0.029 0.029 0.029 0.029 0.636 Hg (t/a) 0.001 0.000 0.000 0.000 0.001 0.001 0.001 0.001 0.000

Standard Level 6
CO 2 (Mt/a) 0.001 0.023 0.034 0.077 0.101 0.101 0.101 0.101 2.16 NOx (kt/a) 0.001 0.018 0.026 0.057 0.073 0.073 0.073 0.073 1.58 Hg (t/a) 0.001 0.001 0.000 -0.001 0.002 0.002 0.002 0.002 -0.001

*All results in metric tons (t), equivalent to 1.1 short tons Extapolation16-14 sources, it is not uncommon to see emissions factor s from residential end uses reported in one general rate. 16 For these reasons, the Department opted to simply use the water heating emissions factor for all of the heating products. It ac knowledges that these estimates are only general approximations.

Tables 16.2.6 through 16.2.8 show the estimated changes in site emi ssions in selected years for each of the water heater, direct heating equipment, and pool heater TSLs.16-15 Table 16.2.6 Change in Site Emissions for Water Heaters

NEMS-BT Results*
Total
2015 2020 2025 2030 2035 2040 2044 2015-2045 Standard Level 1
CO 2 (Mt/a) -0.128 -0.759 -1.285 -1.547 -1.547 -1.547 -1.547 -37.10 NOx (kt/a) -0.105 -0.619 -1.0 47 -1.261 -1.261 -1.261 -1.261 -30.25 Hg (t/a) -0.004 -0.027 -0.045 -0.053 -0.053 -0.053 -0.053 -1.27

Standard Level 2
CO 2 (Mt/a) -0.217 -1.277 -2.152 -2.582 -2.582 -2.582 -2.582 -62.04 NOx (kt/a) -0.177 -1.041 -1.7 55 -2.106 -2.106 -2.106 -2.106 -50.58 Hg (t/a) -0.008 -0.048 -0.081 -0.096 -0.096 -0.096 -0.096 -2.32

Standard Level 3
CO 2 (Mt/a) -0.218 -1.283 -2.162 -2.594 -2.594 -2.594 -2.594 -62.32 NOx (kt/a) -0.178 -1.046 -1.7 63 -2.115 -2.115 -2.115 -2.115 -50.81 Hg (t/a) -0.011 -0.067 -0.112 -0.132 -0.132 -0.132 -0.132 -3.20

Standard Level 4
CO 2 (Mt/a) -0.218 -1.283 -2.162 -2.594 -2.594 -2.594 -2.594 -62.32 NOx (kt/a) -0.178 -1.046 -1.7 63 -2.115 -2.115 -2.115 -2.115 -50.81 Hg (t/a) -0.011 -0.067 -0.112 -0.132 -0.132 -0.132 -0.132 -3.20

Standard Level 5
CO 2 (Mt/a) -0.150 -0.887 -1.498 -1.802 -1.802 -1.802 -1.802 -43.24 NOx (kt/a) -0.123 -0.723 -1.2 21 -1.469 -1.469 -1.469 -1.469 -35.25
SO 2 (kt/a) -0.011 -0.063 -0.106 -0.125 -0.125 -0.125 -0.125 -3.02

Standard Level 6
CO 2 (Mt/a) -0.239 -1.406 -2.367 -2.838 -2.838 -2.838 -2.838 -68.20 NOx (kt/a) -0.195 -1.146 -1.9 29 -2.314 -2.314 -2.314 -2.314 -55.60
SO 2 (kt/a) -0.011 -0.068 -0.114 -0.135 -0.135 -0.135 -0.135 -3.25

Standard Level 7
CO 2 (Mt/a) -0.473 -2.839 -4.866 -5.950 -5.950 -5.950 -5.950 -141.79 NOx (kt/a) -0.386 -2.315 -3.9 68 -4.852 -4.852 -4.852 -4.852 -115.61 SO 2 (kt/a) -0.014 -0.081 -0.137 -0.163 -0.163 -0.163 -0.163 -3.92

Standard Level 8
CO 2 (Mt/a) -0.972 -5.738 -9.693 -11.662 -11.662 -11.662 -11.662 -279.84 NOx (kt/a) -0.793 -4.679 -7.9 04 -9.509 -9.509 -9.509 -9.509 -228.18
SO 2 (kt/a) -0.027 -0.159 -0.268 -0.318 -0.318 -0.318 -0.318 -7.66
*All results in metric tons (t), equivalent to 1.1 short tons Extrapolation16-16 Table 16.2.7 Change in Site Emissions fr om Direct Heating Equipment

NEMS-BT Results*
Total
2013 2015 2020 2025 2030 2035 2040 2042 2013-2043 Standard Level 1
CO 2 (Mt/a) -0.04 -0.11 -0.28 -0.43 -0.47 -0.47 -0.47 -0.47 -11.18 NOx (kt/a) -0.03 -0.09 -0.24 -0.38 -0.41 -0.41 -0.41 -0.41 -9.68 SO 2 (kt/a) 0.00 0.00 -0.01 -0.01 -0.01 -0.01 -0.01 -0.01 -0.31

Standard Level 2
CO 2 (Mt/a) -0.038 -0.114 -0.301 -0.466 -0.507 -0.507 -0.507 -0.507 -11.986 NOx (kt/a) -0.033 -0.098 -0.260 -0.403 -0.439 -0.439 -0.439 -0.439 -10.362
SO 2 (kt/a) -0.001 -0.003 -0.008 -0.013 -0.014 -0.014 -0.014 -0.014 -0.325

Sandard Level 3
CO 2 (Mt/a) -0.040 -0.120 -0.317 -0.491 -0.535 -0.535 -0.535 -0.535 -12.631 NOx (kt/a) -0.035 -0.103 -0.274 -0.424 -0.462 -0.462 -0.462 -0.462 -10.909 SO 2 (kt/a) -0.001 -0.003 -0.009 -0.013 -0.014 -0.014 -0.014 -0.014 -0.339

Standard Level 4
CO 2 (Mt/a) -0.079 -0.234 -0.622 -0.964 -1.050 -1.050 -1.050 -1.050 -24.785 NOx (kt/a) -0.068 -0.203 -0.538 -0.834 -0.908 -0.908 -0.908 -0.908 -21.436
SO 2 (kt/a) -0.002 -0.006 -0.017 -0.026 -0.029 -0.029 -0.029 -0.029 -0.676

Standard Level 5
CO 2 (Mt/a) -0.090 -0.267 -0.705 -1.089 -1.180 -1.180 -1.180 -1.180 -27.932 NOx (kt/a) -0.078 -0.232 -0.612 -0.945 -1.024 -1.024 -1.024 -1.024 -24.247 SO 2 (kt/a) -0.003 -0.008 -0.020 -0.031 -0.034 -0.034 -0.034 -0.034 -0.795

Standard Level 6
CO 2 (Mt/a) -0.222 -0.661 -1.751 -2.708 -2.939 -2.939 -2.939 -2.939 -69.519 NOx (kt/a) -0.193 -0.574 -1.519 -2.349 -2.550 -2.550 -2.550 -2.550 -60.308
SO 2 (kt/a) -0.006 -0.019 -0.050 -0.077 -0.083 -0.083 -0.083 -0.083 -1.964
*All results in metric tons (t), equivalent to 1.1 short tons Extrapolation16-17 Table 16.2.8 Change in Site Emissions from Pool Heaters

16.2.7 Effects on Upstream Fuel-Cycle Emissions
Upstream fuel-cycle emissions refer to th e emissions associated with the amount of energy used in the upstream production and downs tream consumption of electricity, including energy used at the power plant. 17 Upstream processes include the mining of coal or extraction of natural gas, physical preparatory and cleaning processes, and transportation to the power plant. The NEMS-BT 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 re ports only power plant emissions. NEMS-BT Results*
Total
2013 2015 2020 2025 2030 2035 2040 2042 2013-2043 Standard Level 1
CO 2 (Mt/a) -0.002 -0.006 -0.016 -0.021 -0.022 -0.02 -0.02 -0.02 -0.55 NOx (kt/a) -0.002 -0.005 -0.014 -0.018 -0.019 -0.02 -0.02 -0.02 -0.47 SO 2 (kt/a) 0.000 0.000 0.000 0.000 -0.001 0.00 0.00 0.00 -0.01

Standard Level 2
CO 2 (Mt/a) -0.003 -0.011 -0.030 -0.038 -0.040 -0.040 -0.040 -0.040 -0.991 NOx (kt/a) -0.003 -0.010 -0.025 -0.033 -0.034 -0.034 -0.034 -0.034 -0.845
SO 2 (kt/a) 0.000 0.000 -0.001 -0.001 -0.001 -0.001 -0.001 -0.001 -0.023

Sandard Level 3
CO 2 (Mt/a) -0.007 -0.026 -0.068 -0.087 -0.091 -0.091 -0.091 -0.091 -2.263 NOx (kt/a) -0.006 -0.022 -0.058 -0.074 -0.078 -0.078 -0.078 -0.078 -1.930 SO 2 (kt/a) 0.000 -0.001 -0.002 -0.002 -0.002 -0.002 -0.002 -0.002 -0.052

Standard Level 4
CO 2 (Mt/a) -0.010 -0.034 -0.088 -0.114 -0.119 -0.119 -0.119 -0.119 -2.952 NOx (kt/a) -0.008 -0.029 -0.075 -0.097 -0.102 -0.102 -0.102 -0.102 -2.517
SO 2 (kt/a) 0.000 -0.001 -0.002 -0.003 -0.003 -0.003 -0.003 -0.003 -0.067

Standard Level 5
CO 2 (Mt/a) -0.015 -0.051 -0.134 -0.172 -0.180 -0.180 -0.180 -0.180 -4.474 NOx (kt/a) -0.013 -0.044 -0.114 -0.147 -0.154 -0.154 -0.154 -0.154 -3.815 SO 2 (kt/a) 0.000 -0.001 -0.003 -0.004 -0.004 -0.004 -0.004 -0.004 -0.102

Standard Level 6
CO 2 (Mt/a) -0.036 -0.127 -0.330 -0.425 -0.446 -0.446 -0.446 -0.446 -11.047 NOx (kt/a) -0.031 -0.108 -0.282 -0.362 -0.380 -0.380 -0.380 -0.380 -9.419
SO 2 (kt/a) -0.001 -0.003 -0.008 -0.010 -0.010 -0.010 -0.010 -0.010 -0.252
*All results in metric tons (t), equivalent to 1.1 short tons Extrapolation16-18 However, previous DOE environmental assessment documents have developed approximate estimates of effects on upstream fu el-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 a ssessment documents, find that an amount approximately equal to eight percent, by mass, of emissions (including SO 2 ) from coal production are due to mining, prepar ation that includes cleaning the coal, and transportation from the mine to the power plant. 18 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 an amount equal to approximately 14 percent of emissions from natural gas producti on result from upstream processes.

Emission factor estimates and corresponding percentages of contributions of upstream emissions from coal and natural gas production, re lative to power plant emissions, are shown in Table 16.2.9 for CO 2 and NO X . The percentages provide a means to estimate upstream emission savings based on changes in emissions from power plants. This approach does not address Hg emissions.

Table 16.2.9 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
CO 2 2.7 11.9 NO X 5.8 40

16.3 SOCIAL COST OF CARBON DIOXIDE EMISSIONS
Under Executive Order 12866, agencies are requ ired, to the extent permitted by law, “to assess both the costs and the benefits of the in tended regulation and, reco gnizing that some costs and benefits are difficult to quantify, propose or adopt a re gulation only upon a reasoned determination that the benefits of the intended regulation justify its cost s.” The purpose of the Social Cost of Carbon (SCC) estimates presented here is to allow agenci es to incorporate the social benefits of reducing carbon dioxide (CO 2 ) emissions into cost-benefit analyses of regulatory actions that have small, or “margi nal,” impacts on cumulative global emissions. The estimates are presented with an acknowledgement of the many uncertainties involved and with a clear understanding that they should be updated over time to reflect increasing knowledge of the science and economics of climate impacts.

The SCC is an estimate of the monetized damages associated with an incremental increase in carbon emissions in a given year. It is intended to include (but is not limited to) changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services due to climate change.16-19 As part of the interagency process that developed these S CC estimates, technical experts from numerous agencies met on a regular basi s to consider public comments, explore the technical literature in relevant fields, and discuss key model i nputs and assumptions. The main objective of this process was to develop a range of SCC values using a defensible set of input assumptions grounded in the existing scientific and economic literatures. In this way, key uncertainties and model differences transparentl y and consistently inform the range of SCC estimates used in the rulemaking process.

The interagency group selected four SCC valu es for use in regulatory analyses. Three values are based on the average SCC from three integrated assessment models, at discount rates of 2.5, 3, and 5 percent. The fourth value, wh ich represents the 95th percentile SCC estimate across all three models at a 3 pe rcent discount rate, is included to represent higher-than-expected impacts from temperature change further out in the tails of the SCC distribution. Appendix 16-A presents the interagency report “Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866,” which provides further information.

Table 16.3.1 Social Cost of CO 2 , 2010 – 2050 (in 2007 dollars) Discount Rate 5% 3% 2.5% 3%
Year Avg Avg Avg 95th
2010 4.7 21.4 35.1 64.9 2015 5.7 23.8 38.4 72.8 2020 6.8 26.3 41.7 80.7 2025 8.2 29.6 45.9 90.4 2030 9.7 32.8 50.0 100.0 2035 11.2 36.0 54.2 109.7 2040 12.7 39.2 58.4 119.3 2045 14.2 42.1 61.7 127.8 2050 15.7 44.9 65.0 136.2

16.3.1 Monetizing Carbon Dioxide Emissions

The “social cost of carbon” (SCC) is an estimate of the monetized damages associated with an incremental increase in carbon emissions in a given year. It is inte nded to include (but is not limited to) changes in net agricultural pr oductivity, human health, property damages from increased flood risk, and the value of ecosystem services. Estimates of the social cost of carbon are provided in dollars per metric ton of carbon dioxide. j

j In this document, DOE presents all values of the SCC as the cost per metric ton of CO 2 emissions. Alternatively, one could report the SCC as the cost per metric ton of carbon emissions. The multiplier for translating between mass of CO 2 and the mass of carbon is 3.67 (the molecular weight of CO 2 divided by the molecular weight of carbon = 44/12 = 3.67).16-20 When attempting to assess the increm ental economic impacts of carbon dioxide emissions, the analyst faces a number of serious challenges. A recent report from the National Academies of Science (Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use. National Academies Press. 2009) points out that any assessment will suffer from uncertainty, speculation, and lack of information about (1) future emissions of greenhouse gases, (2) the effects of past and future emissions on th e climate system, (3) the impact of changes in climate on the physical and biological envir onment, and (4) the tr anslation of these environmental impacts into economic damages. As a result, any effort to quantify and monetize the harms associated with climate change will raise serious questions of science, economics, and ethics and should be view ed as provisional.

Despite the serious limits of both quantific ation and monetization, SCC estimates can be useful in estimating the social benefits of reducing carbon dioxide emissions. Under Executive Order 12866, agencies are required, to the extent permitted by law, “to assess both the costs and the benefits of the intended re gulation and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regu lation only upon a reasoned determ ination that the benefits of the intended regulation justify its costs.” The purpose of the SCC estimates presented here is to make it possible for agencies to incorporate the social benef its from reducing carbon dioxide emissions into cost-benefit analyses of regulatory actions that have small, or “marginal,” impacts on cumulative global emissions. Most federal re gulatory actions can be expected to have marginal impacts on global emissions.

For such policies, the benefits from reduced (or costs from increased) emissions in any future year can be estimated by multiplying the change in emissions in that year by the SCC value appropriate for that year. The net present value of the benefits can then be calculated by multiplying each of these future benefits by an appropriate discount factor and summing across all affected years. This approach assumes that the marginal damages from increased emissions are constant for small departures from the ba seline emissions path, an approximation that is reasonable for policies that have effects on emissi ons that are small relative to cumulative global carbon dioxide emissions. For policies that have a large (non-marginal) impact on global cumulative emissions, there is a separate question of whether the SCC is an appropriate tool for calculating the benefits of reduced emissions; we do not attempt to answer that question here.

An interagency group convened on a regular ba sis to consider public comments, explore the technical literature in releva nt fields, and discuss key inputs and assumptions in order to generate SCC estimates. Agencies that actively participated in the inte ragency process include the Environmental Protection Agency, and the Departments of Agriculture, Commerce, Energy, Transportation, and Treasury. This process wa s convened by the Council of Economic Advisers and the Office of Management and Budget, with active participation and regular input from the Council on Environmental Quality, National Econo mic Council, Office of Energy and Climate Change, and Office of Science and Technology Polic y. The main objective of this process was to develop a range of SCC values using a defens ible set of input assumptions that are grounded in the existing literature. In this way, ke y uncertainties and model differences can more transparently and consistently info rm the range of SCC estimates used in the rulemaking process.16-21 The interagency group selected four SCC es timates for use in regulatory analyses. For 2010, these estimates are $5, $21, $35, and $65 (in 2007 dollars). The first three estimates are based on the average SCC across models and soci o-economic and emissions scenarios at the 5, 3, and 2.5 percent discount rates, resp ectively. The fourth value is included to represent the higherthan-expected impacts from temperature change fu rther out in the tails of the SCC distribution. For this purpose, we use the SCC value for the 95 th percentile at a 3 percent discount rate. The central value is the average SCC across models at the 3 percent discount rate. For purposes of capturing the uncertainties involved in regulator y impact analysis, we emphasize the importance and value of considering the full range. These S CC estimates also grow over time. For instance, the central value increa ses to $24 per ton of CO 2 in 2015 and $26 per ton of CO 2 in 2020. See Appendix A of this chapter for the full ra nge of annual SCC estimates from 2010 to 2050.

It is important to emphasize that the inte ragency process is committed to updating these estimates as the science and economic understa nding of climate change and its impacts on society improves over time. Specifically, the interagency group set a preliminary goal of revisiting the SCC values within two years or at such time as substantially updated models become available, and to continue to support rese arch in this area. In the meantime, we will continue to explore the issues ra ised by this analysis and consider public comments as part of the ongoing interagency process.

16.3.2 Social Cost of Carbon Values Used in Past Regulatory Analyses
To date, economic analyses for Federal regula tions have used a wide range of values to estimate the benefits associated with reducing carbon dioxide emissi ons. In the final model year 2011 CAFE rule, the Department of Transportati on (DOT) used both a “domestic” SCC value of $2 per ton of CO 2 and a “global” SCC value of $33 per ton of CO 2 for 2007 emission reductions (in 2007 dollars), increasing both values at 2.4 per cent per year. It also included a sensitivity analysis at $80 per ton of CO 2 . A domestic SCC value is meant to reflect the value of damages in the United States resulting from a unit ch ange in carbon dioxide emissions, while a global SCC value is meant to reflect the value of damages worldwide.

A 2008 regulation proposed by DOT assumed a domestic SCC value of $7 per ton CO 2 (in 2006 dollars) for 2011 emission reductions (with a range of $0-$14 for se nsitivity analysis), also increasing at 2.4 percent per year. A regul ation finalized by DOE in October of 2008 used a domestic SCC range of $0 to $20 per ton CO 2 for 2007 emission reductions (in 2007 dollars). In addition, EPA’s 2008 Advance Notice of Proposed Rulemaking for Greenhouse Gases identified what it described as “very preliminary” SCC es timates subject to revision. EPA’s global mean values were $68 and $40 per ton CO 2 for discount rates of approximately 2 percent and 3 percent, respectively (in 2006 dollars for 2007 emissions).

In 2009, an interagency process was initiated to offer a preliminary assessment of how best to quantify the benefits from reducing carb on dioxide emissions. To ensure consistency in how benefits are evaluated acro ss agencies, the Administration s ought to develop a transparent and defensible method, specifically designed for the rulemaking process, to quantify avoided climate change damages from reduced CO 2 emissions. The interagency group did not undertake16-22 any original analysis. Instead, it combined SCC estimates from the existing literature to use as interim values until a more comprehe nsive analysis could be conducted.

The outcome of the preliminary assessment by the interagency group was a set of five interim values: global SCC estimates fo r 2007 (in 2006 dollars) of $55, $33, $19, $10, and $5 per ton of CO 2 . The $33 and $5 values represented m odel-weighted means of the published estimates produced from the most recently availa ble versions of three integrated assessment models—DICE, PAGE, and FUND—at approximat ely 3 and 5 percent discount rates. The $55 and $10 values were derived by adjusting the pub lished estimates for uncertainty in the discount rate (using factors developed by Newell and Pize r (2003)) at 3 and 5 pe rcent discount rates, respectively. The $19 value was chosen as a central value between the $5 and $33 per ton estimates. All of these values were assumed to increase at 3 percent annually to represent growth in incremental damages over time as th e magnitude of climate change increases.

These interim values represent the first su stained interagency effo rt within the U.S. government to develop an SCC for use in regulato ry analysis. The results of this preliminary effort were presented in several proposed and fi nal rules and were offered for public comment in connection with proposed rules, includi ng the joint EPA-DOT fuel economy and CO 2 tailpipe emission proposed rules.

16.3.3 Approach and Key Assumptions
Since the release of the interim values, interagency group reconve ned on a regular basis to generate improved SCC estimates considered for this final rule. Specifically, the group considered public comments and further explored th e technical literature in relevant fields.

It is important to recognize that a number of key uncertainties remain, and that current SCC estimates should be treated as provisional and revisable since th ey will evolve with improved scientific and economic understanding. The interagency group also recognizes that the existing models are imperfect and incomplete. The National Academy of Science (2009) points out that there is tension between the goal of producing quantified estimates of the economic damages from an incremental ton of carbon and the limits of existing efforts to model these effects. There are a number of concerns and pr oblems that should be addressed by the research community, including research pr ograms housed in many of the ag encies participating in the interagency process to estimate the SCC.

The U.S. Government will periodically review and reconsider estimates of the SCC used for cost-benefit analyses to refl ect increasing knowledge of the science and economics of climate impacts, as well as improvements in modeling. In this context, statements recognizing the limitations of the analysis and calling for further research take on exceptional significance. The interagency group offers the new SCC values with all due humility about the uncertainties embedded in them and with a sincere prom ise to continue work to improve them.

In summary, in considering the potential global benefits resulting from reduced CO 2 emissions, DOE used the most recent values iden tified by the interagency process, adjusted to 2009$ using the standard GDP deflator values for 2008 and 2009. For each of the four cases16-23 specified, the values for emissions in 2010 used were approximately $5, $22, $36, and $67 per metric ton avoided (values expr essed in 2009$). To monetize the CO 2 emissions reductions expected to result from amended standards for small electric motors in 2015–2045, DOE used the values identified in Table A1 of the “Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866,” which is reprinted as Appendix A to this chapter, appropriately escalated to 2009$.

16.4 WETLAND, ENDANGERED AND THREATENED SPECIES, AND CULTURAL RESOURCES

Because residential heati ng products are not water-consuming products, more efficient heating would not reduce the amount of water disc harged into the waste stream. As a result, heating product energy conservation standards do not have the eff ect of improving the quality of wetlands, nor threatened or endange red species that reside in thes e wetlands. This action is also not expected to impact cultural resources su ch as historical or archaeological sites.

16.5 SOCIOECONOMIC IMPACTS
DOE's analysis has shown that the increase in the first cost of pur chasing more efficient water heaters, direct heating equipment, and pool heaters at the standard levels is completely offset by a reduction in the life-cycle cost (L CC) of owning a more efficient product for the average consumer. In other words, the consumer will pay less operating costs over the life of the product even through the first cost increases. The complete LCC analysis and its conclusions are presented in chapter 8 of the TSD.

For subgroups of low-income and senior consumers that purchase heating products, DOE determined that the average LCC impact of the sta ndards is similar to that for the full sample of consumers. Therefore, DOE concludes that the action would have no significant adverse socioeconomic impact. For a complete discussi on on the LCC impacts on consumer subgroups, see chapter 11 of the TSD.

16.6 ENVIRONMENTAL JUSTICE IMPACTS

In view of Executive Order 12898 of Februa ry 11, 1994, “Federal Actions to Address Environmental Justice in Minor ity Populations and Low-Income Populations,” DOE examined the effect of the energy conser vation standards on low-income households. As described in the LCC subgroup analysis in Chapter 11 of the TSD, DOE found that there were no disproportionately high and adve rse human health or environm ental effects on low-income populations that would result from the energy conservation standards.16-24 16.7 NOISE AND AESTHETICS
Improvements in efficiency of heating products are expected to result from changes in the choice of components and other desi gn features. These changes are de scribed in chapter 5 of this TSD. These design changes are not expected to ch ange noise levels in co mparison to products in today’s market. Products that are currently manufactured in the ex isting market that would meet the standards are no louder than less efficien t products. Changes to the design to improve the efficiency levels are not anticipated to affect the product aesthetics.

16.8 SUMMARY OF ENVIRONMENTAL IMPACTS
Tables 16.8.1 through 16.8.3 summarize the estimated environmental impacts for each of the TSLs. The summary tables show cumulative changes in emissions for CO 2 , NO X , and Hg for 2015 to 2045 for water heaters and from 2013 to 2043 for direct heating equipment and pool heaters.

For direct heating equipment and pool heaters, cumulative CO 2 , NO X , and Hg emissions from the power sector show a slight increase under some TSLs compared to the Reference case. This result is primarily due to an increase in el ectricity use at the cons idered TSLs. The moreefficient DHE products and pool heaters save natura l gas, but they also us e more electricity due to electronic ignition and, for some DHE TSLs , use of a fan (see section 7.3.6 and section 7.4.4 in chapter 7). This results in hi gher electricity generation than in the Reference case, which leads to higher emissions. For CO 2 and NO X , the higher emissions from the power sector are more than canceled out by lower household emissions fr om gas combustion, such that total emissions decrease under the considered TSLs. For Hg, this is not the case because there are no offsetting household emissions.

Upstream fuel cycle emission of CO 2 and NO X are described but not quantified in section 16.2.7. The text describes potential re ductions in fuel cycle emissions as percentage of decreases in power plant emissions. This approach sugge sts 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.

For subgroups of low-income and senior consumers that purchase heating products, DOE determined that the average LCC impact of the sta ndards is similar to that for the full sample of consumers. Therefore, DOE concludes that the action would have no significant adverse socioeconomic impact.

No impacts are anticipated in the areas of environmental justice, wetlands, endangered and threatened species, and cultural resources; or noise and aesthetics.16-25 Table 16.8.1 Environmental Impact Analysis Results Summary for Water Heaters

Environmental Effects Reference Case* Trial Standard Level 1 2 3 4 5 6 7 8 Cumulative Total Emission Reductions** CO 2 (million metric tons) 76,950 74.30 121.67 130.54 137.25 154.2 209.5 608.8 1,001 NO X (thousand tons) 56,763 57.51 94.27 100.79 105.71 116.2 158.7 456.5 754.5 Hg (tons) 866 0.056 0.090 0.103 0.113 0.553 0.704 2.32 3.58 Cumulative Power Sector Emission Reductions** CO 2 (million metric tons) 76,950 37.20 59.63 68.22 74.94 111.0 141.3 467.0 721.1 NO X (thousand tons) 56,763 27.25 43.69 49.99 54.90 80.99 103.1 340.8 526.4 Hg (tons) 866 0.056 0.090 0.103 0.113 0.553 0.704 2.32 3.59 Cumulative Household Emission Reductions** CO 2 (million metric tons) - 37.10 62.04 62.32 62.32 43.24 68.20 141.8 279.8 NO X (thousand tons) - 30.25 50.58 50.81 50.81 35.25 55.60 115.6 228.2 * The reference case reflects total cumulative emissions (power sector only) in the absence of an amended energy conservation standard. ** Cumulative total is over 2015 to 2045 for water heaters.

Table 16.8.2 Environmental Impact Analysis Re sults Summary for Direct Heating Equipment

Environmental Effects Reference Case* Trial Standard Level 1 2 3 4 5 6 Cumulative Total Emission Reductions** CO 2 (million metric tons) 76,445 8.25 8.84 9.31 17.95 20.24 49.94 NO X (thousand tons) 57,080 7.53 8.06 8.47 16.43 18.62 45.98 Hg (tons) 895 (0.012) (0.013) (0.014) 0.029 0.033 0.084 Cumulative Power Sector Emission Reductions** CO 2 (million metric tons) 76,445 (2.93) (3.15) (3.32) (6.84) (7.69) (19.57) NO X (thousand tons)/ 57,080 (2.15) (2.31) (2.43) (5.01) (5.63) (14.33) Hg (tons) 895 (0.012) (0.013) (0.014) 0.029 0.033 0.084 Cumulative Household Emission Reductions** CO 2 (million metric tons) - 11.18 11.99 12.63 24.79 27.93 69.52 NO X (thousand tons) - 9.68 10.36 10.91 21.44 24.25 60.31 * The reference case reflects total cumulative emissions (pow er sector only) in the absence of an amended energy conservation standard. ** Cumulative total is over 2013 to 2043 for direct hea ting equipment. Values in parentheses refer to emissions increase.16-26 Table 16.8.3 Environmental Impact Analysis Results Summary for Pool Heaters

Environmental Effects Reference Case* Trial Standard Level 1 2 3 4 5 6 Cumulative Total Emission Reductions** CO 2 (Million metric tons) 76,445 0.42 0.75 1.72 2.38 3.61 8.89 NO X (Thousand tons) 57,080 0.37 0.67 1.53 2.10 3.18 7.84 Hg (tons) 895 0.000 0.001 0.001 0.000 0.000 0.001 Cumulative Power Sector Emission Reductions** CO 2 (Million metric tons) 76,445 (0.13) (0.24) (0.54) (0.57) (0.87) (2.16) NO X (Thousand tons) 57,080 (0.10) (0.18) (0.40) (0.42) (0.64) (1.58) Hg (tons) 895 0.000 0.001 0.001 0.000 0.000 0.001 Cumulative Household Emission Reductions** CO 2 (Million metric tons) - 0.55 0.99 2.26 2.95 4.47 11.05 NO X (Thousand tons) - 0.47 0.85 1.93 2.52 3.82 9.42 * The reference case reflects total cumulative emissions (pow er sector only) in the absence of an amended energy conservation standard. ** Cumulative total is over 2013 to 2043 for pool heat ers. Values in parentheses refer to emissions increase.16-27 REFERENCES

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