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ENVIRONMENTAL ASSESSMENT

TABLE OF CONTENTS

1.0 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EA-1

2.0 METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EA-1

3.0 RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EA-2
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 For more information on NEMS, please refer to the U.S. Department of Energy, Energy Information Administration

documentation. A useful summary is National Energy Modeling System: An Overview 2000, DOE/EIA-0581(2000),

March, 2000. DOE/EIA approves use of the name NEMS to describe only an official version of the model without any

modification to code or data. Because this analysis entails some minor code modifications and the model is run under

various policy scenarios that are variations on DOE/EIA assumptions, we refer to it by the name NEMS-BT (BT is

DOE’s Building Technologies program, under whose aegis this work is being performed). NEMS-BT was previously

called NEMS-BRS.

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ENVIRONMENTAL ASSESSMENT

1.0 INTRODUCTION

The Department will assess the impacts of proposed standard levels on certain

environmental indicators using a variant of the U.S.DOE/Energy Information Administration

(EIA)’s National Energy Modelling System (NEMS).a

 DOE/EIA uses NEMS to produce the

2003 Annual Energy Outlook (AEO2003).

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 The department will use a variant known as NEMSBT, as well as some exogenous calculations, to provide key inputs to the analysis. Results of the

environmental analysis are similar to those provided in AEO2003. The Department will conduct

this analysis during the Notice of Proposed Rulemaking (NOPR) stage of this rulemaking.

The Department intends the environmental analysis to provide emissions results to

policymakers and interveners, and to fulfill requirements that the environmental effects of all

new Federal rules be properly quantified and considered. The environmental analysis considers

two pollutants, sulfur dioxide (SO2) and nitrogen oxides (NOx), as well as carbon emissions. The

only form of carbon tracked by NEMS-BT is carbon dioxide (CO2), so the carbon discussed in

this report is only in the form of CO2. For each of the standard levels, the Department will

calculate total emissions using NEMS-BT, with external analysis used as needed.

The Department will conduct the environmental analysis as a policy deviation from the

AEO2003, using the same basic set of assumptions. For example, the emissions characteristics

of an electricity generating plant will be exactly those used in AEO2003. The NEMS reference

case and alternative growth scenarios are as described in the utility impact analysis (Chapter 13).

2.0 METHODOLOGY

The NEMS-BT tracks carbon emissions using a detailed carbon module; this gives good

results because of its broad coverage of all sectors and inclusion of interactive effects. Past

experience with carbon results from NEMS suggests that the NEMS-generated emissions

estimates are somewhat lower than estimates based on simple average factors. One of the

reasons for this divergence is that NEMS tends to predict that conservation displaces renewable

generating capacity in the later years of its forecast. On the whole, NEMS-BT provides carbon
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emissions results of reasonable accuracy, at a level consistent with other published Federal

results.

The NEMS-BT reports the two airborne pollutant emissions, SO2 and NOx, that DOE has

reported in past analyses. The Clean Air Act Amendments of 1990 set an SO2 emissions cap on

all power generation. The attainment of this target, however, is flexible among generators

through the use of emissions allowances and tradable permits. The NEMS model includes a

module for SO2 allowance trading and delivers a forecast of SO2 allowance prices. It is

important to note that accurate simulation of SO2 trading tends to imply that physical emissions

effects will be zero, as long as emissions are at the ceiling. This fact has caused considerable

confusion in the past. However, there is an SO2 benefit from conservation in the form of a lower

allowance price as a result of additional allowances from this rule, and, if it is big enough to be

calculable by NEMS-BT, DOE will report it. NEMS also has an algorithm for estimating NOx

emissions from power generation. Two recent regulatory actions proposed by the EPA regarding

regulations and guidelines for best available retrofit technology determinations and the reduction

of interstate transport of fine particulate matter and ozone are tending towards further NOx

reductions and likely to an eventual emissions cap on nation-wide NOx. 69 FR 25184 (May 5,

2004) and 69 FR 32684 (June 10, 2004). Therefore, as with SO2 emissions, a cap on NOx

emissions will likely result in no physical emissions effects from equipment efficiency standards. 

However, there is a NOx benefit from conservation in the form of a lower allowance price as a

result of additional allowances from this rule, and, if it is big enough to be calculable by NEMSBT, DOE will report this value.

3.0 RESULTS

The results for the environmental analysis are similar to a complete NEMS run, as

published in the AEO2003. These results include power sector emissions for SO2, NOx, and

carbon, and SO2 prices, in five-year forecasted increments extrapolated to the year 2035. The

Department reports the outcome of the analysis for each trial standard level as a deviation from

the AEO2003 reference cases.
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1. U.S. Department of Energy-Energy Information Administration, Annual Energy Outlook

2003, January 2003. Washington, DC. Report No. DOE/EIA-0383(2003).

REFERENCES