From: Robin Moran/AA/USEPA/US To: "Achanta, Chandana L." <Ch andana_L._Achanta@ omb.eop.gov> Cc: William Charmley/AA/USEPA/US@EPA, Ed Nam/AA/USEPA/US@EPA, james.tamm@dot.gov, rebecca.yoon@dot.gov , Elizabeth Kopits/DC/USEPA/US@EPA, Paul Balserak/DC/USEPA/US@EPA Date: 03/25/2010 05:59 PM Subjec
t: EPA's RIA Executive Summary

Chandana, here is EPA's Exec utive Summary for the RIA.

Robin Moran Senior Policy Advisor Assessment and Standards Division U.S. EPA, Office of Transportation and Air Quality 2000 Traverwood Dr. Ann Arbor, MI 48105 (734) 214-4781 (734) 214-4821 (fax)

[attachment "Executive summary - RIA - to OMB 3-25-10.doc" deleted by Tad Wysor/AA/USEPA/US]

### Executive Summary



# Executive Summary

The Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) are issuing a joint fina l rulemaking to establish new standards for light-duty highway vehicles that will reduce greenhouse gas emi ssions (GHG) and improve fuel economy. The joint rulemaking is consistent with the National Fuel Efficiency Policy announced by President Obama on May 19, 2009, respondi ng to the country’s critical need to address global climate change and to reduce o il consumption. EPA is finalizing greenhouse gas emissions standards under the Clean Air Act, an d NHTSA is finalizing Corporate Average Fuel Economy standards under the Energy Policy and C onservation Act (EPCA), as amended. These standards apply to passenger cars, light-duty trucks, and me dium-duty passenger vehicles, covering model years (MY) 2012 through 2016. The st andards will require these vehicles to meet an estimated combined average emissions level of 250 grams of CO2 per mile in MY 2016 under EPA’s GHG program, and 34.1 mpg in MY 2016 under NHTSA’s CAFE program and represent a harmonized and consistent national pr ogram (National Program). These standards are designed such that compliance can be achieved with a single nationa l vehicle fleet whose emissions and fuel economy performance improves year over year. The National Program will result in approximately 960 million metric tons of CO2 emission reductions and approximately 1.8 billion barrels of oil savings over the lifetim e of vehicles sold in model years 2012 through
2016.

Mobile sources are significant contributors to air pollutant emissions (both GHG and non-GHG) across the country, internationally, and into the future. The Agency has determined that these emissions cause or contribute to air pollution wh ich may reasonably be anticipated to endanger public health or welfare, and is therefore establishing standards to control these emissions as required by section 202 (a) of the Clean Air Act. 1 

### The health- and environmentally-related
effects associated with these emissions are a cl assic example of an exte rnality-related market failure. An externality occurs when one party' s actions impose uncompensated costs on another party. EPA’s final rule will deliver additional envi ronmental and energy benefits, as well as cost savings, on a nationwide basis that would likely not be available if the rule were not in place.

Table 1 presents estimated annual net benefits for th e indicated calendar year s. The table also shows the net present values of those net bene fits for the calendar years 2012-2050 using both a

1 “Technical Support Document for Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act” Docket: EPA-HQ-OAR-2009-0472-11292, http://epa.gov/climatechange/endangerment.html . See also State of Massachusetts v. EPA, 549 U.S. 497, 533 ("If EPA makes a finding of endangerment, the Clean Air Ac t requires the agency to regulate emissions of the deleterious pollutant from new motor vehicles").



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### Executive Summary

3 percent and a 7 percent disc ount rate. The table includes the benefits of reduced GHG emissions—and consequently the annual net benefits —for each of four social cost of carbon (SCC) values considered by EPA (please refer to Chapter 7 of this RIA for a discussion of the four SCC values). As noted in the SCC TSD, the models used to estim ate SCC may not capture the economic effects of all possible adverse cons equences of climate change and may therefore
lead to underestimates of the SCC. Note that the quantified annual costs shown in Table 1 are negative because fuel savings are included. Fuel savings are consid ered as negative costs (i.e., positive benefits) of the vehicle program. The fu el savings outweigh the costs associated with the addition of new technology and, therefore, the vehicle program costs are negative.

Table 1: Quantified Net Benefits Associated with the Light-Duty Vehicle GHG Program a



### (Millions of 2007 dollars)

2020 2030 2040 2050 NPV, 3% NPV, 7%

Quantified Annual

Costs -$20,100 -$64,000 -$101,900 -$152,200 -$1,199,700 -$480,700

Quantified Annual Benefits at each assumed SCC value b

Avg SCC at 5% 

### $7,400 $17,500 $25,100 $34,700 $312,000 $162,400 Avg SCC at 3% 

### $10,200 $23,700 $34,500 $48,500 $454,200 $304,600 Avg SCC at 2.5% 

### $12,300 $28,800 $41,500 $57,500 $577,100 $427,500

95 th percentile SCC
at 3% 

### $17,500 $41,800 $63,500 $89,500 $816,000 $666,400

Quantified Net Benefits at each assumed SCC value

Avg SCC at 5% 

### $27,500 $81,500 $127,000 $186,900 $1,511,700 $643,100 Avg SCC at 3% 

### $30,300 $87,700 $136,400 $200,700 $1,653,900 $785,300 Avg SCC at 2.5% 

### $32,400 $92,800 $143,400 $209,700 $1,776,800 $908,200

95 th percentile SCC
at 3% 

### $37,600 $105,800 $165,400 $241,700 $2,015,700 $1,147,100

a Quantified annual costs are shown as negative here because fuel savings are included. Fuel savings are
considered as negative costs (i.e., positive benefits) of the vehicle program. The fuel savings outweigh the

costs associated with the addition of new technology and, therefore, the vehicle program costs are negative.

The fuel impacts included here were calculated using pre

‐ tax fuel prices.

b Monetized GHG benefits exclude the value of reductions in non

‐ CO 2 GHG emissions (HFC, CH 4 and N 2 O) expected under this final rule. Although EPA has not monetized the benefits of reductions in these non

‐ CO 2 emissions, the value of these reductions should not be interpreted as zero. Rather, the reductions in non

‐ CO 2 GHGs will contribute to this rule’s climate benefits, as explained in Section III.F.2. The SCC TSD notes the

difference between the social cost of non

‐ CO 2 emissions and CO 2 emissions, and specifies a goal to develop

methods to value non

‐ CO 2 emissions in future analyses.. Also, Section 7.5 notes that SCC increases over time. Corresponding to the years in this table, the SCC estimates range as follows: for Average SCC at 5%: $5

‐ $16;

for Average SCC at 3%: $21

‐ $45; for Average SCC at 2.5%: $35

‐ $65; and for 95 th percentile SCC at 3%: $65

‐ $136. Section 7.5 also presents these SCC estimates. Finally, net present value of reduced GHG emissions is

calculated differently than other benefits. The same discount rate used to discount the value of damages from

future emissions (SCC at 5, 3, 2.5 percent) is used to calculate net present value of SCC for internal consistency.



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Refer to the SCC TSD for more detail.



### This Regulatory Impact Analysis (RIA) contains supporting documentation to the EPA rulemaking. NHTSA has prepared their own RIA in support of their rulemaking (this can be found in NHTSA’s docket for the rulemaking, NH TSA-2009-0059). While the two rulemakings are similar, there are also differe nces in the analyses that requir e separate discussion. This is largely because EPA and NHTSA act under different statutes. EPA’s authority comes under the Clean Air Act, and NHTSA’s authority comes under EPCA, and each statute has somewhat different requirements and flexibilities. As a re sult, each agency has followed a unique approach where warranted by these differences. Where each agency has followed the same approach— e.g., development of technology costs and eff ectiveness—the supporting documentation is contained in the joint Technical Support Document (joint TSD can be found in EPA’s docket EPA-HQ-OAR-2009-0472). Therefore, this RIA shoul d be viewed as a companion document to the Joint TSD and the two documents together provi de the details of EPA’s technical analysis in support of its rulemaking.

While NHTSA and EPA each modeled their respec tive regulatory programs under the National Program, the analyses were generally consistent and featured similar parameters. EPA did not conduct an overall uncertainty analysis of the impacts associated with its regulatory program, though it did conduct uncertainty and sensitivity analyses of individua l components of the analysis (e.g., uncertainty ranges associated with quantified and monetized non-GHG health impacts). NHTSA, however, conducted a Monte Ca rlo simulation of the uncertainty associated with its regulatory program. Th e focus of the simulation model was variation around the chosen uncertainty parameters and their resulting impact on the key output parameters, fuel savings, and net benefits. Among other parameters, NHT SA varied technology costs, technology effectiveness, fuel prices, the values of oil consumption exte rnalities and the rebound effect.
Because of the similarities be tween the two analyses, EPA references NHTSA RIA Chapter XII
as indicative of the relative magnitude, uncertainty and sensitivities of parameters of the cost/benefit analysis.

This document contains the following;

Chapter 1: Technology Packages, Cost and Effec tiveness. The details of the vehicle technology packages used as inputs to EPA’s Optimization Model for reducing Emissions of Greenhouse gases from Automobiles (OMEGA) are presented. Thes e vehicle packages represent potential ways of meeting the CO2 stringency establ ished by this rule and are the basis of the technology costs and effectiv eness analyses discussed in Chap ter 3 of the Joint TSD. This chapter also contains details on the lumped para meter model, which is a major part of EPA’s determination of the effectiveness of these packages.

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### Executive Summary

Chapter 2: Air Conditioning. EPA’s unique air condi tioning (A/C) program is discussed. Details for this chapter include the A/C credit program and the related technology costs and effectiveness associated with new A/C systems. The A/C credit program allows manufacturers to earn credit for both direct and indirect CO2eq emissions. Direct emission credits are earned through reducing refrigerant leakage (as the curr ent refrigerant, R-134a, has a very high global warming potential) from the A/C system. The amount of direct emission, or leakage, credit that a manufacturer can earn is determined by using a design-based method to calculate the yearly refrigerant leakage from a vehicl e’s A/C system. This leakage value is then used to calculate a “grams-per-mile” credit, with allowances ma de for the global warming potential of the refrigerant. Indirect emissi on credits are earned through improving the efficiency of the A/C system, which reduces the amount of power require d to operate the A/C system as well as the amount of CO2 emitted by the vehicle. The amount of indirect emission credit is determined by using a menu-based approach, where the inclusi on of specific efficiency-improving components or design elements into a vehicle’s A/C syst em results in an assigned credit value.

Chapter 3: Technical Basis of the Standards. This chapter contains two subchapters. In the first, EPA evaluates the stringency of the Ca lifornia Pavley 1 program but for a national standard. However, as further explained in the preamble, before being ab le to do so, technical analysis was necessary in order to be able to assess what would be an equivalent national new vehicle fleet-wide CO2 performance standards fo r model year 2016 which would result in the
new vehicle fleet in the State of California ha ving CO2 performance equal to the performance from the California Pavley 1 standards. This technical analysis is do cumented in this subchapter of the RIA. In the second subchapter, EPA discusses an analysis of the “footprint” approach EPA is using for establishing standards.

Chapter 4: Results of Final and Alternative Standa rds. A conceptual overview of EPA’s OMEGA model and technology cost results fo r the program and alternative standards considered. For each manufacturer, EPA estimates the following achieved fleetwide CO2 levels and technology costs over the reference case, see Table 2.

Table 2: Fleetwide Costs in 2016


### Fleetwide Cost

BMW $ 1,453 Chrysler $ 1,329

Ford $ 1,231

Subaru $ 899

General Motors $ 1,219

Honda $ 575 Hyundai $ 745

Tata $ 984

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### Executive Summary

Kia $ 594

Mazda $ 808

Daimler $ 1,343

Mitsubishi $ 978

Nissan $ 810

Porsche $ 1,257

Suzuki $ 937 Toyota $ 455 Volkswagen $ 1,694

Total $ 948

Key results of the alternative stringencie s analyzed are presented in Table 3:

Table 3: Key Results Per Reduction Scenarios of 4% and 6% Per Year

Reduction Scenarios Industry achieved CO2

level (g/mi) Average industry cost

per vehicle 4% per

year 256.9 $883 6% per

year 236.1 $1,343

Chapter 5: Emissions Impacts. This chapter contains the greenhouse gas and non-greenhouse gas emission impacts of this rule and includes the impact of credits.

Greenhouse Emission Impacts of EPA’s Rulemaking

Table 4 shows reductions estimated from EPA’s GHG standards. The analyses assume a precontrol case of MY 2011 CAFE standards c ontinuing indefinitely beyond 2011, and a postcontrol case in which MY 2016 standards continue indefinitely beyond 2016.

Including the reductions from upstream emissions (fuel produ ction and transport), total
reductions are estimated to reach 307 MMTCO 2 

### eq (million metric tons of CO 2 

### equivalent emissions) annually by 2030 (equivalent to a 21 pe rcent reduction in U.S. car and light truck emissions as compared to the referen ce scenario), and grow to over 500 MMTCO 2 

### eq in 2050 as
cleaner vehicles continue to come into the flee t (equivalent to a 23 percent reduction in U.S. car and light truck emissions relative to the control case that year).

Table 4. Projected Net GHG Reductions (MMT CO 2 

### Equivalent per year)

Calendar Year: 2020 2030 2040 2050

Net Reduction * 156.4 307.0 401.5 505.9



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### Executive Summary

Net CO 2 139.1 273.3 360.4 458.7

Net other GHG 17.3 33.7 41.1 47.2

Downstream Reduction 125.2 245.7 320.7 403.0

CO 2 (excluding A/C) 101.2 199.5 263.2 335.1

A/C – indirect CO 2 10.6 20.2 26.5 33.8

A/C – direct HFCs 13.3 26.0 30.9 34.2

CH 4 (rebound effect) 0.0 0.0 0.0 0.0

N

2 O (rebound effect) 0.0 -0.1 -0.1 -0.1

Upstream Reduction 31.2 61.3 80.8 102.9

CO 2 27.2 53.5 70.6 89.9

CH 4 3.9 7.6 10.0 12.7

N

2 O 0.1 0.3 0.3 0.4

* includes impacts of 10% VMT rebound rate



### Impacts of EPA’s Rulemaking on Emissi ons of Criteria and Toxic Pollutants The results of EPA’s analyses on the impacts of the program on annual criteria emissions are listed in Table 5. For all criteria pollutants the overall impact of the program will be relatively small compared to total U.S. inventories across all sectors. In 2030, EPA estimates the program
will reduce total NO X 

### , PM and SO X 

### inventories by 0.1 to 0.8 pe rcent and reduce the VOC inventory by 1.0 percent, while increasing the total national CO inventory by 0.6 percent.

EPA estimates that the GHG program will result in small changes for toxic emissions compared to total U.S. inventories across all sectors, as listed in Table 6. In 2030, EPA estimates the program will reduce total benzene and 1,3 butadie ne emissions by 0.1 to 0.3 percent. Total acrolein and formaldehyde emissions will increase by 0.1 percent. Acetaldehyde emissions will increase by 2.2 percent.

Table 5. Annual Criteria Emission Impacts of Program (short tons)

Total Impacts Upstream Impacts Downstream Impacts 2020 2030 2020 2030 2020 2030

VOC -60,187 -115,542 -64,506 -126,749 4,318 11,207
% of total

inventory -0.51% -1.01% -0.55% -1.11% 0.04% 0.01%

CO 3,992 170,675 -6,165 -12,113 10,156 182,788
% of total

inventory 0.01% 0.56% -0.02% -0.04% 0.01% 0.6%

NO X -5,881 -21,763 -19,291 -37,905 13,410 16,143
% of total

inventory -0.02 -0.07% -0.06% -0.12% 0.04% 0.05%

PM2.5 -2,398 -4,564 -2,629 -5,165 231.0 602.3
% of total

inventory -0.03% -0.05% -0.03% -0.06% 0.00% 0.01%



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### Executive Summary

SO X -13,832 -27,443 -11,804 -23,194 -2,027 -4,249
% of total

inventory -0.41% -0.82% -0.35% -0.69% -0.06% -0.13%



### Table 6. Annual Air Toxic Emission Impacts of Program (short tons)

Total Impacts Upstream Impacts Downstream Impacts
2020 2030 2020 2030 2020 2030 1,3-Butadiene -95 -21 -1.5 -3.0 -93.6 -18.1
% of total

inventory -0.38% -0.10% -0.01% -0.01% -0.37% -0.09% Acetaldehyde 760 668 -6.8 -13.4 766.9 681.5
% of total

inventory 2.26% 2.18% -0.02% -0.04% 2.28% 2.22%
Acrolein 1 5 -0.9 -1.8 1.7 6.5 % of total

inventory 0.01% 0.07% -0.01% -0.03% 0.03% 0.10%
Benzene -890 -523 -139.6 -274.3 -750.0 -248.3 % of total

inventory -0.48% -0.29% -0.08% -0.15% -0.40% -0.14% Formaldehyde -49 15 -51.4 -101.0 2.1 116.3 % of total

inventory -0.06% 0.02% -0.06% -0.12% 0.00% 0.14%



### Chapter 6: Vehicle Program Costs Including Fuel Consumption Impacts. The program costs and fuel savings associated with EPA’s rulemaking. In Chapter 6, we present briefly some of the outputs of the OMEGA model (costs per vehicle) and how we use those outputs to estimate the annual costs (and fuel savings) of the program through 2050. We also present our cost per ton analysis showing the cost incurred fo r each ton of GHG reduced by the program.

Chapter 7: Environmental and Health Impacts. This Chapter provides details on the non-GHG health and environmental impacts associated with criteria pollutants and air toxics. We also present the results of our non-GHG air quality modeling analysis a nd the quantified and
monetized estimates of PM 2.5 

### - and ozone-related health impa cts. Our air quality modeling
indicates that the final standard s have relatively little impact on ambient concentrations of modeled PM2.5, ozone, and air toxics (See Chapter 7.2.). The criteria pollutant-related benefits
of the rule are associated with small reductions in PM2.5.

As described in Chapter 7.5, EPA used four ne w estimates of the dollar value of marginal
reductions in CO2 emissions—known as the social cost of carbon—to calculate total monetized CO2 benefits. Specifically, total monetized benefits in each year are calculated by multiplying the SCC by the reductions in CO2 for that year. EPA used four different SCC values to generate different estimates of total CO2 benefits and capture some of the uncertainties involved in

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### Executive Summary

regulatory impact analysis. Chapte r 7 also presents an analysis of the CO2 benefits over the model year lifetimes of the 2012 through 2016 model year vehicles.

Chapter 7.6 also includes additional information about EPA’s mass reduction and safety analysis.

Chapter 8: Other Economic and Social Impacts. This chapter provides a description of other economic and social impacts associated with the rule, including vehicle sales impacts, consumer vehicle choice, energy security, and other economic impacts associated with reduced refueling, the value of increased driving, and the cost as sociated with additional noise, congestion and
accidents.

Vehicle Sales Impacts: Our analysis predicts vehicle sales increasing as a result of the rule. Because the fuel savings associated with this ru le are expected to exceed the technology costs, the effective prices of vehicles – the adjusted increase in technology cost less the fuel savings over five years -- to consumers will fall, and co nsumers will buy more new vehicles. This effect is expected to increase over time. As a result, if consumers consider at least five years of fuel savings at the time that they make their vehicle pu rchases, the lower net co st of the vehicles is expected to lead to an increas e in sales for both cars and truc ks. Both the absolute and the percent increases for truck sales are larg er than those for cars (except in 2012).

Consumer Choice Impacts: Consumer vehicle choice models could in principle be used to
examine the effects of this rule on the mix of vehi cles sold. In practice, however, EPA finds that the state of the art of these models is not yet se ttled. The models show great variation, and there has been very little comparative assessment of th em. Like NHTSA, EPA will continue its efforts to review the literature, but, given the known difficulties, neither NHTSA nor EPA has conducted an analysis using th ese models for this rule.

Payback Period on New Vehicle Purchases: We also conducted what we call our "payback analysis" which looks at how qui ckly the improved fuel efficien cy of new vehicles provides savings to buyers despite the vehicles having new technology (and new costs). The consumer payback analysis shows that fuel savings will outweigh up-front costs within three years for people purchasing new vehicles with cash. For those purchasing new vehicles with a typical five-year car note, the fuel savings will outweigh increased costs in the first month of ownership.

Energy Security Impacts: A reduction of U.S. petroleum imports reduces both financial and strategic risks associated with a potential disrupti on in supply or a spike in cost of a particular energy source. This reduction in risk is a meas ure of improved U.S. energy security. Based on
these estimates of fuel savi ngs, over the lifetimes of mode l years 2012-2016, we estimate the discounted energy security impacts at $10.1 billio n dollars, in 2007 dollars , assuming a 3 percent discount rate, and $8.0 billion dollars, a ssuming a 7 percent discount rate.

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### Executive Summary

Other Impacts: There are other impacts associated with the GHG emissions standards and associated reduced fuel consumption. Lower fuel consumption would, presumably, result in fewer trips to the filling stati on to refuel and, thus, time saved. The rebound effect, discussed in detail in Chapter 4 of the joint TSD, produces ad ditional benefits to vehi cle owners in the form of consumer surplus from the increase in vehicle- miles driven, but may also increase the societal
costs associated with traffic c ongestion, motor vehicle crashes, a nd noise. These effects are likely to be relatively small in comparison to the va lue of fuel saved as a result of the proposed standards, but they are neverthe less important to include.

Chapter 8 also presents a summary of the total co sts, total benefits, and net benefits expected under the final rule. Table 7 pres ents these economics impacts.

Table 7. Economic Impacts of the Light-Duty GHG Rule

2020 2030 2040 2050 NPV, 3% A NPV, 7% A

Vehicle Costs b $15,600 $15,800 $17,400 $19,000 $345,900 $191,900 Fuel Savings -$35,700 -$79,800 -$119,300 -$171,200 -$1,545,600 -$672,600

Benefits from Reduced CO 2 Emissions at each assumed SCC value c,d,e

Avg SCC at 5% $900 $2,700 $4,600 $7,200 $34,500 $34,500 Avg SCC at 3% $3,700 $8,900 $14,000 $21,000 $176,700 $176,700 Avg SCC at 2.5% $5,800 $14,000 $21,000 $30,000 $299,600 $299,600

95 th percentile SCC at 3% $11,000 $27,000 $43,000 $62,000 $538,500 $538,500 Other Impacts

Criteria Pollutant
Benefits f,g,h,i B $1,200- $1,300 $1,200- $1,300 $1,200- $1,300 $21,000 $14,000

Energy Security Impacts (price shock) $2,200 $4,500 $6,000 $7,600 $81,900 $36,900

Reduced Refueling $2,400 $4,800 $6,300 $8,000 $87,900 $40,100 Value of Increased Driving j $4,200 $8,800 $13,000 $18,400 $171,500 $75,500
Accidents, Noise, Congestion -$2,300 -$4,600 -$6,100 -$7,800 -$84,800 -$38,600

Quantified Net Benefits at each assumed SCC value c,d,e

Avg SCC at 5% $27,500 $81,500 $127,000 $186,900 $1,511,700 $643,100 Avg SCC at 3% $30,300 $87,700 $136,400 $200,700 $1,653,900 $785,300 Avg SCC at 2.5% $32,400 $92,800 $143,400 $209,700 $1,776,800 $908,200

95 th percentile SCC at 3% $37,600 $105,800 $165,400 $241,700 $2,015,700 $1,147,100

a Note that net present value of reduced GHG emissions is calculated differently than other benefits. The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) is used to calculate net present value of SCC for internal cons istency. Refer to Section III.F for more detail.

b Fuel savings are shown as negative because fuel savings are included as negative costs (i.e., positive savings).

c Monetized GHG benefits exclude the value of reductions in non-CO2 GHG emissions (HFC, CH4 and N2O) expected under this final rule. Although EPA has not monetized the benefits of reductions in these non-CO2 emissions, the value of these reductions should not be interpreted as zero. Rather, the reductions in non-CO2 GHGs will contribute to this rule’s climate benefits, as explained in Section III.F.2. The SCC Technical Support



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### Executive Summary

10 Document (TSD) notes the difference between the social cost of non-CO2 emissions and CO2 emissions, and specifies a goal to develop methods to value non-CO2 emissions in future analyses.

d Section III.H.6 notes that SCC increases over time. Corre sponding to the years in this table, the SCC estimates range as follows: for Average SCC at 5%: $5-$16; for Average SCC at 3%: $21-$45; for Average SCC at 2.5%: $35-$65; and for 95th percentile SCC at 3%: $65-$136. Section III.H.6 also presents these SCC estimates.

e Note that net present value of reduced GHG emissions is calculated differently than other benefits. The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) is used to calculate net present value of SCC for internal consistency. Refer to SCC TSD for more detail.

f Note that “B” indicates unquantified criteria pollutant be nefits in the year 2020. For the final rule, we only modeled the rule’s PM2.5- and ozone-related impacts in the calendar year 2030. For the purposes of estimating a stream of future-year criteria pollutant benefits, we assume that the benefits out to 2050 are equal to, and no less than, those modeled in 2030 as reflected by the stream of estimated future emission reductions. The NPV of criteria pollutant-related benefits should therefore be considered a conservativ e estimate of the potential benefits
associated with the final rule.

g The benefits presented in this table include an estimate of PM-related premature mortality derived from Laden et al., 2006, and the ozone-related premature mortality estimate derived from Bell et al., 2004. If the benefit estimates were based on the ACS study of PM-related premat ure mortality (Pope et al., 2002) and the Levy et al., 2005 study of ozone-related premature mortality, the values would be as much as 70% smaller.

h The calendar year benefits presented in this table assume either a 3% discount rate in the valuation of PM-related premature mortality ($1,300 million) or a 7% discount rate ($1,200 million) to account for a twenty-year segmented cessation lag. Note that the benefits estimated using a 3% discount rate were used to calculate the NPV using a 3% discount rate and the benefits estimated using a 7% discount rate were used to calculate the NPV using a 7% discount rate. For benefits totals presented at each calendar year, we used the mid-point of the criteria pollutant benefits range ($1,250).

i Note that the co-pollutant impacts presented here do not include the full complement of endpoints that, if quantified and monetized, would change the total monetized estimate of impacts. The full complement of human
health and welfare effects associated with PM and ozone remain unquantified because of current limitations in methods or available data. We have not quantified a number of known or suspected health effects linked with ozone and PM for which appropriate health impact functi ons are not available or which do not provide easily interpretable outcomes (e.g., changes in heart rate variability ). Additionally, we are una ble to quantify a number of known welfare effects, including reduced acid and partic ulate deposition damage to cultural monuments and other materials, and environmental benefits due to reduc tions of impacts of eutrophication in coastal areas.
j Calculated using pre-tax fuel prices.



### Chapter 9: Small Business Flexibility Analysis. EPA’s analysis of the small business impacts due to EPA’s rulemaking.