# Oz one NAA QSP ro posal – Re gul ato ryI mp act Analysis

**U. S. En**  **vir onmen**  **ta l**  **Protection Agency** 

Oct ober 27, 2014

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# Ke y Me ssag es • The RIA analyz es costs/benefits of r eaching alternativ e primary sta ndar ds of 70, 65 and 60 ppb in 2025 for mos t of U .S., and post - 2025 for California, which has later atta inmen t dates • The 2025 Baseline incorpor ate s CAIR, MA TS, Tier III , and BART

, as well as adjus tmen t for Clean P owe r Plan and some additional mobile sour ce re gs in California ( 2025 - 2030) • Fo r alt erna tiv e standar ds in the pr oposed r ang e (65 - 70 ppb), the es timated costs for mos t of U .S. r ang e fr om $3.9 - $15 billion, while the health benefits r ang e fr om $6.4 - $38 billion (2011$, 7% discount r ate ) • Cos t es timates reflect updated emissions in ve ntory, baseline with additional Feder al measur es, impr oved contr ol measur e information, and differ ent futur e analysis year • Health benefits r eflect both oz one benefits and PM co - benefits, including mortality 

### • Net benefits ar e positiv e thr oughout pr oposed r ang e (65 - 70 ppb); only neg ative for low end of the 60 ppb alternativ e **2**

# Outline
• Backgr ound on Analysis for Primary St andar d • Air Quality Modeling and Analysis • Con tr ol Str ate gy and Cos t Analyses • Kn own Con tr ol Cos t Es timates • Extrapolated Cos ts 

# • Benefits Analyses • En vir onmen ta l Jus tice Analysis • Additional Qualit ative Discussions

**3**Pr oject Base Y ear (Emissions & Air Quality) Establish 2025 Baseline Air Quality Estimate Air Quality for Atta inment of Alternative NAAQS levels Costs Associated with K nown Contr ols Analysis for P artial Atta inment Extrapolated Costs For Full Attainment Estimate T

otal Costs Benefits Analysis for P artial Atta inment Benefits Analysis for Full Attainment Estimate T

otal Benefits 

# Analytic al Fl ow chart

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### Main Analysis f**or Primary**  **St andard** 

# Background on Analysis fo r Pr im ary St andar d
• Analyz e Alt ernative Standards of 70, 65, and 60 ppb
• Future Analysis Y

ear – 2025 (e xc ept California) • Base Y ear Emissions - 2011 • Monitor data for 2009 thr ough 2013 pr oject ed to 2025 base case using air quality modeling • 2025 baseline r eflects CAIR, MA TS, Tier III, BART

, getting to 75 ppb, and additional adjus tments for mobile sour ce rules in California (2025 to 2030) and for 111d 

### • Re sults Pr esen tation • In this RIA, we pr esent primary cos ts and benefits for the majority of U. S. in 2025 and supplemental r esults for California for pos t - 2025 • For California for pos t - 2025 -- costs will be incurr ed thr ough 2038 and benefits es timated in 2038 • Because of data limitations and compounding analytical uncertainty in the pos t - 2025 analysis, these es timates ar e not included in the primary cos t and benefit es timates **5 6**  

# 2025 Pr oject ed Exceedance Ar eas (e xc luding California)**7** 

# Po st - 2025 Analysis Ar eas i n California

# Ai r Quality Mo deling and Analysis

• Similar t o PM 2.5 

### NAAQS, based on a series of emissions sensitivity model runs we developed “response fact or s” t o assess chang es in how O 3 

### DVs respond t o NOx and VOC reductions • Tw o types of sensitivity model runs • Ma ximum known NOx contr ols in ar eas pr oject ed to violate 75 and/or 70 ppb -- California, T exa s, Northeas t • Re gional emissions cuts in NOx or VOC emissions in ev ery sector 

### • We used the r esults t o det ermine the emissions reductions needed t o meet each alt ernative standard level analyz ed • We c reated oz one surfaces t o estimate benefits for each alt ernative standard level analyz ed • Analysis of Oz one Monit or s • 1,219 ozo ne monitoring sites included in the analysis • 1,150 sites will ha ve quantified cos ts and benefits of meeting alternative ozo ne standards • 69 sites will be e xc luded fr om contr ol s tr ategy analysis and cost/benefit es timates because of insufficient da ta, wintertime ozo ne, or background/tr ansport influences **8**

# Kn own Co nt ro l Cos t Es tim ate s • Impr oved dat a in known contr ol t echnology/co stto ol • Applied maximum end - of- pipe co ntr ols t o indus trial and ar ea sour ces • Bey ond Tier 3, applied a va ilable co ntr ols for nonr oad mobile sour ces • Bey ond the Clean P ower Plan, applied additional SCRs to unc on trolled co al - fir ed E GUs • Pr eliminary r esults for 70 ppb indicate that the per cen t of emissions r eductions fr om known contr ols is ~70% and for 65 pbb is ~55%

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# Con trol S tr ategy R esults – Summ ary of NOx Emi ssions R emai ning Aft er Kn own Con trol s

**10** 1.7

- 1.7

- 1.5

- 1.3

- 1.3 2.0

- 1.0

- 1.0

- 0.8

- 0.8 2.9

- 1.6

- 1.6

- 1.6

- 1.6 5.2

- 1.3

- 1.3

- 1.3

- 1.3 1.5

- 1.7

- 1.4

- 1.2

- 1.2

- 2.0 4.0 6.0 8.0 10.0 12.0 14.0**T o** **n s** **p e** **r y** **e a** **r Annual NOx Emissions**  **fo r US, e** **xc ept CA**  **2025 (millions of tons)** 

Nonpoint Onroad Nonroad EGU non-EGU Pt

**2011 Base Case**  **Emissions 2025 70 ppb**  **Analysis Levels**  **2025 Baseline**  **Analysis Levels**  **2025 65 ppb Analysis**  **Levels 2025 60 ppb**  **Analysis Levels**  **13**

**7.4 6.9**  **6.3 6.2** 

## Con trol Str ategy R esults – Sum mary of Em issions

Re ductions for U. S., exc ept California, 2025

**Emissions R eductions**  **fo r 70, 65, and 60 ppb**  **(Annual To**  **ns NOx** **/Y r in 2025)**  **(R esults**  **Incr emental to**  **Baseline)** AQ Level To ta l Curr ently Known Unknown % fr om Unknown 75 45,000 45,000 -- -- 70 650,000 490,000 150,000 23% 65 1,900,000 1,100,000 750,000 40% 60 3,400,000 1,200,000 2,200,000 65%

**11 Kn**  **own Contr** **ols Applied EGUs**  SCRs bey ond CPP **Nonpoint** NSCR for Rich Burn IC Gas - fired Engines

Low Emission Combustion Te chniques fo r Lean Burn IC Gas - fired Engines **Nonr oad**  Diesel engine rebuilds and retrofits **Non -**  **EGU Point** SCR and SCR + LNB for ICI Boilers

Low Emission Combustion Te chniques fo r IC Engines

# Con trol S tr ategy R esults – Summ ary of NOx Emi ssions R emai ning Aft er Kn own Con trol s

**12** 0.07

- 0.06 0.01 0.03 0.17 0.11 0.41
0.14 0.06

0.05

- 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80**T o** **n s** **p e** **r y** **e a** **r Annual NOx Emissions**  **fo r Calif** **ornia post**  **- 2025**  **(millions of tons)** 

Nonpoint Onroad Nonroad EGU non-EGU Pt

**2011 Base Case Emissions**  **2025 Baseline Analysis**  **Levels 0.73** 

**0.40**

# Con trol S tr ategy R esults – Summ ary of Emi ssions Re ductions for Cal ifornia, pos t - 2025

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**Emissions R eductions**  **fo r 70, 65, and 60 ppb**  **(R esults**  **Incr emental to**  **Baseline) AQ Level**  **Emission Re**  **ductions (Annual**  **To ns**  **NOx/ Yr**  **in Post -**  **2025)**

To ta l Curr ently Known Unknown Pe rcent fr om Unknown 75 190,000 31,000 160,000 84% 70 53,000 0 53,000 100% 65 100,000 0 100,000 100% 60 140,000 0 140,000 100%

# Extr apola te d Cos ts
• EP A has estimated costs of emissions r eductions fo r unknown contr ols using an a ve ra ge - cost methodology • Used $15,000/t on as the primary c os t estimate and alt ernative ave ra ge - co st thresholds for sensitivity analysis • Fo r areas needing emissions reductions t o meet alt ernative sta ndards, 96% of known NOx emissions reductions co st less than $15,000/t on (with an a verag e c os t of $3,400/t on) 

## • This appr oach is consistent with advice fr om the Council on Clean Air Compliance Analy sis, which in 2007 re commended tha t when assigning costs to unidentified measur es, a simple tr anspar en t method is best • Council agreed there is limit ed v alue in assigning c os ts t o uniden tified measures and if c os ts ar e assigned, a fixed - co st methodology is pre fe rred **14**

# Extr apola te d Cos ts
• Curr en t estimates of the known marginal a batement c ost c ur ve ar e incomplete, lea ving abatement opportunities “unobser ve d” in analysis

• Ex amples include fuel switching, energy or pr ocess efficiency impr ove men ts, technical change, learning by doing , and innov ative institutional arr ang emen ts (e.g., pollution offset markets ) **15**

# To ta l Annual Costs fo r U. S., exc eptC alifor ni a, 2025 (billio ns of 2011$, 7% Di sc oun t Ra te)

**16** * Engineering costs reflect 7% discount rate. W e do not have a comprehensive data set to be able to calculate engineering costs at a 3% discount rate.

**Re sults**  **Incr emental**  **to Baseline*** Alt ernative St andar ds (ppb) To ta l Costs* Kn own Contr ol Costs Extrapolat ed

Costs Pe rcent

Extrapolat ed Costs 70 $3.9 $1.6 $2.3 59% 65 $15 $4.2 $11 73% 60 $39 $4.4 $34 87%

# To ta l Annual Costs fo r California , pos t - 2025 (billio ns of 2011$, 7% Di sc oun t Ra te)

**17** * Engineering costs reflect 7% discount rate. W e do not have a comprehensive data set to be able to calculate engineering costs at a 3% discount rate.

**Re sults**  **Incr emental**  **to Baseline*** Alt ernative St andar ds (ppb) To ta l Costs* Kn own Contr ol Costs Extrapolat ed

Costs Pe rcent

Extrapolat ed Costs 70 $0.80 0 $0.80 100% 65 $1.6 0 $1.6 100% 60 $2.2 0 $2.2 100%

# Bene fits Analyses • Oz one - re lated Health Benefits - BenMAP • Will include mort ality and morbidity endpoin ts determined to be “causal” and “likely causal” 

## • PM 2.5 

## - re lated Health Co - Bene fits – Bene fits/T on • Similar to appr oach used in 111d and the 2010 ozo ne re consider at ion • National scale analy sis of PM 2.5 

## - re la ted health co benefits associated with o zo ne pr ecursor emission re ductions 

## • We lfar e Effects • Fo r alt erna tiv e primary s ta ndar ds, modeling agricultur al and ecosystem benefits using FA SOMGHG, including estimates of additional carbon seques trat ion – same as methods used in WREA • Estimates will be presen te d separ ately **18**

# Health Bene fits Re sults in 2025

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## Cor e versus S ensitivity Analysis (mort ality focus)* **Po llutant and Endpoint**  **Core Analysis Sensitivity**  **Analysis** Incidence Va luation

($) Incidence Va luation ($) Ozone Short - term mortality Smith et al., (2009) Zanobetti and Schwartz (2008) X X Long - term mortality Jerrett et al., (2009) X X PM 2.5 Long - term mortality X X * Mortality comprises over 98% of total dollar benefits for both ozone and PM 2.5 and consequently we focus on that endpoint here (a range of morbidity endpoints are modeled for both pollutants as part of the core analysis).

# Cor e Health Bene fits R esults in 2025 (na tionwide bene fits of attai nment everywhere ex cept California)

**20 Health Endpoint**  **70ppb 65ppb**  **60ppb** Short- term exposure - related premature deaths avoided (all ages) (Ozone: 2 studies) **200 to**  **340 630**  **to 1,000**  **1,100 to 1,900** Long - term exposure - related premature deaths avoided (age 30+) (PM: 2 studies) **O 3**  **: 680**  PM 2.5 : 510 to 1,100 **O 3**  **: 2,100** 

PM 2.5 : 1,400 to 3,300 **O 3**  **: 3,900**  PM 2.5 : 2,600 to 6,000 Other health effects avoided Non - fatal heart attacks (age 18 - 99) (5 studies) PM 64 to 600 180 to 1,700 330 to 3,100 Re spiratory hospital admissions (age 0 - 99) O3+PM **510 1,600**  **2,900** Cardiovascular hospital admissions (age 18 - 99) PM 180 530 950 Asthma emergency department visits (age 0 - 18) O3+PM **1,400 4,300**  **8,000** Acute bronchitis (age 8 - 12) PM 790 2,300 4,100 Asthma ex acerbation (age 6 - 18) O3+PM **320,000 970,000**  **1,800,000** Lost work da ys (age 18 - 65) PM 65,000 180,000 340,000 Minor restricted activity days (age 18 - 65) O3+PM **1,300,000 3,900,000**  **7,300,000** Upper & lower respiratory symptoms (children) PM 25,000 70,000 130,000 School loss da ys O3 **330,000 1,000,000**  **1,900,000 To**  **tal Monetized Health Benefits*** **(3% discount rate, billions of 2011$) $6.9 to $14**  **$20 to $41**  **$37 to $75 To**  **tal Monetized Health Benefits*** **(7% discount rate, billions of 2011$) $6.4 to $13**  **$19 to $38 $34 to $70**  Note, incidence estimates in **blue** reflect impacts from ozone (either alone, or in combination with PM as noted) *Range reflects: LOW (sum of lower core estimates of short- term ozone and long - term PM mortality ) to HIGH (sum of upper core estimates for same endpoints). NOTE – core estimates excludes long - term ozone mortality.

# Cor e Health Bene fits Re sults pos t - 2025 (na ti onwi de bene fits of atta in ment i n California)

**21 Health Endpoint**  **70ppb 65ppb**  **60ppb** Short- term exposure - related premature deaths avoided (all ages) (Ozone: 2 studies) **65 to 110 140 to 230**  **210 to 350** Long - term exposure - related premature deaths avoided (age 30+) (PM: 2 studies) **O 3**  **: 260**  PM 2.5 : 45 to 100 **O 3**  **: 560** 

PM 2.5 : 89 to 200 **O 3**  **: 840** 

PM 2.5 : 120 to 280 Other health effects avoided Non - fatal heart attacks (age 18 - 99) (5 studies) PM 6 to 54 11 to 110 16 to 140 Re spiratory hospital admissions (age 0 - 99) O3+PM **130 280**  **430** Cardiovascular hospital admissions (age 18 - 99) PM 16 32 45 Asthma emergency department visits (age 0 - 18) O3+PM **340 730**  **1,100** Acute bronchitis (age 8 - 12) PM 67 130 180 Asthma ex acerbation (age 6 - 18) O3+PM **99,000 210,000**  **320,000** Lost work da ys (age 18 - 65) PM 5,500 11,000 15,000 Minor restricted activity days (age 18 - 65) O3+PM **320,000 690,000**  **1,000,000** Upper & lower respiratory symptoms (children) PM 2,100 4,100 5,600 School loss da ys O3 **110,000 230,000**  **350,000 To**  **tal Monetized Health Benefits *** **(3% discount rate, billions of 2011$) $1.1 to $2**  **$2.3 to $4.2**  **$3.4 to $6.2 To**  **tal Monetized Health Benefits *** **(7% discount rate, billions of 2011$) $1.1 to $2**  **$2.2 to $4.1 $3.2 to $5.9**  Note, incidence estimates in **blue** reflect impacts from ozone (either alone, or in combination with PM as noted) *Range reflects: LOW (sum of lower core estimates of short- term ozone and long - term PM mortality ) to HIGH (sum of upper core estimates for same endpoints). NOTE – core estimates excludes long - term ozone mortality.

# To ta l Monetiz ed Cos ts and Bene fits in 2025 (na tionwide bene fits of attai nment everywhere ex cept California -- billions of 2011$, 3% and 7% Disc ount Rates)

**22 70**  **ppb 65**  **ppb 60**  **ppb** To tal Costs (7%)* $3.9 $15 $39 Health Benefits (3%)** $6.9 to $14 $20 to $41 $37 to $75 Health Benefits (7%)** $6.4 to $13 $19 to $38 $34 to $70 Net Benefits (3%) $3.0 to $10.1 $5 to $26 ($2) to $36 Net Benefits (7%) $2.5 to $9.1 $4 to $23 ($5) to $31 * Engineering costs reflect a 7 % discount rate. Our data set to be able to calculate engineering costs at a 3% discount rate is not comprehensive -- approximately 23% of the known control cost data are disaggregated at a level to allow costs to be discounted at 3%. ** Range reflects: LOW (sum of lower core estimates of short- term ozone and long - term PM mortality ) to HIGH (sum of upper core estimates for same endpoints). NOTE – core estimates excludes long - term ozo ne mortality

# Cos ts and Bene fits fr om K nown Con trols in 2025 fo r U. S., excep t California ( per cen t of to ta l) **70 ppb 65 ppb**  **60 ppb** Pe rcent of Emissions R eductions fr om Kn own Contr ols 77% 60% 35% Pe rcent of Costs fr om Known Contr ols 41% 27% 13% Pe rcent of Benefits fr om Application of Known Contr ols Ozo ne - re lated Benefits 82% 59% 35% PM - re lated Benefits 76% 59% 33% To ta l Benefits 77% 59% 34%

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# To ta l Monetiz ed Cos ts and Bene fits fo r pos t 2025 (na tionwide bene fits of attainment i n California - b illions of 2011$, 3% and 7% Disc ount Rates)

**24 70**  **ppb 65**  **ppb 60**  **ppb** To tal Costs (7%)* $0.80 $1.6 $2.2 Health Benefits (3%)** $1.1 to $2 $2.3 to $4.2 $3.4 to $6.2 Health Benefits (7%)** $1.1 to $2 $2.2 to $4.1 $3.2 to $5.9 Net Benefits (3%) $0.3 to $1.2 $0.70 to $2.6 $1.2 to $4 Net Benefits (7%) $0.3 to $1.2 $0.60 to $2.5 $1 to $3.7 * Engineering costs reflect a 7 % discount rate. Our data set to be able to calculate engineering costs at a 3% discount rate is not comprehensive -- approximately 23% of the known control cost data are disaggregated at a level to allow costs to be discounted at 3 %. ** Range reflects: LOW (sum of lower core estimates of short- term ozone and long - term PM mortality ) to HIGH (sum of upper core estimates for same endpoints). NOTE – core estimates excludes long - term ozo ne mortality

# En vironm en ta l Jus tice Analysis
• Compar e demographic dat a of populations within ‘es timat ed violating ar eas’ for alt ernative sta ndar ds with national population • Will assess CBS As es timated to ha ve D Vsthan 70 ppb and 65 ppb based on curr en t (2011 - 2013) air quality dat a only • Demographics fr om 2010 census 

## • Appr oach consis te ntwith Agency EJ analytic fr amework and similar to that used for r ecen t analy sis conduct ed for other rules, including MACT and RTRs

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# Additional Qualit at iv e Di scussion s • Employmen t Analysis • Not es timating to ta l job impacts • Will only include es timates of the number of jobs in vo lved in cons truction and ins ta llation of a NOx contr ol device at an e xa mple E GU , indus trial boiler , and cemen t kiln 

# • Ec onomic Impacts Analysis • No quan tit ative es timates • Wa iting for guidance fr om S AB panel

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## Notice of Proposed Rulemaking Schedule

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### Milestone **Date** NPRM to OMB for Interagency Review October 3, 2014 Regulatory Impact Analysis to OMB October 24, 2014 OMB Clearance November 26, 2014 (the day before Thanksgiving) 

### Proposal Signature (court order) December 1, 2014 (the Monday after Thanksgiving)