15

- i CHAPTER 15. ENVIRONMENTAL ASSESSMENT

TABLE OF CONTENTS

15.1 INTRODUCTION

................................ ................................ ................................ ............ 15

- 1 15.2 AIR EMISSIONS ANALYS IS

................................ ................................ ......................... 15

- 1 15 .2.1 Air Emissions Descriptions

................................ ................................ ................ 15

- 1 15.3 SOCIAL COST OF CARBO N DIOXIDE EMISSIONS

................................ ................. 15

- 5 15.3.1 Monetizing Carbon Dioxide Emissions

................................ ............................. 15

- 5 15.3.2 Social Cost of Carbon Values Used in Past Regulatory Analyses

..................... 15

- 6 15.3.3 Current Approach and Key Assumptions

................................ .......................... 15

- 7 15.4 VALUATION OF OTHER E MISSIONS REDUCTIONS

................................ .............. 15

- 9 15.5 RESULTS

................................ ................................ ................................ ......................... 15

- 9 REFERENCES

................................ ................................ ................................ ........................ 15

- 10

LIST OF TAB LES

Table 15.3.1 Social Cost of CO 2 , 2010

– 2050 (in 2007$ per Metric Ton)

................................ . 15

- 815

- 1 CHAPTER 15. ENVIRONMENTAL ASSESSMENT

15.1 INTRODUCTION
The U.S. Department of Energy (DOE) will conduct an environmental assessment as part of the n otice of proposed r ulemaking for metal halide lamp fixtures . DOE will assess environmental effects by using a variant of the Energy Information Administration’s Na tional Energy Modeling System (NEMS) known as NEMS

- Building Technologies ( BT ) to provide key input to the analysis. The environmental assessment produces results in a manner s imilar to those provided in the Annual Energy Outlook ( AEO )

.
In the environmenta l assessment , DOE will estimate the reduction in power sector emissions of carbon dioxide (CO 2 ), nitrogen oxides (NO X ), and mercury (Hg) using the NEMS

BT computer model. In the environmental assessment , NEMS

- BT is run similarly to the AEO NEMS, except tha t metal halide lamp fixture energy use will be reduced by the amount of energy saved (by fuel type) due to each trial standard level ( TSL ) . The inputs of national energy savings will come from the NIA spreadsheet model, while the output will be the forecas ted physical emissions. The net benefit of each TSL in the proposed rule will be the difference between the forecasted emissions estimated by NEMS

- BT at each TSL and the AEO2011 Reference Case. NEMS

- BT tracks CO 2 emissions using a detailed module that provides results with broad coverage of all sectors and inclusion of interactive effects.

15.2 AIR EMISSIONS ANALYSIS

DOE will conduct each environmental assessment performed in this rulemaking as an incremental policy i mpact ( i.e. , a standard for the equipment under evaluation ; in this case

, metal halide lamp fixtures ) of the AEO 2011 forecast, applying the same basic set of assumptions used in AEO 2011

. 1 For example, the emissions characteristics of an electricity generat ing plant will be exactly those used in AEO 20 11 . Also, forecasts conducted with NEMS

- BT consider the supply

- side and demand

- side effects on the electric utility industry. Thus, the analysis will account for any factors affecting the type of electricity gen eration and in turn the type and amount of airborne emissions the utility industry generates. Changes in electricity generation are described in the utility impact analysis in chapter 13 of th is preliminary TSD

.

15.2.1 Air Emissions Descriptions

For each TSL, DOE will calculate total power

- sector emissions based on output from the NEMS

- BT model. This analysis will consider three pollutants: sulfur dioxide ( S O 2 ), NO X , and Hg. An air pollutant is any substance in the air that can cause harm to humans or the environment. Pollutants may be natural or man

- made ( i.e. , anthropogenic) and may take the form of solid particles ( i.e. , particulates or particulate matter), liquid droplets, or gases. a This analysis also considers CO 2
. Sulfur Dioxide. Sulfur dioxide, or S O 2 , belongs to the family of sulfur oxide gases (SO X ). These gases dissolve easily in water. Sulfur is prevalent in all raw materials, including

a More information on air pollution characteristics and regulations is available on the U.S. Environment al Protection Agen cy (EPA) website at www.epa.gov

.15

- 2 crude oil, coal, and ore that contains common metals like aluminum, copper, zinc, lead, and iron. SO X 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 other gases and particles in the air to form sulfa tes and other products that can be harmful t o people and their environment. 2

SO 2 emissions from affected electric generating units (EGUs) are subject to nationwide and regional emissions cap

- and

- trade programs, and DOE has preliminarily determined that the se programs create uncertainty about the potential amended standards’ impact on SO 2 emissions. Title IV of the Clean Air Act sets an annual emissions cap on SO 2 for affected EGUs in the 48 contiguous s tates and the District of Columbia (D.C.). SO 2 emission s from 28 eastern states and D.C. are also limited under the Clean Air Interstate Rule (CAIR; 70 FR 25162 (May 12, 2005)), which created an allowance

- based trading program. Although CAIR has been remanded to the U.S. Environmental Protection Agency ( EPA ) b y the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit), see North Carolina v. EPA , 550 F.3d 1176 (D.C. Cir. 2008), it remains in effect temporarily, consistent with the D.C. Circuit’s earlier opinion in North Carolina v. EPA , 531 F .3d 896 (D.C. Cir. 2008). On July 6, 2010, EPA issued the Transport Rule proposal, a replacement for CAIR, which would limit emissions from EGUs in 32 states, potentially through the interstate trading of allowances, among other options. 75 FR 45210 (Aug. 2, 2010).

The attainment of emissions caps is typically flexible among EGUs and is enforced through the use of emissions allowances and tradable permits. Under existing EPA regulations, and under the Transport Rule if it is finalized, any excess SO 2 emissi ons allowances resulting from the lower electricity demand caused by the imposition of an efficiency standard could be used to permit offsetting increases in SO 2 emissions by any regulated EGU. However, if the standards resulted in a permanent increase in the quantity of unused emissions allowances, there would be an overall reduction in SO 2 emissions from the standards. While there remains some uncertainty about the ultimate effects of efficiency standards on SO 2 emissions covered by the existing cap

- and

- t rade system, the NEMS

- BT modeling system that DOE uses to forecast emissions reductions currently indicates that no physical reductions in power sector emissions would occur for SO 2
. 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. However, one common pollutant, nitrogen dioxide (NO 2 ), along with particles in the air

, can often be seen as a r eddish

- 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 th e formation of acid rain, and can impair visibility in areas such as national parks. NO X also contributes to the formation of fine particle s that can impair human health. 3

Nitrogen oxides form when fossil fuel is burned at high temperatures, as in a combus tion process. The primary manmade sources of NO X are motor vehicles ; electric utilities ; and other industrial, commercial, and residential sources that burn fossil fuels. NO X can also be formed naturally. Electric utilities account for about 21 percent of NO X emissions in the U nited States. 415

- 3 A cap on NO X emissions, affecting EGUs in the CAIR region, means that the energy conservation standards for metal halide lamp fixtures may have little or no physical effect on NO X emissions in the 28 eastern s tates and the D

. C

. covered by CAIR or any s tates covered by the proposed Transport Rule if the Transport Rule if finalized. The proposed standards would, however, reduce NO X emissions in those 22 states not affected by the CAIR. As a result, DOE will use NEMS

- BT to forecast emission reductions from the standards considered for the proposed rule

. Mercury. Coal

- fired power plants emit mercury , or Hg

, 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 contribute very little to the global Hg pool or to contamination of U.S. waters. 5 U.S. coal

- fired power plants emit Hg in three different forms: oxidized Hg (likely to deposit within the United 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 the n deposited on land, lakes, rivers, and estuaries 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 primarily by eating cont aminated 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 o f poor performance on neurobehavioral tasks, such as those measuring attention, fine motor function, language skills, visual

- spatia l abilities, and verbal memory. 5

Similar to emissions of SO 2 and NO X , future emissions of Hg would have been subject to emiss ions caps. In May 2005, EPA issued the Clean Air Mercury Rule (CAMR). 70 FR 28606 (May 18, 2005). CAMR would have permanently capped emissions of mercury for new and existing coal

- fired power plants in all states by 2010. However, on February 8, 2008, the D.C. Circuit issued a decision in New Jersey v. Environmental Protection Agency , 517 F.3d 574 (D.C. Cir. 2008), in which it vacated CAMR. EPA has decided to develop emissions standards for power plants under Section 112 of the Clean Air Act, consistent wit h the DC Circuit’s opinion on CAMR. See www.epa.gov/air/mercuryrule/pd fs/certpetition_withdrawal.pdf . Pending EPA’s forthcoming revisions to the rule, DOE will exclude CAMR from its environmental assessment. In the absence of CAMR, a DOE standard would likely reduce Hg emissions and DOE will use NEMS

- BT to estimate these red uctions. However, DOE continues to review the impact of rules that reduce energy consumption on Hg emissions, and may revise its assessment of Hg emission reductions in future rulemakings.

Carbon Dioxide. Carbon dioxide , or CO 2 , is not a criteria pollutant , but it is of interest because of its classification 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 wate r 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 c oal), wood, and wood products are burned. In 200 8 , over 90 percent of anthropogenic CO 2 emissions resu lted from burning fossil fuels. 615

- 4 Concentrations of CO 2 in the atmosphere are naturally regulated by numerous processes, collectively known as the “carbon cycle.” The movement of carbon between the atmosphere and the land and oceans is dominated by natural processes, such as plant photosynthesis. While these

n atural processes can absorb some of the anthropogenic CO 2 emissions produced each year, billions of metric tons (Mt) are added to the atmosphere annually. I n 200 8 , CO 2 emissions from electricity generation accounted for 40 percent of total U.S. GHG emissio ns. 6 In the absence of any Federal emissions control regulation of power plant emissions of CO 2 , a DOE standard is likely to result in reductions of these emissions.

Particulate Matter. Particulate matter , or PM

, also known as particle pollution, is a complex mixture of extremely small particles and liquid droplets. Particle pollution is made up of a number of components, including acids (such as nitrates and sulfates), organic chemicals, metals, and soil or dust particles.

PM impacts are of concern due to human exposures that can impact health. Particle pollution

— especially fine particles

— contains microscopic solids or liquid droplets that are so small that they can get deep into the lungs and cause serious health problems. Numerous scientific studies have linked particle pollution exposure to a variety of problems, including increased respiratory symptoms such as irritation of the airways, coughing, or difficulty breathing; decreased lung function; aggravated asth ma; development of chronic bronchitis; irregular heartbeat; nonfatal 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 p ower plant are in the form of particulates as they leave the smoke stack. These are direct PM emissions. In addition, 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.

C ompared to emission reductions of other pollutants , the relative impacts of reducing direct PM emissions on PM exposures generally are much more difficult to estimate because of the complex interactions among PM, other power plant emissions, meteorology

, a nd atmospheric chemistry that impact human exposure to particulates. Human exposure to PM usually occurs far from the power plants that are emitting particulates and particulate precursors. When power plant emissions travel this distance

, they undergo highly complex atmospheric chemical reactions and the proportion of impacts and exposures attributable to different emissions can vary dramatically for different emissions sources and types of particulate precursors. These variations in emiss ions impacts 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 EPA has compiled and summarized technical studies reg arding P M source apportionment. 7 In this compilation of studies, sources are classified into seven categories: (1) s econdary sulfate/coal ; (2) s econdary organic matter/mobile sources ; (3) n itrate dominated sources ; (4) b iomass burning ; (5) i ndustrial ; (6) c rustal and salt ; and (7) o ther. 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 are a complex mixture of different constituents. Both the SO 2 and the direct PM are emitted from the power plant at the same time

, and if the final aerosol par ticle contains15

- 5 both sulfur compounds and other PM components it is not possible to attribute that aerosol particle to one source or the other. Therefore, DOE cannot perform modeling that can make s reliable estimates of the impact of direct PM emissions on air quality at this time.

15.3 SOCIAL COST OF CARBON DIOXIDE EMISSIONS

Under section 1(b) of Executive Order 12866, agencies must, to the extent permitted by law, “assess both the costs and the benefits of the intended regulation and, recognizing that some
cost s and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.” The purpose of the social cost of carbon ( SCC ) estimates presented here is to allow agencies to incorporate the monetized social benefits of reducing CO 2 emissions into cost

- benefit analyses of regulatory actions that have small, or “marginal,” 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.

As part of the interagency process that developed these SCC estimates, tec hnical experts from numerous agencies met on a regular basis to consider public comments, explore the technical literature in relevant fields, and discuss key model inputs and assumptions. The main objective of this process was to develop a range of SCC va lues using a defensible set of input assumptions grounded in the existing scientific and economic literatures. In this way, key uncertainties and model differences transparently and consistently inform the range of SCC estimates used in the rulemaking proc ess.

15.3.1 Monetizing Carbon Dioxide Emissions

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 inc reased flood risk, and the value of ecosystem services. Estimates of the SCC are provided in dollars per metric ton of CO 2
. When attempting to assess the incremental economic impacts of CO 2 emissions, the analyst faces a number of serious challenges. A re cent report from the National Research Council 8 points out that any assessment will suffer from uncertainty, speculation, and lack of information about (1) future emissions of GHGs ; (2) the effects of past and future emissions on the climate system ; (3) th e impact of changes in climate on the physical and biological environment ; and (4) the translation of these environmental impacts into economic damages. As a result, any effort to quantify and monetize the harms associated with climate change will raise

se rious questions of science, economics, and ethics and should be viewed as provisional.

Despite the serious limits of both quantification and monetization, SCC estimates can be useful in estimating the social benefits of reducing CO 2 emissions. Consistent with the directive in Executive Order 12866 quoted above, the purpose of the SCC estimates presented here is to make it possible for Federal agencies to incorporate the social benefits from reducing CO 2 emissions into cost

- benefit analyses of regulatory ac tions that have small, or “marginal,” impacts15

- 6 on cumulative global emissions. Most Federal regulatory actions can be expected to have marginal impacts on global emissions.

For such policies, the agency can estimate the benefits from reduced (or costs from increased) emissions in any future year by multiplying the change in emissions in that year by the SCC value appropriate for that year. The net present value (NPV) of the benefits can then be calculated by multiplying each of these future benefits by an ap propriate 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 baseline emissions path, an approximation that is reasonable for policies t hat have effects on emissions that are small relative to cumulative global CO 2 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 calcul ating the benefits of reduced emissions. This concern is not applicable to this rulemaking , and DOE does not attempt to answer that question here.

At the time of the preparation of this preliminary TSD , the most recent interagency estimates of the potentia l global benefits resulting from reduced CO 2 emissions in 2010, expressed in 2009$, were $4.9, $22.1, $36.3, and $67.1 per metric ton avoided. For emissions reductions that occur in later years, these values grow in real terms over time. Additionally, the interagency group determined that a range of values from 7 to 23 percent should be used to adjust the global SCC to calculate dom estic effects, b although preference is given to consideration of the global benefits of reducing CO 2 emissions. See appendix 15 A of this TSD for the full range of annual SCC estimates from 2010 to 2050.

It is important to emphasize that the interagency process is committed to updating these estimates as the science and economic understanding of climate change and its impacts on

so ciety improves over time. Specifically, the interagency group has set a preliminary goal of revisiting the SCC values within 2 years or at such time as substantially updated models become available, and to continue to support research in this area. In the meantime, the interagency group will continue to explore the issues raised by this analysis and consider public comments as part of the ongoing interagency process.

15.3.2 Social Cost of Carbon Values Used in Past Regulatory Analyses

To date, economic analyses fo r Federal regulations have used a wide range of values to estimate the benefits associated with reducing CO 2 emissions. In the final model year 2011 CAFE rule, the U.S. Department of Transportation (DOT) used both a “domestic” SCC value of $2 per ton of CO 2 and a “global” SCC value of $33 per ton of CO 2 for 2007 emission reductions (in 2007$), increasing both values at 2.4 percent per year. c DOT 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 change in CO 2 emissions, while a global SCC value is meant to reflect the value of damages worldwide.

b It is recognized that this calculation for domestic values is approximate, provisional, and highly speculative. There is no a priori reason why domestic benefits should be a constant fraction of net global damages over time.

c Throughout this section, references to tons of CO 2 refer to metric tons.15

- 7 A 2008 regulation proposed by DOT assumed a domestic SCC value of $7 per ton of CO 2 (in 2006$) for 201 1 emissio n reductions (with a range of $ 0 to $ 14 for sensitivity analysis), also increasing at 2.4 percent per year. A regulation finalized by DOE in October 2008 used a domestic SCC range of $0 to $20 per ton CO 2 for 2007 emission reductions (in 2007$). I n addition, EPA’s 2008 Advance Notice of Proposed Rulemaking for Greenhouse Gases identified what it described as “very preliminary” SCC estimates subject to revision. EPA’s global mean values were $68 and $40 per ton CO 2 for discount rates of approximatel y 2 percent and 3 percent, respectively (in 2006$ for 2007 emissions).

In 2009, an interagency process was initiated to offer a preliminary assessment of how best to quantify the benefits from reducing CO 2 emissions. To ensure consistency in how benefits a re evaluated across agencies, the Administration sought 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 u ndertake any original analysis. Instead, it combined SCC estimates from the existing literature to use as interim values until a more comprehensive analysis could be conducted. The outcome of the preliminary assessment by the interagency group was a set of five interim values: global SCC estimates for 2007 (in 2006$) of $55, $33, $19, $10, and $5 per ton of CO 2
. These interim values represent the first sustained interagency effort within the U.S. government to develop an SCC for use in regulatory analysis. The results of this preliminary effort were presented in several proposed and final rules and were offered for public comment in connection with proposed rules, including the joint EPA

- DOT fuel economy and CO 2 tailpipe emission proposed rules.

15.3.3 Current App roach and Key Assumptions

Since the release of the interim values, the interagency group reconvened on a regular basis to generate improved SCC estimates, which were considered for this proposed rule. Specifically, the group considered public comments and further explored the technical literature in relevant fields. The interagency group relied on three integrated assessment models (IAMs) commonly used to estimate the SCC: the FUND, DICE, and PAGE models ( described in appendix 16

- A of the preliminary TSD )

. These models are frequently cited in the peer

- reviewed literature and were used in the last assessment of the IPCC . Each model was given equal weight in the SCC values that were developed.

Each model takes a slightly different approach to model how changes in emissions result in changes in economic damages. A key objective of the interagency process was to enable a consistent exploration of the three models while respecting the different approaches to quantifying damages taken by the key modelers in the fie ld. An extensive review of the literature was conducted to select three sets of input parameters for these models: climate sensitivity, socio

- economic and emissions trajectories, and discount rates. A probability distribution for climate sensitivity was sp ecified as an input into all three models. In addition, the interagency group used a range of scenarios for the socio

- economic parameters and a range of values for the discount rate. All other model features were left unchanged, relying on the model develo pers’ best estimates and judgments.15

- 8 The interagency group selected four SCC values 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 val ue, which represents the 95th percentile SCC estimate across all three models at a 3

- percent discount rate, is included to represent higher

- than

- expected impacts from temperature change further out in the tails of the SCC distribution. For emissions (or em ission reductions) that occur in later years, these values grow in real terms over time, as depicted in Table 15.3

. 1

.

Table 15.3

. 1 Social Cost of CO 2 , 2010

– 2050 (in 2007 $ per M etric T on )
Discount Rate 5% Avg 3% Avg 2.5% Avg 3% 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
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 they will evolve with improved scientific and economic understanding. The interagency group also recognizes that the existing models are imperfect and incomplete. The National Research Council report mentioned above 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 problems that should be addressed by the research community, including research programs housed in many of the Federal agencies participating in the interagency process to estimate the SCC.

The U.S. Government intends to periodically review and reconsider estimates of the SCC used for cost

- benefit analyses to refle ct 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 int eragency group offers the new SCC values with all due humility about the uncertainties embedded in them and with a sincere promise to continue work to improve them.

In summary, in considering the potential global benefits resulting from reduced CO 2 emissio ns, DOE will use the most recent values identified by the interagency process. For each of the four cases specified, the values used for emissions in 2010 are $4.9, $22.1, $36.3, and $67.1 per metric ton avoided (values expressed in 2009$). To monetize the CO 2 emissions reductions expected to result from amended standards for metal halide lamp fixtures , DOE will use the values identified in Table A1 of the “Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866” ( reprinted in appen dix 15

- A of the preliminary TSD )

, or updated values as applicable . To calculate a present value of the stream of monetary values, DOE will discount the values in each of the four cases using the discount rates that had been used to obtain the SCC values in each case.15

- 9 15.4 VALUATION OF OTHER EMISSIONS REDUCTIONS

As previously stated, DOE’s analysis will assume the presence of nationwide emission caps on SO 2 and caps on NO X emissions in the 28 s tates covered by the CAIR. In the presence of these caps, DOE anticipates that the NEMS

- BT modeling system that DOE will use to forecast emissions reduction will indicate that no physical reductions in power sector emissions would occur for SO 2 , but that the standards could put slight downward pressure on the pri ces of emissions allowances in cap

- and

- trade markets. Estimating this effect is very difficult because such factors as credit banking can change the trajectory of emissions allowance prices. Based on its modeling to date, DOE currently cannot estimate whet her standards would affect the price of emissions allowances.

DOE will investigate the potential monetary benefit of reduced NO X emissions from the TSLs considered. As noted above, new or amended energy conservation standards would reduce NO X emissions i n those 22 s tates that are not affected by the CAIR. DOE will estimate the monetized value of NO X emissions reductions resulting from each of the TSLs considered for the proposed rule based on environmental damage estimates found in the relevant scientific literature. Available estimates suggest a very wide range of monetary values, ranging from $370 per ton to $3,800 per ton of NO X from stationary sources, measured in 2001$ (equivalent to a range of $447 to $4,591 per ton in 2009$). d In accordance with OMB guidance, DOE will conduct two calculations of the monetary benefits derived using each of the economic values used for NO X , one using a real discount rate of 3 percent and another using a real discount rate of 7 percent. e

DOE is aware of multiple agency efforts to determine the appropriate range of values used in evaluating the potential economic benefits of reduced Hg emissions. DOE has decided to await further guidance regarding consistent valuation and reporting of Hg emissions before it
once ag ain monetizes Hg emissions in its rulemakings.

15.5 RESULTS

The results for the environmental assessment will be similar to a complete NEMS run as published in the AEO 2011 , and include power

- sector emissions for SO 2 , NO X , CO 2 , and Hg . The outcome of the analysis for each TSL will be reported as a deviation from the AEO 2011 reference (base) case.

d F or additional information , refer to U.S. Office of Management and Budget , Office of Information and Regulatory Affairs, 2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities , Washington, D.C

. e OMB, Circular A

- 4: Regulatory Analysis ( Sept. 17, 2003).15

- 10 REFERENCES

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. U.S. Department of Energy

– Energy Information Administration. Annual Energy Outlook 20 11 Early Release Overview

. December 20 10

. Report No. DOE/EIA

- 0383ER(2011).

< www.eia.doe.gov/forecasts/aeo/ >

2

. U.S. Environmental Protection Ag ency

. Sulfur Dioxide. 2010. ( Last accessed February 25, 2011. ) < www.epa.gov/air/sulfurdioxide/ >

3

. U.S. Environmental Protection Agency

. Nitrogen Dioxide . 2010. ( Last accessed February 25, 2011. ) < www.epa.gov/air/nitrogenoxides/ >

4

. U.S. Environmental Protection Agency

. Nitrogen Oxides

. 2009. ( Last accessed February 25, 2011. ) < www.epa.gov/air /emissions/nox.htm >

5

. Trasande, L., C. Schechter, K.A. Haynes, and P.J. Landrigan

. Applying Cost Analyses to Drive Policy That Protects Children: Mercury as a Case Study. Annals of the New York Academy of Sciences

. 2006. 1076

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. U.S. Environmental Protection Agency

. 2010 U.S. Greenhouse Gas Inventory Report

. 2010. (Last accessed February 25, 2011.)

< www.epa.gov/climatechange/emissions/usinventoryreport.html >

7

. U.S. E nvironmental Protection Agency

. Compilation of Existing Studies on Source Apportionment for PM 2.5
. 2003. Washington, D.C.

< www.epa.gov/airtrends/specialstudies/compsareports.pdf >

8

. National Research Council. Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use. National Academies Press: Washington, DC (2009).