15-i

CHAPTER 15. ENVIRONMENTAL ASSESSMENT

TABLE OF CONTENTS

15.1 INTRODUCTION ............................................................................................................ 15-1

15.2 AIR EMISSIONS ANALYSIS......................................................................................... 15-1

15.2.1 Air Emissions Descriptions................................................................................ 15-1

15.3 SOCIAL COST OF CARBON 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 EMISSIONS REDUCTIONS .............................................. 15-9

15.5 RESULTS ......................................................................................................................... 15-9

REFERENCES ........................................................................................................................ 15-10

LIST OF TABLES

Table 15.3.1 Social Cost of CO2, 2010–2050 (in 2007$ per Metric Ton)................................. 15-8
15-1

CHAPTER 15. ENVIRONMENTAL ASSESSMENT

15.1 INTRODUCTION

The U.S. Department of Energy (DOE) will conduct an environmental assessment as part 

of the notice of proposed rulemaking for metal halide lamp fixtures. DOE will assess 

environmental effects by using a variant of the Energy Information Administration’s National 

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 similar to those 

provided in the Annual Energy Outlook (AEO). 

In the environmental assessment, DOE will estimate the reduction in power sector 

emissions of carbon dioxide (CO2), nitrogen oxides (NOX), and mercury (Hg) using the NEMSBT computer model. In the environmental assessment, NEMS-BT is run similarly to the AEO

NEMS, except that 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 forecasted 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 CO2 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 impact (i.e., a standard for the equipment under evaluation; in this case, metal 

halide lamp fixtures) of the AEO2011 forecast, applying the same basic set of assumptions used 

in AEO2011.

1 For example, the emissions characteristics of an electricity generating plant will 

be exactly those used in AEO2011. 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 generation 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 this 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 (SO2), NOX, 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 CO2.

Sulfur Dioxide. Sulfur dioxide, or SO2, belongs to the family of sulfur oxide gases 

(SOX). 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. Environmental Protection 

Agency (EPA) website at www.epa.gov.
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crude oil, coal, and ore that contains common metals like aluminum, 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. SO2 dissolves in water vapor to

form acid, and interacts with other gases and particles in the air to form sulfates and other 

products that can be harmful to people and their environment.2

SO2 emissions from affected electric generating units (EGUs) are subject to nationwide 

and regional emissions cap-and-trade programs, and DOE has preliminarily determined that 

these programs create uncertainty about the potential amended standards’ impact on SO2

emissions. Title IV of the Clean Air Act sets an annual emissions cap on SO2 for affected EGUs 

in the 48 contiguous states and the District of Columbia (D.C.). SO2 emissions 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) by 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 SO2 emissions allowances resulting 

from the lower electricity demand caused by the imposition of an efficiency standard could be 

used to permit offsetting increases in SO2 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 SO2 emissions from the standards. While there remains some 

uncertainty about the ultimate effects of efficiency standards on SO2 emissions covered by the 

existing cap-and-trade 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 SO2.

Nitrogen Oxides. Nitrogen oxides, or NOX, 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 

(NO2), along with particles in the air, can often be seen as a reddish-brown layer over many 

urban areas. NO2 is the specific form of NOX reported in this document. NOX 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 formation of acid rain, and can impair visibility in 

areas such as national parks. NOX also contributes to the formation of fine particles that can 

impair human health.3

Nitrogen oxides form when fossil fuel is burned at high temperatures, as in a combustion 

process. The primary manmade sources of NOX are motor vehicles; electric utilities; and other 

industrial, commercial, and residential sources that burn fossil fuels. NOX can also be formed 

naturally. Electric utilities account for about 21 percent of NOX emissions in the United States.4
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A cap on NOX 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 

NOX emissions in the 28 eastern states and the D.C. covered by CAIR or any states covered by 

the proposed Transport Rule if the Transport Rule if finalized. The proposed standards would, 

however, reduce NOX 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 then 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 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 performance on neurobehavioral 

tasks, such as those measuring attention, fine motor function, language skills, visual-spatial 

abilities, and verbal memory.5

Similar to emissions of SO2 and NOX, future emissions of Hg would have been subject to 

emissions 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 with the DC Circuit’s opinion 

on CAMR. See www.epa.gov/air/mercuryrule/pdfs/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 reductions. 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 CO2, 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 water vapor, CO2, methane (CH4), nitrous oxide (N2O), and 

ozone (O3). Human activities, however, add to the levels of most of these naturally occurring 

gases. For example, CO2 is emitted to the atmosphere when solid waste, fossil fuels (oil, natural 

gas, and coal), wood, and wood products are burned. In 2008, over 90 percent of anthropogenic 

CO2 emissions resulted from burning fossil fuels.6
15-4

Concentrations of CO2 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 

natural processes can absorb some of the anthropogenic CO2 emissions produced each year, 

billions of metric tons (Mt) are added to the atmosphere annually. In 2008, CO2 emissions from 

electricity generation accounted for 40 percent of total U.S. GHG emissions.6 In the absence of 

any Federal emissions control regulation of power plant emissions of CO2, 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 asthma; 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 power plant are in the form of particulates as they leave the smoke stack. 

These are direct PM emissions. In addition, other pollutants such as SO2 and NOX interact with 

other elements in the atmosphere to produce PM at some distance from the power plant.

Compared 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, and 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 emissions 

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 regarding PM source apportionment.7

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) 

biomass burning; (5) industrial; (6) crustal and salt; and (7) other. In these studies, the PM 

exposures attributed to coal power plants are not disaggregated between direct particulate 

emissions and SO2 emissions from these power plants. This is because both SO2 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 SO2 and the direct 

PM are emitted from the power plant at the same time, and if the final aerosol particle contains 
15-5

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 makes

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 

costs 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 CO2 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, technical 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 values 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 process.

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 increased flood 

risk, and the value of ecosystem services. Estimates of the SCC are provided in dollars per metric 

ton of CO2.

When attempting to assess the incremental economic impacts of CO2 emissions, the 

analyst faces a number of serious challenges. A recent report from the National Research 

Council8 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) the 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 

serious 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 CO2 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 CO2

emissions into cost-benefit analyses of regulatory actions that have small, or “marginal,” impacts 
15-6

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 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 baseline emissions path, an 

approximation that is reasonable for policies that have effects on emissions that are small relative 

to cumulative global CO2 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. 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 potential global benefits resulting from reduced CO2 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 domestic effects,b although preference is given to 

consideration of the global benefits of reducing CO2 emissions. See appendix 15A 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 

society 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 for Federal regulations have used a wide range of values to 

estimate the benefits associated with reducing CO2 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 CO2 and a “global” SCC value of $33 per ton of CO2 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 CO2. A domestic SCC value is meant to reflect the value of damages in 

the United States resulting from a unit change in CO2 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 CO2 refer to metric tons.
15-7

A 2008 regulation proposed by DOT assumed a domestic SCC value of $7 per ton of CO2

(in 2006$) for 2011 emission 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 $20 per ton CO2 for 2007 emission reductions (in 2007$). In 

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 CO2 for discount rates of approximately 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 CO2 emissions. To ensure consistency in how 

benefits are 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 CO2 emissions. The interagency group did not undertake 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 CO2. 

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 CO2 tailpipe 

emission proposed rules.

15.3.3 Current Approach 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 field. 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 specified 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 developers’ 

best estimates and judgments.
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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 value, 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 emission 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 CO2, 2010–2050 (in 2007$ per Metric Ton)

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 reflect 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 promise to continue work to improve them.

In summary, in considering the potential global benefits resulting from reduced CO2

emissions, 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 CO2 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 appendix 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.
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15.4 VALUATION OF OTHER EMISSIONS REDUCTIONS

As previously stated, DOE’s analysis will assume the presence of nationwide emission 

caps on SO2 and caps on NOX emissions in the 28 states 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 SO2, but that the standards could put slight downward pressure on the prices 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 whether standards would affect the price of 

emissions allowances.

DOE will investigate the potential monetary benefit of reduced NOX emissions from the 

TSLs considered. As noted above, new or amended energy conservation standards would reduce 

NOX emissions in those 22 states that are not affected by the CAIR. DOE will estimate the 

monetized value of NOX 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 $3,800 per ton of NOX from stationary sources, measured in 2001$ (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 NOX, 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 again 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 AEO2011, and include power-sector emissions for SO2, NOX, CO2, and Hg. The 

outcome of the analysis for each TSL will be reported as a deviation from the AEO2011

reference (base) case.

 d For 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).
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2. U.S. Environmental Protection Agency. 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 

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6. 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. Environmental Protection Agency. Compilation of Existing Studies on Source 

Apportionment for PM2.5. 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).