## From: Higgins, Cortney [mailto:Cortney_Higgins@omb.eop.gov] Sent: Wednesday, May 21, 2014 5:59 PM To: Wayland, Robertj Subject: RE: Revised BB 1&2 Document

Thanks!

From: Wayland, Robertj [mailto:Wayland.Robertj@epa.gov] Sent: Wednesday, May 21, 2014 5:25 PM To: Higgins, Cortney Cc: Culligan, Kevin Subject: Revised BB 1&2 Document

Cortney –
Attached is a revised BB 1&2 document adding in the blank tables, and a few other edits. Please let either Kevin or me know if you have additional questions/concerns.

thanx!

bob
Robert J. Wayland, Ph.D. Leader, Energy Strategies Group U.S. Environmental Protection Agency Office of Air Quality Planning and Standards Sector Policies and Programs Division Mail Code D243-01 Research Triangle Park, NC 27709 Office: (919) 541-1045 Cell: (919) 306-2290 Fax: (919) 541-5450
Email: wayland.robertj@epa.gov

************************************* DRAFT/Deliberative Document - FOIA Exempt *************************************

<< Memo BB 1+2_5-21-14_v2.docx >>

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3-1 

## MEMO: EMISSION REDUCTIONS, COSTS, BENEFITS AND ECONOMIC IMPACTS ASSOCIATED WITH BUILDING BLOCKS 1 AND 2

1 Introduction
This memo provides estimates of the costs, energy impacts, and the monetized climate benefits and air pollution health co-benefits associated with emission reductions for two illustrative compliance scenarios associated with building blocks 1 and 2 only. It also includes estimates of the labor impacts on the regulated sector. The methods applied to generate these
estimates are described in detail in Chapter 3, 4, and 6 of the Regulatory Impact Analysis (RIA). For brevity, this memo just reports the results of these analyses.

EPA used the Integrated Planning Model (IPM), developed by ICF International, to conduct this analysis. It provides forecasts of least cost capacity expansion, electricity dispatch, and emission control strategies while meeting en ergy demand and environmental, transmission, dispatch, and reliability constraints.

This analysis also evaluates the climate benefits associated with emission reductions of
CO 2 

### and the air pollution health co-benefits associated with reduced emissions of SO 2 

### , NO 2 

### NOx
, and PM 2.5 

### , which would lead to lower ambient concentrations of PM 2.5 

### and ozone. Unlike the analysis of health co-benefits in Chapter 4 of the RIA, estimates of emissions reductions of directly emitted particles available are not available for this analysis. Similar to Chapter 4 of the RIA, unquantified co-benefits include exposure to several HAP (including mercury and hydrogen chloride), carbon monoxide, SO 2 

### , and NO 2 

### , as well as ecosystem effects, and visibility impairment.

2 State Goals for Building Blocks 1 and 2
This analysis includes state-specific rate-bas ed goals that reflect a two-building block approach. It is also based upon the same modeling framework, assumptions and calculations as presented in the RIA. The two-blocks incorporated in the following state goals include efficiency improvements at existing coal steam electric gene rating units (EGUs) and use of lower emitting power sources (increased utilization of existing NGCCs) and are identical to the proposed levels,

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3-2 included for purposes of establishing state-specific goals, associated with Option 1 (6% efficiency improvement and no more than 70% redisptach).
Table 1. State-specific Goals for Two-Block Approach State Interim Rate (2020 - 2029 average) Final Rate (2029 Rate) Alabama 1,329 1,329 Alaska 1,252 1,252 Arizona 900 900 Arkansas 1,115 1,115 California 838 838 Colorado 1,521 1,521 Connecticut 809 809 Delaware 1,013 1,013 Florida 910 910 Georgia 1,296 1,296 Hawaii 1,751 1,751 Idaho 858 858 Illinois 1,865 1,865 Indiana 1,834 1,834 Iowa 1,846 1,846 Kansas 2,186 2,186 Kentucky 1,9861,977 1,977 Louisiana 1,099 1,099 Maine 848 848 Maryland 1,868 1,868 Massachusetts 886 886 Michigan 1,511 1,511 Minnesota 1,369 1,369 Mississippi 843 843 Missouri 1,784 1,784 Montana 2,295 2,295 Nebraska 1,941 1,941 Nevada 882 882 New Hampshire 878 878 New Jersey 905 905 New Mexico 1,447 1,447 New York 927 927 North Carolina 1,329 1,329 North Dakota 2,226 2,226 Ohio 1,714 1,714 Oklahoma 1,186 1,186 Oregon 852 852 Pennsylvania 1,480 1,480 Rhode Islan d 918 918 South Carolina 1,514 1,514 South Dakota 1,456 1,456 Tennessee 1,798 1,798 Texas 1,083 1,083 Utah 1,559 1,559 Virginia 1,135 1,135 Washington 811 811 West Virginia 1,933 1,933 Wisconsin 1,619 1,619 Wyoming 2,1512,145 2,145

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3-3 3 Emissions and Power Sector Impacts
Tables 2 through 16 report the emissions and power sector impacts of the two-block approach.

Table 2. Projected CO 2 

### Emission Impacts

CO 2 Emissions (MM Tonnes) CO 2 Emissions Reductions from Reference Base Case (MM Tonnes) CO 2 Emissions Reductions: Percent Change from ReferenceBase Case
2020 2025 2030 2020 2025 2030 2020 2025 2030 ReferenceBase Case 2,161 2,231 2,256
Two-Block Regional 1,9301,9 49 1,9731,99 2 1,9972,01 6 23121 2 25823 9 25824 0 11%10 % 12%11 % 11%11 %
Two-Block State 1,9081,9 27 1,9471,96 5 1,9631,98 2 25223 4 28426 6 29227 4 12%11 % 13%12 % 13%12 % Source: Integrated Planning Model run by EPA, 2014


### Table 3. Projected Non-CO 2 

### Emissions Reductions, 2020-2030

Base Case Two Block Two Block Regional State Regional State 2020 SO 2 (thousand tons) 1,476 1,243 1,199 -15.7% -18.8% NO X (thousand tons) 1,559 1,319 1,286 -15.4% -17.5% Hg (tons) 8.3 7.2 7.1 -12.8% -13.9% HCl (thousand tons) 8 8 8 2.9% -1.3% 2025 SO 2 (thousand tons) 1,515 1,228 1,171 -19.0% -22.7% NO X (thousand tons) 1,587 1,317 1,272 -17.0% -19.9% Hg (tons) 8.7 7.4 7.3 -14.9% -16.2% HCl (thousand tons) 8 9 9 0.8% 3.0% 2030 SO 2 (thousand tons) 1,530 1,188 1,134 -22.3% -25.9% NO X (thousand tons) 1,537 1,274 1,224 -17.1% -20.4% Hg (tons) 8.8 7.4 7.3 -15.2% -16.8% HCl (thousand tons) 9 9 9 0.0% -5.1% Source: Integrated Planning Model run by EPA, 2014


### Table 4. Annualized Compliance Costs (billions of 2011$)
2020 2025 2030 Two Block Regional 3.2 3.0 6.8 Two Block State 4.4 4.6 9.8 Source: Integrated Planning Model run by EPA, 2014

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3-4 Table 5 1 . Generation Mix (thousand GWh)

Base Case Two Block Two Block Regional State Regional State 2020 Pulverized Coal 1,665 1,435 1,395 -14% -16% NG Combined Cycle (existing) 1,003 1,178 1,170 17% 17% NG Combined Cycle (new) 85 153 199 81% 134% Combustion Turbine 19 34 31 79% 63% Oil/Gas Steam 52 25 26 -51% -50% Non-Hydro Renewables 299 300 300 0% 0% Hydro 280 283 283 1% 1% Nuclear 817 819 819 0% 0% Other 8 8 9 11% 17% Total 4,227 4,235 4,232 0% 0% 2025 Pulverized Coal 1,702 1,420 1,377 -17% -19% NG Combined Cycle (existing) 919 1,176 1,144 28% 24% NG Combined Cycle (new) 280 310 385 11% 37% Combustion Turbine 27 42 38 57% 42% Oil/Gas Steam 37 20 20 -47% -46% Non-Hydro Renewables 335 335 335 0% 0% Hydro 280 282 282 1% 1% Nuclear 817 819 819 0% 0% Other 6 7 8 15% 22% Total 4,404 4,411 4,408 0% 0% 2030 Pulverized Coal 1,668 1,372 1,321 -18% -21% NG Combined Cycle (existing) 810 1,144 1,099 41% 36% NG Combined Cycle (new) 599 551 644 -8% 7% Combustion Turbine 23 43 40 92% 78% Oil/Gas Steam 23 15 17 -34% -29% Non-Hydro Renewables 350 352 353 1% 1% Hydro 280 282 282 1% 1% Nuclear 797 797 797 0% 0% Other 6 7 8 23% 31% Total 4,557 4,565 4,560 0% 0% Note: “Other” mostly includes MSW and fuel cells. Source: Integrated Planning Model run by EPA, 2014


### Table 6. Total Generation Capacity by 2020-2030 (GW)

Base Case Two Block Two Block Reg. State Reg. State 2020 Pulverized Coal 244 219 211 -10% -13% NG Combined Cycle (existing) 219 221 221 1% 1% NG Combined Cycle (new) 12 23 30 93% 153% Combustion Turbine 146 148 149 1% 2% Oil/Gas Steam 83 80 79 -3% -5% Formatted Table

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5 Non-Hydro Renewables 93 93 93 0% 1% Hydro 101 101 101 0% 0% Nuclear 103 103 103 0% 0% Other 5 5 5 2% 2% Total 1,005 994 992 -1% -1% 2025 Pulverized Coal 243 219 211 -10% -13% NG Combined Cycle (existing) 219 221 221 1% 1% NG Combined Cycle (new) 39 49 59 25% 52% Combustion Turbine 149 160 160 8% 7% Oil/Gas Steam 82 80 79 -2% -4% Non-Hydro Renewables 103 104 104 0% 1% Hydro 101 101 101 0% 0% Nuclear 103 103 103 0% 0% Other 5 5 5 2% 2% Total 1,044 1,042 1,043 0% 0% 2030 Pulverized Coal 240 217 209 -10% -13% NG Combined Cycle (existing) 219 221 221 1% 1% NG Combined Cycle (new) 84 88 101 6% 20% Combustion Turbine 156 174 172 12% 10% Oil/Gas Steam 82 80 79 -2% -4% Non-Hydro Renewables 107 108 109 1% 1% Hydro 101 101 101 0% 0% Nuclear 101 101 101 0% 0% Other 5 5 5 2% 2% Total 1,095 1,095 1,096 0% 0% Source: Integrated Planning Model run by EPA, 2014


### Table 7. Projected Capacity Factor of Existing Coal Steam and Natural Gas Combined Cycle Capacity

Existing Coal Steam Existing Natural Gas Combined Cycle

2020 2025 2030 2020 2025 2030 Base Case 78% 80% 79% 52% 48% 42% Option 2 Regional 75% 74% 72% 61% 61% 59% Option 2 State 75% 74% 72% 60% 59% 57% Source: Integrated Planning Model run by EPA, 2014 Formatted Table

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6 Table 68 . Projected Capacity Additions, Gas (GW) Cumulative Capacity Additions: Gas Combined Cycle Incremental Cumulative Capacity Additions: Gas Combined Cycle 2020 2025 2030 2020 2025 2030 ReferenceBase Case 11.9 38.9 83.8 Two Block Regional 23.1 48.7 88.5 11.1 9.8 4.7 Two Block State 30.2 58.9 100.7 18.3 20.0 17.0 Source: Integrated Planning Model run by EPA, 2014



### Table 79 . Projected Capacity Additions, Non-hydro Renewable (GW) Cumulative Capacity Additions: Renewables Incremental Cumulative Capacity Additions: Renewables 2020 2025 2030 2020 2025 2030 ReferenceBase Case 17.8 28.4 32.7 Two Block Regional 18.1 28.8 33.6 0.3 0.4 0.8 Two Block State 18.3 29.0 33.7 0.5 0.6 1.0 Source: Integrated Planning Model run by EPA, 2014



### Table 810 . Coal Production for the Electric Power Sector, 2020 Coal Production (MM Tons) Percent Change from ReferenceBase Case Two Block Two Block Base Case Regional State Regional State Appalachia 140 110 111 -22% -21% Interior 249 230 224 -8% -10% West 446 324 308 -27% -31% Waste Coal 9 11 11 20% 20% Imports 0 0 0 Total 844 675 654 -20% -22% Source: Integrated Planning Model run by EPA, 2014



### Table 119 . Power Sector Gas Use Power Sector Gas Use (TCF) Percent Change in Power Sector Gas Use 2020 2025 2030 2020 2025 2030 ReferenceBase Case 8.35 8.88 9.89 Two Block Regional 9.90 10.90 12.14 18.7% 22.7% 22.6% Two Block State 10.14 11.14 12.42 21.5% 25.5% 25.6%



### Table 1 20 . Projected Average Minemouth and Delivered Coal Prices (2011$/MMBtu)
Minemouth Delivered - Electric Power Sector 2020 2025 2030 2020 2025 2030 ReferenceBase Case 1.73 1.88 2.06 2.62 2.80 2.98 Two Block Regional 1.55 1.69 1.81 2.32 2.47 2.59 Two Block State 1.55 1.69 1.83 2.31 2.47 2.62



### Table 1 31 . Projected Average Minemouth and Delivered Coal Prices: Percent Change from Base Case Projections
Minemouth Delivered - Electric Power Sector

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7 2020 2025 2030 2020 2025 2030 Two Block Regional -10.6% -10.5% -12.1% -11.5% -11.8% -13.0% Two Block State -10.5% -10.4% -11.0% -11.7% -11.9% -12.2%

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8 Table 1 42 . Projected Delivered Natural Gas Prices (2011$/MMBtu)
Henry Hub Delivered - Electric Power Sector
2020 2025 2030 2020 2025 2030
Base Case 4.98 5.68 6.00 5.36 6.11 6.39 Two Block Regional 5.53 6.06 6.62 5.90 6.42 6.94 Two Block State 5.56 6.10 6.73 5.93 6.45 7.05

Delivered - Electric Power Sector 2020 2025 2030 Reference 5.36 6.11 6.39 Two Block Regional 5.90 6.42 6.94 Two Block State 5.93 6.45 7.05



### Table 1 53

. Delivered Projected Natural Gas Prices: Percent Change from Base Case Projections
Henry Hub Delivered - Electric Power Sector 2020 2025 2030 2020 2025 2030 Two Block Regional 10.9% 6.7% 10.3% 9.9% 5.0% 8.6% Two Block State 11.5% 7.3% 12.2% 10.6% 5.5% 10.3%



### Table 16. 2020 Projected Contiguous U.S. and Regional Retail Electricity Prices (cents/kWh)

2020 Projected Retail Price (cents/kWh) Percent Change from Base Case Base Case Two Block Regional Two Block State Two Block Regional Two Block State
ERCT 9.9 10.3 10.4 4.8% 5.1%
FRCC 10.6 11.0 11.2 3.6% 5.1%
MROE 10.4 10.5 10.5 0.6% 0.5%
MROW 9.2 9.2 9.3 0.0% 1.8%
NEWE 13.8 14.2 14.5 2.5% 5.0%
NYCW 18.0 18.3 18.5 1.9% 2.6%
NYLI 14.7 15.1 15.2 2.5% 3.3%
NYUP 12.7 13.0 13.1 2.1% 2.8%
RFCE 12.2 12.6 12.7 3.2% 3.6%
RFCM 10.7 10.7 10.8 0.3% 1.1%
RFCW 10.1 10.3 10.4 1.7% 2.5%
SRDA 9.0 9.2 9.2 2.8% 2.6% Formatted Table

Formatted: 05 BodyText

Formatted Table

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9 SRGW 9.3 9.5 9.6 1.9% 2.9%
SRSE 10.4 10.4 10.5 0.5% 0.7%
SRCE 8.2 8.2 8.2 -0.9% -0.9%
SRVC 10.7 10.6 10.7 -0.3% -0.1%
SPNO 10.6 10.5 10.5 -1.0% -1.3%
SPSO 8.3 8.8 8.8 5.0% 5.3%
AZNM 10.5 10.7 10.8 1.7% 2.9%
CAMX 14.3 14.6 14.6 2.2% 2.4%
NWPP 7.3 7.4 7.4 1.3% 1.4%
RMPA 8.9 9.0 9.2 0.7% 2.9% Contiguous U.S. 10.4 10.6 10.7 1.9% 2.5%



### Table 17. 2025 Projected Contiguous U.S. and Regional Retail Electricity Prices (cents/kWh)

2025 Projected Retail Price (cents/kWh) Percent Change from Base Case

Base Case Two Block Regional Two Block State Two Block Regional Two Block State

ERCT 11.2 11.5 11.5 2.5% 3.0%
FRCC 10.9 11.2 11.3 2.6% 4.0%
MROE 10.5 10.5 10.4 0.3% -0.8%
MROW 9.2 9.4 9.6 1.9% 4.2%
NEWE 14.2 14.6 14.9 2.2% 4.4%
NYCW 18.8 19.2 19.3 2.0% 2.3%
NYLI 15.6 16.0 16.1 2.9% 3.3%
NYUP 13.2 13.5 13.6 2.0% 2.3%
RFCE 12.6 12.8 12.9 1.6% 2.0%
RFCM 10.7 10.8 10.9 0.7% 1.8%
RFCW 10.9 11.0 11.1 0.7% 1.0%
SRDA 9.3 9.6 9.6 2.7% 3.0%
SRGW 10.1 10.3 10.3 1.3% 1.9%
SRSE 10.3 10.5 10.5 1.1% 1.1%
SRCE 8.2 8.1 8.1 -1.5% -1.7%
SRVC 10.6 10.6 10.6 -0.1% 0.1%
SPNO 10.3 10.3 10.3 -0.2% -0.3%
SPSO 8.8 9.3 9.2 4.9% 4.4%
AZNM 10.8 11.1 11.3 2.7% 4.7%
CAMX 13.9 14.1 14.1 1.0% 1.0%
NWPP 7.4 7.4 7.5 0.7% 1.7%
RMPA 9.4 9.5 9.7 0.9% 3.3% Formatted Table

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10 Contiguous U.S. 10.8 10.9 11.0 1.4% 2.0%



### Table 18. 2030 Projected Contiguous U.S. and Regional Retail Electricity Prices (cents/kWh)

2030 Projected Retail Price (cents/kWh) Percent Change from Base Case

Base Case Two Block Regional Two Block State Two Block Regional Two Block State

ERCT 11.6 12.1 12.1 4.0% 4.8%
FRCC 10.9 11.5 11.6 5.0% 6.3%
MROE 10.5 10.7 10.7 2.3% 1.6%
MROW 9.4 9.6 9.8 2.1% 4.9%
NEWE 15.1 15.4 15.4 2.0% 1.8%
NYCW 19.9 20.3 20.3 1.7% 1.6%
NYLI 16.9 17.2 17.1 1.8% 1.3%
NYUP 14.2 14.5 14.5 1.7% 1.6%
RFCE 12.4 12.8 12.8 2.8% 3.4%
RFCM 10.8 11.0 11.1 1.8% 2.9%
RFCW 11.2 11.4 11.4 1.3% 1.8%
SRDA 9.5 9.9 10.0 4.5% 5.0%
SRGW 10.4 10.5 10.6 0.9% 1.6%
SRSE 10.4 10.6 10.7 2.4% 2.6%
SRCE 8.1 8.1 8.1 -1.2% -1.2%
SRVC 10.4 10.4 10.5 0.6% 1.1%
SPNO 10.2 10.2 10.2 -0.1% 0.2%
SPSO 9.1 9.7 9.6 6.3% 6.1%
AZNM 11.5 11.8 12.0 2.7% 4.4%
CAMX 14.1 14.4 14.5 1.9% 2.3%
NWPP 7.4 7.5 7.6 1.2% 2.6%
RMPA 9.9 10.1 10.4 2.1% 5.7%

Contiguous U.S. 10.9 11.2 11.3 2.3% 2.9%



### 4 Estimated Climate Benefits from CO 2 

### Emission Reductions

Tables 1 9 through 213 report the climate benefits estimated in three analysis years (2020, 2025, and 2030) for the two illustrative compliance scenarios (i.e., state a nd regional) evaluated. Formatted Table

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11 Table 1 49 . Estimated Global Climate Benefits of CO 2 

### Reductions for Building Blocks 1 and 2 in 2020 (billions of 2011$)*

Discount Rate and Statistic State Regional Million metric tonnes of CO 2 reduced 252 231 5% (average) $3.2 $3.0 3% (average) $12 $11 2.5% (average) $17 $16 3% (95 th percentile) $34 $31 * The SCC values are dollar-year and emissions-year specific. SCC values represent only a partial accounting of climate impacts.



### Table 1520 Estimated Global Climate Benefits of CO 2 

### Reductions in 2025 (billions of 2011$)*

Discount Rate and Statistic State Regional Million metric tonnes of CO 2 reduced 284 258 5% (average) $4.2 $3.9 3% (average) $14 $13 2.5% (average) $21 $19 3% (95 th percentile) $43 $39 * The SCC values are dollar-year and emissions-year specific. SCC values represent only a partial accounting of climate impacts.



### Table 16 21 Estimated Global Climate Benefits of CO 2 

### Reductions in 2030 (billions of 2011$)*

Discount Rate and Statistic State Regional Million metric tonnes of CO 2 reduced 292 258 5% (average) $5.0 $4.4 3% (average) $16 $14 2.5% (average) $23 $21 3% (95 th percentile) $50 $44 * The SCC values are dollar-year and emissions-year specific. SCC values represent only a partial accounting of climate impacts.



### 5 Estimated Human Health Co-Benefits

Tables 224 through 246 provide the emission reductions estimated to occur in three analysis years (2020, 2025, and 2030) for two ill ustrative compliance scenarios (i.e., state and regional) by region (i.e., East, West, and California). Tables 25 7 through 279 report the health co-benefits estimated in three analysis year s (2020, 2025, and 2030) for the two illustrative compliance scenarios (i.e., state and regional) evaluated.

Table 1722 Emission Reductions of Criteria Pollutants in 2020 (thousands of short tons) Region SO 2 All-year NOx Ozone-Season NOx State

East 253 233 96 West 23 40 17

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12 California 0 0 0 Total 277 273 113 Regional 216 209 86

East 15 29 12 West 1 2 1 California 232 240 98 Total 216 209 86



### Table 1823 Emission Reductions of Criteria Pollutants in 2025 (thousands of short tons) Region SO 2 All-year NOx Ozone-Season NOx State

East 318 265 111 West 26 41 17 California 0 9 1 Total 344 315 128 Regional

East 265 237 97 West 22 26 11 California 1 8 1 Total 287 270 109



### Table 1924 Emission Reductions of Criteria Pollutants in 2030 (thousands of short tons) Region SO 2 All-year NOx Ozone-Season NOx State

East 365 265 108 West 31 48 21 California 0 0 0 Total 396 313 128 Regional

East 316 233 92 West 26 29 12 California 1 1 0 Total 342 263 105

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13 Table 2 05 Summary of Estimated Monetized Health Co-benefits in 2020 (millions of 2011$)*
Pollutant 3% Discount Rate 7% Discount Rate State

SO 2 $10,000 to $23,000 $9,300 to $21,000 NOx (as PM 2.5 ) $1,600 to $3,600 $1,400 to $3,200 NOx (as Ozone) $450 to $1,900 $450 to $1,900 Total $12,000 to $29,000 $11,000 to $26,000 Regional

SO 2 $8,900 to $20,000 $8,000 to $18,000 NOx (as PM 2.5 ) $1,500 to $3,300 $1,300 to $3,000 NOx (as Ozone) $410 to $1,700 $410 to $1,700 Total $11,000 to $25,000 $9,800 to $23,000 * All estimates are rounded to two significant figures so numbers may not sum down columns. The estimated monetized co-benefits do not include climate benefits or reduced health effects from direct exposure to NO 2 , SO 2 , ecosystem effects, or visibility impairme nt. All fine particles are assumed to have equivalent health effects, but the benefit-per-ton estimates vary depending on the location and magnitude of their impact on PM 2.5 levels, which drive population exposure. The moneti zed co-benefits incorporate the conv ersion from precursor emissions to ambient fine particles and ozone. Co-benefits for PM 2.5 precursors are based on regional benefit-per-ton estimates. Co-benefits for ozone are based on ozone season NOx emissions. Ozone co-benefits occur in analysis year, so they are the same for all discount rates. Confidence intervals are unavailable for this analysis because of the benefit-perton methodology. In general, the 95 th percentile confidence interval for monetized PM 2.5 benefits ranges from approximately -90 percent to +180 per cent of the central estimates based on Krewski et al. (2009) and Lepeule et al. (2012).



### Table 2 16 Summary of Estimated Monetized Health Co-benefits in 2025 (millions of 2011$)*
Pollutant 3% Discount Rate 7% Discount Rate State

SO 2 $14,000 to $32,000 $13,000 to $29,000 NOx (as PM 2.5 ) $2,100 to $4,800 $1,900 to $4,300 NOx (as Ozone) $680 to $2,900 $680 to $2,900 Total $17,000 to $40,000 $15,000 to $36,000 Regional

SO 2 $12,000 to $27,000 $11,000 to $24,000 NOx (as PM 2.5 ) $1,900 to $4,200 $1,700 to $3,800 NOx (as Ozone) $600 to $2,600 $600 to $2,600 Total $14,000 to $34,000 $13,000 to $30,000 * All estimates are rounded to two significant figures so numbers may not sum down columns. The estimated monetized co-benefits do not include climate benefits or reduced health effects from direct exposure to NO 2 , SO 2 , ecosystem effects, or visibility impairme nt. All fine particles are assumed to ha ve equivalent health effects, but the benefit-per-ton estimates vary depending on the location and magnitude of their impact on PM 2.5 levels, which drive population exposure. The moneti zed co-benefits incorporate the conv ersion from precursor emissions to ambient fine particles and ozone. Co-benefits for PM 2.5 precursors are based on regional benefit-per-ton estimates. Co-benefits for ozone are based on ozone season NOx emissions. Ozone co-benefits occur in analysis year, so they are the same for all discount rates. Confidence intervals are unavailable for this analysis because of the benefit-perton methodology. In general, the 95 th percentile confidence interval for monetized PM 2.5 benefits ranges from approximately -90 percent to +180 per cent of the central estimates based on Krewski et al. (2009) and Lepeule et al. (2012).

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14 Table 2 27 Summary of Estimated Monetized Health Co-benefits in 2030 (millions of 2011$)*
Pollutant 3% Discount Rate 7% Discount Rate State

SO 2 $17,000 to $39,000 $16,000 to $35,000 NOx (as PM 2.5 ) $2,100 to $4,700 $1,900 to $4,200 NOx (as Ozone) $700 to $3,000 $700 to $3,000 Total $20,000 to $47,000 $18,000 to $43,000 Regional

SO 2 $15,000 to $34,000 $14,000 to $31,000 NOx (as PM 2.5 ) $1,800 to $4,100 $1,700 to $3,700 NOx (as Ozone) $600 to $2,600 $600 to $2,600 Total $18,000 to $41,000 $16,000 to $37,000 * All estimates are rounded to two significant figures so numbers may not sum down columns. The estimated monetized co-benefits do not include climate benefits or reduced health effects from direct exposure to NO 2 , SO 2 , ecosystem effects, or visibility impairme nt. All fine particles are assumed to have equivalent health effects, but the benefit-per-ton estimates vary depending on the location and magnitude of their impact on PM 2.5 levels, which drive population exposure. The moneti zed co-benefits incorporate the conv ersion from precursor emissions to ambient fine particles and ozone. Co-benefits for PM 2.5 precursors are based on regional benefit-per-ton estimates. Co-benefits for ozone are based on ozone season NOx emissions. Ozone co-benefits occur in analysis year, so they are the same for all discount rates. Confidence intervals are unavailable for this analysis because of the benefit-perton methodology. In general, the 95 th percentile confidence interval for monetized PM 2.5 benefits ranges from approximately -90 percent to +180 per cent of the central estimates based on Krewski et al. (2009) and Lepeule et al. (2012).



### 6 Combined Climate Benefits and Health Co-benefits

Tables 2810 through 3012 provide the combined climate and health benefits for each compliance scenario s evaluated for 2020, 2025, and 2030.

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15 Table 2 38 Combined Climate Benefits and Health Co-Benefits in 2020 (billions of 2011$)*

SCC Discount Rate Climate Benefits

Only Climate Benefits and Health Co-Benefits (Discount Rate Applied to Health Co-Benefits) 3% 7% State 252 million metric tonnes CO 2

5% $3.2 $16 to $32 $14 to $29 3% $12 $24 to $40 $23 to $38 2.5% $17 $30 to $46 $28 to $43 3% (95 th percentile) $34 $47 to $63 $46 to $61 Regional 231 million metric tonnes CO 2 5% $3.0 $14 to $28 $13 to $26 3% $11 $21 to $36 $20 to $33 2.5% $16 $27 to $41 $26 to $39 3% (95 th percentile) $31 $42 to $57 $41 to $54 *All estimates are rounded to two significant figures. Climate benefits are based on reductions in CO 2 emissions. Co-benefits are based on regional benefit-per-ton estimat es. Co-benefits for ozone are based on ozone season NOx emissions. Ozone co-benefits occur in an alysis year, so they are the same for all discount rates. The health cobenefits reflect the sum of the PM 2.5 and ozone co-benefits and reflect the ra nge based on adult mortality functions (e.g., from Krewski et al. (2009) with Bell et al. (2004) to Lepeule et al. (2012) with Levy et al. (2005)). The monetized health co-benefits do not include redu ced health effects from direct exposure to NO 2 , SO 2 , and HAP; ecosystem effects; or visibility impairment.



### Table 2 49 Combined Climate Benefits and Health Co-Benefits in 2025 (billions of 2011$)*

SCC Discount Rate Climate Benefits

Only Climate Benefits and Health Co-Benefits (Discount Rate Applied to Health Co-Benefits) 3% 7% State 284 million metric tonnes CO 2

5% $4.2 $21 to $44 $20 to $40 3% $14 $31 to $54 $30 to $50 2.5% $21 $38 to $61 $36 to $57 3% (95 th percentile) $43 $60 to $83 $59 to $79 Regional 258 million metric tonnes CO 2 5% $3.9 $18 to $37 $17 to $34 3% $13 $27 to $46 $26 to $43 2.5% $19 $33 to $52 $32 to $49 3% (95 th percentile) $39 $54 to $73 $52 to $70 *All estimates are rounded to two significant figures. Climate benefits are based on reductions in CO 2 emissions. Co-benefits are based on regional benefit-per-ton estimat es. Co-benefits for ozone are based on ozone season NOx emissions. Ozone co-benefits occur in an alysis year, so they are the same fo r all discount rates. The health cobenefits reflect the sum of the PM 2.5 and ozone co-benefits and reflect the ra nge based on adult mortality functions (e.g., from Krewski et al. (2009) with Bell et al. (2004) to Lepeule et al. (2012) with Levy et al. (2005)). It is important to note that the monetized health co-benefits do not include reduced health effects from direct exposure to NO 2 , SO 2 , and HAP; ecosystem effects; or visibility impairment.

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16 Table 2530 Combined Climate Benefits and Health Co-Benefits in 2030 (billions of 2011$)*

SCC Discount Rate Climate Benefits

Only Climate Benefits and Health Co-Benefits (Discount Rate Applied to Health Co-Benefits) 3% 7% State 292 million metric tonnes CO 2

5% $5.0 $25 to $52 $23 to $48 3% $16 $36 to $63 $35 to $59 2.5% $23 $44 to $70 $42 to $66 3% (95 th percentile) $50 $70 to $97 $68 to $92 Regional 258 million metric tonnes CO 2 5% $4.4 $22 to $45 $20 to $41 3% $14 $32 to $55 $30 to $51 2.5% $21 $38 to $62 $37 to $58 3% (95 th percentile) $44 $61 to $85 $60 to $81 *All estimates are rounded to two significant figures. Climate benefits are based on reductions in CO 2 emissions. Co-benefits are based on regional benefit-per-ton estimat es. Co-benefits for ozone are based on ozone season NOx emissions. Ozone co-benefits occur in an alysis year, so they are the same for all discount rates. The health cobenefits reflect the sum of the PM 2.5 and ozone co-benefits and reflect the ra nge based on adult mortality functions (e.g., from Krewski et al. (2009) with Bell et al. (2004) to Lepeule et al. (2012) with Levy et al. (2005)). It is important to note that the monetized health co-benefits do not include reduced health effects from direct exposure to NO 2 , SO 2 , and HAP; ecosystem effects; or visibility impairment.



### 7 Net Benefits

Tables 3113 through 3315 summarize the benefits, costs, and net benefits for 2020, 2025, and 2030 for the two illustrative compliance scenarios evaluated for building blocks 1 and 2 only.

### ***E.O. 12866 Review – Draft – Do Not Ci te, Quote or Release During Review***

17 Table 2631 Summary of Monetized Benefits, Complia nce Costs, and Net Benefits in 2020 (billions of 2011$) a
State 3% Discount Rate 7% Discount Rate Climate Benefits b 5% discount rate 3% discount rate 2.5% discount rate 95 th percentile at 3% discount rate $3.2 $12 $17 $34 Air pollution health co-benefits c $12 to $29 $11 to $26 Total Compliance Costs d $4.4 Net Benefits e $20 to $36 $18 to $33

Non-Monetized Benefits Direct exposure to SO 2 and NO 2 1.1 tons of Hg Ecosystem Effects Visibility impairment Regional 3% Discount Rate 7% Discount Rate Climate Benefits b 5% discount rate 3% discount rate 2.5% discount rate 95 th percentile at 3% discount rate $3.0 $11 $16 $31 Air pollution health co-benefits c $11 to $25 $9.8 to $23 Total Compliance Costs d $3.2 Net Benefits e $18 to $32 $17 to $30

Non-Monetized Benefits Direct exposure to SO 2 and NO 2 1.1 tons of Hg Ecosystem Effects Visibility impairment

a All estimates are for 2020 and are rounded to two significant figures, so figures may not sum. b The climate benefit estimates in this summary table reflect global impacts from CO 2 emission changes and do not account for changes in non-CO 2 GHG emissions. Also, different discount rates are a pplied to SCC than to the other estimates because CO 2 emissions are long-lived and subsequent damages occur over many years. The SCC estimates are year-specific and increase over time.

c The air pollution health co-benefits reflect reduced exposure to PM 2.5 and ozone associated with emission reductions of directly emitted PM 2.5 , SO 2 and NO X . The range reflects the use of concentration-response functions from different epidemiology studies. The reduction in premature fatalities each year accounts for over 90 percent of total monetized co-benefits from PM 2.5 and ozone. These models assume that all fine particles, regardless of thei r chemical composition, are equally potent in causing premature mortality because the scientific evidence is not yet sufficient to allow differentiation of effect estimates by particle type. d Total costs are approximated by the illustrative compliance cost s estimated using the Integrated Planning Model and a discount rate of approximately 5%. This estimate includes monitoring, recordkeeping, and reporting costs and demand side energy efficiency program and participant costs.

e The estimates of net benefits in this summary table are calcu lated using the global SCC at a 3 percent discount rate (model average). Tables 10-12 in this memo present combined cl imate and health estimates based on additional discount rates.

### ***E.O. 12866 Review – Draft – Do Not Ci te, Quote or Release During Review***

18 Table 27 32 Summary of Monetized Benefits, Compliance Costs, and Net Benefits in 2025 (billions of 2011$) a
State 3% Discount Rate 7% Discount Rate Climate Benefits b 5% discount rate 3% discount rate 2.5% discount rate 95 th percentile at 3% discount rate $4.2 $14 $21 $43 Air pollution health co-benefits c $17 to $40 $15 to $36 Total Compliance Costs d $4.6 Net Benefits e $27 to $49 $25 to $46

Non-Monetized Benefits Direct exposure to SO 2 and NO 2 1.4 tons of Hg Ecosystem Effects Visibility impairment Regional 3% Discount Rate 7% Discount Rate Climate Benefits b 5% discount rate 3% discount rate 2.5% discount rate 95 th percentile at 3% discount rate $3.9 $13 $19 $39 Air pollution health co-benefits c $14 to $34 $13 to $30 Total Compliance Costs d $3.0 Net Benefits e $24 to $43 $23 to $40

Non-Monetized Benefits Direct exposure to SO 2 and NO 2 1.3 tons of Hg Ecosystem Effects Visibility impairment

a All estimates are for 2025 and are rounded to two significant figures, so figures may not sum. b The climate benefit estimates in this summary table reflect global impacts from CO 2 emission changes and do not account for changes in non-CO 2 GHG emissions. Also, different discount rates are a pplied to SCC than to the other estimates because CO 2 emissions are long-lived and subsequent damages occur over many years. The SCC estimates are year-specific and increase over time.

c The air pollution health co-benefits reflect reduced exposure to PM 2.5 and ozone associated with emission reductions of directly emitted PM 2.5 , SO 2 and NO X . The range reflects the use of concentration-response functions from different epidemiology studies. The reduction in premature fatalities each year accounts for over 90 percent of total monetized co-benefits from PM 2.5 and ozone. These models assume that all fine particles, regardless of thei r chemical composition, are equally potent in causing premature mortality because the scientific evidence is not yet sufficient to allow differentiation of effect estimates by particle type. d Total costs are approximated by the illustrative compliance cost s estimated using the Integrated Planning Model and a discount rate of approximately 5%. This estimate includes monitoring, recordkeeping, and reporting costs and demand side energy efficiency program and participant costs.

e The estimates of net benefits in this summary table are calcu lated using the global SCC at a 3 percent discount rate (model average). Tables 10-12 in this memo present combined clim ate and health estimates based on additional discount rates.

### ***E.O. 12866 Review – Draft – Do Not Ci te, Quote or Release During Review***

19 Table 28 33 Summary of Monetized Benefits, Compliance Costs, and Net Benefits in 2030 (billions of 2011$) a
State 3% Discount Rate 7% Discount Rate Climate Benefits b 5% discount rate 3% discount rate 2.5% discount rate 95 th percentile at 3% discount rate $5.0 $16 $23 $50 Air pollution health co-benefits c $20 to $47 $18 to $43 Total Compliance Costs d $9.8 Net Benefits e $27 to $53 $25 to $49

Non-Monetized Benefits Direct exposure to SO 2 and NO 2 1.5 tons of Hg Ecosystem Effects Visibility impairment Regional 3% Discount Rate 7% Discount Rate Climate Benefits b 5% discount rate 3% discount rate 2.5% discount rate 95 th percentile at 3% discount rate $4.4 $14 $21 $44 Air pollution health co-benefits c $18 to $41 $16 to $37 Total Compliance Costs d $6.8 Net Benefits e $25 to $48 $23 to $45

Non-Monetized Benefits Direct exposure to SO 2 and NO 2 1.3 tons of Hg Ecosystem Effects Visibility impairment

a All estimates are for 2030, and are rounded to two significant figures, so figures may not sum. b The climate benefit estimates in this summary table reflect global impacts from CO 2 emission changes and do not account for changes in non-CO 2 GHG emissions. Also, different discount rates are a pplied to SCC than to the other estimates because CO 2 emissions are long-lived and subsequent damages occur over many years. The SCC estimates are year-specific and increase over time.

c The air pollution health co-benefits reflect reduced exposure to PM 2.5 and ozone associated with emission reductions of directly emitted PM 2.5 , SO 2 and NO X . The range reflects the use of concentration-response functions from different epidemiology studies. The reduction in premature fatalities each year accounts for over 90 percent of total monetized co-benefits from PM 2.5 and ozone. These models assume that all fine particles, regardless of thei r chemical composition, are equally potent in causing premature mortality because the scientific evidence is not yet sufficient to allow differentiation of effect estimates by particle type. d Total costs are approximated by the illustrative compliance costs estimated using the Integrated Planning and a discount rate o f approximately 5%. This estimate includes monitoring, recordke eping, and reporting costs and demand side energy efficiency program and participant costs.

e The estimates of net benefits in this summary table are calcu lated using the global SCC at a 3 percent discount rate (model average). Tables 10-12 in this memo present combined clim ate and health estimates based on additional discount rates.

### ***E.O. 12866 Review – Draft – Do Not Ci te, Quote or Release During Review***

20 8 Labor
Table 34 presents the labor changes estimated in job-years associated with the illustrative building blocks 1 and 2 analysis.

Table 29 34 Engineering-Based a 

### Changes in Labor Utilizat ion, Building Blocks 1 & 2 ( Number of Job-Years of Employment in Year) Category Regional Compliance State Compliance 2017-2020 2021-2025 2026-2030 2017-2020 2021-2025 2026-2030

Construction-related (One-time) Changes* Heat Rate Improvement: Total 37,400 0 0 35,300 0 0 Boilermakers and General Construction 26,000 0 0 24,500 0 0 Engineering and Management 6,900 0 0 6,500 0 0 Equipment-related 3,300 0 0 3,200 0 0

Material-related 1,200 0 0 1,100 0 0 New Capacity Construction: Total 7,700 7,300 1,600 11,000 9,400 1,000
Renewables 0 500 1,600 -700 500 1,600 Natural Gas 7,700 6,800 0 11,700 8,900 -600 Recurring Changes** 2020 2025 2030 2020 2025 2030 Operation and Maintenance: Total -10,970 -9,500 -8,300 -14,100 -12,200 -10,600 Changes in Gas 1,330 1,500 1,100 2,200 2,400 2,100

Retired Coal -11,800 -10,700 -9,200 -15,600 -14,100 -12,300 Retired Oil and Gas -500 -300 -200 -700 -500 -400 Fuel Extraction: Total -1,900 -1,000 -700 -1,500 -1,000 -800 Coal -9,700 -11,100 -12,000 -10,500 -12,400 -13,500 Natural Gas 7,800 10,100 11,300 9,000 11,400 12,700 Supply Side Employment Impacts – Quantified 32,230 -3,200 -7,400 30,700 -3,800 -10,400

a Job-year estimates are derived from IPM investment and O&M cost estimates, as well as IPM fuel use estimates (tons coals or MMBtu gas) b All job-year estimates on this are Full Time Equivalent (FTE) jobs. Job estimates in the Demand-Side energy efficiency section (below) include both full time and part time jobs *Construction-related job-year changes are one-time impact s, occurring during each year of the 2 to 4 year period during which construction and HRI instal lation activities occur. Figures in tabl e are average job-years during each of the years in each range. Negative job-year estimates when additional generating capacity must be built in the base case, but is avoided in the Guideline implementation s cenarios due to HRI or Demand-side energy efficiency programs. **Recurring Changes are job-years associated with a nnual recurring jobs including operating and maintenance activities and fuel extraction jobs. Newly built generating capacity creates a recurring stre am of positive job-years, while retiring generating capacity, as well as avoided new built capacity, create a stream of negative job-years. In addition, there are recurring jobs prior to 2020 to fuel and operate new generating capacity brought online before 2020; the recurring jobs prior to 2020 are not estimated. Formatted: 05 BodyText

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21 9 References

Bell, M.L., et al. 2004. “Ozone and Short-Term Mortality in 95 U.S. Urban Communities, 1987- 2000.” Journal of the American Medical Association, 292(19): pp. 2372-8.

Krewski D; M. Jerrett; R.T. Burnett; R. Ma; E. Hughes and Y. Shi, et al . 2009. Extended FollowUp and Spatial Analysis of the American Cancer Society Study Linking Particulate Air Pollution and Mortality. HEI Research Report, 140, Health Effects Institute, Boston, MA.
Lepeule, J.; F. Laden; D. Dockery and J. Schwartz. 2012. “Chronic Exposure to Fine Particles and Mortality: An Extended Follow-Up of th e Harvard Six Cities Study from 1974 to 2009.” Environmental Health Perspectives, July, 120(7): pp. 965-70.
Levy, J.I.; S.M. Chemerynski and J.A. Sarnat. 2005. “Ozone Exposure and Mortality: An Empiric Bayes Meta-regression Analysis.” Epidemiology, 16(4): pp. 458-68.