15 -8-i CHAPTER 15. ENVIRONMENTAL ASSESSMENT FOR PROPOSED ENERGY CONSERVATION STANDARDS FOR DISTRIBUTION TRANSFORMERS

TABLE OF CONTENTS

15.1 INTRODUCTION ........................................................................................................... 8-1 15.2 AIR EMISSIONS ANALYS IS ........................................................................................ 8-2 15.2.1 Air Emissions Descriptions .............................................................................................. 8-2 15.2.1.1 Sulfur Dioxide ................................................................................................ 8-2 15.2.1.2 Nitrogen Oxides ............................................................................................. 8-3 15.2.1.3 Mercury .......................................................................................................... 8-3 15.2.1.4 Carbo n Dioxide .............................................................................................. 8-4 15.2.1.5 Particulate Matter ........................................................................................... 8-4 15.2.1.6 Air Quality Regulation ................................................................................... 8-5 15.3 RESULTS ........................................................................................................................ 8-615 -8-1 CHAPTER 8. ENVIRONMENTAL ASSESSMENT FOR PROPOSED ENERGY
CONSERVATION STANDAR DS FOR DISTRIBUTION TRANSFORMERS

8.1 INTRODUCTION

The U.S. Department of Energy (DOE) will conduct an environmental assessment as part of the notice of proposed rulemaking for distribution transformers. To assess the impacts of proposed energy conservation standards on certain environmental indicators , DOE will use a variant of the Energy Information Administration (EIA)’s National Energy Modeling System (NEMS). a EIA uses NEMS to produce the Annual Energy Outlook (AEO)

. 1 DOE will use a variant known as NEMS-BT to provide key inputs to the analysis, based on the late st version of the Annual Energy Outlook

.

The intent of the environmental impact assessment is to properly quantify and consider the environmental effects of new Federal rules. DOE intends the environmental assessment to describe for policymakers and other stakeholders the impact on air emissions of amended energy conservation standards for distribution transformers. The outcomes of the environmental analysis are driven largely by changes in power plant types and quantities of electricity generated under

e ach of the alternatives. Changes in electricity generation are described in the utility impact analysis in chapter 1 3 of this technical support document. As noted in chapter 1 4 , NEMS

- BT model forecasts end in 2035. Emissions impacts beyond 2035 are assumed to be equal to the impacts in 2035.

The primary environmental effects of energy conservation standards for distribution transformers would be reduced power plant emissions resulting from reduced consumption of electricity. 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 and may take the form of solid particles ( i.e. , particulates or particulate matter), liquid droplets, or gases. b The environmental assessment considers three pollutants—sulfur dioxide (SO 2 ), nitrogen oxides (NO X ), and mercury (Hg)

— as well as carbon emissions. The only form of carbon emissions tracked by NEMS-BT is carbon dioxide (CO 2 ), so the carbon discussed in this report is in the form of CO 2 DOE will use NEMS

BT to calculate power sector emissions

, using additional external analysis as needed.

a For more information on NEMS, refer to the U.S. Department of Energy, Energy Information Administration

documentation. A useful summary is National Energy Modeling System: An Overview 2003 , DOE/EIA

0581(2003). March 2003. EIA approves use of the name NEMS only to describe an official version of the model without any modification to code or data. Because this analysis entails some minor code modifications, and the model is run under policy scenarios that are variations on EIA assumptions, DOE refers to the model as NEMS

- BT (BT is DOE’s Building Technologies Program). NEMS

- BT was previously called NEMS

- BRS.

b More information on air pollution characteristics and regulations is available on the U.S. Environment Protection

Agency’s website at www.epa.gov.15 -8-2 DOE notes that the Clean Air Act requires the U.S. Environmental Protection Agency ( EPA ) to set National Ambient Air Quality Standards for the followi ng six common air pollutants, also known as criteria pollutants : (1) ozone; (2) particulate matter (PM); (3) carbon monoxide (CO); (4) nitrogen dioxide; (5) SO 2 ; and (6) lead. 2 SO 2 and NO X

8.2 AIR EMISSIONS ANALYS IS are the primary precursors to ozone and PM, respectively, and will be addressed by the environmental
assessment. In the case of CO, electric utilities and fuel -fired appliances are not significant

sources. Finally, with regard to lead, industrial processes (not electric utilities), including primary and secondary lead sme lters and battery manufacturers, are responsible for most lead emissions

.

DOE plans to conduct the environmental assessment as a policy deviation from the most recent AEO

,

8.2.1 Air Emissions Descriptions applying the same basic set of assumptions. The NEMS reference case and alternative growth scenarios are as described in the utility impact analysis (see c hapter 1 4 of the preliminar y technical support document). Below are descriptions of the air emissions that DOE will consider in the environmental assessment.

DOE ’s analysis considers three pollutants: sulfur dioxide (SO 2 ), nitrogen oxides (NO X ), and mercury (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. c This analysis also considers carbon dioxide (CO 2

8.2.1.1 Sul fur Dioxide ).

Sulfur dioxide, or SO 2 , belongs to the family of sulfur oxide gases (SO X ). Sulfur is prevalent in all raw materials, including crude oil, coal, and ore that contains common metals such as 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 easily 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.

SO 2 emissions from affected Electric Generating Units (EGUs) are subject to nationwide and regional emissions cap and trading programs, which create uncertainty about the standards’ impact on SO 2 emissions. The attainment of emissions caps is flexible among EGUs and is enforced through the use of emissions al lowances and tradable permits. Under existing EPA regulations, any excess SO 2 emission allowances resulting from the lower electricity demand caused by the imposition of an efficiency standard could be used to offset increases in SO 2

c More information on air pollution characteristics and regulations is available on the U.S. Environment Protection Agent (EPA)’s website at www.epa.gov.15 -8-3 emissions by any regulated EGU. If the standard resulted in a permanent increase in the quantity of unused emission allowances, however, it would result in an overall reduction in SO 2 emissions. Although some uncertainty remains about the ultimate effects of efficiency standards

on SO 2 emissions covered by the current cap

- and

- trade system, the NEMS

- BT modeling sy stem that DOE plans to use currently indicates that no physical reductions in power sector emissions would occur for SO 2

8.2.1.2 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 nitrogen oxid es are colorless and odorless. However, one common pollutant, nitrogen dioxide (NO 2 ), combines with particles in the air , and often can be seen as a reddish

- brow n layer above many urban areas. NO 2 is the
spe cific form of NO X reported in this document. NO X is a primary ingredient 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 are as suc h as national parks. NO X also contributes to the formation of fine particles that can impair human health. 4

Nitrogen oxides form when fossil fuel is burned at high temperatures, as in a combustion
process. NO X also can be formed naturally. The primary ma n- made sources of NO X are motor vehicles ; electric utilities ; and other industrial, commercial, and residential sources that burn fossil fuels. Electric utilities account for about 22 percent of NO X emissions in the United States. 4

T here is a cap on NO X emissions in 28 eastern S tates and the District of Columbia. All th e se States and D.C. elected to reduce their NO X emissions by participating in cap

- and

- trade programs for EGUs. Therefore, a s with SO 2 emissions , energy conservation standards for distribut ion transformers may have little or no physical effect on these emissions in the 28 eastern States and D.C. for the same reasons that they may have little or no physical effect on NO X emissions.

DOE is using the NEMS

- BT to estimate NOx emissions reducti ons from possible standards in the S tates where emissions are not capped.

8.2.1.3 Mercury
During the burning process, c oal -fired power plants emit mercury ( Hg ) that occurs in coal . Although coal -fired power plants are the largest remaining source of human- generated Hg emissions in the United States, they contribute little to the global Hg pool or to contamination of U.S. waters. 3 U.S. coal-fired power plants emit Hg in three 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 H g that is in particulate form. Atmospheric Hg is 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.15 -8-4 Americans are exposed to m ethylmercury 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 p opulation of greatest concern. Children exposed to methylmercury be fore 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. 3

8.2.1.4 Carbon Dioxide

Carbon dioxide (CO 2 ) is no t a regulated or criteria pollutant, but is of interest because of its classification as a greenhouse gas (GHG)

. GHGs, which either occur naturally in the atmosphere or result from human activities , trap the sun’s radiation inside the Earth’s atmosphere. Naturally o ccurring GHGs include water vapor, CO 2 , methane, nitrous oxide, and ozone. Human activities 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 coal) ; wood; and wood products are burned. During the past 20 years, about three- quarters of anthropogenic (human- made) CO 2 emissions resulted from burning fossil fuels. In 2007, more than 90 percent of anthropogenic ( i .e. , human- made) CO 2 emissions resulted from burning fossil fuels. 4

Concentrations of CO 2 in the atmosphere are regulated naturally by numerous processes, collectively known as the “carbon cycle.” The movement of carbon between the atmosphere and the lan d and oceans is dominated by natural processes, such as plant photosynthesis. Although these natural processes can absorb some of the anthropogenic CO 2 emissions produced each year, billions of metric tons are added to the atmosphere annually. In the Unite d States, in 2007, CO 2 emissions from electricity generation and industrial processes account ed for 39 percent of total U.S. GHG emissions.

In the absence of any Federal regulation of power plant emissions of CO 2 , a DOE standard is likely to result in reductions of tho se emissions. To estimate the reductions in CO 2 emission s likely to result from a standard DOE will use NEMS

- BT and estimates of national energy savings drawn from the NIA spreadsheet model. The net benefit of the standard is the difference between emissions estimated by NEMS

- BT at each standard level considered and the AEO 2010 r eference c ase. NEMS

- BT tracks CO 2

8.2.1.5 Particulate Matter emissions using a detailed module that provides results based on broad coverage of all sectors and inclusion of interactive effects.

Particulate matter (PM) , also known as particle pollution, is a complex mixture of extremely small particles and liquid d roplets. Particle pollution is made up of various components, including acids (such as nitrates and sulfates), organic chemicals, metals, and soil or dust particles. PM impacts are of concern because of exposures that can impact human health. Particle poll ution— 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 difficulty15 -8-5 breathing; decreased lung function; aggravated asthma; development of chronic bronchitis; irregular heartbeat; nonfatal heart attacks; and prematu re death in people with heart or lung disease.

DOE acknowledges that particulate matter (PM) e xposure can impact human health. Power plant emissions can have either direct or indirect impacts on PM. Some pollutants emitted by a power plant are in the for m of particulates leav ing the smoke stack. These are direct, or primary, PM emissions. However, the great majority of PM emissions associated with power plants are in the form of secondary sulfates, which are produced at a significant distance frompower plants by complex atmospheric chemical reactions that often involve the gaseous (nonparticulate) emissions of power plants, primari ly SO 2 and NO X . The quantity of secondary sulfates p roduced is determined by a complex set of factors that include the atmospheric quantities of SO 2 and NO X , and other atmospheric constituents and conditions. Because these highly complex chemical reactions produce PM comprising different constituents from different
sources, the EPA does not distinguish direct PM emiss ions from the secondary sulfate particulates in its ambient air quality requirements, PM monitoring of ambient air quality, or PM emissions inventories. For these reasons, it currently is not possible to determine how a proposed standard would impact eithe r direct or indirect PM emissions. Therefore, DOE is not planning to assess the impact of standards on PM emissions. Further, DOE is uncertain whether efficiency standards will result in a net decrease in power plant emissions of SO 2 and NO X

8.2.1.6 Air Quality Regulation , because those pollutants are now regulated largely by cap

- and

- trade systems.

The Clean Air Act Amendments of 1990 list 188 toxic air pollutants that EPA is required to control. 6 EPA has set national air quality standards for six common pollutants (also referred to as “criteria” pollutants), two of which are SO 2 and NO X . Also, the Clean Air Act Amendments of 1990 gave EPA the authority to control acidification and to require operators of electric power plants to reduce emissions of SO 2 and NO X . Title IV of the 1990 amendments established a capand

- trade program for SO 2 , in all 50 states and the District of Columbia (D.C.), intended to help control acid rain. 6 This cap

- and

- trade program serves as a model for more recent programs with similar features.

In 2005, EPA issued the Clean Air Interstate Rule (CAIR) under sections 110 and 111 of the Clean Air Act (40 CFR Parts 51, 96, and 97). 7 d CAIR will permanently cap emissions of SO 2 and NO X in eastern States of the United States. CAIR achieves large reductions of SO 2 and/or NO X emissions across 28 eastern States and the District of Columbia. CAIR will gradually replace t he Title IV program in the 28 states and D.C. States must achieve the required emission reductions using one of two compliance options: 1) meet an emission budget for each regulated state by requiring power plants to participate in an EPA- administered int erstate cap

and

- trade system that caps emissions in two stages, or 2) meet an individual state emissions budget through measures of the state’s choosing. Phase 1 caps for NO X have been in place since 2009. Phase 1 caps for SO 2 are to be in place beginning in 2010. The Phase 2 caps for both NO X and SO 2

d See http://www.epa.gov/cleanairinterstaterule/. are due in 2015.15 -8-6 On July 11, 2008, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) issued its decision in North Carolina v. Environmental Protection Agency

, which vacated the CA IR issued by the U.S. Environmental Protection Agency on March 10, 2005. e CAIR was the vehicle for capping NO X emissions

. f On December 23, 2008, the D.C. Circuit decided to allow CAIR to remain in effect until it is replaced by a rule consistent with the court’s earlier opinion. North Carolina v. EPA , 550 F.3d 1176 (D.C. Cir. 2008) (remand of vacatur). g Thus, CAIR is currently in force. However, on July 6, 2010, EPA proposed the Transport Rule, 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).

With respect to Hg emissions, in 2005, EPA issued the final rule entitled “Standards of Performance for New and Existing Stationary Sources: Electric Steam Generating Units,” under sections 110 and 111 of the Clean Air Act (40 CFR Parts 60, 63, 72, and 75) 8 . This rule, called the Clean Air Mercury Rule (CAMR), was closely related to the CAIR and established sta ndards of performance for Hg emissions from new and existing coal- fired electric utility steam generating units. The CAMR regulated Hg emissions from coal -fired power plants.

On February 8, 2008, the U.S. Court of Appeals for the District of Columbia Ci rcuit (D.C. Circuit) issued its decision in State of New Jersey, et al. v. Environmental Protection Agency

, h

8.3 RESULTS in which the Court, among other actions, vacated the CAMR referenced above.

The results of the environmental assessment include NO X , mercury, and CO 2 emissions in 5- year forecasted increments, with extrapola t ion as needed

. DOE will report the outcome of the analysis for each trial standard level as a deviation from results for the reference case of the latest Annual Energy Outlook

.

e See http://www.e pa.gov/cleanairinterstaterule/.

f See id. at 903.

g State of North Carolina, et al. v. Environmental Protection Agency, 550 F.3d 1176 (D.C. Cir. 2008 ).

h 517 F.3d 574, 583 (D.C. Cir. 2008).15 -8-7 REFERENCES

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2 U.S. Environmental Protection Agency. National Ambient Air Quality Standards. 2008. (Last accessed March 2 , 20 11 .) < http://www.epa.gov/air/urbanair/ >

3 Trasande, L., C. Schechter, K.A. Haynes, and P.J. Landrigan. Applying Cos t Analyses to Driv e Policy That Protects Children : Mercury as a Case Study

. Annals of the New York Academy of Sciences

, Living in a Chemical World: Framing the Future in Light of the Past . 2006. 1076: pp. 911–923.

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