3

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## Chapter **3 Im** **pacts of Pr oposed**  **Action**

**Contents** 3.1 Regulatory

Impact Analysis (RIA)

................................ ................................ ...................... 2 3.2 Air

................................ ................................ ................................ ................................ ...... 11 3.3 Energy

................................ ................................ ................................ ................................ 12 3.4 Compliance Costs

................................ ................................ ................................ .............. 15 3.5 Climate Change Protection

................................ ................................ ................................ 19 3.6 Economic and Emplo ym ent Impacts
................................ ................................ ................. 21 3.7 Benefits

................................ ................................ ................................ .............................. 313

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### 3.1 **REGULATORY IMPACT AN ALYSIS (RIA)**  **Comment 3.1 -**  **1:** Commenters 0152, 0186, 0187, 0214, and 0256 stated various reasons for why EPA's use of the social cost of carbon (SCC) is not justified or legal. Commenter 0186 noted that it would be impermissible to rely on the SCC for several reasons "(i) it is inherently

flawed, ultimately

a meaningless metric; (ii) it ascribes undue certainty and reliability to the scientific evidence; (iii) it ignores the soci al benefits of carbon...; and (iv) it ignores the problematic aspects of carbon

- reduction policies. The SCC is a metric that reflects more about the assumptions fed into it than what it is purporting to measure." The commenter stated that the SCC estimates are of highly questionable validity

and are based on speculative assumptions and much

- criticized integrated assessment model (IAM) simulations. The commenter additionall y noted that the SCC assumes that climate science is settled and uncontroversial, when in fact the opposite is true. The commenter stated that the SCC lacks theoretical and empirical foundation for the impacts of asserted climate change that form the key parts of anal ys is. The commenter also noted that because the SCC counts only the cost o f carbon, it will alway s yield a rule that reduces carbon

-- "it is a one

- sided statistic." The commenter stated that a comparison of the CO 2 costs and benefits using GDP figures based on EPA's own SCC estimates demonstrates that an y of the SCC estimates are relativel y so small as to be in the statistical noise of the estimated CO 2 benefits. The commenter additionall y noted that EPA selected discount rate values that are biased toward the low end of the acceptable range given b y the OMB, and slanted the measure even further by specificall y adding a "catastrophic" scenario without a corresponding "optimistic" scenario. The commenter noted that while these details may seem like a technical matter, they have a dramatic effect on the SCC anal ys is. The commenter st ated that "when the models on which the SCC draws are recalculated using the 7% discount rate EPA left out, the SCC goes to zero or even negative

--- showing a net benefit to increased emiss ions under EPA's own anal ys is." See Kevin Day aratna and David Kreutz er, Unfounded FUND: Yet Another EPA Model Not Ready For The Big Game 3, HERITAGE FOUNDATION (Apr. 29, 2014). Commenter 0256 urged EPA to use the domestic SCC value in its analy sis, not the global SCC value. The commenter stated that the costs of these and other CO 2 regulations are borne b y the companies and citizens of this country and as such the purported benefits should also be reflective of the benefits to the United States. The commenter added that unless the CAA directs the EPA to require unilateral a ctions by the United States to address global environmental issues in other countries, while those countries do not take similar steps, the domestic SCC seems to be the only logical metric to use in a cost benefit analy sis. The commenter noted that the SCC document indicates its use is meant for projects/regulations that have a marginal effect on CO 2 emissions and while it is true that the proposed rule may have little effect on CO 2 emissions, the manner in which EPA is implementing CO 2 regulations acts to set energy policy for the country and will have a lasting effect on the energy industry , the competitiveness of American companies and the economic well

- being of many Americans. The commenter stated that the use of cost parameters that were intended for marginal or small projects should not be used as the basis of regulations with far

- reaching and long

- lasting impacts on the United States.3

- 3

Commenters 0152 and 0187 stated that EPA's reliance on SCC violates the CAA Section 111(a)(1) requirement to consider the cost of achieving a proposed standard. Commenter 0187 stated that the RIA relied on climate change benefits determined through applications of values calculated using a "controversial, indeed, legally suspect, protocol fraught with a my riad of shortcomi ngs." Commenter 0152 urged that EPA not use the newl y - revised SCC metric until OMB's review is completed. Commenter 0214 noted the SCC should not be used in a regulatory context given "the nontransparent manner in which it was derived and the inconclusive results achieved through that anal ys is" and stated that "the choice of non

- reviewed models and the input assumptions that were used to contrive the SCC are arbitrary and discount rates were applied inconsistently ." **Response 3.1 -**  **1:** First, the Agency 's demonstration that c osts of the standard are r easonable do not rely on the social cost of carbon . See preamble section V.H. and I. See also Portland Cement I , 486 F. 2d at 387 (cost

- benefit anal ys is not required under section 111 (a)). Second, while the commenters identi fy a number of limitations and uncertainties associated with the illustrative analy sis presented in the Regulatory Impact Anal ys is (RIA) for the modified source standard at proposal , EPA notes that for the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially

modify and determined that it was not possible to conduct a representative illustrative analy sis of what costs and benefits might result from this f inal rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performan ce finalized in this action during the period of anal ys is. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the Agency does not anticipate any

impacts on the price of electricit y or energy supplies. Third, the commenter s' characterization of the SC

- CO 2 process and reliability of the SC

- CO 2 values is deepl y misplaced. See comment responses in unit 4.4 of the section 111 (b) RTC. Also, the SC

- CO 2 comments summarized in 3.1

- 1 mirror those submitted to the Office of Management and Budget’s separate comment solicitation on the SCC (78 FR 70586; November 26, 2013). As a member of the interagency working group (IWG) on SC

- CO 2 , EPA has carefully examin ed and evaluated comments submitted to OMB’s separate solicitation. EPA has also carefully

examined and evaluated all comments received regarding SC

- CO 2 through this rulemaking process and determined that the IWG responses to the comments on the OMB solic itation address the comments on the SC

- CO 2 methodology , including the models used to estimate the SC

- CO 2 . Specificall y, EPA concurs with the IWG’s response to these comments and hereb y incorporates them by reference. 1 The remainder of this section elaborates on these comments in the context of this rulemaking.

1 Referred to as the "OMB Response to Comments on SC

- CO2." See https://www.whitehouse.gov/sites/default/ files/omb/inforeg/scc

- response - to
- comments
- final

- july

- 2015.pdf

.3

- 4

EPA appreciates the commenters’ recommendations for potential opportunities to improve the SC

- CO 2 estimates and has considered each one in the context of this rulemaking. EPA and other members of the IWG have reconfirmed their commitment to periodic review and update of the methodology

and estimates to ensure that they continue to reflect the best available science and economics. Furthermore, EPA has determined that the SC

- CO 2 methodological recomme ndations require additional research, review, and public comment before it can appl y them to a rulemaking context. To help sy

nthesize the technical information and input reflected in the comments, and to add additional rigor to the next update of the SC

- CO 2 , the EPA and all of the other IWG members plan to seek independent expert advice on technical opportunities to improve the SC

- CO 2 estimates, including the approaches suggested b y commenters and summarized in this document. Specificall y, EPA and all of the other IWG members plan to ask the National Academies of Sciences, Engineering, and Medicine (Academies) to examine the technical merits and challenges of potential approaches to improving the SC

- CO 2 estimates in future updates. Input from the Academie s, informed by the comments submitted to this rulemaking and the peer

reviewed literature, will help to ensure that the SC

- CO 2 estimates used by EPA continue to reflect the best available science and methodologies. F inally , should (against the law of the Circuit and EPA's view) some ty pe of cost

- benefit anal ys is be required under section 111 (a), chapter 5 of the RIA shows that quantified benefits of the final standard of performance would exceed regulatory costs under a range of assumptions. **Comment 3.1 -**  **2:** Commenter 02 02 stated support for EPA's use of the social cost of carbon (SCC) metric in its RIA anal ys is with four main points: the SCC is an important policy tool; the IWG's analy

tic process was science

- based, open, and transparent; the SCC is an important and accep ted tool for regulatory policy

- making based on well

- established law and fundamental economics; and that the IWG correctl y used a global SCC value. Commenter 0202 also offered further recommendations on refinements to the SCC. Commenter 0202 stated that the SCC estimates the economic cost of climate impacts

- specificall y the additional economic harm caused by one additional metric ton of carbon dioxide ( CO 2 ) emissions and that SCC calculations are important for evaluating the costs of activities that produc e greenhouse gas emissions and contribute to climate change, such as burning fossil fuels to produce energy . The commenter noted that the SCC is also important for evaluating the benefits of policies that would reduce the amount of those emissions going into the atmosphere. For example, the commenter stated that in order to properl y evaluate standards that reduce the use of carbon

- intensive energy or that improve energy

efficiency

- like the proposed greenhouse gas standards

- it is important to understand the benefits they will provide, including the benefit of reducing carbon pollution and the harm it causes. The commenter noted that even though the anal ys is is generall y not able to encompass all of the effects of a policy , and it is challenging to translate impacts on health, mortality , and welfare into dollar values, benefit

- cost anal ys is is an important economic tool to help inform decision

- makers about the societal benefits of different policy choices. The commenter also stated that without an SCC estim ate, regulators would b y default be using a value of zero for the benefits of reducing carbon pollution, implying that carbon pollution has no costs and that, sadly , is not the case, as evidenced by the large body

of research outlining the sobering health, environmental, and economic impacts of rising3

- 5

temperatures, extreme weather, intensifying smog, and other climate impacts. The commenter stated if an ything, most evidence points to the fact that current numbers significantly underestimate the SCC and it w ould be arbitrary for a federal agency

to weigh the societal benefits and costs of a rule with significant carbon pollution effects but to assign no value at all to the considerable benefits of reducing carbon pollution. Commenter 0202 further noted that the increase in the SCC estimate is important because it reflects the growing scientific and economic research on the risks and costs of climate change, but is still very

likel y an underestimate of the economic cost of carbon emissions. The commenter stated the increase is also necessary given the costs of climate change that we are alread y experiencing, such as those associated with sea level rise and rising temperatures. The commenter stated that the anal yt ic work of the IWG has been transparent and noted that the Office of Management and Budget (OMB) recently created a further opportunity for public comments and transparent review specificall y on the calculation of the social cost of carbon. Additionally , the commenter noted the comment period on these gre enhouse gas standards are ye t another opportunit y for continued dialogue about areas requiring further stud and such repeated comment processes demonstrate that the IWG's SCC estimates were developed

- and are being used

- transparently . The commenter stat ed that given their strong grounding in the best science available, nothing should prevent the current, continued use of this well

- established estimate. The commenter noted that as economic and scientific research continues to develop, future revisions wil l be able to further refine existing estimates based on the latest peer

- reviewed literature and the latest updates to the quality of the overall modeling exercise. Commenter 0202 noted criticisms submitted via petition to OMB and the individual agencies involved in the IWG which included concerns that the estimates of SCC are too uncertain and imprecise to be used in regulatory anal ys is, that the IWG did not follow appropriate protocols in either its estimation or use of SCC, and that SCC must be banned fro m use while it undergoes a wholly new public review process. The commenter stated that as a matter of law and economics, uncertaint y in benefits estimates does not mean they should be excluded from regulatory impact anal ys es. No benefit or cost estimate is certain. Further, the commenter noted the courts have explicitly rejected this argument with respect to the SCC, and executive orders dating back as far as the Reagan administration have all issued guidelines specifying explicit consideration of benefits even if the precise size of the benefit is uncertain. The commenter noted that in 2008, the National Highway

Traffic Safet y Administration had decided not to account for avoided climate damages in issuing fuel econom y standards, but the U.S. Court of Appea ls for the 9th Circuit determined "NHTSA's reasoning is arbitrary and capricious for several reasons. First while the record shows that there is a range of values, the value of carbon emission reductions is certainl y not zero", which directly contradicts arguments made by the petitioners about the validity of SCC. The commenter stated that the IWG's choice of Integrated Assessment Models (IAMs) reflects the best available, peer

- reviewed science to tall y costs and benefits within regulations and noted that the IWG should indeed periodicall y update its choice of socio

economic scenarios to reflect major changes in economic growth projections and other factors influencing emissions trajectories. The commenter noted, however, the long

- term emissions impact of an y one particular energy efficiency

or other carbon reduction standard is only marginal to the trajectory of socio

- economic scenarios, minimizing any risk of double counting the regulatory

benefits towards the petitioners' concern of misrepresentation and d ouble

-3

- 6

counting. The commenter concluded that the IW G has properl y and lawfully used the best available techniques to quantify the benefits of carbon emission reductions, basing its anal ys is on the peer

- reviewed literature and noted that the petitioners off er no alternative estimation procedure in their critique. Commenter 0202 stated that to design the economically efficient policies necessary to forestall severe and potentiall y catastrophic climate change, all countries must use a global SCC value and giv en that the United States and many other significant play ers in the international climate negotiations have already applied a global SCC framework in evaluating their own climate policies, the continued use of the global value in U.S. regulatory decisions may

be strategically important as the United States seeks to set an example for other countries, harmonize regulatory sy stems, and take the lead in ongoing international negotiations. The commenter noted that binding legal obligations, basic ethical respon sibilities, and practical considerations further counsel in favor of the United States using a global SCC value and to avoid a global "tragedy of the commons" and an economically inefficient degradation of the world's climate resources, all countries shoul d set policy according to a global SCC value. The commenter noted that if all countries set their greenhouse gas emissions level based on onl y their domestic costs and benefits, ignoring the large global externalities, the collective result would be substa ntially sub

optimal climate protections and significantly increased risks of severe harm to all nations, including the United States. The commenter noted that Mexico and Canada have both adopted greenhouse gas standards for vehicles that harmonize with U.S . standards and that calculate benefits according to a global SCC value, and that further efforts towards regulatory harmonization are currently underway

as countries within the E.U. are beginning to adopt a global SCC value for use in their regulatory ana ly ses. The commenter also noted that multiple Presidential orders on regulatory anal ys is (E.O. 13609, E.O. 13563, and E.O. 12866) deferred to the discretion of regulatory agencies on whether to evaluate "effects beyond the borders of the United States", su

pporting a global SCC value. Commenter stated that unlike some other significant international environmental impacts, no methodological limitations block the quantitative estimation of a global SCC value and given that sophisticated models already exist to quantify

global SCC, the global estimate is appropriate to use. The commenter also noted that using a global SCC value if of national interest, as harms experienced b y other countries could significantl y impact the United States

-- particularly climate damages that affect foreign economies. Commenter 0202 offered the following recommendations for further refinements to the SCC metric: 1. The commenter stated that the IWG appropriately used consumption discount rates rather than returns on capital because typical financial decisions focus on private decisions and utilize private rates of return but that economic theory would require making optimal choices based on societal preferences (discount rates) rather than from the narrow perspective of investors alon e. The commenter stated that IWG correctly adopted, as one of its discount rates, a value reflecting long

- term interest rate uncertaint y, and should go further b y implementing a declining discount rate. The commenter offered two possible declining interest rate schedules for consideration b y IWG: the one proposed by Weitzman (2007) and the one b y Cropper et al. See Martin L. Weitzman, Gamma Discounting, 91 AM. ECON. REV. 260, 270 (2001); and, Maureen L.3

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Cropper et al., Declining Discount Rates, AMERICAN ECO NOMIC REVIEW: PAPERS AND PROCEEDI

NGS (forthcoming). 2. The commenter stated that the IWG used solid economic tools to address uncertaint y and ought to go further in capturing the full extent of its implications. The commenter noted that IWG was rigorous in addressing uncertainty : "First, it conducted Monte Carlo simulations over the IAMs specifying different possible outcomes for climate sensitivity (represented b y a Roe and Baker Distribution). It also used five different emissions growth scenarios and thr ee discount rates. Second, the IW G reported the various moments and percentiles of the resulting SCC estimates. Third, the IWG put in place an updating process, e.g., the 2013 revision, which updates the models as new information becomes available. As such , the IWG used the various tools that economists have developed over time to address the uncertainty i nherent in estimating the economic cost of pollution: reporting various measures of uncertainty , using Monte Carlo simulations, and updating estimates as evolving research advances our knowledge of climate change." Commenter noted that "while the IAMs take different approaches to explicitly modeling tipping points, which to a great extent is lacking in current versions of FUND and DI CE, the IWG improved (but in no way fixed) the representation of uncertain catastrophic damages with the Monte Carlo anal ys is. Still, black swan events go completely unaddressed in the IWG modeling framework, and to the extent that society has a strong desire to prevent the occur rence of catastrophic events that is not reflected in the estimates." 3. The commenter noted that the current inclusion of CO 2 fertilization benefits likely overstate its effects. The commenter stated that the models do not reflect recent research on agric ultural changes, which suggest the CO 2 fertilization is overestimated, particularl y in the FUND model, and that much, if not all, of the fertilization benefits may be cancelled out by

negative impacts on agriculture (e.g., extreme heat, pests, and weeds). If the agency is not able to adequatel y model all agricultural impacts it should, at a minimum, remove CO 2 fertilization benefits. 4. The commenter stated that IWGs reliance on the three IAM models available at the time (DICE, FUND, and PAGE) was full y jus tified, however, updates to the SCC should also consider other models that are similarly peer reviewed and based on the state of the art of climate

- economic modeling. The commenter noted that one such model is Climate and Regional Economics of Development (CRED); another is the World Bank's ENVironmental Impact and Sustainability

Applied General Equilibrium (ENVISAGE) model. 5. The commenter stated that the IWG should update its socio

- economic assumptions to reflect the latest Shared Socio

- economic Pathway s (SSPs). The commenter noted that IWG selected five sets of trajectories, four of which represent business as usual, and o ne which represents a CO 2 emissions pathway

with concentrations stabilizing at 550ppm. The commenter suggested that IWG include a high

- CO 2 pathway , given the possibility of increases in emissions above those expressed in the business as usual scenarios. 6 . The commenter stated that while the current treatment of uncertainty around climate sensitivity

by the IW G is sufficient to highlight the range of possible uncertainties, a reconsideration of the assumptions feeding into the SCC ought to take the latest advances highlighting the potentially higher costs of deep uncertaint y into account.3

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**Response 3.1 -**  **2:** EPA thanks the commenters for submitting this information and agrees with their support for the application of the estimates. Please s ee comment responses in unit 4.4 of the section 111 (b) RTC for a detailed response to the comments

. While the commenters focused on the illustrative analy sis presented in the Regulatory Impact Anal ys is (RIA) for the modified source standard at proposal, EPA notes that for the RIA supportin g the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially

modify and determined that it was not possible to conduct a representative illustrative analy sis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of anal ys is. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the Agency does no t anticipate any

impacts on the price of electricit y or energy supplies. In addition, we note that the comments mirror those submitted to the Office of Management and Budget’s separate comment solicitation on the SC

- CO 2 (78 FR 70586; November 26, 2013). As a member of the interagency working group (IWG) on SC

- CO 2 , EPA has carefull y examined and evaluated comments submitted to OMB’s separate solicitation. EPA has also carefull y examined and evaluated all comments received regarding SC

- CO 2 through this r ulemaking process and determined that the IWG responses to the comments on the OMB solicitation address the comments on the aggregation of SC

- CO 2 estimates and use of the estimates in this RIA. Specificall y, EPA concurs with the IWG’s response to these co mments and hereb y incorporates them by reference. 2 EPA and other members of the IWG have reconfirmed their commitment to periodic review and update of the methodology and estimates to ensure that they continue to reflect the best available science and e conomics. Furthermore, EPA has determined that the SC

- CO 2 methodological recommendations require additional research, review, and public comment before it can appl y them to a rulemaking context. To help sy

nthesize the technical information and input ref lected in the comments, and to add additional rigor to the next update of the SC

- CO 2 , the EPA and all of the other IWG members plan to seek independent expert advice on technical opportunities to improve the SC

- CO 2 estimates, including the approaches sugge sted b y commenters and summarized in this document. Specificall y, EPA and all of the other IWG members plan to ask the National Academies of Sciences, Engineering, and Medicine (Academies) to examine the technical merits and challenges of potential approac hes to improving the SC

- CO 2 estimates in future updates. Input from the Academies, informed by the comments submitted to this rulemaking and the peer

reviewed literature, will help to ensure that the SC

- CO 2 estimates used by EPA continue to reflect the bes t available science and methodologies.

2 Referred to as the "OMB Response to Comments on SC

- CO2." In particular, see pgs 25 to 28, 40

- 41 at https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- response - to
- comments
- final

- july

- 2015.pdf3

- 9

After careful evaluation of the full range of comments and associated technical issues described in section 4.5 , EPA will has determined that it will continue to use the current SC

- CO 2 estimates until further updates can be made to reflect forthcoming guidance from the Academies. EPA believes that the current estimates continue to represent the best scientific information on the impacts of climate change available in a form appropriate for incorporating the damages from incremental CO 2 emissions changes into regulatory analy sis. Therefore, EPA has presented the current SC

- CO 2 estimates 3 in the analy sis of illustrative benefit

- cost scenarios for new sources in RIA Chapter 5 (see RIA Chapters 3 and 5; see Response to Comments 3.2 for detailed discussion about the conclusions of the RIA) . EPA will continue to consider these comments and will share the recommendations with the IWG as it moves forw ard with the Academies proces s. **Comment 3.1 -**  **3:** Commenters 0152, 0214, 0224, 0230, 0242, and 0254 stated that the use of a single, h ypothetical, 500 MW bituminous coal

- fired unit in EPA's RIA is not adequate to properl y determine the costs and benefits for a rule that spans numerous sources and it no t representative of all units that may be subject to EPA's proposed standard. Commenters 0152, 0224 and 0254 stated that EPA's cost anal ys is of this hypothetical unit and further extrapolation of the costs to a global benefit is erroneous. Commenter 0224 stated that "even if those h ypothetical estimates approximate anticipated national costs, EPA calculates the Proposed Rule's benefits on a global scale that considers emission reductions not only for CO 2 , but also for other pollutants." Commenter 0224 stat ed that "EPA, on its own, questions whether its estimated efficiency

improvements and emission reductions can be fully realized to reach the calculated benefits level" and that "the mismatch between national costs and global benefits, as might be expected, produces greater benefits than costs." Commenter 0224 further noted that the CAA appears to limit consideration of both costs and benefits to actual, nation

- wide numbers. Commenters 0152 and 0254 stated that "extrapolation to a global rather than U.S. ben efit, EPA's calculated cost does not support the imposition of its proposal." Commenter 0230 stated that EPA's approach in using solel y a single, h ypothetical 500MW bituminous coal

- fired unit to represent all affected units may indicate costs and benefits that are significantl y different than what may result from an actual operating EGU. The commenter noted that EPA is assuming that a modified affected unit attempting to comply with the proposed carbon rule can realize certain efficiencies through best prac tices and equipment upgrades in order to compl y which may not be the case. The commenter stated that the anal ys is does not address the fact that such a unit likely will be unable to dispatch with the frequency necessary

to attain the efficiency

as part of the state's effort to comply with the applicable 111(d) carbon limit. Commenter 0242 examined the NEEDS 5.13 database to determine if the 500 MW theoretical case - study

was applicable to the ty

pes of units found in states that meet a large proportion of ele ctricit y demand from coal

- fired EGUs. Commenter stated that of the 213 coal and IGCC units located in Ohio, Pennsylvania, West Virginia, Indiana, and Kentucky , onl y 38 units, or 18%, are between 400 and 600 MW. Commenter cited this finding as a reason wh y EPA's singular RIA example is not representative of coal

- fired units located in states that are heavily reliant on coal

-

3 See https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- tsd

- final

- july

- 2015.pdf3

- 10

fired generation

--- let alone representative of the universe of unit ty pes that will be subject to this rule. Commenter 0214 stated that EPA not only generalized all affected sources by using a hy pothetical bituminous coal

- fired unit for the illustrative anal ys is, but it generalized all coal units as well, even though coal

- fired units are heterogeneous with respect to generation technologie s, fuel t ypes, and size classes. **Response 3.1 -**  **3:** The commenters identify a number of limitations and uncertainties associated with the illustrative analysis presented in the Regulatory Impact Analy sis (RIA) for the modified source standard at proposal. For the RIA support ing the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially

modify and determined that it was not possible to conduct a representative illustrative anal ys is of what cost s and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications an d subject to the standards of performance finalized in this action during the period of anal ysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analy sis. Likewise, the Agency does not anticipate an y impacts on the price of electricit y or energy supplies. **Comment 3.1 -**  **4:** Commenters 0214 and 0242 stated that EPA, in its RIA, evaluates the annualized cost and fuel savings of heat rate improvement at three different level

-- four percent, six percent, and eight percent

-- but unrealistically assumes that those different levels of efficiency improvements cost the same. Commenter 0242 stated that "surely EPA does not believe the results of an impact anal ys is of a singular m odified coal unit performing HRI is indicative of the impacts for all units potentially subject to, or impacted by , this rule." Commenter 0214 stated that EPA must either explain why it believes that significantl y different levels of efficiency improvements can be achieved at the same co st, or revise its anal ys is to recognize that greater efficiency improvements would generally cost more. **Response 3.1 -**  **4:** The commenters refer to the illustrative analy sis presented in the Regulatory Impact Anal ys is (RIA) for the modified source standard at proposal. In that document, the EPA explained that different units may be able to achieve different levels of efficiency for the same investment. “The actual efficiency improvement a unit can achieve for this cost will depend on its starting efficiency

and operating capac ity . Less efficient units may have more efficiency improvement options available and be able to achieve greater efficiency for the same cost. Relatively

more efficient units may have fewer remaining cost

- effective options to improve efficiency

. ” For the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analy sis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modific ations and subject to the standards of performance finalized in this action during the period of anal ys is. For this reason, the standards will result in3

- 11

minimal emission reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the Age ncy does not anticipate any

impacts on the price of electricit y or energy supplies. **Comment 3.1 -**  **5:** Commenter 0289 stated that the EPA found that "few sources will trigger either the NSPS modification or reconstruction provisions" outlined in the Rule Proposal; a claim repeated numerous times in the Rule Proposal. The commenter stated that EPA's finding that there are no benefits to this rule, and likewise limited costs, is clear evidence that this rule is an unnecessary

regulatory

action that should not have been proposed and should not be finalized. **Response 3.1 -**  **5:** Although there have historically been few units that trigger the NSPS modification and reconstruction provisions, any unit that triggers these provisions in the future will be subject to the standards set b y this rule. In that case, there would be benefits and costs associated with the standard. 

### 3.2 **AIR Comment 3.2**  **- 1:**  Commenter 0169 noted that EPA explains that by improving energy

efficiency , generall y a unit reduces CO 2 emissions as well as other air pollutants which could lead to lower ambient air concentrations of PM 2.5 and ozone. The commenter also noted, however, that in some cases CO 2 emission reductions due to energy efficiency

improvements may be offset if, as a r esult of these reductions, a unit is able to reduce operation of pollution control equipment and still meet output

- based standards for these pollutants or pollutants related to their control.(RIA, Chapter 9, p.9

- 9) The commenter stated that this assumes th at an EGU can reduce operation of air pollution control equipment which is required to be operational so it 'just' meets the limits in the EGU's air permit and that in such "reduced operation" instances, the pollution control equipment may

provide less control than if operated at maximum design performance. The commenter stated that they find this suggestion controversial or potentiall y even contrary to positions EPA has taken in the past regarding operation of air pollution control equipment and that impro ving heat rate in this way may conflict with other CAA regulations, state rules, or permits. The commenter requested that EPA clarify the statement of provide specific examples of when a unit may

be able to "reduce operation of pollution control equipment and still meet output
- based standards." The commenter asked that such clarification also explain what "pollutants related to their control" would expressly include. **Response 3.2 -**  **1:** The commenters refer to the illustrative analy sis presented in the Regulatory Impact Anal ys is (RIA) for the modified source standard at proposal. The statement was intended to provide an example of a situation in which the conclusions of the anal ys is may differ, not as a prediction of behavior that would actuall y occur. For the RIA supporting th e final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analy sis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subj ect to the standards of performance finalized in this action during the period of anal ys is. For this reason, the standards will result in3

- 12

minimal emission reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the Agency does not anticipate any

impacts on the price of electricit y or energy supplies. 

### 3.3 **ENERGY Comment 3.3**  **- 1:**  Commenters 0193 and 0242 expressed concern about the impact simple cycle turbines will have on grid reliability and emissions reductions under the proposed rule. Commenter 0193 stated that limiting the role of simple cycle units will result in increased emissions from NGCC units. The commenter noted that combined cycle units produce significantl y more emissions during startup and shutdown than simple cycle units, and that this is es peciall y true when comparing the emission profiles of a "cold" combined cycle startup with a simple cycle unit. The commenter stated that forcing combined cycle units to take the place of simple cycle units and operate under conditions of rapid cycling at lower overall capacit y factors would lead to potentially

higher emissions and higher in

- use degradation. The commenter also noted that forcing generators to deploy combined cycle units in lieu of simple cycle units may force the operator to run the plant d uring low load periods to be prepared to respond quickl y to grid demands instead of simply shutting the unit down completel y. The commenter repeatedl y emphasized the important role that simple cycle units have in terms of being able to respond quickly to c hanging power demands. Commenter 0242 noted that it is likely that simple cycle combustion turbines will be needed, in a manner they

have not historically

been needed, if EPA finalizes Section 111(d) and 111(b) requirements in the manner currentl y proposed . The commenter stated that simple cycle turbines will be needed to ensure reliability when peak demand expands as a result of MATS and Section 111(d). The commenter questioned if EPA considered the impact that increased use of simple cycle turbines will h ave on ozone, because they saw no such anal ys is in any of the proposed rules. **Response 3.3 -**  **1:** The non

- base load subcategory includes in this final rule provides adequate flexibility for the continued use of simple cycle turbines. **Comment 3.3 -**  **2:** Commenter 0181 requested that, as EPA develops regulations under Section 111 of the Clean Air Act, it should keep in mind the significant value of the nation's nuclear fleet. The commenter stated that nuclear energy is the only

carbon free source of predictable, non - intermittent and reliable e lectric generation, and nuclear plants operate at a higher capacity factor than an y other generation resource. The commenter noted that until recentl y, the common understanding was that nuclear plants would operate until license expiration and pointed out that most carbon emission projections assume that nuclear plants will continue to generate carbon free electricity

- however, it is no longer safe to assume that existing nuclear units will continue to operate. The commenter noted that many of the plants tod ay

that are producing large quantities of emissions free electricity and operating at above 90% capacit y factors are in danger of early closure. The commenter went on to state that the lack of coherent carbon policy has hurt the nuclear industry , in additi on to economic factors such as low natural gas prices, and that the government at all levels has reacted to the failure of carbon legislation by implementing subsidies and mandates that benefit all carbon free generation except nuclear

- "the nation's larges t and most reliable carbon free energy source."3

- 13

Commenter 0181 felt that if current policies are not changed, retirements of nuclear units will have drastic impacts on climate change goals. The commenter stated that closing even a few nuclear power plants would make achieving state and national carbon reduction goals difficult or impossible and noted that the power sector has reduced its emissions by 15% from 2005 levels and is responsible for the vast majority of the nation's progress in meeting President Obama's climate goal of reducing overall carbon emissions. The commenter stated that if we continue on the same pace of retirements that we saw in 2013, we would lose 25% of the nation's nuclear fleet b y 2020 and would lose much of the progress the electri c industry has made to date. The commenter noted, b y way of example, after the January 2012 shutdown of the San Onofre Nuclear Generating unit in California, the state's carbon dioxide output increased b y 35% in the first y ear, according to the California Air Resources Board and generation costs in the state increased b y about $369 million, equivalent to a 15% increase in total generation costs, during the 12 months following the January 2012 shutdown. Commenter 0181 detailed their compan y's 2020 plan to invest in cost

- effective, clean energy projects which aims to reduce, offset, or displace 17.5 million metric tons of greenhouse gas emissions per y ear b y 2020. The commenter noted that the closure of even one of their existing nuclear units would jeopardize all accomplishments in the company 's 2020 plan, and would weaken progress in reducing greenhouse gas emissions from the electric sector. Commenter 0181 noted that four of the most respected climate and energy scientists

--- Dr. Ken Caldeira of the Carnegie Institution, Dr. Kerry Emanuel of MIT, Dr. James Hansen of Columbia University , and Dr. Tom Wigley of the National Center for Atmospheric Research

--- acknowledged the value of nuclear energy to addressing climate change. The commenter stated that the scient ists released a letter calling on world leaders to support nuclear energy , concluding that "in the real world there is no credible path to climate stabilization that does not include a substantial role for nuclear power." In addition, the commenter stated that in April of this y ear, the Center for Climate and Energy Solutions released a study identifying the challenges facing nuclear units and noting that retirements of nuclear units will have serious climate change implications. See Doug Vine & Timoth y Jul iani, Center for Climate and Energy Solutions, Climate Solutions: The Role of Nuclear Power (Apr. 2014). Commenter 0181 concluded by stating that is it essential that EPA's regulatory program be structured to preserve the existing nuclear fleet, which is c ritical to sustaining reductions achieved to date. In addition, the commenter stated that the regulations should encourage the expansion of zero emission electricit y generation through nuclear plants, and that weak standards based solel y on improving ener gy efficiency

of fossil fuel

- fired units can have the perverse effect of displacing zero emissions nuclear facilities, while standards that effectively impose a cost on carbon

- either through the cost of operating pollution control equipment of the purchase of allowances

- will prevent this perverse effect. **Response 3.3 -**  **2:** Nuclear units are not included in this final rule. **Comment 3.3 -**  **3:** Commenter 0150 noted that additional reliability assessments regarding the Modified/Reconstructed Proposed Rule, as well as the proposed emission guidelin es under Section 111(d) may

be forthcoming, and stated that such assessments conducted by appropriatel y designated reliability

entities such as the Federal Energy Regulatory

Commission, the North3

- 14

American Reliability

Corporation, and/or regional transmissi on organizations would be of high value to EPA, the public, and industry . The commenter urged EPA to fully consider the results of any reliability

assessments in any

final rule for modified and reconstructed EGUs issued under Section 111(b). Commenter 0150 stated particular concern for the performance required of modified/reconstructed natural gas units necessary to back up deliveries from intermittent renewable generation sources such as wind and solar but notes that the forthcoming reliability assessments are likel y to address the issue, among others, and again stresses that EPA consider these issues in its promulgation of final rules. **Response 3.3 -**  **3:** Historically , few EGUs have triggered the NSPS modification or reconstruction provisions. As a result, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications or reconstructions and subject to the standards of performance finalized in this action during the period of anal ys is. For this reason, the standards will result in minimal emissi on reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the Agency does not anticipate any

impacts on the price of electricit y or energy supplies. **Comment 3.3 -**  **4:** Commenter 0242 noted that, as part of the proposed Section 111(d) rule for existing units, natural gas units could be re

- dispatched at greater than historical levels. The commenter stated that some of these units would likely be operating well outside of their original design parameters following re

- dispatch, which could necessitate acce lerated maintenance schedules and possibl y reconstructions. The commenter stated that is it also likely that some natural gas units may

choose to reconstruct a unit or units in anticipation of what the commenter believes to be a major restructuring of the entire power generation and delivery s ys tem via the proposed standards for existing units. The commenter stated that EPA has clearl y shown in past rulemakings that the IPM model is not a good future predictive tool for distribution of electric generation i n this country , this i s premature for EPA to speculate that NGCC units will not undertake such measures. **Response 3.3 -**  **4:** The EPA made its determination that few units would trigger the NSPS modification or reconstruction provisions in consultation with the Office of Enforcement and Compliance Assurance (OECA). This conclusion was based on OECA’s determination that historically

few units have qualified as NSPS modifications or reconstructions, not on modeling. **Comment 3.3 -**  **5:** Commenter 0193 stated that the proposed rules for new and modif ied and reconstructed units should encourage the expansion and deploy ment of CHP sy stems because CHP sy stems can achieve overall efficiency levels of 60 to 80 percent by simultaneously producing electricity

and useful thermal energy

. **Response 3.3 -**  **5:** The EPA has concluded that the emission standard for reconstructed combustion turbines is achievable. Therefore, the requirements in this final rule would not limit the ability

of owners and operators to reconstruct existing combustion turbines. The final applicability

includes and expanded exemption for industrial CHP units.3

- 15



### 3.4 **COMPLIANCE COSTS Comment 3.4**  **- 1:**  Commenters 0142, 0161, 0215, 0221, and 0223 stated that the potential emissions benefits stated by EPA within the Proposed Rule do not justify the costs. Commenter 0142 stated that EPA has dramatically underestimated the cost of the rule to industry and to consumers of electric power. The commenter further stated that EPA's evaluation of the costs and benefits of the proposed modification rule is not a sufficient analysis because it does not reflect or acknowledge the cumulative costs from all sources which would be affected b y the Proposed Rule. Commenter 0161 stated that EPA should withdraw the Modified Source Proposal because the potential CO 2 - related benefits of the proposal do not justi fy the costs. The commenter noted that, based on EPA's evaluation, complying with the Modified Source Proposal would cost a 500MW coal

- fired unit between $0.78 and $4.5 million and result in CO 2 reductions of 133,000 to 266,000 tons in 2025 but that these achieved reductions would be dwarfed by increases in global CO 2 emissions. The commenter noted that non

- U.S. CO 2 emissions, which already represent 82 percent of global emissions, are projected to grow by 41 percent between 2010 and 2030. See Institute for 21st Century Energy , U.S. Chamber of Commerce, "Statement for the Record on the U.S. Environmental Protection Agency 's 'Proposed Carbon Pollution Standard For Existing Power Plants,'" EPA's Standards of Performance for Greenhouse Gas Emissions from Existi ng Sources: Electric Utility

Generating Units, Docket: EPA

- HQ

- OAR

- 2013

- 0602, RI N 2060

- AR33, July

30, 2014 Commenter 0221 noted that substantial CO 2 reductions have alread y been realized in the electric utility sector over the past decade due to economic downturn, increasing renewable generation, low natural gas prices, energy efficiency

programs, and retirements of older, less efficient plants result ing from ever

- increasing environmental regulations. The commenter stated that benefits were improperl y calculated on a global basis, and when properly calculated on a domestic basis are far exceeded b y the costs of the Proposed Rule. The commenter noted th at the electric utility sector is expected to meet or exceed the President's goal of a 17% CO 2 reduction below 2005 levels by 2020 without any

further government action. The commenter reasoned that since the cost of the Proposed Rule exceeds the environmental benefits, and CO 2 emission reductions are alread y being achieved by the electric utility sector without governmental regulation, EPA should exercise its authority to exempt modified and reconstructed units from NSPS. Commenter 0223 noted that EPA did n ot analyze the cost impacts of modifications that could result from the installation of numerous new technologies on coal units in response to EPA's proposed Section 111(d) ruling, and that these costs must be analyzed. The commenter stated that the Propos al will force utilities to install technologies in search of incremental efficiencies, with marginal benefit, to meet the proposed 2% threshold since most EGU owners routinel y invest in technologies to operate more efficientl y. The commenter stated that be cause of this marginal benefit, the costs will outweigh the possible gain. Additionally , the commenter noted that EPA suggested that a reduction in fuel (coal) costs will offset technology costs. The commenter stated that EPA's Proposal does not hold in th e state of Wyoming and inaccuratel y3

- 16

represents the impacts to Wyoming coal units because most coal units in Wyoming are mine

- to
mouth, meaning they

have near

- zero transportation costs, and EPA did not consider this factor. **Response 3.4 -**  **1:** The commenters refer to the illus trative analysis presented in the Regulatory Impact Anal ys is (RIA) for the modified source standard at proposal. In that document, the EPA presented the costs and benefits associated with a single unit because historically few units have triggered the NSPS modification provisions and there were no data available about an y that may do so in the future. The EPA expects that most of the actions EGUs are likely to take in the foreseeable future that could be classified as NSPS “modifications” would qualify as pollution control projects. In man y cases, those projects are likely to involve the installation of add

- on control equipment needed to meet Clean Air Act (CAA) requirements for criteria and air toxics air pollutants. Any associated CO 2 emissions increases would likely be small and would occur as a chemical by product of the operation of the control equipment. In other cases, those projects would involve equipment changes to improve fuel efficiency to meet state requirements for implementation of the CAA sect ion 111(d) rulemaking for existing sources and would have the effect of increasing a source’s maximum achievable hourly emission rate (lb CO 2 /hr), even while decreasing its actual output based emission rate (lb CO 2 /MWh). Because all of these actions would be treated as pollution control projects under the EPA’s current NSPS regulations, they would be specificall y exempted from the definition of modification. For the RIA supporting the final rule, the EPA considered the limited data available on past modifi cations and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analy sis of what costs and benefits might result from this final rule in the unlikely case that a uni t were to take an action that would be classified as a modification. However, the EPA still anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of anal ys is. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the Agency

does not anticipate an y impacts on the price of electricity or energy supplies. **Comment 3.4 -**  **2:** Commenter 0267, 0289 stated that EPA should exclude the costs of compl ying with EPA's final Section 111(d) existing source program from an y reconstruction anal ys is under Section 111(b). The commenter noted that, in addition to potentially triggering NSPS modification, compliance with EPA's final ESPS under Section 111(d) for EGUs may also force sources to invest heavil y to upgrade their existing units. The commenter urged EPA to exclude these costs from an y reconstruction anal ys is under Section 111(b) sinc e the investments are being made to compl y with existing standards. **Response 3.4 -**  **2:** The commenter refers to the illustrative analy sis presented in the Regulatory Impact Anal ys is (RIA) for the modified source standard at proposal. In that document, the EPA anal yz ed onl y th e benefits and costs associated with compliance with the Section 111(b) modification provisions. No anal ys is was conducted for the reconstructed source standards due to a lack of information.3

- 17

The EPA expects that most of the actions EGUs are likely to take in the foreseeable future that could be classified as NSPS “modifications” would qualify as pollution control projects. In many cases, those projects are likely to involve the installation of add

- on control equipment needed to meet Clean Air Act (CAA) req uirements for criteria and air toxics air pollutants. Any associated CO 2 emissions increases would likely be small and would occur as a chemical by product of the operation of the control equipment. In other cases, those projects would involve equipment changes to improve fuel efficiency to meet state requirements for implementation of the CAA section 111(d) rulemaking for existing sources and would have the effect of increasing a source’s maximum achievable hourly emission rate (lb CO 2 /hr), even while decre asing its actual output based emission rate (lb CO 2 /MWh). Because all of these actions would be treated as pollution control projects under the EPA’s current NSPS regulations, they would be specificall y exempted from the definition of modification. For the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analy sis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modi fications and subject to the standards of performance finalized in this action during the period of anal ys is. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the Agency does not anticipate any

impacts on the price of electricit y or energy supplies. **Comment 3.4 -**  **3:** Commenter 0213 noted that Section 111(a)(1) directs EPA to "take into account" the cost of achieving reductions, and that in Essex Chemical Corp. v. Ruckelshaus , 486 F.2 d 427, 433 (D.C. Cir. 1973), the court held that 111(b) standards must be "reasonable reliable, reasonabl y efficient, and...reasonabl y...expected to serve the interests of pollution control without becoming exorbitantly costly in an economic of environmental way ." (emphasis added) The commenter noted that similarly , in Portland Cement Ass'n v. Train, 513 F.2d 506, 508 (D.C. Cir. 1975), the court upheld EPA's interpretation that section 111's cost inquiry functions as a safet y valve to ensure that the costs a performance standard imposes are not "greater than the industry could bear and survive," but would instead allow industry to "adjust" in a "healthy

and economic fashion to the end sought by the Act as represented by the standards prescribed." The comment er also noted that in Lignite Energy Council , 198 F.3d at 933, the court held that "EPA's choice [of BSER] will be sustained unless the environmental or economic costs of using the technology are exorbitant." The commenter stated that, as the previous hold ings make clear, a performance standards under section 111 will be upheld unless the costs it imposes are exorbitant or too great for the industry

to bear, and that the D.C. Circuit has never invalidated a section 111 rule for being too costl y. The comment er cited multiple cases in which the court upheld performance standards for proposed rules even with seemingl y high costs of compliance ( Portland Cement Ass'n v. Ruckelshaus , 486 F.2d (D.C. Cir. 1973): court upheld standard for PM emissions even though the control technologies amounted to roughly 12 percent of the capital investment for an entirely new plant and consumed 5 to 7 percent of a plant's total operating costs; Portland Cement Ass'n v. EPA , 665 F.3d (D.C. Cir. 2011): court upheld PM standards that were anticipated to increase the cost of cement b y 1 to 7 percent with little projected decrease in demand; Lignite Energy Council v. EPA , 198 F.3d (D.C. Cir. 1999): court ruled that a two percent increase in the cost of producing electricity was not exor bitant and upheld the 1997 NOx3

- 18

standards for EGUs and industrial boilers). The commenter referred to their comments on the New Source Standard at 25

- 27 for additional cost considerations. **Response 3.4 -**  **3:** The EPA anticipates that few EGUs will take actions that would be co nsidered NSPS modifications and subject to the standards of performance finalized in this action during the period of anal ys is. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of anal ys is. L ikewise, the Agency does not anticipate any impacts on the price of electricity or energy

supplies. **Comment 3.4 -**  **4:** Commenter 0230 stated concern with the cumulative costs of EPA's actions or proposals over the last several ye ars and their burden on Alabama residents . The commenter stated that they

are not aware of any

meaningful analy sis undertaken by EPA as to the cumulative cost impacts resulting from implementation of, and compliance with, the suite of pending and issued rules affecting electric utility generating units. The commenter urged EPA to perform a comprehensive cost anal ys is that cannot merel y examine each proposed rule in isolation, but instead should consider the cumulative cost impacts of all such proposals. The commenter additionally noted that the p roposal does not appear to analyze the cost impacts caused when a unit cannot economicall y comply with the standard and is forced off

- line. Commenter 0215 stated that EPA has not provided a macroeconomic impact anal ys is of an y of the Proposed Standards, co ntrary to law. The commenter stated that instead, EPA estimates that a hy pothetical modified 500 MW coal

- fired unit will incur $8.3 million annually to compl y with the Proposed Standards. EPA estimates that this $8.3 million will be incurred regardless of whether the unit makes a 4 percent, 6 percent, or 8 percent efficiency improvement. The commenter felt that they

cannot fully

evaluate and comment on EPA's cost estimates for the Proposed Standards because EPA either has not provided an y anal ys is (for thr ee of the four Proposed Standards), or has provided such scant analy sis that it is impossible to evaluate. **Response 3.4 -**  **4:** The commenters refer to the illustrative analy sis presented in the Regulatory Impact Anal ys is (RIA) for the modified source standard at proposal. In that document, the EPA explained that different units may be able to achieve different levels of efficiency for the same investment. “The actual efficiency improvement a unit can achieve for this cost will depend on its starting efficiency

and operating ca

pacit y. Less efficient units may have more efficiency improvement options available and be able to achieve greater efficiency for the same cost. Relatively

more efficient units may have fewer remaining cost

- effective options to improve efficiency .” For the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analy sis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modi fications and subject to the standards of performance finalized in this action during the period of anal ys is. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the3

- 19

Agency does not anticipate any

impacts on the price of electricit y or energy supplies or significant macroeconomic impacts. 

### 3.5 **CLIMATE CHANGE PROTE CTION**  **Comment 3.5 -**  **1:** Commenters 0142, 0177, 0186, and 0263 stated that the Proposed Rule does not impact carbon emissions or ad dress climate change in an adequate manner, and therefore contend that EPA should withdraw this proposal. Commenters 0142 and 0186 noted that EPA, in its RIA for the Proposed Rules, states that the impact of "reduced climate benefits" has been "monetized" but not "quantified". The commenters noted that EPA discusses at length it's assessment of climate change impacts in the RIA, e.g. global average temperature, sea level rise, and extreme weather events; however, the commenters claimed that EPA did not prov ide a single quantified effect to any climate parameter to demonstrate that the Proposed Rule would actually affect the climate change events which EPA cites as justification for the Rule. Commenter 0186 noted that this is remarkable, because EPA previousl y presented its estimates of impact on climate for other rulemakings such as the RIA for light

- duty

vehicle GHG emission standards in August of 2012 which explicitly considered the climate impact of the reduction of GHGs produced b y the rule. Commenter 018 6 stated that even under EPA's assumptions (with which they do not agree), atmospheric CO 2 concentrations would be reduced b y l ess than 1% (1.52 ppm, against a projected increase of 50

- 150 ppm over the same period), global warming would be slowed b y 0.009 degrees C (against a projected temperature rise of 1.0

- 2.0 degrees C during the same period), and sea level ruse would be reduced b y 0.03 mm. Commenter 0186 noted that even in the best

- case scenario reductions for each of these parameters, EPA's projected benefits are swamped b y projected increases. Commenter 0142 stated that the EPA has not provided an estimated impact of the Proposed Rule on global atmospheric CO 2 concentrations and even though the EPA used the global SCC factor for calculating monetized benefits from the CO 2 reductions of the proposed rule, the EPA failed to consider global CO 2 emission trends. The commenter stated that the EPA cannot claim benefits on a global basis while only taking into consideration changes in United States CO 2 emiss ions. Commenter 0186 pointed to a statistic from the Intergovernmental Panel on Climate Change that calculated that power plants in the United States account for somewhere between 4.2 and 5.1% of GHG emissions worldwide. Commenter 0186 calculated that the maximum amount of CO 2 taken out of the air, when considering all scenarios EPA presents to comply with Section 111(d), would be 555 million metric tons per year, which would constitute between 1.03 and 1.12% of GHG emissions worldwide, likely less. Comment er 0186 stated that assuming perfect compliance and support from the states, the EPA Power Plan might affect around 1% of the GHG emissions. Commenter 0186 further stated that research shows that even an entire shutdown of America's reliable coal

- fueled ge nerating fleet would have no discernible effects on the climate. Commenter 0186 referenced an anal ysis by the American Coalition for Clean Coal Electricity

which showed that such a shutdown

-- which is far beyond what EPA is proposing in this Proposed Rule

-- would result in 1/20th of one degree temperature change. 1 Commenter 0186 stated that EPA's " 'solution' ... is not even a drop in the bucket."3

- 20

Commenter 0186 stated that EPA's RIA continues to rely on flawed IP CC data to define its asserted climate impacts. The commenter stated that "precisel y at the point where the science needs to be strongest, at the very link that would couple these Proposed Rules to the climate impacts they

claim will result, the science became polluted by anthropogenic error, an all

- too
human tendency

to compromise good science in favor of an unscientific agenda." The commenter further stated at their base, all of EPA's projections on the impacts of carbon reduction rel y on one crucial causal connection that has no scientific ba sis. The commenter noted that EPA's RIA spent approximately 25% of the document (96 pages) monetizing but not quantifying the climate impact caused b y the rule and stated that no science supports the causal link: "we do not understand the complex links bet ween changes in GHG levels and an y changes in climate, much less whether x reduction in emissions will "cause" y impact. In other words, there is no reasoned basis for accepting EPA's assessment." **Response 3.5 -**  **1:** These comments refer to information presented in the Regulatory Impact Analy sis for the proposed standards, which addressed both 111(d) and 111(b) sources. While the EPA expects few sources to trigger the NSPS modification or reconstruction provisions, emission reductions, costs and benefits are expected for the 1 11(d) emission guidelines. These are presented in Chapter 4 of the RIA for that rulemaking. See also the Response to Comments for 111(b) for response to comments on climate change science (4.1) and on the social cost of carbon (4.4) , and also the Response to Comments for 111(d) in Section 8.7

. **Comment 3.5 -**  **2:** Commenter 0177 stated concern that a sector limited approach, such as EPA's proposed regulation of carbon dioxide from the utility sector, as opposed to an international framework, will raise consumer electric rates without providing an y significant beneficial climate impact. **Response 3.5 -**  **2:** As discussed in the RIA for the 111(d) rulemaking (Section 8.7) , the Clean Power Plan overall will result in the largest reductions of carbon dioxide emissions from a single regulatory

action in U.S. history . However, EPA has been clear that, as stated in the 2009 GHG Endangerment Finding under Section 202 of the CAA, " the global nature of the air pollution problem and the breadth of countries and sources emitting greenhouse gases means that no si ngle country and no single source category dominate or are even close to dominating on a global scale. " EGUs are the largest contributors of CO 2 in the US, and the reductions achieved in this rule are an unprecedented and necessary first step towards slowi ng the rate of climate change. **Comment 3.5 -**  **3:** Commenter 0215 stated that EPA's estimated benefits reflect global, rather than domestic, effects. It is inappropriate to calculate global benefits when EPA has no jurisdiction to control worldwide emissions. When calculated more properly on a domestic basis, the purported benefits of the rule are far outweighed by their costs. **Response 3.5 -**  **3:** While the commenters identify a number of limitations and uncertainties associated with the illustrative anal ys is presented in the Regulatory Impact An aly sis (RIA) for the modified source standard at proposal , EPA notes that for the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and deter mined that it was not possible to conduct a representative illustrative anal ys is of what costs and benefits might result from this final rule in the unlikely

case that a unit were to take an action that would be classified as a modification.3

- 21

However, the E PA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of analy sis. For this reason, the standards will result in minimal emission re ductions, costs, or quantified benefits in the period of anal ys is. L ikewise, the Agency does not anticipate any impacts on the price of electricity or energy

supplies. EPA disagrees with the commenter’s recommendation of a domestic SC

- CO 2 . See comment re sponses in unit 4.4 of the section 111 (b) RTC for a full discussion

. See also the interagency working group’s (IWG’s) responses to the comments on the OMB solicitation address the comments on the use of a global SC

- CO 2 . Specifically , EPA concurs with the IW G’s response to these comments and hereby incorporates them b y reference. 4 

### 3.6 **ECONOMIC AND EMPLOYM ENT IMPACTS**  **Comment 3.6 -**  **1:** Commenters 0170, 0183, 0186, 0230, 0231, 0237, and 0249 worried that the Proposed Rule would preclude coal and coal

- fueled generation in the Uni ted States by discouraging the use of coal in place of natural gas or other fuels, which would have a negative impact on the U.S. economy in terms of GDP, jobs, and the affordability of electricit y. Commenter 0186 stated that the EPA Power Plan represents a reversal of decades of federal policy emphasizing increased use of domestic coal as a way of achieving U.S. energy independence, reducing consumption of imported foreign oil, and providing the Nation with reliable and affordable domestic energy . The comm enter stated that this reversal of federal policy after private industry

has alread y committed to its investments, operates in retroactive fashion to strand the investments the federal government encouraged under Penn Central Transportation Co. v. New York, 438 U.S. 104, 107 (1978). The commenter noted that the cumulative benefits of low carbon coal programs in the United States total about $40 billion (in 2008 dollars) and federal expenditures for these programs totaled about $3 billion (2008 dollars), thu s creating a benefit

- cost ratio of 13 to 1. See Roger Bezdek and Robert Wendling, The Return on Investment of the Clean Coal Technology Program in the USA, 54 Energy Policy 104

- 12 (March 2013). The commenter noted that these programs are currentl y creating about 60,000 jobs in the U.S. econom y. The commenter emphasized the importance of coal in the U.S. economy and energy policies as the investments made in coal, and in developing new coal technologies, have led to economic growth, affordable and reliable e nergy , and a substantial number of jobs. The commenter stated that low

- cost electricity from coal allows American business to prosper and lower

- income Americans to improve their quality

- of

- life and on the flip side, the costs to societ y from suddenl y curta iling the nation's energy mix away

from coal will be substantial. The commenter expressed concern that the change sought b y the EPA Power Plan will result in millions of jobs lost, billions less in gross economic output, sky rocketing electricit y prices, an d disparity affecting communities based on income and geograph y. The commenter noted that the EPA declined to include a discussion or consideration of these "crippling costs" in its RIA, and that EPA cannot ignore these costs. The commenter stated that whi le it may be politicall y expedient to target coal, our nation's econom y depends significantly on it. The commenter cited a

4 Referred to as the "OMB Response to Comments on SC

- CO2." See https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- response - to
- comments
- final

- july

- 2015.pdf

.3

- 22

Pennsylvania State University study the estimated that U.S. coal

- fueled generation in 2015 would contribute $1.05 trillion (in 2005 d ollars) in gross economic output, $362 billion in annual household incomes, and 6.8 million jobs. The commenter noted that they study further concluded that displacing 33% of coal

- based generation in 2015 would result in a $166 billion reduction in gross e conomic output, $64 billion reduction of annual household incomes, and a loss of 1.2 million jobs. 2 Commenter 0186 stated that EPA's Power Plan "threatens to...direct() investment away from coal. Indeed, the Proposed Rules do not even analyze investing in low carbon technology as a regulatory

alternative at all. A more rational approach suggests using 21st Century Coal technologies to ensure prosperity and economic growth around the world." The commenter stated that the EPA Power Plan is unquestionably des igned to cut and eventually eliminate the use of coal, a policy

that would fall harshl y on the Midwestern United States and other selected regions throughout the country , while largel y b yp assing coastal areas. The commenter suggested that the unprecedented scope and impact of the Proposed Rule raises deep Fifth Amendment concerns in that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking. Pennsylvania Coal Co. v. Mahon , 260 U.S. 393, 415 (1922). The commenter said that the Proposed Rules would "unduly penalize" coal companies, their employ ees, customers, and communities simply for following the government's past directive to invest in coal. The commenter stated that thi s "about

- face in policy punishes those who relied upon the government, in the same way as the regulation held to be an impermissible taking in Ruckelshaus v. Monsanto , 467 U.S. 986 (1984) (finding a constitutional infringement when the government frustrate d statutorily created expectations that trade secretes submitted to the government would be kept confidential.) Government policies shape business decisions and help determine the reasonableness of investment

- backed expectations. See Palazzolo v. Rhode Island, 533 U.S. 606, 618 (2001);T ahoe

- Sierra Preservation Counsel Inc. v. Tahoe Regional Planning Agency , 533 U.S. 606, 633 (2001)." Commenter 0237 stated that the Proposed Rule is "another front in President Obama's well

publicized war on coal, the requirem ents appear especially burdensome for coal

- fueled facilities" and that without meaningful explanation, EPA would deny coal

- fueled facilities to access to two exemptions that the agency proposes to provide natural gas

- fueled facilities. The comm enter stated that while the Performance Standards Programs provide EPA with limited authority to promulgate adequatel y demonstrated, technology

- based "standards of performance," EPA does not have authorit y to use those programs to effectively eliminate coal

- fueled pow er plants and doing so would violate Congressional authorit y. The commenter noted that Congress has clarified, time and again, that coal must figure into the nation's energy future, and the Clean Air Act is not to be used to produce a contrary result and that EPA's actions, granting itself the privilege to enact laws where Congress has declined to do so, and in failing to execute the laws that Congress has enacted, the Proposed Rule has profound constitutional ramifications. The commenter cited one study wh ich considered what would happen from a 20

- ye ar phase

- out of coal

- produced energy

and found that: 500,000 jobs would be lost, aggregate GDP would decrease b y $1.47 trillion, electricit y prices would rise by 20%, natural gas prices would rise 42%, and a fam ily

of four's annual income would drop by more than $1,000 per y ear. See Kreutzer, David W. and Kevin Dayaratna, "Cost of a Climate Policy : The Economic Impact of Obama's Climate Action Plan," Heritage Foundation (June, 27, 2013).3

- 23

Commenter 0249 cited a study commissioned by

the NDTA, performed b y Kadrmas, Lee and Jackson, Inc., which forecasted an expected electrical load growth for the next 20 years, from 2012 to 2032, in the study area which spans regions across North Dakota, South Dakota and Montana. Th e commenter noted that by the end of the study period in 2032, the 43 counties within the Williston Basin are projected to require 2,512 megawatts (MW) of additional electrical demand, related to oil and gas development, to accommodate population growth, n ew ancillary business development and more than 30,000 additional wells. The commenter stated that new efficient lignite

- fueled baseload electric generation facilities should not be prohibited by the Proposed Rule for being an option available for meeting the substantial projected demand, as the Proposed Rule directly threatens the ability

of new lignite generation to address the substantial projected electrical demand. Commenter 0231 stated that coal is a critical component of the nation's energy portfolio with nearl y 40% of U.S. electricity derived from coal combustion. The commenter added that coal can provide substantial amounts of transportation fuels and sy ngas to displace significant amounts of imports of crude oil, refined products and natural gas. T he commenter added that coal is by far the nation's most abundant source of energy , constituting 94 percent of the nation's fossil fuel resources and that the U.S. has nearl y 261 billion tons of recoverable coal reserves, according to the Energy

Informatio n Administration, which is a 240

- year suppl y at current rates of use. The commenter noted that the mining industry is also a major source of jobs and economic development in the United States and that the U.S. coal mining industry directly employ s nearl y 1 20,000 people in 23 states. The commenter stated that for each coal mining job, an additional 3.5 jobs are created elsewhere in the econom y and about 300,000 people work directl y in minerals mining throughout the United States. The commenter stated that employ ment in industries supporting mining, including manufacturing, engineering and environmental and geological consulting, accounts for nearl y 1.6 million jobs. The commenter noted that the average miner makes over $71,000 per ye ar in salary , not includin g overtime, bonuses and benefits and that these are often the highest paying jobs in the community if not some of the highest paying statewide. The commenter stated that with its proposal EPA risks the hundreds of billions of dollars the mining industry co ntributes to the national econom y each ye ar. The commenter noted that mining of coal, metals and minerals provides more than $232 billion annually in direct and indirect economic impact. **Response 3.6 -**  **1:** This rule addresses modified and reconstructed sources and does not impose any requirements on new sources. (111(b) new source standards were proposed in a separate rulemaking in January

2014.) The EPA anticipates that few EGUs will take actions that would be considered NSPS modifications or reconstructions and subject to the standards of performance finalized in this action during the period of anal ys is. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the Agency does not anticipat e an y impacts on the price of electricit y or energy supplies. **Comment 3.6 -**  **2:** Commenters 0186, 0237, 0249, and 0271 expressed concerns about the Proposed Rule's effect on the affordability of electricity

to businesses and the general public. Commenter 0186 noted that the current Administration concedes that the plan will result in significantl y higher electricity prices. The commenter also noted that the Proposed Rule does not require the federal government to make an y capital investment in change but instead will saddle3

- 24

e lectric taxpayers with the true cost of the EPA Power Plan. The commenter stated that sky rocketing electricity

prices will have an immediate impact on businesses that rely on affordable energy

to sustain hiring and production levels and will hit low

- income Americans particularl y hard, given the percentage of their monthly budgets that they

devote to basic needs such as heating and cooling. The commenter pointed to the experience of numerous U.S. states and overseas countries whose experiences they feel are "telling". The commenter noted that California's cost of electricity is significantly

higher than the national average, and has led to significant job losses and economic hardship. The commenter stated that between 2009 and 2013, the average energy bill fo r EU consumers increased b y some 17 percent, while energy costs for individual users jumped by 21 percent and between 2005 and late 2013, the average price of residential electricity in the EU rose by

55 percent, and industrial electric rates jumped by 26 percent. See Robert Bryce, Maintaining the Advantage: Why the US Should Not Follow the EU's Energy

Policies, (report prepared for the Manhattan Institute for Policy Research), (February 2014). The c ommenter noted that the average U.S. household historicall y pay s 12 cents per kilowatt

- hour, about a third of what the same amount of electricity costs in Germany

. The commenter noted that Spain has pushed aggressively for renewable energy , but Spain's electricit y bills are among the highest in Europe, having ris en 60 percent between 2006 and 2012. The commenter noted that a Spanish newspaper reported around 4 million Spaniards facing difficulties paying their electricit y bills, and some 1.4 million homes had their electricity cut off for non

- pay

ment. See " The sho cking price of Spanish electricit y" , EL PAIS, (Jan. 1, 2014). The commenter went on to state that Australia experienced a soar of electricity prices because of its Renewable Energy Target and carbon tax, with household electricity costs rising 100 percent over a five year period. Similarly , The commenter noted that Ontario's Green Energy and Econom y Act has made great strides in solar energy, but has caused Ontario's electric rates to increase b y approximately 33%. The commenter concluded that every country that has aggressivel y sought to discourage coal usage has experienced large electricity price increase with no similar corresponding benefit. Commenter 0237 stated that access to inexpensive energy is the most important contributor to human welfare and th at any increase in the cost of energy creates injuries to individual and collective welfare across numerous dimensions. The commenter noted that money spent on energy is not available to be spent on healthcare, education, food, or housing. The commenter st ated that increases in energy costs must either be absorbed b y manufacturing companies, leading to decreased capital available for investment and lowered growth, or passed on to consumers, who then suffer the corresponding loss in income meaning that incre ased energy prices create ye t another incentive for American companies to shift production to foreign operations. The commenter also noted that increased energy prices also adversel y affect the agricultural sector, driving up the price of food

-- "creating y et another ripple throughout the econom y." The commenter emphasized the importance of coal in sustaining "a health y American econom y". The commenter said the followi ng on the importance of coal: " Over the past 10 ye ars, coal has accounted for half of domes tic energy production. Total demand for U.S. coal reached 1.12 billion tons in 2008. Half of U.S. electricit y is generated from coal. Coal accounts for about 32 percent of U.S. total energy production and 23 percent of total energy consumption. Coal is the most affordable source of power fuel per million BTU, historicall y averaging less than one

quartet the price of petroleum and natural gas. There are approximately 600 coal generating3

- 25

facilities (1,470 generating units) and 1,100 manufacturing facilities u sing coal in the U.S., according to the U.S. Energy Information Administration (EIA)." Commenter 0249 urged EPA to allow potentially promising greenhouse gas (GHG) emissions reducing technologies to "come into their own," while allowing the utilization of abundant, affordable, and reliable lignite coal reserves. The commenter stated that failure to do so will greatl y increase electricity prices to families and businesses, threaten the reliability of the electric grid b y diminishing fuel choices to generate future stable, baseload electricity , retard economic growth and energy

security , and cause the unnecessary loss of thousands of jobs in the coal

mining and manufacturing sectors. Commenter 0271 stated concern that this proposal will be in direct conflict w ith Indiana's goal of affordable reliable energy because it will result in additional and unnecessary costs to EGUs in order to compl y. The commenter noted that these costs generall y get passed along to the consumer. The commenter stated that according to the Indiana State Utility Forecasting Group's (SUFG) 2013 Forecast, compliance with recent environmental regulations alone will push Indiana's electricit y prices 30 percent higher from 2012 to 2023. The commenter is concerned that the proposed restrictions will lead to Hoosiers losing heat and power because they won't be able to pay

the rising utility

costs, that U.S. businesses will be unable to compete in a global econom y, and that worldwide greenhouse gas emissions may actually increase due to the relocation of manufacturing operations from the U.S. to other countries. **Response 3.6 -**  **2:** Based on historical data, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications or reconstructions and subject to the standards of performance fina lized in this action during the period of anal ys is. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the Agency

does not anticipate an y impacts on the price of ele ctricity or energy supplies. **Comment 3.6 -**  **3:** Commenter 0183 stated that EPA justifies its overly burdensome regulation on coal

- fueled plants by

asserting that low natural gas prices are independently driving a decline in coal

- fueled power generation and that stated that t o make this assertion, EPA assumed that gas prices would remain at their current low levels into the indefinite future. The commenter argued that this assumption is short

- sighted, cannot be verified, and ignores the benefit of fuel diversity to buffer agai nst unexpected supply and price fluctuations. **Response 3.6 -**  **3:** The commenter refers to anal ys is supporting 111(b) standards for new sources. This rule addresses modified and reconstructed sources and does not impose an y requirements on new sources. 111(b) new source standards were proposed in a separate rulemaking in January 2014. **Comment 3.6 -**  **4:** Commenter 0183 felt that EPA failed to consider the impacts of the Proposed Rule on the ERCOT market and the unique and critical generation assets operating in Texas. The commenter stated that the proposal is a threat to the reliability of the electricity

s ys tem in Texas and the continued recovery of the economy

nationwide. The commenter felt that EPA's approach is especiall y ill

- suited for Texas's deregulated market and will result in stranded inv estments, reduced fuel diversit y, and loss of jobs. The commenter stated that the ERCOT market supplies3

- 26

8%% of the Texas load, with coal

- fueled units supplying nearly 34% of energy

used in 2012. The commenter further stated that ERCOT must be self

- sufficie nt in providing power for its 23 million customers and that EPA's proposal, coupled with its historic litigating position on New Source Review applicability , could effectivel y eliminate the ability of coal

- fueled units to undertake routine maintenance, rep air, and replacement to keep the units operating as designed. Commenter 0183 noted that the ERCOT market design does not include a capacity pay ment for generators; instead, generators are onl y paid when they generate electricit y for consumers. The commente r added that generators compete against other generators to be "dispatched" to generate electricit y and, as such, participants in the market are incentivized to operate as efficientl y as possible. The commenter noted that they , and other market participant s, have looked for and adopted energy

efficiency

measures to reduce the amount of fuel used to generate electricit y, as fuel is a major expense in generating electricity. The commenter stated that because of the ERCOT market design, all viable heat rate im provements have already been made and are not available for additional reductions as EPA assumes in this proposal and the Existing Unit Proposal. **Response 3.6 -**  **4:** Based on historical data, the EPA anticipates that few EGUs will take actions that would be considered NSPS mo difications or reconstructions and subject to the standards of performance finalized in this action during the period of anal ys is. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analy sis. Likewise, the Agency

does not anticipate an y impacts on the price of electricity or energy supplies. **Comment 3.6 -**  **5:** Commenters 0161 and 0186 showed concern with U.S. regulation of CO 2 emissions, as they

believe that emissions from countries such as China and India would overwhelm an y CO 2 reductions achieved b y U.S. GHG regulations, including the Modified Source Proposal. Commenter 0186 noted that in 2013, CO 2 emissions worldwide rose 2.5% and hit a record high, with China leading this growth and countries such as India and Brazil rapidly increasing their emissions as well. Commenter stated that China emits more CO 2 in one month than the EPA Power Plan would eliminate in one ye ar and assuming the same rate of emissions, China will wipe out one year's worth of emissio ns reduction under both Proposed Rules in only 21 day s. Commenter calculated this by taking China's emission rate of 9.86 Gt/ yr (= 0.82 Gt/mo), dividing it into 0.027 Gt/day for a 30

- day

month, multiplying by

20.5 day s, which resulted in 0.554 Gt of emissi ons --- roughl y what EPA claims the Proposed Rule would eliminate over the course of one year after full implementation. Commenter stated that other countries rel yi ng upon coal for energy

also swamp the reductions from the Proposed Rules because of the high demand for power from emerging markets, which they expect to continue. Commenter concluded that "because of the global need for reliable, affordable energy , much of the rest of the world will need to depend on coal for stable development in the 21st century" and that "an y reduction made in carbon emissions from generating units will be inconsequential given the international demand for affordable, reliable electricit y from coal." Commenter noted that Russia recently announced construction of an 8,000 MW coa l

- fired plant, the largest in the world, with plans to sell the energy to China while India recently rejected the idea of GHG cuts. Commenter suggested that a more sound policy

would be a global push towards 21st century coal, and that the United States3

- 27

sh ould lead by

example. See " Russian Firm Studying World's Largest Coal

- Fired Plant to Supply China " , REUTERS (May 26, 2014)

. **Response 3.6 -**  **5:** While the commenters focus on the illustrative analy sis presented in the Regulatory

Impact Analysis (RIA) for the modified source standard at proposal , EPA notes that for the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the div ersity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analy sis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an a ction that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of anal ys is. F or this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the Agency does not anticipate any

impacts on the price of electricit y or energy supplies. Furthermore, a ll countries contribute to climate change, and no one nation can stop it alone. All nations that are significant emitters of greenhouse gases will need to take the steps necessary to reduce their emissions in the near and long term. We have an obligation to ensure that the world we leave behind for our children and our grandchildren is healthier and safer. This rulemaking further establishes the United States as a leader in international efforts to secure an ambitious and lasting climate agreement in 2015 that will include significant contributions from all major economies. Alread y, U.S. action has helped spur announcements from China and Brazil to limit their own greenhouse gas emissions, building momentum for broader global commitments later this y ear in Paris. **Comment 3.6 -**  **6:** Co mmenter 0186 stated that the Proposed Rule threatens to impede progress in the developing world. Commenter stated that "these nations currently rel y on coal because it is affordable and reliable" and that "the success of our own Nation's development is und eniably linked in large part due to our abundance of coal and our government's past consistent focus and priority on affordable, reliable, and plentiful energy for homes and businesses." Commenter further stated that if the United States intends to lead by example, suggesting that developing countries and economies suddenly shift away

from coal

-- "the very

resource that guided American industrialization"

-- "will be a step backwards." Commenter noted that such an act would "reduce prosperit y and human welf are" because "coal is a necessary bedrock component of global energy , and clean

- coal technologies are the global future." Commenter 0186 also noted that if these developing countries followed the model of the EPA Power Plan, alternative energy sources woul d "cause energy costs to 'sky

rocket' beyond the reach of many

-- and certainly

beyond the reach of those who need it most." Commenter stated for these reasons, coal and lower carbon emission technology using coal must "continue to be the cornerstone and be drock of global energy policies." **Response 3.6 -**  **6:** Please see response to 3.6

- 5. **Comment 3.6 -**  **7:** Commenter 0186 stated that "in addition to the impact that increased energy costs will have on jobs, the EPA Power Plan as a whole will have broad and devastating implications for millions o f jobs and the econom y generall y" and that EPA did not consider these3

- 28

costs. Commenter relied on a 2011 study by the National Economics Research Association (NERA) to support their stance. The NERA study estimated the effects from 2012

- 2020 of the four env ironmental regulations in three major areas: (1) coal unit retirements, (2) electricity and other energy

market impacts, and (3) economic impacts. Commenter stated that NERA found "Over the period from 2012 to 2020, about 183,000 jobs per y ear are predicte d to be lost on net due to the effects of the four regulations. The cumulative effects mean that over the period from 2012 to 2020, about 1.65 million job

- ye ars of employ ment would be lost." Commenter noted that the study also estimated that U.S. disposabl e personal income would be reduced b y $34 billion each ye ar on average over this period (in 2010 dollars), and the average annual loss in disposable personal income per household would be $270, with a cumulative loss of $1,750 (in 2010 dollars). Commenter also noted that these net figures in the study account for "jobs that would be created in some sectors as a result of spending on pollution controls (i.e. 'green jobs') as well as jobs lost due to higher electricit y pri ces and other negative impacts." Comm enter 0186 also stated that it is not plausible to assume that workers displaced from jobs because of EPA regulations will readily be able to find alternative work, as EPA had stated that it did not need to consider job losses as a result of the Proposed R ule because the losses would be temporary . Commenter referenced the Bureau of Labor Statistics' most recent Displaced Worker Survey that found that among the 4.3 million long

- tenured displaced workers who lost their jobs between 2011 and 2013, 39% were sti ll unemployed and that among those long

- tenured workers who were displaced from full

- time wage and salary jobs but were re

- employ ed in such jobs in January 2014, nearl y half (48%) had earnings that were lower than those of their lost job. Commenter emphasi zed again that decreasing the amount of electricit y generated from coal will result in fewer jobs, even taking into account gains in 'green jobs', and EPA "has not shown that those jobs can be replaced elsewhere given the state of the econom y. " Commenter 0 281 also expressed concern about potential job losses, shifts in the workforce (particularl y in rural mining areas where other jobs may not be plentiful), and the corresponding adverse impacts on the communities supporting these workers. The commenter stat ed that the EPA failed to conduct meaningful job impact and economic analy ses of the proposed rule

. **Response 3.6 -**  **7:** The commenter refers to anal ys is conducted regarding the 111(d) emission guidelines for existing sources. This rulemaking addresses new and modified sources under CAA section 111(b). Based on historical data, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications or reconstructions and subject to the standards of performance finalized in this action during the period o f anal ys is. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the Agency

does not anticipate an y impacts on the price of electricity or energy supplies. **Comment 3.6 -**  **8:** Commenter 0 186 stated that a shift away from coal will significantly increase the cost of electricity , which will in turn have a very significant cascading impact on gross domestic product (GDP). Commenter noted that a review of the studies which estimated the energy price/GDP elasticity , one inquiry "determined that a reasonable electricity elasticity estimate is

- 0.1, which implies that a 10 percent increase in the electricity prices will result in a one percent decrease in GDP." See American Coalition for Clean Coa l Electricit y, "The Social Costs of Carbon

- No, the Social Benefits of Carbon," 9 (Jan. 2014). Commenter pointed to3

- 29

another stud y which analyzed the potential impacts of the EPA power plant rules on the electricit y sector and the econom y as a whole and note d that the study found that the rules would cause lower GDP

-- on average $51 billion every y ear through at least 2030, with a peak decline of nearl y $104 billion in 2025

-- accompanied b y l osses in employ ment. See IHS, "Assessing the Impact of Potential N ew Carbon Regulations in the United States,"(report prepared for the U.S. chamber of Commerce) (2014). **Response 3.6 -**  **8:** The commenter refers to anal ys is conducted regarding the 111(d) emission guidelines for existing sources. This rulemaking addresses new and modified sour ces under CAA section 111(b). Based on historical data, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications or reconstructions and subject to the standards of performance finalized in this action during the perio d of anal ys is. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the Agency

does not anticipate an y impacts on the price of electricity or energy supplies. **Comment 3.6 -**  **9:** Commente rs 0160, 0220, 0230, and 0252 said that they were concerned with the effect that the Proposed Rule would have on the nation's power s ys tem. Commenter 0220 held the position that Congressional action, not administrative rule, is required to properl y address the complex and impactful issue of limiting greenhouse gas emissions. Commenter stated that "the proposals threaten the diversity , affordability and securit y of our state and nation's power supply , which is central to the vitality of our economy

and quali ty

of life" and that "EPA's proposal for modified and reconstructed EGUs is complex, inflexible, costly and unnecessaril y burdens long

- term investment decisions needed to ensure the future health of the United States' power s ys tem." Commenter stated that E PA's proposed CO 2 standards for new, modified and reconstructed, and existing EGUs would "increase the volatility and expense of our state and nation's power s ys tem without demonstrating that they would actuall y reduce overall greenhouse gas emissions." Co mmenter noted that instead of supporting the many advantages of domestic power production, the EPA's Proposed Rule "may encourage shifting power production, and related carbon emissions, to unregulated entities outside the U.S. that are generally

less envi ronmentally

responsible than U.S. power generators." Commenter 0252 stated that EPA's Proposed Rules for new, modified and reconstructed, and existing sources "evidence() unparalleled regulatory hubris." Commenter stated that EPA seeks to "unlawfull y lever age its authority under the Clean Air Act, which is limited to regulating air pollutant emissions, to take near total control over the entire electricity sector, from generation to transmission and even demand." Commenter suggested that the effect of EPA's action would be "the crippling of the Nation's electric generation fleet." Commenter 0230 encouraged EPA to avoid energy policies that will have more severe economic impacts than the assumed negative impacts associated with carbon. Commenter urged the EPA to use an y and all available flexibilities to temper its proposed modified and reconstructed standard to avoid such adverse impacts, and assure the consuming public the good and quantifiable benefits of the proposed standard.3

- 30

**Response 3.6 -**  **9:** Based on historical data, th e EPA anticipates that few EGUs will take actions that would be considered NSPS modifications or reconstructions and subject to the standards of performance finalized in this action during the period of anal ys is. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the Agency

does not anticipate an y impacts on the price of electricity or energy supplies. **Comment 3.6 -**  **10:** Commenter 0199 urged EPA to craft rules that are obtainable b y el ectric generating units and that do not impose unworkable requirements that would only serve to increase cost, decrease electric reliability and have negligible environmental benefits. Commenter 0237 stated that the Proposed Rule will significantl y contrib ute to the substantial and unwarranted harm on the American public that EPA will cause with its proposed Standards of Performance for Greenhouse Gas Emissions From New Electric Generating Units and proposed Carbon Pollution Emission Guidelines for Existing Electricity Generating Units. Commenter 0215 stated that EPA has not undertaken a complete economic impact assessment of the Proposed Standards as required b y sections 312 and 317 of the CAA. The commenter stated that EPA provides no impact assessment of Proposed Standards for three of the four subcategories and only

an "illustrative anal ys is" for a single "h ypothetical unit" complying with the modified subpart Da standard. **Response 3.6 -**  **10:** The EPA has concluded that the requirements included in this final rule are achie vable and reasonable in terms of costs. The commenters refer to the illustrative anal ys is presented in the Regulatory Impact Analy sis (RIA) for the modified source standard at proposal. In that document, the EPA presented the costs and benefits associated with a single unit because historically

few units have triggered the NSPS modification provisions and there were no data available about an y that may do so in the future. The EPA expects that most of the actions EGUs are likely to take in the foreseeable future that could be classified as NSPS “modifications” would qualify as pollution control projects. In many cases, those projects are likely to involve the installation of add

- on control equipment needed to meet Clean Air Act (CAA) requirements for criteria and air toxics air pollutants. Any associated CO 2 emissions increases would likely be small and would occur as a chemical by product of the operation of the control equipment. In other cases, those projects would involve equipment changes to improve fuel efficiency to meet state requirements for implementation of the CAA section 111(d) rulemaking for existing sources and would have the effect of increasing a source’s maximum achievable hourly emission rate (lb CO 2 /hr), even while decreasing its actual out put based emission rate (lb CO 2 /MWh). Because all of these actions would be treated as pollution control projects under the EPA’s current NSPS regulations, they would be specificall y exempted from the definition of modification. For the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analy sis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA still anticipates that few EGUs will take3

- 31

actions that would be consid ered NSPS modifications and subject to the standards of performance finalized in this action during the period of anal ys is. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the Agency

does not anticipate an y impacts on the price of electricity or energy supplies. **Comment 3.6 -**  **11:** Commenter 0182 stated that economic considerations must be recognized for coal refuse

- fired CFB's due to fuel considerations and phy sical plant size and that coal refuse EGU's utilizing CFB technology "cannot economically

apply capital intensive advanced efficiency (heat rate) technologies to reduce the greenhouse gases at the plant sites AND be economicall y competitive in the market." **Response 3.6 -**  **11:** See the preamble for the EPA’s rationale for not exempting coal refuse

- fired EGUs. The EPA notes that the expanded industrial CHP exemption would be applicable to coal refuse

- fired units 

### 3.7 **BENEFITS Comment 3.7**  **- 1:**  Commenters 0150, 0157, 0169, 0183, 0186, 0187, 0199, 0214, 0215, 0222, 0224, 02 27, 0230, 0239, 0242, 0253, 0263, and 0284 stated that the Proposed Rule offers no benefits and should therefore be withdrawn. Commenters 0150, 0157, 0183, 0186, 0241, 0215, 0224, 0230, 0239, 0253, 0263, and 0284 noted that EPA stated in the proposal that "[h]istorically , few EGUs have undertaken reconstruction" and that it "expects few units would trigger the modification or reconstruction provisions" in this proposal. The commenters stated that because of these negligible benefits, EPA should exercise its authority to not establish NSPS for modified and reconstructed sources, as it has done in other cases. Commenters 0150, 0183, 0186, 0187, 0199, 0222, 0224, 0253, 0263, and 0284 noted that EPA stated in its RIA that it "do[es] not anticipate any significant costs or benefits associated with this proposal", and therefore find it difficult to justify the Proposal. **Response 3.7 -**  **1:** Although there have historically been few units that trigger the NSPS modification and reconstruction provisions, any unit that triggers these prov isions in the future will be subject to the standards set b y this rule. In that case, there would be benefits and costs associated with the standard. **Comment 3.7 -**  **2:** Commenters 0142, 0161, 0214, 0215 and 0256 stated concern with EPA's evaluation of the potential health be nefits of the proposed rule. Commenters 0161 and 0256 noted that the EPA did not provide the benefits associated with the pollutant that is the target of the proposed regulation

-- carbon dioxide

-- in the cost

- benefit discussion in the preamble. Commenter s noted that EPA instead relied on the co

- benefits associated with the reduction of other pollutants such as SO 2 , NOx, and fine particulate matter. The commenters stated that the benefits of the proposed rule should be quantified based on the benefits asso ciated with the emissions reduction of solely the target pollutant. Commenter 01613

- 32

stated that EPA has provided no legal justification for rel yi ng on the "health co

- benefits" of the reductions of SO 2 , NOx, and fine particulate matter and that EPA is preclu ded from citing their alleged benefits as support for the proposal. Commenter 0256 noted that where co

- benefits are enumerated b y EPA, a majority of the co

- benefits are due to premature mortality due to fine particulate matter. Commenter 0256 stated that b ecause sulfate based fine particulate resulting from emissions of sulfur dioxide from utility units appears to be EPA's major cost component used as a basis for various EPA regulations, the preamble should include a detailed discussion and anal ys is of the health effects of sulfate based fine particulate versus other times of fine particulate. Commenter 0256 further stated that, absent such anal ys is, it seems that EPA is promulgating a series of regulations that are setting the energy policy for this country and will likely result in harmful long

- term effects on the economy without bothering to do the appropriate scientific anal ys is that is the basis for the regulations. Commenters 0161 and 0214 stated that if the National Ambient Air Quality Standards for po llutants such as SO 2 , NOx, and fine particulate matter have been properly set, there cannot be additional substantial human health measures available as co

- benefits of other regulations such as the Modified and Reconstructed Source Proposal. Commenter 0142 stated that the health benefits for collateral decreased in SO2, NOx, and PM 2.5 continue to be exaggerated and do not take into account other recent rules implementing emission reductions from electric generating units. Commenter 0215 stated that EPA clai ms that the health co

- benefits from the Proposed Standards are equal to or greater than the climate benefits. Those co

- benefits are, however, illusory . Most of them are attributable to exposures to pollutants at levels below those EPA has found protective of public health. Even those fictional benefits are largel y due to emission reductions that will occur even in the absence of the Proposed Standards in order to address an y residual pollutant levels above those found to be protective of public health. Thus , the health co

- benefits of the Proposed Standards are essentially zero. **Response 3.7 -**  **2:** These comments refer to the anal ys is conducted in the RIA for the proposed standards. For the RIA supporting the final rule, the EPA considered the limited data available on past modi fications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analy sis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of anal ys is. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of anal ys is. Likewise, the Agency

does not anticipate an y impacts on the price of electricity or energy supplies. Although there is no illustrative anal ys is of costs or benefits for the final rule, the commenters raise general issues with EPA’s benefit methodology that are addressed here. EPA does not conduct benefit

- cost analy ses under any specific requirement of the CAA. The benefit

- cost3

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anal ys is included in the RIA accompanying the proposed rule was conducted in compliance with Executive Order 12866. Consistent with OMB 5 and EPA guidance 6 , when conducting a cost

benefit anal ys is to meet the requirements of EO 12866, the EPA estimates all of the anticipated costs and benefits associated with a regulatory action to the extent feasible, including benefits anticipated to occur from reducing air pollution to below the NAAQS levels. As EPA has consistently

stated, the NAAQ S are not risk free, and as a result, consistent with scientific evidence and CASAC review. The EPA disagrees that it has double

- counted the benefits for this proposal, as all of the estimated health benefits are attributable to the emissions reductio ns associated with this proposed rule. The EPA notes that NAAQS are set at a level deemed by the EPA Administrator to be protective of public health within an adequate margin of safety and are not set at a level of zero risk. Therefore, there would still b e health benefits that occur at the lower concentrations, even if we have less confidence in the magnitude of those benefits. The EPA believes that the best estimate of benefits includes benefits both above and below the levels of the NAAQS and maintains it is not double

- counting benefits simply because the magnitude of the health benefits that occur at lower concentrations are more uncertain. The EPA’s standard practice for its rules is to estimate, to the extent data and time allow, all benefits of the emissions reductions achieved by a rule beyond control requirements for other rules, i.e., establish a baseline. While it can be difficult to account for concurrent rulemakings in a baseline, the EPA clearly identifies what is and what is not in the ba seline for each anal ys is. If this proposed rule was duplicative of other rules, then there would be no additional costs or benefits attributable to this proposed rule. Prior to estimating the health benefits of this proposed rule (and an y other rule), we simulated what PM 2.5 concentrations would be in the future to account for the air quality benefits that would occur due to other regulations (e.g., MATS) or economic factors in this baseline. An y emissions changes expected as a result of this proposed rule are additional emissions reductions beyond the other regulations included in the baseline (e.g., MATS). Therefore, the benefits from particle reductions are not double

- counted

– they are real health benefits from emissions reductions anticipated to be ach ieved b y this proposed rule. Further, the PM 2.5 and ozone health co

- benefits expected from this proposed rule are not double

counted with benefits estimated in the NAAQS RIAs. NAAQS RIAs illustrate, but do not predict, the emissions reductions strategie s that States may choose to enact when implementing a revised NAAQS. Subsequent Federal and State implementation rules will be reflected in future baselines for PM and ozone NAAQS reviews. Also, because it is not possible to accuratel y account for rules that have not y et been promulgated, RIAs prepared for a future rulemaking will likely include any

additional rulemakings in the baseline. For example, the baseline in this RIA reflects many

recently promulgated rulemakings, including MATS, CSAPR, and CCR.

5 Office of Management and Budge t (OMB). 2003. Circular A

- 4: Regulatory Analysis. Washington, DC. Available on the Internet at http://www.whitehouse.gov/omb/circulars/a004/a

- 4.html. 6 U.S. Environmental Protection Agency (U.S. EPA). 2010a. Guidelines for Preparing Economic Analyses. EPA 240

- R

- 10

- 001. National Center for Environmental Economics, Office of Policy Economics and Innovation. Washington, DC. December. Available on the Internet at <http://yosemite.epa.gov/ee/epa/eerm.nsf/vwAN/EE

- 0568

- 50.pdf/$file/EE

- 0568

- 50.pdf>.3

- 34

The U.S. EPA follows a highl y structured, transparent and peer

- reviewed process for estimating the human health impacts attributable to poor air quality . As a first step, the Agency identifies the health endpoints to quantify by consulting the Integrated Science Assessment, a sy stematic review of the clinical, toxicological and epidemiological literature. This document is reviewed by the independent Clean Air Scientific Advisory Committee. The Agency quantifies those endpoints classified b y the I SA as bein g causal or likely causal, selecting concentration

- response relationships from studies that satisfy a host of criteria

— most notably

whether the population characteristics match those affected b y the regulation, thus excluding studies performed outside of the U.S. and Canada. The Agency ’s approach for characterizing the benefits of air qualit y changes has been extensively reviewed by

independent scientific bodies including the National Academies of Sciences and the U.S. EPA Science Advisory Board. Consist ent with the findings of the PM ISA, which found that the log

- linear no

- threshold model best estimates PM

- related premature death, the Agency quantifies PM impacts resulting from changes in ambient concentrations at all levels. **Comment 3.7 -**  **3:** Commenter 0157 noted that EP A's 111(d) proposal means that all coal units, high and low cost, will run even less since 111(d) mandates increased gas

- fired generation. The commenter stated that this means that both reduced hours of operation and increased operation at lower loads will negate benefits that EPA assumes will occur under this proposal. The commenter felt as is EPA failed to consider the interaction of the two proposals. **Response 3.7 -**  **3:** The EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subj ect to the standards of performance finalized in this action during the period of anal ys is. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of anal ys is. The commenter refers to the bene fits identified in an illustrative anal ys is conducted for the RIA for the proposed rule. For the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity

of existing units that could potentially m odify and determined that it was not possible to conduct a representative illustrative analy sis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. **Comment 3.7 -**  **4:** Commenter 0186 stated that, according to EPA, the Proposed Rule has no freestanding benefits other than serving as a necessary predicate (in EPA's view) to a separate Section 111(d) rulemaking for existing sources, on which EPA focuses its regulatory ana ly sis. The commenter noted that EPA did not bother to create separate RIA reports for the two proposed rules, and merely appended the effects of the Proposed Rule to the much more substantial analy sis for the rulemaking. **Response 3.7 -**  **4:** Although there have historically be en few units that trigger the NSPS modification and reconstruction provisions, any unit that triggers these provisions in the future will be subject to the standards set b y this rule. In that case, there would be benefits and costs associated with the stan dard.3

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**Comment 3.7 -**  **5:** Commenter 0294 stated that waste

- derived materials must be broadly defined. The commenter stated that the McCabe Memorandum appropriatel y concludes that the carbon benefits of non

- forestry

"waste

- derived materials" are obvious, given that (1) the so - called "landscape emissions effects" (primaril y the growth of forests and land use changes) are not implicated since these wastes are generated regardless of potential use for bioenergy and (2) conversion to energy

avoids methane emissions. The commente r felt that while correct, this anal ys is should not onl y apply to municipal solid waste but also an y non - forest organic material including such material as urban wood (or what EPA proposes to define as "clean cellulosic biomass" under proposed changes to the Non

- Hazardous Secondary Materials ("NHSM") Rule (Vol. 78 Federal Register No. 26, February 7, 2013) as well as railroad ties and wood derived from construction and demolition debris (as defined by EPA's proposed amendments to NHSM, Vol. 79 Federal Regis ter No. 71. April 14, 2014). The commenter stated that apart from non

forestry organic material discussed above, the primary source of biomass feedstock for energy is what is called "low

- value" wood residues in the form of tops and limbs and fiber such as thinnings and low

- grade wood that would not be used for saw timber or pulp. Because this material is a b yproduct of another activity that would occur regardless of bioenergy, the collection and use for energy is, in and of itself, a sustainable practice. The commenter also stated that to restrict carbon benefits to the ph ys ical location of a specific facility would jeopardize the financial viability of many biomass plants that need the flexibility of selling into the most attractive state REC market, which sometimes is not the state where the facility is located. Restricting the ability of exporting carbon benefits would potentially disqualify a biomass REC in another state since state RPS programs are often premised on the belief that such "attributes" inc lude carbon benefits. **Response 3.7 -**  **5:** Applicability and emissions from non

- fossil sources are discussed in Section III.D of the preamble. **Comment 3.7 -**  **6:** Commenter 0215 stated that for the non

- transparency and the uncertainties involved in the choice of IAMs and the choice of inputs to the IAMs, the lack of public and peer review of the process, and the resulting risk for gamesmanship, the U.S. government's deploy ment of SCC values is premature and should not be used in this rulemaking. The commenter stated that EPA improperly uses the S CC to justify

the Proposed Standards. EPA estimates that a single, hypothetical coal

- fired boiler complying with the modified source rule would generate between $2 million and $41 million in global climate benefits in 2025 depending on the discount rate us ed and the efficiency improvement achieved. The commenter concluded stating in summary , the numerous uncertainties and other issues with both the IAMs used to derive SCC values and the derivation and application of the SCC make SCC values too speculative t o be useful in trying to ascertain the real costs and benefits of the Proposed Standards. **Response 3.7 -**  **6:** See response to 3.1

- 1 in this Response to Comments. **Comment 3.7 -**  **7:** Commenter 0293 stated that the benefits of this rule are undeniable. The commenter stated that the tremendous red uction in CO 2 emissions that will occur will help us prevent the severe impacts of climate change, or at least better position us to adapt to them. According to the commenter, the financial benefits of this rule are also3

- 36

undeniable. Climate and health bene fits are estimated to be $ 55 billion to $ 93 billion by 2030, and this will include avoiding 2,700 to 6,600 premature deaths and hundreds of thousands of asthma attacks in children. The commenter stated that these monetary benefits outweigh annual costs o f the plan, which are estimated to be $ 7.3 billion to $ 8.8 billion in 2030. It is also expected this plan will reduce electricit y costs. In 2030 electricit y bills are expected to be roughl y 8 percent lower than would be the case under "business as usual, " and this will save Americans about $ 8.00 on an average monthl y residential electricit y bill. And finally, the commenter stated that the rule will have the substantial co

- benefit of bringing about significant additional reductions in other air pollutants that are subject to NAAQS. There will be significant reductions in sulfur dioxide, nitrogen oxides, and fine particulate matter (PM 2.5 ) pollution, and mercury emissions will probably

also be reduced. Overall it is expected there will be a 25 percent reduc tion in soot and smog (ozone) pollution. **Response 3.7 -**  **7:** This commenter refers to anal ys is of the 111(d) emission guidelines for existing sources, which are outside the scope of this rulemaking.