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NERA ECONOMIC CONSULT

I NG Assessing

the Potential Economic Impacts of a 65 ppb

Ozone NAAQS NERA Economic Consulting
Insight in Economics"'Data Used in NE 's Analysis to Estimate Compliance Costs • Base case emissions by state and year (EPA) • Attainment tons by state (EPA) • Reductions needed by state (EPA) - Adjusted for correct timing of attainment (NERA) • Emissions reduction costs - "Known" control costs (EPA) - Coal-fired EGU closures/retrofits (NERA modeling) - "Unknown" control costs (NERA)

, . DlJ ECO N O MI C CONSULTI
N G

# !'Ox Emissions (thousand tons)
1990 1992 

# 1994 1996 1998 2(00 

# 2002 2004 2006 2008 2010



# 281~ 2018 2022 (Mo derate) 

# 2025 2031 (Severe) 2036 (Ext reme) 0 **~ ~**  

# tv N 

# uJ U'l 

# 0 Ul 0 V1 0

**~** 

# v v v

**~** 

# v 

# 0 0 0 0 0 0 0 0 0 0 0 0 

# 0 0 0 0 0 0

I 

# IBasis for EPA's Esti111ate of 2025 Cotnpliance

Costs (Emissions

totals are only

in states needing reductions)


# - • . NERA ECONO M IC CO N SULT

I N G NOx (MM tons) Annualized Cost (2011 $, Billions) Base Case (2025)

I 6.3 -----
**~~~-** --

- **~<**

- CPP/75 ppb compliance (0.6)
$0 -

- -- Baseline (2025)

5.7 Known Controls
(0.9) $1.6 **-- ~,**  **--** -- EGU SCR Controls (0.2)

I $1.7 Unknown Controls

(0

. 9) $13 - -

- --- Compliance

Emissions

3.7 Total Reductions from Baseline
2.0 $16

3Base Case

**)** Use 2022 **75** ppb compliance Baseline **2022** Known Controls
NOx (MM tons) _£3 6 . 6 {M} (0
. 3) **3** (-9:9) (0

. 8)
- . ', NERA ECONOMIC CONSULT

I NG Annualized Cost (2011$, Billions) $0 $1.6 EGU **~CR** Contro ls 34 GW closures Unknown Controls
(0..-21 (0

. 8) (-9:9)
( 1 . 0) $t:T{ in mode

l ) $13 ?? Compliance Emissions

3.7 Total Reductions from Baseline
2.0 $16 Source: NERA calculations

. * The NERA Baseline reflects 2022 conditions
in each state requiring reductions

, with two exceptions: The Base Case for UT and CA reflect conditions
in 2031 and 2036

, respectively, based on higher likely severity classifications

in those two states.

4>< 0 z **~** 0 tn c 0 1-- :E :E 

### What Emissions Sources Must Provide the Last 1 Million Tons of Reductions?



# - . NERA 1 . 6 1 . 4 1 .2 1 . 0 0 . 8 0 . 6 0.4 0.2 0 . 0

ECONOMIC CONSULTING • Known Controls & EGU reductions
in NERA analysis • Emiss

i ons Remaining 

## 0-v **~ ·~**  **~'I** 

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rb-0 

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**~0 ~o<::-**  Remaining sources of 

### . . em1ss1ons are mostly

small &lor mobile B a r c h a rt repo rt s e mi ss

i o n s o nl y in st at es re qu

i rin g r e du c ti o n s u nder 65 pp b s t a nd a r d .
5What Will It Cost to Get 1 Million Tons fro111 the Re111aining Sources?

- . DlJ ECONO MI C CONSULnNG • EPA's analysis assumed all the additional controls can be achieved for an average of $15,000/ton • No technology cost evidence to support this assumption • NERA's took a more evidence-based approach: E.g.
, what is the cost of replacing Tier 1 vehicles still on the road in 2022 with Tier 3 or electric vehicles? • $ / ton for 1 0°/o of vehicle emissions

> $50,000

/ ton • $ / ton for last of the Tier 1 emissions was $235

, 000 / ton • If all Tier 1 vehicles replaced

, vehicle emissions reduced by 40 °/ o • NERA assumed all other mobile and small sources would follow a similar cost curve

, proportionately • Assumes
9 tons of other source redu c tions for every ton of vehicle reduction at each $ / ton level

6Base Case **(~)** Use 2022 

### c >PZ 75 ppb compliance Baseline (2025) Known Controls
NOx (MM tons) __&.-3" 6.6 (M1 (0.3) _;kf 6.3 W-9} (0.8)



### ~, NERA ECONOMIC CONSULTING Annualized Cost (2011$

, Billions) $0 $1.6 EGU SCR Controls 34 GW closures Unknown Controls (0.2) (0.8) 

### fEY.9)
( 1.0)



### in model) **($153)** Compliance

Emissions Total Reductions from Baseline Source

: NERA calculations

.
3.7 2.0 $ta ($155+) * The NERA Baseline reflects 2022 conditions
in each state requiring reductions

, with two exceptions

: The Base Case for UT and CA reflect conditions
in 2031 and 2036, respectively, based on higher likely severity classifications

in those two states.

7Cost Curve Used to Estimate Total Cost for Remaining Reduction Needs after EGU Reductions .-. "' 0 0 Q oV). ,.._,

65 ppb Reduction Need c 0 **~** $235 --------------------- **~** Q)

I c. ..... V\ 0 u $30 **$~0**

- ..... -- • • • • • • • · · · ···=···
- ------ \

) y Known Controls

I I I I I I I I • • I 40°/o removal after EGU D Dll O N O M ICCO V) l c 0 1 · v; I Vl l .E ' W
I X I 0 1 Z t **I** ro t U
l w l Vl l ro 1 CO t I I I I 1 00°/o removal EPA

' s Cost Curve for Unknown Contro

l s

8

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# - 

# • . NERA ECO N O M IC CONSULTING 

# • Known Controls Unknown Controls • Attainment Emissions

9Anne Smith, Ph.D. Senior Vice President NERA E c onomic Consulting Washington

, DC + 1 202 466 9229 Anne

. Smith@nera.com David Harrison

, Jr., Ph.D. Senior Vice President NERA Economic Consulting Boston

, MA. +1 617 927 4512 David.Harrison@nera.com NERA ECONOMIC CONSULTING Insight in Economics

" '