# 1 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal

Prepared by : NERA Economic Consulting with the assistance of

Sierra Research

May 2010

Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Table of Contents

Executive Summary p. 2 Introduction p. 4 Methodology p. 9 Results p. 14 References p. 24 Appendix: Lists of Control Measures p. 25

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Study Team NERA Economic Consulting : David Harrison, Andrew Foss, James Johndrow, David Nagler, and Samuel Grausz Sierra Research : James Lyons and Jeremy Heiken

# 2 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Executive Summary

Baseline 2020 Nonattainment Status and Consequences for Pennsylvania Counties

• EPA projects 28 Pennsylvania counties would exceed Introduction and Objective • EPA issued a reconsideration in January 2010 that would lower the primary (8-hour) ambient ozone standard to a level between 60 and 70 parts per billion (ppb). • This study evaluates potential 2020 attainment costs and economic impacts in Pennsylvania from an ozone standard of 60 ppb relative to a standard of 84 ppb (EPA baseline).

Concentration >60 ppb Counties 28 Scranton Erie EPA projects 28 Pennsylvania counties would exceed 60 ppb in 2020 under baseline conditions, with potentially more from expansion of the ozone monitoring network. • Nonattainment for Philadelphia, Pittsburgh, and other urban areas in Pennsylvania would mean restrictions on new facilities and possible loss of f ederal highway/tr ansit funding. • Complications with Prevention of Significant Deterioration (PSD) and New Source Review (NSR) pre-construction permits could lead to project delays and/or deferrals. Pennsylvania Emission Reducti ons Required to Achieve 60 ppb Ozone Standard in 2020 • To meet a 60 ppb standard, EPA projects 2020 NOx emissions must be 119,000 tons, a reduction of 225,000 tons (65 percent) from the 2020 baseline. NERA relied on this estimate of required reduction for its own analysis. • EPA estimates that all “known” controls would onl y reduce Penns y lvania NOx emissions b y 61,000 tons. To Sources: EPA, Final Ozone NAAQS RIA (2008), Table 3a.18; NERA analysis of MSAs requiring new ozone monitors >60 ppb ≤ 60 ppb

No Data 28 3 36 Phila- delphia Pittsburgh Allentown
Lebanon New Monitoring Area

2 yy y reach attainment, reductions of 164,000 tons would be required through “unknown” controls.

Source: NERA analysis of EPA data in Docket No. EPA-HQ-OAR-2007-0225 677
343
119 164 61 0 100 200 300 400 500 600 700 800
2005 Historical
2020 Baseline 2020 for 60 ppb Thousand Tons of NOx

Emissions EPA "Unknown" Controls EPA "Known" Controls

Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Executive Summary

Study Findings: Pennsylvania Cont rols and Attainment Costs • Where EPA “known” controls reduce NOx emissions by 61,000 tons, NERA/Sierra identified additional controls to reduce Pennsylvania NOx emissions by an additional 86,000 tons, for a total reduction of 147,000 tons. The remaining 78,000 tons are assumed to be achieved by “extra” reductions. • Estimated attainment costs for Pennsylvania—including EPA “known” controls, NERA/Sierra “identified” controls, and NERA/Sierra “extra ” reductions—are $43.3 billion annually beginning in 2020. The estimated present value of costs from 2020 to 2030 is $347.0 billion. (All dollars in this report are in 2010 dollars.) St d Fi di P l i E i I t

• On a present value basis from 2020 to 2030, the 60 ppb standard would lead to a $254 1 billion St u d y Fi n di ngs: P ennsy l van i a E conom i c I mpac t s • The state-of-the-art and widely used REMI Policy Insight model was used to estimate net Pennsylvania economic impacts (taking into account attainment costs in other states). • A 60 ppb standard in 2020 would, for Pennsylvania: reduce jobs by 339,000, a 5.1 percent decrease relative to baseline; reduce gross regional product by $31.4 billion; reduce dis posable income by $18.1 billion; and reduce state tax revenue by $2.7 billion.

Units 2020 2025 2030 P V Employment Jobs -339,000 -318,000 -275,000 -3,463,000* Gross re g ional p roduct Billion 2010$ -$31.4 -$31.9 -$29.9 -$254.1

3 would lead to a $254

. 1 billion reduction in Pennsylvania gross regional product.

Note: Present values (“PV”) are sums of annual impacts from 2020 to 2030 discounted to 2020 using a real annual discount rate of 7 percent. (*) The PV for employment impacts is an undiscounted sum of person-years. Source: NERA analysis as explained in text g p Disposable income Billion 2010$ -$18.1 -$23.0 -$23.0 -$174.9 State tax revenue Billion 2010$ -$2.7 -$2.4 -$2.3 -$20.0 Units 2020 2025 2030 Employment % -5.1% -4.7% -3.9% Gross regional product % -4.7% -4.2% -3.5% Disposable income % -2.9% -3.2% -2.9% State tax revenue % -2.4% -2.0% -1.7%

# 3 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal

• Background on Proposed Ozone Standard • Background on EPA Regulatory Impact Analysis • Stud y ob

j ectives 

# Introduction

y j • Study approach

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Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Introduction: Background on Proposed Ozone Standard • In January 2010, the US Envir onmental Protection Agency ( EPA) proposed to reconsider the primary (8-hour) ozone National Am bient Air Quality Standard (NAAQS).

– The current primary ozone standard is 75 ppb, set in March 2008.* – EPA proposed to tighten the primar y ozone standard to between 60 and 70 ppb. – EPA invited comments on the proposal. • A tightening of the primary ozone standard woul d increase the number of counties in the US th t ld b d i t d “ tt i t” ti US th a t wou ld b e d es i gna t e d as “ nona tt a i nmen t” coun ti es. – Some areas of the US that are in attainment of the current standard would be “nonattainment” areas under a tightened standard. – Current “nonattainment” areas could be in a more severe nonattainment category under a tightened standard. • New and continuing nonattainment areas woul d need to achieve additional ozone precursor (i.e., NOx and VOC) emission reductions (rela tive to baseline emissions) to meet a tightened standard.

– Nitrogen oxides (NOx) and volatile or ganic compounds (VOC) are ozone precursor emissions—i.e., emi ssions that lead to ground-level ozone formation in the presence of sunli g ht.

5 • Complications with Preventi on of Significant Deterioration (PSD) and New Source Review (NSR) pre-construction permits could l ead to project delays and/or deferrals. • Nonattainment status under a tightened standard may be tied to restrictions on federal funding or business growth in nonattainment areas.

* For an area to attain the standard, the 3-year average of the fourth-highest daily maximum 8-hour average ozone concentration measured at each monitor within the area (the area’s ozone level) must not exceed the target ozone level.

# 4 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Introduction: Background on EPA Regulatory Impact Analysis

• EPA published an Updated Regulatory Impact Anal ysis (RIA) in conjunction with the proposed revisions to the primary ozone standard. • The EPA Updated RIA, the EPA Final RIA from the 2008 ozone revision, and the EPA ozone rulemaking docket provide the following information relevant to this study:

– Projected (2020) baseline oz one levels for US counties; – Descriptions of the assumed future im plementation of vari ous federal and state programs that form the bases for the baseline ozone level projections; – A sample ozone precursor emission “control scenario” that takes effect in 2020 across the US and achieves ozone level reductions through a set of NOx and VOC emission controls. • EPA estimated attainment costs at a nat ional level for a potential 60 ppb ozone standard. – EPA modeled the “known” controls (i.e., those that were in its data base or otherwise specified) by area. – For areas that would need additional reductions beyond “know n” controls, EPA assumed that they could be achieved at costs roughly similar to the highest-cost known controls.

• The EPA RIAs do not provide economic impacts estimates for a potential ozone standard

6 The EPA RIAs do not provide economic impacts estimates for a potential ozone standard within the range of 60 to 70 ppb.

Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Introduction: Study Objectives

• The objective of this study is to provi de estimates of attain ment costs and economic impacts in Pennsylvania of a potential 60 ppb ozone standard. – We model an attainment deadline of 2020 (as assumed by EPA). – We model attainment costs and economic im pacts relative to projected baseline conditions that would ac hieve an ozone standard of 84 ppb (the baseline conditions assumed b y EPA

. ) – We include the potential gains to some bus inesses from attain ment costs (e.g., increased demand for low-emission technologies). – We assume that it is possible to control emissions to the low levels required for attainment with a 60 ppb standard and develop estimates for additional “identified” controls as well as “ext ra” controls if necessary to achieve attainment. • We do not model the following: – Economic effects associated with potential restrictions on federal funding or business growth in Pennsylvania due to non-attainment status; – Project delays and/or deferrals resulti ng from complications with PSD/NSR preconstruction permits; and

7 construction permits; and – Economic impacts on small bus inesses (since REMI does not develop information by size of business). • Key uncertainties in the analysis include the following: – Level of emission reductions requir ed in 2020 to achieve a 60 ppb ozone standard; – Nature of control meas ures that are possible to reduce emissions; and – Costs of these control measures.

# 5 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Introduction: Study Approach

• We use EPA estimates of NOx and VOC emi ssion reductions necessary to achieve a potential 60 ppb ozone standar d in Pennsylvania. • We use EPA estimates of emission reduc tions and costs from known controls. • With assistance from Sierra Research (Sie rra), we develop estimates of “identified” emission reductions and costs from other cont rols not modeled by EPA as well as from “extra” reductions if “identified” reducti ons are not sufficient for attainment. W d l “ i l t ” f i i d ti i P l i i • W e d eve l op a “ marg i na l cos t curve ” f or em i ss i on re d uc ti ons i n P ennsy l van i a — .e., a dataset identifying the va rious control measures that could contribute to achievement of the ozone targets, ordered in terms of cost per ton.

– The marginal cost curve shows how the co st per ton increases as more expensive measures are implemented to achieve in creasing levels of emission reduction. • Using the marginal cost curve, we calcul ate attainment costs for the 60 ppb standard by selecting control options along t he marginal cost curve from lowest to highest cost per ton until the target is met; this proc ess ensures that the calculated attainment costs reflect the lowest cost to achi eve the 60 ppb ozone standard. • We use the attainment cost estimates as i nputs into the Policy In sight regional economic model, a state-o f -the-art model develo p ed and maintained b y Re g ional Economic Models,

8 p yg Inc. (REMI), to assess the potential economic impacts on Pennsylvania. – The REMI model incorporates the direct economic effects of c ontrol costs and other regional expenditures as well as indirect and induced effects throughout the regional economy. – We present impacts on gross regional pr oduct, employment, disposable income, and state tax revenue.

Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal

• Baseline Ozone Concentrations • Estimating Reduction Require ments and Attainment Costs • Estimatin g Economic Im p acts 

# Methodology

g p

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# 6 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Methodology: Baseline Emissions

• Baseline emissions are the NOx and VOC emi ssions under expected future conditions with an ozone standard of 84 ppb (t he baseline ozone standard assumed in the EPA 2008 and 2010 RIAs). • The EPA RIAs provide projec ted baseline ozone levels for US counties in 2020 and describe the assumptions about future impl ementation of various federal and state programs that form the bases for the ozone level projections.

– Baseline emissions in the EPA RIAs are intended to acc ount for economic growth and reductions expected from all “on-the-books ” local and federal regulations, including existing local commitments to meet t he 84 ppb ozone standard and federal programs to reduce NOx or VOC emissions from vari ous sources (e.g., the Clean Air Interstate Rule). • We use the information in the EPA RIAs to project 2020 bas eline NOx and VOC emissions in Pennsylvania.

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Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Methodology: Estimating Emission Reductions and Attainment Costs • We use information on necessary emission reduc tions in Pennsylvania from the EPA RIAs. • We use the costs of EPA “know n” controls from the EPA RI As that reflect the control alternatives and their costs t hat EPA identified for 2020. • NERA and Sierra develop a marginal abatement cost curve to show the costs of attaining a 60 ppb ozone standard in the least-cost manner. Th is curve includes EPA “known” controls, NERA/Sierra “identified” controls, and NERA/Sierra “extra” controls in situations in which these other cate g ories are not sufficient to achieve com p liance. p • NERA and Sierra identify the following additional controls that potentially could be used in Pennsylvania and elsewhere in the US to reduce emissions beyond EPA known controls. – Electric generating units: Retirement of existing coal units and replacement with natural gas combined cycle units. – Onroad mobile: Retirement (scrapping) of pre-2015 model year vehicles and replacement with more fuel-efficient vehicles. – Commercial marine: Retrofit of local commercial marine vessels with selective catalytic reduction (SCR) technology. – Area sources: Replacement of existing natural gas spac e heaters with more fuelefficient natural gas units

11 efficient natural gas units

. • The appendix to this report lists the types of “known” controls r eported by EPA and the additional controls identified by NERA/Sierra. • The costs of “extra” NOx reductions (if nec essary) are assumed to increase beyond the most expensive identified cont rols at the same rate assumed by EPA for “unknown” controls.

# 7 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Methodology: Overview of Economic Impacts Modeling

• We use the control cost estimates for a potential 60 ppb ozone standard as inputs into the Policy Insight regional economic model, a st ate-of-the-art model developed and maintained by Regional Economic M odels, Inc. (REMI).

– The REMI model is used by numerous lo cal, state and federal governments to evaluate the economic impacts of projects and policies. • Attainment of a potential 60 ppb ozone standard would require implementation of control measures that would impose di rect costs in Pennsylvania.

– Pennsylvania industries would incur increas ed production costs associated with the installation or use of emission control technologies and strategies. – Pennsylvania taxpayers would incur increased taxes associated with increased local government expenditures on emission control programs. – The cost of living in Pennsylvania woul d rise due to regulations on consumer products. – Note, however, that some businesses would gain from the additional demand for control measures (e.g., low-emission technologies). • The REMI model captures the direct impacts in Pennsylvani a associated with attainment of the potential ozone standard in 2020, as well as the secondary indirect and multiplier

12 the potential ozone standard in 2020, as well as the secondary indirect and multiplier effects that result as t he direct effects work thei r way through the state economy. • We estimate changes in costs for busine sses and households and assi gn these changes in costs to the appropriate industr y and household categories in REMI.

Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Methodology: Projected Baseline Economic Conditions

• The REMI model includes baseline projections for various economic variables and outputs (e.g., industry sector relative production co sts, consumer product prices, gross regional product, employment by industry sector and occupation, and income, among others). – Baseline values in REMI are tailored to individually modeled regions and incorporate projected economic growth. • We p resent the economic im p acts of attainment of the p otential 60 pp b ozone standard as p p pp differences from projected baseline economic conditions.

– Inputs enter the REMI model as modificati ons to the baseline va lues of relevant economic variables. – The REMI model produces estimates of t he effects of inputs as impacts on other economic variables and outputs relative to the baseline.

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# 8 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal

• Baseline ozone concentration M i l bt t t 

# Results

• M arg i na l a b a t emen t cos t curve • Total attainment costs • Economic impacts

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Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Results: Baseline 2020 Ozone Concentrations in Pennsylvania
• As shown in the map below, 31 countie s in Pennsylvania currently have ozone monitors, and EPA projects that 28 of thes e counties would exceed 60 ppb in 2020 under baseline conditions. • Expansion of ozone monitoring to in clude a monitor in the Lebanon Metropolitan Statistical Area would likely increase the number of nonattainment counties.

Concentration

>60 ppb ≤ 60 ppb

No Data Counties 28 3 36 Phila - Allentown Scranton Erie

15 Note: The Lebanon Metropolitan Statistical Area is likely to require an ozone monitor by 2012. Sources: EPA, Final Ozone NAAQS RIA (2008), Table 3a.18; NERA analysis of MSAs requiring ozone monitors No Data 36 Phila delphia Pittsburgh Lebanon New Monitoring Area

# 9 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Results: EPA 2020 Emission Reductions

• To meet a 60 ppb standard, EPA projects NOx emissions in Pennsylvania in 2020 must be 119,000 tons, a reduction of 225, 000 tons (65 percent) from the 2020 baseline. NERA relied on this estimate of requi red reduction for its own analysis. • EPA estimates that all “known” controls would reduce Pennsyl vania NOx emissions by only 61,000 tons (27 percent of the necessary reduction fr om the 2020 baseline). To reach attainment, reductions of 164,000 tons would be required through “unknown” controls.

Source: NERA analysis of EPA data in Docket No. EPA-HQ-OAR-2007-0225 677
343
119 164 61 0 100 200 300 400 500 600 700 800
2005 Historical
2020 Baseline 2020 for 60 ppb Thousand Tons of NOx

Emissions EPA "Unknown" Controls EPA "Known" Controls

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Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Results: NERA/Sierra 2020 Emission Reductions

• The figure below compares NERA/Sierra estimates of Pennsylvania NOx emission reductions in 2020 with EPA estimates. – NERA/Sierra “identified” controls would reduce NOx emissions by an additional 86,000 tons (38 percent of the necessary reduction from the 2020 baseline). – The remaining 78,000 tons of “extra” NOx emission reductions (35 percent of the necessary reduction from the 2020 baseline) would have to be achieved with currently unknown controls.

0 50 100 150 200 250 300 350 400 Thousand Tons of NOx

• The figure at right shows the cost per ton of increasingly expensive EPA and NERA/Sierra controls in Pennsylvania.

– EPA’s cost estimate for the most expensive “known” control is $27,000 per ton. The lower dashed line shows EPA’s assumption on the cost per ton of

“ unknown ” controls 200,000 300,000fNOx Equivalent 119

119 78 86 164 61

61 2020 for 60 ppb ( EPA)
2020 for 60 ppb (N/S)

Emissions EPA "Unknown" Controls EPA "Known" Controls N/S "Extra" Controls N/S "Identified" Controls

17 Note: EPA “unknown” controls reflect the Hybrid Mid extrapolation approach; VOC is converted to NOx equivalents using impact ratios from EPA (2007). Source: NERA analysis as explained in text. unknown controls

. – NERA/Sierra’s cost estimates for “identified” controls range from $4,000 to $302,000 per ton. The upper dashed line shows NERA/Sierra’s assumption on the cost per ton of “extra” controls. • The estimated attainment cost for Pennsylvania is $43.3 billion annually beginning in 2020.

– The estimated present value of costs from 2020 to 2030 is $347.0 b illion (as of 2020 using a real annual discount rate of 7 percent). 0 100,0002010 Dollars per Ton of

0 50,000 100,000 150,000 200,000 250,000 Tons of NOx Equivalent EPA ''Known'' Controls NERA/Sierra ''Identified'' Controls EPA ''Unknown'' Controls NERA/Sierra ''Extra'' Controls

# 10 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Results: Pennsylvania Economic Impacts

• The table below summarizes the estimated ec onomic impacts in P ennsylvania of a 60 ppb ozone standard in 2020, 2025 and 2030 relati ve to baseline projections.

Baseline Units 2020 2025 2030 Employment Million Jobs 6 6 6 8 7 1 Million Jobs

. . . Gross regional product Billion 2010$ $671 $760 $866 Disposable income Billion 2010$ $631 $709 $803 State tax revenue Billion 2010$ $111 $123 $137 Change Units 2020 2025 2030 P V Employment Jobs -339,000 -318,000 -275,000 -3,463,000* Gross regional product Billion 2010$ -$31.4 -$31.9 -$29.9 -$254.1 Disposable income Billion 2010$ -$18.1 -$23.0 -$23.0 -$174.9 State tax revenue Billion 2010$ -$2.7 -$2.4 -$2.3 -$20.0 % Change Units 2020 2025 2030 Employment % -5.1% -4.7% -3.9% Gross regional product % -4.7% -4.2% -3.5% Disposable income %

- 2.9%

- 3.2%

- 2.9%

18 Note: Present values (“PV”) are sums of annual impacts from 2020 to 2030 discounted to 2020 using a real annual discount rate o f 7 percent. (*) The PV for employment impacts is an undiscounted sum of person-years. Source: NERA analysis as explained in text Disposable income % 2.9% 3.2% 2.9% State tax revenue % -2.4% -2.0% -1.7%

Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Results: Pennsylvania Employment Impacts by Year

• Pennsylvania employment in 2020 is project ed to decrease by 339,000 jobs (5.1 percent relative to baseline).



### PA Employment Impacts

-250 000 -200,000 -150,000 -100,000 -50,000 0Jobs

19 Note: The change in jobs shown for a given year is the total di fference in jobs relative to the baseline in the given year. Source: NERA analysis as explained in text -350,000 -300,000 -250 , 000

2020 2025 2030

# 11 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Results: Pennsylvania Employment Impacts by Sector

• The figure below shows estimated changes in P ennsylvania employment by sector in 2020, 2025, and 2030 due to a potential 60 ppb ozone standard. The positiv e estimated impacts for manufacturing reflect potentia l production in Pennsylvania of low-emission technologies.

2020 2025 2030 PA Employment Impacts by Sector

-80,000 -60,000 -40,000 -20,000 0 20,000Jobs 2020 2025 2030

20 Note: The change in jobs shown for a given year is the total di fference in jobs relative to the baseline in the given year. Source: NERA analysis as explained in text -100,000 Natural Resources and Mining Utilities Construction Manufacturing Wholesale and Retail Trade Transportation and Accommodation Finance, Real Estate, and Information Professional and Admin Services Health, Education, and Social Services Other Services

Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Results: Pennsylvania Gross Regional Product Impacts by Year • Pennsylvania gross regional product in 2020 is projected to decrease by $31.4 billion (4.7 percent relative to baseline).


### PA Gross Regional Product Impacts

-25 -20 -15 -10 -5 0Billions of 2010 Dollars

21 Note: Gross regional product measures of the value of goods and services produced in an area’s regional economy. Source: NERA analysis as explained in text -35 -30 -25B

2020 2025 2030

# 12 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Results: Pennsylvania Value Added Impacts by Sector

• The figure below shows estimated changes in Pennsylvania value added by sector in 2020, 2025, and 2030 due to a potential 60 ppb ozone standard. The posit ive estimated impacts for manufacturing reflect potent ial production in Pennsylvania of low-emission technologies.

2020 2025 2030 PA Value Added Impacts by Sector

- 8 -6 -4 -2 0 2 4Billions of 2010 Dollars 2020 2025 2030

22 Note: Industry value added is the value of output from a particular industry less the value of intermediate goods; the sum of va lue added from all sources in a region is the gross regional product of the region (i.e., the value of goods and services produced in the regional economy). Source: NERA analysis as explained in text -10

8

Natural Resources and Mining Utilities Construction Manufacturing Wholesale and Retail Trade Transportation and Accommodation Finance, Real Estate, and Information Professional and Admin Services Health, Education, and Social Services Other Services

Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal
• Pennsylvania disposable income in 2020 is projec ted to decrease by $18. 1 billion (2.9 percent relative to baseline). Results: Pennsylvania Dispo sable Income Impacts by Year



### PA Disposable Income Impacts

-15 -10 -5 0Billions of 2010 Dollars

23 Source: NERA analysis as explained in text -25 -20B

2020 2025 2030

# 13 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal References

• US Environmental Protection Agency. 2007. Regulatory Impact Analysis of the Proposed Revisions to the National Ambient Ai r Quality Standards for Ground-Level Ozone . July. • US Environmental Protection Agency. 2008. Final Ozone NAAQS Regulatory Impact Analysis . March. • US Environmental Protection Agency. 2010. Summary of the Updat ed Regulatory Impact A nal y sis ( RIA ) for the Reconsideration of the 2008 Ozone National Ambient Air Q ualit y ( ) Q y Standard (NAAQS) . January. • US Environmental Protection Agency. 2010. Ozone Rulemaking Docket. EPA-HQ-OAR2007-0225.

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Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal 

# Appendix: Lists of Control Measures • Electric Generating Units • Non-EGU Point • Area • Onroad Mobile • Nonroad Mobile

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# 14 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Lists of Control Measures: Electric Generating Units

EPA “Known” Controls NERA/Sierra “Identified” Controls • Lower ozone seas on nested caps in OTC and MWRPO states while retaining the current CAIR cap and a new cap for Eastern Texas. A li ti f l l t l (SCR • Replace coal-fired plants with combined-cycle natural gas turbines

• A pp li ca ti on o f l oca l con t ro l s (SCR and SNCR) nationally to coal fired units in and around NA counties covering the combination of CBSA (Core based Statistical Areas) and CSA (Combined Statistical Areas) outside of OTC, MWRPO, and East Texas.

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Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Lists of Control Measures: Non-EGU Point

EPA “Known” Controls NERA/Sierra “Identified” Controls • Biosolid Injection Technology • LNB (Low NOx Burner) • LNB + FGR (Flu Gas Recirculation) • LNB + SCR ( Selective Catal y tic • None
( y Reduction) • NSCR (Non-selective Catalytic Reduction) • OXY-Firing • SCR • SCR + Steam Injection • SCR + Water Injection • SNCR (Selective Non-catalytic Reduction) SNCR U

27 • — rea • SNCR—Urea Based • Permanent Total Enclosure (PTE) • Work Practices, Use of Low VOC Coatings (Non-EGU Point Sources)

# 15 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Lists of Control Measures: Area

EPA “Known” Controls NERA/Sierra “Identified” Controls • RACT to 25 tpy (LNB) • Switch to Low Sulfur Fuel • Water Heater + LNB Space Heaters • CARB Long-Term Limits • Replace natural gas space heaters in residential buildings with more energy-efficient natural gas appliances Rl t l ht • Catalytic Oxidize r • Equipment and Maintenance • Gas Collection (SCAQMD/BAAQMD) • Incineration >100,000 lbs bread • Low Pressure/Vacuum Relief Valve • OTC Mobile Equipment Repair and Refinishing Rule • OTC Solvent Cleaning Rule • SCAQMD—Low VOC • SCAQMD Limits • R ep l ace na t ura l gas space h ea t ers in commercial buildings with more energy-efficient natural gas appliances

28 • SCAQMD Rule 1168 • Work Practices, Use of Low VOC Coatings • Switch to Emulsified Asphalts

Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Lists of Control Measu res: Onroad Mobile

EPA “Known” Controls NERA/Sierra “Identified” Controls • Diesel Retrofits • Reduce Gasoline Reid Vapor Pressure (RVP) to 7.0 • Elimination of Long Duration Idling • Replace pre-2015 model year lightduty gasoline vehicles (passenger cars and light trucks) with more energy-efficient vehicles • Continuous Inspection and Maintenance • Commuter Programs • Additional Technology Changes in the Onroad Transportation Sector • Increased Penetration of Onroad SCR and DPF from 25% to 75% • Continuous Inspection and Maintenance (OBD)

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# 16 Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal Lists of Control Measures: Nonroad Mobile

EPA “Known” Controls NERA/Sierra “Identified” Controls • Diesel Retrofits and Engine Rebuilds • Reduce Gasoline Reid Vapor Pressure (RVP) to 7.0 • Install SCR on Category 1 and 2 engines for local commercial marine vessels (distillate-powered tugs, dredgers, commercial excursion, ferries fishing and other non • Aircraft NOx International Standard • Increased Penetration of Nonroad SCR and DPF from 25% to 75% ferries , fishing , and other non governmental support vessels)

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Estimated Economic Impacts on Pennsylvania of EPA 2010 Ozone Proposal



## For more information, contact: David Harrison Jr Ph D David Harrison , Jr ., Ph

. D

. Senior Vice President NERA Economic Consulting 200 Clarendon Street, 11th Floor Boston, Massachusetts 02116 Tel: (617) 927-4512 Fax: (617) 927-4501 David Harrison@NERA com

31 

## David

. Harrison@NERA

. com www.nera.com