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

1

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

Erie Scranton

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 federal highway/transit 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 Reductions 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 only reduce Pennsylvania NOx emissions by 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

Phila- 36 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 Controls 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

Study Findings: Pennsylvania Economic Impacts

• 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 disposable income by $18.1 billion; and reduce state 

tax revenue by $2.7 billion.

Units 2020 2025 2030 PV

Employment Jobs -339,000 -318,000 -275,000 -3,463,000*

Gross regional product 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

• Study objectives

Introduction

y j

• Study approach

4

Estimated Economic Impacts on Pennsylvania of

EPA 2010 Ozone Proposal Introduction: Background on Proposed Ozone 

Standard

• In January 2010, the US Environmental Protection Agency (EPA) proposed to reconsider 

the primary (8-hour) ozone National Ambient Air Quality Standard (NAAQS).

– The current primary ozone standard is 75 ppb, set in March 2008.*

– EPA proposed to tighten the primary ozone standard to between 60 and 70 ppb.

– EPA invited comments on the proposal.

• A tightening of the primary ozone standard would increase the number of counties in the 

US th t ld b d i t d “ tt i t” ti US that would be designated as “nonattainment” counties.

– 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 would need to achieve additional ozone precursor 

(i.e., NOx and VOC) emission reductions (relative to baseline emissions) to meet a 

tightened standard.

– Nitrogen oxides (NOx) and volatile organic compounds (VOC) are ozone precursor 

emissions—i.e., emissions that lead to ground-level ozone formation in the presence 

of sunlight.

5

• Complications with Prevention of Significant Deterioration (PSD) and New Source Review 

(NSR) pre-construction permits could lead 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 Analysis (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 ozone levels for US counties;

– Descriptions of the assumed future implementation of various 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 national 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 “known” 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 provide estimates of attainment 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 impacts relative to projected baseline 

conditions that would achieve an ozone standard of 84 ppb (the baseline conditions 

assumed by ) EPA .

– We include the potential gains to some businesses from attainment 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 “extra” 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 resulting from complications with PSD/NSR preconstruction permits; and

7

construction permits; and

– Economic impacts on small businesses (since REMI does not develop information by 

size of business).

• Key uncertainties in the analysis include the following:

– Level of emission reductions required in 2020 to achieve a 60 ppb ozone standard;

– Nature of control measures that are possible to reduce emissions; and

– Costs of these control measures.
5

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

• We use EPA estimates of NOx and VOC emission reductions necessary to achieve a 

potential 60 ppb ozone standard in Pennsylvania.

• We use EPA estimates of emission reductions and costs from known controls.

• With assistance from Sierra Research (Sierra), we develop estimates of “identified” 

emission reductions and costs from other controls not modeled by EPA as well as from 

“extra” reductions if “identified” reductions are not sufficient for attainment.

• W d l “ i l t ” f i i d ti i P l i We develop a “marginal cost curve” for emission reductions in Pennsylvania—i.e., a 

dataset identifying the various 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 cost per ton increases as more expensive 

measures are implemented to achieve increasing levels of emission reduction. 

• Using the marginal cost curve, we calculate attainment costs for the 60 ppb standard by 

selecting control options along the marginal cost curve from lowest to highest cost per ton 

until the target is met; this process ensures that the calculated attainment costs reflect the 

lowest cost to achieve the 60 ppb ozone standard.

• We use the attainment cost estimates as inputs into the Policy Insight regional economic 

model, a state-of-the-art model developed and maintained by Regional Economic Models, 

8

p yg

Inc. (REMI), to assess the potential economic impacts on Pennsylvania.

– The REMI model incorporates the direct economic effects of control costs and other 

regional expenditures as well as indirect and induced effects throughout the regional 

economy.

– We present impacts on gross regional product, employment, disposable income, and 

state tax revenue.

Estimated Economic Impacts on Pennsylvania of

EPA 2010 Ozone Proposal

• Baseline Ozone Concentrations

• Estimating Reduction Requirements and Attainment Costs

• Estimating Economic Impacts

Methodology

g p

9
6

Estimated Economic Impacts on Pennsylvania of

EPA 2010 Ozone Proposal Methodology: Baseline Emissions

• Baseline emissions are the NOx and VOC emissions under expected future conditions with 

an ozone standard of 84 ppb (the baseline ozone standard assumed in the EPA 2008 and 

2010 RIAs).

• The EPA RIAs provide projected baseline ozone levels for US counties in 2020 and 

describe the assumptions about future implementation of various federal and state 

programs that form the bases for the ozone level projections.

– Baseline emissions in the EPA RIAs are intended to account for economic growth and 

reductions expected from all “on-the-books” local and federal regulations, including 

existing local commitments to meet the 84 ppb ozone standard and federal programs 

to reduce NOx or VOC emissions from various sources (e.g., the Clean Air Interstate 

Rule).

• We use the information in the EPA RIAs to project 2020 baseline NOx and VOC emissions 

in Pennsylvania.

10

Estimated Economic Impacts on Pennsylvania of

EPA 2010 Ozone Proposal Methodology: Estimating Emission Reductions and 

Attainment Costs

• We use information on necessary emission reductions in Pennsylvania from the EPA RIAs.

• We use the costs of EPA “known” controls from the EPA RIAs that reflect the control 

alternatives and their costs that 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. This curve includes EPA “known” controls, 

NERA/Sierra “identified” controls, and NERA/Sierra “extra” controls in situations in which 

these other categ p ories are not sufficient to achieve compliance.

• 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 space heaters with more fuelefficient natural gas units

11

efficient natural gas units.

• The appendix to this report lists the types of “known” controls reported by EPA and the 

additional controls identified by NERA/Sierra.

• The costs of “extra” NOx reductions (if necessary) are assumed to increase beyond the 

most expensive identified controls 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 state-of-the-art model developed and maintained 

by Regional Economic Models, Inc. (REMI).

– The REMI model is used by numerous local, 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 direct costs in Pennsylvania.

– Pennsylvania industries would incur increased 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 would 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 Pennsylvania 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 the direct effects work their way through the state economy.

• We estimate changes in costs for businesses and households and assign these changes in 

costs to the appropriate industry 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 costs, 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 p p pp resent the economic impacts of attainment of the potential 60 ppb ozone standard as 

differences from projected baseline economic conditions.

– Inputs enter the REMI model as modifications to the baseline values of relevant 

economic variables.

– The REMI model produces estimates of the effects of inputs as impacts on other 

economic variables and outputs relative to the baseline.

13
8

Estimated Economic Impacts on Pennsylvania of

EPA 2010 Ozone Proposal

• Baseline ozone concentration

M i l bt t t

Results

• Marginal abatement cost curve

• Total attainment costs

• Economic impacts

14

Estimated Economic Impacts on Pennsylvania of

EPA 2010 Ozone Proposal

Results: Baseline 2020 Ozone Concentrations in 

Pennsylvania

• As shown in the map below, 31 counties in Pennsylvania currently have ozone 

monitors, and EPA projects that 28 of these counties would exceed 60 ppb in 2020 

under baseline conditions.

• Expansion of ozone monitoring to include 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

Phila- 36

Allentown

Erie Scranton

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

Phila No Data 36 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 required reduction for its own analysis.

• EPA estimates that all “known” controls would reduce Pennsylvania NOx emissions by only 

61,000 tons (27 percent of the necessary reduction from 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

16

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

300,000

f NOx 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 billion (as of 2020 using a real annual 

discount rate of 7 percent).

0

100,000

2010 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 economic impacts in Pennsylvania of a 60 ppb 

ozone standard in 2020, 2025 and 2030 relative to baseline projections.

Baseline Units 2020 2025 2030

Employment Million Jobs Million Jobs 6 6. 6 8. 7 1.

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 PV

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 of 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 projected 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

0

Jobs

19

Note: The change in jobs shown for a given year is the total difference 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 Pennsylvania employment by sector in 2020, 

2025, and 2030 due to a potential 60 ppb ozone standard. The positive estimated impacts for 

manufacturing reflect potential production in Pennsylvania of low-emission technologies. 

2020 2025 2030

PA Employment Impacts by Sector

-80,000

-60,000

-40,000

-20,000

0

20,000

Jobs

2020 2025 2030

20

Note: The change in jobs shown for a given year is the total difference 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

0

Billions 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

B

-25

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 positive estimated impacts 

for manufacturing reflect potential production in Pennsylvania of low-emission technologies.

2020 2025 2030

PA Value Added Impacts by Sector

-8

-6

-4

-2

0

2

4

Billions 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 value 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 projected to decrease by $18.1 billion (2.9 percent 

relative to baseline).

Results: Pennsylvania Disposable Income Impacts by 

Year

PA Disposable Income Impacts

-15

-10

-5

0

Billions of 2010 Dollars

23

Source: NERA analysis as explained in text

-25

-20

B

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 Air 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 Updated Regulatory Impact 

Analy( ) Q y sis (RIA) for the Reconsideration of the 2008 Ozone National Ambient Air Quality

Standard (NAAQS). January.

• US Environmental Protection Agency. 2010. Ozone Rulemaking Docket. EPA-HQ-OAR2007-0225.

24

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

25
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 season 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

• Application of local controls (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.

26

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 Catalytic 

• 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 Oxidizer

• 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

• Replace natural gas space heaters 

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 Measures: 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)

29
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 nongovernmental support vessels)

30

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

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David.Harrison@NERA.com

www.nera.com