New Costs of attainment of Phase I of the CAAAwps.prenhall.com/wps/media/objects/2513/2574258/pdfs/E14... · 2005. 8. 17. · Costs of attainment of Phase I of the CAAA Pre-CAAA considerations

Costs of attainment of Phase I of the CAAA

Pre-CAAA considerations and predictions

Despite hard work in controlling emissions of hydrocarbons, which were thought to

control ozone levels, not as much has been accomplished in the United States (295,321) or

in Europe (276,322) to reduce ozone levels as had been hoped. It was thought that

controlling hydrocarbon (HC) emission from cars would reduce ozone levels, but that did

not happen at levels expected.(323) Rural measurements of ozone are twice what was

measured a century ago in Europe (324) and current ozone levels in isolated environments

are very low.(325) Pollution in general is bad news far from the source because it scavenges

OH-, which helps clean air keep clean.(281,326,327) Reactions among ozone, NOx, and

PAN are important; nighttime reactions regenerate nitrate that reduces ozone the next

day.(328) The key to ozone is the NOx level, as we have seen earlier.

The ozone-nitrogen oxide cycle by itself does not explain elevated ozone levels; many

coupled reactions are involved. The existence of PAN can lead to long-distance transfer.

McRae and Russell found that controlling HC pushed ozone pollution into the

countryside.(329) When HC/NOx > 20, ozone varies with increasing NOx and is

independent of HC. When HC/NOx is low, ozone increases with increasing HC and

decreases with NOx.(326,329-331) Which of the mechanisms is important is essential in

determining strategies for cleaning the air. The failure of the HC reduction approach to

reduce ozone may stem from such differences. HC reduction works best downtown. NOx

reduction works best as the air moves to rural or suburban areas. It seems that HC control

is less important for autos and NOx more important than had been thought.(326,330,331)

Energy, Ch. 14, extension 6 Costs of attainment of Phase I of the CAAA 2

McRae and Russell also found that methanol-burning engines would reduce ozone

pollution significantly (see Chapter 12), which led to the provision for alternative fuels in

the CAAA. Changing half the cars to burn methanol would reduce the peak values by

40%.(328,331) Model calculations show that methanol fuel can decrease ozone and fine

particulates, too.(331,332) Diesel engines could meet particulate levels if run on methanol

instead of kerosene.(333)

According to the CAAA, California can make its own rules. Other states can follow either

federal rules or California rules to lower pollutant levels, but they cannot make their own

rules. Eight northeastern states have adopted California rules to reduce smog.(334) The

goals of the CAAA for sulfur dioxide emissions are shown in Fig. E14.6.1. The

oxygenated gasoline program is mandated in 36 of the 39 CO nonattainment areas

(Boston, Memphis, and Duluth excepted); oxygenates are fuel additives blended to reduce

CO emissions, for example, MTBE (methyl tertiary butyl ether, (CH3)3 COCH3).(335)

However, MTBE proved to contaminate groundwater, and the compound is being

removed.

Fig. E14.6.1 Sulfur dioxide emissions 1970-1990 and expected emissions reductions due to the 1990Clean Air Act Amendments to 2030 as proposed in 1990.(U.S. Department of Energy)


Environmentalists have complained that California regulators issue slaps on the wrist

rather than persuading polluters to stop polluting. An analysis by the Environmental

Working Group showed that half of fines issued by California’s air regulators were $2000

or lower.(336) The efficacy of this strategy may be judged from the fact that between 1999

and 2004, two refineries—Shell Oil in Martinez and Chevron in Richmond—amassed

over 120 each.(336)

One little-known fact is the contribution of lawn mowers to pollution. There was a

bruising political fight in the U.S. Senate over regulation of lawn mowers between

California and Missouri, won by California only because a Republican was elected as

California governor during a recall election. The South Coast Air Quality Management

District promulgated new rules.(337) The District even initiated a mower swap—you

bring in your gas mower, we’ll give you an electric mower.(338)

The states are affected differently by the CAAA. Ohio, the largest emitter of SO2 in the

U.S. from electrical generating facilities (2 Mt/yr), has about half its units covered under

the act, as do neighboring Indiana and West Virginia. Nationwide, 261 units in 21 states

were regulated in Phase I (1995 to 1999).(339)

What were Ohio’s gains and losses predicted to be? Most utilities predicted huge outlays

of money. In fact, this was the prediction of utility management nationwide.

In investigating several alternative scenarios, it was found that in one in which Ohio

utilized only scrubbers to clean emissions, Ohio would see a net employment increase of

more than 6,000 people due to creation of jobs in high-technology scrubber suppliers, and

would realize cumulative profits after 10 years of over $600 million; the entire nation


would gain more than 75,000 jobs and would gain cumulative profits of almost $12

billion.(320) In the predicted option of scrubbers plus fuel switching, Ohio would lose

almost 4,000 jobs (most in coal-mining areas) but still gain cumulative 10 year profits of

$440 million; nationwide, 72,000 jobs would be created and cumulative profits would

total just under $10 billion.(320)

In Ohio, 95% of all electricity comes from coal. This net profit to Ohio includes the

effects of the increased electric bills necessary to cover the cost of scrubber installation

($4.2 billion for scrubbers only, or $3.0 billion for scrubbers plus fuel switching). By

1985, Ohio utilities had already spent $2 billion for pollution control; even the larger

figure does not greatly exceed that.(340) The beneficial effect to the state could be even

greater if government officials and private industry seize the advantage to be gained in the

opportunity.

Pre-CAAA cost estimates

The cost of implementing the 1990 Clean Air Act Amendments was originally estimated

to be $7 billion.(341) SO2 emissions were to be cut to half 1980 levels. Many of the easy

changes had already been made; SO2 had declined by 80% between 1970 and 1988, even

as the use of coal increased.(341) Thus flue gas desulfurization needed to be 95% or more

efficient (see the discussion in Extension 14.1, Pollution Control Systems). The electrical

capacity equipped with scrubbers, 5.8 GW in 1995, will increase to 33.7 GW in 2010,

and then decline to 17.8 GW in 2030 as technological advances take hold.(342) Is it worth

the money?

Assessment of health costs of ozone reduction suggests that each resident of the South

Coast Basin currently faces 17 days of ozone-related symptoms per year. The study (274)


estimated 10 million daily exposures to concentration in excess of the 150 µg/m3

NAAQS, about 1 per capita. Attaining the standard saves 1600 deaths per year.(274) The

risk is 1 in 10000 higher than in the absence of the pollutant. Basin-wide benefits for

ozone are $1.2 to $5.8 billion and PM10 avoided costs (deaths, health care costs, lost

workdays) were worth $2.9 to $14.9 billion, for a net gain.(274) Additional damage is

borne by forests and crops. Extra maintenance is necessary because rubber, for example,

deteriorates more rapidly when exposed to ozone. A different study, in contrast, reached

the conclusion that control of ozone was not cost-effective.(343)

In Phase 1 of the CAAA, 110 coal-burning power plants’ emissions of sulfur would be

cut back from the 1990-current acreage of 4.2 lb S/MBtu to 2.5 lb S/MBtu in 1995; in

Phase 2, the sulfur emissions would be cut further to 1.2 lb S/MBtu in 2000. The total

release expected in 2010, after both phases were complete, was 9 Mt/yr.(344-347) Figures

E14.6.2, 3, 4, 5, and 6 show the actual and expected experience for VOCs, NOx, SOx, CO,

and PM10 as well as the 1998 problem areas.(346) Ozone emissions in 1998 are shown in

Fig. E14.6.7.(346)

The lowest pre-CAAA cost estimate was $5.5 to $7.5 billion/yr in 2000 dollars.(348) The

original utility and EPA guess for the title dealing with sulfur reduction alone was about

$10 to perhaps as much as $25 billion annually by 2000.(344)

As a success, Table E14.6.1 shows the overall change in air quality from 1989 to 1998.

The CAAA appears to have reduced emissions substantially. The only relative

disappointment is the lack of progress in nitrogen dioxide, which leads to the low decrease

in tropospheric ozone recorded.


a.

b.

Fig. E14.6.2 a. Pre-CAAA expectations, post-CAAA expectations, and actual trends for VOCs. Source:Ref. 346, Fig. A-1.) b. VOC emission data.(Ref. 232, Fig. 2-11)


a.

b.

Fig. E14.6.3 a. Pre-CAAA expectations, post-CAAA expectations, and actual trends for NOx.(Ref. 346, Fig. A-2)b. Highest NO2 annual mean concentration by county, 1998.(Ref. 346, Fig. 2-35)


Year

kt [

N]

0

100

200

300

400

500

600

700

800

900

1980 1985 1990 1995 2000

Energy Sources Waste Management Agricultural Sources

c. Detailed sources of nitrogen emissions, 1980-2002.(U.S. Department of Energy, Annual Energy Review 2003, DOE/EIA-0384(2003), September 2004,Table12.6)

TABLE E14.6.1

Criteria Pollutants — National Trends, National Air Quality Concentrations, 1989–1998

Pollutant Decrease in Concentration (Percent)

Carbon Monoxide 39

Lead 56

Nitrogen Dioxide 14

Ozone* 4

Particulate Matter (PM10) 25

Sulfur Dioxide 39

* Based on 1-hour level.Source: Ref. 346


.a.

b.

Fig. E14.6.4 a. Pre-CAAA expectations, post-CAAA expectations, and actual trends for SOx.(Ref. 346, Fig. A-2)b. Highest 2nd maximum 24-hour SO2 concentration by county, 1998.(Ref. 346, Fig. 2-66)


a.

b.

Fig. E14.6.5 a. Pre-CAAA expectations, post-CAAA expectations, and actual trends for CO.(Ref. 346, Fig. A-2)b. Highest 2nd maximum 24-hour CO concentration by county, 1998.(Ref. 346, Fig. 2-8)


a.

b.

Fig. E14.6.6 a. Pre-CAAA expectations, post-CAAA expectations, and actual trends for PM10 .(Ref. 346, Fig. A-2)b. Highest 2nd maximum 24-hour PM10 concentration by county, 1998.(Ref. 346, Fig. 2-50)


c.

d.

Fig. E14.6.6 c. Annual average 1998 PM2.5 concentrations (in µg/m3) at IMPROVE sites andcontribution by individual constituents. Pie chart sizes are scaled by annual average PM2.5 concentrations.(Ref. 346, Fig. 2-53) d. 2001 annual average PM2.5 concentration.(U.S. EPA, Draft Report on the Environment Technical Document, EPA 600-R-03-050, June 2003,Exhibit 1-8)


Fig. E14.6.7 Highest second daily maximum 1-hour O3 concentration by county, 1998.(Ref. 346, Fig. 2-37)

Actual CAAA compliance costs—a welcome surprise

The EPA in 1999 assessed annual compliance costs for Titles I through V of the CAAA

to total be approximately $19 billion higher by the year 2000 than in 1990, rising to $27

billion by the year 2010.(347) Expected benefits include reduced incidence of some human

health effects, improvements in visibility, and damage to agricultural crops that would be

avoided. According to the EPA,(347) the annual economic value of these benefits ranged

from $26 to $270 billion (1990 dollars) in 2010, with a mean predicted benefit of $110

billion. This gave a predicted benefit-to-cost ratio of about 4.


The pre-CAAA guesses were clearly far off the mark, since now compliance with all titles

is estimated to cost less than four times the absolute lowest guess amount at present.(347)

What can have been responsible for such a gross misjudgment?

In the early 1980s, when the CAAA was being written and debated, as Munson has

pointed out,(348) there were four assumptions that were made:

• acidification was a newly discovered problem in North America,

• sulfur dioxide controls would be expensive, achieved by scrubber installation,

• the new trading system of allowances would reduce costs, and

• the controls would have deleterious consequences for the utility and coal

industries.

However, as Munson pointed out and as is discussed in the chapter, SO2 emissions had

actually caused acidity for a long time. People had written about it for half a century

before the CAAA was written. And research had made some strides in dealing with SO2

pollution.

In addition, the cost turned out to be $0.84 billion/yr and that price achieved a drop to 5.4

Mt, 35% below the legal limit.(344,348) Pass-along cost increases to customers for the

CAAA have been in the modest 2 to 4% range, instead of the feared 40%.(348) Many

utilities met the reductions by switching from high-sulfur to low-sulfur coal (a long-term

trend antedating the CAAA), although a substantial number opted for the much more

expensive scrubber installation.(344,348) In addition, transportation costs of coal dropped

substantially.(344,348)


Pollution trading

Perhaps the most novel idea implemented in the 1990 CAAA is the use of “allowances.”

An allowance is the right to emit 1 ton of SO2 that year or later. It permits the 110

utilities affected by the CAAA to let the free market work: to buy, sell, bank, or to

distribute the costs more wisely without dictating the details. For SO2, an allowance is a

certification that a company may emit one ton during a the year it is purchased or

obtained or any subsequent year. At the end of each year, the company must have at least

as many allowances on hand as its total emissions in that year.

The first sales, by Wisconsin Power and Light, came in May, 1992.(349) About 15% of

the Phase I compliance is expected to come as a result of allowance acquisition.(339)

California has instituted pollution allowances that can be traded within the state.(350) The

United Nations may help the idea of pollution permit trading to go worldwide, thereby

letting the market reduce pollution by identifying the most cost-effective

measures.(344,351) Three states with nonattainment areas and no attainment plan, New

Jersey, Michigan, and Illinois are being allowed to trade air pollution credits by the

EPA.(121)

The new trading system, by allowing flexibility through the trading and sale of emissions

allowances, certainly contributed to the remarkable cheapness of the outcome. The

allowances debuted at about $250 per allowance, but as the success became obvious, the

price decreased down to around $100.(348) Not many utilities have gotten into the market,

although sulfur-dirty Ohio has seen purchase of many allowances from out-of-state

utilities. The freedom to make individual decisions rather than being directed by

government to adopt a particular strategy was a real strength.


Finally, most negative trends expected did not develop, or did not cut as deep as feared.

The coal companies expected to lose business, but acquired their way into western as well

as eastern coal ownership, so after the CAAA, the corporations did not suffer. Eastern

coal miners did lose jobs, but that was a strengthening of a pre-existing trend.(348) Many

utilities actually experienced lower costs as a result of the CAAA.(348)

When new equipment is added to a complex utility plant, troubles can arise. This has

happened at several plants; for example, the notorious Ohio Power Gavin plant (the

biggest emitter of sulfur dioxide in the entire country) gave off an acid cloud because of

difficulties managing flue gas desulfurization equipment.(352) (This is the plant whose

pollution troubles led AEP to buy out everyone living in the town of Cheshire, Ohio. See

Extension 14.5, The 1990 CAAA, NOx, particulates, and the EPA.)

TABLE E14.6.2

Criteria Pollutants Nonattainment Areas

Pollutant Original 1999 1999 Population# Areas # Areas (in 1000s)

CO 43 20 33,230

Pb 12 8 1,116

NO2 1 0 0

O3 101 32 92,505

PM10 85 77 29,880

SO2 51 31 4,371

European countries, having no administrative structure like the EPA have entered into

several protocols to reduce sulfur and nitrogen emissions. Germany, for example, must


reduce sulfur emissions to 1.3 Mt by 2000 and 0.9 Mt by 2005.(218,353) Overall, the

CAAA is the envy of Europe and has reduced emissions substantially as we saw in Table

E14.6.1; the number of nonattainment areas has decreased as well (Table E14.6.2 and

Figs. E14.6 8 and E14.6.9). Note that Fig. E14.6.9 b shows decreases in ozone levels

uniformly across the country. Table E14.6.3 shows the NAAQS for reference, and all this

was at a lower cost than was expected. The analog of Fig. E14.6.1 for industrial emissions

is shown in Fig. E14.6.10. The CAAA was a bargain, and if the reductions of Fig.

E14.6.10 are met, will continue to be so. This is not to say that Europe has not decreased

air pollution levels. Figure E14.6.11 shows that Europe has had successes in reducing

emissions, especially from motor vehicles and the energy industry sector.

Fig E14.6.8 Location of nonattainment areas for criteria pollutants, September 1999.(Ref. 346, Fig. 4-1)


a.

b.

Fig. E14.6.9 a. Classified O3 nonattainment areas where 1-hour standard still applies.(Ref. 346, Fig. 4-2)b. Ozone level trends (8-hour), 1982 –2001, averaged across EPA regions.(U.S. EPA, Draft Report on the Environment Technical Document, EPA 600-R-03-050, June 2003,Exhibit 1-11)


Fig. E14.6.10 Sulfur dioxide industrial emissions grew from 1900 to 1970, when they began to becontrolled because of the CAA. Emissions are already below the CAAA cap.(Ref. 218, Fig. 4-2)

Fig. E14.6.11 Percent emission change by sector and pollutant in the EU (15 countries), 1990–2000.(European Environment Agency, Air pollution in Europe 1990–2000, April 2003, Fig. 3.3 d)


TABLE E14.6.3

NAAQS


How success was achieved

The 1990 CAAA required reducing emissions by 75% by the year 2000. As discussed

above, the goals were met at a cost below what was originally expected (or feared) by the

utilities. Much of it comes from clever engineering in making the technologies work, such

as development of fluidized bed burners and installation of scrubbers in combustion

discharge stacks (see Extension 12.8, Newer gasification and liquefaction technology

and Extension14.1, Pollution Control Systems). We mentioned above emission permit

trading, which also contributed to lowering the cost of compliance.

However, the major reason for the relatively low cost of meeting the goals is due to what

utilities call fuel switching. Instead of achieving reductions of sulfur levels from burning of

relatively high-sulfur Midwest coal (4 to 6% sulfur), the utilities achieved much of their

reductions by switching to low sulfur coal from the states of Wyoming and Montana

(0.5% or less sulfur). By burning a “cleaner” fuel, they automatically reduced sulfur

emissions. This, of course, had economic impacts in Ohio and West Virginia, which was

especially painful for the coal miners in the region, as well as in Wyoming and Montana,

which benefited from the influx of money and jobs. Since the utilities have already

reduced sulfur emissions through fuel switching further emissions reductions will

probably not be so cheap.

Documents

New Costs of attainment of Phase I of the CAAAwps.prenhall.com/wps/media/objects/2513/2574258/pdfs/E14... · 2005. 8. 17. · Costs of attainment of Phase I of the CAAA Pre-CAAA considerations