on behalf of the
North Carolina Department of Environment and Natural Resources
State of North Carolina
Before the US Senate Committee on the
Environment and Public Works
on the Subject of
Multi-Pollutant Strategies for Utilities
November 1, 2001
Good morning.
My name is Brock Nicholson, and I am the Chief of Planning for the
Division of Air Quality, North Carolina Department of Environment and Natural
Resources. I represent the State agency
that is responsible for developing, adopting and implementing the State
Implementation Plan (SIP) for the State of North Carolina. In this role, I am
involved in both regulation adoption and legislation dealing with sources of
air pollutants, including utility boilers. I’m pleased to be here today to
share some insights regarding the current North Carolina experience with
multi-pollutant legislation and how that experience might relate to S.556 under
consideration by this Committee.
Background
I would like to begin by giving some background on
North Carolina Senate Bill, S1078, which many people in our State refer to as
the “Clean Smokestacks” Bill. Today I will refer to the proposed legislation as
the “NC Bill.” This bill was developed through a series of discussions
conducted by the bill sponsors with various environmental groups, the State’s
two largest utility companies, and the State.
The parties to those discussions reached a consensus in support of the
NC Bill.
Some industrial customers and groups, some agricultural
customers and groups, a couple of small environmental groups, and a few other
groups and individuals have opposed the NC Bill. The part of the NC Bill that opponents most frequently cite as
the reason for their opposition is a provision that allows the utilities to
recover, under the oversight of the NC Utilities Commission, control costs that
are just, reasonable and prudently incurred under a cost recovery mechanism
different from a normal rate-making case.
In general, the public and newspaper editors have
been very supportive. The NC Bill quickly passed the Senate 43 to 5 in the
spring. It is currently in the House Public Utilities Committee, with cost to
ratepayers and the mechanism for cost recovery being the major topics of
discussion.
The NC Bill requires all coal-fired utility generating units over
25 MW (all 14 plants in our State) to meet in-state aggregate mass emissions
caps for sulfur dioxide (SO2) and nitrogen oxides (NOx). These caps represent
actual reductions of 73 % and 77 % respectively from 1998 levels. The SO2 cap
must be met in two phases; by January 1, 2009, about a 50% reduction; and by
January 1, 2013, another approximate 50% reduction. The year-round NOx cap is
to be met by January 1, 2009. There is an additional requirement that the State
annually consider and report to the legislature whether controls beyond those
in the NC Bill have become both technically and economically feasible. If necessary, the legislature could then
tighten the requirements.
For mercury, the NC Bill requires an
annual assessment of the state of knowledge on the expected co-benefit of
mercury control when SO2 scrubbers and NOx selective catalytic reduction (SCR)
controls are installed. By March 2005, the State must recommend to the legislature
specific additional control requirements if the co-benefits are less than
expected and needed.
For carbon dioxide, there is a
similar requirement in the NC Bill to report annually to the legislature on
control options and to make recommendations by March 2003.
The NC Bill directs the State to use
all available resources and means, including, but not limited to, negotiation,
participation in interstate compacts and multi-state agreements to achieve
comparable emission reductions in nearby states whose emissions affect North
Carolina.
Comments on
S.556
Our department supports the aggregate
emissions reduction approach. This approach would presumably incorporate a cap
for each pollutant. Caps can provide for an efficient and flexible program to
obtain reductions. Both implementing agencies and emission sources will
benefit. This aggregate approach is one that, based on our consideration of and
discussions about the NC Bill, gives the sources flexibility and certainty to
make the business decisions that are in their best interests while they meet
the requirements of the legislation. In our view, the aggregate emission
reduction approach was a key feature in getting the utility industry to support
our bill.
However, caps must be
meaningful from the standpoint of protecting public health and the environment. By that I mean that they must be
sufficiently stringent to assure that the air quality goals are actually met.
Caps must not be set at levels that merely facilitate a “robust” trading
system. S.556 appears to be
sufficiently stringent to be meaningful.
However, unlike the NC Bill,
which requires all of the actual reductions to be in North Carolina, I would
presume that S.556 and the regulations that implement it would allow for a
national trading program. Such a
program must not only achieve the national aggregate reduction goal, it must
also allow local air pollution problems to be addressed in a way that protects
health and the environment. There must be a “states rights” or “authority” provision
that allows for actual controls (no trading credits) to be applied to specific
units for local air quality needs. Since public health protection is an overall
goal, states must be able to assure NAAQS attainment even if the overall
reductions exceed the national cap or such NAAQS controls “conflict” with the
trading program. Such protections must
apply not only to NOx and SO2 emissions and the associated ozone and fine
particulate matter, but also to mercury emissions, which can give rise to special
local concerns about public health impacts.
Along with a strong Federal
mobile source program, a multi-pollutant approach such as S.556 will be a
critical and important centerpiece of a strategy that is necessary for states
to meet the NAAQS for 8-hour ozone and fine particles, PM2.5. North Carolina, like many others, is a
high-growth state in which about 70% of the counties where monitors are located
violate the NAAQS for 8-hour ozone (aspects of which remain under review by the
courts). For PM2.5 the corresponding percentages of violating counties is about
50%. Our projected future emissions for NOx and SO2 show that power plants are
the substantial majority contributor in both categories. Control of these two pollutants is a must
for public health now and in the future. The attached graphic of some recent
ozone modeling shows that even with full NOx SIP call controls and all of the
expected Federal mobile source controls in place, the NAAQS is not fully
met.
Regarding the compliance
schedule in S.556, we observe that in the discussions that led to the NC Bill,
a consensus between the environmental groups and the two utilities produced a
schedule, which is longer than the one in S.556, but is nonetheless acceptable
and would not adversely affect the economy or energy supply in North Carolina.
However, as I said before, there has been more discussion in our legislature on
cost recovery than on schedule.
As it is in many other
states, mercury is a big public health issue in North Carolina. However, considering
the uncertainties regarding measuring mercury and the expected, and perhaps
relatively large, co-benefits of mercury reduction when scrubber and SCR
controls are placed on the bituminous coal power plants, the drafters of the NC
Bill decided not to specify a control level for mercury. Instead, there is a
requirement that the State study the issue of co-benefit, report annually to
the legislature and make recommendations to that body by September 2004 on
additional controls that would be needed for public health protection from
mercury in North Carolina.
With respect to carbon
dioxide emissions, the NC Bill requires our department to recommend action to
the legislature by March 2003. The 2003 date allows time to consider
developments at the Federal level and in other states and to understand the
benefits of energy conservation, greater use of natural gas, and the developing
clean coal technologies including coal gasification.
North Carolina along with
Georgia, South Carolina and Tennessee have been charged by their governors to
develop recommendations by March 2002 regarding a multi-pollutant strategy for
utilities and innovative energy and transportation strategies that benefit air
quality in the four-state region. Although the Southern Air Principles
agreement signed by the governors focuses on NOx, SO2 and mercury, the states
are also studying energy strategies that reduce carbon dioxide. We will also be monitoring the national
scene for action on this important subject.
In conclusion, thank you for this opportunity to speak on this
very important subject, and I am glad to answer any questions. Thank you again.