TESTIMONY

OF C. BOYDEN GRAY

BEFORE THE

SENATE COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

AT A HEARING ON

THE ISSUE OF AIR EMISSIONS FROM POWER PLANTS

JULY 26, 2001

 

            Thank you very much for the opportunity to testify on the issue of air emissions from power plants.  I am a lawyer and not a scientist or public health officer, but I have had two decades of experience with the Clean Air Act (“CAA”), both in formulating the l990 Amendments (“1990 CAAA”) and in implementing those Amendments as well as the other provisions of the Clean Air Act. What I can contribute is to provide some context for evaluating the role of utility emissions historically and as compared to mobile source emissions in the formation of pollution that is covered by the National Ambient Air Quality Standards (“NAAQS”) designed to protect public health.

 

            As a matter of background, I think it is important to stress that the United States has managed fairly successfully its overall public health responsibilities for air quality.  The chart below  reflects the overall reduction of pollution over the last three decades despite dramatic growth in GDP and population.  As Peter Venturi, a California State Air Resources Board official stated at a recent EPA hearing in Sacramento, “The system is working,” noting that smog-forming emissions from businesses in the state have declined by 50% in the past 20 years despite a 40% increase in population and commensurate industry growth.  As a result of three successive CAA enactments (in l970, l977 and l990), the United States has phased out lead and CFCs, achieved attainment of a number of health standards, including CO, NOx and, except for 19 counties with a population of 20 million, particulate matter (PMl0), and made deep cuts in acid rain, notably a 50% reduction mandated by the l990 CAAA.

 

            The acid rain reductions, contained in Title IV of the l990 CAAA, are of special importance to these hearings because they involve the pollutants most directly associated with power plants.  Title IV has, by all accounts, been highly successful.  Gregg Easterbrook, a senior editor at the New Republic, wrote last week that the results have been “spectacular. Acid rain levels fell sharply during the 90’s, even as coal combustion (its main cause) increased.”  The Wall Street Journal on Monday described the program as “fabulously successful,” in part because the market-oriented emission trading aspect of the program has produced cost savings that “should be as much as $2 billion a year -- that’s twice as much as originally estimated by EPA” -- and, I might add, as much as five to ten times cheaper on a cost-per-ton basis than command-and-control.

 

            Notwithstanding these successes, there remain some difficult problems.  Ozone levels, while improving, are still in violation of the NAAQS in substantial sections of the country.  I think it’s important to say here that while acid rain is primarily, though not exclusively, a power plant problem, ozone is primarily a mobile source problem today.  Cars, trucks and buses account for twice the NOx produced by power plants, which in turn have no role in VOCs, the other smog precursor. Just Monday, The Washington Post noted that “Cleaner fuels and newer cars with more effective emission controls are improving Washington’s air -- just not fast enough to meet federal ozone standards by a 2005 deadline.”  The article and a follow-up editorial yesterday focused exclusively on mobile sources (including the notorious SUVs) (although there is a long-range transport problem implicating Midwestern utilities, the D.C. Circuit has in the last two years affirmed two CAA programs, the NOx SIP Call and the Section 126 interstate transport petition referred to again below, to eliminate this problem).

 

            The other major unresolved problem involves particulate matter.  Thanks to a combination of the TSP and PMl0 NAAQS, the ozone standard and the acid rain program, the United States has engineered a massive reduction of PMl0, which is now largely in attainment (achieving a 15% reduction from 1990 to 1999 and a 80% reduction from 1970).  EPA has pending a NAAQS to control PM2.5 which could, if implemented, call for further reductions of power plant emissions, along with other pollutants.  In the meantime, existing EPA control programs are producing continuing reductions of what EPA describes as the “gaseous precursors of fine particles (e.g., SO2, NOx and VOC), which are all components of the complex mixture of air pollution that has most generally been associated with mortality and morbidity effects” (PM2.5 emissions declined 17% from 1990-1999).

 

            More specifically, the acid rain and interstate NOx SIP Call rules alone are projected to reduce electric utility NOx by 3.6 million tons by 2010 from 1990 levels; 2.1 million tons have been achieved already.  Further, as yet undetermined reductions are anticipated under the Regional Haze “visibility rules.”  A comparison of reductions required of mobile sources and electric utilities shows that the utilities are pulling their own weight.  Mobile sources contribute 58% of annual NOx emissions, more than double the 25% generated by electric utilities, and consequently would seem to have much more scope for emissions reduction.  However, utilities are projected to reduce their contribution by 54% by 2010 comparable to the mobile source reductions of 48%.  Utilities are doing their fair share to reduce NOx under the law as it stands.

 

            For SO2, electric utilities represent 67% of SO2 emissions, while mobile sources represent only 7% of emissions.  Title IV of the Clean Air Act mandates a reduction by electric utilities of 6.4 million tons of SO2 from 1990 to 2010, more than 5 million tons of which have already been reduced in the last decade.  Mobile source reductions will remove a further 1.25 million tons of SO2 between 2000 and 2010.  Utilities make by far the greatest quantitative reduction, although qualitatively it is a reduction of 50% compared to an 80% reduction by mobile sources projected over the next decade.

 

            Like the NOx reductions, SO2 reductions also will be further reduced by the regulations implementing the Regional Haze rules.  For example, the Grand Canyon Visibility Transport Commission has instituted a voluntary reduction-trading program, which complies with the Regional Haze rule that is estimated to reduce SO2 emissions by approximately 25,000 tons by 2010 and by a further 185,000 tons by 2020.  Although this number seems small, it is but the first of programs across the country that cumulatively will have a significant impact on SO2 emissions, above and beyond what is already required under the 1990 Clean Air Act Amendments.

 

            Given the pollution reduction initiatives outlines above that are still underway or just launched, and the PM2.5 NAAQS currently pending before the D.C. Circuit, it is unclear what additional measures are actually necessary at the present time from a public health perspective.  EPA is now also engaged in a New Source Review (“NSR”) enforcement program that operates independently of all of the other initiatives described above and that is under review at EPA, the Department of Justice and the Department of Energy.  The relevant question for this hearing is how many tons of pollution are at stake and at what cost, not the expected useful life of an average power plant.  A review of a recent settlement agreement between EPA and a utility shows that EPA is attempting to require companies to install scrubbers for 95% removal on 70% of the MWs of energy produced by older plants -- which really encompasses all plants over time that do not have scrubbers already.  This will lead to over a 50% further cut in SO2 above and beyond what is already required by Title IV and other requirements of the CAA. Under existing law, utilities engaging in such massive overcontrol beyond Title IV would normally be able to recoup control costs by selling the allowances created by their overcontrol; but EPA is prohibiting allowance sales, thus confiscating those allowances and raising serious takings questions in the process.

            There are many other questions raised by this new enforcement program.  For example, it does not seem to be health-based -- because it is not directed at attainment of the ozone standard (the object of the NOx SIP call) and does not appear to have any geographic focus.  Rather, NSR seems to implicate some of the precursors of regional haze and PM2.5 at a time when new visibility rules have just been issued and it is unclear whether the new PM2.5 NAAQS will be implemented (and, if so, how any reductions required will relate, if at all, to NSR).  In this context, the recent 9-0 Supreme Court decision in American Trucking is relevant, because it holds that EPA may not do more than “is necessary” to protect the public health.  Further administrative reductions of PM2.5 beyond those achieved by the PM10 standard, the ozone standard, Title IV, the NOx SIP Call and the visibility rules must therefore await resolution of the PM2.5 NAAQS.  Moreover, by identifying routine repair and maintenance activities of as much as two decades ago as having triggered a scrubbing requirement, EPA is saying that Congress’ Title IV 50% reduction program of 1990 was totally unnecessary, its allowance trading system and its mandatory scrubbing repeal ineffectual, its resulting pollution control mechanism too cost-effective, and its focus misplaced to reduce pollution and increase efficiency rather than to promote litigation. 

            It may well be that a further 50% cut in acid rain precursors is called for as a matter of public health and environmental protection.  However, if this is truly the case, EPA’s retroactive and economically costly reading of NSR is not the way to achieve it.  Such a reduction beyond the provisions of Title I and Title IV of the Clean Air Act requires EPA either to institute new NAAQS for SO2 and NOx through a notice and comment rulemaking or to turn to Congress for new legislation to revise the 1990 Clean Air Act Amendments, pursuant to which Congress hopefully would not revert to the outmoded command-and-control approach for compliance which it rejected in 1990, but which EPA seems so eager now to reembrace.  It is worth pointing out here that while the United States may be producing more than its share of CO2 on a GDP basis, it is ahead of the rest of the world (including the EU) in reducing health-related pollutants, including the other major greenhouse gases (methane, soot and ozone).[1]  Increasing environmental costs imposed here relative to those imposed abroad exacerbates trade tensions here, especially where unnecessary command-and-control costs are involved.

            When we worked on the CAA Amendments in 1990, we never assumed that they would not be supplemented in 10-15 years just as previous amendments had been periodically revised -- or that the next revision might not seek an additional 50% SO2 cut.  But, to repeat, it is imperative that if Congress is to seek any additional cuts, it do so not through the permitting nightmare and costly command-and-control methods of NSR, but rather through the highly successful and cost-effective cap-and-trade approach adopted in 1990.  Failure to do so will abandon the market innovations of 1990, dramatically raise the cost and reduce the yield of air quality standards, and generally set back the efforts to curtail pollution by a decade or more.

 

APPENDIX

 

Electric Utility NOx Emissions (million tons/year)

Applicable rule

1990

1995

2000

2005

2010

Acid Rain program/ CAAA 90 [2]

 

6.7

 

6.1

 

4.6

 

4.3

 

4.2

Ozone Transport/ NOx SIP Call further reductions[3]

 

 

 

 

-1.0

 

-1.142

TOTAL

6.7

6.1

4.6

3.3

3.058

 

 

 

Electric Utility NOx Emissions Compared to Mobile Source NOx Emissions

(million tons/ year)

Source

2000

2005

2010

Electric Utilities

  4.6

3.3

3.058

Mobile Sources[4]

11.678

8.132

6.078

 

 

Electric Utility SO2 Reductions (million tons/ year)

 

1990

1995

2000

2005

2010

Electric Utilities

 

15.7

 

11.9

 

11.5

 

10.3

 

9.3

Mobile Sources

 

 

 

1.5

 

0.8

 

0.255

 


  

[1] The current WHO ozone standard applicable in the EU is currently significantly less restrictive than the U.S. standard, and the EU Environmental Minister is resisting the European Parliament’s efforts to tighten the WHO standard on the grounds that there is “insufficient scientific knowledge on ozone formation” and that total compliance might not be “efficient from an economic viewpoint.”

[2] Source: Dept. of Energy, Annual Energy Outlook with Projections to 2020, December 2000 at 99.

[3] Source: Ozone Transport Rule.

[4] Includes Heavy Gas Vehicles, Heavy Diesel Engines, Diesel Engines, and other vehicles regulated under Tier II, Highway Diesel Fuel Sulphur, and Regulation of Heavy Duty Engine Rules.