1. Presented By: Arthur Marin, Executive Director NESCAUM Presented To: New Jersey Clean Air Council Annual Public Hearing Trenton, NJ April 14, 2010 Planning for Transformational Change in an Incremental World

2. 2 Planning Challenges for Coming Decade Our region & nation have achieved great success in dramatically reducing the threat from airborne emissions of lead, CO, ozone & acid rain These successes are tempered by the growing understanding of environmental & public health threats posed by microscopic particles & greenhouse gasses Now face challenge of virtually eliminating common air pollutants associated with combustion in order to meet our goals

3. 3 Planning Challenges for Coming Decade Transitioning from incremental SIP approach to more holistic, longer-term planning Meeting multiple goals & planning horizons Achieving near-term requirements while pushing transformational changes Avoiding short-term decisions that inconsistent with longer-term needs Addressing complex air pollution issues within a framework that includes broad social and economic considerations

4. 4 Scale and Scope of Air Quality Issues Neighborhoods – environmental justice Intra-regional – Ozone Transport Region Inter-regional – OTAG, Section 126 petitions Continental scale – IJC, US-Canada Accords Intercontinental – PM & ozone Global – mercury & GHGs

5. 5 The “Drivers” Traditional Air Quality Issues Fine particulate matter & ozone –no known threshold for health impacts –EPA required to reassess NAAQS every 5 years Mercury –Northeast states already committed to virtual elimination Toxics –Benzene and other ubiquitous toxins Regional haze / visibility impairment –Congress requires states to develop plans to restore “pristine” air quality to parks & wilderness areas over long run

6. 6 The “Drivers” Climate Change Mitigation Achieving science-based targets (80%) by mid-century Will need to fundamentally change the way we produce & use energy, plan our built environment, and live our lives

7. 7 Effective Planning for Complex Problems We need to dramatically change the way we conduct air quality planning “Stove pipe” approaches will no longer work NESCAUM has designed an approach to multi-pollutant planning to help states think more holistically Conducted with integrated modeling framework that quantifies environmental, economic & public health impacts

8. 8 Multi-Pollutant Planning Benefits of Multi-Pollutant Planning Addresses multiple pollutants, including SO 2, NO X, CO 2, and Hg Highlights tradeoffs and co-benefits of policy options Analyzes the environmental, public health, economic, & energy implications of various pollution control strategies Allows for multi-sector analyses

9. 9 Multi-Pollutant Planning Makes Sense Strategies & technologies that reduce GHGs can also reduce traditional pollutants Can help design cost-effective approaches that minimize burden on industry & maximize the use of state resources Can result in better environmental results at lower cost Promotes integrated energy & air quality planning

10. 10 Proof of Concept for Multi-Pollutant Policy Analysis Framework Have developed NE-MARKAL that covers region from DC to Maine MARKAL is a least-cost optimization linear programming model that focuses on energy systems & technologies Linked it to atmospheric dispersion, macro- economic, & public health assessment models Following results are preliminary & intended only to demonstrate capabilities

11. 11 NESCAUM’s Multi-Pollutant Policy Analysis Framework NE-MARKAL Energy Model Evolution of Energy System 12-State REMI Economic Model Key Economic Indicators CMAQ Air Quality Model emissions expenditures Wet/Dry Deposition Ambient Concentrations BenMAP Health Benefits Assessment Health Effects Incidence and Cost/Benefit Goals & Policies

12. 12 NE-MARKAL: Energy & Technology Model Source: EPA ORD Uranium Fossil Fuels Oil Refining & Processing H 2 Generation Clean Energy Biomass Combustion Nuclear Power Gasification Renewable Resources Carbon Sequestration Industry Commercial Residential Automobiles Evolution of Today’s Energy System

13. 13 Reference Case – Power Sector by Fuel Type Annual Average Growth Rate between 2007 and 2030 Power Sector Generation Mix Power Sector Capacity Mix

14. 14 Policy Scenario: 60% of LDV fleet to electric vehicle by 2029 by Fuel Type by Vehicle Category Time Integrated Change between 2007 and 2030 Transportation Energy Consumption LDV Technology Deployment

15. 15 Policy Scenario: 60% of LDV fleet to electric vehicle by 2029 LDV Transportation Sector Cost Breakout LDV Transportation Sector Emissions Changes Cost Changes relative to reference (2008 $US) Change in capital costs Change in fixed costs Change in fuel costs Annual (2029) +$18B (+35%) -$1.8 B (-22%) -$10 B (-52%) Cumulative (2007-2030) +$120 B (+13%) -$15 B (-8.7%) -$90 B (-20%) Emission Changes relative to reference CO2 (Million Tons) NOx (Thousand tons) SO2 (Tons) CO (Thousand tons) VOC (Thousand tons) CH4 (Thousand tons) Annual (2029) -42 (-43%) -110 (-40%) -850 (-22%) -1,500 (-65%) -80 (-61%) -4.2 (-73%) Cumulative (2007-2030) -320 (-14%) -840 (-14%) -6,900 (-6.5%) -11,700 (-22%) -600 (-19%) -28 (-20%)

16. 16 Electricity Generation by Fuel Type Reference Case EV Policy Scenario: 60% of LDV fleet to electric vehicle by 2029 Cost Changes relative to reference (2008 $US) Change in capital costs Change in fixed costs Change in fuel costs Annual (2029) +$174 M (+29%) +$108 M (+6%) +1.9 B (+23%) Cumulative (2007-2030) +$2 B (+20%) +$1.2 B (+3%) +$19 B (+12%) Emission Changes relative to reference CO2 (Million Tons) NOx (Thousand Tons) SO2 (Thousand Tons) Hg (lbs) Annual (2029) +16 (+25%) +4 (+12%) +2 (+2%) +86 (+2%) Cumulative (2007-2030) +170 (+12%) +51 (+5%) +60 (+2%) +800 (+2%)

17. 17 Policy Scenario: State Renewable Portfolio Standard by Fuel Type Power Sector Generation Mix Power Sector Capacity Mix Annual Average Growth Rate between 2007 and 2030

18. 18 Policy Scenario: State Renewable Portfolio Standard Net Generation Change 2007-2030 Relative to Reference Net Capacity Change 2007-2030 Relative to Reference Power Sector Cost Breakout Power Sector Emissions Changes Cost Changes relative to reference (2008 $US) Change in capital costs Change in fixed & variable costs Change in fuel costs Annual (2029) +$1.0 B (1.3 times REF) +$89 M (+4.5%) -$1.2 B (-25%) Cumulative (2008-2029) +$19 B (1.4 times REF) +$1.8 B (+3.9%) -$17.4 B (-18%) Emission Changes relative to reference CO2 (Million Tons) NOx (Thousand Tons) SO2 (Thousand Tons Hg (lbs) Annual (2029) -11 (-17%) -3.2 (-8.6%) +1.1 (+0.8%) +5.8 (+0.4%) Cumulative (2007-2030) -190 (-13%) -57 (-6%) +20 (+0.6%) +14 (+0%)

19. 19 Ozone SIP Acid Dep Plan Bringing it All Together NE-MARKAL Energy Model Evolution of Energy System 12-State REMI Economic Model Key Economic Indicators CMAQ Air Quality Model emissions expenditures Wet/Dry Deposition Ambient Concentrations BenMAP Health Benefits Assessment Health Effects Incidence and Cost/Benefit Goals & Policies IRP Economic Plans PM 2.5 SIP Hg Plan Haze,etc. Climate Action Plan NOx/SO 2 2ndary Std AQMP

20. 20 THANK YOU