Reducing Toxic Pollution from Power Plants EPA’s Proposed Mercury and Air Toxics Standards March 22, 2011

Overview of the Regulatory Action On March 16, EPA proposed Mercury and Air Toxics Standards, the first national standards to reduce emissions of toxic air pollutants from new and existing coal- and oil-fired power plants – often the biggest contributors to air pollution Standards would reduce emissions of: Metals, including mercury (Hg), arsenic, chromium, and nickel Acid gases, including hydrogen chloride (HCl) and hydrogen fluoride (HF) Particulate matter These pollutants are linked to cancer, IQ loss, heart disease, lung disease and premature death Standards create uniform emissions-control requirements based on proven, currently in-use technologies and processes Compliance time line set by Clean Air Act: up to 4 years (3 years plus an additional year if granted by the permitting authority) EPA is also proposing a new source performance standard (NSPS) for particulate, sulfur dioxide (SO 2 ), and nitrogen oxide (NO X ) emissions from new sources 2

Toxic Emissions from Power Plants Are a Serious Public Health Concern Power plants release mercury, arsenic, other metals, acid gases, and particles that all harm people’s health. Uncontrolled releases of mercury from power plants damage children’s developing brains, reducing their IQ and their ability to learn Mercury and many of the other toxic pollutants also pollute our nation’s lakes, streams, and fish Other metals such as arsenic, chromium, and nickel can cause cancer Acid gases cause lung damage and contribute to asthma, bronchitis and other chronic respiratory disease, especially in children and the elderly Particles cause premature death and a wide range of lung and heart diseases People who eat large amounts of fish from mercury-contaminated freshwater lakes and rivers in the U.S. are at the greatest risk of exposure This includes Native American, Laotian, Vietnamese, African-American, Hispanic, and Caucasian subsistence fishers and their families The standards would also result in additional reductions of SO 2, preventing thousands of deaths and hundreds of thousands of illnesses each year 3

Sources: NEI Trends Data (2009) and CAMD Data & Maps (2010) (SO 2, NO X ) NEI Trends Data (2009) (PM 10 ) 2005 NATA Inventory Modified for the Utility MACT 2005 Base Year (2010) (Hg) Inventory of U.S. Greenhouse Gas Emissions and Sinks: (2010) (CO 2 ) “Other” sources include transportation, other mobile sources, and industrial sources Other Sectors Other emissions include:  Trace metals (nickel, arsenic, selenium and others)  HCl, HF  Dioxin/furans  Trace organics  Others (e.g., cyanide)  Radionuclides Emissions have substantial public health, environment, and other welfare implications. Nitrogen Oxides (NO x ), Million Tons Particulate Matter (PM 10 ), Million Tons Mercury (Hg), Tons Other Sectors Electric Power 13.3 Million Tons 87% 2.0 Million Tons 13% Electric Power Other Sectors 14.3 Million Tons 96% Electric Power Other Sectors Electric Power 2.6 Billion Tons 40% 52 Tons 50% 53 Tons 50% Sulfur Dioxide (SO 2 ), Million Tons 3.8 Million Tons 40% 5.7 Million Tons 60% Electric Power Carbon Dioxide (CO 2 ), Billion Tons 3.9 Billion Tons 60% 0.5 Million Tons 4% Other Sectors Electric Power Power Sector: A Major Share of US Air Emissions 4

In the U.S., Power Plants Emit: 5 60% of the SO 2 20% of the chromium 13% of the NO x organics, dioxins/furans, and others 50% of the mercury over 50% of many acid gases 30% of the nickel 60% of the arsenic Sources: NEI Trends Data (2009) and IPM (2010) (SO 2, NO X ); Proposed toxics rule modeling platform, based on inventory used for 2005 NATA (Hg); Inventory used for 2005 NATA (other toxics)

6 History of Clean Air Act Power Plant Controls for Mercury/Air Toxics 1990 Clean Air Act Amendments created Acid Rain provisions and revised provisions to require controls to reduce emissions of toxic air pollutants from industrial sources EPA was required to do a study within 3 years, and then list power plants for regulation under the air toxics provisions if the Administrator found that it was appropriate and necessary 1998: EPA released Utility Toxics Study Report to Congress 2000: EPA listed power plants for regulation under the Clean Air Act air toxics provisions Once listed, EPA had 2 years to issue an air toxics standard Mercury cited as pollutant of greatest concern but other toxics include arsenic, chromium, cadmium, nickel, hydrochloric acid, dioxin/furan 2005: Bush Administration EPA reversed 2000 finding, de-listed power plants from regulation under air toxics provisions, and finalized Clean Air Mercury Rule (CAMR) – allowing trading 2008: DC Circuit found the de-listing to be illegal and vacated CAMR EPA must propose utility MACT standards by March 16, 2011, and issue final standards by November 16, 2011, pursuant to a consent decree EPA’s proposed rule requires power plant controls for toxics, including mercury, to be issued in 2011 and require compliance by existing sources 3-4 years later A quarter of a century will have passed since the 1990 Clean Air Act became law

7 Power Plants Are the Largest Remaining Source of Mercury Emissions in the U.S. In 1990 three industry categories made approximately two-thirds of total U.S. mercury emissions – Two of the three are now subject to air toxics standards – So are many other industries such as cement plants and steel manufacturers Today, 20 years after the 1990 CAA Amendments passed, no Federal limit for toxic emissions – including mercury – exists for coal- or oil-fired power plants Industrial Category 1990 Emissions tons per year (tpy) 2005 Emissions (tpy) % Reduction Power Plants % Municipal Waste Combustors 57296% Medical Waste Incinerators 51<1>98% Source: EPA’s 2005 NATA Inventory Modified for the Toxics Rule 2005 Base Year (2010)

Affected Facilities: 1,350 Coal and Oil-Fired Units at 525 Power Plants 8 Approximately 1,200 coal-fired units 45% percent of nationwide electricity generation Bituminous coal ~ 50% of coal generation Subbituminous ~45% of coal generation Lignite ~ 5% of coal generation Includes units that burn coal, coal refuse, or a synthetic gas derived from coal or solid oil (e.g. petroleum coke) either exclusively, in any combination together, or in any combination with other supplemental fuels (e.g., tire-derived fuels) Approximately 150 oil-fired units 1% of nationwide electricity generation Natural gas power plants are not affected by this rule EPA expects most facilities would install technologies to comply with this rule

9 Location of Coal- and Oil-Fired Power Plants Source: National Electric Energy Data System (NEEDS 4.10) (EPA, December 2010)

What the Toxics Rule Proposes Coal- and oil-fired power plants are covered by this rule All hazardous air pollutants must have standards EPA must set emission standards for existing sources in the category that are at least as stringent as the emission reductions achieved by the average of the top 12% best controlled sources for source categories with 30 or more sources Requirements for Coal-Fired Units – Mercury: numeric emission limit would prevent 91% of mercury in coal from being released to the air – Acid Gases: HCl numeric emission limit as a surrogate, with an alternate surrogate of SO 2 – Non-mercury metallic pollutants (e.g., arsenic, chromium): numeric emission limit for total PM as a surrogate, with an alternate surrogate of total metal air toxics – Organic air toxics (including dioxin/furans): work practice standards, instead of numeric emission limits, due to low-detected emission levels in the ICR data. Would ensure optimal combustion preventing dioxin/furan emissions 10

What the Toxics Rule Proposes (cont.) Requirements for Oil-Fired Units – Acid Gases: HCl and HF numerical emission limits – Metal Air Toxics: numerical emission limits for total metal air toxics (including mercury) with individual metal air toxic numerical limits as an alternate – Organic air toxics (including dioxin/furans): work practice standards, instead of numeric emission limits, due to low-detected emission levels in the ICR data. Would ensure optimal combustion preventing dioxin/furan emissions Emissions averaging within a contiguous facility is allowed Monitoring Requirements – Hg CEMS or sorbent traps for mercury – HCl CEMS or SO2 CEMS for acid gases – PM CEMS for metals – Emissions testing, parameter monitoring, and fuel analyses allowed for metals and acid gases – Thirty day averaging period for monitoring accommodates process variability and, coupled with CEMS, facilitates compliance – Records of work practice standards (annual tune ups) are proposed for organic HAP emissions 11

Emissions from Covered Sources Note: Historic HCl emissions based on single emission factor; projected emissions based on fuel-specific Cl assumptions and removal efficiencies. ► The base case includes the Transport Rule as proposed and all other existing federal and state controls and enforceable agreements. ► Emission totals presented here reflect all covered coal steam and IGCC electric generating units > 25 MW. ► The policy case imposes mercury and HCl emission rate limitations on these units, and requires fabric filters on a subset of those units. ► The mercury content of the coal consumed in the base case by EGUs > 25 MW is 75 tons in 2015; emissions from those units under the Toxics Rule represent more than a 90% reduction in that mercury. 12

Sources Can Achieve These Standards 13 Proven control technologies to reduce these emissions such as scrubbers, fabric filters, and activated carbon injection are widely available Many units already use one or more of these technologies As a result of this standard, some power plants will upgrade existing controls (especially particulate matter controls like electrostatic precipitators) Power plants may also install new controls (such as fabric filters, dry sorbent injection, or activated carbon injection) Retrofit pollution control installations on coal-fired capacity (by technology) with the base case and with the proposed Toxics Rule, 2015 (measured in GW capacity). Source: Integrated Planning Model run by EPA, 2011 FGD: flu gas desulfurization (scrubber) DSI: dry sorbent injection SCR: selective catalytic reduction ACI: activated carbon injection FF: fabric filter FGD – 96% SO 2 removal; 99% HCl removalDSI – 70% SO 2 removal; 90% HCl removal SCR – 80% NOx removalACI – 90% Hg removal FF – PM control

Cost and Retirement Projections ► Private compliance costs to utilities are distinct from the overall social cost of the policy. The compliance costs depicted are increased costs of operating the electric generation system throughout the US. ► Incremental retired coal capacity in 2015 is about 10 GW. Also, it is important to recognize: ► EPA identified about 11 GW of firm retirements announced for that were removed from modeling ► EPA modeling suggests forecasted natural gas prices alone close about 4 GW of coal-fired capacity in 2015 in the base case, and Transport Rule may close an additional 1 GW. ► Toxics Rule and Transport Rule (as proposed) together close 11 GW of coal in ► Closures are distributed throughout the US. 14

Average Consumer Electricity Price Projections National average increase of 3.7% in 2015 that declines over time 15

Generation and Capacity Projections ► Coal-fired generation is slightly reduced as a result of the proposed rule. ► Increase in demand is met largely with additional natural gas-fired generation ► IPM results suggest that the sector will be able to comply with the Toxics Rule while relying primarily on existing generating assets ► Overcapacity at existing combined cycle units responds to displaced generation in 2015 ► An additional 8 GW of new capacity is projected by 2030 relative to the base case, most of which is natural gas combined cycle. 16

Impacts on Coal Consumption and Natural Gas Natural gas consumption is expected to increase 3-6 percent by the power sector from Over this time, “delivered” natural gas prices to the power sector and at Henry Hub (wellhead) will have an average increase less than 10 cents per million Btus, about 1.3 percent. Over this time, residential consumers would see an average price increase of less than 1 percent. Coal use from major regions decreases slightly from the proposed Toxics Rule. There is a slight increase in use of interior coals in some years. There is some increase in bituminous coal use and decline in other coal types used. 17

Proposed Toxic Rule Health Benefits The value of the improvements to health alone total $59 billion to $140 billion each year This means that for every dollar spent to reduce this pollution, we would get $5-$13 in health benefits Each year, the proposed rule would prevent serious health effects including: – 6,800-17,000 premature deaths – 11,000 heart attacks – 120,000 asthma attacks – 850,000 missed work or “sick” days Avoiding “sick days” saves companies and families money. It is particularly important for the millions of Americans whose jobs do not provide paid sick leave and who risk losing their jobs if they miss work too often – The proposed rule would also prevent 12,200 hospital admissions and emergency room visits; 4,500 cases of chronic bronchitis; and 5,100,000 days when people must restrict their activities each year 18 Source: EPA Regulatory Impact Analysis

The Toxics Rule: Implementation When we compare the investments that will be required to comply with these standards with investments that this same industry has made in the past they do not look out of line. – In each of 2007 through 2010, over 20 GWs of advanced pollution control equipment was installed. This includes a peak of over 35 GWs of scrubbers and SCRs in The act contains key flexibilities such as providing permitting agencies the discretion to provide one-year extensions (beyond the general three year time- frame for compliance required by the Act) that will be key to addressing any facility- specific concerns. While we project some retirements of old/inefficient and less frequently used coal- fired generation, the large amounts of extra generating capacity that currently exist will be key to being able to ensure reliable electricity (NERC default reserve margins are 15%, absent the rule, average capacity margins are about 25%). 19

Public Hearings and Comment The public is encouraged to provide EPA with comments on this proposed Toxics Rule The Agency will seek comments for 60 days following publication in the Federal Register and the proposed rule is currently available on EPA’s website. Public Hearings Locations Philadelphia, PA (EPA Region 3 Headquarters) Atlanta, GA (EPA Region 4 Headquarters) Chicago, IL (EPA Region 5 Headquarters) For more information on how to attend these public hearings, please visit: Technical Contact: Bill Maxwell ( , 20

Summary – Bottom-Line This proposed rule will result in tremendous public health benefits, worth many times the cost. The rule will require the power sector to invest in commercially available, cost effective, proven technology. That investment will provide jobs for tens of thousands of Americans during a period of high unemployment, create demand for products like cement, that are experiencing low demand, and create a modern clean American power sector. This rule has been long delayed. It is important for public health, that the rule we issue conform to the dictates of the Clean Air Act as interpreted by the courts so that it will withstand a judicial challenge. 21 Thank you!