Improving EPA's Latest Ozone Transport Rule

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EPA’s latest proposed rule targeting NOx emissions from fossil-fueled electric generating units (EGUs) is a classic study of diminishing returns. It marks the seventh round of NOx controls for the EGU sector since 1990. The downwind air quality benefits are minimal.

The proposed Federal Implementation Plan Addressing Regional Ozone Transport for the 2015 Ozone National Ambient Air Quality Standard (87 FR 20036, April 6, 2022) seeks to impose across-the-board retrofit technology requirements by 2026 for coal- and gas-fired units larger than 100 megawatts that are not equipped with Selective Catalytic Reduction (SCR) technology. Units with existing advanced NOx controls must optimize their utilization by 2023. Several heavy industrial sectors, including cement, iron and steel, and chemical production, are required to meet specific NOx emission limits.

The proposed rule would provide de minimus air quality benefits in downwind areas with extremely high costs – estimated by EPA at $22 billion discounted 2016 dollars for the 2023-2042 period. The agency’s air quality modeling indicates that most areas would receive an ozone reduction of less than 0.1 ppb in 2023, with typical reductions of 0.1 to 0.3 ppb by 2025.

These air quality impacts are minimal compared with the major ozone reductions resulting from the 1998 SIP Call, which resulted in more than 80,000 megawatts of coal capacity being retrofitted with SCRs. Most areas of the eastern U.S. enjoyed ozone reductions of 3 to 5 ppb or more. The 2005 Clean Air Interstate Rule (CAIR) provided smaller but significant air quality improvements following its implementation in 2010. EPA estimated that:

Ozone concentrations in over 70 percent (i.e., 16 of 22 counties) of the 2015 Base Case nonattainment counties are projected to be reduced by 1 ppb or more as a result of CAIR. Exceedances of the 8-hour ozone NAAQS are predicted to decline in nonattainment areas by 14 percent with CAIR controls in place in 2015. EPA CAIR Modeling Analysis, March 2005.

Some 23,000 megawatts of coal capacity is projected to be retired due to the new transport rule, largely at units that are not economic candidates for SCR retrofits. These unit shutdowns, representing 15% of the coal generation fleet, would translate to thousands of unionized job losses in the coal mining, electric generation, and transport sectors. This level of forced retirements is far in excess of any prior EPA projections of plant shutdowns resulting from implementation of a Clean Air Act rulemaking. For example, EPA projected a total of just 4,700 MW of coal capacity retirements under the 2012 Mercury and Air Toxics Standards rule. EPA MATS Regulatory Impact Analysis, 2011.

It is difficult to construe the Clean Air Act, or its “good neighbor” provisions, as authorizing EPA to shut down dozens of electric generating units in neighboring states to achieve a fractional ozone reduction of one tenth of a ppb or less in downwind areas. Congress did not intend the “good neighbor” provision as a means for downwind states to inflict severe economic harms on upwind states through the closure of major power generation facilities, with potential risks for electric reliability.

Based on EPA’s emissions trends data, fossil-based electric generation sources have achieved more than their fair share of “good neighbor” emission reductions:

From 1995-2021 … annual emissions of NOX from power plants fell by 87 percent. In 2020, sources in both the Cross-State Air Pollution Rule (CSAPR) NOX annual program and the A(cid) R(ain) P(rogram) together emitted 0.78 million tons, a reduction of 5.1 million tons, or 87 percent, from 1995 levels. https://www.epa.gov/airmarkets/power-plant-emission-trends

In comparison, onroad and offroad mobile sources – the primary cause of urban ozone nonattainment – reduced their NOx emissions by 68% from 1995 to 2021, to a level of 4.1 million tons. Industrial source NOx emissions increased by 19% during this period, to a level of 1.0 million tons. See, EPA National Tier 1 Caps Trends available at https://www.epa.gov/air-emissions-inventories/air-pollutant-emissions-trends-data

EPA should take a more measured approach to defining control obligations for sources that are not yet equipped with state-of-the-art controls. The history of the Clean Act clearly shows that Congress intended state-of-the-art controls such as SCRs to be applied to new sources through New Source Performance Standards (NSPS) and Best Available Control Technology (BACT) reviews in clean air areas. New and modified sources within nonattainment areas must meet Lowest Achievable Emission Rate (LAER) limits for pollutants contributing to nonattainment. Existing stationary sources in nonattainment areas are subject to Reasonably Available Control Technology (RACT) – the least stringent standard in the Clean Air Act’s alphabet soup of controls.

The proposed rule’s SCR retrofit requirements for coal- and gas-fired EGUs would construe the “good neighbor” provisions of the Clean Air Act as a long-arm BACT mandate for many existing sources located hundreds of miles upwind, typically in ozone attainment areas.

Given the severity of the rule’s impacts, EPA should consider a stepwise, incremental approach to NOx control improvements at coal-based EGUs. Units that are not controlled with SCRs but utilize lesser levels of NOx control, such as Low-NOx Burners with Over-Fired Air, could be required to retrofit SNCR technology, a lower-cost alternative to SCRs. Units with SNCR could be required to install SCRs. Such an incremental approach could avoid many of the projected retirements under the rule, with minimal impacts on projected air quality improvements.

EPA also should select the “less stringent” alternative to the rule, providing additional time for control technology retrofits. The proposed 2026 date for installation and operation of state-of-the art emission controls is simply unrealistic given the time required for design, engineering, construction and regulatory approvals for major capital investment projects such as an SCR retrofit – particularly during an age of chronic supply chain disruptions. The 2028 deadline proposed in the less stringent alternative is more realistic, and is consistent with timelines under other federal regulations. Providing this additional compliance time would enhance the prospects for installation of the 32,000 megawatts of SCR retrofits that EPA projects as a result of the rule. In sum, EPA’s proposal for reducing interstate ozone transport adopts unrealistic deadlines and overly-aggressive emission control retrofit mandates. Greater compliance flexibility, and smaller adverse job impacts, could be achieved by an incremental approach to pollution control upgrades. Additional time for retrofits, such as the deadlines in the less stringent alternative to the rule, would enhance the feasibility of control installations while reducing the numbers of premature plant closures and related job losses.

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