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Clear Skies

EPA Clear Skies Legislation and Alternatives

Oct 27, 2005 - - Clear Skies will significantly expand the Clean Air Act's most innovative and successful program to cut power plant pollution of sulfur dioxide, nitrogen oxides and, for the first time, mercury by an unprecedented 70 percent in two phases.  The legislation would impose a mandatory multi-pollutant cap on emissions from more than 1300 power plants nationwide, reducing pollution by as much as 9 million tons annually.  The country will achieve this by spending more than $44 billion in large part to install, operate and maintain pollution abatement technology on both old and new power plants.

Clear Skies cap and trade approach will give states the most powerful, efficient and proven tool available for meeting new, tough, health-based air quality standards for fine particles and ozone.  Most counties will be able to meet the new standards without having to take any new local measures beyond the Clear Skies power plant reductions.  The market-based trading approach will substantially cut the overall cost of compliance that is passed on to consumers and shareholders. The study incorporated the latest computer models and assumptions to create a side-by-side comparison of President Bush's Clear Skies legislation to several alternatives introduced on Capitol Hill. The legislative and regulatory analyses project potential costs and benefits for public health, air quality, and the power sector for the years 2010, 2015, and 2020. 

The legislative and regulatory proposals analyzed:

1.    Clean Air Planning Act (Carper, S.843 in 108th)

2.    Clean Power Act (Jeffords, S.150 in 109th)

3.    Clear Skies Act of 2005 (Inhofe, S.131 in 109th)

4.    Clear Skies Act of 2003 (Bush Administration proposed bill, S.485 in 108th)

5.    Clear Skies Manager's Mark (of S.131)

6.    Clean Air Interstate Rule (CAIR), Clean Air Mercury Rule (CAMR), Clean Air Visibility Rule (CAVR)

The analyses and supporting documentation may be found online at: http://www.epa.gov/airmarkets/mp

CLEAR SKIES BILL DIES IN COMMITTEE

March 2005 -- Legislation to overhaul the Clean Air Act failed on a 9-9 tie vote in the Senate Environment and Public Works Committee. Clear Skies would replace the current industrial air pollution regulatory structure with a system that would cap sulfur dioxide, nitrogen oxides and mercury emissions, and let utilities and other industrial polluters trade emission allowances on a free market. Republican Lincoln Chafee of Rhode Island joined Independent James M. Jeffords of Vermont and the committee's Democrats in voting against the bill, in part because it does nothing to regulate  carbon dioxide emissions, which many scientists consider a major contributor to global warming.

Clear Skies Legislation Introduced in 2005

Senator James Inhofe (R-Okla.), Chairman of the Committee on Environment and Public Works, and Senator George Voinovich (R-Ohio), Chairman of the Subcommittee on Clean Air, Climate Change, and Nuclear Safety, introduced the Clear Skies Act of 2005 on January 24, 2004 -- the latest version of President Bush’s Clear Skies proposal -- which would reduce pollution from power plants by 70 percent by 2018. The Clear Skies legislative approach has bipartisan support from a broad array of stakeholders. AAEA supports the Clear Skies Act of 2005.

The Clear Skies bill is the most aggressive presidential initiative in history to reduce power plant pollution and provide cleaner air across the country. The bill reduces emissions of sulfur dioxide, nitrogen oxides, and -- for the first time -- mercury from power plants by 70 percent by 2018 through expanding the successful Acid Rain Trading Program. This program, combined with the historic diesel rules being implemented by the Bush Administration, provide a national clean air strategy that will bring nearly all of the nation’s counties that are not meeting clean air standards into attainment, makes the future for clean coal possible, and keeps energy affordable, reliable and secure.

Clear Skies responsibly harmonizes our energy and environmental policies to protect both the environment and jobs. It reduces emissions by historic levels and helps ensure continued access to the reliable, low cost electricity that is so critical to job creation and our country’s global competitiveness. It will also significantly help states and locations meet the new, more stringent national air quality standards more quickly and cheaply than current law.

The Subcommittee on Clean Air, Climate Change, and Nuclear Safety held a hearing on Wednesday, January 26, 2005 at 10:00am in SD 406 to discuss the need for multi-emissions legislation including the Clear Skies bill.

AAEA is promoting an Environmental Justice Allowance Reserve to address the racial 'Hot Spots" issue.

AAEA also supported the Clear Skies Initiative in 2003 and 2004

CLEAR SKIES ACT OF 2005

Fact Sheet

Environment and Public Works Committee Chairman Jim Inhofe and Clean Air Subcommittee Chairman George Voinovich reintroduced a major multi-emissions bill on January 24, 2005. The Clear Skies Act of 2005 would enact the largest power plant emissions reduction program ever – 70 percent cut in sulfur dioxide, nitrogen oxide, and mercury.

Continues the Nation’s Progress in Cleaning up the Air

Since 1970, while there have been increases in Gross Domestic Product by 176 percent, vehicle miles traveled by 155 percent, energy consumption by 45 percent, and population by 39 percent – emissions of the six main pollutants have decreased by 51 percent. However, more can and should be done.

The Clear Skies Act expands the nation’s most successful clean air initiative – the Acid Rain Trading Program. Unlike most of our nation’s environmental laws and regulations, this program has had virtually no litigation and has achieved goals of substantial reductions in acid rain at less than the projected cost. Clear Skies builds on this success by creating a new program for mercury and extending SOx and NOx reductions out to 2018 with the aim of modernizing the Clean Air Act for the 21ST century and ending the cycle of litigation and confrontation that has obstructed further progress in reducing pollution.

Achieves the Reduction Levels without Significantly Harming the Economy

EPA recently declared that 474 counties are in non-attainment for the new, stricter National Ambient Air Quality Standards (NAAQS) for ozone, and that 225 counties do not meet the newer, stricter standards for particulate matter. These designations place a significant burden on state and local governments as they must now develop plans to reduce emissions and come into attainment by a specified date. Clear Skies – plus diesel regulations already finalized by EPA – will bring most of these counties into attainment without any local controls because it places most of the burden on the electric generating sector. This allows our states and cities to continue to focus on attracting new industry and create jobs.

Allows the Nation to Keep Burning Coal without Increasing Reliance on Natural Gas

Coal is our nation’s most abundant and cheapest energy source. Manufacturers and businesses depend on its low cost to stay competitive in the global marketplace. In contrast to other proposals, Clear Skies would not dramatically reduce coal-based generation or force an over-reliance on natural gas, which would increase demand beyond supply and bring on crippling economic costs for small businesses and consumers – especially the poor and elderly.

Provides Needed Certainty

Clear Skies ends the uncertainty which currently clouds our clean air laws and regulations because its reduction levels and requirements would be set in law and therefore could not be subjected to the legal challenges that have hindered environmental progress for so long. It institutes environmental certainty that these three pollutants—NOx, SOx, and Mercury—will be reduced by a specific amount by a date certain. It also provides regulatory certainty so that companies can plan for the costly investments necessary to reduce pollution by the required levels.

THE CLEAR SKIES ACT OF 2005

Summary

TITLE IV REFORMS: CAP-AND-TRADE PROGRAMS

Common Provisions: Expands the cap-and-trade Acid Rain Program to nationally reduce power plant emissions of sulfur dioxide, nitrogen oxides, and mercury by 70 percent by 2018.

Sulfur Dioxide Emissions Reductions: Retains the relevant requirements of the existing Acid Rain Program through December 31, 2009 and establishes new caps and allocation procedures for sulfur dioxide emissions starting in 2010.

Phase 1 cap (2010 to 2018) of 4.5 million tons annually. Phase 2 cap (after 2018) of 3.0 million tons annually. Preserves Western Regional Air Partnership (WRAP) agreement between western states.

Nitrogen Oxides Emissions Reductions: Retains the requirements of the existing Acid Rain Program for nitrogen oxides and the requirements of the NOx SIP Call through 2007. Establishes new caps and allocation procedures for nitrogen oxides emissions starting in 2008 with separate cap-and-trade systems for Zone 1 (eastern and central parts of U.S.) and Zone 2 (western part of U.S. and territories).

Zone 1 cap for phase 1 (2008 to 2017) of 1.562 million tons annually. Zone 1 cap for phase 2 (after 2018) of 1.162 million tons annually. Zone 2 cap (after 2008) of 0.538 million tons annually.

Mercury Emissions Reductions: Establishes the first ever caps and allocation procedures for mercury emissions starting in 2010.

Phase 1 cap (2010 to 2017) 34 tons annually. Phase 2 cap (after 2018) of 15 tons annually.

Additional Units: Allows units (cogenerators, etc.) outside the scope of the bill to opt-in to the program and by making the emissions reductions, some MACT standards will no longer be applicable – but EPA retains authority to regulate hazardous air pollutants.

TITLE I REFORMS

New Source Review (NSR) Reform: Exempts affected units from the major source reconstruction review requirements of NSR and for 20 years the requirement to install Best Available Retrofit Technology since emissions are capped at stringent levels. Those located within 50 kilometers of a national park (or other Class I areas) remain subject to their specific Clean Air Act requirements.

Section 126 Reform: Limits the applicability of section 126 petitions and the requirements of the State Implementation Plan (SIP) “good neighbor” provisions since emissions are capped at stringent levels. The Administrator may not grant any finding for a section 126 petition submitted after enactment prior to 2012 or require SIP action prior to 2014.

Transitional Areas: Requires the redesignation of nonattainment areas that will attain the new ozone and fine particulate matter standards as “transitional” if modeling of federal programs (plus additional local controls proposed by a state) will bring the areas into attainment by 2015.

Maximum Achievable Control Technology (MACT): Precludes affected EGU’s from regulation of mercury using maximum available control technology standards since mercury emissions are being capped, but preserves EPA’s authority to regulate hazardous air pollutants.

Source: Senate EPW Committee

The New York Times

February 16, 2005

Clear Skies, No Lies

By Gregg Easterbrook

SUPPOSE Al Gore had become president and proposed a law to cut pollution from power plants by about 70 percent at a low cost, to discourage the lawsuits that often stall clean-air rules from being enforced, and to serve as a model for a future system to regulate greenhouse gases. Chances are Mr. Gore would have been widely praised. Instead George W. Bush got the White House and announced a plan to do those very things, yet it has been relentlessly denounced by Democrats, environmentalists, editorial pages and even characters in a Doonesbury cartoon.

Critics both real and drawn assert that the program, which is called Clear Skies and is scheduled to be voted on by the Senate Environment and Public Works Committee today, is a shocking assault on clean-air law, an insidious weakening of environmental protections wrapped up with an Orwellian label. These criticisms are off target, except it is true that Clear Skies is a really dumb name.

Mr. Bush's proposal would cut by more than 70 percent the amounts of sulfur dioxide, nitrogen oxides and mercury emitted by power plants. The first two substances cause acid rain and contribute to respiratory disease; the third is a poison. The plan would also permanently cap plant emissions nationwide, meaning that pollutant levels must not rise no matter how much more power is generated in the future. The proposed cap for sulfur dioxide is 90 percent lower than the amount emitted in 1970; the cap for nitrogen oxide is 94 percent lower than 1970.

So, under the Bush plan - supposedly a sellout to industry - sulfur dioxide and nitrogen oxide, the two power-plant emissions of most concern to public health, would be nearly eliminated as compared with levels in 1970. Clear Skies would also moot the long-running controversy over the "new source review" rule, which may require operators of the old power plants in the Midwest to add pollution controls when those plants are modified. Those plants too would have to participate in the 70 percent overall reduction, a deeper cut than required by any interpretation of the "new source" standard.

Opponents of Clear Skies rightly note that existing Clean Air Act language already mandates somewhat greater reductions than the Bush plan - for instance, a 93 percent cut in sulfur dioxide from the levels in 1970, versus Clear Skies' 90 percent - and that the reductions must be complete by 2012, rather than by 2018 as in Mr. Bush's bill. But here's the rub: the existing Clean Air Act, though successful, is a complex set of rules that requires a case-by-case drawing up of plans for states, localities and even individual power plants. A raft of lawsuits often accompanies every Clean Air Act regulation - it is common for both industry and environmental organizations to sue to block the same set of rules. This is why, on average, it takes about a decade to complete a Clean Air Act rulemaking.

The Clear Skies plan would replace that case-by-case system with a streamlined "cap and trade" approach. This plan simply sets an overall reduction for the power industry as a whole, then leaves it up to companies and plant managers to decide for themselves how to meet the mandates, including by trading permits to one another.

In practice, cap-and-trade systems have proved faster, cheaper and less vulnerable to legal stalling tactics than the "command and control" premise of most of the Clean Air Act. For example, a pilot cap-and-trade system, for sulfur dioxide from coal-fired power plants, was enacted by Congress in 1990. Since then sulfur dioxide emissions have fallen by nearly a third (the reason you hear so little about acid rain these days is that the problem is declining - even though the amount of combustion of coal for electricity has risen.)

A pleasant surprise of that 1990 program was that market forces and lack of litigation rapidly drove down the predicted cost of acid-rain controls. Now Mr. Bush proposes to apply the same cap-and-trade approach to the entire power industry, in the hope that market forces and fewer lawsuits will lead to rapid, relatively inexpensive pollution cuts.

Here is the real beauty of the Clear Skies plan, something that even its backers may not see: many economists believe that the best tool for our next great environmental project, restraining greenhouse gases, will be a cap-and-trade system for carbon dioxide. Should President Bush's plan prove that the power industry as a whole can be subjected to a sweeping cap-and-trade rule without suffering economic harm or high costs, that would create a powerful case to impose similar regulation on carbon dioxide, too.

Though you'd never know it from the press coverage, the administration's idea has respectable support - from the National Research Council, which is a wing of the National Academy of Sciences, and from the former Environmental Protection Agency administrator Christie Whitman, who since leaving the administration has become a leading critic of the Republican right.

Yes, as in any lawmaking, there is a legitimate danger that factions in Congress will insert into the Bush bill language that does dilute environmental protection. But the underlying idea of the president's proposal is sound and deserves support, even from the comics page.

Gregg Easterbrook, an editor at The New Republic and a fellow of the Brookings Institution, is the author of "The Progress Paradox."