Analysis-Based Regulatory Advocacy: EPA s Boiler MACT Rules

Transcription

1 2011/SOM1/EC/WKSP2/017 Session 6 Analysis-Based Regulatory Advocacy: EPA s Boiler MACT Rules Submitted by: American Forest & Paper Association (AF&PA) Workshop on Using Regulatory Impact Analysis to Improve Transparency and Effectiveness in the Rulemaking Process Washington, D.C., United States 3-4 March 2011

2 Analysis-Based Regulatory Advocacy: EPA s Boiler MACT Rules Paul Noe APEC March 4, 2011

3 Overview: The Perfect Storm State of the Economy Cumulative Air Regulatory Burden Boiler MACT 2

4 Forest Products Industry Employment* 000 workers * Includes paper and allied products, wood products, and logging. Source: Bureau of Labor Statistics 3

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6 Cost of Air Regulations Capital Plus Operating Avg. Industry Profits ( ) 5

7 Boiler MACT Applies to boilers and process heaters at major sources of hazardous air pollutants. Affects 1,600 facilities and 13,555 boilers (about 11,000 are gas boilers) Emission limits for PM, HCl, Hg, CO, and dioxin Will require addition of multiple controls and complex monitoring to meet proposed limits EPA asked for 15-month extension but court only gave one month until February 21, 2011 to finalize 6

8 Key Fixes to Boiler MACT rules 1. Set limits on the overall performance of actual sources, not on a mythical boiler. 2. Use health threshold standard to target environmental investments where risks. 3. Base standards on the best performing 12% of sources; not best of the best. 4. Reflect the variability in boilers due to fuels, operations, designs and testing. 5. Establish work practices for clean gas fired boilers (Gas I & II) 6. Set work practices for smaller biomass, coal and oil fired boilers in Boiler GACT. 7. Narrowly define solid waste in the Non-Hazardous Secondary Materials rule. IMPROVING TOMORROW S ENVIRONMENT TODAY

9 SO2 Emissions from Pulp and Paper Mills in PM 2.5 Non-Attainment Areas (15/35, 2010) 4% SO2 Emissions within PM Non- Attainment Areas SO2 Emissions Outside of PM Non-Attainment Areas 96% 8

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11 Hg Emissions Small Contributors 2005 US Mercury Emissions By Boiler Type Utility Boilers: Coal ICI Boilers & Process Heaters - oil ICI Boilers & Process Heaters - coal ICI Boilers & Process Heaters ICI Boilers & Process Heaters - wood or waste Utility Boilers: Oil Utility Boilers: Wood or Waste ICI Boilers & Process Heaters - natural gas 10

12 Jobs at Risk from Proposed Boiler MACT Paper Mills Only Total Job Losses Boiler MACT 16,888 71,774 All Air Regulations 43, ,581 11

13 Comparison with EPA jobs analysis EPA claiming job Gains 2000 at regulated facilities Ignores indirect/induced impacts (e.g., construction jobs) Flaws with EPA analysis Old data from early 1990s fails to account for influence of digital substitution General equilibrium model assigns sector one coeffecient Understates true costs optimistic controls, old $ estimates Mill closures and lost jobs are permanent, not temporary construction jobs Mills won t hire new staff to run equipment 12

14 Improvements from Proposals Combination Boilers coal and biomass subcategories merged for fuel based HAPs gives higher limits and makes emissions averaging more attractive Biomass Boilers higher limits for HCl and cost-effective work practices for smaller boilers under GACT Some PM, CO and dioxin limits slightly higher Work practices for start-ups and shutdowns Expanded gas fired work practices to other clean gases Limited use boilers subject to work practices Emission averaging/bubbling allow emission trading within facility 13

15 Concerns that Remain EPA ran out of time for further improvements. No health based alternative for HCl or TSM minus Mn No source based limits although other MACT floor adjustments get close to source limits in some cases No adjustment for biased data set New Source limits still very low driven by single source One time Energy Audit with ongoing energy management obligations 14

16 EPA has Underestimated Boiler MACT Costs EPA analysis indicates capital cost is $5.1 Billion AF&PA conservative analysis shows capital cost at least $11B for industry. Largest MACT ever! Pulp and Paper: $2.3 B Chemical: $2.2 B Utilities: $1.8 B Wood Products: $ 0.8 B Food Mfg: $0.9 B Primary Metal: $0.4 B Educational Services: $0.4 B Dozens of other Sectors 15

17 Boiler MACT Costs for Forest Products for Final Rule HAPs/ Surrogates by Fuel type Biomass PM/metals $1.2B ($1.4B) Coal $415M ($576M) Oil $413M ($422M) Gas2 $12M ($12M) HCl (acid gases) $40M ($1.5B) $360M ($896M) $18M ($499M) $0M ($13) Mercury/ Dioxin $11M ($301M) $51M ($126M) $61M ($68M) $2M ($2M) Carbon Monoxide (CO) $124M ($118M) $222M ($238M) $130M ($142M) $4M ($4M) Total $1.4B ($3.2B) $1.0B ($1.9B) $620M ($1.1B) $18M ($31M) Total $2.1B ($2.4B) $419M ($2.9B) $125M ($497) $480M ($502M) $3.1B ($6.3B) Figures in () are Proposed Rule costs 16

18 Benefits exaggerated No benefits quantified for MACT pollutants just PM, SO2 and ozone (mortality and morbidity) leave to NAAQS program Double counting benefits Benefits regardless of location of reductions rural Uncertainty around benefit of reductions below NAAQS Suggested improvement preserve major HAP benefits while cutting costs health based, biomass friendly 17

19 Opportunities for Improvements Cost cut in half from proposal to final Further cost reductions possible while protecting public health 1. Health-based 2. Source-based: $300 to 650 M further saving 3. Show greater variability in performance 4. Dioxin adopt work practices 5. Bubbling less restrictive 6. Clear exclusion of biomass residuals from solid waste rule 18

20 Wrap-up Billions of dollars will translate into tens and probably hundreds of thousands of jobs Harm competitiveness of U.S. manufacturers in fiercely competitive global marketplace Harm new enterprises that make traditional boilers even with good or best controls Pushes energy policy towards natural gas which will drive up prices for everyone Can reduce costs and maintain benefits 19