Tougher Ozone Standard Would Cost Billions, Shutter Coal Plants: Industry

Bloomberg BNA -- A more stringent national ambient air quality standard for ozone could cost the U.S. economy up to $270 billion per year and force the closure of one-third of the nation's coal-fired power plants, according to a report commissioned by the National Association of Manufacturers.

The report, released July 31, outlines the economic effects of revising the current ozone standard of 75 parts per billion to 60 parts per billion, the lowest level being considered by the Environmental Protection Agency. The agency is under a court-ordered deadline to issue a proposal on whether to retain or revise the existing ozone standard by Dec. 1.

The EPA is considering setting a new standard somewhere between 60 ppb and 70 ppb, according to a draft policy document prepared by the agency.

The Clean Air Scientific Advisory Panel concurred that the agency's identified range would be “appropriate” for a revised ozone standard and informed the agency in July that the current standard of 75 ppb is insufficient to protect human health.

A more stringent ozone standard is supported by public health groups, including the American Lung Association, which cites data linking exposure to ambient levels of ozone with asthma, premature death and other health problems.

The ALA and other groups have said the revised ozone standard should be set no higher than 60 ppb due to evidence of adverse health effects at higher levels.

NAM: Tightened Standard Would be Costly

Jay Timmons, president of the association, told reporters during a conference call that tightening the ozone standard to 60 ppb would represent “the most expensive regulation in the history of our economy” and predicted that such a costly regulation “could break” the domestic manufacturing industry.

Setting that stringent of an ozone standard would be a “self-inflicted blow” that could put a stop to a surge in domestic manufacturing that is occurring “in large part” due to an abundance of low-cost energy, according to Timmons.

The report, prepared by NERA Economic Consulting, estimates that a more stringent ozone standard would reduce U.S. gross domestic product by $3.4 trillion from 2017 to 2040 and cost the nation's economy 2.9 million jobs-equivalent per year during that time frame.

Ross Eisenberg, vice president of energy and resources policy at the association, said the report illustrates that the current standard of 75 ppb “needs to remain on the table” and that a standard of 60 ppb shouldn't be considered by the agency.

Eisenberg said the report focused on a level of 60 parts per billion because that level has been included in the EPA's identified appropriate range since 2008 and is the “absolute top end” of the range supported by public health groups.

Power Plant Retirements Projected

The study also estimates that 34 percent of all coal-fired capacity in the “baseline” scenario, which already factors in closures due to current EPA regulations, would retire to meet the more stringent ozone standard.

The baseline scenario took into account existing EPA regulations that affect power plants, including the agency's mercury and air toxics standards, according to David Harrison Jr., senior vice president and environment practice co-chair at NERA Economic Consulting.

Harrison explained that an analysis of ozone standards revealed that “known controls,” which are already-identified strategies to reduce emissions, would only account for about one-third of the emissions reductions needed to attain an ozone standard of 60 ppb.

In order to get the additional reductions needed, areas would need to take “more drastic steps,” including the retirement of coal-fired power plants, he said.

Called ‘Premature' Economic Analysis

The Environmental Protection Agency said in a July 31 e-mail statement that while the agency hasn't reviewed the National Association of Manufacturers report, any economic analysis of a new ozone standard would be “premature.”

The agency said that it's still reviewing available technical information, so any economic analysis isn't based on actual EPA action.

While the EPA didn't directly address the report's findings, the agency noted that over the past 40 years, air pollution has been reduced by more than 70 percent and the nation's GDP has tripled.

“History has proven time and time again we can reduce pollution and grow the economy at the same time,” the agency said.

While the EPA stressed that it has yet to even propose a revised standard, opponents pointed to the new report as more evidence against a more stringent ozone standard.

Would Push Economy Into ‘Black Hole'

Sen. David Vitter (R-La.), ranking member of the Senate Environment and Public Works Committee, said in a July 31 statement that the study shows that the EPA is considering a regulation that would “throw our country's economy into a black hole.”

Vitter and Rep. Lamar Smith (R-Texas), chairman of the House Science, Space and Technology Committee, recently criticized the EPA for failing to ask the Clean Air Scientific Advisory Committee to consider the economic effects of tightening the ozone standard.

Carlton Carroll, a spokesman for the American Petroleum Institute, told Bloomberg BNA in a July 31 e-mail that tightened ozone standards could result in “unachievable” emissions reduction requirements that would make new development unfeasible.

“Needless to say, operating under such stringent requirements could stifle new investment necessary to create jobs and grow our economy,” he said

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