[Senate Hearing 111-1228]
[From the U.S. Government Publishing Office]
S. Hrg. 111-1228
LEGISLATIVE HEARING ON S. 2995:
THE CLEAN AIR ACT AMENDMENTS OF 2010
=======================================================================
JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON CLEAN AIR
AND NUCLEAR SAFETY
AND THE
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
MARCH 4, 2010
__________
Printed for the use of the Committee on Environment and Public Works
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COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
BARBARA BOXER, California, Chairman
MAX BAUCUS, Montana JAMES M. INHOFE, Oklahoma
THOMAS R. CARPER, Delaware GEORGE V. VOINOVICH, Ohio
FRANK R. LAUTENBERG, New Jersey DAVID VITTER, Louisiana
BENJAMIN L. CARDIN, Maryland JOHN BARRASSO, Wyoming
BERNARD SANDERS, Vermont MIKE CRAPO, Idaho
AMY KLOBUCHAR, Minnesota CHRISTOPHER S. BOND, Missouri
SHELDON WHITEHOUSE, Rhode Island LAMAR ALEXANDER, Tennessee
TOM UDALL, New Mexico
JEFF MERKLEY, Oregon
KIRSTEN GILLIBRAND, New York
ARLEN SPECTER, Pennsylvania
Bettina Poirier, Staff Director
Ruth Van Mark, Minority Staff Director
----------
Subcommittee on Clean Air and Nuclear Safety
THOMAS R. CARPER, Delaware, Chairman
MAX BAUCUS, Montana DAVID VITTER, Louisiana
BENJAMIN L. CARDIN, Maryland GEORGE V. VOINOVICH, Ohio
BERNARD SANDERS, Vermont CHRISTOPHER S. BOND, Missouri
JEFF MERKLEY, Oregon JAMES M. INHOFE, Oklahoma (ex
BARBARA BOXER, California (ex officio)
officio)
C O N T E N T S
----------
Page
MARCH 4, 2010
OPENING STATEMENTS
Carper, Hon. Thomas R., U.S. Senator from the State of Delaware.. 1
Voinovich, Hon. George V., U.S. Senator from the State of Ohio... 4
Udall, Hon. Tom, U.S. Senator from the State of New Mexico....... 23
Alexander, Hon. Lamar, U.S. Senator from the State of Tennessee.. 23
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma,
prepared statement............................................. 168
WITNESSES
McCarthy, Regina A., Assistant Administrator, Office of Air and
Radiation, U.S. Environmental Protection Agency................ 42
Prepared statement........................................... 45
Responses to additional questions from:
Senator Cardin........................................... 51
Senator Whitehouse....................................... 53
Senator Inhofe........................................... 56
Senator Vitter........................................... 63
Rizzo, Albert A., M.D., FACP, FCCP, D'ABSM, Board of Directors,
American Lung Association...................................... 78
Prepared statement........................................... 80
Response to an additional question from Senator Cardin....... 118
Durham, Michael D., Ph.D., MBA, President and CEO, ADA
Environmental Solutions........................................ 119
Prepared statement........................................... 121
Response to an additional question from Senator Cardin....... 131
Responses to additional questions from Senator Inhofe........ 131
O'Mara, Collin P., Secretary, Natural Resources and Environmental
Control, State of Delaware..................................... 135
Prepared statement........................................... 138
McManus, John M., Vice President, Environmental Services,
American Electric Power........................................ 141
Prepared statement........................................... 144
Response to an additional question from Senator Cardin....... 152
Responses to additional questions from:
Senator Inhofe........................................... 152
Senator Vitter........................................... 155
LEGISLATIVE HEARING ON S. 2995: THE CLEAN AIR ACT AMENDMENTS OF 2010
----------
THURSDAY, MARCH 4, 2010
U.S. Senate,
Committee on Environment and Public Works,
Subcommittee on Clean Air and Nuclear Safety,
Washington, DC.
The full Committee met, pursuant to notice, at 10:05 a.m.
in room 406, Dirksen Senate Office Building, Hon. Thomas R.
Carper (chairman of the Subcommittee) presiding.
Present: Senators Carper, Alexander, Voinovich, Cardin, and
Udall.
OPENING STATEMENT OF HON. THOMAS R. CARPER,
U.S. SENATOR FROM THE STATE OF DELAWARE
Senator Carper. Senator Voinovich and Senator Alexander and
I are pleased to welcome all of you today to this hearing. We
thank our witnesses for their preparation, for taking time to
join us, and for your willingness to respond to our questions.
As you know, today's hearing is focused on Clean Air Act
Amendments of 2010. It is legislation that Senator Alexander
and I have introduced with, I think, about a dozen other co-
sponsors, a bipartisan group, legislation that reduces fossil
fuel power plant emissions of nitrogen oxide, sulfur dioxide
and mercury, and to alleviate air related health and
environmental problems from ozone, acid rain, and mercury
contamination.
Senators will have roughly 5 minutes for their opening
statements, and I will then recognize each panel of witnesses,
led off by Regina McCarthy from EPA. Each witness will have
roughly 5 minutes to offer her or his statement to our
Committee, and following each panel's statement we will have
two rounds of questions.
I am going to start off with an opening statement, and we
will see how close I can stay to 5 minutes.
I want to very much thank Senator Alexander for being my
partner in this endeavor now for years. I want to thank Senator
Klobuchar for working with us on S. 2995, the Clean Air Act
Amendments of 2010, and Senator Gillibrand, a member of this
Committee, for co-sponsoring our efforts along with, I believe,
10 other Members. We have tri-partisan support for our
legislation, Democrats, Republicans and one Independent from
Connecticut. We are very grateful for all of them. And I just
want to thank our Chairman of the full Committee here, Chairman
Boxer, for allowing us to hold this hearing today.
Almost 20 years have passed since Congress made significant
revisions to the Clean Air Act. During that time, many
polluters have kept polluting, albeit at a somewhat slower
rate, but our Nation's emission standards just have not kept
pace. While there has been some significant environmental
progress along the way, clearly we can still do better. If the
legislation we are discussing today is enacted, we will do
better. Much better. Millions of Americans will breathe easier
as a result.
Almost 8 years ago, when Senator Alexander and I began
working together to clean up our Nation's air, we faced three
monumental challenges. And even before he and I began working
together, Senator Voinovich and I tried hard to work together
during the first term of the Bush administration. If these were
easy issues to resolve, we would have solved them a long time
ago. It is not for lack of effort across the aisle.
The first challenge is that air pollution knows no State
boundaries. Air pollution emitted by our oldest and dirtiest
fossil fuel power plants does not just affect the State in
which they are located. As you will hear here today, States
like Delaware have implemented tough Clean Air laws only to
find pollution still in our air. It comes over from other
States. In fact, mid-Atlantic and northeastern States like
Delaware, Maryland, New Jersey, Connecticut, New Hampshire,
Vermont, Maine, Rhode Island and others are located at what I
call the end of America's tailpipe because we receive a heavy
dose of pollution from other States.
The second major challenge is that air pollution causes
serious health effects nationally, effects such as asthma,
cancer, brain damage, and in some cases even death.
According to the American Lung Association, some 6 out of
10 Americans are exposed to harmful air pollution every day.
For those of you who cannot read the chart, public health is
threatened overall in 6 of 10 Americans. About 186 million
people live in areas where air pollution endangers their lives.
Court challenges have delayed EPA action to reduce daily
emissions and to protect Americans.
The third challenge that we face is that EPA has struggled
to tighten emissions standards beyond the Clean Air Act
Amendments of 1990. Over the past 10 years EPA has attempted to
regulate harmful power plant emissions, but court challenges
have delayed action. Delays in action mean lives lost.
Senators Alexander, Klobuchar, Gillibrand and I, along with
a bipartisan--or rather tri-partisan group of Senators, believe
we need legislative certainty to protect public health because
too many lives are at stake. And that is why we introduced the
Clean Air Act Amendments of 2010.
Our legislation provides an aggressive--but we think
achievable--schedule for fossil fuel power plants to reduce
harmful emissions. First, our bill calls for reducing utility
mercury emissions by at least 90 percent by 2015. Second, our
bill calls for reducing utility sulfur dioxide emissions by at
least 80 percent by 2018. And third, our bill calls for
reducing utility nitrogen oxide emissions by at least 50
percent by 2015.
Those are significant reductions that the EPA agrees will
save more than 215,000 lives over a 15-year period. Two
hundred-fifteen thousand lives over a 15-year period saves
more, we are told, more than $2 trillion in healthcare costs. I
am trying to think quickly what the cost of healthcare
legislation that the House and the Senate have been considering
is, but it is about $850 billion over 10 years.
We are talking here potentially saving more than twice what
is in the healthcare bill legislation, twice in healthcare
savings. And the cost to families? About $1.90 per month. About
$1.90 per month. For less than $2 a month we can save three
times the number of people who live in my hometown of
Wilmington, Delaware.
Passage of our bill also provides a certainty of
predictability that industry in America needs. I think we have
one more. Do we have one more chart? Thank you, Stephanie.
Clean Air Act Amendments of 2010 will guarantee reductions
in harmful SOx, NOx and mercury
emissions, provide business certainty, something we have not
had, and protect public health, all at once.
Certainty allows companies to find the most cost effective
reductions. Certainty puts Americans to work building clean
energy equipment to sell here and export around the world,
equipment that is stamped Made in the U.S.A. Combine business
certainty with certainty that we will be protecting public
health and we have ourselves what I think is a win-win
situation.
In closing, let me just say the time for delay and inaction
needs to come to an end. We cannot wait for another 20 years to
change our clean air laws and save lives and provide greater
certainty to our business community. I look forward to working
with all my colleagues on this Committee and off of this
Committee, Democrat, Republican and a couple of those
Independents as well, as we attempt to pass this legislation
and move forward for the good of our country.
All right. Normally I would yield to Senator Inhofe, who I
think is going to be joining us, but since he is not here, I am
going to ask Senator Voinovich, with whom I have labored in
these fields for years and others, to good effect, I might add.
One of the great joys of serving here in the U.S. Senate, and
before that as Governor, was working with George Voinovich.
We have before us, ladies and gentlemen, three recovering
Governors, all of whom were Chairman of the National Governor's
Association. We enjoy working together, and it is just one of
the--this can be a frustrating job, as you might imagine, but
one of the things that I love is working with George and
working with Lamar.
George.
[The prepared statement of Senator Carper follows:]
Statement of Hon. Thomas R. Carper,
U.S. Senator from the State of Delaware
I'd like to first thank Senators Alexander and Klobuchar
for working with me on S. 2995, the Clean Air Act Amendments of
2010 and Senator Gillibrand for cosponsoring our efforts.
I'd also like to thank Chairman Boxer for holding this
hearing.
Almost 20 years have passed since Congress made significant
revisions to the Clean Air Act. During that time, many
polluters have kept polluting--albeit at a somewhat slower
rate--but our Nation's emissions standards simply have not kept
pace. While there has been some significant environmental
progress along the way, clearly we can do better.
If the legislation we are discussing today is enacted, we
will do better. Much better. Millions of Americans will breathe
easier as a result.
Eight years ago, when Senator Alexander and I began working
together to clean up our Nation's air, we faced three
monumental challenges. The first challenge is that air
pollution knows no State boundaries. Air pollution emitted by
our oldest and dirtiest fossil fuel power plants doesn't just
affect the State in which they are located. As we will hear
today, States like Delaware have implemented tough clean air
laws only to find pollution still in the air from other States.
In fact, mid-Atlantic and northeastern States like Delaware,
Maryland, New Jersey, Connecticut, New Hampshire, Vermont,
Maine, and Rhode Island are located at the end of what I call
``America's tailpipe'' because we receive a heavy dose of
pollution from other States.
The second major challenge is that air pollution causes
serious health effects nationally, effects such as asthma,
cancer, brain damage, even death. According to the American
Lung Association, 6 out of 10 Americans are exposed to harmful
air pollution every day.
Think about that. A majority of Americans--more than 186
million people--live in areas where there is enough air
pollution to endanger their lives or threaten their health.
The third challenge is that the EPA has struggled to
tighten emission standards beyond the Clean Air Act Amendments
of 1990. Over the past 10 years, the Environmental Protection
Agency has attempted to regulate harmful power plant emissions,
but court challenges have delayed action. Delays in action
means lives lost.
Senators Alexander, Klobuchar, Gillibrand and I--along with
a bipartisan group of Senators--believe we need legislative
certainty to protect public health, because too many lives are
at stake.
That is why we introduced the Clean Air Act Amendments of
2010. Our legislation provides an aggressive--yet achievable--
schedule for fossil fuel power plants to reduce harmful
emissions.
First, our bill calls for reducing utility mercury
emissions by at least 90 percent by 2015. Second, our bill
calls for reducing utility sulfur dioxide emissions by at least
80 percent by 2018. Third, our bill calls for reducing utility
nitrogen oxide emissions by at least 50 percent by 2015. These
are significant reductions that the EPA agrees will save more
than 215,000 lives over a 15-year period.
But if saving lives isn't enough, our bill also saves more
than $2 trillion in health care costs over the next 15 years
and will cost families less than $2 a month. For less than $2 a
month, we can save three times the number of people who live in
my hometown of Wilmington, Delaware.
Passage of our bill also provides the certainly and
predictability that industry in America needs. Certainty allows
companies to find the most cost effective reductions. Certainty
puts Americans to work building clean energy equipment to sell
here and export around the world, equipment that's stamped
``Made in the U.S.A.'' Combine business certainty with
certainty that we will be protecting public health, and we have
ourselves a win-win situation.
The time for delay and inaction must end. We cannot wait
another 20 years to change our clean air laws and save lives.
I look forward to working with my colleagues to pass the
Clean Air Act Amendments of 2010 this year.
OPENING STATEMENT OF HON. GEORGE V. VOINOVICH,
U.S. SENATOR FROM THE STATE OF OHIO
Senator Voinovich. Thank you very much. I think the former
Governors have a little different perspective on things.
I am pleased that you and Lamar and the rest of the Members
have gotten together on this legislation because I have, for a
long time, sought a national policy that implements a
comprehensive air quality strategy that helps attain our
Nation's national ambient air standards so that we can achieve
reductions in mercury from coal-fired plants and streamline the
Clean Air Act requirements.
I think most of you, and particularly Senator Carper,
remember that I was the lead sponsor of the Clear Skies Act,
and when that legislation stalled, I was supportive of the
Administration's strategy to implement their policy by rule.
And while there were differences of opinion on how these rules
should have been implemented and whether the reduction
requirements went far enough, they were generally supported by
much of the regulated community affected States and
environmental groups. It gave certainty.
The courts' decisions when vacating these rules left no
comprehensive or cost effective policy to address
NOx compliance, untangle the complicated web of
overlapping and redundant regulations affecting power plants,
and bring about the public health benefits we had hoped to
achieve. The current situation is precisely what I had feared
and is why Senator Inhofe and I worked so hard to get the Clear
Skies Act passed.
Indeed, properly coordinating the compliance obligations
for SO2, NOx and mercury promotes
efficiency and enables many companies to meet a substantial
portion of mercury emission reduction obligations through the
co-benefits achieved through SO2 and NOx
control, that is, scrubbers and SCRs. For these reasons, a
three-piece strategy continues to make sense, and I am
appreciative of the Carper-Alexander effort.
For 11, 12, this is the 12th year that we have tried to do
something about three Ps. Because the environmental groups
wanted four Ps. I think you remember. We thought we had to take
care of the Smokies, and we were going to take care of the
Adirondacks, and they said no, we have to do four Ps. So, it is
wonderful that we are now talking about three Ps.
I do have concerns regarding the proposal. The concerns
relate both to provisions that are in the bill as well as
provisions that I think should be included in it.
In regard to what is proposed, the level and the timing of
the reductions are unprecedented and cannot be achieved without
significant fuel switching and increases in electric rates. And
I think that is something that we all ought to take into
consideration, particularly with the economy that we have today
and the fact that people are just not paying their electric
bills anymore because they cannot afford to pay them.
For example, the bill implements new SO2 and
NOx reduction requirements in 2012, less than 2
years from now. This leaves little time for planning,
implementation or the installation of controlled equipment. For
example, by 2015--less than 5 years from now--the bill requires
a 74 percent reduction for SO2 and a 53 percent
reduction for NOx.
Adding to these concerns, the bill eliminates a key cost
control feature established in the 1990 Clean Air Act
Amendments, the allocation of emission credits to effective
sources in favor of a Government auction. Under a cap-and-trade
system, emissions are controlled by the level of the cap, and
in this context auctions merely drive up electricity rates with
no benefit to the environment.
In regard to the bill's mercury provision, the bill
requires a minimum of 90 percent reduction in emissions by
2015. However, it is far from clear that a 90 percent control
requirement can be met on a consistent and reliable basis
across all types and plant configurations. In fact, while DOE
has concluded that field testing has brought certain mercury
control technologies ``to the point of commercial deployment
readiness'' it cautions that there are ``many fundamental
questions about the long-term consistency of mercury removal
and reliability.''
As told, industry projects this bill would force the early
retirement of over 25 percent of the U.S. coal fleet with the
difference being made up by natural gas. And I would like to
submit for the record an analysis that has been done by Energy
Ventures Analysis, Inc.
Absent from the bill are provisions we all seek, regulatory
certainty. In fact, the bill actually increases uncertainty and
undermines options for cost effective emission reductions. For
example, for both NOx and SOx the bill
gives EPA broad authority to tighten emission caps after 2021.
This gives industry no ability to project future emissions
reduction requirements for planning and implementation
purposes.
And while the bill sets a minimum requirement for mercury
reductions, no upper bound is established, again giving EPA
broad authority to set limits that are out of Congress' reach
and give industry little ability to forecast compliance
requirements.
That being said, Mr. Chairman, I want you to know that I am
pleased that our staffs have been working together, and perhaps
we can work something out. And to the environmental groups
there that have been involved in this for a long period of
time, maybe you will not get exactly what you want, but we can
get close to it, and maybe we can get certainty in this area
that has been hanging out there forever, and ever, and ever,
and ever. And I am going to work my you know what off to see if
we cannot make that happen.
Thank you.
[The referenced analysis follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Carper. Senator Voinovich, thank you very much.
We have been joined by Senator Tom Udall of New Mexico.
Tom, you are welcome to make a statement if you would like to.
And thanks a lot for coming.
OPENING STATEMENT OF HON. TOM UDALL,
U.S. SENATOR FROM THE STATE OF NEW MEXICO
Senator Udall. Thank you, Senator Carper, and I know that
you have been working on this a very long time and this is
something close to your heart. So, I wanted to come here.
Senator Carper. Thanks so much.
Senator Udall. Thank you for holding the hearing.
One of the things that I think that we are talking about
here is how to save lives and create jobs by promoting
pollution reduction investments. The three pollutants we are
discussing, nitrogen oxide, sulfur dioxide and mercury, cause
heart disease, stroke, lung cancer, asthma and developmental
problems for pregnant women and young children.
Interestingly, President Bush and his EPA appointees sought
to develop and expand cap-and-trade systems for these
pollutants during his administration. Federal courts struck
down many of these efforts as failing to go far enough to
protect public health as required under the Clean Air Act.
While the Bush administration's actions primarily addressed
eastern States, subsequent EPA action and Senator Carper's bill
will likely also address coal plants in the Four Corners area
and throughout the West. Reducing pollution there is a very
good thing, and I look forward to learning more about how EPA
plans to proceed, and Senator Carper, how your legislation
would affect us in the West.
So, thank you for doing this, and I cannot stay too long,
but I am going to follow this closely and have my capable staff
here with me.
Senator Carper. Excellent. Thank you so much for being
here, for your statement and for working with us.
My partner, not in crime, but my partner in clean air and
hopefully job creation and some other good things as well,
Lamar Alexander.
OPENING STATEMENT OF HON. LAMAR ALEXANDER,
U.S. SENATOR FROM THE STATE OF TENNESSEE
Senator Alexander. Thank you, Tom.
Yesterday, I had a visitor come by who is an entrepreneur,
and he brought these little things. These are pellets of
limestone which are made from CO2. Not coal ash, but
CO2. In other words, he says that he can take the
CO2 that comes out of--the carbon that comes out of
coal plant smokestacks, and turn it into limestone that can
then be used in concrete and aggregate the way coal ash and
others is. And I said, well, if you figure that out, you are
going to make 2 or 3 billion dollars and solve a great big
problem that we have.
I only bring that up here today to point out that while
this bill has nothing to do with carbon, this bill has a lot to
do with our ability to continue to use coal as a primary source
of low cost electricity in our country which I think we must do
if we want to keep jobs here. And I am optimistic that before
very long there will be more than one way to turn to solve the
carbon problem. And hopefully it is going to be a low cost
problem.
We still have some disagreements over how to regulate
carbon coming out of coal plants. But what I think Senator
Carper and I are saying, along with the other 9 co-sponsors of
the bill, is we can continue to talk about carbon, but in the
meantime there is no excuse remaining for not moving ahead to
do what we know how to do with SOx, NOx
and mercury.
We know what to do. An enormous amount of work has been
done on this. Senator Voinovich has been working on this almost
during his whole career here. And during that time it was said
by the environmental groups, well, we want to deal with all
four pollutants, including carbon. Well, we do not need to wait
for carbon. We can go ahead with this and continue to work on
carbon.
And then some said, well, we would rather do it with a
Democratic President and a Democratic Congress than a
Republican President and a Republican Congress. Well, we have
got one here. That is the condition that we have. So, there is
really no excuse remaining for not going ahead and cleaning up
the air, which we know how to do.
So, we have got the expertise, we have got the bipartisan
support, we have got a history of hard work, we have got
conditions that are right, we have got Republicans and
Democrats who would like to see it done. So, we should do it
this year.
And the reasons are pretty obvious. The Environmental
Protection Agency, for one thing, is going to be toughening the
ambient air quality standards; in other words, the conditions
that metropolitan areas have to meet in terms of clean air,
putting almost every major metropolitan area in America out of
compliance.
Well, what does that mean? Well, that means--Tom mentioned
the three of us were Governors. When I was Governor and Nissan
came to Tennessee, what was the first thing they did? Well,
they went down to the Air Quality Board to get an Air Quality
Permit to operate their paint plant. And if they could not have
gotten an Air Quality Permit to operate their paint plant,
because the air was too dirty around Nashville, they would have
taken their plant to Georgia or to some other place where they
could have gotten a permit.
So, this is a jobs issue for us. It will enable us to give
certainty so that we can continue to use low cost reliable
coal, which comes from America so we do not have to depend on
other countries, and we can figure out the carbon thing as we
go along.
It is very important for our health, as has been mentioned
by the other Senators. And in our part of the world, in eastern
Tennessee, where I live, we have 10 million tourists who come
in every year to see the blue haze that the Cherokees used to
sing about, and not the smog that comes from air pollution from
coal plants. And they are not all TVA plants, either. A lot of
it blows in.
So, I want to give Knoxville and Chattanooga and Nashville
and Memphis and all of our cities and metropolitan areas across
the country a chance to be able to meet their air quality
standards. They will not have that chance unless we have strong
national standards on pollution from coal plants of
SOx, NOx and mercury.
So, my hope is to Senator Udall, Senator Voinovich, Senator
Carper, all of us--I think this is not one of those occasions
where we just take positions and shout at each other. We are
not going to do that here. We have all done too much work on
it. We have actually got a good chance to pass this bill this
year.
And I am looking forward to hearing from the Environmental
Protection Administration and from the industry and from
environmental groups and others how we can improve the bill. If
we made some mistakes in it, we need to know that so we can
improve it. That is what this hearing is about. If we are being
unrealistic, we need to know that. I am very interested in what
the actual cost will be. Those are my questions. I am for low
cost electricity. I am for cleaning up the air. And I think
this year is the time to do it.
Thank you.
Senator Carper. Thank you, Senator Alexander.
I am going to ask for unanimous consent to enter for the
record a number of letters of support for our legislation and a
GAO report dated October 2009 on mercury control technology at
coal-fired plants. Without objection, that will be part of the
record. Thank you.
[The referenced letters follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Carper. I am pleased to welcome our first witness.
Thank you for your patience. Senator Alexander likes to call
hearings, he says that we really should not call them hearings,
we should call them talkings.
[Laughter.]
Senator Alexander. Because we do the talking.
Senator Carper. We are trying to limit that here this
morning. We want to welcome our first panel witness so we can
be hearers, not just talkers, and we welcome Regina McCarthy.
No stranger to this panel, Ms. McCarthy is the EPA Assistant
Administrator for the Office of Air and Radiation. She has
spoken before this Committee on a number of occasions on past
Clean Air issues. So, we welcome her back.
Ms. McCarthy, you will have 5 minutes to read your opening
statement, and the full content of your written statement will
be included in the record.
Again, thank you for joining us.
STATEMENT OF REGINA A. MCCARTHY, ASSISTANT ADMINISTRATOR,
OFFICE OF AIR AND RADIATION, U.S. ENVIRONMENTAL PROTECTION
AGENCY
Ms. McCarthy. Thank you, Chairman Carper, and good morning,
everyone. Members of the Committee, thank you for inviting me
here to testify today, to talk to you about EPA's efforts to
mitigate the impacts of emissions from power plants.
As you will recall, I was here just in July of last year.
Lots of time has passed, and I am pleased to report that EPA
has made significant progress on our regulatory efforts. In my
testimony I hope to discuss the status of that effort and
provide the Committee with some information on the bill before
you, the Clean Air Act Amendments of 2010.
From the outset of this Administration, beginning with the
American Recovery and Reinvestment Act, President Obama has
made providing clean energy for Americans a top priority. Not
only is this enterprise essential to protecting public health
and the environment, but it also serves as the cornerstone of
revitalizing the economy, spurring innovation and creating new
21st century jobs. That is why your leadership on this issue,
Senator Carper and members of the Committee, and that of the
co-sponsors of S. 2995, is especially important.
Every day, the emissions of sulfur dioxide, oxides of
nitrogen, and mercury from power plants threaten the health and
quality of life for millions of Americans. The benefits of
reducing air pollution from these sources are not academic.
Thousands of premature deaths can be avoided. Lower air
pollution from power plants means that we will spend less on
healthcare, hospitalizations, and emergency room visits.
Reducing air pollution from power plants can mean that we are
able to enjoy more sweeping vistas at our National Parks, and
we can more confidently eat freshwater fish from my home State
of Massachusetts.
But like you, I know that air pollution is not the only
thing affecting American lives. Jobs are hard to come by;
businesses large and small are struggling. In fact, some people
would argue that the U.S. cannot afford to make the investments
in clean air, and now may not be the right time to make those
investments.
Well, President Obama, Administrator Lisa Jackson at EPA,
and I disagree with that thinking. Making investments in our
existing energy sources, updating them to create clean and
efficient energy infrastructure, and making investments that
create jobs here in America are, in fact, essential to keeping
the United States competitive in the global economy.
History clearly demonstrates that the economy can grow
while we clean up the air. Since 1990 overall pollution
emissions have been reduced by more than 50 percent, while the
U.S. GDP, when it is adjusted for inflation, has increased 126
percent.
EPA will soon propose a rule to replace the Clean Air
Interstate Rule (CAIR). It will reduce interstate transport of
SO2 and NOx emissions in the eastern half
of the U.S. to help States meet the current health based
ambient air quality standards for fine particles and ozone.
Working within the framework of the 2008 court decision of the
D.C. court that remanded CAIR back to EPA, we are developing a
new approach to reduce regional interstate transport of these
long distance pollutants while we are guaranteeing that each
downwind State non-attainment and maintenance area is getting
the reductions it is entitled to achieve under the law. Past
analysis shows that the benefits of reducing SO2 and
NOx emissions from power plants in the eastern U.S.
far exceed the cost.
Similarly, following actions by the same court on the Clean
Air Mercury Rule, EPA is developing a rule that we intend and
hope to propose in March 2011 establishing MACT standards for
toxic air emissions from power plants, including mercury, heavy
metals and acid gases. We are still gathering the information
needed to determine what the level of our MACT standard must
be. But it is important to note that according to GAO, many
coal-fired power plant boilers have already reduced their
mercury emissions by more than 90 percent.
As you have heard from EPA Administrator Jackson at last
week's hearing before this Committee on the EPA's proposed 2011
budget, we have not not completed our review of S. 2995 in its
entirety. But fortunately, last summer, at your request, EPA
conducted an analysis of several different emission reduction
scenarios, some of which are very similar to the emissions
levels in the time line in this bill.
And based on that analysis, we analyzed emissions,
electricity prices and costs, and we estimated the likely
health benefits. And our experience in modeling similar
emission reduction scenarios, as well as that analysis,
indicates that S. 2995 would likely result in tens of thousands
of lives saved and as much as hundreds of billions in monetized
benefits each and every year, especially when compared to the
base case which does not include major new regulations that are
being contemplated. These benefits are significantly greater
than the estimated costs of implementing the reductions
required by the scenarios.
I am confident that whether it is through legislation like
S. 2995 or the Clean Air Act regulations that EPA is
developing, that reductions in power plant pollution will drive
smart investments in pollution control and energy efficiency as
well as innovative generation technologies, all of which will
pay back the American people in jobs, in economic growth, and
in improved health and environmental protection for years to
come.
As EPA continues the air pollution rulemaking that reflect
our commitment to protecting public health and the environment
and heeding our legal obligations, and as you, Senator Carper,
and your colleagues work to advance your legislation, I believe
that our respective efforts will be mutually reinforcing. They
will not only ensure the pollution reductions that we need but
support the President's efforts to clean up our energy supply
in a way that is consistent with economic growth.
Thank you for your efforts. I look forward to answering
your questions.
[The prepared statement of Ms. McCarthy follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Carper. Thank you so much for your testimony and
for your service.
I am going to go later in the questioning. But Senator
Udall was good enough to join us, and he has another obligation
to meet, so I am just going to give my time to him, and I will
ask questions later.
Senator Udall. Thank you very much, Senator Carper. I
really appreciate that.
Senator Carper. You are welcome.
Senator Udall. Administrator McCarthy, you mentioned the
fact that you like to fish and eat fish from the waters out in
Massachusetts. In my old jobs, before I was in elected office,
I liked to fish also.
One of the things I found the most disturbing in New Mexico
is I think today almost all of our streams are polluted with a
level of mercury that you cannot eat the fish. And there are
warnings out for pregnant women and other vulnerable
populations on that. It really hits people in New Mexico when
they read that, that all of their streams are polluted with a
level of mercury that you cannot eat the fish except in very
small amounts.
So, I want to try to focus on the impact on the West, and
my first question is, you know, the Bush administration's Clean
Air Interstate Rule primarily affected eastern States, which
are downwind from multiple coal plants in the Midwest. And as
we know, the Federal courts have required EPA to start over and
come up with a better rule.
How is the Obama administration's response to the court
ruling likely to affect the West, and what other EPA efforts
are underway to reduce pollution from coal-fired power plants
in the West?
Ms. McCarthy. Senator, I appreciate your questions, and I
sympathize and empathize with you about freshwater fish. I can
remember getting into this business decades ago when fish
advisories were almost unknown. And now they are everywhere.
So, it is a challenge for all of us.
I will tell you that the Clean Air Interstate Rule is still
in development. We are looking at the number of States that
need to be involved in that rulemaking in order to address the
transport of these long range pollutants. It does primarily
focus on the eastern States. It is not the only effort that EPA
will have underway to address these issues.
In particular, relative to the question of mercury we are
also in the development stages, and we have put out some
information requests to the power sector to look at a new
utility MACT, which will be a maximum achievable control
technology rulemaking process that we will begin in early 2011
and hope to complete by November 2011, that will address what
kind of technologies are available, are cost effective, that
can be required for the utility sector across the country.
But you are quite right that our efforts under CAIR have
been mainly focused on the eastern part of the United States.
But the proposal before you and the Senate bill S. 2995 would
be a national program, getting at all 48 States plus D.C.
Senator Udall. Thank you for that answer.
Now, changing direction a little bit here in terms of
asking you about natural gas. Recently we have learned that the
U.S. has very large supplies of natural gas, and thanks to
recent discoveries of shale gas, deep shale gas, some energy
analysts now estimate we have more natural gas than we do coal.
How do natural gas power plants compare with coal-fired
plants for the purposes of these three pollutants we are
talking about today, and is the EPA encouraged about these
recent trends in natural gas supplies?
Ms. McCarthy. Thank you, Senator. I see the same
information that you do, which is, it is very encouraging to
see that there is so much natural gas available so that we can
have the fuel diversity that I think most people are looking to
have in our fuel supply.
Natural gas units tend to be the units that run the
cleanest for the types of pollutants that we are talking about
today. As you know, EPA, when it set standards for utility MACT
and other standards, we actually look at the units in terms of
what fuels they burn and what types of technologies are
available for those types of fuels so that we can achieve the
kind of reductions that we all hope to achieve.
They certainly do have a better profile. I think efforts
that are underway here, and that we have by regulation, will
attempt to bring down the emissions from other fossil fuel
units from oil and from coal units, provide them the ability to
upgrade, provide them the certainty they need to know what
kinds of reductions we are hoping to achieve, because our goal
is to bring down the emissions profiles of all units.
And obviously we are interested in how the market is
looking at natural gas, what that means for the energy market
in terms of what is competitive moving forward, and allow the
market to make some of those critical decisions.
Senator Udall. Thank you, Administrator McCarthy, and I
look forward to working with Senator Alexander and Senator
Voinovich and you, Mr. Chairman, and Senator Cardin, on these
important issues. Thank you.
Senator Carper. It will be our pleasure.
Senator Udall. And thank you for your courtesies, too.
Senator Carper. My pleasure. Thanks for joining us.
Senator Voinovich.
Senator Voinovich. Do you think that it makes sense to pass
3-P legislation with strict targets and timetables while at the
same time leaving in place many of the clean air regulations
that will be imposed on power plants over the next decade?
Should it not be a tradeoff? That is, if you are going to force
tough reductions, should that not be accompanied with some
certainty and flexibility in how plants make those reductions?
Ms. McCarthy. Senator, I think that I share your goal to
try to do my best to provide certainty so that investments that
are being made in clean energy, whether it is cleaning the
existing fleet or making decisions about what to invest in
moving forward, are done with sound foresight. I think we are
attempting to do that in the regulatory structure as best we
can, and I am certain that is one of the reasons why the
Congress is looking at this bill closely.
We are happy to work with you to see how we can align those
efforts. I will say that EPA is under obligation to look at the
full suite of hazardous air pollutants under its utility MACT
standard, not just look at mercury as a specific toxic. So, we
do have, certainly, a broader agenda for us in the regulatory
front and we are hoping to, in concert with what you do in
Congress, work together to provide certainty that you are
looking to achieve.
Senator Voinovich. Well, I would think that that kind of
commitment, as far as it can go, would make a big difference
because, if I am going to come up with a new regime, I would
like to know that is the regime and I am not going to have to
be confronted with something next year or the year after in
terms of what I am doing so that I can make my investments
without worrying about, you know, making another 1, 2, or 3
years in the future.
In your statement you reference an economic analysis of a
previous version of the Carper 3-P proposal. I note that this
analysis was not performed on this bill and did not look at the
costs that electricity customers would incur as a result of a
90 percent mercury control requirement.
And I remember the debate quite well in 2005 when Senator
Lieberman and others tried to come forward with a new standard
for mercury, and at the time the Energy Information
Administration projected the cost for a 90 percent max standard
as high as $358 billion with an average increase in national
electricity prices of 20 percent. That was a big issue then.
The additional reduction in U.S. mercury disposition was
projected to be just about 2 percent, an almost immeasurable
decline in people's exposure to mercury.
I understand that the cost of technology has decreased
since that time, but the potential economic impacts warrant
evaluation, and I would like you to be aware that this is
something that I would like to see if, and we are going to have
a request to your office on this, and I think we are also going
to be asking the Energy Information Administration to do the
same thing.
It is the cost and benefit. If you go to 90 percent, how
much are you going to better the reduction of mercury in terms
of human health, so we can capture that. So often, what we have
found is that you will take it to maybe 90 percent and then 80
percent, and then you go the next 10 percent, and what is the
real benefit that you are getting in terms of improving health?
This calculation is very important. Have you looked at that
recently, in terms of the costs?
Ms. McCarthy. We have not revisited this issue specifically
since we took a look at last year's bill. We did look at
scenarios that were very similar to the targets that you are
trying to achieve in the time line. So, we do think that, while
there is not certainty, there is still a sense that the costs
associated with this would be in the 1.5 to 2.5 percent
increase over the course of between when the bill starts and
2025, which remains pretty minimal.
I will tell you, however, Senator, that the Administrator
has already pledged our full support and our technical
assistance to re-look at these issues. I understand that costs
will be a major consideration, and to the extent that we can
provide technical assistance and work with staff to provide you
additional information and re-look at those issues, we will do
that to the extent that our resources allow.
Senator Voinovich. I appreciate it. We talked about the
concept of a lot of natural gas out there. But from my
recollection, to go from coal to natural gas is a very
expensive proposition.
The other aspect of that is that we have to take these all
under consideration with CO2 emissions, and if you
move off from coal and you do not get the technology, then you
go to natural gas which is about half the emissions for
greenhouse gases. And all of these things work together.
It is very interesting that with the commercial technology
that is available today to deal with greenhouse gases, it takes
about, it would take about one-third of a plant's electricity
to deal with the greenhouses gases. So, you would reduce that
by one-third, and then you would have to provide other energy
to make up the one-third, which means you would have to
replicate, if you are burning coal and other coal facility, to
make up for the loss of energy that you have incurred as a
result of bringing down the greenhouse gases.
So, I think this is one thing, Senator Carper, that we, you
know, look at in terms of how this is all going to fit
together.
Thank you.
Senator Carper. Thank you.
I am going to go ahead and ask my questions now and then
yield to Senator Alexander next.
And welcome to Senator Cardin. Thank you for being here.
Just to follow up on what Senator Voinovich was saying, one
of the virtues of a trading system and using market, the
highest market forces, to enable us to ratchet down emissions
is we give flexibility, in this case to the utilities. And if
it makes sense to convert to what is now more readily available
natural gas, they could do that. If it makes economic sense for
them to change the technology out in their plants, they can do
that.
I think that the idea is that we are not going to stipulate
what to do. It is not one size fits all. One size does not fit
all. But we will let market forces help guide that. And
innovation as well.
One of the virtues of having to set some targets out there,
to say these are our mission's targets, is it provides, we
hope, the kind of certainty that we are looking for. It says to
the technologists that are really smart people, including some
folks in our audience and one of the witnesses in the next
panel, it says, look, there is going to be a market. You spend
the time and the money inventing this technology, there will be
a market for it. And that is an important signal to send as
well.
I want to come back, in terms of certainty, to a point made
by Senator Voinovich, and it is going to be raised later on in
our panel today, in our second panel, by our representative
from AP; I think it is Mr. McManus. The question is on
certainty. We say, for example, in our legislation, we want to
see mercury emissions reduced by 90 percent by a date certain.
We will allow EPA to go beyond that.
And Senator Voinovich says--and rightly so--well, that is
the not the kind of certainty that he is looking for and maybe
that AP is looking for. And I understand that there is a reason
why EPA asked for that kind of flexibility. But it tends to
infringe maybe on the flexibility, or the certainty if you
will, of the utilities themselves.
Would you talk with us a little bit about one and how we
balance one against the other, please?
Ms. McCarthy. I think, Senator, in our individual
rulemaking, as well as our rules that impact sectors and have
to work together, we have to look at the appropriate balance. I
think in terms of mercury technologies and the challenges
moving forward that we have seen tremendous change in our
ability to be able to address mercury and be certain about the
reductions that can be achieved using the newly developed
technologies and assessing those appropriately for each
facility.
We will always struggle with that. The difficulty that we
have is providing certainty on the basis of today's science and
today's technology is one thing. Freezing that and thinking
that science will not develop, we will not have better
understanding of both the long-term transport questions as well
as the localized impacts of some of these toxics is trying to
freeze that in time or just rely on current technology or not
look at what is coming up in trying to provide incentives for
innovation. I think that is a mistake.
I think that the Clean Air Act readily acknowledged that
the science does change. We learn more; technology does provide
opportunities for cost effective actions to reduce toxics. And
we know well that there are localized impacts associated with
some of these pollutants that we are asking the States to
address, not just the long-term transport in national
standards.
So, a market based approach can work very well. We can try
to coordinate with that and provide certainty for any
additional actions that States or that EPA made may have to
take to address localized impacts.
Senator Carper. OK. Thank you.
In the latter part of your testimony, I jotted down--I
tried to jot down what you said; you were talking about the
plan of the EPA to go down your regulatory road to write a
follow up rule to CAIR and our effort to try to find a
legislative path forward. I think what you said is our
efforts--EPA and our legislative efforts--our efforts will be
mutually reinforcing in cleaning up our air, which is very
encouraging to me.
Would you just talk about that a little bit more, please?
Ms. McCarthy. Senator, I think that EPA is obligated by the
courts and under the Clean Air Act to move forward to develop
certain regulatory standards in a timely way. We are going to
meet that obligation. We are going to try to do quite a bit
than we have over the past few years at developing regulations
that will stand the test of time legally.
What we are seeing in the bill that you are contemplating
is moving in exactly the same direction as our regulations
would move. To the extent that we can align those efforts, that
we can inform you about what we are seeing through our
regulatory development process and the data that we are
gathering to define these standards, it can inform what you
think is available and readily available that you should move
through your legislation. It will also inform us in our
regulatory efforts.
I think we are totally aligned in terms of the direction we
are taking. We very much appreciate the standards and the time
lines that you have set. We can adjust those moving forward and
inform what one another does. And the United States works best
when Congress does its thing and we follow the law and do ours
as well. And I think we can align very well.
Senator Carper. All right. Thank you.
Senator Alexander.
Senator Alexander. Thanks, Mr. Chairman.
Administrator McCarthy, you are developing a mercury rule
now, which, if we pass this law, the law would replace that,
right?
Ms. McCarthy. Senator, we are actually going through data
gathering to develop a utility MACT standard which actually
covers many more toxics than mercury. So, even if you move
forward, we still have the regulatory requirement under the
existing Clean Air Act to look beyond mercury and to do that in
a way that meets the letter of the law.
Senator Alexander. You are not planning to have a trading
system for mercury, are you?
Ms. McCarthy. Actually, we do not believe that trading for
toxic pollutants is an inappropriate design for a rule moving
forward, and the courts have spoken to that issue as well.
Senator Alexander. Do you have evidence that mercury from
power plants settles near the power plant?
Ms. McCarthy. There is evidence of local impacts that is
scientifically credible and has been peer reviewed, yes.
Senator Alexander. Senator Voinovich was asking about
further estimates by EPA of the costs, which I am very
interested in as well. How long would it take to do that?
Ms. McCarthy. I think, Senator, we need to have a good
discussion with your staff to figure out exactly how detailed
an analysis we need. We certainly will be sensitive to your
time constraints and try to do that in as timely a way as we
can.
Senator Alexander. Yes, a lot of us would like to get on
with the legislation, and we want to know what it costs before
we do. So, that would be a big help if you could give a
priority to that because, even those of us who are--maybe those
of us who are proposing the legislation especially want to make
sure we have a good understanding of the costs.
The preliminary costs suggest, based upon EPA, well, the
EPA analysis so far, shows that rates will rise between about
1.5 and 2.5 percent by 2025 as a result of the SOx
and NOx requirements. That is about $2 or $3 a
month. Is that right?
Ms. McCarthy. That is accurate. Based on the analysis that
we did----
Senator Alexander. Now, in saying that, is that just actual
costs, or do you balance that against other benefits and
include those benefits in your analysis?
Ms. McCarthy. That is the actual cost.
Senator Alexander. That is just the actual cost?
Ms. McCarthy. Retail cost, yes.
Senator Alexander. And then on mercury, Senator Voinovich
was asking about that and acknowledging that there has been
some improvement in the technology based upon what we can see
from the General Accounting Office. TVA customers in our region
would expect an increase in rates of 13 cents to 33 cents per
month over 15 years. So, do you have any analysis of what the
separate mercury requirements would cost?
Ms. McCarthy. I do not at this point, Senator.
Senator Alexander. What about the--are you familiar with
any studies that, and this may be more appropriate for the next
panel, that reflect on how rules such as the one we are
proposing would impact on the efficiency of coal plants? In
other words, whether a plant would have to reduce its
efficiency in order to meet the rules.
Ms. McCarthy. That is a good question, Senator. I am not
sure that I am able to answer it. I can tell you that when we
are looking at the impact of the Clean Air Interstate Rule we
are relying on a few things. One is the ability for some of the
existing plants to increase their heat rates, which we think
they have an ability to do. We are also relying a great deal on
continued investment in energy efficiency overall, which
impacts demand and can help us stay within those caps.
Senator Alexander. Do you think it provides sufficient
certainty to utilities to just leave it to the EPA after 2020
to decide what the rules should be, the standards should be?
Ms. McCarthy. Senator, I think the best we can do is make
our rules on the basis on what we know now about the science
and technology and costs and do that as far out as we feel
comfortable doing. I do not think we can really be expected to
do more than that. The science does change. The capacity to be
able to bring cost effective solutions to the table changes.
And so we will do our best to provide certainty over time
as you are attempting to do with this legislation. But looking
beyond a 2025 time horizon may not be something that we feel
comfortable doing on the basis of information that we have.
Senator Alexander. Well, my major request to you, and I
said this to the Administrator yesterday, is that you put a
very high priority on doing whatever EPA can do to help Senator
Carper, Senator Voinovich, any of us to understand the actual
cost of the proposed rules on electric rates.
I mean, if it is $2 to $3 a month by 2025, you know, that
is one thing. If it is $20 to $25 a month, that is another
thing. And if it is, my own view is that I want the coal plants
to operate, but they just should not be operating without
strong rules on SOx, NOx and mercury. And
if we can do it at $2 or $3 a month by 2025, we ought to get on
with it.
Thank you, Mr. Chairman.
Ms. McCarthy. Thank you, Senator.
Senator Carper. Senator Alexander, is that your first
round? OK.
Senator Cardin, thanks for joining us.
Senator Cardin. Well, Mr. Chairman, Senator Carper, I want
to really thank you for your extraordinary leadership on the
subject. You have been tenacious in keeping us focused on
dealing with these pollutants, and I thank you.
I think there is not a member of our Committee who has not
had the opportunity to talk with you directly about this issue.
And you have brought together Democrats and Republicans in an
effort to deal with these important areas.
So, I just first want to thank you very much and let you
know how much I appreciate my neighbor, Delaware, providing the
leadership because, as you know, we are all in this together.
Airborne pollutants do not stick to the geographic area in
which they are located. In fact, the quality of air in our
entire region, mercury reductions are critically important to
all of us. We have the Chesapeake Bay. We know of fish
advisories that have been given because of the high levels of
mercury content. It is an extremely important issue for us to
do a much more effective job.
On sulfur dioxide, we know the impact that acid rain has on
plants in our community, the impact that it is having on the
Bay, the impact that it is having on our environment. With the
NOx, it clearly is affecting air quality,
respiratory issues, and I can go through the list and list
them. And it is for that reason the Maryland legislature and
other States have taken action on this issue when we enacted
the Healthy Air Act in July 2007.
I mention that because I know that there was a lot of
concern when the Maryland legislature enacted this, and
Maryland implemented it because there was a concern as to
whether we could reach the type of standards that were applied
at the State level.
The State has moved forward aggressively, and quite frankly
with minimal problems in dealing with the reductions in all
three of these pollutants. Clearly, with mercury and sulfur
dioxide, the limits in Chairman Carper's bill complement what
we have done in Maryland, and I find it very, very helpful that
we have national policies established by Congress in this area.
I also find that true with NOx, although I must
tell you I would hope that we could be more aggressive on the
limits on NOx. I think we could be more. I think the
Maryland experience has shown us that we could be more
aggressive in that area, and I hope, Mr. Chairman, we can work
together to take a look at that particular issue.
I guess this discussion, Administrator McCarthy, I find
very helpful. I mean, when you are trying to answer the cost
issues, it is difficult because we do not know what is going to
happen with energy efficiencies, we do not know what is going
to happen with alternative fuels, we do not know what is going
to happen as far as the mix in this country is concerned, which
obviously affects the cost issues when you are trying to reduce
airborne pollutants.
If the sources are no longer used as frequently because of
an energy policy, that is going to have a dramatic positive
impact on the cost issues. And we all hope that we are going to
enact an energy policy for this country that is going to make
us less dependent upon fossil fuels and that should make your,
all of our jobs a lot easier and less costly to the consumer.
And that is what we are all fighting for.
I want to sort of engage you in a discussion as to how
Congress, working with EPA, can do this most effectively. You
point out, and rightly so, you have a responsibility to act,
you are acting, you are going to act, as you are required to
under the Clean Air Act. Congress has responsibilities, and I
think Senator Carper is right in pursuing legislation here to
deal with these three pollutants.
How do we complement each other as we go forward in this so
that we certainly allow you to do what is necessary from a
regulatory view under existing law, but then we come in and
complement what you are doing through the efforts of
legislation that our Chairman has proposed?
Ms. McCarthy. Senator, you ask a very good question, and I
think one of the most basic things that we can do together is
to share information and to answer the questions that you are
asking about what it means for Maryland and what it means for
other States moving forward if Congress takes this action. What
kind of time line should we be looking at? What emissions
reductions are necessary?
One of the challenges that the court told us when we do the
rewrite of the Clean Air Interstate Rule was we had to be
certain and provide data to show that the reductions we were
achieving through that program needed to ensure that no upwind
State was emitting pollution across its boundaries in a way
that would significantly prevent a downwind State from
achieving or maintaining attainment with the Clean Air Act
standards.
And so it challenged us to go to a different level and a
more detailed level of data gathering and analysis that when
the Clean Air Interstate Rule is ready to come out, and we are
hoping in a very short period of time that we will be able to
share that information and we will be able to inform one
another's discussion about how well to move forward.
Now let me, if I could, just for another minute, just say
that the other thing that we can do is to really look at
history and what that has shown us about market programs like
the Acid Rain Program and what did a market based approach do
to help us achieve pollution reductions in a cost effective
way.
And I think one of the things we learned is that the
certainty question is an interesting one because, back when the
Acid Rain Program was beginning, in 1990, we estimated that the
cost would be $8 billion a year. In 2004 the actual cost was $2
billion a year. And that program has achieved benefits at a
cost ratio of benefits to cost at a ratio of 40 to 1. It has
been enormously successful. We did not even anticipate that
right, never mind the over-caution on the part of industry
about what it might cost.
So, what we have learned is, the certainty question is
something that you really cannot get right if you are
predicting that far into the future. You need to understand
that the innovation is there. The business models, the markets
will grow, if you send the right signals.
And the other issue with certainty is that, frankly, there
is very little certainty now. There have been too many laws
that have been remanded and vacated; there are too many laws
that people are waiting with bated breath to see how they are
going to look. And we have an obligation on the part of EPA to
be as quick and as forthright as we can in sort of laying out
that regulatory pathway. But there is no certainty right now.
The utility companies are having difficulty getting permits to
do major modifications and to site new facilities because of
this uncertainty.
And so we should not worry too much about whether it is
going to be certain 20 years from now as much as acknowledge
that we have uncertainty now that is impacting the market, that
is preventing us from making the transition to a clean energy
future, that this bill, and through regulation, we can try to
provide a much more balanced approach and much more certainty
moving forward.
Senator Cardin. I think that was an excellent answer. I
appreciate that very much. I really do think that Senator
Carper's bill helps us in moving forward on the predictability
you mentioned in regards to the three pollutants.
But I tell you, and I think we are working together, but if
we want to give the maximum predictability then we should get
an energy policy enacted in dealing with the global climate
change issues because then you really have, I would suggest, a
much broader area of predictability to allow the market forces
to really work for the desired results.
But I think your answer as to the need for us working with
EPA, Congress together, to give the community a stronger
direction, is well taken, and I thank you for your reply.
Senator Carper. Senator Cardin, thank you for your
questions, and thank you for your very kind words. I appreciate
the nice things that you said about my involvement in these
issues. I would just--I do not think you were here when we said
this, but Senator Voinovich and I worked on this for, I think,
for about 4 years during the first part of the Bush
administration and for a long time and since then, Senator
Alexander has been very much----
Senator Cardin. I know Senator Voinovich's work and Senator
Alexander's work in this area, and it just points out again how
Senator Voinovich is going to be missed after this year. He has
been an incredibly valuable member of the Committee. I
certainly want that to be reflected in my comments.
Senator Carper. All right. I think that there are not many
things that we agree on, but that would be one of them. So,
thank you for that.
Senator Voinovich.
Senator Voinovich. I just want to comment, as a Governor, I
dealt with this all the time. In fact, when I became Governor,
we were not compliant with the national ambient air standards,
and the first thing was to try and get us into compliance
because we had businesses that would just fly over the State
and say I do not want to be in that area.
So, in Senator Carper's example, you used Tennessee and
said that if were able to do this, the air would be cleaner,
and as a result of that the businesses would have less expense
because of the fact that they would not have to put on various
types of gizmos to keep their emissions down. And so you have
to take that and weigh the costs of reducing NOx,
SOx and mercury and then just see how that folds
into the cost of energy.
This is a reality. If you have a situation like my State,
and the ambient air is down because the economy stinks, but if
the economy comes back, a lot of these businesses are going to
look at what their costs are in terms of, their energy costs,
and they will conclude, as one company before we complied with
the ambient air standards, Cooper Tile, and I will never forget
it, they were going to move. But then we go that worked out,
and they stayed, and they expanded.
But you will see the movement of businesses to other parts
of the country where they do not have the problem. So, this is
a delicate balance, and probably I think more about some of
these issues than say Senator Carper and some of the other
Senators because we are a manufacturing State. And one of the
reasons why we are a manufacturing State is we have cheap
energy.
So, that is where I am at right now, that is why this cost
is very, very important to me. How is going to play out? And I
am not--I am well aware of the health benefits that are here,
and sometimes I do not mention them enough. But how do we put
this together so that we can do the health and at the same time
do not kill the goose that laid the golden egg in a place like
my State with, you know, 10.4 percent unemployment. And we want
to come back.
Senator Carper. Thank you.
Did you want to kind of respond to anything that Senator
Voinovich has said?
Ms. McCarthy. I guess, Senator, I just wanted to agree with
you. I mean, I think we are focusing equally, and certainly on
the cost and benefits associated with our rules. We are looking
at the economy as well and looking at energy prices. We know
the economy is difficult right now, and we want to be able to
make the improvement in air quality.
But we certainly want to do it in a way that creates jobs
in a way that enhances the economy and then provides a much
more level playing field across the Nation so that the kind of
changes that you worry about, the relocations, do not happen.
Certainly we want to grow our manufacturing base here in the
United States.
The only thing I will mention is that I think the President
has been pretty eloquent at talking about clean energy as a
transition, as an approach that moves toward clean energy and
brings in renewables and looks at efficiency. But he has also
recognized that that is a transition that we need to
accommodate and that coal will be a piece of that transition
strategy. I mean, it will challenge us, but it is an issue that
he is putting on our plate.
Now, he has recently brought together a task force for
carbon capture and sequestration. He understands that we need
to provide some assistance here, some regulatory certainty on
that pathway as well. But it is a balance, and it is one that
we will be most sensitive to.
Senator Voinovich. Well, the issue is where is our economy,
and how long is it going to take us to get out from under where
we are today. And you know, I think I have talked to you, and I
have written to Carol Browner twice on another matter, but it
is the cost of the combined sewer overflows in the water area.
I have communities in my States, 100 of them, and a 13
percent increase in their water and sewer rates, 13 percent
this year, 13 percent next year. And there is not any kind of
sensitivity. Some of them, they have had businesses that have
closed, and so the cost of that is now coming down on the folks
that remain in the community.
And there seems to be--I think we need to have some
consideration given into all of this. It may be, frankly, to
move the date down 1 or 2 years to realize that we are going
through this situation. We cannot just deal with things and
close our eyes to what is going on in terms of the people that
are out there in our country today that are really hurting.
Ms. McCarthy. The only other thing I will assure you,
Senator, as we are going through our rulemaking process, we
will ask those questions. We will fully explore where the
technologies are available, whether they are cost effective,
how quickly can we anticipate making the kind the shifts and
reductions that we are hoping to achieve. And we will make our
decisions with our eyes wide open, both in terms of the
environmental benefits but also in terms of the costs
associated with any strategy that we move forward with.
Senator Voinovich. Thank you.
Senator Carper. I have just a couple of questions to follow
up. Earlier in your testimony I think you mentioned a couple of
figures that I thought were striking. And a question that
relates to what Senator Voinovich is getting to, how do we
strengthen our mission standards, how to reduce the emissions
of unhealthy substances into our air, and at the same time not
impede our economic growth? You cited a statistic. I think it
was since 1990 maybe. Can you just go back and say that again?
I thought that was an especially pertinent point.
Ms. McCarthy. We talked about GNP, right?
Senator Carper. Yes, or GDP. You talked about emissions
were down by so much, and GDP was up by a remarkable amount.
Ms. McCarthy. Basically, the economy can grow, obviously,
while we clean up the air. Overall pollution emissions have
been reduced by 54 percent since 1980. At the same time, U.S.
GDP, when it is adjusted for inflation, has increased 126
percent.
Senator Carper. You say adjusted for inflation?
Ms. McCarthy. Yes.
Senator Carper. Well, that is good. That is a pretty
striking point.
Another point I want to come back to, one of the burdens
that businesses carry in this country, particularly compared to
other nations with whom we compete, is the cost of healthcare.
I was struck by a number on one of charts that we went through
earlier where we actually could reduce our healthcare costs in
this country by about $2 trillion over the next 15 years.
And I said earlier the cost of the Senate passed healthcare
bill is about $850 billion over 10 years, fully paid for, fully
offset. But that is roughly 2.5 times more in savings than we
are talking about the cost of our healthcare. That is really
striking.
I want to go back to a point raised by Senator Udall when
he was here, just to follow up on some of his concerns about
the West. Will the new air quality standards that the EPA has
proposed for sulfur dioxide and ozone impact the States outside
of the CAIR region? Could you just come back and talk with us
about that? Will the new air quality standards that EPA has
proposed for sulfur dioxide and ozone impact the States outside
the CAIR region?
Ms. McCarthy. At this point, Senator, we are still in the
process of doing the modeling and analysis on the new CAIR
program. But at this point, I can tell you, it looks like it
will be focused in a very similar region as the original CAIR
proposal.
Senator Carper. OK. Thanks very much.
All right. Any other questions for Senator McCarthy? Well,
there was a Senator McCarthy, there has been a couple of them
actually, but----
Ms. McCarthy. I do not want to remember that.
Senator Carper. Well, actually, one of them was pretty
good. Clean Gene.
[Laughter.]
Senator Carper. But we are glad that you could be with us
today. Thanks for working with us. And among the takeaways, for
me, obviously, the points I asked you to come back to, how much
have we seen emissions go down since 1980, what has happened to
our GDP corrected for inflation, coming back to the uncertainty
raised by Senator Voinovich will be raised by Mr. McManus as
well.
When we get to, say, 2015 and mercury standards, 90
percent, that is our cap, and the idea that the EPA at some
point in the future, 2020, 2025 could be beyond that, that is
of concern to some in the utility industry. And we have to
figure out how to address that. By the same token, technology
will get better. We will figure out how to reduce emissions
further.
I remember being here, I think George and I were both here,
for a hearing, I think he chaired it, our clean air
subcommittee, it was a hearing looking at technology for
mercury, about 4 or 5 years ago. And we were trying to figure
out, could we get to an 80 percent reduction, was that
feasible? And that point in time there were a lot of people
saying we cannot even get to 80 percent. Well today, there are
dozens of utilities and plants where we are at 90 percent.
So we know that the technology will get better. We can do
better. The question is how can we avoid tying EPA's hands in
anticipation of that improved technology and actually be able
to provide you with healthier air to breathe and at the same
time be responsive to the needs for certainty on the part of
the utilities? I think we can figure that out, and we will just
work on that.
Ms. McCarthy. Senator, I would be remiss if I did not point
out that the CAIR rule is not the only rule that EPA is looking
at at this point. As you know, we are looking at a new ozone
standard which would be a nationwide standard. We are looking
at the SO2 standard. So, as we are improving these,
the challenge will be a nationwide one. But CAIR itself will be
eastern focused.
Senator Carper. All right. Thank you so much. It was great
to have your here, and we look forward to working with you
going forward in what you described as a mutually reinforcing
partnership. Thank you.
Ms. McCarthy. Thank you for your leadership, Senator.
Senator Carper. Thanks so much.
I am going to ask our second panel to go ahead and come to
the table, and if someone will put their name cards right where
they belong so that they will know where to sit, that would be
great. Thank you.
Welcome to our second panel. I think I have had a chance to
shake all of your hands. It is nice to see you, some of you for
a second or third time. Secretary O'Mara, I see him a lot back
in the First State. It was great of all of you to come, and I
have had a chance to read your testimony, and I look forward to
hearing from you and having a chance to ask some questions.
I am going to give a short introduction, and as I said to
Ms. McCarthy I am going to ask you to keep your testimony to
about 5 minutes. If you go a little bit over that, I will not
rein you in. If we are talking about 10 minutes, we will
probably have to blow the whistle. But the full content of your
written statements will be included in the record.
The first witness we will hear from on the second panel is
Dr. Albert Rizzo. Dr. Rizzo is here with us today on behalf of
the American Lung Association. He is the Chief of Pulmonary and
Critical Care Medicine of the Christiana Care Health Systems in
Delaware, a real fine outfit. Dr. Rizzo's private practice
includes a strong interest in asthma, in pulmonary
rehabilitation and in lung cancer, and he has led national
research studies related to lung health.
I am going to go ahead and just introduce each of the
witnesses, and then I will come back to you to make the first
statement.
Next we have Dr. Michael Durham, President of ADAES. What
does that stand for?
Mr. Durham. ADA Environmental Solutions.
Senator Carper. ADA Environmental Solutions. OK. All right.
His firm is developing environmental technology to enable coal
fueled power plants to enhance existing air pollution control
equipment, maximize capacity and to improve operating
efficiencies. Dr. Durham has over 30 years of experience in the
measurement and the control of air pollution from utility and
industrial sources.
Our third witness tells us he once spent some time in
Syracuse, and we stole him from San Jose to come to Delaware
and be our Secretary of Natural Resources a year ago. We are
glad that he came, and his wife let him and came with him,
although she misses the weather in San Jose.
We had about 3 feet of snow in Delaware last month. We do
not have that very often. She sent him a text message. He was
in Europe, I think on a trade mission with the Governor. She
sent him a text message from Delaware where we were suffering
under 3 feet of snow, and there was one word in that message.
What was that word?
Mr. O'Mara. Liar.
[Laughter.]
Senator Carper. Well, hopefully things are going to get
better. It is going to be in the 50s this weekend, so maybe you
will get out of the dog house. We are glad you are here and we
are glad you are in Delaware, too. Collin O'Mara, Secretary of
the Department of Natural Resources and Environmental Control,
where he oversees air, energy and other environmental matters.
He also leads the Governor's effort to create a thriving green
economy and sustainable natural environment.
And George, you may be pleased to hear that our--and you
may know this, but our fourth witness, John McManus, is a
Buckeye. He and his family live in Columbus, the Columbus area,
and he has a son who is going to graduate just in--what? A
month or so?
Mr. McManus. Two weeks.
Senator Carper. Two weeks from the Ohio State University.
We are both graduates, law school and undergrad, from Ohio
State, so we give you a big Ohio yell to welcome you here
today. And good luck to your son. I have got two that are still
in college and the days that they graduate will be days that we
celebrate for more reasons than one. Others who have kids in
school, you know what I mean.
Mr. McManus is the Vice President for Environmental
Services of the American Electric Power Service Corporation,
and we are very happy that you could be with us here today and
look forward to your testimony.
Dr. Rizzo, you are up first, and we are going to ask Mr.
McManus to hit clean up. So, let us take it from our left to
our right.
STATEMENT OF ALBERT A. RIZZO, M.D., FACP, FCCP, D'ABSM, BOARD
OF DIRECTORS, AMERICAN LUNG ASSOCIATION
Dr. Rizzo. Thank you, Senator Carper. Thank you for the
opportunity to testify today.
Senator Carper. You bet.
Dr. Rizzo. I am Dr. Albert Rizzo, and as Senator Carper
mentioned I am the Chief of Pulmonary and Critical Care at
Christiana Care Hospitals in Delaware. I have been practicing
medicine and treating patients with lung disease for about 25
years in Delaware.
But today I am here as a volunteer of the American Lung
Association's National Board of Directors. In that regard, I am
also here as an advocate for my patients, particularly a
patient like Kristen, a 16-year-old from Middletown, Delaware,
who, despite as much as she can manage her asthma, she wonders
why she has trouble with sports. Also for Joan and Steve who
are from North Wilmington, older patients of mine who have
emphysema. And they get frustrated by the fact that they become
prisoners of their air conditioned apartments during the summer
months when the bad days of air quality occur.
These are quality of life issues, certainly important, but
only a small part of the larger more tragic burden of emergency
room visits, hospitalizations and premature deaths that you
have already heard about, mainly from polluted air.
The American Lung Association urges Congress to pass S.
2995, the Clean Air Act Amendments of 2010. We are proud to
support this bill because we fight for healthy air and
healthier air as a result of this bill will save lives.
We see a compelling and urgent need for Congress to clean
up air pollution from the power plants. Power plants emit tons
of sulfur dioxide, nitric oxides and mercury. Mercury leaves
the smokestacks and settles into our rivers and lakes. It is a
potent neurotoxin that inflicts permanent damage on kidneys,
the nervous system and affects development of the brain.
Sulfur dioxides and nitric oxides leave the smokestacks and
become fine particles in the air, so tiny that they bypass the
body's natural defenses and lodge deep within the lung tissues,
causing damage. Most at risk for these particles are infants,
children, the elderly, and especially those with heart and lung
disease.
Nitrogen oxides from power plants are a key ingredient in
the formation of ground level ozone or smog that blankets much
of our country during the summer and acts as a powerful
respiratory irritant. When inhaled, ozone damages the lung
tissue much like the summer sun burns our skin.
Ozone pollution at levels in the United States today
contributes to early death. The EPA estimates that the particle
pollution reductions of this bill would prevent between 12,000
and 30,000 premature deaths each year by the year 2025. Even as
early as 2012, the EPA predicts that as many as 6,300 to 16,000
lives will be saved.
The American Lung Association publishes a State of the Air
Report each year. In our 2009 report, we showed that 186
million Americans, or 60 percent of our population, live in
counties that receive a failing grade for ozone or particulate
matter.
As Senator Carper knows, thousands of our neighbors in
Delaware are at risk from air pollution. Our report found that
all three of Delaware's counties fail for ozone, and New Castle
County where I live, and I believe where Senator Carper lives,
fail also for daily levels of particulate matter. In New Castle
County alone, more than 11,500 children with asthma are at risk
from the air pollution that can either progress their disease
more rapidly and more importantly can also trigger life
threatening asthma attacks.
Senator Alexander has been very strongly committed to clean
air, and we thank him. His home State has 15 counties that
earned failing grades for air pollution. Blount County, home to
Great Smoky Mountains National Park, bears a sizable burden of
air pollution. Blount County suffered 77 days with unhealthful
levels of ozone from 2005 to 2007 and roughly 26,000 children
and 17,000 seniors in Blount County are at risk from pollution.
Attached to my testimony are the summaries from our State
of the Air Report for each member of the Committee.
The Carper-Alexander bill sets stringent caps for sulfur
dioxide and nitrogen oxides and ensures that toxic mercury
levels will be cut. Importantly, the EPA has the authority to
set tighter levels, if needed, to protect the public or the
environment.
The mercury provisions provide a critical backstop for the
forthcoming mercury Maximum Achievable Control Technology or
MACT rule. This legislation builds upon and strengthens the
existing Clean Air Act. The EPA and the States retain their
critical tools and enforcement authorities. We will not
support, in fact, we will vigorously oppose any changes that
would undermine the enforcement of the new Source Review
Program or other provisions of the Clean Air Act.
Some suggest it would be better to wait for EPA to
promulgate the Clean Air Interstate Replacement rule and the
MACT. We urge Congress, however, and EPA, to move forward
sooner to implement the law and maximize the reduction of these
pollutants.
Our concern is getting the pollution out of the air. Delays
have a real and dramatic cost, a tragic human toll paid in
thousands of lives lost each year. The public has waited too
long for power plants to clean up. The Clean Air Act Amendments
of 2010 demonstrate broad bipartisan support of this goal.
It is well past time to clean up the Nation's power plants,
and please pass this life saving legislation.
Thank you again.
[The prepared statement of Dr. Rizzo follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Carper. Dr. Rizzo, thank you very much. Thanks for
what you do with your life and looking out for the health of so
many of us in the First State.
Dr. Durham, welcome. It is good to see you again. Thanks
for joining us. Please proceed.
STATEMENT OF MICHAEL D. DURHAM, PH.D., MBA,
PRESIDENT AND CEO, ADA ENVIRONMENTAL SOLUTIONS
Mr. Durham. Good morning. I am Mike Durham, President of
ADA Environmental Solutions. I would like to thank Senator
Carper and the Committee for inviting me to update you on the
status of commercial mercury control technology.
ADA is a company that develops and commercializes emission
control technologies for the power industry. We have been
involved in mercury control since the early 1990s and have
recently installed over 50 mercury control systems at coal-
fired power plants generating over 20,000 megawatts of electric
power.
We are currently constructing what is to be the largest and
cleanest activated carbon production facility ever built to
provide high quality, U.S. produced activated carbon to the
power industry. The plant, which is located in northwest
Louisiana, is scheduled to begin producing activated carbon in
the spring.
To provide you with a quick summary of the status of
commercial mercury control technology, I would like to focus on
the following points.
The commercial market is well underway with over 150
contracts awarded to date for mercury-specific control
technologies driven by regulations in 19 States for existing
power plants and Federal regulations on new power plants.
The accelerated development of mercury control technology
has been a major success story with significant improvements in
technologies resulting in higher mercury capture at lower
costs. One such advancement was the use of bromine enhancements
to enable high efficiency reduction of mercury emissions from
western coals at relatively low costs.
As highlighted by the recent GAO report, multiple control
technologies are now commercially available to meet the needs
for controlling mercury from different coals and from various
equipment configurations.
Another important facet of mercury control is the fate of
the mercury once it has been captured. DOA and EPA have
conducted a number of extensive studies on this issue and
confirm that once the mercury is captured onto fly ash,
scrubber sludge, or activated carbon it does not leach out of
these materials, and therefore is effectively removed from the
environment.
I should point out that there are still challenges
remaining in mercury control, especially for high sulfur
bituminous coals. These provide additional opportunities for
technology innovations and further cost reductions.
I commend the Committee for addressing mercury in a multi-
pollutant approach as this takes advantage of mercury capture
that can be achieved as a co-benefit with other emission
control systems. Therefore, costs can be minimized under a
regulatory framework in which decisions about mercury control
can be integrated with decisions to control emissions of sulfur
dioxide, nitrogen oxide and fine particles.
You should also be aware that all power plants are not the
same ,and because of the differences in the age, location and
design of the 1,100 plants in the U.S. fleet there will be
significant plant-by-plant variations in the costs and
technical difficulties of achieving high levels of emission
control.
However, flexibility in the mercury control regulation can
be used to address these differences in plant configurations
and operations with the benefits of reducing overall costs of
implementation, overcoming technical challenges of the most
difficult applications, minimizing impacts on the reliability
of electricity supply, while obtaining overall high mercury
removal.
Flexibility can be as simple as allowing two plants
operating side by side, one achieving 85 percent mercury
reduction and the other 95 percent reduction, to average their
missions to meet compliance. This would achieve the same
environmental benefit while potentially saving the plant tens
of millions of dollars. The recent mercury control regulations
enacted in a number of States provide good examples of
providing flexibility in the form of safety valves, phase in
periods, and averaging between plants.
Let me conclude by stating that the regulations provide
certainty that drive investments, innovations, cost reductions
and the implementation of emission control technology.
Certainty in a mercury control regulation will also impact
growth of new jobs as previous regulations of other pollutants.
In response to State regulations, ADA began building our
first activated carbon plant that created close to $400 million
of construction jobs in an economically depressed parish in
Louisiana. We estimate than a 90 percent mercury control
regulation would require capital investments for additional
activated carbon plants, creating $2 billion in construction
costs and additional high quality operating jobs to run the new
facilities as well as mining jobs to supply the feedstock
material to make the activated carbon.
In order to finance these operations, it will be necessary
to have certainty in the regulations. Building a large scale
activated carbon plant is a 3- to 5-year process which must
begin prior to the regulation. However, construction cannot
begin until the regulations are final. We have found that
obtaining debt financing is challenging when lenders are
concerned that the EPA regulation creating the market for the
product could disappear as a result of legal challenges as was
the case with CAMR.
I thank you.
[The prepared statement of Mr. Durham follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Carper. Thank you. That last point was especially
welcome and timely. Thank you.
Secretary O'Mara, welcome. Please proceed.
STATEMENT OF COLLIN P. O'MARA, SECRETARY, NATURAL RESOURCES AND
ENVIRONMENTAL CONTROL, STATE OF DELAWARE
Mr. O'Mara. My name is Collin O'Mara, and I serve as the
Secretary of the Department of Natural Resources and
Environmental Control under the leadership of Governor Jack
Markell in the great State of Delaware. I would like to thank
Senator Carper for the opportunity to share our thoughts on the
proposed amendments to the Clean Air Act to establish a multi-
pollutant regulatory program for the electric generating
sector.
I would also like to introduce my Air Director, Ali
Mirzakhalili, who has been integral to the air emission efforts
in reducing emissions in the State of Delaware.
Senator Carper. Let the record show that I can barely see
Ali sitting right behind Collin. I can barely see his lips
moving while you speak.
Mr. O'Mara. I will take responsibility for butchering his
last name again.
[Laughter.]
Mr. O'Mara. I would be remiss not to begin my comments
without recognizing first Senator Carper's steadfast dedication
to our environment in Delaware and his tireless efforts to
ensure that all Americans have the right to clean, healthy air.
I specifically want to recognize his leadership in the area of
diesel emission reductions and the introduction and funding of
the Diesel Emission Reduction Act which has enabled us in
Delaware to implement a number of diesel retrofit activities,
activities that would not have otherwise been possible without
his leadership.
So, thank you, Senator, for----
Senator Carper. You are very nice to say that, but I have
been joined at the hip with this man over here, George
Voinovich. I have been drafting on him, as we say in NASCAR,
drafting on him on diesel emissions for a long time, and
together we have done great work. And we applaud what Delaware
is doing----
Mr. O'Mara. On behalf of Delaware, thank you, Senator
Voinovich, as well.
Every year, millions of people across the country and the
800,000 residents of Delaware are exposed to unhealthful levels
of air pollution, resulting in lost work days, hospitalization,
respiratory and cardiac diseases, premature mortality, and
billions of dollars of adverse impacts on our economy. Delaware
is not immune to these challenges by any stretch, and these
challenges are correlated to the air pollution that we face in
the State. And unfortunately, in Delaware we face some of the
highest rates of cancer and respiratory disease in the Nation.
To provide cleaner air to our citizens, Delaware has
adopted many regulations ranging from rules for inspection and
maintenance of automobiles, standards for consumer products,
requirements applicable to many industrial sources, and we are
advancing energy efficiency, renewable energy activities as
rapidly as possible.
As a result, we have seen our air quality improve over the
years. And last year Delaware had no exceedances of the old
0.08 8-hour ozone standard, and we are working hard to figure
out what is needed to meet the future ozone standard which will
certainly be lower than the 0.075 parts per million.
One of the greatest regulatory successes that we have had
is the adoption of multi-pollutant regulations for the coal and
oil fired electrical and gas generating units. The outcome-
driven regulations establish performance standards for
NOx, SOx and mercury to be met by each
unit. We found that these controls are necessary to meet the
regulatory limits. But they are also technically feasible and
highly cost effective.
The coal-fired units are all meeting the mercury emission
reductions in excess of 80 percent and on track to meet
additional reductions of 90 percent by 2013. The units that are
remaining in operation are also meeting the first phase of the
nitrous oxide and sulfur dioxide reductions and are on track
for the final compliance phase which begins at the end of 2011.
For these and other efforts, Delaware is recognized as
having one of the more robust air pollution control programs in
the country. We have also worked with our regional partners in
the Ozone Transport Commission and have adopted programs to
reduce emissions generated within the Ozone Transport Region.
And most notable, and perhaps most effective of such
programs, was the OTC NOx Budget Program which
targeted NOx emissions from the EGU sector, which
was later mirrored and adopted by the EPA in the NOx
SIP Call.
Unfortunately, despite this progress, Delaware's air
quality still fails to meet attainment standards, mostly
because of high levels of pollution imported from other States.
As Senator Carper often says and said this morning, Delaware
sits at the end of America's tailpipe. We are heavily impacted
by the air emissions coming from the West. The most significant
contributors of these are the emissions and air pollution from
the hundreds of uncontrolled or poorly controlled electric
generating units in upwind States.
In addition to air quality and associated health cost
impacts from these sources, this inequity places consumers in
Delaware who depend on power from cleaner EGUs in Delaware at
an economic disadvantage compared to those in upwind States who
have failed to implement such controls. And this argument is
central to our pending 126 petition with EPA.
As Senator Carper has said, air pollutants do not recognize
State boundaries. And it is with this backdrop that we are here
today to lend our support to a bill that proposes a national
solution to an elusive national challenge of improving air
quality by addressing the emissions of multi-pollutants from
the EGU sector.
Previous attempts to gain reductions from this sector prove
that controls are feasible and highly cost effective.
Unfortunately, previous efforts did not go far enough. Today,
80 percent of the SO2 emissions nationwide come from
uncontrolled coal-fired EGUs and only 25 percent of the EGUs in
the Nation have controlled SCR to control NOx.
Significant emission reductions are possible and achievable
from this sector and without a significant lead time. And after
the adoption of Maryland's Healthy Air Act, as Senator Cardin
referenced earlier, nine scrubbers and eight SCRs were
installed on the affected EGUs within 2 years.
The Clean Air Act Amendments of 2010 introduce a tough and
meaningful national SOx cap which we anticipate will
result in installation of controls on many of the currently
uncontrolled EGUs. SOx emissions are a precursor to
fine particle formation and reductions associated with this
bill will have a significant public health benefit in Delaware
and across the country.
The bill also proposes an aggressive 90 percent reduction
in mercury and builds upon the best practices of Delaware,
Maryland and other East Coast States. The bill preserves
States' rights under section 110 and 126 of the Clean Air Act
and it does not interfere with the New Source Review
provisions.
The certainty that comes along with this legislation will
aid States and industry for planning for the design,
permitting, fabrication and installation of controls which is
important to both regulators and industry alike. By focusing on
outcomes, this bill is likely to spur great innovation because
it will provide predictable targets for industry to meet and
sufficient lead time for commercialization of even more cost
effective technology, as my colleague just mentioned.
The bill provides EPA with the authority needed to
implement phase one of the CAIR rule, and we would encourage
the consideration of additional EPA authorities for adjusting
the sulfur dioxide emission budgets and annual and/or seasonal
NOx budgets as necessary to protect public health,
meet current and new standards, and address transport emissions
as new science becomes available.
Finally, I would like to mention briefly the 53 percent
nationwide reduction in NOx. This is an important
step forward. On this point, please let me share our experience
with you in Delaware.
What we have learned through our collaboration with the OTC
is that controlling NOx emissions from EGUs may be
the silver bullet for meeting ozone standards. We have learned
that significant NOx reductions are feasible, cost
effective and necessary for us to reach attainment, and readily
achievable through existing cost effective technology that is
improving every day.
We believe that adopting a more aggressive approach or a
more accelerated implementation time line for NOx
would help States like Delaware achieve attainment of the ozone
standard even more quickly than would be otherwise possible.
In conclusion, we would like to thank Senator Carper for
his leadership. We believe that the proposed legislation
represents a very important step forward in reducing harmful
emissions from EGUs across our Nation and will improve health
outcomes in Delaware and across the country.
We look forward to working with the Committee as you
continue to refine and strengthen this significant legislation.
We thank you for the opportunity to be with you today, and we
look forward to your questions.
[The prepared statement of Mr. O'Mara follows:]
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Senator Carper. Thank you for your very thoughtful
testimony and for your very kind words as well. We appreciate
your leadership and your energy, the energy that you have
brought to Delaware and clean energy, clean energy to our
environment into our economy.
Mr. McManus, again, welcome. Sometimes, when I find out
folks at the witness table are from like Ohio or Ohio State, I
will start off their introduction by saying OH to see how they
respond.
Mr. McManus. IO.
Senator Carper. OK, he is an Ohio State guy. For those of
you who have never been to an Ohio State football game, one
side of the stadium the fans call out OH and the other side IO
and they do it forever, especially when we are playing
Michigan. And it is quite an exciting moment.
But we are delighted that you are here, and in the spirit
of trying to figure out how to work through this together and
come up with a way that will enable our industries to make
money and for us to clean up our environment, and provide some
certainty not just for AP but also for the company that Mr.
Durham represents and for the folks that are counting on us to
help clean up our air as we go forth.
So, thanks, and we welcome you.
STATEMENT OF JOHN M. MCMANUS, VICE PRESENT, ENVIRONMENTAL
SERVICES, AMERICAN ELECTRIC POWER
Mr. McManus. Thanks, Chairman Carper, and the Committee. I
appreciate the opportunity to participate in today's hearing.
AEP has achieved very substantial emission reductions over
the last two decades. Our efforts began in the 1990s under the
Acid Rain Program and continued with the NOx SIP
Call and the CAIR Program in the past decade. In the last 10
years our annual SO2 emissions have been reduced
600,000 tons, and our annual NOx emissions have
declined 365,000 tons. We also know that we have achieved
significant mercury emission reductions as a result of our
SO2 and NOx emission controls.
As the first phase of CAIR has taken effect in 2009 and
2010 amid some of the most difficult times our country has
faced, our customers have shouldered the cost increases
associated with these significant investments. We expect this
transformation of our coal fleet to continue in the coming
decade, even without new legislation.
We know that there will be new requirements for further
emission reductions in the future. We heard from Administrator
McCarthy this morning about what EPA is working on. Although
committed to working with EPA on the development of future
control requirements, we have concerns about the timing of
compliance associated with multiple and overlapping programs,
as well as the stringency and structure of the underlying
regulatory requirements.
Clean Air Act Amendments that achieve environmental
objectives with reasonable schedules and compliance flexibility
could be extremely helpful. We have concerns about the Clean
Air Act Amendments of 2010 as currently proposed. While the
bill would retain the flexibility of regional emission programs
for SO2 and NOx, other provisions in the
proposal are troublesome and would unnecessarily increase the
cost of compliance.
AEP applauds the structure of the SO2 and
NOx programs in the bill, with the reliance on an
allowance based system. However, the schedule for implementing
the new program's more stringent emission caps may be too fast.
Under the proposal, the first tighter caps apply in 2012 with
EPA rules to establish allocation due at the end of 2011. This
allows only 1 year for implementation.
Increasing the stringency of the caps in 2012 may create
major logistical challenges for the electric power sector.
Companies will not have sufficient time to schedule outages and
install emission controls that may be necessary for meeting new
reduction requirements. The bill should provide a longer
planning horizon before tightening the SO2 and
NOx emission caps.
The bill would establish a much more aggressive allowance
auction program than currently exists under the Acid Rain
auction. This program to auction both SO2 and
NOx allowances will unnecessarily add to the costs
of compliance with no incremental environmental benefit and we
believe should be eliminated from the program.
The bill prohibits EPA from distributing NOx
allowances to affected units based on heat input fuel
adjustment factors under the annual NOx cap-and-
trade program. The elimination of fuel adjustment factors would
penalize coal-fired generation and provide a windfall of
NOx allowances to gas- and oil-fired generation. The
bill should direct EPA to use fuel adjustment factors in
allocating NOx allowances as provided in the current
CAIR rule.
The bill requires EPA to promulgate, by January 2012,
source-specific standards for reducing mercury from coal-fired
units with an objective of achieving at least a 90 percent
reduction overall in emissions from the entire source category.
AEP agrees with the bill's focus on reducing mercury emissions
from coal-fired power plants. However, we have significant
concerns about the achievability of a 90 percent reduction
level for the source category as a whole.
We are also concerned about the January 2015 deadline to
achieve the mercury performance standard. This deadline
provides only 3 years to achieve compliance once EPA
promulgates the new standards. The bill should provide affected
utilities with more time to develop and implement a compliance
strategy for meeting the mercury control requirements.
As the bill is currently written EPA is not relieved from
the plan to set standards for other non-mercury hazardous air
pollutants. Regulation of these non-mercury HAPs is a
significant concern.
The focus of only mercury in the bill is consistent with
the results of the study that EPA conducted under section
112(n)(1)(A) of the Clean Air Act which concluded that there
was not sufficient public health risks for non-mercury
hazardous air pollutants emitted from coal-fired power plants.
Given the results of that study, we believe the bill should
expressly limit EPA's ability to regulate non-mercury HAPs
emissions from coal-fired power plants.
In summary, AEP recognizes that there are many
environmental drivers for additional emission reductions from
our power plants, and we are already planning for many of these
reductions. However, it is critical that any comprehensive
program like the one envisioned in the Clean Air Act Amendments
of 2010 be structured in a way to allow for cost effective
implementation of reductions on a reasonable schedule so as to
minimize the impacts on our customers and on the reliability of
the electricity grid.
I would like to thank the Committee would the opportunity
to participate today. I welcome your questions.
[The prepared statement of Mr. McManus follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Carper. We were glad that you could come. Thank you
for joining us, and thank you for your testimony.
I am going to ask Senator Voinovich to lead off the
questioning for this panel.
Senator Voinovich. Thank you, Senator Carper.
Mr. McManus, GAO has done a study--and it has been
mentioned several times in the testimony written--supporting a
90 percent stack by stack reduction in mercury emissions. But
that study focused on a small subset of units, 25 out of
several hundred coal units. GAO even acknowledged in their
study that the results only applied to about three-quarters of
the coal fleet based on their extrapolation of boiler
configurations and coal type.
In sum, their results do not support that all units can
achieve this 90 percent removal. Can you speak to your
company's experience with mercury coal technology and the
impacts that Senator Carper's proposal might have on the costs
to your customers?
Mr. McManus. Yes, Senator. We have been very active in
trying to understand mercury control technology since the Clean
America Rule was proposed. We have tested, on one of our large
units, it has an SO2 scrubber and an SCR for
NOx----
Senator Voinovich. Is that the Gavin plant?
Mr. McManus. At Gavin plant, yes, and the coal benefit
reduction in mercury. And we have seen substantial reduction in
mercury, but it does not reach quite 90 percent. So, that is
one concern we have, that if a lot of the reduction is to come
from this combination of SO2 and NOx
controls, can you reach 90 percent with that combination? We
got in the 80s, but we did not quite get to 90.
We also have looked at activated carbon injection into
existing precipitators. We work with ADA, actually, on some of
that program. And we have seen varied results there on a unit
at the Conesville plant, which burns a high sulfur coal. We saw
a little mercury reduction because of an interference with
sulfur dioxide and the GAO report actually points out that that
is a complication on some high sulfur coal units.
We have also tested it on a unit with primarily Powder
River Basin coal, and we saw substantial reductions there. We
have actually implemented full scale on two 1,300-megawatt
units in Indiana and activated carbon injection system. We are
in early stages of operating that and do not have good data yet
on the overall mercury reduction, but it has been very
promising.
So, I think the developments in technology are very
promising. The GAO report points to that. But it is on a
limited number of units. And I did find interesting that three
of the specific areas that they identified as a challenge,
sulfur trioxide, interference with higher sulfur coal, units
with hot side precipitators and lignite units, we have all
three of those circumstances on the AEP system. And while we
see promise in the technology and improvement, we have
significant concerns still as we look at our system and how you
would apply this.
A key aspect of it would be what kind of flexibility can
you provide in the rules. So, we would really encourage, as you
look at this provision in the bill, providing guidance to EPA
on what types of flexibility they can provide as they establish
the standard, because flexibility would be very important.
Senator Voinovich. The last time I looked at this real
carefully, one of the arguments that was made was that the
stage of the technology it would be extremely expensive for you
to bring that technology in and that you were far better off
putting the money into NOx and SOx
because you got the coal benefits in terms of mercury.
And you are saying that, say the Gavin plant, you have done
that, it has taken you up to what, 80 percent? And at this
stage of the game, you probably have to find, depending on the
time limit, some other technology that Mr. Durham may be
selling or somebody else, to put that in. And of course if you
do that, then you have got some impact, I would suspect, on
your rate payers.
Mr. McManus. Yes, that is correct. With Gavin as an
example, if we can achieve, you know, 80 to 85 percent with the
coal benefits, to try and put an incremental technology on
there to get that small difference to get to 90 percent, the
sort of cost benefit of that is it is going to be more
expensive because you are trying to get just a small increment.
The activated carbon technology--and Dr. Durham's testimony
shows this--it is a relatively low capital cost and really
looks like a good approach. But if you have to go to more
extensive control technologies that are much higher capital
costs, that is when the costs go up very high, and the impact
on the rate payers would be significant.
Senator Voinovich. Thank you.
Senator Carper. Let me just follow up with that.
Dr. Durham, do you want to comment at all on the exchange
we just heard between Senator Voinovich and Mr. McManus?
Anything you want to add or observe?
Mr. Durham. I think what is pointed out is the
characteristic that all plants are not created equal. And so a
lot of the data is around a lot of averages so, and as with
every average there are performers that do a lot better and a
lot worse. For example, the activated carbon, and what was
mentioned in the GAO report, is looking at ones that are very
low capital costs, relatively low operating costs, and some of
those are getting well above 90 percent.
But there are these other cases. When you get up to a
certain level, that could be an 80 percent, an 85 percent, and
once you hit that roof, then the costs really go up to try to
get further. We talk about variability in costs. We are not
talking about 10 or 20 percent. When we come to a difficult
situation that is operating at 80 or 85, it may be $1 million
or $2 million a year of activated carbon to get to that level.
To continue to push that up may take three times that amount
just to go that much further.
So, those kinds of examples are why you need to be able to
average that plant that was overachieving and getting 95
percent with that one that is getting 80 or 85 percent. That
averaging does not create hot spots, because, as you know, when
you are looking at an overall 90 percent reduction you cannot
have many 80s or 70s in there and still maintain 90 much less
0. So, we are really talking about chasing very small numbers
with very large dollars if you do not have that flexibility.
Senator Carper. Secretary O'Mara is quite familiar with the
large coal-fired plant, actually four plants, that we have in
the southeastern part of Delaware at the Indian River Inlet and
has been very actively involved with NRG, the utility, to cause
them to dramatically reduce their emissions in the years ahead.
And as it turns out it has become a major stakeholder in
offshore wind provider, which will hopefully be developed
enough for the first windmill farm off the coast of our country
in about 2 or 3 years.
At Indian River we have four plants. Some of them are
pretty small, but one of them I think is quite large. But if I
understand the flexibility you are talking about, Dr. Durham,
they are all coal-fired plants. Hypothetically, if they had to
reach a reduction of 90 percent mercury by 2015, if two of the
plants were under 90 percent and two could be over, but if they
are all co-located, the deal is at the end of the average of
the four has to be 90 percent. Is that correct?
Mr. Durham. That is correct, or some whatever its average
within the plant or larger, but the environmental benefit is
the reduction in mercury and whether you have got a few pounds
from one and few more pounds from another, the environmental
benefit of the reduction is the same.
Senator Carper. OK. Now what if instead of having those
plants all co-located together in one part of Sussex County
they had one or two in Sussex County, another north in Kent
County, and another one all the way further north in New Castle
County. Now, in that case, they could not, they would not have
flexibility to balance one another off, would they?
Mr. Durham. Well, it depends on how you write the
regulation. But again, if you are getting up to the 70-80
percent level at every one, what you have to do in order to
achieve an overall 90, you are still only talking about very
small differences between those plants.
Senator Carper. All right. Thank you.
If I could, I want to come back to Mr. McManus again, if I
may, about the question, particularly on SOx
targets, may be too far too fast. Talk with us, if you will,
about the ability under the Acid Rain Program to bank
allowances. My understanding is that utilities have, I think
under the Acid Rain Program the cap on SOx is about
9.3 million tons. Does that sound about right?
But I understand that utilities have been below this mark
for the last several years, allowing companies to bank a large
number of sulfur dioxide allowances. And you know better than
we do what you all have in the bank. But how might that help
you, or help AEP and others, to meet this challenge of too far,
too fast?
Mr. McManus. The banking provision is clearly very helpful
to be able to rely on title IV allowances that are in the bank
and have not been used to meet these caps.
The concern we have, and it really kind of goes to the
first cap, EPA would have until the end of 2011 to establish
new allocations going forward, and without knowing what those
allocations are until 1 year before that cap kicks in, it is
hard to say whether the bank is going to fully cover the needs
in that first cap period.
And what we have seen in the title IV program, in the
NOx SIP Call and the CAIR Program, is companies tend
to develop their compliance plans based on the allocations they
receive and not assume that they can rely on the overall market
to cover their needs because of the risk of relying on a
market. If the market is not there, you do not have controls
installed. And so again, with just 1 year between that
allocation deadline when EPA sets the new allocations in the
first cap, it creates uncertainty and concern.
On the NOx side, I think our concern there is
maybe more on the Western Zone than the Eastern Zone because
the NOx SIP Call is in place, and the CAIR
NOx Program is in place now in the Eastern Zone. We
have seen significant reductions. As I indicated, the
reductions on our system in the last 10 years, it has been 75
percent reduction in our NOx because of the
NOx SIP Call and CAIR's annual program. So, we have
seen significant reductions.
We do have some plants in Oklahoma that would be in the
Western Zone. If that is a brand new program in 2012 that would
require them to put controls on to meet a new NOx
cap; that is a very short amount of time to allow us to do
that.
Senator Carper. OK. Thank you.
Senator Alexander.
Senator Alexander. Thanks, Tom. These are very helpful
conversations.
Mr. McManus, how many coal plants do you have in AEP?
Mr. McManus. We have about 20 or so coal plants, the total
number of coal units is in the 40s.
Senator Alexander. How many have SOx and
NOx controls on them now? Roughly.
Mr. McManus. Probably roughly about a dozen, and they tend
to be our largest units----
Senator Alexander. Big ones?
Mr. McManus. From 700 megawatt to 1,300 megawatt. So, it
makes up a significant percentage of our total capacity.
Senator Alexander. So, typically that is a scrubber and SCR
both?
Mr. McManus. In our eastern fleet, scrubber and SCR,
because we do have the NOx requirements in the east.
We do have two units in our western fleet that just have
scrubbers.
Senator Alexander. They just have scrubbers. And as I
understand what you are saying, and I have heard from others,
you are saying on some of those coal plants if you put on both
the scrubber and the SCR, the SOx and NOx
controls, you can get a lot of the mercury. Does it get into
the 80s? Is that what happens? Well, let me not put words in
your mouth. How much can you get with just those two devices?
Mr. McManus. The data that we have is for our Gavin Plant
which is in southeastern Ohio, and it showed reductions in the
80 to 85 percent range. But it was based on short-term
emissions tests, not on long-term monitoring data. So, we are
very encouraged by that level, but we do not have a good sense
for what we can achieve and maintain from a long-term
perspective.
Senator Alexander. But to reach 90, then, you would have to
buy some other technology like Mr. Durham's technology and add
it to the SCR and scrubber?
Mr. McManus. Correct. We would have to do something to
supplement what we are getting in the coal benefits.
Senator Alexander. But Mr. Durham, I understand you to be
saying that--you are sort of arguing against yourself, aren't
you, if you argue for an average because if they can get it to
85 without your device on some plants, that is what they would
do, and then they would not buy your product. Is that not
right?
Mr. Durham. Well, our best interests are based around
keeping coal as a viable option for power generation. So, it is
in our best interests to make this as inexpensive as possible
and still achieve the goals of reducing emissions.
Senator Alexander. Yes, and I think our country's best
interest is the same, which is to continue to have coal as a
low cost big supplier of electricity. So if under our
legislation we do not allow you to go below, you have to be at
90 percent smokestack by smokestack, so would it be possible to
say, to put a floor under that? Would it make any sense to say
that while you might be able to average your smokestacks to 90,
but that in no case would any smokestack go below a certain
level? Mr. Durham, what would you think of that?
Mr. Durham. I think any form of flexibility helps. Because,
you know, for example, on the scrubbers and SCRs, there are
units that are getting over 90 percent. But if you are stuck at
that 80 percent, the additional equipment, to give you an
example, a new power plant that is being built that has to meet
a 90 percent because of Federal regulation will have not only
that SCR and a wet scrubber, they will have to add activated
carbon injection, they will have to add adding another chemical
alkaloid to control the SOx, they will have to add a
wet ESP. And so you are talking about these huge incremental
changes to get from that 85 to a 90. That is a must just to
make sure you can get there.
Senator Alexander. I understand. But you would not want,
Mr. Durham, but you would not want to let any smokestack go
very much below 90 because there is some evidence, maybe a lot
of evidence, that mercury sort of goes up and comes down,
unlike the SOx and NOx, which blows away,
and so the people who live in the area of that coal plant would
be exposed to more mercury.
What would be a reasonable level below 90 that any
smokestack could--what would be the floor?
Mr. Durham. Well, again, if you are looking at having to
average 90 percent, you can see you cannot get--you know, this
is kind of like trying to maintain an A average in school and
how many 70s----
Senator Alexander. But Mr. McManus has 40 plants, so you
might have one that is 40 percent and the rest at 90, and the
people who live around the one at 40 percent would not be too
happy.
Mr. Durham. I think that would be difficult to do.
Senator Alexander. Mathematically difficult.
Mr. Durham. Mathematically difficult to do.
Senator Alexander. Mr. McManus, any comment on the
averaging from you about the opposing kinds?
Mr. McManus. I agree with the point that if the target is
90 percent you cannot have many units that are significantly
below 90 percent and meet your average. But to the extent that,
in the direction that is given in the bill to EPA as it
establishes these rules, you can encourage them to provide as
much flexibility as possible. It certainly would help.
The Clean Air Mercury Rule had a national trading program
for mercury, and we still do not understand why that was a
concern for many people. But does it make sense to do something
that is on a smaller regional basis that would allow a form of
trading or averaging a number of sources across a fleet or
across a State? Those types of things, I think, can only help
to meet the target.
Senator Alexander. I appreciate the comment, Mr. Chairman.
Just my own thought, I am not in favor of trading mercury, but
some averaging might be worth our thinking about.
Senator Carper. Thank you. Laura Haines is sitting behind
me, on our staff, and reminded me that we do provide under our
legislation some flexibility for EPA on this front, and I do
not think they go in and do it on a boiler by boiler basis. But
they are sort of interested in the overall site.
And I use my example of the Indian River Inlet facility
where they have four plants. And one could be at 80, and the
others could be at like 93. Would they be in compliance? But
your point is well taken, and we think that we have invited
some flexibility there for EPA, and we will look to see if
there is some reasonable way to do a bit more.
Mr. Durham. Senator Carper, that plant is a good example
because it is different ages of plants, equipment
configurations, and so if you had that flexibility, just the
planning process, it would be cheaper to get mercury control of
some than the others. So, looking at each one of those as a
separate entity makes that easier.
Senator Carper. I want to come back to Secretary O'Mara, if
I could, and Dr. Rizzo, if you would want to comment on this as
well, that would be fine.
We have heard, at least from some northeastern States, that
our nitrogen oxide targets for the East are not strong enough
to help States meet new EPA ozone air quality rules. And I
would just say, if we made some adjustments, made some
adjustments to the Seasonal Ozone Program, Secretary O'Mara, do
you think that somehow we could address those concerns?
Mr. O'Mara. Senator Carper, I think that it helps a lot.
The challenge that Delaware faces is, frankly, if we controlled
every unit in the States to the highest possible of 100
percent, we are still not in our attainment because of the
import of emissions. And so I think that having seasonal
allowances established by EPA would help.
I think there are some challenges with the approach that we
need to work with EPA through. For example, EPA right now is
looking at lengthening the ozone season for some States that
are out of attainment. So, for example, Delaware's ozone season
could be from March to October, compared to Massachusetts being
from April to September.
And we also need to look at the winter peaks from
NOx that could result. But I think that clearly it
is a step that helps address some of the concerns that we have
to get into attainment as quickly as possible to bring the
benefits of clean air to our residents as fast as we possibly
can.
Senator Carper. Mr. McManus, let me just ask you to kind of
react to that a little bit. Do you think that it might be
possible for us to meet a tighter mark for NOx in
the East, and again, going to this idea of having some seasonal
adjustments, adjustments to the Seasonal Ozone Program, is that
a live option in your view?
Mr. McManus. Yes, Senator, I think it is an option. The key
to an issue like that is the timing. We have had, as I have
indicated, we have put selective catalytic reduction on a lot
of our units, our biggest units. But we do have a lot of
smaller units that do not have that technology. We use more
combustion controls, low NOx burners, that type of
control, but they do not achieve the level of reduction that a
SCR does.
If we want to look at putting additional SCRs on, that is a
long lead time capital program to do that. So, the timing of
meeting an entire cap is pretty critical as much as sort of the
level of that cap.
And then the other factor is, we do have a lot of smaller
units that are of the 1950s vintage. We are looking at a lot of
those units, and a lot of other companies are as well, in terms
of how much longer would we continue to run those? Would you
invest in the pollution control technology, the cost of higher
capital scrubbers and SCR in those units? Would you make a
decision to shut them down at some point, convert to natural
gas, replace them with natural gas?
So, the timing of that is important as well in terms of our
need to have capacity available to meet electric demand in
balance, putting controls on, maybe retiring some units,
building new units. So, timing is critical. But a lower cap, I
think, clearly could be achieved.
Senator Carper. Do you want to comment on that at all,
Secretary O'Mara? You do not have to, but if you want to.
Mr. O'Mara. Well, I tend to agree that a lower cap could be
achieved. The experience in Delaware has been that it is
possible to put controls on these units at a fairly rapid pace.
And some of the choices that have been faced by NRG, for
example, that you referenced there, are raising some
interesting issues about energy supply in the State of
Delaware.
The one example I will use is a conversation we have been
having in the State about Unit 3 at the Indian River Power
Plant that you referenced.
Senator Carper. That is the largest of the four, is it not?
Mr. O'Mara. Right. And they were planning on going ahead
with all of the air controls, they did not see a major impact
from the price of the air controls, they were still fairly
competitive. They also had some interests in water issues at
that location, concerns about fly ash, concerns about carbon
emissions as well. And the company has decided that it is much
more effective to put their investment into offshore wind and
other cleaner sources of power than to try to rehabilitate an
older unit.
Now, contrast that with a unit that is 15 years newer than
that unit where they have decided to put on the emission
controls that are required similar to what would be required in
this bill, and that unit is still competitive, providing, you
know, cleaner, but also cost competitive electricity.
And so I think that it does make sure that it protects the
consumer, but it also encourages investment in innovative
areas. But it gives people the flexibility to make that choice
and ensure that we have both clean air and reliable power.
Senator Carper. Good. Thank you.
If I could, for Dr. Rizzo, as a physician, as a leader in
our medical community in Delaware, but also here representing
the American Lung Association, can I just ask why does the
America Lung Association support NOx caps?
Dr. Rizzo. Well, as a non-profit and as a vision of a world
without lung disease, anything that will improve pollution--and
the lower nitric oxide is, the less ozone there is at ground
level--will improve how people feel on a day to day basis, not
only those who already have lung disease, but all of us are
affected by these in different degrees. And seasonal variations
occur because of the heat and certainly because of the ozone in
the region that we deal with in the Northeast.
But improving NOx and sulfur dioxide, anything
to get those much, much lower than they are and with more rapid
enactment of these is what the Lung Association pushes.
Senator Carper. All right. Thanks very much.
Senator Voinovich.
Senator Voinovich. These units--how many units do you have,
coal-fired units?
Mr. McManus. We have total, around 50, I believe.
Senator Voinovich. Fifty coal-fired units?
Mr. McManus. Coal-fired units, yes.
Senator Voinovich. OK. And many of them are smaller in
terms of--what would you say the average megawatts would be
from them, the smaller ones?
Mr. McManus. The smaller units tend to be 100- to 250- or
300-megawatt units.
Senator Voinovich. If we did something with the technology
on modular nuclear, those might be some alternatives for those
facilities?
Mr. McManus. We have looked at that; can you put in place a
technology that can handle the full gas from a number of units
on one site and get the economy of scale benefit from a cost
perspective. So, that is a possible approach that could be
used.
Senator Voinovich. OK. One of the things that we talked
about is that--particularly when we were talking about carbon--
is that in most of those plants you could make them more
efficient. But the reason you do not is because, and Dr. Rizzo
said, for God's sake, do not bother with New Source Review. So,
what happens is that the utility decides to kind of keep it
where it is at and not try to improve the efficiency. In other
words, they would be producing more electricity, and you are
getting the same amount of NOx, SOx,
mercury and greenhouse gases.
So, with the New Source Review, your alternative would be
on these smaller coal-fired plants to shut them down and to
move toward natural gas. Is that correct?
Mr. McManus. If ultimately you decide not to make the
investment on pollution control technology, the alternative
really is to shut them down, and the lead time to build new
plants now, the lead time for a new natural gas plant is
shorter than a coal plant. So, there would be a tendency to
look at natural gas because you can get it in place quicker,
again to meet the energy demand that we are trying to meet.
Senator Voinovich. Do you think as this legislation been
drafted that you are going to see a lot more utilities shutting
down and moving to natural gas? And if you do, what impact
would that have at all in terms of the costs to the customer?
Mr. McManus. I think under this legislation, under the
existing regulatory program that Regina McCarthy talked about
this morning, and just looking at the market in general, and
then thinking ahead to possible CO2 requirements,
that we will see more and more units being shut down and a move
to natural gas.
One example of that is that Progress Energy late last year
announced their plans to retire a number of their smaller,
older units by the 2017-18 period, in large part due to
anticipated environmental cost exposure. So, to me that was
sort of an early indicator of where we may seem more in the
industry go in the future.
Senator Voinovich. So, if it was passed this way, you think
there would be a tendency to shut them down and move toward
natural gas?
Mr. McManus. I think that is a real possibility, yes.
Senator Voinovich. I do not know the difference between the
cost of producing electricity and natural gas versus coal. Is
it about the same or a little bit more? What?
Mr. McManus. Natural gas will tend to be more expensive.
The key there will be the gas price. And what we have seen in
recent years is wide fluctuations in natural gas prices. Most
recently it has come down a little bit, in part because the
economy just is not that robust now.
The shale gas resource is going to be pretty critical going
forward in terms of, you know, can you meet the gas demand and
at what price. So, that is a big uncertainty. But a potential,
clearly a big potential going forward, to be able to rely on
natural gas at a more acceptable cost than what we have seen in
the past in gas prices.
Senator Voinovich. And the, in terms of natural gas, tell
me, is it substantially--I should know this but I do not--in
terms of NOx, SOx, mercury, greenhouse
gas emissions. Let us just do the three Ps. How much, using
natural gas, would bring down those pollutants?
Mr. McManus. Burning natural gas for electricity, you do
not have any SO2 emissions, you do not have any
mercury emissions, you do have nitrogen oxide emissions, but
they would be lower than typically in a coal plant, but that
will depend on what nitrogen oxide control technology you have
on the plant.
Senator Voinovich. All right.
So, Mr. Rizzo would be real happy with more gas because of
the fact that it would take care of the three pollutants that
we are talking about in this legislation, I would suspect?
Mr. McManus. I will pass. I will let Dr. Rizzo answer for
that.
Dr. Rizzo. Yes.
[Laughter.]
Senator Voinovich. Well, I think that is about it. The only
other last question would be that, I thought under the CAIR
rule, that States like Delaware, they took into, for example--I
mean, do you have an idea of what percentage--you are not
meeting the ambient air standards right now? And you have done
your thing, with getting them to come down and lower their
levels of emissions. You still have a lot of automobiles and
other things. But about what percentage of your problem that
you have and not meeting your ambient air standards comes as a
result of transport of ozone?
Mr. O'Mara. I am just making sure I have the right number.
On some of these, we have estimated that it could be as high as
90 percent from out of State sources given the size of the
State compared to the generating sources that are close to us.
And that is even with the improvements to Maryland's air
quality in the past few years.
Senator Voinovich. Ninety percent from transport?
Mr. O'Mara. Ninety percent.
Senator Voinovich. I will be darned. Because I know that I
thought that under the CAIR rule that we were going to absolve
you from that. In other words, identify what is coming in, you
doing your thing, and does that 90 percent include----
Mr. O'Mara. That includes some of the transportation sector
itself on the I-95 corridor. And we have actually tried to
explore all the tools at our disposal starting in State. But we
have filed a petition with EPA under 126----
Senator Voinovich. 126.
Mr. O'Mara. And the challenge with a 126 is, the question
is what is the region? And so for us it is really the
Philadelphia metro region. But many of the emissions are coming
from further upwind from States further to the west.
And so far EPA is struggling with this question because the
original legislation really required them to look at that
immediate region. But we are asking for--because as Senator
Carper said we are that kind of tailpipe, across many States,
not just the adjacent ones.
Senator Voinovich. Thank you.
Senator Carper. I would just say, George, one of the
frustrations for us is that I can remember times when we
literally shut down our State's economy and would still be out
of attainment because of the transport of the emissions from
other places upwind.
Sometimes I like to close out a hearing. This has been, I
think, a real good hearing, and I think we had good
conversation and a productive one, a very constructive
conversation. And what I am going to do in closing out here is
just ask each of our witnesses if there is a point that you
want to reiterate, make again, or if maybe you have sort of a
different thought that you want to share with us as we close
that has been brought out by the interaction that we have had
with the panelists and those of us who are privileged to sit up
here.
Is there anything else that would like for us to keep in
mind as we walk away from here today, Dr. Rizzo?
Dr. Rizzo. I think the important thing is to not delay in
whatever we can do to improve the situation. I think there were
a lot of good ideas that have been talked about today, but
certainly moving ahead and enacting laws that will help
pollution. Every day is another life lost or more. Thank you.
Senator Carper. Thank you.
Dr. Durham.
Mr. Durham. Well, just to reiterate. What we are saying, as
equipment has been installed and operating, is performance is
getting better, costs are going down, we are having to redo our
projections on the size of the market because the amounts of
activated carbon are actually going down from the sites. There
are still a number of difficult sites, and we are looking
forward to trying to develop those challenges. But it sometimes
helps having you adjust the laws of man because the laws of
chemistry and physics that we are dealing with are not quite as
flexible.
Senator Carper. OK. Thank you.
Secretary O'Mara.
Mr. O'Mara. Thank you, Senator. I think that the message
that we would like to relay is that, from the Delaware
experience, that this can be very cost effective. We have seen,
you know, the cost rate of being roughly about $5,000 a ton for
NOx. That is cheaper than about $10,000 a ton to buy
a NOx credit on the open market for an equivalent
amount.
The technology works, and we are seeing incredible
reductions on the units that we have. The challenge is that the
scattershot State by State approach is not always successful.
Pennsylvania really took--tried to have some very aggressive
mercury legislation a few years ago that would have had a major
benefit to the State of Delaware. That was struck down by the
courts, and we continue to have pollution into our State.
So, without a national solution, we will continue to have
these issues. Not any individual State can solves this
challenge alone. And we have talked a lot today about the
costs. We have not talked as much about the benefits. And our
analysis shows that for roughly every dollar we spend on
pollution control, we are going to save $10 or more on health
benefit savings.
So, the $2 trillion number that you mentioned today, those
are real dollars, and those are dollars that come out of
people's pockets in Delaware and across the country. And those
are dollars that could be more productively used in other parts
of the economy.
And so when you look at the whole picture, we believe that
this is an important step forward and we look forward to
working with you on it.
Senator Carper. Thank you so much.
Mr. McManus.
Mr. McManus. Thanks, Senator. I think I will step back and
look at a little broader perspective here. Administrator
McCarthy this morning mentioned the transition to an energy
economy, and clearly it is a goal of the current
Administration. It is an opportunity, from our perspective,
that we see when you look at the electric sector. We see a
clear transition occurring that will continue this year.
But it is more than just putting controls on existing power
plants. It is what new power plants do we want to build, fossil
fuels versus renewables versus nuclear. It is the smart grid
concept, how do we make the way we use energy more efficient,
demand side management. There is a lot going on across that.
All of that is going to take money to implement. In a very
struggling economy right now, the challenge I see, really, is
the timing of all of this. To achieve this transition over the
next decade, it is a complex equation. And how do we move
forward and set time lines that make sense, that allow us to be
making the best choices.
You talked about certainty this morning. Certainty would be
great, but we recognize that you cannot have certainty in
everything. But a little better direction in timing that helps
us do this transition would be extremely helpful, and we would
welcome an opportunity to work with you to look for ways to
implement appropriate timing for a lot of this.
Senator Carper. Good. Well thank you for those closing
comments.
In terms of--I certainly learned, I think I knew it before
I was Governor, but I really learned it as Governor, is that
businesses do need certainty and predictability. They did then
and they do now.
We also need some certainty in figuring out how to ratchet
down and rein in the growth of our healthcare costs. We are not
competitive with the rest of the world when we spend twice as
much as the rest of the world for healthcare and do not get
better results, get worse results. And we have all these people
who do not have healthcare coverage. You know, we have got to
do better than that. We need some certainty toward getting us
to a better spot there as well.
Dr. Durham mentioned certainty for him and his company
going to the capital markets to try to raise money for another
facility that they want to build. If we do not do anything, if
we still end up battling it out in court with EPA and the CAIR
rules and stuff like that, that is not the kind of certainty
that he needs. And God knows what it is like following in
Secretary O'Mara's shoes, trying to deal with all of this.
So, I am by nature an optimistic person. And I am leaving
here today optimistic that we are on the right track here, that
we are on the right track here. And I think that we have folks
that are working in a spirit of cooperation. We know that we
are in this together. And we know that we can do better. And we
have got to do better.
I do not want to spend another 12 years in the wilderness,
in and out of court, trying to figure out what regulations are
going to be in effect and what are not, or are we ever going to
legislate around here. I want us to legislate.
And in a season here in Washington where there is, frankly,
not a lot of work across the aisle, unfortunately, I hope we
can provide a model for how we can still do that, reach across
the aisle, Democrats, Republicans, Independents, environmental
community, medical community, non-profits, our utility sector,
and we can still figure out how to get this done. And we need
to. That is why the people in this country sent us here. And we
are going to do our dead level best to do that.
I look forward to talking with Senator Boxer. I appreciate
her very much letting me chair this hearing today. She has been
very encouraging in her comments to me as to the way forward on
this legislation. So, we are going to take it from here.
That having been said, it is almost lunchtime. We thank you
all for spending so much time with us. Some of our colleagues
who were not here, and some of those who were here, will want
to submit some questions for the record. They have 2 weeks to
do that. And I would just ask that, as you receive those
questions, please do your best to respond to us promptly and
fully.
Thank you again, and with that, this hearing is adjourned.
[Whereupon, at 12:27 p.m. the Committee was adjourned.]
[An additional statement submitted for the record follows:]
Statement of Hon. James M. Inhofe,
U.S. Senator from the State of Oklahoma
Chairman Carper, thank you for holding this hearing today
to discuss S. 2995, ``The Clean Air Act Amendments of 2010,''
which you introduced along with Senator Alexander and others.
On the day this legislation was introduced, Senator Voinovich
and I released a statement extending a hand of cooperation in
passing multi-pollutant legislation. As we said, ``The goal of
combining greater regulatory certainty under the Clean Air Act
with significant advances in public health and the environment
is a worthy and attainable one. We stand together today to
begin a dialogue aimed at achieving that goal.''
Today I repeat that pledge, and I'm sure Senator Voinovich
will do the same. I hope that you, Senator Carper, as well as
Senator Alexander and others, will join us in trying to reach
agreement on this important issue.
There's a good deal of history behind legislative efforts
to reduce sulfur dioxides, nitrogen oxides and mercury. I won't
belabor that history, but I will note that several of us,
including Senator Carper, made a good faith effort to reach
bipartisan agreement on the Clear Skies bill in 2005.
Ultimately that didn't happen, and instead we settled for a
regulatory approach to reduce emissions. But without explicit
authorization from Congress, the regulatory program, known as
the Clean Air Interstate Rule, or CAIR, was struck down by the
D.C. Circuit because EPA lacked the necessary legal authority
under the Clean Air Act.
So where do we stand? We have emissions control projects on
hold and a depressed allowance trading market. Without a new
law from Congress, the ability to secure additional emissions
reductions from power plants over the next decade remains
unclear. Moreover, EPA is preparing a new emissions rule to
answer the D.C. Circuit's CAIR decision, but again, without
specific legal authorization from Congress, just what EPA can
propose in light of that decision is highly uncertain.
We have a heavy burden on our shoulders to get this done.
Yet I believe we can provide EPA with the legal authority it
needs to get CAIR up and running again. At the same time, we
can find common ground and pass a bipartisan 3-P bill. Now this
won't be easy; Senator Voinovich and I have several concerns
about S. 2995. I would say my leading concern is that the bill
superimposes fairly strict emissions reductions over a short
timeframe on top of several impending EPA regulations facing
power plants. In my view, we should require significant
emission reductions from power plants, but we also should
provide flexibility for how those plants meet those targets.
So again, I say to my colleagues, let's work together on
achieving the long sought goal of passing 3-P legislation. This
could be a significant milestone that would produce real health
benefits as well as ensure affordable, reliable electricity to
consumers.
Thank you.
[all]