As the CRS notes:
...even after a proposal is signed, cost estimates will be little better than guesses.
Why? Three reasons: the long implementation period; the unpredictable pace of technology development; and the decentralized nature of compliance decisions.
The report goes on to note several key things:
--Areas with dirty air could have up to 20 years to comply.
--Ongoing pollution cleanup programs will likely reduce the number of areas that would be out of compliance with any new standard.
--Improvements in technology historically have produced lower-cost solutions than envisioned at the time any national air standard is actually issued.
The CRS report notes a widely distributed National Association of Manufacturers study, which argued that the smog standard could be the "most expensive" rule in history.
Without directly saying the manufacturers' study is baloney, the CRS report notes
NAM's study reached another conclusion that received less press: it spoke of "the limited information now available to assess these compliance costs and economic impacts," and concluded, "We refer to our estimates as potential costs and economic impacts to reflect the substantial uncertainties in the underlying emission reduction and cost information." These words are worth keeping in mind as competing cost estimates make their appearance in the months ahead.
**
Here is the full CRS report:
CRS Insights
EPA's Upcoming Ozone
Standard: How Much Will Compliance Cost?
James
E. McCarthy, Specialist in Environmental Policy
October 15, 2014 (IN10165)
The Environmental Protection Agency (EPA) is under a court order
to complete a review of its ambient air quality standard for ozone (the
"ozone NAAQS") by October 1, 2015. The agency must propose any
change to the standard by December 1 of this year.
A NAAQS
is essentially EPA's definition of what constitutes clean air in the case of
six of the most common pollutants. The agency conducts an exhaustive review of
the published research on the health effects of
these pollutants before determining the levels that (in the Clean Air Act's
words) "are requisite to protect the public health," allowing an
adequate margin of safety. If an area has monitor readings higher than the
ozone NAAQS when averaged over a three-year period, the area is in
"nonattainment" of the standard.
The
NAAQS does not directly impose emission controls on industry or other pollution
sources, but it sets in motion a process under which nonattainment areas are
identified and states submit implementation plans to EPA to demonstrate how
they will bring the areas into compliance.
It is
widely assumed, based on publicly available EPA documents, that the EPA Administrator will
propose a more stringent ozone standard. The current standard is 75 parts per
billion (ppb), averaged over an eight-hour period, with the fourth highest
annual reading in three consecutive years averaged to determine whether an area
is in attainment. Both EPA staff and the agency's outside science advisors have
recommended that the standard be set in the range of 60 to 70 ppb.
Given
this assumption, there has been speculation regarding the economic impact of a
NAAQS revision. At the moment, no one knows what a revised NAAQS would cost,
because EPA hasn't proposed one and we don't know what areas will be designated
nonattainment. But even after a proposal is signed, cost estimates will be
little better than guesses.
Why?
Three reasons: the long implementation period; the unpredictable pace of
technology development; and the decentralized nature of compliance decisions.
First,
an ozone NAAQS has a longer implementation schedule than almost any air
pollution standard. After the most recent two revisions of the standard in 1997
and 2008, it took seven years and four years respectively for the states and
EPA to identify the areas to be designated "nonattainment." After
that, the states had three years to develop implementation plans detailing the
pollution control measures they would impose. Meanwhile, because of tighter
standards for gasoline, motor vehicles, power plants, and other emission
sources—many of which were already promulgated prior to the NAAQS decisions—air
quality improved in most areas. Economic factors and changes in technology also
played a role.
These
same processes are likely to occur as the current revision is finalized and
implemented. In December, EPA will identify areas that would not meet its
proposed standard based on monitoring data available at that time; by the time
nonattainment areas are actually designated, monitoring data could be
significantly different.
To give
an example from the most recent (2008) revision of the ozone NAAQS:
·
When EPA proposed the revision in July 2007, 398 counties had
monitoring data showing nonattainment with a 75 ppb standard—the standard that
was eventually promulgated.
·
Upon promulgation of the NAAQS eight months later, the number of
counties with data indicating nonattainment was 345, based on available data at
that time.
·
By May 2012, when nonattainment areas were actually designated,
the number of nonattaining counties had been reduced to 221.
Ozone
nonattainment areas have as long as 20 years to reach attainment. There are
numerous mileposts along the way where reasonable further progress toward
attainment must be demonstrated, but EPA's history in regard to implementation
suggests that 20 years is not a firm deadline: New York, Los Angeles, and other
cities have been designated nonattainment for an ozone NAAQS since the early
1970s, and still have years available on what might be called EPA's
"deadline clock."
Meanwhile,
the second factor cited above plays a role: technology to reduce emissions
improves. EPA, in its last two reviews of the ozone NAAQS, stated that it
couldn't identify the controls that some areas might impose to reach
attainment, but it concluded: "Technological advances over time will tend
to increase the economic feasibility of reducing emissions, and will tend to
reduce the costs of reducing emissions." This has certainly been the case
since 1971, when the first NAAQS were promulgated. At the time, not a single
production car was equipped with a catalytic converter, which within five years
became the industry standard. By 2013, continued improvements in catalysts and
engine technology had lowered total ozone-creating vehicle emissions by 60% to
87% while vehicle miles traveled nearly tripled.
A third
factor that makes predicting costs guesswork is the decentralized nature of
emission control decisions. Aside from some statutorily mandated compliance
measures, states—not EPA—decide what sources will be regulated and how
stringent the controls will be. Often, industry can choose how to comply, based
on a range of available technologies.
In
anticipation of the EPA ozone proposal, debate over a standard's cost has
already begun: a July 2014 study released by the National
Association of Manufacturers concluded that "the potential emissions
control costs would reduce U.S. Gross Domestic Product (GDP) by $270 billion
per year on average over the period from 2017 through 2040...." If that
turns out to be the case, the rule will be the most expensive EPA rule in
history, by far.
But
NAM's study reached another conclusion that received less press: it spoke of
"the limited information now available to assess these compliance costs
and economic impacts," and concluded, "We refer to our estimates as
potential costs and economic impacts to reflect the substantial uncertainties in
the underlying emission reduction and cost information." These words are
worth keeping in mind as competing cost estimates make their appearance in the
months ahead.
For
more information on the ozone NAAQS, see CRS Report R43092, Ozone Air Quality Standards: EPA's 2015 Revision.
Related Issues Before Congress:
No comments:
Post a Comment