[Federal Register Volume 73, Number 147 (Wednesday, July 30, 2008)]
[Proposed Rules]
[Pages 44354-44520]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-16432]
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Part II
Environmental Protection Agency
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40 CFR Chapter I
Regulating Greenhouse Gas Emissions Under the Clean Air Act; Proposed
Rule
Federal Register / Vol. 73, No. 147 / Wednesday, July 30, 2008 /
Proposed Rules
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Chapter I
[EPA-HQ-OAR-2008-0318; FRL-8694-2]
RIN 2060-AP12
Regulating Greenhouse Gas Emissions Under the Clean Air Act
AGENCY: Environmental Protection Agency (EPA).
ACTION: Advance Notice of Proposed Rulemaking.
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SUMMARY: This advance notice of proposed rulemaking (ANPR) presents
information relevant to, and solicits public comment on, how to respond
to the U.S. Supreme Court's decision in Massachusetts v. EPA. In that
case, the Supreme Court ruled that the Clean Air Act (CAA or Act)
authorizes regulation of greenhouse gases (GHGs) because they meet the
definition of air pollutant under the Act. In view of the potential
ramifications of a decision to regulate GHGs under the Act, the notice
reviews the various CAA provisions that may be applicable to regulate
GHGs, examines the issues that regulating GHGs under those provisions
may raise, provides information regarding potential regulatory
approaches and technologies for reducing GHG emissions, and raises
issues relevant to possible legislation and the potential for overlap
between legislation and CAA regulation. In addition, the notice
describes and solicits comment on petitions the Agency has received to
regulate GHG emissions from ships, aircraft and nonroad vehicles such
as farm and construction equipment. Finally, the notice discusses
several other actions concerning stationary sources for which EPA has
received comment regarding the regulation of GHG emissions.
The implications of a decision to regulate GHGs under the Act are
so far-reaching that a number of other federal agencies have offered
critical comments and raised serious questions during interagency
review of EPA's ANPR. Rather than attempt to forge a consensus on
matters of great complexity, controversy, and active legislative
debate, the Administrator has decided to publish the views of other
agencies and to seek comment on the full range of issues that they
raise. These comments appear in the Supplemental Information, below,
followed by the June 17 draft of the ANPR preamble prepared by EPA, to
which the comments apply. None of these documents represents a policy
decision by the EPA, but all are intended to advance the public debate
and to help inform the federal government's decisions regarding climate
change.
DATES: Comments must be received on or before November 28, 2008.
ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2008-0318, by one of the following methods:
www.regulations.gov: Follow the on-line instructions for
submitting comments.
E-mail: [email protected].
Fax: 202-566-9744.
Mail: Air and Radiation Docket and Information Center,
Environmental Protection Agency, Mailcode: 2822T, 1200 Pennsylvania
Ave., NW., Washington, DC 20460. In addition, please mail a copy of
your comments on the information collection provisions to the Office of
Information and Regulatory Affairs, Office of Management and Budget
(OMB), Attn: Desk Officer for EPA, 725 17th St., NW., Washington, DC
20503.
Hand Delivery: EPA Docket Center, EPA West Building, Room
3334, 1301 Constitution Ave., NW., Washington DC, 20004. Such
deliveries are only accepted during the Docket's normal hours of
operation, and special arrangements should be made for deliveries of
boxed information.
Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2008-0318. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
www.regulations.gov, including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to
be CBI or otherwise protected through www.regulations.gov or e-mail.
The www.regulations.gov Web site is an ``anonymous access'' system,
which means EPA will not know your identity or contact information
unless you provide it in the body of your comment. If you send an e-
mail comment directly to EPA without going through www.regulations.gov
your e-mail address will be automatically captured and included as part
of the comment that is placed in the public docket and made available
on the Internet. If you submit an electronic comment, EPA recommends
that you include your name and other contact information in the body of
your comment and with any disk or CD-ROM you submit. If EPA cannot read
your comment due to technical difficulties and cannot contact you for
clarification, EPA may not be able to consider your comment. Electronic
files should avoid the use of special characters, any form of
encryption, and be free of any defects or viruses. For additional
information about EPA's public docket visit the EPA Docket Center
homepage at http://www.epa.gov/epahome/dockets.htm. For additional
instructions on submitting comments, go to Section VII, Public
Participation, of the SUPPLEMENTARY INFORMATION section of this
document.
Docket: All documents in the docket are listed in the
www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, will be publicly available only in hard copy.
Publicly available docket materials are available either electronically
in www.regulations.gov or in hard copy at the Air and Radiation Docket
and Information Center, EPA/DC, EPA West, Room 3334, 1301 Constitution
Ave., NW., Washington, DC. The Public Reading Room is open from 8:30
a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The
telephone number for the Public Reading Room is (202) 566-1744, and the
telephone number for the Air Docket is (202) 566-1742.
FOR FURTHER INFORMATION CONTACT: Joe Dougherty, Office of Air and
Radiation, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone
number: (202) 564-1659; fax number: (202) 564-1543; e-mail address:
[email protected].
SUPPLEMENTARY INFORMATION:
Preface From the Administrator of the Environmental Protection Agency
In this Advanced Notice of Proposed Rulemaking (ANPR), the
Environmental Protection Agency (EPA) seeks comment on analyses and
policy alternatives regarding greenhouse gas (GHG) effects and
regulation under the Clean Air Act. In particular, EPA seeks comment on
the document entitled ``Advanced Notice of Proposed Rulemaking:
Regulating Greenhouse Gas Emissions under the Clean Air Act'' and
observations and issues raised by other federal agencies. This notice
responds to the U.S. Supreme Court's decision in Massachusetts v. EPA
and numerous petitions related to the potential regulation of
greenhouse gas emissions under the Clean Air Act.
EPA's analyses leading up to this ANPR have increasingly raised
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questions of such importance that the scope of the agency's task has
continued to expand. For instance, it has become clear that if EPA were
to regulate greenhouse gas emissions from motor vehicles under the
Clean Air Act, then regulation of smaller stationary sources that also
emit GHGs--such as apartment buildings, large homes, schools, and
hospitals--could also be triggered. One point is clear: The potential
regulation of greenhouse gases under any portion of the Clean Air Act
could result in an unprecedented expansion of EPA authority that would
have a profound effect on virtually every sector of the economy and
touch every household in the land.
This ANPR reflects the complexity and magnitude of the question of
whether and how greenhouse gases could be effectively controlled under
the Clean Air Act. This document summarizes much of EPA's work and lays
out concerns raised by other federal agencies during their review of
this work. EPA is publishing this notice today because it is impossible
to simultaneously address all the agencies' issues and respond to our
legal obligations in a timely manner.
I believe the ANPR demonstrates the Clean Air Act, an outdated law
originally enacted to control regional pollutants that cause direct
health effects, is ill-suited for the task of regulating global
greenhouse gases. Based on the analysis to date, pursuing this course
of action would inevitably result in a very complicated, time-consuming
and, likely, convoluted set of regulations. These rules would largely
pre-empt or overlay existing programs that help control greenhouse gas
emissions and would be relatively ineffective at reducing greenhouse
gas concentrations given the potentially damaging effect on jobs and
the U.S. economy.
Your input is important. I am committed to making the data and
models EPA is using to form our policies transparent and available to
the public. None of the views or alternatives raised in this notice
represents Agency decisions or policy recommendations. It is premature
to do so. Rather, I am publishing this ANPR for public comment and
review. In so doing, I am requesting comment on the views of other
federal agencies that are presented below including important legal
questions regarding endangerment. I encourage the public to (1)
understand the magnitude and complexity of the Supreme Court's
direction in Massachusetts v. EPA and (2) comment on the many questions
raised in this notice.
BILLING CODE 6560-50-P
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Department of Transportation
The Department of Transportation (``the Department'' or ``DOT'')
hereby submits the following preliminary comments on the Environmental
Protection Agency (``EPA'') staff's draft Advance Notice of Proposed
Rulemaking ``Regulating Greenhouse Gas Emissions under the Clean Air
Act,'' which was submitted to the Office of Management and Budget on
June 17, 2008 (``June 17 draft'' or ``draft''). In view of the very
short time the Department has had to review the document, DOT will
offer a longer, more detailed response by the close of the comment
period.
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General Considerations
In response to Massachusetts v. EPA and multiple rulemaking
petitions, the EPA must consider whether or not greenhouse gases may
reasonably be anticipated to endanger public health or welfare, within
the meaning of the Clean Air Act. Such a determination requires the
resolution of many novel questions, such as whether global or only U.S.
effects should be considered, how imminent the anticipated endangering
effects are, and how greenhouse gases are to be quantified, to name
just a few. Without resolving any of these questions, let alone
actually making an endangerment finding, the June 17 draft presents a
detailed discussion of regulatory possibilities. In other words, the
draft suggests an array of specific regulatory constructs in the
transportation sector under the Clean Air Act without the requisite
determinations that greenhouse gas emissions endanger public health or
welfare and that regulation is feasible and appropriate. In fact, to
propose specific regulations prejudices those critical determinations
and reveals a predilection for regulation that may not be justified.
Policymakers and the public must consider a broader question: even
if greenhouse gas regulation using a law designed for very different
environmental challenges is legally permissible, is it desirable? We
contend that it is not. We are concerned that attempting to regulate
greenhouse gases under the Clean Air Act will harm the U.S. economy
while failing to actually reduce global greenhouse gas emissions. Clean
Air Act regulation would necessarily be applied unevenly across
sources, sectors, and emissions-causing activities, depending on the
particular existing statutory language in each section of the Act.
Imposing Clean Air Act regulations on U.S. businesses, without an
international approach that involves all of the world's major emitters,
may well drive U.S. production, jobs, and emissions overseas, with no
net improvement to greenhouse gas concentrations.
The Department believes that the Nation needs a well considered and
sustainable domestic climate change policy that takes into account the
best climatological, technical and economic information available. That
policy--as with any significant matter involving Federal law and
regulation--should also reflect a national consensus that the actions
in question are justified and effective, and do not bring with them
substantial unintended consequences or unacceptable economic costs.
Reducing greenhouse gas emissions across the various sectors of our
economy is an enormous challenge that can be met effectively only
through the setting of priorities and the efficient allocation of
resources in accordance with those priorities.
It is an illusion to believe that a national consensus on climate
policy can be forged via a Clean Air Act rulemaking. Guided by the
provisions of a statute conceived for entirely different purposes--and
unconstrained by any calculation of the costs of the specific
regulatory approaches it contemplates--such a rulemaking is unlikely to
produce that consensus.
Administrator Johnson of the EPA said in a recent speech, ``now is
the time to begin the public debate and upgrade [the Clean Air Act's]
components.'' Administrator Johnson has called for fundamental changes
to the Clean Air Act ``to consider benefits, costs, risk tradeoffs and
feasibility in making decisions about how to clean the air.'' This, of
course, is a criticism of the Clean Air Act's ability to address its
intended purposes, let alone purposes beyond those Congress
contemplated. As visualized in the June 17 draft, the U.S. economy
would be subjected to a complex set of new regulations administered by
a handful of people with little meaningful public debate and no ability
to consider benefits, costs, risk tradeoffs and feasibility. This is
not the way to set public policy in an area critical to our environment
and to our economy.
As DOT and its fellow Cabinet departments argue in the cover letter
to these Comments, using the Clean Air Act as a means for regulating
greenhouse gas emissions presents insurmountable obstacles. For
instance, Clean Air Act provisions that refer to specific pollutants,
such as sulfur dioxide, have been updated many times over the past
three decades. In contrast, the language referring to unspecified
pollutants, which would apply to greenhouse gases, retains, in fossil
form, the 1970s idea that air pollution is a local and regional scale
problem, with pollution originating in motor vehicles and a few large
facilities, for which ``end of pipe'' control technologies exist or
could be invented at acceptable cost. Greenhouse gas emissions have
global scale consequences, and are emitted from millions of sources
around the world. If implemented, the actions that the draft
contemplates would significantly increase energy and transportation
costs for the American people and U.S. industry with no assurance that
the regulations would materially affect global greenhouse gas
atmospheric concentrations or emissions.
Transportation-Related Considerations
As the Nation's chief transportation regulatory agency, the
Department has serious concerns about the draft's approach to mobile
sources, including, but not limited to, the autos, trucks, and aircraft
that Section VI of the draft considers regulating.
Title II of the Clean Air Act permits the use of technology-forcing
regulation of mobile sources. Yet Section VI of the draft appears to
presume an endangerment finding with respect to emissions from a
variety of mobile sources and then strongly suggests the EPA's intent
to regulate the transportation sector through an array of source-
specific regulations. Thus, much of Section VI is devoted to describing
and requesting information appropriate to setting technology-forcing
performance standards for particular categories of vehicles and engines
based on an assessment of prospective vehicle and engine technology in
each source category.
In its focus on technology and performance standards, the draft
spends almost no effort on assessing how different regulatory
approaches might vary in their effectiveness and compliance costs. This
despite the fact that picking an efficient, effective, and relatively
unintrusive regulatory scheme is critically important to the success of
any future program--and far more important at this stage than
identifying the cost-effectiveness of speculative future technologies.
The draft fails to identify the market failures or environmental
externalities in the transportation sector that regulation might
correct, and, in turn, what sort of regulation would be best tailored
to correcting a specific situation. Petroleum accounts for 99 percent
of the energy use and greenhouse gas emissions in the transportation
sector. Petroleum prices have increased fivefold since 2002. Rising
petroleum prices are having a powerful impact on airlines, trucking
companies, marine operators, and railroads, and on the firms that
supply vehicles and engines to these industries. Petroleum product
prices have doubled in two years, equivalent to a carbon tax of $200
per metric ton, far in excess of the cost of any previously
contemplated climate change measure. Operators are searching for every
possible operating economy, and capital equipment manufacturers are
fully aware that fuel efficiency is a critical selling point for new
aircraft, vehicles, and engines. At this point, regulations could
provide no
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more powerful incentive for commercial operators than that already
provided by fuel prices. Badly designed performance standards would be
at best non-binding (if private markets demand more efficiency than the
regulatory standard) or would actually undermine efficient deployment
of fuel efficient technologies (if infeasible or non-cost-effective
standards are required).
Light Duty Vehicles
On December 19, 2007, the President signed the Energy Independence
and Security Act (``EISA''), which requires the Department to implement
a new fuel economy standard for passenger cars and light trucks. The
Department's National Highway Traffic Safety Administration (``NHTSA'')
has moved swiftly to comply with this law, issuing a Notice of Proposed
Rulemaking (``NPRM'') on April 22, 2008. The comment period for this
NPRM closed on July 1, 2008. If finalized in its present form, the rule
would reduce U.S. carbon dioxide emissions by an estimated 521 million
metric tons over the lifetime of the regulated vehicles.
This NPRM is only the latest in a series of NHTSA Corporate Average
Fuel Economy (``CAFE'') program rules proposed or implemented during
this Administration. Indeed, these proposals together represent the
most aggressive effort to increase the fuel economy (and therefore to
reduce the emissions) of the U.S. fleet since the inception of the CAFE
program in 1975.
In enacting EISA, Congress made careful and precise judgments about
how standards are to be set for the purpose of requiring the
installation of technologies that reduce fuel consumption. Although
almost all technologies that reduce carbon dioxide emissions do so by
reducing fuel consumption, the EPA staff's June 17 draft not only
ignores those congressional judgments, but promotes approaches
inconsistent with those judgments.
The draft includes a 100-page analysis of a tailpipe carbon dioxide
emissions rule that has the effect of undermining NHTSA's carefully
balanced approach under EISA. Because each gallon of gasoline contains
approximately the same amount of carbon, and essentially all of the
carbon in fuel is converted to carbon dioxide, a tailpipe carbon
dioxide regulation and a fuel economy regulation are essentially
equivalent: they each in effect regulate fuel economy.
In the draft's analysis of light duty vehicles, the external
benefits of reducing greenhouse gas emissions account for less than 15
percent of the total benefits of improving vehicle efficiency, with the
bulk of the benefits attributable to the market value of the gasoline
saved. Only rather small marginal reductions in fuel consumption or
greenhouse gas emissions would be justified by external costs in
general, and climate change benefits in particular. Thus, the draft
actually describes fuel economy regulations, which generate primarily
fuel savings benefits, under the rubric of environmental policy.
Though it borrows an analytical model provided by NHTSA, the draft
uses differing assumptions and calculates the effects of the Agency's
standard differently than does the rule NHTSA proposed pursuant to
EISA. The draft conveys the incorrect impression that the summary
numbers such as fuel savings, emission reductions, and economic
benefits that are presented in the draft are comparable with those
presented in NHTSA's NPRM, when in fact the draft's numbers are
calculated differently and, in many cases, using outdated information.
The draft does not include the provisions of EISA or past, current,
or future CAFE rulemakings in its baseline analysis of light duty
vehicle standards. Thus, the draft inflates the apparent benefits of a
Clean Air Act light duty vehicle rulemaking when much of the benefits
are already achieved by laws and regulations already on the books. The
draft fails to ask whether additional regulation of light duty vehicles
is necessary or desirable, nor gives any serious consideration how
Clean Air Act and EISA authorities might be reconciled.
The draft comprehensively mischaracterizes the available evidence
on the relationship between safety and vehicle weight. In the draft,
EPA asserts that the safety issue is ``very complex,'' but then adds
that it disagrees with the views of the National Academy of Sciences
(NAS) and NHTSA's safety experts, in favor of the views of a two-person
minority on the NAS panel and a single, extensively criticized article.
Much of the text of this portion of the draft is devoted to a
point-by-point recitation and critique of various economic and
technological assumptions that NHTSA, the Office of Management and
Budget, and other Federal agencies--among them EPA--painstakingly
calculated over the past year, but that EPA now unilaterally revises
for this draft. It is not clear why it is necessary or desirable to use
one set of analytical assumptions, while the rest of the Federal
Government uses another.
The public interest is ill-served by having two competing
proposals, put forth by two different agencies, both purporting to
regulate the same industry and the same products in the same ways but
with differing stringencies and enforcement mechanisms, especially
during a time of historic volatility in the auto industry and mere
months after Congress passed legislation tasking another agency with
regulation in this area. The detailed analysis of a light duty vehicle
rule in the draft covers the same territory as does NHTSA's current
rulemaking--and is completely unnecessary for the purposes of an
endangerment finding or for seeking comment on the best method of
regulating mobile source emissions.
Setting Air Quality Standards
The discussion of the process for setting National Ambient Air
Quality Standards (``NAAQS'') and development of state/Federal
implementation plans for greenhouse gases is presented as an option for
regulating stationary sources, and is placed in the discussion of
stationary sources. The draft describes a scenario in which the entire
country is determined to be in nonattainment.
Such a finding would reach beyond power plants and other
installations to include vital transportation infrastructure such as
roads, bridges, airports, ports, and transit lines. At a time when our
country critically needs to modernize our transportation
infrastructure, the NAAQS that the draft would establish--and the
development of the implementation plans that would follow--could
seriously undermine these efforts. Because the Clean Air Act's
transportation and general conformity requirements focus on local
impacts, these procedures are not capable of assessing and reducing
impacts of global pollutants without substantial disruption and waste.
If the entire Nation were found to be in nonattainment for carbon
dioxide or multiple greenhouse gases, and transportation and general
conformity requirements applied to Federal activities, a broad range of
those activities would be severely disrupted. For example, application
of transportation conformity requirements to all metropolitan area
transportation plans would add layers of additional regulations to an
already arduous Federal approval process and expand transportation-
related litigation without any assurance that global greenhouse gas
emissions would be reduced. Indeed, needed improvements to airports,
highways and transit systems that would make the transportation system
more efficient, and thus help reduce greenhouse gas and other
emissions, could be precluded due to
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difficulties in demonstrating conformity. Though the potential for such
widespread impact is clear from even a cursory reading of the draft, it
ignores the issue entirely.
For these reasons, we question the practicality and value of
establishing NAAQS for greenhouse gases and applying such a standard to
new and existing transportation infrastructure across the Nation.
Heavy Duty Vehicles
The draft contemplates establishing a greenhouse gas emissions
standard for heavy duty vehicles such as tractor-trailers. The draft's
discussion of trucks makes no mention of the National Academy of
Sciences study required by Section 108 of EISA that would evaluate
technology to improve medium and heavy-duty truck fuel efficiency and
costs and impacts of fuel efficiency standards that may be developed
under 49 U.S.C. Section 32902(k), as amended by section 102(b) of EISA.
This section directs DOT, in consultation with EPA and DOE, to
determine test procedures for measuring and appropriate procedures for
expressing fuel efficiency performance, and to set standards for
medium- and heavy-duty truck efficiency. DOT believes that it is
premature to review potential greenhouse gas emission standards for
medium- and heavy-duty trucks in light of this study and anticipated
future standard-setting action under EISA, and, in any event, that it
is problematic to do so with no accounting of the costs that these
standards might impose on the trucking industry.
In the case of light duty vehicles, it can be argued that consumers
do not accurately value fuel economy, and regulation can correct this
failure. Heavy-duty truck operators, on the other hand, are acutely
sensitive to fuel costs, and their sensitivity is reflected in the
product offerings of engine and vehicle manufacturers. The argument for
fuel economy or tailpipe emissions regulation is much harder to make
than in the case of light duty vehicles.
The medium and heavy truck market is more complex and diverse than
the light duty vehicle market, incorporating urban delivery vans, on-
road construction vehicles, work trucks with power-using auxiliaries,
as well as the ubiquitous long-haul truck-trailer combinations.
Further, a poorly designed performance standard that pushes operators
into smaller vehicles may result in greater and not fewer of the
emissions the draft intends to reduce. Because freight-hauling
performance is maximized by matching the vehicle to the load, one
large, high horsepower truck will deliver a large/heavy load at a lower
total and fuel cost than the same load split into two smaller, low
horsepower vehicles.
Railroads
The Clean Air Act includes a special provision for locomotives,
Section 213(a)(5), which permits EPA to set emissions standards based
on the greatest emission reduction achievable through available
technology. The text of the draft suggests that EPA may consider such
standards to include hybrid diesel/electric locomotives and the
application of dynamic braking.
As in other sectors, it is hard to imagine how a technology-forcing
regulation can create greater incentives than provided by recent oil
prices. And sensible public policy dictates caution against imposing
unrealistic standards or mandating technology that is not cost-
effective, not reliable, or not completely developed.
Marine Vessels
The International Maritime Organization (``IMO'') sets voluntary
standards for emissions from engines used in ocean-going marine vessels
and fuel quality through the MARPOL Annex VI (International Convention
for the Prevention of Pollution from Ships, 1973, as modified by the
Protocol of 1978 relating thereto (``MARPOL''), Annex VI, Prevention of
Air Pollution from Ships). Member parties apply these voluntary
standards through national regimes. The IMO is also working to consider
ways to address greenhouse gas emissions from vessels and marine
transportation, including both vessel-based and operational measures.
The U.S. is a participant in these discussions. We believe that the
discussion of ways to reduce greenhouse gas emissions from vessels and
marine transportation should reference the IMO voluntary measures and
discussions, and need not address detailed technological or operational
measures.
Aviation
The draft includes a lengthy discussion of possible methods by
which to regulate the greenhouse gas emissions of aircraft. For all its
detail, however, the draft does not provide adequate information (and
in some instances is misleading) regarding aviation emissions related
to several important areas: (1) The overwhelming market pressures on
commercial airlines to reduce fuel consumption and therefore carbon
dioxide emissions and the general trends in aviation emissions growth;
(2) expected technology and operational improvements being developed
under the interagency Next Generation Air Transportation System
(``NextGen'') program; (3) the work and role of the International Civil
Aviation Organization (``ICAO'') in aviation environmental matters; (4)
limits on EPA's ability to impose operational controls on aviation
emission; and (5) the scientific uncertainty regarding greenhouse gas
emissions from aircraft.
First, the draft does not provide the public an accurate picture of
aviation emissions growth. Compared to 2000, U.S. commercial aviation
in 2006 moved 12 percent more passengers and 22 percent more freight
while burning less fuel, thereby reducing carbon output. Further, the
draft's projections of growth in emissions are overstated because they
do not reflect technology improvements in aircraft or air traffic
operations and apparently do not take into account the industry's
ongoing contraction or even the sustained increase in aviation jet fuel
prices in 2007 and 2008. That increase (in 2008, U.S. airlines alone
will spend $60 billion for fuel, compared to $16 billion in 2000)
provides an overwhelming economic incentive for a financially troubled
industry to reduce fuel consumption. Because reduction of a gallon of
jet fuel displaces about 21 pounds of carbon dioxide, that incentive is
the single most effective tool for reducing harmful emissions available
today. Yet the draft makes no note of the trend.
Second, the draft does not adequately address the multi-agency
NextGen program, one of whose principal goals is to limit or reduce the
impact of aviation emissions on the global climate. This includes
continued reduction of congestion through modernization of the air
traffic control system, continued research on aircraft technologies and
alternative fuels, and expanded deployment of operational advances such
as Required Navigation Performance that allow aircraft to fly more
direct and efficient routes in crowded airspace. Through NextGen, the
Department's Federal Aviation Administration (FAA), in cooperation with
private sector interests, is actively pursuing operational and
technological advances that could result in a 33 percent reduction in
aircraft fuel burn and carbon dioxide emissions.
Third, the draft gives short shrift to the Administration's efforts
to reduce aviation emissions through a multilateral ICAO process, and
it contemplates regulatory options either never analyzed by EPA or the
aviation community for aircraft (``fleet
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averaging''\1\) or previously rejected by ICAO itself (flat carbon
dioxide standards). The FAA has worked within the ICAO process to
develop guidance for market-based measures, including adoption at the
2007 ICAO Assembly of guidance for emissions trading for international
aviation. ICAO has established a Group on International Aviation and
Climate Change that is developing further recommendations to address
the aviation impacts of climate change.\2\ The FAA's emphasis on
international collaboration is compelled by the international nature of
commercial aviation and the fact that performance characteristics of
engines and airframes--environmental and otherwise--work best when they
maximize consistency among particular national regulations.\3\
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\1\ The concept of ``fleet averaging,'' though used for
automobiles, has never been applied to aviation or considered by
either ICAO or FAA as a basis for standard setting. The draft offers
little indication of why the concept would be worth serious
consideration, and it is difficult to understand how that could be,
given that manufacturers turn out only several hundred commercial
airplanes for ``averaging'' annually, compared to over a million
light duty vehicles per year built by large manufacturers. In any
event, if further analysis supports the viability of fleet
averaging, the appropriate venue for pursuing this would be through
ICAO--so that aviation experts from around the world can assess the
concept.
\2\ In this context, we note that the draft invites comment on
proposals in the European Union regarding an emissions trading
scheme to be imposed by the EU on all Europe-connected commercial
operations. The U.S. Government, led by the Department of State, has
repeatedly argued that any of these proposals, if enacted, would
violate international aviation law and has made clear its opposition
to the proposals in ICAO and other international fora. It is curious
that the EPA would solicit comments on the benefits of proposals
that the United States (along with numerous other nations) opposes
as unlawful and unworkable.
\3\ The draft is potentially misleading in suggesting that the
fuel flow rate data reported for the ICAO landing and takeoff cycle
engine emissions certification process, and the carbon dioxide
emissions concentrations data collected for calculation and
calibration purposes may be used as the basis for a carbon dioxide
standard.
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Fourth, the draft invites comments on potential aviation
operational controls that might have emissions benefits. But proposals
for changes to airspace or air traffic operational procedures usurp the
FAA's responsibility as the Nation's aviation safety regulator and air
traffic manager. It is inappropriate for the EPA to suggest operational
controls without consideration of the safety implications that the FAA
is legally required to address.
Finally, the draft does not accurately present the state of
scientific understanding of aviation emissions and contains misleading
statements about aviation emissions impacts. The report of the
Intergovernmental Panel on Climate Change (cited in the draft but often
ignored) more clearly conveys cautions about underlying uncertainties
associated with regulating aviation emissions. For instance, the IPCC
specifically concludes that water vapor is a small contributor to
climate change, yet the draft focuses on condensation trails produced
by water vapor and includes an inaccurate statement that carbon dioxide
and water vapor are ``the major compounds from aircraft operations that
are related to climate change.'' Further, the draft does not convey the
significant scientific uncertainty associated with measuring
particulate matter (PM) emissions from aircraft engines. That
understanding needs to be significantly improved before any
``tailpipe'' PM standard could sensibly be considered.
Conclusion
The EPA has made an enormous effort in assembling the voluminous
data that contributed to the draft as published today. However, because
the draft does not adequately identify or discuss the immense
difficulties and burdens, and the probable lack of attendant benefits,
that would result from use of the Clean Air Act to regulate GHG
emissions, DOT respectfully submits these preliminary comments to point
out some of the problematic aspects of the draft's analysis regarding
the transportation sector. We anticipate filing additional comments
before the close of the comment period.
Department of Energy
I. Introduction
The U.S. Department of Energy (Department or DOE) strongly supports
aggressively confronting climate change in a rational manner that will
achieve real and sustainable reductions in global greenhouse gas (GHG)
emissions, promote energy security, and ensure economic stability. In
support of these goals, DOE believes that the path forward must include
a comprehensive public discussion of potential solutions, and the
foreseeable impacts of those proposed solutions--including impacts on
energy security and reliability, on American consumers, and on the
Nation's economy.
The Department supports the actions taken by the United States to
date to address global climate change and greenhouse gas emissions, and
believes these efforts should be continued and expanded. These actions
have included a broad combination of market-based regulations, large
increases in funding for climate science, new government incentives for
avoiding, reducing or sequestering GHG emissions, and enormous
increases in funding for technology research. The Department has played
a significant role in implementing many of these initiatives, including
those authorized by the Energy Policy Act of 2005 and the Energy
Independence and Security Act of 2007.
The Department believes that an effective and workable approach to
controlling GHG emissions and addressing global climate change should
not simply consist of a unilateral and extraordinarily burdensome Clean
Air Act (CAA or the Act) regulatory program being layered on top of the
U.S. economy, with the Federal Government taking the position that
energy security and indeed the American economy will just have to live
with whatever results such a program produces. Rather, the United
States can only effectively address GHG emissions and global climate
change in coordination with other countries, and by addressing how to
regulate GHG emissions while considering the effect of doing so on the
Nation's energy and economic security. Considering and developing such
a comprehensive approach obviously is enormously difficult.
Unfortunately, and no doubt due in part to the limitations of the
Clean Air Act itself, the draft Advance Notice of Proposed Rulemaking
prepared by the staff of the Environmental Protection Agency (EPA) does
not take such an approach. That draft Notice, entitled ``Regulating
Greenhouse Gas Emissions under the Clean Air Act'' (``draft''), which
was submitted to the Office of Management and Budget on June 17, 2008,
instead seeks to address global climate change through an enormously
elaborate, complex, burdensome and expensive regulatory regime that
would not be assured of significantly mitigating global atmospheric GHG
concentrations and global climate change. DOE believes that once the
implications of the approach offered in the draft are fully explained
and understood, it will make one thing clear about controlling GHG
emissions and addressing global climate change--unilaterally proceeding
with an extraordinarily burdensome and costly regulatory program under
the Clean Air Act is not the right way to go.
DOE has had only a limited opportunity to review the June 17 EPA
staff draft, and therefore anticipates providing additional comments at
a later date. Based on the limited review DOE has been able to conduct
so far, it is apparent that the draft reflects extensive work and
includes valuable information, analyses and data that
[[Page 44366]]
should help inform the public debate concerning global climate change
and how to address GHG emissions.
However, DOE has significant concerns with the draft because it
lacks the comprehensive and balanced discussion of the impacts, costs,
and possible lack of effectiveness were the United States, through the
EPA, to use the CAA to comprehensively but unilaterally regulate GHG
emissions in an effort to address global climate change. The draft
presents the Act as an effective and appropriate vehicle for regulating
GHG emissions and addressing climate change, but we believe this
approach is inconsistent with the Act's overarching regulatory
framework, which is based on States and local areas controlling
emissions of air pollutants in order to improve U.S. air quality.
Indeed, the Act itself states that Congress has determined ``air
pollution prevention * * * and air pollution control at its source is
the primary responsibility of States and local governments,'' CAA Sec.
101(a)(3); that determination is reflected in the Act's regulatory
structure. The CAA simply was not designed for establishing the kind of
program that might effectively achieve global GHG emissions controls
and emissions reductions that may be needed over the next decades to
achieve whatever level of atmospheric GHG concentration is determined
to be appropriate or necessary.
Although the draft recognizes that the CAA does not authorize
``economy-wide'' cap and trade programs or emission taxes, it in
essence suggests an elaborate regulatory regime that would include
economy-wide approaches and sector and multi-sector trading programs
and potentially other mechanisms yet to be conceived. The draft has the
overall effect of suggesting that under the CAA, as it exists today, it
would be possible to develop a regulatory scheme of trading programs
and other mechanisms to regulate GHG emissions and thus effectively
address global climate change. It is important to recognize, however,
that such programs have not yet been fully conceived, in some cases
rely on untested legal theories or applications of the Act, would
involve unpredictable but likely enormous costs, would be invasive into
virtually all aspects of the lives of Americans, and yet would yield
benefits that are highly uncertain, are dependent on the actions of
other countries, and would be realized, if at all, only over a long
time horizon.
The draft takes an affirmative step towards the regulation of
stationary sources under the Act--and while it is easy to see that
doing so would likely dramatically increase the price of energy in this
country, what is not so clear is how regulating GHG emissions from such
sources would actually work under the CAA, or whether doing so would
effectively address global climate change. Other countries also are
significant emitters of GHGs, and ``leakage'' of U.S. GHG emissions
could occur--that is, reduced U.S. emissions simply being replaced with
increased emissions in other countries--if the economic burdens on U.S.
GHG emissions are too great. In that regard, CAA regulation of GHG
emissions from stationary sources would significantly increase costs
associated with the operation of power plants and industrial sources,
as well as increase costs associated with direct energy use (e.g.,
natural gas for heating) by sources such as schools, hospitals,
apartment buildings, and residential homes.
Furthermore, in many cases the regulatory regime envisioned by the
draft would result in emission controls, technology requirements, and
compliance costs being imposed on entities that have never before been
subject to direct regulation under the CAA. Before proceeding down that
path, EPA should be transparent about, and there should be a full and
fair discussion about, the true burdens of this path--in terms of its
monetary cost, in terms of its regulatory and permitting burden, and in
terms of exactly who will bear those costs and other burdens. These
impacts are not adequately explored or explained in the draft. What
should be crystal clear, however, is that the burdens will be enormous,
they will fall on many entities not previously subject to direct
regulation under the Act, and all of this will happen even though it is
not clear what precise level of GHG emissions reduction or atmospheric
GHG concentration level is being pursued, or even if that were decided,
whether the CAA is a workable tool for achieving it.
In the limited time DOE has had to review the draft, DOE primarily
has focused on the extent to which the draft addresses stationary
sources and the energy sector. Based on DOE's review, we briefly
discuss below (1) the inadequacy of CAA provisions for controlling
greenhouse gas emissions from stationary sources as a method of
affecting global GHG concentrations and addressing global climate
change; (2) the potential costs and effects of CAA regulation of GHG
emissions on the U.S. electric power sector; and (3) considerations for
U.S. action to address GHG emissions from stationary sources in the
absence of an effective global approach for addressing climate change
and worldwide GHG emissions.
II. The Ineffectiveness and Costs Associated with CAA Regulation of
Greenhouse Gas Emissions from Stationary Sources
The draft states that it was prepared in response to the decision
of the United States Supreme Court in Massachusetts v. EPA, 549 U.S. --
----, 127 S. Ct. 1438 (2007). In that case, the Court held that EPA has
the authority to regulate GHG emissions from new motor vehicles because
GHGs meet the Clean Air Act's definition of an ``air pollutant.'' Id.
at 1460. As a result, under section 202(a) of the Act, the EPA
Administrator must decide whether, ``in his judgment,'' ``the emission
of any air pollutant from any class or classes of new motor vehicles or
new motor vehicle engines'' ``cause, or contribute to, air pollution
which may reasonably be anticipated to endanger public health or
welfare.'' If the EPA Administrator makes a positive endangerment
finding, section 202(a) states that EPA ``shall by regulation prescribe
* * * standards applicable to the emission of'' the air pollutant with
respect to which the positive finding was made.
The Supreme Court stated that it did not ``reach the question
whether on remand EPA must make an endangerment finding, or whether
policy concerns can inform EPA's actions in the event that it makes
such a finding.'' Instead, the Court said that when exercising the
``judgment'' called for by section 202(a) and in deciding how and when
to take any regulatory action, ``EPA must ground its reasons for action
or inaction in the statute.''
As a result, and based on the text of section 202(a) of the Clean
Air Act, any EPA ``endangerment'' finding must address a number of
issues that involve interpretation of statutory terms and the
application of technical or scientific data and judgment. For example,
an endangerment determination must involve, among other things, a
decision about the meaning of statutory terms including ``reasonably be
anticipated to,'' ``cause, or contribute to,'' ``endanger,'' and
``public health or welfare.'' Moreover, because the Act refers to ``air
pollutant'' in the singular, presumably EPA should make any
endangerment finding as to individual greenhouse gases and not as to
all GHGs taken together, but this also is a matter that EPA must
address and resolve. There are other issues that must be resolved as
well, such as: whether the ``public health and welfare'' should be
evaluated with respect to the United States alone or, if foreign
impacts can or
[[Page 44367]]
should or must be addressed as well, what the statutory basis is for
doing so and for basing U.S. emissions controls on foreign impacts;
what time period in the future is relevant for purposes of determining
what is ``reasonably anticipate[d]''; whether and if so how EPA must
evaluate any beneficial impacts of GHG emissions in the United States
or elsewhere in making an endangerment determination; and whether a
particular volume of emissions or a particular effect from such
emissions from new motor vehicles must be found before EPA may make a
``cause or contribute'' finding, since the Act explicitly calls for the
EPA Administrator to exercise his ``judgment,'' and presumably that
judgment involves more than simply a mechanistic calculation that one
or more molecules will be emitted.
If EPA were to address these issues and resolve them in favor of a
positive endangerment finding under section 202(a) of the Act with
respect to one or more greenhouse gases and in favor of regulating GHG
emissions from new motor vehicles, then the language similarities of
various sections of the CAA likely would require EPA also to regulate
GHG emissions from stationary sources. A positive endangerment finding
and regulation of GHGs from new motor vehicles likely would immediately
trigger the prevention of significant deterioration (PSD) permit
program which regulates stationary sources that either emit or have the
potential to emit 250 tons per year of a regulated pollutant or, if
they are included on the list of source categories, at least 100 tons
per year of a regulated pollutant. Because these thresholds are
extremely low when considered with respect to GHGs, thousands of new
sources likely would be swept into the PSD program necessitating time
consuming permitting processes, costly new investments or retrofits to
reduce or capture GHG emissions, increasing costs, and creating vast
areas of uncertainty for businesses and commercial and residential
development.
In addition to the PSD program, it is widely acknowledged that a
positive endangerment finding could lead to three potential avenues of
stationary source regulation under the CAA: (1) The setting of national
ambient air quality standards (NAAQS) under sections 108 and 109; (2)
the issuance of new source performance standards (NSPS) under section
111; and/or (3) the listing of one or more greenhouse gases as
hazardous air pollutants (HAP) under section 112. Each of these
approaches, and their associated deficiencies with respect to GHG
emissions and as a method of addressing global climate change, are
briefly discussed below.
a. Sections 108-109: NAAQS
Section 108 of the CAA requires EPA to identify and list air
pollutants that ``cause or contribute to air pollution which may
reasonably be anticipated to endanger public health or welfare.'' For
such pollutants, EPA promulgates ``primary'' and ``secondary'' NAAQS.
The primary standard is defined as the level which, in the judgment of
the EPA Administrator, based on scientific criteria, and allowing for
an adequate margin of safety, is requisite to protect the public
health. The secondary standard is defined as the level which is
requisite to protect the public welfare. Within one year of EPA's
promulgation of a new or revised NAAQS, each State must designate its
regions as non-attainment, attainment, or unclassifiable. Within three
years from the NAAQS promulgation, States are required to adopt and
submit to EPA a State implementation plan (SIP) providing for the
implementation, maintenance, and enforcement of the NAAQS.
At least three major difficulties would be presented with respect
to the issuance by EPA of a NAAQS for one or more greenhouse gases: (1)
The determination of what GHG concentration level is requisite to
protect public health and welfare; (2) the unique nature of GHGs as
pollutants dispersed from sources throughout the world and that have
long atmospheric lifetimes; and (3) GHG concentrations in the ambient
air are virtually the same throughout the world meaning that they are
not higher near major emissions sources than in isolated areas with no
industry or major anthropogenic sources of GHG emissions.
While much has been said and written in recent years about the need
to reduce greenhouse gas emissions to address climate change, there is
far less agreement on the acceptable or appropriate atmospheric
concentration level of CO2 or other GHGs. As the draft
states, ``[d]etermining what constitutes `dangerous anthropogenic
interference' is not a purely scientific question; it involves
important value judgments regarding what level of climate change may or
may not be acceptable.'' While the Department agrees with this
statement, the courts have held that when setting a NAAQS, EPA cannot
consider important policy factors such as cost of compliance. This
limitation inhibits a rational balancing of factors in determining and
setting a GHG NAAQS based on the science available, the availability
and cost of emission controls, the resulting impact on the U.S.
economy, the emissions of other nations, etc.
Unlike most pollutants where local and regional air quality, and
local and regional public health and welfare, can be improved by
reducing local and regional emissions, GHGs originate around the globe,
and are mixed and dispersed such that there is a relatively uniform
atmospheric GHG concentration level around the world. There is little
or nothing that a single State or region can do that will appreciably
alter the atmospheric GHG concentration level in that particular State
or region. Thus, it is hard to see how a GHG NAAQS, which required
States to take action to reduce their emissions to meet a particular
air quality standard, would actually work. A GHG NAAQS standard would
put the entire United States in either attainment or non-attainment,
and it would be virtually impossible for an individual State to control
or reduce GHG concentrations in its area and, thus, to make significant
strides towards remaining in or reaching attainment with the NAAQS.
Whatever level EPA might eventually establish as an acceptable
NAAQS for one or more GHGs, EPA's setting of such a level would
immediately implicate further issues under the NAAQS regime, including
the ability of States and localities to meet such a standard. If the
GHG NAAQS standard for one or more gases is set at a level below the
current atmospheric concentration, the entire country would be in
nonattainment. All States then would be required to develop and submit
State Implementation Plans (SIPs) that provide for meeting attainment
by the specified deadline. And yet, as the draft states, ``it would
appear to be an inescapable conclusion that the maximum 10-year horizon
for attaining the primary NAAQS is ill-suited to pollutants such as
greenhouse gases with long atmospheric residence times * * * [t]he long
atmospheric lifetime of * * * greenhouse gases * * * means that
atmospheric concentrations will not quickly respond to emissions
reduction measures * * * in the absence of substantial cuts in
worldwide emissions, worldwide concentrations of greenhouse gases would
continue to increase despite any U.S. emission control efforts. Thus,
despite active control efforts to meet a NAAQS, the entire United
States would remain in nonattainment for an unknown number of years.''
As the draft also recognizes, if the NAAQS standard for GHGs is set
at a
[[Page 44368]]
level above the current atmospheric concentration, the entire country
would be in attainment. In a nationwide attainment scenario, the PSD
and new source review (NSR) permitting regimes would apply and States
would have to submit SIPs for the maintenance of the primary NAAQS and
to prevent interference with the maintenance by other States of the
NAAQS; tasks, that as applied to GHGs, are entirely superfluous given
the inability of any single State to change through its own unilateral
action the global or even local concentration level of GHGs.
As the difficult choices and problematic results outlined above
demonstrate, the inability of a single State to appreciably change
atmospheric GHG concentrations in its own area through its own emission
reduction efforts is inconsistent with a fundamental premise of the
Clean Air Act and of the NAAQS program--that States and localities are
primarily responsible for air pollution control and maintaining air
quality, and that State and local governments can impose controls and
permitting requirements that will allow the State to maintain or attain
air quality standards through its own efforts.
b. Section 111: NSPS
Section 111 of the CAA requires the EPA Administrator to list
categories of stationary sources if such sources cause or contributes
significantly to air pollution which may reasonably be anticipated to
endanger public health or welfare. The EPA must then issue new source
performance standards (NSPS) for such sources categories. An NSPS
reflects the degree of emission limitation achievable through the
application of the ``best system of emission reduction'' which the EPA
determines has been adequately demonstrated. EPA may consider certain
costs and non-air quality health and environmental impact and energy
requirements when establishing NSPS. Where EPA also has issued a NAAQS
or a section 112 maximum achievable control technology (MACT) standard
for a regulated pollutant, NSPS are only issued for new or modified
stationary sources. Where no NAAQS has been set and no section 112 MACT
standard issued, NSPS are issued for new, modified, and existing
stationary sources.
Regulation of GHGs under section 111 presents at least two key
difficulties. First, EPA's ability to utilize a market system such as
cap and trade has not been confirmed by the courts. EPA's only attempt
to establish a cap and trade program under section 111, the ``Clean Air
Mercury Rule,'' was vacated by the U.S. Court of Appeals for the
District of Columbia Circuit, though on grounds unrelated to EPA's
authority to implement such a program under section 111. DOE believes
EPA does have that authority, as EPA previously has explained, but
there is legal uncertainty about that authority, which makes a GHG
market-oriented program under section 111 uncertain.
Second, EPA's regulation of small stationary sources (which account
for a third of all stationary source emissions) would require a
burdensome and intrusive regulatory mechanism unlike any seen before
under the CAA. If EPA were to determine that it cannot feasibly issue
permits to and monitor compliance for all of these sources, a section
111 system presumably would cover only large stationary sources, which
would place the compliance burden completely on electric generators and
large industrial sources, and reduce any overall effect from the GHG
control regime.
However, there are questions about whether it would be permissible
for EPA to elect not to regulate GHG emissions from small stationary
sources. Section 111(b)(1) indicates that the Administrator must list a
category of sources if, in his judgment, it causes, or contributes
significantly to, air pollution which may reasonably be anticipated to
endanger public health and welfare. Given the volume of greenhouse
gases that are emitted from small stationary sources in the aggregate,
it is uncertain whether, if EPA makes a positive endangerment finding
for emissions of one or more GHGs from new motor vehicles, EPA could
conclude that small stationary sources do not cause ``or contribute
significantly'' to air pollution that endangers the public health or
welfare. This might well turn on the interpretation and application of
the terms in CAA section 202(a), noted above. Regardless, it is
uncertain whether, and if so where, EPA could establish a certain GHG
emission threshold for determining what sources or source categories
are subject to GHG regulations under section 111. What does seem clear
is that regulating GHG emissions under section 111 would entail
implementation of an enormously complicated, costly, and invasive
program.
c. Section 112: HAP
Section 112 contains a list of hazardous air pollutants subject to
regulation. A pollutant may be added to the list because of adverse
health effects or adverse environmental effects. DOE believes it would
be inappropriate for greenhouse gases to be listed as HAPs given, among
other things, EPA's acknowledgment that ambient GHG concentrations
present no health risks. Nevertheless, if one or more GHGs were listed
under section 112, EPA would have to list all categories of ``major
sources'' (defined as sources that emit or potentially emit 10 tons per
year of any one HAP or 25 tons per year of any combination of HAPs).
For each major source category, EPA must then set a maximum available
control technology (MACT) standard.
It is entirely unclear at this point what sort of MACT standard
would be placed on which sources for purposes of controlling GHG
emissions, what such controls would cost, and whether such controls
would be effective. However, complying with MACT standards with respect
to GHG emission controls likely would place a significant burden on
States and localities, manufacturing and industrial facilities,
businesses, power plants, and potentially thousands of other sources
throughout the United States. As the draft explains, section 112
``appears to allow EPA little flexibility regarding either the source
categories to be regulated or the size of sources to regulate * * * EPA
would be required to regulate a very large number of new and existing
stationary sources, including smaller sources * * * we believe that
small commercial or institutional establishments and facilities with
natural gas fired furnaces would exceed this major source threshold;
indeed, a large single family residence could exceed this threshold if
all appliances consumed natural gas.''
Compliance with the standards under section 112 is required to be
immediate for most new sources and within 3-4 years for existing
sources. Such a strict timeline would leave little to no time for
emission capture and reduction technologies to emerge, develop, and
become cost-effective.
d. Effects of CAA Regulation of GHGs on the U.S. Energy Sector
While the Department has general concerns about the portrayal of
likely effects of proposals to regulate GHGs under the CAA on all
sectors of the U.S. economy, DOE is particularly concerned about the
effects of such regulation on the energy sector. The effects of broad
based, economy-wide regulation of GHGs under the CAA would have
significant adverse effects on U.S. energy supplies, energy
reliability, and energy security.
Coal is used to generate about half of the U.S. electricity supply
today, and the Energy Information Administration (EIA) projects this
trend to continue
[[Page 44369]]
through 2030. (EIA AEO 2008, at 68) At the electricity generating plant
itself, conventional coal-fired power stations produce roughly twice as
much carbon dioxide as a natural gas fired power station per unit of
electricity delivered. Given this reality, the effect of regulating
emissions of GHGs from stationary sources under the CAA could force a
drastic shift in the U.S. power sector. As Congressman John D. Dingell,
Chairman of the U.S. House of Representatives Committee on Energy and
Commerce, explained in a statement issued on April 8, 2008:
``As we move closer to developing policies to limit and reduce
emissions, we must be mindful of the impact these policies have on
the price of all energy commodities, particularly natural gas. What
happens if efforts to expand nuclear power production and cost-
effectively deploy carbon capture and storage for coal-fired
generation are not successful? You know the answer. We will drive
generation to natural gas, which will dramatically increase its
price tag. We don't have to look too far in the past to see the
detrimental effect that high natural gas prices can have on the
chemical industry, the fertilizer industry, and others to know that
we must be conscious of this potential consequence.''
Chairman Dingell's view is supported by studies of the climate bill
recently considered by the United States Senate. EIA's analysis of the
Lieberman-Warner bill stated that, under that bill, and without
widespread availability of carbon capture and storage (CCS) technology,
natural gas generation would almost double by 2030. See Energy
Information Administration, Energy Market and Economic Impacts of S.
2191, the Lieberman-Warner Climate Security Act of 2007 at 25.\4\
---------------------------------------------------------------------------
\4\ DOE's Energy Information Administration (EIA) prepared an
analysis of the proposed Lieberman-Warner Climate Security Act of
2007 and projected that if new nuclear, renewable and fossil plans
with carbon capture and sequestration are not developed and deployed
in a time frame consistent with emissions reduction requirements,
there would be increased natural gas use to offset reductions in
coal generation, resulting in markedly higher delivered prices of
natural gas. See Energy Market and Economic Impacts of S. 2191, the
Lieberman-Warner Climate Security Act of 2007 (EIA, April 2008) EIA
estimated price increases from 9.8 cents per kilowatthour in 2020 to
14.5 cents per kilowatthour in 2030, ranging from 11 to 64 percent
higher by 2030. Id., p. 27, Figure 16. EPA's analysis of the
proposed legislation similarly projected electricity prices to
increase 44% in 2030 and 26% in 2050 assuming the growth of nuclear,
biomass or carbon capture and storage technologies. See EPA Analysis
of the Lieberman-Warner Climate Security Act of 2008 (March 14,
2008), pp. 3, 57. If the growth of nuclear, biomass, or carbon
capture and storage technologies was constrained, EPA projected that
electricity prices in 2030 would be 79% higher and 2050 prices would
be 98% higher than the reference scenario prices. Other analyses of
the legislation also projected substantial increases in energy costs
for consumers. See, e.g. Analysis of the Lieberman-Warner Climate
Security Act (S. 2191) Using the National Energy Modeling System (A
Report by the American Council for Capital Formation and the
National Associate of Manufacturers, conducted by Science
Applications International Corporation (SAIC))(study finding
increases in energy prices for residential consumers by 26% to 36%
in 2020, and 108% to 146% in 2030 for natural gas, and 28% to 33% in
2020, and 101% to 129% in 2030 for electricity). Further, in its
analysis o the bill the Congressional Budge Office estimated that
costs of private sector mandates associated with the legislation
would amount to more than $90 billion each year during the 2012-2016
period, most of which cost would ultimately be passed on to
consumers in the form of higher prices for energy and energy-
intensive goods and services. See Congressional Budget Office Cost
Estimate, S. 2191 (April 10, 2008), pp. 2, 19.
---------------------------------------------------------------------------
If CAA regulation of GHG emissions from stationary sources forces
or encourages a continued move toward natural gas fired electric
generating units, there will be significantly increased demand for
natural gas. Given the limitations on domestic supplies, including the
restrictions currently placed on the production of natural gas from
public lands or from areas on the Outer Continental Shelf, much of the
additional natural gas needed likely would have to come from abroad in
the form of liquefied natural gas (LNG). This LNG would have to be
purchased at world prices, currently substantially higher than domestic
natural gas prices and generally tied to oil prices (crude or product).
To put this into perspective, natural gas closed on June 27, 2008, at
about $13.20/mcf for August delivery, about twice as high as last year
at this time, despite increasing domestic natural gas production. The
reason is that unlike last year, the U.S. has been able to import very
little LNG this year, even at these relatively high domestic prices.
United States inventories of natural gas in storage currently are about
3% below the five year average, and are 16% below last year at this
time. Among other effects, a large policy-forced shift towards
increased reliance on imported LNG would raise energy security and
economic concerns by raising domestic prices for consumers (including
electricity prices) and increasing U.S. reliance on foreign sources of
energy.
In order for coal to remain a viable technology option to help meet
the world's growing energy demand while at the same time not addressing
GHG emissions, CCS technologies must be developed and widely deployed.
While off-the-shelf capture technologies are available for coal power
plant applications, current technologies are too costly for wide scale
deployment for both new plant construction and retrofit of the existing
fleet of coal-fired power plants. DOE studies (e.g., DOE/NETL Report:
``Cost and Performance Baseline for Fossil Energy Plants,'' May 2007)
show that capturing and sequestering CO2 with today's
technology is expensive, resulting in electricity cost increases on the
order of 30%-90% above the cost of electricity produced from new coal
plants built without CCS.
The impact of a policy that requires more production of electricity
from natural gas will be felt not just in the United States but in
worldwide efforts to reduce GHG emissions. Unless U.S. policy supports
rapid development of CCS technologies to the point that they are
economically deployable (i.e., companies are not forced to switch to
natural gas fired electric generating facilities), CCS will not be
installed as early as possible in the China or other developing
nations. In a global climate sense, most of the benefit from new
technology installation will come from the developing countries, and
much of the international benefit would come from providing countries
like China and India with reasonable-cost CCS options for development
of their massive coal resources, on which we believe they will continue
to rely.
III. Energy Policy Considerations for Addressing Climate Change
The Department is concerned that the draft does not properly
acknowledge collateral effects of using CAA regulation to address
global climate change, particularly in the absence of a regime that
actually will effectively address global climate change by addressing
global GHG emissions. DOE strongly supports efforts to reduce GHG
emissions by advancing technology and implementing policies that lower
emissions, but doing so in a manner that is conscious of and that
increases, rather than decreases, U.S. energy security and economic
security. With these goals in mind, DOE believes policymakers and the
public should be mindful of the considerations briefly described below
as the United States seeks to effectively address the challenge of
global climate change.
Secretary Bodman has stated that ``improving our energy security
and addressing global climate change are among the most pressing
challenges of our time.'' This is particularly true in light of the
estimate by the International Energy Agency that the world's primary
energy needs will grow by over 50% by 2030.
In order to address these challenges simultaneously and
effectively, the United States and other countries must make pervasive
and long-term changes. Just as the current energy and environmental
situation did not develop
[[Page 44370]]
overnight, neither can these challenges be addressed and resolved
immediately.
To ensure that we both improve energy security and reduce GHG
emissions, rather than address one at significant cost to the other,
DOE believes that a number of actions must be taken. None of these
actions is sufficient in itself, and none of these actions can be
pursued to the exclusion of the others.
Specifically, the United States and other nations must: Bring more
renewable energy online; aggressively deploy alternative fuels; develop
and use traditional hydrocarbon resources, and do so in ways that are
clean and efficient; expand access to safe and emissions-free nuclear
power, while responsibly managing spent nuclear fuel and reducing
proliferation risks; and significantly improve the efficiency of how we
use energy. In all of these things, the Department believes that
technological innovation and advancement is the key to unlocking the
future of abundant clean energy and lower GHG emissions. Therefore,
this innovation and advancement--through government funding, private
investment, and public policies that promote both of these--should be
the cornerstone of any plan to combat global climate change.
In recent years, DOE has invested billions of dollars to advance
the development of technologies that advance these objectives. For
example, in 2007 DOE funded the creation of three cutting-edge
bioenergy research facilities. These facilities, which are already
showing progress, will seek to advance the production of biofuels that
have significant potential for both increasing the Nation's energy
security and reducing GHG emissions. Since the start of 2007, DOE has
invested well over $1 billion to spur the growth of a robust,
sustainable biofuels industry in the United States.
DOE also has promoted technological advancement and deployment in
other renewable energy areas such as wind, solar and geothermal power,
and these advancements and policies are producing results. For example,
in 2007, U.S. cumulative wind energy capacity reached 16,818
megawatts--more than 5,000 megawatts of wind generation were installed
in 2007 alone. The United States has had the fastest growing wind power
capacity in the world for the last three years in a row. In addition,
DOE recently issued a solicitation offering up to $10 billion in
federal loan guarantees, under the program authorized by Title XVII of
the Energy Policy Act of 2005, to incentivize the commercial deployment
of new or significantly improved technologies in projects that will
avoid, reduce or sequester emissions of GHGs or other air pollutants.
DOE strongly believes that nuclear power must play an important
role in any effective program to address global climate change. Indeed,
we believe that no serious effort to effectively control GHG emissions
and address climate change can exclude the advancement and development
of nuclear power. DOE continues to seek advancements in nuclear power
technology, in the licensing of new nuclear power facilities, and in
responsibly disposing of spent nuclear fuel. With respect to new
nuclear power plants, DOE has put in place a program to provide risk
insurance for the developers of the first new facilities, and recently
issued a solicitation offering up to $18.5 billion in federal loan
guarantees for new nuclear power plants.
Significant advancements have been made in recent years toward the
development of new nuclear facilities. There now are pending at the
Nuclear Regulatory Commission several applications, all of which have
been filed in 2007 or 2008, to license new nuclear generating
facilities. DOE views the filing of these applications and the interest
in licensing and building new nuclear power facilities as very positive
developments from the perspectives of the Nation's electric reliability
and energy security, as well as the effort to control greenhouse gas
emissions. But there still is much to be done, and it will take a
sustained effort both by the private sector and by federal, State and
local governments, to ensure that these facilities are licensed, built
and placed into service.
As noted above, DOE believes that coal can and must play an
important role in this Nation's energy future. Moreover, regardless
what decisions about coal U.S. policy officials may wish to make, it
seems clear that coal will continue to be used by other countries to
generate electricity for decades to come. It has been noted that China
is building new coal power plant capacity at the incredible rate of one
per week. As a result, it is critically important that we develop and
deploy cost-effective carbon capture and sequestration technology, both
to ensure that we can take advantage of significant energy resources
available in the United States, but also to help enable the control of
emissions in other countries as well.
DOE believes that cost effective CCS technology must be developed
over the next 10-15 years that could be deployed on new plants built to
meet increasing demand and to replace retiring capital stock, and
retrofitted on existing plants with substantial remaining plant life.
DOE is helping to develop technologies to capture, purify, and store
CO2 in order to reduce GHG emissions without significant
adverse effects on energy use or on economic growth. DOE's primary CCS
research and development objectives are: (1) Lowering the cost and
energy penalty associated with CO2 capture from large point
sources; and (2) improving the understanding of factors affecting
CO2 storage permanence, capacity, and safety in geologic
formations and terrestrial ecosystems.
Once these objectives are met, new and existing power plants and
fuel processing facilities in the U.S. and around the world will have
the potential to deploy CO2 capture technologies. Roughly
one third of the United States' carbon emissions come from power plants
and other large point sources. To stabilize and ultimately reduce
atmospheric concentrations of CO2, it will be necessary to
employ carbon sequestration--carbon capture, separation and storage or
reuse. The availability of advanced coal-fired power plants with CCS to
provide clean, affordable energy is essential for the prosperity and
security of the United States.
The DOE carbon sequestration program goal is to develop at R&D
scale by 2012, fossil fuel conversion systems that offer 90 percent
CO2 capture with 99 percent storage permanence at less than
a 10 percent increase in the cost of energy services from new plants.
For retrofits of existing facilities, the task will be much harder, and
the penalties in terms of increased cost of power production from those
plants likely will be much higher. We expect that these integrated
systems for new plants will be available for full commercial
deployment--that is, will have completed the demonstration and early
deployment phase--in the 2025 timeframe. Of course, there are inherent
uncertainties in these projections and long-term research, development,
demonstration and deployment goals.
In line with the Department's CCS R&D goals, DOE is working with
regional carbon sequestration partnerships to facilitate the
development of the infrastructure and knowledge base needed to place
carbon sequestration technologies on the path to commercialization. In
addition, DOE recently restructured its FutureGen program to accelerate
the near-term deployment of advanced clean coal technology by equipping
new integrated gasification combined cycle (IGCC) or other clean coal
commercial power
[[Page 44371]]
plants with CCS technology. By funding multiple projects, the
restructured FutureGen is expected to at least double the amount of
CO2 sequestered compared to the concept that previously had
been announced in 2003. The restructured FutureGen approach also will
focus on the challenges associated with avoidance and reduction of
carbon emissions and criteria pollutants through sequestration.
In order to reduce the demand on our power sector and the
associated emissions of GHGs and other pollutants, we must continue to
support expanded efforts to make our society more efficient, from major
power plants to residential homes. DOE has helped lead this effort
with, among other things, its Energy Star program, a government-backed
joint effort with EPA to establish voluntary efficiency standards that
help businesses and individuals protect the environment and save money
through greater energy efficiency. By issuing higher efficiency
standards for an increasing number of products, the Energy Star program
helps consumers make fully-informed and energy-conscious decisions that
result in reduced emissions of GHGs and other pollutants. Last year
alone, with the help of the Energy Star program, American consumers
saved enough energy to power 10 million homes and avoid GHG emissions
equivalent to the emissions from 12 million cars--all while saving $6
billion in energy costs.
IV. Conclusion
The Department believes the draft does not address and explain in
clear, understandable terms the extraordinary costs, burdens and other
adverse consequences, and the potentially limited benefits, of the
United States unilaterally using the Clean Air Act to regulate GHG
emissions. The draft, while presenting useful analysis, seems to make a
case for the CAA being the proper vehicle to meaningfully combat global
climate change, but we believe it understates the potential costs and
collateral adverse effects of attempting to regulate GHG emissions and
address climate change through a regulatory scheme that is forced into
the Clean Air Act's legal and regulatory mold.
Any effective and workable approach to controlling GHG emissions
and addressing global climate change should not simply consist of a
unilateral and extraordinarily burdensome CAA regulatory program that
is placed on top of the U.S. economy with all other existing mandates,
restrictions, etc. simply remaining in place and the Government taking
the position that U.S. energy security and indeed the American economy
will just have to live with whatever results the GHG control program
produces. Rather, the Nation can only effectively address GHG emissions
and global climate change in coordination with other countries, and by
addressing how to regulate GHG emissions while considering the effect
of doing so on the Nation's energy and economic security. Considering
and developing such a comprehensive approach obviously will be very
difficult. But what seems clear is that it would be better than the
alternative, if the alternative is unilaterally proceeding with the
enormously burdensome, complex and costly regulatory program under the
Clean Air Act discussed in the draft, which in the end might not even
produce the desired climate change benefits.
U.S. Department of Commerce
Analysis of Draft Advanced Notice of Proposed Rulemaking
''Regulating Greenhouse Gas Emissions Under the Clean Air Act''
Overview: This analysis reviews some of the implications of
regulating greenhouse gas (GHG) emissions under the Clean Air Act (CAA)
as outlined in the draft Advance Notice of Proposed Rulemaking
submitted to the Office of Management and Budget on June 17, 2008 (the
draft). The Department of Commerce's fundamental concern with the
draft's approach to using the CAA to regulate GHGs is that it would
impose significant costs on U.S. workers, consumers, and producers and
harm U.S. competitiveness without necessarily producing meaningful
reductions in global GHG emissions.
Impact on U.S. Competitiveness and Manufacturing: The draft states
that competitiveness is an important policy consideration in assessing
the application of CAA authorities to GHG emissions. It also
acknowledges the potential unintended consequences of domestic GHG
regulation, noting ``[t]he concern that if domestic firms faced
significantly higher costs due to regulation, and foreign firms
remained unregulated, this could result in price changes that shift
emissions, and possibly some production capacity, from the U.S. to
other countries.'' \5\ This is a real issue for any domestic regulation
implemented without an international agreement involving the world's
major emitters.
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\5\ EPA draft, pg. 36.
\6\ EIA International Energy Outlook 2008, http://www.eia.doe.gov/oiaf/ieo/highlights.html.
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However, the draft does not detail the shift in global emissions
that is currently taking place. As the chart below shows, the emissions
of countries outside of the Organization of Economic Cooperation and
Development (OECD) already exceed those of OECD countries. By 2030,
non-OECD emissions are projected to be 72 percent higher than those of
their OECD counterparts.\6\
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Any climate change regulation must take this trend into account.
Greenhouse gas emissions are a global phenomenon, and, as documented in
the draft, require reductions around the world in order to achieve
lower concentrations in the atmosphere. However, the costs of emissions
reductions are generally localized and often borne by the specific
geographic area making the reductions. As a result, it is likely that
the U.S. could experience significant harm to its international
competitiveness if GHGs were regulated under the CAA, while at the same
time major sources of emissions would continue unabated absent an
international agreement.
Because the draft does not specify an emissions target level, the
implications of national regulation for the U.S. economy as a whole and
for energy price-sensitive sectors in particular are difficult to
forecast. However, recent analysis of emissions targets similar to
those cited in the draft provides a guide to the estimated level of
impacts.
In April 2008, the Energy Information Administration (EIA) released
an analysis of legislation that set emission reduction targets of 30
percent below 2005 levels by 2030 and 70 percent below 2005 levels by
2050. The EIA estimated that in the absence of international offsets
and with limited development of alternatives, achieving those emission
targets would reduce manufacturing employment by 10 percent below
currently projected levels in 2030. Under the same scenario, the EIA
estimate indicated the emission targets would reduce the output of key
energy-intensive manufacturing industries, such as food, paper, glass,
cement, steel, and aluminum, by 10 percent and the output of non-energy
intensive manufacturing industries by nine percent below currently
projected levels in 2030.\7\
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\7\ Energy Market and Economic Impacts of S. 2191, Figure 28 &
29, http://www.eia.doe.gov/oiaf/servicerpt/s2191/economic.html.
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The European Union's experience with implementation of its cap-and-
[[Page 44373]]
trade system is also instructive from a competitiveness standpoint. Key
energy intensive industries in Europe have raised concerns about the
competitiveness impacts of the emissions trading system (ETS), arguing
that the ETS would force them to relocate outside of Europe. EU leaders
have responded to these concerns by considering the possibility of
awarding free emissions permits to certain industries, provided the
industries also agreed to reduce emissions.\8\ This illustrates one of
the challenges of crafting an effective national or regional solution
to a global problem.
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\8\ Financial Times, ``Brussels softens line on carbon
permits,'' Andrew Bounds, Jan. 22, 2008.
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International Trade: In order to address the concern that GHG
regulation in the United States will lead to emissions leakage and
movement of certain sectors to countries without strict carbon
regulations, the draft requests comment on ``trade-related policies
such as import tariffs on carbon or energy content, export subsidies,
or requirements for importers to submit allowances to cover the carbon
content of certain products.'' \9\
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\9\ EPA draft, pg. 37.
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Applying tariffs to imports from countries without carbon
regulations would have a number of significant repercussions. In
addition to exposing the United States to World Trade Organization
challenges by our trading partners, unilateral U.S. carbon tariffs
could spark retaliatory measures against U.S. exporters, the brunt of
which would fall on U.S. workers, consumers, and businesses. For
example, a World Bank study found that carbon tariffs applied to U.S.
exports to Europe ``could result in a loss of about 7 percent in U.S.
exports to the EU. The energy intensive industries, such as steel and
cement * * * could suffer up to a 30 percent loss.'' \10\
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\10\ The World Bank, International Trade and Climate Change:
Economic, Legal, and Institutional Perspectives, 2008, pg. 12.
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Moreover, carbon tariffs would actively undermine existing U.S.
trade policy. The U.S. Government has consistently advocated for
reducing tariffs, non-tariff barriers, and export subsidies.
Introducing new tariffs or export subsidies for carbon or energy
content would undermine those efforts with respect to clean energy
technologies specifically and U.S. goods and services more broadly, as
well as invite other countries to expand their use of tariffs and
subsidies to offset costs created by domestic regulations.
Two examples of U.S. efforts to reduce tariffs or enhance exports
in this area: The United States Trade Representative is actively
engaged in trade talks to specifically reduce tariffs on environmental
technologies, which will lower their costs and encourage adoption,
while the Department of Commerce's International Trade Administration
is currently planning its third ``Clean Energy'' trade mission to China
and India focused on opening these rapidly developing economies to U.S
exporters of state-of-the-art clean technologies. Rather than raising
trade barriers, the U.S. Government should continue to advocate for the
deployment of clean energy technologies through trade as a way to
address global GHG emissions
The issue of emissions leakage and the potential erosion of the
U.S. industrial base are real concerns with any domestic GHG regulation
proposal outside of an international framework. Accordingly, the proper
way to address this concern is through an international agreement that
includes emission reduction commitments from all the major emitting
economies, not by unilaterally erecting higher barriers to trade.
Realistic Goals for Reducing Carbon Emissions: Establishing a
realistic goal of emissions reduction is an essential aspect of
designing policies to respond to climate change. Although the draft
does not ``make any judgment regarding what an appropriate [greenhouse
gas] stabilization goal may be,'' the document cites, as an example,
the Intergovernmental Panel on Climate Change's projection that global
CO2 emissions reductions of up to 60 percent from 2000 levels by 2050
are necessary to stabilize global temperatures slightly above pre-
industrial levels.\11\
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\11\ EPA draft, pg. 14.
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To provide context, it is useful to note that a 60 percent
reduction in U.S. emissions from 2000 levels would result in emissions
levels that were last produced in the United States during the 1950s
(see chart on next page). In 1950, the population in the United States
was 151 million people--about half the current size--and the Gross
Domestic Product was $293 billion.\12\ Without the emergence of
technologies that dramatically alter the amount of energy necessary for
U.S. economic output, the reduction of energy usage necessary to
achieve this goal would have significant consequences for the U.S.
economy.
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\12\ U.S. Census Bureau, 1950 Decennial Census; Bureau of
Economic Analysis, National Income and Product Accounts Table.
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Moreover, as the draft acknowledges, initial emissions reductions
under the CAA or other mechanism ``may range from only [a] few percent
to 17% or more in some cases. Clearly, more fundamental technological
changes will be needed to achieve deeper reductions in stationary
source GHG emissions over time.'' \13\ But the inability, at this time,
to identify either a realistic emissions target or the technical
feasibility of achieving various levels of reduction is one of the
major flaws of using the draft to assess policy changes of this
magnitude.
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\13\ EPA draft, pg. 209.
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The draft also notes that ``[a]n economy-wide, market-oriented
environmental regulation has never been implemented before in the
U.S.'' \14\ This point is worth underscoring: The CAA has never been
applied to every sector in the U.S. economy. Instead, the CAA is
generally applied to specific sectors (such as the power sector) or
sources of emissions, and it has included initiatives to address
regional and multi-state air quality issues. While these examples
clearly provide valuable experience in addressing air pollution issues
across state boundaries, using the CAA to regulate GHGs is
significantly more ambitious in scope than anything previously
attempted under the CAA.
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\14\ EPA draft, pg. 32.
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Accountability and Public Input: The draft contemplates a dramatic
regulatory expansion under the CAA. However, climate policies of this
magnitude are best addressed through legislative debate and scrutiny.
Examining these issues in the legislative context would ensure that
citizens, through their elected representatives, have ample opportunity
to make their views known and to ensure accountability for the
decisions that are made.
Economic Implications of Applying CAA Authorities: The draft noted
numerous issues of economic significance in analyzing the potential
application of the CAA to stationary sources of GHGs. The Department of
Commerce highlights below some of the most important issues raised in
the draft that could impact U.S. competitiveness, innovation, and job
creation.
Compliance Costs of Multiple State Regulations Under the CAA: The
draft describes the various authorities under the CAA that could be
applied to GHGs. One such mechanism involves the development of
individual state implementations plans (SIPs) in order to meet a
national GHG emissions reduction standard. As the draft notes, ``[t]he
SIP development process, because it relies in large part on individual
states, is not designed to result in a uniform national program of
emission controls.'' \15\ The draft also raises the potential
implications of this approach: ``[u]nder the traditional SIP approach,
emissions controls on specific source categories would flow from
independent state-level decisions, and could result in a patchwork of
regulations requiring different types and levels of controls in
different states.'' \16\ If this were the result, it could undermine
the benefit of having a national standard and significantly raise
compliance costs. The implications of this approach should be examined
further.
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\15\ EPA draft, pg. 181.
\16\ EPA draft, pg. 187.
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Viability of Technological Alternatives: The draft notes that some
of the authorities in the CAA could impose requirements to use
technology that is not commercially viable. For example, when
discussing Standards of Performance for New and Existing Sources, the
draft notes that ``the systems on which the standard is based need only
be `adequately demonstrated' in EPA's view * * * The systems, and
corresponding emission rates, need not be actually in use or achieved
in
[[Page 44375]]
practice at potentially regulated sources or even at a commercial
scale.'' \17\ Similarly, in examining the potential application of the
New Source Review program to nonattainment areas, the draft outlines
the program's required use of the Lowest Available Emissions Rate
(LAER) technology which ``does not allow consideration of the costs,
competitiveness effects, or other related factors associated with the
technology * * * New and modified sources would be required to apply
the new technology even if it is a very expensive technology that may
not necessarily have been developed for widespread application at
numerous smaller sources, and even if a relatively small emissions
improvement came with significant additional cost.'' \18\
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\17\ EPA draft, pg. 196.
\18\ EPA draft, pg. 232.
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If CAA requirements such as these were used to regulate GHGs, it
would impose significant costs on those required to adopt the
technology.
Expanding CAA Regulation to Cover Small Businesses and Non-Profits:
The draft notes that the use of some CAA authorities could extend
regulation to small and previously unregulated emissions sources. For
example, the draft states that the use of one authority under the CAA
could result in the regulation of ``small commercial or institutional
establishments and facilities with natural gas-fired furnaces.'' \19\
This could include large single family homes, small businesses,
schools, or hospitals heated by natural gas. If the CAA was applied in
ways that extended it beyond those traditionally regulated under the
Act, it could have significant economic impacts, and the costs of such
an application should be further analyzed. To put this potential
expansion in context, in 2003 there were 2.4 million commercial non-
mall buildings in the United States that used natural gas, and an
estimated 54 percent of these buildings were larger than 5,000 square
feet.\20\ According to the EIA's 2003 Commercial Building Energy
Consumption Survey, a building between 5,001 to 10,000 square feet
consumes 408,000 cubic feet of natural gas per year.\21\ Based on
preliminary calculations using the EPA's Greenhouse Gas Equivalencies
Calculator, this translates into annual CO2 emissions of 21
metric tons, which would exceed the allowable threshold under one
provision of the CAA.\22\
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\19\ EPA draft, pg. 215.
\20\ Energy Information Agency, 2003 Commercial Buildings Energy
Consumption Survey-Overview of Commercial Buildings Characteristics,
Table C23.
\21\ 2003 Commercial Buildings Energy Consumption Survey.
\22\ Calculation done by converting cubic feet of gas consumed
to therms, and the number of therms then inserted into the EPA
calculator. According to the EPA draft (pg. 214): If GHGs were
listed as a Hazardous Air Pollutant (HAP) under the CAA, the HAP
standard's ``major source thresholds of 10 tons for a single HAP and
25 for any combination of HAP would mean that very small GHG
emitters would be considered major sources.''
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The table below taken from the EIA's 2003 Commercial Building
Energy Consumption Survey shows the number and size of U.S. buildings,
providing more detail on the type of structures that could be regulated
if the CAA was applied to GHGs. Based on the estimate of 21 metric tons
of annual emissions from a building 5,000-10,000 square feet in size,
it is likely that schools, churches, hospitals, hotels, and police
stations heated by natural gas could be subject to the CAA. Clearly,
the costs and benefits of such an approach should be examined in
greater detail.
Non-Mall Buildings Using Natural Gas
[Number and Floorspace by Principal Building Activity, 2003]
----------------------------------------------------------------------------------------------------------------
Number of Total floorspace Mean square feet
buildings (million sq. per building
(thousand) ft.) (thousand)
----------------------------------------------------------------------------------------------------------------
All Buildings............................................. 2,391 43,468 18.2
Education................................................. 213 7,045 33.1
Food Sales................................................ 98 747 7.6
Food Service.............................................. 226 1,396 6.2
Health Care............................................... 72 2,544 35.5
Inpatient............................................. 7 1,805 257.0
Outpatient............................................ 65 739 11.4
Lodging................................................... 86 4,256 49.7
Mercantile................................................ 245 2,866 11.7
Office.................................................... 488 8,208 16.8
Public Assembly........................................... 146 2,723 18.6
Public Order and Safety................................... 36 637 17.7
Religious Worship......................................... 220 2,629 11.9
Service................................................... 281 2,496 8.9
Warehouse and Storage..................................... 187 5,494 29.4
Other..................................................... 45 1,252 27.9
Vacant.................................................... 49 1,176 24.2
----------------------------------------------------------------------------------------------------------------
Source: from Energy Information Administration, 2003 Commercial Buildings Energy Consumption Survey, Table C23.
(http://www.eia.doe.gov/emeu/cbecs/cbecs2003/detailed_tables_2003/2003set11/2003excel/c23.xls)
Cost of CAA Permitting: As the draft states, ``the mass emissions
[of CO2] from many source types are orders of magnitude
greater than for currently regulated pollutants,'' which could result
in the application of the CAA's preconstruction permitting requirements
for modification or new construction to large office buildings, hotels,
apartment building and large retail facilities.\23\ The draft also
notes the potential time impacts (i.e., the number of months necessary
to receive a CAA permit) of applying new permit requirements to
projects and buildings like those noted above that were not previously
subject to the CAA.\24\ The potential economic costs of applying the
CAA permitting regimes to these areas of the economy, such as small
businesses and commercial development, merit a complete assessment of
the costs and benefits of such an approach.
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\23\ EPA draft, pg. 224, 225.
\24\ EPA draft, pg. 227.
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Conclusion: Climate change presents real challenges that must be
addressed through focused public policy
[[Page 44376]]
responses. However, the draft raises serious concerns about the use of
the CAA to address GHG emissions. The CAA is designed to reduce the
concentration of pollutants, most of which have a limited lifetime in
the air, while climate change is caused by GHG emissions that linger in
the atmosphere for years. The CAA uses regulations that are often
implemented at the state and regional level, while climate change is a
global phenomenon. The CAA is designed to regulate major sources of
traditional pollutants, but applying those the standards to GHGs could
result in Clean Air Act regulation of small businesses, schools,
hospitals, and churches.
Using the CAA to address climate change would likely have
significant economic consequences for the United States. Regulation of
GHG emissions through the CAA would mean that the United States would
embrace emissions reductions outside of an international agreement with
the world's major emitters. This would put U.S. firms at a competitive
disadvantage by raising their input costs compared to foreign
competitors, likely resulting in emissions leakage outside of the
United States and energy-intensive firms relocating to less regulated
countries. Such an outcome would not be beneficial to the environment
or the U.S. economy.
Department of Agriculture
Americans enjoy the safest, most abundant, and most affordable food
supply in the world. Our farmers are extraordinarily productive, using
technology and good management practices to sustain increased yields
that keep up with growing populations, and they are good stewards of
the land they depend upon for their livelihoods. Because of their care
and ingenuity, the United States is projecting an agricultural trade
surplus of $30 billion in 2008.
Unfortunately, the approach suggested by the Environmental
Protection Agency (``EPA'') staff's draft Advance Notice of Proposed
Rulemaking ``Regulating Greenhouse Gas Emissions under the Clean Air
Act,'' which was submitted to the Office of Management and Budget on
June 17, 2008 (``June 17 draft'' or ``draft ANPR''), threatens to
undermine this landscape. If EPA were to exercise a full suite of the
Clean Air Act (``CAA'') regulatory programs outlined in the draft ANPR,
we believe that input costs and regulatory burden would increase
significantly, driving up the price of food and driving down the
domestic supply. Additionally, the draft ANPR does not sufficiently
address the promise of carbon capture and sequestration, and how a
Clean Air Act regulatory framework could address these issues.
Input Costs
Two of the more significant components of consumer food prices are
energy and transportation costs, and as these costs rise, they will
ultimately be passed on to consumers in the form of higher food prices.
As the past several months have demonstrated to all Americans, food
prices are highly sensitive to increased energy and transportation
costs. From May 2007 to May 2008, the price of crude oil has almost
doubled, and the price consumers in the United States paid for food has
increased by 5.1%.
We do not attempt here to address the effects on energy and
transportation costs that would likely flow from a Clean Air Act
approach to regulating greenhouse gases. The expert agencies--the
Department of Energy and the Department of Transportation--have each
included their own brief assessments of such effects. Our analysis
begins with the assumption that these input costs would be borne by
agricultural producers.
United States commercial agriculture is a highly mechanized
industry. At every stage--field preparation, planting, fertilization,
irrigation, harvesting, processing, and transportation to market--
modern agriculture is dependent on technically complex machinery, all
of which consume energy. Direct energy consumption in the agricultural
sector includes use of gas, diesel, liquid petroleum, natural gas, and
electricity. In addition, agricultural production relies on energy
indirectly through the use of inputs such as nitrogen fertilizer, which
have a significant energy component associated with their production.
Crop and livestock producers have been seeing much higher input
prices this year. From June 2007 to June 2008, the prices paid by
farmers for fertilizer are up 77%, and the prices paid for fuels have
risen 61%. The prices paid by farmers for diesel fuel alone have
increased by 72% over the past year. In practical terms, these figures
mean that it is becoming far more costly for the producer to farm.
Currently, USDA forecasts that expenditures for fertilizers and lime,
petroleum fuel and oils, and electricity will exceed $37 billion in
2008, up 15% from 2007.
Depending on the extent to which the Clean Air Act puts further
pressure on energy prices, input costs for indispensible items such as
fuel, feed, fertilizer, manufactured products, and electricity will
continue to rise. A study conducted by USDA's Economic Research Service
(Amber Waves, April 2006) found the impact of energy cost changes on
producers depends on both overall energy expenditures and, more
importantly, energy's share of production costs, with the potential
impacts on farm profits from changes in energy prices greatest for feed
grain and wheat producers. The study also found that variation in the
regional distribution of energy input costs suggests that changes in
energy prices would most affect producers in regions where irrigation
is indispensable for crop production. Less use of irrigation could mean
fewer planted acres or lower crop yields, resulting in a loss of
production. In addition to potential financial difficulties, farmers
fear that future tillage practices could be mandated and livestock
methane management regulated.
However, the impact of higher energy prices on farmers is only part
of the story. Only 19% of what consumers paid for food in 2006 went to
the farmer for raw food inputs. The remaining 81% covered the cost of
transforming these inputs into food products and transporting them to
the grocery store shelf. Of every $1 spent on U.S.-grown foods, 3.5
cents went toward the costs of electricity, natural gas, and other
fuels used in food processing, wholesaling, retailing, and food service
establishments. An additional 4 cents went toward transportation costs.
This suggests that for every 10 percent increase in energy costs,
retail food prices could increase by as much as 0.75 percent if fully
passed onto consumers. The resulting impact to the consumer of higher
energy prices will be much higher grocery bills. More important,
however, will be the negative effect on our abundant and affordable
food supply.
Regulatory Burden on Agriculture
In its draft ANPR, EPA contemplates regulating agricultural
greenhouse gas (GHG) emissions under the three primary CAA programs--
National Ambient Air Quality Standards (``NAAQS''), New Source
Performance Standards (``NSPS''), or Hazardous Air Pollutant (``HAP'')
standards. Like the Act itself, these programs were neither designed
for, nor are they suitable to, regulation of greenhouse gases from
agricultural sources. If agricultural producers were covered under such
complex regulatory schemes, most (except perhaps the largest
operations) would be ill-equipped to bear the costly
[[Page 44377]]
burdens of compliance, and many would likely cease farming altogether.
The two common features of each CAA program are permitting and
control requirements:
Permitting: Operators who are subject to Title V permitting
requirements--regardless of which CAA program is applicable--are
required to obtain a permit in order to operate. These Title V permits
are subject to a public notice and comment period and contain detailed
requirements for emission estimation, monitoring, reporting, and
recordkeeping. Title V permits may also contain control requirements
that limit the operation of a facility. If a producer desired, or were
compelled by changed circumstances (e.g., changing market demand,
weather events, or pest infestation) to modify his operational plans,
he would be required to first seek a permit modification from EPA or
the State.
If GHG emissions from agricultural sources are regulated under the
CAA, numerous farming operations that currently are not subject to the
costly and time-consuming Title V permitting process would, for the
first time, become covered entities. Even very small agricultural
operations would meet a 100-tons-per-year emissions threshold. For
example, dairy facilities with over 25 cows, beef cattle operations of
over 50 cattle, swine operations with over 200 hogs, and farms with
over 500 acres of corn may need to get a Title V permit. It is neither
efficient nor practical to require permitting and reporting of GHG
emissions from farms of this size. Excluding only the 200,000 largest
commercial farms, our agricultural landscape is comprised of 1.9
million farms with an average value of production of $25,589 on 271
acres. These operations simply could not bear the regulatory compliance
costs that would be involved.
Control: Unlike traditional point sources of concentrated emissions
from chemical or manufacturing industries, agricultural emissions of
greenhouse gases are diffuse and most often distributed across large
open areas. These emissions are not easily calculated or controlled.
Moreover, many of the emissions are the result of natural biological
processes that are as old as agriculture itself. For instance,
technology does not currently exist to prevent the methane produced by
enteric fermentation associated with the digestive processes in cows
and the cultivation of rice crops; the nitrous oxide produced from the
tillage of soils used to grow crops; and the carbon dioxide produced by
soil and animal agricultural respiratory processes. The only means of
controlling such emissions would be through limiting production, which
would result in decreased food supply and radical changes in human
diets.
The NAAQS program establishes national ambient concentration levels
without consideration of specific emission sources. The determination
of which source is required to achieve emission reductions and how to
achieve those reductions is specified in the State Implementation Plans
(``SIPs'') developed by each State. Under a NAAQS regulatory program,
agricultural sources may need to employ Reasonably Available Control
Measures (``RACM'') or, at a minimum, include the use of Reasonably
Available Control Technologies (``RACT''). In the past, such control
measures were established with a national focus for typical industrial
sources. In previously regulated sectors, these control measures and
technologies have typically been associated with improved engineering
or chemical processes; however, agriculture is primarily dependent upon
biological processes which are not readily re-engineered. Given the
nature of many agricultural source emissions, RACM and RACT may not
exist or may be cost prohibitive.
The NSPS program regulates specific pollutants emitted from
industrial categories for new, modified, or reconstructed facilities.
EPA, rather than individual States, determines who is regulated, the
emission reductions that must be achieved, and the associated control
technologies and compliance requirements. Should EPA choose to regulate
agriculture under NSPS, control requirements would be established at
the national level using a ``one-size-fits-all'' approach. Differences
in farming practices make it difficult to comply with this approach, as
variability exists between types of operations and between similar
operations located in different regions of the United States.
In addition, regulation of the agricultural sector under a NSPS
program would likely trigger the added challenge of compliance with the
pre-construction permitting process under the Prevention of Significant
Deterioration (``PSD'') program. Triggering pre-construction permits
could result in a requirement to utilize Best Available Control
Technologies (``BACT'') or technologies that achieve the Lowest
Available Emission Reductions (``LAER''). Given the state of available
control methods for agricultural area sources, compliance with these
requirements may not currently be achievable in many instances. Should
BACT or LAER technologies exist, the ability to utilize them across the
variety of farming operations is questionable, and the costs to employ
these technologies would be high since they would be relatively new
technologies.
Similar to the NSPS program, the HAP program focuses on industrial
categories. EPA must list for regulation all categories of major
sources that emit one or more HAP at levels that are very low (i.e., 10
tons per year of a single HAP or 25 tons per year of a combination of
HAP). Under a HAP program, EPA can regulate both major sources and
smaller (i.e., area) sources. In addition to the Title V permit
requirement, this program would result in emission control requirements
for all agricultural sources regardless of the size of the operation.
These requirements are driven by the best-performing similar sources,
with EPA determining the similarity between sources. This approach does
not lend itself to compliance by agricultural sources whose practices
vary farm-by-farm and locality-by-locality. In addition, the cost of
controls used by the best-performing sources would increase the
operating expenses for all farms regardless of size.
While this discussion only begins to address the practical
difficulties that agricultural producers will face if EPA were to
regulate GHGs under the CAA, these questions have not been raised in
the draft ANPR in the context of agriculture. USDA believes that these
issues must be thoroughly considered before a rule is finalized.
Capture and Sequestration
The draft ANPR does not sufficiently address the promise of carbon
capture and sequestration, or how a Clean Air Act regulatory framework
could address these issues. In describing emissions by sector, the
draft ANPR does contain the following brief introductory statement:
Land Use, Land-Use Change, and Forestry: Land use is not an
economic sector per se but affects the natural carbon cycle in ways
that lead to GHG emissions and sinks. Included in this category are
emissions and sequestration of CO2 from activities such
as deforestation, afforestation, forest management and management of
agricultural soils. Emissions and sequestration depend on local
conditions, but overall land use in the United States was a net sink
in 2006 equivalent to 12.5 percent of total GHG emissions.
Thus, the United States Government, as well as private landowners
throughout the country, possess land resources that hold potentially
[[Page 44378]]
tremendous economic and environmental value in a carbon-limited
environment.
Unfortunately, in the draft ANPR's extensive discussion of
regulatory alternatives, the EPA staff does not even attempt to make
the case that the Clean Air Act could or should be used to ensure that
a regulatory scheme maximizes opportunities and incentives for carbon
capture and sequestration. Had the draft ANPR raised these issues, it
would become evident that there are substantial questions as to whether
the CAA could provide an effective vehicle to account for such
beneficial actions.
Additionally, any regulatory program should avoid needless
duplication and conflict with already existing efforts. The recently
enacted Food, Conservation and Energy Act of 2008 (``Farm Bill'')
requires the Secretary of Agriculture to establish technical guidelines
to create a registry of environmental services benefits from
conservation and land management activities, including carbon capture
and sequestration. USDA is including EPA and other Federal agencies as
participants in this process, which we believe holds substantial
promise.
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BILLING CODE 6560-50-C
General Information
What Should I Consider as I Prepare My Comments for EPA?
A. Submitting CBI
Do not submit this information to EPA through www.regulations.gov
or e-mail. Clearly mark the part or all of the information that you
claim to be confidential business information (CBI). For CBI
information in a disk or CD ROM that you mail to EPA, mark the outside
of the disk or CD ROM as CBI and then identify electronically within
the disk or CD ROM the specific information that is claimed as CBI. In
addition to one complete version of the comment that includes
information claimed as CBI, a copy of the comment that does not contain
the information claimed as CBI must be submitted for inclusion in the
public docket. Information so marked will not be disclosed except in
accordance with procedures set forth in 40 CFR part 2.
B. Tips for Preparing Your Comments
When submitting comments, remember to:
Explain your views as clearly as possible.
Describe any assumptions that you used.
Provide any technical information and/or data you used
that support your views.
If you estimate potential burden or costs, explain how you
arrived at your estimate.
Provide specific examples to illustrate your concerns.
Offer alternatives.
Make sure to submit your comments by the comment period
deadline identified.
To ensure proper receipt by EPA, identify the appropriate
docket identification number in the subject line on the first page of
your response. It would also be helpful if you provided the name, date,
and Federal Register citation related to your comments.
Outline of This Preamble
I. Introduction
II. Background Information
III. Nature of Climate Change and Greenhouse Gases and Related
Issues for Regulation
IV. Clean Air Act Authorities and Programs
V. Endangerment Analysis and Issues
VI. Mobile Source Authorities, Petitions and Potential Regulation
VII. Stationary Source Authorities and Potential Regulation
VIII. Stratospheric Ozone Protection Authorities, Background, and
Potential Regulation
I. Introduction
Climate change is a serious global challenge. As detailed in
section V of this notice, it is widely recognized that greenhouse gases
(GHGs) have a climatic warming effect by trapping heat in the
atmosphere that would otherwise escape to space. Current atmospheric
concentrations of GHGs are significantly higher than pre-industrial
levels as a result of human activities. Warming of the climate system
is unequivocal, as is now evident from observations of increases in
global average air and ocean temperatures, widespread melting of snow
and ice, and rising global average sea level. Observational evidence
from all continents and most oceans shows that many natural systems are
being affected by regional climate changes, particularly temperature
increases. Future projections show that, for most scenarios assuming no
additional GHG emission reduction policies, atmospheric concentrations
of GHGs are expected to continue climbing for most if not all of the
remainder of this century, with associated increases in average
temperature. Overall risk to human health, society and the environment
increases with increases in both the rate and magnitude of climate
change.
Today's notice considers the potential use of the CAA to address
climate change. In April 2007, the Supreme Court concluded in
Massachusetts v. EPA, 127 S. Ct. 1438 (2007), that GHGs meet the CAA
definition of ``air pollutant,'' and that section 202(a)(1) of the CAA
therefore authorizes regulation of GHGs subject to an Agency
determination that GHG emissions from new motor vehicles cause or
contribute to air pollution that may reasonably be anticipated to
endanger public health or welfare. The Court also ruled that in
deciding whether to grant or deny a pending rulemaking petition
regarding section 202(a)(1), EPA must decide whether new motor vehicle
GHG emissions meet that endangerment test, or explain why scientific
uncertainty is so profound that it prevents making a reasoned judgment
on such a determination. If EPA finds that new motor vehicle GHG
emissions meet the endangerment test, section 202(a)(1) of the CAA
requires the Agency to set motor vehicle standards applicable to
emissions of GHGs.
EPA is also faced with the broader ramifications of any regulation
of motor vehicle GHG emissions under the CAA in response to the Supreme
Court's decision. Over the past several months, EPA has received seven
petitions from states, localities, and environmental groups to set
emission standards under Title II of Act for other types of mobile
sources, including nonroad vehicles such as construction and farm
equipment, ships and aircraft. The Agency has also received public
comments seeking the addition of GHGs to the pollutants covered by the
new source performance standard (NSPS) for several industrial sectors
under section 111 of the CAA. In addition, legal challenges have been
brought seeking controls for GHG emissions in
[[Page 44397]]
preconstruction permits for several coal-fired power plants.
The interrelationship of CAA authorities and the broad array of
pending and potential CAA actions concerning GHGs make it prudent to
thoroughly consider how the various CAA authorities would or could work
together if GHG controls were established under any provision of the
Act. Since regulation of one source of GHG emissions would or could
lead to regulation of other sources of GHG emissions, the Agency should
be prepared to manage the consequences of CAA regulation of GHGs in the
most effective and efficient manner possible under the Act.
Today's notice discusses our work to date in response to the
Supreme Court's decision regarding an endangerment finding and vehicle
standards under section 202 of the Act. It also includes a
comprehensive examination of the potential effects of using various
authorities under the Act to regulate other sources of GHG emissions.
In addition, this notice examines and seeks public comment on the
petitions the Agency has received for GHG regulation of additional
mobile source categories. In light of the interrelationship of CAA
authorities and the pending CAA actions concerning GHGs, the notice
identifies and discusses possible approaches for controlling GHG
emissions under the Act and the issues they raise.
Today's notice is also part of broader efforts to address the
climate change challenge. Since 2001, President Bush has pursued a
broad climate change agenda that has improved our understanding of
climate change and its effects, spurred development of needed GHG
control technologies, increased our economy's energy efficiency, and
engaged other nations in efforts to foster sensible solutions to the
global challenge of climate change. Building on that success, the
President recently announced a new national goal: to stop the growth of
U.S. GHG emissions by 2025. New actions will be necessary to meet this
goal.
The President has identified several core principles for crafting
any new GHG-specific legislation. EPA believes these principles are
also important in considering GHG regulation under the CAA, to the
extent allowed by law. These principles include addressing GHG
emissions in a manner that does not harm the U.S. economy; encouraging
the technological development that is essential to significantly
reducing GHG emissions; and recognizing that U.S. efforts to reduce GHG
emissions could be undermined if other countries with significant GHG
emissions fail to control their emissions and U.S. businesses are put
at a competitive disadvantage relative to their foreign competitors.
Throughout this notice we discuss and seek comment on whether and how
these principles can inform decisions regarding GHG regulation under
the CAA.
In Congress, both the House and Senate are considering climate
change legislation. A number of bills call for reducing GHG emissions
from a wide variety of sources using a ``cap-and-trade'' approach. Many
of the sources that would be subject to requirements under the bills
are already subject to numerous CAA controls. Thus, there is potential
for overlap between regulation under the CAA and new climate change
legislation.
This ANPR performs five important functions that can help inform
the legislative debate:
First, in recognition of the Supreme Court's decision that
GHGs are air pollutants under the CAA, the ANPR outlines options that
may need to be exercised under the Act.
Second, this notice provides information on how the GHG
requirements under the CAA might overlap with control measures being
considered for climate change legislation.
Third, the notice discusses issues and approaches for
designing GHG control measures that are useful in developing either
regulations or legislation to reduce GHG emissions.
Fourth, the ANPR illustrates the complexity and
interconnections inherent in CAA regulation of GHGs. These complexities
reflect that the CAA was not specifically designed to address GHGs and
illustrate the opportunity for new legislation to reduce regulatory
complexity. However, unless and until Congress acts, the existing CAA
will be applied in its current form.
Fifth, some sections of the CAA are inherently flexible
and thus more capable of accommodating consideration of the President's
principles. Other sections may not provide needed flexibility, raising
serious concerns about the results of applying them. EPA believes that
the presentation in this notice of the various potential programs of
the CAA will help inform the legislative debate.
EPA is following the Supreme Court's decision in Massachusetts v.
EPA by seriously considering how to apply the CAA to the regulation of
GHGs. In light of the CAA's interconnections and other issues explored
in this notice, EPA does not believe that all aspects of the Act are
well designed for establishing the kind of comprehensive GHG regulatory
program that could most efficiently achieve the GHG emission reductions
that may be needed over the next several decades. EPA requests comment
on whether well-designed legislation for establishing a broad GHG
regulatory framework has the potential for achieving greater
environmental results at lower cost for many sectors of the economy,
with less concern about emissions leakage and more effective, clearer
incentives for development of technology, than a control program based
on the CAA alone.
II. Background Information
A. Background on the Supreme Court Opinion
On October 20, 1999, the International Center for Technology
Assessment (ICTA) and 18 other environmental and renewable energy
industry organizations filed a petition with EPA seeking regulation of
GHGs from new motor vehicles under section 202 (a)(1) of the CAA. The
thrust of the petition was that four GHGs--carbon dioxide
(CO2), methane (CH4), nitrous oxide
(N2O), and hydrofluorocarbons (HFCs)--are air pollutants as
defined in CAA section 302(g), that emissions of these GHGs contribute
to air pollution which is reasonably anticipated to endanger public
health or welfare, that these GHGs are emitted by new motor vehicles,
and therefore that EPA has a mandatory duty to issue regulations under
CAA section 202(a) addressing GHGs from these sources.
EPA denied the petition in a notice issued on August 8, 2003. The
Agency concluded that it lacked authority under the CAA to regulate
GHGs for purposes of global climate change. EPA further decided that
even if it did have authority to set GHG emission standards for new
motor vehicles, it would be unwise to do so at this time. More
specifically, EPA stated that CAA regulation of CO2 emitted
by light-duty vehicles would interfere with fuel economy standards
issued by the Department of Transportation (DOT) under the Energy
Policy and Conservation Act (EPCA), because the principal way of
reducing vehicle CO2 emissions is to increase vehicle fuel
economy. The Agency also noted in the 2003 notice that there was
significant scientific uncertainty regarding the cause, extent and
effects of climate change that ongoing studies would reduce. EPA
further stated that regulation of climate change using the CAA would be
inappropriate given the President's comprehensive climate
[[Page 44398]]
change policies, concerns about piecemeal regulation, and implications
for foreign policy.
EPA's denial of the ICTA petition was challenged in a petition for
review filed in the U.S. Court of Appeals for the D.C. Circuit.
Petitioners included 12 states, local governments, and a variety of
environmental organizations. Intervenors in support of respondent EPA
included 10 states and several industry trade associations.
The D.C. Circuit upheld EPA's denial of the petition in a 2-1
opinion (Massachusetts v. EPA, 415 F.3d 50 (D.C. Cir. 2005)). The
majority opinion did not decide but assumed, for purposes of argument,
that EPA had statutory authority to regulate GHGs from new motor
vehicles and held that EPA had reasonably exercised its discretion in
denying the petition.
In a 5-4 decision, the Supreme Court reversed the D.C. Circuit's
decision and held that EPA had improperly denied ICTA's petition
(Massachusetts v. EPA, 127 S. Ct. 1438 (2007)). The Court held that
GHGs are air pollutants under the CAA, and that the alternative denial
grounds provided by EPA were ``divorced from the statutory text'' and
hence improper.
Specifically, the Court held that CO2, CH4, N2O, and HFCs fit the
CAA's definition of ``air pollutant'' because they are `` `physical
[and] chemical * * * substances which [are] emitted into * * * the
ambient air.' '' Id. at 1460. The Court rejected the argument that EPA
could not regulate new motor vehicle emissions of the chief GHG,
CO2, under CAA section 202 because doing so would
essentially regulate vehicle fuel economy, which is the province of DOT
under EPCA. The Court held that EPA's mandate to protect public health
and welfare is ``wholly independent of DOT's mandate to promote energy
efficiency,'' even if the authorities may overlap. Id. at 1462. The
Court stated that ``there is no reason to think the two agencies cannot
both administer their obligations and yet avoid inconsistency.'' Id.
Turning to EPA's alternative grounds for denial, the Court held
that EPA's decision on whether to grant the petition must relate to
``whether an air pollutant `causes, or contributes to, air pollution
which may reasonably be anticipated to endanger public health or
welfare.' '' Id. Specifically, the Court held that generalized concerns
about scientific uncertainty were insufficient unless ``the scientific
uncertainty is so profound that it precludes EPA from making a reasoned
judgment as to whether greenhouse gases contribute to global warming.''
Id. at 1463. The Court further ruled that concerns related to piecemeal
regulation and foreign policy objectives were unrelated to whether new
motor vehicle GHG emissions contribute to climate change and hence
could not justify the denial.
The Court remanded the decision to EPA but was careful to note that
it was not dictating EPA's action on remand, and was not deciding
whether EPA must find there is endangerment. Nor did the Court rule on
``whether policy concerns can inform EPA's actions in the event that it
makes such a finding.'' Id. The Court also observed that under CAA
section 202(a), ``EPA no doubt has significant latitude as to the
manner, timing, content, and coordination of its regulations with those
of other agencies.'' The Supreme Court sent the case back to the D.C.
Circuit, which on September 14, 2007, vacated and remanded EPA's
decision denying the ICTA petition for further consideration by the
Agency consistent with the Supreme Court's opinion.
B. Response to the Supreme Court's Decision to Date
1. The President's May 2007 Announcement and Executive Order
In May 2007, President Bush announced that he was ``directing the
EPA and the Departments of Transportation and Energy (DOT and DOE) to
take the first steps toward regulations that would cut gasoline
consumption and GHG emissions from motor vehicles, using my 20-in-10
plan as a starting point.'' The 20-in-10 plan refers to the President's
legislative proposal, first advanced in his 2007 State of the Union
address, to reduce domestic gasoline consumption by 20% by 2017 through
the use of renewable and alternative fuels and improved motor vehicle
fuel economy.
On the same day, President Bush issued Executive Order (EO) 13432
``to ensure the coordinated and effective exercise of the authorities
of the President and the heads of the [DOT], the Department of Energy,
and [EPA] to protect the environment with respect to greenhouse gas
emissions from motor vehicles, nonroad vehicles, and nonroad engines,
in a manner consistent with sound science, analysis of benefits and
costs, public safety, and economic growth.''
In response to the Supreme Court's Massachusetts decision and the
President's direction, EPA immediately began work with DOT and the
Departments of Energy and Agriculture to develop draft proposed
regulations that would reduce GHG emissions from motor vehicles and
their fuels. In particular, EPA and DOT's National Highway Traffic
Safety Agency (NHTSA) worked together on a range of issues related to
setting motor vehicle GHG emission standards under the CAA and
corporate average fuel economy (CAFE) standards under EPCA. As a
prerequisite to taking action under the CAA, the Agency also compiled
and reviewed the available scientific information relevant to deciding
whether GHG emissions from motor vehicles, and whether GHG emissions
from the use of gasoline and diesel fuel by motor vehicles and nonroad
engines and equipment, cause or contribute to air pollution that may
reasonably be anticipated to endanger public health or welfare.
Sections V and VI of this notice provide further discussion and
detail about EPA's work to date on an endangerment finding and new
motor vehicle regulation under section 202 of the CAA.
2. Passage of a New Energy Law
At the same time as EPA was working with its federal partners to
develop draft proposed regulations for reducing motor vehicle and fuel
GHG emissions, Congress was considering broad new energy legislation
that included provisions addressing the motor vehicle fuel economy and
fuel components of the President's 20-in-10 legislative plan. By the
end of 2007, Congress passed and the President signed the Energy
Independence and Security Act (EISA). Title II of EISA amended the CAA
provisions requiring a Renewable Fuels Standard (RFS) that were first
established in the Energy Policy Act of 2005. EISA also separately
amended EPCA with regard to the DOT's authority to set CAFE standards
for vehicles.
With regard to the RFS, Congress amended section 211(o) of the CAA
to increase the RFS from 7.5 billion gallons in 2012 to 36 billion
gallons in 2022. There are a number of significant differences between
the RFS provisions of EISA and the fuels program EPA was developing
under the President's Executive Order. As a result, EPA is undertaking
substantial new analytical work as part of its efforts to develop the
regulations needed to implement the new RFS requirements. These
regulations are subject to tight statutory deadlines.
With regard to motor vehicle regulations, EISA did not amend CAA
section 202, which contains EPA's general authority to regulate motor
vehicle emissions. However, EISA did substantially alter DOT's
authority to set CAFE standards under EPCA. The
[[Page 44399]]
legislation directs the Department to set CAFE standards that achieve
fleet-wide average fuel economy of at least 35 miles per gallon by 2020
for light-duty vehicles, and for the first time to establish fuel
economy standards for heavy-duty vehicles after a period of study.
In view of this new statutory authority, EPA and DOT have reviewed
the previous regulatory activities they had undertaken pursuant to the
President's May 14 directive and EO 13432. While EPA recognizes that
EISA does not change the Agency's obligation to respond to the Supreme
Court's decision in Massachusetts v. EPA or the scientific basis for
any decision, the new law has changed the context for any action EPA
might take in response to the decision by requiring significant
improvements in vehicle fuel economy that will in turn achieve
substantial reductions in vehicle emissions of CO2.\25\
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\25\ The Current Unified Agenda and Regulatory Plan (Regulatory
Plan) available in May 2008 reflects that EPA is addressing its
response to Massachusetts v. EPA as part of today's notice. The
latest Regulatory Plan also contains a new entry for the renewable
fuels standard program EPA is undertaking pursuant to Title II of
EISA (RIN 2060-AO81). The current Regulatory Plan is available at
http://www.reginfo.gov/public/do/eAgendaMain.
---------------------------------------------------------------------------
3. Review of CAA Authorities
As part of EPA's efforts to respond to the Supreme Court's
decision, the Agency conducted a thorough review of the CAA to identify
and assess any other CAA provisions that might authorize regulation of
GHG emission sources. That review made clear that a decision to control
any source of GHG emissions could or would impact other CAA programs
with potentially far-reaching implications for many industrial sectors.
In particular, EPA recognized that regulation of GHG emissions from
motor vehicles under section 202(a)(1) or from other sources of GHG
emissions under many other provisions of the Act would subject major
stationary sources to preconstruction permitting under the CAA. As
discussed later in this notice, the Prevention of Significant
Deterioration (PSD) program established in Part C of Title I of the Act
requires new major stationary sources and modified stationary sources
that significantly increase their emissions of regulated air pollutants
to apply for PSD permits and put on controls to reduce emissions of
those pollutants that reflect the best available control technology
(BACT). Because CO2 is typically emitted in much larger quantities
relative to traditional air pollutants, CAA regulation of CO2 would
potentially extend PSD requirements to many stationary sources not
previously subject to the PSD program, including large buildings heated
by natural gas or oil, and add new PSD requirements to sources already
subject to the program. This and other CAA implications of regulation
of GHG emissions under the Act are explored later in this notice.
C. Other Pending GHG Actions Under the CAA
1. Additional Mobile Source Petitions
Since the Supreme Court's Massachusetts decision, EPA has received
seven additional petitions requesting that the Agency make the
requisite endangerment findings and undertake rulemaking under CAA
sections 202(a)(3), 211, 213 and 231 to regulate GHG emissions \26\
from (1) fuels and a wide array of mobile sources including ocean-going
vessels; (2) all other types of nonroad engines and equipment, such as
locomotives, construction equipment, farm tractors, forklifts, harbor
crafts, and lawn and garden equipment; (3) aircraft; and (4) rebuilt
heavy-duty highway engines. The petitioners represent state and local
governments, environmental groups, and nongovernmental organizations.
Copies of these seven petitions can be found in the docket for this
notice.
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\26\ While petitioners vary somewhat in their definition of
GHGs, taken together they seek regulation of CO2, CH4, N2O, HFCs,
PFCs, and SF6, water vapor, and soot or black carbon.
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These petitions have several common elements. First, the
petitioners state that climate change is occurring and is driven by
increases in GHG emissions; that the mobile sources described in the
petitions account for a significant and growing portion of these
emissions; and that those mobile sources must therefore be regulated
under the CAA. Second, the petitioners assert that EPA should
expeditiously regulate GHG emissions from those mobile sources because
they are already harming the petitioners' health and welfare and
further delay by the Agency will only increase the severity of future
harms to public health and welfare. Lastly, the petitioners contend
that technology is currently available to reduce GHG emissions from the
mobile sources for which regulation is sought.
Section VI of this notice provides a brief discussion of these
petitions. The section also summarizes information on the GHG emissions
of each of the three mobile source categories, technologies and other
strategies for reducing GHG emissions from those categories, and
potential approaches for EPA to address their emissions. We request
comment on all issues raised by the petitioners.
2. New Source Performance Standards
The Massachusetts decision also impacts several stationary source
rulemakings. A group of state and local governments and environmental
organizations petitioned the U.S. Court of Appeals for the D.C. Circuit
to review a 2006 decision by EPA not to regulate the GHG emissions of
several types of steam generating units when the Agency conducted the
periodic review of the new source performance standard (NSPS) for those
units as required by CAA section 111. EPA based its decision on the
position it announced in denying the ICTA petition that the CAA does
not authorize regulation of GHG emissions. After the Supreme Court
ruled that the CAA does provide authority for regulating GHG emissions,
the Agency filed a request with the D.C. Circuit to have the NSPS rule
remanded to us for further actions consistent with the Supreme Court's
opinion. Our motion was granted, and this ANPR represents the next step
in our efforts to evaluate and respond to the court's decision.
Another NSPS affected by the Supreme Court's decision is the
standard applicable to petroleum refineries. Pursuant to a consent
decree deadline, EPA proposed revisions to the NSPS on April 30, 2007,
less than one month following the Supreme Court decision. During the
comment period for the review, EPA received comments calling for the
NSPS to be revised to include limits on GHG emissions. In our final
rule on April 30, 2008, we declined to adopt standards for GHGs at that
time. First, we noted that, in the context of statutorily mandated 8-
year reviews for NSPS, EPA has discretion regarding the adoption of
standards for pollutants not previously covered by an NSPS. We also
explained that the significant differences between GHGs and the other
air pollutants for which we have previously established standards under
section 111 require a more thorough and deliberate process to identify
and fully evaluate the implications of a decision to regulate under
this and other provisions of the CAA before deciding how to regulate
GHGs under the Act. We pointed to this notice as the means for
providing that process. We further noted that the time period available
for proposing NSPS was too short for EPA to evaluate and develop
proposed standards in light of the Massachusetts decision.
EPA also recently issued proposed revisions of the Portland cement
NSPS in accordance with the schedule of a
[[Page 44400]]
consent decree. In its May 30, 2008 notice, EPA decided not to propose
adding GHG emission requirements to the Portland cement NSPS for
essentially the same reasons the Agency gave in deciding against adding
GHG controls to the refinery NSPS.
3. Prevention of Significant Deterioration Permitting
As noted previously, the CAA's PSD program requires new major
stationary sources and modified major stationary sources that
significantly increase emissions to obtain air pollution permits before
construction can begin. As part of the permit issuance process, the
public can comment on drafts of these permits. Since the Massachusetts
decision, the number and scope of issues raised by public comments on
draft permits has increased.\27\ The main issue that has been raised is
whether EPA should be establishing facility-specific emission limits
for CO2 in these permits as a result of the Court's decision. EPA's
interpretation, discussed in more detail later in this notice, is that
CO2 is not a regulated pollutant under the Act and that we therefore
currently lack the legal authority to establish emission limits for
this pollutant in PSD permits. That interpretation has been challenged
to EPA's Environmental Appeals Board, and we anticipate a decision in
this case later this year.\28\ The Appeals Board's decision could also
affect several other permits awaiting issuance by EPA, and may have
significant implications for the entire PSD program. The broader
consequences of CO2 and other GHGs being classified as a regulated
pollutant are discussed later in this notice.
EPA has also received other GHG related comments related to other
elements of the PSD program, such as the consideration of GHG emissions
in establishing controls for other pollutants, the consideration of
alternatives to the proposed project, and related issues. EPA is
currently considering these comments in the context of evaluating each
PSD permit application on a case-by-case basis, applying current law.
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\27\ Most PSD permits are issued by states under EPA-approved
state rules. Other states without approved rules can also issue
permits on behalf of EPA under delegation agreements. EPA is the
permitting authority in New York, Massachusetts, Washoe Co (Nevada),
Puerto Rico, Guam, American Samoa, and the Virgin Islands. EPA also
issues PSD permits for sources on tribal lands.
\28\ See, In Re Deseret Power Electric Cooperative, PSD Appeal
No. 07-03 (http://www.epa.gov/region8/air/permitting/deseret.html).
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4. GHG Reporting Rule
In EPA's most recent appropriations bill, Congress called on EPA to
develop and issue a mandatory GHG emissions reporting rule by the
middle of 2009.\29\
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\29\ The fiscal year 2008 Consolidated Appropriations Act states
that ``not less than $3,500,000 shall be provided for activities to
develop and publish a draft rule not later than 9 months after the
date of enactment of this Act, and a final rule not later than 18
months after the date of enactment of this Act, to require mandatory
reporting of greenhouse gas emissions above appropriate thresholds
in all sectors of the economy * * *.''
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Accordingly, EPA is now developing a proposed rule that would
collect emissions and emissions-related information from stationary and
mobile sources. The overall purpose of the rule is to obtain
comprehensive and accurate GHG data relevant to future climate policy
decisions, including potential regulation under the CAA. EPA expects
the rule to provide valuable additional information on the number and
types of U.S. GHG sources and on the GHG emission levels of those
sources.
D. Today's Action
In view of the interrelationship of CAA authorities and the many
pending CAA actions concerning GHGs before the Agency, EPA decided to
issue this ANPR to elicit information that will assist us in developing
and evaluating potential action under the CAA. In this ANPR, we review
the bases for a potential endangerment finding in the context of the
pending petition concerning new motor vehicles, explore
interconnections between CAA provisions that could lead to broader
regulation of GHG emissions, and examine the full range of potential
CAA regulation of GHGs, including a discussion of the issues raised by
regulation of GHG emissions of mobile and stationary sources under the
Act. The ANPR will help us shape an overall approach for potentially
addressing GHG emissions under the CAA as part of a broader set of
actions to address GHG emissions taken by Congress, EPA, other federal
departments and agencies, state and local governments, the private
sector, and the international community.
III. Nature of Climate Change and Greenhouse Gases and Related Issues
for Potential Regulation
Much of today's notice is devoted to a detailed examination of the
various CAA authorities that might be used to regulate GHG emissions
and the scientific and technical bases for potentially exercising those
authorities. A key question for EPA is whether and how potentially
applicable CAA provisions could be used to regulate GHG emissions in an
effective and efficient manner in light of the terms of those
provisions. The global nature of climate change, the unique
characteristics of GHGs, and the ubiquity of GHG emission sources
present special challenges for regulatory design. In this section of
the notice, we identify and discuss these and several other important
considerations that we believe should inform our examination and
potential use of CAA authorities. Throughout this notice we ask for
comment on whether particular CAA authorities would allow EPA to
develop regulations that address those considerations in an effective
and appropriate manner.
A. Key Characteristics of Greenhouse Gases
The six major GHGs of concern are those directly emitted by human
activities. These are CO2, CH4, N2O, HFCs, perfluorocarbons (PFCs), and
sulfur hexafluoride (SF6). GHGs have a climatic warming effect by
trapping heat in the atmosphere that would otherwise escape to space.
Global emissions of these six GHGs have grown since pre-industrial
times and particularly over recent decades, having increased by 70%
between 1970 and 2004.\30\ In 2000, U.S. GHG emissions accounted for
approximately 21% of the global total. Other major emitting countries
include China, the Russian Federation, Japan, Germany, India and
Brazil. Future projections show that, for most scenarios assuming no
additional GHG emission reduction policies, global atmospheric
concentrations of GHGs are expected to continue climbing for most if
not all of the remainder of this century and to result in associated
increases in global average temperature. The Intergovernmental Panel on
Climate Change (IPCC) projects an increase of global GHG emissions by
25 to 90% between 2000 and 2030 under a range of different scenarios.
For the U.S., under a business as usual scenario, total gross GHG
emissions are expected to rise 30 percent between 2000 and 2020.\31\
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\30\ The data provided here come from ``Contribution of Working
Group III to the Fourth Assessment Report of the Intergovernmental
Panel on Climate Change (IPCC)''--Summary for Policymakers.
\31\ Fourth U.S.Climate Action Report, 2007. http://www.state.gov/g/oes/rls/rpts/car/.
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A significant difference between the major GHGs and most air
pollutants regulated under the CAA is that GHGs have much longer
atmospheric
[[Page 44401]]
lifetimes.\32\ Once emitted, GHG can remain in the atmosphere for
decades to centuries while traditional air pollutants typically remain
airborne for days to weeks. The fact that GHGs remain in the atmosphere
for such long periods of time has several important and related
consequences:
---------------------------------------------------------------------------
\32\ Some pollutants regulated under the CAA have long
atmospheric lifetimes, including those regulated for protection of
stratospheric ozone and mercury.
---------------------------------------------------------------------------
(1) Unlike most traditional air pollutants, GHGs become well mixed
throughout the global atmosphere so that the long-term distribution of
GHG concentrations is not dependent on local emission sources. Instead,
GHG concentrations tend to be relatively uniform around the world.
(2) As a result of this global mixing, GHGs emitted anywhere in the
world affect climate everywhere in the world. U.S. GHG emissions have
climatic effects not only in the U.S. but in all parts of the world,
and GHG emissions from other countries have climatic effects in the
U.S.
(3) Emissions of the major GHGs build up in the atmosphere so that
past, present and future emissions ultimately contribute to total
atmospheric concentrations. While concentrations of most traditional
air pollutants can be reduced relatively quickly (over months to
several years) once emission controls are applied, atmospheric
concentrations of the major GHGs cannot be so quickly reversed. Once
applied, GHG emission controls would first reduce the rate of build-up
of GHGs in the atmosphere and, depending on the degree of controls over
the longer term, would gradually result in stabilization of atmospheric
GHG concentrations at some level.
(4) GHG emissions have long-term consequences. Once emitted, the
major GHGs exert their climate changing effects for a long period of
time. Past and current GHG emissions thus lead to some degree of
commitment to climate change for decades or even centuries. According
to the IPCC, past GHG emissions have already resulted in an increase in
global average temperature and associated climatic changes. Much of
those past emissions will continue to contribute to temperature
increases for some time to come, while current and future GHG emissions
contribute to climate change over a similarly long period. See section
V for a fuller discussion of the effects of GHG emissions as they
relate to making an endangerment finding under the CAA.\33\
---------------------------------------------------------------------------
\33\ Another important difference between CO2 and
traditional air pollutants is the high volume of CO2
emissions relative to other pollutants for most sources. The
significance of this difference is discussed later in this section
and in section VII of this notice.
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The large temporal and spatial scales of the climate change
challenge introduce regulatory issues beyond those typically presented
for most traditional air pollutants. Decision makers are faced with
many uncertainties over long time frames and across national
boundaries, such as population and economic growth, technological
change, the exact rate and magnitude of climate change in response to
different emissions pathways, and the associated effects of that
climate change. These uncertainties increase the complexity of
designing an effective long-term regulatory strategy.
Acknowledging that overall risk increases with increases in both
the rate and magnitude of climate change, the United Nations Framework
Convention on Climate Change (UNFCCC), signed and ratified by the U.S.
in 1992, states as its ultimate objective the ``* * * stabilization of
greenhouse gas concentrations in the atmosphere at a level that would
prevent dangerous anthropogenic interference with the climate system.''
In 2007, the U.S. and other Parties to the UNFCCC recognized that ``* *
* deep cuts in global emissions will be required to achieve the
ultimate objective of the Convention * * *'' and emphasized ``* * * the
urgency to address climate change as indicated * * *'' by the IPCC.
Determining what constitutes ``dangerous anthropogenic
interference'' is not a purely scientific question; it involves
important value judgments regarding what level of climate change may or
may not be acceptable. It is not the purpose of this ANPR to make any
judgment regarding what an appropriate stabilization goal may be. In
the absence of further policy action, the IPCC notes that, ``With
current climate change mitigation policies and related sustainable
development practices, global GHG emissions will continue to grow over
the next few decades.''
As indicated above, to stabilize GHGs at any level in the
atmosphere, emissions would need to peak and decline thereafter. A
decision to stabilize at lower concentrations and associated
temperature increases would necessarily advance the date by which
emissions would need to peak, and would therefore require greater
emissions reductions earlier in time. According to the IPCC, mitigation
efforts over the next two to three decades will have a large impact on
the ability of the world to achieve lower stabilization levels. For
illustration, IPCC projected that, in order to prevent long-term global
temperatures from exceeding 2.8 [deg]C (approximately 5 [deg]F)
relative to pre-industrial temperatures, atmospheric CO2
concentrations would need to be stabilized at 440 parts per million
(ppm) (current levels stand at about 379 ppm), translating into global
CO2 emission reductions by 2050 of up to 60% (relative to
emissions in the year 2000). Stabilization targets that aim to prevent
even more warming would require steeper and earlier emission
reductions, whereas stabilization targets that allow for more warming
(with higher associated risks and impacts) would require less steep and
later emission reductions.
B. Types and Relative Emissions of GHG Emission Sources
1. Background
Each year EPA prepares a complete inventory of the anthropogenic
emissions and sinks of all six major GHGs in the United States.\34\
Anthropogenic in this context means that emissions result from human
activities. ``Sinks'' are the opposite of emissions in that they are
activities or processes that remove GHGs from the atmosphere (e.g.,
CO2 uptake by plants through photosynthesis). EPA prepares
the inventory in cooperation with numerous federal agencies as part of
the U.S. commitment under the UNFCCC.\35\ This inventory is derived
largely from top-down national energy and statistical data. As
mentioned previously, EPA is currently developing a proposed GHG
reporting rule that will provide bottom-up data from covered reporters
and thus provide greater detail on the emissions profile of specific
source categories.
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\34\ Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-
2006, (April 2008) USEPA 430-R-08-005. http://www.epa.gov/climatechange/emissions/usinventoryreport.html.
\35\ See Articles 4 and 12 of the UNFCCC treaty. http://www.unfccc.int. Parties to the Convention ``shall develop,
periodically update, publish and make available * * * national
inventories of anthropogenic emissions by sources and removals by
sinks of all greenhouse gases not controlled by the Montreal
Protocol, using comparable methodologies * * *''
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2. Emissions by Gas
In 2006, total U.S. GHG emissions were 7,054 million metric tons of
CO2 equivalent (MMTCO2e).\36\ Overall, total U.S.
GHG emissions have risen by 14.7% from 1990 to 2006. GHG emissions
decreased from 2005 to 2006 by 1.1 percent (or 76 MMTCO2e).
Figure III-1 illustrates the relative share of each
[[Page 44402]]
gas, and trend since 1990, weighted by global warming potential.\37\
All GHG units and percentage changes provided in this section are based
on CO2-equivalency.
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\36\ International standards for reporting are established by
the IPCC, which uses metric units. 1 MMTCO2e is equal to
1 teragram (Tg) or 10 12 grams. 1 metric ton is equal to
1.1023 short tons.
\37\ Emissions of different GHGs are compared using global
warming potentials (GWPs). The GWP of a GHG is the ratio of heat
trapped by one unit mass of the GHG compared to that of one unit
mass of CO2 over a specified time period, which is 100
years for the GWPs estimated by the IPCC used here. The reference
gas is CO2, and therefore GWP-weighted emissions are
measured in teragrams of CO2 equivalent (Tg
CO2 Eq.). The GWP values used in this analysis come from
the IPCC Second Assessment report, consistent with the UNFCCC
reporting requirements for Parties listed in Annex I.
[GRAPHIC] [TIFF OMITTED] TP30JY08.026
Carbon Dioxide: The primary GHG emitted as a result of human
activities in the United States is CO2, representing approximately 85%
of total GHG emissions. CO2 results primarily from fossil fuel
combustion to generate electricity, power vehicles and factories, heat
buildings, etc. Fossil fuel-related CO2 emissions accounted for
approximately 79% of CO2 emissions since 1990, and increased at an
average annual rate of 1.1% from 1990 to 2006. Changes in CO2 emissions
from fossil fuel combustion are influenced by many long-term and short-
term factors, including population and economic growth, energy price
fluctuations, technological changes, and seasonal temperatures.
Methane: According to the IPCC, CH4 is more than 20 times as
effective as CO2 at trapping heat in the atmosphere. By 2006, CH4
emissions had declined from 1990 levels by just under 9%, and now make
up approximately 8% of total U.S. GHG emissions. Enteric fermentation
(22.7%) is the largest anthropogenic source of CH4 emissions in the
United States, followed by landfills (22.6%), natural gas systems
(18.4%), coal mining (10.5%), and manure management (7.5%). Smaller
sources such as rice cultivation and incomplete fossil fuel combustion
account for the remainder.
Nitrous Oxide: While total N2O emissions are much lower than CO2
emissions in terms of mass, N2O is approximately 300 times more
powerful than CO2 at trapping heat in the atmosphere. U.S. emissions of
N2O are just over 5% of total U.S. GHG emissions, and have declined by
4% since 1990. The main anthropogenic activities producing N2O in the
United States are agricultural soil management (72%), and fuel
combustion in motor vehicles (9%). A variety of chemical production
processes and liquid waste management sources also emit N2O.
HFCs, PFCs, and SF6: These GHGs are often grouped together because
they contain fluorine, typically have large global warming potentials,
and are produced only through human activities (there are no natural
sources), either intentionally for use or unintentionally as an
industrial byproduct. HFCs and some PFCs are increasingly being used--
and therefore emitted--as substitutes for the ozone depleting
substances controlled under the Montreal Protocol and Title VI of the
CAA. The largest source is the use of HFCs in air conditioning and
refrigeration systems. Other sources include HFC-23 emitted during the
production of HCFC-22, electrical transmission and distribution systems
(SF6), and PFC emissions from semiconductor manufacturing and primary
aluminum production. U.S. HFC emissions have increased 237% over 1990
levels, while emissions of PFCs and SF6 have decreased by 71 and 47%,
respectively, from 1990 levels. Combined, these GHGs made up 2.1% of
total U.S. GHG emissions in 2006.
3. Emissions by Sector
An alternative way to look at GHG emissions is by economic sector.
All U.S. GHG sources can be grouped into the electricity, industrial,
commercial, residential, transportation and agriculture sectors.
Additionally, there are changes in carbon stocks that result in
emissions and sinks associated with land-use and land-use change
activities. Figure III-2 illustrates the relative contributions and
historical trends of these economic sectors.
Electricity Generation: The electricity generation sector includes
all facilities that generate electricity primarily for sale rather than
for use on site (e.g., most large-scale power plants). Electricity
generators emitted 33.7% of all U.S. GHG emissions in 2006. The type of
fuel combusted by electricity generators has a significant effect on
[[Page 44403]]
their emissions. For example, some electricity is generated with low or
no CO2 emitting energy technologies, particularly non-fossil options
such as nuclear, hydroelectric, or geothermal energy. However, over
half of the electricity in the U.S. is generated by burning coal,
accounting for 94% of all coal consumed for energy in the U.S. in 2006.
Transportation Sector: The transportation sector includes
automobiles, airplanes, railroads and a variety of other sources.
Transportation activities (excluding international bunker fuels)
accounted for approximately 28% of all GHG emissions in 2006, primarily
through the combustion of fossil fuels.\38\ Virtually all of the energy
consumed in this end-use sector came from petroleum products. Over 60%
of the CO2 emissions resulted from gasoline consumption for personal
vehicle use.
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\38\ International bunker fuels are used in aviation and marine
trips between countries.
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Industrial Sector: The industrial sector includes a wide variety of
facilities engaged in the production and sale of goods. The largest
share of emissions from industrial facilities comes from the combustion
of fossil fuels. Emissions of CO2 and other GHGs from U.S. industry
also occur as a result of specialized manufacturing processes (e.g.,
calcination of limestone in cement manufacturing). The largest emitting
industries tend to be the most energy intensive: Iron and steel,
refining, cement, lime, chemical manufacturing, etc. Overall, 19.4% of
total U.S. GHG emissions came from the industrial sector in 2006.
Residential and Commercial Sectors: These two sectors directly emit
GHGs primarily through operation and maintenance of buildings (i.e.,
homes, offices, universities, etc.). The residential and commercial
end-use sectors accounted for 4.8 and 5.6% of total emissions,
respectively, with CO2 emissions from consumption of natural gas and
petroleum for heating and cooking making up the largest share.
Agriculture Sector: The agriculture sector includes all activities
related to cultivating soil, producing crops, and raising livestock.
Agricultural GHG emissions result from a variety of processes,
including: Enteric fermentation in domestic livestock, livestock manure
management, rice cultivation, agricultural soil management, and field
burning of agricultural residues. Methane and N2O are the primary GHGs
emitted by agricultural activities.\39\ In 2006, agriculture emission
sources were responsible for 6.4% of total U.S. GHG emissions.
---------------------------------------------------------------------------
\39\ Agricultural soils also emit CO2 and sequester carbon. The
fluxes are discussed under the Land-Use, Land-Use Change and
Forestry section because of the integrated nature of methodological
approaches to the carbon cycle, and international reporting
conventions.
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Land Use, Land-Use Change, and Forestry: Land use is not an
economic sector per se but affects the natural carbon cycle in ways
that lead to GHG emissions and sinks. Included in this category are
emissions and sequestration of CO2 from activities such as
deforestation, afforestation, forest management and management of
agricultural soils. Emissions and sequestration depend on local
conditions, but overall land use in the U.S. was a net sink in 2006
equivalent to 12.5% of total GHG emissions.
BILLING CODE 6560-50-P
[[Page 44404]]
[GRAPHIC] [TIFF OMITTED] TP30JY08.027
C. Advancing Technology
President Bush, the IPCC, and many other private and public groups
have spotlighted the critical importance of technology to reducing GHG
emissions and the risks of climate change. International, U.S., and
private studies have identified a broad range of potential strategies
that can reduce emissions from diverse economic sectors. Many
strategies, such as increasing energy efficiency and conservation and
employing hybrid and diesel vehicle technologies, are available today.
There is also broad consensus that for many sectors of the economy new
technologies will be
[[Page 44405]]
needed to achieve deep reductions in GHG emissions at less cost than
today's technologies alone can achieve.
In developing potential CAA (or other) controls, one important
question is the extent to which needed technological development can be
expected to occur as a result of market forces alone (e.g., as a result
of increasing prices for oil and other fossil fuels), and the extent to
which government or other action may be needed to spur development.
There are several different pathways for technological change,
including investment in research and development (private and public),
spillovers from research and development in other sectors (e.g.,
advances in computing made hybrid vehicles possible), learning by doing
(i.e., efficiency gains through repetition), and scale economies (i.e.,
aggregate cost reductions from improved process efficiencies). As
further discussed later in this section, market-based incentives that
establish a price (directly or indirectly through a limit) for carbon
and/or other GHGs could continuously spur technological innovation that
could lower the cost of reducing emissions. However, even with such a
policy, markets tend to under-invest in development of new technologies
when investors can only capture a portion of the returns. This is
particularly true at the initial stages of research and development
when risks are high and market potential is not evident. In such cases,
policies to encourage the development and diffusion of technologies
that are complements to pollution control policies may be
warranted.\40\
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\40\ Economic Report of the President, February 2007.
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This section draws insights from IPCC and other reports on
available and needed technologies. In later sections of this notice, we
explain each potentially applicable CAA provision and consider the
extent to which that provision authorizes regulatory actions and
approaches that could spur needed technology development.
1. The Role of Existing and New Technology in Addressing Climate Change
The 2007 IPCC report on mitigation of climate change examined the
availability of current technologies and the need for new technologies
to mitigate climate change.\41\ Among its conclusions, the IPCC states:
---------------------------------------------------------------------------
\41\ IPCC, 2007, ``Climate Change 2007: Mitigation. Contribution
of Working Group III to the Fourth Assessment Report of the
Intergovernmental Panel on Climate Change,'' [B. Metz, O.R.
Davidson, P.R. Bosch, R. Dave, L.A. Meyers (eds)], Cambridge
University Press, Cambridge, United Kingdom and New York, NY.
The range of stabilization levels assessed [by the
IPCC] can be achieved by deployment of a portfolio of technologies
that are currently available and those that are expected to be
commercialized in coming decades. This assumes that appropriate and
effective incentives are in place for development, acquisition,
deployment and diffusion of technologies and for addressing related
barriers.\42\
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\42\ Ibid, ``Summary for Policymakers,'' p. 25.
According to one study, five groups of strategies that could
substantially reduce emissions between now and 2030 include (1)
improving energy efficiency in buildings and appliances; (2) increasing
fuel efficiency and reducing GHG emissions from vehicles and the carbon
intensity of transportation fuels; (3) industrial equipment upgrades
and process changes to improve energy efficiency; (4) increasing forest
stocks and improving soil management practices; and (5) reducing carbon
emissions from electric power production through a shift toward
renewable energy, expanded nuclear capacity, improved power plant
efficiency, and use of carbon capture and storage technology on coal-
fired generation.\43\ (Note that EPA is not rank-ordering these
technologies by their relative cost effectiveness.) As noted elsewhere
in this notice, there is federal regulatory or research and development
activity ongoing in most of these areas.
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\43\ See McKinsey & Company, ``Reducing U.S. Greenhouse Gas
Emissions: How Much at What Cost?'', U.S. Greenhouse Gas Abatement
Mapping Initiative, Executive Report, December 2007. This study
performed an economic assessment of potential control methods based
on a ``bottom-up'' partial equilibrium model, which does not account
for interactions among economic sectors. Bottom-up models include
many more specific technologies than ``top-down'' general
equilibrium models, which account for cross-sector interactions.
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Many energy efficiency technologies exist that appear to be
extremely cost-effective in reducing fuel costs compared to other
alternatives. However, they have yet to be adopted as widely as
expected because of market barriers. Such barriers include lack of
knowledge or confidence in the technology by potential users,
uncertainty in the return on investment (potentially due to uncertainty
in either input prices or output prices), concerns about effects of
energy efficiency technologies on the quality of inputs or outputs,
size of the initial capital investment (coupled with potential
liquidity constraints), and requirements for specialized human capital
investments. Some of these costs are lower in larger firms, due to the
increased availability of financial resources and human capital.\44\
Vendor and other projections of cost-savings for energy efficiency
technologies are often based on average pay-back and thus do not
reflect differences among firms that can affect the costs and benefits
of these technologies and therefore the likelihood of adoption. Over
time, as firms gain more experience with these technologies, the rate
of adoption will likely increase if significant cost-savings are
realized by early adopters.
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\44\ Pizer, et al., ``Technology Adoption and Aggregate Energy
Efficiency,'' December 2002, December 2002 Resources for the Future
Discussion Paper 02-52.
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The IPCC report on mitigation identified technologies that are
currently available and additional technologies that are expected to be
commercialized by 2030, as shown in the following table.\45\ These
include technologies and practices in the energy supply,
transportation, buildings, industry, agriculture, forest, and waste
sectors:
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\45\ IPCC 2007, ``Summary for Policymakers,'' p. 14. Figure III-
3
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[[Page 44406]]
[GRAPHIC] [TIFF OMITTED] TP30JY08.028
How much any of the mitigation strategies identified by these
studies would actually be deployed to address climate change is an open
question. It is possible that unanticipated technologies could play a
significant role in reducing emissions. The point of these studies is
to illustrate that potentially feasible technologies exist that could
be employed to mitigate GHG emissions, not to predict the precise role
they will play or to suggest sectors or methods for regulation. The
particular policies pursued by governments, including the U.S. under
the CAA or other authorities, will influence the way in which these
technologies are deployed as well as incentives for developing and
deploying new technologies.
2. Federal Climate Change Technology Program
The U.S. government is investing in a diverse portfolio of
technologies with
[[Page 44407]]
the potential to yield substantial reductions in emissions of GHGs. The
Climate Change Technology Program (CCTP) is a multi-agency planning and
coordination entity that assists the government in carrying out the
President's National Climate Change Technology Initiative. Managed by
the Department of Energy, the program is organized around five
technology areas for which working groups were established. EPA
participates in all of the working groups and chairs the group focused
on non-CO2 GHGs.
The CCTP strategic plan, released in September 2006, provides
strategic direction and organizes approximately $3 billion in federal
spending for climate change-related technology research, development,
demonstration, and deployment.\46\ The plan sets six complementary
goals, including five aimed at developing technologies to:
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\46\ U.S. Climate Change Technology Program Strategic Plan,
September 2006; http://www.climatetechnology.gov/stratplan/final/index.htm.
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Reduce emissions from energy end-use and infrastructure;
Reduce emissions from energy supply, particularly through
development and commercialization of no- or low-emission technologies;
Capture, store and sequester CO2;
Reduce emissions of non-CO2 GHGs; and
Enhance the measurement and monitoring of CO2
emissions.
The first four of these goals focus on GHG emissions reduction
technologies, and the fifth addresses a key need for developing
comprehensive GHG control strategies. The sixth CCTP goal is to
strengthen the contributions of basic science to climate change
technology development.
3. Potential for CAA Regulation to Encourage Technology Development
Past EPA efforts to reduce air pollution under the CAA demonstrate
that incentives created by regulation can help encourage technology
development and deployment. As noted in a recent EPA regulatory
analysis, the history of the CAA provides many examples in which
technological innovation and ``learning by doing'' have made it
possible to achieve greater emissions reductions than had been feasible
earlier, or have reduced the costs of emission control in relation to
original estimates.\47\ Among the examples are motor vehicle emission
controls, diesel fuel and engine standards to reduce NOX and
particulate matter emissions, engine idle-reduction technologies,
selective catalytic reduction and ultra-low NOX burners for
NOX emissions, high-efficiency scrubbers for SO2
emissions from boilers, CFC-free air conditioners and refrigerators,
low or zero VOC paints, and idle-reduction technologies for
engines.\48\
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\47\ See section 5.4 of Final Ozone NAAQS Regulatory Impact
Analysis, March 2008, EPA-HQ-OAR-2007-0225. The RIA is available at
http://www.epa.gov/ttn/ecas/ria.html#ria2007.
\48\ Ibid.
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One of the issues raised by potential CAA regulation of GHGs is
whether the CAA can help spur needed technological development for
reducing GHG emissions and the costs of those reductions. The
regulatory authorities in the CAA vary in their potential for
encouraging new technology. As discussed later in this notice, some
provisions offer little flexibility in standard-setting criteria,
emission control methods, compliance deadlines and potential for
market-oriented regulation. Other provisions offer more potential to
encourage new technology through market incentives or to establish
standards based on anticipated advances in technology. EPA requests
comment on the extent to which various CAA provisions could be used to
help spur technological development, and on the need for federally
conducted or funded research to promote technological development.
D. Relationship to Traditional Air Pollutants and Air Pollution
Controls
An issue for any regulation of GHGs under the CAA or other
statutory authority is how a GHG control program would and should
interact with existing air quality management programs. This section
describes the relationships between climate change and air quality and
between GHG emissions and traditional air pollution control programs.
As explained below, those relationships suggest the need for integrated
approaches to climate change mitigation and air quality protection.
Differences between GHGs and traditional air pollutants should also be
taken into account in considering how CAA authorities could be employed
for GHG regulation.
1. Connections Between Climate Change and Air Quality Issues
Climate change affects some types of air pollution, and some
traditional air pollutants affect climate. According to the IPCC,
climate change can be expected to influence the concentration and
distribution of air pollutants through a variety of direct and indirect
processes. In its recent review of the NAAQS for ozone, EPA examined
how climate change can increase ozone levels and how ozone, itself a
GHG, can contribute to climate change. Similarly, in its reviews of the
NAAQS for particulate matter, the Agency examined the extent to which
some particles help absorb solar energy in the earth's atmosphere and
others help reflect it back to space.\49\ How EPA regulates those
pollutants under the CAA is potentially part of an overall strategy for
addressing climate change, and how GHGs are regulated is potentially an
important component of protecting air quality. For example, it is
likely to become more difficult and expensive to attain the ozone NAAQS
in a future, warmer climate.
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\49\ EPA did not have adequate information in these reviews for
impacts on climate change to change the Agency's decision on whether
or how to revise the standards. See, e.g., 71 FR 61144, 61209-10
(October 17, 2006) (PM NAAQS review).
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Most of the largest emitters of GHGs are also large emitters of
traditional air pollutants and therefore are already regulated under
the CAA. The electricity generation, transportation and industrial
sectors, the three largest contributors to GHG emissions in the U.S.,
are subject to CAA controls to help meet NAAQS, control acid rain, and
reduce exposures to toxic emissions. Some manufacturers of the GHGs
that are fluorinated gases are subject to CAA regulations for
protection of the stratospheric ozone layer.
Many measures for controlling GHG emissions also contribute to
reductions in traditional air pollutants, and some measures for
controlling traditional air pollutants result in reductions in
GHGs.\50\ Co-benefits from reduced air pollution as a result of actions
to reduce GHG emissions can be substantial.\51\ In general, fossil fuel
combustion results in emissions not only of CO2 but also of
many traditional air pollutants, including SO2,
NOX, CO and various toxic air pollutants. For many types of
sources, to the extent fossil fuel combustion is reduced, emissions of
all those pollutants are reduced as well. Some control measures reduce
GHGs and traditional air pollutants, including leak detection and fuel
switching. However, some measures for controlling traditional air
pollutants increase GHGs, and some measures for controlling GHGs may
increase traditional air pollutants. For example, controls to decrease
SO2 emissions from industrial sources require energy to
operate and result in reduced process efficiencies and increases in
GHGs, and changing
[[Page 44408]]
the composition of transportation fuels to reduce GHGs may affect
traditional air pollutant emissions.
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\50\ EPA, OAP, Clean Energy-Environmental Guide to Act, http://www.epa.gov/cleanenergy/documents/gta/guide_action_full.pdf.
\51\ IPCC, 2007, Working Group III, Summary for Policymakers.
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By considering policies for addressing GHGs and traditional air
pollutants in an integrated manner, EPA and the sectors potentially
subject to GHG emission controls would also have the opportunity to
consider and pursue the most effective way of accomplishing emission
control across pollutants. For example, adoption of some air quality
controls could result in a degree of ``technology lock-in'' that
restricts the ability to implement GHG control technologies for
significant periods of time because of the investment in capital and
other resources to meet the air quality control requirements. Sections
VI and VII below discuss technologies and opportunities for controlling
GHGs in more detail from various sectors, including transportation,
electricity generation, and manufacturing. EPA requests comment on
strategies and technologies for simultaneously achieving reductions in
both traditional air pollutants and GHG emissions.
In light of the connections between climate change and air quality,
the large overlap of GHG and traditional air pollution sources, and the
potential interactions of GHG and traditional air pollution controls,
it makes sense to consider regulation of GHGs and traditional air
pollutants in an integrated manner. Indeed, the National Academy of
Sciences recommends that development of future policies for air
pollution control be integrated with climate change considerations.\52\
GHG control measures implemented today could have immediate impacts on
air pollution and air quality. Similarly, air pollution controls
implemented today could have near term impacts on GHG emissions and
thus long term impacts on climate. Ideally, any GHG control program
under the Act, or other statutory authority would address GHGs in ways
that simultaneously reduce GHGs and traditional air pollutants as
needed to mitigate climate change and air pollution.\53\
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\52\ National Academy of Sciences, ``Radiative Forcing of
Climate Change: Expanding the Concept and Addressing
Uncertainties,'' October 2005.
\53\ Integration of planning efforts related to air quality,
land use, energy efficiency, and transportation to improve air
quality and reduce GHG emissions is in line with the CAA Advisory
Committee Air Quality Management Subcommittee's Phase II
recommendations (June 2007), and the recommendations of the National
Research Council of the National Academy of Sciences in its January
2004 report, ``Air Quality Management in the United States.'' EPA
has initiated several programs to encourage integrated planning
efforts, including the Sustainable Skylines Initiative, a public-
private partnership to reduce air emissions and promote
sustainability in urban environments, and the Air Quality Management
Plan pilot program for testing a comprehensive, multipollutant
planning approach.
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2. Issues in Applying CAA Controls to GHGs
One important issue for regulation of GHGs under some CAA
provisions concerns the emissions thresholds established by the Act for
determining the applicability of those provisions. Several CAA
provisions require stationary sources that emit traditional air
pollutants above specific emission thresholds to comply with certain
requirements. Applying the same thresholds to GHGs could result in
numerous sources, such as space heaters in large residential and
commercial buildings, becoming newly subject to those requirements.
Currently regulated sources could become subject to additional
requirements. This would occur in part because most sources typically
emit CO2, the predominant GHG, in much larger quantities
than traditional air pollutants. Issues related to threshold levels are
discussed in more detail in Section VII below.
Other important issues for CAA regulation of GHGs are raised by the
different temporal and spatial scope of GHGs compared to traditional
pollutants. Air pollutants currently regulated under the CAA tend to
have local (a few kilometers) or regional (hundreds to thousands of
kilometers) impacts and relatively short atmospheric lifetimes (days to
a month). Historically, this has meant that EPA could identify and
differentiate between affected and unaffected areas and devise control
strategies appropriate for each area. Controls applied within an area
with high concentrations of traditional air pollutants generally have
been effective in achieving significant reductions in air pollution
concentrations within that area in a relatively short amount of time.
The spatial nature of traditional air pollution also has made it
appropriate to place the primary responsibility for planning controls
on state, tribal, or local governments.
In the years since the CAA was enacted, we have learned that some
traditional air pollutants (e.g., ozone, particulates and their
precursors) are transported across regions of the country and thus have
geographically broader impacts than individual states can address on
their own. Our control strategies for those pollutants have evolved
accordingly. The Nitrogen Oxides (NOX) SIP Call Rule and the
Clean Air Interstate Rule (CAIR) are examples of regional control
programs that significantly supplement local control measures. NSPS and
motor vehicle controls are examples of national measures that also help
improve air quality locally and regionally.
The global nature and effect of GHG emissions raise questions
regarding the suitability of CAA provisions that are designed to
protect local and regional air quality by controlling local and
regional emission sources.\54\ As noted above, GHGs are relatively
evenly distributed throughout the global atmosphere. As a result, the
geographic location of emission sources and reductions are generally
not important to mitigating global climate change. Instead, total GHG
emissions in the U.S. and elsewhere in the world over time determine
cumulative global GHG concentrations, which in turn determine the
extent of climate change. As a result, it will be the total emission
reductions achieved by the U.S. and the other countries of the world
that will determine the extent of climate change mitigation. The global
nature of GHGs suggests that the programmatic and analytical tools used
to address local and regional pollutants under the CAA (e.g., SIPs,
monitoring networks, and models) would need to be adapted to inventory,
analyze, control effectively and evaluate progress in achieving GHG
reductions.
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\54\ It should be noted that international transport of ozone
and particulate matter precursors contributes to NAAQS nonattainment
in some areas of the U.S. Nevertheless, most traditional air
pollution problems are largely the result of local and regional
emission sources, while for GHGs, worldwide emissions determine the
extent of the problem.
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EPA seeks information about how differences in pollutant
characteristics should inform regulation of these pollutants under the
CAA. EPA also requests comment on the types of effective programs at
all levels (local, regional, national and international) that may be
feasible to design and implement under existing CAA authorities.
E. Relationship to Other Environmental Media
An effective GHG control program may require application of many
technologies and approaches that may in turn result in increased
discharges to water, generation of solid materials that require
appropriate disposal, or have other impacts to the environment that may
not be addressed under the CAA. Examples of these impacts include the
potential for groundwater contamination from geological
[[Page 44409]]
sequestration of CO2, the generation of spent sorbent
material from carbon capture systems, or the depletion of water
resources and increased nutrient runoff into surface waters from
increased production of bioenergy feedstocks. EPA and other regulatory
agencies at the tribal, state, and local level may need to respond to
such impacts to prevent or minimize their impact to the environment and
public health under authorities other than the CAA.
Since the nature and extent of these impacts would depend upon the
technologies and approaches that are implemented under a GHG control
program, an important consideration in designing GHG controls is
minimizing or mitigating such impacts EPA seeks comment on how
different regulatory approaches to GHG control under the CAA could
result in environmental impacts to water or land that could require
response under the CAA or EPA's other legislative authorities.
F. Other Key Policy and Economic Considerations for Selecting
Regulatory Approaches
This section identifies general policy considerations relevant to
developing potential regulatory approaches for controlling GHG
emissions. In developing approaches under the CAA, EPA must first
consider the Act's provisions as well as the Agency's previous
interpretation of the provisions and relevant and controlling court
opinions. Provisions of the CAA vary in terms of the degree of
flexibility afforded EPA in designing implementing regulations under
the Act. To the extent particular provisions permit, EPA believes the
following considerations should guide its choice among available
regulatory approaches. This section also discusses three selected
issues in greater depth because of their importance to designing
effective GHG controls: advantages of market-oriented regulatory
approaches, economy-wide and sector-based regulation under the CAA, and
emissions leakage and international competitiveness. In discussing
these and other policy and economic considerations, EPA is not directly
or indirectly implying that it possesses the requisite statutory
authority in all areas.
1. Overview of Policy and Economic Considerations
The following considerations are useful in developing potential
regulatory approaches to the extent permissible under the CAA. These
considerations are also generally applicable to the design of GHG
control legislation. EPA is in the process of evaluating the CAA
options described later in this notice in light of these
considerations.
Effectiveness of health and environmental risk reduction: How much
would the approach reduce negative health and environmental impacts (or
the risk of such impacts), relative to other potential approaches?
Certainty and transparency of results: How do the potential
regulatory approaches balance the trade-off between certainty of
emission reductions and costs? To what extent can compliance
flexibility be provided for regulated entities while maintaining
adequate accountability for emission reductions?
Cost-effectiveness and economic efficiency considerations: To what
extent does the approach allow for achieving health and environmental
goals, determined in a broader policy process, in a manner that imposes
the least cost? How do the societal benefits compare to the societal
costs? To what extent are there non-monetizable or unquantifiable
benefits and costs? Given the uncertainties associated with climate
change, to what extent can economic efficiency be judged?
Equity considerations (i.e., distributional effects): Does the
approach by itself or in combination with other programs result in a
socially acceptable apportionment of the burden of emission reduction
across groups in our society? Does the approach provide adequate
protection for those who will experience the adverse effects of
emissions, including future generations?
Policy flexibility over time: Does the approach allow for updating
of environmental goals and mechanisms for meeting those goals as new
information on the costs and benefits of GHG emission reductions
becomes available?
Incentives for innovation and technology development: Does the
approach provide incentives for development and deployment of new,
cleaner technologies in the United States and transfer abroad? Does the
approach create incentives for individual regulated entities to achieve
greater-than-required emissions reductions?
Competitiveness/emissions shifts: Can the approach be designed to
reduce potential adverse impacts and consequent shifts in production
and emissions to other sectors or geographic areas? Can the policy be
designed to minimize the shifting, or ``leakage,'' of emissions to
other sectors or other countries, which would offset emission reduction
benefits of the policy? To what extent can the approach consider the
degree and nature of action taken by other countries?
Administrative feasibility: How complex and resource-intensive
would the approach be for federal, state, and local governments and for
regulated entities? Do personnel in the public and private sectors have
sufficient expertise, or can they build sufficient expertise, to
successfully implement the approach?
Enforceability: Is the approach enforceable in practice? Do
available regulatory options differ regarding whether the government or
the regulated entity bears the burden of demonstrating compliance?
Unintended consequences: Does the approach result in unintended
consequences or unintended effects for other regulations? Does the
approach allow for consideration of, and provide tools to address, any
perverse incentives?
Suitability of tool for the job: Overall, is the approach well-
suited to the environmental problem, or the best-suited among imperfect
alternatives? For example, does the regulatory approach fit the
characteristics of the pollutant in question (e.g., the global and
long-lived nature of GHGs, high volume of CO2 emissions)?
2. Market-Oriented Regulatory Approaches for GHGs
EPA believes that market-oriented regulatory approaches, when well-
suited to the environmental problem, offer important advantages over
non-market-oriented approaches. A number of theoretical and empirical
studies have shown these advantages.\55\ In general, market-oriented
approaches include ways of putting a price on emissions through a fixed
price (e.g., a tax) or exchangeable quantity-based instrument (e.g., a
cap-and-trade program), while non-market-oriented approaches set
performance standards limiting the rate at which individual entities
can emit, or prescribe what abatement behaviors or technologies they
should use.\56\ The primary regulatory advantage of a market-oriented
approach is that it can achieve a particular emissions target at a
lower
[[Page 44410]]
social cost than a non-market-oriented \57\ approach (Baumol and Oates,
1971; Tietenberg, 1973).\58\ This is because market-oriented approaches
leave the method for reducing pollution to the emitter, and emitters
have an incentive to find the least cost way of achieving the
regulatory requirement. Efficient market-oriented regulatory systems
provide a common emissions price for all emitters that contribute to a
particular harm, either through the tax on emissions or the price of an
exchangeable right to emit. As a result, the total abatement required
by the policy can theoretically be distributed across all emitters in
such a way that the marginal cost of control is equal for all emitters
and the cost of reducing emissions is minimized.\59\ Non-market-
oriented policies offer emitters fewer choices on how to reduce
emissions, which can lead to higher costs than are necessary to achieve
the overall environmental objective (i.e. emission level).
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\55\ See EPA (2000), Baumol and Oates (1988), Tietenberg (2006)
and Burtraw et al. (2005) for a detailed description of the
advantages of market-oriented policies, such as the Title IV sulfur
dioxide trading program, over non-market-oriented approaches.
\56\ Performance standards provide a source flexibility to use
any emission reduction method that meets the performance standard;
they can be coupled with market-oriented approaches such as
emissions trading to promote lower costs and technology innovation,
as described later in this section.
\57\ Many studies use the term ``command-and-control'' to refer
to non-market-oriented approaches. Here we use the term ``non-
marketed-oriented'' because the term ``command and control'' may be
misleading when used to refer to performance-based emission limits
that allow the regulated entity to choose the control technology or
strategy for compliance.
\58\ It is important to note that judgments about the
appropriate mitigation approach also may consider important societal
values not fully captured in economic analysis, such as political,
legal, and ethical considerations. For example, different regulatory
forms may result in different distributions of costs and benefits
across individuals and firms. This is a particularly sensitive issue
with policies that raise energy costs, which are known to be
regressive. However, these issues are not discussed at length here.
\59\ For a standard textbook treatment supporting this finding
see Tietenberg (2006) or Callan and Thomas (2007).
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As noted previously, it is especially important that any GHG
emission reduction policy encourage the innovation, development and
diffusion of technologies to provide a steady decline in the costs of
emission reductions. Another advantage of market-oriented approaches is
that they generally provide a greater incentive to develop new ways to
reduce pollution than non-market-oriented approaches (Malueg 1989;
Milliman and Prince 1989; Jung et al., 1996). Polluters not only have
an incentive to find the least cost way of adhering to a standard but
they also have an incentive to continually reduce emissions beyond what
is needed to comply with the standard. For every unit of emissions
reduced under a market-oriented policy, the emitter either has a lower
tax burden or can sell an emissions permit (or buy one less emissions
permit). Also, there are more opportunities under a market-oriented
approach for developers of new control technologies to work directly
with polluters to find less expensive ways to reduce emissions, and
polluters are faced with less compliance risk if a new pollution
control technique does not work as expected. This is because they can
either pay for their unanticipated emissions through the tax or by
purchasing emission rights instead of being subject to enforcement
action (Hahn, 1989).
There are a number of examples of CAA rules in which market-
oriented approaches have been used for groups of mobile or stationary
sources. Usually this has taken the form of emissions trading within a
sector or subsector of a source category, although there are some
examples of broader trading programs. Differences in implications of
sector-specific and economy-wide market-oriented systems are discussed
in subsection below.
The cost advantage of market-oriented policies can be extended when
emitters are allowed to achieve a particular environmental objective
across multiple pollutants that affect environment quality in the same
way but differ in the magnitude of that effect (e.g., different GHGs
have different global warming potentials). Either a cap-and-trade or a
tax approach could be designed so that the effective price per unit of
emissions is higher for those pollutants that have a greater
detrimental effect. Under a cap, the quantity of emissions reductions
is fixed but not the price; under a tax, the price is fixed but not the
emissions reductions. Some current legislative proposals include
flexible multiple-pollutant market-oriented policies for the control of
GHG emissions.
Market-oriented approaches are relatively well-suited to
controlling GHG emissions. Since emissions of the major GHGs are
globally well-mixed, a unit of GHG emissions generally has the same
effect on global climate regardless of where it occurs. Also, while
policies can control the flow of GHG emissions, what is of ultimate
concern is the concentration of cumulative GHGs in the atmosphere.
Providing flexibility on the method, location and precise timing of GHG
reduction would not significantly affect the global climate protection
benefits of a GHG control program (assuming effective enforcement
mechanisms), but could substantially reduce the cost and encourage
technology innovation.\60\ However, it should be noted that for GHG
control strategies that also reduce emissions of traditional
pollutants, the timing and location of those controls could
significantly affect air quality in local or regional areas. There is
the potential for positive air quality effects from strategies that
reduce both GHGs and traditional pollutants, and for adverse air
quality effects that may be avoidable through complementary measures to
address air quality. For example, when the acid rain control program
was instituted, existing sulfur dioxide control programs were left in
place to ensure that trading under the acid rain program did not
undermine achievement of local air quality objectives.
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\60\ We say ``precise'' timing because the qualifier is
important: The IPCC and others have noted that lower GHG
stabilization targets would require steeper and earlier emission
reductions, whereas stabilization targets that allow for more
warming (with higher associated risks and impacts) would require
less steep and later emission reductions.
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As noted previously, broad-based market-oriented approaches include
emissions taxes and cap-and-trade programs with and without cost
containment mechanisms. While economists disagree on which of these
approaches--emissions taxes or cap-and-trade programs--may be
particularly well-suited to the task of mitigating GHG emissions, they
do agree that attributes such as flexibility, cost control, and broad
incentives for minimizing abatement costs and developing new
technologies are important policy design considerations.\61\ For a
description of various market-oriented approaches, see section VII.G.
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\61\ These approaches also raise the issue of the potential use
of revenues from collecting a tax or auctioning allowances to emit
GHGs at levels that do not exceed the cap. See Chapter 4 of U.S. EPA
(2000), ``Guidelines for Preparing Economic Analyses,'' EPA 240-R-
00-003.
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3. Legal Authority for Market-Oriented Approaches Under the Clean Air
Act
The ability of each CAA regulatory authority potentially applicable
to GHGs to support market-oriented regulatory approaches is discussed
in sections VI and VII of this notice. To summarize, some CAA
provisions permit or require market-oriented approaches, and others do
not. Trading programs within sectors or subsectors have been
successfully implemented for a variety of mobile and stationary source
categories under the Act, including the Acid Rain Control Program (58
FR 3590 (Jan. 11, 1993)) and a variety of on-road and non-road vehicle
and fuel rules. Multi-sector trading programs, though not economy-wide,
have been successfully implemented under section 110(a)(2)(D) for
nitrogen oxides (i.e. the NOX SIP Call Rule) and under Title
VI for ozone-depleting substances, and may be
[[Page 44411]]
possible among stationary source sectors under section 111. An economy-
wide system might be legally possible under CAA section 615 (if the
two-part test unique to that section were met) or if a NAAQS were
established for GHGs. However, any economy-wide program under either
provision would not stand alone; it would be accompanied by source-
specific or sector-based requirements as a result of other CAA
provisions (e.g., PSD permitting under section 165).
The CAA does not include a broad grant of authority for EPA to
impose taxes, fees or other monetary charges specifically for GHGs and,
therefore, additional legislative authority may be required if EPA were
to administer such charges (which we will refer to collectively as
fees). EPA may promulgate regulations that impose fees only if the
specific statutory provision at issue authorizes such fees, whether
directly or through a grant of regulatory authority that is written
broadly enough to encompass them. For example, CAA section 110(a)(2)(A)
allows for the use of ``economic incentives such as fees, marketable
permits, and auctioning allowances.'' Under this provision, some states
intend to auction allowances under CAIR (70 FR 25162 (May 12, 2005))
and some have under the NOX SIP Call Rule (63 FR 57356 (Oct.
27, 1998)). By the same token, states have authority to impose
emissions fees as economic incentives as part of their SIPs and collect
the revenues. Similarly, section 110(a)(2)(A) authorizes EPA to impose
fees as economic incentives as part of a Federal Implementation Plan
(FIP) under section 110(c), although EPA has never done so.\62\
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\62\ Any such revenues from a FIP would be deposited in the
Federal Treasury under the Miscellaneous Receipts Act, and not
retained and disbursed by EPA.
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Section 111 authorizes EPA to promulgate ``standards of
performance,'' which are defined as ``standard[s] for emissions of air
pollutants.'' EPA has taken the position that this term authorizes a
cap-and-trade program under certain circumstances. A fee program
differs from a cap and trade because it does not establish an overall
emission limitation, and we have not taken a position on whether, given
this limitation, a fee program fits the definition of a ``standard of
performance.'' Even so, under section 111 costs may be considered when
establishing NSPS regulations, and a fee may balance the consideration
of assuring emissions are reduced but not at an unacceptably high cost.
Also, there may be advantages of including an emission fee feature into
a cap-and-trade program (i.e., as a price ceiling). The use of a price
ceiling that is not expected to be triggered except in the case of
unexpectedly high (or low) control costs may be viewed differently
under the auspices of the CAA than a stand-alone emissions fee.
We request comment on what CAA provisions, if any, would authorize
emissions fees to control GHG emissions, and whether there are other
approaches that could be taken under the CAA that would approximate a
fee. Furthermore, we request comments on the use of emission fee
programs under other sections of the Act. We also seek comment on
whether sector-specific programs, or inter-sector programs where
emission fees on a CO2 equivalent basis are harmonized,
might be more appropriate as possible regulatory mechanisms under the
Act.
4. Economy-Wide and Sector-Based Regulation in a Clean Air Act Context
Several legislative cap-and-trade proposals for reducing GHG
emissions are designed to be nearly economy wide, meaning that they
attempt to reduce GHG emissions in most economic sectors through a
single regulatory system. By contrast, many CAA authorities are
designed for regulations that apply to a sector, subsector or source
category, although broader trading opportunities exist under some
authorities. This section discusses the relative merits of economy-wide
systems and sector-based market-oriented approaches. These
considerations may also be relevant in considering the use of CAA
provisions in tandem with any climate change legislation.
i. Economy-Wide Approach
Economic theory suggests that establishing a single price for GHG
emissions across all emitters through an economy-wide, multiple GHG,
market-oriented policy would promote optimal economic efficiency in
pursuing GHG reductions. According to the economics literature,
economy-wide GHG trading or GHG emissions taxes could offer
significantly greater cost savings than a sector-by-sector approach for
GHGs because the broader the universe of sources covered by a single
market-oriented approach (within a sector, across sectors, and across
regions), the greater the potential for finding lower-cost ways to
achieve the emissions target. If sources of pollution are
compartmentalized into different sector-specific or pollutant-specific
approaches, including the relatively flexible cap-and-trade approaches,
each class of polluter may still face a different price for their
contribution to the environmental harm, and therefore some trading
opportunities that reduce pollution control costs will be unrealized
(Burtraw and Evans, 2008).\63\ Taking a sector-by-sector approach to
controlling GHG emissions is likely to result in higher costs to the
economy. For example, limiting a market-oriented GHG policy to the
electricity and transportation sectors could double the welfare cost of
achieving a five percent reduction in carbon emissions compared to when
the industrial sector is also included.\64\
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\63\ With traditional pollutants there are geographic issues to
consider.
\64\ William Pizer, Dallas Burtraw, Winston Harrington, Richard
Newell, and James Sanchirico (2006), ``Modeling Economywide versus
Sectoral Climate Policies Using Combined Aggregate-Sectoral
Models,'' The Energy Journal, Vol. 27, No. 3: 135-168.
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A second factor that favors making the scope of a market-oriented
system as broad as possible is that the incentive for development,
deployment and diffusion of new technologies would be spread across the
economy. In contrast to an approach targeting a few key sectors, an
economy-wide approach would affect a greater number of diverse GHG-
emitting activities, and would influence a larger number of individual
economic decisions, potentially leading to innovation in parts of the
economy not addressed by a sector-by-sector approach.
As stated at the outset of this section, there are, first and most
important, CAA authority issues as well as other policy and practical
considerations in addition to economic efficiency that must be weighed
in evaluating potential CAA approaches to GHG regulation. An economy-
wide, market-oriented environmental regulation has never been
implemented before in the U.S. The European Union, after encountering
difficulties in early years of implementation, recently adopted major
revisions to its broad multi-sector cap-and-trade system; this
illustrates that some time and adjustments may be needed for such a
program to achieve its intended effect. Although EPA has successfully
designed and implemented market-oriented systems of narrower scope, a
single economy-side system would involve new design and implementation
challenges, should the CAA make possible such a system. For example --
Administrative costs may be a concern, because more
sources and sectors would have to be subject to
[[Page 44412]]
reporting and measurement, monitoring, and verification requirements.
Some sources and sectors are more amenable to market-
oriented approaches than others. The feasibility and cost of accurate
monitoring and compliance assurance needed for trading programs
(whether economy-wide or sector-based) varies among sectors and source
size. As a result, there are potential tradeoffs between trading
program scope and level of assurance that required emissions reductions
will be achieved.
To broaden the scope of cap-and-trade systems, covered
sources could be allowed to purchase GHG emission reductions
``offsets'' from non-covered sources. However, offsets raise additional
accountability issues, including how to balance cost efficiency against
certainty of emissions reductions, how to quantify resulting emissions
reductions, and how to ensure that the activities generating the
offsets are conducted and maintained over time.
Allocating allowances or auction revenues for an economy-
wide GHG trading system would be very challenging for an executive
branch agency because of high monetary stakes and divergent stakeholder
views on how to distribute the allowances or revenues to promote
various objectives. For example, many economists believe that
auctioning allowances under a cap-and-trade system and using the
proceeds to reduce taxes that distort economic incentives would be
economically efficient, but regulated entities typically favor free
allowance allocations to offset their compliance costs.65 66
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\65\ Many economists also suggest that an emissions tax with
proceeds used to decrease distortionary taxes would be economically
efficient; however, the CAA does not authorize such a program.
\66\ Bovenberg and Goulder (2001) find that freely allocating
20% of allowances to fossil fuel suppliers is enough to keep profits
from falling. When all allowances are freely allocated, profits are
found to be higher than in the absence of the carbon cap-and-trade
policy. Free allocation of allowances or an approach that exempts
particular sectors also raises the specter of ``rent-seeking,'' the
notion that sectors or particular source categories will lobby to
gain preferential treatment and, in essence, be subject to less
regulatory oversight than other sectors or competitors.
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ii. Sector-Based and Multi-Sector Trading Under the Clean Air Act
As mentioned above, EPA has implemented multi-sector, sector and
subsector-based cap-and-trade approaches in a number of CAA programs,
including the Acid Rain (SO2) Program, the NOX
SIP Call Rule, the Clean Air Interstate Rule (CAIR), and the
stratospheric ozone-depleting substances (ODS) phase-out rule. In the
case of the acid rain and ODS rules, the CAA itself called for federal
controls. By contrast, the NOX SIP Call rule and CAIR were
established by EPA through regulations under CAA section 110(a)(2)(d)
to help states attain various NAAQS. The two rules and EPA's
accompanying model rules enable states to adopt compatible cap-and-
trade programs that form regional interstate trading programs. The
power sector and a few major industrial source categories are included
in the trading system for the NOX SIP Call, and the trading
system for CAIR focuses on the electricity generation sector.
In addition to creating cap-and-trade systems, EPA has often
incorporated market-oriented emissions trading elements into the more
traditional performance standard approach for mobile and stationary
sources. Coupling market-oriented provisions with performance standards
provides some of the cost advantages and market flexibility of market-
oriented solutions while also directly incentivizing technology
innovation within the particular sector, as discussed below. For
example, performance standards for mobile sources under Title II have
for many years been coupled with averaging, banking and trading
provisions within a subsector. In general, averaging allows covered
parties to meet their emissions obligation on a fleet- or unit-wide
basis rather than requiring each vehicle or unit to directly comply.
Banking provides direct incentives for additional reductions by giving
credit for over-compliance; these credits can be used toward future
compliance obligations and, as such, allow manufacturers to put
technology improvements in place when they are ready for market, rather
than being forced to adhere to a strict regulatory schedule that may or
may not conform to industry or company developments. Allowing trading
of excess emission reductions with other covered parties provides an
incentive for reducing emissions beyond what is required.
Based on our experience with these programs, EPA believes that
sector and multi-sector trading programs for GHGs--relative to non-
market regulatory approaches--could offer substantial compliance
flexibility, cost savings and incentives for innovation to regulated
entities. In addition, as discussed below, in some sectors there may be
a need to more directly incentivize technology development because of
market barriers that a sector-specific program might help to overcome.
To the extent sector-based approaches could provide for control of
multiple pollutants (e.g., traditional pollutants and GHGs), they could
provide additional cost savings relative to multiple single-pollutant,
sector-based regulations. Another consideration is that it may be
simpler and thus faster to move forward with cap-and-trade programs for
sectors already involved in, and thus familiar with, cap-and-trade
programs. This raises the question of whether it would make sense to
phase in an economy-wide system over time.
Sector and multi-sector approaches would not offer the relative
economic efficiency of the economy-wide model for the reasons explained
above. To the extent the program sets more stringent requirements for
new sources than for existing source, a sector or multi-sector approach
could also pose the vintage issues discussed below. It is also
important to keep in mind that the economic efficiency of any CAA cap-
and-trade approach for GHGs, sector- or economy-wide, could be reduced
to a significant extent by the application of other GHG control
requirements (e.g., PSD permitting) to the sources covered by the cap-
and-trade program, if the result were to restrict compliance options.
iii. Combining Economy-Wide and Sector-Based Approaches
It is worth noting that market-oriented approaches may not
incentivize the most cost-effective reductions when information
problems, infrastructure issues, technological issues or other factors
pose barriers that impeded the market response to price incentives. In
such instances, there may be economic arguments for combining an
economy-wide approach with complementary sector-based requirements
unless these problems can be directly addressed, for instance by
providing the information needed or directly subsidizing the creation
of needed infrastructure.
For instance, given the relative inelasticity of demand for
transportation, even a relative high permit price for carbon may not
substantially change consumer vehicle purchases or travel demand,
although recent reports indicate that the current price of gasoline and
diesel are inducing an increasing number of consumers to choose more
fuel efficient vehicles and drive less. Some have expressed concern
that this relatively inelastic demand may be related to undervaluation
by consumers of fuel economy when making vehicle purchasing decisions.
If consumers adequately value fuel economy, fuel saving technologies
will come online as a result of market forces. However, if
[[Page 44413]]
consumers undervalue fuel economy, vehicle or engine manufacturers may
need a more direct incentive for making improvements or the technology
innovation potential may well be delayed or not fully realized. Beyond
this consumer valuation issue, questions have been raised as to whether
a carbon price alone (especially if the impact is initially to raise
gasoline prices by pennies a gallon) will provide adequate incentives
for vehicle manufacturers to invest now in breakthrough technologies
with the capability to achieve significantly deeper emissions
reductions in the future, and for fuel providers to make substantial
investments in a new or enhanced delivery infrastructure for large-
scale deployment of lower carbon fuels.\67\
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\67\ See Kopp and Pizer, ``Assessing U.S. Climate Policy
Options,'' Chapter 12, RFF Press: Washington, DC (2007).
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EPA requests comment on how to balance the different policy and
economic considerations involved in selecting potential regulatory
approaches under the CAA, and on how the potential enactment of
legislation should affect EPA's deliberations on how to use CAA
authorities.
5. Other Selected Policy Design Issues
Another policy and legal issue in regulatory design is whether
requirements should differentiate between new and existing sources.
Because it is generally more costly to retrofit pollution control
equipment than to incorporate it into the construction or manufacture
of a new source, environmental regulations, including under the CAA,
frequently apply stricter standards to new or refurbished sources than
to ``grandfathered'' sources that pre-date the regulation. New sources
achieve high-percentage reductions and over time existing high-emitting
sources are replaced with much cleaner ones. For example, emissions
from the U.S. auto fleet have been dramatically reduced over time
through new vehicle standards. However, some suggest that stricter
pollution control requirements for new or refurbished sources may
retard replacement of older sources, discouraging technology
investment, innovation and diffusion while encouraging older and less
efficient sources to remain in operation longer, thereby reducing the
environmental effectiveness and cost-effectiveness of the regulation.
Others believe that economic factors other than differences in new and
existing source requirements (e.g., capital outlay, power prices and
fuel costs) have the most impact on rate of return, and that
differences in regulatory stringency generally do not drive business
decisions on when to build new capacity.
A 2002 EPA report on new source review requirements found that NSR
``appears to have little incremental impact on construction of new
electricity generation,'' but also found that ``there were credible
examples of cases in which uncertainty over the [NSR] exemption for
routine activities has resulted in delay or cancellation of projects
[at existing plants]'' that would have increased energy capacity,
improved energy efficiency and reduced air pollution.\68\ To the extent
that a gap in new and existing source requirements affects business
decisions, regulating existing as well as new sources can diminish or
eliminate that gap. In the power sector, the gap has narrowed over
time, in part as a result of CAA national and regional cap-and-trade
systems that do not discriminate between new and existing facilities
(i.e., both new and old power plants must hold allowances to cover
their NOX and SO2 emissions). Another
consideration is that equity issues can arise when applying retroactive
requirements to existing sources. For GHGs, EPA requests comment on the
concept of a market-oriented approach that does not differentiate
between new and existing source controls and, by avoiding different
marginal costs of control at new and existing sources, would promote
more cost-effective emissions reductions. In addition, EPA requests
comment on whether GHG regulations should differentiate between new and
existing sources for various sectors, and whether there are
circumstances in which requirements for stringent controls on new
sources would have policy benefits despite the existence of a cap-and-
trade system that also would apply to those sources.
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\68\ ``New Source Review: Report to the President, June 2002,''
U.S. EPA, pp. 30-31.
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Another possible design consideration for a GHG program is whether
and how lifecycle approaches to controlling GHG emissions could or
should be used. Lifecycle (LC) analysis and requirements have been
proposed for determining and regulating the entire stream of direct and
indirect emissions attributable to a regulated source. Indirect
emissions are emissions from the production, transportation, and
processing of the inputs that go into producing that good. Section VI.D
describes possible CAA approaches for reducing GHG emissions from
transportation fuels through lifecycle analysis and includes a brief
discussion of a potential lifecycle approach to reducing fuel-related
GHG emissions. In that context, displacing petroleum-based fuels with
renewable or alternative fuels can reduce fuel-related GHGs to the
extent the renewable or alternative fuels are produced in ways that
result in lower GHG emissions than the production of an equivalent
amount of fossil-based fuels. Tailpipe GHG emissions typically do not
vary significantly across conventional and alternative or renewable
fuels.
EPA recognizes that other programs, such as stationary source or
area source programs described in this notice, could potentially
address at least some of the indirect GHG emissions from producing
fuels. We note that the technology and fuel changes that may result
from an economy-wide cap-and-trade approach would likely be different
from the technology and fuel changes that may result from a lifecycle
approach.
EPA asks for comment on how a lifecycle approach for fuels could be
integrated with other stationary source approaches and whether there
are potentially overlapping incentives or disincentives. EPA also asks
for comments on whether a lifecycle approach to reducing GHG emissions
may be appropriate for other sectors and types of sources, and what the
implications for regulating other sectors would be if a lifecycle
approach is taken for fuels.
6. ``Emissions Leakage'' and International Competitiveness
A frequently raised concern with domestic GHG regulation
unaccompanied by comparable policies abroad is that it might result in
emissions leakage or adversely affect the international competitiveness
of certain U.S. industries. The concern is that if domestic firms faced
significantly higher costs due to regulation, and foreign firms
remained unregulated, this could result in price changes that shift
emissions, and possibly some production capacity, from the U.S. to
other countries. Emissions leakage also could occur without being
caused by a competitiveness issue: for instance, if a U.S. GHG policy
raised the domestic price of petroleum-based fuels and led to reduced
U.S. demand for those fuels, the resulting world price decline could
spur increased use of petroleum-based fuels abroad, leading to
increased GHG emissions abroad that offset U.S. reductions.
The extent to which international competitiveness is a potential
concern varies substantially by sector. This issue is mainly raised for
industries with high energy use and substantial potential
[[Page 44414]]
foreign competition. Even for vulnerable sectors, the concern would
depend on the actual extent which a program would raise costs for an
energy intensive firm facing international competition, and on whether
policies to address the competitiveness issue were adopted (either as
part of the rule or in another venue).
Leakage also could occur within the U.S. if emissions in one sector
or region are controlled, but other sources are not. In this case, the
market effects could lead to increased activity in unregulated sectors
or regions, offsetting some of the policy's emissions reductions. In
turn, this would raise the cost of achieving the environmental
objective. The more uniform the price signal for an additional unit
reduction in GHG emissions across sectors, states, and countries, the
less potential there is for leakage to occur.
A recent report has identified and evaluated five conceptual
options for addressing competitiveness concerns in a legislative
context; some options might also be available in a regulatory
context.\69\ The first option, weaker program targets, would affect the
entire climate protection policy. Four other options also could
somewhat decrease environmental stringency but would allow for the
targeting of industries or sectors particularly vulnerable to adverse
economic impacts:
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\69\ Morgenstern, Richard D., ``Issue Brief 8: Addressing
Competitiveness Concerns in the Context of a Mandatory Policy for
Reducing U.S. Greenhouse Gas Emissions,'' in Assessing U.S. Climate
Policy Options: A report summarizing work at RFF [Resources for the
Future] as part of the inter-industry U.S. Climate Policy Forum,
November 2007, Raymond J. Kopp and William A. Pizer, eds.
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Exemptions
Non-market regulations to avoid direct energy price
increases on an energy-intensive industry
Distribution of free allowances to compensate adversely
affected industries in a cap-and-trade system
Trade-related policies such as import tariffs on carbon or
energy content, export subsidies, or requirements for importers to
submit allowances to cover the carbon content of certain products.
Significantly, the report noted that identifying the industries most
likely to be adversely affected by domestic GHG regulation, and
estimating the degree of impact, is complex in terms of data and
analytical tools needed.
We request comment on the extent to which CAA authorities described
in this notice could be used to minimize competitiveness concerns and
leakage of emissions to other sectors or countries, and which
approaches should be preferred.
G. Analytical Challenges for Economic Analysis of Potential Regulation
In the event that EPA pursues GHG emission reduction policies under
the CAA or as a result of legislative action, we are required by
Executive Order 12866 to analyze and take into account to the extent
permitted by law the costs and benefits of the various policy options
considered. Economic evaluation of GHG mitigation is particularly
challenging due to the temporal and spatial dimensions of the problem
discussed previously: GHG emissions have extremely long-run and global
climate implications. Furthermore, changes to the domestic economy are
likely to affect the global economy. In this section, we discuss a few
overarching analytical challenges that follow from these points. Many
of the issues discussed are also relevant when valuing changes in GHGs
associated with non-climate policies.
1. Time Horizon and International Considerations in General
As discussed earlier in this section, changes in GHG emissions
today will affect environmental, ecological, and economic conditions
for decades to centuries into the future. In addition, changes in U.S.
GHG emissions that result from U.S. domestic policy will affect climate
change everywhere in the world, as will changes in the GHG emissions of
other countries. U.S. domestic policy could trigger emissions changes
across the U.S. economy and across regions globally, as production and
competitiveness change among economic activities. Similarly,
differences in the potential impacts of climate change across the world
can also affect competitiveness and production. Capturing these effects
requires long-run, global analysis in addition to traditional domestic
and sub-national analyses.
2. Analysis of Benefits and Costs Over a Long Time Period
Since changes in emissions today will affect future generations in
the U.S. and internationally, costs and benefits of GHG mitigation
options need to be estimated over multiple generations. Typically,
federal agencies discount future costs or benefits back to the present
using a discount rate, where the discount rate represents how society
trades-off current consumption for future consumption. With the
benefits of GHG emissions reductions distributed over a very long time
horizon, benefit and cost estimations are likely to be very sensitive
to the discount rate. For policies that affect a single generation of
people, the analytic approach used by EPA is to use discount rates of
three and seven percent at a minimum.\70\ According to the Office of
Management and Budget (OMB), a three percent rate is consistent with
what a typical consumer might expect in the way of a risk free market
return (e.g., government bonds). A seven percent rate is an estimate of
the average before-tax rate of return to private capital in the U.S.
economy. A key challenge facing EPA is the appropriate discount rate
over the longer timeframe relevant for GHGs.
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\70\ EPA (U.S. Environmental Protection Agency), 2000.
Guidelines for Preparing Economic Analyses. EPA 240-R-00-003. See
also OMB (U.S. Office of Management and Budget), 2003. Circular A-4.
September 17, 2003.
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There are reasons to consider even lower discount rates in
discounting the costs of benefits of policy that affect climate change.
First, changes in GHG emissions--both increases and reductions--are
essentially long-run investments in changes in climate and the
potential impacts from climate change. When considering climate change
investments, they should be compared to similar alternative investments
(via the discount rate). Investments in climate change are investments
in infrastructure and technologies associated with mitigation; however,
they yield returns in terms of avoided impacts over a period of one
hundred years and longer. Furthermore, there is a potential for
significant impacts from climate change, where the exact timing and
magnitude of these impacts are unknown. These factors imply a highly
uncertain investment environment that spans multiple generations.
When there are important benefits or costs that affect multiple
generations of the population, EPA and OMB allow for low but positive
discount rates (e.g., 0.5-3% noted by U.S. EPA, 1-3% by OMB).\71\ In
this multi-generation context, the three percent discount rate is
consistent with observed interest rates from long-term investments
available to current generations (net of risk premiums) as well as
current estimates of the impacts of climate change that reflect
potential impacts on consumers. In addition, rates of three percent or
lower are consistent with long-run uncertainty in economic growth and
interest rates, considerations of issues associated with the transfer
of wealth between generations, and the risk of
[[Page 44415]]
high impact climate damages. Given the uncertain environment, analysis
could also consider evaluating uncertainty in the discount rate (e.g.,
Newell and Pizer, 2001, 2003).\72\ EPA solicits comment on the
considerations raised and discounting alternatives for handling both
benefits and costs for this long term, inter-generational context.
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\71\ OMB (2003). EPA (2000). These documents are the guidance
used when preparing economic analyses for all EPA rulemakings.
\72\ Newell, R. and W. Pizer, 2001. Discounting the benefits of
climate change mitigation: How much do uncertain rates increase
valuations? PEW Center on Global Climate Change, Washington, DC.
Newell, R. and W. Pizer, 2003. Discounting the distant future: how
much do uncertain rates increase valuations? Journal of
Environmental Economics and Management 46: 52-71.
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3. Uncertainty in Benefits and Costs
The long time horizon over which benefits and costs of climate
change policy would accrue and the global relationships they involve
raise additional challenges for estimation. The exact benefits and
costs of virtually every environmental regulation is at least somewhat
uncertain, because estimating benefits and costs involves projections
of future economic activity and the future effects and costs of
reducing the environmental harm. In almost every case, some of the
future effects and costs are not entirely known or able to be
quantified or monetized. In the case of climate change, the uncertainly
inherent in most economic analyses of environmental regulations is
magnified by the long-term and global scale of the problem and the
resulting uncertainties regarding socio-economic futures, corresponding
GHG emissions, climate responses to emissions changes, the bio-physical
and economic impacts associated with changes in climate, and the costs
of reducing GHG emissions. For example, uncertainties about the amount
of temperature rise for a given amount of GHG emissions and rates of
economic and population growth over the next 50 or 100 years will
result in a large range of estimates of potential benefits and costs.
Lack of information with regard to some important benefit categories
and the potential for large impacts as a result of climate exceeding
known but uncertain thresholds compound this uncertainty. Likewise,
there are uncertainties regarding the pace and form of future
technological innovation and economic growth that affect estimates of
both costs and benefits. These difficulties in predicting the future
can be addressed to some extent by evaluating alternative scenarios. In
uncertain situations such as that associated with climate, EPA
typically recommends that analysis consider a range of benefit and cost
estimates, and the potential implications of non-monetized and non-
quantified benefits.
Given the substantial uncertainties in quantifying many aspects of
climate change mitigation and impacts, it is difficult to apply
economic efficiency criteria, or even positive net benefit
criteria.\73\ Identifying an efficient policy requires knowing the
marginal benefit and marginal cost curves for GHG emissions reductions.
If the marginal benefits are greater than the marginal costs, then
additional emissions reductions are merited (i.e., they are efficient
and provide a net benefit). However, the curves are not precise lines;
instead they are wide and partially unknown bands. Similarly, estimates
of total benefits and costs can be expressed only as ranges. As a
result, it is difficult to both identify the efficient policy and
assess net benefits.
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\73\ IPCC WGI. (2007). Climate Change 2007--The Physical Science
Basis Contribution of Working Group I to the Fourth Assessment
Report of the IPCC, http://www.ipcc.ch/. IPCC WGII. (2007). Climate
Change 2007--Impacts, Adaptation and Vulnerability Contribution of
Working Group II to the Fourth Assessment Report of the IPCC, http://www.ipcc.ch/. IPCC WGIII (2007). Climate Change 2007--Mitigation
Contribution of Working Group III to the Fourth Assessment Report of
the IPCC, http://www.ipcc.ch/. U.S. Congressional Budget Office
(2005). Uncertainty in Analyzing Climate Change: Policy
Implications. The Congress of the United States, January 2005.
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In situations with large uncertainties, the economic literature
suggests a risk management framework as being appropriate for guiding
policy (Manne and Richels, 1992; IPCC WGIII, 2007).\74\ In this
framework, the policymaker selects a target level of risk and seeks the
lowest cost approach for reaching that goal. In addition, the decision-
making process is an iterative one of acting, learning, and acting
again (as opposed to there being a single decision point). In this
context, the explicit or implicit value of changes in risk is
important. Furthermore, some have expressed concern in the economics
literature that standard deterministic approaches (i.e., approaches
that imply there is only one known and single realization of the world)
do not appropriately characterize the uncertainty and risk related to
climate change and may lead to a substantial underestimation of the
benefits from taking action (Weitzman, 2007a, 2007b).\75\ Formal
uncertainty analysis may be one approach for at least partially
addressing this concern. EPA solicits comment on how to handle
uncertainty in benefits and costs calculations and application, given
the quantified and unquantified uncertainties.
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\74\ Manne, A. and R. Richels (1992). ``Buying Greenhouse
Insurance--the Economic Costs of Carbon Dioxide Emission Limits'',
MIT Press book, Cambridge, MA, 1992. IPCC WGIII (2007).
\75\ Weitzman, M., 2007a, ``The Stern Review of the Economics of
Climate Change,'' Journal of Economic Literature. Weitzman, M.,
2007b, ``Structural Uncertainty and the Statistical Life in the
Economics of Catastrophic Climate Change,'' Working paper http://econweb.fas.harvard.edu/faculty/weitzman/papers/ValStatLifeClimate.pdf.
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4. Benefits Estimation Specific Issues--Scope, Estimates, State-of-the-
art
Another important issue in economic analysis of climate change
policies is valuing domestic and international benefits. U.S. GHG
reductions are likely to yield both domestic and global benefits.
Typically, because the benefits and costs of most environmental
regulations are predominantly domestic, EPA focuses on benefits that
accrue to the U.S. population when quantifying the impacts of domestic
regulation. However, OMB's guidance for economic analysis of federal
regulations specifically allows for consideration of international
effects.\76\
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\76\ OMB (2003), page 15.
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GHGs are global pollutants. Economic principles suggest that the
full costs to society of emissions should be considered in order to
identify the policy that maximizes the net benefits to society, i.e.,
achieves an efficient outcome (Nordhaus, 2006).\77\ Estimates of global
benefits capture more of the full value to society than domestic
estimates and can therefore help guide policies towards higher global
net benefits for GHG reductions.\78\ Furthermore, international effects
of climate change may also affect domestic benefits directly and
indirectly to the extent U.S. citizens value international impacts
(e.g., for tourism reasons, concerns for the existence of ecosystems,
and/or concern for others); U.S. international interests are affected
(e.g., risks to U.S. national security, or the U.S. economy from
potential disruptions in other nations); and/or domestic mitigation
decisions affect the level of mitigation and emissions changes in
general in other countries (i.e, the benefits realized in the U.S. will
depend on emissions changes in the U.S. and internationally). The
economics literature also suggests that policies based on direct
domestic benefits will result in little appreciable
[[Page 44416]]
reduction in global GHGs (e.g., Nordhaus, 1995).\79\
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\77\ Nordhaus, W., 2006, ``Paul Samuelson and Global Public
Goods,'' in M. Szenberg, L. Ramrattan, and A. Gottesman (eds),
Samuelsonian Economics, Oxford.
\78\ Both the United Kingdom and the European Commission
following these economic principles in consideration of the global
social cost of carbon (SCC) for valuing the benefits of GHG emission
reductions in regulatory impact assessments and cost-benefit
analyses (Watkiss et al, 2006).
\79\ Nordhaus, William D. (1995). ``Locational Competition and
the Environment: Should Countries Harmonize Their Environmental
Policies?'' in Locational Competition in the World Economy,
Symposium 1994, ed., Horst Siebert, J. C. B. Mohr (Paul Siebeck),
Tuebingen, 1995.
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These economic principles suggest that global benefits should also
be considered when evaluating alternative GHG reduction policies.\80\
In the literature, there are a variety of global marginal benefits
estimates (see the Tol, 2005, and Tol, 2007, meta analyses).\81\ A
marginal benefit is the estimated monetary benefit for each additional
unit of carbon dioxide emissions reduced in a particular year.\82\
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\80\ Recently, the National Highway Traffic Safety
Administration (NHTSA) proposed a new rulemaking for average fuel
economy standards for passenger cars and light trucks that is based
on domestic marginal benefit estimates for carbon dioxide
reductions. See section V.A.7.l.(iii) ``Economic value of reductions
in CO2 emissions'' (p. 24413) of Vol. 73 of the Federal
Registry. Department of Transportation, National Highway Traffic
Safety Administration, 49 CFR Parts 523, 531, 533, 534, 536 and 537
[Docket No. NHTSA-2008 -0089], RIN 2127-AK29, Average Fuel Economy
Standards: Passenger Cars and Light Trucks, Model Years 2011-2015,
http://www.regulations.gov/fdmspublic/component/main?main=DocumentDetail&;o=0900006480541adc.
\81\ Tol, Richard, 2005. The marginal damage costs of carbon
dioxide emissions: an assessment of the uncertainties. Energy Policy
33: 2064-2074. Tol, Richard, 2007. The Social Cost of Carbon:
Trends, Outliers and Catastrophes. Economics Discussion Papers
Discussion Paper 2007-44, September 19, 2007. Tol (2007) has been
published on-line with peer review comments (http://www.economics-ejournal.org/economics/discussionpapers/2007-44).
\82\ This is sometimes referred to as the social cost of carbon,
which specifically is defined as the net present value of the change
in climate change impacts over the atmospheric life of the
greenhouse gas and the resulting climate inertia associated with one
additional net global metric ton of carbon emitted to the atmosphere
at a particular point in time.
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Based on the characteristics of GHGs and the economic principles
that follow, EPA developed ranges of global and U.S. marginal benefits
estimates. The estimates were developed as part of the work evaluating
potential GHG emission reductions from motor vehicles and their fuels
under Executive Order 13432. However, it is important to note at the
outset that the estimates are incomplete since current methods are only
able to reflect a partial accounting of the climate change impacts
identified by the IPCC (discussed more below). Also, as noted above,
domestic estimates omit potential impacts on the United States (e.g.,
economic or national security impacts) resulting from climate change
impacts in other countries. The global estimates were developed from a
survey analysis of the peer reviewed literature (i.e. meta analysis).
U.S. estimates, and a consistent set of global estimates, were
developed from a single model and are highly preliminary, under
evaluation, and likely to be revised.
The range of estimates is wide due to the uncertainties described
above relating to socio-economic futures, climate responsiveness,
impacts modeling, as well as the choice of discount rate. For instance,
for 2007 emission reductions and a 2% discount rate the global meta
analysis estimates range from $-3 to $159/tCO2, while the
U.S. estimates range from $0 to $16/tCO2. For 2007 emission
reductions and a 3% discount rate, the global meta-estimates range from
$-4 to $106/tCO2, and the U.S. estimates range from $0 to
$5/tCO2.\83\ The global meta analysis mean values for 2007
emission reductions are $68 and $40/tCO2 for discount rates
of 2% and 3% respectively (in 2006 real dollars) while the domestic
mean value from a single model are $4 and $1/tCO2 for the
same discount rates. The estimates for future year emission changes
will be higher as future marginal emissions increases are expected to
produce larger incremental damages as physical and economic systems
become more stressed as the magnitude of climate change increases.\84\
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\83\ See the Technical Support Document on Benefits of Reducing
GHG Emissions for global estimates consistent with the U.S.
estimates in the text and for a comparison to the Tol (2005) meta
analysis peer reviewed estimates. Tol (2005) estimates were cited in
NHTSA's proposed rule and by the 9th U.S. Circuit Court (Center for
Biodiversity v. NHTSA, F. 3d. 9th Cir., Nov. 15, 2007).
\84\ Note that, except for illustrative purposes, marginal
benefits estimates in the peer reviewed literature do not use
consumption discount rates as high as 7%.
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The current state-of-the-art for estimating benefits is also
important to consider when evaluating policies. There are significant
partially unquantified and omitted impact categories not captured in
the estimates provided above. The IPCC WGII (2007) concluded that
current estimates are ``very likely'' to be underestimated because they
do not include significant impacts that have yet to be monetized.\85\
Current estimates do not capture many of the main reasons for concern
about climate change, including non-market damages (e.g., species
existence value and the value of having the option for future use), the
effects of climate variability, risks of potential extreme weather
(e.g., droughts, heavy rains and wind), socially contingent effects
(such as violent conflict or humanitarian crisis), and potential long-
term catastrophic events. Underestimation is even more likely when one
considers that the current trajectory for GHG emissions is higher than
typically modeled, which when combined with current regional population
and income trajectories that are more asymmetric than typically
modeled, imply greater climate change and vulnerability to climate
change.
Finally, with projected increasing changes in climate, some types
of potential climate change impacts may occur suddenly or begin to
increase at a much faster rate, rather than increasing gradually or
smoothly. In this case, there are likely to be jumps in the functioning
of species and ecosystems, the frequency and intensity of extreme
conditions (e.g., heavy rains, forest fires), and the occurrence of
catastrophic events (e.g., collapse of the West Antarctic Ice Sheet).
As a result, different approaches are necessary for quantifying the
benefits of ``small'' (incremental) versus ``large'' (non-incremental)
reductions in global GHGs. Marginal benefits estimates, like those
presented above, can be useful for estimating benefits for small
changes in emissions. However, for large changes in emissions, a more
comprehensive assessment of impacts would be needed to capture changes
in economic and biophysical dynamics and feedbacks in response to the
policy. Even small reductions in global GHG emissions are expected to
reduce climate change risks, including catastrophic risks.
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\85\ IPCC WGII, 2007. In the IPCC report, ``very likely'' was
defined as a greater than 90% likelihood based on expert judgment.
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EPA solicits comment on the appropriateness of using U.S. and
global values in quantifying the benefits of GHG reductions and the
appropriate application of benefits estimates given the state of the
art and overall uncertainties. We also seek comment on our estimates of
the global and U.S. marginal benefits of GHG emissions reductions that
EPA has developed, including the scientific and economic foundations,
the methods employed in developing the estimates, the discount rates
considered, current and proposed future consideration of uncertainty in
the estimates, marginal benefits estimates for non-CO2 GHG
emissions reductions, and potential opportunities for improving the
estimates. We are also interested in comments on methods for
quantifying benefits for non-incremental reductions in global GHG
emissions.
5. Energy Security
In recent actions, both EPA and NHTSA have considered other
benefits of a regulatory program that, though not directly
environmental, can result from compliance with the program and may
[[Page 44417]]
be quantified.\86\ One of these potential benefits, related to the
transportation sector, is increased energy security due to reduced oil
imports. It is clear that both financial and strategic risks can result
within the U.S. economy if there is a sudden disruption in the supply
or a spike in the costs of petroleum. Conversely, actions that promote
development of lower carbon fuels that can substitute for petroleum or
technologies that more efficiently combust petroleum during operation
can result in reduced U.S. oil imports, and can therefore reduce these
financial and strategic risks. This reduction in risks is a measure of
improved energy security and represents a benefit to the U.S. As the
Agency evaluates potential actions to reduce GHGs from the U.S.
economy, it intends to also consider the energy security impacts
associated with these actions.
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\86\ The EPA has worked with Oak Ridge National Laboratory to
develop a methodology that quantifies energy security benefits
associated with the reduction of imported oil. This methodology was
used to support the EPA's 2007 Renewable Fuels Standards Rulemaking
and NHTSA's 2008 proposed Average Fuel Economy Standards for
Passenger Cars and Light Trucks Rulemaking for Model Years 2001--
2015.
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6. Interactions With Other Policies
Climate change and GHG mitigation policies will likely affect most
biophysical and economic systems, and will therefore affect policies
related to these systems. For example, as previously mentioned, climate
change will affect air quality and GHG mitigation will affect criteria
pollutant emissions. These effects will need to be evaluated, both in
the context of economic costs and benefits, as well as policy design in
order to exploit synergies and avoid inefficiencies across policies.
Non-climate policies, whether focused on traditional air pollutants,
energy, transportation, or other areas, can also affect baselines and
mitigation opportunities for climate policies. For instance, energy
policies can change baseline GHG emissions and the development path of
particular energy technologies, potentially affecting the GHG
mitigation objectives of climate policies as well as changing the
relative costs of mitigation technologies. EPA seeks comment on
important policy interactions.
7. Integrating Economic and Noneconomic Considerations
While economics can answer questions about the cost effectiveness
and efficiency of policies, judgments about the appropriate mitigation
policy, potential climate change impacts, and even the discount rate
can be informed by economics and science but also involve important
policy, legal, and ethical questions. The ultimate choice of a global
climate stabilization target may be a policy choice that incorporates
both economic and non-economic factors, while the choice of specific
implementation strategies may be based on effectiveness criteria.
Furthermore, other quantitative analyses are generally used to support
the development of regulations. Distributional analyses, environmental
justice analyses, and other analyses can be informative. For example,
to the extent that climate change affects the distribution of wealth or
the distribution of environmental damages, then climate change
mitigation policies may have significant distributional impacts, which
may in some cases be more important than overall efficiency or net
benefits. EPA seeks comment on how to adequately inform economic
choices, as well as the broader policy choices, associated with GHG
mitigation policies.
IV. Clean Air Act Authorities and Programs
In developing a response to the Massachusetts decision, EPA
conducted a thorough review of the CAA to identify and assess all of
the Act's provisions that might be applied to GHG emissions. Although
the Massachusetts decision addresses only CAA section 202(a)(1), which
authorizes new motor vehicle emission standards, the Act contains a
number of provisions that could conceivably be applied to GHGs
emissions. EPA's review of these provisions and their interconnections
indicated that a decision to regulate GHGs under section 202(a) or
another CAA provision could or would lead to regulation under other CAA
provisions. This section of the notice provides an overview of the CAA
and examines the various interconnections among CAA provisions that
could lead to broad regulation of GHG emission sources under the Act.
A. Overview of the Clean Air Act
The CAA provides broad authority to combat air pollution. Cars,
trucks, construction equipment, airplanes, and ships, as well as a
broad range of electric generation, industrial, commercial and other
facilities, are subject to various CAA programs. Implementation of the
Act over the past four decades has resulted in significant reductions
in air pollution at the same time the nation's economy has grown.
As more fully examined in Section VII of this notice, the CAA
provides three main pathways for regulating stationary sources of air
pollutants. They include, in order of their appearance in the Act,
national ambient air quality standards (NAAQS) and state plans for
implementing those standards (SIPs); performance standards for new and
existing stationary sources; and hazardous air pollutant standards for
stationary sources. In addition, the Prevention of Significant
Deterioration (PSD) program requires preconstruction permitting and
emission controls for certain new and modified major stationary
sources, and the Title V program requires operating permits for all
major stationary sources.
Section 108 of the CAA authorizes EPA to list air pollutants that
are emitted by many sources and that cause or contribute to air
pollution problems such as ozone (smog) and particulate matter (soot).
For every pollutant listed, EPA is required by section 109 to set NAAQS
that are ``requisite'' to protect public health and welfare. EPA may
not consider the costs of meeting the NAAQS in setting the standards.
Under section 110, every state develops and implements plans for
meeting the NAAQS by applying enforceable emission control measures to
sources within the state. The Act's requirements for SIPs are more
detailed and stringent for areas not meeting the standards
(nonattainment areas) than for areas meeting the standards (attainment
areas). Costs may be considered in implementing the standards. States
are aided in their efforts to meet the NAAQS by federal emissions
standards for mobile sources and major categories of stationary sources
issued under other sections of the Act.
Under CAA section 111, EPA establishes emissions performance
standards for new stationary sources and modifications of existing
sources for categories of sources that contribute significantly to
harmful air pollution. These new source performance standards (NSPS)
reduce emissions of air pollutants addressed by NAAQS, but can be
issued regardless of whether there is a NAAQS for the pollutants being
regulated. NSPS requirements for new sources help ensure that when
large sources of air pollutants are built or modified, they apply
available emission control technologies and strategies.
When EPA establishes a NSPS for a pollutant, section 111(d) calls
upon states to issue a standard for existing sources in the regulated
source category except in two circumstances. First, section 111(d)
prohibits regulation of a NAAQS pollutant. Second, ``where a source
category is being regulated under section 112, a section 111(d)
standard of performance cannot be established to
[[Page 44418]]
address any HAP listed under section 112(b) that may be emitted from
that particular source category.''\87\ In effect, existing source NSPS
provides a ``regulatory safety net'' for pollutants not otherwise
subject to major regulatory programs under the CAA. Section 111
provides EPA and states with significant discretion concerning the
sources to be regulated and the stringency of the standards, and allows
consideration of costs in setting NSPS.
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\87\ See 70 FR 15994, 16029-32 (Mar. 29, 2005).
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CAA section 112 provides EPA with authority to list and issue
national emissions standards for hazardous air pollutants (HAPs) from
stationary sources. HAPs are broadly defined as pollutants that
present, or may present, a threat of adverse human or environmental
effects. HAPs include substances which are, or may reasonably be
anticipated to be, carcinogenic, mutagenic, neurotoxic or acutely or
chronically toxic. Section 112 contains low emissions thresholds for
regulation in view of its focus on toxic pollutants, and requires
regulation of all major sources of HAPs. Section 112 also provides for
``maximum achievable control technology'' (MACT) standards for major
sources, limiting consideration of cost.
The PSD program under Part C of Title I of the Act is triggered by
regulation of a pollutant under any other section of the Act except for
sections 112 and 211(o). As mentioned previously in this notice, under
this program, new major stationary sources and modifications at
existing major stationary sources undergo a preconstruction permitting
process and install best available control technology (BACT) for each
regulated pollutant. These basic requirements apply regardless of
whether a NAAQS exists for the pollutant; additional PSD requirements
apply in the event of a NAAQS. The PSD program's control requirements
help prevent large new and modified sources of air pollutants from
significantly degrading the air quality in clean air areas. A similar
program, called ``new source review,'' ensures that new or modified
large sources in areas not meeting the NAAQS do not make it more
difficult for the areas to eventually attain the air quality standards.
Title II of the CAA provides comprehensive authority for regulating
mobile sources of air pollutants. As more fully described in Section VI
of this notice, Title II authorizes EPA to address all categories of
mobile sources and take an integrated approach to regulation by
considering the unique aspects of each category, including passenger
vehicles, trucks and nonroad vehicles, as well as the fuels that power
them. Title II requires EPA to consider technological feasibility,
costs, safety and other factors in setting standards, and gives EPA
discretion to set technology-forcing standards as appropriate. In
addition, section 211(o) of the Act establishes the renewable fuel
standard (RFS) program, which was recently strengthened by EISA to
require substantial increases in the use of renewable fuels, including
renewable fuels with significantly lower lifecycle GHG emissions than
the fossil fuel-based fuels they replace.\88\ The CAA's mobile source
authorities work in tandem with the Act's stationary source authorities
to help protect public health and the environment from air pollution.
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\88\ As explained further below, EISA provides that regulation
of renewable fuels based on lifecycle GHG emissions does not trigger
any other regulation of GHGs under the CAA.
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Title VI of the CAA authorizes EPA to take various actions to
protect stratospheric ozone, a layer of ozone high in the atmosphere
that helps protect the Earth from harmful UVB radiation. As discussed
in Section VIII of this notice, section 615 provides broad authority to
regulate any substance, practice, process or activity that may
reasonably be anticipated to affect the stratosphere and that effect
may reasonably be anticipated to endanger public health or welfare.
B. Interconnections Among Clean Air Act Provisions
The provisions of the CAA are interconnected in multiple ways such
that a decision to regulate one source category of GHGs could or would
lead to regulation of other source categories of GHGs. As described in
detail below, there are several provisions in the CAA that contain
similar endangerment language. An endangerment finding for GHGs under
one provision of the Act could thus have ramifications under other
provisions of the Act. In addition, CAA standards applicable to GHGs
for one category of sources could trigger PSD requirements for other
categories of sources that emit GHGs. How a term is interpreted for one
part of the Act could also affect other provisions using the same term.
These CAA interconnections are by design. As described above, the
Act combats air pollutants in several ways that reflect the nature and
effects of the particular air pollutant being addressed. The Act's
approaches are in many cases complementary and reinforcing, ensuring
that air pollutants emitted by various types of emission sources are
reduced in a manner and to an extent that reflects the relative
contribution of particular categories of sources. The CAA's authorities
are intended to work together to achieve air quality that protects
public health and welfare.
For GHGs, the CAA's interconnections mean that careful attention
needs to be paid to the consequences and specifics of decisions
regarding endangerment and regulation of any particular category of GHG
sources under the Act. In the case of traditional air pollutants, EPA
and States have generally regulated pollutants incrementally over time,
adding source categories or program elements as evolving circumstances
make appropriate. In light of the broad variety and large number of GHG
sources, any decision to regulate under the Act could lead, relatively
quickly, to more comprehensive regulation of GHG sources under the Act.
A key issue to consider in examining the Act's provisions and their
interconnections is the extent to which EPA may choose among and/or
tailor the CAA's authorities to implement a regulatory program that
makes sense for GHGs, given the unique challenges and opportunities
that regulating them would present.
This section of the notice explores these interconnections, and
later sections explain how each CAA provision might apply to GHGs.
1. Similar Endangerment Language Is Found in Numerous Sections of the
Clean Air Act
The Supreme Court's decision in Massachusetts v. EPA requires EPA
to address whether GHG emissions from new motor vehicles meet the
endangerment test of CAA section 202(a)(1). That section states:
[t]he Administrator shall by regulation prescribe (and from time
to time revise) * * * standards applicable to the emissions of any
air pollutant from any class or classes of new motor vehicles or new
motor vehicle engines, which in his judgment cause, or contribute
to, air pollution which may reasonably be anticipated to endanger
public health or welfare.
CAA section 202(a)(1). If the Administrator makes a positive
endangerment determination for GHG emissions from new motor vehicles,
he must regulate those GHG emissions under section 202(a) of the Act.
Similar endangerment language is found in numerous sections of the
CAA, including sections 108, 111, 112, 115, 211, 213, 231 and 615. For
example, CAA section 108(a)(1) (regarding listing pollutants to be
regulated by NAAQS)
[[Page 44419]]
states, ``[T]he Administrator shall * * * publish, and shall from time
to time thereafter revise, a list which includes each air pollutant (A)
emissions of which, in his judgment, cause or contribute to air
pollution which may reasonably be anticipated to endanger public health
or welfare * * *'' CAA section 111(b)(1)(A) (regarding listing source
categories to be regulated by NSPS) states: ``[The Administrator] shall
include a category of sources in such list if in his judgment it
causes, or contributes significantly to, air pollution which may
reasonably be anticipated to endanger public health or welfare.''\89\
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\89\ Other CAA endangerment provisions read as follows:
CAA section 115 (regarding international air pollution) states:
``Whenever the Administrator, upon receipt of reports, surveys or
studies from any duly constituted international agency has reason to
believe that any air pollutant or pollutants emitted in the United
States cause or contribute to air pollution which may reasonably be
anticipated to endanger public health or welfare in a foreign
country or whenever the Secretary of State requests him to do so
with respect to such pollution which the Secretary of State alleges
is of such a nature, the Administrator shall give formal
notification thereof to the Governor of the State in which such
emissions originate.''
CAA section 211(c)(1) (regarding regulating fuels and fuel
additives) states: ``The Administrator may, * * * [regulate fuels or
fuel additives] (A) if in the judgment of the Administrator any
emission product of such fuel or fuel additive causes, or
contributes, to air pollution which may reasonably be anticipated to
endanger public health or welfare, (B) * * *''
CAA section 213(a)(4) (regarding regulating nonroad engines)
states: ``If the Administrator determines that any emissions not
referred to in paragraph 2 [regarding CO, NOX and VOC
emissions] from new nonroad engines or vehicles significantly
contribute to air pollution which may reasonably be anticipated to
endanger public health or welfare, the Administrator may promulgate
* * * standards applicable to emissions from those classes or
categories of new nonroad engines and new nonroad vehicles (other
than locomotives) which in the Administrator's judgment cause, or
contribute to, such air pollution, * * *''.
CAA section 231 (regarding setting aircraft standards) states:
``The Administrator shall * * * issue proposed emissions standards
applicable to the emission of any air pollutant from any class or
classes of aircraft engines which in his judgment causes, or
contributes to, air pollution which may reasonably be anticipated to
endanger public health or welfare.''
CAA section 615 (regarding protection of stratospheric ozone)
states: ``If, in the Administrator's judgment, any substance,
practice, process, or activity may reasonably be anticipated to
affect the stratosphere, especially ozone in the stratosphere, and
such effect may reasonably be anticipated to endanger public health
or welfare, the Administrator shall promptly promulgate regulations
respecting the control of such substance, practice, process, or
activity * * *''
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While no two endangerment tests are precisely the same, they
generally call on the Administrator of EPA to exercise his or her
judgment regarding whether a particular air pollutant or source
category causes or contributes to air pollution which may reasonably be
anticipated to endanger public health or welfare. For provisions
containing endangerment language, a positive finding of endangerment is
a prerequisite for regulation under that provision.\90\ The precise
effect of a positive or negative finding depends on the specific terms
of the provision under which it is made. For some provisions, a
positive endangerment finding triggers an obligation to regulate (e.g.,
section 202(a)(1)), while for other provisions, a positive finding
allows the Agency to regulate in its discretion (e.g., section 213). In
some cases, other criteria must also be met to authorize or require
regulation (e.g., section 108). Each of these sections is discussed in
more detail later in this notice.
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\90\ As defined by the CAA, ``air pollutant'' includes virtually
any substance or material emitted into the ambient air. Given the
breadth of that term, many CAA provisions require the Administrator
to determine whether a particular air pollutant causes or
contributes to an air pollution problem as a prerequisite to
regulating emissions of that pollutant.
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2. Potential Impact Cross the Clean Air Act From a Positive or Negative
Endangerment Finding or Regulation of GHGs Under the Act
a. Potential Impact on Sections Containing Similar Endangerment
Language
One important issue is whether a positive or negative endangerment
finding under one section of the CAA (e.g., under section 202(a) in
response to the ICTA petition remand) would necessarily or
automatically lead to similar findings under other provisions of the
Act containing similar language. Even though CAA endangerment tests
vary to some extent, an endangerment finding under one provision could
have some bearing on whether endangerment could or should be found
under other CAA provisions, depending on their terms and the facts at
issue. EPA request comment on the extent to which an endangerment
finding under any section of the CAA would lead EPA to make a similar
endangerment finding under another provision.
In discussing the implications of making a positive endangerment
finding under any CAA section, we use the actual elements of the
endangerment test in section 202(a) for new motor vehicles as an
example. The section 202(a) endangerment test asks two distinct
questions--
(1) whether the air pollution at issue may reasonably be
anticipated to endanger public health or welfare, and
(2) whether emissions from new motor vehicles cause or contribute
to that air pollution. The first question is generic and looks at
whether the type of air pollution at issue endangers public health or
welfare. The second question is specific to motor vehicles, and
considers the contribution of motor vehicle emissions to the particular
air pollution problem. EPA must answer both questions in the
affirmative for the Agency to regulate under section 202(a) of the Act.
A finding of endangerment under one section of the Act would not by
itself constitute a complete finding of endangerment under any other
section of the CAA. How much of a precedent an endangerment finding
under one CAA provision would be for other CAA provisions would depend
on the basis for the finding, the statutory tests for making findings,
and the facts. For example, the two-part endangerment test in section
202(a) (motor vehicles) is similar to that in sections 211(c)(1)
(highway and nonroad fuels) and 231(a)(2) (aircraft). An affirmative
finding under section 202(a) on the first part of the test--whether the
air pollution at issue endangers public health or welfare--would appear
to satisfy the first part of the test for the other two provisions as
well. However, an affirmative finding on the second part of the test,
regarding the contribution of the particular source category to that
air pollution, would not satisfy the test for the other provisions,
which apply to different source categories. Still, a finding that a
particular source category's emissions cause or contribute to the air
pollution problem would likely establish some precedent for what
constitutes a sufficient contribution for purposes of making a positive
endangerment finding for other source categories.
Other similarities and differences among endangerment tests are
also relevant. While the first part of the test in sections 213(a)(4)
(nonroad engines and vehicles) and 111(b) (NSPS) is similar to that in
other sections (i.e., whether the air pollution at issue endangers
public health or welfare), the second part of the test in sections
213(a)(4) and 111(b) requires a finding of ``significant''
contribution. In addition, the test under section 111(b) applies to
source categories, not to a particular air pollutant.\91\ Sections 112
and 615 have somewhat different tests.
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\91\ As discussed below, EPA has already listed a very wide
variety of source categories under section 111(b)(1)(A).
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The extent to which an endangerment finding would set precedent
would also depend on the pollutants at issue. For example, the ICTA
petition to regulate motor vehicles under section 202(a)
[[Page 44420]]
addresses CO2, CH4 , N2O, and HFCs,
while the petitions to regulate GHGs from other mobile source
categories collectively address water vapor, NOX and black
carbon, as well as CO2, CH4, and N2O.
As further discussed below, the differences in the GHGs emitted by
different types of sources may be relevant to the issue of how to
define ``air pollutant'' for purposes of applying the endangerment
tests.
In addition, some CAA sections require EPA to act following a
positive endangerment finding, while others do not. In the case of
section 202(a)(1), if we make a positive endangerment finding, we are
required to issue standards applicable to motor vehicle emissions of
the GHGs covered by the finding. Section 231(a) (aircraft) uses similar
mandatory language, while sections 211(c)(1) (highway and nonroad fuel)
and 213(a)(4) (nonroad engines and vehicles) authorize but do not
require the issuance of regulations. Section 108 (NAAQS pollutants)
requires that EPA list a pollutant under that section if a positive
endangerment finding is made and two other criteria are met.
In sum, a positive or negative endangerment finding for GHG
emissions under one provision of the Act could have a significant and
direct impact on decisions under other CAA sections containing similar
endangerment language. EPA requests comment on the interconnections
between the CAA endangerment tests and the impact that a finding under
one provision of the Act would have for other CAA provisions.
b. Potential Impact on PSD Program
Another important issue is the potential for a decision to regulate
GHGs for mobile or stationary sources to automatically trigger
additional permitting requirements for stationary sources under the PSD
program. As explained previously and in detail in Section VII of this
notice, the main element of the PSD program under Part C of Title I of
the Act is the requirement that a PSD permit be obtained prior to
construction of any new major source or any major modification at an
existing major source. Such a permit must contain emissions limitations
based on BACT for each pollutant subject to regulation under the Act.
EPA does not interpret the PSD program provisions to apply to GHG at
this time, but any requirement to control CO2 or other GHGs
promulgated by EPA under other provisions of the CAA would make parts
of the PSD program applicable to any additional air pollutant(s) that
EPA regulates in this manner.
The PSD program applies to each air pollutant (other than a HAP)
that is ``subject to regulation under the Act'' within the meaning of
sections 165(a)(4) and 169(3) of the Clean Air Act and EPA's
regulations.\92\ As a practical matter, the identification of
pollutants subject to the PSD program is driven by the BACT requirement
because this requirement applies to the broadest range of pollutants.
Under EPA's PSD program regulations, BACT is required for ``each
regulated NSR pollutant.'' 40 CFR 52.21(j)(2)-(3). EPA has defined this
term to include pollutants that are regulated under a NAAQS or NSPS, a
class I or II substance under Title VI of the Act, or ``[a]ny pollutant
otherwise subject to regulation under the Act.'' See 52.21(b)(50).\93\
Similarly, the determination of whether a source is a major source
subject to PSD is based on whether the source emits more than 100 or
250 tons per year (depending on the type of source) of one or more
regulated pollutants.\94\
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\92\ Section 112(b)(6) precludes listed HAPs from the PSD
program. Section 210(b) of EISA provides that nothing in section
211(o) of the Act, or regulations issued pursuant to that
subsection, ``shall affect or be construed to affect the regulatory
status of carbon dioxide or any other greenhouse gas, or to expand
or limit regulatory authority regarding carbon dioxide or any other
greenhouse gas, for purposes of other provisions (including section
165) of this Act.''
\93\ This definition reflects EPA's interpretation of the phrase
``each pollutant subject to regulation under the Act'' that is used
in the provisions in the Clean Air Act that establish the BACT
requirement. Since this statutory language (as implemented in the
definition of ``regulated NSR pollutant'') can apply to additional
pollutants that are not also subject to a NAAQS, the scope of the
BACT requirement determines the overall range of pollutants that are
subject to the PSD permitting program.
\94\ Under the relevant regulations, a major stationary source
is determined by its emissions of ``any regulated NSR pollutant.''
See 40 CFR 52.21(b)(1)(i). Thus, the emissions that are considered
in identifying a major source are determined on the basis of the
same definition that controls the applicability of the BACT.
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EPA has historically interpreted the phrase ``subject to regulation
under the Act'' to describe air pollutants subject to CAA statutory
provisions or regulations that require actual control of emissions of
that pollutant.\95\ PSD permits have not been required to contain BACT
emissions limit for GHGs because GHGs (and CO2 in
particular) have not been subject to any CAA provisions or EPA
regulations issued under the Act that require actual control of
emissions.\96\ Although CAA section 211(o) now targets GHG emissions,
EISA provides that neither it nor implementing regulations affect the
regulatory status of GHGs under the CAA. In the absence of statutory or
regulatory requirements to control GHG emissions under the Act, a
stationary source need not consider those emissions when determining
its major source status.
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\95\ 43 FR 26388, 26397 (June 19, 1978); Gerald E. Emison,
Director, Office of Air Quality Planning and Standards,
Implementation of North County Resource Recovery PSD Remand (Sept.
22, 1987) (footnote on the first page).
\96\ See briefs filed before the Environmental Appeal Board on
behalf of specific EPA offices in challenges to the PSD permits for
Deseret Power Electric Cooperative (PSD Appeal No. 07-03) and
Christian County Generation LLC (PSD Appeal No. 07-01), as well as
the Response to Public Comments on Draft Air Pollution Control
Prevention of Significant Deterioration (PSD) Permit to Construct
[for Deseret Power Electric Cooperative], Permit No. PSD-OU-0002-
04.00 (August 30, 2007), at 5-6, available at http://www.epa.gov/region8/air/permitting/deseret.html. EPA has not previously
interpreted the BACT requirement to apply to air pollutants that are
only subject to requirements to monitor and report emissions. See,
67 FR 80186, 80240 (Dec. 31, 2002); 61FR 38250, 38310 (July 31,
1996); In Re Kawaihae Cogeneration Project 7 E.A.D. 107, 132 (EAB
1997); Inter-power of New York, 5 E.A.D. 130, 151 (EAB 1994);
Memorandum from Jonathan Z. Cannon, General Counsel to Carol M.
Browner, Administrator, entitled EPA's Authority to Regulate
Pollutants Emitted by Electric Power Generation Sources (April 10,
1998) (emphasis added); Memorandum from Lydia N. Wegman, Deputy
Director, Office of Air Quality Planning and Standards, entitled
Definition of Regulated Air Pollutant for Purposes of Title V, at 5
(April 26, 1993).
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The Supreme Court's conclusion that GHGs are ``air pollutants''
under the CAA did not automatically make these pollutants subject to
the PSD program. A substance may be an ``air pollutant'' under the Act
without being regulated under the Act. The Supreme Court directed the
EPA Administrator to determine whether GHG emissions from motor
vehicles meet the endangerment test of CAA section 202(a). A positive
finding of endangerment would require the Administrator to then set
standards applicable to GHG emissions from motor vehicles under the
Act. The positive finding itself would not constitute a regulation
requiring actual control of emissions. GHGs would become regulated
pollutants under the Act if and when EPA subjects GHGs to control
requirements under a CAA provision other than sections 112 and 211(o).
c. Definition of ``Air Pollutant''
Another way in which a decision to regulate GHGs under one section
of the Act could impact other sections of the Act involves how the term
``air pollutant'' is defined as part of the endangerment analysis. As
described above, many of the Act's endangerment tests require a two-
part analysis: Whether the air pollution at issue may reasonably be
anticipated to endanger public health or welfare, and whether emissions
of particular air pollutants cause or contribute to that air pollution.
[[Page 44421]]
As discussed in more detail in the following sections, what GHGs might
be defined as an ``air pollutant'' and whether those GHGs are treated
individually or as a group could impact EPA's flexibility to define the
GHGs as air pollutants elsewhere in the CAA.
For example, as noted above, how EPA defines GHGs as air pollutants
in making any positive endangerment finding could carry over into
implementation of the PSD program. If EPA defines each individual GHG
as a separate air pollutant in making a positive endangerment finding,
then each GHG would be considered individually as a ``regulated NSR
pollutant'' in the PSD program. On the other hand, if EPA defines the
group of GHGs as an air pollutant, then the PSD program would need to
treat the GHGs in the same manner--as a group. As discussed in more
detail below, there are flexibilities and considerations under various
approaches. One question is whether we could or should define GHGs as
an ``air pollutant'' one way under one section of the Act (e.g.,
section 202) and another way under another section (e.g., section 231).
See, e.g., Environmental Defense v. Duke Energy Corp., 127 S.Ct. 1423,
1432 (2007) (explaining that the general presumption that the same term
has the same meaning is not rigid and readily gives way to context).
Another question is whether having different definitions of ``air
pollutant'' would result in both definitions applying to the PSD
program, and whether that result would mean that any flexibilities
gained under one definition would be lost with the application of the
second.
Another consideration, noted above, is that different source
categories emit different GHGs. This fact could impact the definition
of ``air pollutant'' more broadly. EPA requests comment on the issues
raised in this section, to assist the Agency as it considers the
implications of how to define a GHG ``air pollutant'' for the first
time under any section of the Act.
2. Relationships Among Various Stationary Source Programs
As a result of other interactions among various CAA sections, a
decision to act under one part of the CAA may preclude action under
another part of the Act. These interactions reflect the Act's different
regulatory treatment of pollutants meeting different criteria, and
prevent duplicative regulation. For instance, listing a pollutant under
section 108(a), which leads to setting a NAAQS and developing SIPs for
the pollutant, generally precludes listing the same air pollutant as a
HAP under section 112(b), which leads to every major source of a listed
HAP having to comply with MACT standards for the HAP. CAA section
112(b)(2).\97\ Listing an air pollutant under section 108(a) also
preludes regulation of that air pollutant from existing sources under
section 111(d), which is intended to provide for regulation of air
pollutants not otherwise subject to the major regulatory programs under
the Act. CAA section 111(d)(1)(A).
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\97\ ``No air pollutant which is listed under section 108(a) may
be added to the list under this section, except that the prohibition
of this sentence shall not apply to any pollutant which
independently meets the listing criteria of this paragraph and is a
precursor to a pollutant which is listed under section 108(a) or to
any pollutant which is in a class of pollutants listed under such
section.''
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Similarly, regulation of a substance under Title VI precludes
listing that substance as a HAP under section 112(b) based solely on
the adverse effects on the environment of that air pollutant. CAA
section 112(b)(2). Moreover, listing an air pollutant as a HAP under
section 112(b) generally precludes regulation of that air pollutant
from existing sources under section 111(d). CAA section
111(d)(1)(A).\98\ Finally, section 112(b)(6) provides that the
provisions of the PSD program ``shall not apply to pollutants listed
under [section 112].'' CAA section 112(b)(6), 42 U.S.C. 7412(b)(6)
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\98\ However, see 70 FR 15994, 16029-32 (2005) (explaining EPA's
interpretation of the conflicting amendments to section 111(d)
regarding HAPs).
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V. Endangerment Analysis and Issues
In this section, we present our work to date on an endangerment
analysis in response to the Supreme Court's decision in Massachusetts
v. EPA. As explained previously, the Supreme Court remanded EPA's
denial of the ICTA petition and ruled that EPA must either decide
whether GHG emissions from new motor vehicles cause or contribute to
air pollution which may reasonably be anticipated to endanger public
health or welfare, or explain why scientific uncertainty is so profound
that it prevents making a reasoned judgment on such a determination.
In response to the remand, EPA analyzed synthesis reports and
studies on how elevated concentrations of GHGs in the atmosphere, and
other factors, contribute to climate change, and how climate change is
affecting, and may affect in the future, human health and welfare,
primarily within the United States. We also analyzed direct GHG effects
on human health and welfare, i.e., those effects from elevated
concentrations of GHGs that do not occur via climate change. This
information, summarized briefly below, is contained in the Endangerment
Technical Support Document found in the docket for today's notice. In
addition, we compiled information concerning motor vehicle GHG
emissions to assess whether motor vehicles cause or contribute to
elevated concentrations of GHGs in the atmosphere. Information on motor
vehicle emissions is contained in the Section 202 Technical Support
Document, also found in the docket.
As discussed above, making an endangerment finding under one
section of the CAA has implications for other sections of the Act. In
this ANPR, we consider, and seek comment on these implications and
other questions relevant to making an endangerment finding regarding
GHG emissions.
This section is organized as follows. Section A discusses the legal
framework for the endangerment analysis. Section B provides information
on how ``air pollution'' could be defined for purposes of the
endangerment analysis, as well as a summary of the science regarding
GHGs and climate change and their effects on health and welfare.
Section C uses the information on emissions of GHGs from the mobile
source categories relevant to the ICTA Petition to frame a discussion
about whether GHGs as ``air pollutants'' ``cause or contribute'' to
``air pollution'' which may reasonably be anticipated to endanger
public health or welfare.
A. Legal Framework
The endangerment language relevant to the ICTA petition is
contained in section 202(a) of the CAA. As explained previously, it is
similar to endangerment language in many other provisions of the Act
and establishes a two-part test. First, the Administrator must decide
if, in his judgment, air pollution may reasonably be anticipated to
endanger public health or welfare. Second, the Administrator must
decide whether, in his judgment, emissions of any air pollutant from
new motor vehicles or engines cause or contribute to this air
pollution.
1. Origin of Current Endangerment and Cause or Contribute Language
The endangerment language in section 202(a) and other provisions of
the CAA share a common legislative history that sheds light on the
meaning of this language. As part of the 1977 amendments to the CAA,
Congress added or revised endangerment language in various sections of
the Act. The legislative history of those amendments, particularly the
report by the House Committee on Interstate and Foreign Commerce,
provides important information regarding Congress' intent
[[Page 44422]]
when it revised this language. See H.R. Rep. 95-294 (1977), as
reprinted in 4 A Legislative History of the Clean Air Act Amendments of
1977 at 2465 (hereinafter ``LH'').
a. Ethyl Corp. v. EPA
In revising the endangerment language, Congress relied heavily on
the approach discussed in a federal appeals court opinion interpreting
the pre-1977 version of CAA section 211. In Ethyl Corp v. EPA, 541 F.2d
1 (D.C. Cir. 1976), the en banc (i.e. full) court reversed a 3-judge
panel decision regarding an EPA rule restricting the content of lead in
leaded gasoline.\99\ The en banc court began its opinion by stating:
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\99\ At the time of the 1973 rules requiring the reduction of
lead in gasoline, section 211(c)(1)(A) of the CAA stated that the
Administrator may promulgate regulations that control or prohibit
the manufacture, introduction into commerce, offering for sale, or
sale of any fuel or fuel additive for use in a motor vehicle or
motor vehicle engine (A) if any emissions product of such fuel or
fuel additive will endanger the public health or welfare * * * .
CAA section 211(c)(1)(A) (1970) (emphasis added). The italicized
language in the above quote is the relevant language revised by the
1977 amendments.
Man's ability to alter his environment has developed far more
rapidly than his ability to foresee with certainty the effects of
---------------------------------------------------------------------------
his alterations.
541 F.2d at 6. After reviewing the relevant facts and law, the full-
court evaluated the statutory language at issue to see what level of
``certainty [was] required by the Clean Air Act before EPA may act.''
Id.
By a 2-1 vote, the 3-judge panel had held that the statutory
language ``will endanger'' required proof of actual harm, and that the
actual harm had to come from fuels ``in and of themselves.'' Id. at 12.
The en banc court rejected this approach, finding that the term
``endanger'' allowed the Administrator to act when harm is threatened,
and did not require proof of actual harm. Id. at 13. ``A statute
allowing for regulation in the face of danger is, necessarily, a
precautionary statute.'' Id. Optimally, the court held, regulatory
action would not only precede, but prevent, a perceived threat. Id.
The court also rejected petitioners' argument that any threatened
harm must be ``probable'' before regulation was authorized.
Specifically, the court recognized that danger ``is set not by a fixed
probability of harm, but rather is composed of reciprocal elements of
risk and harm, or probability or severity.'' Id. at 18. Next, the court
held that EPA's evaluation of risk is necessarily an exercise of
judgment, and that the statute did not require a factual finding. Id.
at 24. Thus, ultimately, the Administrator must ``act, in part on
`factual issues,' but largely on choices of policy, on an assessment of
risks, [and] on predictions dealing with matters on the frontiers of
scientific knowledge * * * .'' Id. at 29 (citations omitted). Finally,
the en banc court agreed with EPA that even without the language in
section 202 regarding ``cause or contribute to,'' section 211
authorized EPA to consider the cumulative impact of lead from numerous
sources, not just the fuels being regulated under section 211. Id. at
29-31.
b. The 1977 Clean Air Act Amendments
The dissent in the original Ethyl Corp decision and the en banc
opinion were of ``critical importance'' to the House Committee which
proposed the revisions to the endangerment language in the 1977
amendments to the CAA. H.R. Rep. 95-294 at 48, 4 LH at 2515. In
particular, the Committee believed the Ethyl Corp decision posed
several ``crucial policy questions'' regarding the protection of public
health and welfare.'' Id.\100\ The Committee addressed those questions
with the endangerment language that now appears in section 202(a) and
several other CAA provisions--``which in [the Administrator's] judgment
cause, or contribute to, air pollution which may reasonably be
anticipated to endanger public health or welfare.''
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\100\ The Supreme Court recognized that the current language in
section 202(a)(1) is ``more-protective'' than the 1970 version that
was similar to the section 211 language before the D.C. Circuit in
Ethyl Corp. 127 S.Ct. at 1447, fn 1.
---------------------------------------------------------------------------
The Committee intended the language to serve several purposes
consistent with the en banc decision in Ethyl Corp.\101\ First, the
phrases ``in his judgment'' and ``in the judgment of the
Administrator'' call for the Administrator to make comparative
assessment of risks and projections of future possibilities, consider
uncertainties, and extrapolate from limited data. Thus, the
Administrator must balance the likelihood of effects with the severity
of the effects in reaching his judgment. The Committee emphasized that
``judgment'' is different from a factual ``finding.'' Importantly,
projections, assessments and estimates must be reasonable, and cannot
be based on a ``crystal ball inquiry.'' Moreover, procedural safeguards
apply (e.g., CAA 307(d)) to the exercise of judgment, and final
decisions are subject to judicial review. Also, the phrase ``in his
judgment'' modifies both phrases ``cause and contribute'' and ``may
reasonably be anticipated'' discussed below. H.R. Rep. 95-294 at 50-51,
4 LH at 2517-18.
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\101\ Specifically, the language (1) emphasizes the
precautionary or preventive purpose of the CAA; (2) authorizes the
Administrator to reasonably project into the future and weigh risks;
(3) requires the consideration of the cumulative impact of all
sources; (4) instructs that the health of susceptible individuals,
as well as healthy adults, should be part of the analysis; and (5)
indicates an awareness of the uncertainties and limitations in
information available to the Administrator. H.R. Rep. 95-294 at 49-
50, 4 LH at 2516-17. Congress also wanted to standardize this
language across the various sections of the CAA which address
emissions from both stationary and mobile sources which may
reasonably be anticipated to endanger public health or welfare. H.R.
Rep. 95-294 at 50, 4 LH at 2517; Section 401 of CAA Amendments of
1977.
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As the Committee further explained, the phrase ``may reasonably be
anticipated'' builds upon the precautionary and preventative goals
already provided in the use of the term ``endanger.'' Thus, the
Administrator is to assess current and future risks rather than wait
for proof of actual harm. This phrase is also intended to instruct the
Administrator to consider the limitations and difficulties inherent in
information on public health and welfare. H.R. Rep. 95-294 at 51, 4 LH
at 2518.
Finally, the phrase ``cause or contribute'' ensures that all
sources of the contaminant which contribute to air pollution be
considered in the endangerment analysis (e.g., not a single source or
category of sources). It is also intended to require the Administrator
to consider all sources of exposure to a pollutant (e.g., food, water,
air) when determining risk. Id.
3. Additional Considerations for the ``Cause or Contribute'' Analysis
While the legislative history sheds light on what should be
considered in making an endangerment finding, it is not clear regarding
what constitutes a sufficient ``contribution'' for purposes of making a
finding. The CAA does not define the concept ``cause or contribute''
and instead requires that the Administrator exercise his judgment when
determining whether emissions of air pollutants cause or contribute to
air pollution. As a result, the Administrator has the discretion to
interpret ``cause or contribute'' in a reasonable manner when applying
it to the circumstances before him.
The D.C. Circuit has discussed the concept of ``contribution'' in
the context of a CAA section 213 rule for nonroad vehicles. In
Bluewater Network v. EPA, 370 F.3d 1 (2004), industry argued that
section 213(a)(3) requires a finding of a significant contribution
before EPA could regulate, but EPA argued that the CAA requires a
finding only of ``contribution.'' \102\ Id. at 13. The court
[[Page 44423]]
looked at the ``ordinary meaning of `contribute''' when upholding EPA's
reading. After referencing dictionary definitions of contribute,\103\
the court also noted that ``[s]tanding alone, the term has no inherent
connotation as to the magnitude or importance of the relevant `share'
in the effect; certainly it does not incorporate any `significance'
requirement.'' Id.\104\ The court also found relevant the fact that
section 213(a) uses the term ``significant contributor'' in some places
and the term ``contribute'' elsewhere, suggesting that the
``contribute'' language invests the Administrator with discretion to
exercise his judgment regarding what constitutes a sufficient
contribution for the purpose of making an endangerment finding. Id. at
14
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\102\ The relevant language in section 213(a)(3) reads ``[i]f
the Administrator makes an affirmative determination under paragraph
(2) the Administrator shall, * * * promulgate (and from time to time
revise) regulations containing standards applicable to emissions
from those classes or categories of new nonroad engines and new
nonroad vehicles (other than locomotives or engines used in
locomotives) which in the Administrator's judgment cause, or
contribute to, such air pollution.'' Notably, CAA section 213(a)(2),
which is referenced in section 213(a)(3), requires that the
``Administrator shall determine * * * whether emissions of carbon
monoxide, oxides of nitrogen, and volatile organic compounds from
new and existing nonroad engines or nonroad vehicles (other than
locomotives or engines used in locomotives) are significant
contributors to ozone or carbon monoxide concentrations in more than
1 area which has failed to attain the national ambient air quality
standards for ozone or carbon monoxide'' (emphasis added).
\103\ Specifically, the decision noted that `` `contribute'
means simply `to have a share in any act or effect,' Webster's Third
New International Dictionary 496 (1993), or `to have a part or share
in producing,' 3 Oxford English Dictionary 849 (2d ed. 1989).'' 370
F.3d at 13.
\104\ The court explained, ``The repeated use of the term
`significant' to modify the contribution required for all nonroad
vehicles, coupled with the omission of this modifier from the
`cause, or contribute to' finding required for individual categories
of new nonroad vehicles, indicates that Congress did not intend to
require a finding of `significant contribution' for individual
vehicle categories.'' Id.
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In the past the Administrator has looked at emissions of air
pollutants in various ways to determine whether they ``cause or
contribute'' to the relevant air pollution. For instance, in some
mobile source rulemakings, the Administrator has looked at the percent
of emissions from the regulated mobile source category compared to the
total mobile source inventory for that air pollutant. See, e.g., 66 FR
5001 (2001) (heavy duty engine and diesel sulfur rule). In other
instances the Administrator has looked at the percent of emissions
compared to the total nonattainment area inventory of the air pollution
at issue. See, e.g., 67 FR 68,242 (2002) (snowmobile rule). EPA has
found that air pollutant emissions that amount to 1.2% of the total
inventory ``contribute.'' Bluewater Network, 370 F.3d at 15 (``For
Fairbanks, this contribution was equivalent to 1.2% of the total daily
CO inventory for 2001.'').
We solicit comment on these prior precedents, including their
relevance to contribution findings EPA may be considering regarding GHG
emissions. Where appropriate, may the Administrator determine that
emissions at a certain level or percentage contribute to air pollution
in one instance, while also finding that the same level or percentage
of another air pollutant and involving different air pollution, and
different overall circumstances, does not contribute? When exercising
his judgment, is it appropriate for the Administrator to consider not
only the cumulative impact, but also the totality of the circumstances
(e.g., the air pollutant, the air pollution, the type of source
category, the number of sources in the source category, the number and
type of other source categories that may emit the air pollutant) when
determining whether the emissions ``justify regulation'' under the CAA?
See Ethyl Corp., 541 F.2d at 31, n62 (``Moreover, even under a
cumulative impact theory emissions must make more than a minimal
contribution to total exposure in order to justify regulation under
Sec. 211(c)(1)(A).'').
B. Is the Air Pollution at Issue Reasonably Anticipated to Endanger
Public Health or Welfare?
This section discusses options for defining, with respect to GHGs,
the ``air pollution'' that may or may not be reasonably anticipated to
endanger public health or welfare, the first part of the two part
endangerment test. It also summarizes the state of the science on GHGs
and climate change, and relates that science to the endangerment
question. We solicit comment generally on the information and issues
discussed below.
1. What is the Air Pollution?
As noted above, in applying the endangerment test in section 202(a)
or other sections of the Act to GHG emissions, the Administrator must
define the scope and nature of the relevant ``air pollution'' that may
or may not be reasonably anticipated to endanger public health or
welfare. The endangerment issue discussed in today's notice involves,
primarily, anthropogenic emissions of GHGs, the accumulation of GHGs in
the atmosphere, the resultant impacts including climate change, and the
risks and impacts to human health and welfare associated with those
impacts.
a. The Six Major GHGs of Concern
The six major GHGs of concern are CO2, CH4,
N2O, HFCs, PFCs, and SF6. The IPCC focuses on
these six GHGs for both scientific assessments and emissions inventory
purposes because these are the six long-lived, well-mixed GHGs not
controlled by the Montreal Protocol on Substances that Deplete the
Ozone Layer. These six GHGs are directly emitted by human activities,
are reported annually in EPA's Inventory of U.S. Greenhouse Gas
Emissions and Sinks, and are the common focus of the climate change
research community. The ICTA petition addresses the first four of these
GHGs, and the President's Executive Orders 13423 and 13432 define GHGs
to include all six of these GHGs.
Carbon dioxide is the most important GHG directly emitted by human
activities, and is the most significant driver of climate change. The
anthropogenic combined heating effect (referred to as forcing) of
CH4, N2O, HFCs, PFCs and SF6 is about
40% as large as the CO2 cumulative heating effect since pre-
industrial times, according to the Fourth Assessment Report of the
IPCC.
b. Emissions and Elevated Concentrations of the Six GHGs
As mentioned previously, these six GHGs can remain in the
atmosphere for decades to centuries. Therefore, these GHGs, once
emitted, become well mixed throughout the global atmosphere regardless
of their emission origin, such that their average concentrations over
the U.S. are roughly the same as the global average. This also means
that current GHG concentrations are the cumulative result of both
historic and current emissions, and that future concentrations will be
the cumulative result of historic, current and future emissions.
Greenhouse gases trap some of the Earth's heat that would otherwise
escape to space. The additional heating effect caused by the buildup of
anthropogenic GHGs in the atmosphere enhances the Earth's natural
greenhouse effect and causes global temperatures to increase, with
associated climatic changes (e.g., change in precipitation patterns,
rise in sea levels, and changes in the frequency and intensity of
extreme weather events). Current atmospheric concentrations of all of
these GHGs are significantly higher than pre-industrial (~1750) levels
as a result of human activities. Atmospheric concentrations of
CO2 and other GHGs
[[Page 44424]]
are projected to continue to climb over the next several decades.
The scientific literature that assesses the potential risks and
end-point impacts of climate change (driven by the accumulation of
atmospheric concentrations of GHGs) does not assess these impacts on a
gas-by-gas basis. Observed climate change and associated effects are
driven by the buildup of all GHGs in the atmosphere, as well as other
natural and anthropogenic factors that influence the Earth's energy
balance. Likewise, the future projections of climate change that have
been done are driven by emission scenarios of all six GHGs, as well as
other pollutants, many of which are already regulated in the U.S. and
other countries.
For these reasons, EPA is considering defining the ``air
pollution'' related to GHGs as the elevated combined current and
projected atmospheric concentration of the six GHGs. This approach is
consistent with other provisions of the CAA and previous EPA practice
under the CAA, where separate air pollutants from different sources but
with common properties may be treated as a class (e.g., Class I and
Class II substances under Title VI of the CAA). It also addresses the
cumulative effect that the elevated concentrations of the six GHGs have
on climate, and thus on different elements of health, society and the
environment. We seek comment on this potential approach, as well as
other alternative ways to define ``air pollution.'' One alternative
would be to define air pollution as the elevated concentration of an
individual GHG; however, in this case the Administrator may still have
to consider the impact of the individual GHG in combination with the
impacts caused by the elevated concentrations of the other GHGs.
c. Other Anthropogenic Factors That Have a Climatic Warming Effect
Beyond the Six Major GHGs
There are other GHGs and aerosols that have climatic warming
effects: water vapor, chlorofluorocarbons (CFCs),
hydrochlorofluorocarbons (HCFCs), halons, stratospheric and
tropospheric ozone (O3), and black carbon. Each of these is
discussed here. We seek comment on whether and how they should be
considered in the definition of ``air pollution'' for purposes of an
endangerment finding.
Water vapor is the most abundant naturally occurring GHG and
therefore makes up a significant share of the natural, background
greenhouse effect. However, water vapor emissions from human activities
have only a negligible effect on atmospheric concentrations of water
vapor. Significant changes to global atmospheric concentrations of
water vapor occur indirectly through human-induced global warming,
which then increases the amount of water vapor in the atmosphere
because a warmer atmosphere can hold more moisture. Therefore, changes
in water vapor concentrations are not an initial driver of climate
change, but rather an effect of climate change which then acts as a
positive feedback that further enhances warming. For this reason, the
IPCC does not list direct emissions of water vapor as an anthropogenic
forcing agent of climate change, but does include this water vapor
feedback mechanism in response to human-induced warming in all modeling
scenarios of future climate change. Based on this recognition that
anthropogenic emissions of water vapor are not a significant driver of
anthropogenic climate change, EPA's annual Inventory of U.S. Greenhouse
Gas Emissions and Sinks does not include water vapor, and GHG inventory
reporting guidelines under the United Nations Framework Convention on
Climate Change (UNFCCC) do not require data on water vapor emissions.
Water vapor emissions may be an issue for concern when they are
emitted by aircraft at high altitudes, where, under certain conditions,
they can lead to the formation of condensation trails, referred to as
contrails. Similar to high-altitude, thin clouds, contrails have a
warming effect. Extensive cirrus clouds can also develop from aviation
contrails, and increases in cirrus cloud cover would also have a
warming effect. The IPCC Fourth Assessment Report estimated a very
small positive radiative forcing effect for linear contrails, with a
low degree of scientific understanding. Unlike the warming effects
associated with the six long-lived, well-mixed GHGs, the warming
effects associated with contrails or contrail-induced cirrus cloud
cover are more regional and temporal in nature. Further discussion of
aviation contrails can be found in Section VI on mobile sources. EPA
invites input and comment on the scientific and policy issues related
to consideration of water vapor's association with aviation contrails
in an endangerment analysis.
The CFCs, HCFCs, and halons are all strong anthropogenic GHGs that
are long-lived in the atmosphere and are adding to the global
anthropogenic heating effect. Therefore, these gases share common
climatic properties with the six GHGs discussed above. The production
and consumption of these substances (and hence their anthropogenic
emissions) are being controlled and phased out, not because of their
effects on climate change, but because they deplete stratospheric
O3, which protects against harmful ultraviolet B (UVB)
radiation. The control and phase-out of these substances in the U.S.
and globally is occurring under the Montreal Protocol on Substances
that Deplete the Ozone Layer, and in the U.S. under Title VI of the CAA
as well.\105\ Therefore, the climate change research and policy
community typically does not focus on these substances, precisely
because they are essentially already being 'taken care of' with non-
climate policy mechanisms. For example, the UNFCCC does not address
these substances, and instead defers their treatment to the Montreal
Protocol. As mentioned above, the President's Executive Orders 13423
and 13432 do not include these substances in the definition of GHGs.
For these reasons, EPA's preliminary conclusion is that we would not
include CFCs, HCFCs and halons in the definition of ``air pollution''
for purposes of an endangerment finding. We seek comment on this issue.
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\105\ Under the Montreal Protocol, production and consumption of
CFCs were phased out in developed countries in 1996 (with some
essential use exemptions) and are scheduled for phase-out by 2010 in
developing countries (with some essential use exemptions). For
halons the schedule was 1994 for phase out in developed countries
and 2010 for developing countries; HCFC production was frozen in
2004 in developed countries, and in 2016 production will be frozen
in developing countries; and HCFC consumption phase-out dates are
2030 for developed countries and 2040 in developing countries.
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The depletion of stratospheric O3 due to CFCs, HCFCs,
and other ozone-depleting substances has resulted in a small cooling
effect on the planet.
Increased concentrations of tropospheric O3 are causing
a significant anthropogenic warming effect, but, unlike the long-lived
six GHGs, tropospheric O3 has a short atmospheric lifetime
(hours to weeks), and therefore its concentrations are more variable
over space and time. For these reasons, its global heating effect and
relevance to climate change tends to entail greater uncertainty
compared to the well-mixed, long-lived GHGs. More importantly,
tropospheric ozone is already listed as a NAAQS pollutant and is
regulated through SIPs and other measures under the CAA, due to its
direct health effects including increases in respiratory infection,
medicine use by asthmatics, emergency department visits and hospital
admissions, and its potential to contribute to premature death,
especially in susceptible populations such as asthmatics,
[[Page 44425]]
children and the elderly. Tropospheric O3 is not addressed
under the UNFCCC. For these reasons, EPA's preliminary conclusion is
that we would not include tropospheric O3 in the definition
of ``air pollution'' for purposes of an endangerment finding because,
as with CFCs, HCFCs and halons, it is already being addressed by
regulatory actions that control precursor emissions (NOX and
volatile organic compounds (VOCs)) from major U.S. sources. We invite
comment on this issue.
Black carbon is an aerosol particle that results from incomplete
combustion of the carbon contained in fossil fuels, and it remains in
the atmosphere for about a week. Black carbon causes a warming effect
by absorbing incoming sunlight in the atmosphere (whereas GHGs cause
warming by trapping outgoing, infrared heat), and by darkening bright
surfaces such as snow and ice, which reduces reflectivity and increases
absorption of sunlight at the surface. Some recent research,\106\
published after the IPCC Fourth Assessment Report, has suggested that
black carbon may play a larger role in warming than previously thought.
Like other aerosols, black carbon can also alter the reflectivity and
lifetime of clouds, which in turn can have an additional climate
effect. How black carbon and other aerosols alter cloud properties is a
key source of uncertainty in climate change science. Given these
reasons, there is considerably more uncertainty associated with black
carbon's warming effect compared to the estimated warming effect of the
six long-lived GHGs.
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\106\ Ramathan, V, and G. Carmichael (2008) Global and regional
climate changes due to black carbon. Nature Geoscience, 1: 221-227.
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Black carbon is also co-emitted with organic carbon, which tends to
have a cooling effect on climate because it reflects and scatters
incoming sunlight. The ratio of black carbon to organic carbon varies
by fuel type and by combustion efficiency. Diesel vehicles, for
example, emit a much greater portion of black carbon, whereas forest
fires tend to emit much more organic carbon. The net effect of black
carbon and organic carbon on climate should therefore be considered.
Also, black carbon is a subcomponent of particulate matter (PM), which
is regulated as a NAAQS pollutant under the CAA due to its direct
health effects caused by inhalation. Diesel vehicles are estimated to
be the largest source of black carbon in the U.S., but these emissions
are expected to decline substantially over the coming decades due to
recently promulgated EPA regulations targeting PM2.5
emissions from on-road and off-road diesel vehicles (the Highway Diesel
Rule and the Clean Air Nonroad Diesel Rule, the Locomotive and Marine
Compression Ignition Rule). Non-regulatory partnership programs such as
the National Clean Diesel Campaign and Smartway are reducing black
carbon as well. In sum, black carbon has different climate properties
compared to long-lived GHGs, and major U.S. sources of black carbon are
already being aggressively reduced through regulatory actions due to
health concerns. Nevertheless, EPA has recently received petitions
asking the Agency to reduce black carbon emissions from some mobile
source categories (see Section VI.). Therefore, EPA seeks comment on
how to treat black carbon (and co-emitted organic carbon) regarding the
definition of ``air pollution'' in the endangerment context.
2. Science Summary
The following provides a summary of the underlying science that was
reviewed and utilized in the Endangerment Technical Support Document
for the endangerment discussion, which in turn relied heavily on the
IPCC Fourth Assessment Report. We seek comment on the best available
science for purposes of the endangerment discussion, and in particular
on the use of the more recent findings of the U.S. Climate Change
Science Program.
a. Observed Global Effects
The global atmospheric CO2 concentration has increased about 35%
from pre-industrial levels to 2005, and almost all of the increase is
due to anthropogenic emissions. The global atmospheric concentration of
CH4 has increased by 148% since pre-industrial levels. Current
atmospheric concentrations of CO2 and CH4 far exceed the recorded
natural range of the last 650,000 years. The N2O concentration has
increased 18%. The observed concentration increase in these non-CO2
gases can also be attributed primarily to anthropogenic emissions. The
industrial fluorinated gases, HFCs, PFCs, and SF6, have relatively low
atmospheric concentrations but are increasing rapidly; these gases are
entirely anthropogenic in origin.
Current ambient concentrations of CO2 and other GHGs remain well
below published thresholds for any direct adverse health effects, such
as respiratory or toxic effects.
The global average net effect of the increase in atmospheric GHG
concentrations, plus other human activities (e.g., land use change and
aerosol emissions), on the global energy balance since 1750 has been
one of warming. This total net radiative forcing (a measure of the
heating effect caused by changing the Earth's energy balance) is
estimated to be +1.6 Watts per square meter (W/m\2\). The combined
radiative forcing due to the cumulative (i.e., 1750 to 2005) increase
in atmospheric concentrations of CO2, CH4, and N2O is +2.30 W/m\2\. The
rate of increase in positive radiative forcing due to these three GHGs
during the industrial era is very likely to have been unprecedented in
more than 10,000 years. The positive radiative forcing due to the
increase in CO2 concentrations is the largest (+1.66 W/m\2\). The
increase in CH4 concentrations is the second largest source of positive
radiative forcing (+0.48 W/m2). The increase in N2O has a positive
radiative forcing of +0.16 W/m\2\.
Warming of the climate system is unequivocal, as is now evident
from observations of increases in global average air and ocean
temperatures, widespread melting of snow and ice, and rising global
average sea level. Global mean surface temperatures have risen by
0.74[deg]C (1.3[deg]F) over the last 100 years. The average rate of
warming over the last 50 years is almost double that over the last 100
years. Global mean surface temperature was higher during the last few
decades of the 20th century than during any comparable period during
the preceding four centuries.
Most of the observed increase in global average temperatures since
the mid-20th century is very likely due to the observed increase in
anthropogenic GHG concentrations. Global observed temperatures over the
last century can be reproduced only when model simulations include both
natural and anthropogenic forcings, i.e., simulations that remove
anthropogenic forcings are unable to reproduce observed temperature
changes. Thus, the warming cannot be explained by natural variability
alone.
Observational evidence from all continents and most oceans shows
that many natural systems are being affected by regional climate
changes, particularly temperature increases. Observations show that
changes are occurring in the amount, intensity, frequency and type of
precipitation. There is strong evidence that global sea level gradually
rose in the 20th century and is currently rising at an increased rate.
Widespread changes in extreme temperatures have been observed in the
last 50 years. Globally, cold days, cold nights, and frost have become
less frequent, while hot days, hot nights, and heat waves have become
more frequent.
[[Page 44426]]
The Endangerment Technical Support Document provides evidence that
the U.S. and the rest of the world are experiencing effects from
climate change now.
b. Observed U.S. Effects
U.S. temperatures also warmed during the 20th and into the 21st
century. U.S. temperatures are now approximately 1.0 [deg]F warmer than
at the start of the 20th century, with an increased rate of warming
over the past 30 years. The past nine years have all been among the 25
warmest years on record for the contiguous U.S., a streak which is
unprecedented in the historical record. Like the average global
temperature increase, the observed temperature increase for North
America has been attributed to the global buildup of anthropogenic GHG
concentrations in the atmosphere.
Widespread changes in extreme temperatures have been observed in
the last 50 years across all world regions including the U.S. Cold
days, cold nights, and frost have become less frequent, while hot days,
hot nights, and heat waves have become more frequent.
Total annual precipitation has increased over the U.S. on average
over the last century (about 6%), and there is evidence of an increase
in heavy precipitation events. Nearly all of the Atlantic Ocean shows
sea level rise during the past decade with highest rate in areas that
include the U.S. east coast.
Observations show that climate change is currently impacting the
nation's ecosystems and services in significant ways.
c. Projected Effects
The Endangerment Technical Support Document, the IPCC Fourth
Assessment Report, and a report under the U.S. Climate Change Science
Program, provide projections of future ambient concentrations of GHGs,
future climate change, and future anticipated effects from climate
change under various scenarios. This section summarizes some of the key
global projections, such as changes in global temperature, as well as
those particular to North America and the United States.
Overall risk to human health, society and the environment increases
with increases in both the rate and magnitude of climate change.
Climate warming may increase the possibility of large, abrupt, and
worrisome regional or global climatic events (e.g., disintegration of
the Greenland Ice Sheet or collapse of the West Antarctic Ice Sheet).
The majority of the climate change impacts literature assesses the
potential effects on health, society and the environment due to
projected changes in average conditions (e.g., temperature increase,
precipitation change, sea level rise) and do not take into account how
the frequency and severity of extreme events due to climate change may
cause certain additional impacts. Likewise, impact studies typically do
not account for large, abrupt climatic events, and generally consider
rates of warming that would result from climate sensitivities \107\
within the most likely range, not at the tails of the distribution. To
weigh the full range of risks and impacts, it is important to consider
these possible extreme outcomes, including those that are of low
probability.
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\107\ ``Climate sensitivity'' is a term used to describe how
much long-term global warming occurs if global atmospheric
concentrations of CO2 are doubled compared to their pre-
industrial levels. The IPCC Fourth Assessment Report states that
climate sensitivity is very likely greater than 1.5[deg]C (2.7
[deg]F) and likely to lie in the range of 2 [deg]C to 4.5 [deg]C
(3.6 [deg]F to 8.1 [deg]F), with a most likely value of about 3
[deg]C (5.4 [deg]F), and that a climate sensitivity higher than 4.5
[deg]C cannot be ruled out.
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i. Global Effects
The majority of future reference-case scenarios (assuming no
explicit GHG mitigation actions beyond those already enacted) project
an increase of global GHG emissions over the century, with climbing GHG
concentrations and associated increases in radiative forcing and
average global temperatures.
Projected ambient concentrations of CO2 and other GHGs remain well
below published thresholds for any direct adverse health effects, such
as respiration or toxic effects.
Through about 2030, the global warming rate is affected little by
different future scenario assumptions or different model sensitivities,
because there is already some degree of commitment to future warming
given past and present GHG emissions. By mid-century, the choice of
scenario becomes more important for the magnitude of the projected
warming because only about a third of that warming is projected to be
due to climate change that is already committed. By the end of the
century, projected average global warming (compared to average
temperature around 1990) varies significantly by emissions scenario,
with IPCC's best estimates ranging from 1.8 to 4.0 [deg]C (3.2 to 7.2
[deg]F), with a fuller likely range of 1.1 to 6.4 [deg]C (2.0 to 11.5
[deg]F), which takes into account a wider range of future emission
scenarios and a wider range of uncertainties.\108\
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\108\ The IPCC scenarios are also described in the Technical
Support Document and include a range of future global emission
scenarios and a range of climate sensitivities (which measure how
much global warming occurs for a given increase in global
CO2 concentrations).
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The IPCC identifies the most vulnerable world regions as the
Arctic, because of high rates of projected warming on natural systems;
Africa, especially the sub-Saharan region, because of current low
adaptive capacity; small islands, due to high exposure of population
and infrastructure to risk of sea-level rise and increased storm surge;
and Asian mega deltas, due to large populations and high exposure to
sea level rise, storm surge, and river flooding. Climate change impacts
in certain regions of the world may exacerbate problems that raise
humanitarian and national security issues for the U.S. Climate change
has been described as a potential threat multiplier regarding national
security issues.
ii. United States Effects
Projected global warming is anticipated to lead to effects in the
U.S. For instance, all of the U.S. is very likely to warm during this
century, and most areas of the U.S. are expected to warm by more than
the global average. The U.S, along with the rest of the world, is
projected to see an increase in the intensity of precipitation events
and the risk of flooding, greater runoff and erosion, and thus the
potential for adverse water quality effects.
Severe heat waves are projected to intensify in magnitude,
frequency, and duration over the portions of the U.S. where these
events already occur, with likely increases in mortality and morbidity,
especially among the elderly, young, and frail. Warmer temperatures can
also lead to fewer cold-related deaths. It is currently not possible to
quantify the balance between decreased cold-related deaths and
increased heat-related deaths attributable to climate change over time.
The IPCC projects with virtual certainty (i.e., greater than 99%
likelihood) declining air quality in cities due to warmer days and
nights, and fewer cold days and nights, and/or more frequent hot days
and nights over most land areas, including the U.S. Climate change is
expected to lead to increases in regional ozone pollution, with
associated risks for respiratory infection, aggravation of asthma, and
potential premature death, especially for people in susceptible groups.
Climate change effects on ambient PM are currently less certain.
Additional human health concerns include a change in the range of
vector-
[[Page 44427]]
borne diseases, and a likely trend towards more intense hurricanes
(even though any single hurricane event cannot be attributed to climate
change) and other extreme weather events. For many of these issues,
sensitive populations, such as the elderly, young, asthmatics, the
frail and the poor, are most vulnerable.
Moderate climate change in the early decades of the century is
projected to increase aggregate yields of rainfed agriculture in the
United States by 5-20%. However, as temperatures continue to rise,
grain and oilseed crops will increasingly experience failure,
especially if climate variability increases and precipitation lessens
or becomes more variable. How climatic variability and extreme weather
events will continue to change under a changing climate is a key
uncertainty, and these events also have the potential to offset the
benefits of CO2 fertilization and a longer growing season.
Climate change is projected to constrain over-allocated water
resources in the U.S., increasing competition among agricultural,
municipal, industrial, and ecological uses. Rising temperatures will
diminish snowpack and increase evaporation, affecting seasonal
availability of water.
Disturbances like wildfire and insect outbreaks are increasing and
are likely to intensify in a warmer future with drier soils and longer
growing seasons. Overall forest growth in the U.S. will likely increase
by 10-20% as a result of extended growing seasons and elevated
CO2 over the next century, but with important spatial and
temporal variation. Although recent climate trends have increased
vegetation growth in parts of the United States, continuing increases
in disturbances are likely to limit carbon storage, facilitate invasive
species, and disrupt ecosystem services.
The U.S. will be affected by global sea level rise, which is
expected to increase between 0.18 and 0.59 meters by the end of the
century relative to around 1990. These numbers represent the lowest and
highest projections of the 5 to 95% ranges for all scenarios considered
collectively and include neither uncertainty in carbon cycle feedbacks
nor rapid dynamical changes in ice sheet flow. U.S. coastal communities
and habitats will be increasingly stressed by climate change
interacting with development and pollution. Sea level is already rising
along much of the coast, and the rate of change is expected to increase
in the future, exacerbating the impacts of progressive inundation,
storm-surge flooding, and shoreline erosion.
Climate change is likely to affect U.S. energy use (e.g., heating
and cooling requirements), and energy production (e.g., effects on
hydropower), physical infrastructures (including coastal roads,
railways, transit systems and runways) and institutional
infrastructures. Climate change will likely interact with and possibly
exacerbate ongoing environmental change and environmental pressures in
some settlements, particularly in Alaska where indigenous communities
are facing major environmental and cultural impacts.
3. Endangerment Discussion Regarding Air Pollution
The Administrator must exercise his judgment in evaluating whether
the first part of the endangerment test is met, i.e., whether air
pollution (e.g., the elevated concentrations of GHGs) is reasonably
anticipated to endanger public health or welfare. As discussed above,
in exercising his judgment it is appropriate for the Administrator to
make comparative assessments of risk and projections of future
possibilities, consider uncertainties, and extrapolate from limited
data. The precautionary nature of the statutory language also means
that the Administrator should act to prevent harm rather than wait for
proof of actual harm.
The scientific record shows there is compelling and robust evidence
that observed climate change can be attributed to the heating effect
caused by global anthropogenic GHG emissions. The evidence goes beyond
increases in global average temperature to include observed changes in
precipitation patterns, sea level rise, extreme hot and cold days, sea
ice, glaciers, ecosystem functioning and wildlife patterns. Global
warming trends over the last 50 years stand out as significant compared
to estimated global average temperatures for at least the last few
centuries. Some degree of future warming is now unavoidable given the
current buildup of atmospheric concentrations of GHGs, as the result of
past and present GHG emissions. Based on the scientific evidence, it is
reasonable to conclude that future climate change will result from
current and future emissions of GHGs. Future warming over the course of
the 21st century, even under scenarios of low emissions growth, is very
likely to be greater than observed warming over the past century.
The range of potential impacts that can result from climate change
spans many elements of the global environment, and all regions of the
U.S. will be affected in some way. The U.S. has a long and populous
coastline. Sea level rise will continue and exacerbate storm-surge
flooding and shoreline erosion. In areas where heat waves already
occur, they are expected to become more intense, more frequent, and
longer lasting. Wildfires and the wildfire season are already
increasing and climate change is expected to continue to worsen
conditions that facilitate wildfires. Where water resources are already
scarce and over-allocated in the western U.S., climate change is
expected to put additional strain on these water management issues for
municipal, agricultural, energy and industrial uses. Climate change
also introduces an additional stress on ecosystems which are already
affected by development, habitat fragmentation, and broken ecological
dynamics. There is a wide range in the magnitude of these estimated
impacts, with there being more confidence in the occurrence of some
effects and less confidence in the occurrence of others.
In addition to the effects from changes in climate, there are some
additional welfare effects that occur directly from the anthropogenic
GHG emissions themselves. For example, ocean acidification occurs
through elevated concentrations of CO2, and crop and other
vegetation growth can be enhanced through elevated CO2
concentrations as well.
Current and projected levels of ambient concentrations of the six
GHGs are not expected to cause any direct adverse health effects, such
as respiratory or toxic effects, which would occur as a result of the
elevated GHG concentrations themselves rather than through the effects
of climate change. However, there are indirect human health risks
(e.g., heat-related mortality, exacerbated air quality, extreme events)
and benefits (e.g., less cold-related mortality) that occur due to
climate change. We seek comment on how these human health impacts
should be characterized under the CAA for purposes of an endangerment
analysis.
Some elements of human health, society and the environment may
benefit from climate change (e.g., short-term increases in agricultural
yields, less cold-related mortality). We seek comment on how the
potential for some benefits should be viewed against the full weight of
evidence showing numerous risks and the potential for adverse impacts.
Quantifying the exact nature and timing of impacts due to climate
change over the next few decades and beyond, and across all vulnerable
elements of U.S. health, society and the environment, is currently not
possible. However, the full weight of evidence as
[[Page 44428]]
summarized above and as documented in the Endangerment Technical
Support Document points towards the robust conclusion that expected
rates of climate change (driven by past, present and plausible future
GHG emissions) pose a number of serious risks to the U.S., even if the
exact nature of the risks is difficult to quantify with confidence. The
uncertainties in this context can also mean that future rates of
climate change are being underestimated, and that the potential for
associated and difficult-to-predict-and-quantify extreme events is not
adequately incorporated into impact assessments. The scientific
literature states that risk increases with increases in both the rate
and magnitude of climate change. We solicit comment on how these
uncertainties should be considered.
We seek comment on whether, in light of the precautionary nature of
the statutory language, the Administrator needs to find that current
levels of GHG concentrations endanger public health or welfare now. As
noted above, the fact that GHGs remain in the atmosphere for decades to
centuries means that future concentrations are dependent not only on
tomorrow's emissions, but also on today's emissions. Should the
Administrator consider both current and projected future elevated
concentrations of GHGs, as well as the totality of the observed and
projected effects that result from current and projected
concentrations? Or should the Administrator focus on future projected
elevated concentrations of GHGs and their projected effects in the
United States because they are larger and of greater concern than
current GHG concentrations and observed effects?
In sum, EPA invites comment on all issues relevant to making an
endangerment finding, including the scientific basis supporting a
finding that there is or is not endangerment under the CAA, as well as
the potential scope of the finding (i.e., public health, welfare, or
both).
C. Illustration for the ``Cause or Contribute'' Part of the
Endangerment Discussion: Do emissions of air pollutants from motor
vehicles or fuels cause or contribute to the air pollution that may
reasonably be anticipated to endanger public health or welfare in the
United States?
1. What Is/Are the Air pollutant(s)?
a. Background and Context
If the Administrator, in his judgment, finds that GHG ``air
pollution'' may reasonably be anticipated to endanger public health or
welfare, he must then define ``air pollutant(s)'' for purposes of
making the ``cause or contribute'' determination. The question is
whether the ``air pollutants'' to be evaluated for ``cause or
contribute'' should be the individual GHGs, or whether the ``air
pollutant'' is one or more classes of GHGs as a group.
We recognize that the alternative definitions could have important
implications for how GHGs are treated under other provisions of the
Act. The Administrator seeks comment on these options, and is
particularly interested in views regarding the implications for the
potential future regulation of GHGs under other parts of the Act.
b. Defining ``Air Pollutant'' as Each Individual Greenhouse Gas
Under this approach, the Administrator could define ``air
pollutant'' as each individual GHG rather than as GHGs as a collective
whole for the purposes of assessing ``cause or contribute.'' The
Administrator would evaluate each individual GHG to determine if it
causes, or contributes to, the elevated combined level of GHG
concentrations.
This approach enables an evaluation of the unique characteristics
and properties of each GHG (e.g., radiative forcing, lifetimes, etc.),
as well as current and projected emissions. This facilitates a
customized approach accounting for these factors. This approach also is
consistent with the approach taken in several federal GHG programs
which target reductions of individual greenhouse gases. For example,
EPA manages a variety of partnership programs aimed at reducing
emissions of specific sources of methane and the fluorinated gases
(HFCs, PFCs and SF6).
c. Defining ``Air Pollutants'' Collectively as a Class of Greenhouse
Gases
Under this approach, the Administrator could define the ``air
pollutant'' as (a) the collective group of the six GHGs discussed above
(CO2, CH4, N2O, HFCs, PFCs, and
SF6), (b) the collective group of the specific GHGs that are
emitted from the relevant source category at issue in the endangerment
finding (e.g., for section 202 sources it would be CO2,
CH4, N2O, and HFCs), or (c) other reasonable
groupings.
There are several federal and state climate programs, such as EPA's
Climate Leaders program, DOE's 1605b program, and Multi-state Climate
Registry, that encourage firms to report (and reduce) emissions of all
six GHGs, recognizing that the non-CO2 GHG emissions are a
significant part of the atmospheric buildup of GHG concentrations and
thus radiative forcing. In addition, the President's recent 2007
Executive Orders (13423 and 13432) and his 2002-2012 intensity goal
both encompass the collective emissions of all six GHGs. Consideration
of a class of gases collectively takes into account the multiple
effects of mitigation options and technologies on each gas, thus
enabling a more coordinated approach in addressing emissions from a
source. For example, collection and combustion of fugitive methane will
lead to net increases in CO2 and possibly nitrous oxide
emissions, but this is nevertheless desirable from an overall
mitigation perspective given the lower total radiative forcing.
2. Discussion of ``Cause or Contribute''
Once the ``air pollutant(s)'' is defined, the Administrator must
look at the emissions of the air pollutant from the relevant source
category in determining whether those emissions cause or contribute to
the air pollution he has determined may reasonably be anticipated to
endanger public health or welfare. There arguably are many possible
ways of assessing ``cause and contribute'' and different approaches
have been used in previous endangerment determinations under the CAA.
For example, EPA could consider how emissions from the relevant source
category would compare as a share of the following:
Total global aggregated emissions of the 6 GHGs discussed
in the definition of ``air pollution'';
Total aggregated U.S. emissions of the 6 GHGs;
Total global emissions of the individual GHG in question;
Total U.S. emissions of the individual GHG in question;
and
Total global atmospheric concentrations of the GHG in
question.
In the past, the smallest level or amount of emissions that the
Administrator determined ``contributed'' to the air pollution at issue
was just less than 1% (67 FR 68242 (2002)). We solicit comment on other
factors that may be relevant to a contribution determination for GHG
emissions. For example, given the global nature of the air pollution
being addressed in this rulemaking, one might expect that the
percentage contribution of specific GHGs and sectors would be much
smaller than for previous rulemakings when the nature of the air
pollution at issue was regional or local. On an absolute basis, a small
U.S. GHG source on a global scale may have emissions at the same level
as one of the largest sources in a single small to medium size country,
and given the
[[Page 44429]]
large size of the global denominator, even sectors with significant
emissions could be very small in percentage terms.
In addition, EPA notes that the EPA promotes the reduction of
particular GHG emissions through a variety of voluntary programs (e.g.,
EPA's domestic CH4 partnership programs and the international Methane
to Markets Partnership (launched in 2004)). EPA requests comment on how
these and other efforts to encourage the voluntary reductions in even
small amounts of GHG emissions are relevant to decisions about what
level of ``contribution'' merits mandatory regulations.
Below we use the section 202 source category to illustrate these
and other various ways to consider and compare source category GHG
emissions for the ``cause or contribute'' analysis. In keeping with the
discussion above regarding possible definitions of ``air pollutant,''
we provide the information on an individual GHG and collective GHG
basis. In addition, we raise various policy considerations that could
be relevant to a ``cause or contribute'' determination. EPA invites
comment on the various approaches, data, and policy considerations
discussed below.
a. Overview of Section 202 Source Categories
The relevant mobile sources under section 202(a)(1) of the Clean
Air Act are ``any class or classes of new motor vehicles or new motor
vehicle engines, * * * '' CAA section 202(a)(1). To support this
illustrative assessment, EPA analyzed historical GHG emissions data for
motor vehicles and motor vehicle engines in the United States from 1990
to 2006.\109\
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\109\ The source of the emissions data is the Inventory of U.S.
Greenhouse Gas Emissions and Sinks: 1990-2006 (USEPA #430-R-08-005)
(hereinafter ``U.S. Inventory''). See the Emissions Technical
Support Document for a discussion on the correspondence between
Section 202 source categories and IPCC source categories. The most
recent year for which official EPA estimates are available is 2006.
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The motor vehicles and motor vehicle engines (hereinafter ``section
202 source categories'') addressed include passenger cars, light-duty
trucks, motorcycles, buses, medium/heavy-duty trucks, and cooling.\110\
Of the six primary GHGs, four are associated with section 202 source
categories: CO2, CH4, N2O, and HFCs.
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\110\ Greenhouse gas emissions result from the use of HFCs in
cooling systems designed for passenger comfort, as well as auxiliary
systems for refrigeration.
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A summary of the section 202 emissions information is presented
here, and a more detailed description along with data tables is
contained in the Emissions Technical Support Document. All annual
emissions data are considered on a CO2 equivalent basis.
b. Carbon Dioxide Emissions From Section 202 Sources
CO2 is emitted from motor vehicles and motor vehicle
engines during the fossil fuel combustion process. During combustion,
the carbon stored in the fuels is oxidized and emitted as
CO2 and smaller amounts of other carbon compounds.\111\
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\111\ Detailed CO2 emissions data from section 202
source categories are presented in the Emissions Technical Support
Document. Other carbon compounds emitted such as CO, and non-methane
volatile organic compounds oxidize in the atmosphere to form
CO2 in a period of hours to days.
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CO2 is the dominant GHG emitted from motor vehicles and
motor vehicle engines, and the dominant GHG emitted in the U.S. and
globally.\112\ CO2 emissions from section 202 sources grew
by 32% between 1990 and 2006, largely due to increased CO2
emissions from light-duty trucks (61% since 1990) and medium/heavy-duty
trucks (76%). Emissions of CO2 from section 202 sources, and
U.S. and global emissions are presented below in Table V-1.
---------------------------------------------------------------------------
\112\ EPA typically uses current motor vehicle fleet emissions
information when making a contribution analysis under section 202.
We solicit comment on how or whether the reductions in
CO2 emissions expected by implementation of EISA, or any
other projected change in emissions from factors such as growth in
the fleet or vehicle miles traveled, would impact a contribution
analysis for CO2.
Table V-1--Section 202 CO2, U.S. and Global Emissions
------------------------------------------------------------------------
Sec 202 CO2
U.S. Emissions 2006 share
(percent)
------------------------------------------------------------------------
Section 202 CO2......................... 1,564.6
All U.S. CO2............................ 5983.1 26.2
U.S. emissions of Sec 202 GHG........... 1,665.4 93.9
All U.S. GHG emissions.................. 7,054.2 22.2%
------------------------------------------------------------------------
Sec 202 CO2
share (in
Global Emissions 2000 2000)
(percent)
------------------------------------------------------------------------
All global CO2 emissions................ 30,689.5 4.8
Global transport GHG emissions.......... 5,315.2 27.5
All global GHG emissions................ 36,727.9 4.0
------------------------------------------------------------------------
Share of U.S.
Other Sources of U.S. CO2 2006 CO2 emissions
(percent)
------------------------------------------------------------------------
Electricity Sector CO2.................. 2360.3 39.4
Industrial Sector CO2................... 984.1 16.4
------------------------------------------------------------------------
Arguably, based on these data, if the Administrator did not find
that, for purposes of section 202, that CO2 emissions from
section 202 source categories contribute to the elevated combined level
of GHG concentrations, it is unlikely that he would find that the other
GHGs emitted by section 202 source categories contribute.
c. Methane Emissions From Section 202 Source Categories
Methane (CH4) emissions from motor vehicles are a function of the
CH4 content of the motor fuel, the amount of
[[Page 44430]]
hydrocarbons passing uncombusted through the engine, and any post-
combustion control of hydrocarbon emissions (such as catalytic
converters). Methane emissions from these source categories decreased
by 58% between 1990 and 2006, largely due to decreased CH4 emissions
from passenger cars and light-duty trucks.\113\ Emissions of
CH4 from section 202 sources, and U.S. and global emissions
are presented below in Table V-2.
---------------------------------------------------------------------------
\113\ Detailed methane emissions data for section 202 source
categories are presented in the Emissions Technical Support
Document.
Table V-2--Section 202 CH4, U.S. and Global Emissions
------------------------------------------------------------------------
Sec 202 CH4
U.S. Emissions 2006 share
(percent)
------------------------------------------------------------------------
Section 202 CH4......................... 1.80
All U.S. CH4............................ 555.3 0.32
U.S. emissions of Sec 202 GHG........... 1,665.40 0.11
All U.S. GHG emissions.................. 7,054.20 0.03
------------------------------------------------------------------------
Sec 202 CH4
share (in
Global Emissions 2000 2000)
(percent)
------------------------------------------------------------------------
All global CH4 emissions................ 5,854.90 0.05
Global transport GHG emissions.......... 5,315.20 0.05
All global GHG emissions................ 36,727.90 0.01
------------------------------------------------------------------------
Share of U.S.
Other Sources of U.S. CH4 2006 CH4 emissions
(percent)
------------------------------------------------------------------------
Landfill CH4 emissions.................. 125.7 22.6
Natural Gas CH4 emissions............... 102.4 18.4
------------------------------------------------------------------------
EPA also notes that the EPA promotes the reduction of
CH4 and other non-CO2 GHG emissions, as
manifested in its domestic CH4 partnership programs and the
international Methane to Markets Partnership (launched in 2004), which
are not focused on the transportation sector. EPA requests comment on
how these and other efforts to encourage the voluntary reductions in
even small amounts of GHG emissions are relevant to decisions about
what level of ``contribution'' merits mandatory regulations.
d. Nitrous Oxide Emissions From Section 202 Source Categories
Nitrous oxide (N2O) is a product of the reaction that
occurs between nitrogen and oxygen during fuel combustion.
N2O (and nitrogen oxide (NOX)) emissions from
motor vehicles and motor vehicle engines are closely related to fuel
characteristics, air-fuel mixes, combustion temperatures, and the use
of pollution control equipment.
Nitrous oxide emissions from section 202 sources decreased by 27%
between 1990 and 2006, largely due to decreased emissions from
passenger cars and light-duty trucks.\114\ Earlier generation control
technologies initially resulted in higher N2O emissions,
causing a 24% increase in N2O emissions from motor vehicles
between 1990 and 1995. Improvements in later-generation emission
control technologies have reduced N2O output, resulting in a
41% decrease in N2O emissions from 1995 to 2006. Emissions
of N2O from section 202 sources, and U.S. and global
emissions are presented below in Table V-3.
---------------------------------------------------------------------------
\114\ Detailed nitrous oxide emissions data for section 202
source categories are presented in the Emissions Technical Support
Document.
Table V-3--Section 202 N2O, U.S. and Global Emissions
------------------------------------------------------------------------
Sec 202 N2O
U.S. Emissions 2006 share
(percent)
------------------------------------------------------------------------
Section 202 N2O......................... 29.5
All U.S. N2O............................ 367.9 8.0
U.S. emissions of Sec 202 GHG........... 1665.4 1.8
All U.S. GHG emissions.................. 7054.2 0.4
------------------------------------------------------------------------
Sec 202 N2O
share (in
Global Emissions 2000 2000)
(percent)
------------------------------------------------------------------------
All global N2O emissions................ 3,113.8 1.6
Global transport GHG emissions.......... 5,315.2 0.9
All global GHG emissions................ 36,727.9 0.1
------------------------------------------------------------------------
[[Page 44431]]
Share of U.S.
Other Sources of U.S. N2O 2006 N2O emissions
(percent)
------------------------------------------------------------------------
Agricultural Soil N2O emissions......... 265.0 72.0
Nitric Acid N2O emissions............... 15.6 4.3
------------------------------------------------------------------------
Past experience has shown that substantial emissions reductions can
be made by small N2O sources. For example, the
N2O emissions from adipic acid production is smaller than
that of Section 202 sources, and this sector reduced its emission by
over 60 percent from 1990 to 2006 as a result of voluntary adoption of
N2O abatement technology by the three major U.S. adipic acid
plants.\115\
---------------------------------------------------------------------------
\115\ Inventory of U.S. Greenhouse Gas Emissions and Sinks:
1990-2006 (USEPA #430-R-08-005), p.2-22.
---------------------------------------------------------------------------
e. Hydrofluorocarbons Emissions From Section 202 Source Categories
Hydrofluorocarbons (a term which encompasses a group of eleven
related compounds) are progressively replacing CFCs and HCFCs in
section 202 cooling and refrigeration systems as they are being phased
out under the Montreal Protocol and Title VI of the CAA.\116\
---------------------------------------------------------------------------
\116\ 2006 IPCC Guidelines, Volume 3, Chapter 7. Page 43.
---------------------------------------------------------------------------
Hydrofluorocarbons were not used in motor vehicles or refrigerated
rail and marine transport in the U.S. in 1990, but by 2006 emissions
had increased to 70 Tg CO2e.\117\ Emissions of HFC from
section 202 sources, and U.S. and global emissions are presented below
in Table V-4.
---------------------------------------------------------------------------
\117\ Detailed HFC emissions data for section 202 source
categories are presented in Tables in the Emissions Technical
Support Document.
Table V-4--Section 202 HFC, U.S. and Global Emissions
------------------------------------------------------------------------
Sec 202 HFC
U.S. Emissions 2006 share
(percent)
------------------------------------------------------------------------
Section 202 HFC......................... 69.5
All U.S. HFC............................ 124.5 55.8
U.S. emissions of Sec 202 GHG........... 1665.4 4.2
All U.S. GHG emissions.................. 7054.2 1.0
------------------------------------------------------------------------
Sec 202 HFC
share (in
Global Emissions 2000 2000)
(percent)
------------------------------------------------------------------------
All global HFC emissions................ 259.2 20.3
Global transport GHG emissions.......... 5,315.2 1.0
All global GHG emissions................ 36,727.9 0.1
------------------------------------------------------------------------
Share of U.S.
Other Sources of U.S. HFC 2006 HFC emissions
(percent)
------------------------------------------------------------------------
HCFC-22 Production...................... 13.8 11.1
Other ODS Substitutes................... 41.2 33.1
------------------------------------------------------------------------
EPA notes that section 202 HFC emissions are the largest source of
HFC emissions in the United States, that these emissions increased by
274% from 1995 to 2006, and that section 202 sources are also the
largest source of emissions of high GWP gases (i.e., HFCs, PFCs or
SF6) in the U.S. Thus, a decision not to set standards for
HFCs under section 202 could be viewed as precedential with respect to
the likelihood of future regulatory actions for any of these three
gases.
f. Perfluorocarbons and Sulfur Hexafluoride
Perfluorocarbons (PFCs) and sulfur hexafluoride (SF6)
are not emitted from motor vehicles or motor vehicle engines in the
United States.
g. Total GHG Emissions From Section 202 Source Categories
We note if ``air pollutant'' were defined as the collective group
of four to six GHGs, the emissions of a single component (e.g.,
CO2) could theoretically support a positive contribution
finding. We also solicit comment on whether the fact that total GHG
emissions from section 202 source categories are approximately 4.3% of
total global GHG emissions would mean that adopting this definition of
``air pollutant'' would make it unnecessary to assess the individual
GHG emissions levels less than that amount. Table V-5 below presents
the contribution of individual GHGs to total GHG emissions from section
202 sources, and from all sources in the U.S.
Table V-5--Contribution of Individual gases in 2006 to Section 202 and U.S. Total GHG
(In percent)
----------------------------------------------------------------------------------------------------------------
CO2 CH4 N2O HFC PFC SF6
----------------------------------------------------------------------------------------------------------------
Section 202................................... 93.9 0.1 1.8 4.2
[[Page 44432]]
U.S. Total.................................... 84.8 7.9 5.2 1.8 0.1 0.2
----------------------------------------------------------------------------------------------------------------
Emissions of GHG from section 202 sources, and U.S. and global
emissions are presented below in Table V-6.
Table V-6--Section 202 GHG, U.S. and Global Emissions
------------------------------------------------------------------------
Sec 202 GHG
U.S. Emissions 2006 share
(percent)
------------------------------------------------------------------------
Section 202 GHG......................... 1665.4
All U.S. GHG emissions.................. 7054.2 23.6
------------------------------------------------------------------------
Sec 202 GHG
share (in
Global Emissions 2000 2000)
(percent)
------------------------------------------------------------------------
Global transport GHG emissions.......... 5,315.2 29.5
All global GHG emissions................ 36,727.9 4.3
------------------------------------------------------------------------
Share of U.S.
Other Sources of U.S. GHG 2006 GHG emissions
(percent)
------------------------------------------------------------------------
Electricity Sector emissions............ 2377.8 33.7
Industrial Sector emissions............. 1371.5 19.4
------------------------------------------------------------------------
h. Summary of Requests for Comment
EPA is seeking comment on the approach outlined above in the
context of section 202 source categories, regarding how ``air
pollutant'' should be defined, and contribution analyzed. Specifically,
EPA is interested in comments regarding the data and comparisons
underlying the above example contained in Emissions Technical Support
Document. We also welcome comment on prior precedents for assessing
contributions, as well as the potential precedential impact of a
positive section 202 contribution findings for other potential sources
of these and other GHGs. We also welcome comment on the relationship of
these proposals to existing U.S. climate change emissions reduction
programs and the magnitude of reductions sought under these programs.
VI. Mobile Source Authorities, Petitions, and Potential Regulation
A. Mobile Sources and Title II of the Clean Air Act
Title II of the CAA provides EPA's statutory authority for mobile
source air pollution control. Mobile sources include cars and light
trucks, heavy trucks and buses, nonroad recreational vehicles (such as
dirt bikes and snowmobiles), farm and construction machines, lawn and
garden equipment, marine engines, aircraft, and locomotives. The Title
II program has led to the development and widespread commercialization
of emission control technologies throughout the various categories of
mobile sources. Overall, the new technologies sparked by EPA regulation
over four decades have reduced the rate of emission of regulated
pollutants from personal vehicles by 98% or more, and are key
components of today's high-tech cars and SUVs. EPA's heavy-duty,
nonroad, and transportation fuels regulatory programs have likewise
promoted both pollution reduction and cost-effective technological
innovation.
In this section, we consider how Title II authorities could be used
to reduce GHG emissions from mobile sources and the fuels that power
them. The existing mobile source emissions control program provides one
possible model for how EPA could use Title II of the CAA to achieve
long-term reductions in mobile source GHG emissions. The approach would
be to set increasingly stringent performance standards that
manufacturers would be required to meet over 10, 20 or 30 years using
flexible compliance mechanisms like emissions averaging, trading and
banking to increase the economic effectiveness of emission reductions
over less flexible approaches. These performance standards would
reflect EPA's evaluation of available and developing technologies,
including the potential for technology innovation, that could provide
sustained long-term GHG emissions reductions while allowing mobile
sources to satisfy the full range of consumer and business needs.
Another approach we explore is the extent to which CAA authorities
could be used to establish a cap-and-trade system for reducing mobile
source-related GHG emissions that could provide even greater
flexibility to manufacturers in finding least cost emission reductions
available within the sector. With respect to cars and light trucks, we
also present and discuss an alternative approach to standard-setting,
focused on technology already in the market today in evaluating near
term standards, that EPA began developing in 2007 as part of an inter-
agency effort in response to the Massachusetts decision and the
President's May 2007 directive. This approach took into consideration
and used as a starting point the President's 20-in-10 goals for vehicle
standards. Congress subsequently
[[Page 44433]]
addressed many of the 20-in-10 goals through its action in passing EISA
in December 2007.
EPA seeks public comment on how a Title II regulatory program could
serve as an approach for addressing GHG emissions from mobile sources.
In addition, EPA invites comments on the following specific questions:
What are the implications for developing Title II programs
in view of the global and long-lived nature of GHGs?
What factors should be considered in developing a long-
term, i.e, 2050, GHG emissions target for the transportation sector?
Should the transportation sector make GHG emission
reductions proportional to the sector's share of total U.S. GHG
emissions or should other approaches be taken to determining the
relative contribution of the transportation sector to GHG emission
reductions?
What are the merits and challenges of different regulatory
timeframes such as 5 years, 10-15 years, 30-40 years?
Should Title II GHG standards be based on environmental
need, current projections of future technology feasibility, and/or
current projections of future net societal benefits?
Could Title II accommodate a mobile sources cap-and-trade
program and/or could Title II regulations complement a broader cap-and-
trade program?
Should trading between mobile sources and sources in other
sectors be allowed?
Is it necessary or would it be helpful to have new
legislation to complement Title II (such as legislation to provide
incentives for the development and commercialization of low-GHG mobile
source technologies)?
How best can EPA fulfill its CAA obligations under Title
II yet avoid inconsistency with NHTSA's regulatory approach under EPCA?
EPA also invites comments on whether there are specific limitations of
a Title II program that would best be addressed by new legislation.
1. Clean Air Act Title II Authorities
In this section we review the Title II provisions that could be
applied to GHG emissions from various categories of motor vehicles and
fuels. For each provision, we describe the relevant category of mobile
sources, the terms of any required ``endangerment'' finding, and the
applicable standard-setting criteria. We also identify the full range
of factors EPA may consider, including costs and safety, and discuss
the extent to which standards may be technology-forcing.
a. CAA Section 202(a)
Section 202(a)(1) provides broad authority to regulate new ``motor
vehicles,'' which are on-road vehicles. While other provisions of Title
II address specific model years and emissions of motor vehicles,
section 202(a)(1) provides the authority that EPA would use to regulate
GHGs from new on-road vehicles. The ICTA petition sought motor vehicle
GHG emission standards under this section of the Act.
As previously discussed, section 202(a)(1) makes a positive
endangerment finding a prerequisite for setting emission standards for
new motor vehicles. Any such standards ``shall be applicable to such
vehicles * * * for their useful life.'' Emission standards under CAA
section 202(a)(1) are technology-based, i.e. the levels chosen must be
premised on a finding of technological feasibility. They may also be
technology-forcing to the extent EPA finds that technological advances
are achievable in the available lead time and that the reductions such
advances would obtain are needed and appropriate. However, EPA also has
the discretion to consider and weigh various additional factors, such
as the cost of compliance (see section 202(a)(2)), lead time necessary
for compliance (section 202(a)(2)), safety (see NRDC v. EPA, 655 F. 2d
318, 336 n. 31 (D.C. Cir. 1981)) and other impacts on consumers, and
energy impacts. Also see George E. Warren Corp. v. EPA, 159 F.3d 616,
623-624 (D.C. Cir. 1998). CAA section 202(a)(1) does not specify the
weight to apply to each factor, and EPA accordingly has significant
discretion in choosing an appropriate balance among the factors. See
EPA's interpretation of a similar provision, CAA section 231, at 70 FR
69664, 69676 (Nov. 17, 2005), upheld in NACAA v. EPA, 489 F.3d 1221,
1230 (2007).
b. CAA Section 213
CAA section 213 provides broad authority to regulate emissions of
non-road vehicles and engines, which are a wide array of mobile sources
including ocean-going vessels, locomotives, construction equipment,
farm tractors, forklifts, harbor crafts, and lawn and garden equipment.
CAA section 213(a)(4) authorizes EPA to establish standards to
control pollutants, other than NOX, volatile organic
compounds and CO, which are addressed in section 213(a)(3), if EPA
determines that emissions from nonroad engines and vehicles as a whole
contribute significantly to air pollution ``which may reasonably be
anticipated to endanger public health or welfare''. Once this
determination is made, CAA section 213(a)(4) provides that EPA ``may''
promulgate standards it deems ``appropriate'' for ``those classes or
categories of new nonroad engines and new nonroad vehicles (other than
locomotives or engines used in locomotives), which in the
Administrator's judgment, cause or contribute to, such air pollution,
taking into account costs, noise, safety, and energy factors associated
with the application of available technology to those vehicles and
engines.'' As with section 202(a)(1), this provision authorizes EPA to
set technology-forcing standards to the extent appropriate considering
all the relevant factors.
CAA section 213(a)(5) authorizes EPA to adopt standards for new
locomotives and new locomotive engines. These standards must achieve
the greatest degree of emissions reduction achievable through the
application of available technology, giving appropriate consideration
to the cost of applying such technology, lead time, noise, energy and
safety. Section 213(a)(5) does not require that EPA review the
contribution of locomotive emissions to air pollution which may
reasonably be expected to endanger public health or welfare before
setting emission standards, although in the past, EPA has provided such
information in its rulemakings.
c. CAA Section 231
CAA section 231(a) provides broad authority for EPA to establish
emission standards applicable to the ``emission of any air pollutant
from any class or classes of aircraft engines, which in the
Administrator's judgment, causes, or contributes to, air pollution
which may reasonably be anticipated to endanger public health or
welfare.'' NACAA v. EPA, 489 F.3d 1221, 1229 (D.C. Cir. 2007). As with
sections 202(a) and 213(a)(4), this provision authorizes, but does not
require, EPA to set technology-forcing standards to the extent
appropriate considering all the relevant factors, including noise,
safety, cost and necessary lead time for the development and
application of requisite technology.
Unlike the motor vehicle and non-road programs, however, EPA does
not directly enforce its standards regulating aircraft engine
emissions. Under CAA section 232, the Federal Aviation Administration
(FAA) is required to prescribe regulations to insure compliance with
EPA's standards. Moreover, FAA has authority to regulate aviation
fuels, under Federal Aviation
[[Page 44434]]
Act section 44714. However, under the Federal Aviation Act, the FAA
prescribes standards for the composition or chemical or physical
properties of an aircraft fuel or fuel additive to control or eliminate
aircraft emissions the EPA ``decides under section 231 of the CAA
endanger the public health or welfare[.]''
d. CAA Section 211
Section 211(c) authorizes regulation of vehicle fuels and fuel
additives (excluding aircraft fuel) as appropriate to protect public
health and welfare, and section 211(o) establishes requirements for the
addition of renewable fuels to the nation's vehicle fuel supply.\118\
In relevant parts, section 211(c) states that, ``[t]he Administrator
may * * * by regulation, control or prohibit the manufacture,
introduction into commerce, offering for sale, or sale of any fuel or
fuel additive for use in a motor vehicle, motor vehicle engine, or
nonroad engine or nonroad vehicle'' if, in the judgment of the
Administrator, any fuel or fuel additive or any emission product of
such fuel or fuel additive causes, or contributes, to air pollution or
water pollution (including any degradation in the quality of
groundwater) which may reasonably be anticipated to endanger the public
health or welfare, * * *'' Similar to other CAA mobile source
provisions, section 211(c)(1) involves an endangerment finding that
includes considering the contribution to air pollution made by the fuel
or fuel additive.
---------------------------------------------------------------------------
\118\ EPA's authority to regulate fuels under CAA section 211
does not exend to aircraft engine fuel. Instead, under the Federal
Aviatiion Act, the FAA prescribes standads for the compositiion or
chemical or physical properties of an aircraft fuel or additive to
control or eliminate aircraft emissions the EPA ``decides under
section 231 of the Clean Air Act endanger the public health or
welfare[.]'' 49 U.S.C. 44714.
---------------------------------------------------------------------------
The Energy Policy Act of 2005 also added section 211(o) to
establish the volume-based Renewable Fuels Standard program. Section
211(o) was amended by the Energy Independence and Security Act of 2007.
Section VI.D of this notice provides more information and
discussion about the CAA section 211 authorities.
2. EPA's Existing Mobile Source Emissions Control Program
In this notice, EPA is examining whether and how the regulatory
mechanisms employed under Title II to reduce conventional emissions
could also prove effective for reducing GHG emissions. Under Title II,
mobile source standards are technology-based, taking such factors as
cost and lead time into consideration. Various Title II provisions
authorize or require EPA to set standards that are technology forcing,
such as standards for certain pollutants for heavy-duty or nonroad
engines.\119\ Title II also provides for comprehensive regulation of
mobile sources so that emissions of air pollutants from all categories
of mobile sources may be addressed as needed to protect public health
and the environment.
---------------------------------------------------------------------------
\119\ Technology-forcing standards are based upon performance of
technology that EPA determines will be available (considering
technical feasibility, cost, safety, and other relevant factors)
when the standard takes effect, as opposed to standards based upon
technology which is already available. Technology-forcing standards
further Congress' goal of having EPA project future advances in
pollution control technology, rather than being limited by
technology which already exists. NRDC v. Thomas, 805 F. 2d 410, 428
n. 30 (D.C. Cir. 1981). Technology-forcing standards are performance
standards and do not require the development or use of a specific
technology.
---------------------------------------------------------------------------
Pursuant to Title II, EPA has taken a comprehensive, integrated
approach to mobile source emission control that has produced benefits
well in excess of the costs of regulation. In developing the Title II
program, the Agency's historic, initial focus was on personal vehicles
since that category represented the largest source of mobile source
emissions. Over time, EPA has established stringent emissions standards
for large truck and other heavy-duty engines, nonroad engines, and
marine and locomotive engines, as well. The Agency's initial focus on
personal vehicles has resulted in significant control of emissions from
these vehicles, and also led to technology transfer to the other mobile
source categories that made possible the stringent standards for these
other categories.
As a result of Title II requirements, new cars and SUVs sold today
have emissions levels of hydrocarbons, oxides of nitrogen, and carbon
monoxide that are 98-99% lower than new vehicles sold in the 1960s, on
a per mile basis. Similarly, standards established for heavy-duty
highway and nonroad sources require emissions rate reductions on the
order of 90% or more for particulate matter and oxides of nitrogen.
Overall ambient levels of automotive-related pollutants are lower now
than in 1970, even as economic growth and vehicle miles traveled have
nearly tripled. These programs have resulted in millions of tons of
pollution reduction and major reductions in pollution-related deaths
(estimated in the tens of thousands per year) and illnesses. The net
societal benefits of the mobile source programs are large. In its
annual reports on federal regulations, the Office of Management and
Budget reports that many of EPA's mobile source emissions standards
typically have projected benefit-to-cost ratios of 5:1 to 10:1 or more.
Follow-up studies show that long-term compliance costs to the industry
are typically lower than the cost projected by EPA at the time of
regulation, which result in even more favorable real world benefit-to-
cost ratios. Title II emission standards have also stimulated the
development of a much broader set of advanced automotive technologies,
such as on-board computers and fuel injection systems, which are at the
core of today's automotive designs and have yielded not only lower
emissions, but improved vehicle performance, reliability, and
durability.
EPA requests comment on whether and how the approach it has taken
under Title II could effectively be employed to reduce mobile source
emissions of GHGs. In particular, EPA seeks comment and information on
ways to use Title II authorities that would promote development and
transfer of GHG control technologies for and among the various mobile
source categories. The Agency is also interested in receiving
information on the extent to which GHG-reducing technologies developed
for the U.S. could usefully and profitably be exported around the
world. Finally, EPA requests comments on how the Agency could implement
its independent obligations under the CAA in a manner to avoid
inconsistency with NHTSA CAFE rulemakings, in keeping with the Supreme
Court's observation in the Massachusetts decision (``there is no reason
to think the two agencies cannot both administer their obligations yet
avoid inconsistencies'').
3. Mobile Sources and GHGs
The domestic transportation sector emits 28% of total U.S. GHG
emissions based on the standard accounting methodology used by EPA in
compiling the inventory of U.S. GHG emissions pursuant to the United
Nations Framework Convention on Climate Change (Figure VI-1).
BILLING CODE 6560-50-P
[[Page 44435]]
[GRAPHIC] [TIFF OMITTED] TP30JY08.029
The only economic sector with higher GHG emissions is electricity
generation which accounts for 34% of total U.S. GHG emissions. However,
the inventory accounting methodology attributes to other sectors two
sources of emissions that EPA has the authority to regulate under Title
II of the CAA. First, the methodology includes upstream transportation
fuel emissions (associated with extraction, shipping, refining, and
distribution, some of which occur outside of the U.S.) in the emissions
of the industry sector, not the transportation sector. However,
reducing transportation fuel consumption would automatically and
proportionally reduce upstream transportation fuel-related GHG
emissions as well. Second, nonroad mobile sources (such as
construction, farm, and lawn and garden equipment) are also included in
the industry sector contribution. All of these emissions can be
addressed under CAA Title II authority, at least with respect to
domestic usage. Including these upstream transportation fuel (some of
which occur outside of U.S. boundaries) and nonroad equipment GHG
emissions in the mobile sources inventory would raise the contribution
from mobile sources and the fuels utilized by mobile sources to
approximately 36% of total U.S. GHG emissions. Since, based on 2004
data, the U.S. emits about 23% of global GHG emissions, under the
traditional accounting methodology the U.S. transportation sector
contributes about 6% of the total global inventory. If upstream
transportation fuel emissions and nonroad equipment emissions are also
included, U.S. mobile sources are responsible for about 8% of total
global GHG emissions.
Personal vehicles (cars, sport utility vehicles, minivans, and
smaller pickup trucks) emit 54% of total U.S. transportation sector GHG
emissions (including nonroad mobile sources), with heavy-duty vehicles
the second largest contributor at 18%, aviation at 11%, nonroad sources
at 8%, marine at 5%, rail at 3%, and pipelines at 1% (Figure VI-2).
CO2 is responsible for about 95% of transportation GHG
emissions, with air conditioner refrigerant HFCs accounting for 3%,
vehicle tailpipe nitrous oxide emissions for 2%, and vehicle tailpipe
methane emissions for less than 1% (Figure VI-3).
[[Page 44436]]
[GRAPHIC] [TIFF OMITTED] TP30JY08.030
[GRAPHIC] [TIFF OMITTED] TP30JY08.031
As noted previously, global climate change is a long-term problem.
Climate experts such as the IPCC often use 2050 as a key reference
point for future projections. Long-term projections of U.S. mobile
source GHG emissions show that there is likely to be a major increase
in transportation GHG emissions in the future.
Prior to the passage of EISA, U.S. transportation GHG emissions
(including upstream fuel emissions) were projected to grow
significantly, from about 2800 million metric tons in 2005 to about
4800 million metric tons in 2050 (see Figure VI-4, top curve). The fuel
economy and renewable fuels provisions of EISA (Figure VI.A.2.-4,
second curve from top) provide significant near-term mobile source GHG
emissions reductions relative to the non-EISA baseline case. However,
addressing climate change requires setting long-term goals. President
Bush has proposed a new goal of stopping the growth of GHG emissions by
2025, and the IPCC has modeled several long-term climate mitigation
targets for 2050.
[[Page 44437]]
Using Title II authority, mobile sources could achieve additional
GHG emission reductions based on a variety of criteria including the
amount of reduction needed, technological feasibility and cost
effectiveness. While EISA's fuel economy and renewable fuel
requirements will contribute to mobile source GHG emission reductions,
its fuel economy standards affect only CO2 emissions and do
not apply to the full range of mobile source categories. EISA also
specifies that fuel economy standards be set for no more than five
years at a time, effectively limiting the extent to which those
standards can take into account advancing technologies. Moreover, its
renewable fuel provisions are limited in the extent to which they
provide for GHG emission reductions, although EISA does mandate the use
of renewable fuels that meet different lifecycle GHG emission reduction
requirements.
Under Title II, EPA has broad authority to potentially address all
GHGs from all categories of mobile sources. In addition, Title II does
not restrict EPA to specific timeframes for action. If circumstances
warrant, EPA could set longer term standards and promote technological
advances by basing standards on the performance of technologies not yet
available but which are projected to be available at the time the
standard takes effect. Title II also provides authority to potentially
require GHG emission reductions from transportation fuels.
Consequently, the CAA authorizes EPA to consider what GHG emissions
reductions might be available and appropriate to require from the
mobile source sector, consistent with the Act.
EPA has not determined what level of GHG emission reduction would
be appropriate from the mobile source sector in the event a positive
endangerment finding is made, although this ANPR includes some
discussion of possible reductions. Any such determination is
necessarily the province of future rulemaking activity. Without
prejudging this important issue, and for illustrative purposes only,
the final three curves in Figure VI-4 illustrate the additional
reductions mobile sources would have to achieve if mobile sources were
to make a proportional contribution to meeting the President's climate
goal, the IPCC 450 CO2 ppm stabilization scenario, and an
economy-wide GHG emissions cap based on a 70% reduction in 2005
emissions by 2050.\120\ As the figure illustrates, EISA provides about
25%, 15% and 10% of the transportation GHG emissions reductions that
would be needed for mobile sources to make a proportional contribution
to meeting the President's climate goal by 2050 (Figure VI-4, third
curve), the IPCC 450 CO2 ppm stabilization scenario in 2050
(Figure VI-4, fourth curve), and a 70% reduction in 2005 levels in 2050
(Figure VI-4, bottom curve), respectively.\121\ These curves shed light
on the possible additional role the transportation sector could play in
achieving reductions, but do not address whether such reductions would
be cost effective compared to other sectors. Title II regulation of GHG
emissions could conceivably achieve greater emissions reductions so
that mobile sources would make a larger contribution to meeting these
targets. EPA requests comment on the usefulness of the information
provided in Figure VI-4 and on approaches for determining what
additional mobile source GHG emissions reductions would be appropriate.
As described later in this section, our assessment of available and
developing mobile source technologies for reducing GHG emissions
indicates that mobile sources could feasibly achieve significant
additional reductions.
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\120\ Prior to the passage of EISA, an EPA analysis projected
that, absent additional regulatory approaches, transportation would
provide about one-tenth of the GHG emission reductions that would be
required to comply with an emissions cap based on a 70% reduction
from 2005 levels in 2050, even though transportation is responsible
for 28% of the official U.S. GHG emissions inventory.
\121\ Calculation of the GHG emission reductions that EISA's
fuel economy provisions will achieve include standards that result
in an industry-wide fleet average fuel economy of 35 miles per
gallon by 2020.
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[[Page 44438]]
[GRAPHIC] [TIFF OMITTED] TP30JY08.032
4. Potential Approaches for Using Clean Air Act Title II To Reduce
Mobile Source GHG Emissions
The regulatory approach and principles that guided development of
our current mobile source emissions control program may prove useful in
considering a possible mobile source GHG emissions control strategy
under Title II of the CAA. As explained above, under Title II, EPA
could potentially apply its historical approach for regulating
traditional tailpipe emissions to long-term mobile source GHG emissions
control, with the aim of providing strong incentives for technological
innovation. The Agency invites public comment on the principles and
underlying legal authority it has applied in the past and other
possible principles for establishing GHG emissions standards under
Title II, including--
Coverage of all key vehicle, engine, and equipment sub-
sectors in the entire transportation sector so that GHG emission
standards are set not only for cars and light trucks, but for heavy-
duty vehicles, non-road engines and equipment, including locomotive and
marine engines, and aircraft as well. This broader regulatory coverage
would provide more comprehensive mobile source GHG emissions reductions
and market incentives to seek the most cost-effective solutions within
the sector.
Coverage of all GHGs emitted by the transportation sector
by setting emissions standards that address every GHG for which the
Agency makes the appropriate cause or contribute endangerment finding.
Inclusion of transportation fuels in the program by
considering vehicles and fuels as a system, rather than as isolated
components.
Addressing transportation fuels by setting GHG standards
that account for the complete lifecycle of GHG emissions, including
upstream GHG emissions associated with transportation fuel
production.\122\
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\122\ EPA invites comment on how such an approach would interact
with GHG regulations under other parts of the CAA or with a possible
economy-wide approach.
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Identifying long-term U.S. mobile source GHG emissions
targets based on scientific assessments of environmental need, and
basing the stringency of standards for individual mobile source sub-
sectors on technology feasibility, cost and fuel savings, taking into
account the relationship of mobile source reductions to reductions in
other sectors under any economy-wide program.
Allowing for staggered rulemakings for various sub-sectors
and fuels, rather than regulating all mobile source entities at one
time. EPA seeks comment on its CAA authority in this area, as well as
on an approach to base the timing of the staggered rulemakings on
factors such as the contribution of the mobile source sub-sector to the
overall GHG emissions inventory and the lead time necessary for the
commercialization of innovative technology.
Use of Title II statutory authority to adopt technology-
forcing standards, when appropriate, in conjunction with periodic
reviews of technology and other key analytical inputs as a ``reality
check'' to determine whether mid-course corrections in GHG emissions
standards are needed.
Use of our statutory authority to increase the rate of
emissions reduction targets over time while allowing sufficient time
for entrepreneurs and engineers to develop cost-effective technological
solutions and minimize the risk of early retirement of capital
investments.
Establishment of a flexible compliance program that would
allow averaging, banking and borrowing, and credit trading. Existing
Title II programs generally allow credit trading only within individual
mobile source sub-sector programs. EPA solicits comments on whether the
global nature of climate
[[Page 44439]]
change supports allowing credit trading between obligated parties
across all mobile source sub-sectors and whether this would allow the
sector as a whole to seek the lowest-cost solutions.
Design of enforcement programs to ensure real world
emissions reductions over the life of vehicles, engines, and equipment.
Providing sufficient flexibility so that mobile source GHG
emissions control programs can complement and harmonize with existing
regulatory programs for certain pollutants.
In developing potential approaches to design of a Title II program,
it is critical for EPA to understand the full ramifications of advanced
technologies. Accordingly, EPA seeks public comment on potential GHG
reducing technologies and their impacts, including availability,
practicality, emissions reduction potential, cost, performance,
reliability, and durability. EPA also seeks comment on how best to
balance factors such as the need to send effective long-term signals
that stimulate technology innovation, the imprecision of predictions of
future technology innovation, and the importance of lead time to allow
orderly investment cycles.
While advanced technology for reducing GHGs would likely increase
the initial cost of vehicles and equipment to consumers and businesses,
it would also increase efficiency and reduce fuel costs. In many cases,
there is the potential for the efficiency advantages of low-GHG
technologies to offset or more than offset the higher initial
technology cost over the lifetime of the vehicle or equipment. EPA
recognizes that not all consumers may understand or value changes to
vehicles that reduce GHG emissions by increasing fuel efficiency, even
though these changes lower fuel costs (see discussion in Section
VI.C.2). One analytic issue that has policy implications is the most
appropriate method for treating future consumer fuel savings when
calculating cost effectiveness for a mobile sources GHG control
strategy. Some analyses that consider the decisions made by automakers
in isolation from the market and consumers exclude future fuel savings
entirely. A second approach, used in models trying to predict future
consumer behavior based on past experience, counts only those future
fuel savings which consumers implicitly value in their new vehicle
purchase decisions. A third method, reflecting a societal-wide
accounting of benefits, includes all future fuel savings over vehicle
lifetimes, whether overtly valued by new vehicle purchasers or not. EPA
seeks comments on what could be done under Title II, or under any new
legislation to complement Title II, to establish economic incentives
that send long-term market signals to consumers and manufacturers that
would help spark development of and investment in the necessary
technology innovation.
An effective mobile source emissions compliance and enforcement
program is fundamental to ensuring that the environmental benefits of
the emission standards are achieved. We request comments on all aspects
of the compliance approaches discussed in this notice and any other
approaches to a compliance program for mobile source GHG emissions
control. Topics to address could include, but are not limited to,
methods for classifying, grouping and testing vehicles for
certification, useful life and component durability demonstration, in-
use testing, warranty and tampering, prohibited acts, and flexibilities
for manufacturers.
Historically, EPA's programs to reduce criteria pollutants have
typically included provisions to allow the generation, averaging,
banking, and trading of emission credits within a vehicle or engine
category. For example, there are averaging, banking, and trading (ABT)
programs for light-duty vehicles, heavy-duty engines, and nonroad
engines, among others. In these programs, manufacturers with vehicles
or engines designed to over-comply with the standards can generate
credits. These credits can then be used by that manufacturer or sold to
other manufacturers in order to allow similar vehicles or engines with
emissions above the standards to be certified and sold.
However, for a variety of reasons, we have in most cases not
provided for trading of emission credits from one mobile source
category to another. For example, credits generated in the light-duty
vehicle program cannot be used for heavy-duty engines to comply, or
credits generated for lawn and garden equipment cannot be used for
larger gasoline engines to comply. These limitations are generally
grounded in characteristics of required pollutants that do not
necessarily apply in the case of GHG emissions. For instance, in the
case of hydrocarbon emissions, because our programs are meant, in part,
to reduce the pollutant in areas where it most contributes to ozone
formation, we have not allowed farm tractors in rural areas to generate
credits that would allow urban passenger cars to be sold with little or
no emission control. Similarly, for problems like carbon monoxide ``hot
spots'' or direct, personal exposure to diesel PM, it has been
important to ensure a certain minimum degree of control from each
vehicle or engine, rather than allowing the very localized benefits to
be ``traded away.''
Given the global nature of the major GHGs, we request comment on
whether new provisions could be used to allow broad trading of
CO2-equivalent emission credits among the full range of
mobile sources, and if so, how they could be designed, including
highway and nonroad vehicles and engines as well as mobile source
fuels.
EPA has also considered the potential of GHG emissions leakage to
other domestic economic sectors, or to other countries, should EPA
adopt Title II standards for motor vehicle GHG emissions and GHG
emissions from transportation fuels. As discussed in more detail later
in this section, there are transportation fuels (such as grid
electricity) that do not result in tailpipe GHG emissions, but that do
result in GHG emissions when the fuel is produced. Greater use of such
fuels in transportation would reduce GHG emissions covered by Title II,
but would increase GHG emissions covered by Title I, requiring
coordination among the CAA programs to ensure the desired level of
overall GHG control. In addition, GHG emissions from potential land use
changes caused by transportation fuel changes could cause GHG emissions
leakage unless accounted for in any transportation fuels GHG program.
Finally, since transportation fuels can be fungible commodities, if
other countries do not adopt similar GHG control programs, it is
possible that lower-lifecycle GHG fuels will be concentrated in the
U.S. market, while higher-lifecycle GHG fuels will be concentrated in
unregulated markets. For example, sugar cane-based ethanol, if it were
determined to have more favorable upstream GHG emissions, could shift
from the Brazilian to the U.S. market, and corn-based ethanol, if it
were determined to have less favorable upstream GHG emissions, could
shift from the U.S. to the Brazilian market. This shifting could ease
compliance with U.S. transportation fuel GHG regulations, but could
actually increase global GHG emissions due to the GHG emissions that
would result from transporting both types of ethanol fuels over greater
distances. EPA seeks comments on all possible GHG emissions leakage
issues associated with mobile source GHG regulation, and in particular
on whether the theoretical concern with fungible transportation fuels
is likely to be realized.
While the preceding discussion has focused on using the existing
CAA Title
[[Page 44440]]
II model for regulating mobile source GHG emissions, there are other
alternative regulatory approaches on which EPA invites comments. In
particular, long-term mobile source GHG emissions reductions from
vehicles and equipment might be achieved by establishing GHG emissions
caps on vehicle, engine, and/or equipment manufacturers to the extent
authorized by the CAA. EPA's existing regulatory program uses
performance standards that are rate-based, meaning that they require
manufacturers to meet a certain gram/mile average for their fleet, as
in the Tier 2 light-duty vehicle program. Manufacturers produce
vehicles with varying rates of emissions performance, and through
averaging, banking, and trading demonstrate compliance with this
performance standard on a sales-weighted average basis. While a
manufacturer must take its fleet mix of higher-emitting and lower-
emitting models into account in demonstrating compliance, the sales-
weighted average is independent of overall sales as long as the fleet
mix does not change. As a result, a manufacturer's fleet may emit more
or less total pollution depending on its total sales, so long as the
sales-weighted average emissions of its vehicles do not exceed the
standard.
In a cap-and-trade program, the standard set by EPA would not be an
average, sales-weighted rate of emissions, but rather a cap on overall
emissions from a manufacturer's production. Under such a program, the
emissions attributable to a manufacturer's fleet could not grow with
sales unless the manufacturer obtained (e.g., through trading)
additional allowances to cover higher emissions. Presumably, EPA could
assign a VMT or usage value to be used by manufacturers, and
manufacturers would demonstrate compliance by combining the rate of
performance of their vehicles, their sales volume, and the assigned VMT
or usage value to determine overall emissions.
EPA could set standards under an emissions cap-and-trade program by
assessing the same kind of factors as we have in the past: Availability
and effectiveness of technology, cost, safety, energy factors, etc.
Setting an appropriate emissions cap would be more complex, and EPA
would need to demonstrate that the cap is appropriate, given that
changes in sales levels (both industry-wide and for individual
manufacturers) must be accounted for in the standard-setting process.
An emissions cap approach also raises difficult issues of how allowable
emissions under the cap would be allocated among the manufacturers,
including new entrants.
EPA invites comment on all issues involving this emissions cap-and-
trade approach, including comment on relevant technical and policy
issues, and on EPA's authority to adopt such an approach under Title
II.
A third possible model for regulating mobile source GHG emissions
would combine elements of these approaches. This type of hybrid
approach would include, as one element, either rate-based GHG emissions
performance standards similar to the existing mobile source program for
conventional pollutants or GHG emissions caps for key vehicle, engine,
and/or equipment manufacturers, both of which would be promulgated
under Title II of the CAA. The second element of this hybrid approach
would be an upstream emissions cap on fuel refiners for all life-cycle
GHG emissions associated with transportation fuels, including both
upstream fuel production GHG emissions and downstream vehicle GHG
emissions, to the extent authorized under the CAA or future climate
change legislation. For a discussion of issues associated with
including direct mobile source obligations in combination with an
economy-wide approach, see section III.F.3.
An important interrelationship between stationary sources and
mobile sources would develop if grid electricity becomes a more
prevalent transportation fuel in the future. There is considerable
interest, both by consumers and automakers, in the possible development
and commercialization of plug-in hybrid electric vehicles (PHEVs) that
would use electricity from the grid as one of two sources of energy for
vehicle propulsion. Use of grid electricity would yield zero vehicle
tailpipe GHG emissions, providing automakers with a major incentive to
consider PHEVs, which may be appropriate given that vehicle cost is the
single biggest market barrier to PHEV commercialization. But it would
also result in a net increase in demand for electricity, which could
add to the challenge of reducing GHG emissions from the power sector.
Any evaluation of the overall merits of using grid electricity as a
transportation fuel could not be done in isolation, but would require a
coordinated assessment and approach involving both mobile sources under
CAA Title II and stationary sources under CAA Title I. Linking efforts
under Titles I and II would allow for needed coordination regarding any
type of future transportation fuel that would have zero vehicle
tailpipe GHG emissions but significant fuel production GHG emissions.
EPA seeks comment on all aspects, including the advantages and
disadvantages, of using Title II regulations to complement an economy-
wide cap-and-trade GHG emissions program.
EPA also seeks public comment on the available authority for, and
the merits of, allowing credit trading between mobile sources and non-
mobile source sectors. One of the potential limitations of allowing
credit trading only within the transportation sector is that it would
not permit firms to take advantage of emission reduction opportunities
available elsewhere in the economy. In particular, EPA requests comment
on the advantages and disadvantages of allowing trading across sectors,
and how to ensure that credit trading would have environmental
integrity and that credits are real and permanent.
Finally, EPA seeks public comment on two remaining issues: (1) How
a CAA Title II mobile source GHG emissions control program and NHTSA's
corporate average fuel economy program for cars and light-duty trucks
could best be coordinated; and (2) whether and how Title II, or other
provisions in the CAA, could be used to promote lower vehicle miles
traveled and equipment activity.
B. On-Highway Mobile Sources
1. Passenger Cars and Light-Duty Trucks
In this section, we discuss and request comment on several
potential approaches for establishing light-duty vehicle GHG emission
standards under section 202(a)(1). These approaches build off of, to
varying extents, the analysis EPA undertook during 2007 to support the
development of a near-term control program for GHG emissions for
passenger cars and light duty trucks under the authorities of Title II
of the CAA.
We begin this section with a discussion of one potential approach
for establishing GHG standards under section 202(a) of the CAA that
reflects EPA's historical approach used for traditional pollutants,
including the principles EPA has used in the past under Title II. This
approach focuses on long-term standard setting based on the technology-
forcing authority provided under Title II. Next we present and discuss
the results of alternative approaches to standard-setting which EPA
considered during 2007 in the work performed under EO 13432. This
alternative approach is based on setting near-term standards based
primarily on technology already in the market today.
[[Page 44441]]
This is followed by a discussion of the wide range of technologies
available today and technologies that we project will be available in
the future to reduce GHG emissions from light-duty vehicles. We next
include a discussion of a potential approach to reduce HFC, methane,
N2O, and vehicle air conditioning-related CO2
emissions. We conclude with a discussion of the key implementation
issues EPA has considered for the development of a potential light-duty
vehicle GHG control program.
Our work to date indicates that there are significant reductions of
GHG emissions that could be achieved for passenger cars and light-duty
trucks up to 2020 and beyond that would result in large net monetized
benefits to society. For example, taking into account specific vehicle
technologies that are likely to be available in that time period and
other factors relevant to motor vehicle standard-setting under the CAA,
EPA's analysis suggests that substantial reductions can occur where the
cost-per-ton of GHG reduced is more than offset by the value of fuel
savings, and the net present value to society could be on the order of
$340 to $830 billion without considering benefits of GHG reductions
(see section VI.B.1.b).\123\
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\123\ These estimates do not account for the future CAFE
standards that will be established under EISA.
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a. Traditional Approach to Setting Light-Duty Vehicle GHG Standards
In this section we discuss and request comment on employing EPA's
traditional approach to setting mobile source emissions standards to
develop standards aimed at ensuring continued, long-term, technology-
based GHG reductions from light-duty vehicles, in light of the unique
properties of GHG emissions. We also request comment on how EPA could
otherwise use its CAA Title II authorities to provide incentives to the
market to accelerate the development and introduction of ultra clean,
low GHG emissions technologies.
Based on our work to date, we expect that such an approach could
result in standards for the 2020 to 2025 time frame that reflect a
majority of the new light-duty fleet achieving emission reductions
based on what could be accomplished by many of the most advanced
technologies we know of today (e.g., hybrids, diesels, plug-in hybrid
vehicles, full electric vehicles, and fuel cell vehicles, all with
significant use of light-weight materials). Our analysis (presented in
section VI.B.1.b) indicates that standards below 250 g/mile
CO2 (above 35 mpg) could be achievable in this time frame,
and the net benefit to society could be in excess of $800 billion.
These estimates, however, do not account for future CAFE standards that
will be established under EISA.
EPA's historical approach for setting air pollutant standards for
mobile sources has been to assess the capabilities of pollution control
technologies, including advanced control technologies; whether
reductions associated with these technologies are feasible considering
cost, safety, energy, and other relevant factors; and the benefits of
these controls in light of overall public health and environmental
goals. Public health and environmental goals provide the important
context in which this technology-driven process occurs. In many cases
in the past, the goals have involved the need for emissions reductions
to attain and maintain NAAQS.
As mentioned previously, EPA has utilized the CAA to establish
mobile source programs which apply progressively more stringent
standards over many years, often with substantial lead time to maximize
the potential for technology innovation, and where appropriate, we have
included technology reviews along the way to allow for ``mid-course
corrections,'' if needed. We have also provided incentives for
manufacturers to develop and introduce low emission technologies more
quickly than required by the standards. For example, in our most recent
highway heavy-duty engine standards for PM and NOX, we
established technology-forcing standards via a rulemaking completed in
2000 which provided six years of lead-time for the start of the program
and nearly ten years of lead-time for the completion of the phase-in of
the standards. In addition, EPA performed periodic technology reviews
to ensure industry was on target to comply with the new standards, and
these reviews allowed EPA to adjust the program if necessary. This same
program provided early incentive emission credits for manufacturers who
introduced products complying with the standards well in advance of the
program requirements.
Consistent with the CAA and with our existing mobile source
programs, we request comment on using the following traditional
principles for development of long-term GHG standards for light-duty
vehicles: Technology-forcing standards, sufficient lead-time (including
phase-in of standards reflecting use of more advanced technologies),
continual improvements in the rate of emissions reduction, appropriate
consideration of the costs and benefits of new standards, and the use
of flexible mechanisms such as banking and credit trading (between
sources within or outside of this sector). EPA's goal would be to
determine the appropriate level of GHG emission standards to require by
an appropriate point in the future. We would establish the future time
frame in light of the needs of the program. EPA would evaluate a broad
range of technologies in order to determine what is feasible and
appropriate in the time frame chosen, when considering the fleet as a
whole. EPA would analyze the costs and reductions associated with the
technologies, and compare those to the benefits from and the need for
such reductions. We would determine what reductions are appropriate to
require in that time frame, assuming industry started now, and then
determine what appropriate interim standards should be set to most
effectively move to this long-term result.
In developing long-term standards, we would consider known and
projected technologies which in some cases are in the market in limited
production or which may not yet be in the market but which we project
can be, provided sufficient lead-time. We would consider how broadly
and how rapidly specific technologies could be applied across the
industry. If appropriate, EPA could include technology reviews during
the implementation of new standards to review the industry's progress
and to make adjustments as necessary. EPA would evaluate the amount of
lead-time necessary and if appropriate the phase-in period for long-
term standards. To the extent that future standards may result in
significant increases in advanced technologies such as plug-in electric
hybrid or full electric vehicles, we would consider how a Title II
program might interact with a potential Title I program to ensure that
reductions in GHG emissions due to a decrease in gasoline consumption
are not off-set by increases in GHG emissions from the electric utility
sector. We would also consider the need for flexibilities and
incentives to promote technology innovation and provide incentives for
advanced technologies to be developed and brought to the market. We
would consider the need for orderly manufacturer production planning to
ensure that capital investments are wisely used and not stranded.
Finally, EPA would evaluate the near and long-term costs and benefits
of future standards in order to ensure the appropriate relationship
between benefits and costs, e.g. ensuring that
[[Page 44442]]
benefits of any future standards exceed the costs. This could lead to
standard phase-in schedules significantly different from the two
approaches contained in our Light-duty Vehicle Technical Support
Document analysis (available in the docket for this advance notice);
which under one approach was the same incremental increase in
stringency each year (the 4% per year approach), and for the second
approach lead to large increases in stringency the first several years
followed by small changes in the later years (the model-optimized
approach).
One critical element in this approach is the time frame over which
we should consider new GHG standards for light-duty vehicles. We
request comment on the advantages and disadvantages of establishing
standards for the 2020 or 2025 time frame, which is roughly consistent
with EPA's traditional approach to setting standards while allowing a
sufficient time period for investment and technological change, and
even longer. There are two major factors which may support a long-term
approach. First, addressing climate change will require on-going
reductions from the transportation sector for the foreseeable future.
Thus, establishing short-term goals will not provide the long-term road
map which the environmental problem requires. Second, providing a long-
term road map could have substantial benefits for the private sector.
The automotive industry itself is very capital intensive--the costs for
developing and producing a major vehicle model is on the order of
several billion dollars. A manufacturer making a major investment to
build a new engine, transmission or vehicle production plant expects to
continue to use such a facility without major additional investments
for at least 15 years, if not more. A regulatory approach which
provides a long-term road map could allow the automotive industry to
plan their future investments in an orderly manner and minimize the
potential for stranded capital investment, thus helping to ensure the
most efficient use of societal resources. A long-term regulatory
program could also provide industry with the regulatory certainty
necessary to stimulate technology development, and help ensure that the
billions of dollars invested in technology research and development are
focused on long-term needs, rather than on short-term targets alone.
There could also be disadvantages to establishing long-term
standards. For example, uncertainties in the original analysis
underlying the long-term standards could result in overly conservative
or optimistic assumptions about emission reductions could and should be
accomplished. Long-terms standards could also reduce flexibility to
respond to more immediate market changes or other unforeseen events.
EPA has tools, such as technology reviews, that could help reduce these
risks of long-term standards. We request comment on the advantages and
disadvantages of a long-term approach to standard-setting, and any
issues it might raise for integration with an economy-wide approach to
emission reductions.
More generally, EPA requests comment on the issues discussed in
this section, and specifically the appropriateness of a light-duty
vehicle GHG regulatory approach in which EPA would identify long-term
emissions targets (e.g., the 2020-2025 time frame or longer) based on
scientific assessments of environmental need, and developing standards
based on a technology-forcing approach with appropriate consideration
for lead-time, costs and societal benefits.
b. 2007 Approach to Setting Light-Duty Vehicle Emission Standards
i. CAA and EPCA Authority; Passage of EISA
As indicated above in section VI.A.2, CAA section 202(a) provides
broad authority to regulate light-duty vehicles. Standards which EPA
promulgates under this authority are technology-based and applicable
for the useful life of a vehicle. EPA has discretion to consider and
weigh various additional factors, including the cost of compliance,
safety and other impacts on consumers, and energy impacts.
NHTSA authority to set CAFE standards derives from the Energy
Policy and Conservation Act (42 U.S.C. section 6201 et seq.) as amended
by EISA. This statutory authority, enacted in December 2007, directs
NHTSA to consider four factors in determining maximum feasible fuel
economy standards--technological feasibility, economic practicability,
the effect of other standards issued by the government on fuel economy,
and the need of the nation to conserve energy. NHTSA may also take into
account other relevant considerations such as safety.
EISA amends NHTSA's fuel economy standard-setting authority in
several ways. Specifically it replaces the statutory default standard
of 27.5 miles per gallon for passenger cars with a mandate to establish
separate passenger cars and light truck standards annually beginning in
model year 2011 to reflect the maximum feasible level. It also requires
that standards for model years 2011-2020 be set sufficiently high to
ensure that the average fuel economy of the combined industry-wide
fleet of all new passenger cars and light trucks sold in the U.S.
during MY 2020 is at least 35 miles per gallon. In addition, EISA
provides that fuel economy standards for no more than five model years
be established in a single rulemaking, and mandated the reform of CAFE
standards for passenger cars by requiring that all CAFE standards be
based on one or more vehicle attributes, among other changes.\124\ EISA
also directs NHTSA to consult with EPA and the Department of Energy on
its new CAFE regulations.
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\124\ For a full discussion of EISA requirements and NHTSA
interpretation of its statutory authority please see 73 FR 24352
(May 2, 2008).
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Pursuant to EISA's amendments to EPCA, NHTSA recently issued a
notice of proposed rulemaking for new, more stringent CAFE standards
for model years 2011-2015 for both passenger cars and light-duty
trucks. 73 FR 24352 (May 2, 2008).
Prior to EISA's enactment, EPA and NHTSA had coordinated under EO
13432 on the development of CAA rules that would achieve large GHG
emission reductions and CAFE rules that would achieve large
improvements in fuel economy. As discussed later in this section, there
are important differences in the two agencies' relevant statutory
authorities. EPA nevertheless believes that it is important that any
future GHG regulations under CAA Title II and future fuel economy
regulations under NHTSA's statutory authority be designed to ensure
that an automaker's actions to comply with CAA standards not interfere
with or impede actions taken for meeting fuel economy standards and
vice versa. The goals of oil savings and GHG emissions reductions are
often closely correlated, but they are not the same. As the Supreme
Court pointed out in its Massachusetts decision, ``[EPA's] statutory
obligation is wholly independent of DOT's mandate to promote energy
efficiency'', and ``[t]he two obligations may overlap, but there is no
reason to think the two agencies cannot both administer their
obligations and yet avoid inconsistency.'' It is thus important for EPA
and NHTSA to maximize coordination between their programs so that both
the appropriate degree of GHG emissions reductions and oil savings are
cost-effectively achieved, given the agencies' respective statutory
authorities. EPA asks for comment on how EPA's and NHTSA's respective
statutory authorities can best be
[[Page 44443]]
coordinated under all of the alternatives presented in this section so
that inconsistency can be avoided.
ii. 2007 Approach
In this section, we present an overview of two alternative
approaches for setting potential light-duty vehicle GHG standards based
on our work during 2007 under EO 13432. As noted previously, in
response to Massachusetts v. EPA and as required by EO 13432, prior to
EISA's passage, we coordinated with NHTSA and the Department of Energy
in developing approaches and options for a comprehensive near-term
program under the CAA to reduce GHG emissions from cars and light-duty
trucks.\125\ Results from this effort are discussed below and in a
Technical Support Document, ``Evaluating Potential GHG Reduction
Programs for Light Vehicles'' (referred to as the ``Light-duty Vehicle
TSD'' in the remainder of this notice).
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\125\ E.O. 13432 called on the agencies to, ``undertake such
regulatory action, to the maximum extent permitted by law and
determined by the head of the agency to be practicable, jointly with
other agencies.''
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The Light-duty Vehicle TSD represents EPA's assessment during 2007
of how a light-duty vehicle program for GHG emissions reduction under
the CAA might be designed and implemented in keeping with program
parameters (e.g., time frame, program structure, and analytical tools)
developed with NHTSA prior to enactment of EISA. In addition, the
Light-duty Vehicle TSD assesses the magnitude of the contribution of
light-duty vehicles to U.S. GHG emissions. It also addresses both
tailpipe CO2 emissions as measured by EPA tests used for
purposes of determining compliance with CAFE standards, and control of
other vehicular GHG emissions. These other emissions are not accounted
for if the regulatory focus is solely on CO2, and involve
greenhouse gases that have higher global warming potentials than
CO2. These emissions, as well as air-conditioning-related
CO2, are not measured by the existing EPA test procedure for
determining compliance with CAFE standards, so that there is no overlap
with control of these emissions and CAFE standards if these emissions
are controlled under the CAA. As described in the section VI.B.1.d of
this advance notice, these emissions account for 10 percent of light-
duty vehicle GHG emissions on a CO2 equivalent basis. They
include emissions of CO2 from air conditioning use and
emissions of HFCs from air conditioning system leaks. Technologies
exist which can reduce these emissions on the order of 40 to 75% (for
air conditioning efficiency improvements and HFC leakage control,
respectively), at an initial cost to the consumer of less than $110.
This initial cost would be more than offset by the reduced maintenance
and fuel savings due to the new technology over the life of the
vehicle. We also considered standards which would prevent future
increases in N2O and methane.
Based on our work in 2007 pursuant to Executive Order 13432, EPA
developed two different analytical approaches which could be pursued
under the CAA for establishing light-duty vehicle CO2
standards. Both are attribute-based approaches, using vehicle footprint
(correlating roughly to vehicle size) as the attribute. Under either
approach, a CO2-footprint continuous function curve is
defined that establishes different CO2 emission targets for
each unique vehicle footprint. In general, the larger the vehicle
footprint, the higher (less stringent) the corresponding vehicle
CO2 emission target will be. Each manufacturer would have a
different overall fleet average CO2 emissions standard
depending on the distribution of footprint values for the vehicles it
sells. See Section VI.B.1.d and the Light-duty Vehicle TSD of this
Advance Notice for additional discussion of attribute-based standards
and other approaches (e.g., a non-attribute, or universal standard).
One approach was based on a fixed percentage reduction per year in
CO2 emissions. We examined a 4% per year reduction in CO2 emissions,
reflecting the projected reductions envisioned by the President in his
20-in-10 plan in the 2007 State of the Union address and subsequent
legislative proposals . The other approach identified CO2 standards
which an engineering optimization model projects as resulting in
maximum net benefits for society (hereafter referred to as the ``model-
optimized'' approach). That approach uses a computer model developed by
the Department of Transportation Volpe Center called the CAFE Effects
and Compliance Model (the ``Volpe Model''). The Volpe Model was
designed by DOT as an analytical tool which could evaluate potential
changes in the stringency and structure of the CAFE program, and was
first used in DOT's 2006 rulemaking establishing CAFE standards for
model years 2008-2011 light-trucks.126 127
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\126\ See 66 FR 17566--Average Fuel Economy Standards for Light
Trucks Model Years 2008-2011.
\127\ See ``CAFE Compliance and Effects Modeling System
Documentation, Draft, 1/26/07'' published by DOT, a copy of which is
available in the docket for this Advanced Notice.
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Using the fixed percentage reduction approach, projections
regarding technology feasibility, technology effectiveness, and lead-
time are critical as these are the most important factors in
determining whether and how the emission reductions required by a
future standard would be achieved. When using the model-optimized
approach, a larger set of inputs are critical, as each of these inputs
can have a significant impact in the model's projections as to the
future standard. These inputs include technology costs and
effectiveness, lead-time, appropriate discount rates, future fuel
prices, and the valuation of a number of externalities (e.g., criteria
air pollution improvements, GHG emission reductions, and energy
security). Although all of these factors are relevant under either
approach, there are major differences in the way this information is
used in each approach to develop and evaluate appropriate standards.
EPA believes both of these approaches for establishing fleet-wide
average CO2 emissions standards are permissible, conceptually, under
section 202(a) of the Act. Section 202(a)(2) requires EPA to give
consideration to ``the cost of compliance'' for use of the technology
projected to be used to achieve the standards (``requisite
technology''). The model-optimized approach can be used in appropriate
circumstances to satisfy this requirement.\128\ The fixed percent per
year approach is broadly consistent with EPA's traditional means of
setting standards for mobile sources, which identifies levels of
emissions reductions that are technologically feasible at reasonable
cost with marginal emissions reduction benefits which may far outweigh
marginal program costs, without adverse impacts on safety and with
positive impacts on energy utilization, and which address a societal
need for reductions.\129\ Comparing and contrasting these approaches
with the model-optimized approach is one way to evaluate options for
appropriate standards under section 202(a). We request comment on these
approaches and whether one or the other is a more appropriate method
for EPA to consider future light-duty GHG standards under section 202
of the CAA. We also request comment on other potential approaches
[[Page 44444]]
EPA should consider, including the approach described in section
VI.B.1.a.
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\128\ See Husqvarna AB v. EPA, 254 F. 3d 195, 200 (D.C. Cir.
2001) (EPA reasonably chose not to use marginal cost-benefit
analysis to analyze standards [under the technology-forcing section
213 of the Act], where section 213 does not mandate a specific
method of cost analysis).
\129\ See NRDC v. EPA, 655 F. 2d 318, 332-334 (D.C. Cir. 1981).
---------------------------------------------------------------------------
During 2007, EPA, DOT's Volpe Center, and NHTSA expended a major
technical effort to make a series of significant enhancements to the
Volpe Model by reviewing and updating, where possible, many of the
critical inputs to the Model (e.g., cost reduction learning curves, the
number and estimated costs and effectiveness of potential CO2/mpg
control technologies), as well as making updates to the Model itself.
This technical work notably improved the Volpe Model. However, the
Volpe Model was designed specifically to analyze potential changes to
NHTSA's CAFE program, and there remained several aspects of the
analysis we conducted that did not reflect differences between EPA and
NHTSA statutory authorities, and we were not able to address these
aspects in 2007. As a result, our analysis tended to underestimate the
benefits and/or overestimate the costs of light-duty vehicle CO2
standards that could be established under the CAA. We discuss these
issues below.
First, past NHTSA CAFE regulatory actions have generally had a
short-term focus (a 3-5 year timeframe), and NHTSA is currently
proposing more stringent CAFE standards for five model years, 2011-
2015, in keeping with its revised statutory authority, as discussed
above. In contrast, EPA's Title II authority permits EPA to set
standards over a significantly longer period of time as appropriate in
light of environmental goals, developing technologies, costs, and other
factors. A short-term focus can have a significant implication for the
technology assumptions which go into a standard-setting analysis.
In our 2007 analysis, we assumed limited technology innovation
beyond what is known today, and did not include several commercially
available or promising technologies such as advanced lightweight
materials for all vehicle classes (several auto companies have recently
announced plans for large future reductions in vehicle weight), plug-in
hybrids, optimized ethanol vehicles, and electric vehicles. To the
extent such innovations penetrate the market over the next 10 years,
the societal benefits and/or decreased societal cost of CO2 standards
will be greater than what we projected. A short-term focus may yield a
more reliable short-term projection because it relies on available
technology and is less prone to uncertainties involved in projecting
technological developments and other variables over a longer term. The
trade-off is that such a focus may not stimulate the development of
advanced, low GHG-emitting technologies. For the auto industry,
significant technological advances have historically required many
years and large amounts of capital.
Second, our 2007 analysis does not account for a series of
flexibilities that EPA may employ under the CAA to reduce compliance
costs, such as multi-year strategic planning, and credit trading and
banking. As mentioned previously, EPA has used many of these
flexibilities in its existing mobile source programs, and we would
attempt to include such flexibilities in any future EPA GHG standards
analysis.
Third, under the CAA manufacturers traditionally choose to comply
instead of non-comply, since they cannot sell new vehicles unless they
receive a certificate of conformity from EPA that is based on a
demonstration of compliance. Under the penalty provisions of the CAA,
light-duty vehicle manufacturers may not pay a civil penalty or a fine
for non-compliance with the standards and still introduce their
vehicles into commerce. In our 2007 analysis, we assumed a number of
manufacturers would pay fees rather than comply with the analyzed
standards. This assumption resulted in a lower compliance cost
estimation and lower GHG benefits.
Fourth, in our 2007 analysis, we did not reflect the difference in
carbon content between gasoline and diesel fuel. This difference has
not been germane to NHTSA's setting of CAFE standards, but it is
important to the GHG emissions reductions that different standards can
achieve. Therefore, our Light-duty Vehicle TSD analysis did not account
for the higher CO2 emissions which result from the use of a gallon of
diesel fuel compared to a gallon of gasoline (diesel fuel has a higher
carbon content than gasoline fuel), and we would address this issue in
any future EPA GHG standards analysis.
As noted previously, our 2007 analysis relied upon the use of key
inputs concerning predictions of future technologies and fuel prices
and valuation of a number of externalities, such as the benefits of
climate change mitigation and improvements in energy security. The
information used for these key inputs can have a significant effect on
projections regarding the costs of a standard based on a fixed
percentage reduction or the level of a model-optimized standard. In the
analyses we present in this notice, we have generally taken an approach
similar to NHTSA's, although we have also used alternative values in
some cases to illustrate the impact from different, alternative values.
For example, to account for large uncertainties regarding the magnitude
of the marginal benefits of GHG emission reductions, we looked at
alternative approaches to valuing those benefits and developed a range
of values to capture the uncertainties. (See section III.G in this ANPR
for a discussion of GHG benefits issues and marginal benefits
estimates.)
Another key, but uncertain, input is the future price of fuel.
Important for any analysis of fuel savings over a long time frame is an
adequate projection of future oil prices. Typically, EPA relies on
Annual Energy Outlook (AEO) forecasts made by the Energy Information
Agency. However, AEO forecasts in past decades have at times over-
predicted the price of oil, and more recently, with the rapid increase
in oil prices over the past several years, AEO forecasts have
consistently under-predicted near-term oil prices. In the Light-duty
Vehicle TSD analysis, we used the Energy Information Administration's
2007 AEO projections for future oil and fuel prices, which correspond
to a projected retail gasoline price of slightly more than $2 per
gallon in the 2010-2020 time period, while current gasoline fuel prices
are on the order of $3.50 to $3.80 per gallon or more. Since our
analyses are sensitive to the oil price used, this raised concerns
regarding the ability to accurately estimate fuel savings. In addition,
when using a model-optimized approach, this can have a significant
impact on the appropriate standard predicted by the model. For our
updated analysis (described in more detail below), however, we have
continued to use the AEO2007 forecasted fuel prices. The ``baseline''
for our Light-duty Vehicle TSD and updated analysis reflects
projections from the automotive manufacturers regarding future product
offerings which were developed by the manufacturers in late 2006
through the spring of 2007. The AEO2007 fuel price projections are more
representative of the fuel prices considered by the manufacturers when
they developed the baseline future product offerings used as an input
in the analysis.
This approach has certain limitations. Given the large increases in
fuel price in the past year, most major automotive companies have since
announced major changes to their future product offerings, and these
changes are not represented in our analysis. However, the projection of
future product offerings (model mix and sales volume) is static in the
analysis we have performed, both for the baseline (projections with no
new standards) and in the control scenarios (projections
[[Page 44445]]
with the impact of new standards). Our analysis to date does not
account for a range of possible consumer and automaker responses to
higher fuel prices, higher vehicle prices and attribute-based standards
that could affect manufacturer market share, car/truck market share, or
vehicle model mix changes. EPA has initiated work with Resources for
the Future to develop a consumer choice economic model which may allow
us to examine the impact of consumer choice and varying fuel prices
when analyzing potential standard scenarios in the future, and to more
realistically estimate a future baseline. Higher fuel prices than those
predicted in AEO2007 can certainly have a large impact on the projected
costs and benefits of future light-duty GHG limits, and we will
continue to examine this issue as part of our on going work.
We ask for comment on the relative importance of, and how best to
address, the various issues we have highlighted with our analysis of
potential light-duty vehicle GHG standards performed to date. In
particular, we seek comment on the feasibility and utility of
incorporating into the regulations themselves a mechanism for
correcting mistaken future projections or accomplishing the same
through a periodic review of the regulations.
We now summarize the results from our 2007 analysis. Since 2007 we
have updated this analysis to address several of the issues noted
above, in order to evaluate the impact of these issues. EPA requests
comment on the two approaches we examined for setting standards, and
seeks input on alternative approaches, including the approach described
in section VI.B.1.a.
In Table VI-1 we present weighted combined car and truck standards
we developed based on efforts to update the work we did in 2007 to
address some of the issues identified above. We show the results from
our 2007 analysis, as well as the updated results when we utilize the
same methodology for the 4% per year approach, but attempt to address a
number of the issues discussed above. As part of addressing these
issues, we have extended the time frame for our analysis to 2020, while
our Light-duty Vehicle TSD analysis was limited to 2018. Our updated
analysis results are documented in a separate technical memorandum
available in the public docket for this Advance Notice.\130\
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\130\ See EPA Technical Memorandum, ``Documentation of Updated
Light-duty Vehicle GHG Scenarios.''
Table VI-1--Projected Vehicle CO2 (Gram/Mile Units) and MPG Standards (MPG Units in Square Brackets), Including
A/C CO2 Limits
----------------------------------------------------------------------------------------------------------------
Light-duty vehicle TSD analysis Updated 2008
------------------------------------ analysis
Year -----------------
4% per year Model-Optimized 4% per year
----------------------------------------------------------------------------------------------------------------
2011...................................................... 338 [26.3] 334 [26.6] 335 [26.5]
2012...................................................... 323 [27.5] 317 [28.0] 321 [27.7]
2013...................................................... 309 [28.8] 295 [30.1] 307 [28.9]
2014...................................................... 296 [30.0] 287 [31.0] 293 [30.3]
2015...................................................... 285 [31.2] 281 [31.6] 283 [31.4]
2016...................................................... 274 [32.4] 275 [32.3] 272 [32.7]
2017...................................................... 263 [33.8] 270 [32.9] 261 [34.0]
2018...................................................... 253 [35.1] 266 [33.4] 251 [35.4]
2019...................................................... n/a n/a 241 [36.9]
2020...................................................... n/a n/a 232 [38.3]
----------------------------------------------------------------------------------------------------------------
Compared to the Light-duty Vehicle TSD analysis, we have attempted
in the updated analysis to address for potential CAA purposes several,
but not all, of the noted issues, and as such we continue to believe
that the results of this analysis are conservative--that is, they tend
to overestimate the costs and/or underestimate the benefits. We have
included the following updates:
--Inclusion of plug-in hybrids as a viable technology beginning in
2012;
--Consideration of multi-year planning cycles available to
manufacturers;
--Consideration of CO2 trading between car and truck fleets
within the same manufacturer;
--Assumption that all major manufacturers would comply with the
standards rather than paying a monetary penalty;
--Correction of the CO2 reduction effectiveness for diesel
technology.
Our updated analysis does not address all of the issues we
discussed previously. For example, we have not considered the
widespread use of lightweight materials, further improvements in the
CO2 reduction effectiveness of existing technologies,
potential for cost reductions beyond our 2007 analysis, and the
potential for new technologies. We also have not addressed the
potential changes in vehicle market shifts that may occur in the future
in response to new standards, new consumer preferences, or the
potential for higher fuel prices. Recent trends in the U.S. auto
industry indicate there may be a major shift occurring in consumer
demand away from light-duty trucks and SUVs and towards smaller
passenger cars.\131\ Such potential trends are not captured in our
analysis and they could have a first-order impact on the results.
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\131\ See ``As Gas Costs Soar, Buyers Are Flocking to Small
Cars'', New York Times, May 2, 2008, page A1.
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Table VI-2 summarizes the most important societal and consumer
impacts of the standards we have analyzed.
[[Page 44446]]
Table VI-2--Summary of Societal and Consumer Impacts From Potential Light-Duty Vehicle GHG Standards
[2006 $s, AEO2007 oil prices]
----------------------------------------------------------------------------------------------------------------
Light-duty vehicle TSD analysis * Updated 2008 analysis
------------------------------------------------------------------------------
4% per year Model-Optimized 4% per year
----------------------------------------------------------------------------------------------------------------
Societal Impacts
----------------------------------------------------------------------------------------------------------------
GHG Reductions (MMTCO2 equivalent 378...................... 343..................... 635
in 2040).
Fuel Savings (million bpd in 2.3...................... 2.0..................... 4.2
2040).
Net Societal Benefits in 2040 $54 + B.................. $54 + B................. $130 + B
(Billion $s) **.
Net Present Value of Net Benefits
through 2040 (Billion $s): **
3% DR........................ $320 + B................. $390 + B................ $830 + B
7% DR........................ $120 + B................. $160 + B................ $340 + B
----------------------------------------------------------------------------------------------------------------
Consumer Impacts
----------------------------------------------------------------------------------------------------------------
Per-Vehicle Costs:
2015......................... $736..................... $672.................... $565
2018......................... $1,567................... $995.................... $1,380
2020......................... n/a...................... n/a..................... $1,924
Payback Period: ***
3% DR........................ 6.2 yr. (2018)........... 4.8 yr. (2018).......... 6.0 yrs. (2020)
7% DR........................ 8.9 yr. (2018)........... 6.0 yr. (2018).......... 8.7 yrs. (2020)
Lifetime Monetary Impact: ***
3% DR........................ $2,753 (2018)............ $2,245 (2018)........... $1,630 (2020)
7% DR........................ $1,850 (2018)............ $1,508 (2018)........... $437 (2020)
----------------------------------------------------------------------------------------------------------------
* The Light-duty Vehicle TSD Societal Impacts are based on new stds. for 2011-2018 for cars and 2012-2017 for
trucks, while the updated analysis is based on new stds. for 2011-2020 for cars and trucks.
** The identified ``B'' = unquantified benefits, for example, we have not quantified the co-pollutant impacts
(PM, ozone, and air toxics), and does not include a monetized value for the social cost of carbon. Societal
benefits exclude all fuel taxes because they represent transfer payments. In addition, for the updated
analysis, we have not included the increased costs nor the GHG emissions of electricity associated with the
use of plug-in electric hybrid vehicles. We have also not quantified the costs and/or benefits associated with
changes in consumer preferences for new vehicles.
*** The payback period and lifetime monetary impact values for Light-duty Vehicle TSD analysis is for the
average 2018 vehicle, and 2020 for the updated analysis.
Given the current uncertainty regarding the social cost of carbon,
Table VI-2 does not include a monetized value for the reduction in GHG
emissions. We present here a number of different values and indicate
what impact they would have on the net social benefits for our updated
analysis. Presentation of these values does not represent, and should
not be interpreted to represent, any determination by EPA as to what
the social cost of carbon should be for purposes of calculating
benefits pursuant to the Clean Air Act.
We have analyzed the valuation for the social cost of carbon of $40
per metric ton (for emission changes in year 2007, in 2006 dollars,
grown at a rate of 3% per year) that reflects potential global,
including domestic, benefits of climate change mitigation. This
valuation (which is the mean value from a meta analysis of global
marginal benefits estimates for a 3% discount rate discussed in section
III.G. of this Advance Notice) would result in an increase in the 2040
monetized benefits for the 2008 updated analysis of $67 billion. Given
the nature of the investment in GHG reductions, we believe that values
associated with lower discount rates should also be considered. For
example, for a 2% discount rate for year 2007, the mean value from the
meta analysis is $68 per metric ton. This valuation would result in an
increase in the 2040 monetized benefits for the 2008 updated analysis
of $110 billion.
As discussed in section III.G, another approach to developing a
value for the social cost of carbon is to consider only the domestic
benefits of climate change mitigation. The two approaches--use of
domestic or global estimates--are discussed in section III.G of this
notice. There is considerable uncertainty regarding the valuation of
the social cost of carbon, and in future analyses EPA would likely
utilize a range of values (see section III.G).\132\ Furthermore,
current estimates are incomplete and omit a number of impact categories
such that the IPCC has concluded that current estimates of the social
cost of carbon are very likely to underestimate the benefits of GHG
reductions.
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\132\ Ranges better reflect the available scientific information
and the uncertainties in marginal benefits estimates, and the fact
that there are estimates well above the means. The corresponding
ranges for the 2007 mean estimates discussed above are the
following: For the meta-analysis global marginal benefits estimates,
the range is $-4 to $106 per metric ton CO2 based on a 3
percent discount rate, or $-3 to $159 per metric ton CO2
based on a 2 percent discount rate. The preliminary domestic ranges
derived from a single model are $0 to $5 per metric ton
CO2 based on a 3 percent discount rate, and $0 to $16 per
metric ton CO2 based on a 2 percent discount rate.
---------------------------------------------------------------------------
This Advance Notice asks for comment on the appropriate value or
range of values to use to quantify the benefits of GHG emission
reductions, including the use of a global value. While OMB Guidance
allows for consideration of international effects, it also suggests
that the Agency consider domestic benefits in regulatory analysis.
Section III.G.4 discusses very preliminary ranges for U.S. domestic
estimates with means of $1 and $4 per metric ton in 2007, depending on
the discount rate. These valuations ($1 and $4 per metric ton in 2007)
would result in an increase in the 2040 monetized benefits for the 2008
updated analysis of $1.7-6.7 billion. In its recent proposed
rulemaking, NHTSA utilized $7 per metric ton as the initial value for
U.S. CO2 emissions in 2011.
Table VI-2 shows the impact of addressing a number of the issues
noted
[[Page 44447]]
above. With respect to per-vehicle costs, the updated 4% per year
approach shows a $171 per vehicle lower cost in 2015 and a $187 per
vehicle lower cost in 2018 compared to our 2007 analysis, for a
slightly more stringent standard in both cases. This is primarily due
to the impact of including multi-year planning and car-truck trading
within a given manufacturer.
The estimated CO2 reductions in 2040 from the updated
analysis are much larger than the 2007 analysis (by nearly a factor of
2). This occurs primarily because we have addressed the diesel
CO2 issue noted above, and because we have extended the time
frame for the analyzed standards to 2020. The estimated fuel savings
are also larger primarily due to the additional years we extended the
4% per year standard to. The estimated monetized net benefits for the
updated analysis are also significantly higher than our previous
estimates. This is a result of a combination of factors: lower
estimates for the increased vehicle costs due to multi-year planning
and within manufacturer car-truck trading; and the extension of the
analyzed standards to 2020.
Table VI-2 also provides estimates of ``payback period'' and
``lifetime monetary impact''. The payback period is an estimate of how
long it will take for the purchaser of the average new vehicle to
break-even; that is, where the increased vehicle costs is off-set by
the fuel savings. Our updated analysis shows for the average 2020
vehicle that period of time ranges from 6.0 to 8.7 years (depending
upon the assumed discount rate). The lifetime monetary impact provides
an estimate of the costs to the consumer who owns a vehicle for the
vehicle's entire life. The lifetime monetary impact is simply the
difference between the higher initial vehicle cost increase and the
lifetime, discounted fuel savings. Our updated analysis indicates the
lifetime, discounted fuel savings will exceed the initial cost increase
substantially. As shown in the table, the positive lifetime monetary
impact ranges from about $440 to $1,630 per vehicle (depending upon the
assumed discount rate). Section VI.C.2 of the Light-duty Vehicle TSD
discusses possible explanations for why consumers do not necessarily
factor in these fuel savings in making car-buying decisions.
Our updated analysis projects the 2020 CO2 limit of 232
gram/mile (38.3 mpg) shown in Table VI-1, could be achieved with about
33% of the new vehicle fleet in 2020 using diesel engines and full
hybrid systems (including plug-in electric hybrid vehicles). Higher
penetrations of these and other advanced technologies (including for
example the wide-spread application of light-weight materials) could
result in a much greater GHG reductions.
The results of our updated analysis indicate that:
--Technology is readily available to achieve significant reductions
in light-duty vehicle GHG emissions between now and 2020 (and beyond);
--The benefits of these new standards far outweigh their costs;
--Owners of vehicles complying with the new standard will recoup
their increased vehicle costs within 6-9 years, and;
--New standards would result in substantial reductions in GHGs.
We request comment on all aspects of this analysis, the
appropriateness of the two approaches described, and the inputs and the
tools that we utilized in performing the assessment, when considering
the setting of light-duty vehicle GHG standards under the CAA. We also
request comment on the alternative approach for establishing light-duty
vehicle GHG standards described in section VI.B.1.a of this advance
notice.
c. Technologies Available To Reduce Light-Duty Vehicle GHGs
In this section we discuss a range of technologies that can be used
to significantly reduce GHG emissions from cars and light trucks. We
discuss EPA's assessment of the availability of these technologies,
their readiness for introduction into the market, estimates of their
cost, and estimates of their GHG emission reduction potential. We
request comment on all aspects of our current assessment, including
supporting data regarding technology costs and effectiveness.
In the past year EPA undertook a comprehensive review of
information in the literature regarding GHG-reducing technologies
available for cars and light trucks. In addition, we reviewed
confidential business information from the majority of the major
automotive companies, and we met with a large number of the automotive
companies as well as global automotive technology suppliers regarding
the costs and effectiveness of current and future GHG-reducing
technologies. EPA also worked with an internationally recognized
automotive technology firm to perform a detailed assessment of the GHG
reduction effectiveness of a number of advanced automotive
technologies.\133\
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\133\ See ``A Study of Potential Effectiveness of Carbon Dioxide
Reducing Vehicle Technologies'', Ricardo, Inc., EPA Report 420-R-08-
004a, June 2008.
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EPA recently published a Staff Technical Report describing the
results of our assessment, and we provided this report to the National
Academy of Sciences Committee on the Assessment of Technologies for
Improving Light-Duty Vehicle Fuel Economy.\134\ This Staff Technical
Report details our estimates of the costs and GHG reduction potential
of more than 40 technologies applicable to light-duty vehicles, and is
one of the key inputs to our analysis of potential future standards
presented in Section VI.B.1.b. These technologies span a large range of
effectiveness and technical availability, from technologies as simple
as reduced rolling resistance tires (offering a 1-2% reduction in
vehicle CO2 emissions) to advanced powertrain systems like
gasoline and diesel hybrids, plug-in electric hybrids, and full
electric vehicles (offering up to a 100% reduction in vehicle
CO2 emissions).
---------------------------------------------------------------------------
\134\ See ``EPA Staff Technical Report: Cost and Effectiveness
Estimates of Technologies Used to Reduce Light-duty Vehicle Carbon
Dioxide Emissions'', EPA Report 420-R-08-008, March 2008.
---------------------------------------------------------------------------
The majority of the technologies we investigated are in production
and available on vehicles today, either in the United States, Japan or
Europe. Over the past year, most of the major automotive companies or
suppliers have announced the introduction of new technologies to the
U.S. market. The following are some recent examples:
--Ford's new ``EcoBoost'' turbocharged, down-sized direct-injection
gasoline engines;
--Honda's new 2009 global gasoline hybrid and 2009 advanced diesel
powertrain;
--Toyota and General Motors plans for gasoline plug-in hybrid systems
within the next two to three years;
--General Motors breakthroughs in lower-cost advanced diesel engines;
--Nissan's 2010 introduction of a clean diesel passenger car;
--Chrysler's widespread use of dual-clutch automated manual
transmissions beginning in 2009; and,
--Mercedes' new product offerings for clean diesel applications as well
as diesel-electric hybrid technologies.
We also evaluated the costs and potential GHG emissions reductions
from some of the advanced systems not currently in production or that
are only available in specialty niche vehicles, such as gasoline
homogeneous charge compression ignition engines, camless valve
actuation systems, hydraulic hybrid powertrains, and full electric
[[Page 44448]]
vehicles. These technologies are described in detail, along with our
estimates for costs and GHG reduction potential, in our Staff Technical
Report.
An additional area where we see opportunities for significant
CO2 emissions reduction is in material weight substitution.
The substitution of traditional vehicle materials (e.g., steel, glass)
with lighter materials (e.g., aluminum, plastic composites) can provide
substantial reductions in CO2 emissions while maintaining or
enhancing vehicle size, comfort, and safety attributes. Several
companies have recently announced plans to utilize weight reduction as
a means to improve vehicle efficiency while meeting all applicable
safety standards.\135\ We request data and comment on the extent to
which material substitution should be considered as a means to reduce
GHG emissions, and information on the costs and potential scope of
material substitution over the next 5 to 20 years.
---------------------------------------------------------------------------
\135\ See Automotive News, February 11, 2008, in which Daimler-
Benz CEO states that Mercedes-Benz will reduce the weight of all new
vehicle models by 5%, and Ford announces every model will lose
between 250 and 750 pounds.
---------------------------------------------------------------------------
Finally, we note that in the past 30 years there has been a steady,
nearly linear increase in the performance of cars and light trucks. We
estimate that the average new vehicle sold in 2007 had a 0-60 miles/
hour acceleration time of 9.6 seconds--compared to 14.1 seconds in
1975.\136\ If this historic trend continues, by 2020 the average 0-60
acceleration for the combined new car and truck fleet will be less than
8 seconds. During the past 20 years, this increase in acceleration has
been accompanied by a gradual increase in vehicle weight. It is
generally accepted that over the past 20 years, while fuel economy for
the light-duty fleet has changed very little, the fuel efficiency has
in fact improved but has largely been used to enable increases in both
the weight and the performance of vehicles. We request comment on how
we should consider the potential for future changes in vehicle weight
and performance (e.g., acceleration time) in assessing the costs and
benefits of standards for reducing GHG emissions.
---------------------------------------------------------------------------
\136\ See ``Light-Duty Automotive Technology and Fuel Economy
Trends: 1995-2007'', EPA Report EPA420-R-07-008, September 2007.
---------------------------------------------------------------------------
d. Potential Options for Reducing HFCs, N2O, CH4,
and Air Conditioning-Related CO2
As described above, in addition to fleet average and in-use
CO2 standards, EPA has analyzed how new control measures
might be developed for other car and light truck emissions that have
global warming impacts: air conditioning (``A/C'')-related emissions of
HFCs and CO2, and tailpipe emissions of nitrous oxide
(N2O), and methane (CH4). Under CAA section
202(a), EPA may regulate these emissions if a positive endangerment
finding is made for the relevant GHGs. Together, these emissions
account for about 10% of greenhouse gases from light-duty cars and
trucks (on a CO2 equivalent basis). The direct HFC emissions
account for 4.3%, while the A/C CO2 emissions are 3.1%.
N2O and CH4 account for 2.7% and 0.2%
respectively. With regard to air conditioning-related emissions,
significant opportunity exists to reduce HFC emissions from refrigerant
leakage and CO2 from A/C induced engine loads, and EPA has
considered potential standards to reduce these emissions. In addition,
EPA has considered potential limits for N2O and
CH4 emissions that could apply to both cars and light trucks
that would limit future growth of these emissions.
i. Potential Controls for Air Conditioning-Related GHG Emissions
Over 95% of the new cars and light trucks in the U.S. are equipped
with A/C systems. There are two mechanisms by which A/C systems
contribute to the emissions of GHGs. The first is through direct
leakage of the refrigerant (currently the HFC compound R134a) into the
air. Based on the higher GWP of HFCs, a small leakage of the
refrigerant has a greater global warming impact than a similar amount
of emissions of other mobile source GHGs. Leakage can occur slowly
through seals, gaskets, hose permeation and even small failures in the
containment of the refrigerant, or more quickly through rapid component
deterioration, vehicle accidents or during maintenance and end-of-life
vehicle scrappage (especially when refrigerant capture and recycling
programs are less efficient). The leakage emissions can be reduced
through the choice of leak-tight, durable components, or the global
warming impact of leakage emissions can be addressed through the
implementation of an alternative refrigerant. Refrigerant emissions
during maintenance and at the end of the vehicle's life (as well as
emissions during the initial charging of the system with refrigerant)
are already addressed by the CAA Title VI stratospheric ozone
protection program, as described in section VIII of this notice.\137\
---------------------------------------------------------------------------
\137\ The second mechanism by which vehicle A/C systems
contribute to GHG emissions is through the consumption of excess
fuel when the A/C system is running, and from carrying around the
weight of the A/C system hardware all-year round. This excess fuel
required to run the system is converted into CO2 by the
engine during combustion. This excess CO2 from A/C
operation can thus be reduced by increasing the efficiency of the
overall vehicle-A/C system.
---------------------------------------------------------------------------
EPA's analysis indicates that together, these A/C-related emissions
account for about 7.5% of the GHG emissions from cars and light trucks.
EPA considered standards designed to reduce direct leakage emissions by
75% and to reduce the incremental increase of A/C related
CO2 emissions by 40% in model year 2015 vehicles, phasing in
starting in model year 2012. It is appropriate to separate the
discussion of these two categories of A/C-related emissions because of
the fundamental differences in the emission mechanisms and the methods
of emission control. Refrigerant leakage control is akin in many
respects to past EPA fuel evaporation control programs in that
containment of a fluid is the key control feature, while efficiency
improvements are more similar to the vehicle-based control of
CO2 in that they would be achieved through specific hardware
and controls.
The Memo to the Docket, ``Light-Duty Vehicle Hydrofluorocarbon,
Nitrous Oxide, Methane, and Air Conditioning-Related Carbon Dioxide
Emissions'' provides a more detailed discussion of the air
conditioning-related GHG emissions, both refrigerant leakage and
CO2 emissions from A/C use, as well as potential test
procedure and compliance approaches that have been considered by EPA.
ii. Feasibility of Potential A/C Reduction Approaches
EPA believes that significant reductions in A/C HFC leakage and A/C
CO2 emissions would be readily technically feasible and
highly cost effective. The types of technologies and methods that
manufacturers could use to reduce both types of A/C emissions are
commercially available and used today in many models of U.S. cars and
light trucks. For example, materials and components that reduce leakage
as well as electronic monitoring systems have been used on various
vehicles in recent years. Regarding A/C CO2 reduction, such
technologies as variable-displacement compressors and their controls
are also in use today. Although manufacturers might find that more
advanced technologies, like alternate refrigerants, become economically
attractive in the coming years, EPA believes that currently available
technologies and systems designs would
[[Page 44449]]
be sufficient to meet potential limits being assessed by EPA.
iii. Potential Impacts of Requiring Improved A/C Systems
(1) Emission Reductions for Improved A/C Systems
Manufacturers producing cars and light trucks for the U.S. market
have not historically had economic or regulatory incentives or
requirements to reduce refrigerant leakage and CO2 from A/C
systems. As a result, there is an opportunity for significant
reductions in both of these types of emissions. With potential
standards like the ones considered above, EPA has estimated that
reductions in HFC refrigerant leakage, converted to CO2
equivalent emissions, and added to projected A/C CO2
reductions, these limits would result in an average per-vehicle
reduction in CO2-equivalent emissions of about 4.7%
(excluding CH4 and N2O from the baseline). This
reduction is equivalent to about 7.5% of light vehicle CO2-
equivalent emissions, or about 2 tons per year.
(2) Potential Costs for Improved A/C Systems
Although the technologies and system designs EPA expects could be
used to comply with the two A/C related standards being considered are
currently available, not all manufacturers are using them on all
vehicles. Thus, the industry would necessarily incur some costs to
apply these technologies more broadly across the car and truck fleet.
EPA estimates that the cost of meeting the full HFC leakage standard it
is considering would average about $40 per vehicle (retail price
equivalent or RPE) and that the cost of meeting the A/C CO2
standard would be about $70 per vehicle (RPE). At the same time,
complying with such limits would result in very significant savings in
fuel costs (as system efficiency improves) and in A/C-related
maintenance costs (as more durable systems result in less frequent
repairs). In fact, EPA's analysis shows that these cost savings would
significantly exceed projected retail costs of the potential A/C
standards, more than offsetting the costs of both types of A/C system
improvements.\138\
---------------------------------------------------------------------------
\138\ See Appendix 3.B. of the EPA Technical Memorandum
``Documentation of Updated Light-duty Vehicle GHG Scenarios'' for a
detailed discussion of these costs estimates.
---------------------------------------------------------------------------
iv. Potential Interaction With Title VI Refrigerant Regulations
As described further in Section VIII of this notice, Title VI of
the CAA deals with the protection of stratospheric ozone. Section 608
of the Act establishes a comprehensive program to limit emissions of
certain ozone-depleting substances (ODS) from appliances and
refrigeration. The rules promulgated under section 608 regulate the use
and disposal of such substances during the service, repair or disposal
of appliances and industrial process refrigeration. In addition,
section 608 and the regulations promulgated under it prohibit the
knowingly venting or releasing ODS during the course of maintaining,
servicing, repairing or disposing of an appliance or industrial process
refrigeration equipment. Section 609 governs the servicing of motor
vehicle air conditioners (MVACs). The regulations promulgated under
section 609 (40 CFR part 82, subpart B) establish standards and
requirements regarding the servicing of MVACs. These regulations
include establishing standards for equipment that recovers and recycles
or only recovers refrigerant (CFC-12, HFC 134a, and for blends only
recovers) from MVACs; requiring technician training and certification
by an EPA-approved organization; establishing recordkeeping
requirements; imposing sales restrictions; and prohibiting the venting
of refrigerants.
Another Title VI provision that could interact with potential Title
II motor vehicle regulation of GHGs is section 612, which requires EPA
to review substitutes for ozone depleting substances and to consider
whether such substitutes would cause an adverse effect to human health
or the environment as compared with other substitutes that are
currently or potentially available. EPA promulgated regulations for
this program in 1992 and those regulations are located at 40 CFR part
82, subpart G. When reviewing substitutes, in addition to finding them
acceptable or unacceptable, EPA may also find them acceptable so long
as the user meets certain use conditions. For example, all motor
vehicle air conditioning system must have unique fittings and a
uniquely colored label for the refrigerant being used in the system.
EPA views the potential program analyzed here as complementing
these Title VI programs, and not conflicting with them. The potential
standards would apply at pre-production when manufacturers demonstrate
that they are utilizing requisite equipment (or utilizing other means
designated in the potential program) to achieve the suggested 75% leak
reduction requirement. These requirements would dovetail with the Title
VI section 609 standards which apply to maintenance events, and to end-
of-vehicle life disposal. In fact, as noted, a benefit of a program is
that there could be fewer and less impactive maintenance events for
MVACs, since there would be less leakage. In addition, although the
suggested standards would also apply in-use, the means of enforcement
should not conflict (or overlap) with the Title VI section 609
standards. EPA also believes the menu of leak control technologies
described above would complement the section 612 requirements because
these control technologies would help ensure that 134a (or other
refrigerants) would be used in a manner that would further minimize
potential adverse effects on human health and the environment.
v. Potential Controls for Nitrous Oxide Emissions
Nitrous oxide, or N2O, is emitted from gasoline and
diesel car and light truck tailpipes and is generated during specific
catalyst warm-up temperature conditions conducive to N2O
formation. While N2O emissions from current Tier 2 vehicles
with conventional three-way catalysts are relatively low on a mass
basis (e.g., around 0.005 g/mi), N2O does have a high GWP of
310. N2O is a more significant concern with diesel vehicles
(and potentially future gasoline lean-burn engines) equipped with
advanced catalytic NOX emissions control systems. These
systems can (but need not) be designed in a way that emphasizes
efficient NOX control while allowing the formation of
significant quantities of N2O. Excess oxygen present in the
exhaust during lean-burn conditions in diesel (or lean-burn gasoline)
engines equipped with these advanced systems can favor N2O
formation if catalyst temperatures are not carefully controlled.
Without specific attention to controlling N2O emissions in
the development of such new NOX control systems, vehicles
could have N2O emissions many times greater than are emitted
by current gasoline vehicles.
EPA has considered a ``cap'' approach to controlling N2O
emissions would not require any new technology for current Tier 2
gasoline vehicles, but would limit any increases in N2O
emissions that might otherwise occur with future technology vehicles.
Such an approach would have minimal feasibility, emissions, or cost
impacts.
The Memo to the Docket, ``Light-Duty Vehicle Hydrofluorocarbon,
Nitrous Oxide, Methane, and Air Conditioning-Related Carbon Dioxide
Emissions'' has more in-depth discussion of car and light truck
N2O emissions, as well as of potential test procedure and
compliance
[[Page 44450]]
approaches that have been considered by EPA.
vi. Potential Controls for Methane Emissions
Methane, or CH4, is emitted from gasoline and diesel car
and light truck tailpipes and is one of the family of hydrocarbon
compounds generated in the engine as a by-product of gasoline and
diesel fuel combustion. As such, levels of CH4 emissions
have been somewhat controlled by the lower hydrocarbon emissions
standards that have been phased in since the early 1970s. Current
CH4 emissions from Tier 2 gasoline vehicles are relatively
low (about 0.017 g/mi on average), and CH4 has a global
warming potential of 23. The one technology where much higher
CH4 emissions could be of concern would be natural gas-
fueled vehicles, since CH4 is the primary constituent of
natural gas fuel and would be the largest component of unburned fuel
emissions.
As with N2O, EPA has considered a ``cap'' CH4
emissions standard approach that would not require any new technology
for current Tier 2 gasoline vehicles, but would limit any increases in
CH4 emissions that might otherwise occur with future natural
gas vehicles. Such an approach would have no significant feasibility,
emissions, or cost impacts.
The Memo to the Docket, ``Light-Duty Vehicle Hydrofluorocarbon,
Nitrous Oxide, Methane, and Air Conditioning-Related Carbon Dioxide
Emissions'' has greater discussion of car and light truck
CH4 emissions.
e. Specific Programmatic Design Issues
As discussed above, Title II of the CAA provides the Agency with
both direction and flexibility in designing and implementing a GHG
control program. Consistent with existing motor vehicle programs, the
Agency would need to develop appropriate mechanisms to address issues
such as certification of new motor vehicles to applicable standards,
ensuring the emissions requirements are being met throughout the
designated useful life of the vehicle, and appropriate compliance
mechanisms if the requirements are not being met. Domestic and imported
vehicles and engines subject to emissions standards must obtain a
certificate of conformity in order to be sold in the U.S. marketplace.
EPA has utilized a wide range of program design tools and compliance
mechanisms to help address the large variation of market participants
yet still provide a level regulatory playing field for these parties.
As part of the design effort for a GHG program, it would be appropriate
to take into account these flexibilities as well as existing
requirements that the automobile and engine industries already face in
order to help reduce compliance costs if possible while still
maintaining our overall environmental objectives. However, given the
nature of GHG control, it would also be appropriate to determine if new
design structures and compliance measures might be more effective.
The Light-duty Vehicle TSD includes a discussion of a wide range of
programmatic and technical issues and presents potential approaches
that would address these issues in the design of a comprehensive near-
term light-duty vehicle GHG control program. We highlight here a few of
these issues, and point the reader to the Light-duty Vehicle TSD for
additional detail. Among the issues discussed in the Light-duty Vehicle
TSD are several which could differ significantly under a different
approach. EPA specifically requests comment on these issues:
--Potential classification approaches for light-duty vehicles (e.g.,
treating cars and light trucks in a single averaging class or separate,
and the potential classification of vehicle types as either a passenger
car or a light truck);
--How any classification approaches would relate to NHTSA's regulatory
approach;
--The significant flexibilities allowed under Title II which we utilize
for existing criteria pollutant standards for light-duty vehicles,
including detailed concepts for a GHG averaging, banking, and trading
program;
--Potential light-duty GHG compliance program concepts.
As we have considered various potential light-duty vehicle GHG
approaches, significant thought and stakeholder outreach went into
designing a potential system for determining compliance that would meet
Agency and industry needs and goals. The Light-duty Vehicle TSD
presents a compliance structure for vehicle GHG control that adheres to
CAA requirements and at the same time is compatible with the existing
CAFE program. However, this is not the only approach to compliance, as
is discussed in the Light-duty Vehicle TSD. Other compliance approaches
could also be considered, each with their own advantages. For example,
a GHG compliance program patterned after the Tier 2 light duty vehicles
emissions program offers an approach that is more similar to the
existing compliance structure for other pollutants.
We discuss below in detail three specific issues regarding
potential future light-duty vehicle GHG programmatic issues: universal
and attribute-based standards; environmental backstop standards; and
tailpipe CO2 test cycles.
i. Universal and Attribute-Based Vehicle GHG Standard Approaches
A specific programmatic issue that EPA would like to highlight here
is the use of attribute-based standards for vehicle GHG standards, and
the concept of an environmental backstop to accompany an attribute-
based standard promulgated under the CAA, in order to assure that GHG
emission reductions which are feasible at reasonable cost under section
202(a) are not foregone. A CAA program for reducing GHG emissions from
light vehicles could set the average emissions standards for
manufacturers in one of two fundamental ways. A ``universal'' GHG
standard would apply a single numerical requirement to each
manufacturer, to be met on average across its entire light-duty vehicle
production. One potential consequence of the universal approach is that
the costs of compliance may fall unevenly on different manufacturers.
That is, complying with a single standard would be more difficult for
companies with current product mixes weighted relatively heavily toward
vehicles with higher compliance costs.
The other approach EPA has considered would set individual
standards for each manufacturer, based on one or more vehicle
attributes (such as the footprint attribute approach currently used by
NHTSA). Thus, to the extent a manufacturer produced vehicles with
different attributes from the vehicles of another manufacturer; unique
standards would be set for each company. The Light-duty Vehicle TSD
discusses various vehicle attributes on which light duty vehicle
CO2 standards could be based. EPA requests comment on the
use of an attribute-based approach, and on each of the attributes
considered in the Light-duty Vehicle TSD, as well as on a universal
standard approach. In addition, some in the industry have suggested
power-to-weight ratio may be an appropriate attribute for this purpose,
and we request comment on that attribute as well.
A key characteristic of any attribute-based program is that
significant industry shifts in the attribute over time would increase
or decrease the average emission performance requirement for the fleet.
For example, if such a shift in attributes resulted in the unique
manufacturer standards being on
[[Page 44451]]
average less stringent than those determined to be feasible and cost-
effective in the establishment of the program, the program would fall
short of those overall emissions reductions, and conversely, market
shifts could also result in larger emissions reductions than those
determined to be feasible and cost-effective at the time the program
was established. EPA seeks comment on the universal approach as
compared to the attribute-based approach.
ii. Concepts for Light-Duty Vehicle GHG Environmental Backstops
In order to limit the potential loss of feasible emissions control
due to a change in market attributes, EPA could consider a supplemental
``backstop'' carbon dioxide emissions standard for each year (also
referred to as an ``anti-backsliding'' provision) as a complement under
the CAA to an attribute-based standard. This would be an additional
obligation for manufacturers that would limit the maximum fleet average
carbon dioxide emissions, independent of attributes. The backstop
requirement could establish fixed minimum and feasible fleet average
CO2 g/mile standards. The backstop would apply separately to
the domestic car, import car, and truck classes. This backstop
obligation may not apply to small volume manufacturers. While EPA will
quantitatively describe one specific backstop concept below, we are
seeking public comment on a range of alternative approaches described
qualitatively below, briefly, as well. More generally, EPA seeks
comment as to whether a backstop approach would be appropriate under
the CAA as a means of providing greater emission reduction certainty.
A backstop could be an appropriate complement under the CAA to an
attribute-based standard. The most important factor under section
202(a) of the Act is to ensure reductions of the emissions from the
motor vehicle sector which cause or contribute to the endangerment
caused by greenhouse gas emissions. As discussed earlier, one important
feature of an attribute-based program is that collective decisions by
consumers and manufacturers could result in higher or lower industry-
wide average footprint values than projected by EPA at the time of
promulgation. Since the attribute-based curve establishes a fleet
average for a manufacturer based on the manufacturer's sales and
attribute values, the actual reductions achieved by the program could
vary as this mix varies. In the extreme, if the entire industry moved
to much higher attribute values, then the carbon dioxide emissions
reductions could be significantly less than projected by EPA as
technically feasible and cost effective.
Under section 202(a), EPA could consider a supplemental fleet
average backstop standard that would be the same for every manufacturer
in a given year. Such a standard would ensure that a minimum level of
reductions would be achieved as the fleet mix changes over time. EPA
could base such a standard on feasible carbon dioxide emission
reductions and other important factors such as technological
feasibility, cost, energy, and safety in analyzing section 202(a)
standards. EPA recognizes that a CO2 emissions backstop
could partially reduce the flexibility and market elements of an
attribute-based approach, but believes it could be needed to provide
for an appropriate degree of emissions reduction certainty.
As with other structural issues such as universal versus attribute-
based approaches, EPA believes that various backstop approaches have
conceptual advantages and disadvantages with respect to relevant
criteria such as certainty of industry-wide carbon dioxide emissions
reductions, flexibility with respect to consumer choice and vehicle
offerings, varying treatment of automakers, and complexity of
explanation and implementation. Any approach would also need to address
the relevant factors, including cost (economic feasibility, cost
effectiveness, and per vehicle cost) and technological feasibility. EPA
encourages commenters to evaluate the design approaches presented
below, as well as to suggest alternative approaches, in terms of these
and other relevant criteria.
As an illustrative example, Table VI-3 shows one set of fleet
average carbon dioxide emissions and mpg backstops, along with the
projected, average industry-wide carbon dioxide emissions and mpg
compliance levels, for the two sets of fleet average carbon dioxide
emissions standards based on the footprint attribute, analyzed in
December 2007, and discussed earlier in this advance notice: The 4% per
year and model-optimized scenarios. These carbon dioxide emissions
backstops are based on the projected fleet average carbon dioxide
emissions compliance levels for the high-volume car and light truck
manufacturers with the highest projected car and light truck footprint
levels, based on the footprint curves that were developed by EPA in
December 2007. Chrysler is the high-volume car manufacturer with the
highest projected footprint values, and General Motors has the highest
projected footprint values among the high-volume truck manufacturers.
These backstops would be universally applied to every manufacturer,
except small volume manufacturers, and would become the effective fleet
average standard for any automaker that would otherwise have a higher
fleet average carbon dioxide emissions standard, for any of the three
respective averaging sets (import and domestic cars and trucks), based
on the footprint curve.
The underlying rationale for this backstop approach is that the
manufacturer that is projected to sell the highest footprint vehicles,
which therefore is projected to be able to comply with the highest
fleet average carbon dioxide emissions compliance levels, should be
treated as establishing the minimum acceptable level of emissions
reductions for the industry. Similarly, no other manufacturers should
exceed the feasible, cost effective level established by that projected
highest footprint manufacturer. The approach, and underlying rationale,
is similar to the approach used by NHTSA before the 2006 truck
standards, whereby the level of a universal standard was established
based on the capabilities of the least capable large manufacturer
(Public Citizen v. NHTSA, 848 F. 2d 256, 259, D.C. Cir. 1988). Although
the backstop would not prohibit the highest footprint manufacturer from
selling higher footprint vehicles, it would prohibit any carbon dioxide
emissions ``backsliding'' that would otherwise be associated with that
increase in footprint. Average carbon dioxide emissions from other
manufacturers could increase, of course, in accordance with the
footprint curve, but in no case could the carbon dioxide emissions
level for any manufacturer increase beyond these backstop levels.
The passenger car carbon dioxide emissions and mpg backstop levels
shown in Table VI-3 adhere to the methodology described above with one
exception. Based on Chrysler's projected footprint values, its 2011
standard for the 4% per year option would be 325 g/mi, equivalent to a
gasoline vehicle fuel economy of 27.3 mpg. Since the current car CAFE
standard, which acts as an effective fuel economy backstop, is 27.5
mpg, EPA could instead consider a 2011 backstop of 323 g/mi for the 4%
per year option, which is equivalent to a 27.5 mpg gasoline vehicle.
In this illustrative backstop example, the carbon dioxide emissions
backstop levels would range from 8 to 22 g/mi, or 2 to 8%, higher than
the projected, average industry-wide carbon dioxide levels.
[[Page 44452]]
Table VI-3--Illustrative Backstops for the Fleet Average Carbon Dioxide Emissions Standard (CO2 grams per mile/
mpg)
----------------------------------------------------------------------------------------------------------------
CARS
-------------------------------------------------------------------
4 percent per year option Model-optimized option
-------------------------------------------------------------------
Projected Projected
industry-wide Backstop industry-wide Backstop
CO2 levels CO2 levels
----------------------------------------------------------------------------------------------------------------
2010 (base)................................. (323)/27.5 ............... (323)/27.5 ...............
2011........................................ 309/28.7 323/27.5 301/29.5 317/28.0
2012........................................ 298/29.8 319/27.8 291/30.5 314/28.3
2013........................................ 285/31.1 296/30.0 276/32.1 287/30.9
2014........................................ 275/32.3 287/30.9 268/33.2 281/31.6
2015........................................ 264/33.6 277/32.0 260/34.1 273/32.5
2016........................................ 254/34.9 266/33.4 247/35.9 258/34.4
2017........................................ 244/36.3 257/34.5 244/36.4 257/34.5
2018........................................ 235/37.7 245/36.2 239/37.2 249/35.7
----------------------------------------------------------------------------------------------------------------
A second illustrative example of a universal backstop approach
could be modeled on the ``minimum standard'' in the Energy Independence
and Security Act (EISA) of 2007. EISA establishes a fuel economy
backstop for the domestic car class that is equal to 92% of the average
fuel economy level projected for all cars. EPA believes this 92% value
was derived by dividing the current car CAFE standard of 27.5 mpg by
the average industry-wide car fuel economy performance over the past
several years. The car CAFE standard, in effect, has served as a
backstop for those manufacturers that have chosen not to pay CAFE
penalties. Applying this model to a carbon dioxide emissions backstop
would involve dividing the average projected industry-wide carbon
dioxide emissions levels by 0.92, or multiplying by a factor of 1.087,
an increase of 8.7%, to generate a universal backstop level that would
apply to all manufacturers. Under this approach, the backstop levels
for the 4% per year and model-optimized standards in Table VI-3 would
be greater than the backstop levels discussed earlier in every case,
ranging from 3 to 23 g/mi higher. This alternative approach yields
backstop levels 20 to 31 g/mi higher than the projected, average
industry-wide standards.
For the backstop approaches discussed above, all automakers would
have the same uniform backstop for domestic and import cars, and a
higher uniform backstop for trucks. These universal approaches would
make the backstop more of a constraint on those manufacturers that sold
vehicles with higher average footprint levels and less of a constraint
on those automakers that sold vehicles with lower average footprint
levels.
An alternative backstop approach could be to establish unique
maximum numerical carbon dioxide emissions values that would apply to
different automakers (e.g., X g/mi for Automaker A, and Y g/mi for
Automaker B) and that would become the effective fleet average standard
for an individual automaker when that automaker would otherwise be
allowed to meet a higher fleetwide average carbon dioxide emissions
value based exclusively on the footprint curve. The rationale for this
type of approach would be that since manufacturers start at different
average footprint levels, manufacturer-specific backstop values could
provide greater insurance against carbon dioxide emissions backsliding
for all manufacturers, rather than just those manufacturers that sold
vehicles with higher average footprint levels. One illustrative example
of this type of approach would be to base the annual backstop for each
manufacturer on its 2010 carbon dioxide emissions baseline, reducing it
by the same percentage each year. A similar approach would base the
annual backstop for the highest-footprint manufacturer on its 2010
carbon dioxide emissions baseline reduced by a percentage each year,
the annual backstop for the lowest-footprint automaker on its 2010
carbon dioxide emissions baseline reduced by a lesser percentage per
year, and the annual backstop values for other manufacturers on annual
percentage reductions between the higher and lower percentages. This
latter approach would yield backstop values that would be somewhat more
binding on manufacturers that sold vehicles with higher average
footprint values, yet still binding to some degree on all automakers.
This approach would also limit the degree to which manufacturers that
sold vehicles with lower average footprint values could increase
average footprint values over time.
A combination of the universal and manufacturer-specific approaches
could be to begin with manufacturer-specific backstop values, and to
transition to uniform backstop values over a 5 or 10 year period.
Another alternative backstop approach would not set a maximum
numerical carbon dioxide emissions value for individual manufacturers,
but would establish mathematical functions that would automatically
increase the stringency of and/or ``flatten'' the footprint curves for
future years when actual industry-wide carbon dioxide emissions
performance in the future is found to fall short of EPA's projections
at the time of promulgation. For example, at the time of promulgation,
EPA could assume a certain average industry-wide carbon dioxide g/mi
emissions level for 2011-2012. If, in 2013, EPA found that the average
industry-wide emissions level in 2011-2012 was higher than projected in
the final rule (and therefore the carbon dioxide emissions reductions
were lower than projected because of higher than projected average
footprint levels), then the backstop provisions would be triggered and
the footprint curves for future years (say, 2016 and later) would be
automatically changed to be more stringent and/or flatter in shape.
This approach would reframe the backstop issue in terms of industry-
wide emissions performance, rather than in terms of individual
automaker emissions performance.
In lieu of a backstop, another approach would be to flatten (i.e.,
reduce the slope of) the carbon dioxide emissions-footprint curve such
that there would a major disincentive for automakers to increase
vehicle footprint. EPA invites comments on the pros and cons of this
approach relative to a backstop.
[[Page 44453]]
In conclusion, EPA seeks comment on whether a CO2
emissions backstop is an appropriate complement to a footprint-based
regulatory approach under the CAA to ensure that the program would
achieve a minimum level of feasible carbon dioxide emissions
reductions. EPA invites comments on both the potential backstop
approaches discussed above, as well as suggestions for other
approaches.
iii. Potential Test Procedures for Light-Duty Vehicle Tailpipe
CO2 Emissions
For the program options EPA analyzed to date, EPA would expect
manufacturers and EPA to measure CO2 for certification and
compliance purposes over the same test procedures currently used for
measuring fuel economy, except for A/C-related CO2
emissions. This corresponds with the data used in our analysis of the
potential footprint-based CO2 standards presented in section
VI.B.1.b of this advance notice, as the data on control technology
efficiency was also developed in reference to these test procedures.
These procedures are the Federal Test Procedure (FTP or ''city'' test)
and the Highway Fuel Economy Test (HFET or ''highway'' test). EPA
established the FTP for emissions measurement in the early 1970s. In
1976, in response to requirements in the Energy Policy and Conservation
Act (EPCA), EPA extended the use of the FTP to fuel economy measurement
and added the HFET. The provisions in the 1976 regulation, effective
with the 1977 model year, established procedures to calculate fuel
economy values both for labeling and for CAFE purposes. Under EPCA, EPA
is required to use these procedures (or procedures which yield
comparable results) for measuring fuel economy for cars for CAFE
purposes, but not for fuel economy labeling purposes. EPCA does not
impose this requirement on CAFE test procedures for light trucks, but
EPA does use the FTP and HFET for this purpose.
On December 27, 2006, EPA established new ``5-cycle'' test
procedures for fuel economy labeling--the information provided to the
car-buying public to assist in making fuel economy comparisons from
vehicle to vehicle. These procedures were originally developed for
purposes of criteria emissions testing, not fuel economy labeling,
pursuant to section 206(h) of the Clean Air Act, which requires EPA to
review and revise as necessary test procedures for motor vehicles and
motor vehicle engines ``to insure that vehicles are tested under
circumstances which reflect the actual current driving conditions under
which motor vehicles are used.'' In updating the fuel economy labeling
regulations, EPA determined that these emissions test procedures take
into account several important factors that affect fuel economy in the
real world but are missing from the FTP and HFET tests. Key among these
factors are high speeds, aggressive accelerations and decelerations,
the use of air conditioning, and operation in cold temperatures.
Consistent with section 206 (h), EPA revised its procedures for
calculating the label estimates so that the miles per gallon (mpg)
estimates for passenger cars and light-duty trucks would better reflect
what consumers achieve in the real world. Under the new methods, the
city miles per gallon estimates for the manufacturers of most vehicles
have dropped by about 12% on average relative to the previous
estimates, with estimates for some vehicles dropping by as much as 30%.
The highway mpg estimates for most vehicles dropped on average by about
8%, with some estimates dropping by as much as 25% relative to the
previous estimates. The new test procedures only affect EPA's vehicle
fuel economy labeling program and do not affect fuel economy
measurements for the CAFE standards, which continue to be based on the
original 2-cycle test procedures (FTP/HFET).
EPA continues to believe that the new 5-cycle test procedures more
accurately predict in-use fuel economy than the 2-cycle test
procedures. Although, as explained below, to date there has been
insufficient information to develop standards based on 5-cycle test
procedures, such information could be developed and there is no legal
constraint in the CAA to developing such standards. Indeed, section
206(h) provides support for such an approach. Now that automotive
manufacturers are using the 5-cycle test procedure for labeling
purposes, we anticipate significant amount of data regarding the impact
of the 5-cycle test on vehicle CO2 emissions will be made
available to the Agency over the next several years.
However, for the programs analyzed in the Light-duty Vehicle TSD,
EPA used the original 2-cycle test. Indeed, data were simply lacking
for the efficiencies of most fuel economy control measures as measured
by 5-cycle tests. Thus, existing feasibility studies and analyses, such
as the 2002 National Academy of Sciences (NAS) and the 2004 Northeast
States Center for a Clean Air Future (NESCCAF) studies that examined
technologies to reduce CO2, were based on the 2-cycle test
procedures. However, as noted above, we expect that new data regarding
the 5-cycle test procedures will be made available and could be
considered in future analysis.
It is important to note, however, that all of our benefits inputs,
modeling and environmental analyses underlying the potential programs
analyzed in the Light-duty Vehicle TSD accounted for the difference
between emissions levels as measured by the 2-cycle test and the levels
more likely to actually be achieved in real world performance. Thus,
EPA applied a 20% conversion factor (2-cycle emissions result divided
by 0.8) to convert industry-wide 2-cycle CO2 emissions test
values to real world CO2 emissions factors. EPA used this
industry-wide conversion factor for all of its emission reduction
estimates, and calculated such important values as overall emission
reductions, overall benefits, and overall cost-effectiveness using
these corrected values. In reality, this conversion factor is not
uniform across all vehicles. For example, the conversion factor is
greater than 20% for vehicles with higher fuel economy/lower
CO2 values and is less than 20% for vehicles with lower fuel
economy/higher CO2 values. But to simplify the technology
feasibility analysis, the analysis assumed a uniform conversion factor
of 20% for all vehicles. EPA does not believe the overall difference
would have a significant effect on the standards because the errors on
either side of 20% tend to offset one another.
EPA thus analyzed CO2 standards based on the 2-cycle
test procedures for our analysis to date. EPA would expect to continue
to gain additional experience and data on the 5-cycle test procedures
used in the labeling program. If EPA determined that analyzing
potential CO2 standards based on these test procedures would
result in more robust control of those emissions, we would consider
this in future analyses. EPA requests comments on the above test
procedure issues, and the relative importance of using the 2-cycle
versus the 5-cycle test in any future EPA action to establish standards
for light-duty vehicle tailpipe CO2 emissions.
2. Heavy-Duty Trucks
Like light-duty vehicles, EPA's regulatory authority to address
pollution from heavy-duty trucks comes from section 202 of the CAA. The
Agency first exercised this responsibility for heavy-duty trucks in
1974. Since that time, heavy-duty truck and diesel engine technologies
have continued to improve, and the Agency has set increasingly
stringent emissions standards (today's diesel engines are 98% cleaner
than those from 1974). Over that same period, freight shipment
[[Page 44454]]
by heavy-duty trucks has more than doubled. Goods shipped solely by
truck account for 74% of the value of all commodities shipped within
the United States. Trucked freight is projected to double again over
the next two decades, growing from 11.5 billion tons in 2002 to over
22.8 billion tons in 2035.\139\ Total truck GHG emissions are expected
to grow with this increase in freight.
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\139\ Government Accountability Office. Freight Transportation:
National Policy and Strategies Can Help Improve Freight Mobility
GAO-08-287. Report to the Ranking Member, Committee on Environment
and Public Works, U.S. Senate. January 2008.
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Reflecting important distinctions between light and heavy-duty
vehicles, section 202 gives EPA additional guidelines for heavy-duty
vehicle regulations for certain pollutants, including defined
regulatory lead time criteria and authority to address heavy-duty
engine rebuild practices. The Agency has further used the discretion
provided in the CAA to develop regulatory programs for heavy-duty
vehicles that reflect their primary function. Key differences between
our light-duty and heavy-duty programs include vehicle standards for
cars versus engine standards for heavy-duty trucks, gram per distance
(mile) standards for cars versus gram per work (brake horsepower-hour)
for trucks, and vehicle test procedures for cars versus engine-based
tests for trucks. EPA has thus determined that in the heavy-duty
sector, the appropriate metric to evaluate performance is per unit of
work and that engine design plays a critical role in controlling
criteria pollutant emissions. EPA's rules also reflect the nature of
the heavy-duty industry with separate engine and truck manufacturers.
As EPA considers the best way to address GHG emissions from the heavy-
duty sector, we will again be considering the important ways that
heavy-duty vehicles differ from light-duty vehicles.
In this section, we will characterize the heavy-duty GHG emissions
inventory, broadly discuss the technologies available in the near- and
long-term to reduce heavy-duty truck GHG emissions, and discuss
potential regulatory options to address these emissions. We invite
comment on the issues that are relevant to considering potential GHG
emission standards for heavy-duty trucks. In particular, we invite
commenters to compare and contrast potential heavy-duty solutions to
our earlier discussion of light-duty vehicles and our existing heavy-
duty criteria pollutant control program in light of the differences
between GHG emissions and traditional criteria air pollutants.
a. Heavy-Duty Truck GHG Emissions
Heavy-duty on-road vehicles emitted 401 million metric tons of
CO2 emissions in 2006, or approximately 19% of the mobile
source CO2 emissions, the largest mobile source sub-category
after light-duty vehicles.\140\ CO2 emissions from these
vehicles are expected to increase significantly in the future, by
approximately 29% between 2006 and 2030.\141\
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\140\ Emissions data in this section are from the United States
Environmental Protection Agency. Inventory of U.S. Greenhouse Gas
Emissions and Sinks: 1990-2006. EPA 430-R-08-005. April 2008.
\141\ Growth data in this section is from United States
Department of Energy, Energy Information Administration. Annual
Energy Outlook 2008. DOE/EIA-0383. April 2008.
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Diesel powered trucks comprise 91% of the heavy-duty CO2
emissions, with the remaining 9% coming from gasoline and natural gas
engines. Heavy-duty GHG emissions come primarily from two types of
applications, combination and single unit trucks. Combination trucks
constitute 75% of the total heavy-duty GHG emissions--44% from long-
haul and 31% from short-haul operations. Short-haul single unit trucks
are the third largest source at 19%. The remaining 5% consists of long-
haul single unit trucks; intercity, school, and transit buses; refuse
trucks, and motor home emissions.\142\
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\142\ Breakdown of emissions data in this section is from United
States Environmental Protection Agency. MOVES model. April 8, 2008.
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GHG emissions from heavy-duty trucks are dominated by
CO2 emissions, which comprise approximately 99% of the
total, while hydrofluorocarbon and N2O emissions represent
0.5% and 0.3%, respectively, of the total emissions on a CO2
equivalent basis.
b. Potential for GHG Emissions Reductions From Heavy-Duty Trucks
Based on the work from EPA's SmartWay Transport Partnership and the
21st Century Truck Partnership, we see a potential for up to a 40%
reduction in GHG emissions from a typical heavy-duty truck in the 2015
timeframe, with greater reductions possible looking beyond 2015,
through improvements in truck and engine technologies.\143\ While
highly effective criteria pollutant control has been realized based on
engine system regulation alone, the following sections make clear that
GHG emissions improvements to truck technology provide a greater
potential for overall GHG emission reductions from this sector.
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\143\ 21st Century Truck Partnership. Technology Roadmap for the
21st Century Truck Program. 21CT-001. December 2000. http://www.doe.gov/bridge.
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In this section, we will provide a brief summary of the potential
for GHG emission reductions in terms of engine technology, truck
technology and changes to fleet operations. The public docket for this
Advance Notice includes a technical memorandum from EPA staff
summarizing this potential in greater detail.\144\ In discussing the
potential for CO2 emission reductions, it can be helpful to
think of work flow through a truck's system. The initial work input is
fuel. Each gallon of diesel fuel has the potential to produce some
amount of work and will produce a set amount of CO2 (about
22 lbs. of CO2 per gallon of diesel fuel). The engine
converts the chemical energy in the fuel to useable work to move the
truck. Any reductions in work demanded of the engine by the vehicle or
improvements in engine fuel conversion efficiency will lead directly to
CO2 emission reductions. Current diesel engines are about
35% efficient over a range of operating conditions with peak efficiency
levels of a little over 40%. This means that approximately one-third of
the fuel's chemical energy is converted to useful work and two-thirds
is lost to waste heat in the coolant and exhaust. In turn, the truck
uses this work output from the engine to overcome vehicle aerodynamic
drag (53%), tire rolling resistance (32%), and friction in the vehicle
driveline (6%) and to provide auxiliary power for components such as
air conditioning and lights (9%).\145\ While it may be intuitive to
look first to the engine for CO2 reductions given that only
about one-third of the fuel is converted to useable work, it is
important to realize that any improvement in vehicle efficiency reduces
both the work demanded and also the energy wasted in proportional
amounts.
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\144\ Summary of GHG Emission Control Technologies for Heavy-
Duty Trucks, Memorandum to Docket XXX, May 2008.
\145\ Approximate truck losses at 65 mph from 21st Century Truck
Partnership. 21st Century Truck Partnership Roadmap/Technical White
Papers: Engine Systems. 21CT-003. December 2006. http://www.doe.gov/bridge.
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In evaluating the potential to reduce GHG emissions from trucks and
operations as a whole, it will be important to develop an appropriate
metric to quantify GHG emission reductions. As discussed above, our
current heavy-duty regulatory programs measure emissions expressed on a
mass per work basis (g/bhp-hr). This approach has proven highly
effective at controlling criteria pollutant emissions while normalizing
the diverse range of
[[Page 44455]]
heavy-duty vehicle applications to a single engine-based test metric.
While such an approach could be applied to evaluate CO2
emission reductions from heavy-duty engines, it would not readily
provide a mechanism to measure and compare reductions due to vehicle
improvements. Hence, we will need to consider other performance metrics
such as GHG emissions per ton-mile. We request comment on what types of
metrics EPA should consider to measure and express GHG emission rates
from heavy-duty trucks.
We discuss below the wide range of engine, vehicle, and operational
technologies available to reduce GHG emissions from heavy-duty trucks.
Our discussion broadly assesses the availability of these technologies
and their GHG emissions reduction potential. We request comment on all
aspects of our current assessment summarized here and in more detail in
our technical memorandum, including supporting data with regard to
technology costs, GHG reduction effectiveness, the appropriate GHG
metric to evaluate the technology and the timeframe in which these
technologies could be brought into the truck market. More generally, we
request comment on the overall GHG emissions reductions that can be
achieved by heavy-duty trucks in the 2015 and 2030 timeframes.
i. Engine
The majority of heavy-duty vehicles today utilize turbocharged
diesel engines. Diesel engines are more efficient compared to gasoline
engines due to the use of higher compression ratios, the ability to run
with lean air-fuel mixtures, and the ability to run without a throttle
for load control. Modern diesel engines have a peak thermal efficiency
of approximately 42%, compared to gasoline engines that have a peak
thermal efficiency of 30%. Turbochargers increase the engine's power-
to-weight ratio and recover some of the exhaust heat energy to improve
the net efficiency of the engine.
Additional engine improvements could increase efficiency through
combustion improvements and reductions of parasitic and pumping losses.
Increased cylinder pressure, waste heat recovery, and low viscosity
lubricants could reduce CO2 emissions, but are not widely
utilized in the heavy-duty industry. Individual improvements have a
small impact on engine efficiency, but a combination of approaches
could increase efficiency by 20% to achieve a peak engine efficiency of
approximately 50%.\146\
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\146\ 21st Century Truck Partnership. 21st Century Truck
Partnership Roadmap/Technical White Papers: Engine Systems. 21CT-
003. December 2006. http://www.doe.gov/bridge.
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Waste heat recovery technologies, such as Rankine bottoming cycle,
turbocompounding and thermoelectric materials, can recover and convert
engine waste heat to useful energy, leading to improvements in the
overall engine thermal efficiency and consequent reduction in
CO2 emissions. We request comment on the potential of these
technologies to lower both GHG emissions and overall heavy-duty vehicle
operating costs.
In section VI.D below, we discuss the Renewable Fuel Standard (RFS)
program and more broadly the overall role of fuel changes to reduce GHG
emissions. As we have previously noted, the Agency has addressed
vehicle emissions through a systems-based approach that integrates
consideration of fuel quality and vehicle or engine emission control
systems. For example, removing lead from gasoline and sulfur from
diesel fuel has enabled the introduction of very clean gasoline and
diesel engine emission control technologies. A systems approach may be
a means to address GHG emissions as well. Since 1989, European engine
maker Scania has offered an ethanol powered heavy-duty diesel cycle
engine with traditional diesel engine fuel efficiency (the current
version offers peak thermal efficiency of 43%).\147\ Depending on the
ethanol production pathway, such an approach could offer a significant
reduction in GHG emissions from a life cycle perspective when compared
to more traditional diesel fuels. We request comment on the potential
for a systems approach considering alternate fuel and engine
technologies to reduce GHG emission from heavy-duty trucks. We also
request comment on how EPA might structure a program to appropriately
reflect the potential for such GHG emission reductions.
ii. Vehicle systems
An energy audit of heavy-duty trucks shows that vehicle efficiency
is strongly influenced by systems outside of the engine. As noted
above, aerodynamics, tire rolling resistance, drivetrain, and weight
are areas where technology improvements can significantly reduce GHG
emissions through reduced energy losses. The fuel savings benefits of
many of these technologies often offset the additional costs.
Opportunities for HFC and additional CO2 reductions are
available through improved air conditioning systems.
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\147\ Green Car Congress. Scania Extending Heavy-Duty Ethanol
Engine Technology to Trucks. April 15, 2008. http://www.greencarcongress.com/2008/04/scania-extendin.html (April 30,
2008).
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For a typical combination tractor-trailer truck traveling at 65
mph, energy losses due to aerodynamic drag can total over 21% of the
total energy consumed.\148\ A recent study between industry and the
federal government demonstrated that reducing the tractor-trailer gap
and adding trailer side skirts, trailer boat tails, and aerodynamic
mirrors can reduce aerodynamic drag by as much as 23%. If aerodynamic
drag were reduced from 21% to 15% (a 23% reduction), GHG emissions at
65 mph would be reduced by almost 12%.\149\ The cost of aerodynamic
equipment installed on a new or existing trailer is generally paid back
within two years.\150\ As aerodynamic designs become more
sophisticated, more consistency in how aerodynamics is measured is
needed. There is no single, consistent approach used by industry to
measure the coefficient of aerodynamic drag of heavy trucks. As a
result, it is difficult for fleets to understand which truck
configurations have the lowest aerodynamic drag. We request comment on
the best approach to evaluate aerodynamic drag and the impact of
aerodynamic drag on truck GHG emissions.
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\148\ 21st Century Truck Partnership. Technology Roadmap for the
21st Century Truck Program. 21CT-001. December 2000. http://www.doe.gov/bridge.
\149\ United States Department of Energy, Lawrence Livermore
National Laboratory. Working Group Meeting on Heavy Vehicle
Aerodynamic Drag: Presentation, Summary of Contents and Conclusion.
UCRL-TR-214683. May 2005.
\150\ Bachman, L. Joseph,; Anthony Erb; Cheryl Bynum. Effect of
Single Wide Tires and Trailer Aerodynamics on Fuel Economy and
NOx Emissions of Class 8 Line-Haul Tractor-Trailers. SAE
Paper 2005-01-3551. 2005.
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For a typical combination tractor-trailer truck traveling at 65
mph, energy losses due to tire rolling resistance can total nearly 13%
of the total energy consumed.\151\ Approximately 80-95% of the energy
losses from rolling resistance occur as the tire flexes and deforms
when it meets the road surface, due to viscoelastic heat dissipation in
the rubber. For heavy trucks, a 10% reduction in rolling resistance can
reduce GHG emissions by 1-3%.\152\ Improvements of this magnitude and
greater have already been demonstrated, and continued innovation in
tire design
[[Page 44456]]
has the potential to achieve even larger improvements in the future.
Specifying single wide tires on a new combination truck can have a
lower initial cost and lead to immediate fuel savings.\153\ Despite the
well-understood benefits of lower rolling resistance tires,
manufacturers differ in how they assess tire rolling resistance. We
seek comment on the potential for low rolling resistance tires to lower
GHG emissions, the need for consistent protocols to measure tire
rolling resistance, and the need for a common ranking or rating system
to provide tire rolling resistance information to the trucking
industry.
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\151\ 21st Century Truck Partnership. Technology Roadmap for the
21st Century Truck Program. 21CT-001. December 2000. http://www.doe.gov/bridge.
\152\ 21st Century Truck Partnership. Technology Roadmap for the
21st Century Truck Program. 21CT-001. December 2000. http://www.doe.gov/bridge.
\153\ United States Environmental Protection Agency. A Glance at
Clean Freight Strategies: Single Wide-Based Tires. EPA420-F-04-004.
February 2004.
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Hybrid technologies, both electric and hydraulic, offer significant
GHG reduction potential. The hybrid powertrain is a combination of two
or more power sources: an internal combustion engine and a second power
source with an energy storage and recovery device. Trucks operating
under stop-and-go conditions, such as urban delivery trucks and refuse
trucks, lose a significant amount of energy during braking. In
addition, engines in most applications are designed to perform under a
wide range of requirements and are often oversized for the majority of
their requirements. Hybrid powertrain technologies offer opportunities
to capture braking losses and downsize the engine for more efficient
operation. We invite comment on the potential of GHG reductions from
hybrids in all types of heavy-duty applications.
Currently most truck auxiliaries, such as the water pump, power
steering pump, air conditioning compressor, air compressor and cooling
fans, are mechanical systems typically driven by belts or gears off of
the engine driveshaft. The auxiliary systems are inefficient because
they produce power proportionate to the engine speed regardless of the
actual vehicle requirements and require conversion of fuel energy to
electrical or mechanical work. If systems were driven by electrical
systems they could be optimized for actual requirements and reduced
energy consumption. We request comment on the potential for these
auxiliary systems to lower GHG emissions from heavy-duty trucks.
Air conditioning systems are responsible for GHG emissions from
refrigerant leakage and from the exhaust emissions generated by the
engine to produce the load required to run the air conditioning. The
emissions due to leakage can be reduced by the use of improved sealing
designs, low-permeation hoses, and refrigerant substitution. Replacing
today's refrigerant, HFC-134a, which has a high global warming
potential (GWP=1,300), with HFC-152a (GWP=120) or CO2
(GWP=1) reduces the impact of the air conditioning leakage on the
environment.\154\ The load requirements of the air conditioning system
can be reduced through the use of improved condensers, evaporators, and
variable displacement compressors. We request comment on the impact of
air conditioning improvements on GHG reductions in heavy-duty trucks.
iii. Operational
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\154\ Frey, H. Christopher and Po-Yao Kuo. Best Practices
Guidebook for GHG Emissions Reductions in Freight Transportation.
Prepared for U.S. Department of Transportation via Center for
Transportation and the Environment. October 2007. Pages 26-27.
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The operation of the truck, including idle time and vehicle speed,
also has significant impact on the GHG emissions. Technologies that
improve truck operation exist and provide benefits to owners through
reduced fuel costs.
Idling trucks emit a significant amount of CO2 emissions
(as well as criteria pollutants). On average, a typical truck will emit
18 pounds of CO2 per hour of idling.\155\ Long haul truck
idle reduction technologies can reduce main engine idling while still
meeting cab comfort needs. Some idle reduction technologies have no
upfront cost for the truck owner and hence represent an immediate
savings in operating costs with lower GHG emissions. Other idle
reduction technologies pay back within three years.\156\ In addition to
providing information about these systems, EPA seeks comment on whether
it should work with stakeholders to develop a formal evaluation
protocol for the effectiveness, cost, durability, and operability of
various idle-reduction technologies.
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\155\ United States Environmental Protection Agency. A Glance at
Clean Freight Strategies: Idle Reduction. EPA420-F-04-009. February
2004.
\156\ EPA SmartWay Transport Partnership, Technology Package
Savings Calculator, http://www.epa.gov/smartway/calculator/loancalc.htm.
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Vehicle speed is the single largest operational factor affecting
CO2 emissions from large trucks. A general rule of thumb is
that every mph increase above 55 mph increases CO2 emissions
by more than 1%. Speed limiters are generally available on new trucks
or as a low-cost retrofit, and assuming a five mph decrease in speed,
payback occurs within a few months.\157\
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\157\ American Trucking Associations Petition to National
Highway Traffic Safety Administration, (Docket NHTSA-2007-26851,
Document ID NHTSA-2007-26851-0005), October 20, 2006, and American
Trucking Associations Comment to Docket (Docket NHTSA-2007-26851,
Document ID NHTSA-2007-26851-3708), March 27, 2007.
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Automatic tire inflation systems maintain proper inflation
pressure, and thereby reduce tire rolling resistance. Studies indicate
that automatic tire inflation systems result in about 0.5 to 1%
reduction of CO2 emissions for a typical truckload or less-
than-truckload over-the-road trucking fleet.\158\ Automatic tire
inflation systems can pay back in less than four years, assuming
typical underinflation rates.
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\158\ mission reduction and payback information from United
States Environmental Protection Agency. A Glance at Clean Freight
Strategies: Automatic Tire Inflation Systems. EPA420-F-04-010.
February 2004.
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All of the technologies summarized here can provide real GHG
reductions while providing value to the truck owner through reduced
fuel consumption. We request comment on the potential of these specific
technologies and on any other technologies that may allow vehicle
operators to reduce overall GHG emissions.
c. Regulatory Options for Reducing GHGs From Heavy-Duty Trucks
In developing any GHG program for heavy-duty vehicles, we would
rely on our past experience addressing the multifaceted characteristics
of this sector. In the following sections, we discuss three potential
regulatory approaches for reducing GHG emissions from the heavy-duty
sector. We request comments on all aspects of these options. We also
encourage commenters to suggest other approaches that EPA should
consider to address GHG emissions from heavy-duty trucks, recognizing
that there are some important differences between criteria air
pollutants and GHG emissions.
The heavy-duty engine manufacturers have made great strides in
reducing criteria pollutant emissions. We know these same manufacturers
have already achieved GHG emission reductions through the introduction
of more efficient engine technologies, and have the potential to
realize even greater reductions. We estimate that approximately 30% of
the overall GHG emission reduction potential from this sector comes
from engine improvements, 60% from truck improvements, and 10% from
operational improvements based on the technologies outlined in the 21st
Century Truck roadmap and Best Practices Guidebook for GHG Emissions
Reductions in Freight Transportation. We request comment on our
assessment
[[Page 44457]]
of the relative contributions of engine, truck, and operational
technologies.
The first approach we could consider would be a regulatory program
based on an engine CO2 standard or weighted GHG standard
including N2O and methane. One advantage to this option is
its simplicity because it preserves the current regulatory and market
structures. The heavy-duty engine manufacturers are familiar with
today's certification testing and procedures. They have facilities,
engine dynamometers, and test equipment to appropriately measure
emissions. The same equipment and test procedures can be, and already
are, used to measure CO2 emissions. Measuring and reporting
N2O and methane emissions would require relatively simple
additions to existing test cell instrumentation. We request comment
regarding issues that EPA should consider in evaluating this option and
the most appropriate means to address the issues raised. We recognize
that an engine-based regulatory structure would limit the potential GHG
emission reductions compared to programs that include vehicle
technologies and the crediting of fleets for operational improvements.
The other approaches considered below would have the potential to
provide greater GHG reductions by providing mechanisms to account for
vehicle and fleet operational changes.
Recognizing that GHG emissions could be further reduced through
improvements to both engines and trucks, we request comment on an
alternative test procedure that would include vehicle aspects in an
engine-based standard. This option would still be based on an engine
standard. However, it would provide a mechanism to adjust the engine
test results to account for improvements in vehicle design. For
example, if through an alternate test procedure (e.g., a vehicle
chassis test) a hybrid truck were shown to reduce GHG emissions by 20%,
under this option an engine based GHG test result could be adjusted
downward by that same 20%. In this way, we could reflect a range of
vehicle or perhaps even operational changes into an engine based
regulatory program. In fact, we are already developing such an approach
for a vehicle based change to provide a better mechanism to evaluate
criteria emissions from hybrid vehicles.\159\ We are currently working
with the heavy-duty industry to develop these new alternate test
procedures and protocols. These new procedures could provide a
foundation for regulatory programs to address GHG emissions as well. We
request comment on the potential for alternate test procedures to
reflect vehicle technologies in an engine based GHG regulatory program.
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\159\ As discussed in section VI.C.2, we have also applied a
similar alternate test procedure approach in our new locomotive
standards (see 40 CFR 1033.530(h)).
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A second potential regulatory option for heavy-duty truck GHG
emissions would be to follow a model very similar to our current light-
duty vehicle test procedures. Each truck model could be required to
meet a GHG emissions standard based on a specified drive cycle. The
metric for the standard could be either a weighted GHG gram/mile with
prescribed test weight and payload or GHG gram/payload ton-mile to
recognize that heavy-duty trucks perform work. This option would
reflect an important change from our current regulatory approach for
most heavy-duty vehicles by direct regulation of trucks (and therefore
truck manufacturers) rather than engines.\160\ As discussed earlier in
this section, we have historically regulated heavy-duty engines rather
than vehicles reflecting in part the heavy-duty industry structure and
in part the preeminence of engine technology in controlling
NOX and PM emissions. Clearly truck design plays a much more
important role in controlling GHG emissions due to significant energy
losses through aerodynamic drag and tire rolling resistance, and
therefore, this option directly considers the regulation of heavy-duty
trucks. We request comment on all aspects of this option including the
appropriate test metric, the need to develop new test procedures and
potential approaches for grouping heavy-duty vehicles into
subcategories for GHG regulatory purposes.
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\160\ For some years EPA has allowed gasoline and other non-
diesel vehicle manufactures to certify to and comply with a vehicle
based standard as compared to en engine based standard, at their
option. See, e.g., 40 CFR 86.005-10.
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As described earlier, there are a number of technologies and
operational changes that heavy-duty fleet operators can implement to
reduce both their overall operating costs and their GHG emissions.
Therefore, a third regulatory option that could be considered as a
complement to those discussed previously would be to allow heavy-duty
truck fleets to generate GHG emissions credits for applying
technologies to reduce GHG emissions, such as idle reduction, vehicle
speed limiters, air conditioning improvements, and improved aerodynamic
and tire rolling resistance. In order to credit the use of such
technologies, EPA would first need to develop procedures to evaluate
the potential for individual technologies to reduce GHGs. Such a
procedure could be based on absolute metrics (g/mile or g/ton-mile) or
relative metrics (percent reductions). We would further need to address
a wide range of complex potential issues including mechanisms to ensure
that the reductions are indeed realized in use and that appropriate
assurance of such future actions could be provided at the time of
certification, which occurs prior to the sale of the new truck. Such a
regulatory program could offer a significant opportunity to reward
trucking fleets for their good practices while providing regulatory
flexibility to help address the great diversity of the heavy-duty
vehicle sector. It would not lead to any additional GHG reductions,
however, as the credits generated by the fleet operators would be used
by the engine or vehicle makers to comply with their standards. We
welcome comments on the merits and issues surrounding potential
approaches to credit operational and technical changes from heavy-duty
fleets to reduce GHG emissions.
In considering the regulatory options available, we are cognizant
of the significant burden that could result if these programs were to
require testing of every potential engine and vehicle configuration
related to its GHG emissions. Therefore, we have been following efforts
in Japan to control GHG emissions through a regulatory program that
relies in part on engine test data and in part on vehicle modeling
simulation. As currently constructed, Japan's heavy-duty fuel
efficiency regulation considers engine fuel consumption, transmission
type, and final drive ratio in estimating overall GHG emissions. Such a
modeling approach may be a worthwhile first step and may be further
improved by including techniques to recognize design differences in
vehicle aerodynamics, tire rolling resistance, weight, and other
factors. We request comment on the appropriateness of combining
emissions test data with vehicle modeling results to quantify and
regulate GHG emissions. In particular, we welcome comments addressing
issues including model precision, equality aspects of model based
regulation, and the ability to standardize modeling inputs.
The regulatory approaches that we have laid out in this section
reflect incremental steps along a potential path to fully address GHG
emissions from this sector. These approaches should not be viewed as
discrete options but rather as potential building blocks that could be
mixed and matched in an
[[Page 44458]]
overall control program. Given the potential for significant burden,
EPA is also interested in considering how flexibilities such as
averaging, banking, and/or credit trading that may help to reduce costs
may be built into any of the regulatory options discussed above. We
request comment on all of the approaches described in this section and
the potential to implement one or more of these approaches in a phased
manner to capture the more straightforward approaches in the near-term
and the more complex approaches over a longer period.
3. Highway Motorcycles
The U.S. motorcycle fleet encompasses a vast array of types and
styles, from small and light scooters with chainsaw-sized engines to
large and heavy models with engines as big as those found in many
family sedans. In 2006 approximately 850,000 highway motorcycles were
sold in the U.S., reflecting a near-quadrupling of sales in the last
ten years. Even as motorcycles gain in popularity, their overall GHG
emissions remain a relatively small fraction of all mobile source GHG
emissions. Most motorcycles are used recreationally and not for daily
commuting, and use is seasonally limited in much of the country. For
these reasons and the fact that the fleet itself is relatively small,
total annual vehicle miles traveled for highway motorcycles is about
9.5 billion miles (as compared to roughly 1.6 trillion miles for
passenger cars).\161\
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\161\ ``Highway Statistics 2003,'' U.S. Department of
Transportation, Federal Highway Administration, Table VM-1, December
2004.
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The Federal Highway Administration reports that the average fuel
economy for motorcycles in 2003 was 50 mpg, almost twice that of
passenger cars in the same time frame. However, motorcycles are
generally designed and optimized to achieve maximum performance, not
maximum efficiency. As a result, many high-performance motorcycles have
fuel economy in the same range as many passenger cars despite the
smaller size and weight of motorcycles. Recent EPA emission regulations
are expected to reduce fuel use and hence GHG emissions from
motorcycles by: (1) Leading manufacturers to increase the use of
electronic fuel injection (replacing carburetors); (2) reducing
permeation from fuel lines and fuel tanks; and (3) eliminating the use
of two-stroke engines in the small scooter category.\162\
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\162\ See 69 FR 2398, January 15, 2004.
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There may be additional opportunities for further reductions in GHG
emissions. Options available to manufacturers may include incorporating
more precise feedback fuel controls; controlling enrichment on cold
starts and under load by electronically controlling choke operation;
allowing lower idle speeds when the opportunity exists; optimizing
spark for fuel and operating conditions through use of a knock sensor;
and, like light-duty vehicles, reducing the engine size and
incorporating a turbo-charger. The cost of these fuel saving and GHG
reducing technologies may be offset by the fuel savings realized over
the lifetime of the motorcycle.
We request comment on information on what approaches EPA should
consider for potential further reductions in GHG emissions from
motorcycles. We also request comment and data regarding what
technologies may be applicable to achieve further GHG reductions from
motorcycles.
C. Nonroad Sector Sources
As discussed previously, CAA section 213 provides broad authority
to regulate emissions from a wide array of nonroad engines and
vehicles,\163\ while CAA section 211 provides authority to regulate
fuels and fuel additives from both on-highway and nonroad sources and
CAA section 231 authorizes EPA to establish emissions standards for
aircraft. Collectively, the Title II nonroad and fuel regulation
programs developed by EPA over the past two decades provide a possible
model for how EPA could structure a long-term GHG reduction program for
nonroad engines and vehicles, fuels and aircraft.
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\163\ The Act does not define ``vehicle'', but we have
interpreted section 213 from its inception to include the broad
array of equipment, machines, and vessels powered by nonroad
engines, including those that are not self-propelled, such as
portable power generators. In keeping with common usage, we
typically use the generic terms ``equipment'', ``machine'', or
``application'', as well as the more application-specific terms
``vehicle'' and ``vessel'', to refer to these units, as appropriate.
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In this section, we first review and request comment on a number of
petitions received by EPA requesting action to regulate GHG emissions
from these sources and we highlight the similarities and key issues
raised in those petitions. We invite comment on all of the questions
and issues raised in these petitions. For each of three primary
groupings, nonroad, marine, and aircraft, we then discuss and seek
comment on the GHG emissions from these sources and the opportunities
to reduce GHG emissions through design and operational changes.
1. Petition Summaries
Since the Massachusetts decision, EPA has received seven additional
petitions requesting that we make endangerment findings and undertake
rulemaking procedures using our authority under CAA sections 211, 213
and 231 to regulate GHG \164\ emissions from fuels, nonroad sources,
and aircraft. The petitioners represent states, local governments,
environmental groups, and nongovernmental organizations (NGO) including
the states of California, New Jersey, New Mexico, Friends of the Earth,
NRDC, OCEANA, International Center for Technology Assessment, City of
New York, and the South Coast Air Quality Management District. Copies
of these seven petitions can be found in the docket for this Advance
Notice. Following is a brief summary of these petitions. We request
comment on all issues raised by the petitioners.
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\164\ While petitioners vary somewhat in their definition of
GHGs, collectively they define carbon dioxide, methane, nitrous
oxide, hydrofluorocarbons, perfluorocarbons, water vapor, sulfur
hexaflouride, and soot or black carbon as GHGs.
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a. Marine Engine and Vessel Petitions
The Agency has received three petitions to reduce GHG emissions
from ocean-going vessels (OGVs). California submitted its petition on
October 3, 2007. A joint petition was filed on the same day by
EarthJustice on behalf of three environmental organizations: Oceana,
Friends of the Earth and the Center for Biological Diversity
(``Environmental Petitioners''). A third petition was received from the
South Coast Air Quality Management District (SCAQMD) on January 10,
2008.
The California petition requests that EPA immediately begin the
process to regulate GHG emissions from Category 3 powered OGVs.\165\
According to the petition, the Governor of California has already
recognized that, ``California is particularly vulnerable to the impacts
of climate change,'' including the negative impact of increased
temperature on the Sierra snowpack, one of the State's primary sources
of water, and the further exacerbation of California's air quality
problems.\166\ The petition outlines the steps California has already
taken to reduce its own contributions to global warming and states that
it is petitioning the Administrator to take action to regulate GHG
emissions from
[[Page 44459]]
OGVs because it believes national controls will be most effective.
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\165\ A category 3 vessel is one where the main propulsion
engine(s) have a per-cylinder displacement of more than 30 liters.
\166\ State of California, Petition for Rulemaking Seeking the
Regulation of Greenhouse Gas Emissions from Ocean--Going Vessels,
page3, October 3, 2007 (``California Petition'').
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California makes three key points in its petition. First,
California claims that EPA has clear authority to regulate OGV GHG
emissions under CAA section 213(a)(4). The State points out that the
``primary substantive difference'' between CAA section 202(a)(1), which
the Supreme Court found authorizes regulation of GHGs emissions from
new motor vehicles upon the Administrator making a positive
endangerment finding, and section 213 is that section 202(a)(1)
requires regulation if such an endangerment finding is made while
section 213(a)(4) authorizes, but does not require, EPA to regulate
upon making the requisite endangerment finding. But petitioner states
that EPA's discretion to decide whether to regulate OGVs under section
213(a)(4) is constrained in light of the overall structure and purpose
of the CAA. Citing the Massachusetts decision, California asserts that
the Supreme Court has ``set clear and narrow limits on the kinds of
reasons EPA may advance for declining to regulate significant sources
of GHGs''.
The second claim California makes is that international law does
not bar regulation of GHG emissions from foreign-flagged vessels by the
U.S. California asserts that U.S. laws can operate beyond U.S. borders
(referred to as extra-territorial operation of laws) when the conduct
being regulated affects the U.S. and where Congress intended such
extra-territorial application.\167\ Petitioner believes that such
application of the CAA is both ``permissible and essential in this
case'' because to effectively control GHG emissions from shipping
vessels, the EPA must regulate foreign-flagged vessels since they
comprise 95% of the fleet calling on U.S. ports.\168\ Petitioner cites
two other instances where the U.S. has regulated foreign-flagged
vessels. First, in Specto v. Norwegian Cruiseline. 545 U.S. 119 (2005),
the Supreme Court held that the Americans with Disabilities Act (ADA)
could be applied to foreign-flagged cruise ships that sailed from U.S.
ports as long as the required accommodations for disabled passengers
did not require major, permanent modification to the ships involved.
Second, the National Park Service recently imposed air pollutant
emissions controls on cruise ships, including foreign-flagged cruise
ships that sail off the coast from Glacier Bay National Park, Alaska.
The petitioner points out that in this case they did so to protect and
preserve the natural resources of the Park, which is analogous to
California's reasons for why EPA must regulate GHG emissions from
foreign-flagged vessels.\169\
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\167\ Petitioners cite EEOC v. Arabian American Oil Co., 499
U.S. 244 (1991) (``Aramco'') as supporting this principle.
\168\ California Petition, page 13.
\169\ Petitioners cite regulations found at 36 CFR 13.65 (b)(4)
and 61 FR 27008, at 27011.
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The third claim raised in California's petition is that technology
is currently available to reduce GHG emissions from these vessels,
either through NOX reductions or by reducing fuel
consumption. Options include, using marine diesel fuel oil instead of
bunker fuel, using selective catalytic reductions and exhaust gas
recirculation or by reducing speed. Petitioner states that the Clean
Air Act was intended to be a technology-forcing statute and that EPA
can and should consider OGV control measures that force the development
of new technology.
California requests three forms of relief: (1) That EPA make a
finding that carbon dioxide emissions from new marine engines and
vessels significantly contribute to air pollution which may reasonably
be anticipated to endanger public health and welfare; (2) that EPA use
its CAA section 213(a)(4) authority to adopt regulations specifying
emissions standards for CO2 emissions from these engines and
vessels; and (3) that EPA adopt regulations specifying fuel content or
type necessary to carry out the emission standards adopted for new
marine engines.
The second group requesting EPA action on OGVs, Environmental
Petitioners, believes that climate change threatens public health and
welfare and that marine shipping vessels make a significant
contribution to GHG emissions, and that therefore EPA should quickly
promulgate regulations requiring OGVs to meet emissions standards by
``operating in a fuel-efficient manner, using cleaner fuels and/or
employing technical controls, so as to reduce emissions of carbon
dioxide, nitrous oxide, and black carbon.'' These petitioners further
state that EPA should also control ``the manufacture and sale of fuels
used in marine shipping vessels by imposing fuel standards'' to reduce
GHG emissions.\170\
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\170\ Environmental Petition, Petition for Rulemaking Under the
Clean Air Act to Reduce the Emissions of Air Pollutants from Marine
Shipping Vessels that Contribute to Global Climate Change, page 2,
October 3, 2007.
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The Environmental Petitioners focus their petition on four specific
arguments. First, like California, they assert that OGVs play a
significant role in global climate change. They focus on the emissions
of four pollutants: CO2, NOX, N20, and
black carbon (also known as soot). Petitioners cite numerous studies
that they assert document that the impact of these GHG emissions are
significant today and that industry trends indicate these emissions
will grow substantially in future decades. Second, petitioners lay out
a detailed legal argument asserting that EPA has clear authority to
regulate these four air pollutants from OGVs, and contending that the
Massachusetts decision must guide EPA's actions as it decides how to
regulate GHG emissions from OGVs. Third, petitioners discuss a number
of regulatory measures that can effectively reduce GHG emissions from
OGVs and which EPA could adopt using its regulatory authority under CAA
section 213(a)(4), including measures requiring restrictions on vessel
speed; requiring the use of cleaner fuels in ships and other technical
and operations measures petitioners believe are relatively easy and
cost-effective. Lastly, petitioners assert that the CAA section 213
provides EPA with clear authority to regulate GHG emissions from both
new and remanufactured OGV engines as well as from foreign-flagged
vessels.
SCAQMD petition also requests Agency action under section 213 of
the CAA and states that it has a strong interest in the regulation of
GHG emissions from ships including emissions of NOX, PM, and
CO2. SCAQMD states that the net global warming effect of
NOX emissions is potentially comparable to the climate
effect from ship CO2 emissions and that PM emissions from
ships in the form of black carbon can also increase climate
change.\171\ Finally, because international shipping activity is
increasing yearly, SCAQMD asserts that if EPA dos not act quickly,
future ship pollution will become even worse, increasing both ozone and
GHG levels in the South Coast area of California. As with other
petitioners, SCAQMD states that there is a clear legal basis for EPA to
regulate ships GHG emissions under section 213(a)(4).
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\171\ SCAQMD, Petition for Rulemaking under the Clean Air Act to
Reduce Global Warming Pollutants from Ships, page 2, January 10,
2008.
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SCAQMD makes two additional assertions in its petition which mirror
the California and Environmental Petitions. First, EPA can avoid
regulation of ship GHG emissions only if it determines that
``endangerment'' can be avoided without regulation of ship
emissions.\172\ Second, SCAQMD believes that EPA has the authority to
regulate foreign-flagged vessels under at
[[Page 44460]]
least two circumstances: (1) For a foreign owned and operated vessel,
where the regulation(s) would not interfere with matters that ``involve
only the internal order and discipline of the vessel,'' Spector v.
Norwegian Cruise Lines, 545 U.S. 119, 131 (2005), and (2) where the
vessel is owned and operated by a U.S. corporation, even if it is
foreign-flagged.\173\
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\172\ SCAQMD Petition, page 9.
\173\ SCAQMD Petition, page10.
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SCAQMD requests two types of relief: (1) That EPA, within six
months of receiving its petition, make a positive endangerment
determine for CO2, NOX, and black carbon
emissions from new marine engines and vessels ``because of their
contribution to climate change;'' and (2) that EPA promulgate
regulations under CAA section 213 (a)(4) to obtain the maximum feasible
reductions in emissions of these pollutants. We invite comment on all
elements of the petitioners' assertions and requests.
b. Aircraft Petitions
The Agency has received two petitions to reduce GHG emissions from
aircraft.\174\ The first petition was submitted on December 4, 2007, by
California, Connecticut, New Jersey, New Mexico, Pennsylvania's
Department of Environmental Protection, the City of New York, the
District of Columbia, and the SCAQMD (``State Petitioners''). A second
petition was filed on December 31, 2007, by Earthjustice on behalf of
four environmental organizations: Friends of the Earth, Oceana, Center
for Biological Diversity and NRDC (``Environmental Petitioners'').
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\174\ While aircraft engines are not ``nonroad engines'' as
defined in CAA section 216(10) and aircraft are not ``nonroad
vehicles'' as defined in CAA section 216(11), such that aircraft
could be subject to regulation under CAA section 213, for
organizational efficiency we include aircraft in this ``Nonroad
Sector Sources'' section of today's notice.
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All petitioners request that EPA exercise its authority under
section 231(a) of the CAA to regulate GHG emissions from new and
existing aircraft and/or aircraft engine operations, after finding that
aircraft GHG emissions cause or contribute to air pollution which may
reasonably be anticipated to endanger public health or welfare.\175\
Petitioners suggest that these regulations could allow compliance
through technological controls, operational measures, emissions fees,
or a cap-and-trade system.
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\175\ Petitioners maintain that aircraft engine emissions of
CO2, NOX, water vapor, carbon monoxide, oxides
of sulfur, and other trace components including hydrocarbons such as
methane and soot contribute to global warming and that in 2005,
aircraft made up 3% of U.S. CO2 emissions from all
sectors, and 12% of such emissions from the transportation sector.
States of California et al, Petition for Rulemaking Seeking the
Regulation of Greenhouse Gas Emissions from Aircraft, page 11,
December 4, 2007, and Friends of the Earth et al., Petition for
Rulemaking under the Clean Air Act to Reduce the Emissions of Air
Pollutants from Aircraft that Contribute to Global Climate Change,
pages 6-7, December 31, 2007.
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Both petitions discuss how aircraft engines emit GHG emissions
which they assert have a disproportionate impact on climate change.
Petitioners cite a range of scientific documents to support their
statements. They assert that ground-level aircraft NOX, a
compound they identify as a GHG, contributes to the formation of ozone,
a relatively short-lived GHG. NOX emissions in the upper
troposphere and tropopause, where most aircraft emissions occur, result
in greater concentrations of ozone in those regions of the atmosphere
compared to ground level ozone formed as a result of ground level
aircraft NOX emissions. Petitioners contend that aircraft
emissions contribute to climate change also by modifying cloud cover
patterns. Aircraft engines emit water vapor, which petitioners identify
as a GHG that can form condensation trails, or ``contrails,'' when
released at high altitude. Contrails are visible line shaped clouds
composed of ice crystals that form in cold, humid atmospheres.
Persistent contrails often evolve and spread into extensive cirrus
cloud cover that is indistinguishable from naturally occurring cirrus
clouds. The petitioners state that over the long term this contributes
to climate change.
State Petitioners highlight the effects climate change will have in
California and the City of New York as well as efforts underway in both
places to reduce GHG emissions. They argue that without federal
government regulation of GHG emissions from aircraft, their efforts at
mitigation and adaptation will be undermined. Both petitioners urge
quick action by EPA to regulate aircraft GHG emissions since these
emissions are anticipated to increase considerably in the coming
decades due to a projected growth in air transport both in the United
States and worldwide. They cite numerous reports to support this point,
including an FAA report, which indicates that by 2025 emissions of
CO2 and NOX from domestic aircraft are expected
to increase by 60%.\176\
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\176\ FAA, Office of Environment and Energy, Aviation and
Emission: A Primer, January 2005, page 10, available at http://www.faa.gov/regulations_policies/policy_guidance/envir_policy/media/aeprimer.pdf.
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We request comment on all issues raised in the petitions,
particularly on two assertions made by Environmental Petitioners: (1)
That technology is available to reduce GHG emissions from aircraft
allowing EPA to take swift action, and (2) that EPA has a mandatory
duty to control GHG emissions from aircraft and can fulfill this duty
consistent with international law governing aircraft. In addition, we
invite comment on the petitioners' assessment of the impact of aircraft
GHG emissions on climate change, including the scientific understanding
of these impacts, and whether aircraft GHG emissions cause or
contribute to air pollution which may reasonably be anticipated to
endanger public health or welfare.
With regard to technology, petitioners highlight existing and
developing aviation procedures and technologies which could reduce GHG
emissions from new and existing aircraft. For example, they point to
various aviation operations and procedures including minimizing engine
idling time on runways and employing single engine taxiing that could
be undertaken by aircraft to reduce GHG emissions. Petitioners also
discuss the availability of more efficient aircraft designs to reduce
GHG emissions, such as reducing their weight, and they suggest that
using alternative fuels could also reduce aviation GHG emissions.
Environmental Petitioners contend that once EPA makes a positive
endangerment finding for aircraft GHG emissions, EPA has a mandatory
duty to act, but that the potential regulatory responses available to
EPA are quite broad and should be considered for all classes of
aircraft, including both new and in-use aircraft and aircraft engines.
In addition, petitioners argue that EPA's authority to address GHG
emissions from aircraft is consistent with international law-in
particular the Convention on International Civil Aviation (the
``Chicago Convention'')--and that the United States'' obligations under
the Convention do not constrain EPA's authority to adopt a program that
addresses aviation's climate change impacts, including those from
foreign aircraft.
The State and Environmental Petitioners each request the following
relief: (1) That EPA make an explicit finding under CAA section
231(a)(2)(A) that GHG emissions from aircraft cause or contribute to
air pollution which may reasonably be anticipated to endanger public
health or welfare; (2) that EPA propose and adopt standards for GHG
emissions from both new and in-use aircraft as soon as possible; (3)
that EPA adopt regulations that allow a range of compliance approaches,
including emissions limits, operations practices and/or fees, a cap-
and-trade system, as well as measures that are more near-
[[Page 44461]]
term, such as reduced taxi time or use of ground-side electricity
measures. The Environmental Petitioners' also request that EPA issue
standards 90 days after proposal. We invite comment on all elements of
the petitioners' assertions and requests, as well as the scientific and
technical basis for their assertions and requests.
c. Nonroad Engine and Vehicle Petitions
On January 29, 2008, EPA received two petitions to reduce GHG
emissions from nonroad engines and vehicles. The first petition was
submitted by California, Connecticut, Massachusetts, New Jersey and
Oregon and Pennsylvania's Department of Environmental Protection
(``State Petitioners''). The second petition was submitted by the
Western Environmental Law Center on behalf of three nongovernmental
organizations: the International Center for Technology Assessment,
Center for Food Safety, and Friends of the Earth (``NGO Petitioners'').
Both petitions request that EPA exercise its authority under CAA
section 213(a)(4) to adopt emissions standards to control and limit GHG
emissions from new nonroad engines excluding aircraft and vessels. Both
petitions seek EPA regulatory action on a wide range of nonroad engines
and equipment, which the petitioners believe, contribute substantially
to GHG emissions, including outdoor power equipment, recreational
vehicles, farm and construction machinery, lawn and garden equipment,
logging equipment and marine vessels.\177\
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\177\ The two petitions request that EPA regulate slightly
different categories of nonroad engines and vehicles under CAA
section 213. State Petitioners exclude from their request aircraft,
locomotives and ocean-going vessels and do not include rebuilt
heavy-duty engines. The NGO Petitioners exclude only aircraft and
ocean-going vessels but also request that EPA use its CAA section
202 authority to regulate GHG emissions from rebuilt heavy-duty
engines.
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The State Petitioners, mirroring the earlier State petitions on
ocean-going vessels and aircraft, describe the harms which they believe
will occur due to climate change, including reduced water supplies,
increased wildfires, and threats to agricultural outputs in California;
loss of coastal wetlands, beach erosion, saltwater intrusion of
drinking water in Massachusetts and Connecticut; and similar harms to
the Pennsylvania, New Jersey and Oregon. The petition highlights
actions that California has already taken to reduce its own
contributions to global warming but points out that only EPA has
authority to regulate emissions from new farm and construction
equipment under 175 horsepower, ``which constitutes a sizeable portion
of all engines in this category.* * * '' \178\
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\178\ States Petition for Nonroad, page 7-8.
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The State Petitioners present three claims which, they believe
compel EPA action to reduce GHG emissions from nonroad sources. First,
petitioners claim that GHG emissions from these sources are
significant.\179\ Petitioners cite various reports documenting national
GHG emissions from a broad range of nonroad categories which, they
contend, provide evidence that nonroad GHG emissions are already
substantial, and will continue to increase in the future. Petitioners,
also cite additional inventory reports that nonroad GHG emissions
already exceed total U.S. GHG emissions from aircraft as well as from
boats and ships, rail, and pipelines combined.\180\ Petitioner's
present California nonroad GHG emissions data which, they contend,
mirror national GHG emission trends for nonroad engines and bolster
their claim that GHG emissions from the nonroad sector, as a whole, are
significant and are substantial for three categories: Construction and
mining equipment, agricultural, and industrial equipment.
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\179\ Petitioners indicate that in 2007, non-transportation
mobile vehicles and equipment were responsible for approximately 220
million tons of CO2 emissions (data derived from EPA's
Nonroad Emissions model for 2007). State of California et al,
Petition for Rulemaking Seeking the Regulation of Greenhouse Gas
Emissions from Nonroad Vehicles and Engines, page 8, January 29,
2008, and International Center for Technology Assessment et al,
Petition for Rulemaking Seeking the Regulation of Greenhouse Gas
Emissions from Nonroad Vehicles and Engines, page 5, January 29,
2008.
\180\ State Petition for Nonroad, page 9.
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State Petitioners' second claim is that EPA has the authority to
regulate GHG emissions from nonroad sources, although they acknowledge
that CAA section 213(a)(4) is discretionary. Petitioners contend this
discretion is not unlimited and that the structure of the CAA must
guide EPA's actions. Petitioners maintain that since the CAA prohibits
States from undertaking their traditional police power role in
regulating pollution from new construction or agricultural sources
under 175 horsepower, ``Congress has implicitly invested EPA with the
responsibility to act to prevent [these] harmful emissions.'' The third
and final claim raised by State Petitioners is that both physical and
operational controls are currently available to achieve fuel savings
and/or to limit GHG emissions. Such measures include idle reduction,
electrification of vehicles, the use of hybrid or hydraulic-hybrid
technology, as well as use of ``cool paints'' that reduce the need for
air conditioning.
NGO petitioners make three similar claims in their petition. First,
petitioners argue that serious public health and environmental
consequences are projected for this century unless effective and timely
action is taken to mitigate climate change. Petitioners further contend
that GHG emissions from nonroad engines and vehicles are responsible
for a significant and growing amount of GHG emissions and, like the
State petitioners previously, they highlight three nonroad sectors
responsible for a large portion of these GHG emission--construction,
mining, and agriculture.
Petitioners' second claim is that once EPA renders a positive
endangerment determination under CAA section 202 for motor vehicles and
engines, this finding should also satisfy the endangerment
determination required under CAA section 213(a)(4) for nonroad engines.
EPA's discretion under CAA section 213(a)(4) is limited, petitioners
assert, by the relevant statutory considerations, as held by the
Supreme Court in Massachusetts v. EPA, so that the Agency ``can decline
to regulate nonroad engine and vehicle emissions only if EPA determines
reasonably that such emissions do not endanger public health or
welfare, or else, taking into account factors such as cost, noise,
safety and energy, no such regulations would be appropriate.'' \181\
Like State petitioners, NGOs point out that because the CAA restricts
states' ability to regulate pollution from new construction or farm
vehicles and engines under 175 horsepower, Congress ``implicitly
invested EPA with unique responsibility to act in the states'' stead so
as to prevent such harmful emissions.'' Petitioners also argue that the
National Environment Policy Act (NEPA) section 101(b) compels EPA
action to fulfill its duty ``as a trustee of the environment for
succeeding generations.''
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\181\ NGO Petition, page 8.
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NGO Petitioners' third claim is that a wide range of technology is
currently available to reduce GHG emissions from nonroad engines and
vehicles and that, in addition, the CAA was intended to be a
technology-forcing statute so that EPA ``can and should'' establish
regulations that ``substantially limit GHG emissions.* * * even where
those regulations force the development of new technology.'' Regarding
technology availability, petitioners provide a list of technologies
that they believe are currently available to reduce GHG emissions from
nonroad vehicles and engines, including auxiliary power unit systems to
avoid engine use solely to
[[Page 44462]]
heat or cool the cab; tire inflation systems; anti-idling standards;
use of hybrid or hydraulic-hybrid technology; use of low carbon fuels;
and use of low viscosity lubricants.
Both State and NGO Petitioners request three types of relief: (1)
That EPA make a positive endangerment determination for GHG emissions
from nonroad vehicles and engines; \182\ (2) that EPA adopt regulations
to reduce GHG emissions from this sector; and (3) that regulations
necessary to carry out the emissions standards also be adopted.\183\ We
invite comment on all of the petitioners' assertions and requests.
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\182\ In addition, NGO Petitioners also request that EPA make a
determination under CAA section 202 (a)(3)(D) that GHG emissions
from rebuilt heavy-duty engines also are significant contributors to
air pollution which may reasonably be anticipated to endanger public
health and welfare. NGO Petition, page 11.
\183\ State Petitioners indicate that adopting regulations
specifying fuel type, for example, may be necessary to carry out the
emission limitations.
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2. Nonroad Engines and Vehicles
In this section, we discuss the GHG emissions and reduction
technologies that are or may be available for the various nonroad
engines and vehicles that are the subject of the petitioners described
above. Since section 213 was added to the CAA in 1990, the Agency has
completed a dozen major rulemakings which established programs that
reduce traditional air pollutants from nonroad sources by over 95%,
benefitting local, regional, and national air quality. EPA's approach
has been to set standards based on technology innovation, with
flexibility for the regulated industries to meet environmental goals
through continued innovation that can be integrated with marketing
plans.
With help from industry, environmental groups and state regulators,
EPA has designed nonroad regulatory programs that have resulted in
significant air quality gains with little sacrifice of products'
ability to serve their purpose. In fact, manufacturers have generally
added new features and performance improvements that are highly
desirable to users. Because GHG reductions from nonroad sources can be
derived from fuel use reductions that directly benefit the user's
bottom line, we expect that manufacturers' incentive to increase the
fuel efficiency of their products will be even stronger in the future.
This potential appears higher for nonroad engines compared to highway
engines because in the past energy consumption has been less of a focus
in the nonroad sector, so there may be more opportunity for
improvement, while at the same time higher fuel prices are now
beginning to make fuel expenses more important to potential equipment
purchasers.
The Agency and regulated industries have in the past grouped
nonroad engines in a number of ways. The first is by combustion cycle,
with two primary cycles in use: compression-ignition (CI) and spark-
ignition (SI). The combustion cycle is closely linked to grouping by
fuel type, because CI engines largely burn diesel fuel while SI engines
burn gasoline or, for forklifts and other indoor equipment, liquefied
petroleum gas (LPG). It has also been useful to group nonroad engines
by application category. Regulating nonroad engine application
categories separately has helped the Agency create effective control
programs, due to the nonroad sector's tremendous diversity in engine
types and sizes, equipment packaging constraints, affected industries,
and control technology opportunities. Although for the sake of
discussion we use these application groupings, we solicit comment on
what grouping engines and applications would make the most sense for
GHG regulation, especially if flexible emissions credit and averaging
concepts are pursued across diverse applications.
a. Nonroad Engine and Vehicle GHG Emissions
Nonroad engines emitted 249 million metric tons of CO2
in 2006, 12% of the total mobile source CO2 emissions.\184\
CO2 emissions from the nonroad sector are expected to
increase significantly in the future, approximately 46% between 2006
and 2030. Diesel engines emit 71% of the total nonroad CO2
emissions. The other 29% comes from gasoline, LPG, and some natural
gas-fueled engines. CO2 emissions from individual nonroad
application categories in decreasing order of prominence are: Nonroad
diesel (such as farm tractors, construction and mining equipment),
diesel locomotives, small SI (such as lawn mowers, string trimmers, and
portable power generators), large SI (such as forklifts and some
construction machines), recreational marine SI, and recreational
offroad SI (such as all terrain vehicles and snowmobiles).
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\184\ Emissions data in this section are from Inventory of U.S.
Greenhouse Gas Emissions and Sinks: 1990-2006. EPA 430-R-08-005.
April 2008, and EPA NONROAD2005a model.
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GHG emissions from nonroad applications are dominated by
CO2 emissions which comprise approximately 97% of the total.
Approximately 3% of the GHG emissions (on a CO2 equivalent
basis) from nonroad applications are due to hydrofluorocarbon
emissions, mainly from refrigerated rail transport. Methane and
N2O make up less than 0.2% of the nonroad sector GHG
emissions on a CO2 equivalent basis. Much of the following
discussion focuses on technology opportunities for CO2
reduction, but we note that these technologies will generally reduce
N2O and methane emissions as well, and we ask for comment on
measures and options for specifically addressing N2O and
methane emissions.
b. Potential for GHG Reductions From Nonroad Engines and Vehicles
The opportunity for GHG reductions from the nonroad sector closely
parallels the highway sector, especially for the heavy-duty highway and
nonroad engines that share many design characteristics. In addition,
there is potential for significant further GHG reductions from changes
to vehicle and equipment characteristics. A range of GHG reduction
opportunities is summarized in the following discussion. Comment is
requested on these opportunities and on additional suggestions for
reducing GHGs from nonroad sources.
It should be noted that any means of reducing the energy
requirements necessary to power a nonroad application can yield the
desired proportional reductions of GHGs (and other pollutants as well).
Although in past programs, the Agency has typically focused on a new
engine's emissions per unit of work, such as gram/brake horsepower-hour
(g/bhp-hr), it may prove more effective to achieve GHG reductions by
redesigning the equipment or vehicle that the engine powers so that the
nonroad application accomplishes its task while expending less energy.
Improvements such as these do not show up in measured g/bhp-hr
emissions levels, but would be reflected in some other metric such as
grams emitted by a locomotive in moving a ton of freight one mile.
EPA solicits comment on possible nonroad GHG emissions reduction
strategies for the various ``pathways'' by which GHGs can be impacted.
Although it is obvious that internal combustion engines emit GHGs via
the engine exhaust, it is helpful to take the analysis to another level
by putting it in the context of energy use and examining the pathways
by which energy is expended in a nonroad application, such as through
vehicle braking. Because of the diversity of nonroad applications, we
are taking a different approach here than in other sections of this
notice: first, we summarize some of the engine, equipment, and
operational pathways
[[Page 44463]]
and opportunities for GHG reductions that are common to all or at least
a large number of nonroad applications; next, we examine more closely
just one of the hundreds of nonroad applications, locomotives, to
illustrate the many additional application-specific pathways for GHG
reductions that are available. Our assessment is that, despite the
great diversity in nonroad applications, technology-based solutions
exist for every application to achieve cost-effective and substantial
GHG emissions reductions.
i. Common GHG Reduction Pathways
To ensure that this advance notice initiates the widest possible
discussion of potential GHG control solutions, the following discussion
includes all three types of possible control measures: engine,
equipment, and operational.
(1) Engine Pathways
To date, improving fuel usage in many nonroad applications has not
been of great concern to equipment users and therefore to designers.
There is potential for technologies now fairly commonplace in the
highway sector, such as advanced lubricants and greater use of
electronic controls, to become part of an overall strategy for GHG
emissions reduction in the nonroad sector. We welcome comment on the
opportunities and limitations of doing so.
One engine technology in particular warrants further discussion.
Two-stroke gasoline engines have been popular especially in handheld
lawn care applications and recreational vehicles because they are
fairly light and inexpensive. However, they also produce more GHGs than
four-stroke engines. Much progress has been made in recent years in the
development of four-stroke engines that function well in these
applications. We ask for comment on the extent to which a shift to
four-stroke engines would be feasible and beneficial.
Although today's nonroad gasoline and diesel engines produce
significantly less GHGs than earlier models, further improvements are
possible. Engine designers are continuing to work on new designs
incorporating technologies that produce less GHGs, such as homogeneous
charge CI, waste heat recovery through turbo compounding, and direct
fuel injection in SI engines. Most of this work has already been done
for the automotive sector where economies of scale can justify the
large investments. Much of this innovation can eventually be adapted to
nonroad applications, as has occurred in the past with such
technologies as electronic fuel injection and common rail fueling. We
therefore request comment on the feasibility and potential for these
advanced highway sector technologies, discussed in section VI.B, to be
introduced or accelerated in the nonroad sector.
(2) Equipment and Operational Pathways
Technology solutions in both the equipment design and operations
can reach beyond the engine improvements to further reduce GHG
emissions. We broadly discuss the following technologies below:
Regenerative energy recovery and hybrid power trains, CVT
transmissions, air conditioning improvements, component design
improvements, new lighting technologies, reduced idling, and consumer
awareness.
Locomotives, as an example, have significant potential to recover
energy otherwise dissipated as heat during braking. An 8,000-ton coal
train descending through 5,000 feet of elevation converts 30 MW-hrs of
potential energy to frictional and dynamic braking energy. Storing that
energy on board quickly enough to keep up with the energy generation
rate presents a challenge, but may provide a major viable GHG emissions
reduction strategy even if only partially effective. Another
regenerative opportunity relates to the specific, repetitive,
predictable work tasks that many nonroad machines perform. For example,
a forklift in a warehouse may lift a heavy load to a shelf and in doing
so expend work. Just as often, the forklift will lower such a load from
the shelf, and recover that load's potential energy, if a means is
provided to store that energy on board.
There are, however, many nonroad applications that may not have
much potential for regenerative energy recovery (a road grader, for
example), but in those applications a hybrid diesel-electric or diesel-
hydraulic system without a regenerative component may still provide
some GHG benefits. A machine that today is made with a large engine to
handle occasional peak work loads could potentially be redesigned with
a smaller engine and battery combination sized to handle the occasional
peak loads.
Besides pre-existing electrical or hydraulic systems, some nonroad
applications have one additional advantage over highway vehicles in
assessing hybrid prospects: They often have quite predictable load
patterns. A hybrid locomotive, for example, can be assigned to
particular routes, train sizes, and consist (multi-locomotive) teams,
to ensure it is used as close to full capacity as possible. The space
needs of large battery banks could potentially be accommodated on a
tender car, and the added weight would be offset somewhat by a smaller
diesel fuel load (typically 35,000 lbs today) and dynamic brake grid.
At least one locomotive manufacturer, General Electric, is already
developing a hybrid design, and battery energy storage has been
demonstrated for several years in rail yard switcher applications.
We request comment on all aspects of the hybrid and regeneration
opportunity in the nonroad sector, including the extent to which the
electric and hydraulic systems already designed into many nonroad
machines and vehicles could provide some cost savings in implementing
this technology, and the extent to which plug-in technologies could be
used in applications that have very predictable downtime such as
overnight at construction sites, or that can use plug-in electric power
while working or while sitting idle between tasks.
A Continuously Variable Transmission (CVT) has an advantage over
other conventional transmission designs by allowing the engine to
operate at its optimum speed over a range of vehicle speeds and
typically over a wider range of available ratios, which can provide GHG
emission reductions. It has been estimated that CVTs can provide a 3 to
8% decrease in fuel use over 4-speed automatic transmissions.\185\ They
are already in use some in nonroad vehicles such as snowmobiles and
all-terrain vehicles, and could possibly be used in other nonroad
applications as well. We request comment on the opportunities to apply
CVT to various nonroad applications.
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\185\ ``Effectiveness and Impact of Corporate Average Fuel
Economy (CAFE) Standards,'' National Research Council, National
Academy of Sciences, 2002.
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Some nonroad applications have air conditioning or refrigeration
equipment, including large farm tractors, highway truck transport
refrigeration units (TRUs), locomotives, and refrigerated rail cars.
Reducing refrigerant leakage in the field or reducing its release
during maintenance would work to reduce GHG emissions In addition, a
switch to refrigerants with lower GHG emissions than the currently-used
fluorinated gases can have a significant impact. We expect that the
measures used to reduce nonroad equipment refrigerant GHGs would most
likely involve the same strategies that have been or could be pursued
in the highway and stationary
[[Page 44464]]
source sectors, and the reader is referred to section VI.B.1 for
additional discussion. We request comment on the degree to which
nonroad applications emit fluorinated gases, and on measures that may
be taken to reduce these emissions.
An extensive variety of energy-consuming electrical, mechanical,
and hydraulic accessories are designed into nonroad machines to help
them perform their tasks. Much of the energy output of a nonroad engine
passes through these components and systems in making the machine do
useful work, and all of them have associated energy losses through
bearing friction, component heating, and other pathways. Designing
equipment to use components with lower GHG impacts in these systems can
yield substantial overall reductions in GHG emissions.
Some nonroad applications expend significant energy in providing
light, such as locomotive headlights and other train lighting.
Furthermore, diesel-powered portable light towers for highway
construction activities at night are increasingly being used to reduce
congestion from daytime lane closures. We request comment on the extent
to which a switch to less energy-intensive lighting could reduce GHG
emissions.
Many nonroad diesel engines are left idling during periods when no
work is demanded of them, generally as a convenience to the operator,
though modern diesel engines are usually easy to restart. In some
applications this may occupy hours every day. Even though the hourly
fuel rate is fairly low during idle, in the past several years
railroads have saved considerable money by adding automatic engine stop
start (AESS) systems to locomotives. These monitor key parameters such
as state of battery charge, and restart the engine only as needed,
thereby largely eliminating unnecessary idling. They reduce GHG
emissions and typically pay for themselves in fuel savings within a
couple of years. Our recent locomotive rule mandated these systems for
all new locomotives as an emission control measure (40 CFR
1033.115(g)). AESS or similar measures may be feasible for other
nonroad applications with significant idling time as well. We request
comment on the availability and effectiveness of nonroad idle reduction
technologies.
ii. Application-Specific GHG Pathways
As mentioned above, we discuss application-specific approach for
further reducting GHG emissions from one nonroad application,
locomotives, to illustrate application-specific opportunities for GHG
emission reductions beyond those discussed above that apply more
generally. We note that some of these application-specific
opportunities, though limited in breadth, may be among the most
important, because of their large GHG reduction potential.
We have chosen locomotives for this illustration in part because
rail transportation has already been the focus of substantial efforts
to reduce its energy use, resulting in generally favorable GHG
emissions per ton-mile or per passenger-mile. The Association of
American Railroads calculates that railroads move a ton of freight 423
miles on one gallon of diesel fuel.\186\ Reasons for the advantage
provided by rail include the use of medium-speed diesel engines, lower
steel-on-steel rolling resistance, and relatively gradual roadway
grades. Rail therefore warrants attention in any discussion on mode-
shifting as a GHG strategy. Even if GHG emissions reduction were not at
issue, shippers and travelers already experience substantial mode-shift
pressure today from long-term high fuel prices. Growth in the rail
sector highlights the critical importance of locomotive GHG emissions
reduction.
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\186\ Comments of the Association of American Railroads on EPA's
locomotive and marine engine proposal, July 2, 2007. Available in
EPA docket EPA-HQ-OAR-2003-0190.
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We have listed some key locomotive-specific opportunities below. We
note that a number of these are aimed at addressing GHG pathways from
rail cars. Rail cars create very significant GHG reduction pathways for
locomotives, because all of the very large energy losses from railcar
components translate directly into locomotive fuel use. This is
especially important when one considers that an average train has
several dozen cars. We request comment on the feasibility of the ideas
on this list and on other possible ways to reduce GHG emissions.
Opportunities for Rail GHG Reduction
Locomotives
Low-friction wheel bearings
Aerodynamic improvements
Idle emissions control beyond AESS (such as auxiliary
power units)
Electronically-controlled pneumatic (ECP) brakes
High-adhesion trucks (wheel assemblies)
Global positioning system (GPS)-based speed management (to
minimize braking, over-accelerations, and run-out/run-in losses at
couplings)
Railcars
Low-torque rail car wheel bearings
Tare weight reduction
Aerodynamic design of rail cars and between-car gaps
Better insulated refrigeration cars
Rail Infrastructure
Application of lubricants or friction modifiers to
minimize wheel-to-track friction losses
Higher-speed railroad crossings
Targeted-route electrification
Rail yard infrastructure improvements to eliminate
congestion and idling
Operational
Consist manager (automated throttling of each locomotive
in a consist team for lowest overall GHG emissions)
Optimized GPS-assisted dispatching/routing/tracking of
rail cars and locomotives
Optimized matching of locomotives with train load for
every route (including optimized placement of each locomotive along the
train)
Expanded resource sharing among railroads
Reduction of empty-car trips
Early scrappage of higher-GHG locomotives
c. Regulatory Options for Nonroad Engines and Vehicles
There is a range of options that could be pursued under CAA section
213 to control nonroad sector GHGs. The large diversity in this sector
allows for a great number of technology solutions as discussed above,
while also presenting some unique challenges in developing a
comprehensive, balanced, and effective regulatory program, and
highlights the importance of considering multiple potential regulatory
strategies. We have met similar challenges in regulating traditional
air pollutants from this sector, and we request comment on the
regulatory approaches discussed below and whether they would address
the challenges of regulating GHGs from nonroad engines.
As discussed in our earlier section on heavy-duty vehicles, the
potential regulatory approaches that we discuss here should be
considered not as discrete options but as a continuum of possible
approaches to address GHG emissions from this sector. Just as we have
in our technology discussion, these regulatory approaches begin with
the engine and then expand to included potential approaches to realize
reductions through vehicle and operational changes. In approaching the
discussion in this way, each step along such a path has the potential
to greater regulatory complexity but also has the
[[Page 44465]]
potential for greater regulatory flexibility, GHG reduction, and
program benefits. For large GHG reductions in the long term we expect
to give consideration to approaches that accomplish the largest
reductions, but we also note that, given the long time horizons for GHG
issues, we can consider a number of incremental regulatory steps along
a longer path. Also, given the absence of localized effects associated
with GHG emissions, EPA is interested in considering the incorporation
of banking, averaging, and/or credit trading into the regulatory
options discussed below.
The first regulatory approach we consider is a relatively
straightforward extension of our existing criteria pollutant program
for nonroad engines. In its simplest form, this approach would be an
engine GHG standard that preserves the current regulatory structure for
nonroad engines. Nonroad engine manufacturers are already familiar with
today's certification testing and procedures. Just like the highway
engine manufacturers, they have facilities, engine dynamometers, and
test equipment to appropriately measure GHG emissions. Further,
technologies developed to reduce GHG emissions from heavy-duty engines
could be applied to the majority of diesel nonroad engines with
additional development to address differences in operating conditions
and engine applications in nonroad equipment. Hence, this approach
would benefit from both regulatory work done to develop a heavy-duty
engine GHG program and technology development for heavy-duty engines to
comply with a GHG program. While we do not expect that new test cycles
would be needed to effect meaningful GHG emissions control, we request
comment on whether new test cycles would allow for improved control,
and especially on whether there are worthwhile GHG control technologies
that would not be adequately exercised and measured under the current
engine test cycles and test procedures.
A second approach that would extend control opportunities beyond
engine design improvements involves developing nonroad vehicle and
equipment GHG standards. Changes to nonroad vehicles and equipment can
offer significant opportunity for GHG emission reductions, and
therefore any nonroad GHG program considered by EPA would need to
evaluate the potential for reductions not just from engine changes but
from vehicle and equipment changes as well. In section VI.B.2 we
discussed a potential heavy-duty truck GHG standard (e.g., a gram per
mile or gram per ton-mile standard). A similar option could be
considered for at least some portion of nonroad vehicles and equipment.
For example, a freight locomotive GHG standard could be considered on a
similar mass per ton mile basis. This would be a change from our
current mass per unit work approach to locomotive regulation, but
section 213 of the Clean Air Act does authorize the Agency to set
vehicle-based and equipment-based nonroad standards as well.
However, we are concerned that there may be significant drawbacks
to widespread adoption of this application-specific standards-setting
approach. For the freight locomotive example given above, a gram per
ton-mile emissions standard measured over a designated track route
might be a suitable way to express a GHG standard, but such a metric
would not necessarily be appropriate for other applications. Instead
each application could require a different unit of measure tied to the
machine's mission or output-- such as grams per kilogram of cuttings
from a ``standard'' lawn for lawnmowers and grams per kilogram-meter of
load lift for forklifts. Such application-specific standards would
provide the clearest metric for GHG emission reductions. The standards
would directly reflect the intended use of the equipment and would help
drive equipment and engine designs that most effectively meet that need
while reducing overall GHG emissions. However, the diversity of tasks
performed by the hundreds of nonroad applications would lead to a
diverse array of standard work units and measurement techniques in such
a nonroad GHG program built on equipment-based standards. We request
comments on this second regulatory approach, and in particular comments
that identify specific nonroad applications that would be best served
by such a nonroad vehicle-based regulatory approach.
A variation on the above-described approaches would be to maintain
the relative simplicity of an engine-based standard while crediting the
GHG emission reduction potential of new equipment designs. Under this
option, the new technology would be evaluated by measuring GHG
emissions from a piece of equipment that has the new technology while
performing a standard set of typical tasks. The results would then be
compared with data from the same or an identical piece of equipment,
without the new technology, performing the same tasks. This approach
could be carried out for a range of equipment models to help improve
the statistical case for the resulting reductions. The percentage
reduction in GHG emissions with and without the new equipment
technology could then be applied to the GHG emissions measured in
certification testing of engines used in the equipment in helping to
demonstrate compliance with an engine-based GHG standard. Thus if a new
technology were shown to reduce the GHG emissions of a typical piece of
equipment by 20%, that 20% reduction could be applied at certification
to the GHG emission results from a more traditional engine-based test
procedure and engine-based standard.
In fact, a very similar approach has been adopted in EPA's recently
established locomotive program (see 73 FR 25155, May 6, 2008). In this
provision, credit is given to energy-saving measures based on the fact
that they provide proportional reductions in the criteria pollutants.
This credit takes the form of an adjustment to criteria pollutant
emissions measured under the prescribed test procedure for assessing
compliance with engine-based standards.
A more flexible extension of this approach would be to de-link the
equipment-based GHG reduction from the compliance demonstration for the
particular engine used in the same equipment. Instead the GHG
difference would provide fungible credits for each piece of equipment
sold with the new technology, credits that then could be used in a
credit averaging and trading program. Under this concept it would be
important to collect and properly weight data over an adequate range of
equipment and engine models, tasks performed, and operating conditions,
to ensure the credits are deserved. We request comments on the option
of applying the results of equipment testing to an engine-based GHG
standard and the more general concept of generating GHG emission
credits from such an approach. We also request comment on whether such
credit-based approaches to accounting for the many promising equipment
measures are likely to obtain similar GHG reductions as the setting of
equipment based standards, and on whether some combined approach
involving both standards and credits may be appropriate.
There are also a number of ways to reduce GHG emissions in the
nonroad sector that do not involve engine or equipment redesign.
Rather, reductions can be achieved by altering the way in which the
equipment is used. For example, intermodal shipping moving freight from
trucks and onto lower GHG rail or marine services, provides a means of
reducing these emissions for
[[Page 44466]]
freight shipments that can accommodate the logistical constraints of
intermodal shipping. Many of the operational measures with GHG-reducing
potential do involve a significant technology component, perhaps even
hardware changes, but they can also involve actions on the part of the
equipment operator or owner that go beyond simply maintaining and not
tampering with the emission controls. For example, a railroad may make
the capital and operational investment in sophisticated computer
technology to dispatch and schedule locomotive resources, using onboard
GPS-based tracking hardware. The GHG reduction benefit, though enabled
in part by the onboard hardware, is not realized without the people and
equipment assigned to the dispatch center.
Credit for such operational measures could conceivably be part of a
nonroad GHG control program and could be calculated and assigned using
the same ``with and without'' approach to credit generation described
above for equipment-based changes. However, some important
implementation problems arise from the greater human element involved.
This human element becomes increasingly significant as the scope of
creditable measures moves further away from automatic technology-based
solutions. Assigning credits to such measures must involve good
correlation between the credits generated and the GHG reductions
achieved in real world applications. It therefore may make sense to
award these credits only after an operational measure has been
implemented and verified as effective. This might necessitate that such
credits have value for equipment or sources other than the equipment
associated with the earning of the credit, such as in a broader credit
market. This is because nonroad equipment and engines must demonstrate
compliance with EPA standards before they are put into service. They
therefore cannot benefit from credits created in the future unless
through some sort of credit borrowing mechanism.
Once verified, however, we would expect credits reflecting these
operational reductions could be banked, averaged and traded, just as
much as credits derived from equipment- or engine-based measures.
Verifiable GHG reductions, regardless of how generated, have equal
value in addressing climate change. We also note, however, that an
effective credit program, especially one with cross-sector utility,
should account for the degree to which a credit-generating measure
would have happened anyway, or would have happened eventually, had no
EPA program existed; this is likely to be challenging. We request
comment on the appropriateness of a much broader GHG credit-based
program as described here.
In this section, we have laid out a range of regulatory approaches
for nonroad equipment that takes us from a relatively simple extension
of our existing engine-based regulatory program through equipment based
standards and finally to a fairly wide open credit scheme that would in
concept at least have the potential to pull in all aspects of nonroad
equipment design and operation. In describing these approaches, we have
noted the increasing complexity and the greater need for new mechanisms
to ensure the emission reductions anticipated are real and verifiable.
We seek comment on the relative merits of each of these approaches but
also on the potential for each approach along the continuum to build
upon the others.
3. Marine Vessels
Marine diesel engines range from very small engines used to propel
sailboats, or used for auxiliary power, to large propulsion engines on
ocean-going vessels. Our current marine diesel engine emission control
programs distinguish between five kinds of marine diesel engines,
defined in terms of displacement per cylinder. These five types include
small (<=37 kW), recreational, and commercial marine engines.
Commercial marine engines are divided into three categories based on
per cylinder displacement: Category 1 engines are less than 5 l/cyl,
Category 2 engines are from 5 l/cyl up to 30 l/cyl, and Category 3
engines are at or above 30 l/cyl. Category 3 engines are 2- or 4-stroke
propulsion engines that typically use residual fuel; this fuel has high
energy content but also has very high fuel sulfur levels that result in
high PM emissions. Most of the other engine types are 4-stroke and can
be used to provide propulsion or auxiliary power. These operate on
distillate fuel although some may operate on a blend of distillate and
residual fuel or even on residual fuel (for example, fuels commonly
known as DMB, DMC, RMA, and RMB).
There are also a wide variety of vessels that use marine diesel
engines and they can be distinguished based on where they are used.
Vessels used on inland waterways and coastal routes include fishing
vessels that may be used either seasonally or throughout the year,
river and harbor tug boats, towboats, short- and long-distance ferries,
and offshore supply and crew boats. These vessels often have Category 2
or smaller engines and operate in distillate fuels. Ocean-going vessels
(OGVs) include container ships, bulk carriers, tankers, and passenger
vessels and have Category 3 propulsion engines as well as some smaller
auxiliary engines. As EPA deliberates on how to potentially address GHG
emissions from marine vessels, we will consider the significance of the
different engine, vessel, and fuel types. We invite comment on the
marine specific issues that EPA should consider; in particular, we
invite commenters to compare and contrast potential marine vessel
solutions to our earlier discussions of highway and nonroad mobile
sources and our existing marine engine criteria pollutant control
programs.
a. Marine Vessel GHG Emissions
Marine engines and vessels emitted 84.2 million metric tons of
CO2 in 2006, or 3.9 percent of the total mobile source
CO2 emissions. CO2 emissions from marine vessels
are expected to increase significantly in the future, more than
doubling between 2006 and 2030. The emissions inventory from marine
vessels comes from operation in ports, inland waterways, and offshore.
The CO2 inventory estimates presented here refer to
emissions from marine engine operation with fuel purchased in the
United States.\187\ OGVs departing U.S. ports with international
destinations take on fuel that emits 66 percent of the marine vessel
CO2 emissions; the other 34 percent comes from smaller
commercial and recreational vessels.
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\187\ U.S. EPA, ``Inventory of U.S. Greenhouse Gas Emissions and
Sinks: 1990-2006,'' April 15, 2008.
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GHG emissions from marine vessels are dominated by CO2
emissions which comprise approximately 94 percent of the total.
Approximately 5.5 percent of the GHG emissions from marine vessels are
due to HFC emissions, mainly from reefer vessels (vessels which carry
refrigerated containers). Methane and nitrous oxide make up less than 1
percent of the marine vessel sector GHG emissions on a CO2
equivalent basis. Comment is requested on the contribution of marine
vessels to GHG emissions and on projections for growth in this sector.
b. Potential for GHG Reductions From Marine Vessels
There are significant opportunities to reduce GHG emissions from
marine vessels through both traditional and innovative strategies.
These strategies include technological improvements to engine and
vessel design as well as changes in vessel operation. This
[[Page 44467]]
section provides an overview of these strategies, and a more detailed
description is available in the public docket.\188\ EPA requests
comment on the advantages and drawbacks of each of the strategies
described below, as well as on additional approaches for reducing
greenhouse gases from marine vessels.
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\188\ ``Potential Technologies for GHG Reductions from
Commercial Marine Vessels'', memorandum from Michael J. Samulski,
U.S. EPA, to docket xx, DATE.
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i. Reducing GHG Emissions Through Marine Engine Changes
GHG emissions may be reduced by increasing the efficiency of the
marine engine. As discussed earlier for heavy-duty trucks, there are a
number of improvements for CI engines that may be used to lower GHGs.
These improvements include higher compression ratios, higher injection
pressure, shorter injection periods, improved turbocharging, and
electronic fuel and air management. Much of the energy produced in a CI
engine is lost to the exhaust. Some of this energy can be reclaimed
through the use of heat recovery systems. We request comment on the
feasibility of reducing GHG emissions through better engine designs and
on additional technology which could be used to achieve GHG reductions.
As discussed above, marine engines are already subject to exhaust
emission standards. Many of the noxious emissions emitted by internal
combustion engines may also be GHGs. These pollutants include
NOX, methane, and black carbon soot. Additionally, some
strategies used to mitigate NOX and PM emissions can also
indirectly impact GHGs through their impact on fuel use--for example,
use of aftertreatment rather than injection timing retard to reduce
NOX emissions. We request comment on the GHG reductions
associated with HC+NOX and PM emissions standards for these
engines.
The majority of OGVs operate primarily on residual fuel, while
smaller coastal vessels operate primarily on distillate fuel. Shifting
more shipping operation away from residual fuel would reduce GHG
emissions from the ship due to the lower carbon/hydrogen ratio in
distillate fuel. Marine engines have been developed that operate on
other lower carbon fuels such as natural gas and biodiesel. Because
biodiesel is a renewable fuel, lifecycle GHG emissions are much lower
than for operation on petroleum diesel. We request comment on these and
other fuels that may be used to power marine vessels and the impact
these fuels would have on lifecycle GHG emissions.
A number of innovative alternatives are under development for
providing power on marine vessels. These alternative power sources
include fuel cells, solar power, wind power, and even wave power. While
none of these technologies are currently able to supply the total power
demands of larger, ocean-going vessels, they may prove to be capable of
reducing GHG emissions through auxiliary power or power-assist
applications. Hybrid engine designs are used in some vessels where a
bank of engines is used to drive electric motors for power generation.
The advantage of this approach is that the same engines may be used
both for propulsion and auxiliary needs. Another advantage is that
alternative power sources could be used with a hybrid system to provide
supplemental power. We request comment on the extent to which
alternative power sources and hybrid designs may be applied to marine
vessels to reduce greenhouse gases.
ii. Reducing GHG Emissions Through Vessel Changes
GHG emissions may be reduced by minimizing the power needed by the
vessels to perform its functions. The largest power demand is generally
for overcoming resistance as the vessel moves through the water but is
also affected by propeller efficiency and auxiliary power needs.
Water resistance is made up of the effort to displace water and
drag due to friction on the hull. The geometry of the vessel may be
optimized in many ways to reduce water resistance. Ship designers have
used technologies such as bulbous bows and stern flaps to help reduce
water resistance from the hull of the vessel. Marine vessels typically
use surface coatings to inhibit the growth of barnacles or other sea
life that would increase drag on the hull. Innovative strategies for
reducing hull friction include coatings with textures similar to marine
animals and reducing water/hull contact by enveloping the hull with
small air bubbles released from the sides and bottom of the ship.
Both the wetted surface area and amount of water displaced by the
hull may be reduced by lowering the weight of the vessel. This may be
accomplished through the use of lower weight materials such as aluminum
or fiberglass composites or by simply using less ballast in the ship
when not carrying cargo. Other options include ballast-free ship
designs such as constantly flowing water through a series of pipes
below the waterline or a pentamaran hull design in which the ship is
constructed with a narrow hull and four sponsons which provide
stability and eliminate the need for ballast water. We request comment
to the extent that these approaches may be used to reduce GHGs by
reducing fuel consumption from marine vessels in the future. We also
request comment on other design changes that may reduce the power
demand due to resistance on the vessel.
In conventional propeller designs, a number of factors must be
considered including load, speed, pitch, diameter, pressure pulses, and
cavitation (formation of bubbles which may damage propeller and reduce
thrust). Proper maintenance of the propeller can minimize energy losses
due to friction. In addition, propeller coatings are available that
reduce friction on the propeller and lead to energy savings. Because of
the impact of the propeller on the operation of the vessel, a number of
innovative technologies have been developed to increase the efficiency
of the propeller. These technologies include contra-rotating
propellers, azimuth thrusters, ducted propellers, and grim vane wheels.
We request comment on the GHG reductions that may be achieved through
improvements in vessel propulsion efficiency, either through the
approaches listed here or through other approaches.
Power is also needed to provide electricity to the ship and to
operate auxiliary equipment. Power demand may be reduced through the
use of less energy intensive lighting, improved electrical equipment,
improved reefer systems, crew education campaigns, and automated air-
conditioning systems. We request comment on the opportunities to
provide auxiliary power with reduced GHG emissions.
In addition, GHG emissions may be released from leaks in air
conditioning or refrigeration systems. There is a large amount of
fluorinated and chlorinated hydrocarbons used in refrigeration and air-
conditioning systems on ships. We request comment on the degree to
which marine vessels emit fluorinated and chlorinated hydrocarbons to
the atmosphere, and on measures that may be taken to mitigate these
emissions.
iii. Reducing GHG Emissions Through Vessel Operational Changes
In addition to improving the design of the engine and vessel, GHG
emissions may be reduced through operational measures. These
operational measures include reduced speeds, improved routing and fleet
planning, and shore-side power.
[[Page 44468]]
In general, the power demand of a vessel increases with at least
the square of the speed; therefore, a 10 percent reduction in speed
could result in more than a 20 percent reduction in fuel consumption,
and therefore in GHG emissions. An increased number of vessels
operating at slower speeds may be able to transport the same amount of
cargo while producing less GHGs. In some cases, vessels operate at
higher speeds than necessary simply due to inefficiencies in route
planning or congestion at ports. Ship operators may need to speed up to
correct for these inefficiencies. GHG reductions could be achieved
through improved route planning, coordination between ports, and
weather routing systems. GHG reductions may also be achieved by using
larger vessels and through better fleet planning to minimize the time
ships operate at less than full capacity. We request comment on the
extent to which greenhouse gas emissions may be practically reduced
through vessel speed reductions and improved route and fleet planning.
Many ports have shore-side power available for ships as an
alternative to using onboard engines at berth. To the extent that the
power sources on land are able to produce energy with lower GHG
emissions than the auxiliary engines on the vessel, shore-side power
may be an effective strategy for GHG reduction. In addition to more
traditional power generation units, shore-side power may come from
renewable fuels, nuclear power, fuel cells, windmills, hydro-power, or
geothermal power. We request comment on GHG reductions that could be
achieved through the use of shore-side power.
c. Regulatory Options for Marine Vessels
EPA could address GHG emissions from marine vessels using
strategies from a continuum of different regulatory tools, including
emission standards, vessel design standards, and strategies that
incorporate a broader range of operational controls. These potential
regulatory strategies are briefly described below. As is the case with
other source categories, EPA is also interested in exploring the
potential applicability of flexible mechanisms such as banking and
credit trading. With regard to ocean-going vessels, we are also
exploring the potential to address GHG emissions through the
International Maritime Organization under a program that could be
adopted as a new Annex to the International Convention for the
Prevention of Pollution from Ships (MARPOL). Those efforts are also
described below. EPA requests comment on the advantages and drawbacks
of each of these regulatory approaches.
As with trucks and land-based nonroad equipment, the first
regulatory approach we could consider entails setting GHG emission
limits for new marine diesel engines. For engines with per cylinder
displacement up to 30 liters (i.e., Category 1 and Category 2), EPA has
already adopted stringent emission limits for several air pollutants
that may be GHGs, including NOX, methane (through
hydrocarbon standards) and black carbon soot (through PM standards).
This emission control program could be augmented by setting standards
for GHG emissions that could be met through the application of the
technologies described above (e.g., improved engine designs, hybrid
power). We request comment regarding issues that EPA should consider in
evaluating this approach and the most appropriate means to address the
issues raised. We recognize that an engine-based regulatory structure
would limit the potential GHG emission reductions compared to programs
that include vessel technologies and crediting operational
improvements. In the remainder of this section, we consider other
options that would have the potential to provide greater GHG reductions
by providing mechanisms to account for vessel and operational changes.
A second regulatory approach to address GHG emissions from marine
vessels is to set equipment standards. As described above, these could
take the form of standards that require reduced air and/or water
resistance, improved propeller design, and auxiliary power
optimization. Equipment standards could also address various equipment
onboard vessels, such as refrigeration units. While Annex VI currently
contains standards for ozone depleting substances, this type of control
could be applied more broadly to U.S. vessels that are not subject to
the Annex VI certification requirements.
A critical characteristic of marine vessels that must be taken into
account when considering equipment standards is that not all marine
vessels are designed alike for the same purpose. A particular hull
design change that would lower GHGs for a tugboat may not be
appropriate for a lobster vessel or an ocean-going vessel. These
differences will have an impact on how an equipment standard would be
expressed. We request comment on how to express equipment standards in
terms of an enforceable limit, and on whether it is possible to set a
general standard or if separate standards would be necessary for
discrete vessel types/sizes. We also request comment on the critical
components of a compliance program for an equipment standard, how it
can be enforced, and at what point in the vessel construction process
it should be applied.
In addition to the above, the spectrum of regulatory approaches we
outline in section VI.C.2.c for nonroad engines and vehicles could
potentially be applied to the marine sector as well, with corresponding
GHG reductions. These would include: (1) Setting mission-based vessel
standards (such as GHG gram per ton-mile shipping standards) for at
least some marine applications where this can be reliably measured and
administered, (2) allowing vessel changes such as lower resistance hull
designs to generate credits against marine engine-based standards, (3)
granting similar credits for operational measures such as vessel speed
reductions, and (4) further allowing such credits to be used in wider
GHG credit exchange programs. We note too that the implementation
complexities for these approaches discussed in section VI.C.2.c apply
in the marine sector as well, and these complexities increase as
regulatory approaches move further along the continuum away from
engine-based standards.
Separate from the Annex VI negotiations for more stringent
NOX and PM standards discussed above, the United States is
working with the Marine Environment Protection Committee of the IMO to
explore appropriate ways to reduce CO2 emissions from ships
for several years. At the most recent meeting of the Committee, in
April 2008, the Member States continued their work of assessing short-
and long-term GHG control strategies. A variety of options are under
consideration, including all of those mentioned above. The advantage of
an IMO-based program is that it could provide harmonized international
standards. This is important given the global nature of vessel traffic
and given that this traffic is expected to increase in the future.
4. Aircraft
In this section we discuss and seek comment on the impact of
aircraft operations on GHG emissions and the potential for reductions
in GHG emissions from these operations. Aircraft emissions are
generated from aircraft used for public, private, and national defense
purposes including air carrier commercial aircraft, air taxis, general
aviation, and military aircraft.
[[Page 44469]]
Commercial aircraft include those used for scheduled service
transporting passengers, freight, or both. Air taxis fly scheduled and
for-hire service carrying passengers, freight or both, but they usually
are smaller aircraft than those operated by commercial air carriers.
General aviation includes most other aircraft (fixed and rotary wing)
used for recreational flying, business, and personal transportation
(including piston-engine aircraft fueled by aviation gasoline).
Military aircraft cover a wide range of airframe designs, uses, and
operating missions.
As explained previously, section 231 of the CAA directs EPA to set
emission standards, test procedures, and related requirements for
aircraft, if EPA finds that the relevant emissions cause or contribute
to air pollution which may reasonably be anticipated to endanger public
health or welfare. In setting standards, EPA is to consult with FAA,
particularly regarding whether changes in standards would significantly
increase noise and adversely affect safety. CAA section 232 directs FAA
to enforce EPA's aircraft engine emission standards, and 49 U.S.C.
section 44714 directs FAA to regulate fuels used by aircraft.
Historically, EPA has worked with FAA and the International Civil
Aviation Organization (ICAO) in setting emission standards and related
requirements. Under this approach international standards have first
been adopted by ICAO, and subsequently EPA has initiated CAA
rulemakings to establish domestic standards that are at least as
stringent as ICAO's standards. In exercising EPA's own standard-setting
authority under the CAA, we would expect to continue to work with FAA
and ICAO on potential GHG emission standards, if we found that aircraft
GHG emissions cause or contribute to air pollution which may reasonably
be anticipated to endanger public health or welfare.
Over the past 25-30 years, EPA has established aircraft emission
standards covering certain criteria pollutants or their precursors and
smoke; these standards do not currently regulate emissions of
CO2 and other GHGs.\189\ However, provisions addressing test
procedures for engine exhaust gas emissions state that the test is
designed to measure various types of emissions, including
CO2, and to determine mass emissions through calculations
for a simulated aircraft landing and takeoff cycle (LTO). Currently,
CO2 emission data over the LTO cycle is collected and
reported.\190\ Emission standards apply to engines used by essentially
all commercial aircraft involved in scheduled and freight airline
activity.\191\
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\189\ Our existing standards include hydrocarbon emissions and
CH4 is a hydrocarbon. If CH4 is present in the
engine exhaust, it would be measured as part of the LTO test
procedure. There is not a separate CH4 emission standard
for aircraft engines.
\190\ Certification information includes fuel flow rates over
the different modes (and there are specified times in modes) of the
LTO cycle. Utilizing this information, the ICAO Engine Emissions
Databank reports kilograms of fuel used during the entire LTO cycle
(see http://www.caa.co.uk/default.aspx?catid=702&pagetype=90).
\191\ Regulated aircraft engines are used on commercial aircraft
including small regional jets, single-aisle aircraft, twin-aisle
aircraft, and 747s and larger aircraft.
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a. GHG Emissions From Aircraft Operations
Aircraft engine emissions are composed of about 70 percent
CO2, a little less than 30 percent water vapor, and less
than one percent each of NOX, CO, sulfur oxides
(SOX), non-methane volatile organic carbons (NMVOC),
particulate matter (PM), and other trace components including hazardous
air pollutants (HAPs). Little or no nitrous oxide (N2O)
emissions occur from modern gas turbines. Methane (CH4) may
be emitted by gas turbines during idle and by relatively older
technology engines, but recent data suggest that little or no
CH4 is emitted by more recently designed and manufactured
engines.\192\ By mass, CO2 and water vapor are the major
compounds emitted from aircraft operations that relate to climate
change.
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\192\ IPCC, Aviation and the Global Atmosphere, 1999, at http://www.grida.no/climate/ipcc/aviation/index.htm.
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In 2006, EPA estimated that among U.S. transportation sources,
aircraft emissions constituted about 12 percent of CO2
emissions, and more broadly, about 12 percent of the combined emissions
of CO2, CH4, and N2O. Together
CH4 and N2O aircraft emissions constituted only
about 0.1 percent of the combined CO2, CH4, and
N2O emissions from U.S. transportation sources, and they
make up about one percent of the total aircraft emissions of
CO2, CH4, and N2O.\193\ Aircraft
emissions were responsible for about 4 percent of CO2
emissions from all U.S. sources, and about 3 percent of CO2,
CH4, and N2O emissions collectively. While
aircraft CO2 emissions have declined by about 6 percent
between 2000 and 2006, from 2006 to 2030, the U.S. Department of Energy
projects that the energy use of aircraft will increase by about 60
percent (excluding military aircraft operations).\194\ Commercial
aircraft make up about 83 percent of both CO2 emissions and
the combined emissions of CO2, CH4, and
N2O for U.S. domestic aircraft operations. In addition, U.S.
domestic commercial aircraft activity represents about 24 percent of
worldwide commercial aircraft CO2 emissions. With
international aircraft departures, the total U.S. CO2
emissions from commercial aircraft are about 35 percent of the total
global commercial aircraft CO2 emissions.195 196
Globally, 93 percent of the fuel burn (a surrogate for CO2)
and 92 percent of NOX emissions from commercial aircraft
occur outside of the basic LTO cycle (i.e., operations nominally above
3,000 feet).\197\
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\193\ U.S. EPA, Inventory of U.S. Greenhouse Gas Emissions and
Sinks: 1990-2006, April 2008, USEPA 430-R-08-005, available
at http://www.epa.gov/climatechange/emissions/usinventoryreport.html.
\194\ Energy Information Administration, Annual Energy Outlook
2008, Report No.: DOE/EIA-0383 (2008), March 2008, available at
http://www.eia.doe.gov/oiaf/aeo/. These Department of Energy
projections are similar to FAA estimates (FAA, Office of Environment
and Energy, Aviation and Emission: A Primer, January 2005, at pages
10 and 23, available at http://www.faa.gov/regulations_policies/policy_guidance/envir_policy/media/aeprimer.pdf ). The FAA
projections were based on FAA long-range activity forecasts that
assume a constant rate of emissions from aircraft engines in
conjunction with an increase in aviation operations. It does not
take into account projected improvements in aircraft, aircraft
engines, and operational efficiencies.
\195\ FAA, System for Assessing Aviation's Global Emissions,
Version 1.5, Global Aviation Emissions Inventories for 2000 through
2004, FAA-EE-2005-02, September 2005, available at http://www.faa.gov/about/office_org/headquarters_offices/aep/models/sage/
.
\196\ International flights are those that depart from the U.S.
and arrive in a different country.
\197\ FAA, System for Assessing Aviation's Global Emissions,
Version 1.5, Global Aviation Emissions Inventories for 2000 through
2004, FAA-EE-2005-02, September 2005, at page 10, at Table 3,
available at http://www.faa.gov/about/office_org/headquarters_offices/aep/models/sage/.
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The compounds emitted from aircraft that directly relate to climate
change are CO2, CH4, N2O and, in
highly specialized applications, SF6.\198\ Aircraft also
emit other compounds that are indirectly related to climate change such
as NOX, water vapor, and PM. NOX is a precursor
to cruise-altitude ozone, which is a GHG. An increase in ozone also
results in increased tropospheric hydroxyl radicals (OH) which reduces
ambient CH4, thus potentially at least partially offsetting
the warming effect from the increase in ozone. Water vapor and PM
modify or create cloud cover, which in turn can either amplify or
[[Page 44470]]
dampen climate change.\199\ Contrails are unique to aviation
operations, and persistent contrails are of interest because they
increase cloudiness.\200\ The IPCC Fourth Assessment Report (2007) has
characterized the level of scientific understanding as low to very low
regarding the radiative forcing of contrails and aviation induced
cirrus clouds.\201\ EPA requests information on the climate change
compounds emitted by aircraft and the scientific understanding of their
climate effects, including contrail formation and persistence.
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\198\ SF6 is used as an insulating medium in the
radar systems of some military reconnaissance planes. 2006 IPCC
Guidelines for National Greenhouse Gas Inventories, Volume 3,
Industrial Processes and Product Use, Chapter 8, Other Product
Manufacture and Use, Section 8.3, Use of SF6 and HFCs in
Other Products; http://www.ipcc-nggip.iges.or.jp/public/2006gl/index.htm.
\199\ IPCC, Climate Change 2007--The Physical Science Basis,
Contribution of Working Group I to the Fourth Assessment Report of
the IPCC, Chapter 2, Changes in Atmospheric Constituents and in
Radiative Forcing.
\200\ EPA, Aircraft Contrails Factsheet, EPA430-F-00-005,
September 2000, developed in conjunction with NASA, the National
Oceanic and Atmospheric Administration (NOAA), and FAA, available at
http://www.epa.gov/otaq/aviation.htm.
\201\ IPCC, Climate Change 2007--The Physical Science Basis,
Contribution of Working Group I to the Fourth Assessment Report of
the IPCC, Chapter 2, Changes in Atmospheric Constituents and in
Radiative Forcing, (page 202).
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b. Potential for GHG Reductions From Aircraft Operations
There are both technological controls and operational measures
potentially available to reduce GHG emissions from aircraft and
aircraft operations. These are discussed below.
i. Reducing GHG Emissions Through Aircraft Engine Changes
Fuel efficiency and therefore GHG emission rates are closely linked
to jet aircraft engine type (e.g., high bypass ratio) and choice of
engine thermodynamic cycles (e.g., pressure and temperature ratios),
but modifications in the design of the engine's combustion system can
also have a substantial effect on the composition of the exhaust.\202\
Turbofan engines, with their high bypass ratios and increased
temperatures, introduced in the 1970s and 1980s reduced CO2,
HC, and CO emissions, but in many cases put upward pressure on
NOX emission rates. Also, a moderate increase in the engine
bypass ratio (high bypass turbofan) decreases fuel burn (and
CO2) by enhancing propulsive efficiency and reduces noise by
decreasing exhaust velocity, but it may lead to increased engine
pressure ratio and potentially higher NOX. \203\ There is no
single relationship between NOX and CO2 that
holds for all engine types. As the temperatures and pressures in the
combustors are increased to obtain better efficiency, emissions of
NOX increase, unless there is also a change in combustor
technology.\204\ There are interrelationships among the different
emissions and noise to be considered in engine design.
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\202\ IPCC, Aviation and the Global Atmosphere, 1999, at
Aircraft Technology and Its Relation to Emissions, at page 221, at
section 7.1, available at http://www.grida.no/climate/ipcc/aviation/index.htm.
\203\ ICCIA, Technical Design Interrelationships, Presentation
by Dan Allyn, ICCAIA Chair, at Aviation and the Environment
Conference, March 19, 2008, available at http://www.airlines.org/government/environment/Aviation+and+the+Environment+Conference+Presentations.htm.
\204\ IPCC, Aviation and the Global Atmosphere, 1999, at
Aircraft Technology and Its Relation to Emissions, at page 237, at
section 7.5.6, available at http://www.grida.no/climate/ipcc/aviation/index.htm.
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The three major jet engine manufacturers in the world are General
Electric (GE), Pratt and Whitney, and Rolls-Royce. All of these
manufacturers supply engines to both U.S. and non-U.S. aircraft
manufacturers, and their engines are installed on aircraft that operate
worldwide. These three manufacturers are now (or will be in the future)
producing more fuel efficient (lower GHG) engines with improved
NOX. The General Electric GEnx jet engine is being developed
for the new Boeing 787, and GE's goal is to have the GEnx engine meet
NOX levels 50 percent lower than the ICAO standards approved
in 2005.\205\ The combustor technology GE is employing is called the
Twin Annular, Pre-mixing Swirler (TAPS) combustor. In addition, the
GEnx is expected to improve specific fuel consumption by 15 percent
compared to the previous generation of engine technology (GE's CF6
engine).\206\
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\205\ The NOX standards adopted at the sixth meeting
of ICAO's Committee on Aviation Environmental Protection (CAEP) in
February 2004 were approved by ICAO in 2005.
\206\ General Electric, Press Release, Driving GE Ecomagination
with the Low-Emission GEnx Jet Engine, July 20, 2005, available at
http://www.geae.com/aboutgeae/presscenter/genx/genx_20050720.html.
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Pratt and Whitney has developed the geared turbofan technology that
is expected to deliver 12 percent reduction in fuel burn while emitting
half of the NOX emissions compared to today's engines. In
addition to an advanced gear system, the new engine design includes the
next generation technology for advanced low NOX (TALON). The
rich-quench-lean TALON combustor utilizes advanced fuel/air atomizers
and mixers, metallic liners, and advanced cooling management to
decrease NOX emissions during the LTO and high-altitude
cruise operations. Flight testing of the engine is expected this year,
and introduction into service is expected in 2012.\207\ Mitsubishi
Heavy Industries has chosen the engine for its regional
jet.208 209
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\207\ Engine Yearbook, Pratt & Whitney changing the game with
geared turbofan engine, 2008, at page 96.
\208\ Aviation, Japanese Airliner to Introduce PW's New Engine
Technology, by Chris Kjelgaard, October 9, 2007, available at http://www.aviation.com/technology/071009-pw-geared-turbofan-powering-mrj.html.
\209\ The New York Times, A Cleaner, Leaner Jet Age Has Arrived,
by Matthew L. Wald, April 9, 2008, available at http://www.nytimes.com/2008/04/09/technology/techspecial/09jets.html?_r=1&ex=1208491200&en=6307ad7d1372acdf&ei=5070&emc=eta1&oref=slogin.
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Rolls-Royce's Trent 1000 jet engine will power the Boeing 787s on
order for Virgin Atlantic airlines. The Trent 1000 powered 787 is
expected to improve fuel consumption by up to 15 percent compared to
the previous generation of engines (Rolls-Royce's Trent 800
engine).\210\ The technology in the Trent 1000 improves the operability
of the compressors, and enables the engine to run more efficiently at
lower speeds. This contributes to better fuel burn, especially in
descent.\211\
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\210\ Rolls-Royce, Trent and the environment, available at
http://www.rolls-royce.com/community/downloads/trent_env.pdf and
the Rolls-Royce environmental report, Powering a better world:
Rolls-Royce and the environment, 2007, available at http://www.rolls-royce.com/community/environment/default.jsp.
\211\ Green Car Congress, Rolls-Royce Wins $2.6B Trent 1000
Order from Virgin Atlantic; The Two Launch Joint Environmental
Initiative, March 3, 2008, available at http://www.greencarcongress.com/2008/03/rolls-royce-win.html.
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ii. Reducing GHG Emissions Through Aircraft Changes
Aircraft (or airframe) efficiency gains are mainly achieved through
aerodynamic drag and weight reduction.\212\ Most of the fuel used by
aircraft is needed to overcome aerodynamic drag, since they fly at very
high speeds. Reduction of aerodynamic drag can substantially improve
the fuel efficiency of aircraft thus reducing GHG emissions.
Aerodynamic drag can be decreased by installing add-on devices, such as
film surface grooves, hybrid laminar flow technology, blended winglets,
and spiroid tips, and GHG emissions can be reduced by each of these
measures from 1.6 to 6 percent.
[[Page 44471]]
Further discussion of these devices is provided below.
\212\ U.S. Department of Transportation, Best Practices
Guidebook for Greenhouse Gas Reductions in Freight Transportation--
Final Report, Prepared for U.S. Department of Transportation via
Center for Transportation and the Environment, Prepared by H.
Christopher Frey and Po-Yao Kuo, Department of Civil, Construction,
and Environmental Engineering, North Carolina State University,
October 4, 2007, available at http://www4.ncsu.edu/~frey/Frey--Kuo--
071004.pdf.
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--Film surface grooves: This technology is undergoing testing, and
it is an adhesive-backed film with micro-grooves placed on the outer
surfaces of the wings and the fuselage of the aircraft. Film surface
grooves are estimated to reduce total aerodynamic drag and GHG
emissions by up to 1.6 percent.
--Hybrid laminar flow technology: Contamination on the airframe
surface, such as the accumulation of ice, insects or other debris,
degrades laminar flow. A newly developed concept, hybrid laminar flow
technology (replace turbulent air flow), integrates approaches to
maintain laminar flow. This technology can reduce fuel use by 6 to 10
percent and potentially GHG emissions by 6 percent.
--Blended winglets: A blended winglet is a commercially available
wing-tip device that can decrease lift-induced drag. This technology is
an extension mounted at the tip of a wing. The potential decreases in
both GHG emissions and fuel use are estimated to be 2 percent.
--Spiroid tip: A spiroid tip has been pilot tested and, similar to
blended winglets, it is intended to reduce lift-induced drag. This
technology is a spiral loop formed by joining vertical and horizontal
winglets. Greenhouse gas emissions and fuel use are both potentially
estimated to be decreased by 1.7 percent.
Reductions in the weight of an aircraft by utilizing light-weight
materials and weight reduction of non-essential components could lead
to substantial decreases in fuel use. The weight of an airframe is
about 50 percent of an aircraft's gross weight. The use of advanced
lighter and stronger materials in the structural components of the
airframe, such as aluminum alloy, titanium alloy, and composite
materials for non-load-bearing structures, can decrease airframe
weight. These materials can reduce structural weight by 4 percent. The
potential reduction in greenhouse gas emissions and fuel use are
estimated to both be 2 percent.
iii. Reducing GHG Emissions Through Operational Changes
Rising jet fuel prices tend to drive the aviation industry to
implement practices to decrease fuel usage and lower fuel usage reduces
GHG emissions.\213\ Indeed this has occurred in the recent past where
several airlines have reduced flights and announced plans to retire
older aircraft. However, such practices are voluntary, and there is no
assurance that such practices would continue or not be reversed in the
future. Technology developments for lighter and more aerodynamic
aircraft and more efficient engines which reduce aircraft fuel
consumption and thus GHG emissions are expected to improve in the
future. However, technology changes take time to find their way into
the fleet. Aircraft and aircraft engines operate for about 25 to 30
years.
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\213\ According to the Energy Information Administration, jet
fuel prices increased by about 140 percent from 2000 to 2007 (see
http://tonto.eia.doe.gov/dnav/pet/hist/rjetnyhA.htm.).
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Air traffic management and operational changes are governed by FAA.
The FAA, in collaboration with other agencies, is in the process of
developing the next generation air transportation system (NextGen), a
key environmental goal of which is to decrease aviation's contribution
to GHG emissions by reducing aviation system-induced congestion and
delay and accelerating air traffic management improvements and
efficiencies. As will be discussed below, measures of this type
implemented together with technology changes may be a way to reduce GHG
emissions in the near term. A few examples of the advanced systems/
procedures and operational measures are provided below.
Reduced Vertical Separation Minimum (RSVM) allows air traffic
controllers and pilots to reduce the standard required vertical
separation from 2,000 feet to 1,000 feet for aircraft flying at
altitudes between 29,000 and 41,000 feet. This increases the number of
flight altitudes at which aircraft maximize fuel and time efficiency.
RSVM has led to about a 2 percent decrease in fuel burn.\214\
Continuous Descent Approach is a procedure that enables continuous
descent of the aircraft on a constant slope toward landing, as opposed
to a staggered or staged approach, thus allowing for a more efficient
speed requiring less fuel and reducing GHG emissions. Aircraft
auxiliary power units (APUs) are engine-driven generators that supply
electricity and pre-conditioned cabin air for use aboard the aircraft
while at the gate. Ground-based electricity sources or electrified
gates combined with preconditioned air supplies can reduce APU fuel use
and thus CO2 emissions substantially. Single-engine taxiing,
a practice already used by some airlines, could be utilized more
broadly to reduce CO2 emissions.\215\ Fuel consumption, and
thus GHG emissions, could be reduced by decreasing the aircraft weight
by reducing the amount of excess fuel carried. More efficient routes
and aircraft speeds would be directly beneficial to reducing full
flight GHG emissions. Operational safety must be considered in the
application of all of these measures.
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\214\ PARTNER, Assessment of the impact of reduced vertical
separation on aircraft-related fuel burn and emissions for the
domestic United States, PARTNER-COE-2007-002, November 2007,
available at web.mit.edu/aeroastro/partner/reports/rsvm-caep8.pdf.
\215\ ICAO, Operational Opportunities to Minimize Fuel Use and
Reduce Emissions, Circular 303 AN/176, February 2004, available at
http://www.icao.int/icao/en/m_publications.html.
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In regard to the above three sections, we request information on
potentially available technological controls (technologies for
airframes, main engines, and auxiliary power units) and operational
measures to reduce GHG emissions from aircraft operations. Since FAA
currently administers and implements air traffic management and
operational procedures, EPA would share information on these items with
FAA.
Efforts are underway to potentially develop alternative fuels for
aircraft in the future. Industry (manufacturers, operators and
airports) and FAA established the Commercial Aviation Alternative Fuels
Initiative (CAAFI) in 2006 to explore the potential use of alternative
fuels for aircraft for energy security and possible environmental
improvements. CAAFI's goals are to have available for certification in
2008 a 50 percent Fischer-Tropsch synthetic kerosene fuel, 2010 for 100
percent synthetic fuel, and as early as 2013 for other biofuels.
However, any alternative fuel would need to be compatible with current
jet fuel for commercial aircraft to prevent the need for tank and
system flushing on re-fueling and to meet comprehensive performance and
safety specifications. In February 2008, Boeing, General Electric, and
Virgin Atlantic airlines tested a Boeing 747 that was partly powered by
a biofuel made from babassu nuts and coconut oil, a first for a
commercial aircraft.
EPA requests information on decreasing aircraft emissions related
to climate change through the use of alternative fuels, including what
is feasible in the near-term and long-term and information regarding
safety, distribution and storage of fuels at airports, life-cycle
impacts, and cost information. Given the Agency's work to develop a
lifecycle methodology for fuels as required by the Energy Independence
and Security Act, EPA also is interested in information on the
lifecycle impacts of alternative fuels.
[[Page 44472]]
c. Options To Address GHG Emissions From the Aviation Sector
In the preceding nonroad sections, we have described a continuum of
regulatory approaches that take us from traditional engine standards
through a range of potential approaches for vehicle standards and even
potential mechanisms to credit operational changes. For commercial
aircraft, although the reasons to consider such continuum are just as
valid, the means to accomplish these could be simpler. We see at least
two potential basic approaches for regulating aircraft GHG emissions
under the CAA, engine emission standards or a fleet average standard.
These approaches are discussed further below.
The first approach we can consider is setting emission standards as
an extension of our current program. Under this approach we would
establish, for example, CO2 exhaust emission standards and
related requirements for all newly and previously certified engines
applicable in some future year and later years. These standards could
potentially cover all phases of flight. Depending on timing, this first
set of standards could effectively be used to either establish baseline
values and/or to require reductions.
As described earlier, ICAO and EPA currently require measurement
and reporting of CO2 emissions during engine exhaust gaseous
emissions testing for the current certification cycle (although the
current absence of this information for other GHGs does not rule out a
similar approach for those GHGs).\216\ Although test procedures for
measuring CO2 are in place already and LTO cycle
CO2 data exists, test requirements to simulate full-flight
emissions are a significant consideration. Further work is needed to
determine how CO2 and other GHG emissions measured over the
various modes of LTO cycle might be used to as a means to estimate or
simulate cruise or full-flight emissions. A method has been developed
by ICAO for determining NOX for climb/cruise operations
(outside the LTO) based on LTO data, and this could be a good starting
point.217 218 For CO2, and potentially
NOX and other GHGs as well, the climb/cruise methods could
then be codified as test procedures, and we could then establish
emission standards for these GHGs. We request comments on the need to
develop a new test procedure for aircraft engines and the best approach
to developing such a procedure, including the viability and need for
altitude simulation tests for emissions certification.
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\216\ EPA's regulations at 40 CFR 87.62 require testing at each
of the following operating modes in order to determine mass emission
rates: taxi/idle, takeoff, climbout, descent and approach.
\217\ ICAO, CAEP/7 Report, Working Paper 68, CAEP/7-WP/68,
February 2007, see http://www.icao.int.
\218\ ICAO has deferred work on using the NOX climb/
cruise method for a certification procedure and standards since
future engines (potential new technologies) may behave in a
different way. There may need to be future work to consider the
aircraft mission, taking into account all phases of flight and the
performance of the whole aircraft.
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Furthermore, to drive the development of engine technology, we
could pursue near- and long-term GHG exhaust emission standards. Near-
term standards, which could for example apply 5 years from their
promulgation, would encourage engine manufacturers to use the best
currently available technology. Long-term standards could require more
significant reductions in emissions beyond the near-term values. In
both cases, new standards could potentially apply to both newly and
previously certified engines, but possibly at different levels and
implementation dates based on lead time considerations. Under this
approach, we would expect that no engines would be able to be produced
indefinitely if they did not meet the new standards, except possibly
based on the inclusion of an emissions averaging program for GHG as
discussed below.
For emission standards applied to other mobile sources, EPA has
often incorporated emission averaging, banking and trading (ABT)
programs to provide manufacturers more flexibility in phasing-in and
phasing-out engine models as they seek to comply with emission
standards. In these types of programs, the average emissions within a
manufacturer's current year product line are required to meet the
applicable standard, which allows a manufacturer to produce some
engines with emission levels above the standard provided they are
offset with some below the standard. The calculation for average
compliance is usually sales, activity, and power weighted. In addition,
emissions credits and debits may be generated, banked and traded with
other engine manufacturers. We request comment on the approaches to
engine standards for reducing GHG emissions and an engine ABT program
for new GHG emission standards, including whether certain GHGs, such as
CO2, are more amenable than are other GHGs to being addressed by such a
program.
As part of this option, we could pursue new standards and test
procedures for PM that would encompass LTO and climb/cruise operations
(ICAO and EPA currently do not have test procedures or emission
standards for PM from aircraft), if we find that aircraft PM emissions
cause or contribute to air pollution which may reasonably be
anticipated to endanger public health or welfare.\219\ Work has been
underway for several years under the auspices of the Society of
Automotive Engineers E-31 Committee, and EPA/FAA are working actively
with this committee to bring forth a draft recommended test procedure.
In addition, requirements could potentially be proposed and adopted
using the same approach as discussed above for GHGs for near- and long-
term standards and newly and already certified engines.
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\219\ As mentioned earlier, PM modifies or creates cloud cover,
which in turn can either amplify or dampen climate change. Aircraft
are also a source of PM emissions that contribute to local air
quality near the ground, and the public health and welfare effects
from these emissions are an important consideration.
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In the preceding nonroad sections, we have discussed several
approaches or variations on approaches to include vehicle and
operational controls within a GHG emission control program for nonroad
equipment. In doing so, we have not discussed direct regulation of
equipment or fleet operators. Instead, we have focused on approaches
that would credit fleet operators for improvements in operational
controls within a vehicle or engine GHG standards program. Those
approaches described in section VI.C.2 could apply to aircraft GHG
emissions as well, and we request comments on the potential to apply
those approaches to aircraft.
As a second approach, in the case of aircraft, it may be more
practical and flexible to directly regulate airline fleet average GHG
emissions. Under such an approach we would set a declining fleet
average GHG emission standard for each airline, based on the GHG
emission characteristics of its entire fleet. This would require GHG
certification emission information for all engines in the fleet from
the aircraft engine manufacturers and information on hours flown and
average power (e.g., thrust). Airlines would have GHG emission
baselines for a given year based on the engine emission characteristics
of their fleet, and beginning in a subsequent year, airlines would be
required to reduce their emissions at some annual rate, at some rolling
average rate, or perhaps to some prescribed lower level in a future
year. This could be done as a fleet average GHG emission standard for
each airline or through a surrogate measure of GHGs such as airline
total fuel consumption, perhaps adjusted for flight activity in some
way. This could
[[Page 44473]]
cover all domestic operations and international departures of domestic
airlines. The fleet average program could potentially be implemented in
the near term since it is not as reliant on lead times for technology
change.
Although we might develop such a declining fleet average emissions
program based on engine emissions, an operational declining fleet
average program could potentially be designed to consider the whole
range of engine, aircraft and operational GHG control opportunities
discussed above. Under this approach compliance with a declining fleet
average standard would be based not only on parameters such as engine
emission rates and activity, but could also consider efficiencies
gained by use of improved operational controls. It is important to note
that as part of this approach, a recordkeeping and reporting system
would need to be established for airlines to measure and track their
annual GHG emissions. Perhaps this could be accomplished through a
surrogate measure of GHGs such as airline total fuel consumption. Today
each airline reports its annual fuel consumption to the Department of
Transportation. We request comment on the operational fleet average GHG
emission standard concept, how it could be designed and implemented,
what are important program design considerations, and what are
potential metrics for establishing standards and determining
compliance. While we have discussed two basic concepts above, we invite
comment and information on any other approaches for regulating aircraft
GHG emissions.
d. Other Considerations
We are aware that the European Commission (EC) has proposed a
program to cap aviation-related CO2 emissions (cap is 100%
of sector's emissions during 2004-2006). They would by 2012 include
CO2 emissions from all flights arriving at and departing
from European airports, including U.S.-certified aircraft, in the
European Union Emissions Trading Scheme (ETS).220, 221 If
the proposal is adopted, airlines from all countries (EU and non-EU)
will be required to submit allowances to cover emissions from all such
aircraft flights over the compliance period (e.g., 5 years). The EU has
expressed some interest in developing a program to waive this
requirement for foreign-flagged carriers (non-EU carriers) whose
nations develop ``equivalent'' measures. The petitioners discussed this
program, and we invite comments on it.
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\220\ Commission Proposal for a Directive of the European
Parliament and of the Council amending Directive 2003/87/EC so as to
include aviation activities in the scheme for greenhouse gas
emission allowance trading within the Community, 2006/0304 (COD),
COM(2006) 818 final, December 20, 2006, available at http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexplus!prod!DocNumber&1g=en&type_doc=COMfinal&an_doc=2006&nu_doc=818.
\221\ Proposal for a Directive of the European Parliament and of
the Council amending Directive 2003/87/EC so as to include aviation
activities in the scheme for greenhouse gas emission allowance
trading within the Community--Political agreement, December 21, 2007
available at http://register.consilium.europa.eu/pdf/en/07/st16/st16855.en07.pdf.
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The 36th Session of ICAO's Assembly met in September 2007 to focus
on aviation emissions related to climate change, including the use of
emissions trading.\222\ In response to the EC's proposed aviation
program, the Assembly agreed to establish a high-level group through
ICAO to develop a framework of action that nations could use to address
these emissions. A report with recommendations is due to be completed
before the next Assembly Session in 2010. In addition, the Assembly
urged all countries to not apply an emissions trading system to other
nations' air carriers except on the basis of mutual consent between
those nations.\223\
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\222\ ICAO, Assembly--36th Session, Report of the Executive
Committee on Agenda Item 17, A36-WP/355, September 27, 2007.
\223\ ICAO, Assembly--36th Session, Report of the Executive
Committee on Agenda Item 17, A36-WP/355, September 27, 2007.
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To address greenhouse gas emissions, ICAO's focus currently appears
to be on the continued development of guidance for market-based
measures.\224\ These measures include emissions trading (for
CO2), environmental levies, and voluntary measures.
Emissions trading is when an overall target or cap is established and a
market for carbon is set. This approach allows participants to buy and
sell allowances, the price of which is established by the market.
Environmental levies include taxes and charges with the objective of
generating an economic incentive to decrease emissions. Voluntary
measures are unilateral actions by industry or in an agreement between
industry and government to decrease emissions beyond the base case.
Note, for ICAO's efforts on CO2 emission charges, it
evaluated an aircraft efficiency parameter, and in early 2004 ICAO
decided that there was not enough information available at the time to
create a parameter that correlated properly with aircraft/engine
performance.\225\ However, it is important to note, that unlike EPA,
ICAO has not been petitioned under applicable law to determine whether
GHG emissions from aircraft may reasonably be anticipated to endanger
public health or welfare or to take any action if such a finding is
made. We invite information on reducing overall emissions that relate
to climate change from aircraft through a cap-and-trade system or other
market-based system.
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\224\ ICAO, ICAO Environmental Report 2007, available at http://www.icao.int/env/.
\225\ ICAO, CAEP/6 Report, February 2004, available at http:/
www.icao.int.
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Another consideration in the GHG program is the regulation of
emissions from engines commonly used in general aviation aircraft. As
indicated earlier, our current aircraft engine requirements apply to
gas turbine engines that are mainly used by commercial aircraft, except
in cases where general aviation aircraft sometimes use commercial
engines. Our requirements do not currently apply to many engines used
in business jets or to piston-engines used in aircraft that fall under
the general aviation category, although our authority under the Clean
Air Act extends to any aircraft emissions for which we make the
prerequisite finding that those emissions cause or contribute to air
pollution which may reasonably be anticipated to endanger public health
or welfare.\226\ In 2006, general aviation made up about one percent of
the CO2 emissions from U.S. domestic transportation sources,
and about 8 percent of CO2 emissions from U.S. domestic
aircraft operations.\227\ Regulating GHG emissions from this sector of
aviation would require the development of test procedures and emission
standards. EPA requests comment on this matter and on any elements we
should consider in potentially establishing test procedures and
emission standards for these currently unregulated engines.
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\226\ As specified in 40 CFR 87.10, our emission standards apply
to different classes of aircraft gas turbine engines, which have a
particular minimum rated output. The engine class and rated output
specifications correspond to certain engine operational or use
practices, but we do not, by the terms of the rule, exempt general
aviation aircraft or engines as such.
\227\ U.S. EPA, Inventory of U.S. Greenhouse Gas Emissions and
Sinks: 1990-2006, April 2008, USEPA 430-R-08-005, available
at http://www.epa.gov/climatechange/emissions/usinventoryreport.html.
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5. Nonroad Sector Summary
There are a number of potential approaches for reducing GHG
emissions from the nonroad sector within the regulatory structure of
the CAA. In considering our next steps to address GHG emissions from
this sector, we seek comment on all of the issues raised in this notice
along with recommendations
[[Page 44474]]
on the most appropriate means to address the issues.
D. Fuels
1. Recent Actions Which Reduce GHG Impacts of Transportation Fuels
Historically under Title II of the CAA, EPA has treated vehicles,
engines and fuels as a system. The interactions between the designs of
vehicles and the fuels they use must be considered to assure optimum
emission performance at minimum cost. While EPA continues to view its
treatment of vehicles, engines and fuels as a system as appropriate, we
request comment on whether it would continue to be advantageous to take
this approach for the purpose of controlling GHG emissions from the
transportation sector. This section describes existing authorities
under the CAA for regulating the GHG emissions contribution of fuels.
In this discussion, we ask for comment on the combination of
authorities that would suit the goal of GHG emission reductions from
transportation fuel use.
In response to CAA section 211(o) adopted as part of the Energy
Policy Act of 2005 (Energy Act of 2005), EPA issued regulations
implementing a Renewable Fuels Standard (RFS) program (72 FR 23900, May
1, 2007). These regulations were designed to ensure that 4.0 billion
gallons of renewable fuel were used in motor vehicles beginning in
2006, gradually increasing to 7.5 billion gallons in 2012. While the
primary purpose of this provision of the Energy Act of 2005 was to
reduce U.S. dependence on petroleum-based fuel and promote domestic
sources of energy, EPA analyzed the extent to which reductions in GHG
emissions would also result from the new RFS program. Therefore, for
the first time in a major rule, EPA presented estimates of the GHG
impacts of replacing petroleum-based transportation fuel with fuel made
from renewable feedstocks.
In December 2007, EISA revised section 211(o) to set three specific
volume standards for biomass-based diesel, cellulosic biofuel, and
advanced biofuel as well as a total renewable fuel standard of 36
billion gallons annually by 2022. Certain eligible fuels must also meet
specific GHG performance thresholds based upon a lifecycle GHG
assessment. In addition to being limited to renewable fuels, EISA puts
constraints on what land sources can be used to produce the renewable
fuel feedstock, requires assessment of both primary and significant
secondary land use impacts as part of the required lifecycle GHG
emissions assessment, and has a number of other specific provisions
that affect both the design of the rule and the required analyses. EISA
requires that EPA adopt rules implementing these provisions by January
2009.
The U.S. federal government is not alone in considering or pursuing
fuel changes which can result in reductions of GHG emissions from the
transportation sector California is moving toward adopting a low carbon
fuel standard that it anticipates will result in significant reductions
in GHG emissions through such actions as increasing the use of
renewable fuel and requiring refiners to offset any emission increases
that might result from changes in crude oil supply. Canada, the
countries of the European Union, and a number of other nations are
considering or in the process of requiring fuel changes as part of
their strategy to reduce GHG emissions from the transportation sector.
2. GHG Reductions Under CAA Section 211(o)
The two principal CAA authorities available to EPA to regulate
fuels are sections 211(c) and 211(o). As explained in previously,
section 211(o), added by the Energy Act of 2005 and amended by EISA,
requires refiners and other obligated parties to assure that the
mandated volumes of renewable fuel are used in the transportation
sector. Section 211(o) only addresses renewable fuels; other
alternative fuels such as natural gas are not included nor are any
requirements imposed on the petroleum-based portion of our
transportation fuel pool. EPA is authorized to waive or reduce required
renewable fuel volumes specified in EISA under certain circumstances,
and is also authorized to establish required renewable fuel volumes
after the years for which volumes are specified in the Act (2012 for
biomass-based diesel and 2022 for total renewable fuel, cellulosic
biofuel and advanced biofuel). One of the factors EPA is to consider in
setting standards is the impact of production and use of renewable
fuels on climate change. In sum, EPA has limited discretion under
211(o) to improve GHG performance of fuels.
Changes in fuel feedstock sources (for example, petroleum versus
biomass) and processing technologies can have a significant impact on
GHG emissions when assessed on a lifecycle basis. As analyzed in
support of the RFS rules, a lifecycle approach considers the GHG
emissions associated with producing a fuel and bringing it to market
and then attributes those emissions to the use of that fuel. In the
case of petroleum, the lifecycle would account for emissions resulting
from extraction of crude oil, shipping the oil to a refiner, refining
the oil into a fuel, distributing the fuel to retail markets and
finally the burning the gasoline or diesel fuel in an engine. This
assessment is sometimes referred to as a ``well-to-wheels'' assessment.
A comparable assessment for renewable fuel would include the process of
growing a feedstock such as corn, harvesting the feedstock,
transferring it to a fuel production facility, turning the feedstock
into a fuel, getting the renewable fuel to market and then assessing
its impact on vehicle emissions. EPA presented estimates of GHG impacts
as part of the assessment for the Energy Act of 2005 RFS rulemaking
that increasing renewable fuel use from approximately 4 billion gallons
to 7.5 billion gallons by 2012. However, as noted below, the
methodology used in that RFS rulemaking did not consider a number of
relevant issues.
The 7.5 billion gallons of renewable fuel required by the Energy
Act of 2005 program represents a relatively small portion of the total
transportation fuel pool projected to be used in 2012 (add figure as %
of energy). The much larger 36 billion gallons of renewable fuel
required by EISA for 2022 would be expected to displace a much larger
portion of the petroleum-based fuel used in transportation and would
similarly be expected to have a greater impact on GHG emissions.
Comments on the RFS proposal suggested improvements to the lifecycle
assessment used in that rule. For instance, the RFS analysis did not
fully consider the impact of land use changes both domestically and
abroad that would likely result from increased demand for corn and
soybeans as feedstock for ethanol and biodiesel production in the U.S.
EPA largely agreed with these comments but was not able to incorporate
a more thorough assessment of land use impacts and other enhancements
in its lifecycle emissions modeling in time. We are undertaking such a
lifecycle assessment as we develop the proposal to implement EISA fuel
mandates. Because this updated lifecycle assessment will incorporate
more factors and the latest data, it will undoubtedly change the
estimates of GHG reductions included in the Energy Act 2005 RFS
package.
EISA recognizes the importance of distinguishing between renewable
fuels on the basis of their impact on lifecycle GHG emissions.
Nevertheless, EISA stops short of directly comparing and crediting each
fuel on the basis of its
[[Page 44475]]
estimated impact on GHG emissions. For example, while requiring a
minimum of 60% GHG emission reduction for cellulosic biomass fuel
compared to the petroleum-based fuel displaced, EISA does not
distinguish among the multiple pathways for producing cellulosic
biofuel even though these pathways might differ significantly in their
lifecycle GHG emission performance. It may be that the least costly
fuels meeting the cellulosic biofuel GHG performance threshold will be
produced which may not be the fuels with the greatest GHG benefit or
even the greatest GHG benefit when considering cost (e.g., GHG
reduction per dollar cost). The same consideration applies to other
fuels and pathways. Without further delineating fuels on the basis of
their lifecycle GHG impact, no incentive is provided for production of
particular fuels which would minimize lifecycle GHG emissions within
the EISA fuel categories.
We request comment on the importance of distinguishing fuels beyond
the categories established in EISA and how an alternative program might
further encourage the development and use of low GHG fuels. We also
request comment on the ability (including considerations of uncertainty
and the measurement of both direct and indirect emissions associated
with the production of fuels) of lifecycle analysis to estimate the GHG
emissions of a particular fuel produced and used for transportation and
how EPA should delineate fuels (e.g., on the basis of feedstock,
production technology, etc.). EPA notes that a certain level of
aggregation in the delineation of fuels may be necessary, but that the
greater the aggregation in the categories of fuels, the fewer
incentives exist for changes in behavior that would result in
reductions of GHG emissions. EPA asks for comment on this idea as well
as how and whether methods for estimating lifecycle values for use in a
regulatory program can take into account the dynamic nature of the
market. EPA also requests comment on the relative efficacy of a
lifecycle-based regulatory approach versus a price-based (e.g., carbon
tax or cap and trade) approach to incentivize the multitude of actors
whose decisions collectively determine the GHG emissions associated
with the production, distribution and use of transportation fuels.
Finally, we request comment on the ability to determine lifecycle GHG
performance for fuels and fuel feedstocks that are produced outside the
U.S.
EISA addresses impacts of renewable fuels other than GHG impacts.
Section 203 of EISA directs that the National Academy of Sciences be
asked to consider the impacts on producers of feed grains, livestock,
and food and food products, energy producers, individuals and entities
interested in issues relating to conservation, the environment and
nutrition, users and consumers of renewable fuels, and others
potentially impacted. Section 204 directs EPA to lead a study on
environmental issues, including air and water quality, resource
conservation and the growth and use of cultivated invasive or noxious
plants. We request comment on what impacts other than GHG impacts
should be considered as part of a potential fuels GHG regulation and
how such other impacts should be reflected in any policy decisions
associated with the rule. These impacts could include the potential
impacts on food prices and supplies.
Programs under section 211(o) are subject to further limitations.
Limited to renewable fuels, these programs do not consider other
alternative fuels such as coal-to-liquids fuel that could be part of
the transportation fuel pool and could impact the lifecycle GHG
performance of the fuel pool. Additionally, EISA's GHG performance
requirements are focused on the renewable fuels, not the petroleum-
based fuel being replaced. Under EISA, the GHG performance of renewable
fuels is tied to a 2005 baseline for petroleum fuel. No provision is
included for considering how the GHG impacts of the petroleum-based
fuel pool might change over time, either for the purpose of determining
the comparative performance for threshold compliance of renewable fuels
or for assessing the impact of the petroleum fuel itself on
transportation fuel GHG emissions. Thus, for example, there is no
opportunity under EISA to recognize and credit improvements in refinery
operation which might improve the lifecycle GHG performance of the
petroleum-based portion of the transportation fuel pool. Comments are
requested on the importance of lowering GHG emissions from
transportation fuels via the inclusion of alternative, non-renewable
fuels in a GHG regulatory program as well as the petroleum portion of
the fuel pool, thus providing opportunity to reflect improvements in
refinery practices.
Finally while the current RFS and anticipated EISA programs will
tend to improve the GHG performance of the transportation fuel pool
compared to a business as usual case, they would not in any way cap the
GHG emissions due to the use of fuels. In fact, under both programs,
the total amount of fuel consumed and thus the total amount of GHG
emissions from those fuels can both increase. We note that other
lifecycle fuel standard programs being developed such as those in
California, Canada, and Europe, while also taking into account the GHG
emissions reduction potential from petroleum fuels, do not cap the
emissions from the total fuel pool; the GHG per gallon of
transportation fuel consumed may decrease but the total gallons
consumed are not constrained such that the total GHG emissions from
fuel may continue to grow. We request comment on setting a GHG control
program covering all transportation fuels used in the United States
which would also cap the total emissions from these transportation
fuels.
Elsewhere in this notice, comments are solicited on the potential
for regulating GHG emissions from stationary sources which could
include petroleum refineries and renewable and alternative fuel
production facilities. EPA recognizes the potential for overlapping
incentives to control emissions at fuel production facilities. We
request comment on the implications of using a lifecycle approach in
the regulation of GHG emissions from fuels which would include refinery
and other fuel production facilities while potentially also directly
regulating such stationary source emission under an additional control
program. Recognizing that the use of biomass could also be a control
option for stationary sources seeking to reduce their lifecycle GHG
impacts, EPA requests comment on the implications of using biomass for
transportation fuel in potential competition as an energy source in
stationary source applications.
3. Option for Considering GHG Fuel Regulation Under CAA Section 211(c)
Section 211(c)(1) of the CAA has historically been the primary
authority used by EPA to regulate fuels. It provides EPA with authority
to ``control or prohibit the manufacture, introduction into commerce,
offering for sale, or sale of any fuel or fuel additive for use in a
motor vehicle, motor vehicle engine, or nonroad engine of nonroad
vehicle [(A)] if in the judgment of the Administrator any emission
product of such fuel or fuel additive causes or contributes to air
pollution or water pollution (including any degradation in the quality
of groundwater) which may reasonably be anticipated to endanger public
health or welfare.'' Section 211(c)(2) specifies that EPA must consider
all available relevant medical and scientific information, including
consideration of other technologically or economically feasible means
of
[[Page 44476]]
achieving vehicle emission standards under CAA section 202 before
controlling a fuel under section 211(c)(1)(A). A prerequisite to action
under 211(c)(1) is an EPA finding that a fuel or fuel additive, or
emission product of a fuel or fuel additive, causes or contributes to
air or water pollution that may reasonably be anticipated to endanger
public health or welfare. Issues related to an endangerment finding are
discussed in section V of this advance notice.
EPA asks for comment on whether section 211(c) could be read as
providing EPA a broader scope of authority to establish a new GHG fuel
program than section 211(o). Specifically, EPA asks for comment on
whether section 211(c)(1)(A) could allow EPA to start the program as
soon as appropriate in light of our analysis and similarly cover the
time period most appropriate; whether it could allow a program that
would encourage the use of both renewable and alternative fuels with
beneficial GHG emissions impacts and discourage those fuels with
relatively detrimental GHG impacts; and whether it could allow EPA to
establish requirements for all fuels (gasoline, diesel, renewables,
alternative and synthetic fuel, etc.) used in both highway and nonroad
vehicles and engines. EPA requests comment on whether the flexibilities
under section 211(c) allow it to consider a broad set of options for
controlling GHG emissions through fuels, including those that solely
regulate the final point of emissions such as tailpipe emissions rather
than also controlling the emissions at the fuel production facility
through a lifecycle approach.
Typically EPA has acted through CAA section 211(c) to prohibit the
use of certain additives (e.g., lead) in fuel, to control the level of
a component of fuel to reduce harmful vehicle emissions (e.g., sulfur,
benzene), or to place a limit on tailpipe emissions of a pollutant
(e.g., the reformulated gasoline standards for volatile organic
compounds and toxics emissions performance). While multiple approaches
may be available to regulate GHG emissions under section 211(c), one
option could require refiners and importers of gasoline and diesel meet
a GHG performance standard based on reducing their lifecycle GHG
emissions of the fuel they import or produce. They would comply with
this performance standard by ensuring the use of alternative and/or
renewable fuels that have lower lifecycle GHG emissions than the
gasoline and diesel they displace and through selection of lower
petroleum sources that also reduce the lifecycle GHG performance of
petroleum-based fuel. EPA asks comment on whether section 211(c) could
authorize such an approach because it would be a control on the sale or
manufacture of a fuel that addresses the emissions of GHGs from the
transportation fuels that would be the subject the endangerment finding
discussed in section V. Comments are requested on this interpretation
of 211(c) authority.
As pointed out above, neither the Energy Act of 2005 RFS program
nor the forthcoming program under EISA directly addresses the varying
GHG emission reduction potential of each fuel type and production
pathway. EPA asks comment on whether it could have the authority under
CAA section 211(c) to design and implement a program that includes not
only renewable fuels but other alternative fuels, considers the GHG
emissions from the petroleum portion of the fuel pool and reflects
differences in fuel production not captured by the GHG thresholds
established under EISA, including differences in technology at the fuel
production facility. We request comment on the factors EPA should
consider in developing a GHG fuel control program under section 211(c)
and how including such factors could serve to encourage the use of low
GHG-emitting practices and technology.
We note that the RFS and the forthcoming EISA programs require
refiners and other obligated parties to meet specified volume standards
and that these programs are anticipated to continue. We request comment
on the impacts and opportunities of implementing both a GHG program
under 211(c) and volume mandates under 211(o).
EPA seeks comment on the potential for reducing GHG emissions from
transportation fuel over and above those reductions that could be
achieved by RFS and the anticipated EISA requirements. Although EPA has
not completed its analysis of the GHG emission reductions expected
under the combined RFS and EISA programs, EPA seeks comment on how it
might structure a program that could reduce GHG emissions from
transportation fuel over and above those reductions that could be
achieved by the RFS and anticipated EISA requirements.
VII. Stationary Source Authorities and Potential Options for Regulating
Greenhouse Gases Under the Clean Air Act
In this section, we explore three major pathways that the CAA
provides for regulating stationary sources, as well as other stationary
source authorities of the Act, and their potential applicability to
GHGs. The three pathways include NAAQS and implementation plans
(sections 107-110 and related provisions); performance standards for
new and existing stationary sources (section 111); and hazardous air
pollutant standards for stationary sources (section 112).\228\ Special
provisions for regulating solid waste incinerators are contained in
section 129.
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\228\ As explained in this section, the NAAQS pathway is not
solely a stationary source regulatory authority; plans for
implementating the NAAQS can involve regulation of stationary and
mobile sources.
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We also review the implications of regulating GHGs under Act's
programs for preconstruction permitting of new emissions sources, with
emphasis on the PSD program under Part C of the Act. These programs
require permits and emission controls for major new sources and
modifications of existing major sources. The permitting discussion
closes by examining the implications of requiring operating permits
under Title V for major sources of GHGs. Finally, we describe four
different types of market-oriented regulatory designs that (in addition
to other forms of regulation) could be considered for programs to
reduce GHG emissions from stationary sources to the extent permissible
under the CAA: cap-and-trade, rate-based emissions trading, emissions
fees, and a hybrid approach.
For each potential pathway of stationary source regulation, this
notice discusses the following basic questions:
What does the section require?
What sources would be affected if GHGs were regulated
under this authority?
What would be the key milestones and implementation
timeline?
What are key considerations regarding use of this
authority for GHGs and how could potential issues be addressed?
What possible implications would use of this authority for
GHGs have for other CAA programs?
In discussing these questions, EPA considers the President's core
principles and other policy design principles enumerated in Section
III.F.1. EPA seeks comment on the advantages and disadvantages of
alternative regulatory authorities in light of those policy design
principles. EPA further invites comments on the following aspects of
each CAA stationary source authority:
How much flexibility does the CAA section provide for
implementing its requirements? For example, can EPA set compliance
dates that reflect the global
[[Page 44477]]
and long-lived nature of GHGs and that allow time for technological
advances and new technology deployment?
To what extent would the section allow for consideration
of the costs and economic impacts of regulating GHGs? For example,
would the section provide opportunities for sending a price signal,
such as through cap and trade programs (with or without cost
containment mechanisms) and emission fees.
To what extent can each section account for the
international aspects of GHG emissions, atmospheric concentrations, and
emission impacts, including ways for potentially addressing
international pollutant transport and emission leakage?
How does each section address the assessment of available
technologies, and to what extent could the section promote or require
the advancement of technology?
To what extent does the section allow for the ability to
prioritize regulation of significant emitting sectors and sources?
To what extent could each authority be adapted to GHG
regulation without compromising the Act's effectiveness in regulating
traditional air pollutants?
Finally, for each regulatory authority, EPA requests comment on a
range of program-specific issues identified in the discussion below.
EPA also requests comment on whether there are specific statutory
limitations that would best be addressed by new legislation. Additional
information concerning potential CAA regulation of stationary source
GHGs may be found in the Stationary Source Technical Support Document
(Stationary Source TSD) placed in the docket for this notice.
A. National Ambient Air Quality Standards (NAAQS)
1. What Are the Requirements for Setting and Implementing NAAQS?
a. Section 108: Listing Pollutant(s) and Issuing Air Quality Criteria
Section 108(a)(1) establishes three criteria for listing air
pollutants to be regulated through NAAQS. Specifically, section
108(a)(1) states that: EPA ``shall from time to time * * * list * * *
each air pollutant--
(A) emissions of which, in [the Administrator's] judgment, cause or
contribute to air pollution which may reasonably be anticipated to
endanger public health or welfare;
(B) the presence of which in the ambient air results from numerous
or diverse mobile or stationary sources; and
(C) for which air quality criteria had not been issued before the
date of enactment of the Clean Air Amendments of 1970, but for which
[the Administrator] plans to issue air quality criteria under this
section.''
In determining whether a pollutant meets these criteria, EPA must
consider a number of issues, including many of those discussed in
section IV above regarding an endangerment finding. As discussed there,
in the context of the ICTA petition remand, EPA is considering defining
the ``air pollution'' as the elevated current and future concentration
of six GHGs (CO2, CH4, N2O, HFCs,
PFCs, and SF6). Also in that context, EPA is considering
alternative definitions of ``air pollutant'' as the group of GHGs or
each individual GHG for purposes of the ``cause or contribute''
determination.
In considering the potential listing of GHGs under section 108, EPA
solicits input on appropriate definitions of both the ``air pollution''
and the ``air pollutants.'' With regard to section 108, it is important
to note that EPA has clear precedents for listing related compounds as
groups rather than as individual pollutants. For example, photochemical
oxidants, oxides of nitrogen, and particulate matter all comprise
multiple compounds, but the listing under section 108 is for the group
of compounds, not the individual elements of the group. The Agency is
soliciting comment on the relevance of these precedents for GHGs. In
addition, as discussed later, there would be increased complexity in
setting NAAQS for individual GHGs than for GHGs as a group. We are
particularly interested in comments on how to apply the terms ``air
pollution'' and/or ``air pollutants'' under sections 108 and 109 in the
context of GHGs, and the implications of taking consistent or different
approaches under other Titles or sections of the Act.
A positive endangerment finding for GHGs under section 202(a) or
other sections of the CAA could have significant and direct impacts on
EPA's consideration of the first two criteria for listing the
pollutant(s) under section 108, as explained in section IV.B.2 of this
notice. The third criterion for listing under section 108, however, may
be unrelated to the issues involved in any motor vehicle or other
endangerment finding. Moreover, this third criterion could provide EPA
discretion to decide whether to list those pollutants under section 108
for purposes of regulating them via the NAAQS.\229\ EPA requests
comment on the effect of a positive finding of endangerment for GHGs
under section 202(a) of the Act on potential listing of the
pollutant(s) under section 108.
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\229\ With respect to the third criterion, while there is a
decision of U.S. Court of Appeals for the Second Circuit to the
contrary, NRDC v. Train, 545 F.2d 320 (2nd Cir. 1978), EPA notes
that that decision was rendered prior to the Supreme Court's
decision in Chevron v. Natural Resources Defense Council, 467 U.S.
837 (1984). Thus, a proper and reasonable question to ask is whether
this criterion affords EPA discretion to decide whether it is
appropriate to apply the NAAQS structure to a global air pollution
problem like GHGs.
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Section 108 also requires that once a pollutant is listed, EPA
issue ``air quality criteria'' encompassing ``all identifiable effects
on public health or welfare,'' including interactions between the
pollutant and other types of pollutants in the atmosphere. We are
interested in commenters' views on whether and how developing air
quality criteria for GHGs would differ from developing such criteria
for other pollutants such as ozone and particular matter, given the
long-lived nature of GHGs and the breadth of impacts and other special
issues involved with global climate change. EPA also invites comment on
the extent to which it would be appropriate to use the most recent IPCC
reports, including the chapters focusing on North America, and the U.S.
government Climate Change Science Program synthesis reports as
scientific assessments that could serve as an important source or as
the primary basis for the Agency's issuance of ``air quality
criteria.''
Finally, section 108 requires EPA to issue information on air
pollution control techniques at the same time it issues air quality
criteria. This would include information on the cost of installation
and operation, energy requirements, emission reduction benefits, and
environmental impacts of these techniques. Generally, the Agency defers
this obligation until the time a standard is actually issued. As
required under Executive Order 12866, EPA must issue a Regulatory
Impact Analysis (RIA) for major rulemaking actions, and it is in this
context that EPA has previously described the scope and effectiveness
of available pollution control techniques. EPA requests comment on
whether this approach is appropriate in the case of GHGs.
b. Section 109: Standard-Setting
Section 109 requires that the Administrator establish NAAQS for any
air pollutant for which air quality criteria are issued under section
108. Both the air quality criteria and the standards are to be reviewed
and, as appropriate, revised by the Administrator, every five years.
These decisions are to be informed by an
[[Page 44478]]
independent scientific review committee, a role which has been
fulfilled by the Clean Air Scientific Advisory Committee (CASAC) of
EPA's Science Advisory Board. The committee is charged with reviewing
both the air quality criteria for the pollutant(s) and the standards,
and recommending any revisions deemed appropriate.
The statute specifically provides that primary NAAQS ``shall be
ambient air quality standards the attainment and maintenance of which
in the judgment of the Administrator, based on such criteria and
allowing an adequate margin of safety, are requisite to protect the
public health,'' including the health of sensitive groups. The
requirement that primary standards provide an adequate margin of safety
was intended to address uncertainties associated with inconclusive
scientific and technical information available at the time of standard
setting. It was also intended to provide a reasonable degree of
protection against hazards that research has not yet identified. Lead
Industries Association v. EPA, 647 F.2d 1130, 1154 (DC Cir 1980), cert.
denied, 449 U.S. 1042 (1980); American Petroleum Institute v. Costle,
665 F.2d 1176, 1186 (DC Cir 1981), cert. denied, 455 U.S. 1034 (1982).
The selection of any particular approach to providing an adequate
margin of safety is a policy choice left specifically to the
Administrator's judgment. Lead Industries Association v. EPA, 647 F.2d
at 1161-62.
With regard to secondary NAAQS, the statute provides that these
standards ``specify a level of air quality the attainment and
maintenance of which in the judgment of the Administrator * * * is
requisite to protect the public welfare from any known or anticipated
adverse effects associated with the presence of such air pollutant in
the ambient air.'' Welfare effects as defined in CAA section 302(h)
include, but are not limited to, ``effects on soils, water, crops,
vegetation, manmade materials, animals, wildlife, weather, visibility
and climate, damage to and deterioration of property, and hazards to
transportation, as well as effects on economic values and on personal
comfort and well-being.''
One of the central issues posed by potential regulation of GHGs
through the NAAQS is the nature of the health and environmental effects
to be addressed by the standards and, thus, what effects should be
addressed when considering a primary (public health) standard and what
effects should be addressed when considering a secondary (public
welfare) standard. This issue has implications for whether it would be
appropriate to establish a primary standard as well as a secondary
standard for these pollutants. As discussed above in section V, the
direct effects of GHG emissions appear to be principally or exclusively
welfare-related. GHGs are unlike other current NAAQS pollutants in that
direct exposure to GHGs at current or projected ambient levels appears
to have no known adverse effects on human health. Rather, the health
impacts associated with ambient GHG concentrations are a result of the
changes in climate at the global, regional, and local levels, which
trigger myriad ecological and meteorological changes that can adversely
affect public health (e.g., increased viability or altered geographical
range of pests or diseases; increased frequency or severity of severe
weather events including heat waves) (see section V above). The effects
on human health are thus indirect impacts resulting from these
ecological and meteorological changes, which are effects on welfare.
This raises the question of whether it is more appropriate to address
these health effects as part of our consideration of the welfare
effects of GHGs when setting a secondary NAAQS rather than a primary
NAAQS. Control of GHGs would then occur through implementation of the
secondary NAAQS rather than the primary NAAQS. EPA invites comment on
whether and how these indirect human health impacts should be addressed
in the context of setting a primary or a secondary NAAQS.
Past experience suggests EPA may have discretion to decline to set
either a primary or a secondary standard for a pollutant if the
evidence shows that there are no relevant adverse effects at or near
current ambient concentrations, and therefore that no standard would be
requisite to protect public health or welfare. In 1985, for example,
EPA determined that it was appropriate to revoke the secondary standard
for carbon monoxide (CO) after a review of the scientific evidence
indicated that there was no evidence of known or anticipated adverse
welfare effects associated with CO at or near ambient levels. 50 FR
37484, 37494 (September 13, 1985). This decision was reaffirmed by the
Agency in the 1994 CO NAAQS review, and there remains only a primary
standard for this pollutant. EPA requests comment on whether it would
be necessary and/or appropriate for the Agency to establish both
primary and secondary NAAQS for GHGs if those pollutants were listed
under section 108.
It is also important to consider how a NAAQS for GHGs would
interface with existing NAAQS for other pollutants, particularly oxides
of nitrogen (NOX) and ozone (O3), as well as particulate
matter. EPA's approach in other NAAQS reviews has been to consider
climate impacts associated with any pollutant as part of the welfare
impacts evaluated for that pollutant in setting secondary standards for
the pollutant. If separate NAAQS were established for GHGs, EPA would
likely address the climate impacts of each specific GHG in the NAAQS
for GHGs, and would not need to address the climate impacts of that GHG
when addressing other NAAQS, thus avoiding duplication of effort.
In considering the application of section 109 to GHGs and whether
it would be appropriate to regulate GHGs through the NAAQS, EPA must
evaluate a number of other standard-setting issues, as discussed below.
i. Level
For potential GHG standards, EPA would face special challenges in
determining the level of the NAAQS. As noted above, the primary
standard must be ``requisite to protect public health with an adequate
margin of safety'' and the secondary standard ``requisite to protect
public welfare against any known or anticipated adverse effects.''
EPA's task is to establish standards that are neither more nor less
stringent than necessary for the purposes of protecting public health
or welfare. Whitman v. American Trucking Associations, 531 U.S. 457,
473. Under established legal interpretation, the costs of
implementation associated with various potential levels cannot be
factored into setting a primary or secondary standard.\230\ Any
determinations by the EPA Administrator regarding the appropriate level
(and other elements of) of a NAAQS for GHGs must based on the available
scientific evidence of adverse public health and/or public welfare
impacts, without consideration of the costs of implementation.
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\230\ The Supreme Court has confirmed EPA's long-standing
interpretation and ruled that ``[t]he text of Sec. 109(b),
interpreted in its statutory and historical context and with
appreciation for its importance to the CAA as a whole, unambiguously
bars cost considerations from the NAAQS-setting process.'' The court
also noted that consideration of costs occurs in the state's
formulation of the implementation plan with the aid of EPA cost
data. Whitman v. American Trucking Associations, 531 U.S. at 472.
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EPA expects it would be difficult to determine what levels and
other elements of NAAQS would meet these criteria for GHGs, given that
the full effects associated with elevated atmospheric concentrations of
these
[[Page 44479]]
pollutants occur over a long period of time and there are significant
uncertainties associated with the health or welfare impacts at any
given concentration. The delayed nature of effects and the complex
feedback loops associated with global climate change would require EPA
to consider both the current effects and the future effects associated
with current ambient concentrations. In making a determination of what
standard is sufficient but not more stringent than necessary, EPA would
also have to grapple with significant scientific uncertainty. As with
other NAAQS, however, the iterative nature of the 5-year review cycle
means the standards could be revised as appropriate in light of new
scientific information as it becomes available. EPA requests comment on
the scientific, technical, and policy challenges of determining
appropriate levels for NAAQS for GHG pollutants, for both primary and
secondary standards.
As with all pollutants for which EPA establishes NAAQS, EPA would
need to evaluate what constitutes an ``adverse'' impact in the climate
context. EPA notes that the 1992 UNFCCC calls for the avoidance of
``dangerous anthropogenic interference with the climate system.''
However, it is possible that the criteria for setting a NAAQS may call
for protection against risks and effects that are less egregious than
``dangerous interference.'' Furthermore, international agreement has
not been reached on either the metric (e.g., atmospheric concentrations
of the six major directly emitted anthropogenic GHGs, radiative
forcing, global average temperature increase) or the level at which
dangerous interference would occur. EPA requests comment on whether it
would be appropriate, given the unique attributes of GHGs and the
significant contribution to total atmospheric GHG contributions from
emissions emanating outside the United States, to establish a level for
a GHG NAAQS based on an internationally agreed-upon target GHG level,
considering legal and policy factors.
Another key question is the geographical extent of the human health
and welfare effects that should be taken into consideration in
determining what level and other elements of a standard would provide
the appropriate protection. The pollutants already subject to NAAQS are
typically local and/or regional in nature, so the standards are
designed to limit ambient concentrations of pollutants associated with
emissions typically originating in and affecting various parts of the
United States. In assessing what standard is requisite to protect
either public health or welfare, EPA has focused in the past on
analyzing and addressing the impacts in the United States. It may be
appropriate to interpret the Act as requiring standards that are
requisite for the protection of U.S. public health and welfare.
However, atmospheric concentrations of GHGs are relatively uniform
around the globe, the impacts of climate change are global in nature,
and these effects, as described in section V, may be unequally
distributed around the world. The severity of impacts in the U.S. might
differ from the severity of impacts in the rest of the world. In light
of these factors, EPA invites comment on whether it would be
appropriate to consider adverse effects on human health and welfare
occurring outside the U.S. Specifically, we invite comment on whether,
and if so, on what legal basis, it would be appropriate for EPA to
consider impacts occurring outside the U.S. when those impacts, either
in the short or long term, may reasonably be anticipated to have an
adverse effect on health or welfare in the U.S.
As noted briefly above, if each GHG is listed as a separate
pollutant under section 108, rather than as a group or category of
pollutants, then EPA arguably would have to establish separate NAAQS
for each listed GHG. This scenario raises significant challenges for
determining which level of any particular standard is appropriate,
especially as the science of global climate change is generally focused
on the total radiative impact of the combined concentration of GHGs in
the atmosphere. Since for any one pollutant, the standard that is
requisite to protect public health with an adequate margin of safety or
public welfare from known or anticipated adverse effects is highly
dependent upon the concentration of other GHGs in the atmosphere, it
would be difficult to establish independent standards for any of the
six principal GHGs. EPA requests comments on possible approaches for
determining appropriate levels for GHG NAAQS if these pollutants are
listed individually under section 108.
ii. Indicator
If each GHG is listed as an individual pollutant under section 108,
the atmospheric concentration of each pollutant could be measured
separately, and establishing an indicator for each pollutant would be
straightforward. However, if GHGs are listed as a group, it would be
more challenging to determine the appropriate indicator for use in
measuring ambient air quality in comparison to a GHG NAAQS. One
approach could be to measure the total atmospheric concentration of a
group of GHGs on a CO2 equivalent basis, by assessing their
total radiative forcing (measured in W/m2).\231\ Radiative
forcing is a measure of the heating effect caused by the buildup of the
GHGs in the atmosphere. Estimating CO2-equivalent
atmospheric concentrations, however, would not be a simple matter of
multiplying emissions times their respective GWP values. Rather, the
heating effect (radiative forcing) due to concentrations of each
individual GHG would have to be estimated to define CO2-
equivalent concentrations. EPA invites comment on the extent to which
radiative forcing could be an effective metric for capturing the
heating effect of all GHGs in a group (or for each GHG individually).
For example, in the year 2005 global atmospheric CO2
concentrations were 379 parts per million (ppm), but the
CO2-equivalent concentration of all long-lived GHGs was 455
ppm. This approach would not require EPA to specify the allowable level
of any particular GHG, alone or in relation to the concentration of
other GHGs present in the atmosphere.
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\231\ See footnote 13 for an explanation of CO2
equivalency.
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A second option would be to select one GHG as the indicator for the
larger group of pollutants intended to be controlled under the
standard. This kind of indicator approach is currently used in
regulating photochemical oxidants, for which ozone is the indicator,
and oxides of nitrogen, for which NO2 has been used as an
indicator. There are several reasons, however, that this approach may
not be appropriate for GHGs. For example, in the instances noted above,
the indicator species is directly related to the other pollutants in
the group, either through common precursors or similar chemical
composition, and there is a basis for expecting that control of the
indicator compound will lead to the appropriate degree of control for
the other compounds in the listed pollutant. In the case of GHGs, it
would be more difficult to select one species as the indicator for the
larger group, given that the GHGs are distinct in origin, chemical
composition, and radiative forcing, and will require different control
strategies. Furthermore, this approach raises an issue regarding
whether states would have the appropriate incentive to address all
pollutants within the group. For example, there could be a focus on
controlling the single indicator species at the expense of other
species also associated with the adverse effects from
[[Page 44480]]
which the standard(s) are designed to offer protection.
EPA seeks comment on the merits and drawbacks of these various
approaches, as well as suggestions for other possible approaches, to
defining an indicator for measuring allowable concentrations of GHGs in
the atmosphere.
c. Section 107: Area Designations
After EPA establishes or revises a NAAQS, the CAA requires EPA and
the states to begin taking steps to ensure that the new or revised
NAAQS are met. The first step is to identify areas of the country that
do not meet the new or revised NAAQS. This applies to both the primary
and secondary NAAQS. EPA is required to identify each area of the
country as ``attainment,'' ``nonattainment,'' or ``unclassifiable.''
\232\
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\232\ CAA Section 107(d)(1) requires EPA to establish a deadline
for states to submit recommendations for area designations that is
no later than one year after promulgation of the new or revised
NAAQS. Section 107(d)(1) also directs states to recommend
appropriate area boundaries. A nonattainment area must consist of
that area that does not meet the new or revised NAAQS, and the area
that contributes to ambient air quality in a nearby area that does
not meet the new or revised NAAQS. Thus, a key factor in setting
boundaries for nonattainment areas is determining the geographic
extent of nearby source areas contributing to the nonattainment
problem. EPA then reviews the states' recommendations, collects and
assesses additional information as appropriate, and issues final
designations no later than 2 years following the date EPA
promulgated the new or revised NAAQS. EPA may take one additional
year (meaning final designations can be up to 3 years after
promulgation of new or revised NAAQS) if the Administrator has
insufficient information to promulgate the designations. Whether or
not a state or a Tribe provides a recommendation, EPA must
promulgate the designation that it deems appropriate.
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For a GHG NAAQS, the designations given to areas would depend on
the level of the NAAQS and the availability of ambient data to make
informed decisions for each area. For GHGs, in contrast to current
NAAQS pollutants, it would likely make sense to conduct the air quality
assessment at the national scale rather than at a more localized scale.
All of the potential indicators discussed above for measuring ambient
concentrations of GHGs for purposes of a NAAQS involve globally
averaged metrics. Therefore, the ambient concentrations measured across
all locations within the U.S. for purposes of comparison to the level
of the standard would not vary, and all areas of the country would have
the same designation--that is, the entire U.S. would be designated
either attainment or non-attainment, depending on the level of the
NAAQS compared to observed GHG ambient concentrations.
If, in making decisions about the appropriate level of the GHG
NAAQS, EPA were to determine that current ambient concentrations are
not sufficient to cause known or anticipated adverse impacts on human
health or welfare now or in the future, then it is possible that the
NAAQS would be set at some level higher than current ambient
concentrations. In that case, the entire country would likely be
designated nonattainment. If, on the other hand, EPA were to set the
NAAQS at a level above current ambient concentrations, the entire
country would likely be designated attainment.
d. Section 110: State and Federal Implementation Plans
i. State Implementation Plans
The CAA assigns important roles to EPA, states, and tribal
governments in implementing NAAQS and in ensuring visibility protection
in Class I areas. States have the primary responsibility for developing
and implementing state implementation plans (SIPs). A SIP is the
compilation of authorities, regulations, control programs, and other
measures that a state uses to carry out its responsibilities under the
CAA to attain, maintain, and enforce the NAAQS and visibility
protection goals, and to prevent significant deterioration of air
quality in areas meeting the standard. Additional specifics on SIP
requirements are contained in other parts of the CAA.
EPA assists states and tribes in their efforts to clean the air by
promulgating national emissions standards for mobile sources and
selected categories of stationary sources. Also, EPA assists the states
in developing their plans by providing technical tools, assistance, and
guidance, including information on potentially applicable emissions
control measures.
Historically, the pollutants addressed by the SIP program have been
local and regional pollutants rather than globally mixed pollutants
like GHGs. The SIP development process, because it relies in large part
on individual states, is not designed to result in a uniform national
program of emissions controls.
(1) Generic Requirements for All SIPs
This section discusses the specific CAA requirements states must
address when implementing any new or revised NAAQS.\233\
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\233\ The visibility protection program required by CAA sections
169A and 169B, and as implemented through state compliance with
EPA's 1999 Regional Haze Rule, will only be raised again here in
this section of the ANPR in the context of a framework for
implementing a secondary GHG NAAQS.
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Under section 110(a)(1) and (2) of the CAA, all states are required
to submit plans to provide for the implementation, maintenance, and
enforcement of any new or revised NAAQS. Section 110(a)(1) and (2)
require states to address basic program elements, including
requirements for emissions inventories, monitoring, and modeling, among
other things. These requirements apply to all areas of the state
regardless of whether those areas are designated nonattainment for the
NAAQS.
In general, every state is required to submit to EPA within 3 years
of the promulgation of any new or revised NAAQS a SIP demonstrating
that these basic program elements are properly addressed. Subsections
(A) through (M) of section 110(a)(2) enumerate the elements that a
state's program must contain. See the Stationary Source TSD for this
list.
Other statutory requirements for state implementation plans vary
depending on whether an area is in nonattainment or attainment. There
are four specific scenarios that could hypothetically apply, depending
on whether a primary or a secondary standard, or both, are established,
and on the level(s) set for those standards. Because we are proposing
no scientific determinations in this notice, our discussion of NAAQS
implementation addresses all four of these scenarios.
(2) Scenario 1: Primary GHG Standard With Country in Nonattainment
If the entire country were designated nonattainment for a primary
GHG NAAQS, each state would be required to develop and submit a SIP
that provided for attainment and met the other specific requirements of
Part D of Title I of the Act by the specified deadline.
Requirements for the general contents of a nonattainment area plan
are set forth in section 172 of the CAA. Section 172(c) specifies that
SIPs must, among other things: \234\
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\234\ For additional information about nonattainment area
planning requirements, please see the Technical Support Document.
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Include all Reasonably Available Control Measures (RACM)
(including, at a minimum, emissions reductions obtained through
adoption of Reasonably Available Control Technology (RACT)) and provide
for attainment of the NAAQS;
Provide for Reasonable Further Progress (RFP), which means
reasonable interim progress toward attainment;
Include an emissions inventory;
Require permits for the construction and operation of
major new or modified stationary sources, known as
[[Page 44481]]
``nonattainment new source review'' (see also section 173 of the Act
and section VII.E. of this notice);
Contain contingency measures that are to be implemented in
the event the air quality standard is not met by the area's attainment
deadline; and
Meet the applicable provisions of section 110(a)(2) of the
CAA related to the general implementation of a new or revised NAAQS.
In addition, all nonattainment areas must meet requirements of
section 176(c) known as ``general conformity'' and ``transportation
conformity.'' \235\ In brief, general conformity requires the federal
government only to provide financial assistance, issue a permit or
approve an activity that conforms to an approved SIP for a NAAQS.
Transportation conformity requires metropolitan planning organizations
and the U.S. Department of Transportation only to approve or fund
transportation plans, programs and projects that conform to an approved
SIP for a NAAQS. For the scenario of the country in nonattainment with
a GHG NAAQS, these requirements would apply nationwide one year after
the effective date of EPA's nonattainment designations.
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\235\ These requirements also apply to ``maintenance areas''--
former nonattainment areas that have met the standard and been
redesignated according to a formal EPA determination.
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For nonattainment areas, SIPs must provide for attainment of the
primary NAAQS as expeditiously as practicable, but no later than 5
years from the effective date of the nonattainment designation for the
area--or no later than 10 years if EPA finds additional time is needed
considering the severity of nonattainment and the availability and
feasibility of pollution control measures.
At the outset, it would appear to be an inescapable conclusion that
the maximum 10-year horizon for attaining the primary NAAQS would be
ill-suited to GHGs. The long atmospheric lifetime of the six major
emitted GHGs means that atmospheric concentrations will not quickly
respond to emissions reduction measures (with the possible exception of
methane, which has an atmospheric lifetime of approximately a decade).
In addition, in the absence of substantial cuts in worldwide emissions,
worldwide concentrations of GHGs would continue to increase despite any
U.S. emission control efforts. Thus, despite active control efforts to
meet a NAAQS, the entire U.S. would remain in nonattainment for an
unknown number of years. If States were unable to develop plans
demonstrating attainment by the required date, the result would be
long-term application of sanctions, nationwide (e.g., more stringent
offset requirements and restrictions on highway funding), as well as
restrictions on approvals of transportation projects and programs
related to transportation conformity. EPA is currently evaluating the
extent to which section 179B might provide relief to states in this
circumstance. As further explained below, section 179B is a waiver
provision providing for SIP approval under certain circumstances when
international emissions affect a U.S. nonattainment area.
In addition to submitting plans providing for attainment within the
state, each state would be required to submit, within 3 years of NAAQS
promulgation, a plan under section 110(a)(2)(D) prohibiting emissions
that would significantly contribute to nonattainment in another state.
EPA requests comments on what approaches could be utilized for purposes
of addressing this requirement as well as the general matter of
controlling GHGs to meet a NAAQS.
Impact of section 179B on nonattainment requirements: States may
use section 179B of the CAA to acknowledge the impact of emissions from
international sources that may contribute to violations of a NAAQS.
Section 179B provides that EPA shall approve a SIP for a nonattainment
area if: (1) The SIP meets all applicable requirements of the CAA; and
(2) the submitting state can satisfactorily demonstrate that ``but for
emissions emanating from outside of the United States,'' the area would
attain and maintain the applicable NAAQS. EPA has historically
evaluated these ``but for'' demonstrations on a case-by-case basis,
based on the individual circumstances and the data provided by the
submitting state. These data might include ambient air quality
monitoring data, modeling scenarios, emissions inventory data, and
meteorological or satellite data. In the case of GHGs, however, where
global emissions impact all areas within the United States, the federal
government may be best suited for establishing whether a ``but for''
demonstration can be made for the entire country.
If a ``but for'' conclusion is affirmed, section 179B would allow
EPA to approve a SIP that did not demonstrate attainment or maintenance
of the relevant NAAQS. Section 179B does not provide authority to
exclude monitoring data influenced by international transport from
regulatory determinations related to an area's status as an attainment
or nonattainment area. Thus, even if EPA approves a section 179B ``but
for'' demonstration for an area, the area would continue to be
designated as nonattainment and subject to certain applicable
nonattainment area requirements, including nonattainment new source
review, conformity, and other measures prescribed for nonattainment
areas by the CAA. EPA requests comment on the practical effect of
application of section 179B on the global problem of GHG emissions and
on the potential for controls based on the attainment plan requirement
and other requirements directly related to the attainment requirement,
including the reasonable further progress requirement and the RACM
requirement.\236\
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\236\ EPA has interpreted RACM as emissions reducing measures
that are technically and economically feasible, and considered
collectively would advance the nonattainment area's attainment date
by at least one year. RACT has been interpreted in two different
ways, depending on the applicable statutory requirements. In the
case of ozone, RACT consists of measures that are technically and
economically feasible, without regard to whether the measures would
result in earlier attainment. In recent rules on PM2.5, EPA
interpreted RACT for PM2.5 as essentially the same as RACM, with
RACT referring to the stationary source component of RACM, which
applies to all types of sources.
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(3) Scenario 2: Secondary Standard With Country in Nonattainment (No
Primary Standard)
As noted above in the NAAQS standard-setting discussion, depending
on the nature and bases of any endangerment finding under section 108,
EPA may be able to consider setting only a secondary NAAQS for GHGs and
not also a primary NAAQS.
In general, the same nonattainment requirements that apply to SIPs
for a primary standard apply for a secondary standard, including
nonattainment new source review and the other programs listed under the
Scenario 1 subsection above.
A notable difference in nonattainment requirements for primary and
secondary standards is the time allowed for attainment. Under a
secondary standard, state plans must achieve attainment as
expeditiously as practicable, but there is no statutory maximum date
for attainment. The general requirement to attain as expeditiously as
practicable includes consideration of required controls, including
``reasonably available control measures.'' These requirements do allow
for consideration of cost. What would constitute ``as expeditiously as
practicable'' would be determined based on the entire set of facts and
circumstances at issue. EPA requests comment on how to interpret
[[Page 44482]]
the requirement that state plans demonstrate that attainment will be
achieved ``as expeditiously as practicable'' in the context of a
secondary NAAQS for GHGs.
Potential implementation approach based on regional haze model: For
a secondary GHG NAAQS with no prescribed attainment date, EPA requests
comment on the concept of implementing a GHG secondary NAAQS standard
in a way roughly analogous to an approach used in the long-term
regional visibility program, known as the regional haze program. This
program is based on a goal of achieving natural visibility conditions
in our nation's parks and wilderness areas (Class I areas) by 2064. The
program requires states to develop reasonable progress goals every 10
years and implement emissions control programs to achieve those goals,
ultimately achieving the 2064 natural condition goal in each Class I
area. At the midpoint of every 10-year period, states must assess the
progress being made and take corrective action if necessary to maintain
reasonable progress toward the 10-year progress milestone.
The regional haze program's model for goal planning, control
strategy development, and control strategy implementation could offer a
possible framework for achieving a GHG secondary NAAQS. This framework
potentially could be designed to address the RACM, RACT and Reasonable
Further Progress requirements, as well as the attainment planning
requirement. This framework may also provide a mechanism for
implementing a nationwide GHG emissions cap and trade program adopted
and implemented through state plans. However, EPA recognizes that the
global nature of GHGs and their persistence in the atmosphere make an
approach based on ``reasonable'' progress more difficult to implement
than in the case of regional haze. For example, despite domestic
emissions reductions, it might not be possible to discern improvement
in atmospheric concentrations of GHGs due to their relatively long
atmospheric lifetimes or to growth in emissions from other countries
which could eclipse reductions made in the U.S. We note that using this
framework would not provide relief from any of the applicable
nonattainment area requirements of the Act. EPA requests comment on
whether, and if so how, the regional haze approach could be adapted for
use in the GHG context.
(4) Scenarios 3 and 4: Primary and/or Secondary Standard With Country
in Attainment
If a primary or secondary GHG NAAQS were set at a level higher than
ambient GHG levels at the time of designations, then the country would
be in attainment. (See preceding section on NAAQS standard-setting for
discussion of this issue.) In this case, a much shorter list of
requirements would apply than if the country were in nonattainment.
SIPs would be required to include PSD programs for GHGs, which
would require preconstruction permitting of new major sources and
significant modifications to existing major sources. (See section VII.D
on PSD.)
EPA has identified two other requirements that potentially could
apply, both of which could provide authority for a nationwide cap-and-
trade program implemented at the state level. First, section 110(a)(1)
requires states to submit a SIP providing for ``implementation,
maintenance, and enforcement'' of primary and secondary NAAQS. Under
the scenario of a GHG NAAQS with the country in attainment, where
states may need more than PSD/NSR to maintain attainment, EPA could
consider using this provision to require SIPs to provide for
maintenance of air quality consistent with the GHG standard. This
requirement could be implemented through a nationwide cap-and-trade
program designed at the federal level and adopted by individual states
in their SIPs, a program similar but broader in scope than existing
programs such as the more limited NOX SIP Call regional cap-
and-trade system for EGUs and selected industrial source categories. If
a state failed to submit an adequate maintenance SIP, EPA would be
required to develop and implement a federal implementation plan for
that state. EPA could design the FIP to enable the state to participate
in a nationwide cap-and-trade system.
Second, section 110(a)(2)(D) requires SIPs to prohibit emissions
that would interfere with maintenance of the standard by other states.
Because GHGs are globally well-mixed, it may be that GHGs emitted from
any state could be found to interfere with maintenance of a GHG NAAQS
in every other state. In the past, EPA has issued rules that have
resulted in states adopting interstate cap-and-trade programs (e.g.,
the Clean Air Interstate Rule) implemented through SIPs to address the
requirements of this provision. In the case of GHGs, this authority
could potentially support a nationwide cap-and-trade program for GHGs,
adopted through SIPs. If a state failed to submit its section
110(a)(2)(D) SIP, EPA would be required to develop and implement a FIP
for that state. EPA could design the FIP to enable the state to
participate voluntarily in a nationwide cap-and-trade system. We
request comment on the suitability of adopting either of these
approaches under section 110(a).
ii. Additional CAA Provisions Affecting SIP Obligations and FIPs
(1) Section 179(a)
The CAA requires states to submit SIPs to EPA for review, and EPA
must approve or disapprove them based on whether the state plan or
component meets the Act's requirements. An EPA finding that a state has
failed to submit a nonattainment plan or plan component, or an EPA
disapproval of such a plan because it does not meet the requirements of
the Act, would start a ``sanctions clock'' under section 179(a). This
means that sanctions would apply in the state if the deficiencies are
not corrected within prescribed deadlines. These sanctions include
additional requirements for major new sources (18 months after the
finding of failure) and restrictions on federal highway funds (6 months
after the offset sanction).\237\ EPA must promulgate a FIP for the
deficient component of the SIP if the state's plan component is not
approved within 2 years of EPA's finding or disapproval action. In the
case of GHGs, it is possible that EPA could design the FIP to enable
the state to participate in a nationwide cap-and-trade system.
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\237\ 40 CFR 52.31.
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(2) Section 115
CAA section 115 creates a mechanism through which EPA can require
states to amend their SIPs to address international transport issues.
It is designed to protect public health and welfare in another country
from air pollution emitted in the U.S. provided the U.S. is given
essentially reciprocal rights with respect to prevention and control of
air pollution originating in the other country. The Administrator could
exercise his authority under this provision if EPA were to promulgate a
NAAQS for GHG.
To act under section 115, the Administrator would need to make a
finding that, based on information from any duly constituted
international agency, he has reason to believe that air pollutants
(GHGs) emitted in the U.S. causes or contributes to air pollution which
may reasonably be anticipated to endanger public health or welfare in a
foreign country. Upon making such a finding, the Administrator would
give
[[Page 44483]]
formal notification to the Governor of the state (or in this case
potentially all of the states) where GHGs originate. A finding under
this section has the same regulatory consequences as a finding that the
state's existing SIP is inadequate to attain the NAAQS or otherwise
meet the requirements of the Act. This notification would require the
notified states to modify their SIPs to prevent or eliminate the
endangerment.
Addressing GHGs under this authority could allow some flexibility
in program design, subject to limitations of the SIP development
process. Section 115 could not be used to require states to incorporate
into their SIPs measures unrelated to attainment or maintenance of a
NAAQS. A factor to consider is that this section of the Act only
applies where countries that suffer possible endangerment give
reciprocal rights to the U.S. However, reciprocity with one or more
affected countries may be sufficient to trigger section 115. We request
comment on the efficacy of using section 115 as a mechanism to
facilitate more effective regulation of GHGs through a NAAQS.
2. What Sources Would Be Affected?
Sections 108 and 109 impose no controls directly on sources, but
instead establish the air quality benchmarks that control requirements
would be designed to meet. The precise nature of these controls would
be determined through federal and state programs, as established via
SIPs and, for states failing to submit an approvable plan, FIPs.
Considering that GHGs are emitted by a wide array of sources, it is
likely that NAAQS implementation would result in controls on numerous
stationary and mobile sources through sections 110 and 172.
The federal government could have less flexibility under the NAAQS
approach to target control efforts toward particular groups of existing
stationary sources. Under the traditional SIP approach, emissions
controls on specific source categories would flow from independent
state-level decisions, and could result in a patchwork of regulations
requiring different types and levels of controls in different states.
However, the SIP approach could also be adapted for use in a more
coordinated strategy. As mentioned above, EPA has in the past issued
rules that have resulted in states adopting limited interstate cap-and-
trade programs (e.g., NOX SIP Call and the Clean Air
Interstate Rule) implemented through state SIPs. Furthermore, the
federal government would also have flexibility to design a national
control program in the event that states did not adopt the required
programs and EPA were required to promulgate a FIP.
EPA requests comment on whether and how the different
implementation provisions within the NAAQS program could be adapted to
be most suitable for application to control GHGs.
3. What Would Be the Key Milestones and Implementation Timeline?
The key milestones that would apply if EPA were to regulate GHGs as
a NAAQS pollutant include: listing the pollutant(s); issuing air
quality criteria; issuing information on air pollution control
techniques; proposing primary and secondary NAAQS for the pollutants;
issuing final standards; designating areas; development of SIPs/FIPs;
and application of control measures.
EPA has discretion with regard to the date of listing of a
pollutant under section 108. The statute does not prescribe any
specific deadline for listing, instead stating that EPA ``shall from
time to time * * * list * * * each air pollutant'' that EPA judges
meets the three criteria discussed above. This could provide the Agency
some latitude in determining the precise timing of any listing.
Once a pollutant is listed, the CAA specifies a very ambitious
timeline for issuing the initial NAAQS for the pollutant. Section 108
allows 12 months between date of listing and issuance of air quality
criteria for the pollutant(s). Since these criteria are intended to
encompass ``all identifiable effects on public health or welfare,'' it
would be difficult to meet this timeline in the case of GHGs. In 1970,
when the NAAQS program was first established under the CAA, air quality
criteria either were in development or had already been issued for a
variety of pollutants, and the process involved consideration of a much
smaller body of science than is now available. Therefore, the 12-month
period allotted for the initial issuance of air quality criteria
appeared reasonable.\238\ However, based on recent NAAQS reviews for
ozone, particulate matter, lead, and other pollutants, it now generally
takes several years for the Agency to complete the thorough scientific
assessment necessary to issue air quality criteria.
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\238\ For each air pollutant for which air quality criteria had
already been issued prior to enactment of the Clean Air Act
Amendments of 1970, section 109(a)(1) actually required EPA to issue
proposed NAAQS within 30 days of enactment and to finalize those
standards within 90 days of publication of the proposal. This
included carbon monoxide, ozone, particulate matter, hydrocarbons,
and sulfur oxides.
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Given the complexity of global climate change science, and the vast
amount of research that would be relevant to the Agency's scientific
assessment, EPA anticipates this task would be particularly time
consuming in the case of GHGs, though relying on synthesis reports such
as the Intergovernmental Panel on Climate Change's Fourth Assessment
Report and various reports of the U.S. Climate Change Science Program
could help expedite the process. The challenge of completing a thorough
scientific assessment for GHGs could result in a significant delay in
listing the pollutant(s) under section 108, since EPA would likely
choose to list GHGs only when the scientific assessment had progressed
sufficiently to enable the Agency to meet the statutory requirement to
issue ``air quality criteria'' within one year of listing, and to meet
the tight rulemaking timeframe, discussed below. To the extent that EPA
addresses GHGs through this CAA mechanism, EPA requests comments on the
issuance of ``air quality criteria'' following listing, as well as the
adequacy of the available scientific literature.
Under section 109, EPA must propose NAAQS for any newly listed
pollutant at the same time it issues air quality criteria under section
108, and must finalize those standards within 90 days after proposal.
Thus, from the date of listing a pollutant(s) under section 108, the
Agency has only 12 months to propose standards, and only 3 additional
months to issue final NAAQS for the pollutant(s). This tight timeframe
would be particularly challenging in the case of GHGs, for which review
and synthesis of an enormous body of literature would be required
before a proposal could be issued. Furthermore, it is important to note
that while subsequent NAAQS reviews of existing standards are required
on a revolving 5-year cycle, EPA has found it challenging to meet even
this extended schedule, which generally allows 9-12 months between
issuance of the air quality criteria and proposal and an additional 6
months or more for issuance of final standards.
Once a new standard has been established, the CAA allows EPA to
establish a deadline for states to submit designation recommendations
that is no later than one year after promulgation of the new or revised
NAAQS. EPA then reviews the states' recommendations, collects and
assesses additional information as appropriate, and issues final
designations no later than 2 years following the date EPA promulgated
the new or revised NAAQS. EPA may take up to one additional year if the
Administrator has insufficient
[[Page 44484]]
information to promulgate the designations, which could push the date
of final designations out to three years after promulgation of a new
GHG NAAQS.
The timeline for SIP submittal and implementation of control
requirements depends an area's designation status (attainment,
nonattainment, unclassifiable) and whether there is only a secondary
NAAQS, or both a primary and a secondary standard. These various
scenarios are described above. As a first step, regardless of
attainment status of level of the standard, states must submit
infrastructure SIPs to EPA within 3 years of the promulgation of any
new or revised NAAQS. These SIPs demonstrate that certain basic program
elements (including emissions inventories, monitoring, and modeling)
are properly addressed. Areas that are designated attainment would face
a much shorter list of requirements, which are discussed above in the
context of, Scenarios 3 and 4.
For areas designated nonattainment with a primary standard, states
must submit nonattainment SIPs no more than 3 years after the effective
date of designations, and must reach attainment no later than 5 years
after the effective date designations. EPA can extend the attainment
deadline by up to an additional 5 years--i.e., to no later than 10
years after the effective date of designations, if EPA finds additional
time is needed considering the severity of nonattainment and the
availability and feasibility of pollution control measures.
As noted above, the maximum 10-year horizon for attaining the
primary NAAQS is ill-suited to pollutants such as GHGs with long
atmospheric residence times. It is probable that, despite active
control efforts, the entire U.S. would remain in nonattainment for an
indefinite number of years if the level of a NAAQS were set at or below
current atmospheric concentrations; whether attainment would ever be
reached would depend on the timing and stringency of GHG control
measures implemented on a global basis.
For areas designated nonattainment with a secondary standard only,
the attainment schedule could be significantly longer. The CAA requires
that state plans under a secondary standard must provide for reaching
attainment as expeditiously as practicable, but there is no statutory
maximum date for attainment (e.g., up to 10 years). EPA requests
comment on the suitability of adapting this approach for use in the GHG
context, and specifically, on the schedule that could reasonably be
considered as ``expeditious as practicable.'' We also request comment
on how global emissions should be taken into consideration in this
context.
EPA requests comment on whether the avenues discussed in this
notice, or alternative approaches, could facilitate schedule
adjustments that would better enable use of the NAAQS approach for
regulating GHGs.
4. What Are Key Considerations Regarding Use of This Authority for
GHGs?
a. Possible Cost and Emissions Impacts
Listing GHGs as pollutants under section 108 and setting NAAQS
under section 109 would have no direct cost or emissions impacts.
However, these actions would trigger further federal actions, including
designations under section 107, and state or federal actions through
SIPs or FIPs developed under section 110 and other provisions in title
I of the CAA. Thus, the listing of GHGs as NAAQS pollutants would
likely lead to the adoption of a substantial control program affecting
sources across the nation.
Because establishing NAAQS for a pollutant sets in motion a broad
and prescriptive implementation process that could affect a wide array
of stationary and mobile sources, it is likely to entail substantial
costs. The magnitude of these costs would depend, in part, on the
relative reliance on technologies which are not yet suitable for
commercial application or which have not yet been developed. Though
this problem affects other pollutants, it is more acute in the case of
GHGs. The timing and nature of controls instituted, and thus the costs,
would depend to a significant extent on an area's designation status
and whether EPA set only a secondary NAAQS (with a longer
implementation time horizon), or a primary standard as well (with a
more rapid and rigid compliance schedule, allowing less time for
technological advances and efficiency improvements). The standard set
and the nature of GHGs could also determine whether it is feasible to
attain a NAAQS in the near-term, or how costly attainment could be over
a longer term.
One important aspect of the NAAQS approach is that the standards
themselves (both primary and secondary) are established without
consideration of these costs. EPA requests comment on the suitability
of establishing regulations to limit atmospheric concentrations of GHGs
through a statutory mechanism that prohibits consideration of the costs
such regulations might entail. EPA also requests comment on the extent
to which various implementation mechanisms in Title I are available for
addressing such costs.
As mentioned above, CAA section 108 requires EPA to issue
information on air pollution control techniques at the same time it
issues air quality criteria. This would include information on the cost
of installation and operation, energy requirements, emission reduction
benefits, and environmental impacts. Generally, the Agency fulfills
this obligation at the time a standard is issued; as required under
Executive Order 12866, EPA must issue an RIA for major rulemaking
actions. A NAAQS RIA provides an illustrative analysis of control
options available to reduce emissions and ambient concentrations of the
regulated pollutant(s); evaluates the costs of these controls; and
estimates the human health and environmental benefits likely to accrue
from the improved air quality resulting from the standards.
As required by EO 12866 and guidance from OMB, the analysis
generally compares control options and estimated costs and benefits of
multiple, specific standard options under consideration. While EPA
recognizes the cost estimates for future GHG control technologies would
potentially place more reliance on yet-to-be-developed options, the
precedent exists for consideration of future, unknown controls. EPA
requests comment on whether there are important distinctions between
GHGs and previously regulated criteria pollutants that would make it
appropriate in the case of a new NAAQS for GHG(s) to issue a separate
air pollution control techniques document earlier in the process,
specifically in conjunction with the air quality criteria as required
by section 108, or whether such information is more useful if tailored
to specific standard options under consideration, as in the RIA.
b. Technology Development and Leakage
Two of the policy design considerations noted in section III.F.1
include the potential to promote technology development and to address
potential concerns about shifting emissions to other countries. The
NAAQS establish standards based on ambient concentrations that must be
attained and maintained everywhere, and are implemented through SIPs
that establish emissions budgets consistent with meeting the standards.
The limited emissions budget encourages state and local areas and
affected sources to work together to identify least-cost emissions
[[Page 44485]]
controls to meet their SIP obligations and reduce ambient
concentrations of the regulated pollutant(s). The NAAQS requirements
help create market demand for technologies that can assist in meeting
air quality standards at the least cost. As discussed in Section III.C
of this notice, this process has encouraged significant technological
innovation. EPA requests comment on the extent to which the NAAQS can
be an effective mechanism for encouraging technological innovation and
development of least-cost controls for GHG emissions.
The 10-year maximum timeline for attaining a primary NAAQS would
allow some time for development and deployment of emerging
technologies, but longer timelines available under other forms of the
NAAQS would provide greater flexibility to provide continuous
incentives over a longer time period for major technology advances, and
more time to deploy new technologies that are developed. EPA requests
comment on the extent to which a GHG NAAQS could reasonably be expected
to advance new control technologies, and on what timeframe.
With respect to the leakage issue, establishing a primary NAAQS
could lead to high costs among affected industries unless a viable
approach is identified to limit the control burden on U.S. sources.
Because the standards themselves are set without consideration of cost
or availability of control technologies, and because states would be
required to adopt a plan to attain a primary standard within 10 years
of designation, the NAAQS approach might offer less flexibility to
delay emissions reductions in the absence of effective control
technologies or when costs are prohibitive. This consideration may be
particularly relevant in the case of GHGs, where highly efficient
control technologies or mitigation options are currently limited, and
where critical new control strategies, such as carbon capture and
storage, are still in the early stages of development. In these
instances, industries that are unable to locate cost-effective control
strategies may consider relocating to non-regulated locations,
resulting in significant emissions leakage.
We request comment on the cost-effectiveness of utilizing a NAAQS
approach to regulating GHGs, and on the extent to which this approach
might be expected to result in emissions leakage, especially as
compared to other potential regulatory approaches outlined in this
notice.
c. Summary of Opportunities and Challenges Afforded by NAAQS Pathway
Regulating GHGs through a NAAQS offers certain opportunities;
however, there are also significant technological, legal and program
design challenges that would tend to limit the appropriateness of the
NAAQS program.
NAAQS are based purely on preventing adverse health and
environmental impacts, rather than on considerations of cost,
feasibility, or availability of technology. Our expectation is that the
NAAQS approach would establish a goal tied to actual ambient
concentrations of GHGs. A NAAQS would call for assessment of potential
control strategies for a broad array of sources, rather than focusing
only on emissions reductions from a specified (but potentially limited)
list of sources. The NAAQS approach would allow for some flexibility in
the design of control strategies and requirements, including the
possibility of a cap-and-trade approach, and might spur significant
technological innovation. It would provide a mechanism for reducing GHG
emissions from current sources and limiting the growth of emissions
from new sources. If the facts supported adopting only a secondary
standard, this would somewhat reduce the specific obligations on
states, and would allow a suitably extended timeline for achieving the
emissions reductions necessary to stabilize and then reduce ambient GHG
concentrations.
Though such an approach has the potential to be effective in
reducing emissions, there would be a number of obstacles to overcome.
Chief among these is that if worldwide (non-U.S.) emissons were to
continue increasing, global concentrations of GHGs would continue to
increase despite U.S. emission control efforts, and the NAAQS would be
unachievable (depending on the level of the standards) even if U.S.
emissions were reduced to zero. Unless viable legal approaches could be
identified for limiting the control burden on U.S. sources, such as by
defining a U.S. share of the emissions reductions needed to attain a
NAAQS, the NAAQS approach would result in an expensive program. It
would not achieve the adopted GHG NAAQS due to foreign emissions
growth, although U.S. emissions reductions would be achieved. If the
result of a NAAQS were stringent unilateral controls for vulnerable
industries, this would encourage emissions leakage in the absence of
comparable control efforts abroad.
Especially if the Agency were to set a primary as well as a
secondary standard, a NAAQS would trigger a relatively rigid
implementation apparatus, limiting the Agency's flexibility to target
cost-effective emissions reductions and to shift the burden of control
requirements among different industries based on the availability of
new technological approaches. The lack of flexibility allowed under the
CAA for many of the NAAQS implementation requirements--especially those
affecting areas designated nonattainment with a primary standard--makes
them difficult to adapt effectively for application in the GHG context.
For example, it would be challenging to apply requirements for
transportation conformity under a GHG NAAQS, or for states to develop
attainment demonstration SIPs. As discussed in section IV.E, a
nonattainment new source review program requiring for GHGs would
dramatically expand the scope of the preconstruction permitting program
to include smaller sources and new types of sources such as apartment
buildings with natural gas heat, unless EPA were successful in applying
legal theories that justify deviating from statutory language. This
would pose substantial administrative feasibility and cost issues.
While implementation of an attainment-level NAAQS would involve fewer
specific requirements, this avenue would only apply if the standard set
by EPA under section 109 resulted in attainment designations. Section
109 calls for standards to be set based on science-based criteria,
which exclude consideration of the cost or efficiency of the
implementation requirements in determining the level of the standard.
We note that while the NAAQS implementation system is state-based,
legislative proposals have focused on establishing federally
administered national cap-and-trade strategies to address the global
climate problem.
In closing, we request comment on our assessment of NAAQS
approaches, and on how the NAAQS approach compares to other potential
CAA approaches in light of the policy principles enunciated in section
III.F.1.
5. Possible Implications for Other CAA Provisions
Listing a pollutant under section 108(a)(1) would preclude listing
under section 112 or regulation under section 111(d), but would not
preclude listing and regulation under section 111(a)-(c) New Source
Performance Standards (NSPS) provisions as described below. Similarly,
regulation of GHGs under section 111(a)-(c) NSPS provisions, as
discussed further in other sections of
[[Page 44486]]
today's notice, would not preclude regulation of those pollutants
through a NAAQS, although controls implemented through these provisions
might influence the Agency's perspective on the appropriateness of
establishing air quality criteria for GHGs. EPA requests comment on the
extent to which regulatory action under section 111 could be considered
in the context of exercising authority under section 108 relevant to
GHGs.
B. Standards of Performance for New and Existing Sources
CAA section 111 provides EPA with authority to set national
performance standards for stationary sources. There are two alternative
pathways for using section 111 to regulate GHGs--as part of an
implementation program for a GHG NAAQS or as a freestanding program.
In the event of a GHG NAAQS, section 111 authorizes EPA to
set emissions performance standards for new and modified sources but
not for unmodified existing sources.
In the absence of a GHG NAAQS, section 111 offers the
potential for an independent, comprehensive program for regulating most
stationary sources of GHGs, except to the extent GHG emissions are
regulated under section 112
Section 111 provides for consideration of cost, and allows
substantial discretion regarding the types and size of sources
regulated. As with most other CAA authorities, however, establishment
of a section 111 standard for any source category of GHGs would trigger
preconstruction permitting requirements for all types of GHG major
sources under the PSD program.
The Stationary Source TSD for this ANPR identifies some specific
industry sectors that EPA has evaluated for their emissions of multiple
pollutants, including GHGs. EPA requests comment on this analysis. In
addition, EPA requests comment on GHG emissions from these and all
other categories and subcategories that have been subject to section
111 standards and on the relative costs that could be associated with
employing certain identified control technology or practices affecting
GHG emissions, including any positive or negative impacts on the
emissions of traditional pollutants.
1. What Does Section 111 Require?
Section 111 establishes two distinct mechanisms for controlling
emissions of air pollutants from stationary sources. Section 111(b)
provides authority for EPA to promulgate New Source Performance
Standards (NSPS) which may be issued regardless of whether there is a
NAAQS for the pollutant being regulated, but apply only to new and
modified sources. Once EPA has elected to set an NSPS for new and
modified sources in a given source category, section 111(d) calls for
regulation of existing sources with certain exceptions explained below.
Taken together, the section 111 provisions could allow significant
flexibility in regulation that may not be available under other CAA
Title I provisions.
a. Section 111(b) New Source Performance Standards
Section 111(b) of the CAA requires EPA to establish emission
standards for any category of new and modified stationary sources that
the Administrator, in his judgment, finds ``causes, or contributes
significantly to, air pollution which may reasonably be anticipated to
endanger public health or welfare.'' EPA has previously made
endangerment findings under this section for more than 60 stationary
source categories and subcategories that are now subject to NSPS.\239\
An endangerment finding would be a prerequisite for listing additional
source categories under section 111(b), but is not required to regulate
GHGs from source categories that have already been listed.
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\239\ EPA has developed NSPS for more than 70 source categories
and subcategories. However, endangerment findings apply to the
categories as a whole, while subcategories within them have been
established for purposes of creating standards that distinguish
among sizes, types, and classes of sources.
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For listed source categories, EPA must establish ``standards of
performance'' that apply to sources that are constructed, modified or
reconstructed after EPA proposes the NSPS for the relevant source
category.\240\ However, EPA has significant discretion to define the
source categories, determine the pollutants for which standards should
be developed, identify the facilities within each source category to be
covered, and set the level of the standards. In addition, EPA believes
that the NSPS program is flexible enough to allow the use of certain
market-oriented mechanisms to regulate emissions, as discussed below.
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\240\ Specific statutory and regulatory provisions define what
constitutes a modification or reconstruction of a facility. 40 CFR
60.14 provides that an existing facility is modified, and therefore
subject to an NSPS, if it undergoes ``any physical change in the
method of operation . . . which increases the amount of any air
pollutant emitted by such source or which results in the emission of
any air pollutant not previously emitted.'' 40 CFR 60.15, in turn,
provides that a facility is reconstructed if components are replaced
at an existing facility to such an extent that the capital cost of
the new equipment/components exceed 50 percent of what is believed
to be the cost of a completely new facility.
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As implemented over many years by EPA, the NSPS program has
established standards that do not necessarily set emission limits for
all pollutants or even all regulated pollutants emitted by sources
within the relevant source category. Rather, the NSPS generally focus
on specific pollutants of concern for a particular source category. Air
pollutants currently regulated through section 111(b) include the
criteria pollutants listed under section 108 and certain additional
pollutants. These additional pollutants are acid mist, fluorides,
hydrogen sulfide in acid gas, total reduced sulfur, and landfill gas.
EPA has discretion to revise an existing NSPS to add standards for
pollutants not currently regulated for that source category, but has
interpreted the section to not require such a result when an NSPS is
reviewed pursuant to section 111(b)(1)(B). That section requires EPA to
review and, if appropriate, revise NSPS every eight years unless the
Agency determines that such review is not appropriate in light of
readily available information on the efficacy of the standard.
Further, in contrast to other provisions in the CAA which require
regulation of all sources above specific size thresholds, section 111
gives EPA significant discretion to identify the facilities within a
source category that should be regulated. To define the affected
facilities, EPA can use size thresholds for regulation and create
subcategories based on source type, class or size. Emission limits also
may be established either for equipment within a facility or for an
entire facility.
EPA also has significant discretion to determine the appropriate
level for the standards. Section 111(a)(1) provides that NSPS are to
``reflect the degree of emission limitation achievable through the
application of the best system of emission reduction which (taking into
account the cost of achieving such reduction and any nonair quality
health and environmental impact and energy requirements) the
Administrator determines has been adequately demonstrated.'' This level
of control is commonly referred to as best demonstrated technology
(BDT). In determining BDT, we typically conduct a technology review
that identifies what emission reduction systems exist and how much they
reduce air pollution in practice. This allows us to identify potential
emission limits. Next, we evaluate each limit in conjunction with
costs, secondary air benefits (or disbenefits) resulting from energy
[[Page 44487]]
requirements, and non-air quality impacts such as solid waste
generation. The resultant standard is commonly a numerical emissions
limit, expressed as a performance level (i.e., a rate-based standard).
While such standards are based on the effectiveness of one or more
specific technological systems of emissions control, unless certain
conditions are met, EPA may not prescribe a particular technological
system that must be used to comply with a NSPS. Rather, sources remain
free to elect whatever combination of measures will achieve equivalent
or greater control of emissions.
It is important to note that under section 111, the systems on
which a standard is based need only be ``adequately demonstrated'' in
EPA's view such that it would be reasonable to apply them to the
regulated category. The systems, and corresponding emission rates, need
not be actually in use or achieved in practice at potentially regulated
sources or even at a commercial scale. Further, EPA believes that if a
technology is ``adequately demonstrated'' for use at a date in the
future, EPA could establish a future-year standard based on that
technology. This would allow EPA to develop two- or multi-phased
standards with more stringent limits in future years that take into
account and promote the development of technology.
Costs are also considered in evaluating the appropriate standard of
performance for each category or subcategory. We generally compare
control options and estimated costs and emission impacts of multiple,
specific emission standard options under consideration. As part of this
analysis, we consider numerous factors relating to the potential cost
of the regulation, including industry organization and market
structure; control options available to reduce emissions of the
regulated pollutant(s); and costs of these controls. Frequently, much
of this information is presented in the Regulatory Impact Analysis
(RIA) that is required for all major rulemaking actions.
b. Section 111(d) Emissions Guidelines for Existing Sources
Section 111(d) requires regulation of existing sources in specific
circumstances. Specifically, where EPA establishes a NSPS for a
pollutant, a section 111(d) standard is required for existing sources
in the regulated source category except in two circumstances. First,
section 111(d) prohibits regulation of a NAAQS pollutant under that
section. Second, ``where a source category is being regulated under
section 112, a section 111(d) standard of performance cannot be
established to address any HAP listed under 112(b) that may be emitted
from that particular source category.'' \241\
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\241\ See 70 FR 15994, 16029-32 (Mar. 29, 2005).
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Section 111(d) also uses a different regulatory mechanism to
regulate existing sources than section 111(b) uses for new and modified
sources in a source category. Instead of giving EPA direct authority to
set national standards applicable to existing sources in the source
category, section 111(d) provides that EPA shall establish a procedure
for states to issue performance standards for existing sources in that
source category. Under the 111(d) mechanism, EPA first develops
regulations known as ``emission guidelines.'' These may be issued at
the same time or after an NSPS for the source category is promulgated.
Although called ``guidelines,'' they establish binding requirements
that states are required to address when they develop plans to regulate
the existing sources in their jurisdictions. These state plans are
similar to state implementation plans and must be submitted to EPA for
approval. Historically, EPA has issued model standards for existing
sources that could then be adopted by states. Under this approach,
creating an interstate trading system would require adoption of
compatible state rules promoted by EPA rules and guidance. In the event
that a state does not adopt and submit a plan, EPA has authority to
then issue a federal plan covering affected sources.
Section 111(d) guidelines, like NSPS standards, must reflect the
emission reduction achievable through the application of BDT. However,
both the statute and EPA's regulations implementing section 111(d)
recognize that existing sources may not always have the capability to
achieve the same levels of control at reasonable cost as new sources.
The statute and EPA's regulations in 40 CFR 60.24 permit states and EPA
to set less stringent standards or longer compliance schedules for
existing sources where warranted considering cost of control; useful
life of the facilities; location or process design at a particular
facility; physical impossibility of installing necessary control
equipment; or other factors making less stringent limits or longer
compliance schedules appropriate.
2. What Sources Could Be Affected?
Section 111 has been used to regulate emissions of traditional and
nontraditional air pollutants from a broad spectrum of stationary
source categories. EPA has already promulgated NSPS for more than 70
source categories and subcategoriesand we could add GHG emission
standards, as appropriate, to the standards for existing source
categories.\242\ EPA has begun a review of the existing NSPS source
categories to determine whether it would be appropriate to regulate GHG
emissions from sources in each category. In addition, EPA is in the
process of responding to a remand from the D.C. Circuit requiring it to
consider whether to add standards for GHGs to the NSPS for utility
boilers, and EPA has received suggestions that it would be appropriate
to add such standards to the NSPS for Portland cement kilns.\243\
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\242\ Some of the existing source categories are very broad,
comprising an entire industrial process such as steel making, while
others are narrowly defined as a single piece of equipment within a
broader production process. Examples of source categories subject to
NSPS are fossil fuel-fired boilers, incinerators, sulfuric acid
plants, petroleum refineries, lead smelters, and equipment leaks of
VOCs in the synthetic organic chemicals manufacturing industry. A
complete list of the NSPS source categories is found at 40 CFR part
60.
\243\ The NSPS for Petroleum Refineries were recently amended,
resulting in the promulgation of new Subpart Ja. These performance
standards include emission limitations and work practice standards
for fluid catalytic cracking units, fluid coking units, delayed
coking units, fuel gas combustion devices, and sulfur recovery
plants. As such, they regulate criteria pollutant emissions from the
processes that are also responsible for most of the refinery GHG
emissions. During the public comment period for Subpart Ja, we
received several comments in favor of developing new source
performance standards to address GHG emissions from refineries.
However, we declined to adopt standards for GHG emissions in that
rulemaking, in part because while doing so was within our
discretion, we believed that it was important to fully consider the
implications for programs under other parts of the CAA before
electing to regulate GHG under section 111. This is a fundamental
purpose for today's notice and request for comments.
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To determine whether regulation of GHGs is appropriate for existing
categories, we must evaluate whether it is reasonable to do so given
the magnitude of emissions and availability of controls, considering
the costs of control. Decisions in this regard could be influenced by
several factors, including the magnitude of the GHG emissions from a
source category; the potency of the particular GHG emitted; whether
emissions are continuous, seasonal or intermittent; the availability of
information regarding the category's GHG emissions; and whether
regulating GHG emissions from the source category would be beneficial.
EPA requests comment on the extent to which these factors should, if at
all, influence EPA's decisions whether to add standards to existing
NSPS and what additional factors should be taken into consideration.
EPA also requests
[[Page 44488]]
comment on which of the previously regulated categories might be
appropriate for GHG regulation and on the information on which such
judgments might be based.
To inform the public of EPA's analytical work to date, we have
provided descriptions of key industrial sectors, their GHG emissions,
and information that we have collected to date on GHG control options
for those sectors in the Stationary Source TSD in the docket for
today's notice. It is important to note that, as described further in
the technical support materials, many near-term technologies or
techniques for reducing GHG, e.g., energy efficiency or process
efficiency improvements, are relatively cost effective and achieve
modest emission reductions when compared with the potential of some
add-on control techniques. Other controls may become available in the
future whose costs and emission reduction effectiveness may differ
substantially from what is discussed here today. The Stationary Source
TSD also discusses various mechanisms, such as cap-and-trade programs
or emissions averaging approaches across facilities or industries, that
can help reduce costs of reducing emissions. EPA requests comment on
the availability and extent of its legal authority for such mechanisms.
In addition to regulating GHGs from previously listed source
categories, section 111 provides discretionary authority to list new
source categories, or reformulate listed source categories, for
purposes of regulating of GHG emissions. For example, such categories
could include sources of emissions covered by existing NSPS source
categories as well as sources not currently covered by any NSPS. One
option available to EPA is the reorganization of source categories for
purposes of GHG regulation. In creating new categories to be used for
regulation of GHGs, EPA could consider factors unique to GHG emissions.
For example, EPA could take into account concerns about emissions
leakage (discussed in section III.F.5 of this notice), and structure
categories to minimize opportunities for shifting emissions to other
source categories. EPA could also explore how the rearrangement of
source categories could facilitate netting arrangements through which a
more broadly defined ``source'' could avoid triggering an GHG NSPS by
off-setting its increased GHG emissions.\244\ In addition, EPA could
structure categories to take into account possible reductions from
improvements at non-emitting parts of the plants, for example, by
creating source categories that cover all equipment at particular
plants, instead of using categories that cover only specific types of
equipment at a plant. EPA invites comment on whether such rearrangement
would be appropriate and what type of rearrangement would be desirable.
We also solicit information on how rearrangement could facilitate
netting and how we might structure such netting.
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\244\ We recognize that the Court in Asarco Inc. v. EPA, 578
F.2d 326 (D.C. Cir. 1978) struck down an NSPS provision that allowed
netting. The provision at issue there, however, permitted netting
between sources, not within a source. See Alabama Power v. EPA, 636
F.2d 323, 401-02 (D.C. Cir. 1980).
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An alternative, or complementary, scenario would be to create
larger ``super-categories'' covering major groupings of stationary
sources of GHG emissions. For example, it might be possible to create
process-based categories (i.e., all sources emitting CO2 through a
stack as a result of combustion processes) or vertically integrated
categories which take more of a life-cycle approach to the control of
GHG emissions and reduce the possibility of leakage of GHG reductions
to other parts of the economy or other geographic regions.\245\ The
creation of such ``super-categories'' might provide additional
opportunities for the development of innovative control mechanisms such
as cap-and-trade programs covering multiple industry sectors. In light
of these considerations, EPA requests comment on whether the creation
of such ``super categories'' would be appropriate and what categories
would be most useful for regulating GHGs.
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\245\ For instance, a ``super-category'' could be created
encompassing all aspects of the production, processing, and
consumption of petroleum fuels, or to regulate the production and
consumption of fossil fuels for heat and power, addressing all
aspects of emissions-producing activity within a sector, including
fuel production, consumption, and energy conservation.
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Under either option, EPA possesses authority to distinguish among
classes, types and sizes of sources within existing categories for
purposes of regulating GHG emissions. For example, we have at times
distinguished between new and modified/reconstructed sources when
setting the standards. This may be appropriate, for instance, when a
particular new technology may readily be incorporated into a new
installation, but it may be technically infeasible or unreasonably
costly to retrofit this technology to an existing facility undergoing
modification or reconstruction. Alternatively, we have distinguished
among sources within a category, for instance fossil fuel-fired
boilers, for which we have subcategorized on the basis of fuel types
(e.g., coal, oil, natural gas). EPA requests comment on what
considerations are relevant to determining whether it is appropriate
and reasonable to establish subcategories for regulation under section
111.
3. What Are Possible Key Milestones and Implementation Timelines?
a. Priority Setting Among Source Categories
If EPA were to pursue section 111 regulation of GHGs, timetables
for regulation would depend upon how EPA prioritized among source
categories to determine which categories should be regulated first. In
the near term, it may be possible to address GHGs under section 111 in
a limited fashion by establishing control requirements for new and
existing sources in some number of existing source categories, while
information is developed on other source categories. Actions under
other portions of the CAA may involve longer lead times to develop and
implement, so that standards under section 111 for certain source
categories could provide for emission reductions in the interim. We
have begun to examine source categories subject to existing NSPS and
other standards to consider how we might determine priorities among
them for review and revisions, and whether GHGs could be addressed for
specific sectors in a more coordinated, multi-pollutant fashion. EPA
requests comment on the availability of its legal authority, if any, to
prioritize among source categories in the event that regulation under
section 111 was pursued.
Under a ``prioritization'' approach, EPA could seek to revise
standards earliest for those categories offering the greatest potential
for significant reductions in the emissions of covered pollutants, and
either deferring action or determining that no further action is
necessary or appropriate at this time for other categories. This
conclusion could be based, for example, on the lack of significant
improvements in technology since the last NSPS review or the fact that
no new sources are considered to be likely in the foreseeable future.
Another possibility might be to schedule and structure the review
and revision of standards for source categories to account for the fact
that, in addition to the need to address GHG emissions, they may be
subject to multiple standards for different pollutants under several
sections of the CAA. Such standards may often be subject currently to
different review
[[Page 44489]]
timetables resulting from when these standards were last established or
revised. In addition, as discussed in section III.D of today's notice,
they may have the potential for positive or negative interactions with
one another and with opportunities for the control of GHG emissions.
Still another approach might consider the impacts of future
reduction opportunities or enacted legislation so that standards under
section 111 might focus initially on source categories for which near-
term benefits might result largely from efficiency improvements which
do not result in ``stranded capital,'' or investment in systems that
will be superseded by more effective systems that we determine will be
available at some specific future date. Alternatively, standards could
focus on those sectors of the economy which will not likely be subject
to controls being addressed in enacted legislation.
We request comment on EPA's available legal authority, if any, to
defer action with respect to any ``class'' of section 111 source
categories or subcategories as well as how and under what circumstances
EPA could also consider such approaches to the identification of source
categories for standards to address GHGs. Assuming the existence of
adequate authority, what, if any, additional criteria should be
considered in our priority-setting analysis efforts? In considering
such sector- or multi-pollutant-based approaches, we further request
comment on the extent to which we could establish new or revised source
categories which better accommodate these approaches, or whether we are
bound by existing source categories and their definitions.
b. Timetables for Promulgation and Implementation
In our experience, collecting and analyzing information regarding
available control technologies, resulting emission reductions, and cost
effectiveness can take up to several years for a source category.
However, this time period can be shortened to 1\1/2\ to 2 years when
information is readily available or is presented to the Agency in a
form that facilitates efficient consideration. With respect to GHGs,
there has been significant effort devoted to identifying and evaluating
ways to reduce emissions within sectors such as the electricity
generating industry, and we are aware of the potential for GHG
reductions through energy efficiency and other means within other
industries. However, for many others, technologies for reducing GHG
emissions have not yet been identified or evaluated by EPA. EPA
requests comment on whether and how the availability of current
information should be considered when considering regulation under
section 111.
As is the case with traditional pollutants, any new or revised NSPS
for new and modified sources of GHGs under section 111(b) would be
developed through a notice and comment rulemaking process and would be
effective upon promulgation. As noted previously, EPA is also required
to review, and if appropriate revise, existing NSPS every 8 years
unless the Administrator determines that ``such review is not
appropriate in light of readily available information on the efficacy
of such standard.'' Standards for pollutants not regulated by the
existing NSPS may be added concurrent with the 8-year review, but such
additions are not part of that review process.
Any section 111(d) emission guidelines associated with the revised
NSPS standards would be promulgated either along with or after the
NSPS. States are generally required to submit the required state plans
containing the standards of performance applicable to existing sources
in their jurisdictions within 9 months of EPA's promulgation of the
guidelines.
In the case of existing sources regulated under section 111(d),
affected sources are typically provided up to 3 years to comply with
any resulting requirements; however, states have flexibility to provide
longer or shorter compliance timeframes based on a number of source-
specific factors. In addition, where we determine that a technology has
been adequately demonstrated to be available for use by some particular
future date, we believe it is possible to establish timeframes for
compliance that reflect this finding.\246\
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\246\ See Portland Cement Association v. EPA, 486 F.2d 275 (D.C.
Cir. 1973).
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No explicit 8-year review requirement exists with regard to section
111(d) standards for existing sources. Nonetheless, it also may be
appropriate to require existing source plans to periodically revise
their control strategies to reflect changes in available technologies
and standards over time, particularly where the existing limitations
were based on more limited controls at the time they were established.
EPA requests comment on its authority and the advisability of such
periodic updating with respect to the possible control of GHG.
The CAA and EPA's regulations implementing section 111(d) permit
states to consider a number of factors when determining the level of
stringency of controls, but do not establish a bright line test when
stricter requirements for existing sources are warranted. Many of these
sources may also be subject to requirements for the control of other
non-section 111(d) pollutants as part of implementation plans to attain
and maintain NAAQS for one or more pollutants, and in some cases, these
provisions may result in more stringent coincidental control of section
111(d) pollutants. We request comment on how and when we should
evaluate, review, and revise as appropriate any section 111(d)
standards that might be established in the future for GHGs.
4. What Are the Key Considerations Regarding Use of This Authority To
Regulate GHGs?
a. Key Attributes and Limitations of Section 111
As noted above, section 111 possesses certain flexible attributes
that may be useful in tailoring emissions standards to address GHG
emissions. Yet, regulation under this section also has important
limitations. This section of today's notice briefly summarizes these
attributes and limitations. We request comment on how these attributes
and limitations relate to the policy design considerations set forth in
section III.F.1.
Program scope: Section 111 provides EPA with authority to regulate
GHG emissions from stationary source categories, but does not require
EPA to regulate GHGs emitted by all source categories or even all
listed source categories. EPA has flexibility to identify the source
categories for which it is appropriate to establish GHG limits. For
example, EPA could decide to set GHG limits for those source categories
with the largest GHG emissions and reduction opportunities. EPA could
postpone or decline to set GHG limits for source categories for which
emissions contributions may be small or for which no effective means of
reducing emissions exist, currently or within the reasonably
foreseeable future. EPA also could consider traditional air pollutants
as well as GHGs in setting its overall priorities for the NSPS program.
Source size: Section 111 does not require regulation of all sources
above a certain size. Instead, EPA has discretion to use rational
emission thresholds to identify which facilities within a source
category are covered by NSPS standards.
Consideration of cost: Section 111 explicitly directs EPA to take
``into account the cost of achieving'' emission
[[Page 44490]]
reductions, as well as other nonair quality, health and environmental
impact and energy requirements.'' This gives EPA significant
flexibility to determine of appropriate levels of control, and can be
an important source of distinctions between requirements for new
sources and those for modified or reconstructed sources.
Potential for emissions trading: As EPA has interpreted the NSPS
requirements in the past with respect to certain air pollutants, we
believe that the NSPS program could use emissions trading, including
cap-and-trade programs and rate-based regulations that allow emissions
trading, to achieve GHG emission reductions. EPA believes such programs
are consistent with the statutory requirements because they satisfy the
three substantive components of the section 111(a)(1) definition of
``standard of performance''--(1) a standard for emissions of air
pollutants; that (2) reflects that degree of emission limitation
available''; and (3) ``constitutes the best system of emission
reduction.'' A cap-and-trade program can constitute a ``standard for
emissions of air pollutants'' because it is a system created by EPA for
control of emissions. The use of emissions budgets does not make the
system less of a ``standard'' since the budgets must be met regardless
of the methodology used to allocate allowances to specific sources.
Further, any such system would be based on our assessment of the
overall degree of emission reduction available for the source category
and our analysis of the available systems of emission reductions. EPA
could select a market-oriented mechanism as the ``standard of
performance'' if these analyses (including cost analyses) indicate that
the system would ``reflect the degree of emission limitation
achievable'' and ``constitute the best system of emission reduction.''
EPA also believes that trading among new and existing sources could be
permitted, and could offer, at least in some cases, cost
efficiencies.\247\ EPA also believes that because of the potential cost
savings, it might be possible for the Agency to consider deeper
reductions through a cap-and-trade program that allowed trading among
sources in various source categories relative to other systems of
emission reduction. We request comment on the extent of EPA's available
legal authority in this area as well as the attributes such a program
must possess to qualify as a standard of performance under section 111.
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\247\ In the Clean Air Mercury Rule we concluded that new
sources needed to comply with a unit specific control requirement in
addition to participating in the trading program. We solicit comment
on whether section 111 requires such controls for new sources or if
it would be sufficient for them to participate in a trading program
or other market based mechanism without this restriction. While not
ensuring an equally stringent level of control at each new source,
the latter approach would be expected to achieve the same total
emissions reductions at a lower overall compliance cost.
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Potential for declining performance standards: EPA believes that
section 111 authority may be used to set both single-phase performance
standards based upon current technology and to set two-phased or multi-
phased standards with more stringent limits in future years. Future-
year limits may permissibly be based on technologies that, at the time
of the rulemaking, we find adequately demonstrated to be available for
use at some specified future date. Alternatively, it may be possible to
establish a goal based on future availability of a technology and to
revise the standard to reflect technological advancements at
appropriate intervals, such as the 8-year review cycles. We believe
these concepts could be applied to standards for new and modified
sources, as well as to standards for existing sources under section
111(d). In addition, this concept could be coupled with emissions
trading.
We recognize that various legal issues and questions concerning
legal authority may be involved in setting standards based on
technology only adequately demonstrated for use at a future date. For
example, there might be greater uncertainty regarding the cost of
technology for such standards than for standards based only on
technology that is already commercially demonstrated at the time of
promulgation. In the Clean Air Mercury Rule (CAMR), which was vacated
by the D.C. Circuit on other grounds, EPA interpreted section 111 to
allow a two-phased ``standard of performance'' to reduce mercury
emissions from existing sources. The compliance date for the more
stringent second phase was 2018. EPA believed that it had greater
flexibility to set such a standard for existing sources under section
111(d) because these standards, in contrast to section 111(b) standards
for new sources, are not subject to the requirements of section 111(e).
Section 111(e) makes unlawful to operate any new source in violation of
a standard of performance after its effective date. EPA requests
comment on this interpretation. We also request comment on the
circumstances under which the requirements of section 111(e) would be
satisfied by a standard requiring compliance with the initial
requirements of a multi-phase standard. More generally, EPA seeks
comment on its legal authority in this matter as well as the legal and
factual conditions that must be satisfied to support a multi-phase
standard with future-year standards based on technology adequately
demonstrated for use by that future date. EPA also seeks comment on how
far into the future multi-phase standards could extend and the degree
of certainty with which EPA must make its determinations of
availability for future use, considering the section 111 standard
setting language.
Technology development: Section 111 also contains a waiver
provision that can be used to encourage the development of innovative
technologies, as described below.
Standards tied to available technology: The fact that section 111
requirements are based upon a demonstration of the availability of
control technology could limit the amount of reductions achievable
through section 111 regulations to demonstrably feasible and cost-
effective levels. If a given level of overall emission reduction is
determined to be necessary and that level exceeds what is currently
demonstrated to be feasible now or by some future date, then section
111 may not provide adequate authority by itself to achieve needed
reductions. Although section 111 provides certain opportunities and
incentives for technology development, this feature may make it more
difficult to set ``stretch goals'' without other companion mechanisms.
In light of these considerations, we request comment on whether and
to what extent section 111 provides an appropriate means for regulating
GHG emissions.
b. Additional Considerations
We also request comment on the questions presented below which
relate to the manner in which EPA could or should exercise its
authority under this section to regulate GHGs.
i. What Regulatory Mechanisms Are Available?
As noted above, NSPS standards and 111(d) emission guidelines most
commonly establish numerical emission standards expressed as a
performance level. Such rate-based limits, however, are not the only
mechanisms that could be used to regulate GHGs.
Efficiency Standards: We believe that most reductions in stationary
GHG emissions may occur initially as the result of increased energy
efficiency, process efficiency improvements, recovery and beneficial
use of process gases, and certain raw material and product changes that
could reduce inputs of carbon or other GHG-
[[Page 44491]]
generating materials. Such emission reductions may range in the near
term (e.g., 5-10 years) from 1 to 10%. Thus, it could be possible to
utilize NSPS standards to ensure reductions from efficiency
improvements are obtained. For such standards to be effective, they
likely would generally need to apply to the entire facility, not just
specific equipment at the facility. EPA requests comment on the
availability of its legal authority in this area and whether and when
it might be appropriate to establish efficiency standards for source
categories as a way of reducing GHG emissions.
Plant-wide standards: EPA also believes there may be benefits to
developing plant-wide or company-wide standards for GHG emissions.
Section 111, however, requires each affected facility to comply with
the standard. EPA believes that it could redefine the affected facility
for certain categories, for purposes of GHG regulation only, to include
an entire plant. EPA also requests comment on whether it would be
consistent with the statutory requirements to establish company-wide
limits.
Work practice standards: In some circumstances, it may not be
possible to identify a specific performance level for sources in a
particular category; however, section 111(h) permits promulgation of
design, equipment, work practice, or operational standards but allows
such standards to be established only in specific circumstances.
Specifically, it provides that where we determine ``that (A) a
pollutant or pollutants cannot be emitted through a conveyance designed
and constructed to emit or capture such pollutant, or that any
requirement for, or use of, such a conveyance would be inconsistent
with any Federal, State, or local law, or (B) the application of
measurement methodology to a particular class of sources is not
practicable due to technological or economic limitations,'' we may
establish a ``design, equipment, work practice, or operational
standard, or combination thereof, which reflects the best technological
system of continuous mission reduction which . . . has been adequately
demonstrated.'' EPA requests comment on the circumstances under which
the section 111(h) criteria would be satisfied and when, and for which
source categories, work practice standards could be appropriate
standards to control GHGs.
Market-oriented regulatory mechanisms: As mentioned above, EPA
believes that market-oriented regulatory approaches including emissions
trading are worthy of consideration for applying NSPS to GHG emissions.
Several market-oriented regulatory mechanisms are discussed in section
VII.G of today's notice. EPA requests comment on which of these
mechanisms are consistent with the section 111 definition of a
``standard of performance.''
ii. Request for Comment on Section 111 Regulatory Approaches
This notice and the Stationary Source TSD describe possible
approaches for using section 111 to reduce GHG emissions, in general
and in regard to particular source categories. We request comment on
the following specific questions regarding potential regulatory
approaches under section 111:
What are the overall advantages and disadvantages of the
regulatory approaches discussed above, in light of the policy design
considerations in section III.F.1? Please describe in detail any
approaches not discussed in today's notice that you think we should
consider.
What are the industry-specific advantages and
disadvantages of the regulatory approaches discussed above and in the
TSD?
In developing section 111 standards for a particular source
category (e.g., refineries, cement plants, industrial commercial
boilers, electric generating plants, etc.) we are requesting source
category-specific comments on the following additional issues:
What data are available, or would need to be collected, to
support the development of performance standards, either by process,
subcategory, or for the facility?
Should the standards be different for new and existing
sources, either in terms of the systems for emission reductions on
which they should be based and/or on the regulatory structure and
implementing mechanisms for such standards?
To what extent, if any, should the standards be
technology-forcing for existing sources?
Should the standards require additional reductions over
time? To what extent would such reductions be consistent with the
authority and purpose of section 111, and how should they be designed
and carried out to ensure consistency?
iii. What Reductions Could Be Achieved From Efficiency Improvements at
Existing Sources?
Recognizing that existing sources do not have as much flexibility
in the levels of control that may realistically be achieved at a new
source, a section 111(d) standard regulating GHG from existing sources
would at this time most likely focus on currently available measures to
increase the energy efficiency at the facility, thereby reducing GHG
emissions. Examples of typical measures that promote energy efficiency
include the use of cleaner fuels and equipment replacement or process
improvements which reduce energy consumption. How well a measure, or
combination of measures, will reduce GHG emissions at an individual
facility will vary. A review of available literature suggests a range
of improvements for various industry sectors that may be achievable
through energy and process efficiency improvements, and some
representative examples are summarized below. This information is
illustrative, and does not represent any final technical determination
by the agency as to what emission reduction requirements might be
appropriate to require from the source categories discussed below.
For example, reductions in emissions of GHG from cement plants
would most likely occur from fuel efficiency and electric energy
efficiency measures as well as raw material and product changes that
reduce the amount of CO2 generated per ton of cement
produced. There are numerous efficiency measures generally accepted by
much of the U.S. industry, and many of these measures have been adopted
in recent cement plant improvements. Such measures may directly reduce
GHG emissions by cement plants, or they may indirectly reduce GHG
emissions at sources of power generation due to reduced electrical
energy requirements. The range of effectiveness of the individual
measures in reducing GHG is from less than 1% to 10%.\248\ Benchmarking
and other studies have demonstrated a technical potential for up to 40%
improvement in energy efficiency for a new cement plant using the most
efficient technologies compared to older plants using wet kilns.
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\248\ U.S. EPA (2008), Air Pollution Controls and Efficiency
Improvement Measures for Cement Kiln. Final Report.
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A number of opportunities may exist within refineries to increase
energy efficiency by optimizing utilities, fired heaters, heat
exchangers, motors, and process designs. Competitive benchmarking data
indicate that most petroleum refineries can economically improve energy
efficiency by 10 to 20%.\249\ Therefore, we would expect that a new
refinery could be designed to be at least 20% more efficient than an
existing one.
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\249\ Energy Efficiency Improvement and Cost Saving
Opportunities for Petroleum Refineries, LBNL, 2005.
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[[Page 44492]]
In the case of industrial boilers, measures applied to individual
facilities could result in energy savings and GHG reductions on the
order of 1% to 10%. Replacing an existing boiler with a combined heat
and power plant could improve the energy efficiently of an existing
plant by 10% to 33%.
Existing coal-fired power plants can reduce their fuel consumption
(reduce heat rate) and reduce CO2 emissions by performing
well known modifications and upgrades to plant systems. Heat rate
reductions of up to 10% may be feasible through various efficiency
improvements at individual coal units, depending on site specific
conditions. Because of plant age and other physical limitations, the
potential average heat rate reduction for the coal fleet would likely
not exceed about 5%. The existing fleet operates at an average net
efficiency of about 33%. If the corresponding coal fleet average net
heat rate were reduced by 5% via efficiency improvements, a potential
5% reduction in CO2 emissions could be obtained as well.
As older, less efficient coal power plants are retired, their
capacity may be replaced with new, more efficient coal-fired units. A
new, fully proven supercritical coal plant design can operate at a heat
rate 10-15% below the current coal fleet average, and therefore produce
10-15% less GHG than the average existing coal plant. Future more
advanced ultra-supercritical plant designs with efficiencies above 40%
would have heat rates that are 20-25% or more below the current coal
fleet average, and therefore produce that much less GHG than the
average existing coal plant.
Technology to capture and geologically sequester CO2 is
the subject of ongoing projects in the U.S. and other countries and is
a promising technology.\250\ The electric power sector will most likely
be the largest potential market for carbon capture and sequestration
(CCS) technologies, with the potential to reduce CO2 by
approximately 80-90% at an individual plant.\251\ It may become
possible to apply CCS to some portion of the existing coal-fired fleet
by retrofit to achieve significant CO2 reductions. Other
facilities that might be able to use CCS include refineries, chemical
manufacturing plants, ethanol production facilities, cement kilns and
steel mills. As advances in GHG reduction technologies continue,
section 111(d) standards would be expected to consider and reflect
those advances over time. We solicit comment on the criteria EPA should
use to evaluate whether CCS technology is adequately demonstrated to be
available for the electric power and other industrial sectors,
including the key milestones and timelines associated with the wide-
spread use of the technology.
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\250\ See http://www.netl.doe.gov/technologies/carbon_seq/partnerships/partnerships.html for more information about the
Regional Carbon Sequestration Partnerships in the United States.
\251\ IPCC Special Report on Carbon Dixoide Capture and Storage,
2005, pp.3, 22.
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iv. What Are the Possible Effects of Section 111 With Respect to
Innovation?
As noted previously, whatever path may be pursued with respect to
the control of GHG through the CAA or other authority, we believe it is
likely that most early reductions in stationary GHG emissions may occur
as the result of increased energy efficiency, process efficiency
improvements, recovery and beneficial use of process gases, and certain
raw material and product changes that could reduce inputs of carbon or
other GHG-generating materials. Clearly, more fundamental technological
changes will be needed to achieve deeper reductions in stationary
source GHG emissions over time. We request general comments on how to
create an environment in which new, more innovative approaches may be
encouraged pursuant to section 111, or other CAA or non-CAA authority.
Waiver authority under section 111(j) would be useful as one
element of broader policies to encourage development of innovative
technologies. Section 111(j) authorizes the Administrator to waive the
NSPS requirements applicable to a source if he determines that the
innovative technology the source proposes to use will operate
effectively and is likely to achieve greater emission reductions, or at
least equivalent reductions but at lower cost. Also, the Administrator
must determine that the proposed system has not yet been adequately
demonstrated (i.e. it is still an innovative technology), but that it
will not cause or contribute to an unreasonable risk to public health,
welfare, or safety in its operation, function, or malfunction. These
waivers can be given for up to 7 years, or 4 years from the date that a
source commences operation, whichever is earlier.
We believe that effective GHG reduction techniques for many source
categories potentially subject to NSPS may at this time be limited and
that additional research and development will be necessary before these
controls are demonstrated to be effective. We ask for comment on how
the use of innovative technology waivers could conceivably be used to
foster the development of additional approaches for GHG reductions.
5. Possible Implications for Other CAA Provisions
Regulation of GHGs under a section 111 standard for any industry
would trigger preconstruction permitting requirements for all types of
GHG sources under the PSD program. NSPS are also incorporated into
operating permits issued under Title V of the CAA. The consequences of
triggering and the options for addressing these permitting requirements
are addressed in detail in section VII.D of this notice.
Whether GHGs were regulated individually or as a group in NSPS
standards would affect the definition of regulated pollutant for
stationary sources subject to preconstruction permitting under the PSD
program. Conversely, while the section 111 mechanisms are relatively
independent of other CAA programs, NSPS decision-making as a practical
matter would need to consider the pollutant definitions adopted under
other CAA authorities. It would be advantageous to maintain consistency
regarding the GHG pollutants subject to regulation elsewhere in the Act
to avoid the potential for PSD review requirements for individual GHGs
as well as for groups of the same GHGs.
In considering the impact that decisions to list pollutants under
other authorities of the CAA might have on our use of section 111
authority, we note that some industries have processes that emit more
than one GHG and a potential may exist among some of these industries
to control emissions of one GHG in ways that may increase emissions of
others (e.g., collecting methane emissions and combusting them to
produce heat and/or energy, resulting in emissions of CO2.)
While an overall reduction in GHGs may occur, as well as a reduction in
global warming potential, whether GHGs are regulated as a class of
compounds or as individual constituents could have implications for the
degree of flexibility and for the outcome of any regulatory decisions.
More specifically, if we were to regulate GHGs as a group, then
standards under section 111 might establish an overall level of
performance that could accommodate increases in emissions of some gases
together with reductions in others, so long as the overall performance
target was met. If we were to regulate individual GHGs, then we may be
less able to establish less stringent requirements for the control of
some gases, while setting more stringent requirements for others. The
extent to which we may be able to do so depends
[[Page 44493]]
on the significance of the emissions of each gas from the source
category in question as well as the feasibility and cost-effectiveness
of controlling each. One result of this lessened flexibility may be the
preclusion of certain approaches that could yield greater net reduction
in GHG emissions. For this reason, we request comments on (1) the
extent to which we are limited in our flexibility to regulate GHG as a
class if listed individually under other CAA authorities, and (2)
whether regulation under section 111 should treat GHG emissions as a
class for determining the appropriate systems for emissions reduction
and resulting standards.
Finally, we note that our authority to promulgate 111(d) standards
for existing sources depends on the two restrictions noted above.
First, section 111(d) prohibits regulation of a NAAQS pollutant under
that section. Second, ``where a source category is being regulated
under section 112, a section 111(d) standard of performance cannot be
established to address any HAP listed under 112(b) that may be emitted
from that particular source category.'' If we were to promulgate a
section 111(d) emission standard and then subsequently take action
under sections 108 or 112 such that we could not promulgate a section
111(d) standard had we not already done so, the continued validity of
the section 111(d) regulations might become unclear. We request comment
on the extent, if any, to which the requirements of section 111(d)
plans would, or could, remain in force under such circumstances.
C. National Emission Standards for Hazardous Air Pollutants
Along with the NAAQS system and section 111 standards, section 112
is one of the three main regulatory pathways under the CAA for
stationary sources. Section 112 is the portion of the Act that Congress
designed for controlling hazardous air pollutant emissions from these
sources, including toxic pollutants with localized or more
geographically widespread effects. This focus is reflected in the
statutory provisions, which, for example, require EPA to regulate
sources with relatively small amounts of emissions. In comparison to
section 111, section 112 provides substantially less discretion to EPA
concerning the size and types of sources to regulate, and is specific
about when EPA may and may not consider cost.
This section explores the implications if EPA were to list GHGs as
hazardous air pollutants under section 112.
1. What Does Section 112 Require?
a. Overview
Section 112 contains a list of hazardous air pollutants (HAPs) for
regulation. EPA can add or delete pollutants from the list consistent
with certain criteria described below.
EPA must list for regulation all categories of major sources that
emit one or more of the HAPs listed in the statute or added to the list
by EPA. A major source is defined as a source that emits or has the
potential to emit 10 tons per year or more of any one HAP or 25 tons
per year of any combination of HAPs.
For each major source category, EPA must develop national emission
standards for hazardous air pollutants (NESHAP). Standards are required
for existing and new major sources. The statute requires the standards
to reflect ``the maximum degree of reduction in HAP emissions that is
achievable, taking into consideration the cost of achieving the
emission reduction, any nonair quality health and environmental
impacts, and energy requirements.'' This level of control is commonly
referred to as maximum achievable control technology, or MACT.
The statute also provides authority for EPA to list and regulate
smaller ``area'' sources of HAPs. For those sources EPA can establish
either MACT or less stringent ``generally available control
technologies or management practices''.
Section 112(d)(6), requires a review of these technology-based
standards every 8 years and requires that they be revised ``as
necessary taking into account developments in practices, processes and
control technologies.'' Additionally, EPA under section 112(f)(2)(C)
must reevaluate MACT standards within 8 years of their issuance to
determine whether MACT is sufficient to protect public health with an
ample margin of safety and prevent adverse environmental effects. If
not, EPA must promulgate more stringent regulations to address any such
``residual risk''.
b. How Are Pollutants and Source Categories Listed for Regulation Under
Section 112?
Section 112(b)(1) includes an initial list of more than 180 HAPs.
Section 112(b)(2) requires EPA to periodically review the initial HAP
list and outlines criteria to be applied in deciding whether to add or
delete particular pollutants.
A pollutant may be added to the list because of either human health
effects or adverse environmental effects. With regard to adverse human
health effects, the provision allows listing of pollutants ``including,
but not limited to, substances which are known to be, or may reasonably
be anticipated to be, carcinogenic, mutagenic, teratogenic, neurotoxic,
which cause reproductive dysfunction, or which are acutely or
chronically toxic.'' An adverse environmental effect is defined as
``any significant and widespread adverse effect, which may reasonably
be anticipated, to wildlife, aquatic life, or other natural resources,
including adverse impacts on populations of endangered or threatened
species or significant degradation of environmental quality over broad
areas.'' Section 112(b)(2) provides that ``no substance, practice,
process or activity regulated under [the Clean Air Act's stratospheric
ozone protection program] shall be subject to regulation under this
section solely due to its adverse effects on the environment.'' Thus,
section 112 may not be used to regulate certain chlorofluorocarbons and
other ozone-depleting substances, their sources, or activities related
to their production and use to address climate change unless we
establish that such regulations are necessary to address human health
effects in addition to any adverse environmental impacts. See section
602 of the Clean Air Act for a partial list of these substances.
Section 112(b)(3) of the Act establishes general requirements for
petitioning EPA to modify the HAP list by adding or deleting a
substance. Although the Administrator may add or delete a substance on
his own initiative, if a party petitions the Agency to add or delete a
substance, the burden historically has been on the petitioner to
include sufficient information to support the requested addition or
deletion under the substantive criteria set forth in CAA section
112(b)(3)(B) and (C). The Administrator must either grant or deny a
petition within 18 months of receipt of a complete petition.
The effects and findings described in section 112 are different
from other sections of the CAA addressing endangerment of public health
discussed in previous sections of today's notice. Given the nature of
the effects identified in section 112(b)(2), we request comment on
whether the health and environmental effects attributable to GHG fall
within the scope of this section. We also request comment on direct and
indirect GHG emissions from existing source categories currently
subject to regulation under section 112, any assessment of the relative
costs of regulating GHG under the authority of section 112, and any co-
benefits or co-detriments with regard to controlling GHG and the
emissions of HAP.
[[Page 44494]]
The source categories to be regulated under section 112 are
determined based on the list of HAP. Section 112(c) requires EPA to
publish a list of all categories and subcategories of major sources of
one or more of the listed pollutants, and to periodically review and
update that list. In doing this, EPA also is required to list each
category or subcategory of area sources which the Administrator finds
presents a threat of adverse effects to human health or the environment
(by such sources individually or in the aggregate) warranting
regulation under section 112.
c. How Is MACT Determined?
In essence, MACT standards are intended to ensure that all major
sources of HAP emissions achieve the level of control already being
achieved by the better controlled and lower emitting sources in each
category. This approach provides assurance to citizens that each major
source of toxic air pollution will be required to effectively control
its emissions. At the same time, this approach provides assurances that
facilities that employ cleaner processes and good emissions controls
are not disadvantaged relative to competitors with poorer controls.
MACT is determined separately for new and existing sources. For
existing sources, MACT standards must be at least as stringent as the
average emissions limitation achieved by the best performing 12 percent
of sources in the category or subcategory (or the best performing five
sources for source categories with less than 30 sources). This level is
called the ``MACT floor.'' For new or reconstructed sources, MACT
standards must be at least as stringent as the control level achieved
in practice by the best controlled similar source.\252\ EPA also must
consider more stringent ``beyond-the-floor'' control options for MACT.
When considering beyond-the-floor options, EPA must consider not only
the maximum degree of reduction in emissions of the HAP, but also
costs, energy requirements and non-air quality health environmental
impacts of imposing such requirements.
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\252\ See CAA section 112(d)(3).
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MACT standards may require the application of measures, processes,
methods, systems, or techniques including, but not limited to, (1)
reducing the volume of, or eliminating emissions of, such pollutants
through process changes, substitution of materials, or other
modifications; (2) enclosing systems or processes to eliminate
emissions; (3) collecting, capturing, or treating such pollutants when
released from a process, stack, storage or fugitive emissions point;
(4) design, equipment, work practice, or operational standards
(including requirements for operator training or certification) as
provided in subsection (h); or (5) a combination of the above. (See
section 112(d)(2) of the Act.)
For area sources, CAA section 112(d)(5) provides that the standards
may reflect generally available control technology or management
practices (GACT) in lieu of MACT.
d. What Is Required To Address Any Residual Risk?
Section 112(f)(2) of the CAA requires us to determine for each
section 112(d) source category whether the MACT standards protect
public health with an ample margin of safety. If the MACT standards for
a HAP ``classified as a known, probable, or possible human carcinogen
do not reduce lifetime excess cancer risks to the individual most
exposed to emissions from a source in the category or subcategory to
less than 1-in-1-million,'' EPA must promulgate residual risk standards
for the source category (or subcategory) as necessary to protect public
health with an ample margin of safety. EPA must also adopt more
stringent standards if needed to prevent an adverse environmental
effect, but must consider cost, energy, safety, and other relevant
factors in doing so. EPA solicits comments on the extent to which these
programs could apply with respect to the possible regulation of sources
of GHG under section 112, including the relevance of any carcinogenic
effects of individual GHG.
2. What Sources Would Be Affected if GHGs Were Regulated Under This
Authority?
If GHGs were listed as HAP, EPA would be required to regulate a
very large number of new and existing stationary sources, including
smaller sources than if alternative CAA authorities were used to
regulate GHG. This is the result of three key requirements. First, the
section 112(a) major sources thresholds of 10 tons for a single HAP and
25 for any combination of HAPs would mean that very small GHG emitters
would be considered major sources. Second, section 112(c) requires EPA
to list all categories of major sources. Third, section 112(d) requires
EPA to issue MACT standards for all listed categories.
We believe that most significant stationary source categories of
GHG emissions have already been listed under section 112 (although the
10-ton threshold in the case of GHGs would be expected to bring in
additional categories such as furnaces in buildings, as explained
below). To date we have adopted standards for over 170 categories and
subcategories of major and area sources. This is a significantly
greater number than the categories for which we have adopted NSPS
because under section 112 we must establish standards for all listed
categories, whereas section 111 requires that we identify and regulate
only those source categories that contribute ``significantly'' to air
pollution endangering public health and welfare.
3. What Are the Key Milestones and Expected Timeline if Section 112
Were Used for GHG Controls?
One possible timetable for addressing GHG under this part of the
Act would be to incorporate GHG emission control requirements
concurrent with the mandatory 8-year technology reviews for each
category, collecting information on emissions and control technologies
at the time the existing MACT standards are reviewed to determine
whether revisions are needed. If we were to list new source categories
under section 112, EPA would be required to adopt MACT standards for
those categories within 2 years of the date of category listing.
EPA must require existing sources to comply within 3 years of a
standard's promulgation, although states and EPA are authorized in
certain circumstances to extend the period of compliance by one
additional year. Most new sources must comply as soon as a section 112
standard is issued; however, there is an exception where the final rule
is more stringent than the proposal.
Because of the more detailed requirements for identifying
appropriate levels of control to establish a level for MACT,
significantly more information on the best performing sources is needed
under section 112 than under section 111, making the development of
such standards within 2 years after listing a source category
difficult. We request comment on this and other approaches for
addressing GHG under section 112, both for categories already listed
for regulation and for any that might appropriately be added to the
section 112 source category list if we were to elect to regulate GHGs
under this section.
4. What Are the Key Considerations Regarding Use of This Authority for
GHGs (and How Could Potential Issues Be Addressed)?
A key consideration in evaluating use of section 112 for GHG
regulation is that
[[Page 44495]]
the statutory provisions appear to allow EPA little flexibility
regarding either the source categories to be regulated or the size of
sources to regulate. As described above, EPA would be required to
regulate a very large number of new and existing stationary sources,
including smaller sources than if alternative CAA authorities were used
to regulate GHG. For example, in calculating CO2 emissions based on
fossil-fuel consumption, we believe that small commercial or
institutional establishments and facilities with natural gas-fired
furnaces would exceed this major source threshold; indeed, a large
single-family residence could exceed this threshold if all appliances
consumed natural gas. EPA requests comment on the requirement to
establish standards for all sources under section 112 relevant to GHG
emissions and whether any statutory flexibility is or is not available
with respect to this requirement and GHGs.
A section 112 approach for GHGs would require EPA to issue a large
number of standards based on assessments for each source category.
Determining MACT based on the best-controlled 12 percent of similar
sources for each category would present a difficult challenge, owing to
our current lack of information about GHG control by such sources and
the effort required to obtain sufficient information to establish a
permissible level of performance.
GHG regulation under section 112 would likely be less cost
effective than under some CAA authorities, in part because section 112
was designed to ensure a MACT level of control by each major source,
and thus provides little flexibility for market-oriented approaches.
Given the structure and past implementation of section 112, this
section may not provide EPA with authority to allow emissions trading
among facilities or averaging across emitting equipment in different
source categories. This is because the statutory terms of section 112
provide that emission standards must be established for sources within
``each category'' and those standards must be no less stringent than
the ``floor,'' or the level of performance achieved by the best-
performing sources within that category. Each source in the category
must then achieve control at least to this floor level. Trading would
allow sources to emit above the floor. In addition, it may not be
possible to assess individual source fence line risk for section 112(f)
residual risk purposes if the sources did not each have fixed limits.
Finally, the section 112 program is in part designed to protect the
population in the vicinity of each facility, which trading could
undermine (in contrast to an ambient standard). Given the global nature
of GHGs and the lack of direct health effects from such emissions at
ambient levels, EPA requests comments on the extent to which the CAA
could be interpreted to grant flexibility to consider such alternative
implementation mechanisms, and what, if any, limitations should be
considered appropriate in conjunction with them.
Another reason that section 112 regulation of GHGs would be
expected to be less cost effective than other approaches is that the
statute limits consideration of cost in setting MACT standards. As
described above, the statute sets minimum stringency levels, or
``floors,'' for new and existing source standards. Cost can only be
considered in determining whether to require standards to be more
stringent than the floor level.
A further consideration is that the short compliance timetables--
immediate for most new sources, and within 3-4 years for existing
sources--appear to preclude setting longer compliance timeframes to
allow for emerging GHG technologies to be further developed or
commercialized.
5. What Are the Possible Implications for Other Provisions of the Clean
Air Act?
As provided under section 112(b)(6), pollutants regulated under
section 112 of the Act are exempt from regulation under the PSD
program. Also, a section 111(d) standard of performance for existing
sources cannot be established to address any HAP listed under section
112(b) that that is emitted from a source category regulated under
section 112.\253\
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\253\ It is important to note that many sources may be subject
to standards under both section 111 and 112; however these standards
establish requirements for the control of different pollutants.
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If EPA were to list GHGs under section 108 of the CAA for purposes
of establishing NAAQS, we would be prevented by section 112(b)(2) from
listing and regulating them as HAPs under this section of the Act.
However, it is less clear that the reverse is true; that is, if a
pollutant were first listed under section 112 and then EPA decided to
list and regulate it under section 108, the statute does not clearly
say whether that is permissible, or whether EPA would then have to
remove the pollutant from the section 112 pollutant list. We request
comment on the extent to which this apparent ambiguity in the Act poses
an issue regarding possible avenues for regulating GHG and if so, how
it should be addressed.
In light of the foregoing, we request comment on the
appropriateness of section 112 as a mechanism for regulating stationary
source emissions of GHGs under the CAA. If commenters believe use of
section 112 would be appropriate, we further request comments on which
GHGs should be considered, what additional sources of emissions should
be listed and regulated, and how MACT should be determined for GHG
emission sources.
D. Solid Waste Combustion Standards
1. What Does Section 129 Require?
Section 129 of the CAA requires EPA to set performance standards
under section 111 to control emissions from solid waste incineration
units of at least 9 specific air pollutants. It directs EPA to develop
standards which include emission limitations and other requirements for
new units and guidelines and other requirements applicable to existing
units.
Section 129 directs EPA to set standards for ``each category'' of
such units, including those that combust municipal, hospital, medical,
infectious, commercial, or industrial waste, and ``other categories''
of solid waste incineration units, irrespective of size. The pollutants
to be addressed by these standards include the NAAQS pollutants
particulate matter (total and fine), sulfur dioxide, oxides of
nitrogen, carbon monoxide, and lead; and the hazardous air pollutants
hydrogen chloride, cadmium, mercury, and dioxins and dibenzofurans. EPA
is authorized to regulate additional pollutants under these provisions,
but section 129 includes no endangerment test or other criteria for
determining when it is appropriate to do so.
Although the emission standards called for by section 129 are to be
established pursuant to section 111, the degree of control required
under those standards more closely resembles that of section 112(d).
For new sources the level of control is required to be no less
stringent than that of the best performing similar source, while for
existing sources the level of control is to be no less stringent than
the average of the top 12% of best-performing sources. For both new and
existing source standards, beyond these ``floor'' levels EPA must
consider the cost of achieving resulting emission reductions and any
non-air quality health and environmental impacts and energy
requirements in determining what is achievable for units within each
category. The performance standards must be reviewed every 5 years.
Additionally, for those pollutants that
[[Page 44496]]
are listed under section 112 as a HAP, EPA must reevaluate the
standards in accordance with section 112(f) to determine whether they
are sufficient to protect public health with an ample margin of safety
and prevent adverse environmental effects, and must promulgate more
stringent regulations if necessary to address any such ``residual
risk.'' Thus, for this particular class of source categories, section
129 merges important elements of both sections 111 and 112.
EPA has established standards for a variety of solid waste
incinerator categories and is in the process of developing additional
standards and revising others.\254\ In the absence of statutory
criteria for determining whether and under what circumstances EPA
should regulate additional pollutants under this section of the CAA, we
request comment on whether emissions of GHG could fall within the scope
of this section. We also request comment on direct and indirect GHG
emissions from existing source categories currently subject to
regulation under section 129, any assessment of the relative costs of
regulating GHGs under the authority of section 129, and any co-benefits
or co-detriments with regard to controlling GHG and the emissions of
pollutants specifically listed for regulation under section 129.
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\254\ Rules have been promulgated for large and small municipal
waste combustors; medical waste incinerators; other solid waste
incinerators; and commercial, institutional, and industrial solid
waste incinerators. EPA is also currently reevaluating and revising
certain standards under section 129 in response to decisions by the
U.S. Court of Appeals for the D.C. Circuit.
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2. What Sources Would Be Affected if GHGs Were Regulated Under This
Authority?
Standards required by section 129 are applicable to ``any facility
which combusts any solid waste material from commercial or industrial
establishments or the general public (including single and multiple
residences, hotels, and motels).'' Thus the provisions of this section
are limited to a specific type of emission source, although there are
many such units in existence that are subject to regulation. To date we
have adopted standards for five categories of incinerators and are
currently in the process of developing revised standards on remand for
several of these categories, which may involve the inclusion of several
additional subcategories of incineration units. We anticipate that when
completed these rules will establish standards of performance for as
many as five hundred or more units.
Because section 129 does not require, but authorizes EPA to
establish requirements for other air pollutants, we request comment on
whether and for what categories or subcategories of incinerators EPA
could address GHG emissions control requirements.
a. How Are Control Requirements Determined?
As noted above, the control requirements for sources regulated
under section 129 are similar to the MACT standards mandated under
section 112(d). However, whereas section 112(d)(3) provides that
standards are to be based on the best performing sources ``for which
the Administrator has emissions information,'' section 129 contains no
such limitation. Consequently, it appears that EPA is obligated to
obtain information from all potentially affected sources in order to
determine the appropriate level of control.
Section 129(a)(2) provides authority for EPA to distinguish among
classes, types, and sizes of units within a category in establishing
standards. This provision is similar to authorities provided in
sections 111( b)(2) and 112(b)(2). Because section 129 directs that EPA
establish standards for affected source categories under sections
111(b) and (d), we believe that the provisions governing the creation
of design, equipment, work practice, or operational standards are also
available for standards required by section 129. For existing sources,
we believe that provisions for consideration of remaining useful life
and other related factors are relevant to EPA and States when
determining the requirements and schedules for compliance for
individual affected sources.
b. What Is Required To Address Any Residual Risk?
For each of the air pollutants named in section 129 that are listed
as HAP under section 112, section 129 requires EPA to evaluate and
address any residual risk remaining after controls established under
the initial emission standards.\255\ In so doing, it requires EPA to
determine for each affected source category whether the performance
standards protect public health with an ample margin of safety. EPA
must also adopt more stringent standards if needed to prevent an
adverse environmental effect, but must consider cost, energy, safety,
and other relevant factors in doing so.
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\255\ Section 129(h)(3) provides that for purposes of
considering residual risk the standards under section 129(a) and
section 111 applicable to categories of solid waste incineration
units are to be ``deemed standards under section 112(d)(2).''
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Section 129(h)(3) limits residual risk assessments and any
subsequent resulting regulations to ``the pollutants listed under
subsection (a)(4) of this section and no others.'' Consequently, if EPA
were to regulated GHG emissions from incineration units under section
129, we would not be required to conduct additional residual risk
determinations.
3. What Are the Key Milestones and Expected Timeline if Section 129
Were Used for GHG Controls?
As stated above, we have adopted rules governing emissions from
certain categories of solid waste incineration units and are in the
process of revising or establishing new standards for others. Thus if
we were to elect to regulate GHG emissions under section 129, a
question arises concerning how to incorporate new requirements for
those categories for which standards have already been established. One
possible timetable for addressing GHG under this part of the Act would
be to incorporate GHG emission control requirements concurrent with the
mandatory 5-year reviews for each previously-regulated category,
collecting information on emissions and control technologies at the
time the existing standards are reviewed to determine whether revisions
are needed. Because of the more detailed requirements for identifying
appropriate levels of control to establish a level for these categories
of sources, significantly more information on the best performing
sources is needed under section 129 than even under section 112
(because of the absence of limitations for this analysis to those
sources ``for which the Administrator has information''), making the
development of such standards a more time-consuming effort. In the
event that we were to elect to regulate GHGd under this section, we
request comment on this and other approaches for addressing GHGd under
section 129, both for categories already regulated and for any for
which standards are currently under development.
4. What Are the Key Considerations Regarding Use of This Authority for
GHGs (and How Could Potential Issues Be Addressed)?
If we were to elect to regulate GHG emissions from solid waste
incinerators under section 129, then we would need to establish
standards for at least some number of categories of such sources. We
request comment on the availability of authority to establish
requirements
[[Page 44497]]
for controlling GHG emissions from subcategories of incineration units
based on size, type or class, as provided under section 111, and to
exclude from regulation other categories or subcategories.
Given the structure of section 129 and its hybrid approach to the
use of authorities under sections 111 and 112, we question whether this
section provides EPA with available authority to establish alternative
compliance approaches, such as emissions trading or averaging across
sources within a category. This is because the statutory terms of
section 129 provide that emission standards must be established for
sources within ``each category'' and those standards must be no less
stringent than the level of performance achieved by the best-performing
sources within that category. Each source in the category must then
achieve control at least to this level. Trading would allow sources to
emit above the floor. As a practical matter, given that requirements
for control of specifically-listed pollutants may preclude trading for
those pollutants, and given that many of the controls applicable to
those pollutants would be the same as or similar to those that would be
applicable to GHGs, we believe that trading options would likely be
infeasible with respect to GHG control requirements. However, EPA
requests comments on the extent to which the CAA could be interpreted
to grant flexibility to consider such alternative implementation
mechanisms, to what extent, and what, if any, limitations should be
considered appropriate in conjunction with them.
5. What Are the Possible Implications for Other Provisions of the Clean
Air Act?
Section 129 recognizes that many incineration units may also be
subject to prevention of significant deterioration or nonattainment new
source review requirements. It addresses potentially conflicting
outcomes of control determinations under those programs by providing
that ``no requirement of an applicable implementation plan . . . may be
used to weaken the standards in effect under this section.''
If EPA were to list GHGs under section 108 for purposes of
establishing NAAQS, we would not be prevented from regulating them
under this section of the Act as well. If EPA were to list GHG under
section 112, a potential conflict arises in that section 112
establishes major and area source emissions thresholds, providing for
standards of different stringency for each, and requires analysis of
residual risk for major sources regulated under that section of the
Act. We request comments on how such apparent conflicts could be
reconciled if we were to elect to regulate emissions of GHGs from solid
waste incineration units under section 129.
In light of the foregoing, we request comment on the
appropriateness of section 129 as a mechanism for regulating
incineration unit emissions of GHGs under the CAA. If commenters
believe that use of section 129 would be appropriate, we further
request comments on which GHGs should be considered, what source
categories or subcategories should be regulated, and how appropriate
control requirements should be determined for new and existing GHG
emission sources.
E. Preconstruction Permits Under the New Source Review (NSR) Program
1. What Are the Clean Air Act Provisions Describing the NSR Program?
Under what is known as the New Source Review (NSR) program, the CAA
requires the owners and operators of large stationary sources of air
pollution to obtain construction permits prior to building or modifying
such a facility. The program is subdivided into the Prevention of
Significant Deterioration (PSD) and nonattainment NSR (NNSR) programs,
either of which may be applicable depending on the air quality for a
particular pollutant in the location of the source subject to
permitting.
The PSD program, set forth in Part C of Title I of the CAA, applies
in areas that are in attainment with the NAAQS (or are unclassifiable)
and has the following five goals and purposes:
To protect public health and welfare from air pollution
beyond that which is addressed by the attainment and maintenance of
NAAQS;
To protect specially designated areas such as national
parks and wilderness areas from the effects of air pollution;
To assure that economic growth will occur in a manner
consistent with the preservation of existing clean air resources;
To assure emissions in one state will not interfere with
another state's PSD plan; and
To assure that any decision to permit increased air
pollution is made only after evaluating the consequences of the
decision and after opportunities for informed public participation.
The main element of the PSD program is the requirement that a PSD
permit be obtained prior to construction of any new ``major emitting
facility'' or any new ``major modification.'' Before a source can
receive approval to construct under PSD, the source and its permitting
authority (usually a state or local air pollution control agency, but
sometimes EPA) must follow certain procedural steps, and the permit
must contain certain substantive requirements. The most important
procedural step is providing an opportunity for the public to comment
when a permitting authority proposes to issue a permit.
The PSD program primarily applies to all pollutants for which a
NAAQS is promulgated, but some of the substantive requirements of the
PSD program also apply to regulated pollutants for which there is no
NAAQS (except that there is an explicit statutory exemption from PSD
for HAPs).\256\ Since there is currently no NAAQS for GHGs and GHGs are
not otherwise subject to regulation under the CAA, the PSD program is
not currently applicable to GHGs.\257\ However, as discussed in section
IV of this notice, it is possible that EPA actions under other parts of
the CAA could make GHGs pollutants subject to regulation under the Act
and thus subject to one or more parts of the PSD program.
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\256\ CAA section 112(b)(6).
\257\ In the Energy Independence and Security Act of 2007
(EISA), Congress provided that regulation of GHGs under CAA section
211(o) would not automatically result in regulation of GHGs under
other CAA provisions. Because of this provision, EISA does not
impact the interrelationship of other provisions of the CAA, and we
only reference the HAP exception in the text.
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If EPA were to promulgate a rule establishing limitations on GHG
emissions from mobile sources or stationary sources without
promulgating a NAAQS for GHGs, the PSD requirement of greatest
relevance would be the requirement that a permit contain emissions
limits that reflect the Best Available Control Technology (BACT). BACT
is defined as the maximum achievable degree of emissions reduction for
a given pollutant (determined by the permitting authority on a case-by-
case basis), taking into account energy, environmental, and economic
impacts. BACT may include add-on controls, but also includes
application of inherently lower-polluting production processes and
other available methods and techniques for control. BACT cannot be less
stringent than any applicable NSPS.
Since emission control requirements will likely have the most
direct impact on new or modified stationary sources subject to PSD, our
focus in this notice is on the BACT requirement. However, we are also
interested in stakeholder input on the extent to which we should
[[Page 44498]]
evaluate other substantive PSD program elements which would be affected
by any possible EPA action to regulate GHGs under other parts of the
Act. These include the requirements to evaluate, in consultation with
the appropriate Federal Land Manager (FLM), the potential impact of
proposed construction on the Air Quality Related Values of any affected
``Class I area'' (national parks, wilderness areas, etc.) and
additional impacts analysis.\258\
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\258\ As codified at 40 CFR 51.166(o), the owner or operator
shall provide an analysis of the impairment to visibility, soils,
and vegetation that would occur as a result of the source or
modification and general commercial, residential, industrial, and
other growth associated with the source or modification.
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If EPA were to promulgate a NAAQS for GHGs, because of the
relatively uniform concentration of GHGs, we expect that the entire
country would be in nonattainment or attainment of the NAAQS. The
preconstruction permitting requirements that apply would depend on
whether the country is designated as nonattainment or attainment for
the GHG emissions that would increase as a result of a project being
constructed.
If the entire country is designated attainment, and PSD applies,
the adoption of a NAAQS would trigger air quality analysis requirements
that are in addition to all the requirements described above. For
example, under CAA section 165(a)(3), permit applicants have to conduct
modeling to determine whether they cause or contribute to a NAAQS
violation. Following promulgation of a NAAQS, EPA may also promulgate a
PSD increment for GHGs, which would require additional analysis for
each new and modified source subject to PSD.\259\ However, this notice
does not address in detail the PSD elements that relate to increments.
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\259\ PSD increments are air quality levels which represent an
allowable deterioration in air quality as compared to the existing
air quality level on a certain baseline date for a given area.
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Under a GHG NAAQS with the country in nonattainment, the
nonattainment NSR permitting program would be triggered nationally. The
nonattainment NSR program requirements are contained in section 173 of
the Act. Like PSD, they apply to new and modified major stationary
sources, but they contain significantly different requirements from the
PSD program. A key difference is the requirement that the emissions
increases from the new or modified source in a nonattainment area must
be offset by reductions in existing emissions from the same
nonattainment area or a contributing upwind nonattainment area of equal
or higher nonattainment classification. The offsetting emissions
reductions must be at least equal to the proposed increase and must be
consistent with a SIP that assures the nonattainment area is making
reasonable progress toward attainment.\260\ Another key difference is
that instead of BACT, sources subject to nonattainment NSR must comply
with the Lowest Achievable Emission Rate (LAER), which is the most
stringent emission limitation that is (1) contained in any SIP for that
type of source, or (2) achieved in practice for sources of the same
type as the proposed source.\261\ Notably, if the rate is achievable,
LAER does not allow for consideration of costs or of the other factors
that BACT does. While LAER and offsets are likely of greatest
significance for GHG regulation under nonattainment NSR, there are
additional requirements for nonattainment NSR that would also apply.
The additional requirements include the alternatives analysis
requirement; the requirement that source owners and operators
demonstrate statewide compliance with the Act; and the prohibition
against permit issuance if the SIP is not being adequately implemented.
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\260\ CAA section 173(a)(1); limitations on offsets are set
forth in section 173(c).
\261\ CAA section 173(a); LAER is defined in section 171(3)(A).
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For simplicity, the remainder of this notice describing affected
sources, impacts, and possible tailoring generally focuses on PSD,
raising issues specific to nonattainment NSR where applicable.
2. What Sources Would Be Affected if GHGs Were Regulated Under NSR?
A PSD permit is required for the construction or modification of
``major emitting facilities,'' which are commonly referred to as
``major sources.'' A ``major emitting facility'' is generally any
source that emits or has the potential to emit 250 tons per year (tpy)
of a regulated NSR pollutant.\262\ \263\ A source that belongs to one
of several specifically identified source categories is considered a
major source if it emits or has the potential to emit 100 tpy of a
regulated NSR pollutant.\264\ Also, for nonattainment NSR, the major
source threshold is at most 100 tpy, and is less in some nonattainment
areas, depending on the pollutant and the nonattainment classification.
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\262\ 42 U.S.C. 7569(1). The PSD regulations use the term
``major stationary source.'' 40 CFR 51.166(b)(1) The definition of
``regulated NSR pollutant'' is at 40 CFR 51.166(b)(49).
\263\ ``Potential-to-emit'', or PTE, is defined as the maximum
capacity of a source to emit any air pollutant under its physical
and operational design.
\264\ These specific sources include major industrial categories
such as petroleum refining, fossil-fuel fired steam electric plants,
chemical process plants, and 24 other categories. The full list of
100 tpy major sources is promulgated at 40 CFR 51.166(b)(1)(i)(a).
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A ``major modification'' is any physical change or change in the
method of operation of a major source which significantly increases the
amount of emissions of any regulated NSR pollutant. EPA defines what
emissions levels of a pollutant are ``significant'' through regulation,
and the defined significance levels range from 0.3 tpy for lead to 100
tpy for CO. Currently there is no defined significance level for GHGs
(either individually or as a group) because they are not regulated NSR
pollutants, and thus, were GHGs to become regulated, the significance
threshold would be zero. Note that, when determining whether a facility
is ``major,'' a source need not count fugitive emissions (i.e.,
emissions which may not reasonably be vented through stacks, vents,
etc.) unless it is in a listed category.
As noted in section IV, GHGs are not currently subject to
regulation under the Act, and therefore are not regulated NSR
pollutants. However, if GHG emissions become subject to regulation
under any of the stationary or mobile source authorities discussed
above (except sections 112 and 211(o)), GHGs could become regulated NSR
pollutants. Many types of new GHG sources and GHG-increasing
modifications that have not heretofore been subject to PSD would become
subject to PSD permitting requirements. This is particularly true for
CO2 because, as noted in section III, the mass
CO2 emissions from many source types are orders of magnitude
greater than for currently regulated pollutants. Thus, many types of
new small fuel-combusting equipment could become newly subject to the
PSD program if CO2 becomes a regulated NSR pollutant. As
discussed below in the section on potential to emit, the extent to
which such equipment would become subject to PSD would depend upon
whether, for each type of equipment, its maximum capacity considering
its physical and operational design would involve constant year-round
operation or some lesser amount of operation. For example, the
calculated size of a natural gas-fired furnace that has a potential to
emit 250 tpy of CO2, if year-round operation (8760 hours per
year) were assumed--would be only 0.49 MMBTU/hr, which is comparable to
the size of a very small commercial furnace. In practice, a furnace
like this would likely operate far less than year round and its actual
emissions would be well below 250 tpy. For example, such a furnace, if
used for
[[Page 44499]]
space heating, might only be burning gas for about 1000 hours per year,
meaning that it would need to be sized at over 4 MMBTU/hr--a size more
comparable to a small industrial furnace--to actually emit 250 tons of
CO2. For sources such as these, the interpretation of the
term ``potential to emit'' and the availability of streamlined
mechanisms for smaller sources to limit their potential to emit would
determine whether they would be considered ``major'' for GHG emissions
under PSD.
For sources already major for other pollutants, it is likely that
many more changes made by the source would also qualify as major
modifications and become subject to PSD as well, unless potential
approaches (including those discussed below) for raising applicability
thresholds were implemented. Relatively small changes in energy use
that cause criteria pollutant emissions too small to trigger PSD would
newly trigger PSD at such facilities because such changes would likely
result in greater CO2 increases. For example, consider a
hypothetical 500 MW electric utility boiler firing a bituminous coal
that is well-controlled for traditional pollutants. Such a boiler,
operating more than 7000 hours per year (out of a possible 8760), can
emit approximately 4 million tons of CO2 per year, or more
than 580 tons per hour. Assuming a 100 tpy significance level (rather
than the current zero level for GHGs), any change resulting in just 10
additional minutes of utilization over the course of a year at such a
source would be enough to result in an increase of 100 tons and
potentially subject the change to PSD. By contrast, to be considered a
modification for NOX, the same change would require
approximately 36 additional hours of operation assuming that the
hypothetical source had a low-NOX burner, and 90 additional
hours of operation assuming that the source also employed a selective
catalytic reduction add-on control device.
Once a source is major for any NSR regulated pollutant, PSD applies
to significant increases of any other regulated pollutant, so
significant increases of GHGs would become newly subject to PSD at
sources that are now major for other regulated pollutants. Similarly,
significant increases of other pollutants would become subject to PSD
if they occur at sources previously considered minor, but which become
classified as major sources for GHG emissions.
Currently, EPA estimates that EPA, state, and local permitting
authorities issue approximately 200-300 PSD permits nationally each
year for construction of new major sources and major modifications at
existing major sources. Under existing major source thresholds, we
estimate that if CO2 becomes a regulated NSR pollutant
(either as an individual GHG or as a group of GHGs), the number of PSD
permits required to be issued each year would increase by more than a
factor of 10 (i.e. more than 2000-3000 permits per year), unless action
were taken to limit the scope of the PSD program under one or more of
the legal theories described below. The additional permits would
generally be issued to smaller industrial sources, as well as large
office and residential buildings, hotels, large retail establishments,
and similar facilities. These facilities consist primarily of equipment
that combusts fuels of various kinds and release their exhaust gases
through a stack or vent. Few of these additional permits would be for
source categories (such as agriculture) where emissions are
``fugitive,'' because, as noted above, fugitive emissions do not count
toward determining if a source is a major source except in a limited
number of categories of large sources.
Because EPA and states have generally not collected emissions
information on sources this small, our estimate of the number of
additional permits relies on limited available information and
engineering judgment, and is uncertain. Our estimate of the number of
additional permits is also not comprehensive. First, it does not
include permits that would be required for modifications to existing
major GHG sources because the number of these is more difficult to
estimate.\265\ Nonetheless, we anticipate that, for modifications,
coverage of GHGs would increase because the larger universe of major
sources will bring in additional sources at which modifications could
occur and because for ``traditional'' major sources, many more types of
small modifications that were minor for traditional pollutants could
become major due to increases in GHG emissions that exceed the
significance levels. Second, EPA's estimate is uncertain because it is
based on actual emissions, and thus excludes a potentially very large
number of sources that would be major if they operated at their full
potential-to-emit (PTE) (i.e. they emitted at a level that reflects the
maximum capacity to emit under their physical and operational design),
but which in practice do not. Such sources could be defined as major
sources without an enforceable limitation on their PTE, but for the
purposes of this estimate, we assume they have options for limiting
their PTE and avoiding classification as a major source. (Nonetheless,
there are important considerations in creating such PTE limits, as
discussed below). Third, this estimate does not specifically account
for CO2 from sources other than combustion sources. While we
know there are sources with significant non-combustion emissions of
GHGs, there are relatively few of these compared to the sources with
major amounts of combustion CO2. These non-combustion
sources would likely be major for combustion CO2 in any
event, and many of these are likely already major for other pollutants,
though GHG regulation would likely mean increases in the number of
major modifications at such sources.
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\265\ Among other things, any estimate of modifications must
take into account the netting provisions of NSR, in which sources
can avoid NSR if the increase of pollutant emissions from a project
is below the significance level for that pollutant, after taking
into account other increases and decreases of emissions that are
contemporaneous with the project.
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We request any available information that would allow us to better
characterize the number and types of sources and modifications that
would become subject to the PSD program if CO2 becomes a
regulated NSR pollutant. As discussed below, we are particularly
interested in information that would allow us to analyze the effects of
different major source thresholds and significance levels.
Finally, we note that our estimates above are for CO2.
As described above in section IV, there are implications to regulating
additional GHGs as pollutants, or GHGs in the aggregate. Our estimates
of PSD program impacts do not include consideration of GHGs other than
CO2 because we expect that at the vast majority of these
sources CO2 will be the dominant pollutant. We ask for
comment on whether there are large categories of potentially newly
regulated PSD sources for individual GHGs besides CO2. We
also ask for comment on the effects of aggregating GHGs for PSD
applicability. Aggregating GHGs could bring additional sources into PSD
to the extent that other GHGs are present and would add enough to a
source's PTE to make it a major source. On the other hand, under the
netting provisions of the CAA, it may be easier to facilitate
interpollutant netting if GHGs are aggregated (e.g., a source using
netting to avoid PSD for a CO2 increase based on methane
decreases at the same source).
[[Page 44500]]
3. What Are the Key Milestones and Expected Timeline if the PSD Program
Were Used for GHG Controls?
Because PSD applies to all regulated pollutants except HAP, EPA's
interpretation of the Act is that PSD program requirements would become
applicable immediately upon the effective date of the first regulation
requiring GHG control under the Act.\266\ While existing PSD permits
would remain unaffected, from that point forward, each new major source
of GHGs and each major modification at an existing major source that
significantly increases GHGs would need to get a PSD permit before
beginning construction. Control requirements could take effect as the
first new and modified sources obtain their permits and complete
construction of the permitted projects. Because of the case-by-case
nature of the PSD permitting decisions, the complexity of the PSD
permitting requirements, and the time needed to complete the PSD
permitting process, it can take several months to receive a simple PSD
permit, and more than a year to receive a permit for a complex
facility. We ask for comment on whether there are additional timeline
considerations not noted here.
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\266\ Because PSD is implemented in many areas by states under
EPA-approved state regulations, there may be a lag time in a small
number of states if their PSD regulations are written in such a way
that revision of the regulations (and EPA approval) would be
required to give the state authority to issue permits for GHGs.
However this would not be the case for EPA's own regulations or for
any state delegated to implement EPA regulations on our behalf.
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4. What Are Key Considerations Regarding Application of the PSD Program
to GHGs (and How Could Potential Issues Be Addressed?)
a. Program Scope
As noted above, regulating GHGs under the PSD program has the
potential to dramatically expand the number of sources required to
obtain PSD permits, unless action is taken to limit the scope of the
program, as described below. Since major source thresholds were enacted
before this assessment of the application of the PSD program to GHGs,
it is reasonable to expect that Congress could consider legislative
alterations to account for the different aspects of GHGs versus
traditional air pollutants noted above (e.g., the relatively uniform
atmospheric concentrations of GHGs versus more localized effects of
traditional pollutants.) Possible ways to limit the scope of the
program without legislation are described later in this section.
In the absence of such action, we would expect (assuming a 250 tpy
major source threshold, or 100 tpy for statutorily specified source
categories) at least an order-of-magnitude increase in the number of
new sources required to obtain PSD permits, and an expansion of the
program to numerous smaller sources not previously subject to it. While
such sources may emit amounts of GHGs that exceed statutory thresholds,
they have relatively small emissions of non-GHG pollutants (such that
they have not been regulated under PSD, and many have not been
regulated under any CAA program).\267\ Regulating GHGs under the PSD
program would also cause a large increase in the number of
modifications at existing sources that would be required to obtain PSD
permits. Such modifications may occur at existing sources that have
been long regulated as major for other pollutants, or at existing
sources that become classified as major solely due to their GHG
emissions.
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\267\ Some fraction of these small sources are regulated, at
least in some areas, by SIPs and state minor source permit programs
under section 110 of the CAA.
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Permitting smaller sources and modifications is generally less
effective due to the fact that, while there are still administrative
costs borne by the source and permitting authority, the environmental
benefit of each permit is generally less than what results from
permitting a larger source. Congress excluded smaller sources from PSD
by adopting 100 and 250 tpy major source cutoffs in 1977 when PSD was
enacted, and EPA rules have long excluded smaller sources and
modifications from the program. This cutoff would not exclude many
smaller sources of GHGs because the mass emissions (i.e., tons per
year) of the relevant GHG may be substantially higher than the mass
emissions of traditional pollutants for the same process or activity.
Thus, while existing cutoffs for traditional pollutants capture a
relatively modest number of new and modified sources per year, applying
those same major source levels to CO2, and possibly for
other GHG, would capture a very large number of sources, many of which
are comparatively smaller in size when compared to ``traditional''
sources. Similarly, for modifications, the current absence of a
significance level, or the future adoption of a significance level that
is below the current major source thresholds, would subject numerous
small changes to PSD permitting requirements.
b. Potential Program Benefits
In the past, EPA has recognized that the PSD program can achieve
significant emissions benefits over time as emissions increases from
new major sources and major modifications are minimized through
application of state-of-the-art technology.\268\ As a result, other
programs designed to reduce emissions are not compromised by growth in
new emissions from PSD sources. Further emissions benefits are achieved
when sources limit or reduce emissions to avoid PSD applicability.
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\268\ See, for example, Section II of ``NSR Improvements:
Supplemental Analysis of the Environmental Impact of the 2002 Final
NSR Improvement Rules,'' U.S. EPA, November 21, 2002.
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A rationale for new source review since its inception has been that
it is generally more effective and less expensive to engineer and
install controls at the time a source (or major modification) is being
designed and built, as BACT does, rather than retrofitting controls
absent other construction.\269\ In addition, the BACT determination
process requires consideration of new emissions reduction technologies,
which provides an ongoing incentive to developers of these
technologies. There is the potential for avoiding or reducing GHG
emissions if ``traditional'' sources begin to install abatement
technologies for GHGs as they do for traditional pollutants. On the
other hand, as discussed in section III,F, some suggest that
regulations that apply stringent requirements to new sources and
``grandfather'' existing sources may create incentives to keep older
and inefficient sources in use longer than otherwise would occur,
diminishing the incentive for technological innovation and diffusion
and reducing the environmental effectiveness and cost effectiveness of
the regulation. Others believe that economic factors other than these
regulatory differences tend to drive business decisions on when to
build new capacity. EPA examined the effect of new source review on
utilities and refineries in a 2002 report, as described in section
III.F.4 of this notice.\270\
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\269\ Critics of this rationale suggest that under a market-
oriented system covering both new and existing sources, source
owners would be best placed to decide whether it is economic to
place state-of-the-art controls on new sources.
\270\ See U.S. EPA, ``New Source Review: Report to the
President, June 2002.'' As noted in section III.F of this notice,
the report concluded (pp. 30-31) that, for existing sources,
``[c]redible examples were presented of cases in which uncertainty
about the exemption for routine activities has resulted in delay or
resulted in the cancellation of projects which sources say are done
for purposes of maintaining and improving the reliability,
efficiency and safety of existing energy capacity. Such
discouragement results in lost capacity, as well as lost
opportunities to improve energy efficiency and reduce air
pollution.'' With respect to new facilities, the report said,
``there appears to be little incremental impact of the program on
the construction of new electricity generation and refinery
facilities.''
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[[Page 44501]]
EPA has not performed an analysis of the GHG emissions that might
be avoided or reduced under PSD preconstruction permitting, nor of
possible increases through unintended incentives. Such an analysis
would necessarily involve new analysis of potential BACT technologies,
considering costs and other factors, for GHGs emitted by numerous
sectors. The PSD program, through the BACT requirement, might result in
installation of such technologies as CCS, or the incorporation of other
CO2 reducing technologies, such as more efficient combustion
processes.\271\ However, it is not possible at this time to estimate
these effects in light of the uncertainty surrounding the future trends
in construction at new and modified sources, demonstration of
commercial availability of various GHG control technology options,
their control effectiveness, costs, and the aforementioned incentives
to keep existing sources in operation and avoid modifying them. We ask
for comment on the nature (and to the extent possible, the magnitude)
of the potential effects of PSD on GHG emissions, and whether these
effects vary between new and existing sources.
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\271\ However, EPA notes that the BACT requirement does not
require consideration of technologies that would fundamentally
redefine a proposed source into a different type of source (e.g.,
BACT for a proposed coal-fired power plant need not reflect emission
limitations based on building a gas-fired power plant instead). See,
for example, In re: Prairie State Generating Company, PSD Appeal No.
05-05, slip op. at 19-37 (EAB 2006).
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Regarding the potentially large universe of smaller sources and
modifications that could become newly subject to BACT, as described
above, there are large uncertainties about the potential benefits of
applying BACT requirements to GHG emissions from such sources.
Individual emission reduction benefits from such sources would be
smaller; however, the cumulative effect could theoretically be large
because the requirement would cover many more sources. However, unless
there are ways to effectively streamline BACT determinations and
permitting for smaller sources (as discussed below), BACT would not
appear to be an efficient regulatory approach for many other types of
sources. We request comment on the potential overall benefit of
applying the BACT requirement to GHG emissions, and how this potential
benefit is distributed among categories of potentially regulated
sources and modifications. Below, we discuss and ask for comment on
possible tailoring of BACT for GHGs.
Finally, in considering the potential for emissions reductions from
the PSD program, it is important to note that, historically, sources
generally have taken action to avoid PSD rather than seeking a permit,
where possible. Companies can reduce their PTE, for example, by
artificially capping production or forgoing efficiency improvements.
While these PSD avoidance strategies can sometimes reduce emissions
(e.g., limiting operating hours or installing other controls to net
out), they can sometimes result in forgone environmental benefits
(e.g., postponing an efficiency project). These effects are very
difficult to quantify. For example, the developer of a large apartment
building that would be a major source for CO2 might elect to
provide electric space heat if it were determined that the direct and
indirect costs of PSD made installation of gas heat uneconomical. From
a lifecycle analysis standpoint, PSD could--depending upon the source
of the electricity--lead to either a better or a worse outcome for
overall emissions of GHGs. Similarly, because PSD is triggered based on
increases over a past baseline, a source considering a potential
modification may have an incentive to increase emissions (to the extent
that can be done without a modification) for the 2-year period before
the modification to artificially inflate the baseline. Similarly, in
the electricity sector, a desire to avoid PSD review could be a
disincentive for some projects to improve efficiency, because a small
increase in utilization of the more-efficient EGU would raise
CO2 emissions sufficiently to trigger review. We solicit
comments on the potential indirect effects, adverse or beneficial, that
may arise from the incentive to avoid triggering PSD.
c. Administrative Considerations and Implications of Regulating
Numerous Smaller Sources
The PSD program is designed to provide a detailed case-by-case
review for the sources it covers, and that review is customized to
account for the individual characteristics of each source and the air
quality in the particular area where the source will be located.
Although this case-by-case approach has effectively protected the
environment from emissions increases of traditional criteria
pollutants, there have been significant and broad-based concerns about
PSD implementation over the years due to the program's complexity and
the costs, uncertainty, and construction delays that can sometimes
result from the PSD permitting process. Expanding the program by an
order of magnitude through application of the 100/250-ton thresholds to
GHGs, and requiring PSD permits for numerous smaller GHG sources and
modifications not previously included in the program, would magnify
these concerns. EPA is aware of serious concerns being expressed by
sources and permitting authorities concerning the possible impacts of a
PSD program for GHGs.
While the program would provide a process for reviewing and
potentially reducing GHG emissions through the BACT requirement as it
has done for other pollutants, we are concerned that without
significant tailoring (and possibly even with significant tailoring),
application of the existing PSD permitting program to these new smaller
sources would be a very inefficient way to address the challenges of
climate change. We ask for comment on how we should approach a
determination of (1) whether PSD permit requirements could be
appropriate and effective for regulating GHGs from the sources that
would be covered under the statutory thresholds, (2) whether PSD
requirements could at least be effective for particular groups of
sources (and if so, which ones), and (3) what tailoring of program
requirements (options for which are described in more detail below) is
necessary to maximize the program's effectiveness while minimizing
administrative burden and permitting delays. We are particularly
interested in how we might make such judgments in light of the
limitations on our ability to quantify the costs and emissions
reduction benefits of the PSD program, and whether there are specific
examples or other data that would help us with such an analysis.
For example, if 100- and 250-ton thresholds were applied to GHGs,
the BACT requirement would need to be newly implemented for numerous
small sources and modifications that permitting authorities have little
experience with permitting. It would also likely involve, for both
large and small sources, consideration of new pollutants for which
there are limited add-on control options available at this time. Thus,
as with setting NSPS, a BACT determination for GHGs would likely
involve decisions on how proposed installations of equipment and
processes for a specific source category can be redesigned to make
those sources more energy efficient while taking cost considerations
into account. However,
[[Page 44502]]
unlike NSPS, because BACT is typically determined on a case-by-case
basis for each facility and changes as technology improves, these
decisions would have to take into account case-specific factors and
constantly evolving technical information \272\. Due to the more-than-
tenfold increase in the number of PSD permits that would be required if
the 100- and 250-ton thresholds were applied to GHGs, and the potential
complexity of those permitting decisions, state, local, federal, and
tribal permitting authorities would likely face significant new costs
and other administrative burdens in implementing the BACT requirement
for GHGs. Large investments of resources would be required by
permitting authorities, sources, EPA, and members of the public
interested in commenting on these decisions. Also under this scenario,
sources would likely face new costs, uncertainty, and delay in
obtaining their permits to construct.
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\272\ The NSPS program does take into account improvements in
technology, but does so during the 8-year review of the NSPS under
111(b)(1)(B) rather than on a permit-by-permit basis.
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d. Definition of Regulated Pollutant for GHGs
We also note, as described above, that decisions on the definition
of regulated pollutant for GHGs--whether GHGs would be regulated as
individual gases or as a class--has implications for BACT
determinations under the PSD program. If GHGs are regulated separately,
it is possible that a control project for one GHG could trigger PSD for
another (e.g., controlling methane in a way that increases
CO2). In addition, the economic and other impacts for BACT
would need to be evaluated on a pollutant-by-pollutant basis. While
regulating GHGs as a class would provide additional flexibility in this
area, each BACT analysis would be more extensive because it would have
to include combined consideration of all GHGs in the class. We ask for
comment on the relative strengths and weaknesses of the various ways to
define the regulated pollutant for GHGs as related to the BACT
requirement.
e. Other PSD Program Requirements
Other parts of the CAA PSD provisions and EPA regulations that
could be affected by bringing GHGs into the program include the
requirement to evaluate, in consultation with the Federal Land Manager
(FLM), impacts on Air Quality Related Values (AQRVs) in any affected
``Class I area'' (national parks, wilderness areas, etc.), and the need
to conduct additional analysis of the proposed source's impacts on
ambient air quality, climate and meteorology, terrain, soils and
vegetation, and visibility, as provided for in section 165(e) of the
Act. These requirements can result in adjustments to the permit (for
example, permit conditions may be added if a FLM demonstrates to a
permitting authority that additional mitigation is necessary to address
the impacts of GHG emissions on the AQRVs of a Class I area). Due to
the increase in number of permits, permitting authorities may have to
make significant programmatic changes to deal with the increased
workload to conduct these analytical requirements of the PSD program,
and many additional applicants will have to devote resources to
satisfying these requirements. In addition, given the uneven geographic
distribution of new source growth, some permitting authorities may be
required to conduct more permit analyses than others.
f. GHG NAAQS Nonattainment Scenario
If nonattainment NSR were triggered under a GHG NAAQS, the most
significant requirement would be the LAER requirement. Because LAER
does not allow consideration of costs, energy, and environmental
impacts of the emissions reduction technology, the LAER requirement
would have the potential to act as a strong technology forcing
mechanism in GHG nonattainment areas. On the other hand, once a
technology is demonstrated, this mechanism does not allow consideration
of the costs, competitiveness effects, or other related factors
associated with the new technology. As with PSD requirements, the
application of LAER to numerous smaller sources nationwide would raise
new issues on which we request comment. For example, with LAER, any
demonstrated technology for reducing CO2 emissions, such as
a new efficient furnace or boiler design, could become mandated as LAER
for all future construction or modification involving furnaces or
boilers. Manufacturers would have to supply technologies that could
meet LAER or face regulatory barriers to the market, and could face a
constantly changing regulatory level that may result in newly designed
products being noncompliant shortly after, or even before, they are
produced and sold. New and modified sources would be required to apply
the new technology even if it is a very expensive technology that may
not necessarily have been developed for widespread application at
numerous smaller sources, and even if a relatively small emissions
improvement came with significant additional cost. We request comment
on how EPA should evaluate the LAER requirement under a NAAQS approach
for GHGs. In particular, we ask for information about whether the
relatively inflexible nature of the LAER requirement would lead to
economic disruption for certain types of sources (and if so which
ones), and whether the benefits of a NAAQS approach including LAER
would warrant further evaluation and possible tailoring of LAER to
address GHGs.
We also ask for comment on any other NSR program issues particular
to a NAAQS approach, should EPA decide to establish a NAAQS for GHGs.
Although we have not provided a comprehensive discussion of such
issues, a number of questions arise that are particular to the NSR
requirements that flow from a NAAQS approach. For example, if the
entire country were designated nonattainment for GHGs, would the offset
requirement function as a national cap-and-trade program for GHG
emissions for all major sources? If so, how would such a program be
administered, and would the numerous small sources described above be
covered? Would the offset requirement argue for regulating GHGs as a
group, rather than individually, to facilitate offset trading? What
would be an appropriate offset ratio to ensure progress toward
attainment? Similarly, for the air quality analysis requirements of
PSD, how would a single source determine whether its contribution to
nonattainment is significant? When must such a source mitigate its
emissions impact, and what options are available to do so? Should EPA
set a PSD increment for GHGs if a NAAQS is established? Are there
additional issues of interest that we have not raised in this notice?
5. What Are the Possible Implications on Other Provisions of the Clean
Air Act?
If PSD for GHGs applied to the same sources as a new market-
oriented program to regulate GHGs under the Act, the interaction of the
two programs would be a key issue. PSD would ensure that new and
modified sources were built with the best available technology to
minimize GHG emissions. A traditional argument for NSR is that it
ensures that new sources are built with state-of-the-art technology
that will reduce emissions throughout the lifetime of that source,
which can be several decades. However if the market-oriented program is
a cap-and-trade system with sufficiently stringent caps, PSD would not
result in more stringent control of new GHG sources than the
[[Page 44503]]
cap-and-trade system alone. In addition, the potential would exist for
PSD to interfere with the efficient operation of the GHG cap-and-trade
program. Although PSD would neither reduce nor increase the overall
emission reductions achieved under the cap, it would force different
choices about the stringency and location of controls than if control
choices were based solely on market factors. Under this scenario, the
result would be to increase costs without achieving additional GHG
emissions reductions. For example, assume that a company undertakes a
change that triggers PSD at a location where controls are expensive to
retrofit but are required as BACT for that location. Without PSD, the
company could have increased emissions and still complied with the cap
by purchasing less expensive emissions reductions from another source,
and the same total GHG emissions reductions would have been achieved.
Notably, for GHGs, which have relatively uniform global concentrations,
the location of GHG emissions does not matter to global climate
impacts, so the policy reasons for the spatial component of PSD control
requirement would not apply to GHG controls.
PSD program requirements also affect numerous CAA programs that
require stationary source controls that may increase emissions of
pollutants other than the pollutant targeted for control (i.e.
``collateral increases''), such as the increased NOX
emissions that result when a thermal oxidizer is installed to control
VOC. Because there is no exemption from PSD requirements for such
pollution control projects, the collateral increase must be reviewed,
which can result in added costs and delay of those pollution control
projects. Regulation of GHGs would exacerbate these concerns because
the energy demands of many controls for criteria pollutants, HAP, and
other pollutants have the potential to result in increased
CO2 emissions.
6. What Are Some Possible Tailoring Approaches to Address
Administrative Concerns for GHG NSR?
The cost and potential broad applicability of PSD requirements
raises questions about whether GHG regulation through PSD would be more
effective in minimizing GHG increases if it operates as a broad program
targeting numerous smaller sources and modifications, or as a narrow
program targeting smaller numbers of large sources and modifications.
We ask for comment on how these cost/benefit considerations for
permitting small sources and modifications under PSD, as well as any
other factors, should be considered in EPA's deliberations regarding
the major source cutoffs and significance levels for GHGs as well as
EPA's available legal authority in this area.
EPA believes that whether or not PSD is workable for GHGs may
depend on our ability to craft the program to deal with the unique
issues posed by GHG regulation.
This section discusses several options, including:
Reducing the potential universe of sources based on
``potential to emit'' approaches;
Increasing the major source thresholds and significance
levels for GHGs, to permanently restrict the program to larger sources;
Phasing in the applicability of PSD for GHGs;
Developing streamlined approaches to implementing the BACT
requirement; and
Issuing general permits for numerous similar sources.
The options are not necessarily exclusive. Many are complementary, and
we note that some combination of these options may be most effective.
We also ask for suggestions on additional tailoring options not
described below, and more generally on which options, if any, present
an appropriately balanced means of addressing the administrative
concerns.
Before discussing each option in detail, we present an overarching
legal discussion that lays out possible rationales for such
flexibility. For at least one of the options identified (e.g., the
option of adopting higher major source sizes than those contained in
the Act), the principal legal constraint is the ``plain meaning'' of
the applicable PSD provisions, such as the major source levels.
Nonetheless, we have identified two legal doctrines that may provide
EPA with discretion to tailor the PSD program to GHGs: Absurd results
and administrative necessity.
The Supreme Court has stated that the plain meaning of legislation
is not conclusive ``in the `rare cases [in which] the literal
application of a statute will produce a result demonstrably at odds
with the intentions of the drafters' * * * [in which case] the
intention of the drafters, rather than the strict language, controls.''
U.S. v. Ron Pair Enterprises, Inc., 489 U.S. 235, 242 (1989). To
determine whether ``the intentions of the drafters'' differs from the
result produced from ``literal application'' of the statutory
provisions in question, the courts may examine whether there is a
related statutory provision that conflicts, whether there is
legislative history of the provisions in question that exposes what the
legislature meant by those terms, and whether a literal application of
the provisions produces a result that the courts characterize variously
as absurd, futile, strange, or indeterminate. See, e.g., id., Nixon v.
Missouri Municipal League, 541 U.S. 125 (2004); United States v.
American Trucking Association, Inc. 310 U.S. 534 (1940); Rector of Holy
Trinity Church v. U.S., 143 U.S. 457 (1892).
Further, the administrative burdens that would result for the
federal and state permitting authorities, as well as the sources, from
a literal application of the PSD provisions give rise to consideration
of whether EPA can craft relief from a strict interpretation based on
the judicial doctrine of administrative necessity. In Alabama Power,
the D.C. Circuit addressed various instances of claimed administrative
burdens resulting from the application of the PSD statutory provisions
and efforts by EPA to provide regulatory relief. Alabama Power Co. v.
Costle, 636 F.2d at 357-60 (D.C. Cir. 1980). In a section of its
opinion titled ``Exemptions Born of Administrative Necessity,'' the
Court stated,
Certain limited grounds for the creation of exemptions are
inherent in the administrative process, and their unavailability
under a statutory scheme should not be presumed, save in the face of
the most unambiguous demonstration of congressional intent to
foreclose them.
Id. at 357. The Court identified several types of administrative
relief. One is ``[c]ategorical exemptions from the clear commands of a
regulatory statute,'' which the court stated are ``sometimes
permitted,'' but emphasized that they ``are not favored.'' Id. at 358.
A second is ``an administrative approach not explicitly provided in the
statute,'' such as ``streamlined agency approaches or procedures where
the conventional course, typically case-by-case determinations, would,
as a practical matter, prevent the agency from carrying out the mission
assigned to it by Congress.'' Id. A third is a delay of deadlines upon
`` `a showing by [the agency] that publication of some of the
guidelines by that date is infeasible.' '' Id. at 359 (quoting NRDC v.
Train, 510 F.2d 692, 712 (D.C. Cir. 1974). The Court indicated it would
evaluate these choices based on the ``administrative need to adjust to
available resources * * * where the constraint was imposed * * * by a
shortage of funds * * *, by a shortage of time, or of the
[[Page 44504]]
technical personnel needed to administer a program.'' Id. at 358.
a. Potential-to-Emit: Reducing the Number of Sources Potentially
Covered
Applicability of PSD is based in part on a source's ``potential to
emit'' or PTE. The PTE concept also is used for applicability of
nonattainment NSR, Title V, and the air toxics requirements of section
112. We discuss PTE in detail here, but the issues and questions we
discuss in this section apply equally to these other programs. As noted
above, PTE is defined as the maximum capacity of a source to emit any
air pollutant under its physical and operational design. In the case of
sources that are not operating for part of the year, the PTE for many
types of sources counts the emissions that would be possible if those
sources did emit year round.
EPA believes that an important threshold question is how to
interpret ``maximum capacity * * * to emit * * * under its physical and
operational design'' for commercial and residential buildings, and
other types of source categories that might be subject to PSD and Title
V solely due to GHG emissions. For example, in the case of a furnace at
a residence, is it appropriate, in calculating the furnace's PTE, to
assume that a homeowner would set the thermostat at a level that would
require the furnace to operate continuously throughout the year? Even
on a cold winter day, a furnace typically turns on and off throughout
the day, and as the weather warms, the number of operating hours
decreases until the weather warms to the point where the furnace is not
needed at all and is shut off for an extended time.
The EPA has in a few instances provided guidance on PTE calculation
methodologies to account for category-specific considerations. For
example, we issued technical guidance for calculating PTE from grain
elevators that took into account inherent limitations on the amount of
grain that could be handled due to the fact that grain is only
available for handling during a relatively short harvest period, and is
further limited by the amount of grain capable of being grown (as
represented by a record crop year adjusted for future increases in crop
yield) on the land that would ever reasonably be served by the
elevator.\273\ We ask for comment on whether, for smaller GHG sources
like these, there could be appropriate methodologies for defining PTE
in ways that consider these common-sense limitations on a source's
operation, but still reflect the maximum capacity to emit of a source.
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\273\ Calculating Potential to Emit (PTE) and Other Guidance for
Grain Handling Facilities: November 14, 1995 memorandum from John S.
Seitz, Director, U.S. EPA Office of Air Quality Planning and
Standards, to EPA Regional Offices.
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Sources with PTE exceeding the major source threshold can become
minor sources by taking legally and practically enforceable limits on
their PTE, by, for example, agreeing to operate only part of the year,
or only so many hours per day, or by employing control devices.\274\
Many sources are able to avoid classification as ``major'' by taking
such limits.
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\274\ Current regulatory language allows consideration of such
limits in calculating PTE only if they are federally enforceable,
but this definition was vacated or remanded in three separate
cases--one for PSD/NSR (Chemical Manufacturers Assn v. EPA, No. 89-
1514 (D.C. Cir. Sept. 15, 1995), one for Title V (Clean Air
Implementation Project v. EPA, No. 96-1224 (D.C. Cir. June 28,
1996), and one for section 112 (National Mining Association v. EPA,
59 F. 3d 1351 (D.C. Cir. 1995). EPA is developing a rule to respond
to these cases and in the meantime is following a transition policy
that does not require federal enforceability.
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The estimates provided for potential new permits for GHG sources
outlined in section VII.D.2 above are based on actual emissions. Were
they based on PTE, and if year-round operation were assumed to
represent PTE for all source categories, the estimates would likely be
an order of magnitude higher (in the absence of actions to limit the
scope of the programs). This emphasizes the significance of the
interpretation of ``potential to emit'' for buildings and other
categories not traditionally subject to PSD, as well as the importance
of streamlined mechanisms for obtaining limits on PTE.
For traditional PSD and Title V permitting, the PTE limit is
typically a source specific limit that is crafted in a facility's minor
source permit and tailored to the source's individual circumstances. If
it were necessary to create PTE limits for very large numbers of GHG-
emitting sources nationwide, this would certainly require a more
efficient approach than creating them through individual minor source
permits. Not only would the sheer volume of permits and the process
required for each one severely strain permitting authority resources,
but some state and local agencies may lack the authority to establish
minor source permit limits for non-NAAQS pollutants. In addition, while
sources may not seek PTE limits for PSD until they have planned
modifications that could otherwise trigger PSD, sources may seek PTE
limits for Title V purposes as soon as the program is effective,
meaning that the approach would need to deal with a large number of
sources at essentially the same time.
We ask for comment on whether we should also therefore consider
streamlined regulatory approaches for creating the legally and
practically enforceable limits sources need without requiring a huge
number of individual minor source permits. A possible mechanism could
involve adopting a regulation that sets forth operational restrictions
that limit PTE for a broad class of sources. We may wish to consider
adopting--or encouraging state permitting authorities to adopt--rules
for numerous categories where we expect there to be large numbers of
sources whose actual emissions are not major but who have major PTE
(unless addressed through interpreting maximum capacity as described
above). Such a rule could, for example, limit a source's natural gas
usage to 1700 MM BTU (17,000 therms) per year, which would keep it
below the 100 tpy cutoff for Title V.\275\ Typically, the rule would
also build in some operating margin so that the limit is not right at
the major source cutoff. The rule would have to include recordkeeping
and reporting, which would be simple here since fuel use is metered.
This approach may be a streamlined effective way to limit PTE for many
sources with fuel combustion equipment, provided they can agree to
comply with the limits in the rule, even in an abnormally long, cold
winter. We ask for comment on stakeholders' experience with limiting
PTE by rule rather than through individual permits, possible
considerations in tailoring this approach to GHG sources, and
identification of categories that might benefit from the use of rules
limiting PTE.
---------------------------------------------------------------------------
\275\ Although the PSD cutoff may in some cases be 250 tpy,
sources will generally adopt PTE limits below 100 tpy to avoid both
PSD and Title V applicability where they have the option to do so.
For this reason, this example uses a 100 tpy cutoff, though in some
cases PTE limits are taken to stay below a 250 tpy cutoff.
---------------------------------------------------------------------------
Finally, where the establishment of a rule-based PTE limit for an
entire source category is not recommended or is infeasible, the EPA
requests comment on whether general permitting approaches might be
useful. A general permit is a permit that the permitting authority
drafts one time, and then applies essentially identically (except for
some source-specific identifying information) to each source of the
appropriate type that requests coverage under the general permit.
Similar to the type of rules limiting PTE described above, a general
permit could also limit PTE by setting out the operational restrictions
(e.g., fuel combusted per
[[Page 44505]]
year) necessary to assure the GHG emissions stay below major source
thresholds, and would also spell out records the source would have to
keep to assure it met these restrictions. To be most useful, the permit
would need to address large numbers of similar sources. This approach
may also work well for many types of GHG sources as well. We request
comment on the use of a general permit approach to limiting PTE, and
whether it would offer additional benefit over the approach of
establishing operational restrictions directly by rule.
b. Options for Setting Higher GHG Major Source Cutoffs and Significance
Levels
If the EPA ultimately determines that subjecting numerous small
sources and modifications to PSD is not an effective way to address GHG
emissions, one possible option for tailoring the program would be to
raise the major source cutoffs (e.g., raise the threshold only for GHGs
as a class, or perhaps only for certain individual GHGs) and establish
a significance level for GHGs at a level high enough to assure that the
program applies to larger sources and modifications, but excludes
smaller sources and modifications. Since the existing major source
thresholds are set forth in the CAA itself, EPA would need to find the
legal flexibility to raise these thresholds above 250 and 100 tons per
year. We present for discussion below several policy and legal options
for higher major source cutoffs and significance levels.
i. Higher GHG major source cutoffs--possible approaches and legal basis
Regardless of how PTE is calculated, the major source size
threshold will be a critical consideration in tailoring the PSD program
for GHGs. There are a number of factors one might consider in choosing
an appropriate cutoff for GHGs and whether to establish the cutoff for
individual gases such as CO2 or for GHGs as a class. One
conceptual approach might be to identify the number of sources and
modifications affected by various cutoffs, calculate the costs and
benefits of a PSD program for that universe of affected sources, and
select a cutoff that optimizes the benefit-cost ratio. Unfortunately,
we presently have the ability to quantify in dollar terms only a subset
of the climate impacts identified by the IPCC. Also, we have very
limited data on the number of sources expected at various major source
cutoffs, and even more limited data on the number of modifications at
various significance levels. More importantly, it is very difficult to
project the future number of permits or the incremental impact of any
additional GHG reductions that would result from the control technology
decisions therein. For these reasons, EPA cannot quantitatively
determine an optimal major source size or significance level.
We could, however, consider other means of setting levels. One
example is an emissions scaling approach. This approach would compare
the emissions of other existing NSR pollutants for sources that are
major and would calculate the corresponding GHG emissions that the same
source would emit. This would be an appropriate approach if the goal
were to tailor PSD applicability for GHGs to cover a similar universe
of source sizes and types to the universe now regulated for other
pollutants. A second option would be to base the major source size on a
scientific determination of a level below which an individual source
would have a de minimis contribution to any particular adverse climate-
related impact on a relevant health, societal, or environmental
endpoint. Although it may be possible to generally estimate such a
level, we are not currently aware of any scientific literature that
establishes a specific numeric threshold below which GHG emissions are
de minimis, either in terms of their impact on climate, or on these
endpoints. By the same token, aside from an ability to use currently
available models to project temperature effects, the Agency does not
have the ability to project specific climatic impacts or endpoints
resulting from individual sources. Alternatively, we could potentially
choose a GHG major source size that is selected to harmonize with GHG
cutoffs from other regulatory programs. For example, the DOE's 1605(b)
program has a threshold of 10,000 metric tons of CO2-
equivalent, California's AB32 regulation for mandatory reporting of
GHGs has a threshold of 25,000 metric tons of CO2-
equivalent, and the Wisconsin emission inventory reporting requirements
has a CO2 threshold of 100,000 short tons. Notably, these
examples are thresholds for reporting requirements only. PSD would
involve much more than simply reporting emissions, so under a
harmonizing approach we may need to evaluate whether it is feasible to
require not only reporting, but also the other PSD elements for the
sources that would be covered. We ask for comment on the range of
approaches EPA could take in selecting a major source cutoff if we
decide it is appropriate under existing legal authority, if available,
to develop a higher cutoff for GHGs. In addition, we request data that
may be useful for conducting necessary analysis to support such
approaches.
A related issue to the establishment of the major source thresholds
and significance levels for GHGs is the selection of the metric against
which these levels are evaluated. Emissions of GHGs are typically
expressed in a common metric, usually the metric called CO2-
equivalent, although the measure known as Carbon Equivalent (CE) is
also used. The use of either metric allows the impact of emissions of
different GHGs to be directly compared, as some gases have a higher
global warming potential or GWP than others. Since both units are
measured in weight--usually tons--either could be used for purposes of
PSD applicability. The use of either metric has the advantage of
linking emissions of a GHG directly to its ability to impact climate,
appropriately regulating more potent GHGs more stringently. The use of
CO2-equivalent would solve the problem of leaving unreviewed
significant GHG emissions of some chemicals, such as
hydrofluorocarbons, but it would leave many small CO2
sources with less climate impact still subject to PSD. However, the use
of Carbon Equivalent (CE) addresses both concerns. The attached table
demonstrates the possible effect of using CE in making PSD
applicability decisions:
------------------------------------------------------------------------
Emissions equal to 250
GWP tons CE
------------------------------------------------------------------------
Carbon dioxide (CO2)................. 1 917 tons.
Methane (CH4)........................ 21 44 tons.
Nitrous oxide (N2O).................. 310 3 tons.
Hydrofluorocarbon (HFC)-134a......... 1300 1410 lbs.
------------------------------------------------------------------------
As the table shows, it would take more CO2 emissions to
reach the major source size for CE. However. it would take
substantially less of several other GHGs. Such an approach would likely
result in fewer sources being added to the PSD program for GHGs in
total. While more sources for several GHGs would be considered major,
the major source population is, as noted above, dominated by
CO2, and there would be fewer sources classified as major
due to CO2 emissions. This approach arguably would regulate
significant sources of potent GHG while also reducing the burden on
relatively small sources of CO2, focusing efforts on the
sources with the most important climate impacts. EPA seeks comments on
the potential use of the CE measure as the means to determine PSD
applicability. Specifically we ask for comment on the appropriateness
of the metric (considering that CO2, rather than
[[Page 44506]]
carbon, is the air pollutant), data regarding its effect on PSD
applicability, and views concerning whether such an approach fits
within the language of the CAA.
Whether, and the extent to which, EPA has flexibility to limit the
application of the PSD permitting requirements (and, by extension, the
nonattainment NSR permitting requirements if a NAAQS is set for GHGs)
to sources that emit larger amounts of CO2 and other GHGs
than the 100/250 tpy thresholds depends on the interpretation of the
key PSD definitional term, ``major emitting facility.'' Under CAA
section 165(a), the basic PSD applicability requirement is that a
``major emitting facility'' may not construct unless it has received a
permit that covers specified requirements.\276\ As defined by CAA
section 169(1), a ``major emitting facility'' is defined to include (i)
``any * * * stationary source[]'' that emits or has the potential to
emit 100 tpy or more of any air pollutant and that falls into one of 28
specified industrial source categories; and (ii) ``any other source
with the potential to emit 250 tons per year or more of any air
pollutant.'' However, the last sentence of this definition allows
states to exempt ``new or modified facilities which are nonprofit
health or educational institutions'' from the PSD program. EPA's
regulations, promulgated in 1980 and revised several times since then,
make clear that emissions count toward the 100/250 tpy thresholds only
if they are ``regulated NSR pollutant[s]'' (e.g., 40 CFR
52.21(b)(1)(i)(a)), the specific meaning of which is discussed
elsewhere in this notice.
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\276\ The requirement to obtain a permit applies to a source
that commences construction after the effective date of the 1977
Clean Air Act Amendments (August 7, 1977), and that does so ``in any
area to which [the PSD provisions] appl[y].'' All parts of the
United States and its possessions are covered (see CAA sections 161,
302(d) and (q), and 110(a)(1)), but if EPA promulgates a NAAQS for
GHGs and designates certain areas as nonattainment, then those areas
would not be covered.
---------------------------------------------------------------------------
Once GHGs are regulated, these PSD provisions, by their terms,
would apply to sweep into the PSD program new sources that emit 100 or
250 tpy of CO2 or other GHGs. As indicated above, the courts
have held that the plain meaning of statutory provisions is generally
controlling. Even so, we solicit comment on whether these PSD threshold
requirements may present one of those rare cases in which congressional
intent differs, based on the legislative history.
The legislative history indicates that Congress was aware of the
range of stationary sources that emitted pollution and did not envision
that PSD would cover the large numbers of smaller sources within that
inventory. As the D.C. Circuit stated in Alabama Power, the seminal
court decision regarding PSD that reviewed numerous challenges to EPA's
initial set of PSD regulations,
Congress's intention was to identify facilities which, due to
their size, are financially able to bear the substantial regulatory
costs imposed by the PSD provisions and which, as a group, are
primarily responsible for emissions of the deleterious pollutants
that befoul our nation's air.
636 F.2d. 323, 353 (D.C. Cir. 1980) (emphasis added). In addition,
Congress also sought to protect permitting authorities from undue
administrative burdens. See S. Rep. 95-127 at 97; Alabama Power, 636
F.2d at 354.
One important indication that Congress viewed PSD as limited in
scope may be found in information provided by EPA in 1976 and included
in the Congressional Record: A comprehensive list of industrial and
commercial source categories, which included the amounts of certain
pollutants emitted by ``typical'' sources in those categories and the
number of new plants in those categories constructed each year. 122
Cong. Rec. S 24548-50 (July 29, 1976) (statement of Sen. McClure). The
pollutants included particulate matter (PM), sulfur dioxide
(SO2), carbon monoxide (CO), and hydrocarbons. The two
largest of these source categories consisted of--
Small boilers, those that generate between 10 MMbtu/hr and
250 MMbtu/hr. EPA estimated that 1,446 new plants with boilers of this
size were, at that time, constructed each year, and that the amount of
PM emissions with controls from a ``typical'' such boiler were 53 tpy.
Very small ``boilers,'' those that generate between 0.3
MMBtu/hr and 10 MMBtu/hr. EPA estimated that 11,215 new plants with
boilers of this size were, at that time, constructed each year, and
that the amount PM emissions with controls would be 2 tpy.
The D.C. Circuit indicated, in Alabama Power, that Congress did not
believe sources with boilers of these small sizes should be covered by
PSD: ``[With respect to] the heating plant operating in a large high
school or in a small community college * * * [w]e have no reason to
believe that Congress intended to define such obviously minor sources
as `major' for the purposes of the PSD provision.'' \277\ 636 F.2d at
354. To support this proposition, the Court cited a statement in the
Congressional Record by Sen. Bartlett arguing that the PSD provisions
should not cover ``[s]chool buildings, shopping malls, and similar-
sized facilities with heating plants of 250 million BTUs.'' Id. at 354
(citing 122 Cong. Rec. S. 12775, 12812 (statement of Sen. Bartlett)).
Yet, boilers of even this small size could well emit at least 250 tpy
of CO2 and therefore could fall into PSD permitting
requirements if the definition of ``major emitting facility'' is read
to include emitters of CO2 of that size or more.
---------------------------------------------------------------------------
\277\ Although Congress specifically authorized the States to
exempt ``nonprofit health or education institutions'' from the
definition of ``major emitting facility'' this statement by the D.C.
Circuit should be taken as the Court's view that Congress did not
design PSD to cover sources of the small size described.
---------------------------------------------------------------------------
Thus, it is clear that Congress's construct of PSD--specifically,
the 100/250 tpy thresholds--was based on Congress's focus on
conventional pollutants at that time and its understanding that sources
emitting conventional pollutants above those levels should be subject
to PSD, with its attendant cost burdens, both because such sources have
the financial resources and because they have the responsibility to
reduce their large share of the convention pollution problems. Limited
administrative resources were also part of this equation. But the
equation is scrambled when CO2 is the pollutant because many
smaller sources, with limited resources, and whose share of the GHG
emissions problem is no greater than their share of the conventional
pollution problem, get swept into PSD at those threshold levels.
Further, administrative resources become greatly stretched. Juxtaposing
the limited scope of the universe of PSD sources that Congress had in
mind against the broad terms that Congress used in defining ``major
emitting facility,'' which determines PSD applicability, raises the
question of whether a narrower interpretation of those terms may be
permissible under various judicial doctrines.
We solicit comment on whether the case law cited above, concerning
narrowing the application of statutory provisions in light of other
indications of congressional intent or in light of administrative
necessity, support interpreting the term, ``major emitting facility''
in a manner that is narrower than the literal meaning of the phrase,
``any other source'' in the case of sources that emit amounts of
CO2 that are more than 250 tpy but less than the levels
discussed above.
[[Page 44507]]
ii. Modifications: Options and Legal Basis for Higher GHG Significance
Levels
Regarding the selection of a significance level for GHG emissions,
we could follow a de minimis approach, as we have done in setting the
existing PSD significance levels. We could base the significance level
on the level below which an individual modification has a de minimis
contribution to climate change. A scaling approach similar to that
discussed above for the major source threshold is also an option for
setting the significance level. We could set the significance level to
a level of GHG emissions that corresponds to the same activity level as
the significance levels for other pollutants, so as to roughly maintain
the same permitting burden for GHGs as for ``traditional'' pollutants.
We ask for comment on the merits of these approaches and invite
suggestions on other approaches. We are also interested in specific
information that would help us analyze how the selection of various
significance levels would affect the number and types of modifications
affected.
The legal rationale for establishing a significance level is found
in the D.C. Circuit's Alabama Power decision, 636 F.2d at 405, where
the Court authorized EPA to establish ``a de minimis standard
rationally designed to alleviate severe administrative burdens.'' The
Court elaborated:
A rational approach would consider the administrative burden
with respect to each statutory context: what level of emission is de
minimis for modification, what level de minimis for application of
BACT. Concerning the application of BACT, a rational approach would
consider whether the de minimis threshold should vary depending on
the specific pollutant and the danger posed by increases in its
emission. The Agency should look at the degree of administrative
burden posed by enforcement at various de minimis threshold levels.*
* * It may * * * be relevant * * * that Congress made a judgment in
the Act that new facilities emitting less than 100 or 250 tons per
year are not sizeable enough to warrant PSD review.
Id. (emphasis added). We believe that this approach entails broad
discretion in fashioning a de minimis level, consistent with the
overarching principle of obviating administrative burdens that are not
commensurate with the contribution of the amount of emissions to the
pollution problem. We consider the Court's emphasized statement to
leave the door open to setting significance levels at the same level as
the applicability threshold levels. We solicit comment on appropriate
GHG significance levels, and on the relationship of significance levels
to the GHG applicability thresholds discussed above.
c. Phase-In of PSD Permitting Requirements
Absent higher major source cutoffs and significance levels, it
would be necessary to formulate a strategy for dealing with the tenfold
increase in required permits that EPA projects permitting authorities
will experience if GHGs become regulated for PSD purposes. Even with
advance notice, an increase of this magnitude over a very short time
could overwhelm permitting authorities. They would likely need to fund
and hire new permit writers, and staff would need to develop expertise
necessary to identify sources, review permits, assess control
technology options for a new group of pollutants (and for a mix of
familiar and unfamiliar source categories), and carry out the various
procedural requirements necessary to issue permits. Sources would also
face transition issues. Many new source owners and operators would need
to become familiar with the PSD regulations, control technology
options, and procedural requirements for many different types of
equipment. If the transition were not effectively managed, an
overwhelmed permit system would not be able to keep up with the demand
for new pre-construction permits, and construction could be delayed on
a large number of projects under this scenario.
The size of the increase in workload that must be accommodated and
the potentially serious consequences of an overly abrupt transition
demonstrate that a phase-in approach may have merit. Under one concept
of a phase-in approach, EPA could phase-in PSD applicability beginning
with the largest sources of GHGs and gradually include smaller sources.
This could be accomplished by initially adopting a relatively high
major source size and significance level, and then periodically
lowering the level until the full coverage level is reached. We ask for
comment on what an appropriate transition time would be, what the
appropriate starting, middle, and end points would be in terms of
coverage, and what requirements, if any, should be put into place for
sources prior to their being phased in. For example, if the ultimate
goal is to reach a 250 tpy major source cutoff, what would be the
appropriate starting cutoff (e.g., 10,000 tpy) and how should it be
determined? Would the phase-in need to be complete by a certain date,
and if so how long should the phase-in take? Alternatively, could the
phase-in of the smaller sources proceed by setting up periodic EPA
evaluations of the administrative necessity for deferring applicability
for such sources, and applying PSD only after we determine that it is
feasible to do so? We also ask for comment on what activities occurring
over this time we should consider in structuring a phase-in.
As noted elsewhere, in its broad review of the initial PSD program
promulgated under the 1977 Clean Air Act Amendments, the D.C. Circuit
set out a range of mechanisms through which an agency can, at least
under ``limited'' circumstances, provide relief on grounds of
``administrative necessity'' from even clear statutory mandates, as
long as those mandates do not unambiguously foreclose such relief.
Alabama Power, 636 F.2d at 357. The Court noted that an agency could
establish the need for such relief based on ``a shortage of funds[,] *
* * time, or * * * technical personnel.'' Id. at 358.
As described above, the large number of sources that would become
subject to the PSD requirements at the 100/250 tpy levels would strain
the administrative resources of the State permitting authorities and
perhaps also of the EPA regional offices that issue PSD permits. Each
of the constraints noted by the Court in Alabama Power--funds, time,
and technical personnel--would arise.
Elsewhere in this notice, we solicit comment on whether
``administrative necessity'' authorizes EPA to exempt categories of
smaller GHG emitters. Here, we solicit comment on phasing-in the
applicability of the permit program over a multi-year period, with
successively smaller sources becoming subject. This method could allow
an orderly ramp-up in funding and in essential human capital. Under
such an approach, we also seek comment on whether it would be necessary
to set a firm schedule for phase-in, or whether it is sufficient for
the agency to select a future date to assess the level of program
coverage and the associated administrative burden, and determine at
that time whether it is appropriate to add them to the program, and if
not, to set an additional future date to revisit the issue. We request
information that would help us determine the appropriate timeframe for
such assessments, including the current and anticipated state resources
for processing PSD permits, including numbers of permitting personnel,
and the time period and person-hours needed to issue a typical permit.
d. Streamlining Determinations of Required Controls
As previously noted, one of the most significant aspects of the PSD
program
[[Page 44508]]
for GHGs is the BACT requirement. While permitting authorities are
accustomed to making BACT determinations on a case-by-case basis for
major sources and modifications under the current PSD program, BACT for
GHGs (particularly CO2) presents significant additional permitting
challenges. The primary challenge is the dramatic increase in the
number of sources and modifications that under the 100/250-ton
thresholds would be subject to BACT review and the new source
categories that would be brought into the PSD program, which could
exceed the capacity of the permitting system and have negative effects
described above in section VII.D.4. An additional challenge stems from
the fact that for some GHG-emitting activities, primarily CO2 from
combustion sources, permitting authorities will need to look at
alternative approaches to determining BACT such as setting efficiency
targets, if add-on controls are not viewed as adequately demonstrated.
While there is much information available on efficiency for some of the
various kinds of equipment used by these newly applicable sources,
permit engineers will need to understand this information for a very
wide range of source categories.
This section seeks comment on approaches for streamlining the BACT
process for many new smaller sources that could be brought into the PSD
program based on their GHG emissions. Under PSD, BACT is a case-by-case
decision that reflects the state-of-the-art demonstrated control
technology at the time of the permit action. Thus, BACT changes over
time and requires continual updating. Determining BACT is also a
decision that affords permitting authorities flexibility to consider a
range of case-specific factors such as cost, energy, and environmental
impacts. However, full case-by-case consideration of those factors
requires significant data and analysis in order for permitting
authorities to arrive at a permitting decision that is appropriate for
each individual source or modification
EPA is interested in whether there would be ways to move from a PSD
permit system in which BACT limits are set on an individual case-by-
case basis to a system in which BACT determinations could be made for
common types of equipment and sources, and those determinations could
be applied to individual permits with little to no additional tailoring
or analysis. EPA has previously introduced this concept, known as
``presumptive BACT,'' as an aid to streamlining permitting for
desulfurization projects at refineries as well as in other
instances,\278\ and some state permitting authorities have adopted
similar approaches in their air permitting programs.\279\ Based on our
understanding of the types of sources that will become subject to PSD
if GHGs are regulated with a major source size of 250 tpy of emissions,
we believe the presumptive BACT process could offer significant
streamlining benefits. These benefits arise because many of these
smaller sources will likely have very similar emissions producing
equipment, and there will be little variation across sources with
respect to the cost, energy, and environmental considerations in the
BACT decision.
---------------------------------------------------------------------------
\278\ See January 19, 2001 memo from John S. Seitz, Director,
Office of Air Quality Planning and Standards to the Regional Air
Division Directors entitled, ``BACT and LAER for Emissions of
Nitrogen Oxides and Volatile Organic Compounds at Tier 2/Gasoline
Sulfur Refinery Projects.''
\279\ For example, Wyoming has a minor source permitting program
that includes a BACT analysis, and they use a presumptive BACT
process for issuing minor source permits to a particular source
category--oil and gas production facilities. See Permitting Guidance
for Oil and Gas Production Facilities, Wyoming Dept. of
Environmental Quality, Air Quality Division (August 2007 revision).
---------------------------------------------------------------------------
While the CAA states that PSD permits shall be issued with BACT
determinations made for each pollutant on a ``case-by-case basis,'' the
court in Alabama Power recognized that exceptions may be appropriate
where ``case-by-case determinations, would, as a practical matter,
prevent the agency from carrying out the mission assigned to it by
Congress.'' 636 F.2d at 358 (emphasis added). The court recognized that
such streamlining measures may be needed when time or personnel
constraints or other practical considerations ``would make it
impossible for the agency to carry out its mandate.'' See id. at 359.
Given the more-than-tenfold increase in new sources that would likely
be brought into the PSD program once GHGs are regulated and the other
challenges described above, maintaining a traditional PSD permitting
program with individual case-by-case BACT determinations may be
impractical, warranting streamlined regulatory approaches as allowed
under the Act. A presumptive BACT permitting program would allow EPA,
state and local permitting authorities to carry out the PSD program in
a timely and efficient manner necessary to promote (rather than hinder)
control of GHG emissions from the many new, small source categories
that would be required to have PSD permits based on their GHG
emissions, while still preserving opportunities for public
participation.
In considering a change from case-by-case BACT determinations to a
presumptive BACT process for some specific source categories within the
PSD program, EPA is considering how such presumptive BACT limits should
be established and used, and what provisions in the CAA would set
requirements or limits on their establishment and use. In particular,
EPA recognizes the statutory requirement to set BACT limits on a case-
by-case basis after taking into account site-specific energy, economic,
and environmental impacts (otherwise known as collateral impacts). One
option would be to allow permitting authorities to adjust any BACT
limit that was based on presumptive BACT, as necessary, upon
identifying significant collateral impacts applicable to a specific
source. EPA also recognizes the requirement to subject proposed PSD
permits, and the BACT limits contained within them, to public notice
and comment before such permits become final. A presumptive BACT
program could be designed to establish presumptive emissions limits for
a particular category of sources through guidance that would be issued
only after public notice and comment procedures. Another approach could
be to allow presumptive BACT limits in each permit to become final only
if public comments fail to establish that significant case-specific
energy, economic, and/or environmental impacts require adjustment of
the presumed limit for that particular source.
In addition, while case-by-case BACT determinations allow for the
continual evolution of BACT requirements over time (as controls applied
in prior permits are considered in each subsequent case-by-case BACT
determination), EPA recognizes that application of presumptive BACT to
a category of sources over many permitting decisions may somewhat
diminish PSD's incentives for improved technology. EPA is interested in
options that would help maintain advances in control technologies, such
as a requirement to update and/or strengthen the presumptive BACT at
set intervals (such as after 3 years). EPA seeks comment on all aspects
of the use of presumptive BACT limits within the PSD program, including
EPA's authority to do so, whether there is need for and value to such
an approach, and suggestions for how such limits could be established,
updated, and used consistent with the requirements of the CAA.
[[Page 44509]]
The central component of a presumptive BACT approach would be the
recurring technical determination, subject to notice and comment, of
the presumptive BACT levels for various categories. Because of the
limited data we currently have about the number and types of sources
that would become subject to the BACT requirement for GHGs, we cannot
at this time predict how many or which source categories might benefit
from such an approach if we opt to pursue it. We seek comment on the
basis we could use in setting the presumptive BACT level. Considerable
work will be needed to determine what options exist for controlling GHG
emissions from these categories of smaller sources and the various
emitting equipment they use. Even if a determination is made that add-
on controls for CO2 from combustion sources are adequately
demonstrated, it is unlikely that the application of these controls
would be cost-effective at these small sources in the relatively near
future. Thus the focus of presumptive BACT for CO2 would
likely be on energy efficiency standards for the installed equipment.
While PSD permitting staff generally would not possess specialized
knowledge in the area of energy efficiency for categories of small
sources, there is experience within EPA and other agencies that could
help inform the establishment of presumptive BACT. Both EPA and DOE,
for example, have extensive experience in deploying cost effective
technologies and practices to reduce greenhouse gases from a wide range
of emissions sources in support of the President's GHG intensity goal.
For example the Energy Star program promotes efficient technologies
through a labeling program that establishes performance-based
specifications for determining the most efficient products in a
particular category, which then qualify for the Energy Star label. To
develop these specifications, EPA and DOE use a systematic process that
relies on rigorous market, engineering, and pollution savings analyses
as well as input from stakeholders. While Energy Star specifications
generally cover electrical appliances or fuel combusting appliances
that would be smaller than those triggering the BACT requirement, the
types of analyses conducted for Energy Star could inform the
presumptive BACT process. In addition, DOE's Energy Efficiency and
Renewable Energy program sets standards for several types of equipment,
some of which may be affected by the BACT requirement if GHGs are
regulated, including furnaces, boilers, and water heaters. The DOE
standards are similar to the concept of presumptive BACT in that they
take cost into consideration and are updated over time.\280\ They also
take into account effects on competitiveness among equipment
manufacturers, which could be a significant concern if left unaddressed
in determining presumptive BACT. We ask for comment on whether these or
other similar programs could serve as a basis for the setting of
presumptive BACT where applicable.
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\280\ See, e.g., 42 U.S.C. 6295(o).
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Regarding LAER, we note that, as previously discussed, if a NAAQS
were established for GHG at levels lower than current concentrations,
the relevant technology requirement would be LAER, not BACT. We ask for
comment on whether the presumptive BACT approach would have utility for
LAER and whether the particular statutory language of the LAER
requirement would allow a presumptive approach under the same legal
principles laid out for BACT.
Finally, while presumptive BACT or LAER may have the potential to
help address the problem of numerous small but similar types of
sources, it is likely of less value in making BACT or LAER
determinations at the types of large sources that have generally been
subject to PSD for traditional pollutants. This is because there is
generally less similarity among these traditional sources. Nonetheless,
as noted above, there may be numerous modifications that will be newly
subject to PSD for GHGs at such sources, and there may also be issues
unique to establishing control technology requirements for GHGs that do
not presently exist for such sources. We ask for comment on whether
there are issues at traditional PSD major sources that arise for GHGs
and that would not be addressed by a presumptive BACT approach. If so,
we ask for comment on additional options for tailoring the BACT
requirement to address these issues.
e. General Permits for Streamlined Permitting of Numerous Similar
Sources
An approach closely linked with the presumptive BACT concept is the
concept of a general permit for PSD. A general permit is a permit that
the permitting authority drafts one time, and then applies essentially
identically (except for some source specific identifying information)
to each source of the appropriate type that requests coverage under the
general permit. Congress expressly codified the concept of general
permits when it enacted the Title V program (discussed below) and
states have been using general permits and similar process for years in
their own permit programs, particularly for minor source NSR \281\ and
operating permits. Due to the case-by-case nature of PSD permitting for
``traditional'' major sources and the differences among individual PSD
sources, there has not been much interest or activity in general
permitting for PSD. However, if one or more GHGs (particularly
CO2) become regulated pollutants, this approach merits
strong consideration due to the large number of sources that EPA
expects will become newly subject to PSD for their GHG emissions and
the similar characteristics of many of these sources.
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\281\ The minor NSR is a NAAQS-based program for review of minor
sources that is distinct from the PSD program. It is not discussed
here.
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Although there is no provision in the CAA that expressly authorizes
the use of general permits in the PSD program, the D.C. Circuit, in the
Alabama Power case described above, recognized that ``[c]onsiderations
of administrative necessity may be a basis for finding implied
authority for an administrative approach not explicitly provided in the
statute'' and expressly identified general permits as an alternative to
the exemptions that were at issue in that case. See 636 F.2d at 360.
Further, courts have recognized EPA's authority to use general permits
under section 402 of the Clean Water Act without an express provision
authorizing such general permits. Environmental Defense Center v. EPA,
344 F.3d 832, 853 (9th Cir. 2003) (``General permitting has long been
recognized as a lawful means of authorizing discharges.'') (citing
NRDC. v. Costle., 568 F.2d 1369, 1381 (D.C. Cir. 1977)); NRDC v.
Train., 396 F. Supp. 1393, 1402 (D.D.C. 1975) (EPA has ``substantial
discretion to use administrative devices, such as area permits, to make
EPA's burden manageable.'').
In considering the use of general permits within the PSD program,
EPA is considering how such general permits would be established and
used, and what provisions in the CAA might limit their establishment
and use. One consideration in establishing PSD general permits is the
requirement in CAA section 165(a)(2) that permits be issued after ``a
public hearing has been held with opportunity for interested persons
including representatives of the Administrator to appear and submit
written or oral presentations.'' One possible approach for fulfilling
the public participation requirement is the approach followed for Title
V general
[[Page 44510]]
permits in 40 CFR 70.6(d), which provide that permitting authorities
may establish general permits after following notice and comment
procedures required under 40 CFR 70.7(h) and then grant a source's
request to operate under a general permit without repeating the public
participation procedures. Other considerations for establishing general
permits under the PSD program include determining BACT on a case-by-
case basis (as discussed in the previous section), and the other
requirements referred to earlier in this section concerning the
evaluation of impacts on AQRVs in Class I areas and the analysis of air
quality and other potential impacts under CAA section 165(e).
EPA seeks comment on the use of general permits within the PSD
program, including both EPA's authority to do so and suggestions for
how general permits would be established and used consistent with the
requirements of the CAA and identification of source categories that
could benefit from such an approach. We also ask for comment on whether
a general permit program approach could also work for nonattainment NSR
in the event the EPA promulgates a NAAQS for GHGs and designates areas
as nonattainment.
f. Coordinating Timing of PSD Streamlining With GHG Regulation Under
the Act
Regardless of how EPA might tailor the NSR program for GHGs, the
timing of these approaches must be coordinated with other GHG actions
under the CAA. As described above, the applicability of PSD is tied to
whether a pollutant is subject to a control program under the Act. EPA
strongly believes that we should be prepared the first time we regulate
one or more GHGs under any part of the CAA to explain our approach to
permitting, including full consideration of the ideas presented above
for responding to the PSD implementation challenges. Coordination of
the timing of tailoring strategies for PSD or nonattainment NSR to
match with the effective date of the first GHG regulation is necessary
to minimize confusion on the part of sources, permitting authorities,
and the public, to provide for as effective a transition as possible,
and to ensure that the strategies intended to avoid problems can be in
place in time to prevent those problems. We seek comment on timing
issues in general, and particularly on the coordination of the timing
of permitting requirements with the timing of GHG regulation under
other parts of the Act.
F. Title V Operating Permits Program
1. What Are the Clean Air Act Requirements Describing the Operating
Permits Program?
The Title V operating permits program was enacted in 1990 to
improve sources' compliance with the requirements of the CAA.\282\ In
summary, it provides for facility operating permits that consolidate
all Act requirements into a single document, provides for review of
these documents by EPA, States, and the public, and requires permit
holders to track, report, and certify annually to their compliance
status with respect to their permit requirements. Through these
measures, it is more likely that compliance status will be known, any
noncompliance will be discovered and corrected, and emissions
reductions will result. Title V generally does not add new substantive
requirements for pollution control, but it does require that each
permit contain all a facility's ``applicable requirements'' under the
Act, and that certain procedural requirements be followed, especially
with respect to compliance with these requirements. ``Applicable
requirements'' for Title V purposes generally include all stationary
source requirements, but mobile source requirements are excluded.
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\282\ The operating permits program requirements are contained
in title V of the CAA, and are codified in EPA regulations at 40 CFR
parts 70 and 71.
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Presently there are generally not any applicable requirements for
control of GHGs that would be included in Title V permits, but
regulation of GHGs under any of the approaches described above,
including PSD, could give rise to applicable requirements that would be
included. Even if a particular source emitting 100 tpy of a GHG is not
subject to GHG regulations that are ``applicable requirements,'' under
a literal reading of Title V, the Title V permit for that source must
include any other applicable requirements for other pollutants. For
example, while a 100 tpy CO2 source would usually have
relatively small criteria pollutant emissions that would not by
themselves have subjected the source to title V, once subjected to
title V for CO2 emissions, the source would then need to
include any SIP rules (e.g., generally applicable opacity limitations
that exist in several SIPs) that apply to the source.
When a source becomes subject to Title V, it must apply for a
permit within one year of the date it became subject.\283\ The
application must include identifying information, description of
emissions and other information necessary to determine applicability of
CAA requirements, identification and certification of the source's
compliance status with these requirements (including a schedule to come
into compliance for any requirements for which the source is currently
out of compliance), a statement of the methods for determining
compliance, and other information. The permitting authority then uses
this information to issue the source a permit to operate, as
appropriate. A Title V source may not operate without a permit, except
that if it has submitted a complete application, it can operate under
an ``application shield'' while awaiting issuance of its permit.
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\283\ The deadline may be earlier if the permitting authority
(usually an approved state or local air pollution control agency,
but in some cases the EPA) sets an earlier date.
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Title V permits must contain the following main elements: (1)
Emissions standards to assure compliance with all applicable
requirements; (2) a duration of no more than 5 years, after which the
permit must be renewed; (3) monitoring, recordkeeping, and reporting
requirements necessary to assure compliance, including a semiannual
report of all required monitoring and a prompt report of each deviation
from a permit term; (4) provisions for payment of permit fees as
established by the permitting authority such that total fees collected
are adequate to cover the costs of running the program; and (5) a
requirement for an annual compliance certification by a responsible
official at the source. An additional specific monitoring requirement,
compliance assurance monitoring (CAM), also applies to some emissions
units operating at major sources with Title V permits.\284\ The CAM
rule requires source owners to design and conduct monitoring of the
operation of add-on control devices used to control emissions from
moderately large emissions units. Source owners use the monitoring data
to evaluate, verify, and certify the compliance status for applicable
emissions limits.\285\ The CAM rule is implemented in conjunction with
the schedule of the operating permits program.
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\284\ Specifically, CAM applies to units with add-on control
devices whose pre-control emissions exceed the applicable major
source threshold for the regulated pollutant.
\285\ CAM requirements are codified in 40 CFR part 64.
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While these are the main elements relevant to a discussion of GHGs,
there are numerous other permit content requirements and optional
elements, as set forth in the Title V implementing regulations at 40
CFR 70.6. One of these
[[Page 44511]]
optional elements is of particular interest when considering the
implications of GHG permitting: The provisions for general permits,
which, as discussed in more detail below, can allow for more
streamlined permitting of numerous similar sources.
In addition to the permit content requirements, there are
procedural requirements that the permitting authority must follow in
issuing Title V permits, including (1) determining and notifying the
applicant that its application is complete; (2) public notice and a 30-
day public comment period on the draft permit, as well as the
opportunity for a public hearing; (3) notice to EPA and affected
states, and (4) preparing and providing to anyone who requests it a
statement of the legal and factual basis of the draft permit. The
permitting authority must take final action on permit applications
within 18 months of receipt. EPA also has 45 days from receipt of a
proposed permit to object to its issuance, and citizens have 60 days to
petition EPA to object. Permits may also need to be revised or reopened
if new requirements come into effect or if the source makes changes
that conflict with, or necessitate changes to, the current permit.
Permit revisions and reopenings follow procedural requirements which
vary depending on the nature of the necessary changes to the permit.
2. What Sources Would Be Affected If GHGs Were Regulated Under Title V?
Title V requires permitting for several types of sources subject to
CAA requirements including all sources that are required to have PSD
permits. However, it also applies to all sources that emit or have the
potential to emit 100 tpy of an air pollutant.\286\ As discussed above
for the PSD program, the addition of GHG sources to the program would
trigger permitting requirements for numerous sources that are not
currently subject to Title V because their emissions of other
pollutants are too small. The Title V cutoff would bring in even more
sources than PSD because the 100 tpy (rather than 250 tpy) cutoff
applies to all source categories, not just the ones specified in the
Act's PSD provisions.
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\286\ Other sources required to obtain Title V permits are
``affected sources'' under the acid rain program, and sources
subject to NSPS or MACT standards (though non-major sources under
these programs can be exempted by rule). It does not apply to mobile
sources.
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Using available data, which we acknowledge are limited, and
engineering judgment in a manner similar to what was done for PSD, EPA
estimates that more than 550,000 additional sources would require Title
V permits, as compared to the current universe of about 15,000-16,000
Title V sources. If actually implemented, this would be more than a
tenfold increase, and many of the newly subject sources would be in
categories not traditionally regulated by Title V, such as large
residential and commercial buildings. However, as described below, EPA
believes that, if appropriate, there may be grounds to exclude most of
these sources from Title V coverage, either temporarily or permanently,
under legal theories similar to those for PSD.
The CAM requirement also applies to major sources that require
Title V permits, meaning that a number of smaller sources are
potentially newly subject to CAM as well. Under the current CAM
requirements, applicability is limited to the monitoring of add-on
control devices (e.g., scrubbers, ESPs). Presently there are few known
add-on control devices for CO2, and for many smaller
sources, it is unlikely that there will be cost effective add-on
controls for CO2 for many years. Thus, we generally expect
source owners to comply with any applicable GHG limits through the use
of improved energy efficiency and other process operational changes
rather than the use of add-on emissions reduction devices. As a result,
even with the large number of sources that will exceed the
applicability cutoffs, the CAM rule will have very limited application
for sources subject to GHG rules. We ask for comment on this assessment
of CAM applicability, and whether there may be CAM impacts that we have
not described here.
As an additional note, if GHGs were regulated under section 112
authority, Title V could apply at an even smaller threshold. This
consideration adds to the list of difficulties with using section 112
to regulate GHGs that were identified in section VII.C. Although HAPs
are excluded from the definition of ``regulated NSR pollutant,'' Title
V explicitly includes major sources as defined in section 112 on the
list of sources required to obtain an operating permit. While minor
sources of HAP can be excluded by rule, major sources of HAP cannot.
For HAPs, the major source cutoffs are (as noted previously) 25 tons
for any combination of HAPs, and 10 tons for any single HAP. Thus, if
GHGs were regulated as HAPs, a 10 ton CO2 source would
require an operating permit under Title V. Under this approach, the
number of new Title V sources would easily number in the millions
absent a means to limit PTE. In addition the major source definition
under section 112 does not exclude fugitive emissions, as it does under
PSD for unlisted categories. Thus, if GHGs were designated as HAPs, an
uncertain number of additional new kinds of sources (e.g., agriculture,
mining), would become newly subject to Title V due to fugitive
emissions of GHGs. We ask for comment on whether there are factors EPA
should consider in its description of the universe of potentially
affected sources.
3. What Are the Key Milestones and Implementation Timeline if Title V
Were Applicable for GHGs?
Under an interpretation of the Act parallel to that for PSD, Title
V would become applicable for GHGs as soon as GHGs become subject to
any actual control requirement. This timing is perhaps even more
important for Title V than for PSD because of the potential for an
extremely large number of new sources (unless EPA administratively
reduced coverage) combined with the fact that Title V applications
would all be due at the same time (unless a phase-in approach were
adopted). This is because Title V requires permit applications within
one year of a source becoming subject to the program, in contrast to
the PSD program, where permitting authorities would receive
applications over time as sources construct or modify.
Permitting authorities generally must act on Title V applications
within 18 months. However, Congress addressed the burden imposed by the
initial influx of (what turned out to be less than 20,000) initial
Title V permits when it enacted Title V in 1990 by providing for a 3-
year phased permit issuance timeline. Although the initial phase-in
period is over, we discuss below the possibility of interpreting Title
V provisions to authorize a phase-in period for GHG sources becoming
newly subject to Title V as well. We ask for comment on whether there
are factors EPA should consider in its description of these timelines.
4. What Are Possible Cost and Emission Impacts of Title V for GHGs?
Title V generally does not impose additional applicable
requirements on a source. However, sources, permitting authorities,
EPA, and the public (to the extent that they participate in the
permitting process) all may incur administrative burden due to numerous
activities associated with applying for, reviewing, commenting on, and
complying with Title V permits. There are significant challenges that
would arise if GHG sources become subject to Title V. The sheer volume
of new permits would heavily strain the
[[Page 44512]]
resources of state and local Title V programs. These programs may have
to tailor their fee requirements or other program elements to address
the strain caused by the influx of numerous smaller sources, even if
the permits for each individual source are relatively straightforward.
Many new types of sources would need to understand and comply with a
new and unfamiliar program. Even under streamlined approaches like
general permits (discussed below), there would be administrative burden
imposed as sources would have to determine whether they are covered
and, if so, would need to submit annual reports and certifications. EPA
would see additional burden as well, both because we are the permitting
authority in some areas and because we would probably see an increase
in the number of Title V petitions. Because Title V does not create new
applicable requirements, the new costs of Title V would be mainly
attributable to administrative burden. Nonetheless, this overall
administrative burden is likely to be unreasonable unless EPA reduces
the number of covered sources as discussed below.
Title V of the CAA also contains a self-funding mechanism requiring
that permitting authorities collect permit fees adequate to support the
costs of running a Title V program. Title V fees must be used solely to
run the permit program. For GHGs, the possibility of a huge influx of
smaller sources raises questions about how permitting authorities
should adjust their fee schedules to ensure that they have adequate
resources to permit these sources without causing undue financial
hardship to the sources. The most common approach, a cost per ton fee
that is equal for all pollutants, would likely result in excessive
costs to GHG-emitting sources because of the large mass emissions of
GHGs compared to other pollutants. This is particularly true for the
universe of small sources brought into Title V solely for their GHG
emissions, because those permits are expected to be relatively simple
and may even be addressed through general permits (which would not
require as many resources or as high a fee). Although it may be
permissible for permitting authorities to adopt lower fees specifically
for GHGs, they would have to assess the new resources needed for
permitting these sources and determine some basis for an appropriate
fee and a workable mechanism for collecting it.
As noted above, the benefits of Title V stem primarily from the way
its various provisions contribute to improved compliance with CAA
requirements. However, for the particular sources that would be added
to the program solely due to their GHG emissions, it is unclear whether
there would be much benefit from these provisions given the small size
of most of these new sources, the uniform design and operation of many
of their emissions points, the anticipated lack of add-on control
devices, and the relatively small number of applicable requirements
that would be included in the permit. We ask for comment on the
expected overall costs and benefits of running a Title V program for
small GHG sources and for larger GHG sources (e.g., those emitting more
than 10,000 tons per year).
5. What Possible Implications Would Use of This Authority for GHGs Have
for Other CAA Programs?
Because Title V is designed to work in concert with other CAA
requirements and is self-funding, we have not identified any impacts it
would have on other programs.
6. What Are Possible Tailoring Approaches To Address Administrative
Concerns for Title V for GHGs?
As we did in section VII.D regarding NSR, we present here for
comment some possible tailoring options to address concerns about
implementing Title V for GHGs. As was previously noted for NSR, we must
consider how the Act's language may constrain these options.
Nonetheless, we see at least two possible legal theories for reducing
administrative concerns through limiting the scope of coverage of Title
V that would otherwise result from regulating GHGs. First, case law
indicates that in rare cases, the courts will interpret or apply
statutory provisions in a manner other than what is indicated by their
plain meaning. Courts will do so when Congress's intent differs from
the plain meaning, as indicated by other statutory provisions,
legislative history, or the absurd, futile, strange, or indeterminate
results produced by literal application. Second, the administrative
burden of literal application of the Title V provisions may also
provide a basis for EPA, based on the judicial doctrine of
administrative necessity, to craft relief in the form of narrowed
source coverage, exemptions, streamlined approaches or procedures, or a
delay of deadlines. Some specific options are discussed in the
remainder of this section, and we invite comment on these and other
suggested approaches.
a. Potential for Higher Major Source Cutoffs
As discussed above in section VII.A.5, Title V applies to several
types of sources under the Act, including, among others, all PSD
sources, as well as 100 tpy sources that are not subject to PSD. In
section VII.D, we described the reasons why a higher major source
cutoff for PSD might make sense to improve the effectiveness of the
program by focusing resources away from numerous small sources for
which the environmental benefits gained from permitting may not justify
the associated administrative burdens. We believe such an approach
might be even more important for Title V because many small sources
that could become subject to the program solely because of their GHG
emissions may have few or no applicable requirements. Unless GHG
emissions from these small sources are regulated elsewhere under the
Act, the only GHG-related applicable requirements for these sources
would come from PSD permitting. Thus, if EPA adopts a higher major
source size for PSD, it would arguably be incongruous to require 100
tpy GHG sources to obtain permits under Title V. In that case, adopting
a higher applicability threshold for GHGs under Title V in parallel
with, and at the same level as for PSD, would make even more sense.
Similarly, if EPA were to regulate GHGs for certain source categories
under CAA section 111 or 112, and were to include size cutoffs in those
regulations, then it could make sense for the size-cutoffs for Title V
purposes to reflect the cutoffs for those source categories under those
regulations. Indeed, it could make sense to apply Title V only to those
sources of GHGs that are themselves subject to regulation for GHG
emissions.
We have found several indications of congressional intent that
could serve as a basis for interpreting the Title V applicability
provisions to implement the above-described size-cutoffs or other
limitations, instead of interpreting them literally. First, other
provisions in Title V and the legislative history indicate that the
purpose of Title V is to promote compliance and facilitate enforcement
by gathering into one document the requirements that apply to a
particular source. See section 504(a) (each Title V permit must contain
terms ``necessary to assure compliance with applicable requirements''
of the CAA), H.R. Rep. No. 101-490, at 351 (1990) (``It should be
emphasized that the operating permit to be issued under this title is
intended by the Administration to be the single document or source of
all of the requirements under the Act applicable
[[Page 44513]]
to the source.''). Limiting the applicability of Title V to sources
that emit GHGs in the same quantity as sources that would be subject to
GHG limits under PSD (or other CAA requirements) for GHGs--and
excluding sources that emit GHGs in lower quantities and therefore are
not subject to CAA requirements for GHGs--would be consistent with that
purpose. Second, the legislative history of Title V indicates that
Congress expected the provisions to apply to a much smaller set of
sources than would become subject at 100 tpy GHG levels. See S. Rep.
101-228, at 353 (``[T]he additional workload in managing the air
pollution permit system is estimated to be roughly comparable to the
burden that States and EPA have successfully managed under the Clean
Water Act[,]'' under which ``some 70,000 sources receive permits,
including more than 16,000 major sources'').
We ask for comment on whether we should consider higher GHG
applicability cutoffs for Title V, what the appropriate cutoffs might
be, and whether there are additional policy reasons and legal
justifications for doing so or concerns about such an approach.
b. Potential for Phase-In of Title V Requirements
Due to the severe administrative burden that would result if
hundreds of thousands of sources were all to become subject to Title V
at the same time, as could be the case if EPA regulates GHGs elsewhere
under the Act, and because many of the sources could become subject
before the development of any stationary source controls for GHGs, it
may make sense to defer Title V applicability for GHG sources that are
subject to Title V solely due to GHG emissions. One deferral approach
would be to defer Title V for such sources until such time as they
become subject to applicable requirements for GHGs. Alternatively, it
may make sense to phase in Title V applicability with the largest
sources applying soonest, similar to what was discussed above for PSD
permitting.
Legal support for some type of deferral may be found in the case
law, described above, that identifies deferral as one of the tools in
the ``administrative necessity'' toolbox. In the case of Title V,
deferral may find further legal support by reference to provisions of
Title V itself: Congress addressed the burden imposed by the initial
influx of tens of thousands of Title V permits when it originally
enacted Title V in 1990 by providing for a 3-year phased permit
issuance timeline.\287\ A similar phased approach may have even greater
merit here due to the even greater number of permits. We ask for
comment on the legal and policy arguments for or against a phase-in
approach, and request suggestions for workable permit application and
issuance timelines for Title V permits for small GHG sources.
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\287\ CAA section 503(c).
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c. General Permits
The use of general permits is an additional option for addressing
the potentially large numbers of GHG sources that could become subject
to Title V. While general permits would not completely eliminate the
resource burden, and may not work for every type of source, they
clearly offer an option for meeting the Title V requirements in a more
efficient way. Congress expressly provided for general permits for
Title V and many states have experience issuing them. They appear to be
a good fit for the numerous similar small sources we are primarily
concerned about. Nonetheless, we still expect that the sheer volume of
sources and number of different types of sources affected will present
challenges. Further, any Title V general permit must comply with all
requirements applicable to permits under Title V, and no source covered
by a general permit may be relieved from the obligation to file a
permit application under section 503 of the Act. We seek comment on
whether source characteristics and applicable requirements are similar
enough for a general permit approach to be helpful, for what categories
it would provide the greatest benefit, and the degree to which it would
or would not ease the expected difficulties with implementing a GHG
Title V program.
d. Fees
Title V contains a self-funding mechanism requiring that permitting
authorities collect permit fees adequate to support the costs of
running a Title V program. Title V fees must be used solely to run the
permit program. For GHGs, the possibility of a huge influx of new
sources raises questions about how permitting authorities should adjust
their fee schedules to ensure that they have adequate resources to
permit these sources. Title V provides significant flexibility to
permitting authorities in setting their fee schedules so long as they
can demonstrate that fees are adequate to cover all reasonable costs
required to develop and administer the Title V program
requirements.\288\ The additional resource burden imposed by GHG
sources will depend heavily on what approaches EPA and states
ultimately adopt for tailoring the program for these sources, but EPA
does expect that some additional resources will be necessary under
virtually any scenario.
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\288\ See CAA section 502(b)(3), which also lists specific
activities whose costs must be covered.
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Most states charge Title V fees on a dollar/ton basis, and actual
amounts vary from state to state. For 2008, EPA charges $43.40 per ton,
but only for regulated pollutants for the fee calculation (which
generally includes all regulated pollutants but excludes carbon
monoxide and some other pollutants). Because of the large mass
emissions of GHGs and especially of CO2 compared to other
pollutants, if EPA and states charge fees for GHG emissions based on
cost/ton numbers for criteria pollutants or HAPs, we expect that the
fee revenues would be grossly excessive for what is needed to process
permits for GHG sources. This is particularly true for the universe of
small sources brought into Title V solely for their GHG emissions
because those permits are expected to be relatively simple and may be
addressed through general permits. Therefore we believe that it is
appropriate for permitting authorities to consider other available
options for covering their GHG source permitting costs, including:
substantially lower cost per ton fees for GHGs, fixed fees (e.g., one
time or annual processing fee that is the same for all applicants below
a certain size), and/or charging no fees for smaller GHG sources. We
ask for comment on these and other suggestions for permitting
authorities to use on structuring their fee provisions. We also request
comment on the expected resource burden resulting from new GHG
permitting, and how EPA should determine the adequacy of fees. EPA
rules contain an optional method for permitting authorities to use in
calculating a presumptively adequate fee. These regulations do not
include GHGs as a regulated pollutant for this calculation but could in
the future if GHGs were regulated under certain parts of the Act. For
permitting authorities that still use this presumptive calculation, we
ask for comment on whether, for the reasons described above, EPA should
specifically exclude GHGs from this calculation or address it in a
different manner. Finally, because EPA itself is the permitting
authority for some sources, we are also interested in comments on
whether and how EPA should change its fee structure in its part 71
permitting regulations to meet
[[Page 44514]]
its own increased resource needs from GHG permitting.\289\
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\289\ Technically these increased resources would need to be
provided to EPA through increased appropriation, as the EPA fee
revenues would go to the general treasury.
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e. Coordinating Timing With Other Actions
Like PSD, the timing of any approach to streamline Title V must be
coordinated with other GHG actions under the CAA. We believe that any
EPA determination about the applicability of the Title V program to
GHGs should be accompanied by an explanation of how EPA plans to
address--and how we recommend that State and local permitting
authorities address--the numerous implementation challenges such a
determination would pose. This timing is perhaps even more important
for Title V than for PSD because of the potential for an extremely
large number of new sources and the fact that Title V applications
would (unless a phase-in approach is adopted) all be due at the same
time, whereas PSD applications would come in over time as sources
construct or modify. We seek comment on timing issues in general, and
particularly on the coordination of the timing of Title V applicability
with the timing of GHG regulation under other parts of the Act.
We specifically request comment on the timing of the applicability
of Title V permit requirements in relation to the applicability of GHG
control requirements. Consider the scenario where EPA issues a rule
regulating GHGs from mobile sources, and then issues a series of rules
regulating GHGs from categories of stationary sources. One possible
interpretation of the Act and EPA's regulations is that the mobile
source rule would trigger the applicability of Title V, at which point
the hundreds of thousands of 100-ton and above sources would become
subject toTtitle V and would have one year to apply for Title V
permits. Generally, however, these permits would initially contain no
applicable requirements for control of GHGs (mobile source requirements
are not included in Title V permits), and would likely contain no
applicable requirements for other pollutants, or only some generally
applicable SIP rules that apply to sources which had previously not
needed Title V permits. We have discussed the challenges of issuing
even these minimal permits in such large numbers. However, as EPA
proceeded to issue stationary source rules, each permit with three or
more years remaining on its term would, under current rules, have to be
reopened within 18 months of promulgation of each new rule to
incorporate any applicable requirements from the new rule that would
apply to the permitee. For permits with less than 3 years remaining,
the applicable requirements would be incorporated at permit renewal.
This scenario would result in duplicative effort as permitting
authorities issued hundreds of thousands of minimal Title V permits
with no GHG requirements, followed by a period of numerous reopenings
for some GHG source categories, while the requirements for other GHG
source categories would remain off-permit until renewal, at which point
they would need to be included in the renewal permit. We ask for
comment on how best to tailor the options above to minimize duplicative
effort and maximize administrative efficiency in light of these timing
concerns, and on whether additional options may be needed.
G. Alternative Designs for Market-Oriented Regulatory Mechanisms for
Stationary Sources
EPA believes that market-oriented regulatory approaches merit
consideration under section 111 or other CAA authorities for regulating
stationary source emissions, along with other forms of regulation.
Economic efficiency advantages of market-oriented approaches that have
the effect of establishing a price for emissions were discussed in
section III. This section discusses four types of market-oriented
approaches:
A cap-and-trade program, which caps total emissions from
covered sources, providing certainty regarding their future emission
levels, but not their costs.
A rate-based emission credit program (also called a
tradable performance standard), which imposes an average mass-based
emission rate across covered sources but does not cap total emissions,
so emissions could rise with increased production.
An emissions fee, which sets a price for emissions but
doesn't limit total emissions from covered sources.
A hybrid approach, which could combine some attributes of
a rate-based emissions trading system and some attributes of a tax. A
variety of hybrid approaches are possible; the best-known is the
combination of a cap-and-trade system with a ``price ceiling.'' With a
price ceiling, if the price of allowances exceeds a certain level, the
government makes allowances available to the market at the ceiling
price.
For a local pollutant, a regulatory approach that provides
certainty concerning future emissions can provide a predictable level
of protection, within modeling uncertainties. In the GHG context,
certainty concerning the amount of emission reduction to be achieved by
a U.S. program can make possible an estimated change in predicted
warming, but does not provide certainty that the U.S. will achieve a
desired level of climate protection. This is because GHGs are global
pollutants and the level of climate protection provided depends on the
actions of other countries as well as the U.S.
There is a robust debate about the respective merits of policies
that provide price certainty, but not emissions certainty, and policies
that provide emissions certainty, but not price certainty. A variety of
cost-containment mechanisms have been proposed for GHG cap-and-trade
systems; these mechanisms offer different tradeoffs between emissions
certainty and price certainty.
EPA requests comment on the extent to which CAA legal authorities
would accommodate each of these regulatory approaches. In the section
111 context, we note that these market-oriented approaches could be
used in lieu of, or in addition to, other options including emission
rate standards, technology-based standards, or work practices. With
respect to section 111, EPA recognizes that these market-oriented
approaches may differ in significant ways from the manner in which we
have historically designed emission standards and required compliance
with those standards. For this reason, we request comment on the extent
to which each of these approaches could meet the statutory definition
of a ``standard of performance'' and on what additional criteria or
conditions could be considered to ensure that they do so. We also seek
comment on how these options compare based on the policy design
considerations listed in section III.F.1, including effectiveness of
risk reduction, certainty and transparency of results, economic
efficiency, incentives for technology development, and enforceability.
1. Emissions Cap-and-Trade
A cap-and-trade system limits GHG emissions by placing a cap on
aggregate emissions from covered sources. Authorizations to emit, known
as emissions allowances, are distributed to companies or other entities
consistent with the level of the cap. Each allowance gives the holder
an authorization to emit a fixed amount of
[[Page 44515]]
emissions (e.g., one ton) during a given compliance period. At the
close of the compliance period, sources must surrender allowances equal
to their emissions during that period. Such a system does not impose
limits on emissions from individual sources; rather, it caps emissions
across a group of sources (e.g., an industry sector) and allows
entities to buy and sell those allowances with few restrictions. Key
features of a well-designed cap-and-trade program include accurate
tracking and reporting of all emissions, compliance flexibility, and
certainty (provided by the cap) in achieving emission reductions. While
the cap provides certainty in future emissions, cap-and-trade does not
provide certainty of the price, which is determined by the market
(price uncertainty diminishes as certainty regarding control costs
increases).
EPA has previously authorized emissions trading under section 111.
For instance, EPA promulgated standards of performance for new and
existing electric utility steam generating units on May 18, 2005 (70 FR
28606), establishing a mercury emissions cap-and-trade program for
coal-fired electric generating units that states could use to meet
their section 111 obligations to control mercury for coal-fired
electric generating units. While the court subsequently vacated this
action, the ruling did not address the legality of trading under
section 111.
If EPA designed a cap-and-trade program that could cover certain
source categories covered by section 111, such a program could be
modeled after similar trading programs the Agency has developed under
sections 110 and 111 of the Act, such as the NOX Budget
Trading Program, the Clean Air Interstate Rule NOX and
SO2 Trading Programs, and the Clean Air Mercury Rule Trading
Program. Under this model, EPA would establish appropriate state GHG
emissions budgets covering emissions of GHG for each covered source
category. EPA would establish consistent rules related to subjects such
as monitoring, applicability and timing of allocations that states
would be required to meet. EPA would develop and administer a GHG
allowance tracking system, similar to tracking systems the Agency
administers for SO2, and NOX. EPA would determine
provisions for monitoring, reporting, and enforcement. If states
promulgated rules consistent with the requirements set forth by EPA,
sources in their State could participate in the trading program.
Alternatively, states could develop alternative regulatory mechanisms
to meet the emissions budgets.
A key component of an emissions cap-and-trade program is the
ability to accurately monitor emissions.\290\ For many, but possibly
not all, large stationary sources, there are methods to monitor
CO2 that may provide enough accuracy for a cap-and-trade
program. Most large utility boilers are already required to monitor and
report CO2 emissions under the Acid Rain Program. Utility
and industrial boilers are well suited to cap-and-trade; many
participate in SO2 and NOX trading under the Acid
Rain and NOX SIP Call programs. At refineries, some emission
sources could be well suited to cap-and-trade, while for others,
accurate monitoring methods or other ways to track and verify emissions
may not be available. More analysis is needed to determine availability
of monitoring methods for all refinery emission sources. The cement
industry is another that may be well suited to emissions cap-and-trade,
since monitoring is available and a number of facilities currently
participate in NOX trading under the NOX SIP
Call. Cap-and-trade may not be an appropriate mechanism for the
landfills, except for potential use of landfill gas projects for
offsets. The quantity of landfill methane captured and combusted (i.e.,
the emission reduction) can be measured directly; however, total
emissions are difficult to measure.
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\290\ While monitoring is important for determining compli,ance
in all regulatory emission reduction approaches, in a cap-and-trade
system monitoring is also important for functioning of the allowance
market.
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We request comments generally on the use of cap-and-trade programs
for GHGs under section 111 and other CAA authorities, including design
elements such as opportunities for sources to opt into such programs,
inter-sector trading and offsets, allowance auctions, cost containment
mechanisms, and conditions or safeguards to ensure that emission
reduction goals are met and that local air quality is protected.
Particular issues to consider include whether it be allowable under
section 111 to develop a cap-and-trade program that covered multiple
source categories or would each source category have to be covered
under a source-category-specific cap-and-trade program. Another issue
is whether it would be legally permissible to allow offsets (i.e.,
obtaining emission reductions from sources outside of the capped
sector) to meet the requirements of section 111.
2. Rate-Based Emissions Credit Program
A rate-based emissions credit program--also called a tradable
credit standard or intensity target program--is an emissions trading
mechanism. Unlike cap-and-trade, however, a rate-based credit program
does not impose a cap on aggregate emissions from covered sources.
Rather, a rate-based emissions credit program establishes a regulatory
standard based on emissions intensity (e.g., emissions per unit of
input, emissions per unit of product produced, emissions per revenue/
value-added generated). To the extent that a covered source has an
emission rate below the regulatory intensity standard, the source
generates credits that it can sell to sources with emission rates
higher than the regulatory intensity standard. The price of credits
would be determined by the market.\291\ The regulatory intensity
standard might be set below the recent average intensity for a given
industry.\292\ Once in place, the standard would determine the average
emissions intensity (or rate) of the regulated industry.
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\291\ Credits are generated by a source with emissions below the
regulatory intensity (or rate). Credits are measured in a fixed unit
of emissions, e.g., a ton. A source that emits at an intensity
higher than the regulatory intensity must surrender credits--
purchased from a source with emissions below the regulatory
intensity or other entity holding credits--equivalent to the
difference between their actual emissions and the allowable
emissions.
\292\ The average intensity could be set using any of a number
of metrics and baselines. For example, the metric might be tons of
CO2 emitted per ton of cement produced. The baseline year
for calculating average intensity might be the same as the
compliance year, i.e., after the close of the compliance year, the
average tons CO2 emitted per ton of cement produced would
be calculated across the industry and a source that produced with
emissions above the average would need to buy credits while a source
that produced with emissions below the average could sell credits.
Alternatively, the average intensity could be based on a year prior
to the initial compliance year.
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Like a cap-and-trade approach, a rate-based trading approach can
reduce the cost of reducing emissions from a group of sources, relative
to the cost of requiring every source to reach the same emission rate.
A drawback of the rate-based approach is that it provides an incentive
to increase whatever is used in the denominator of the rate (e.g., the
output of a good or the amount of a particular input). Therefore, rate-
based policies can encourage increased production because production
can be rewarded with additional credits. This in turn has the potential
to encourage increased emissions and thus to raise the overall cost of
achieving a given level of emissions.
Many of the considerations described above for cap-and-trade
program design
[[Page 44516]]
would also apply to design of a rate-based credit program. Measuring
outputs to determine the regulatory intensity may present some
difficulty. In particular, determining the intensity for facilities
that generate multiple products would be challenging. Sectors that use
multiple inputs (e.g., different fuels) might require use of a common
metric (e.g., Btu combusted) to support a rate-based approach based on
inputs.
Rate-based trading programs are most easily applied in a specific
sector where facilities have similar emissions characteristics. For
utility and industrial boilers, a rate-based credit standard could be
established for GHG emissions. For refineries, rate-based credit
standards could be established for individual processes or equipment
but would be difficult to set at the facility level. A GHG emissions
rate-based tradable credit standard could be developed for the Portland
cement industry. This mechanism may not be appropriate for landfills
(see discussion of monitoring above).
We request comments on the use of emission rate trading programs
under section 111 or other CAA authorities. Similar to cap-and-trade
programs, we are seeking comment on whether sector-specific programs or
inter-sector programs might be more appropriate. We also request
comment on issues related to defining emission rates for facilities
producing multiple types of products.
3. Emissions Fee
A GHG fee would limit GHG emissions by placing a price on those
emissions. The price is fixed up front (unlike cap-and-trade where the
price depends on the market), and a source covered by the tax would pay
to the government the fixed price for every ton of GHG that it emits. A
GHG fee permits the aggregate amount of emissions to adjust in response
to the tax, in contrast to a cap-and-trade system where the quantity of
emissions is fixed. Some key features of a GHG fee include accurate
tracking and reporting of all emissions from covered sources,
compliance flexibility, and certainty in the price of emissions (but
not certainty in future emissions because there is no cap). As noted in
the cap-and-trade subsection above, the emissions of CO2 from most
large utility boilers are already accurately monitored; this attribute
would facilitate application of an emissions tax (as well as
facilitating application of a cap-and-trade system).
Depending on the specific authority granted by Congress with
respect to the disposition of revenue, the revenue generated by the fee
(as with potential auction revenues under a cap-and-trade approach)
could theoretically be used for any number of public purposes. Note
that depending on how the money was spent, the use of the revenues
would have the potential either to reduce or to increase market
distortions that reduce economic welfare.
The issue of whether the CAA authorizes emissions fees is discussed
above in section III.F.2.
4. Hybrid Market Based Approach
A hybrid, market-oriented approach that could be used to regulate
GHG borrows from pollution control options that are based on setting
emissions rates, emissions credit trading, and emissions fees. This
approach starts with a rate-based emissions credit program in which an
average emission rate (e.g., tons of GHGs emitted per unit of output or
input) would be established for a given industry. As with a typical
rate-based policy, a source in the given industry would need to buy
credits to the extent it produces with emissions over the average
intensity, and could sell credits to the extent it produces with
emissions below the average. An element of an emissions fee approach
would then be added to this policy in which the government would also
buy and sell credits. The government could set a price for credits
based on selected policy criteria, and offer credits to sources at that
predetermined price. Sources could then buy credits from the government
as well as other regulated sources. Therefore, the government-set price
would act as a price ceiling (or ``safety-valve''), and the potential
for price fluctuations in emissions credits would be diminished
(because the government's predetermined price would act as a ceiling
price). As long as relatively cost-effective GHG emissions reductions
could occur within a covered sector over time, the average emissions
intensity may decline and total reductions in emissions would occur in
a relatively cost-effective manner without significant government
handling of emissions fee revenues. In addition to being a seller, the
government could also act as a buyer (so the government sales of
credits would not result in an excess supply). A similar approach
without the government's role in selling credits at a ceiling price and
with a fixed schedule of allowable average annual rate of allowable
emissions was actually successfully used in the phase down of lead in
gasoline in the 1980s by EPA.
Some have suggested that the government could set a price for GHG
credits or allowances based on its assessment of those benefits to be
gained from the GHG emissions reduction per unit of output or input. In
theory, under this approach the marginal compliance costs would never
exceed the marginal benefits of reducing emissions. Note, however, that
there are serious issues to be resolved regarding whether and how a
defensible single estimate of marginal GHG reduction benefits can be
developed for this purpose (see section III.G). First, whether the
scope of benefits counted is global or domestic could significantly
affect the marginal benefits estimate. Second, for benefits categories
that can be quantified and monetized, there are many uncertainties that
result in a range of legitimate estimates, making it difficult to
pinpoint an appropriate number. Third, there is a bias toward
underestimating benefits of GHG reductions because many impacts
categories identified by the IPCC are not quantified and
monetized.\293\ As a result, the price might be set too low to achieve
the amount of emissions reductions that would be warranted considering
all benefits and policy goals.
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\293\ There also are policy considerations that would be
neglected by an approach attempting to find a point at which
marginal costs equal marginal benefits. Examples include
irreversibility of changes in climate with adverse impacts affecting
future generations who cannot take part in today's decision-making,
and unequal geographic distribution of adverse climate change
impacts.
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By including this discussion, EPA is not taking a position on
whether it has legal authority to pursue a hybrid market-oriented
approach. (See section III.F.2 above.) However, the agency seeks
comment on the general matter of how the pricing of credits within an
emissions intensity approach might be designed and established, what
legal authority would be necessary for this action, and what impact
different price-setting approaches would have on aggregate emissions
reductions, costs and benefits.
VIII. Stratospheric Ozone Protection Authorities, Background, and
Potential Regulation
A. Ozone Depleting Substances and Title VI of the Clean Air Act
Title VI of the CAA provides authority to protect stratospheric
ozone, a layer high in the atmosphere that protects the Earth from
harmful UVB radiation. Added to the CAA in 1990, Title VI establishes a
number of regulatory programs to phase out and otherwise control
substances that deplete stratospheric ozone. These ozone-depleting
substances (ODS) are used in many consumer and industrial applications,
such as refrigeration,
[[Page 44517]]
building and vehicle air conditioning, solvent cleaning, civil
aviation, foam blowing, and fire extinguishing, and even in small but
important uses such as metered dose inhalers.
Many ODS and some of the substances developed to replace them
(e.g., HFCs) are also potent GHGs. As described below, Title VI
programs have already achieved significant reductions in emissions of
ODS and thus in emissions of GHGs. However, the ODS being phased out
are not among the six major GHGs addressed by this notice. Because
these ODS are already being addressed by international and national
requirements for protecting stratospheric ozone, they are not covered
by UNFCCC requirements, the President's May 2007 directive or many
other efforts to address climate change. Similarly, the discussion in
this notice of a potential endangerment finding for GHGs does not
include in its analysis the ODS being phased out.
In this section of the notice, we briefly describe Title VI
regulatory programs as they relate to ODS because of the GHG emission
reductions they achieve. We also consider the Title VI program for
regulating ODS substitutes, since some substitutes are also GHGs. Since
our focus in this notice is on potential use of the CAA to control the
six major GHGs, we also examine the general authority in section 615 as
it might be used to control those GHGs. However, as further explained
below, section 615 would be available for that purpose only to the
extent that EPA finds that emissions of the major GHGs are known or
reasonably anticipated to cause or contribute to harmful effects on
stratospheric ozone or otherwise affect the stratosphere in a way that
may reasonably be anticipated to endanger public health or welfare.
Unlike other CAA provisions examined in this notice, section 615 would
not be triggered by a finding that one or more GHGs cause or contribute
to air pollution that may reasonably be anticipated to endanger public
health or welfare. The potential applicability of section 615 to the
major GHGs depends on whether specified findings related to the
stratosphere or ozone in the stratosphere could be made. In this way,
Title VI is significantly different from other CAA titles that provide
more general regulatory authority to address air pollutants that meet
an endangerment test.
1. Title VI Regulatory Programs
Existing Title VI programs are largely focused on reducing and
otherwise controlling ODS to protect stratospheric ozone. The
cornerstone Title VI program is a graduated phaseout of ODS that
implements similar requirements in the Montreal Protocol on Substances
that Deplete the Ozone Layer, an international treaty to which the U.S.
is a party. The Title VI phaseout program relies on a system of
marketable allowances to control overall U.S. consumption (defined as
production + imports-exports) consistent with the Protocol's
requirements. EPA tracks production, export, and import of ODS, as well
as transactions in ODS allowances reflecting the flexibility inherent
in the program's market-oriented approach. This ensures compliance with
U.S. consumption caps established under the Protocol. The program also
allows exemptions from the phaseout to ensure that supplies of ODS
critical to certain sectors, like the agricultural fumigant methyl
bromide, are available until alternatives adequately penetrate the
marketplace.
Other Title VI provisions supplement the phaseout program in a
variety of ways that enhance ozone layer protection. Under these
provisions, EPA has established a national ODS recycling and emission
reduction program, bans on nonessential ODS uses, a program for
labeling ODS-containing products, and the Significant New Alternatives
Policy (SNAP). Under the SNAP program, EPA reviews and approves
substitutes for ODS to help spur the development and uptake of safer
alternatives. Finally, Title VI authorizes EPA to accelerate the
schedule for phasing out ODS as warranted by scientific information,
the availability of substitutes, or the evolution of the treaty's
requirements pursuant to international negotiations among Parties to
the Montreal Protocol.
Title VI has achieved large reductions in ODS consumption and
emissions, and consequently has reduced GHG emissions and slowed
climate change. According to a recent study, by 2010 ozone layer
protection will have done more to mitigate climate change than the
initial reduction target under the Kyoto Protocol, amounting to avoided
emissions of 11 billion metric tons of CO2 equivalent per
year, or a delay in climate impacts by about 10 years.\294\
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\294\ Velders, G.J. et al., The Importance of the Montreal
Protocol in Protecting Climate, Proceedings of the National Academy
of Sciences, March 2007.
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Because some ODS substitutes are GHGs, some have asked whether the
net effect of the Protocol on climate has been beneficial. Recent
research has demonstrated that the climate impact of ODS (e.g.,
chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs)), compared
to CO2 emissions from fossil fuel combustion, fell from
about 33 percent in 1990 to about 10 percent in 2000. The following
graph shows how the shift over time toward ODS alternatives under Title
VI has created a marked downward trend for GHG consumption in sectors
that use ODS and their substitutes, even while these uses have grown
with the U.S. economy and population. As can be seen below, consumption
of the ODS (CFCs, HCFCs, etc.) in 2004, although significantly lower
than peak ODS emissions in 1990, were actually greater than consumption
of HFCs, which are substitutes for CFCs and HCFCs.
In view of the GHG emission reduction benefits of existing Title VI
programs, EPA seeks public comment on how elements of the existing
Title VI program could be used to provide further climate protection
while assuring a successful completion of the ODS phaseout, including a
smooth transition to alternatives.
BILLING CODE 6560-50-P
[[Page 44518]]
[GRAPHIC] [TIFF OMITTED] TP30JY08.033
2. Further Action Under the Montreal Protocol
The Montreal Protocol has been and will continue to be an
important, if limited, step in addressing climate change. At the 19th
Meeting of the Parties in September 2007, the Parties agreed to more
aggressively phase out a class of ODS, the hydrochlorofluorocarbons
(HCFCs). The agreement to adjust the phase-out schedule for HCFCs is
expected to reduce emissions of HCFCs to the atmosphere by 47 percent,
compared to the prior commitments under the treaty over the 30-year
period of 2010 to 2040. For the developing countries, the agreement
means there will be about a 58 percent reduction in HCFC emissions over
the same period.
The climate benefits of the faster phase-out of HCFCs will depend
to some extent on technology choices in the transition from HCFCs. The
estimated climate benefit of the new, stronger HCFC phase-out may be
approximately 9,000 million metric tons of CO2e. A byproduct
of the manufacture of HCFC-22 is hydrofluorocarbon-23 (HFC-23), a gas
that does not damage ozone in the stratosphere but has a very high GWP.
Because this gas is produced in higher quantities in lower efficiency
production, to the extent that HCFC-22 production in the developing
world remains uncontrolled, additional HFC-23 would be created. Thus,
the agreement to sharply limit future developing world production of
ODS represents an important opportunity for climate protection, as well
as ozone layer recovery, as the President recognized in his April 16,
2008 speech on climate change.
B. Title VI Authorities Potentially Applicable to the Major GHGs
As mentioned previously, the framework created by Title VI could be
effective in achieving GHG reductions by reducing and controlling ODS
and ODS substitutes through existing mechanisms for tracking
production, evaluating new safer alternatives, and addressing the needs
of the major contributing subsector, refrigeration and air
conditioning, through technician training, emission reduction and
recycling. In this section we review Title VI provisions that could
potentially apply to efforts to reduce the major GHGs that are not also
ODS or ODS substitutes.
Title VI mostly includes provisions specific to individual ODS and
programs. The provisions generally apply to ``class I'' or ``class II''
ODS. Title VI requires EPA to list specified substances as class I and
class II ODS, and authorizes EPA to add other substances to either
category if the Agency makes certain findings regarding the substance's
effect on stratospheric ozone (see sections 602(a) and (b)). One
important difference between class I and class II ODS is that class I
substances include the most potent ODS; section 602(a) requires EPA to
list as class I substances all substances with an ozone depletion
potential of more than 0.2.\295\
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\295\ The ozone depletion potential (ODP) of a chemical measures
its ability to reduce stratospheric ozone compared to a common ODS
known as CFC-11. While this and another common ODS have ODPs of 1.0,
the ODPs of class I and class II ODSs known to be in use range from
0.02 to 10.
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Title VI also requires EPA to publish the global warming potential
(GWP) of each listed ODS. Section 602(e) further provides that the
requirement to publish
[[Page 44519]]
GWP for a listed substance ``shall not be construed to be the basis of
any additional regulation under'' the CAA.
Since the major GHGs being addressed in this notice have no ozone
depletion potential, it appears that the Title VI provisions that
authorize regulation of listed ODS are of limited potential use for
regulating those GHGs. EPA requests comment on the potential
applicability of ODS-specific Title VI authorities, and the
significance of the section 602(e) language quoted above for regulation
of GHGs under Title VI.
1. Section 615
In addition to the specific provisions that authorize regulation of
listed ODS and in some cases ODS substitutes, Title VI also includes
general authority in section 615 to protect the stratosphere,
especially stratospheric ozone. Section 615 states:
If, in the Administrator's judgment, any substance, practice,
process, or activity may reasonably be anticipated to affect the
stratosphere, especially ozone in the stratosphere, and such effect
may reasonably be anticipated to endanger public health or welfare,
the Administrator shall promptly promulgate regulations respecting
the control of such substance, practice, process or activity, and
shall submit notice of the proposal and promulgation of such
regulation to the Congress.
While Title VI was added to the CAA in 1990, a provision largely
identical to section 615 was added to the Act in 1977, soon after
concerns about the effects of some substances on the stratosphere were
initially raised. In 1988, EPA promulgated regulations implementing the
first round of requirements of the Montreal Protocol through a system
of tradable allowances under section 157(b) of the CAA as amended in
1977. Section 157(b) was subsequently modified by the 1990 Amendments
and became section 615.
Since 1990, EPA has rarely relied on the authority in section 615
to support rulemaking activity, since the activities that the Agency
regulates to protect stratospheric ozone have generally been addressed
under the more specific Title VI authorities. However, in 1993 EPA did
rely on section 615 to promulgate trade restrictions in order to
conform EPA regulations to Montreal Protocol provisions on trade with
countries that were not Parties to the Protocol. (March 18, 1993, 58 FR
15014, 15039 and December 10, 1993, 58 FR 65018, 65044). These trade
restrictions prevented shipments of ODS from the U.S. to countries with
no regulatory infrastructure to control their use. Promulgating these
restrictions reduced the release of ODS into the atmosphere, thereby
reducing harmful effects on public health and welfare. The restrictions
also resulted in eliminating the U.S. as a potential market for ODS
produced in non-Parties, thereby discouraging shifts of production to
non-Parties and limiting the potential for undermining the phaseout.
Section 615 authority remains available when other CAA authorities
are not sufficient to address effects on the stratosphere, especially
ozone in the stratosphere. For example, in the late 1990s, EPA, the
National Aeronautics and Space Administration (NASA), and the Federal
Aviation Administration (FAA) considered options for addressing
potential ozone depletion resulting from supersonic commercial
aircraft. EPA and NASA analyzed the impacts from a theoretical fleet of
supersonic commercial aircraft, known as High Speed Civil Transport
(HSCT), and in an October 1998 Memorandum of Agreement between the two
agencies (signed by Spence M. Armstrong, Associate Administrator for
Aeronautics and Space Transportation Technology (NASA) and Robert
Perciasepe, Assistant Administrator for Air and Radiation (EPA)) noted
the potential to rely on section 615 in conjunction with other
regulatory authorities.\296\
While section 615 sets forth the authority and responsibility of
the Administrator to address effects on the stratosphere in order to
protect public health and welfare, EPA recognizes that this authority
was intended to augment other authorities and responsibilities
established by Title VI. EPA does not believe this authority is a basis
for prohibiting practices, processes, or activities that Congress
specifically exempted elsewhere. For example, EPA does not intend to
promulgate regulations eliminating the exceptions from the ODS phaseout
for essential uses as established by section 604.
For section 615 authority to be used, a two-part endangerment test
unique to that section must be met. First, the Administrator must find,
in his judgment, that ``a substance, practice, process or activity may
reasonably be anticipated to affect the stratosphere, especially ozone
in the stratosphere.'' Second, he must determine that ``such effect may
reasonably be anticipated to endanger health or welfare.'' To determine
the potential applicability of section 615 to major GHGs, EPA thus
would have to consider whether available scientific information
supports making the requisite findings.
The effect on the stratosphere of GHG emissions and of climate
change generally is a topic of ongoing scientific study.\297\ Recent
science suggests that feedback mechanisms exist that allow temperatures
in the stratosphere and troposphere to be mutually reinforcing or
mutually antagonistic depending on a number of factors, including the
latitude at which the ozone loss occurs. Further research is underway
to better understand these interactions. While it is beyond the scope
of this notice to assess and analyze the available scientific
information on the effect of GHGs on the stratosphere, EPA requests
comment on how evolving science might be relevant to the Agency's
potential use of section 615. More specifically, EPA requests comment
on how scientific research might help resolve areas of ambiguity in the
relationship between GHGs, effects on the stratosphere, and climate
change, and how this might help the Administrator make appropriate
judgments in applying the two-part test of section 615.
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\297\ See, e.g., World Meteorological Organization, Global Ozone
Research and Monitoring Project--Report No. 50, Scientific
Assessment of Ozone Depletion: 2006, Ch. 5, Climate-Ozone
Connections.
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If the requisite endangerment finding is made, the regulatory
authority provided by section 615 is broad. While most Title VI
authorities are applicable to class I or class II substances or their
substitutes, section 615 authorizes regulation of ``any substance,
practice, process, or activity'' which EPA finds meets the two-part
endangerment test. As noted elsewhere in this notice, depending on the
nature of any finding made, section 615 authority may be broad enough
to establish a cap-and-trade program for the substance, practice,
process or activity covered by the finding, if appropriate. Title VI
provisions provide other examples of possible regulatory approaches,
such as maximizing recapture and recycling and requiring product
labeling. EPA requests comment on possible regulatory approaches under
section 615 and how those approaches would be affected by the
particular endangerment finding that is a prerequisite to the use of
section 615 authority.
2. Section 612
Section 612 is also relevant to today's notice to the extent a GHG
may be used as a substitute for an ODS. CAA section 612 provides for
the review of alternatives to ODS and the approval of substitutes that
do not present a risk more significant than other alternatives that are
available. Under that authority, the SNAP program has worked
collaboratively for many years with industries, user groups, and other
[[Page 44520]]
stakeholders to create a menu of alternatives that can be substituted
for the ODS as they are phased out of production in the U.S.
In recent years, industry partners in the motor vehicle air
conditioning (MVAC) sector have urged EPA to identify and approve
appropriate new substitutes to allow for the implementation of a world-
wide platform that will satisfy the needs of the U.S. market while also
meeting new requirements in the European Union, which call for a
transition over approximately six years beginning with the 2011 model
year into non-ODS alternatives with Global Warming Potentials (GWPs) of
less than 150.
To address these concerns, EPA proposed in September 2006 a SNAP
rulemaking that provided for the use of CO2 and HFC-152a in MVACs (71
FR 55140 docket no. EPA-HQ-OAR-2004-0488). In a separate action (INSERT
FR CITE), EPA has made final the portion of the rulemaking related to
HFC-152a. This substitute meets the EU requirements, while also
providing a new avenue for automakers to replace ODS. We believe we
should issue guidance on the use of CO2 as an MVAC alternative in the
context of the broader considerations of regulating GHGs set forth in
this notice. We have included in the docket cited above a summary of
our proposal regarding CO2 as an alternative from MVACs. This summary
reflects our latest thinking on the safe use of CO2 in those systems.
List of Subjects in 40 CFR Chapter I
Environmental protection, Air pollution control.
Dated: July 11, 2008.
Stephen L. Johnson,
Administrator.
[FR Doc. E8-16432 Filed 7-29-08; 8:45 am]
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