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Clear Skies in Indiana

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Highlights of Clear Skies in Indiana

• Indiana sources would reduce emissions of SO2 by 37%, NOx by 69%, and mercury by 59% by 2020 due to Clear Skies.
• The health benefits in Indiana would total $4.1 billion annually ($770 million under the alternative estimate) and include approximately 500 fewer premature deaths (300 under the alternative estimate) and 1,300 fewer hospitalizations/emergency room visits each year.
• In addition, Indiana would receive environmental benefits, including reductions in sulfur and mercury deposition and visibility benefits valued at $49 million for Indiana residents who visit America's National Parks and Wilderness Areas.
• Clear Skies does not significantly impact electricity prices. With or without Clear Skies, electricity prices in the electric supply region that includes Indiana are expected to remain below the national average.

Clear Skies: An Innovative Approach to Improving Human Health and the Environment

Why Clear Skies?

• Air quality has improved, but serious concerns persist
• Indiana's citizens suffer ill effects from air pollution, including asthma attacks and premature death
• Electricity generation sector remains a major emissions source
• Very cost-effective to control the power sector, relative to other sources
• Sources are concerned about upcoming complex and burdensome regulations

Advantages of the Clear Skies Approach

• Guarantees significant nationwide emissions reductions - beginning years before full implementation
• Indiana sources would substantially reduce emissions of SO2, NOx, and mercury
• Delivers dramatic progress towards achievement of critical health and environmental goals
• Uses proven, market-based flexible approach with incentives for innovation
• Recognizes environmental needs as well as industry constraints, allowing industry to better manage its operations and finances while lowering risks to the public
• Sources are projected to install pollution controls to enable continued reliance on coal
• Increases certainty across the board for industry, regulators, and consumers

Under Current Clean Air Act Power Plants Would Face a Complex Set of Requirements

For a larger image, click here.

Clear Skies Sets a Firm Timeline for Emission Reductions

The existing Title IV SO2 cap-and-trade program provides an incentive and a mechanism to begin reductions upon enactment of Clear Skies years before regulatory action under the current Act.

2004: The NOx SIP call (summertime NOx cap in 19 Eastern States + D.C.)

2008: Clear Skies NOx Phase I (2.1 million ton annual cap assigned to two Zones with trading programs)

2010:

• Clear Skies Hg Phase I (26 ton annual cap with a national trading program)
• SO2 Phase I (4.5 million ton annual cap with a national trading program)

2018:

• Clear Skies NOx Phase II (1.7 million ton annual cap assigned to two Zones with trading programs)
• Clear Skies Hg Phase II (15 ton annual cap with a national trading program)
• Clear Skies SO2 Phase II (3.0 million ton annual cap with a national trading program)

Emissions in Indiana under Clear Skies

Emissions in Indiana (2020) would be reduced from 2000 levels: 62% reduction in SO2 emissions 77% reduction in NOx emissions 64% reduction in mercury emissions

Emissions: Current (2000) and Existing Clean Air Act Regulations (base case*) vs. Clear Skies in Indiana in 2010 and 2020

Note: The base case using IPM includes Title IV, the NOx SIP Call, NSR settlements, and state-specific caps in CT, MA, MO, NC, NH, TX, and WI. It does not include mercury MACT in 2007 or any other potential future regulations to implement the current ambient air quality standards or other part of the Clean Air Act. Base case emissions in 2020 will likely be lower due to state and federal regulatory actions that have not yet been promulgated.

Clear Skies Health Benefits in Indiana

Improve Public Health

By 2020, Indiana would receive approximately $4.1 billion in annual health benefits from reductions in fine particle and ozone concentrations alone due to Clear Skies. (see note 1)

• Reduced ozone and fine particle exposure by 2020 would result in public health benefits of:
• approximately 500 fewer premature deaths each year (see note 1)
• approximately 300 fewer cases of chronic bronchitis each year
• approximately 900 fewer nonfatal heart attacks each year
• approximately 1,300 fewer hospital and emergency room visits each year
• approximately 63,000 fewer days workers are out sick due to respiratory symptoms each year
• approximately 8,900 fewer school absences each year

• Reduced mercury emissions would reduce exposure to mercury through consumption of contaminated fish, resulting in additional, unquantified benefits for those who eat fish from Indiana's rivers.

Counties Projected to Remain Out of Attainment with the PM2.5 and Ozone Standards in Indiana

1: Based on 1999-2001 data of counties with monitors that have three years of complete data.

Note: The base case includes Title IV, the NOx SIP Call, the Tier II, Heavy-Duty Diesel, and Nonroad Diesel rules, final NSR settlements as of early spring 2003, and state-specific caps in CT, MA, MO, NC, NH, TX, and WI. It does not include mercury MACT or any other potential future regulations to implement the current ambient air quality standards or other parts of the Clean Air Act. Based on 1999-2001 data of counties with monitors that have three years of complete data.

Clear Skies Would Help Indiana Meet Air Quality Standards

• Currently there are 4 counties exceeding the annual fine particle standards and 13 counties exceeding the 8-hour ozone standard.
  • Lake and Floyd counties are expected to be brought into attainment with the fine particle standards under existing programs by 2020.
  • All but Lake County is expected to be brought into attainment with the ozone standard under existing programs by 2010.
• Clear Skies would significantly improve air quality in Kentucky further and more quickly than what is expected from existing programs.
  • By 2010, Clear Skies would bring the remaining nonattainment counties into attainment:
    • the three remaining fine particle nonattainment counties (Lake, Marion, and Clark--population approximately 1.5 million) would come into attainment with the annual fine particle standards
    • the single remaining ozone nonattainment county (Lake County -- population approximately 500,000 thousand) into attainment with the 8-hour ozone standard.
• In addition, Clear Skies would reduce ozone and fine particle concentrations in counties attaining the standards throughout the state.

Note: Based on 1999-2001 data of counties with monitors that have three years of complete data.

Clear Skies Environmental Benefits in Indiana

Clear Skies Would Provide Substantial Environmental Benefits in Indiana

In comparison to existing programs,

• Visibility would improve perceptibly. The value of this benefit for Indiana residents who visit America's National Parks and Wilderness Areas is $49 million.
• Sulfur deposition, a primary cause of acid rain, would decrease 15-30% throughout most of Indiana and 30-60% in southern portions of the state.
• Nitrogen deposition, another significant contributor to acid rain as well as a cause of damage in nitrogen-sensitive forests would decrease 5-20%.
• Mercury deposition would decrease by up to 15% throughout most of Indiana and up to 30% in some small areas along the Ohio, Illinois and Kentucky borders.*

* These results are based on modeling the Clear Skies mercury cap without triggering the safety valve.

SO2 and NOx Emissions Reductions under Clear Skies

Emissions in Indiana and surrounding states would decrease considerably. These emission reductions would make it much easier for Indiana to comply with the national air quality standards.

Note: The base case in IPM includes Title IV, the NOx SIP Call, NSR settlements, and state-specific caps in CT, MA, MO, NC, NH, TX, and WI. It does not include mercury MACT in 2007 or any other potential future regulations to implement the current ambient air quality standards or other parts of the Clean Air Act. Base case emissions in 2020 will likely be lower due to state and federal regulatory actions that have not yet been promulgated. Emissions projected for new units in 2020 are not reflected.

Electricity Generation in Indiana under Clear Skies

Current and Projected Generation by Fuel Type in Indiana under Clear Skies (GWh)	Indiana's electricity growth is projected to be met by increases in coal-fired generation. Clear Skies does not significantly alter this projection. Electricity from coal-fired generation will increase by 22% from 1999 to 2020.

Indiana's sources are projected to reduce their emissions through the installation of emission controls, rather than from a switch from coal to natural gas. In 2010, 75% of Indiana's coal-fired generation is projected to come from units with advanced SO2 and/or NOx control equipment that also substantially reduce mercury emissions; in 2020, the percentage is projected to increase to 83%. No coal-fired units in Indiana are projected to be removed from operation as a result of Clear Skies.

Emission Controls in Indiana under Clear Skies

Under Clear Skies by 2020... 32% of coal-fired capacity would install SCR 29% would install scrubber

The major generation companies in Indiana include: PSI Energy, Inc. Northern Indiana Pub Service Co. Indiana Power Co. Indianapolis Power & Light Co. Total coal-fired capacity in Indiana is projected to be 19,021 MW in 2010.

Units in Indiana Projected to Be Retrofitted Due to Clear Skies by 2020

CAYUGA	1	Scrubber/ SCR
CAYUGA	2	Scrubber/ SCR
CLIFTY CREEK	1	Scrubber*
CLIFTY CREEK	2	Scrubber*
CLIFTY CREEK	3	Scrubber*
CLIFTY CREEK	4	Scrubber*
CLIFTY CREEK	5	Scrubber*
CLIFTY CREEK	6	Scrubber*
FRANK E RATTS	1SG1	Scrubber*/ SCR
FRANK E RATTS	2SG1	Scrubber*/ SCR
GIBSON	1	Scrubber*
GIBSON	2	Scrubber*
GIBSON	3	Scrubber*
MICHIGAN CITY	12	Scrubber*
R M SCHAHFER	14	Scrubber*
WABASH RIVER	6	Scrubber/ SCR
WARRICK	4	Scrubber/ SCR
PETERSBURG	1	SCR*
PETERSBURG	2	SCR*
PETERSBURG	3	SCR*
PETERSBURG	4	SCR*
ROCKPORT	MB1	SCR*
ROCKPORT	MB2	SCR*
STATE LINE	4	SCR

** Retrofit was installed under Clear Skies by 2010

Electricity Prices in Indiana under Clear Skies

With or without Clear Skies, retail prices in the North American Electric Reliability Council (NERC) MAAC region (the electricity supply region that contains Indiana) are projected to increase between 2005 and 2020. With Clear Skies, retail prices are projected to be approximately 2.1 - 4.2% higher between 2005 and 2020 than in the absence of the legislation.

Note: The base case using IPM includes Title IV, the NOx SIP Call, NSR settlements, and state-specific caps in CT, MA, MO, NC, NH, TX, and WI. It does not include mercury MACT in 2007 or any other potential future regulations to implement the current ambient air quality standards or other part of the Clean Air Act. Base case emissions in 2020 will likely be lower due to state and federal regulatory actions that have not yet been promulgated.

Costs and Benefits in Indiana under Clear Skies

Benefits Outweigh the Costs

Clear Skies.... Guarantees significant emissions reductions - beginning years before full implementation Uses a proven and flexible market-based approach with incentives for innovation Increases certainty across the board for industry, regulators, and consumers

• In Indiana, Clear Skies is projected to cost approximately $334 million annually by 2020 while providing health benefits totaling approximately $4.1 billion annually.
• The increases in production costs under Clear Skies represent only a small percentage of total retail electricity sales revenue in Indiana.
• Retail electricity sales revenue in Indiana was over $5.0 billion in 2000.
• Adjusting these sales revenues by the same growth rate used for the modeling of costs would result in revenues of over $7.7 billion annually in 2020.

• Nationwide, the projected annual costs of Clear Skies (in $1999) are $4.3 billion in 2010 and $6.3 billion in 2020; the nationwide benefits of Clear Skies are expected to be over $113 billion annually by 2020.
• An alternate estimate projects annual health benefits totaling $23 billion.

Note: Costs include capital costs, fuel, and other operation and maintenance costs (both fixed and variable) associated with the achievement of the emissions caps in the legislation (for example, the installation and operation of pollution controls). These state-level production costs are estimates; they do not account for the costs associated with the transfer of electricity across regions, nor the costs or savings that could be associated with allowance movement between sources.

Notes on EPA's Analysis

• The information presented in this analysis reflects EPA's modeling of the Clear Skies Act of 2003.
  • EPA has updated this information to reflect modifications:
  • Changes included in the Clear Skies Act of 2003.
  • Revisions to the Base Case to reflect newly promulgated rules at the state and federal level since the initial analysis was undertaken.
  • The Clear Skies modeling results presented include the safety valve feature
• This analysis compares new programs to a Base Case (Existing Control Programs), which is typical when calculating costs and benefits of Agency rulemakings.
• The Base Case reflects implementation of current control programs only:
  • Does not include yet-to-be developed regulations such as those to implement the National Ambient Air Quality Standards.
• The EPA Base Case for power sector modeling includes:
  • Title IV, the NOx SIP Call, NSR settlements, and state-specific caps in Connecticut, Massachusetts, Missouri, New Hampshire, North Carolina, Texas, and Wisconsin finalized before March 2003.
• For air quality modeling, the Base Case also includes federal and state control programs, as well as the Tier II, Heavy Duty Diesel, and Nonroad Diesel rules.

State information based on EPA's modeling of the Clear Skies Act of 2002 is presented here for archival reasons. Clear Skies in Indiana 2002 (PDF 344KB)

1. An alternative methodology for calculating health-related benefits projects approximately 300 premature deaths prevented and $770 million in health benefits each year in Indiana by 2020.

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