Clear Skies

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Clear Skies in New Mexico

Note: EPA no longer updates this information, but it may be useful as a reference or resource.

Unless otherwise noted, the data presented throughout this Web site reflect EPA’s 2003 modeling and analysis of the Clear Skies Act of 2003. Clear Skies legislation was intended to create a mandatory program that would dramatically reduce power plant emissions of sulfur dioxide (SO2), nitrogen oxides (NOx), and mercury by setting a national cap on each pollutant. The Clear Skies bill was proposed in response to a growing need for an emission reduction plan that will protect human health and the environment while providing regulatory certainty to the industry. The proposed legislation for air regulation never moved out of the Senate Environment and Public Works committee in 2005 and was therefore never enacted.

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Highlights of Clear Skies in New Mexico

New Mexico sources would reduce emissions of SO2 by 13%, NOx by 57%, and mercury by 28% by 2020 due to Clear Skies.
The health benefits in the West would total $8.6 billion annually ($1.6 billion under the alternative estimate) and include approximately 1,100 fewer premature deaths (600 under the alternative estimate) and 2,500 fewer hospitalizations/emergency room visits each year.

Note:

For the purposes of this analysis, the West includes all states that would be affected by the Zone 2 cap for NOx under Clear Skies. These states are WA, OR, CA, UT, AZ, ID, MT, WY, CO, NM, TX, OK, KS, NE, ND, and SD.

In addition, Western states would continue to enjoy good visibility and the other benefits of a clean environment even in the face of increasing demand for electricity.
Clear Skies does not significantly impact electricity prices. With or without Clear Skies, electricity prices in the electricity supply region that includes New Mexico are expected to remain near or below 2000 prices.

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

Why Clear Skies?

Air quality has improved, but serious concerns persist

New Mexico'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

New Mexico sources would 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)

Clear Skies Builds Upon the Work of the WRAP

Clear Skies is designed to support the WRAP goals and process; in addition to a national constraint on SO2, the bill ensures that the WRAP's emissions reduction goal for nine states is achieved:
- If for any reason the regional reduction goal set by the WRAP for 2018 (271,000 tons for the power sector) is not achieved, a separate WRAP cap-and-trade program is triggered to ensure that the regional reductions are preserved.
  - This special cap-and-trade program is based on the framework established in the WRAP process.
- This special cap can also be triggered by 2013 if States determine there is sufficient evidence that the target will not be met by 2018.

Note: Yellow states are states involved in the WRAP voluntary emissions reduction program.

The West Faces Unique Challenges

Environmental effects of power plant emissions - including visibility impairment and acid deposition - are broadly distributed
- Increasing ground-level ozone concentrations in national parks
- Particle-related haze in national parks and wilderness areas
- Nitrogen deposition in high elevation ecosystems (e.g., Colorado Front Range)
- Brown clouds in major cities
Few western non-attainment areas are due to stationary source emissions

Field of flowers

As the West Grows, Clear Skies Protects Human Health and the Environment

The West Will Continue to Grow...

Population is projected to grow more than 20% from current levels by 2020
Electricity demand is expected to grow more than the national average
- More than 10% over national average in the Pacific States
- More than 30% over national average in the Mountain States

...While the Environment Is Protected

Clear Skies would protect air quality by lowering or halting increases in air emissions throughout the West from today's levels:
- Prevent degradation of visibility in parks.
- Help counties remain in attainment with health-based air quality standards, reducing the burden on state and local governments.
- Ensure nitrogen deposition does not increase and reduce mercury deposition.

Emissions in New Mexico under Clear Skies

Emissions in New Mexico (2020) would be reduced from 2000 levels:

39% reduction in SO2 emissions
62% reduction in NOx emissions
61% reduction in mercury emissions

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

Emissions: Current (2000) and Existing Clean Air Act Regulations (base case*) vs. Clear Skies in New Mexico in 2010 and 2020 -- Sulfur dioxide

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 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.

SO2 and NOx Emissions Reductions under Clear Skies

Projected SO2 Emissions from Power Plants with the Base Case and Clear Skies (2020) - West

Projected NOx Emissions from Power Plants with the Base Case and Clear Skies (2020) - West

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.

Clear Skies Health and Air Quality Benefits in the West

Improve Public Health

By 2020, the West would receive approximately $8.6 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 1,100 fewer premature deaths each year (see note 1)
approximately 800 fewer cases of chronic bronchitis each year
approximately 1,800 fewer nonfatal heart attacks each year
approximately 2,500 fewer hospital and emergency room visits each year
approximately 150,000 fewer days workers are out sick due to respiratory symptoms each year
approximately 19,000 fewer school absences each year

Reduced mercury emissions would reduce exposure to mercury through consumption of contaminated fish, resulting in additional, unquantified benefits to those who eat fish from mercury-contaminated lakes and streams in the West.

Help Maintain Health-Based Air Quality Standards (see note 2)

All counties in New Mexico are currently expected to meet the 8- hour ozone and fine particle standards.
Clear Skies would reduce concentrations of fine particles beyond what is expected under the base case throughout New Mexico, providing additional benefits to public health.

Clear Skies Would Provide Important Environmental Benefits in the West

Clear Skies would produce significant visibility benefits in highly visited national parks and wilderness areas in the West.

Quantifiable visibility benefits in just 5 parks (Grand Canyon, Rocky Mountain, Zion, Bryce Canyon, and Mesa Verde National Parks) total over $300 million.
Visibility benefits in the Grand Canyon alone are estimated to be $100 million annually by 2020.
Visibility improvements are also projected to improve tourism.
In comparison to existing programs, nitrogen deposition would decrease by 5-20% in the intermountain West, and in some areas, such as the Four Corners region, by up to 35%. Sulfur and mercury deposition would not increase despite growth in electricity demand.

Click here for a larger image

Electricity Generation in New Mexico under Clear Skies

Current and Projected Generation by Fuel Type in New Mexico under Clear Skies (GWh)

New Mexico's sources are projected to reduce their emissions through the installation of emission controls, rather than through a switch from coal to natural gas.

In 2010 and 2020, 100% of New Mexico's coal-fired generation is projected to come from units with advanced SO2 and/or NOx control equipment that also substantially reduce mercury emissions.

Current and Projected Coal Production for Electricity Generation

Emission Controls in New Mexico under Clear Skies

Under Clear Skies by 2020...

44% of coal-fired capacity would install SCR
None would install scrubbers

The major generation companies in New Mexico include:

Public Service Company of New Mexico
Arizona Public Service Company
El Paso Electric Company
Southwestern Public Service Company
Tri-State Generation &
Transmission

Total coal-fired capacity in New Mexico is projected to be 3,577 MW in 2010.

Units in New Mexico Projected to Be Retrofitted Due to Clear Skies by 2020

FOUR CORNERS	3	SCR*
FOUR CORNERS	4	SCR*
FOUR CORNERS	5	SCR*

*Retrofit was installed under Clear Skies by 2010

Notes:
1. Retrofits and total coal-fired capacity apply to coal units greater than 25 MW.

2. San Juan unit 2 is projected to be removed from operation by 2005 with Clear Skies due to excess gas-fired capacity in the marketplace, unless otherwise needed for voltage purposes. The recent overbuild of gas-fired generation reduces the need for less efficient units operating at lower capacity factors. These units are inefficient compared to other coal-fired plants and newer gas-fired generation. Less conservative assumptions regarding natural gas prices or electricity demand would create a greater incentive to keep these units operational.

Electricity Prices in New Mexico under Clear Skies

With or without Clear Skies, retail prices in the North American Electric Reliability Council (NERC) WECC region (the electricity supply region that contains New Mexico) are projected to increase between 2005 and 2020.
With Clear Skies, retail prices are projected to be approximately 0.6 - 2.6% higher between 2005 and 2020 than in the absence of the legislation.

NERC

Projected Retail Electricity Prices in New Mexico under the Base Case and Clear Skies (2005-2020)

Projected National Retail Electricity Prices in New Mexico under Clear Skies (2005-2020)

In 2000, the average retail electricity price in New Mexico was approximately 6.6 cents/kWh, which was below the average national retail price of approximately 6.7 cents/kWh.

Costs and Benefits in New Mexico 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 New Mexico, economic modeling projects that the cost of generating electricity, of which a component is the cost of installing and operating pollution controls, is less under Clear Skies than under the base case as power production shifts within the region to enable the power sector to comply in the most costeffective manner. Total annual health and visibility benefits in 2020 for New Mexico are projected to be $120 million, with health and visibility benefits projected to be $9.5 billion throughout the West.
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:
- 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.