Chapter 3
Impacts of Proposed Action

Contents
3.1	Regulatory Impact Analysis (RIA)	2
3.2	Air	11
3.3	Energy	12
3.4	Compliance Costs	15
3.5	Climate Change Protection	19
3.6	Economic and Employment Impacts	21
3.7	Benefits	31

Regulatory Impact Analysis (RIA)
Commenters 0152, 0186, 0187, 0214, and 0256 stated various reasons for why EPA's use of the social cost of carbon (SCC) is not justified or legal.
Commenter 0186 noted that it would be impermissible to rely on the SCC for several reasons "(i) it is inherently flawed, ultimately a meaningless metric; (ii) it ascribes undue certainty and reliability to the scientific evidence; (iii) it ignores the social benefits of carbon...; and (iv) it ignores the problematic aspects of carbon-reduction policies. The SCC is a metric that reflects more about the assumptions fed into it than what it is purporting to measure." The commenter stated that the SCC estimates are of highly questionable validity and are based on speculative assumptions and much-criticized integrated assessment model (IAM) simulations. The commenter additionally noted that the SCC assumes that climate science is settled and uncontroversial, when in fact the opposite is true. The commenter stated that the SCC lacks theoretical and empirical foundation for the impacts of asserted climate change that form the key parts of analysis. The commenter also noted that because the SCC counts only the cost of carbon, it will always yield a rule that reduces carbon--"it is a one-sided statistic." The commenter stated that a comparison of the CO2 costs and benefits using GDP figures based on EPA's own SCC estimates demonstrates that any of the SCC estimates are relatively so small as to be in the statistical noise of the estimated CO2 benefits. The commenter additionally noted that EPA selected discount rate values that are biased toward the low end of the acceptable range given by the OMB, and slanted the measure even further by specifically adding a "catastrophic" scenario without a corresponding "optimistic" scenario. The commenter noted that while these details may seem like a technical matter, they have a dramatic effect on the SCC analysis. The commenter stated that "when the models on which the SCC draws are recalculated using the 7% discount rate EPA left out, the SCC goes to zero or even negative---showing a net benefit to increased emissions under EPA's own analysis." See Kevin Dayaratna and David Kreutzer, Unfounded FUND: Yet Another EPA Model Not Ready For The Big Game 3, HERITAGE FOUNDATION (Apr. 29, 2014).
Commenter 0256 urged EPA to use the domestic SCC value in its analysis, not the global SCC value. The commenter stated that the costs of these and other CO2 regulations are borne by the companies and citizens of this country and as such the purported benefits should also be reflective of the benefits to the United States. The commenter added that unless the CAA directs the EPA to require unilateral actions by the United States to address global environmental issues in other countries, while those countries do not take similar steps, the domestic SCC seems to be the only logical metric to use in a cost benefit analysis. The commenter noted that the SCC document indicates its use is meant for projects/regulations that have a marginal effect on CO2 emissions and while it is true that the proposed rule may have little effect on CO2 emissions, the manner in which EPA is implementing CO2 regulations acts to set energy policy for the country and will have a lasting effect on the energy industry, the competitiveness of American companies and the economic well-being of many Americans. The commenter stated that the use of cost parameters that were intended for marginal or small projects should not be used as the basis of regulations with far-reaching and long-lasting impacts on the United States.
Commenters 0152 and 0187 stated that EPA's reliance on SCC violates the CAA Section 111(a)(1) requirement to consider the cost of achieving a proposed standard. Commenter 0187 stated that the RIA relied on climate change benefits determined through applications of values calculated using a "controversial, indeed, legally suspect, protocol fraught with a myriad of shortcomings." Commenter 0152 urged that EPA not use the newly-revised SCC metric until OMB's review is completed.
Commenter 0214 noted the SCC should not be used in a regulatory context given "the nontransparent manner in which it was derived and the inconclusive results achieved through that analysis" and stated that "the choice of non-reviewed models and the input assumptions that were used to contrive the SCC are arbitrary and discount rates were applied inconsistently."
 First, the Agency's demonstration that costs of the standard are reasonable do not rely on the social cost of carbon.  See preamble section V.H. and I.  See also Portland Cement I, 486 F. 2d at 387 (cost-benefit analysis not required under section 111 (a)).

Second, while the commenters identify a number of limitations and uncertainties associated with the illustrative analysis presented in the Regulatory Impact Analysis (RIA) for the modified source standard at proposal, EPA notes that for the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analysis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.

Third, the commenters' characterization of the SC-CO2 process and reliability of the SC-CO2 values is deeply misplaced.  See comment responses in unit 4.4 of the section 111 (b) RTC.  Also, the SC-CO2 comments summarized in 3.1-1 mirror those submitted to the Office of Management and Budget's separate comment solicitation on the SCC (78 FR 70586; November 26, 2013).  As a member of the interagency working group (IWG) on SC-CO2, EPA has carefully examined and evaluated comments submitted to OMB's separate solicitation.  EPA has also carefully examined and evaluated all comments received regarding SC-CO2 through this rulemaking process and determined that the IWG responses to the comments on the OMB solicitation address the comments on the SC-CO2 methodology, including the models used to estimate the SC-CO2. Specifically, EPA concurs with the IWG's response to these comments and hereby incorporates them by reference.  The remainder of this section elaborates on these comments in the context of this rulemaking.
EPA appreciates the commenters' recommendations for potential opportunities to improve the SC-CO2 estimates and has considered each one in the context of this rulemaking. EPA and other members of the IWG have reconfirmed their commitment to periodic review and update of the methodology and estimates to ensure that they continue to reflect the best available science and economics. Furthermore, EPA has determined that the SC-CO2 methodological recommendations require additional research, review, and public comment before it can apply them to a rulemaking context.
To help synthesize the technical information and input reflected in the comments, and to add additional rigor to the next update of the SC-CO2, the EPA and all of the other IWG members plan to seek independent expert advice on technical opportunities to improve the SC-CO2 estimates, including the approaches suggested by commenters and summarized in this document. Specifically, EPA and all of the other IWG members plan to ask the National Academies of Sciences, Engineering, and Medicine (Academies) to examine the technical merits and challenges of potential approaches to improving the SC-CO2 estimates in future updates. Input from the Academies, informed by the comments submitted to this rulemaking and the peer-reviewed literature, will help to ensure that the SC-CO2 estimates used by EPA continue to reflect the best available science and methodologies.

Finally, should (against the law of the Circuit and EPA's view) some type of cost-benefit analysis be required under section 111 (a), chapter 5 of the RIA shows that quantified benefits of the final standard of performance would exceed regulatory costs under a range of assumptions.
Commenter 0202 stated support for EPA's use of the social cost of carbon (SCC) metric in its RIA analysis with four main points: the SCC is an important policy tool; the IWG's analytic process was science-based, open, and transparent; the SCC is an important and accepted tool for regulatory policy-making based on well-established law and fundamental economics; and that the IWG correctly used a global SCC value. Commenter 0202 also offered further recommendations on refinements to the SCC.
Commenter 0202 stated that the SCC estimates the economic cost of climate impacts - specifically the additional economic harm caused by one additional metric ton of carbon dioxide (CO2) emissions and that SCC calculations are important for evaluating the costs of activities that produce greenhouse gas emissions and contribute to climate change, such as burning fossil fuels to produce energy. The commenter noted that the SCC is also important for evaluating the benefits of policies that would reduce the amount of those emissions going into the atmosphere. For example, the commenter stated that in order to properly evaluate standards that reduce the use of carbon-intensive energy or that improve energy efficiency - like the proposed greenhouse gas standards - it is important to understand the benefits they will provide, including the benefit of reducing carbon pollution and the harm it causes. The commenter noted that even though the analysis is generally not able to encompass all of the effects of a policy, and it is challenging to translate impacts on health, mortality, and welfare into dollar values, benefit-cost analysis is an important economic tool to help inform decision-makers about the societal benefits of different policy choices. The commenter also stated that without an SCC estimate, regulators would by default be using a value of zero for the benefits of reducing carbon pollution, implying that carbon pollution has no costs and that, sadly, is not the case, as evidenced by the large body of research outlining the sobering health, environmental, and economic impacts of rising temperatures, extreme weather, intensifying smog, and other climate impacts. The commenter stated if anything, most evidence points to the fact that current numbers significantly underestimate the SCC and it would be arbitrary for a federal agency to weigh the societal benefits and costs of a rule with significant carbon pollution effects but to assign no value at all to the considerable benefits of reducing carbon pollution.
Commenter 0202 further noted that the increase in the SCC estimate is important because it reflects the growing scientific and economic research on the risks and costs of climate change, but is still very likely an underestimate of the economic cost of carbon emissions. The commenter stated the increase is also necessary given the costs of climate change that we are already experiencing, such as those associated with sea level rise and rising temperatures. The commenter stated that the analytic work of the IWG has been transparent and noted that the Office of Management and Budget (OMB) recently created a further opportunity for public comments and transparent review specifically on the calculation of the social cost of carbon. Additionally, the commenter noted the comment period on these greenhouse gas standards are yet another opportunity for continued dialogue about areas requiring further stud and such repeated comment processes demonstrate that the IWG's SCC estimates were developed - and are being used - transparently. The commenter stated that given their strong grounding in the best science available, nothing should prevent the current, continued use of this well-established estimate. The commenter noted that as economic and scientific research continues to develop, future revisions will be able to further refine existing estimates based on the latest peer-reviewed literature and the latest updates to the quality of the overall modeling exercise.
Commenter 0202 noted criticisms submitted via petition to OMB and the individual agencies involved in the IWG which included concerns that the estimates of SCC are too uncertain and imprecise to be used in regulatory analysis, that the IWG did not follow appropriate protocols in either its estimation or use of SCC, and that SCC must be banned from use while it undergoes a wholly new public review process. The commenter stated that as a matter of law and economics, uncertainty in benefits estimates does not mean they should be excluded from regulatory impact analyses. No benefit or cost estimate is certain. Further, the commenter noted the courts have explicitly rejected this argument with respect to the SCC, and executive orders dating back as far as the Reagan administration have all issued guidelines specifying explicit consideration of benefits even if the precise size of the benefit is uncertain. The commenter noted that in 2008, the National Highway Traffic Safety Administration had decided not to account for avoided climate damages in issuing fuel economy standards, but the U.S. Court of Appeals for the 9th Circuit determined "NHTSA's reasoning is arbitrary and capricious for several reasons. First while the record shows that there is a range of values, the value of carbon emission reductions is certainly not zero", which directly contradicts arguments made by the petitioners about the validity of SCC. The commenter stated that the IWG's choice of Integrated Assessment Models (IAMs) reflects the best available, peer-reviewed science to tally costs and benefits within regulations and noted that the IWG should indeed periodically update its choice of socio-economic scenarios to reflect major changes in economic growth projections and other factors influencing emissions trajectories. The commenter noted, however, the long-term emissions impact of any one particular energy efficiency or other carbon reduction standard is only marginal to the trajectory of socio-economic scenarios, minimizing any risk of double counting the regulatory benefits towards the petitioners' concern of misrepresentation and double-counting. The commenter concluded that the IWG has properly and lawfully used the best available techniques to quantify the benefits of carbon emission reductions, basing its analysis on the peer-reviewed literature and noted that the petitioners offer no alternative estimation procedure in their critique.
Commenter 0202 stated that to design the economically efficient policies necessary to forestall severe and potentially catastrophic climate change, all countries must use a global SCC value and given that the United States and many other significant players in the international climate negotiations have already applied a global SCC framework in evaluating their own climate policies, the continued use of the global value in U.S. regulatory decisions may be strategically important as the United States seeks to set an example for other countries, harmonize regulatory systems, and take the lead in ongoing international negotiations. The commenter noted that binding legal obligations, basic ethical responsibilities, and practical considerations further counsel in favor of the United States using a global SCC value and to avoid a global "tragedy of the commons" and an economically inefficient degradation of the world's climate resources, all countries should set policy according to a global SCC value. The commenter noted that if all countries set their greenhouse gas emissions level based on only their domestic costs and benefits, ignoring the large global externalities, the collective result would be substantially sub-optimal climate protections and significantly increased risks of severe harm to all nations, including the United States. The commenter noted that Mexico and Canada have both adopted greenhouse gas standards for vehicles that harmonize with U.S. standards and that calculate benefits according to a global SCC value, and that further efforts towards regulatory harmonization are currently underway as countries within the E.U. are beginning to adopt a global SCC value for use in their regulatory analyses. The commenter also noted that multiple Presidential orders on regulatory analysis (E.O. 13609, E.O. 13563, and E.O. 12866) deferred to the discretion of regulatory agencies on whether to evaluate "effects beyond the borders of the United States", supporting a global SCC value. Commenter stated that unlike some other significant international environmental impacts, no methodological limitations block the quantitative estimation of a global SCC value and given that sophisticated models already exist to quantify global SCC, the global estimate is appropriate to use. The commenter also noted that using a global SCC value if of national interest, as harms experienced by other countries could significantly impact the United States -- particularly climate damages that affect foreign economies.
Commenter 0202 offered the following recommendations for further refinements to the SCC metric:
1. The commenter stated that the IWG appropriately used consumption discount rates rather than returns on capital because typical financial decisions focus on private decisions and utilize private rates of return but that economic theory would require making optimal choices based on societal preferences (discount rates) rather than from the narrow perspective of investors alone. The commenter stated that IWG correctly adopted, as one of its discount rates, a value reflecting long-term interest rate uncertainty, and should go further by implementing a declining discount rate. The commenter offered two possible declining interest rate schedules for consideration by IWG: the one proposed by Weitzman (2007) and the one by Cropper et al. See Martin L. Weitzman, Gamma Discounting, 91 AM. ECON. REV. 260, 270 (2001); and, Maureen L. Cropper et al., Declining Discount Rates, AMERICAN ECONOMIC REVIEW: PAPERS AND PROCEEDINGS (forthcoming).
2. The commenter stated that the IWG used solid economic tools to address uncertainty and ought to go further in capturing the full extent of its implications. The commenter noted that IWG was rigorous in addressing uncertainty: "First, it conducted Monte Carlo simulations over the IAMs specifying different possible outcomes for climate sensitivity (represented by a Roe and Baker Distribution). It also used five different emissions growth scenarios and three discount rates. Second, the IWG reported the various moments and percentiles of the resulting SCC estimates. Third, the IWG put in place an updating process, e.g., the 2013 revision, which updates the models as new information becomes available. As such, the IWG used the various tools that economists have developed over time to address the uncertainty inherent in estimating the economic cost of pollution: reporting various measures of uncertainty, using Monte Carlo simulations, and updating estimates as evolving research advances our knowledge of climate change." Commenter noted that "while the IAMs take different approaches to explicitly modeling tipping points, which to a great extent is lacking in current versions of FUND and DICE, the IWG improved (but in no way fixed) the representation of uncertain catastrophic damages with the Monte Carlo analysis. Still, black swan events go completely unaddressed in the IWG modeling framework, and to the extent that society has a strong desire to prevent the occurrence of catastrophic events that is not reflected in the estimates."
3. The commenter noted that the current inclusion of CO2 fertilization benefits likely overstate its effects. The commenter stated that the models do not reflect recent research on agricultural changes, which suggest the CO2 fertilization is overestimated, particularly in the FUND model, and that much, if not all, of the fertilization benefits may be cancelled out by negative impacts on agriculture (e.g., extreme heat, pests, and weeds). If the agency is not able to adequately model all agricultural impacts it should, at a minimum, remove CO2 fertilization benefits.
4. The commenter stated that IWGs reliance on the three IAM models available at the time (DICE, FUND, and PAGE) was fully justified, however, updates to the SCC should also consider other models that are similarly peer reviewed and based on the state of the art of climate-economic modeling. The commenter noted that one such model is Climate and Regional Economics of Development (CRED); another is the World Bank's ENVironmental Impact and Sustainability Applied General Equilibrium (ENVISAGE) model.
5. The commenter stated that the IWG should update its socio-economic assumptions to reflect the latest Shared Socio-economic Pathways (SSPs). The commenter noted that IWG selected five sets of trajectories, four of which represent business as usual, and one which represents a CO2 emissions pathway with concentrations stabilizing at 550ppm. The commenter suggested that IWG include a high-CO2 pathway, given the possibility of increases in emissions above those expressed in the business as usual scenarios.
6. The commenter stated that while the current treatment of uncertainty around climate sensitivity by the IWG is sufficient to highlight the range of possible uncertainties, a reconsideration of the assumptions feeding into the SCC ought to take the latest advances highlighting the potentially higher costs of deep uncertainty into account.
EPA thanks the commenters for submitting this information and agrees with their support for the application of the estimates.  Please see comment responses in unit 4.4 of the section 111 (b) RTC for a detailed response to the comments.  While the commenters focused on the illustrative analysis presented in the Regulatory Impact Analysis (RIA) for the modified source standard at proposal, EPA notes that for the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analysis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.

In addition, we note that the comments mirror those submitted to the Office of Management and Budget's separate comment solicitation on the SC-CO2 (78 FR 70586; November 26, 2013).  As a member of the interagency working group (IWG) on SC-CO2, EPA has carefully examined and evaluated comments submitted to OMB's separate solicitation.  EPA has also carefully examined and evaluated all comments received regarding SC-CO2 through this rulemaking process and determined that the IWG responses to the comments on the OMB solicitation address the comments on the aggregation of SC-CO2 estimates and use of the estimates in this RIA.  Specifically, EPA concurs with the IWG's response to these comments and hereby incorporates them by reference.
EPA and other members of the IWG have reconfirmed their commitment to periodic review and update of the methodology and estimates to ensure that they continue to reflect the best available science and economics. Furthermore, EPA has determined that the SC-CO2 methodological recommendations require additional research, review, and public comment before it can apply them to a rulemaking context.
To help synthesize the technical information and input reflected in the comments, and to add additional rigor to the next update of the SC-CO2, the EPA and all of the other IWG members plan to seek independent expert advice on technical opportunities to improve the SC-CO2 estimates, including the approaches suggested by commenters and summarized in this document. Specifically, EPA and all of the other IWG members plan to ask the National Academies of Sciences, Engineering, and Medicine (Academies) to examine the technical merits and challenges of potential approaches to improving the SC-CO2 estimates in future updates. Input from the Academies, informed by the comments submitted to this rulemaking and the peer-reviewed literature, will help to ensure that the SC-CO2 estimates used by EPA continue to reflect the best available science and methodologies.
After careful evaluation of the full range of comments and associated technical issues described in section 4.5, EPA will has determined that it will continue to use the current SC-CO2 estimates until further updates can be made to reflect forthcoming guidance from the Academies.  EPA believes that the current estimates continue to represent the best scientific information on the impacts of climate change available in a form appropriate for incorporating the damages from incremental CO2 emissions changes into regulatory analysis.  Therefore, EPA has presented the current SC-CO2 estimates in the analysis of illustrative benefit-cost scenarios for new sources in RIA Chapter 5 (see RIA Chapters 3 and 5; see Response to Comments 3.2 for detailed discussion about the conclusions of the RIA).   EPA will continue to consider these comments and will share the recommendations with the IWG as it moves forward with the Academies process.
Commenters 0152, 0214, 0224, 0230, 0242, and 0254 stated that the use of a single, hypothetical, 500 MW bituminous coal-fired unit in EPA's RIA is not adequate to properly determine the costs and benefits for a rule that spans numerous sources and it not representative of all units that may be subject to EPA's proposed standard.
Commenters 0152, 0224 and 0254 stated that EPA's cost analysis of this hypothetical unit and further extrapolation of the costs to a global benefit is erroneous. Commenter 0224 stated that "even if those hypothetical estimates approximate anticipated national costs, EPA calculates the Proposed Rule's benefits on a global scale that considers emission reductions not only for CO2, but also for other pollutants." Commenter 0224 stated that "EPA, on its own, questions whether its estimated efficiency improvements and emission reductions can be fully realized to reach the calculated benefits level" and that "the mismatch between national costs and global benefits, as might be expected, produces greater benefits than costs." Commenter 0224 further noted that the CAA appears to limit consideration of both costs and benefits to actual, nation-wide numbers. Commenters 0152 and 0254 stated that "extrapolation to a global rather than U.S. benefit, EPA's calculated cost does not support the imposition of its proposal."
Commenter 0230 stated that EPA's approach in using solely a single, hypothetical 500MW bituminous coal-fired unit to represent all affected units may indicate costs and benefits that are significantly different than what may result from an actual operating EGU. The commenter noted that EPA is assuming that a modified affected unit attempting to comply with the proposed carbon rule can realize certain efficiencies through best practices and equipment upgrades in order to comply which may not be the case. The commenter stated that the analysis does not address the fact that such a unit likely will be unable to dispatch with the frequency necessary to attain the efficiency as part of the state's effort to comply with the applicable 111(d) carbon limit.
Commenter 0242 examined the NEEDS 5.13 database to determine if the 500 MW theoretical case-study was applicable to the types of units found in states that meet a large proportion of electricity demand from coal-fired EGUs. Commenter stated that of the 213 coal and IGCC units located in Ohio, Pennsylvania, West Virginia, Indiana, and Kentucky, only 38 units, or 18%, are between 400 and 600 MW. Commenter cited this finding as a reason why EPA's singular RIA example is not representative of coal-fired units located in states that are heavily reliant on coal-fired generation---let alone representative of the universe of unit types that will be subject to this rule.
Commenter 0214 stated that EPA not only generalized all affected sources by using a hypothetical bituminous coal-fired unit for the illustrative analysis, but it generalized all coal units as well, even though coal-fired units are heterogeneous with respect to generation technologies, fuel types, and size classes.
The commenters identify a number of limitations and uncertainties associated with the illustrative analysis presented in the Regulatory Impact Analysis (RIA) for the modified source standard at proposal. For the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analysis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
Commenters 0214 and 0242 stated that EPA, in its RIA, evaluates the annualized cost and fuel savings of heat rate improvement at three different level -- four percent, six percent, and eight percent -- but unrealistically assumes that those different levels of efficiency improvements cost the same. Commenter 0242 stated that "surely EPA does not believe the results of an impact analysis of a singular modified coal unit performing HRI is indicative of the impacts for all units potentially subject to, or impacted by, this rule." Commenter 0214 stated that EPA must either explain why it believes that significantly different levels of efficiency improvements can be achieved at the same cost, or revise its analysis to recognize that greater efficiency improvements would generally cost more.
The commenters refer to the illustrative analysis presented in the Regulatory Impact Analysis (RIA) for the modified source standard at proposal. In that document, the EPA explained that different units may be able to achieve different levels of efficiency for the same investment. "The actual efficiency improvement a unit can achieve for this cost will depend on its starting efficiency and operating capacity. Less efficient units may have more efficiency improvement options available and be able to achieve greater efficiency for the same cost. Relatively more efficient units may have fewer remaining cost-effective options to improve efficiency."
For the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analysis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
Commenter 0289 stated that the EPA found that "few sources will trigger either the NSPS modification or reconstruction provisions" outlined in the Rule Proposal; a claim repeated numerous times in the Rule Proposal. The commenter stated that EPA's finding that there are no benefits to this rule, and likewise limited costs, is clear evidence that this rule is an unnecessary regulatory action that should not have been proposed and should not be finalized.
Although there have historically been few units that trigger the NSPS modification and reconstruction provisions, any unit that triggers these provisions in the future will be subject to the standards set by this rule. In that case, there would be benefits and costs associated with the standard.
Air
Commenter 0169 noted that EPA explains that by improving energy efficiency, generally a unit reduces CO2 emissions as well as other air pollutants which could lead to lower ambient air concentrations of PM2.5 and ozone. The commenter also noted, however, that in some cases CO2 emission reductions due to energy efficiency improvements may be offset if, as a result of these reductions, a unit is able to reduce operation of pollution control equipment and still meet output-based standards for these pollutants or pollutants related to their control.(RIA, Chapter 9, p.9-9) The commenter stated that this assumes that an EGU can reduce operation of air pollution control equipment which is required to be operational so it 'just' meets the limits in the EGU's air permit and that in such "reduced operation" instances, the pollution control equipment may provide less control than if operated at maximum design performance. The commenter stated that they find this suggestion controversial or potentially even contrary to positions EPA has taken in the past regarding operation of air pollution control equipment and that improving heat rate in this way may conflict with other CAA regulations, state rules, or permits. The commenter requested that EPA clarify the statement of provide specific examples of when a unit may be able to "reduce operation of pollution control equipment and still meet output-based standards." The commenter asked that such clarification also explain what "pollutants related to their control" would expressly include.
The commenters refer to the illustrative analysis presented in the Regulatory Impact Analysis (RIA) for the modified source standard at proposal. The statement was intended to provide an example of a situation in which the conclusions of the analysis may differ, not as a prediction of behavior that would actually occur.
For the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analysis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
Energy
Commenters 0193 and 0242 expressed concern about the impact simple cycle turbines will have on grid reliability and emissions reductions under the proposed rule.
Commenter 0193 stated that limiting the role of simple cycle units will result in increased emissions from NGCC units. The commenter noted that combined cycle units produce significantly more emissions during startup and shutdown than simple cycle units, and that this is especially true when comparing the emission profiles of a "cold" combined cycle startup with a simple cycle unit. The commenter stated that forcing combined cycle units to take the place of simple cycle units and operate under conditions of rapid cycling at lower overall capacity factors would lead to potentially higher emissions and higher in-use degradation. The commenter also noted that forcing generators to deploy combined cycle units in lieu of simple cycle units may force the operator to run the plant during low load periods to be prepared to respond quickly to grid demands instead of simply shutting the unit down completely. The commenter repeatedly emphasized the important role that simple cycle units have in terms of being able to respond quickly to changing power demands.
Commenter 0242 noted that it is likely that simple cycle combustion turbines will be needed, in a manner they have not historically been needed, if EPA finalizes Section 111(d) and 111(b) requirements in the manner currently proposed. The commenter stated that simple cycle turbines will be needed to ensure reliability when peak demand expands as a result of MATS and Section 111(d). The commenter questioned if EPA considered the impact that increased use of simple cycle turbines will have on ozone, because they saw no such analysis in any of the proposed rules.
The non-base load subcategory includes in this final rule provides adequate flexibility for the continued use of simple cycle turbines.
 Commenter 0181 requested that, as EPA develops regulations under Section 111 of the Clean Air Act, it should keep in mind the significant value of the nation's nuclear fleet. The commenter stated that nuclear energy is the only carbon free source of predictable, non-intermittent and reliable electric generation, and nuclear plants operate at a higher capacity factor than any other generation resource. The commenter noted that until recently, the common understanding was that nuclear plants would operate until license expiration and pointed out that most carbon emission projections assume that nuclear plants will continue to generate carbon free electricity-however, it is no longer safe to assume that existing nuclear units will continue to operate. The commenter noted that many of the plants today that are producing large quantities of emissions free electricity and operating at above 90% capacity factors are in danger of early closure. The commenter went on to state that the lack of coherent carbon policy has hurt the nuclear industry, in addition to economic factors such as low natural gas prices, and that the government at all levels has reacted to the failure of carbon legislation by implementing subsidies and mandates that benefit all carbon free generation except nuclear-"the nation's largest and most reliable carbon free energy source."
Commenter 0181 felt that if current policies are not changed, retirements of nuclear units will have drastic impacts on climate change goals. The commenter stated that closing even a few nuclear power plants would make achieving state and national carbon reduction goals difficult or impossible and noted that the power sector has reduced its emissions by 15% from 2005 levels and is responsible for the vast majority of the nation's progress in meeting President Obama's climate goal of reducing overall carbon emissions. The commenter stated that if we continue on the same pace of retirements that we saw in 2013, we would lose 25% of the nation's nuclear fleet by 2020 and would lose much of the progress the electric industry has made to date. The commenter noted, by way of example, after the January 2012 shutdown of the San Onofre Nuclear Generating unit in California, the state's carbon dioxide output increased by 35% in the first year, according to the California Air Resources Board and generation costs in the state increased by about $369 million, equivalent to a 15% increase in total generation costs, during the 12 months following the January 2012 shutdown.
Commenter 0181 detailed their company's 2020 plan to invest in cost-effective, clean energy projects which aims to reduce, offset, or displace 17.5 million metric tons of greenhouse gas emissions per year by 2020. The commenter noted that the closure of even one of their existing nuclear units would jeopardize all accomplishments in the company's 2020 plan, and would weaken progress in reducing greenhouse gas emissions from the electric sector.
Commenter 0181 noted that four of the most respected climate and energy scientists---Dr. Ken Caldeira of the Carnegie Institution, Dr. Kerry Emanuel of MIT, Dr. James Hansen of Columbia University, and Dr. Tom Wigley of the National Center for Atmospheric Research---acknowledged the value of nuclear energy to addressing climate change. The commenter stated that the scientists released a letter calling on world leaders to support nuclear energy, concluding that "in the real world there is no credible path to climate stabilization that does not include a substantial role for nuclear power." In addition, the commenter stated that in April of this year, the Center for Climate and Energy Solutions released a study identifying the challenges facing nuclear units and noting that retirements of nuclear units will have serious climate change implications. See Doug Vine & Timothy Juliani, Center for Climate and Energy Solutions, Climate Solutions: The Role of Nuclear Power (Apr. 2014).
Commenter 0181 concluded by stating that is it essential that EPA's regulatory program be structured to preserve the existing nuclear fleet, which is critical to sustaining reductions achieved to date.  In addition, the commenter stated that the regulations should encourage the expansion of zero emission electricity generation through nuclear plants, and that weak standards based solely on improving energy efficiency of fossil fuel-fired units can have the perverse effect of displacing zero emissions nuclear facilities, while standards that effectively impose a cost on carbon-either through the cost of operating pollution control equipment of the purchase of allowances-will prevent this perverse effect.
Nuclear units are not included in this final rule.
Commenter 0150 noted that additional reliability assessments regarding the Modified/Reconstructed Proposed Rule, as well as the proposed emission guidelines under Section 111(d) may be forthcoming, and stated that such assessments conducted by appropriately designated reliability entities such as the Federal Energy Regulatory Commission, the North American Reliability Corporation, and/or regional transmission organizations would be of high value to EPA, the public, and industry. The commenter urged EPA to fully consider the results of any reliability assessments in any final rule for modified and reconstructed EGUs issued under Section 111(b).
Commenter 0150 stated particular concern for the performance required of modified/reconstructed natural gas units necessary to back up deliveries from intermittent renewable generation sources such as wind and solar but notes that the forthcoming reliability assessments are likely to address the issue, among others, and again stresses that EPA consider these issues in its promulgation of final rules.
Historically, few EGUs have triggered the NSPS modification or reconstruction provisions. As a result, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications or reconstructions and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
Commenter 0242 noted that, as part of the proposed Section 111(d) rule for existing units, natural gas units could be re-dispatched at greater than historical levels. The commenter stated that some of these units would likely be operating well outside of their original design parameters following re-dispatch, which could necessitate accelerated maintenance schedules and possibly reconstructions. The commenter stated that is it also likely that some natural gas units may choose to reconstruct a unit or units in anticipation of what the commenter believes to be a major restructuring of the entire power generation and delivery system via the proposed standards for existing units. The commenter stated that EPA has clearly shown in past rulemakings that the IPM model is not a good future predictive tool for distribution of electric generation in this country, this is premature for EPA to speculate that NGCC units will not undertake such measures.
The EPA made its determination that few units would trigger the NSPS modification or reconstruction provisions in consultation with the Office of Enforcement and Compliance Assurance (OECA). This conclusion was based on OECA's determination that historically few units have qualified as NSPS modifications or reconstructions, not on modeling.
 Commenter 0193 stated that the proposed rules for new and modified and reconstructed units should encourage the expansion and deployment of CHP systems because CHP systems can achieve overall efficiency levels of 60 to 80 percent by simultaneously producing electricity and useful thermal energy.
The EPA has concluded that the emission standard for reconstructed combustion turbines is achievable. Therefore, the requirements in this final rule would not limit the ability of owners and operators to reconstruct existing combustion turbines. The final applicability includes and expanded exemption for industrial CHP units.
Compliance Costs
Commenters 0142, 0161, 0215, 0221, and 0223 stated that the potential emissions benefits stated by EPA within the Proposed Rule do not justify the costs.
Commenter 0142 stated that EPA has dramatically underestimated the cost of the rule to industry and to consumers of electric power. The commenter further stated that EPA's evaluation of the costs and benefits of the proposed modification rule is not a sufficient analysis because it does not reflect or acknowledge the cumulative costs from all sources which would be affected by the Proposed Rule.
Commenter 0161 stated that EPA should withdraw the Modified Source Proposal because the potential CO2-related benefits of the proposal do not justify the costs. The commenter noted that, based on EPA's evaluation, complying with the Modified Source Proposal would cost a 500MW coal-fired unit between $0.78 and $4.5 million and result in CO2 reductions of 133,000 to 266,000 tons in 2025 but that these achieved reductions would be dwarfed by increases in global CO2 emissions. The commenter noted that non-U.S. CO2 emissions, which already represent 82 percent of global emissions, are projected to grow by 41 percent between 2010 and 2030. See Institute for 21st Century Energy, U.S. Chamber of Commerce, "Statement for the Record on the U.S. Environmental Protection Agency's 'Proposed Carbon Pollution Standard For Existing Power Plants,'" EPA's Standards of Performance for Greenhouse Gas Emissions from Existing Sources: Electric Utility Generating Units, Docket: EPA-HQ-OAR-2013 -0602, RIN 2060-AR33, July 30, 2014
Commenter 0221 noted that substantial CO2 reductions have already been realized in the electric utility sector over the past decade due to economic downturn, increasing renewable generation, low natural gas prices, energy efficiency programs, and retirements of older, less efficient plants resulting from ever-increasing environmental regulations. The commenter stated that benefits were improperly calculated on a global basis, and when properly calculated on a domestic basis are far exceeded by the costs of the Proposed Rule. The commenter noted that the electric utility sector is expected to meet or exceed the President's goal of a 17% CO2 reduction below 2005 levels by 2020 without any further government action. The commenter reasoned that since the cost of the Proposed Rule exceeds the environmental benefits, and CO2 emission reductions are already being achieved by the electric utility sector without governmental regulation, EPA should exercise its authority to exempt modified and reconstructed units from NSPS.
Commenter 0223 noted that EPA did not analyze the cost impacts of modifications that could result from the installation of numerous new technologies on coal units in response to EPA's proposed Section 111(d) ruling, and that these costs must be analyzed. The commenter stated that the Proposal will force utilities to install technologies in search of incremental efficiencies, with marginal benefit, to meet the proposed 2% threshold since most EGU owners routinely invest in technologies to operate more efficiently. The commenter stated that because of this marginal benefit, the costs will outweigh the possible gain. Additionally, the commenter noted that EPA suggested that a reduction in fuel (coal) costs will offset technology costs. The commenter stated that EPA's Proposal does not hold in the state of Wyoming and inaccurately represents the impacts to Wyoming coal units because most coal units in Wyoming are mine-to-mouth, meaning they have near-zero transportation costs, and EPA did not consider this factor.
The commenters refer to the illustrative analysis presented in the Regulatory Impact Analysis (RIA) for the modified source standard at proposal. In that document, the EPA presented the costs and benefits associated with a single unit because historically few units have triggered the NSPS modification provisions and there were no data available about any that may do so in the future.
The EPA expects that most of the actions EGUs are likely to take in the foreseeable future that could be classified as NSPS "modifications" would qualify as pollution control projects. In many cases, those projects are likely to involve the installation of add-on control equipment needed to meet Clean Air Act (CAA) requirements for criteria and air toxics air pollutants. Any associated CO2 emissions increases would likely be small and would occur as a chemical byproduct of the operation of the control equipment. In other cases, those projects would involve equipment changes to improve fuel efficiency to meet state requirements for implementation of the CAA section 111(d) rulemaking for existing sources and would have the effect of increasing a source's maximum achievable hourly emission rate (lb CO2/hr), even while decreasing its actual output based emission rate (lb CO2/MWh). Because all of these actions would be treated as pollution control projects under the EPA's current NSPS regulations, they would be specifically exempted from the definition of modification.
 For the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analysis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA still anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
Commenter 0267, 0289 stated that EPA should exclude the costs of complying with EPA's final Section 111(d) existing source program from any reconstruction analysis under Section 111(b). The commenter noted that, in addition to potentially triggering NSPS modification, compliance with EPA's final ESPS under Section 111(d) for EGUs may also force sources to invest heavily to upgrade their existing units. The commenter urged EPA to exclude these costs from any reconstruction analysis under Section 111(b) since the investments are being made to comply with existing standards.
The commenter refers to the illustrative analysis presented in the Regulatory Impact Analysis (RIA) for the modified source standard at proposal. In that document, the EPA analyzed only the benefits and costs associated with compliance with the Section 111(b) modification provisions. No analysis was conducted for the reconstructed source standards due to a lack of information.
The EPA expects that most of the actions EGUs are likely to take in the foreseeable future that could be classified as NSPS "modifications" would qualify as pollution control projects. In many cases, those projects are likely to involve the installation of add-on control equipment needed to meet Clean Air Act (CAA) requirements for criteria and air toxics air pollutants. Any associated CO2 emissions increases would likely be small and would occur as a chemical byproduct of the operation of the control equipment. In other cases, those projects would involve equipment changes to improve fuel efficiency to meet state requirements for implementation of the CAA section 111(d) rulemaking for existing sources and would have the effect of increasing a source's maximum achievable hourly emission rate (lb CO2/hr), even while decreasing its actual output based emission rate (lb CO2/MWh). Because all of these actions would be treated as pollution control projects under the EPA's current NSPS regulations, they would be specifically exempted from the definition of modification.
For the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analysis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
Commenter 0213 noted that Section 111(a)(1) directs EPA to "take into account" the cost of achieving reductions, and that in Essex Chemical Corp. v. Ruckelshaus, 486 F.2d 427, 433 (D.C. Cir. 1973), the court held that 111(b) standards must be "reasonable reliable, reasonably efficient, and...reasonably...expected to serve the interests of pollution control without becoming exorbitantly costly in an economic of environmental way." (emphasis added) The commenter noted that similarly, in Portland Cement Ass'n v. Train, 513 F.2d 506, 508 (D.C. Cir. 1975), the court upheld EPA's interpretation that section 111's cost inquiry functions as a safety valve to ensure that the costs a performance standard imposes are not "greater than the industry could bear and survive," but would instead allow industry to "adjust" in a "healthy and economic fashion to the end sought by the Act as represented by the standards prescribed." The commenter also noted that in Lignite Energy Council, 198 F.3d at 933, the court held that "EPA's choice [of BSER] will be sustained unless the environmental or economic costs of using the technology are exorbitant." The commenter stated that, as the previous holdings make clear, a performance standards under section 111 will be upheld unless the costs it imposes are exorbitant or too great for the industry to bear, and that the D.C. Circuit has never invalidated a section 111 rule for being too costly. The commenter cited multiple cases in which the court upheld performance standards for proposed rules even with seemingly high costs of compliance (Portland Cement Ass'n v. Ruckelshaus, 486 F.2d (D.C. Cir. 1973): court upheld standard for PM emissions even though the control technologies amounted to roughly 12 percent of the capital investment for an entirely new plant and consumed 5 to 7 percent of a plant's total operating costs; Portland Cement Ass'n v. EPA, 665 F.3d (D.C. Cir. 2011): court upheld PM standards that were anticipated to increase the cost of cement by 1 to 7 percent with little projected decrease in demand; Lignite Energy Council v. EPA, 198 F.3d (D.C. Cir. 1999): court ruled that a two percent increase in the cost of producing electricity was not exorbitant and upheld the 1997 NOx standards for EGUs and industrial boilers). The commenter referred to their comments on the New Source Standard at 25-27 for additional cost considerations.
The EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
Commenter 0230 stated concern with the cumulative costs of EPA's actions or proposals over the last several years and their burden on Alabama residents. The commenter stated that they are not aware of any meaningful analysis undertaken by EPA as to the cumulative cost impacts resulting from implementation of, and compliance with, the suite of pending and issued rules affecting electric utility generating units. The commenter urged EPA to perform a comprehensive cost analysis that cannot merely examine each proposed rule in isolation, but instead should consider the cumulative cost impacts of all such proposals.
The commenter additionally noted that the proposal does not appear to analyze the cost impacts caused when a unit cannot economically comply with the standard and is forced off-line.
Commenter 0215 stated that EPA has not provided a macroeconomic impact analysis of any of the Proposed Standards, contrary to law. The commenter stated that instead, EPA estimates that a hypothetical modified 500 MW coal-fired unit will incur $8.3 million annually to comply with the Proposed Standards. EPA estimates that this $8.3 million will be incurred regardless of whether the unit makes a 4 percent, 6 percent, or 8 percent efficiency improvement.  The commenter felt that they cannot fully evaluate and comment on EPA's cost estimates for the Proposed Standards because EPA either has not provided any analysis (for three of the four Proposed Standards), or has provided such scant analysis that it is impossible to evaluate.
The commenters refer to the illustrative analysis presented in the Regulatory Impact Analysis (RIA) for the modified source standard at proposal. In that document, the EPA explained that different units may be able to achieve different levels of efficiency for the same investment. "The actual efficiency improvement a unit can achieve for this cost will depend on its starting efficiency and operating capacity. Less efficient units may have more efficiency improvement options available and be able to achieve greater efficiency for the same cost. Relatively more efficient units may have fewer remaining cost-effective options to improve efficiency."
For the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analysis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies or significant macroeconomic impacts.
Climate Change Protection
Commenters 0142, 0177, 0186, and 0263 stated that the Proposed Rule does not impact carbon emissions or address climate change in an adequate manner, and therefore contend that EPA should withdraw this proposal.
Commenters 0142 and 0186 noted that EPA, in its RIA for the Proposed Rules, states that the impact of "reduced climate benefits" has been "monetized" but not "quantified". The commenters noted that EPA discusses at length it's assessment of climate change impacts in the RIA, e.g. global average temperature, sea level rise, and extreme weather events; however, the commenters claimed that EPA did not provide a single quantified effect to any climate parameter to demonstrate that the Proposed Rule would actually affect the climate change events which EPA cites as justification for the Rule. Commenter 0186 noted that this is remarkable, because EPA previously presented its estimates of impact on climate for other rulemakings such as the RIA for light-duty vehicle GHG emission standards in August of 2012 which explicitly considered the climate impact of the reduction of GHGs produced by the rule. Commenter 0186 stated that even under EPA's assumptions (with which they do not agree), atmospheric CO2 concentrations would be reduced by less than 1% (1.52 ppm, against a projected increase of 50-150 ppm over the same period), global warming would be slowed by 0.009 degrees C (against a projected temperature rise of 1.0-2.0 degrees C during the same period), and sea level ruse would be reduced by 0.03 mm. Commenter 0186 noted that even in the best-case scenario reductions for each of these parameters, EPA's projected benefits are swamped by projected increases.
Commenter 0142 stated that the EPA has not provided an estimated impact of the Proposed Rule on global atmospheric CO2 concentrations and even though the EPA used the global SCC factor for calculating monetized benefits from the CO2 reductions of the proposed rule, the EPA failed to consider global CO2 emission trends. The commenter stated that the EPA cannot claim benefits on a global basis while only taking into consideration changes in United States CO2 emissions.
Commenter 0186 pointed to a statistic from the Intergovernmental Panel on Climate Change that calculated that power plants in the United States account for somewhere between 4.2 and 5.1% of GHG emissions worldwide. Commenter 0186 calculated that the maximum amount of CO2 taken out of the air, when considering all scenarios EPA presents to comply with Section 111(d), would be 555 million metric tons per year, which would constitute between 1.03 and 1.12% of GHG emissions worldwide, likely less. Commenter 0186 stated that assuming perfect compliance and support from the states, the EPA Power Plan might affect around 1% of the GHG emissions. Commenter 0186 further stated that research shows that even an entire shutdown of America's reliable coal-fueled generating fleet would have no discernible effects on the climate. Commenter 0186 referenced an analysis by the American Coalition for Clean Coal Electricity which showed that such a shutdown -- which is far beyond what EPA is proposing in this Proposed Rule -- would result in 1/20th of one degree temperature change.[1] Commenter 0186 stated that EPA's " 'solution' ... is not even a drop in the bucket."
Commenter 0186 stated that EPA's RIA continues to rely on flawed IPCC data to define its asserted climate impacts. The commenter stated that "precisely at the point where the science needs to be strongest, at the very link that would couple these Proposed Rules to the climate impacts they claim will result, the science became polluted by anthropogenic error, an all-too-human tendency to compromise good science in favor of an unscientific agenda." The commenter further stated at their base, all of EPA's projections on the impacts of carbon reduction rely on one crucial causal connection that has no scientific basis. The commenter noted that EPA's RIA spent approximately 25% of the document (96 pages) monetizing but not quantifying the climate impact caused by the rule and stated that no science supports the causal link: "we do not understand the complex links between changes in GHG levels and any changes in climate, much less whether x reduction in emissions will "cause" y impact. In other words, there is no reasoned basis for accepting EPA's assessment."
These comments refer to information presented in the Regulatory Impact Analysis for the proposed standards, which addressed both 111(d) and 111(b) sources. While the EPA expects few sources to trigger the NSPS modification or reconstruction provisions, emission reductions, costs and benefits are expected for the 111(d) emission guidelines. These are presented in Chapter 4 of the RIA for that rulemaking. See also the Response to Comments for 111(b) for response to comments on climate change science (4.1) and on the social cost of carbon (4.4), and also the Response to Comments for 111(d) in Section 8.7.
 Commenter 0177 stated concern that a sector limited approach, such as EPA's proposed regulation of carbon dioxide from the utility sector, as opposed to an international framework, will raise consumer electric rates without providing any significant beneficial climate impact.
As discussed in the RIA for the 111(d) rulemaking (Section 8.7), the Clean Power Plan overall will result in the largest reductions of carbon dioxide emissions from a single regulatory action in U.S. history. However, EPA has been clear that, as stated in the 2009 GHG Endangerment Finding under Section 202 of the CAA, "the global nature of the air pollution problem and the breadth of countries and sources emitting greenhouse gases means that no single country and no single source category dominate or are even close to dominating on a global scale." EGUs are the largest contributors of CO2 in the US, and the reductions achieved in this rule are an unprecedented and necessary first step towards slowing the rate of climate change.
Commenter 0215 stated that EPA's estimated benefits reflect global, rather than domestic, effects. It is inappropriate to calculate global benefits when EPA has no jurisdiction to control worldwide emissions. When calculated more properly on a domestic basis, the purported benefits of the rule are far outweighed by their costs.
While the commenters identify a number of limitations and uncertainties associated with the illustrative analysis presented in the Regulatory Impact Analysis (RIA) for the modified source standard at proposal, EPA notes that for the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analysis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
EPA disagrees with the commenter's recommendation of a domestic SC-CO2.  See comment responses in unit 4.4 of the section 111 (b) RTC for a full discussion.  See also the interagency working group's (IWG's) responses to the comments on the OMB solicitation address the comments on the use of a global SC-CO2. Specifically, EPA concurs with the IWG's response to these comments and hereby incorporates them by reference.
Economic and Employment Impacts
Commenters 0170, 0183, 0186, 0230, 0231, 0237, and 0249 worried that the Proposed Rule would preclude coal and coal-fueled generation in the United States by discouraging the use of coal in place of natural gas or other fuels, which would have a negative impact on the U.S. economy in terms of GDP, jobs, and the affordability of electricity.
Commenter 0186 stated that the EPA Power Plan represents a reversal of decades of federal policy emphasizing increased use of domestic coal as a way of achieving U.S. energy independence, reducing consumption of imported foreign oil, and providing the Nation with reliable and affordable domestic energy. The commenter stated that this reversal of federal policy after private industry has already committed to its investments, operates in retroactive fashion to strand the investments the federal government encouraged under Penn Central Transportation Co. v. New York, 438 U.S. 104, 107 (1978). The commenter noted that the cumulative benefits of low carbon coal programs in the United States total about $40 billion (in 2008 dollars) and federal expenditures for these programs totaled about $3 billion (2008 dollars), thus creating a benefit-cost ratio of 13 to 1. See Roger Bezdek and Robert Wendling, The Return on Investment of the Clean Coal Technology Program in the USA, 54 Energy Policy 104-12 (March 2013). The commenter noted that these programs are currently creating about 60,000 jobs in the U.S. economy. The commenter emphasized the importance of coal in the U.S. economy and energy policies as the investments made in coal, and in developing new coal technologies, have led to economic growth, affordable and reliable energy, and a substantial number of jobs. The commenter stated that low-cost electricity from coal allows American business to prosper and lower-income Americans to improve their quality-of-life and on the flip side, the costs to society from suddenly curtailing the nation's energy mix away from coal will be substantial. The commenter expressed concern that the change sought by the EPA Power Plan will result in millions of jobs lost, billions less in gross economic output, skyrocketing electricity prices, and disparity affecting communities based on income and geography. The commenter noted that the EPA declined to include a discussion or consideration of these "crippling costs" in its RIA, and that EPA cannot ignore these costs. The commenter stated that while it may be politically expedient to target coal, our nation's economy depends significantly on it. The commenter cited a Pennsylvania State University study the estimated that U.S. coal-fueled generation in 2015 would contribute $1.05 trillion (in 2005 dollars) in gross economic output, $362 billion in annual household incomes, and 6.8 million jobs. The commenter noted that they study further concluded that displacing 33% of coal-based generation in 2015 would result in a $166 billion reduction in gross economic output, $64 billion reduction of annual household incomes, and a loss of 1.2 million jobs.[2]
Commenter 0186 stated that EPA's Power Plan "threatens to...direct() investment away from coal. Indeed, the Proposed Rules do not even analyze investing in low carbon technology as a regulatory alternative at all. A more rational approach suggests using 21st Century Coal technologies to ensure prosperity and economic growth around the world." The commenter stated that the EPA Power Plan is unquestionably designed to cut and eventually eliminate the use of coal, a policy that would fall harshly on the Midwestern United States and other selected regions throughout the country, while largely bypassing coastal areas. The commenter suggested that the unprecedented scope and impact of the Proposed Rule raises deep Fifth Amendment concerns in that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922). The commenter said that the Proposed Rules would "unduly penalize" coal companies, their employees, customers, and communities simply for following the government's past directive to invest in coal. The commenter stated that this "about-face in policy punishes those who relied upon the government, in the same way as the regulation held to be an impermissible taking in Ruckelshaus v. Monsanto, 467 U.S. 986 (1984) (finding a constitutional infringement when the government frustrated statutorily created expectations that trade secretes submitted to the government would be kept confidential.) Government policies shape business decisions and help determine the reasonableness of investment-backed expectations. See Palazzolo v. Rhode Island, 533 U.S. 606, 618 (2001);Tahoe-Sierra Preservation Counsel Inc. v. Tahoe Regional Planning Agency, 533 U.S. 606, 633 (2001)."
Commenter 0237 stated that the Proposed Rule is "another front in President Obama's well-publicized war on coal, the requirements appear especially burdensome for coal-fueled facilities" and that without meaningful explanation, EPA would deny coal-fueled facilities to access to two exemptions that the agency proposes to provide natural gas-fueled facilities. The commenter stated that while the Performance Standards Programs provide EPA with limited authority to promulgate adequately demonstrated, technology-based "standards of performance," EPA does not have authority to use those programs to effectively eliminate coal-fueled power plants and doing so would violate Congressional authority. The commenter noted that Congress has clarified, time and again, that coal must figure into the nation's energy future, and the Clean Air Act is not to be used to produce a contrary result and that EPA's actions, granting itself the privilege to enact laws where Congress has declined to do so, and in failing to execute the laws that Congress has enacted, the Proposed Rule has profound constitutional ramifications. The commenter cited one study which considered what would happen from a 20-year phase-out of coal-produced energy and found that: 500,000 jobs would be lost, aggregate GDP would decrease by $1.47 trillion, electricity prices would rise by 20%, natural gas prices would rise 42%, and a family of four's annual income would drop by more than $1,000 per year. See Kreutzer, David W. and Kevin Dayaratna, "Cost of a Climate Policy: The Economic Impact of Obama's Climate Action Plan," Heritage Foundation (June, 27, 2013).
Commenter 0249 cited a study commissioned by the NDTA, performed by Kadrmas, Lee and Jackson, Inc., which forecasted an expected electrical load growth for the next 20 years, from 2012 to 2032, in the study area which spans regions across North Dakota, South Dakota and Montana. The commenter noted that by the end of the study period in 2032, the 43 counties within the Williston Basin are projected to require 2,512 megawatts (MW) of additional electrical demand, related to oil and gas development, to accommodate population growth, new ancillary business development and more than 30,000 additional wells. The commenter stated that new efficient lignite-fueled baseload electric generation facilities should not be prohibited by the Proposed Rule for being an option available for meeting the substantial projected demand, as the Proposed Rule directly threatens the ability of new lignite generation to address the substantial projected electrical demand.
Commenter 0231 stated that coal is a critical component of the nation's energy portfolio with nearly 40% of U.S. electricity derived from coal combustion. The commenter added that coal can provide substantial amounts of transportation fuels and syngas to displace significant amounts of imports of crude oil, refined products and natural gas. The commenter added that coal is by far the nation's most abundant source of energy, constituting 94 percent of the nation's fossil fuel resources and that the U.S. has nearly 261 billion tons of recoverable coal reserves, according to the Energy Information Administration, which is a 240-year supply at current rates of use. The commenter noted that the mining industry is also a major source of jobs and economic development in the United States and that the U.S. coal mining industry directly employs nearly 120,000 people in 23 states. The commenter stated that for each coal mining job, an additional 3.5 jobs are created elsewhere in the economy and about 300,000 people work directly in minerals mining throughout the United States. The commenter stated that employment in industries supporting mining, including manufacturing, engineering and environmental and geological consulting, accounts for nearly 1.6 million jobs. The commenter noted that the average miner makes over $71,000 per year in salary, not including overtime, bonuses and benefits and that these are often the highest paying jobs in the community if not some of the highest paying statewide. The commenter stated that with its proposal EPA risks the hundreds of billions of dollars the mining industry contributes to the national economy each year. The commenter noted that mining of coal, metals and minerals provides more than $232 billion annually in direct and indirect economic impact.
This rule addresses modified and reconstructed sources and does not impose any requirements on new sources. (111(b) new source standards were proposed in a separate rulemaking in January 2014.) The EPA anticipates that few EGUs will take actions that would be considered NSPS modifications or reconstructions and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
Commenters 0186, 0237, 0249, and 0271 expressed concerns about the Proposed Rule's effect on the affordability of electricity to businesses and the general public.
Commenter 0186 noted that the current Administration concedes that the plan will result in significantly higher electricity prices. The commenter also noted that the Proposed Rule does not require the federal government to make any capital investment in change but instead will saddle electric taxpayers with the true cost of the EPA Power Plan. The commenter stated that skyrocketing electricity prices will have an immediate impact on businesses that rely on affordable energy to sustain hiring and production levels and will hit low-income Americans particularly hard, given the percentage of their monthly budgets that they devote to basic needs such as heating and cooling. The commenter pointed to the experience of numerous U.S. states and overseas countries whose experiences they feel are "telling". The commenter noted that California's cost of electricity is significantly higher than the national average, and has led to significant job losses and economic hardship. The commenter stated that between 2009 and 2013, the average energy bill for EU consumers increased by some 17 percent, while energy costs for individual users jumped by 21 percent and between 2005 and late 2013, the average price of residential electricity in the EU rose by 55 percent, and industrial electric rates jumped by 26 percent. See Robert Bryce, Maintaining the Advantage: Why the US Should Not Follow the EU's Energy Policies, (report prepared for the Manhattan Institute for Policy Research), (February 2014). The commenter noted that the average U.S. household historically pays 12 cents per kilowatt-hour, about a third of what the same amount of electricity costs in Germany. The commenter noted that Spain has pushed aggressively for renewable energy, but Spain's electricity bills are among the highest in Europe, having risen 60 percent between 2006 and 2012. The commenter noted that a Spanish newspaper reported around 4 million Spaniards facing difficulties paying their electricity bills, and some 1.4 million homes had their electricity cut off for non-payment. See "The shocking price of Spanish electricity", EL PAIS, (Jan. 1, 2014). The commenter went on to state that Australia experienced a soar of electricity prices because of its Renewable Energy Target and carbon tax, with household electricity costs rising 100 percent over a five year period. Similarly, The commenter noted that Ontario's Green Energy and Economy Act has made great strides in solar energy, but has caused Ontario's electric rates to increase by approximately 33%. The commenter concluded that every country that has aggressively sought to discourage coal usage has experienced large electricity price increase with no similar corresponding benefit.
Commenter 0237 stated that access to inexpensive energy is the most important contributor to human welfare and that any increase in the cost of energy creates injuries to individual and collective welfare across numerous dimensions. The commenter noted that money spent on energy is not available to be spent on healthcare, education, food, or housing. The commenter stated that increases in energy costs must either be absorbed by manufacturing companies, leading to decreased capital available for investment and lowered growth, or passed on to consumers, who then suffer the corresponding loss in income meaning that increased energy prices create yet another incentive for American companies to shift production to foreign operations. The commenter also noted that increased energy prices also adversely affect the agricultural sector, driving up the price of food--"creating yet another ripple throughout the economy." The commenter emphasized the importance of coal in sustaining "a healthy American economy". The commenter said the following on the importance of coal: "Over the past 10 years, coal has accounted for half of domestic energy production. Total demand for U.S. coal reached 1.12 billion tons in 2008. Half of U.S. electricity is generated from coal. Coal accounts for about 32 percent of U.S. total energy production and 23 percent of total energy consumption. Coal is the most affordable source of power fuel per million BTU, historically averaging less than one-quartet the price of petroleum and natural gas. There are approximately 600 coal generating facilities (1,470 generating units) and 1,100 manufacturing facilities using coal in the U.S., according to the U.S. Energy Information Administration (EIA)."
Commenter 0249 urged EPA to allow potentially promising greenhouse gas (GHG) emissions reducing technologies to "come into their own," while allowing the utilization of abundant, affordable, and reliable lignite coal reserves. The commenter stated that failure to do so will greatly increase electricity prices to families and businesses, threaten the reliability of the electric grid by diminishing fuel choices to generate future stable, baseload electricity, retard economic growth and energy security, and cause the unnecessary loss of thousands of jobs in the coal-mining and manufacturing sectors.
Commenter 0271 stated concern that this proposal will be in direct conflict with Indiana's goal of affordable reliable energy because it will result in additional and unnecessary costs to EGUs in order to comply. The commenter noted that these costs generally get passed along to the consumer. The commenter stated that according to the Indiana State Utility Forecasting Group's (SUFG) 2013 Forecast, compliance with recent environmental regulations alone will push Indiana's electricity prices 30 percent higher from 2012 to 2023. The commenter is concerned that the proposed restrictions will lead to Hoosiers losing heat and power because they won't be able to pay the rising utility costs, that U.S. businesses will be unable to compete in a global economy, and that worldwide greenhouse gas emissions may actually increase due to the relocation of manufacturing operations from the U.S. to other countries.
Based on historical data, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications or reconstructions and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
Commenter 0183 stated that EPA justifies its overly burdensome regulation on coal-fueled plants by asserting that low natural gas prices are independently driving a decline in coal-fueled power generation and that stated that to make this assertion, EPA assumed that gas prices would remain at their current low levels into the indefinite future. The commenter argued that this assumption is short-sighted, cannot be verified, and ignores the benefit of fuel diversity to buffer against unexpected supply and price fluctuations.
The commenter refers to analysis supporting 111(b) standards for new sources. This rule addresses modified and reconstructed sources and does not impose any requirements on new sources. 111(b) new source standards were proposed in a separate rulemaking in January 2014.
Commenter 0183 felt that EPA failed to consider the impacts of the Proposed Rule on the ERCOT market and the unique and critical generation assets operating in Texas. The commenter stated that the proposal is a threat to the reliability of the electricity system in Texas and the continued recovery of the economy nationwide. The commenter felt that EPA's approach is especially ill-suited for Texas's deregulated market and will result in stranded investments, reduced fuel diversity, and loss of jobs. The commenter stated that the ERCOT market supplies 8%% of the Texas load, with coal-fueled units supplying nearly 34% of energy used in 2012. The commenter further stated that ERCOT must be self-sufficient in providing power for its 23 million customers and that EPA's proposal, coupled with its historic litigating position on New Source Review applicability, could effectively eliminate the ability of coal-fueled units to undertake routine maintenance, repair, and replacement to keep the units operating as designed.
Commenter 0183 noted that the ERCOT market design does not include a capacity payment for generators; instead, generators are only paid when they generate electricity for consumers. The commenter added that generators compete against other generators to be "dispatched" to generate electricity and, as such, participants in the market are incentivized to operate as efficiently as possible. The commenter noted that they, and other market participants, have looked for and adopted energy efficiency measures to reduce the amount of fuel used to generate electricity, as fuel is a major expense in generating electricity. The commenter stated that because of the ERCOT market design, all viable heat rate improvements have already been made and are not available for additional reductions as EPA assumes in this proposal and the Existing Unit Proposal.
Based on historical data, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications or reconstructions and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
Commenters 0161 and 0186 showed concern with U.S. regulation of CO2 emissions, as they believe that emissions from countries such as China and India would overwhelm any CO2 reductions achieved by U.S. GHG regulations, including the Modified Source Proposal.
Commenter 0186 noted that in 2013, CO2 emissions worldwide rose 2.5% and hit a record high, with China leading this growth and countries such as India and Brazil rapidly increasing their emissions as well. Commenter stated that China emits more CO2 in one month than the EPA Power Plan would eliminate in one year and assuming the same rate of emissions, China will wipe out one year's worth of emissions reduction under both Proposed Rules in only 21 days. Commenter calculated this by taking China's emission rate of 9.86 Gt/yr (= 0.82 Gt/mo), dividing it into 0.027 Gt/day for a 30-day month, multiplying by 20.5 days, which resulted in 0.554 Gt of emissions---roughly what EPA claims the Proposed Rule would eliminate over the course of one year after full implementation. Commenter stated that other countries relying upon coal for energy also swamp the reductions from the Proposed Rules because of the high demand for power from emerging markets, which they expect to continue. Commenter concluded that "because of the global need for reliable, affordable energy, much of the rest of the world will need to depend on coal for stable development in the 21st century" and that "any reduction made in carbon emissions from generating units will be inconsequential given the international demand for affordable, reliable electricity from coal." Commenter noted that Russia recently announced construction of an 8,000 MW coal-fired plant, the largest in the world, with plans to sell the energy to China while India recently rejected the idea of GHG cuts. Commenter suggested that a more sound policy would be a global push towards 21st century coal, and that the United States should lead by example. See "Russian Firm Studying World's Largest Coal-Fired Plant to Supply China", REUTERS (May 26, 2014).
While the commenters focus on the illustrative analysis presented in the Regulatory Impact Analysis (RIA) for the modified source standard at proposal, EPA notes that for the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analysis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.

Furthermore, all countries contribute to climate change, and no one nation can stop it alone.  All nations that are significant emitters of greenhouse gases will need to take the steps necessary to reduce their emissions in the near and long term. We have an obligation to ensure that the world we leave behind for our children and our grandchildren is healthier and safer. This rulemaking further establishes the United States as a leader in international efforts to secure an ambitious and lasting climate agreement in 2015 that will include significant contributions from all major economies. Already, U.S. action has helped spur announcements from China and Brazil to limit their own greenhouse gas emissions, building momentum for broader global commitments later this year in Paris.
Commenter 0186 stated that the Proposed Rule threatens to impede progress in the developing world. Commenter stated that "these nations currently rely on coal because it is affordable and reliable" and that "the success of our own Nation's development is undeniably linked in large part due to our abundance of coal and our government's past consistent focus and priority on affordable, reliable, and plentiful energy for homes and businesses." Commenter further stated that if the United States intends to lead by example, suggesting that developing countries and economies suddenly shift away from coal -- "the very resource that guided American industrialization" -- "will be a step backwards." Commenter noted that such an act would "reduce prosperity and human welfare" because "coal is a necessary bedrock component of global energy, and clean-coal technologies are the global future."
Commenter 0186 also noted that if these developing countries followed the model of the EPA Power Plan, alternative energy sources would "cause energy costs to 'skyrocket' beyond the reach of many -- and certainly beyond the reach of those who need it most." Commenter stated for these reasons, coal and lower carbon emission technology using coal must "continue to be the cornerstone and bedrock of global energy policies."
 Please see response to 3.6-5.
Commenter 0186 stated that "in addition to the impact that increased energy costs will have on jobs, the EPA Power Plan as a whole will have broad and devastating implications for millions of jobs and the economy generally" and that EPA did not consider these costs. Commenter relied on a 2011 study by the National Economics Research Association (NERA) to support their stance. The NERA study estimated the effects from 2012-2020 of the four environmental regulations in three major areas: (1) coal unit retirements, (2) electricity and other energy market impacts, and (3) economic impacts. Commenter stated that NERA found "Over the period from 2012 to 2020, about 183,000 jobs per year are predicted to be lost on net due to the effects of the four regulations. The cumulative effects mean that over the period from 2012 to 2020, about 1.65 million job-years of employment would be lost." Commenter noted that the study also estimated that U.S. disposable personal income would be reduced by $34 billion each year on average over this period (in 2010 dollars), and the average annual loss in disposable personal income per household would be $270, with a cumulative loss of $1,750 (in 2010 dollars). Commenter also noted that these net figures in the study account for "jobs that would be created in some sectors as a result of spending on pollution controls (i.e. 'green jobs') as well as jobs lost due to higher electricity prices and other negative impacts."
Commenter 0186 also stated that it is not plausible to assume that workers displaced from jobs because of EPA regulations will readily be able to find alternative work, as EPA had stated that it did not need to consider job losses as a result of the Proposed Rule because the losses would be temporary. Commenter referenced the Bureau of Labor Statistics' most recent Displaced Worker Survey that found that among the 4.3 million long-tenured displaced workers who lost their jobs between 2011 and 2013, 39% were still unemployed and that among those long-tenured workers who were displaced from full-time wage and salary jobs but were re-employed in such jobs in January 2014, nearly half (48%) had earnings that were lower than those of their lost job. Commenter emphasized again that decreasing the amount of electricity generated from coal will result in fewer jobs, even taking into account gains in 'green jobs', and EPA "has not shown that those jobs can be replaced elsewhere given the state of the economy."
Commenter 0281 also expressed concern about potential job losses, shifts in the workforce (particularly in rural mining areas where other jobs may not be plentiful), and the corresponding adverse impacts on the communities supporting these workers. The commenter stated that the EPA failed to conduct meaningful job impact and economic analyses of the proposed rule.
The commenter refers to analysis conducted regarding the 111(d) emission guidelines for existing sources. This rulemaking addresses new and modified sources under CAA section 111(b). Based on historical data, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications or reconstructions and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
Commenter 0186 stated that a shift away from coal will significantly increase the cost of electricity, which will in turn have a very significant cascading impact on gross domestic product (GDP). Commenter noted that a review of the studies which estimated the energy price/GDP elasticity, one inquiry "determined that a reasonable electricity elasticity estimate is -0.1, which implies that a 10 percent increase in the electricity prices will result in a one percent decrease in GDP." See American Coalition for Clean Coal Electricity, "The Social Costs of Carbon-No, the Social Benefits of Carbon," 9 (Jan. 2014). Commenter pointed to another study which analyzed the potential impacts of the EPA power plant rules on the electricity sector and the economy as a whole and noted that the study found that the rules would cause lower GDP -- on average $51 billion every year through at least 2030, with a peak decline of nearly $104 billion in 2025 -- accompanied by losses in employment. See IHS, "Assessing the Impact of Potential New Carbon Regulations in the United States,"(report prepared for the U.S. chamber of Commerce) (2014).
The commenter refers to analysis conducted regarding the 111(d) emission guidelines for existing sources. This rulemaking addresses new and modified sources under CAA section 111(b). Based on historical data, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications or reconstructions and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
Commenters 0160, 0220, 0230, and 0252 said that they were concerned with the effect that the Proposed Rule would have on the nation's power system.
Commenter 0220 held the position that Congressional action, not administrative rule, is required to properly address the complex and impactful issue of limiting greenhouse gas emissions. Commenter stated that "the proposals threaten the diversity, affordability and security of our state and nation's power supply, which is central to the vitality of our economy and quality of life" and that "EPA's proposal for modified and reconstructed EGUs is complex, inflexible, costly and unnecessarily burdens long-term investment decisions needed to ensure the future health of the United States' power system." Commenter stated that EPA's proposed CO2 standards for new, modified and reconstructed, and existing EGUs would "increase the volatility and expense of our state and nation's power system without demonstrating that they would actually reduce overall greenhouse gas emissions." Commenter noted that instead of supporting the many advantages of domestic power production, the EPA's Proposed Rule "may encourage shifting power production, and related carbon emissions, to unregulated entities outside the U.S. that are generally less environmentally responsible than U.S. power generators."
Commenter 0252 stated that EPA's Proposed Rules for new, modified and reconstructed, and existing sources "evidence() unparalleled regulatory hubris." Commenter stated that EPA seeks to "unlawfully leverage its authority under the Clean Air Act, which is limited to regulating air pollutant emissions, to take near total control over the entire electricity sector, from generation to transmission and even demand." Commenter suggested that the effect of EPA's action would be "the crippling of the Nation's electric generation fleet."
Commenter 0230 encouraged EPA to avoid energy policies that will have more severe economic impacts than the assumed negative impacts associated with carbon. Commenter urged the EPA to use any and all available flexibilities to temper its proposed modified and reconstructed standard to avoid such adverse impacts, and assure the consuming public the good and quantifiable benefits of the proposed standard.
Based on historical data, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications or reconstructions and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
 Commenter 0199 urged EPA to craft rules that are obtainable by electric generating units and that do not impose unworkable requirements that would only serve to increase cost, decrease electric reliability and have negligible environmental benefits.
Commenter 0237 stated that the Proposed Rule will significantly contribute to the substantial and unwarranted harm on the American public that EPA will cause with its proposed Standards of Performance for Greenhouse Gas Emissions From New Electric Generating Units and proposed Carbon Pollution Emission Guidelines for Existing Electricity Generating Units.
Commenter 0215 stated that EPA has not undertaken a complete economic impact assessment of the Proposed Standards as required by sections 312 and 317 of the CAA. The commenter stated that EPA provides no impact assessment of Proposed Standards for three of the four subcategories and only an "illustrative analysis" for a single "hypothetical unit" complying with the modified subpart Da standard.
The EPA has concluded that the requirements included in this final rule are achievable and reasonable in terms of costs. The commenters refer to the illustrative analysis presented in the Regulatory Impact Analysis (RIA) for the modified source standard at proposal. In that document, the EPA presented the costs and benefits associated with a single unit because historically few units have triggered the NSPS modification provisions and there were no data available about any that may do so in the future.
The EPA expects that most of the actions EGUs are likely to take in the foreseeable future that could be classified as NSPS "modifications" would qualify as pollution control projects. In many cases, those projects are likely to involve the installation of add-on control equipment needed to meet Clean Air Act (CAA) requirements for criteria and air toxics air pollutants. Any associated CO2 emissions increases would likely be small and would occur as a chemical byproduct of the operation of the control equipment. In other cases, those projects would involve equipment changes to improve fuel efficiency to meet state requirements for implementation of the CAA section 111(d) rulemaking for existing sources and would have the effect of increasing a source's maximum achievable hourly emission rate (lb CO2/hr), even while decreasing its actual output based emission rate (lb CO2/MWh). Because all of these actions would be treated as pollution control projects under the EPA's current NSPS regulations, they would be specifically exempted from the definition of modification.
 For the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analysis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA still anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
 Commenter 0182 stated that economic considerations must be recognized for coal refuse-fired CFB's due to fuel considerations and physical plant size and that coal refuse EGU's utilizing CFB technology "cannot economically apply capital intensive advanced efficiency (heat rate) technologies to reduce the greenhouse gases at the plant sites AND be economically competitive in the market."
See the preamble for the EPA's rationale for not exempting coal refuse-fired EGUs. The EPA notes that the expanded industrial CHP exemption would be applicable to coal refuse-fired units
Benefits
Commenters 0150, 0157, 0169, 0183, 0186, 0187, 0199, 0214, 0215, 0222, 0224, 0227, 0230, 0239, 0242, 0253, 0263, and 0284 stated that the Proposed Rule offers no benefits and should therefore be withdrawn.
Commenters 0150, 0157, 0183, 0186, 0241, 0215, 0224, 0230, 0239, 0253, 0263, and 0284 noted that EPA stated in the proposal that "[h]istorically, few EGUs have undertaken reconstruction" and that it "expects few units would trigger the modification or reconstruction provisions" in this proposal. The commenters stated that because of these negligible benefits, EPA should exercise its authority to not establish NSPS for modified and reconstructed sources, as it has done in other cases.
Commenters 0150, 0183, 0186, 0187, 0199, 0222, 0224, 0253, 0263, and 0284 noted that EPA stated in its RIA that it "do[es] not anticipate any significant costs or benefits associated with this proposal", and therefore find it difficult to justify the Proposal.
Although there have historically been few units that trigger the NSPS modification and reconstruction provisions, any unit that triggers these provisions in the future will be subject to the standards set by this rule. In that case, there would be benefits and costs associated with the standard.
Commenters 0142, 0161, 0214, 0215 and 0256 stated concern with EPA's evaluation of the potential health benefits of the proposed rule.
Commenters 0161 and 0256 noted that the EPA did not provide the benefits associated with the pollutant that is the target of the proposed regulation -- carbon dioxide -- in the cost-benefit discussion in the preamble. Commenters noted that EPA instead relied on the co-benefits associated with the reduction of other pollutants such as SO2, NOx, and fine particulate matter. The commenters stated that the benefits of the proposed rule should be quantified based on the benefits associated with the emissions reduction of solely the target pollutant. Commenter 0161 stated that EPA has provided no legal justification for relying on the "health co-benefits" of the reductions of SO2, NOx, and fine particulate matter and that EPA is precluded from citing their alleged benefits as support for the proposal. Commenter 0256 noted that where co-benefits are enumerated by EPA, a majority of the co-benefits are due to premature mortality due to fine particulate matter. Commenter 0256 stated that because sulfate based fine particulate resulting from emissions of sulfur dioxide from utility units appears to be EPA's major cost component used as a basis for various EPA regulations, the preamble should include a detailed discussion and analysis of the health effects of sulfate based fine particulate versus other times of fine particulate. Commenter 0256 further stated that, absent such analysis, it seems that EPA is promulgating a series of regulations that are setting the energy policy for this country and will likely result in harmful long-term effects on the economy without bothering to do the appropriate scientific analysis that is the basis for the regulations.
Commenters 0161 and 0214 stated that if the National Ambient Air Quality Standards for pollutants such as SO2, NOx, and fine particulate matter have been properly set, there cannot be additional substantial human health measures available as co-benefits of other regulations such as the Modified and Reconstructed Source Proposal.
Commenter 0142 stated that the health benefits for collateral decreased in SO2, NOx, and PM2.5 continue to be exaggerated and do not take into account other recent rules implementing emission reductions from electric generating units.
Commenter 0215 stated that EPA claims that the health co-benefits from the Proposed Standards are equal to or greater than the climate benefits. Those co-benefits are, however, illusory. Most of them are attributable to exposures to pollutants at levels below those EPA has found protective of public health. Even those fictional benefits are largely due to emission reductions that will occur even in the absence of the Proposed Standards in order to address any residual pollutant levels above those found to be protective of public health. Thus, the health co-benefits of the Proposed Standards are essentially zero.
These comments refer to the analysis conducted in the RIA for the proposed standards. For the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analysis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification. However, the EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. Likewise, the Agency does not anticipate any impacts on the price of electricity or energy supplies.
Although there is no illustrative analysis of costs or benefits for the final rule, the commenters raise general issues with EPA's benefit methodology that are addressed here. EPA does not conduct benefit-cost analyses under any specific requirement of the CAA.  The benefit-cost analysis included in the RIA accompanying the proposed rule was conducted in compliance with Executive Order 12866.  Consistent with OMB and EPA guidance, when conducting a cost-benefit analysis to meet the requirements of EO 12866, the EPA estimates all of the anticipated costs and benefits associated with a regulatory action to the extent feasible, including benefits anticipated to occur from reducing air pollution to below the NAAQS levels.  As EPA has consistently stated, the NAAQS are not risk free, and as a result, consistent with scientific evidence and CASAC review.

The EPA disagrees that it has double-counted the benefits for this proposal, as all of the estimated health benefits are attributable to the emissions reductions associated with this proposed rule. The EPA notes that NAAQS are set at a level deemed by the EPA Administrator to be protective of public health within an adequate margin of safety and are not set at a level of zero risk. Therefore, there would still be health benefits that occur at the lower concentrations, even if we have less confidence in the magnitude of those benefits.  The EPA believes that the best estimate of benefits includes benefits both above and below the levels of the NAAQS and maintains it is not double-counting benefits simply because the magnitude of the health benefits that occur at lower concentrations are more uncertain.

The EPA's standard practice for its rules is to estimate, to the extent data and time allow, all benefits of the emissions reductions achieved by a rule beyond control requirements for other rules, i.e., establish a baseline. While it can be difficult to account for concurrent rulemakings in a baseline, the EPA clearly identifies what is and what is not in the baseline for each analysis. If this proposed rule was duplicative of other rules, then there would be no additional costs or benefits attributable to this proposed rule.  Prior to estimating the health benefits of this proposed rule (and any other rule), we simulated what PM2.5 concentrations would be in the future to account for the air quality benefits that would occur due to other regulations (e.g., MATS) or economic factors in this baseline. Any emissions changes expected as a result of this proposed rule are additional emissions reductions beyond the other regulations included in the baseline (e.g., MATS). Therefore, the benefits from particle reductions are not double-counted  -  they are real health benefits from emissions reductions anticipated to be achieved by this proposed rule.

Further, the PM2.5 and ozone health co-benefits expected from this proposed rule are not double-counted with benefits estimated in the NAAQS RIAs. NAAQS RIAs illustrate, but do not predict, the emissions reductions strategies that States may choose to enact when implementing a revised NAAQS.  Subsequent Federal and State implementation rules will be reflected in future baselines for PM and ozone NAAQS reviews. Also, because it is not possible to accurately account for rules that have not yet been promulgated, RIAs prepared for a future rulemaking will likely include any additional rulemakings in the baseline. For example, the baseline in this RIA reflects many recently promulgated rulemakings, including MATS, CSAPR, and CCR.

The U.S. EPA follows a highly structured, transparent and peer-reviewed process for estimating the human health impacts attributable to poor air quality. As a first step, the Agency identifies the health endpoints to quantify by consulting the Integrated Science Assessment, a systematic review of the clinical, toxicological and epidemiological literature. This document is reviewed by the independent Clean Air Scientific Advisory Committee. The Agency quantifies those endpoints classified by the ISA as being causal or likely causal, selecting concentration-response relationships from studies that satisfy a host of criteria -- most notably whether the population characteristics match those affected by the regulation, thus excluding studies performed outside of the U.S. and Canada. The Agency's approach for characterizing the benefits of air quality changes has been extensively reviewed by independent scientific bodies including the National Academies of Sciences and the U.S. EPA Science Advisory Board.

Consistent with the findings of the PM ISA, which found that the log-linear no-threshold model best estimates PM-related premature death, the Agency quantifies PM impacts resulting from changes in ambient concentrations at all levels.
Commenter 0157 noted that EPA's 111(d) proposal means that all coal units, high and low cost, will run even less since 111(d) mandates increased gas-fired generation. The commenter stated that this means that both reduced hours of operation and increased operation at lower loads will negate benefits that EPA assumes will occur under this proposal. The commenter felt as is EPA failed to consider the interaction of the two proposals.
The EPA anticipates that few EGUs will take actions that would be considered NSPS modifications and subject to the standards of performance finalized in this action during the period of analysis. For this reason, the standards will result in minimal emission reductions, costs, or quantified benefits in the period of analysis. The commenter refers to the benefits identified in an illustrative analysis conducted for the RIA for the proposed rule. For the RIA supporting the final rule, the EPA considered the limited data available on past modifications and the diversity of existing units that could potentially modify and determined that it was not possible to conduct a representative illustrative analysis of what costs and benefits might result from this final rule in the unlikely case that a unit were to take an action that would be classified as a modification.
Commenter 0186 stated that, according to EPA, the Proposed Rule has no freestanding benefits other than serving as a necessary predicate (in EPA's view) to a separate Section 111(d) rulemaking for existing sources, on which EPA focuses its regulatory analysis. The commenter noted that EPA did not bother to create separate RIA reports for the two proposed rules, and merely appended the effects of the Proposed Rule to the much more substantial analysis for the rulemaking.
Although there have historically been few units that trigger the NSPS modification and reconstruction provisions, any unit that triggers these provisions in the future will be subject to the standards set by this rule. In that case, there would be benefits and costs associated with the standard.
 Commenter 0294 stated that waste-derived materials must be broadly defined. The commenter stated that  the McCabe Memorandum appropriately concludes that the carbon benefits of non-forestry "waste-derived materials" are obvious, given that (1) the so-called "landscape emissions effects" (primarily the growth of forests and land use changes) are not implicated since these wastes are generated regardless of potential use for bioenergy and (2) conversion to energy avoids methane emissions. The commenter felt that while correct, this analysis should not only apply to municipal solid waste but also any non-forest organic material including such material as urban wood (or what EPA proposes to define as "clean cellulosic biomass" under proposed changes to the Non-Hazardous Secondary Materials ("NHSM") Rule (Vol. 78 Federal Register No. 26, February 7, 2013) as well as railroad ties and wood derived from construction and demolition debris (as defined by EPA's proposed amendments to NHSM, Vol. 79 Federal Register No. 71. April 14, 2014). The commenter stated that apart from non-forestry organic material discussed above, the primary source of biomass feedstock for energy is what is called "low-value" wood residues in the form of tops and limbs and fiber such as thinnings and low-grade wood that would not be used for saw timber or pulp. Because this material is a byproduct of another activity that would occur regardless of bioenergy, the collection and use for energy is, in and of itself, a sustainable practice.
The commenter also stated that to restrict carbon benefits to the physical location of a specific facility would jeopardize the financial viability of many biomass plants that need the flexibility of selling into the most attractive state REC market, which sometimes is not the state where the facility is located. Restricting the ability of exporting carbon benefits would potentially disqualify a biomass REC in another state since state RPS programs are often premised on the belief that such "attributes" include carbon benefits.
Applicability and emissions from non-fossil sources are discussed in Section III.D of the preamble.
Commenter 0215 stated that for the non-transparency and the uncertainties involved in the choice of IAMs and the choice of inputs to the IAMs, the lack of public and peer review of the process, and the resulting risk for gamesmanship, the U.S. government's deployment of SCC values is premature and should not be used in this rulemaking. The commenter stated that EPA improperly uses the SCC to justify the Proposed Standards. EPA estimates that a single, hypothetical coal-fired boiler complying with the modified source rule would generate between $2 million and $41 million in global climate benefits in 2025 depending on the discount rate used and the efficiency improvement achieved. The commenter concluded stating in summary, the numerous uncertainties and other issues with both the IAMs used to derive SCC values and the derivation and application of the SCC make SCC values too speculative to be useful in trying to ascertain the real costs and benefits of the Proposed Standards.
See response to 3.1-1 in this Response to Comments.
Commenter 0293 stated that the benefits of this rule are undeniable. The commenter stated that the tremendous reduction in CO2 emissions that will occur will help us prevent the severe impacts of climate change, or at least better position us
to adapt to them. According to the commenter, the financial benefits of this rule are also undeniable. Climate and health benefits are estimated to be $ 55 billion to $ 93 billion by 2030, and this will include avoiding 2,700 to 6,600 premature deaths and hundreds of thousands of asthma attacks in children. The commenter stated that these monetary benefits outweigh annual costs of the plan, which are estimated to be $ 7.3 billion to $ 8.8 billion in 2030. It is also expected this plan will reduce electricity costs. In 2030 electricity bills are expected to be roughly 8 percent lower than would be the case under "business as usual," and this will save Americans about $ 8.00 on an average monthly residential electricity bill. And finally, the commenter stated that the rule will have the substantial co-benefit of bringing about significant additional reductions in other air pollutants that are subject to NAAQS. There will be significant reductions in sulfur dioxide, nitrogen oxides, and fine particulate matter (PM2.5) pollution, and mercury emissions will probably also be reduced. Overall it is expected there will be a 25 percent reduction in soot and smog (ozone) pollution.
This commenter refers to analysis of the 111(d) emission guidelines for existing sources, which are outside the scope of this rulemaking.