Ancillary Benefits from the Clean Power Plan
Alan Krupnick
EPRI/RFF Webinar Series #4
December 16, 2014
Can the CPP be justified from ancillary benefits
alone?
• Ancillary benefits are side effects of a policy 
Conventional air quality benefits of a climate policy
• The USEPA estimates the costs and benefits of a proposed
policy in a Regulatory Impact Analysis, required by Executive
Order
• Ancillary benefits typically included
• For the CPP (2025)
o Costs = $5.5 B
o Ancillary benefits >= Climate benefits
o Climate benefits > Costs
YES!
Details/Critique of Ancillary
Benefits
Pollutants affected by CPP
•
PM2.5 precursors
o Black carbon
o Particulate organic matter (POM)
o Sulfur dioxide (SO2)  KEY
o Nitrogen oxides (NOx)
•
Ozone precursors
o Nitrogen oxides (NOx)
o Volatile Organic Carbons (VOCs)
Associated climate impacts of black carbon, SO2,
etc. not calculated in RIA
Air quality modeling
• Continental U.S. coverage
• Base year for emissions and meteorology is 2005
• Utility emissions estimates for 2016 are from IPM
o Include reductions related to NOx SIP Call,
Transport Rule, MATS
• Source apportionment from CMAQ and a study
• No bottom up modeling of change in emissions
Health effects
Most significant health benefit for both pollutants is mortality
o 98% of PM monetized value, >90% of ozone value
• Adult PM-related mortality: the American Cancer Society cohort (Krewski et
al., 2009) and the Harvard Six Cities cohort (Lepeule et al., 2012). Using
relative risk estimates from both studies & expert elicitation study (Roman et
al., 2008; IEc, 2006)
• Co-benefits avoiding short-term ozone mortality: Bell et al. (2004) NMMAPS
analysis, the Schwartz (2005) multi-city study, the Huang et al. (2005) multi-city
study , and 3 meta-analyses: Bell et al. (2005), Levy et al. (2005), and Ito et al.
(2005)
Economic benefits for health co-benefits
• Premature deaths: value of a statistical life (VSL) approach
o EPA working to update VSL guidance
o Currently, uses single estimate: $8.2 million (2011$)
• Discount future mortality 3% and 7%
• Assumes “cessation” lag between exposures and health
effects
• WTP estimates for changes in risk of a health effect
o For some health effects, cost-of-illness estimates are used (generally
underestimate value)
• Benefits are calculated at regional level (East, West, and
California
Other quantified effects
• PM 2.5 (PM Integrated Science Assessment, 2009)
o
o
o
o
o
Non-fatal heart attacks
Hospital admissions
Asthma and respiratory systems
Lost work days
Minor restricted-activity days
• Ozone (Ozone Integrated Science Assessment, 2013)
o
o
o
o
Hospital admissions – respiratory causes
Emergency department visits
Minor restricted-activity days
School absence days
Economic benefits for PM2.5
EPA’s take on modelling issues
All estimates reflect geographic distribution of modeled emissions,
which...
o May not match reductions anticipated by guidelines
o May not reflect local variability in population density, meteorology,
exposure, and baseline health incidence
o Assumes linear atmospheric response to emission reductions (largely
accurate for SO2 but not NOx)
Economic benefits for Ozone
EPA’s take on modelling issues
All estimate reflect geographic distribution of modeled emission, which
are similar to those of PM 2.5 except …
o Are equal to the sum of premature mortality and morbidity of reducing NOx
Not VOC
o Based on NOx emissions during the ozone season (May - September), which
is an underestimate in areas with longer ozone season
o NOx contribution to ozone is non-linear, and thus using average benefit-perton estimate adds uncertainty
Other issues
• What’s in the baseline?
o MATS; Transport Rule, etc.
o Not: New Ozone Regs, PHASE I and II, 2012 CAFÉ
• What’s being assumed for the policies?
o Ancillary benefits are sensitive to form and stringency
Ancillary benefits depend on structure of the regulation
Equal (400 mty) CO2 reduction across scenarios: three policies
2020
Carbon Tax
National Emissions
Rate Standard
Cap and Trade with
Allowance Value to LDCs
1,417
1,332
1,349
-3
-7
-7
16
16
16
17
22
21
(2010$)
Fossil Emissions
Rate
(lbs/MWh)
Total Welfare
Change: Cost
(B$)
Total Welfare
Change: CO2
Benefits (B$)
Total Welfare
Change: SO2
Benefits (B$)
 Final structure depends on state compliance plans!
Burtraw, Linn, Palmer, Paul 2014; AER P&P
Other issues ctd.
• What’s in the baseline?
– New Ozone Regs, PHASE I and II, 2012 CAFÉ
• What’s being assumed for the policies?
– Ancillary benefits are sensitive to form and stringency
• Are there thresholds in health effects? Where?
o Implication of NAAQS
• Mortality C-Rs
• VSL
 Fraas and Lutter: factor of 10 lower AB
• No confidence intervals, only CR mortality model
uncertainty
Other issues ctd.
Does not include:
• Health effects from direct exposure to NOx and Sox
• Ecosystem effects
• Visibility impairment
Conclusions
• Ancillary benefits are legitimate and appropriate for the RIA
• Further benefit of legitimizing making ancillary benefits
primary and CO2 benefits ancillary
• Some issues lead to underestimates of AB
• Some lead to overestimates
• Lots of overarching uncertainty – statistical uncertainty not
addressed; model uncertainties very limited