1. The Effect of Criteria Pollutant and GHG Damage Based Fees on Emissions from the US Energy System Kristen E. Brown*, Daven K. Henze, Jana B. Milford University of Colorado Boulder Mechanical Engineering Dept. CMAS Conference 2014

2. 2 Activity The market activity Externality Negative effects not considered in market decisions Damages Monetary value of externalities Photo Credits: Commons.wikimedia.org/wiki/File:Air.pollution_1.jpg National Parks Service Commons.wikimedia.org/wiki/File:Respiratory_system.svg Drawn by Theresa Knott

3. Criteria Pollutant Health Damages Fann et al. 2012 – Uniform Value of Statistical Life – Krewski et al. (2009) – Laden et al. (2006) Muller et al. 2011 – Value of Statistical Life age differentiated – Pope et al. (2002) 3 Photo Credit: Drawn by Theresa Knott Commons.wikimedia.org/wiki/File:Respiratory_system.svg

4. 4 Fann et al. 2012

5. Climate Change Damages Social Cost of Carbon – Interagency Working Group of the US Government Discount Rates – Central 2 of 4 estimates in report – 3% for low – 2.5% for high Applied to CH4 using GWP(100) = 28 (Myhre et al. 2013) 5

6. 6 Dan Loughlin US EPA ORD 2011 MARKAL finds least cost way to meet energy demand MARKAL

7. MARKAL updates Results shown here use an edited version of EPAUS9R_12_v1.1 Emissions – Upstream emissions Better natural gas representation Renewable technologies including biomass – Sector specific emissions definitions – Calcination CO2 emissions from cement are included More industrial technologies – Solar process heat – Emissions controls (NOx, SO2, PM, CO2) – Efficiency improvements (boiler optimization) – Refinery emissions controls (SO2, PM, NOx, VOC) Light duty vehicle hurdle rate reduced to 18% Coal EGU lifetime limited to 75 years from initial use Applicable changes made to 2012 database are currently being incorporated into 2014 release – Renewable cost projections from NREL 7

8. Policy Implications Indicate energy system changes with fees Economically efficient emissions levels 8

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10. 10 High Criteria Pollutant fees lead to industrial efficiency improvements

11. 11 Criteria pollutant fees lead to more control devices.

12. 12 Criteria pollutant fees have little effect on GHG emissions.

13. 13 GHG fees reduce GHG and criteria pollutants.

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15. Considerations Damages fixed in space and time Fann et al. 2012 vs. Muller et al. 2011 – Fann et al. has much larger effect on industrial technologies GHG high vs. low – Values closer than for criteria pol. cases High is approx. 1.4x low ($/ton) – Additional reduction in electric coal with high fees 15 % reduction from BAU

16. Thanks to: Greg Frost Shelly Miller Mike Hannigan EPA for the EPA US 9- region MARKAL database Dan Loughlin Nick Flores Garvin Heath NASA for funding You for your attention 16

17. References Brown K.E., Henze D.K., Milford J.B., (2013): Accounting for Climate and Air Quality Damages in Future U.S. Electricity Generation Scenarios. Environmental Science & Technology 47, pp. 3065–3072. Fann N., Lamson A.D., Anenberg S.C., Wesson K., Risley D., Hubbell B.J., (2012): Estimating the National Public Health Burden Associated with Exposure to Ambient PM2.5 and Ozone. Risk Analysis 32, pp. 81–95. Interagency Working Group on Social Cost of Carbon. (2013): Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. Muller N.Z., Mendelsohn R., Nordhaus W., (2011): Environmental accounting for pollution in the United States economy. American Economic Review, 101(5), pp. 1649–1675. 17

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