1. Mercury and CO 2 Emissions from the Power Generation Sector By C.V. Mathai, Ph. D. Manager for Environmental Policy Arizona Public Service Company Phoenix, Arizona A Presentation at the DENR/DAQ Mercury/CO 2 Workshop Raleigh, North Carolina April 20, 2004

2. Overview Introduction Mercury Emissions and Proposed Regulation Global Climate Change United Nations Framework Convention on Climate Change (UNFCCC) Kyoto Protocol Multi-Pollutant Legislation Summary and Conclusions

3. Electricity and Fuel Diversity Power generation is a major contributor to national air pollutant emissions SO 2 :63% NOx:22% Hg:37% CO 2 :~40% A diverse fuel mix is critical to ensure electrical reliability, minimize price volatility, and strengthen national security Coal 51 % Gas 16 % Fuel Oil 3 % Hydro/ Other Renewables 11 % Current Generation Mix (Numbers exceed 100% due to rounding.) Source: Form EIA-759 and Form EIA-860B Nuclear 20 %

5. Contributions to Global Anthropogenic Emissions of Mercury (t/yr) United States 155 (utilities: 48) South & Central America 194 Europe 560 Africa 271 Oceania 53 Rest of North America 71 Asia1232 Global total: 2536 T/y Source: EPRI

7. Is there a mercury management floor? Mercury entering the U.S. from other countries 0 to 20% 20 to 40% 40 to 60% 60 to 80% 80 to 100% EPRI TEAM regional model, global chemical model Percent of mercury deposition that originates outside of the U.S. PORTIONS OF THE U.S. WHERE MORE THAN 60% OF THE MERCURY ORIGINATES IN OTHER COUNTRIES PORTION OF THE U.S. WHERE LESS THAN 20% OF THE MERCURY ORIGINATES IN OTHER COUNTRIES

8. Chlorine and Mercury Emissions Mercury emissions from power plants occur in three forms: Elemental, Oxidized, and Particle-bound Chlorine concentration in coal has a significant impact on the type of Hg emissions: Lower the Cl level, higher the elemental Hg fraction higher the Cl level, higher the oxidized and particulate Hg fractions Oxidized and particulate Hg fractions are easily controllable in conventional pollution control devices, but not elemental Hg PM and SO 2 controls are not efficient to remove elemental Hg, i.e., little Co-benefits

10. Mercury Removal with PAC Upstream of Fabric Filters and ESPs

11. PAC Performance with ESPs: Bituminous versus PRB

13. Mercury MACT 1990 CAA required EPA to Report to Congress on the need to regulate Hg emissions from power generation sources (Report submitted in 1998) In 1999, EPA assembled the ICR database In Dec 2000, EPA made a regulatory finding that controlling utility Hg emissions was necessary and appropriate triggering the CAA Maximum Achievable Control Technology (MACT) provision For existing sources, MACT is defined as the average emission limitation achieved by the best performing 12% For new sources, MACT is the best of the best EPA proposed three options to regulate Hg emissions from coal-fired power plants; Rule to become final by Dec 2004

14. EPAs Proposed Mercury Rule EPA proposed three approaches to control mercury from coal-fired power plants: Traditional, plant-by-plant MACT controls, achieving 29% reduction by Dec. 2007 (via CAA Section 112 MACT) A two-phased cap-and-trade program, reducing Hg emissions by 69% by 2018, administered by the EPA (via CAA Section 112(n)(1)(A)) A similar cap-and trade program, but administered by the States and SIPs (via CAA Section 111) Public comments are due by April 30, and EPA to finalize the Rule by Dec. 15, 2004

15. Global Climate Change In 1988, the United Nations Environmental Program and the World Meteorological Organization established the Intergovernmental Panel on Climate Change (IPCC) Based on the IPCCs 1990 First Assessment Report, world leaders adopted the United Nations Framework Convention on Climate Change (UNFCCC) at the Earth Summit in Rio de Janeiro, Brazil in 1992 UNFCCCs Objective is.... stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the Climate system The UNFCCC has been ratified by a large number of countries, including the U.S., and is in effect as of 1994 Conferences of Parties (COPs) to the UNFCCC has been held annually since 1995

16. UNFCCC Commitments Annex I Parties commit themselves... The policies and measures will aim to return emissions of CO 2 and other greenhouse gases, individually or jointly, to their 1990 levels... adopt national policies and take measures on the mitigation of climate change by limiting its anthropogenic emissions of greenhouse gases... These Parties may implement such policies and measures jointly with other Parties and may assist other Parties in contributing to the achievement of the objective of the convention

17. THE KYOTO PROTOCOL In 1997 COP-3 agreed on a protocol establishing legally- binding differentiated emission limits for 38 industrialized countries reducing their annual average GHG emissions by about 5.2% below its 1990 level, during 2008-2012; United States share is 7% below 1990 emissions The Protocol incorporates several compliance flexibility measures -- five-year emission budgets, banking, inclusion of sinks, six greenhouse gases, international emission trading, joint implementation, and a Clean Development Mechanism It marks a major first step towards the objective of the UNFCCC, i.e., to stabilize atmospheric concentrations of greenhouse gases at a safe level The Protocol does not call for any emission limits for developing countries

18. U.S. Actions on Climate Change In 2001 U.S. withdrew from the Kyoto Protocol; Bush Administration is embarking on a voluntary program to cut carbon intensity (GHG emissions/GDP) There is momentum building to initiate some form of domestic action on carbon, independent of the Kyoto Protocol process A number of States have initiated programs to reduce GHG emissions Proposals to reduce CO 2 emissions from power generation sources are pending before the Congress McCain/Lieberman Bill failed in the Senate by 43 to 55

19. Multi-Pollutant Legislation Several proposals are pending before Congress calling for a coordinated, market-based approach to reduce multiple pollutant emissions from the power generation sector: Clear Skies Act (Bush Bill) Clean Air Planning Act (Carper Bill) Clean Power Act (Jeffords Bill)

20. The Alternative under the Clean Air Act is a Complex Set of Requirements Covering the Power Sector Phase II Acid Rain Compliance Mercury Determination Proposed Utility MACT New Fine PM NAAQS Implementation Plans Designate Areas for Fine PM NAAQS Ozone Acid Rain, PM 2.5, Haze, Toxics 1-hr Severe Area Attainment Date Compliance for BART Sources NSR Permits for new sources & modifications that increase emissions 99010203 04 05 0607 08 0910 11 1213 14 151617 OTC NO x Trading 1-hr Serious Area Attainment Date NO x SIPs Due Designate areas for 8-hr Ozone NAAQS Section 126 NO x Controls 1 NO x SIP Call Red- uc- tions 00 18 Final Utility MACT Compliance with Utility MACT Assess Effectiveness of Regional Ozone Strategies Regional Haze SIPs due Latest attainment date for Fine PM NAAQS 3 Compliance for BART sources under the Trading Program Second Regional Haze SIPs due Marg- inal 8-hr Ozone NAAQS Attain- ment Date Possible Regional NO x Reductions ? (SIP call II) 2 Interstate Transport Rule to Address SO 2 / NO x Emissions for Fine PM NAAQS and Regional Haze Note: Dotted lines indicate a range of possible dates. 1 The D.C. Circuit Court has delayed the May 1, 2003 EGU compliance date for the section 126 final rule 2 Further action on ozone would be considered based on the 2007 assessment. 3 The SIP-submittal and attainment dates are keyed off the date of designation; for example, if PM or ozone are designated in 2004, the first attainment date is 2009 EPA is required to update the new source performance standards (NSPS) for boilers and turbines every 8 years Serious 8-hr Ozone NAAQS attainment Date Moderate 8-hr Ozone NAAQS Attainment Date 8-hr Ozone Attain- ment Demon- stration SIPs due In developing the timeline of current CAA requirements, it was necessary for EPA to make assumptions about rulemakings that have not been completed or, in some case, not even started. EPAs rulemakings will be conducted through the usual notice-and-comment process, and the conclusions may vary from these assumptions.

21. Multi-Pollutant Control Legislative Proposals Proposed Emissions Caps (Tons / Year) Actual 2001 S. 485 - Clear Skies S. 366 - Jeffords S. 843 – Carper Sulfur Dioxide (SO 2 ) 10.6 M 4.5 M in 2010 3.0 M in 2018 2.25 M in 2009 4.5 M in 2009 3.5 M in 2013 2.25 M in 2016 Nitrogen Oxides (NOx) 4.8 M 2.1 M in 2008 1.7 M in 2018 1.51 M in 2009 1.87 M in 2009 1.7 M in 2013 Mercury (Hg) 48 (1999) 26 in 2010 15 in 2018 5 in 2008 24 in 2009 10 in 2013 Carbon Dioxide (CO 2 ) 2.47 B (est.)N.A.2.05 B in 2009 2.57 B (est.) in 2009 2.47 B (est.) in 2013 Source: EIA AEO 2003 Reference Case Forecast, S.485, S.366, S.843

22. Power Sector Emission Reductions

23. Summary and Conclusions Mercury is a global air pollutant and U.S. Power Plants emissions contribute only about 2% of the total man- made Hg emissions Recent studies show that 60% or more of the Hg deposition in the U.S., except for some areas in the East, originate outside the U.S. Activated Carbon Injection can effectively control mercury at coal-fired power plants EPA has proposed three approaches to control Hg emissions from coal-fired power plants -- A MACT program and two cap-and-trade programs; a final Rule is expected by Dec 2004

24. Summary and Conclusions (Contd.) Global CO 2 emissions and atmospheric CO 2 concentrations are steadily increasing and there is increasing public support for climate-related action The Kyoto Protocol appears to be dead; global agreement for action on climate is likely only if the U.S. provides leadership Current pollutant-by-pollutant, source-by-source Clean Air Act regulatory program is complex, costly, and inefficient An integrated emission reduction strategy, like the proposed Clear Skies Act, is necessary to make cost- effective and timely emission reductions to achieve improved air quality and to ensure affordable and reliable electric power supply