on behalf of the
North Carolina Department of Environment and Natural Resources
State of North Carolina
Before the US Senate Committee on the Environment and Public Works
on the Subject of
Multi-Pollutant Strategies for Utilities
November 1, 2001
Good morning. My name is Brock Nicholson, and I am the Chief of Planning for the Division of Air Quality, North Carolina Department of Environment and Natural Resources. I represent the State agency that is responsible for developing, adopting and implementing the State Implementation Plan (SIP) for the State of North Carolina. In this role, I am involved in both regulation adoption and legislation dealing with sources of air pollutants, including utility boilers. I’m pleased to be here today to share some insights regarding the current North Carolina experience with multi-pollutant legislation and how that experience might relate to S.556 under consideration by this Committee.
I would like to begin by giving some background on North Carolina Senate Bill, S1078, which many people in our State refer to as the “Clean Smokestacks” Bill. Today I will refer to the proposed legislation as the “NC Bill.” This bill was developed through a series of discussions conducted by the bill sponsors with various environmental groups, the State’s two largest utility companies, and the State. The parties to those discussions reached a consensus in support of the NC Bill.
Some industrial customers and groups, some agricultural customers and groups, a couple of small environmental groups, and a few other groups and individuals have opposed the NC Bill. The part of the NC Bill that opponents most frequently cite as the reason for their opposition is a provision that allows the utilities to recover, under the oversight of the NC Utilities Commission, control costs that are just, reasonable and prudently incurred under a cost recovery mechanism different from a normal rate-making case.
In general, the public and newspaper editors have been very supportive. The NC Bill quickly passed the Senate 43 to 5 in the spring. It is currently in the House Public Utilities Committee, with cost to ratepayers and the mechanism for cost recovery being the major topics of discussion.
The NC Bill requires all coal-fired utility generating units over 25 MW (all 14 plants in our State) to meet in-state aggregate mass emissions caps for sulfur dioxide (SO2) and nitrogen oxides (NOx). These caps represent actual reductions of 73 % and 77 % respectively from 1998 levels. The SO2 cap must be met in two phases; by January 1, 2009, about a 50% reduction; and by January 1, 2013, another approximate 50% reduction. The year-round NOx cap is to be met by January 1, 2009. There is an additional requirement that the State annually consider and report to the legislature whether controls beyond those in the NC Bill have become both technically and economically feasible. If necessary, the legislature could then tighten the requirements.
For mercury, the NC Bill requires an annual assessment of the state of knowledge on the expected co-benefit of mercury control when SO2 scrubbers and NOx selective catalytic reduction (SCR) controls are installed. By March 2005, the State must recommend to the legislature specific additional control requirements if the co-benefits are less than expected and needed.
For carbon dioxide, there is a similar requirement in the NC Bill to report annually to the legislature on control options and to make recommendations by March 2003.
The NC Bill directs the State to use all available resources and means, including, but not limited to, negotiation, participation in interstate compacts and multi-state agreements to achieve comparable emission reductions in nearby states whose emissions affect North Carolina.
Comments on S.556
Our department supports the aggregate emissions reduction approach. This approach would presumably incorporate a cap for each pollutant. Caps can provide for an efficient and flexible program to obtain reductions. Both implementing agencies and emission sources will benefit. This aggregate approach is one that, based on our consideration of and discussions about the NC Bill, gives the sources flexibility and certainty to make the business decisions that are in their best interests while they meet the requirements of the legislation. In our view, the aggregate emission reduction approach was a key feature in getting the utility industry to support our bill.
However, caps must be meaningful from the standpoint of protecting public health and the environment. By that I mean that they must be sufficiently stringent to assure that the air quality goals are actually met. Caps must not be set at levels that merely facilitate a “robust” trading system. S.556 appears to be sufficiently stringent to be meaningful.
However, unlike the NC Bill, which requires all of the actual reductions to be in North Carolina, I would presume that S.556 and the regulations that implement it would allow for a national trading program. Such a program must not only achieve the national aggregate reduction goal, it must also allow local air pollution problems to be addressed in a way that protects health and the environment. There must be a “states rights” or “authority” provision that allows for actual controls (no trading credits) to be applied to specific units for local air quality needs. Since public health protection is an overall goal, states must be able to assure NAAQS attainment even if the overall reductions exceed the national cap or such NAAQS controls “conflict” with the trading program. Such protections must apply not only to NOx and SO2 emissions and the associated ozone and fine particulate matter, but also to mercury emissions, which can give rise to special local concerns about public health impacts.
Along with a strong Federal mobile source program, a multi-pollutant approach such as S.556 will be a critical and important centerpiece of a strategy that is necessary for states to meet the NAAQS for 8-hour ozone and fine particles, PM2.5. North Carolina, like many others, is a high-growth state in which about 70% of the counties where monitors are located violate the NAAQS for 8-hour ozone (aspects of which remain under review by the courts). For PM2.5 the corresponding percentages of violating counties is about 50%. Our projected future emissions for NOx and SO2 show that power plants are the substantial majority contributor in both categories. Control of these two pollutants is a must for public health now and in the future. The attached graphic of some recent ozone modeling shows that even with full NOx SIP call controls and all of the expected Federal mobile source controls in place, the NAAQS is not fully met.
Regarding the compliance schedule in S.556, we observe that in the discussions that led to the NC Bill, a consensus between the environmental groups and the two utilities produced a schedule, which is longer than the one in S.556, but is nonetheless acceptable and would not adversely affect the economy or energy supply in North Carolina. However, as I said before, there has been more discussion in our legislature on cost recovery than on schedule.
As it is in many other states, mercury is a big public health issue in North Carolina. However, considering the uncertainties regarding measuring mercury and the expected, and perhaps relatively large, co-benefits of mercury reduction when scrubber and SCR controls are placed on the bituminous coal power plants, the drafters of the NC Bill decided not to specify a control level for mercury. Instead, there is a requirement that the State study the issue of co-benefit, report annually to the legislature and make recommendations to that body by September 2004 on additional controls that would be needed for public health protection from mercury in North Carolina.
With respect to carbon dioxide emissions, the NC Bill requires our department to recommend action to the legislature by March 2003. The 2003 date allows time to consider developments at the Federal level and in other states and to understand the benefits of energy conservation, greater use of natural gas, and the developing clean coal technologies including coal gasification.
North Carolina along with Georgia, South Carolina and Tennessee have been charged by their governors to develop recommendations by March 2002 regarding a multi-pollutant strategy for utilities and innovative energy and transportation strategies that benefit air quality in the four-state region. Although the Southern Air Principles agreement signed by the governors focuses on NOx, SO2 and mercury, the states are also studying energy strategies that reduce carbon dioxide. We will also be monitoring the national scene for action on this important subject.
In conclusion, thank you for this opportunity to speak on this very important subject, and I am glad to answer any questions. Thank you again.