How the U.S. judges air quality Clean Air Act of 1970 – First Federal Act

to set air quality standards National Ambient Air Quality Standards

(NAAQS): Legal ceilings on the allowable concentration

of the pollutant in the outdoor air for a specified period of time. Judged annually and daily.

Two standards: Primary – protect human health Secondary - protect aesthetics, physical

objects and vegetation.

AAQS Standards set for 6 pollutantsCarbon Monoxide (CO)Nitrogen Dioxide (NO2)

Ozone (O3)LeadParticulate Matter (aka “soot”)Sulfur Dioxide What’s not included?

Why do we care?Health Effects: breathing symptoms,

aggravation of existing respiratory and cardiovascular disease; impairment of and immune system; damage to lungs, impairment of visual perception, carcinogenesis, premature mortality

Non-Health Effects: contributes to ozone formation and acid rain, reduction in crop yields, damage to trees, damage to ecosystems, visibility impairment

Studies (by health experts) suggest approximately 50,000 people die each year due to air pollution in the U.S.

Millions more suffer non-lethal health conditions.

Non-attainment/complianceLike a speed limit

If over limit, subject to penalties. If noncompliant, states must design state

implementation plans (SIPs) and submit to the EPA.

1990 CAA Amendments gave EPA Power to:prevent construction of new sources of pollution

or deny federal transport or sewage grants.halt construction of major new or modified

pollution sources in non-attainment areas enforce monetary penalties for noncompliance establish pollution permits to reduce SO2(we’ll

talk about)

Has air quality improved in U.S. since 1980?Yup.

Percent Change in Air Quality since CAAMillions of Tons Per Year

  1980 2013 % change

Carbon Monoxide (CO) 178 59 -66.9%Lead 0.074 0.001 -98.7%Nitrogen Oxides (NOx) 27 13 -51.9%Volatile Organic   Compounds (VOC)

30 14-53.3%

Particulate Matter (PM)    PM10

6 3 -50.0%

Sulfur Dioxide (SO2) 26 5 -80.8%Totals 267 94 -62%

Relative to Economic Indicators

Air Quality Changes Substantial Improvements have occurred

for all six pollutants since Clean Air Act was enacted.

Change in quality does not equal change in emissions

Quality is not just based on emissions Most monitors are in urban areas. Emissions are sometimes estimated, air

quality is always measured.

So what? EPA study suggests the costs of the CAA to

the U.S. economy are approximately $65 billion!

So what?Health Effect Reductions (PM2.5 & Ozone Only)

Pollutant(s)

Year 2010 Year 2020

PM2.5 Adult Mortality

PM 160,000 230,000

PM2.5 Infant Mortality

PM 230 280

Ozone Mortality Ozone 4,300 7,100

Chronic Bronchitis

PM 54,000 75,000

Acute Bronchitis PM 130,000 180,000

Acute Myocardial Infarction

PM 130,000 200,000

Asthma Excaberation

PM 1,700,000 2,400,000

Hospital Admissions

PM, Ozone 86,000 135,000

Emergency Room Visits

PM, Ozone 86,000 120,000

Restricted Activity Days

PM, Ozone 84,000,000 110,000,000

School Loss Days Ozone 3,200,000 5,400,000

Lost Work Days PM 13,000,000 17,000,000

Efficiency of Clean Air ActStudies suggest PVNB gained from Clean Air Act

are substantial (Hundreds of billions to Trillions of dollars).

Central estimate is $1.9 trillion.Annual net benefits exceed $200 billionhttp://www.epa.gov/air/sect812/prospective2.htmlClean Air Act does not allow balancing of costs

and benefits!Relies instead on the “threshold concept”—that

there IS some level of pollutant below which the stuff is not harmful.Efficiency in the standards would be only

accidental, since net benefits cannot be calculated.

Inefficiency of Clean Air ActClean Air Act does not allow balancing of costs

and benefits!Relies instead on the “threshold concept”—that

there IS some level of pollutant below which the stuff is not harmful.Efficiency in the standards would be only

accidental, since net benefits cannot be calculated.

For everything except SO2 and NOx, used command and control to achieve reductions

Problems with CAAUniformity: Same primary and secondary

standards apply everywhere, which sounds fair but must be inefficient. No account is taken of “exposure” (# of people

affected), sensitivity of ecological systems, or costs.

MSB/MSC of abatement will be different in different areas.

Timing: Would be less costly to have tight controls when conditions are bad, looser ones when absorptive capacity is greater.

Outdoor vs. Indoor Air pollution: Only 10% of time is spent outdoors. Growing evidence that while NAAQS limit outdoor exposure to pollutants, there is little monitoring of indoor air hazards (can be even more harmful).

Cost-(in)effectiveness of CAALeast costly method of abatement requires

that MAC of all polluters are equalized.The ratio of CAC cost to least cost suggests

widely varying differences in cost-effectiveness of CAC policies Most found it’s at least 78% more costly then

minimum cost approach. CAC will be close to cost-effective only if a

high degree of control is necessary (stringent controls resulting in similar marginal costs).

Studies of efficiency of CAA

All find Total Social Benefits > Total Social Costs by substantial amount

Most find Marginal Social Costs > Marginal Social Benefits by substantial amount.What does this mean?

Understanding Uniform/Timing Inefficiency.Know the graph with two MD curves, and be

able to indicate inefficiency areas if one standard is applied to both.

Summary of CAASubstantial Net Benefits overall (Total

Benefits >Total Costs by trillions of dollars)Could be even better (higher net benefits) if

they allowed consideration of MSB and MSC and quality to vary across regions.

Acid Rain Program (ARP)

Acid Rain• Caused primarily by SO2 and Nox, which is

generated largely by coal fired plants• Harmful to trees and crops (and statues)

How it works?• Title IV of the 1990 Clean Air Act– The Sulfur Allowance Program• National cap and trade• Allowances can be bought or sold without restriction

anywhere in the US

– Program was intended to cut sulfur dioxide and nitrous oxide emissions to about half their 1980 levels. Starting in 1995 emissions are monitored constantly ($100,000 annual costs/unit).• 100% compliance from utilities

Program History• Allowances were given to utilities rather than sold

(no way auction could pass Congress).• Allowances can be used or banked for use in future

years (or sold to other firms)– Important to have firms invested in the program for it to

succeed.• Done in two phases– In the early 1990s, analysts expected prices to be about

$250-350/ton in Phase I and $500-$700 in Phase II (generally under that price).• Initial permits went as low as $63.• Suggests abatement costs were lower than expected (innovation)

The effects of banking allowances• 2 million more permits were purchased in 2010

than total emissions.• Some purchased by environmental groups

(why?), others by investors (why?).• Most purchased by energy companies.– Can use them or sell them later– Expect emissions will be higher later.– If 1,000 permits are sold from American Electric

Power to Ohio Valley Electric Corp for $100/permit, what do we know is true?

Price history –SO2

Specifics on auctions today

• http://www.epa.gov/airmarkets/participants/allowance/auction.html

• Why is the price so low today?

SO2 Emissions, 1980 - 2007

Nobody wants our pollution permits!

Air Quality in Ohio/Youngstown

– http://www.epa.state.oh.us/dapc/ – http://www.mahoningvalleyair.org/

International situation• Air quality has improved substantially in

virtually all developed countries over last 3 decades.

• Air quality has gotten much worse in most developing countries (especially India and China)

• Relationship shown by the Kuznets Curve – Per capita income on horizontal axis, pollution or

environmental degradation on vertical axis