AAEA Supports CLEAR SKIES

The African American Environmentalist Association supports the Clear Skies Initiative (CSI) because it will lead to significant (70%) emission reductions of sulfur dioxide, nitrogen oxides and mercury: three air pollutants (3P).

Other groups supporting Clear Skies or similar multi-emission reduction plans:

• American Association of Blacks in Energy
• National Conference of Black Mayors 
• National Black Chamber of Commerce

An important feature of Clear Skies is its emissions trading program. The emissions trading program will allow big 3P emitters that exceed mandatory emission targets to buy credits from cleaner companies whose emissions come in lower than the targets (Cap & Trade). The current regulatory approach under the Clean Air Act has resulted in significant improvements in air quality, but significant additional environmental benefits have often been put on hold while stakeholders battle in the courts.  It is time to end the delays and get to work on real air quality improvements. 

CSI, introduced in the Senate by Environment & Public Works Chairman Inhofe (S.485) and in the House by Energy & Commerce Chairman Tauzin (H.R.999), provides a clear roadmap and realistic deadlines for utilities to reach aggressive emission reductions targets.  Although alternative bills introduced by Senators Jeffords (S.366) and Carper (S.843) would speed up the timetable for emissions reductions, it is our opinion that the current state of the utility industry and technology make it impossible to achieve those reductions that quickly, and likely will lead to more litigation and economic harm. Clear Skies will integrate the requirements of the Clean Air Act, including New Source Review (NSR), into a straightforward, aggressive, and cost-effective program to clear our nation’s air.

It has been over a year since President Bush first called for strict cuts in mercury, sulfur dioxide and nitrogen oxides. The framework for these emission cuts is the Clear Skies Initiative. Clear Skies will integrate several requirements under the Clean Air Act and set simple, but aggressive, goals for these pollutants under an emissions allowance trading system.  A similar type of program, established in 1990 under the Clean Air Act (Acid Rain Program), was hugely successful in generating significant and less costly reductions of SO2 and NOx to combat Acid Rain.  The plan calls for conforming to the Cap & Trade program in 2010 and later. This flexibility encourages early reductions and gives utilities time to plan, finance and implement pollution control strategies.

Electricity is closely tied to the economy and affordable electricity fuels economic growth and jobs.  When the cost of producing electricity spikes, the cost to produce other goods and services rises also, affecting the entire economy and all Americans, especially low and fixed-income households.  Clear Skies represents a balance between the dire need for healthy air and a healthy economy. Even so, compliance with Clear Skies will cost billions of dollars, according to EPA estimates.  For an individual mid-size utility, capital expenditures are likely to exceed $2 billion.  Annual operation and maintenance costs under Clear Skies could exceed $200 million for a single utility.

Unfortunately, the electric utility industry is in a financial crisis, brought on by the Enron debacle, SEC investigations, deregulation woes (led by California's botched deregulation attempt), and the economic slowdown.  This has contributed to downgrades by the financial community, poor stock performance, and a torrent of layoffs and capital project cutbacks in the utility industry.  There is no shortage of bad news in the electricity generator world.  As a result, finding investors willing to take on the risk of investing in the industry is increasingly difficult and the cost of capital to finance projects has skyrocketed.  Clear Skies will not solve these problems and compliance will be costly, but it will provide regulatory certainty and reasonable timeframes for utility business planners, allowing them to better manage the financial challenges of pollution control strategies.

Opacity, haze, PM2.5, mercury maximum available control technology (MACT), NOx State Implementation Plan (SIP) calls, Section 126 petition, Phase II of Title 4, New Source Review, utility deregulation, natural gas supply and infrastructure limits, credit worthiness and the Kyoto Treaty are a few of the major problems for America's electric power sector.  CSI is not intended to solve all of these problems, but it goes far in untangling the maze of regulations constraining emission reductions.

The Clear Skies Initiative proposes to:

Dramatically Cut Power Plants’ Emissions of Three of the Worst Air Pollutants:

• Cut sulfur dioxide (SO2) emissions by 73 percent, from current emissions of 11 million tons to a cap of 4.5 million tons in 2010, and 3 million tons in 2018.
• Cut emissions of nitrogen oxides (NOx) by 67 percent, from current emissions of 5 million tons to a cap of 2.1 million tons in 2008, and to 1.7 million tons in 2018.
• Cutting mercury emissions by 69 percent, - the first-ever national cap on mercury emissions. Emissions will be cut from current emissions of 48 tons to a cap of 26 tons in 2010, and 15 tons in 2018.
• Emission caps will be set to account for different air quality needs in the East and the West.

Use A New, Market-Based Approach To Clean Air:

• Protect Americans from respiratory and cardiovascular diseases by dramatically reducing smog, fine particulate matter, regional haze; and protect wildlife habitat and ecosystem health from acid rain, nitrogen and mercury deposition. NOx and SO2 emissions both contribute to fine particulate matter emissions and NOx also contributes to ground-level ozone or smog.
• Save Americans as much as $1 billion annually in compliance costs that are passed along to American consumers, while improving air quality and protecting the reliability and affordability of electricity for consumers.
• Cut pollution further, faster, cheaper – and with more certainty – eliminating the need for expensive and uncertain litigation as a means of achieving clean air.
• Build upon the 1990 Clean Air Act’s Acid Rain Program, America’s most successful clean air law in the last decade, and encourage the use of new pollution control technologies.

Although CSI does not include mandatory limits on power plants' emissions of carbon  dioxide -- the main greenhouse gas -- President Bush abandoned a campaign pledge in March 2002 to control the four plant emissions (nitrogen oxides, sulfur dioxide, mercury & carbon dioxide) together (4P) -- many electric utilities accept the fact that such limits will be required one day.  Many have taken the lead in implementing programs and supporting research and development to reduce, sequester, or avoid greenhouse gas emissions.

Although President Bush abandoned U.S. participation in the Kyoto Protocol, the Administration recently unveiled a  voluntary program that aims to reduce greenhouse gas intensity by 18 percent by 2012. The voluntary program sets up a framework for adjusting to the reality that climate change is a serious, potentially devastating problem that must be addressed.  This approach will encourage greater commitment by utilities and facilitate technological advances needed to reduce greenhouse gas emissions from power plants.

Though we would like to see greenhouse gas requirements included in Clear Skies, the political reality is that  there are not 60 votes in the Senate to pass carbon limits.  Senators McCain (Chairman, Committee on Commerce, Science & Transportation) and Lieberman introduced the Climate Stewardship Act of 2003 (S.139) and held a hearing on January 8, 2003.  Control of CO2 remains a checkmated policy.  The U.S. Senate went on record in 1997 almost unanimously opposing the essential features of the Kyoto (Global Warming Treaty) Protocol.  The likelihood for a carbon mandate passing in the U.S. House is even less. 

President Bush rejected the Kyoto global warming (carbon reduction) treaty in 2001, saying it would harm the U.S. economy while exempting developing countries, including India and China, from mandatory emissions targets. Inclusion of a carbon  mandate in Clear Skies would only further delay badly needed reductions of SO2, NOx and mercury emissions. The voluntary measures to address global warming are President Bush's response to the 1997 Kyoto Protocol, which would require cuts in such emissions by 2010 by an average of 5.2 percent below 1990 levels. The president set the goal of an 18 percent reduction over the next 10 years in greenhouse gas intensity — the ratio of emissions to economic activity — not an arbitrary goal for curbs on total emissions. The plan is designed to slow the rate of growth in emissions in relation to the growth of the overall economy. Critics believe it will allow emissions to increase without any time frame.

One provision of the new climate plan would be to greatly expand a program encouraging businesses to monitor and report their emissions of greenhouse gases. Those that participate, voluntarily, would gain credits that might eventually be used in a trading scheme similar to that used for other pollution.

The Bush Administration's comprehensive energy plan provides $4.6 billion over the next five years in clean energy tax incentives to encourage companies and individuals to limit those emissions: purchases of hybrid and fuel cell vehicles, to promote residential solar energy, and to reward investments in wind, solar and biomass energy production.  It is hoped that these tax incentives will motivate utilities to build power-generating windmills and homeowners to buy solar panels and more efficient cars.

Clear Skies will not solve all of our utility air pollution problems, but it goes far in untangling the maze of regulations constraining emission reductions.  Each day that Congress delays action on Clear Skies legislation, the opportunity to ensure dramatic reductions in three harmful pollutants slips further from our reach.

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