James L. ConnaughtonChairman

White House Council on Environmental Quality

Renewing Our Communities and Renewing Our Communities and Their Natural EnvironmentTheir Natural Environment

• Keep Communities Together & Grow JobsKeep Communities Together & Grow Jobs– Where People Now Live, Work, Pray, & PlayWhere People Now Live, Work, Pray, & Play

• BrownfieldsBrownfields– President Signed Bi-Partisan Legislation 2002President Signed Bi-Partisan Legislation 2002– Already More than 1000 Abandoned Industrial Already More than 1000 Abandoned Industrial

Sites Being Assessed and RedevelopedSites Being Assessed and Redeveloped

• National Clean Air StrategyNational Clean Air Strategy– Unleash High-Value Reinvestment Through Unleash High-Value Reinvestment Through

Certainty, New Technology, and Affordable, Certainty, New Technology, and Affordable, Reliable, and Increasingly Clean EnergyReliable, and Increasingly Clean Energy

The Next Generation of Clean AirThe Next Generation of Clean Air• Air Pollution Reduced by Nearly Half Since 1970Air Pollution Reduced by Nearly Half Since 1970

– Economy More Than Doubled (+165%)Economy More Than Doubled (+165%)– Population Increased (<30%)Population Increased (<30%)– Energy Consumption Increased (<30%)Energy Consumption Increased (<30%)

• New, Tougher Air Quality StandardsNew, Tougher Air Quality Standards– Healthier Citizens and Significant Economic BenefitHealthier Citizens and Significant Economic Benefit

• Prolong Lives & Easier Breathing for Asthmatics & OthersProlong Lives & Easier Breathing for Asthmatics & Others• Fewer Sick Days and Reduced Emergency Room VisitsFewer Sick Days and Reduced Emergency Room Visits

– Greater Vitality of Natural ResourcesGreater Vitality of Natural Resources• Finally Halt Acid RainFinally Halt Acid Rain• Reduce Acid and Nitrogen to Rivers, Lakes and BaysReduce Acid and Nitrogen to Rivers, Lakes and Bays

– Better Visibility in Parks and Prime ViewshedsBetter Visibility in Parks and Prime Viewsheds• Designation of Areas Not Meeting StandardsDesignation of Areas Not Meeting Standards

– April 2004 Ozone, December 2004 PMApril 2004 Ozone, December 2004 PM

Challenges on Road to SuccessChallenges on Road to Success

• Clean Air Act Obligates States to Develop PlansClean Air Act Obligates States to Develop Plans– Next Three Years; EPA ReviewsNext Three Years; EPA Reviews

• Traditional Path Doable, But Very Rocky RoadTraditional Path Doable, But Very Rocky Road– Internal State Process Much More DifficultInternal State Process Much More Difficult– Existing Inter-State Conflict ElevatedExisting Inter-State Conflict Elevated– Uncertainty, Delay, Litigation InevitableUncertainty, Delay, Litigation Inevitable– Impedes Long-Term PlanningImpedes Long-Term Planning– Promotes Fuel Switching from Coal to Natural Gas: Promotes Fuel Switching from Coal to Natural Gas:

Threatens Even Higher Energy Prices for Consumers Threatens Even Higher Energy Prices for Consumers and Existing/New Manufacturingand Existing/New Manufacturing

• How About a Better, Faster, Cheaper and More How About a Better, Faster, Cheaper and More Certain Way to Meet the New Standards?Certain Way to Meet the New Standards?

National Clean Air StrategyNational Clean Air Strategy Mandatory 90%+ Cut in Diesel PollutionMandatory 90%+ Cut in Diesel Pollution

• Consensus, Performance-Based RegulationConsensus, Performance-Based Regulation

• Black Puff of Smoke Will Be a Thing of the PastBlack Puff of Smoke Will Be a Thing of the Past

• Large Trucks, Construction and Farm VehiclesLarge Trucks, Construction and Farm Vehicles– Locomotives and Marine Vessels AlsoLocomotives and Marine Vessels Also– Incentives to Retrofit Schools Buses in Places That Incentives to Retrofit Schools Buses in Places That

Need it MostNeed it Most

National Clean Air Strategy National Clean Air Strategy Mandatory 70% Cut in Power Plant PollutionMandatory 70% Cut in Power Plant Pollution

• Clear Skies Legislation & Clean Air RulesClear Skies Legislation & Clean Air Rules– Expands Successful Acid Rain Trading ProgramExpands Successful Acid Rain Trading Program– Permanently Caps Pollution Even as New Plants BuiltPermanently Caps Pollution Even as New Plants Built– Includes Mercury for the First Time for Power PlantsIncludes Mercury for the First Time for Power Plants

• Clear Skies Pollution Cap Applies NationwideClear Skies Pollution Cap Applies Nationwide– Utilities Will Spend $52 Billion to Control Old Plants and Utilities Will Spend $52 Billion to Control Old Plants and

Build Very Clean New OnesBuild Very Clean New Ones– Far Outpaces Pending New Source Review LawsuitsFar Outpaces Pending New Source Review Lawsuits

• Makes Future for Clean Coal Possible, Keeping Makes Future for Clean Coal Possible, Keeping Energy Affordable, Reliable and SecureEnergy Affordable, Reliable and Secure

Clear Skies Delivers Extensive Health Benefits and Widespread Attainment with Standards for PM2.5 and Ozone

Clear Skies Projections for 2020

Clear Skies projections for 2020 show dramatic improvement.

Current Data*

Under Clear Skies, more than 20 million additional people would be breathing air that meets the national standards in 2020.

*Note: To permit comparisons among various analyses, the air quality data were the most complete and recently available as of mid-2001 (1997-1999 ozone monitoring data and 1999-2000 PM2.5 data). More complete and recent air quality data for ozone and fine particles (1999-2001 data) is now available.

National Clean Air StrategyNational Clean Air Strategy• Strategy Will Deliver Results, Without the Strategy Will Deliver Results, Without the

Litigation, Delay and Conflict of the PastLitigation, Delay and Conflict of the Past– States Can Incorporate Gains in Their PlansStates Can Incorporate Gains in Their Plans

• Provides Certainty Needed to Create New Jobs Provides Certainty Needed to Create New Jobs and Opportunity, Especially in Urban Areasand Opportunity, Especially in Urban Areas– Clean Air Interstate Rule Could Be Litigated Clean Air Interstate Rule Could Be Litigated – Clear Skies Legislation is More CertainClear Skies Legislation is More Certain– Approach Supported by NGA, NACO, Conference of Approach Supported by NGA, NACO, Conference of

Mayors, Conference of Black Mayors, Unions, Mayors, Conference of Black Mayors, Unions, National Association of Manufacturers, U.S. Chamber National Association of Manufacturers, U.S. Chamber of Commerce, Black Chamber of Commerce, Ohio of Commerce, Black Chamber of Commerce, Ohio Catholic Charities, Some Environmental GroupsCatholic Charities, Some Environmental Groups

Power Generation and Transportation are Major Sources of Emissions

2001 Sulfur Dioxide 2001 Nitrogen Oxides

Fuel Combustion - electric utilities

Other stationary combustion

Transportation

Miscellaneous

Utilities (65%)

(10.7 million tons)

Utilities (49%)

(5.4 million tons)

Utilities (21%)

(4.8 million tons)

2015 Projected Sulfur Dioxide 2015 Projected Nitrogen Oxides

Utilities (16%)

(2.3 million tons)

Notes: 2015 emission projections include rules that were final through 2004 in addition to the reductions proposed under CAIR.

Transportation (4.8%)

(0.8 million tons)

Transportation (2.4%)

(0.3 million tons)

Transportation (55.5%)

(12.8 million tons)

Transportation (44.7%)

(6.4 million tons)

16.6 million tons

22.9 million tons

10.9 million tons

14.2 million tons

MANUFACTURING

Source: Energy Information Administration

Reference case does not account for new SOx, NOx, and Hg rules. Implementation likely to cause coal consumption to fall somewhere between the red and blue lines.

1970 1980 1990 2000 2010 20250

500

1,000

1,500

Reference

Clear Skies

Carbon Cap

Coal Consumption, 1970-2025

Reference case assumes:•Construction of 74 gigawatts of new coal generation capacity.•Coal gasification becomes economic – 10 percent of new coal capacity will use advanced gasification technology.•Average annual electricity prices fall from 7.3 cents per kwh in 2001 to 6.7 cents/kwh in 2025.

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Impacts of Competing LegislationImpacts of Competing Legislation

• McCain-Lieberman Carbon Cap I (S. 139)McCain-Lieberman Carbon Cap I (S. 139)

– 460,000 Jobs Lost (47,000 from Coal out of 78,000 total today)460,000 Jobs Lost (47,000 from Coal out of 78,000 total today)

– Electricity and Natural Gas Up 50% by 2025Electricity and Natural Gas Up 50% by 2025

– $444 Increase in Household Energy by 2025$444 Increase in Household Energy by 2025

– Gasoline Price Up 40 Cents a Gallon by 2025Gasoline Price Up 40 Cents a Gallon by 2025

• McCain-Lieberman Carbon Cap II (SA.2028)McCain-Lieberman Carbon Cap II (SA.2028)

– Essentially First Phase of Carbon Cap IEssentially First Phase of Carbon Cap I

– 200,000 Jobs Lost200,000 Jobs Lost

– Electricity Costs Up 35% by 2025Electricity Costs Up 35% by 2025

– Natural Gas Up 21% by 2010 and 58% by 2025Natural Gas Up 21% by 2010 and 58% by 2025

Impacts of Competing LegislationImpacts of Competing Legislation

• Jeffords-Lieberman Multi-Emissions (S.366)Jeffords-Lieberman Multi-Emissions (S.366)

– 272,000 Jobs Lost (36,000 From Coal)272,000 Jobs Lost (36,000 From Coal)

– Coal Production Down 55% by 2025 Coal Production Down 55% by 2025

– Electricity Costs Up 26% by 2025 Electricity Costs Up 26% by 2025

• Carper Multi-Emissions (S.843)Carper Multi-Emissions (S.843)

– 43,000 Jobs Lost (12,000 From Coal)43,000 Jobs Lost (12,000 From Coal)

– Electricity Costs Up 4-7% by 2025Electricity Costs Up 4-7% by 2025