Air Quality and Energy:Problem or Opportunity?

Ken ColburnNortheast States for Coordinated Air Use Management

kcolburn@nescaum.org

NEDRIJuly 16, 2002

Sources: 1970 - 1999 emissions data is from the National Air Pollutant Emissions Trend Report, (EPA, March 2000). Projections for SO2 and NOx are derived from the Integrated Planning Model (IPM). GDP data through 2000 is from the Bureau of Economic Analysis, GDP projections follow EIA’s assumptions in AEO 2001 of 3% growth per year.

Simultaneous Economic Growth and Environmental Improvement

• Public Officials’ Job: Quality of Life• QOL =

- Healthy Bodies, - Healthy Economy, and - Healthy Ecosystems

• Increasingly, the interests of the environment and economic well-being are aligned…

• So, economic and environmental regulators need to “align” better as well.

Starting Point

Acid Deposition Levels in the United States

Source: US EPA

Acid Neutralizing Capacity (ANC) of NH Lakes and Remote Ponds

Sensitivity Category

ANC (mg/L)

Summer No. %

Winter No. %

Spring No. %

AAcciiddiiffiieedd < 0 21 3 19 3 6 10

CCrriittiiccaall > 0-2 134 18 141 19 26 46

EEnnddaannggeerreedd > 2-5 244 32 237 32 15 26

HHiigghhllyy SSeennssiittiivvee > 5-10 228 30 224 31 8 14

SSeennssiittiivvee > 10-20 98 13 80 11 2 4

NNoott SSeennssiittiivvee > 20 31 4 32 4 0 0

Total 756 100% 733 100% 57 100%

Source: DES

Atmospheric Deposition Estimates for Total Nitrogen, 1996

Source: US EPA

Impact of Ozone on White Pine Health as Measured by Red Edge Inflection Point (REIP)

Source: UNH Forest Watch

NH Forest Products Industry = $1.6 billion direct economic impact

annually…

Anthropogenic Mercury Deposition Rates in the United States

Source: USEPA, Mercury Study Report to Congress, December 1997.

NH Fishing Industry = $300 million annual economic impact…

Visibility Impairment in New Hampshire’s White Mountains:Mt. Jefferson photographed from AMC’s Camp Dodge at near

natural conditions (6 deciviews) and at 90+ percentile haze (28 deciviews)

Source: Appalachian Mountain Club

Tourism is NH’s 2nd largest industry, with $3.5 billion direct economic impact annually…

TemperatureChange in

New England 1985-1999

(Source: NERA, 2001)

Changes in Dominant Forest Types Under Two Climate Scenarios

Source: U.S. Global Change Research Program

NEG-ECP Climate Commitment:

Why Should States Start? Our Actions Count!•1997 GHG Emissions:

– NESCAUM States > Canada, Korea, Italy, Mexico, Australia, Brazil,

France, Spain– New York > Taiwan, Venezuela– New England > Netherlands, Argentina– New Jersey > Egypt, Belgium, Algeria– Massachusetts > Greece, Austria, Denmark,

Kuwait, Norway, Sweden, Israel, Portugal

– Connecticut > Switzerland, Ireland, New Zealand, Peru

– Maine > Croatia, Estonia, Tunisia– New Hampshire > Lithuania, Jordan, Ivory Coast– Rhode Island > Bolivia, Jamaica, Panama, Kenya– Vermont > Paraguay, Tanzania, Iceland, Cyprus

Air pollution and climate change problems largely

share a common root:Energy…

… But can we address Energy without injuring the

Economy?

0

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30000

Mw

08/06/2001 08/07/2001 08/08/2001 08/09/2001 08/10/2001

ISO-NE Load [source www.iso-ne.com]

0100200300400500600700800900

1000

$/M

wh

08/06/2001 08/07/2001 08/08/2001 08/09/2001 08/10/2001

Hourly Bids ISO-NE[source www.iso-ne.com]

Energy Reliability

• Demand-side investments (e.g., energy efficiency) are less expensive and more reliable than fixing weak links in the supply side (Generation, T&D):

– EE reduces environmental impact (e.g., fuel use, emissions, need to site new plants and T&D lines, and future environmental risk)

– EE enhances reliability of each link vs. having the “Next Weak Link” emerge

– EE load reductions follow load profile well, so they diminish peaks

– Slightly lower peaks produce substantial savings and avoid costly, little-used, supply-side upgrades

(Source: Efficient Reliability, Cowart/RAP, 2001)

Energy and National Security

• Energy Security is best served by:– Fewer vulnerable targets like centralized

fossil plants, nukes, dams, refineries, pipelines, and transmission facilities

– More distributed generation (DG)– Less imported oil– More energy efficiency, energy conservation

and Demand-Side Management (DSM)

• National Security better served by:– Above items– Greater multi-lateralism on all fronts

An Economic Sea Change is Underway

Energy

Environment

EconomyEconomyOld Paradigm:

Environment

Energy

EconomyEconomyNew Paradigm:

• ACEEE: Energy/GDP fell 42% from 1970-1999

• Global Business Competitiveness:– Power Quality & Reliability is more and more

important• Bank of Omaha example (chose fuel cells)

– Companies Need to Reduce Vulnerability to Price Shocks, Supply Disruptions, etc.

– Basis of Financial Performance and International Competitiveness is Changing (“Triple Bottom Line”)

– Economic Opportunity: “Who will own the patents?”

– Dollar cost savings that Energy Efficiency provides

• New England: High Electric Rates, but:– Low Poverty Rate, Unemployment Rate, etc.– High Growth in Jobs, Businesses, Per Capita

Income

Evidence of an Economic Sea Change

Per Capita Personal Income versus Utility Average Electricity Price for the 50 States and Washington, DC

(Data Sources: US Department of Commerce, Bureau of Economic AnalysisUS Energy Information Administration)

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

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Utility Average Electricity Price (cents/kWh, 1998)

Per

Cap

ita P

erso

nal I

ncom

e (1

998)

Green & Gold 2000 - Rankings of StatesData Source: Institute for Southern Studies, 2000

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LowestRankedStates

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In an economy where physical assets are not as important as they used to be, where intellectual assets dominate, where business can be conducted from anywhere to anywhere, it would seem that place should not matter; in fact, it matters more. … Places – through the quality of life they offer – matter because entrepreneurs and highly skilled and sought-after workers want to live in areas with educational, cultural, natural and civic amenities.1 [emphasis added]

1 NetworkNH (a consortium of high tech companies), NH in the 21st Century, Competing in the New Economy, December 1, 2000, p. 16. See http://www.network.com

“Place” Matters More in the New Economy

ECO

NO

MIC

EFFI

CIE

NC

YLo

wer

Hig

her

TIME

Energy Efficiency Path(More reliable, moresecure, cleaner, more exportable)

Energy Intensity Path(Less reliable, less secure, less clean,

less exportable)

Competitive AdvantageLost to Delay

Now Later

Sustainability

Old or New Energy Path?