ENV & NAT RESOURCE ECON
ENV & NAT RESOURCE ECON AGEC 350
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AGEC 350 Reading Guide Lecture 17 for Nov 9 2006 Questions based on the readings packet Frank Ackerman s Beyond the Trash Can reading packet pp 5665 1 Explain how specialized multilayer plastic packages can be good economics and good for the environment 2 Give three examples of recycling that follow from economic considerations 3 What are the six environmental reasons that Ackerman lists for recycling 4 What is the answer to Ackerman s question If recycling is the answer what s the question 5 To be discussed in class Frank Ackerman criticizes the work of John Tierney who included in the costs of recycling the value of people s time to organize their recyclables He concludes Life is not a business and participation in society is not a reimbursable business expense Do you agree with Ackerman that the value of time should not be taken into account or with Tierney Questions based on the Tietenberg pp 18185 amp 189203 6 Summarize Tietenberg s explanation of how increasing scarcity will affect the market for recycled vs virgin materials 7 Why is demand for recycled aluminum stronger than for recycled plastics 8 Suppose it costs a community 20 per ton to recycle waste which can be sold at 10 per ton Does it follow that recycling is inefficient Explain 9 Will the private marginal cost of recycling old scrap differ from the private marginal cost of recycling new scrap Why 10 Based on figure 92 What level of recycling would be chosen by private individuals and Why is this level not socially efficient Referring to Ackerman s discussion Why might the social marginal cost MCS be different from the private marginal cost MCP Figure 92 is the most important model in this chapter as it summarizes the basic principles afe icient waste management ll List three examples of policies that cities have adopted to increase recycling rates AGEC 350 Reading Guide Lecture 7 due September 21 Tietenberg pp 62 76 This is a long reading guide In these pages Tietenberg introduces some of the most important principles of the course Try to work through this reading guide carefully this will give you a strong foundation for everything we do in the rest of the semester You only need to skim the section on common property resources and the section on producer surplus and scarcity rent We will cover these issues in more detail later 1 N E 4 V39 0 In economics what do we mean by property rights In your own words explain whether each of the three characteristics of efficient property rights are or are not satisfied for an automobile In your own words without referring to a graph what is consumer surplus In your own words without referring to a graph what is producer surplus In figure 41 if someone was selling the good at the price P per unit see some answers below a How many units would the individual be willing to buy b Why would he or she not be willing to buy any more than that number at that price c Why would he or she not want to buy any less d The D in the graph stands for Demand but the curve is also the MWTP curve Explain why the same line has 2 meanings In figure 42 if someone offered the firm P per unit a How many units would the firm be willing to produce b Why would the firm not be willing to sell any more than that number at that price c Why would the firm not want to sell any less d The S in the graph stands for Supply but it is also the MC curve Explain why the same line has 2 meanings 7 Indicate on the graph below the following a The marketclearing price b How many units would be produced and consumed at that price c Consumer and producer surplus d What does it mean for the price you identi ed in part a to be market clearing 100 200 300 400 8 De ne an eXtemality in your own words 50 In Figure 44 explain in a complete sentence what each of the following means you should be able to explain in a way that would be clear to someone who knows nothing about economics a MCp b MCS c The vertical distance between MCS and MCp This is REALLY important d Qm e Q f Pm g Pquot 10 What is a pecuniary externality also called a secondary impact 11 In your own words de ne a Public good 12 Tietenberg says Because of the interdependence of species within ecological communities any particular species may have a value to the community far beyond its intrinsic value p 71 Since a public good has the characteristics of nonexcludability and indivisibility explain why biological diversity is typically considered to be a public good Reading Packet page 17 13 Are the characteristics of ef cient property rights satis ed for an Aggie ring 14 Would a rule prohibiting the sale of Aggie rings ie eliminating transferability necessarily be a socially inef cient change Review and analysis questions 15 De ne what we mean by an ef cient outcome then using a graph show and explain how implementing the recommendations of onestep bene t cost analysis does not necessarily lead to an ef cient outcome Answers 5a Qd 5c Because for every unit before Qd the marginal WTP is greater than the price 6a QS AGEC 350 Reading Guide Lecture 10 due Tuesday October 10 amp Thurs Oct 12 Lecture 10 will be covered over 2 class periods For the rst day the reading assignment are the pages from the textbook For the second day the reading assignment is the material from the reading packet Tietenberg pages 23 25 We re now going to go back and cover discounting and the concept of present value You may also want to look at the section on present value and discounting in Dr Woodward s textbook chapter downloadable from the web site 1 Suppose you invest 100 and you put it in the bank earning 10 interest per year How much would you have after 5 years ans 16105 be sure you understand how you get this 2 If you discount future income at the rate of 10 per year what is the present value of 16105 to be received 5 years in the future ans 100 be very sure you understand how you get this 3 If you discount future income at the rate of 5 per year what is the present value of 16105 to be received 5 years in the future ans 126 54 4 Suppose you are considering two possible activities one of which will yield net benefits of 15000 after 5 years and one which yields net benefits of 20000 after 9 years a If you discount future net benefits at the rate of 5 which project would you prefer b If you discount future net benefits at the rate of 10 which project would you prefer Intuitively why is there a difference between your answer in a and b 0 3 1 If both projects would cost 10000 right now to implement would you implement the project under a 5 discount rate How about with a 10 rate Questions based on the Tietenberg pp 88 93 5 What does it mean for an allocation to be dynamically efficient Question 6 is designed to walk you through the analysis on these pages First try to answer the question then looking at the book to see if you can follow what s going on there This is a dif cult topic Spending time preparing will really help you understmld what is going on when we see it again in lecture There will not be a quiz on the material covered in this question 6 Dynamically ef cient allocation of a nonrenewable resource a The graph below shows the marginal WTP and MC of a particular good These bene ts and costs are true in the current and will be true next period If 30 units or more are available what would be the ef cient level of consumption in this period and in the next period I MC 0 5 1o 15 Q Next to the graph above make a graph of the marginal net bene ts generated by the good in each period Hint MNB WTPMC Assume now that there are only 15 units and to start out with Show on the graphs the change in net bene ts in each period associated with a reduction in consumption today and an increase in consumption next period Fquot 0 3 1 Assuming an interest rate of 10 make a graph in which you convert the marginal net bene ts of using the good next period to present value terms This indicates the present value of the marginal net bene t of each additional unit left for consumption next period D Assuming an interest rate of 10 what would be the present value of the increase in future bene ts identi ed in question c Does the present value of the bene ts exceed the cost Now extend your analysis from parts c and d making a graph of the future bene ts ie increase in PV of net bene ts and current costs reduction in current net bene ts of reducing current consumption from 14 to 13 to 12 etc Approximately how many units would you consume today and how many next period if you want to maximize the present value of the net bene ts quot1 Questions on Tietenberg 128 137 6Lh edition 127135 7 9 gt0 What is the difference between quotcurrent reservesquot and quotthe resource endowmentquot of a depletable resource such as oil De ne and give an example of each of the following a Depletable resources b Recyclable resources c Renewable resources Just as in the 2period case covered above in the N period case there is a user cost a What does the user cost represent b In the constantmarginaleXtractioncost case does the user cost rise fall or stay constant over time and why Can you write this in your own words Do prices go as high when there is a renewable substitute Why or why not Question on reading packet pages 39 47 11 12 What is Colin Cambell so happy about Why does Campbell predict that the supply of oil will soon start to decline AGEC 350 Reading Lecture 15 Nov 2 2006 Questions based on the Tietenberg pages 286311 1 The figure below is similar to figurel3l 0 0 100 200 300 Label the axes correctly in the figure What is the meaning of the height of the curve when the horizontal axis is at 200 57 c If the stock is at 100 in one period what would be the stock next period d What is the natural equilibrium in this model Why is this the equilibrium What is meant by a sustainable yield Using the model presented in Figure 132 explain why achieving the maximum sustainable yield not efficient Show on a graph how the static efficient sustainable yield would change if the cost of harvesting were to increase Are openaccess resources and commonproperty resources synonymous 6 Explain Why the policies used to reduce the harvests of Pacific salmon were inefficient Reading packet page 51 7 The article mentions a derby style crab fishery What is this and how is it relevant to the deaths of the fishermen Reading packet pages 5255 This article is a striking portrayal of What happens when you don t manage a fishery efficiently and the great things that can happen if you do manage it efficiently You don t have to read the Whole thing if you don t have time but you should read the first pages or two and then skim the rest 8 What policies are in place in Australia that make the use of the lobster fishery more efficient than in Maine Agec 350 I Lecture 2 Learning Styles Results Results for Rlchard Woodward ACT X REF 11 9 7 5 3 1 1 3 5 7 9 11 lt77 77gt SEN X INT 11 9 7 5 3 1 1 3 5 7 9 11 lt77 77gt v15 X VRB 11 9 7 5 3 1 1 3 5 7 9 11 lt77 77gt SEQ X GLO 11 9 7 5 3 1 1 3 5 7 9 11 lt77 77gt What is a model I 39I I Essentiay all models are wrong but some are usefulquot 39 George E P Box P UNITED STATES mm arm i I xquot A quot a 1 MW 7 7 1 V Manna W 7 mu mm no u 139 v v rym A m n m W x H mm 1 L r mm 5 m M I What is the point of models of the relationship between the economy and the environment h I rId in Models of the future What s the question What will the future look like What do we need to answer the question I Knowledge of the current global economy and environment I Assumptions about how things will change in the future ie wha c anges are exogenous I Understanding and assumptions about feedback loops ie what changes are endogenous h quotTriad What is a feedback loop Positive feed backs I Reinforce the general trend I Example technological advancement provides opportunities for more technological advancemen Negative feed backs I Dampen the general trend I Example When population grows so fast that an adequate food supply is no onger available death rates will go up decreasing the population 9 Assumptions of the Pessimists model I Exponential population growth I Limited Resources land energy gt food I No ma39or changes in the physical economic or societal relationships that have traditionally governed world developmen I Feed back loops Positive growth gt lower death rate gt growth Negative growthgtResource limitationsgtless growth bl l l Exponential Population Growth Population billions zuuu zulu zuzu zuau zutu zuau Vear h The Basic Malthusian Model Food per capita Food Supply Population Year Work in pairs I How do the assumptions of linear and exponential growth play a role in a Malthusian model I What are the policy implications of the Pessimist model I What one or two things would you change in this model I If the Pessimists are correct I society will run out of the nonrenewable resources on which the industrial base depends When the resources have been depleted a precipitous collapse of the economic system will result manifested in massive unemployment decreased food production and a decline in population as the death rate soars Tietenberg p 5 i What do the editors of The Economist say about the F Pessimists models How do Portney and Oates respond Optimist s model I Population growth logistic S shaped not exponential New technologies will appear when limits are reached I There are no limits to technology I The second law of thermodynamics is not relevant The Entropy Law Energy tends to dissipate gt you can39t recycle one can into and er can without using some energy to do it 17 l The Assumptions of the l h m Feedbacks in the optimists model I Negative Resource scarcity gt Technological innovation Population pressure gt Decreasing birth rates I Positive Technology gt More technology h m rnjd h III3d in HITi If the Optimists are right I 200 years from now we expect almost everywhere human beings will be nature Tietenberg p 8 be 15 times what it was in 1976 numerous rich and in control of the forces of I in the year 2176 global per capita income will The Extreme optimist I each time the Sierra Club impedes economic development to preserve some specimen of natural beauty it is the relatively poor to sacrifice forthe live like Bill Gates Steven E Landsburg asking people who live like you and me enjoyment of future generations that will Work in pairs l I What are the basic assumptions of the Optimist model i I What are the policy implications of the V Optimist model I What one or two things would you change in the optimists model Lessons about models I They are only as good as their underlying assumptions I Simplicity is valuable Ockham39s razor I Even the best model is not the same as reality I You should understand the purpose of a model Is it intended to predict accurately To make us ask questions To help us learn h Inf3d in HITi Work in small groups A model of the future of Texas I What variables should we include in the model I What feedback loops are important I What changes can we assume Paul Rolke OurLandOurLives Texas AampM AGEC 350 October 26 2006 N Ox Electric utilities account for 22 percent of all NOx emissions in the US15 Groundlevel ozone which is especially harmful to children and people with respiratory problems such as asthma is formed when NOx and volatile organic compounds VOCs react in sunlight NOx also reacts with ammonia moisture and other compounds to form ne particle pollution which damages lung tissue and is linked to premature death Small particles penetrate deeply into sensitive parts ofthe lungs and can cause or worsen respiratory disease such as emphysema and bronchitis and aggravate heart disease NOx also increases nitrogen loading in water bodies especially in sensitive coastal estuaries Too much nitrogen accelerates eutrophication which leads to oxygen depletion and kills sh According to EPA NOx emissions are one of the largest sources of nitrogen pollution in the Chesapeake Bay 1 6 Mercury Plants in Texas and Pennsylvania topped the list for the nation s highest power plant mercury emission rates TXU s Martin Lake gTexas plant ranked number one with 1744 pounds of mercury emissions Two Texas power plants TXU s Big Brown and American Electric Power s Pirkey rank in the top 10 for both emission rate m total pounds Coal red power plants are the single largest source of mercury air pollution accounting for roughly 40 percent of all mercury emissions nationwide20 Mercury is a highly toxic metal that once released into the atmosphere settles in lakes and rivers where it moves up the food chain to humans The Centers for Disease Control has found that roughly 10 percent ofAmerican women carry mercury concentrations at levels considered to put a fetus at risk of neurological damage21 State Policies of the Texas Farm Bureau 2006 The first paragraph of the Environmental Issues section reads as follows emphasis added Environmental Issues 143 We recommend TCEQ Texas Commission on Environmental Quality not issue permits for new coalfired power plants unless they meet environmental standards equal to or better than a gas fired plant with latest technology meaning the most stringent controls categorized as quotlowest achievable emission rate Should a coal red plant be permitted with the latest technology and meet clean air standards pollutants extracted should not be buried in critical areas that could harm our environment 802 Health and Environmental Effects Power plants especially those that burn coal are by far the largest single contributor of 02 pollution in the United States accounting for approximately 67 percent of all 502 emissions nationwide4 Sulfates from 802 are major components of the fine particle pollution that plagues many parts of the country especially communities nearby or directly downwind of coal red power plants Sulfur dioxide also interacts with NOx to form nitric and sulfuric acids commonly known as acid rain which damages forests and acidifies soil and waterways 8 Harvard School of Public Health studies have shown that 02 emissions from power plants significantly harm the cardiovascular and respiratory health of people who live near the plants According to EPA studies fine particle pollution from power plants causes more than 20000 premature deaths a year In April 2005 EPA took final action to designate 177 counties and 31 partial counties home to more than 100 million Americans as nonattainment for health based fine particle pollution standards5 C02 Texas has more plants 6 represented in the top 50 than any other state for C02 emission rates Large ligniteburning power plants in North Dakota and Texas rank among the worst C02 polluters based on emission rate Lignite is low grade fuel abundant in places like Texas and North Dakota its comparatively low BTU heat value means more C02 for the electricity it generates Carbon dioxide one of several greenhouse gases that contributes to climate change is released into the atmosphere when fossil fuels oil natural gas and coal wood and solid waste are burned Power plants are responsible for about 40 percent of all manmade C02 emissions in the nation 12 and unlike emissions of 02 and NOx the electric power industry s 002 emissions are steadily rising Power plant C02 emissions are directly linked to the efficiency with which fossil fuels are converted into electricity and coalfired power plants are inherently inefficient According to EIA in a typical power plant only about a third of the energy contained in coal is converted into electricity While the remainder is emitted as waste heat 13 In fact coalfired power plant efficiency has remained largely unchanged since the mid 1960 s Emissions Comparison StateoftheArt Coal Combustion vs IGCC amp NGCC I 802 l NOx D PM NATURAL GAS COAL GASSAFICATION COAL COMBUSTION PERMITTED 2E Cupynght zuns EIectnc Power Research Institme In AII ngms reserved EimMon I mquot Pra rliwbzvg r 11 sa I g c r a If II Iradinghouse 1800 in xu Fquotquot 3quotquote Teagua fz39 I quot L I u I D K r I 7 39 V I I r wiyv rnesheck H x Twin Oaks III 600 Mw x xquot I I 39iiew Baden Franklin 4 JiIllnerva Vi I 393 I t w IMummru V 39 Mlla o l I p r 39Maanng I Tunis Xcaldwell I EXISTING TNP I PLANT COMPARED TO PROPOSED PLANTS by Megavvatt of Electric Production EXISTING TXU Bloler l TWIN OAKS III TXU Boiler 2 HOW TALL WILL THE SMOKESTACKS BE One Amencnn Center Frost Bank BILIldIng 395 feet 2 Stones Tallest in Austin 55 feet shorter than 0G Snmkestacks 514 feet 65 feet taller than 0G snmkestacks Oak Grove Snioliestacks in Austin TXU39s Oak Grove Plant Compared to the 13 Most Recently Proposed Coal Fired Power Plants in Texas By Rate of Emissions mu AnnualEmiss ans Nam ml cum JstkGrumlvs Iamherpmrnsm letsln exashyrm E m to sm voch Mm momma minim chantakenimman Irtzmal lCEOdncumemquotPnIDV Pant Pmlects Updated n M W TXU s Oak Grove Plant Compared to the 1 3 Most Recently Proposed Coal Fired Power Plants in Texas ate of Emissions Total Annual EmissionsNominal Output NOxis Nitrogen Oxides the chemical that causes smog and Ozone problems damages lung tissue and is linked to premature death C 39 arbon mo xid the poisonous gas cars emit 02 is Sul lr Dioxid w 39c causes acid rain S 2 emissions from power plants signi cantly harm the cardiovascular and respiratory health ofpeople who live near the plants VOC is Volatile Organic Compounds which combine with NOx to form smog PMPMlO is particulate matter tinyparticles ofsoot that can be inhaled deep into the lungs and cause numerous problems according to EPA studies ne particle pollution from power plants causes more than 20000 premature deaths a year Hg is Mercury which is a brain toxin and can cause slow development and IQ loss in newborns Source Dirty Kilowat ts America s Most Polluting Power Plants a report by The Environmental Integrity Project July 2006 TXU39s Oak Grove Plant Compared to the 13 Most Recently Proposed Coal Fired Power Plants in Texas By Total Annual Emissions xu SOIkavePlm II n omu p ulstDnm m cm NEIx cu m vm x n7 M M n Ni x nanny Dawnth chat aken mm an mmaircEqancmwnwunam mm um ed X Z TXU39s FOUR LIGNITE PLANTS RESPONSABLE FOR 14 OF TEXAS INDUSTRIAL POLLUTION mus a mum an em 0 AL EXAS NDUS RIALVOLLU 0N ELEC mu ILi Es xumem EVLAN s EXISTING TXU COAL PLANTS TXU had the top 3 plants in Texas for industrial air pollution in 2003 and its four coallignite plants accounted for 493886 tons or nearly 24 of the State39s total TXU s Sandow Station ranked 8 in Texas 2100000 tons Texas Total Industrial Emissions 2003 1083015 tons From Industrial Sources other than Power Plants 48 1083015 tons From Electric Power plants 52 1002227 tons From 17 Coal Fired Plants 93 of power plant pollution 80957 tons From 134 Gas Fired Plants 7 of power plant pollution TXU EMISSIONS 512319 tons From 19 TXU Power Plants 18433 tons From 15 TXU Gas Fired power plants 4 of TXU s Pollution 493886 tons From 4 TXU Lignite Fired power plants equals 96 0f TXU s Pollution 46 of Texas Power Plant Pollution 24 of Texas Industrial Pollution TXU s proposed Oak Grove lignitefired power plant that seeks to emit 41600 tons per year would rank 11 for all power plants 50 Dirtiest Plants Rank by Tons of Emissions National Rank Among 400 Plants EPA 2004 Data Sulpher Nitrogen Dioxide Oxides STATE OPERATOR FACILITY RANK Emissions RANK Emissions TX TXU Generation Co LP Big Brown 21 90828 174 7005 Sandow No TX TXU Generation Co LP 4 119 25969 228 4776 TX TXU Generation Co LP Monticello 28 79698 78 14136 TX TXU Generation Co LP Martin Lake 33 76631 61 16199 Carbon Mercury Dioxide RANK Emissions RANK Emissions Big Brown 6 1182 57 10573229 Sandow No 4 41 558 152 5275320 Monticello 4 1330 13 17491542 Martin Lake 1 1744 5 21593119 OAK GROVE 3 1440 Source Environmental Integrity Project 2006 Report quotDirty Kilowatts America s Most Polluting Power Plantsquot Data from EPA 50 Diitiest Power Plants Mercury Emission Rates EP 2004 EPA 2004 EMISSION 0rd er STATE OPERATO R FACI LITV RANK RATE 1 TX Southwestern Electric Power Co Pirkey 1 21907 Reliant Energy Mid Atantic Power 2 PA Holoin Shawlills 2 20800 3 TX TXU Generation Co LP Big Brown 3 14238 4 TX Twin Oaks Power LLP Twin Oaks Power One 4 12722 5 PA Allegheny Energy Supply Co LLC Armstrong Power Station 5 125 05 6 AL Alabama Power Co Greene C u B 12344 7 TX TXU Generation Co LP Samlow No 4 7 12324 8 KS Sun ower Elec Power Corp Holcomb 8 12185 9 IA IES Utilities Inc Ottumwa 9 11983 10 AL Alabama Power Co Gorgas 10 11898 11 OH Columbus Southern Power Co Conesyille 11 11281 Reliant Energy MidAtlantic Power 12 PA olclin Keystone 12 10238 13 TX TXU Generation Co LP Martin Lake 13 10117 14 AZ Tucson Electric Power Company Springeryille 14 10095 15 ND Coop PowerAssn Coal Creek 15 9874 16 ND Minnkota Power Coop Inc Milton R Young 18 98 27 17 TX TXU Generation Co LP Monticello 17 9467 18 TX San Miguel Electric Coop Inc San Miguel 18 9439 Red Hilis Generating 19 MS Choctaw Generating LP Facility 19 93 E2 20 OH Orion Power Holdings Inc Avon Lake 20 9285 21 WI Wisconsin Electric Power Co Pleasant Prairie 21 9005 22 NE Omaha Public Power District Nebraska City 22 9004 23 NE Omaha Public Power District North Omaha 23 89 81 24 AL Alabama Power Co E C Gaston 24 8724 25 KY East Kentucky Power Coop Inc Cooper 25 8351 26 TX Texas Genco II LP Limestone 26 8347 27 ME South Mississippi El Perssn R D Morrow 27 82 58 28 IN Northern Indiana Pub Sery Co R M Schanter 28 8234 Southern Mirant Energy MidAtlantic 28 MD C Dickerson 29 8190 3 AL Alabama Power Co James H Miller Jr 30 7918 3 ND Otter Tail Power Co Coyote 31 78 E2 32 WI Alliant Energy Corporation Columbia 32 78 34 33 TX Texas Municipal Power Agency Gibbons Creek 33 7782 34 IN State Line Energy LLC State Line Energy 34 7E 02 3 LA Louisiana Generating LLC Big Cajun 2 35 75 59 35 TX Topaz Power Group LLC Coleto Creek 313 75 05 39 i39Iui u u Report 39 i IIutiIIJI rr39ldIIL UUILI Data from EPA Notes All 4 ofTXU39s Coal Plants are inthetoo 17 NationaIly Twin Oaks Power I aka TNP1 is located in Northern Robertson County and has the 4 worst Mercury Emissions Nationally Texas Genco II LP ranks 0 t39 t it IS also the 8 largest Mercury Emitler Nationally Seven ofthe Top Twenty Emission Rate Plants are inTexas Dirty Kilowatts America s Most Polluting Power Plants Exerpts The Environmental Integrity Project July 2006 http www environm entalintegritv orgpub sDirtv2 OKilowat tspdfsearch22Dirtv20Kilowatts20AmericaE28 099s20Most20Polluting20P0wer20Plants22 The Environmental Integrity Project EIP is a nonpartisan nonprofit organization dedicated to more effective enforcement of environmental laws and to the prevention of political interference with those laws EIP was founded by Eric Schaeffer who directed the U S Environmental Protection Agency39s Office of Regulatory Enforcement until 2002 EIP s research and reports shed light on how environmental laws affect public health 502 Health andEnvironmemalE ctx Power plants especially those that burn coal are by far the largest single contributor of S02 pollution in the Unit Sta es accounting or approximately 67 percent of all 02 emissions nationwide4 Sulfate from S02 are major components 0 e fine particle pollution that plagues many parts of the country especially communities nearby or directl downwind o coalfired power plants Su ur dioxide also interacts wrth N x to form ni ic an su uric aci 5 common nown as acid rain which damages fores s and acidifies soil and waterwa t 02 emissions rom power plants significantly harmt e cardrovascular and respiratory health of people who live near the plants According to EPA studies fine particle pollution from power plants causes more than 0 0 premature eat 5 ayear In April 2005 EPA took final action to designate 177 counties and 31 partial counties 7 home to more than 100 mi ion Americans 7 as nonattainment for healthbased fine particle pollution standards5 Texas has more plants 6 represented in the top 50 than any other state for C02 emission rates Large ligniteeburnin ower plants in North Dakota and Texas rank among the wor st CO2 polluters based on emission rate Lignite is low rade fuel abundant in places like Texas and North D ota its comparatively low BTU heat va ue means more C02 for the electricity it generates Carbon dioxide one of 39 L L 39 quot L is released into the ere when fossil fuels oil natural gas and coal wood and solid waste are burned Power plants are responsible for about 40 percent of all manemade CO2 emissions in the nation12 and un i e emissions of S02 and NOx the electric power industr 5 C02 emissions are steadil rising Power plant 2 emissions are directly linked to the ef ciency with which fossil uels are converted into electricity and coalef ire power lants are inherent ine icient Accor in to E1 in at ical power lant on y about a third of the energy contained in coa is converted into electrrcity while the remainder is emitted as waste heat13 In fact coalefired power plant ef ciency has remained largely unchanged since the mi 1960 s NOx Electric utilities account for 22 percent of all NOx emissions in the U 15 Groundlevel ozone which is especially harmful to children and people with respiratory problems such as asthma is formed when NOx andvolatile organic compounds VOCs react in sunlight NOx also reacts with ammonia moisture and other compounds to form fine particle pollution which damages lung tissue and is linked to premature death Small particles penetrate deeply into sensitive parts of the lungs and can cause or worsen respiratory disease such as emphysema and bronchitis and aggravate heart disease NOx also increases nitrogen loading in water bodies especially in sensitive coastal estuaries Too muc nitrogen accelerates eutrophication which leads to oxygen depletion and kills 1s According to E X emissions are one of the largest sources of nitrogen pollution in the Chesapeake Bay 1 6 Mercury Plants in Texas and Pennsylvania topped the list for the nation s highest power plant mercury emission rates TXU s Marti Lake gTexasL plant ranked number one with 1744 pounds of mercury emissions Two Texas power plants TXU s Big Brown and American Electric Power s Pirkey rank in the top 10 for both emission rate M total pounds Coalfired power plants are the single largest source of mercury air pollution accounting for roughly 40 percent of all mercury emissions nationwide20 Mercury is a hig ly toxic metal that once released into the atmosphere settles in lakes and rivers where it moves up the food chain to humans The Centers for Disease Control has found that roughly 10 percent of American women carry mercury concentrations at levels considered to put a fetus at risk of neurological damage21 Texas Medical Association adopt the Consensus Statement on Methylmercury and Public Hea th APPROVED Therefore policy makers at all levels should Treat mercury emissions from all anthropogenic sources as quothazardousquot and rapidly implement regulations aimed at attaining the maximum achievable emissions reductions The American public is not adeguately protected from mercury pollution Available data suggest that human activities have increased levels of mercury in the atmosphere by roughly a factor of 3 average deposition rates by a factor of l 5 to and deposition near industrial areas by a factor of 2 to 10 Major identi ed sources of mercury pollution in the United States include coal red power plants industrial boilers municipal and medical waste incinerators and chlorine manufacturing chloralkali facilities While mercury emissions from various sources may be transported long distances in the l 39 a mercurv sources play an important role in local pollution Draft EPA modeling indicates that at mercury quothotspotsquot Within the United States locations where mercury deposition is highest local emission sources Within a state can be the dominant source of deposition In addition a recent 10year study by the State of Florida points to the importance of local merch pollution sources and the feasibilitv of measures to protect public health In that studv strict emission limits applied to incinerators in south Florida were found to produce emissions reductions of 99 percent and corresponding reductions in mercu levels in Everglades sh and Wildlife of 60 percent Mercury threatens human health and child development Scienti c ndings indicate that mercury is a signi cant threat to the fetus infants and young children Exposure to methylmercury the highly toxic form of organic mercury found in our environment and foo may adversely affect reproduction and a variety of organ systems including the cardiovascular system and in particular the brain and central nervous system The developing brain is more susceptible to methylmercury exposure than are adult brains and is most sensitive while in utero Methylmercury crosses the placenta easily and readily penetrates the fetal brain It also is secreted in breast milk although the contribution of methylmercury exposure through lactation is not yet fully understood High dose exposures to methylmercury during fetal development can result in low birth weight small head circumference severe mental retardation cerebral palsy deafness blindness and seizures Recent epidemiological studies have shown that children exposed to moderate or low levels of mercury before birth also may experience neurological and development impairment Outcomes may include delaved walking delaved speech and decreased performance on tests of attention ne motor function language visualspatial abilities and memog httpwww seedcoalition orgtx med assoc maternal health html ROBERTSON COUNTY RANK IN MERCURY EMISSIONS AS A STATE IF COAL PLANTS APPROVED MERCURY MERCURY 4911 PLANTS COMPOUNDS US STATE 2003 STACK RANK EMISSIONS Lbs TEXAS 9100 1 OHIO 7285 2 PENNSYLVANIA 6827 3 INDIANA 4885 4 ALABAMA 4398 5 ILLINOIS 4125 6 WEST VIRGINIA 3948 7 KENTUCKY 3486 8 MISS URI 3289 9 NORTH CAROLINA 3037 10 FLORIDA 2981 11 GEORGIA 2793 12 ROBERTSON COUNTY 2575 13 NORTH DAKOTA 2512 14 MICHIGAN 2462 15 Coal is cheap if you don t look at total costs According to a report prepared by independent consultants for the Government of Ontario the province s coal plants kill 668 people per year in Ontario and cause 928 hospital admissions 1100 emergency room visits and 333660 minor illnesses According to the same report when the health and environmental costs of burning coal are properly factored in switching from coal to natural gas for electricity generation would reduce the province s total cost of power generation by 1 7 billon per year The net savings from replacing coal with energy conservation and renewables would be even greater As Figure 1 reveals the total cost per kWh of coalfired electricity generation is 67 greater than for natural gasfired generation DSS Management Consultants Inc and RWDI Air Inc Cost Benefit Analysis Replacing Ontan39o s CoalFired Electricity Generation Prepared for ontario Ministry ofEnergy April 2005 p ii Fig 1 Real cost comparison coal vs natural gas for electricity generation 20 I64 IS E El Haalth and emiionmental g l0 m xsaaa rmmmg 3 5 39 aammm39aa wva mammaawaaayammmw wwwmmawmmmamwm ma 1 1mm 29 H HARC7H60new7EGUsreport fmalF naliH607EGUand Offset Report doc WNMN P E Warwi i a a 35 n amammmwmm a n JquotX x Maw 38 133wa W ma H HARC7H60new7EGUsreportfmal FinaliH607EGUand Offset Repor doc Ozone Impacts of Proposed Power Plants and Offsets by ENVIRON DRAFT August 11 2006 Results from TERC Project H60 Phase 1 Summary Points 3 of 4 Robertson County in Central Texas consistently had the largest ozone impacts from proposed new Electric Generation Units Increases of 5 to 7 ppb in episode average maximum ozone from all 17 proposed EGUs and only about half a ppb lower with TXU s offsets Monitoring data are lacking to place these modeled ozone changes in context Four Highest EightHour Ozone Concentrations in 2006 as of September 7 htt wwwtce statetxusc ibincom liancemono s8hr 4hi hest The table below lists the four highest daily maximum eighthour ozone concentrations measured in 2006 in each community where the TCEQ measures ozone Concentrations that are rated Moderate or higher are colorhighlighted based on the EPAdefined Air Quality Index colors All ozone measurements are in parts per billioL 06292006 1200 06282006 140039 Fayette Countv 2 N C601 08182006 1200 06142006 1400 2 iBURNE1 i 1 Lake Goalg mwn 41 r E x A s h n 2 Wquot arhumaie Tamara 7v Thrall ervuie C 2513 F I z 7 waenmgu39 quot1 L A M a quot WILLIMSON prongs 2 1 281 39 i A V Babref r 7 winged Mano r 1 322 I Rncxuug Joanie Falls 3 A aLeann I 1QO v BLANCO f I 39v Springs Cednrcraek r B H A r s Wimbcliev 1 canyon L 1M1 l I 1 Largvan9 a co 39x 39 quot Fayen ii a S FM WM F A v E r r E e COMAL a CAODWELL ADALQEE Copyright Q 20113 Microso CD19 andor 3915 slippllers Ni quot91115 reserved 39 I i EPA BROCHURE httpcfpub epa govairnowindex cfmactionstatic ozone23 How can groundlevel ozone affect your health Ozone can irritate your respiratory system causing you to start coughing feel an irritation in your throat andor experience an uncomfortable sensation in your chest Ozone can reduce lung function and make it more difficult for you to breathe as deeply and vigorously as you normally would When this happens you may notice that breathing starts to feel uncomfortable If you are exercising or working outdoors you may notice that you are taking more rapid and shallow breaths than normal Ozone can aggravate asthma When ozone levels are high more people with asthma have attacks that require a doctor s attention or the use of additional medication One reason this happens is that ozone makes people more sensitive to allergens which are the most common triggers for asthma attacks Also asthmatics are more severely affected by the reduced lung function and irritation that ozone causes in the respiratory system Ozone can inflame and damage cells that line your lungs Within a few days the damaged cells are replaced and the old cells are shedmuch in the way your skin peels after a sunburn Ozone may aggravate chronic lung diseases such as emphysema and bronchitis and reduce the immune system s ability to fight off bacterial infections in the respiratory system Ozone may cause permanent lung damage Repeated shortterm ozone damage to children s developing lungs may lead to reduced lung function in adulthood In adults ozone exposure may accelerate the natural decline in lung function that occurs as part of the normal aging process States Health Impacts Annual Rank State Mortality Hospital Hiear39t Atim Bsians Attacks 1 Penna ylua nia 1 825 1654 3 329 2 Ohio 143 1638 2373 3 Florida 14113 13137 2145 4 Illinois 1355 1333 2351 5 New York 1212 1191 2455 6 Texas 1160 1135 1791 T North Carolina 1133 1013 1603 S Virginia 989 895 1421 9 Michigan 981 158 128 10 Te 0 has sea 152 804 12761 11 Georgia 945 837 1352 12 Indiana 387 1345 1491 13 Missouri 13954 E199 1237 14 Kentucky 74 5 1339 1022 15 Maryland 587 1331 1014 This report the full Abt Associates report Power Plant Emissions Particulate MatterRelated Health Damages and the Bene ts of Alternative Emission Reduction Scenarios June 2004 and the interactive site Your Air on the Web are available at wwwcleartheairorgdirtypower MatroArmHed1hlmpaelsAnmd Metro Areas Per Capita Deaths Flank MeirlziArea Murialily Hospital Heart Rani Main Area TutalMarlallw Mariam Admissions Amps arm uaili Risk Fer wanna admits 1 New York 1w 10112 1012113 20911 2 Chicago IL E155 843 15151 1 Vii healing W 33 332 3 Pittsburgh PA 553 5015 990 2 Cumbgrlandp MD 23 35min 4 Philadelphia PA 559 5115 1007 3 Steubenwills 1111 31 359 5 Washington DC 515 521 351 4 unariesmn MW 74 355 5 Detroit MI 4115 119 1 83 5 Pittsaurgl 11 Pa 5133 355 1 Atlanta GA 4313 2100 63912 6 Huntington WV 55 355 a 31 Louis MD 353 339 5951 J h wni PA 33 311 a Baltimore 1111 as 311 4 3 Hammn W9 3quot 33 10 Cincinnati DH 319 am 51139 9 HIW QSWL TN 5392 327139 11 mailgland OH 303 257 502 1 Parker sb urg W 35 3213 12 Dallas Tx 29a 2311 are 11 E39F Sm39f T p 15 32quot 1 1 14 Miami FL 247 2511 391 j l j 15 Indianapolis IN 221 211 3713 M M rr39gl w TN 27 315 15 Owsnsboro H21quot 22 310 113 Columbus OH 2111 211 3751 15 Bla kabmg w 25 3M 1 Boston MA 215 221 451 1 Ea s en AL 2 m 1 18 LlDLJISVHIE K i 2111 132 293 13 Mama pp 25 312 19 w 203 quot3999 33 1 19 maxlame TN 128 299 2039 Kansas Ciiy MD 191 192 345 2111 ygungsmwrL cm 115 2951 AECT Members 7 p American Electric Power 39 Centerpoint Energy 2 39 El Paso Electric Company i 39 Entergy Texas Reliant Energy TexasNew Mexico Power Company TXU Xcel Energy ASSOClAT10N OF ELECTRIC COMPANIES OF TEXAS INC The Association of Electric Companies of Texas Inc AECT is a trade organization representing electric companies in Texas Organized in 1978 AECT provides a forum for member company representatives to exchange information on their industry and to communicate with state and federal government of cials According to a January 2006 publication by AECT titled Questions and Answers on Texas s Competitive Electric Market power is sold and procured based on the prices that buyers pay for electricity produced by natural gas As a result natural gasfueled generation sets the price for all other electricity produced even electricity produced from coal red or nuclear red generating facilities April 20 2006 TXU Media Information Sheet Commitment to Voluntagy Air Quality Improvement 0 Setting a New Environmental Standard TXU s plan will double its solidfuel eet while voluntarily improving air quality with large reductions in key emissions TXU will set a new environmental standard by voluntarily offsetting all sulfur dioxide SO 2 nitrogen oxide NOx and mercury emissions from all 11 new proposed units by making reductions at existing plants In addition the company will actually reduce these same key emissions by 20 To achieve this reduction TXU will voluntarily remove at least 15 pounds of key emissions from existing plants for every one pound from the new units These actions will more than offset the S02 NOx and mercury emissions from the new coal plants and will reduce these key emissions by 20 from current levels TXU plans to invest about 500 million in this voluntary program it will be in place as the new units become operational This will be the largest program of its type in the nation and will make way for the next wave of needed electric generation 0 Bene ts TXU s voluntary new environmental standard will actually improve air quality for key regulated emissions at the same time that generation capacity is signi cantly increased This reduction is the equivalent of taking 15 million cars off Texas roads or converting 16 million drivers to hybrid cars These reductions are being achieved while adding enough capacity to power 65 million homes 0 Voluntary Veri cation TXU will voluntarily enter into a legallybinding commitment with the Texas Commission on Environmental Quality TCEQ 0 EPA Reporting TXU has continuous emission monitors that measure S02 and NOx emissions 24 hours a day 7 days a week These monitors are certi ed by the Environmental Protection Agency EPA and data is transmitted electronically to the EPA Results are posted in EPA s publicly available Ailid Rain Database Mercury emissions will be measured in accordance with the approved EPA met 0 Reserve Margin with Publicly Announced Units Added I Firm LOG Forecast M39i R39i 60544 62110 3953 134838 693436 67922 R958quot 33quot PWY Md 15 9 15 4 12 0 20 me 240 230 260 27 5 390 a scarelo assumes 39 p12 cw amaze3c Freed 200 m be bun see 393 d9 tici 175 150 Reserve 1 2 6 ugh I Maigin quotfui 39 quotK 100 39 h I X dice 55215 is based on 75 Signed martyred n OSWI39C Margin 93quot quotY 739 391 9quot 0395 5390 bananas an C39llf 39iquot 6 o Regszin Malgill u ill39l 911113 Unit 00 39 2MB 2007 2008 2009 2010 2011 F a J 9113 0 mm on Z ura QSOUI OQS in 139001quot quot 5 1C tree Nl IR LIGNITE ISSUES Double Dipping TCEQ doesn t involve itself in economic decisions of applicant Meaning in part they don t say what kind of stuff you can or can t burn to make electricity But BACT is determined as the best available control applied to that particular fuel Because Lignite is the lowest BTU coal you must burn signi cantly more of it to generate heat equivalent to a higher rank coal It has more ash These and other faults make it far dirtier to burn and harder to successfully clean up Thus the lignite burner is having it both ways TCEQ isn t telling them what they can burn but if they choose to burn the dirtier coal the standards are more lax A compelling argument can be made that if the applicant gets to choose the fuel the State should set a xed standard for everyone I understand that this cuts against the grain of the whole regulatory scheme The fact remains that the rules as they exist allow those that choose to use dirtier methods to generate electricity are externalizing enormous costs to the public primarily in the form of health related costs And the current scheme ensures that the market will never accurately value generation methods that are cleaner while continuing to provide de facto subsidies to those who choose the dirtiest methods The NOX allowances under CAIR will be distributed based on the average of the three highest amounts of heat input from calendar years 2000 through 2004 adjusted for the type of fuel burned 090 for coal 050 for gas and 030 for all other fossil fuels Emissions Comparison StateoftheArt Coal Combustion vs IGCC amp NGCC IbMWhr 08 EISOZ l NOX 3 PM 06 04 02 NATURAL GAS COAL GASSAFICATION COAL COMBUSTION TXU39S GROVE PERMITTED Copyright 2005 Electric Power Research institute Inc All rights reserved 50 yr societal choice 7 To generate more electricity than We need by the Dittiest Available Technology DAT in a plant that Will be the dirtiest in Texas for most ofiw life and Will pollute for the next half century 7 Theoretical argumenw about free unregulated markets and government action on behalf of the public interest Will become painfully real in some child s lungs or brain AGEC 350 Reading Guide Lecture 18 due November 28 2006 Questions based on pages 7586 in the reading packet N In the model that we have used in AGEC350 we have typically assumed that firms are always acting optimally so that environmental regulations always lead to increased costs According to Porter and van der Linde what are the assumptions that are implicit in this model What are the six purposes that properly crafted environmental regulation can serve Give two examples of cases where firms have benefited from tightened environmental standards Give an example of an industry39s overestimate of the cost of complying with a new environmental regulation Explain Porter and van der Linde s three principles for improved environmental regulation