Technical
Support
Document
for
the
Final
Clean
Air
Interstate
Rule
Modeling
of
Control
Costs,
Emissions,
and
Control
Retrofits
for
Cost
Effectiveness
and
Feasibility
Analyses
EPA
Docket
number:
OAR­
2003­
0053
March,
2005
U.
S.
Environmental
Protection
Agency
Office
of
Air
and
Radiation
2
Modeling
of
Control
Costs,
Emissions,
and
Control
Retrofits
for
Cost
Effectiveness
and
Feasibility
Analyses
Overview
This
Technical
Support
Document
(
TSD)
describes
EPA's
use
of
the
Integrated
Planning
Model
(
IPM)
to
develop
estimates
of
SO2
and
NOx
emission
control
costs,
projections
of
future
emissions
and
emission
reductions,
and
projections
of
capacity
of
future
control
retrofits,
assuming
controls
on
electricity
generating
units
(
EGUs).
This
TSD
also
describes
EPA's
use
of
the
Technology
Retrofitting
Updating
Model
(
TRUM)
to
develop
marginal
cost
effectiveness
curves
for
SO2
and
NOx
reductions
from
EGUs.

The
EPA
used
IPM
projections
and
TRUM
marginal
cost
curves
to
conduct
analyses
contained
in
the
CAIR
Notice
of
Final
Rulemaking
(
NFR)
preamble
in
section
IV,
which
is
entitled
"
What
Amounts
of
SO2
and
NOx
Emissions
Did
EPA
Determine
Should
Be
Reduced?"
Specifically,
EPA
used
these
control
cost
estimates
and
marginal
cost
effectiveness
curves
to
analyze
the
cost
effectiveness
of
CAIR,
as
presented
in
section
IV.
A
of
the
NFR
preamble.
Additionally,
the
Agency
used
the
projections
of
control
retrofit
capacities
to
analyze
the
feasibility
of
CAIR,
as
presented
in
preamble
section
IV.
C.

This
TSD
provides
background
on
the
IPM
and
TRUM
models,
and
explains
the
following
specific
analyses
for
the
CAIR
NFR:

°
Use
of
IPM
to
estimate
average
and
marginal
costs
of
SO2
and
NOx
controls
°
Use
of
IPM
to
project
future
SO2
and
NOx
emissions
and
emission
reductions
°
Use
of
IPM
to
project
capacity
of
future
SO2
and
NOx
control
retrofits
°
Use
of
TRUM
to
examine
changes
in
marginal
costs
at
varying
levels
of
SO2
and
NOx
reduction
Background
on
EPA's
IPM
Analyses
EPA
uses
the
Integrated
Planning
Model
(
IPM)
to
examine
costs
and,
more
broadly,
analyze
the
projected
impact
of
environmental
policies
on
the
electric
power
sector
in
the
48
contiguous
States
and
the
District
of
Columbia.
The
IPM
is
a
multi­
regional,
dynamic,
deterministic
linear
programming
model
of
the
U.
S.
electric
power
sector.
It
provides
forecasts
of
least­
cost
capacity
expansion,
electricity
dispatch,
and
emission
control
strategies
for
meeting
energy
demand
and
environmental,
transmission,
dispatch,
and
reliability
constraints.
The
National
Electric
Energy
Data
System
(
NEEDS)
contains
the
generation
unit
records
used
to
construct
model
plants
that
represent
existing
and
planned/
committed
units
in
EPA
modeling
applications
of
IPM.
The
NEEDS
2004
includes
basic
geographic,
operating,
air
emissions,
and
other
data
on
all
the
generation
units
that
are
represented
by
model
plants
in
EPA's
version
2.1.9
update
of
IPM.
Documentation
for
IPM,
and
the
NEEDS
database,
are
available
in
the
CAIR
rulemaking
docket
and
also
on
EPA's
website
at
www.
epa.
gov/
airmarkets/
epa­
ipm/
.
3
1
An
exception
was
made
to
the
run
year
mapping
for
an
IPM
sensitivity
run
that
examined
the
impact
of
a
NOx
Compliance
Supplement
Pool
(
CSP).
In
that
run
the
years
2009
through
2012
were
mapped
to
2010
and
2008
was
mapped
to
2008.
Modeling
applications
of
IPM
produce
forecasts
for
model
plants,
i.
e.,
clusters
of
real
life
electricity
generating
units
with
similar
characteristics.
The
model
plant
projections
can
be
used
to
produce
parsed
results,
which
are
unit­
level
results
derived
from
the
model
plant
projections.
Projections
for
individual
plants
are
based
on
data
currently
available
and
modeling
parameters
which
are
simplifications
of
the
real
world.
It
is
likely
that
some
future
actions
regarding
individual
plants
could
differ
from
model
projections
of
actions;
however,
the
aggregate
impacts
are
expected
to
be
appropriately
characterized
by
the
model.
Where
appropriate,
EPA
produced
parsed
results
from
IPM
runs
for
use
in
analyzing
CAIR.

The
EPA
used
IPM
to
evaluate
the
cost
and
emissions
impacts
of
the
policies
to
limit
annual
emissions
of
SO2
and
NOx,
and
ozone
season
emissions
of
NOx,
that
are
required
by
CAIR
 
if
all
affected
States
choose
to
implement
reductions
by
controlling
EGUs
 
to
be
made
from
the
electric
power
sector.
For
the
CAIR
Notice
of
Proposed
Rulemaking
(
NPR),
EPA
used
IPM
version
2.1.6
and
NEEDS
2003
to
analyze
cost
and
emissions
impacts
of
the
proposed
rule.
For
the
CAIR
NFR,
EPA
updated
IPM
and
NEEDS.
The
updated
versions
are
named
IPM
version
2.1.9
and
NEEDS
2004.
This
TSD
describes
the
IPM
runs
that
EPA
used
to
estimate
average
and
marginal
costs
of
EGU
controls,
emissions
and
emission
reductions,
and
control
retrofits
for
the
CAIR
NFR.

The
Regulatory
Impact
Analysis
(
RIA)
for
the
CAIR
NFR
includes
a
list
and
description
of
each
IPM
run
that
supports
EPA's
analysis
for
the
NFR
(
see
RIA
Table
D­
9).
Data
files
for
each
of
the
IPM
runs
that
EPA
used
for
the
NFR
are
available
in
the
CAIR
docket
as
well
as
on
EPA's
website.
This
TSD
provides
some
additional
description
regarding
the
particular
IPM
runs
that
EPA
used
for
its
cost
effectiveness
and
feasibility
analyses,
which
are
presented
in
section
IV
of
the
CAIR
NFR
preamble.
Data
files
for
the
runs
described
in
this
TSD
are
available
in
the
CAIR
docket
and
on
EPA's
website,
along
with
the
other
runs
used
for
the
NFR.

The
IPM
uses
model
run
years
to
represent
the
full
planning
horizon
being
modeled.
That
is,
several
years
in
the
planning
horizon
are
mapped
into
a
representative
model
run
year,
enabling
IPM
to
perform
multiple
year
analyses
while
keeping
the
model
size
manageable.
Although
IPM
reports
results
only
for
model
run
years,
it
takes
into
account
the
costs
in
all
years
in
the
planning
horizon.
In
EPA's
v.
2.1.9
update
of
IPM,
the
years
2008
through
2012
are
mapped
to
run
year
2010,
and
the
years
2013
through
2017
are
mapped
to
run
year
2015.1
In
the
CAIR
NFR
preamble,
section
IV,
model
outputs
for
2009
and
2010
are
from
the
2010
run
year,
and
model
outputs
for
2015
are
from
the
2015
model
run
year.

In
its
IPM
modeling,
EPA
assumes
interstate
emissions
trading
for
EGUs.
Although
States
are
not
required
to
participate
in
an
interstate
EGU
emissions
trading
program,
EPA
believes
it
is
reasonable
to
evaluate
control
costs
assuming
States
choose
to
participate
in
such
a
program
since
4
2
The
District
of
Columbia
and
the
following
23
States
must
reduce
annual
SO2
and
NOx
emissions:
Alabama,
Florida,
Georgia,
Illinois,
Indiana,
Iowa,
Kentucky,
Louisiana,
Maryland,
Michigan,
Minnesota,
Mississippi,
Missouri,
New
York,
North
Carolina,
Ohio,
Pennsylvania,
South
Carolina,
Tennessee,
Texas,
Virginia,
West
Virginia,
and
Wisconsin.
The
District
of
Columbia
and
the
following
25
States
must
reduce
ozone
season
NOx
emissions:
Alabama,
Arkansas,
Connecticut,
Delaware,
Florida,
Illinois,
Indiana,
Iowa,
Kentucky,
Louisiana,
Maryland,
Massachusetts,
Michigan,
Mississippi,
Missouri,
New
Jersey,
New
York,
North
Carolina,
Ohio,
Pennsylvania,
South
Carolina,
Tennessee,
Virginia,
West
Virginia,
and
Wisconsin.

3
The
EPA
began
its
emissions
and
economic
analyses
for
CAIR
before
the
air
quality
analyses,
which
affect
the
States
covered
by
the
final
rule,
was
completed.
that
will
result
in
less
expensive
reductions.
Also,
note
that
EPA's
IPM
modeling
accounts
for
the
use
of
the
existing
title
IV
bank
of
SO2
allowances.

The
final
CAIR
requires
annual
SO2
and
NOx
reductions
in
23
States
and
the
District
of
Columbia,
and
also
requires
ozone
season
NOx
reductions
in
25
States
and
the
District
of
Columbia.
Many
of
the
CAIR
States
are
affected
by
both
the
annual
SO2
and
NOx
reduction
requirements,
and
the
ozone
season
NOx
requirements.
2
The
EPA
initially
conducted
IPM
modeling
for
the
final
CAIR
using
a
control
strategy
that
is
similar
but
not
identical
to
the
final
CAIR
requirements.
3
The
control
strategy
that
EPA
initially
modeled
included
three
additional
States
(
Arkansas,
Delaware
and
New
Jersey)
within
the
region
required
to
make
annual
SO2
and
NOx
reductions,
however
these
three
States
are
not
required
to
make
annual
reductions
under
the
final
CAIR.
The
addition
of
these
three
States
made
a
total
of
26
States
and
the
District
of
Columbia
affected
by
annual
SO2
and
NOx
caps
for
the
initial
model
run.
(
Note
that
EPA
is
proposing
to
require
annual
SO2
and
NOx
reductions
in
Delaware
and
New
Jersey.)
The
initial
model
run
also
included
individual
State
ozone
season
NOx
caps
for
Connecticut
and
Massachusetts,
and
did
not
include
ozone
season
NOx
caps
for
any
other
States.
Several
of
the
analyses
for
the
final
CAIR
are
based
on
this
initial
model
run.
In
this
TSD,
we
refer
to
this
initial
model
run
as
the
"
CAIR
2004
analysis"
run.

The
Agency
conducted
revised
final
IPM
modeling
that
reflects
the
final
CAIR
control
requirements.
The
final
IPM
modeling
includes
regionwide
annual
SO2
and
NOx
caps
on
the
23
States
and
the
District
of
Columbia
that
are
required
to
make
annual
reductions,
and
includes
a
regionwide
ozone
season
NOx
cap
on
the
25
States
and
the
District
of
Columbia
that
are
required
to
make
ozone
season
reductions.
The
EPA
modeled
the
final
CAIR
NOx
strategy
as
an
annual
NOx
cap
with
a
nested,
separate
ozone
season
NOx
cap.
In
this
TSD,
we
refer
to
this
final
model
run
as
the
"
final
CAIR
policy."

The
analyses
in
section
IV
of
the
CAIR
NFR
preamble
are
generally
derived
from
the
final
CAIR
policy
run
reflecting
the
final
CAIR.
However,
some
of
EPA's
analyses
are
based
on
the
original
CAIR
policy
run
that
reflected
a
similar
but
not
identical
control
strategy
to
the
final
CAIR.
Below,
EPA
explains
how
each
IPM
run
was
used
for
the
analyses
in
section
IV
of
the
preamble.
5
Note
that
the
air
quality
analyses
in
section
VI
in
the
NFR
preamble
and
the
benefits
analysis
in
section
X,
as
well
as
the
analyses
presented
in
the
Regulatory
Impact
Analysis
(
RIA),
are
based
on
emissions
projections
from
the
initial
CAIR
policy
run
(
the
CAIR
2004
analysis
run).
As
explained
in
section
IV
in
the
preamble,
EPA
believes
that
the
differences
between
the
CAIR
2004
analysis
run
and
the
final
CAIR
policy
run
have
very
little
impact
on
projected
control
costs
and
emissions.

In
section
IV
in
the
CAIR
NFR
preamble,
EPA
summarizes
some
cost
and
emissions
projections
that
were
previously
presented
in
the
NPR
(
published
January
30,
2004).
The
IPM
runs
that
the
Agency
used
to
develop
those
NPR
cost
and
emissions
projections
were
described
in
the
NPR
and
in
a
supporting
memo
available
in
the
CAIR
docket
(
the
memo
is
entitled
"
Memorandum
to
the
OAR
Docket
from
USEPA,
Clean
Air
Markets
Division
re:
Integrated
Planning
Model
(
IPM)
Runs
used
in
Developing
the
Proposed
Interstate
Air
Quality
Rule
(
IAQR)
Emission
Reduction
and
Cost­
effectiveness
Estimates,"
dated
January
28,
2004).
This
TSD
does
not
repeat
descriptions
of
IPM
runs
from
the
NPR.

Here
is
a
description
of
how
EPA
estimated
control
costs,
emissions
projections,
and
retrofit
projections,
using
outputs
from
IPM
runs:
°
Marginal
control
costs.
In
the
IPM
runs,
the
marginal
cost
reflects
what
it
would
cost
to
obtain
one
additional
ton
of
reduction
beyond
the
amount
reduced
by
the
modeled
control
scenario,
in
a
particular
model
run
year.
The
marginal
cost
can
be
read
directly
as
an
output
in
the
Environmental
Measures
Report,
where
it
is
labeled
"
constraint
shadow
price."
°
Average
control
costs.
To
estimate
average
control
costs,
EPA
compares
the
total
annual
production
costs
from
a
single­
pollutant
policy
run
to
the
Base
Case
run
(
for
a
particular
model
run
year)
and
compares
the
total
(
SO2
or
NOx)
emissions
from
the
single­
pollutant
policy
run
to
the
Base
Case
run,
then
divides
the
difference
in
production
costs
to
the
difference
in
emissions
to
get
dollars/
ton.
The
total
annual
production
costs
and
total
emissions
are
found
in
the
Regional
Summary
Report.
The
total
annual
production
cost
in
the
Regional
Summary
Report
does
not
include
the
cost
of
combustion
controls
because
that
cost
is
not
included
in
IPM,
but
rather
is
calculated
exogenously.
See
Table
1
in
this
TSD
for
combustion
control
costs
that
EPA
used
to
calculate
average
control
cost
estimates
presented
in
section
IV
in
the
NFR
preamble.
°
Emissions
and
Emission
Reductions.
The
total
emissions
of
SO2
or
NOx
emitted
by
all
affected
units
in
a
particular
policy
scenario
can
be
found
in
the
Environmental
Measures
Report,
listed
under
the
specific
policy
constraint
of
interest.
If
a
parsed
file
is
produced,
then
the
emissions
at
affected
units
can
also
be
determined
by
summing
the
emissions
for
all
affected
units
from
the
parsed
file.
(
The
emissions
totals
that
are
found
in
the
Regional
Summary
Report
are
total
national
emissions
 
not
only
at
affected
plants.)
To
estimate
emission
reductions,
EPA
calculates
the
difference
between
the
emissions
in
the
Base
Case
run
and
the
emissions
in
a
policy
case
run.
°
Control
Retrofits.
The
capacity
and
type
of
emission
control
retrofits
are
found
in
the
Regional
Summary
Report.
6
Description
of
IPM
Runs
Used
to
Estimate
Control
Costs
and
Emissions
IPM
Run
ID:
Base
Case
2004
Description:
EPA
Base
Case
for
2004
Analyses
This
is
the
Base
Case
model
run,
which
includes
the
national
title
IV
SO2
cap
and
trade
program,
NOx
SIP
Call
regional
ozone
season
cap
and
trade
program,
and
State­
specific
programs
in
Connecticut,
Illinois,
Maine,
Massachusetts,
Minnesota,
Missouri,
New
Hampshire,
New
York,
North
Carolina,
Oregon,
Texas,
and
Wisconsin.
New
Source
Review
(
NSR)
settlement
actions
are
included,
as
they
existed
on
March
19,
2004
(
see
Exhibit
3­
15
in
the
IPM
v.
2.1.9
Documentation
Summary
for
more
information
about
NSR
settlements
in
the
Base
Case).
This
IPM
run
represents
conditions
without
CAIR
and
without
future
State
SIP
actions
for
ozone
and
PM2.5.
The
EPA
used
the
Base
Case
run
to
compare
costs
and
emissions
to
CAIR
policy
runs
in
order
to
estimate
average
costs
of
CAIR,
to
present
estimated
emissions
under
Base
Case
conditions
and
estimated
reductions
under
CAIR,
and
to
estimate
costs
of
some
State
programs.
The
EPA
used
parsed
files
produced
from
this
IPM
run
to
analyze
State­
level
emission
projections.

IPM
Run
ID:
CAIR
2004_
Analysis
Description:
CAIR
2004
Analysis
Run
This
is
the
initial
CAIR
policy
run,
which
EPA
used
for
several
analyses
for
the
final
CAIR.
As
explained
above,
EPA
initially
conducted
IPM
modeling
for
the
final
CAIR
using
a
control
strategy
that
is
similar
but
not
identical
to
the
final
CAIR
requirements.
This
run
included
three
additional
States
(
Arkansas,
Delaware,
and
New
Jersey)
within
the
region
required
to
make
annual
SO2
and
NOx
reductions,
although
these
three
States
are
not
required
to
make
annual
reductions
under
the
final
CAIR.
With
the
addition
of
these
3
States,
a
total
of
26
States
and
the
District
of
Columbia
are
affected
by
annual
SO2
and
NOx
caps
in
this
run.
In
addition,
this
run
included
individual
State
ozone
season
NOx
caps
for
Connecticut
and
Massachusetts,
and
did
not
include
ozone
season
NOx
caps
for
any
other
States.

Note
that
EPA
is
proposing
to
include
2
additional
States
 
Delaware
and
New
Jersey
 
with
the
CAIR
region
required
to
make
annual
SO2
and
NOx
emission
reductions.
Because
the
CAIR
2004
analysis
run
capped
annual
SO2
and
NOx
emissions
in
Arkansas,
Delaware,
and
New
Jersey,
the
original
run
is
quite
similar
to
what
the
final
requirements
will
be
if
EPA's
proposal
to
require
annual
reductions
in
those
2
additional
States
is
finalized
(
although
EPA
is
not
proposing
annual
caps
on
emissions
in
Arkansas).
However,
the
CAIR
2004
analysis
run
imposed
ozone
season
NOx
caps
on
Connecticut
and
Massachusetts
only,
whereas
the
final
CAIR
requires
ozone
season
caps
on
all
of
the
25
States
and
DC
that
are
affected
by
CAIR
for
ozone.
The
IPM
run
called
CAIR
2004_
Final_
DE
and
NJ,
described
below,
represents
what
the
CAIR
requirements
will
be
if
EPA
finalizes
its
proposal
to
require
annual
SO2
and
NOx
reductions
in
Delaware
and
New
Jersey,
and
that
run
includes
an
ozone
season
cap
on
all
25
States
and
DC
that
are
affected
by
CAIR
for
ozone.

The
Agency
conducted
revised
final
IPM
modeling
that
reflects
the
final
CAIR
requirements.
The
IPM
run
that
reflects
the
final
CAIR
policy
is
called
run
CAIR
2004_
Final,
which
is
described
7
below.
Cost
and
emissions
projections
for
CAIR,
as
presented
in
section
IV
of
the
CAIR
NFR
preamble,
are
derived
from
the
final
CAIR
policy
run.
However,
some
of
the
sensitivity
analyses
were
developed
using
IPM
runs
that
are
based
on
the
CAIR
2004
analysis
run.

IPM
Run
ID:
CAIR
2004_
Final
Description:
Final
CAIR
Policy
Run
This
is
the
final
CAIR
policy
run.
This
run
includes
regionwide
annual
SO2
and
NOx
caps
on
the
23
States
and
the
District
of
Columbia
that
are
required
to
make
annual
reductions,
and
includes
a
regionwide
ozone
season
NOx
cap
on
the
25
States
and
the
District
of
Columbia
that
are
required
to
make
ozone
season
reductions.
This
run
includes
an
annual
NOx
cap
and
a
nested,
separate
ozone
season
NOx
cap.

The
District
of
Columbia
and
the
following
23
States
are
included
in
regionwide
annual
SO2
and
NOx
caps
in
this
run:
Alabama,
Florida,
Georgia,
Illinois,
Indiana,
Iowa,
Kentucky,
Louisiana,
Maryland,
Michigan,
Minnesota,
Mississippi,
Missouri,
New
York,
North
Carolina,
Ohio,
Pennsylvania,
South
Carolina,
Tennessee,
Texas,
Virginia,
West
Virginia,
and
Wisconsin.

The
District
of
Columbia
and
the
following
25
States
are
included
in
regionwide
ozone
season
NOx
caps
in
this
run:
Alabama,
Arkansas,
Connecticut,
Delaware,
Florida,
Illinois,
Indiana,
Iowa,
Kentucky,
Louisiana,
Maryland,
Massachusetts,
Michigan,
Mississippi,
Missouri,
New
Jersey,
New
York,
North
Carolina,
Ohio,
Pennsylvania,
South
Carolina,
Tennessee,
Virginia,
West
Virginia,
and
Wisconsin.

The
EPA
used
the
final
CAIR
policy
run
to
estimate
marginal
costs
of
SO2
and
NOx
control
under
CAIR,
and
to
develop
projections
of
emissions
under
CAIR
and
emission
reductions
compared
to
the
Base
Case.
The
EPA
used
parsed
files
produced
from
this
IPM
run
to
analyze
State­
level
emission
projections.

IPM
Run
ID:
CAIR
2004_
Final_
DE
and
NJ
Description:
CAIR
Policy
Run
If
DE
and
NJ
Are
Required
to
Make
Annual
Reductions
This
run
represents
the
CAIR
requirements
if
EPA
finalizes
its
proposal
to
require
annual
SO2
and
NOx
emission
reductions
in
Delaware
and
New
Jersey.
This
run
is
the
same
as
the
final
CAIR
policy
run,
CAIR
2004_
Final,
except
that
these
2
additional
States
are
included
under
the
annual
SO2
and
NOx
caps.
The
EPA
used
this
run
to
develop
projections
of
emissions
and
emission
reductions
if
EPA
finalizes
its
proposal
to
require
annual
SO2
and
NOx
reductions
in
Delaware
and
New
Jersey.
The
EPA
used
parsed
files
produced
from
this
IPM
run
to
analyze
State­
level
emission
projections.

IPM
Run
ID:
CAIR
2004_
No
NOx
Description:
CAIR
SO2
Policy
with
Base
Case
NOx
Policy
This
run
uses
the
same
SO2
policy
as
the
initial
CAIR
policy
run,
CAIR
2004_
Analysis,
but
for
NOx
the
Base
Case
policy
is
used.
As
with
the
CAIR
2004
analysis
run,
modeling
was
based
on
a
slightly
different
control
region
than
that
covered
by
the
final
rule
(
if
EPA
finalizes
its
proposal
to
require
annual
emission
reductions
in
Delaware
and
New
Jersey,
then
the
SO2
region
capped
in
8
this
run
will
be
the
same
as
that
final
region,
except
that
Arkansas
was
included
in
this
run
but
would
not
be
in
the
final
region).
The
EPA
used
this
model
run
to
estimate
costs
of
the
SO2
policy
alone.
Specifically,
we
compared
the
annual
costs
of
the
Base
Case
with
the
annual
costs
of
this
model
run
to
get
the
costs
of
the
SO2
policy
alone,
and
we
compared
the
annual
SO2
emissions
in
the
Base
Case
with
the
annual
SO2
emissions
in
this
model
run.
Using
the
annual
costs
of
the
proposed
SO2
policy
and
the
annual
emission
reductions,
we
calculated
the
estimated
average
costs
of
SO2
reductions.

IPM
Run
ID:
CAIR
2004_
No
SO2
Description:
CAIR
NOx
Policy
with
Base
Case
SO2
Policy
This
IPM
run
used
the
same
NOx
policy
as
the
initial
CAIR
policy
run,
CAIR
2004_
Analysis,
which
includes
a
regionwide
annual
NOx
cap
on
the
District
of
Columbia
and
26
States
(
the
23
States
required
by
CAIR
to
make
annual
emission
reductions
plus
Arkansas,
Delaware,
and
New
Jersey),
and
ozone
season
NOx
caps
on
Connecticut
and
Massachusetts.
Base
Case
SO2
policy
was
used
for
this
run.
As
with
the
CAIR
2004
analysis
run,
modeling
was
based
on
a
slightly
different
control
region
than
that
covered
by
the
final
rule
(
if
EPA
finalizes
its
proposal
to
require
annual
emission
reductions
in
Delaware
and
New
Jersey,
then
the
NOx
region
capped
in
this
run
will
be
the
same
as
that
final
region
with
the
exception
of
Arkansas,
although
this
run
does
not
include
a
separate
nested
ozone
season
cap
on
all
ozone
States).
The
EPA
used
this
model
run
to
estimate
costs
of
the
NOx
policy
alone.
Specifically,
we
compared
the
annual
costs
of
the
Base
Case
with
the
annual
costs
of
this
model
run
to
get
the
costs
of
the
NOx
policy
alone,
and
we
compared
the
annual
NOx
emissions
in
the
Base
Case
with
the
annual
NOx
emissions
in
this
model
run.
Using
the
annual
costs
of
the
proposed
NOx
policy
and
the
annual
emission
reductions,
we
calculated
the
estimated
average
costs
of
NOx
reductions.

In
addition,
we
used
this
run
to
estimate
the
average
cost
of
NOx
reductions
during
the
months
outside
of
the
ozone
season
(
non­
ozone
season
reductions).
That
analysis
is
discussed
further
below
(
see
the
run
ID
CAIR
2004_
No
SO2_
Summer
NOx_
1).

IPM
Run
ID:
CAIR
2004_
EIA
Description:
CAIR
Policy
Using
Alternate
Assumptions
for
Natural
Gas
Price
and
Electricity
Growth
The
EPA
performed
a
sensitivity
analysis
to
evaluate
the
effect
of
varying
our
assumptions
about
natural
gas
price
and
electricity
growth
on
the
projected
marginal
costs
of
CAIR.
This
model
run
is
the
same
as
the
initial
CAIR
policy
run,
CAIR
2004_
Analysis,
except
for
the
different
assumptions
for
natural
gas
price
and
electricity
growth.
Specifically,
for
this
run
EPA
used
the
difference
between
EIA's
estimates
for
well­
head
natural
gas
prices
and
minemouth
coal
prices
to
establish
the
difference
between
the
natural
gas
and
coal
prices
for
this
IPM
run,
increasing
our
natural
gas
price
assumptions
to
be
more
similar
to
EIA's.
For
electricity
growth
in
this
IPM
run,
we
replaced
EPA's
assumed
annual
growth
of
1.6%
with
EIA's
projection
of
annual
growth
of
1.8
%.
As
with
the
CAIR
2004
analysis
run,
modeling
was
based
on
a
slightly
different
control
strategy
than
that
required
by
the
final
rule,
but
quite
similar
to
what
the
final
requirements
will
be
if
EPA
finalizes
its
proposal
to
require
annual
reductions
in
Delaware
and
New
Jersey.
9
IPM
Run
ID:
CAIR
2004_
CSP
Description:
Final
CAIR
Policy
with
Compliance
Supplement
Pool
The
EPA
performed
a
sensitivity
analysis
to
evaluate
the
effect
of
an
annual
NOx
Compliance
Supplement
Pool
on
the
projected
marginal
costs
of
NOx
control
of
CAIR.
This
run
is
the
same
as
the
final
CAIR
policy
run,
CAIR
2004_
Final,
except
that
an
additional
200,000
tons
is
added
to
the
annual
NOx
cap
for
the
initial
model
run
year.
In
other
IPM
runs
in
v.
2.1.9,
years
2008
through
2012
are
mapped
to
model
run
year
2010,
however
in
this
run,
year
2008
is
mapped
separately
to
model
run
year
2008
and
years
2009
through
2012
are
mapped
to
model
run
year
2010.

IPM
Run
ID:
CAIR
2004_
No
SO2_
Summer
NOx_
1
Description:
CAIR
NOx
Policy
during
Ozone
Season
Only
in
All
CAIR
States,
with
Base
Case
SO2
Policy
In
this
IPM
run,
EPA
applied
ozone
season
NOx
controls
at
CAIR
levels
in
all
States
affected
by
CAIR
(
not
only
in
States
that
are
required
to
make
ozone
season
NOx
reductions),
and
Base
Case
SO2
policy.
Specifically,
EPA
applied
a
regionwide
ozone
season
NOx
cap
on
the
same
26
States
plus
the
District
of
Columbia
as
in
run
CAIR
2004_
No
SO2
(
see
above),
and
separate
ozone
season
NOx
caps
on
Connecticut
and
Massachusetts.

The
EPA
used
this
IPM
run
to
estimate
the
average
cost
of
NOx
reductions
during
months
outside
the
ozone
season
(
non­
ozone
season
reductions).
The
Agency
compared
the
NOx
emissions
from
this
run
to
the
NOx
emissions
from
run
CAIR
2004_
No
SO2
(
which
included
annual
NOx
reductions
in
all
affected
States
except
Connecticut
and
Massachusetts,
which
have
ozone
season
reductions),
to
get
an
estimate
of
non­
ozone
season
reductions.
We
also
compared
the
total
costs
of
the
same
two
model
runs,
and
used
the
difference
in
costs
and
the
difference
in
emissions
to
estimate
the
average
cost
of
NOx
tons
reduced
during
months
outside
of
the
ozone
season.
(
For
this
IPM
run,
EPA
assumed
that
Rhode
Island
 
which
was
not
found
to
be
a
significant
contributor
for
8­
hour
ozone
or
PM2.5
under
CAIR,
but
is
a
NOx
SIP
Call
State
 
would
not
trade
with
CAIR
States.
This
was
simply
an
assumption
for
modeling
purposes,
it
does
not
reflect
any
assumption
of
future
policy
choices.)

IPM
Run
ID:
CAIR
2004_
No
SO2_
Summer
NOx_
2
Description:
CAIR
NOx
Policy
during
Ozone
Season
Only
in
8­
Hour
Ozone
States,
with
Base
Case
SO2
Policy
The
EPA
used
this
IPM
run
to
estimate
the
average
and
marginal
costs
of
ozone
season
NOx
reductions
for
CAIR.
This
run
is
quite
similar
to
the
run
described
above,
with
regionwide
ozone
season
NOx
controls
at
CAIR
levels
and
Base
Case
SO2
policy.
The
difference
between
this
run
and
the
preceding
run
is
in
the
region
covered
by
the
ozone
season
NOx
caps.
For
the
preceding
run,
ozone
season
NOx
caps
were
applied
to
all
States
affected
by
CAIR,
however,
for
this
run
ozone
season
caps
were
applied
only
to
the
subset
of
States
that
EPA
found
to
be
significant
contributors
for
8­
hour
ozone
(
25
States
and
the
District
of
Columbia).

To
estimate
the
average
costs
of
ozone
season
NOx
reductions
for
CAIR,
EPA
compared
the
10
total
costs
of
the
Base
Case
IPM
run
with
the
total
costs
of
this
IPM
run
and
compared
the
NOx
emissions
in
the
Base
Case
run
with
the
NOx
emissions
in
this
run.
(
For
this
IPM
run,
EPA
assumed
that
Rhode
Island
 
which
was
not
found
to
be
a
significant
contributor
for
8­
hour
ozone
under
CAIR,
but
is
a
NOx
SIP
Call
State
 
would
not
trade
with
CAIR
States.
This
was
simply
an
assumption
for
modeling
purposes,
it
does
not
reflect
any
assumption
of
future
policy
choices.)

IPM
Run
ID:
BART
2004_
No
NOx
Description:
Nationwide
BART
SO2
Limits,
with
Base
Case
NOx
Policy
In
this
IPM
run,
EPA
modeled
the
Regional
Haze
Requirements
for
Best
Available
Retrofit
Technology
(
BART)
as
nationwide
source
specific
SO2
limits
of
90%
SO2
reduction
or
0.1
lb/
mmBtu
rate
(
except
the
5­
State
WRAP
region
for
which
we
did
not
model
SO2
controls
beyond
what
is
done
for
the
WRAP
cap
in
the
base
case
modeling).
The
SO2
limits
were
applied
to
all
BART­
eligible
units
of
capacity
greater
than
100
MW.
The
EPA
used
this
model
run
to
estimate
the
average
costs
of
BART
SO2
controls
for
comparison
with
CAIR
costs.

IPM
Run
ID:
BART
2004_
No
SO2
Description:
Nationwide
BART
NOx
Limits,
with
Base
Case
SO2
Policy
In
this
IPM
run,
EPA
modeled
the
Regional
Haze
Requirements
for
BART
as
a
nationwide
source
specific
NOx
emission
rate
limit
of
0.2
lb/
mmBtu
NOx.
The
NOx
limit
was
applied
to
all
units
with
capacity
greater
than
25
MW.
The
EPA
used
this
model
run
to
estimate
the
average
costs
of
BART
NOx
controls
for
comparison
with
CAIR
costs.

IPM
Run
ID:
CAIR
2004_
SCR
Bypass_
NOx
SIP
Call
Description:
CAIR
Policy
with
Cost
for
Gas
Bypass
Duct
Systems
on
Existing
SCRs
The
EPA
used
this
run
as
a
sensitivity
analysis
to
evaluate
the
effect
of
adding
a
gas
bypass
duct
system
to
each
existing
SCR
installation
on
the
costs
of
CAIR.
In
this
run,
the
cost
of
a
gas
bypass
duct
system
was
added
for
pre­
1994
coal
units
with
SCR
that
are
located
in
the
NOx
SIP
Call
region
or
OTR.
(
This
result
is
not
presented
in
the
NFR
preamble
section
IV,
but
is
in
the
RTC
document.)
11
Table
1
 
Combustion
Control
Costs
Used
in
Estimating
Average
Control
Costs
(
dollars
1/
year)

IPM
Run
ID
2009
/
2010
2015
Base
Case
2004
$
48,787,094
$
48,879,415
CAIR
2004_
No
NOx
$
48,787,094
$
48,879,415
CAIR
2004_
No
SO2
$
90,952,515
$
91,044,836
CAIR
2004_
No
SO2_
Summer
NOx_
1
$
90,952,515
$
91,044,836
CAIR
2004_
No
SO2_
Summer
NOx_
2
$
79,044,348
$
79,136,668
BART
2004_
No
NOx
$
48,787,094
$
48,879,415
BART
2004_
No
SO2
$
48,787,094
$
122,104,629
1
1999$

Description
of
IPM
Runs
Used
to
Estimate
Capacity
of
Control
Retrofits
for
Feasibility
Analyses
The
EPA
used
IPM
to
project
the
capacity
of
EGUs
that
would
be
retrofit
with
emission
control
devices
for
compliance
with
CAIR,
in
order
to
evaluate
the
feasibility
of
achieving
the
CAIR
control
levels
in
the
available
time
period.
The
emission
control
devices
in
EPA's
analysis
include
selective
catalytic
reduction
(
SCR)
and
Flue
Gas
Desulfurization
(
FGD).
EPA
provides
a
detailed
discussion
of
its
feasibility
analyses
in
section
IV.
C
in
the
CAIR
NFR
preamble.
In
addition,
EPA
provides
further
discussion
in
a
TSD
entitled
"
Boilermaker
Labor
and
Installation
Timing
Analysis"
that
is
available
in
the
CAIR
docket.
The
Agency
used
IPM
to
project
the
capacity
of
SCR
and
FGD
retrofits
that
would
occur
for
compliance
with
CAIR,
as
well
as
to
project
the
capacity
of
retrofits
that
could
occur
under
alternate
scenarios.
The
IPM
runs
that
EPA
used
for
these
analyses
are
described
below.

IPM
Run
ID:
EPA216_
IAQR_
2003
Description:
Policy
Case
for
the
CAIR
NPR
The
EPA
used
this
IPM
run
to
project
control
retrofits
under
the
conditions
of
the
CAIR
NPR.
This
run
was
described
in
the
NPR.

IPM
Run
ID:
CAIR
2004_
Analysis
Description:
CAIR
2004
Analysis
Run
This
is
the
CAIR
2004
analysis
run,
which
EPA
used
for
several
analyses
for
the
final
CAIR.
See
description
above.
12
4
EPA
used
the
marginal
cost
curve
analysis
solely
to
corroborate
its
findings
concerning
cost
effectiveness
of
CAIR
emission
reductions.
The
marginal
cost
curve
reflects
only
emissions
reduction
and
cost
information,
and
not
other
considerations.
We
note
that
it
might
be
reasonable
in
a
particular
regulatory
action
to
require
emissions
reductions
past
the
knee
of
the
curve
to
reduce
overall
costs
of
meeting
the
NAAQS
or
to
achieve
benefits
that
exceed
costs.
It
should
be
noted
that
similar
analysis
for
other
source
categories
may
yield
different
curves.
IPM
Run
ID:
CAIR
2004_
EIA
Description:
CAIR
Policy
Using
Alternate
Assumptions
for
Natural
Gas
Price
and
Electricity
Growth
The
EPA
used
this
run
as
a
sensitivity
analysis
to
evaluate
the
effect
of
varying
assumptions
about
natural
gas
price
and
electricity
growth
on
the
capacity
of
control
retrofits.
See
description
of
this
run
above.

IPM
Run
ID:
CAIR
2004_
EIA_
SCR
Costs
Description:
CAIR
Policy
Using
Alternate
Assumptions
for
Natural
Gas
Price,
Electricity
Growth,
and
SCR
Costs
The
EPA
used
this
run
as
a
sensitivity
analysis
to
evaluate
the
effect
of
varying
assumptions
about
natural
gas
price,
electricity
growth,
and
SCR
costs
on
the
capacity
of
control
retrofits.
In
this
run,
the
natural
gas
price
and
electricity
growth
assumptions
are
the
same
as
in
run
CAIR
2004_
EIA.
For
SCR
costs
in
this
run,
EPA
assumed
30%
higher
capital
costs
and
fixed
Operations
and
Maintenance
costs
for
SCR
on
coal­
fired
units,
compared
to
the
costs
in
EPA's
other
IPM
runs.

IPM
Run
ID:
CAIR
2004_
EIA_
One
Phase
Description:
CAIR
Policy
Using
Alternate
Assumptions
for
Natural
Gas
Price
and
Electricity
Growth,
with
Implementation
in
One
Phase
Starting
in
2010
The
EPA
used
this
run
as
a
sensitivity
analysis
to
evaluate
the
effect
of
varying
assumptions
about
natural
gas
price
and
electricity
price,
in
addition
to
modifying
the
timing
of
the
control
requirements,
on
the
capacity
of
control
retrofits.
In
this
run,
the
natural
gas
price
and
electricity
growth
assumptions
are
the
same
as
in
run
CAIR
2004_
EIA.
In
addition,
this
run
is
based
on
a
policy
with
one
control
phase
instead
of
two
phases.
In
this
run,
the
CAIR
second
phase
(
lower)
regionwide
SO2
and
NOx
emissions
caps
are
implemented
in
2010
instead
of
2015.

Background
on
EPA's
TRUM
Analyses
The
EPA
developed
marginal
cost
curves
to
examine
the
changes
in
marginal
costs
for
EGUs
at
varying
levels
of
SO2
and
NOx
emission
reductions.
These
curves
are
presented
in
section
IV
in
the
CAIR
NFR
preamble4.
The
Agency
developed
these
marginal
cost
curves
using
the
Technology
Retrofit
and
Updating
Model
(
TRUM),
a
model
that
selects
investment
options
and
dispatches
generation
to
meet
electricity
demand.
For
simplicity,
TRUM
was
developed
as
a
steady­
state,
single­
region
spreadsheet
model
supported
by
Visual
Basic
for
Applications
(
VBA)
code.
The
TRUM
consists
of
a
set
of
sample
generating
units
with
varying
characteristics.
The
13
mix
of
generation
types
and
sizes
was
chosen
to
mirror,
in
general
terms,
the
nationwide
mix
of
capacities.
The
TRUM
relies
on
the
same
underlying
data
as
IPM.
For
the
final
CAIR,
EPA
updated
TRUM
based
on
the
IPM
update
(
IPM
version
2.1.9).

In
the
CAIR
NPR,
the
Agency
also
presented
marginal
costs
curves
for
SO2
and
NOx
reductions
from
EGUs.
When
the
NPR
was
published,
EPA
provided
a
detailed
description
of
its
use
of
TRUM
to
develop
such
curves
in
a
memo
to
the
CAIR
docket.
That
memo,
which
is
entitled
"
Analysis
of
the
Marginal
Cost
of
SO2
and
NOx
Reductions"
and
dated
January
28,
2004,
is
available
in
the
CAIR
docket
and
also
on
EPA's
website.
For
a
more
detailed
description
of
EPA's
use
of
TRUM
than
is
provided
in
this
TSD,
refer
to
the
January
28,
2004
memo.
