TCS Daily


Clear Foolishness

By Joel Schwartz - March 23, 2005 12:00 AM

Almost since President Bush took office, his administration has been trying to pass environmental legislation known as Clear Skies. Clear Skies would have required large reductions in air pollution from coal-fired power plants, but in exchange would also have removed them from a Clean Air Act requirement known as New Source Review, which is sacred to environmentalists and environmental enforcement officials.

Clear Skies now appears to have finished dying its slow death in Congress, but EPA has just implemented the Clear Skies pollution caps through regulations known as the Clean Air Interstate Rule (CAIR) and the Clean Air Mercury Rule (CAMR). Though a boon to regulators and activists, the big losers from these regulations will be the American public, who will have to pay big bucks for them in the form of higher energy bills, while reaping few or no health benefits.

From Legislation to Regulation

Clear Skies faced stiff opposition in Congress, as well as from activists and newspaper editorialists, for at least three reasons: First, these groups believe the Clean Air Act requires greater and more-rapid pollution reductions than required by Clear Skies.[1] Second, in exchange for a permanent cap on power plant pollution, Clear Skies would have absolved power plants from New Source Review (NSR). Third, Clear Skies did not require any reductions in carbon dioxide emissions. As a result of the latter two concerns, a Senate Committee essentially killed the legislation last week.

Knowing that Clear Skies was likely to fail, the Bush Administration proposed the CAIR and CAMR regulations in January of 2004, and finalized the regulations last week. The regulations impose the following pollution reduction requirements on power plants:

        · Sulfur dioxide. CAIR would reduce power-plant SO2 by 40 percent in 2010 and 70 percent after 2020. EPA estimates power plants currently contribute about two-thirds of all SO2 emissions.

        · Nitrogen oxides. CAIR would reduce May-September, or "ozone season," power-plant NOx emissions by about 18 percent in 2009 and 33 percent in 2020. The reductions are relatively small, because EPA already reduced ozone-season NOx from power plants by 60 percent in 2004. Though not highlighted by EPA, more than 80 percent of the CAIR's total NOx reductions are required during October-April -- a time of year when power-plant NOx emissions have little or no effect on air pollution levels.[2] EPA estimates power plants currently contribute about 22 percent of total U.S. NOx emissions, though the fraction is a few percentage points higher in the eastern U.S., where the CAIR will have its effect.

        · Mercury. CAMR would reduce power plant mercury emissions by 21 percent in 2010 and 70 percent in 2018. EPA estimates power plants currently contribute about 40 percent of U.S. mercury emissions.

What's Health Got to Do with It?

According to EPA, during the next 10 years the CAIR will prevent 17,000 premature deaths, 22,000 non-fatal hearth attacks, and 12,300 hospital admissions. Almost all of these benefits are due to the ostensible health benefits of reducing sulfate particulate matter, which is formed from SO2 emissions from burning coal. These health benefits exist only on paper, because sulfate PM is not toxic. Sulfate PM comes mainly in the form of ammonium sulfate, which is used in air pollution health studies with human volunteers as an "inert control" -- that is, a substance without any health effects -- to compare with the effects of the pollutant under study. Even elderly asthmatics show no effects from breathing sulfate PM at levels far higher than the highest levels found in ambient air.[3] EPA attributes about 13 percent of the PM reduction benefits to reductions in NOx emissions. But ammonium nitrate is also not toxic, even at levels many times higher than ever occur today.[4]

EPA bases its PM health-benefit estimates on epidemiological studies that report small statistical correlations between PM and health outcomes. The lack of toxicological effects from large doses of sulfate PM in laboratory studies suggests that these statistical correlations are spurious and don't represent a cause-effect relationship. Indeed, the epidemiological studies have recently come under attack for amounting to fishing expeditions that turn up chance correlations rather than real health effects.[5]

The ostensible health benefits of mercury reductions are likewise ephemeral. Activists' and journalists' claims about mercury have bordered on the hysterical, including the assertion that mercury from power plants is causing 630,000 children each year to be born mentally retarded, and a Friends of the Earth ad published in USA Today showing a picture of toddlers with the headline "They're being poisoned."[6] Here's the chain of reasoning that led activists and journalists from power plants to brain-damaged children:

· Based on a study of mothers and their children in the Faroe Islands, where people ingest mercury mainly from whale meat, EPA and the National Research Council concluded that children exposed in the womb to an umbilical cord blood mercury level greater than 85 parts per billion (ppb) had a reduced score on the Boston Naming Test -- a test in which children name objects based on line drawings. [7] Other health effects required higher mercury exposures or did not occur at any mercury level. In particular, the study reported no statistically significant changes in the two IQ subtests that assess reasoning.[8]

· The Centers for Disease Control reported that about 8 percent of women of childbearing age (16-49) have a blood mercury level greater than EPA's mercury "Reference Dose" of 5.8 ppb -- or 1/15th the level associated with a small reduction in score on the Boston Naming Test in the Faroe Islands study. Not a single woman had blood mercury above 58 ppb -- the bottom of the 95 percent confidence interval for the Boston Naming Test effect.[9] Indeed, less than one-in-200 women had blood mercury greater than even half this level.[10]

· Based on the fraction of women with blood mercury greater than the Reference Dose and the fact that mercury appears to be a factor of 1.7 times higher umbilical cord blood than in mothers' blood, EPA estimated that 630,000 children are born each year who were exposed to mercury at a level greater than the 5.8 ppb Reference Dose.[11]

So, yes, based on these data, 630,000 children are born every year exposed to mercury above the Reference Dose, but their exposures are still 65 to 90 percent below the levels associated with even the most subtle health effects in the Faroe Islands study. Brain damage of the sort that would result in mental retardation wasn't observed even at Faroe Islands exposure levels, much less at the far lower mercury exposures that occur in the U.S. Nevertheless, as astounding as it seems, this is the fundamental basis for all of the hysteria and fear-mongering over mercury, and EPA's and activists' justification for regulating power plant mercury emissions.[12]

In reality, the case for harm from current mercury exposures is even weaker than this. First, studies that are more relevant to people in the U.S. don't find any harm from mercury at any mercury dose. For example, a study of children in the Seychelles found no neurological or cognitive effects from mercury, even though exposure levels are similar to those in the Faroe Islands.[13] But children in the Seychelles get their mercury from ocean fish rather than whale meat, and are therefore exposed to mercury in a similar manner to people in the U.S. The Seychellois are also more ethnically diverse than the Faroese and are therefore more likely to be representative of the full range of sensitivity to mercury in the ethnically diverse U.S. population. A study of New Zealand children exposed to mercury from shark meat likewise did not report any mercury effects.[14] Second, the CDC recently released data for pregnant women specifically. It turns out that fewer than 4 percent of pregnant women have mercury levels greater than the Reference Dose -- less than half the value for women aged 16-49 that contributed to the mercury hysteria in the first place.[15]

Third, regardless of whether mercury in fish is causing harm, reducing power plant emissions will do virtually nothing to reduce fish mercury levels. Researchers believe most of the mercury in fish comes ultimately from deposition of airborne mercury. But no more than one-third of all mercury deposition in the U.S. comes from North American emissions.[16] U.S. power plants account for an estimated 40 percent of U.S. mercury emissions and about 30 percent of North American emissions. Thus, even a complete elimination of U.S. power plant mercury would at best reduce U.S. mercury deposition, and therefore fish mercury levels, by about 10 percent.[17]

But even this is unrealistically optimistic. Fish mercury levels don't decline one-to-one with decreasing deposition, but only about 0.5-to-one or less.[18] Thus, a complete elimination of power plant mercury might reduce fish mercury levels by at most 5 percent. And this applies only to U.S. freshwater fish. Ocean fish would be unaffected by declines in U.S. mercury emissions, as the U.S. accounts for only about 2 percent of estimated worldwide mercury emissions. Indeed, whatever the potential benefits of reducing U.S. mercury emissions, almost all of those benefits have already been achieved. The U.S. has reduced mercury emissions by 80 to 90 percent since the early 1980s, due mainly to a near elimination of mercury emissions from waste incineration and from milling and roasting of mercury-containing ores.[19] Coal-fired power plants are today the largest source of U.S. mercury emissions only because far larger sources have already been addressed.

EPA's new power plant regulations will thus do little or nothing to improve Americans' health. But the costs of the rules might do substantial harm. According to EPA, power plants will spend as much as $50 billion over the next decade to comply with the rules, with much of the cost passed on to consumers in the form of higher energy bills. Higher incomes are associated with a reduced risk of premature death, because people spend a portion of each additional increment of income on risk-reducing measures such as medical care and safer cars. Higher incomes are also associated with better health habits. Reducing people's incomes through regulatory costs thus reduces their health. Based on this income-health relationship, each $15 million in regulatory costs induces one additional statistical death.[20] EPA's new regulations should thus be expected to induce more than 650 premature deaths during the next decade.

New Source of Confusion

In terms of emission reductions, Clear Skies would have performed just as well (or as poorly) as the CAIR and CAMR. But Clear Skies would have had one advantage: it would have removed power plants from New Source Review, a Clean Air Act provision requiring big industries to install state-of-the-art pollution controls when they upgrade an existing facility, or build a new one. NSR is part of the Clean Air Act, so new legislation would be necessary to absolve power plants from NSR's requirements.

NSR is one of environmental protection's sacred cows. When the Bush administration in 2002 relaxed key NSR provisions for existing plants (NSR for newly built facilities was not changed) numerous activists, legislators, regulators, prosecutors, and journalists claimed the administration was "gutting" and "rolling back" the Clean Air Act, and that emissions would increase by the millions of tons per year.[21]

NSR's proponents see the regulation as a tough enforcement tool to ensure that old, high-polluting facilities meet modern pollution-control requirements. The EPA initiated lawsuits against several power companies in the late 1990s for allegedly circumventing NSR's requirements during past facility maintenance and upgrades. These cases were arguably based on a retroactive reinterpretation of NSR's requirements.[22] Regardless, part of the furor over Bush's regulatory proposals was that they also involved dropping these NSR enforcement cases.

The storm over NSR enforcement is misguided and ironically points up NSR's main weakness. NSR has actually made air pollution worse than it would otherwise be, by increasing the costs of new and upgraded plants relative to existing ones. The predictable result was that NSR encouraged businesses to put their R&D efforts into keeping old plants running as long as possible without triggering NSR's requirements. Rather than a way to reduce pollution from old power plants, NSR is a key reason these decades-old, high-polluting facilities are still in operation. Indeed, it was precisely because of frustration over the fact that plants were not triggering NSR that EPA's enforcement staff decided to reinterpret the regulation.

At any given time there are known methods of pollution control and yet-to-be-discovered methods, and they range in cost from the cheap to the expensive. NSR requires the use of the most expensive among known pollution-control methods, while discouraging a search for new methods. NSR also guarantees complete uncertainty about when any particular amount of pollution reduction will occur. Yet NSR is the approach activists and regulators prefer.

The debate over power plant regulation would be funny if it wasn't so tragic. Activists, with the help of journalists and elected officials seeking splashy headlines and simple hero-villain morality tales, fomented hysteria over phantom power-plant health threats. They pressed for solving this manufactured problem with one of the Clean Air Act's least cost effective and most counterproductive provisions. The ostensibly anti-environment Bush administration validated the health scares and gave the activists most of the pollution reductions they wanted, but has gotten little credit for its efforts. Indeed, despite continuing declines in ambient pollution and emissions, environmentalists continue to pillory the administration for ostensibly rolling back the Clean Air Act.

Who are the winners and losers from these political machinations? Environmental activists and Democratic congressmen have a key fundraising issue. Power companies have somewhat kinder and gentler regulation than they might otherwise have expected. The Bush administration can declare a victory for clean air. Newspapers have a dramatic political battle that makes for catchy headlines. And the American people -- well, they get stuck with the $50 billion tab.

The author is Visiting Fellow, American Enterprise Institute.



[2] EPA claims that CAIR requires a 60 percent reduction in NOx. This is true, but misleading. NOx emissions matter mainly during the May-September "ozone season." NOx also helps form particulate matter (PM), but accounts for only about 10% or less of PM in the eastern U.S., where sulfur dioxide is the overwhelming power-plant contributor to PM. Power plants account for only about 22% of NOx, power plant NOx emissions therefore account for only a few percent of eastern PM. But EPA already eliminated 60 percent of ozone-season NOx emissions from power plants with its "SIP Call" regulation, implemented in 2004. The SIP Call eliminated about one million tons per year of ozone-season NOx emissions. The CAIR will get rid of another 0.12 tons in 2009 and 0.22 tons in 2020. The CAIR will also eliminate more than one million tons per year of NOx during October-April, when ozone levels are already low. Thus, the vast majority of the CAIR's NOx reductions will occur during times of the year when NOx reductions do little or nothing to reduce air pollution levels.

[3] J. Q. Koenig, K. Dumler, V. Rebolledo et al., "Respiratory Effects of Inhaled Sulfuric Acid on Senior Asthmatics and Nonasthmatics," Archives of Environmental Health 48 (1993): 171-5.

[4] M. T. Kleinman, W. S. Linn, R. M. Bailey et al., "Effect of Ammonium Nitrate Aerosol on Human Respiratory Function and Symptoms," Environmental Research 21 (1980): 317-26.

[5] M. Clyde, "Model Uncertainty and Health Effect Studies for Particulate Matter," Environmetrics 11 (2000): 745-63; G. Koop and L. Tole, "Measuring the Health Effects of Air Pollution: To What Extent Can We Really Say That People Are Dying from Bad Air?" Journal of Environmental Economics and Management 47 (2004): 30-54; T. Lumley and L. Sheppard, "Time Series Analyses of Air Pollution and Health: Straining at Gnats and Swallowing Camels?" Epidemiology 14 (2003): 13-4.

[6] See www.foe.org/new/releases/304mercpr.html. For more examples, see footnote 41 on page 16 of my AEI-Brookings analysis of EPA's mercury rule: J. Schwartz, A Regulatory Analysis of EPA's Proposed Rule to Reduce Mercury Emissions from Utility Boilers (Washington, DC: AEI-Brookings Joint Center for Regulatory Studies, September 2004), www.joelschwartz.com/pdfs/AEI_Brookings_Mercury.pdf.

[7] D. C. Rice, R. Schoeny and K. Mahaffey, "Methods and Rationale for Derivation of a Reference Dose for Methylmercury by the U.S. EPA," Risk Analysis 23 (2003): 107-15.

[8] P. Grandjean, E. Budtz-Jorgensen, R. F. White et al., "Methylmercury Exposure Biomarkers as Indicators of Neurotoxicity in Children Aged 7 Years," Am J Epidemiol 150 (1999): 301-5.

[9] Centers for Disease Control, "Blood and Hair Mercury Levels in Young Children and Women of Childbearing Age-United States, 1999," Morbidity and Mortality Weekly Report 50 (2001): 140-43, http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5008a2.htm.

[10] Schwartz, A Regulatory Analysis of EPA's Proposed Rule to Reduce Mercury Emissions from Utility Boilers.

[11] J. Lowy, "EPA Raises Estimate of Newborns Exposed to Mercury," Scripps-Howard News Service," Scripps-Howard News Service, April 4, 2004, p.

[12] A Washington Post report on March 22, 2005 claimed EPA had suppressed a study by the Harvard Center for risk analysis that concluded reducing power plant mercury emissions would result in $5 billion in annual benefits, which is far larger than the cost of the mercury controls. What the Post report didn't say is that more than 95% of these ostensible benefits would occur only if reducing power plant mercury reduces risk of death. Yet even the Harvard study itself concluded that the case for increased mortality from low-level mercury exposure is weak. Only about 2% of the predicted benefits of power plant mercury reductions were due to improvements in children's IQ. To generate even these improvements, the researchers had to assume that mercury reduces all children's IQs at any mercury exposure above EPA's Reference Dose and even though even the Faroe Islands study did not find an association between mercury exposure and reduced scores on the reasoning portions of IQ tests. The Post article can be found here: http://www.washingtonpost.com/wp-dyn/articles/A55268-2005Mar21.html. The Harvard study can be downloaded here: http://bronze.nescaum.org/airtopics/mercury/rpt050315mercuryhealth.pdf.

[13] G. J. Myers, P. W. Davidson, C. Cox et al., "Prenatal Methylmercury Exposure from Ocean Fish Consumption in the Seychelles Child Development Study," Lancet 361 (2003): 1686-92.

[14] This was true for the full sample of children. However, there were some statistically significant decreases in scores on a few of the administered tests when one child was removed from the dataset. This child had the highest mercury exposure, but normal test scores. However, even with this child removed, there was no decrease in scores on any portion of the IQ test. K. S. Crump, T. Kjellstrom, A. M. Shipp et al., "Influence of Prenatal Mercury Exposure Upon Scholastic and Psychological Test Performance: Benchmark Analysis of a New Zealand Cohort," Risk Analysis 18 (1998): 701-13.

[15] Centers for Disease Control, "Blood Mercury Levels in Young Children and Childbearing-Aged Women --- United States, 1999-2002," Morbidity and Mortality Weekly Report 53 (2004): 1018-20, www.cdc.gov/mmwr/preview/mmwrhtml/mm5343a5.htm.

[16] C. Seigneur, K. Vijayaraghavan, K. Lohman et al., "Global Source Attribution for Mercury Deposition in the United States," Environmental Science & Technology 38 (2003): 555-69.

[17] 30 percent of 33 percent is 10 percent.

[18] See references in Schwartz, A Regulatory Analysis of EPA's Proposed Rule to Reduce Mercury Emissions from Utility Boilers.

[19] Ibid.

[20] R. Lutter, J. Morrall, III and W. Viscusi, "The Cost-Per-Life-Saved Cutoff for Safety-Enhancing Regulations," Economic Inquiry 37 (1999): 599-608, http://ei.oupjournals.org/cgi/content/abstract/37/4/599.

[21] See, for example, www.nrdc.org/media/pressreleases/030822.asp, schumer.senate.gov/schumerwebsite/pressroom/press_releases/PR01588.html, www.house.gov/pelosi/prcleanair061302.htm, www.state.nj.us/lps/newsreleases2/pr20021231. Also see "Christie Whitman's Tribulations," New York Times, November 27, 2002, p. A22; S. Borenstein and P. Rogers, "Easing Air Rules for Power Plants Generates Scorn," San Jose Mercury News, June 14, 2002, p. A4; J. Kay, "EPA Plans Rollback of Clean Air Act," San Francisco Chronicle, June 14, 2002, p. A1; P. Krugman, "Every Breath You Take," New York Times, November 26, 2002, p. A27; C. Lochhead, "California Air Could Get Dirtier -- EPA Relaxes Rules," San Francisco Chronicle, November 23, 2002, p. A1; NRDC, "The Bush Administration's Air Pollution Plan; the White House's 'Clear Skies' Bill Would Be A Giant Step Backward in the Fight to Clean up Air Pollution," www.nrdc.org/air/pollution/fclearsk.asp. The Bush administration's changes are the subject of litigation over whether they are permissible under the Clean Air Act.

In any case, due to declining caps on pollution that remain in force regardless of NSR, emissions and ambient pollution levels have, in fact, continued to decline. See State of the Scare, Once Again and Smog Hits A Record Low.

[22] S. F. Hayward, "Making Sense of New Source Review," Environmental Policy Outlook July-August (2003), http://www.aei.org/docLib/200308051_%2315599graphics.pdf.

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