Breaking the Deadlock on Acid Rain Control

Acid deposition has been the subject of extensive scientific investigation in the last decade, during which time important progress has been made in understanding its causes and consequences. These research efforts may be divided into two broad categories: the study of the regional transport and atmospheric chemistry of pollutants in the eastern United States and the study of the effects of acid deposition on ecosystems, agriculture, and human health. Several committees of eminent scientists have reviewed the research and produced detailed statements on the current state of scientific knowledge regarding acid deposition. Despite recent advances, scientists remain far from fully understanding acid precipitation phenomena, and these gaps in knowledge have important policy implications.

A scientific description of the acid deposition problem involves a rather elaborate chain of logic linking emissions from power plants and other sources, mostly in the industrial Midwest, to apparent damage to aquatic and terrestrial ecosystems, mostly in the Adirondacks, New England, and eastern Canada.

1. The concentration of acid compounds in the atmosphere of the northeastern United States and eastern Canada is significantly higher than it was just thirty years ago, and gives rise to precipitation that is much more acidic than would be the case with "pristine" rainfall.
2. Acid precipitation, together with the dry deposition of acidic particulate matter, is imposing an unprecedented and alarming acid burden on the forests, streams, and lakes in this area. Some ecosystems have a limited capacity to neutralize acid and have already been seriously damaged.
3. These acid constituents are man-made. Emissions of sulfur dioxide (SO2) and oxides of nitrogen (NO,) from power plants, industrial sources, and automotive emissions undergo chemical transformation into acid compounds in the atmosphere.
4. The principal source of these acid precursors is the concentration of industrial and utility plants located in the heavily industrialized Midwest, far from the affected regions.
5. Prevention of further ecosystem damage in the affected regions, therefore, requires a substantial reduction in emissions of these pollutants, especially sulfur dioxide.

As it stands now, none of the propositions regarding acid deposition has been firmly established to everyone's satisfaction, although some are better established than others. The physical and chemical processes involved are complex, both in the atmosphere and on the ground. Furthermore, to some degree, the evidence of acid rain and its effects depends on a comparison of current conditions with what "natural" conditions would be, or at any rate with conditions of years ago, to determine if a trend can be delineated. Unfortunately, until recently only a small amount of data was collected, making it difficult to identify trends.

Though a firm scientific consensus on acid deposition has not emerged, it seems fairly clear that the acidity in rainfall and in deposited particles is much higher than it used to be, and that the main source of the acid compounds is coal combustion. But the extent and severity of ecosystem damage resulting from acidity is uncertain, especially in terrestrial ecosystems. Also uncertain is the extent to which emission reductions will help. In spite of the uncertainties, the consequences of taking no action include potentially grave and irreversible damage to valuable natural resources.

Mitigating actions

Two general approaches are available for mitigating the effects of acid rain: amelioration of the effects of acid deposition in sensitive areas and reduction of emissions of acid rain precursors. The first approach involves treatment of sensitive areas to make them less susceptible to acid rain damage and is now undergoing extensive study, especially in Sweden. These approaches mostly involve the application of lime to sensitive lakes and other areas to increase their ability to absorb additional acidity. Unfortunately, many uncertainties remain concerning the cost, effectiveness, and other environmental consequences of liming. Furthermore, no amelioration measure for terrestrial ecosystems has been devised. While not all observers agree that an acid deposition policy is necessary or desirable, there is a consensus that any such policy will require emission reductions.

Difficult decisions remain regarding almost every other important question involving what to do about acid deposition. Among the more important are the following:

Issue I: Which pollutants should be regulated?

Although both SO2 and NOx emissions are acid rain precursors, not all proposed actions contemplate additional controls on both pollutants. Approximately two-thirds of the total acidity found in precipitation in the Adirondacks and New England is believed to be from SO2, and one-third is from NO. For this reason most proposals focus on SO2, at least initially. But the NOx contribution is growing steadily, and perhaps at some point NOx controls will be required as well. Also, there have been some recent reports of a high relative contribution of nitrate to acidity during the winter. Considering the "acid flush" that has been observed in snowmelt, an S02-only policy might be inadequate even now.

Another consideration is the role of NOx in the complex atmospheric chemistry of sulfate transformation. NOx is believed to play an important role in the photochemical reactions that in turn affect sulfur oxidation, and it is possible that a change in NOx emissions will affect sulfate transformation rates. But whether a reduction in NOx emissions will increase or decrease oxidation rates is unknown.

Issue 2: How large will emission reductions have to be?

Up to now, the aggregate emission reduction is one of the principal means of describing and classifying various policy proposals. The desired reductions have ranged from about 6 million to 14 million tons per year of SO2 and 0 to 2 million tons per year of NOx. In general, policies have been formulated by determining the desired reduction in acid burden, comparing it to the current or projected acid burden, and applying the resulting proportion to the projected aggregate emissions. This procedure for calculating emission reduction requirements is often called a "linear rollback."

At present, much of the geographical area of concern receives an estimated sulfate burden of about 40 kilograms per hectare per year (kg/h.yr). It is estimated that reduction to 10 to 30 kg/h.yr will protect sensitive ecosystems (the range reflecting both scientific uncertainty and differences in sensitivity in different areas). Achieving a reduction to 20 kg/h.yr requires a 50 percent reduction in SO2 emissions, assuming a linear roll-back. Applying this percentage to projected emissions in the United States in the year 2000 gives a required reduction of 13.4 million tons per year, or 11 million tons per year if applied only to eastern U.S. emissions.

The aggregate reduction required may not be a very useful way of characterizing acid rain policies because such a number will not reveal much about the total cost of a policy, the distribution of those costs, or the effects on the environment. As a rough approximation, it is true, the greater the aggregate emission reduction, the greater the reduction in aggregate acid burden. It is also true that aggregate costs are usually greater for large emission reductions than for small ones, and indeed, the costs increase at an increasing rate. But both the environmental impacts and the total costs depend critically on the distribution of the emission reductions.

Issue 3: What technological approach for reducing emissions will be required?

One of the most contentious issues in the entire acid rain debate has been the method to be used to reduce emissions of SO2 and NOx. Specifically, to what extent should emission sources be required to employ particular abatement technologies—chiefly flue gas desulfurization, commonly called "scrubbing"? Or should sources be allowed to reduce emissions by any method they desire?

The great attraction of allowing sources to choose the method of emission reduction is that it reduces cost, for an alternative to scrubbing would be selected only if it was less expensive. At present, the most likely substitute is switching from a high- to a low-sulfur coal.

There is considerable uncertainty about the magnitude of the savings that might result from allowing fuel switching. For an 8-million-ton-per-year reduction in SO2 emissions, for example, it is estimated that the savings could be as much as $1.6 billion per year or as little as $400 million per year. This wide range arises in part because of uncertainties in the availability and cost of low-sulfur coal.

The other side of the fuel switching debate is its potential effect on employment among miners. These prospective job losses are the driving force behind opposition, by groups such as the United Mine Workers and eastern coal-state congressmen, to policy alternatives permitting fuel switching.

It is important to keep these employment consequences in perspective. First, the gain in employment under policies permitting fuel switching will probably exceed the loss of jobs. A second consideration is that more than just coal mining jobs might be at stake. A loss of coal production and employment in a community will very likely reduce demand for supporting services, which, in turn, triggers other losses.

The choice between forced scrubbing and increased use of low-sulfur coal also has environmental consequences, for scrubbing may generate enormous quantities of solid waste. A 10-million-ton-per-year reduction of SO2 emissions by scrubbing may generate 45 million tons per year of scrubber sludges. By comparison, the total generation of municipal solid waste in 1978 was 154 million tons. Furthermore, scrubber sludges are difficult to handle. Chemical "hardeners" must be added to prevent scrubber sludges from retaining a toothpaste-like consistency indefinitely. It is easily seen, then, that the disposal of solid wastes from flue gas desulfurization will not be a trivial problem if extensive scrubbing is required.

The unpleasant consequences of scrubbing could be avoided if current efforts to develop or reduce the cost of alternative technologies are successful. These alternatives include coal cleaning, combustion modification techniques, and regenerable scrubbing technologies that produce no sludge by-product. Successful development of any of these technologies would certainly improve the prospects for burning high-sulfur coal.

If the desired emission reductions were to he accomplished by a large public works project, the discussion could be confined to the issues discussed above. The fact that these reductions will have to be put in place by privately owned utility and industrial sources raises an additional set of issues: How can these sources be given the appropriate incentives to reduce emissions? How will such reductions be paid for, and by whom? What are the implications for policy design of the scientific and economic uncertainties surrounding the acid deposition question? And how can a policy be coordinated with the extensive collection of air pollution control policies already in place?

Let us take up the last of these concerns first. An acid deposition policy will have to be grafted onto an existing federal policy to control air pollution, embodied in the Clean Air Act. Although the Clean Air Act has required sources of pollution to make major commitments to pollution reduction, and none more so than electric utilities, it was formulated to achieve ambient air quality standards. As a result, the act has mostly been concerned about local effects of pollution. In general, the act (working through the states) required sources to reduce their emissions so that ambient air standards could be achieved locally. Because almost all areas of the country were already in compliance with ambient standards for SO2 and NOx, relatively little emission reduction was required for these pollutants. Indeed, while implementing the act to improve local ambient conditions, the Environmental Protection Agency probably exacerbated the long-range transport problem, because it permitted use of "tall stacks" for dispersing pollutants so as not to violate ambient standards near major industrial or utility facilities. Pollutants dispersed from tall stacks returned to earth at much greater distances than before.

The one feature of the existing Clean Air Act that may eventually reduce emissions of SO2 and NOx is the New Source Performance Standards (NSPS). These are generally uniform national standards for new facilities based not on the ambient conditions in the area but on the technology available. Presumably, existing industrial plants will at some point be retired and replaced with more modern equipment subject to more stringent emission standards, that is, lower emission rates per unit production. The NSPS are also supposed to be made even more stringent as technology improves. However, economic growth ensures that production will be increased even as the emission rate falls, so that total emissions could increase.

To give the Clean Air Act its due, emissions of SO2 in the eastern United States did decline about 20 percent, from 20 million to about 16 million tons, between 1970 and 1985. This improvement is unimpressive to many, especially when compared to the 45 percent reduction in SO2 achieved in eastern Canada over the same period. Emissions of NOx showed little change, although at least emissions did not increase in step with the growth of the economy.

Furthermore, projections of future emissions by most analysts agree that SO2 emissions have bottomed out and will slowly increase without additional restrictions. From a level of 24.1 million tons in 1980, total SO2 emissions in the United States have been projected by the first U.S.-Canada task force to decline slightly to 23.2 million tons in 1990, but increase again to 26.8 million tons in 2000, if there is no change in policy. Almost all these emissions are in the thirty-one states east of, or bordering on, the Mississippi River. NOx emissions are expected to increase steadily. Thus, NSPS are not expected to lead to significant effects on acid deposition unless made considerably more stringent. And even in that case the emission reductions will only be felt far in the future as the existing capital stock is retired and replaced.

These estimates do not consider one other factor that may push the effects of NSPS even further into the future. Because NSPS is so much more expensive than emission controls on existing equipment, the economically useful life of existing equipment may be prolonged. Although persuasive for theoretical reasons, no empirical study has demonstrated this effect.

The Clean Air Act represents a "command and control" approach to air quality management. That is, the act, together with the state and federal regulations written to implement it, sets forth source-specific emission limitations enforced by the possibility of civil and even criminal penalties. For the most part the act leaves it to the source to decide the technology to be used for emission reduction. But there is an exception of special interest for acid rain policymaking: the 1977 amendments to the act amended the NSPS provisions so that new coal-fired utility boilers would not be permitted to meet emission limitations through use of low-sulfur coal.

Precedent can thus be found for a highly centralized acid rain policy, in which the authorities decide both the emission reduction required of each source and the technology to be used. However, it is also possible to formulate a policy in which both decisions are left to the sources themselves. In fact, whether or not to allow sources to decide how to meet emission reduction targets is the way the issue of scrubbing versus fuel switching arises.

Economic incentives

It is further possible to allow sources to choose their own emission reduction targets, by implementing a program of economic incentives. The two classes of economic incentive policies are emission fees, in which a fee is charged for each unit of pollutant discharged, and marketable permits, in which each source buys the right to discharge pollutants at a certain rate (or the right to degrade the environment by a certain amount). The common attractiveness of these approaches is that in theory they achieve a given emission reduction at the least possible cost. However, a pure economic incentive approach to acid deposition is unlikely, inasmuch as such approaches have seldom been employed in environmental policy anywhere in the world.

One difficulty with economic incentive approaches is that the objective of the policy is not emission reduction for its own sake, but reduction of acid loadings in those areas thought to be especially sensitive to deposition. This means that emission reductions can be more important at some locations than others. While it is possible to develop economic incentive policies that are location-sensitive, such policies are much more complex and may sacrifice some of the efficiency gains that initially make them attractive.

The details of the policy will have a strong influence on the distribution of the cost burden. However, to a large extent distributional concerns can be tempered by the use of subsidies, which means that we need to consider as a separate question, Who should pay the costs of controlling acid rain? Should it be the emission sources, or the general public, or those most likely to benefit from acid rain control? The contentiousness of this issue will depend on the extent to which emission reductions will be required beyond the regions where acid rain damage is apparently occurring—New England, Upstate New York, the southern Appalachians, and eastern Canada. Based on the scientific evidence and the bills introduced in Congress, it appears very likely that emission reductions will be required throughout the thirty-one eastern states, falling with particular force on a band of states stretching from Missouri to Pennsylvania.

Is it fair that coal producers and electricity consumers in these states be required to bear all the costs of acid rain control? After all, at the time the heavy investments were made in high-sulfur coal combustion no one had any idea of the consequences. Would it be reasonable to spread the costs?

The distributional question is more than simply a question of fairness; it may have efficiency implications as well. For example, one way of spreading the cost of acid rain control is to levy a nationwide tax on electricity use, with the proceeds going to a trust fund to subsidize scrubbing. Something like this is frequently found in the acid rain proposals before Congress. Not only will this policy fail to deliver the appropriate incentive to electricity users (since it affects all users and not just those using electricity produced by coal combustion), but it blunts the incentive of emission sources to seek the least costly abatement alternatives and, in fact, may lock them into a costly and inelegant technology.

Scientific considerations

As a final point, it is worthwhile to consider acid rain policies from the vantage point of their contribution to the resolution of the scientific debate. Up to now, that part of the acid rain policy debate dealing with specific patterns of emission reductions has been dominated by political and economic considerations. Perhaps policies ought also to be evaluated according to their contribution to scientific information. Necessarily, emission abatement will have to be phased in over the course of several years, and it should be possible to use the results of emission reductions made early on to develop information to locate subsequent emission reductions. But this will require any emission reduction policy to be considered not only as a problem of cost minimization and allocation, but also as a problem of experimental design.

It is not clear what effect this strategy would have on the policy variable discussed above, with one exception. It would probably make less attractive, and perhaps infeasible, economic incentive policies, because to maximize the value of the scientific information gained from such experiments will require the centralization of emission reduction allocation decisions. It may also make policy implementation in general more difficult, if sources are allowed to think that regulatory proposals are tentative or temporary.