------- % 5T 2i 6 -H Of i u CO f& C 0) *> win S ->* O w 0^ £87 ' W_* Mill l*- O o» Ml W d) JJ ^•J f\ ja •* EH t> V •o 8 IX § c * m § «r 0 at ft 8 n 01 ^ 5 di »•» o to V" Ol r- 00 en t«b f- cnooooo o ooooo o ooooo o ooooo o 1 ooooo o,..- ooooo o ooooo o ooooo o ooooo o ooooo o ooooo o ooooo o I OOOOO O ; OOOOO O ooooo o ooooo o ooooo o ooooo o ooooo o ooooo o VI «J v o . •" in a> c u-~- vt » rain o ">«> Ot- O O.OT3 "-f~ O O-OT) oo> — c t.o> — c ,-4-Tj— caw 4-<»-4^T3— cam «^C4tN4J ^UJ3 10 3 C U) N V ii)3 w «. O E — •" — ' O <-" T) O 6 — — — O C*-'-^4''~~QSI04-'C C^C °*~ *-* •• Q. It* 10 4J £ m c "~ 10 10 *u ^ 4^ o t~ Q) *~* *™ t/) 3 c ac «) t — > c at c. • to C C "0— (-OB1CC IS — o t- — •-< < oa u 4J — ^-. < o a C •- CM ooooo o ooooo o. ooooo o ooooo o ooooo o ooooo o ooooo o ooooo o ooooo o ; ooooo o , , 1 in in u o -~- m o c O M 4-> U 01 in « e ^ — in o — >• w at- o a. o tj ao> — c ._.-v-o_ ca«o ~O C-c at c. tti m c c n — u ** -*^ *^ «< u o c to » « c 4-* c S X ft S E (0 e o ** ,_ »— o a u •3 o j a m ta 01 TJ » u c « v~ ? ** .c o u « c. 3 o ID «. S i c. o 14* a in o c c tJ 3 c (A c 41 4»* (It 41 c ------- Table 18. Summary of Major Economic Factors of the Energy Scenario as Compared to the Reference Scenario 1975 1977 1980 1983 1985 GNP (Billion 1975 $) Energy 1,470 1,669 2,020 2,227 2,370 Reference 1,470 1,665 2,012 2,221 2,365 Difference 0 +4 +8 +6 +5 Employment (Millions) Energy 86.1 90.U 97.1 101.1 103.2 Reference 86.1 90.3 96.8 100.9 103.1 Difference 0 +0.1 +0.3 +0.2 +0.1 Investment (Billion 1975 $) Energy 221 285 315 362 377 Reference 221 286 344 364 381 Difference 0 -1 1 -2 -4 Net Exports (Billion 1975 $) Energy , 10.5 11.3 8.6 6.2 1.2 Reference 10.6 7.7 1.6 -2.6 -8.9 Difference -0.1 3.6 7.0 8.8 10.1 It can be seen that the major factor in raising GNP between the Energy Scenario and the Reference Scenario is increased net exports and that, for several years, the level of investment expenditures actually declines slightly. To achieve increased net exports, both imports and exports fall, with imports decreasing at a faster rate. Turning to total output, for most years the output of the Energy scenario is about 0.1 to 0.3 percent higher than the Reference Scenario; however, the pattern is erratic. This 'induces similar increases in employment, as shown in Table 18. To analyze changes in energy and material consumption between the two scenarios, Table 19 provides annual usage comparisons for petroleum, coal, electricity, iron ore, ;aluminum, and copper. (Note that petroleum and coal data in Table 19 include use in generating electricity. Table 17 figures do not include this factor in order to avoid double- 4-53------- counting in energy accounting.) The trends for usage of these forms of energy and materials are consistant with the variations in assumptions for the scenarios. Petroleum demand, coal demand, and electricity demand for the Energy Scenario decline in 1985 by approximately 21, 11, and 8.5 percent, respectively, when compared to the Reference Scenario. Slight decreases in use of iron, aluminum and copper are noted with no decline greater than 5 percent, which is consistent with the variation in total output. U-5U------- Table 19. Comparison of Energy 6 Material Usage Between the Reference and Energy Scenarios 1975 1977 1980 1983 1985 Petroleum (Btu's Quadrillions) Energy 32.1 33.8 36.1 37.2 37.9 Reference 30.3 37.2 41.4 45.0 47.6 Difference -2.2 -3.4 -5.3 -7.8 -9.7 Coal (Btu»s Quardri1lions) Energy 13.8 16.6 17.7 17.6 17.6 Reference 13.9 17.0 18.4 19.0 19.8 Difference -0.1 -0.4 -0.7 -1.4 -2.2 Electricity (Btu* s Quadrillions) Energy 22.5 26.5 30.9 34.9 37.6 Reference 22.8 27.3 32.1 37.1 41.1 Difference -0.3 -0.8 -1.2 -2.2 -3.5 Iron Ore (Million Metric Tons) Energy 129 151 168 167 168 Reference 129 151 167 169 173 Difference 0 0 -1 -2 -5 Aluminum (Million Metric Tons) Energy 5.1 6.2 7.4 7.9 8.2 Reference 5.1 6.2 7.4 8.0 8.6 Difference 000 -0.1 -0.4 Copper (Million Metric Tons) Energy 2.9 3.5 4.1 4.3 4.5 Reference 2.9 3.5 4.1 4.4 4.5 Difference 0 0 0 -0. 1 0 4-55------- As a final comparison of the effects of energy conservation. Table 20 provides the level of environmental residuals produced in the Energy Scenario relative to those produced in the Reference Scenario. Table 20. Environmental Residuals from Energy Scenario (S5) as a Percentage of Reference Scenario Residuals (SI) (S5/S1 in X) Air Residuals 1975 1977 1980 1983 1985 Air Residuals Stationary Sources Particulates 99 99 99 98 96 Sulfur Oxides 98 97 96 93 89 Nitrogen Oxides 98 97 96 93 89 Hydrocarbons 95 95 92 89 87 Carbon Monoxide 98 99 98 96 95 Air Residuals Mobile Sources Particulates 95 95 95 94 95 Sulfur Oxides 98 101 103 104 105 Nitrogen Oxides 95 96 96 95 91 Hydrocarbons 92 91 89 87 86 Carbon Monoxide 92 90 88 86 85 Water Residuals Biochemical Oxygen Demand 100 100 100 100 99 Suspended Solids 100 100 100 99 99 Dissolved Solids 100 99 99 98 97 Nutrients 100 100 100 100 100 In general, for water residuals, little impact is noted since the energy conservation assumptions do not cause major variations in output for the industries that produce the majority of water pollutants. The reduction in mobile source emissions is consistent with the major reduction in auto mileage and concomitant small increases in mass transit and small decreases in freight transportation. The major impact of the Energy Scenario on residuals is in stationary source air emissions. All five air residuals. -56------- particulates, sulfur oxides, nitrogen oxides, hydrocarbons, and carbon monoxide, show significantly lower levels over time. The lesser reductions for particulates and carbon monoxide are due to a mixed reaction in the output levels of six major producing sectors. In summary, the Energy Conservation Scenario assumptions produce major effects on energy and material consumption and on air pollution emissions when compared to the Reference Scenario. Remaining statistics for the two scenarios show only minor effects when the two are compared. The effects of the pollution control regulations under the Energy Conservation Case assumptions are provided by comparing the Energy Abatement Scenario with its predecessor, the Energy Scenario. The general output statistics for the Energy Abatement Scenario are given in Table 21 while Table 22 compares the results of Energy Abatement Scenario with those of the Energy Scenario. As in the other scenario pairs, the scenario that includes the pollution control costs and purchases generates higher employment, GNP and total output for all forecast years. The differences are greatest for the years 1975 and 1977 when the available labor force is sufficient to provide for the increased resources needed for abatement controls without diverting labor from competing employment opportunities. By 1985, Energy Abatement Scenario forecasts are greater than those of the Energy Scenario by 0.16 percent for GNP, 0.5«» percent for total output and 0.26 percent for total employment. Table 23 presents various pollution control costs as a percentage of Energy Scenario GNP. Comparing these percentages with the values given in Table 6 and Table 1<* again reveals the relative impact insensitivity over the range of assumptions provided in this macroeconomic/energy analysis. U-57------- , *•• M 0 r4 J^ iA CH * «^ \O CO t. s V u CO 4» i Q) JJ 1 >ilD tJtCD M W 0} ^* C 1 M VO r* •C ^* •P u. o a Tl in CO Cn 0> CO OD O) CM T* 01 0 to en tn t** en CO en i- C"* O) V- IO cn o o o r- r«. o no CM »- o o o •» i- o • to to v n o CM *- o o o Ot^CM •^Ift » P) O CM •- o o o r- in in a>*t CM CO CM CM to »~ CM 01 O CM CM O • CM _ cn ,T ^ CO _' o t- ^ cn in ,_ to to m n »-o in co *-o inr^ « to •- 0 at ID rt B*J v- O CO IO CO PI ~ o r- in CM P) • » »- o cn co *- o — o CM O T- P) T- O CO O o ro *- o r- r- o> CN o o CM * CO it «- CM O O O — *t- O O O OO f» * T- CM 000 en ro u> PI «- CM o o o too in CO »- CM O o O t- CM in CO — CM « • • o o o co CM «r CO «- CM o o o in CM co P) — CM o o o «T CM CM CO — CM O O O CN CM O CO »- CN O O O CO O m cn «*> _ CO CO CO (0 CO to tn PI ,3. ^- •* • CO ^. CM co to 0 CO to CO CM to to CM cn e»«- o>«- Pl O ^ O O o •- co to en O CM CO PI CM o to in «- CO CM CO 0> CO co -^ CM in co »- o o «• t«. cn tn in oo to in o CM in to cn CM co co tn »*• ^ co in to ID — «•» y- n o CM m in cn CM co n «n CM- "" to ait *• in «r * «O l>- (O *-* • v to in o en o to in — « 00 r^ to co tn to in t^ 00 f u> in co co in to tn «- o in •*- CO «I CO to in in *- cninr- <» to co in co T- cncMoi O> T CM rt CM CM co in in t« cn o> CM CD CO •» o en CM r»- t* ^ « at r~ cn CM r» 00 V to v o o CN m CM o in co CM r- CO T CM •• CO CM co in CM •- o eo CM to en «r in oo o cn - • • • •- oo CM in 00 t to eno *» *t to cn to p*> c** *- PJ r~ t T M ID me ** c u — o t. E — a — O > O nj 4-» U. O fil U n — (A — c. a. o c. 3 O E Q. 0> a o a> m a. o « c — Q. -1 3 O *• u 3 73 .— OW c. a tn r- ^ cn IB - £ o c — o 4-t — (0 — z - ul c. in l- O **• c. o Onsumptioh tures Expendi tures CJ — 4-1 <-• •o c c (0 di E E O x in c M uj at oi c. > > 111 co a. « o ._ Q 01 » m ^ u. o in 01 4-1 3 C a o 3 — Q - .M •— c. «J t- O^" H- D 10 O eft >— ra o>— o E C- — 3 a at C c. «J — iu -a t o «J 3 C fl] O 10 <1> o~ H- 4J — ' U c 4^ — o o — etric Tons) 5 TJ C C
a> 4-1 3? m E C C «22 s s u — — 0) CK I> C. n ui S « c, *• ^ Qf a s n E CL 3 t» -^ C 3 C — O §c. c ICt— W a. < u. 00 in i ------- in CO 01 c*> von in CM T-O «- r» •- in m i-in 10 n -• o — m woo in no in CD in CO o> o n in t» n o to u> »- (o on on o *-u> IA n tf>f- CO t in «- at co 10 a at CD O — 10 «- o> in •» in ID c- CM m in m t- o r- PI o» na a> •O I a c o CJ • M Q> J3 flj £H « ? W %* o . . * 7> M s 0 8 *> S I § *> 3 >iin beo M a\ §7 HVO r* 0><* A r 4* II * *f^ O w g *p4 • ^j ?J 0) T°> 0 & H « M 0> C 8 CM CD en ^ •" 00 en •» o CO at *- o» i- en ** t- cn ^ en to en ** in o — *•» in ••• +j c ^ ID 0 »-• |A 01 01 »* C 01 3 u c 0 u H .^ ^ BJ 3 C C < o to IIM M •Q O E - C C — •*• — C 1. 41 CD C C ti w"" "* CM T in CM CM P) « « • IO (^ f*" I** « n M to O t- in r- o o 01 O) (O O) •- co ia a. o n — c — cam «> —en +•* UJ- 13 — o OL S (0 *^ C Q >4 4^ U i~ O O "^ fl* ^* a c. Q — o a o CO • o 1- t^ ^ en CM in in ? CO - • CO in in ID *2 in o ^^ u w» — 'in co r~* Q.O) — T- *J — O C (Q ••*• C fl* w C O E CD—*-' Ql S - Ifl E _ CD n c- ••- > t_ 01 CO C O *•* '•' ^"^ c a w IA O U •o <1> N 'r- ^« 10 3 C C < o en co C1) CO O • • • in «- co "* *- *J CO CM CO CM • • • m — t^ * — (O »- o N in in r- in ID CD in T — CM t- co m o n o> '<»• «- ID w co ro in •^ en oo C*) O CO CN 00 CO "» w to t» CJ 0 0 CM Oi U a. — c ID *r- — Q. •? 1J 10 M3 *> o o - a ID O *» C 01 >. 0 a UJ «J Q at c .,» o (O in ^ in CM in to o CO CM O rt C 4-« 3 O a o L 3 O a> JO 0 E C a w n o o — o c. 0 u c o Z 10 c_ 0 a IB c. ** 4) ------- Table 22. Comparison of the Macro Statistics of the Energy Abatement Scenario {S6) and the Energy Scenario (S5) [ (S6-S5)/S5 in %] Statistic Gross National Product DisposaOle Income Per Capita Total Employment Federal Expenditures Personal Consumption Expenditures Total Output Investment Energy Use Demand: Iron Aluminum Recycling: Paper/Paperboard Aluminum Ferrous Metals Vehicle Kilometers Travelled Freight Metric Ton-Kilometers Net Air Residuals: Participates Sulfur Oxides Ni trogen Oxides Hydrocarbons Carbon Monoxide Net Water Residuals: Biochemical Oxygen Demand Suspended Solids 1975 1.97 0.00 2.04 0.24 0.59 a-. 33 6.11 3.98 o71 2.13 1.70 0.00 3.60 -3267 ??1a -,337 .9 05 11.70 14 15 1 1>96 1977 1.74 0.00 1.86 1.07 0.33 1.18 1 46 oioo 3.05 . -38.05 -53 07 !: -6.20 1980 • 0. 10 -0.95 0. 14 2.24 -0.70 0.34 1.79 022 o ia J'w ? B8 8 -57 os ' -11^99 1983 0.22 -0.82 0.26 2.20 -0.22 0.50 0.94 4.09 022 «To 2'i! ~?'RO 1-8° ^ „„ "8°-25 -67.29 •»< 5C ~I1 ' !! *:S -16.62 1985 0.16 -1.19 0.26 2.17 -0. 12 0.54 .0.38 4.89 -1.42 oat "86-°° -60'8' -7.61 -59.48 -75.12 ,„ „, -78.07 -19.45 .-61 4-61------- Table 23. Incremental Pollution Control Costs as a Percentage of Energy Scenario GNP Air Stationary Source Costs Annual Capital Cost O6M Cost Water Industrial Costs Annual Capital Cost O&M Cost Water Municipal Costss Annual Capital Cost O6M cost 1977 1980 1983 1985 1976-85 0.28 0.30 0.29 0.28 0.26 0.28 0.25 0.24 0.16 0.28 0.23 0.33 0.31 0.34 0.30 0.47 0.19 0.25 0.24 0.23 0.05 0.09 0.09 0.08 0.29 0.26 0.24 0.35 0.22 0.07 The effects of the energy conservation assumptions on environmental residuals are provided as annual average treatment efficiencies and emission levels in Tables 24 and 25. These values again show about the same changes in treatment efficiencies, although the changes are slightly different here than in the Reference Abatement and Low Productivity Abatement Scenarios. This difference results primarily from the greater variability introduced into the interindustry flows by the energy conservation measures. Thus, for data concerning the level of economic activity and level of energy usage in the three major scenario pairs, the difference at the macroeconomic level between the scenarios without abatement effects and those with abatement effects appear quite similar. 4-62------- Table 21. Relative Stationary Source Treatment Efficiencies of Selected Pollutants'for the Energy and Energy Abatement Scenarios (Efficiencies in Percent of Residuals Removed) 1975 Energy Energy Abatement 1980 Energy Energy Abatement 1985 Energy Energy Abatement Air Residuals Participates 73.6 Sulfur Oxides 23.5 Nitrogen Oxides 0,2 Hydrocarbons 38.2 Carbon Monoxide 45.7 Water Residuals „ Biochemical Oxygen Demand 68.6 Suspended Solids 82.7 Dissolved Solids 30.9 Nutrients 35.2 85.3 51.0 2.5 49.7 61 .3 72.4 65.7 33.6 37.1 73.7 23.2 0.2 37.4 46.0 67.7 82.9 32.1 38.6 94.0 72.9 5.6 58.4 72.0 86.2 96.0 43.7 47.0 72.9 23.8 0.3 37.7 46.8 67.7 83.3 34.1 40.0 96.8 72.1 5.7 69.3 74.7 92.9 98.4 61.4 53.1 Table 25. Passenger Transportation Emission Levels for the Energy and Energy Abatement Scenarios (Metric Tons per Million Vehicle Kilometers Travelled) 1975 1980 1985 Air Residuals Participates Su)fur- Oxides Nitrogen Oxides Hydrocarbons Carbon Monoxide Energy 0.22 0.09 1 .96 2.63 21.83 Energy Abatement 0.19 0.09 1.85 2.26 17.74 Energy 0.22 0.10 1 .99 2.19 21.97 Energy Abatement 0.17 0.10 1 .66 1 .24 10.35 Energy 0.23 0.11 2.01 2.10 22.06 Energy Abatement! 0.16 0.11 1 .21 0.54 3.64 4-63 1-63------- Chapter <» Sectoral Analyses Results In order to assess the impacts of pollution abatement activities at a more detailed level than the macro-analysis presented in Chapter 3, a sectoral level analysis of one of the three abatement scenarios is required. In this chapter, the Reference Abatement Scenario is analyzed at the sectoral level to describe these micro-level impacts. Estimated reductions in pollutant residuals for industries, mobile sources, municipal treatment, and Federal, state, and local governments, which are derived from the Reference Abatement Scenario are analyzed first. Following this, the sectoral costs forecast for various industries to comply with Federal pollution control legislation are analyzed. ESTIMATING THE REDUCTION IN AIR RESIDUAL GENERATION The graphs In Figure 1 show the impacts of the Reference Abatement Scenario on generation of air residuals. In the graphs, the controlled (net) residual emission for each pollutant in 1971 is set equal to 100 and forecasts for subsequent years are indexed to the 1971 controlled emissions. Uncontrolled emissions are also shown indexed to the 1971 controlled emissions. The relative difference between the two plots indicates the overall effectiveness of pollution abatement technology for each pollutant in the forecast year. Controlled emissions are defined to be those that enter the receiving media (air, water) from the generating source after the abatement process is completed. The relative contribution to total controlled emissions in air by industrial/commercial sources, electric utilities and municipal treatment is shown by the distance between the appropriately labeled curves on each graph. Reduction in residuals discharged to the nation's environment, as shown in Figure 1, is only a rough indicator of environmental quality. However, significant increases or decreases of the various types of emissions are indicative of probable changes in ambient trends. Therefore, the graphs afford a measure of the probable environmental quality so far as air is concerned. The major source of each air pollutant is illustrated in Figure 1. Particulates and sulfur oxide emissions in 1971 result primarily from activity in the stationary sources------- (industrial/commercial and electric utilities) while the major cause of hydrocarbons and carbon monoxide is mobile sources (transportation). Nitrogen oxide emissions are approximately equal from fixed and mobile sources in 1971 and are shown to be difficult to abate in both sources. U-65------- Figure 1. Trends in Air Residuals from the Reference Abatement: Scenario in ISO 130 no M 70 so so HYDROCARBONS H7I COMTIXIU-EO JITRQL FT 100 I I \ _tOTAL UNCOKTOOLLEB_ RESIDUALS ^iNSKSN SSSS^'MSSSSSS ELECTS 1C UTIUTIK 75 77 89 YEAR *so ELECTIIIC UTILtTIES TRANSPORTATION TRANSPORTATION CARBON MONOXIDE mi COHTROLLEa = 100 1«0 I70^ ... LTOTA1- I I HO-j-UMCONTROLLEO RESIDUALS tiLITlES TRA»iSP3I!TATIOll 75 77 80 YEAR 4-66------- For the major stationary-source residuals (particulates and sulfur dioxide), decreasing emissions are shown until 1977. The end of 1977 was chosen in the Reference Case scenarios to be the date that full compliance to the Clean Air Act for all fixed sources occurs. After 1977, the plots of both sulfur oxide and particulate emissions from fixed sources level until 1980 and sulfur oxides even shows slight increases to 1985. This represents a pattern approximating the growth in economic activity without significant subsequent increases in pollution abatement efficiencies for these two pollutants. This pattern is found for particulates from 1977-1980 and for sulfur oxides from 1977- 1985. (There is a slight dampening in the growth of the emissions from these sources compared with the economic growth over the 1977-1980 or 1977-1985 period due to more stringent controls on emissions from new plants.) The index of emissions for particulates relative to the 1971 total show the mobile sources share to be approximately constant at 3 percent from 1971 through 1985; the index for industrial/commercial sectors decreases from 84 percent in 1971 to 16 percent in 1985; and the electric utilities index declines sharply from 13 percent to 2 percent by 1977 and then becomes fairly constant. The relative indices for sulfur oxides emissions show the mobile source share increasing from 2 percent in 1971 to 3 percent in 1985. The index for the industrial/commercial source remains fairly constant throughout the interval, decreasing slightly by 1977, while the electric utilities index decreases from approximately 50 percent in 1971 to about 25 percent in 1985. Turning to air pollutants where mobile sources are most important, the graph for hydrocarbon and carbon monoxide emissions both show a steady decrease to 1985. Emissions standards for both pollutants for automobiles are scheduled for full compliance in 1978. The steady decrease in the graphs after that time is due to phaseout of the older model-year automobiles from vehicles still on the road that occurs in each successive year since older automobiles are not as well controlled as new models. This factor tends to offset any increases in stationary source emissions after 1977, which result from growth in economic output. Uncontrolled hydrocarbon and carbon monoxide emissions show a decrease from 1971 to 1975, because older automobiles (pre-1968 model years) have hydrocarbon and carbon monoxide emission factors approximately 120 percent larger than those for the 1971 model year. Many of these automobiles were still in use in 1971 and are phased out throughout the forecast period. This effect continues after 1977 for carbon monoxide due to the existence of more strict control «»-67------- standards after that time. The mobile sources index of hydrocarbons decreases from 63 percent in 1971 to 20 percent in 1985 while the index for hydrocarbon emissions from stationary sources decreases from 37 percent to 25 percent. Corresponding values for carbon monoxide are 85 to 25 percent and 15 to 9 percent. Nitrogen oxide uncontrolled emissions increase 57 percent over the course of the forecast period. The electric utilities index to 1971 controlled emissions increases from 29 to 61 percent, while the mobile source index increases from 52 percent to 65 percent; the remainder from industrial/commercial sources is fairly constant. The forecast increase in nitrogen oxide controlled emissions due to mobile sources is probably underestimated by this forecast because it is assumed that the presently legislated 1978 standard will be met. If the 1978 standard is modified or not met, which appears to be quite possible, the increase in nitrogen oxide emissions would be even more severe. Table 1 shows further detail concerning the largest contributors to the industrial/commercial share of emissions for air residuals after controls. The combustion of fossil fuels by 1985 causes the largest proportion of both sulfur oxide and nitrogen oxide emissions. For particulates, the greatest source by far of emissions is the Crushed Stone subsector, particularly in 1980. The consumption of gasoline at service stations and the production and use of solvent-based paints dominate the generation of hydrocarbon emissions in 1971 and increase their shares by 1985. In 1985, the production and consumption of Solvent-Based Paints yield over 40 percent of the industrial/commercial share of hydrocarbons and about 25 percent of the total hydrocarbon emissions from all sources. Several sectors/subsectors, such as Asphalt Production in particulates and Crude oil Refining in sulfur oxides, have large shares of controlled emissions in 1971; however, because of improved treatment efficiencies, they make small contributions to the aggregate industrial/commercial residuals in 1985. Differences in air residuals as forecast in the Low Productivity Abatement and Energy Abatement Scenarios are presented in Table 2 as percent changes from the forecast for major polluting industries in the Reference Abatement Scenario. For the Low Productivity Abatement Scenario, one might expect these differences to be on the order of the percent change in GNP, as shown at the bottom of the table. The general tendency, however, is for residual production to change at lower rates than GNP, with the notable exception of the industrial and commercial use of fossil fuels. As 4-68------- expected, little difference is seen between the Energy Abatement and the Reference Abatement Scenarios other than in the energy related sectors, where significantly lower residuals are forecast for the Energy Abatement Scenario. «-69------- Table 1. Industrial/Commercial Net Air Residuals by Major contributing Sectors/Subsectors Percent of Industrial and Elec. Emissions from Reference Abatement Scenario Sectors/Subsectors 1971 Particulates Stone S Clay Products Crushed Stone Electric Utilities Elec. by Coal Paving & Asphalt Asphalt Cement, Concrete, Gypsum Cement-Dry Grinding Cement-Wet Grinding Steel Cement, Concrete, Gypsum Lime Industrial Combustion of Coal Sulfur Oxides Electric Utilities Elec. by High Sulfur Coal Petroleum Refining Crude Oil Refining Commercial/Institutional Use of Residual Oil Petroleum Refining-Ind. Combustion of Oil Crude Petro. Nat. Gas Sour Nat. Gas Proc. Plants 3.3 1975 1980 1985 21.4 12.9 11.2 8.6 8.0 6.5 3.6 3.2 46.9 7.6 3.8 3.6 34.2 12.7 8.5 7.2 6.1 5.4 2.9 2.4 42.6 4.6 5.4 6.3 70.7 4.3 1.4 1.4 1.0 2.7 0.3 0.4 26.5 0.6 7.8 11.1 46.7 7.9 1.0 0.3 0.2 3.9 0.6 0.8 24.1 0.7 11.8 12.0 1.9 0.1 0.1 4-70------- Table 1. (Continued) Industrial/Commercial Net Air Residuals by Major Contributing Sectors/Subsectors percent of Industrial and Elec. Emissions from Reference Abatement Scenario Sectors/Subsectors 1971 1975 1980 1985 Electric Utilities Elec. by High Sulfur Residual Oil 3.3 2.9 2.2 2.5 Elec. by Low Sulfur Coal 0.8 4.4 12.0 14.4 Nitrogen Oxides Electric Utilities Elec. by Coal Elec. by Gas Elec. by Oil Petroleum Refining Industrial Combustion of Oil Hydrocarbons Service Stations Gasoline Consumption Paints Solvent Base Paints Production Open Burning Solvent Based Paints Consumption Petroleum Refining Crude Oil Refining Gasoline Production Industrial Chemicals Ethylene Oxide 3.2 2.0 0.4 0.5 41.6 10.8 8.9 3.8 17.3 17.0 10.2 10.1 8.5 6.8 48.1 8.1 11.4 3.2 25.5 22.2 0 10.6 5.6 7.0 50.7 5.5 13.5 2.5 29.3 26.3 0 9.8 2.2 5.7 50.3 5.5 14.7 2.5 24.9 32.9 0 11.1 3.1 8.5 4-71------- to oi ft _, 3" M O —' C. « C Ol £ g~ u * 10 *» m * o I o 0 T in in i o n o i oo I I in in oo I t N I O n 7 o I o * o h. n in in i « o * o t- o I r> : in i- f WWW s * ^ u>j o ••- I t 01 u c o o o o c o o 0 0 1 1 o o o o o o o o i o o o o o o o o o o n o o o r- o * o m 0 1 «W E o •— u> C- "f— a < oi CD Ol I in i oo l ID CD ai oi l i n o Ol Ol ** • * * o *"• I 00 CO I I CM o »- I. o oi n * CM CO I Ift 6 3 O O i ng mbust ion of Oi 1 c o — o 44. 01 ~ ee it ••- E t 0> "/I •— 3 O TJ t. C 01 a. , Natural. Gas Gas Proc. Plant: 4-7: E 3 — Ol 19 — c. O 3 C 4^ 4-> IB 0 2 0. C. Ol 3 ?5 c OC. C. Ol O O c. o >• *• C t- Oi 002 0 1 1 - c c •*-* AI Ot c E e O 41 4) e o o Oi o e. Gypsum 4J a> C- u c o o • M 0) - c e U 01- IU E -J 4-< 01 l/i U II o CJ 4- 3 V> C. !». O Ifl X Ol — > 4J O — > '«- 4-* 4-* -r~ 3 O >^ M o c ra •~ »-• O C- O O o — 01 Ul *~ Ul 01 c Ol"- c c C 1- a- ct 01 £c *-* .^ E 0 3 Oi a> *— "^ O 3 t. t. *^ U 01 a ------- (JJ Q) 5 ^ 4J § S5-H M M «H 14 j i i* » H «O tt) — >«H rt CD O •C5 (8 M W 0) 9 fc «S C >H «M E C •H « O 0> 4J Q) (0 O E: C 05 4) O O -H « JJ U M H O « *<•* *|p^ ^J *|pf jjQ id! CO Li id£ * jig 10 ^!\j {2 113 C§ (U I|H| Jjj fll f\C 4J Q> fc* C-H C«H » I -i AI %J ^1 Qp ^J ^J dl ^J ^j nt ifi C Oi ^) JJ A) ^3 •» * ^^ W M M O t\ Mt Ml IM 2i . D IM» o f^ c a u c 0) E 0» *• 1 « o c » c. « 2 g «• g C, • U C L. • O ••» Q C O o c « , . ,' -. 10 ut 4^ C g * < > c « 5 u» ""* *» c 01 1 < ^ ** .^ > ^t (J 3 •D O C 3 O J in CO at 0 o> en ^ in CD ^ »* *• & ** ai ! o CO en in in £. O Q 4> (/> r» • CO 7 10 * , in- I ^ * ^ 1 o • o I «— • » «~ *J U O •^- *-* IQ 4J .^ 3 3 0 -O U C M c u a «•< (b o — 0) U) UJ t» n 7 in 'T r» * v* I O o :- •• v» * en I m I o CM o 0 IS 0 o c. H~ 3 I/I 3 O _l > > *J 777 • » • m in in i i i I»«O t- *• *• »~ i i i o o o * • » o oo - ,- K *- • • • en o) on I i i _m ^ • * » in v in i i I o o o CM CM CM • O O O o o o *_ ra 10 — ifl o O o 01 m Z n n £> O ^ > » •r- *r- +»+*+* X *-* -^ "~ ~*~ O 3 O O O C U c. C. L 0> -^ 4-» *^ ** O> C O O U t. o . 4-4 '~ a: n> E tT 01 in ^ 3 O T) t C *J •-* a> a. to in «• « CM 1 ^ « CM v 1 O • O o> CM 1 • CM 1 t*. O O o c o trf . a E in 3 c ta .?§ M *- U ^3 (/) C C. •*- f[J Qj — o u o O — to C. > <0 t> CO >> * X in 0 o • o o • o o * o ^ ^ 09 en <*) o o c 0 •M O 3 t) o c. a 4-* C <~ n a. ft tn m 0 *j c at w > *-< — C O — 1/1 n) 0. o o o • o o • 0 o • o o o o o o o 1 o; •i o i ' 1 ) Oi C c c 3 m c a o -9 O V- • O _ 4 O o * o m 00 l p> in < CO CM o o in *•• C •^ m o. TJ C Of O in — (0 w ta a E *-• 3 c m 0) C > O — o o U) MC0 * * t m 7 i ^ « • * t- ^ 1 CM 1 *r <9 t- ct 1 «- i OO • « o o in at 10 n i i at — *r c* i i ^* c*» CM O • O O o o c o o C — O •*- *-• ceo .^ — 3 C «t- TJ - 0) 0 •*-«[_ ai a. /»* <— -«-
.-. fl y .- 0 e xj « ~f 0 O flj C C ^~ »-» >« (ff C z> *^ -Q Hi c (•-« ------- ESTIMATING THE REDUCTION IN WATER RESIDUAL GENERATION Figure 2 presents graphs for water residuals which are similar to those in Figure 1. The shape of the total water residual curves (see Figure 2) does not show any increases after 1977 similar to the total controlled air residual curves for sulfur oxides. (However, the controlled level of nutrients remains approximately the same after 1977 since the increase in tertiary treatment of municipal sewage is only sufficient to offset the increase in uncontrolled nutrients due to population growth.) This is due primarily to the phased abatement schedule for water effluents in the 1972 amendments. The Reference Abatement Scenario assumes that BPT is operational by 1977 and BAT is operating by 1983; therefore, there is a continual increase in most water effluent removal efficiencies until 1983. Other than the change from the sulfur oxides curve, the curves for the total uncontrolled water residuals show shapes similar to the remaining air residual curves, responding to increases in economic output and population. Industrial/commercial and municipal sewage contribute approximately equal, but declining, shares to BOD effluents through 1985. All three sources, industrial/commercial, municipal sewage, and electric utilities, contribute to suspended solids emissions. In 1971, the industrial/commercial index was approximately 78 percent of all suspended solids emissions; however, this index diminishes to less than 6 percent by 1985 while the municipal sewage index changes only from 21 percent in 1971 to about 10 percent in 1985.------- Figure 2. Trends in Water Residuals from the Reference Abatement scenario tNOtrtTKMlS COM WE RCW. ElCCntKAL UTILITIES HUHKIFJU. a-75------- The composition of dissolved solids emissions is almost totally (85 percent) from industrial/commercial sources in 1971; by 1985 the industrial/commercial index has dropped to 50 percent while the electric utilities index has grown from 15 percent to 30 percent, primarily due to electric generation by coal. Nutrients (composed of phosphate and nitrate effluents) are almost totally due to municipal sources for all years and remain at a relatively constant level throughout the time period. Table 3 shows the largest economic sector and subsector contributors to the industrial/commercial share of effluents for water. Municipal sewage treatment is excluded from consideration in this table because residuals attributed to this sector come from a variety of sources in addition to industrial and commercial establishments. For BOD, Pulp Mills are the major source of effluents in 1971. However, by 1985, Forestry and Fishery Products has the largest share of BOD effluents, reflecting the lesser degree of treatment efficiency for this sector. Asphalt production and the Bauxite Refining process were the largest polluters of suspended solids from industrial/commercial sources in 1971. By 1985, however, sectors/subsectors with less efficient control technologies, such as Forestry and Fishery Products, Lime production, and Bleached Kraft Pulp Mills, account for almost half of the effluent while suspended solids from Asphalt and Bauxite Refining are completely controlled. Subsectors of the Industrial Chemicals sector yield the greatest share of dissolved solids effluents prior to the implementation of BAT in 1983. Of these subsectors, the production of sodium carbonate by the Solvay process was the largest contributor in 1971. This economic production process, however, is being replaced by a competing process for the production of sodium carbonate, the Trona process. The Trona process yields negligible water residuals; therefore, effluents from the Sodium Carbonate process decrease to almost zero in 1985. In contrast to this pattern, the share for Citric Acid production increases from less than 25 percent to over 50 percent of industrial/commercial suspended solids effluents over the period because the production of Citric Acid increases to double the 1971 value by 1985. Table 4 presents the percent differences in water residuals forecast for the major polluters of the Reference Abatement Scenario in the Low Productivity Abatement and Energy Abatement Scenarios as compared with water residuals from those polluters found in the Reference Abatement Scenario. The same general trends between scenarios are evidenced for water residual differences as for air residuals. The trends «-76------- for the Energy Abatement Scenario are, however, less pronounced because major changes in assumptions made for this scenario impacted primarily on air residuals rather than on water residuals. U-77------- Table 3. Industrial/Commercial Net Water Residuals by Major Contributing Sectors/Subsectors Percent of Industrial and Elec. Emissions from Reference Abatement Scenario Sectors/Subsectors 1971 1977 1983 1985 Biochemical Oxygen Demand Pulp Mills Kraft-Bleached Plastic Materials & Resins Forestry & Fishery Products 13.1 11.1 7.5 6.7 8.6 13.3 11.4 8.0 7.4 14.6 33.4 40.6 Pulp Mills Sulfite-Pulp Pulp Mills Kraft-Unbleached suspended solids Paving 6 Asphalt Asphalt Aluminum Bauxite Refining Steel Cement, Concrete, Gypsum Lime Pulp Mills Kraft-Bleached Forestry & Fishery Products 6.0 5.9 26.3 25.3 13.5 7.7 4.7 4.2 5.5 5.6 19. 1 18.9 12.4 1.7 7.0 9.7 3.5 5.8 0 0 7.5 9.2 13.0 19.7 2.5 5.9 0 0 3.7 16.6 13.5 17.1 4-78------- Table 3. (Continued) Industrial/Commercial Net Water Residuals by Major Contributing Sectors/Subsectors Percent of Industrial and Elec. Emissions from Reference Abatement Scenario Sectors/Subsectors 1971 1977 1983 1985 Dissolved Solids Industrial Chemicals Sodium Carbonate- Solvay Process 39.0 29.8 7.6 Citric Acid 23.0 27.2 «5.2 Electric Utilities Electricity by Coal 1ft.1 24.2 31.8 Industrial Chemicals Chlorine-Diaphragm cell 2.3 3.5 1.5 0 50.6 U-79------- at to V — w I I M O ca o — »- »- o Is *2 O A, V4-H M o> > m - S 3 — ID ot o « t? • 0 ** c « r- o a i«- u < o> w •- •H (» , S & E C 01 UJ •- O Ol l>- Io • o o o o o O O 1 O r- O O O O O O o o o * o 0 1 to • o o * o o 1 rr o o o o £ c. 4J — in t at 6 10 o» O — •- c PI «- o n T 7 in i- IX n o to • o n o i U E C O Oft iuf c a CD a> Ol O I •- m * in in CO O) 1 « O) J •A in W—l f ^ X) «0 W (CSS OJ C4J 0) Cr>-H c IM e 4> « « o *• JB 4^ U C. en O " •o o o. 3 O o o o o o o o o o o m • O o o — in . • • «- O o o o o o o o o o o o to I. o f 3 3 10 — i/> a — HI o u 10 o fl IA C lt> a t. a C » >. in *^ O Ifl 3 $f XI L O O t u. a ------- £ o> o- — ui u> »- C C. 0 » E C O ul «- «•* c*» B Ok n o I- o o d o in in • n o • o o • o « fl* •H O a x! H C *> O H >r4' « 3 to to 4> (0 •HH'O C «-» rt < 0 13 U * CO fl -H O O< |C MV <« h E-i &>-H C V C*» ««W A96« £M «J u TJ O c. a. 3 O _t in CD at . Pl CD m »• r^ •^ 01 h. O) ** M C. O in 4-> TJ (^ .n- 0? ~ IA O I] in 3 in v ^ a in > c — 0 O *• in u in Hi .•• iy> a at • o n i n o o »- 7 7 i i W 1 * * t < 1 1 • • o o : O O in _ 1 " "w QJ O ** — ™ in ECOT Q| Q At £ U U 'O U C. O — a) <- O — O Q. < a — E > o c. 3 IB - *• — > C. in t) — *^ 3 O O — T3 01 U> O C t-i *• * 01 in ^ at o • o o _L1 •a 0 «t u — - 5* M JO ** >t '•- *J «J -•- 3 O u t- •^ 4^ C U «-• 01 41 ul ^. ul a> • 7 n o 7 * o o _ •— u in E lo fl U c- — C E a a» ------- ESTIMATING THE COST OF POLLUTION CONTROL Assuming air and water pollution controls, associated cost functions, and the Reference Case growth in GNP, direct costs of pollution control for each industry sector can be forecast using SEAS. Using these forecasts, the total annual costs (annualized capital plus O6M) for the 1976-85 period for all industries will be: Industrial Control Costs Air costs Water Costs (Billions 1975$) $231.8 $111. 1 $120.7 The detailed distribution of these costs across aggregate industrial sectors is shown in Table 5. Note that Electric Power Plants must expend about a fourth of the air pollution costs. Nearly another quarter of the air costs are borne by many different industries in order to provide space heating, with Chemicals and Paper being the major aggregate industries making this expenditure. By far the largest water pollution control expenditure is made by the Machinery and Equipment sector (this includes the aggregate sectors of electroplating,'fabricated metal products, and electrical and nonelectrical machinery). This sector is required to expend over 50 percent of all industrial water pollution control expenditures. The Chemicals sector is the second largest spender for water pollution control (in particular. Organic Chemicals, Inorganic Chemicals, and Plastics and Synthetics), and will be required to spend slightly over 16 percent of the total industrial control costs for water pollutants. When air and water pollution control costs are combined, the preponderance of Machinery and Equipment expenditures for water pollution control also make it the aggregate sector, expending over twice the amount that any other aggregate sector expends for total pollution control even though no air pollution control expenditures are required. The share of total pollution control equipment costs for Machinery and Equipment is 29 percent. Of the remaining aggregate sectors, five show total pollution control costs in excess of 5 percent of the national industrial pollution control 4-82------- costs: Electric Utilities (14 percent); Other (11 percent) Pulp, Paper, Printing, and Lumber (8 percent); Ferrous Metals (8 percent); and Chemicals (7 percent). Together, these six aggregate sectors account for two-thirds of national industrial pollution control costs. 4-83------- in 00 Js Own ie O xz o « *- o o t-0 01 r-— n*CT c we IA 41 •ft. « E « c »> — a. t> o — o — — •> O> C. A 10 3 *• « C IX 3 in *-• oo CT-^ O a — ai ui — — tn • m s - — > (U M C aO*-1 >ofl u c c. at 01 <|II/)I034) 3 o a « E s 3 — > in «-• o»a— D o o c o — c.a>o- ------- To illustrate the components of the cost estimates for each industry, two aggregate industrial sectors (Paper and Printing, and Ferrous Metals) may be examined in greater detail. Table 6 shows the cost sectors involved in each of these aggregate sectors and their associated air pollution abatement expenditures. Note that Kraft Pulping contributes more than 85 percent of the air pollution control expenditures for the aggregate Paper and Printing sector. Similarly, the manufacture of iron and steel mill products comprise the bulk of the Ferrous Metals expenditures for air pollution control. Table 6. Air Pollution Abatement Expenditure Detail for Paper and Ferrous Metals % of Total Annual Air Expenditures (1976-85) Pulp, Paper, Printing 6 Lumber 10.7 Kraft Pulp 9.3 NSSC Pulp 1.2 Printing 0.2 Lumber 0.0 Ferrous Metals 10.7 Iron and steel 7.2 Iron Foundries 2.3 Steel Foundries 0.6 Ferroal1oys 0.7 Kraft Pulping expenditures for air pollution control are calculated using 11 industrial process segments while the expenditures for iron and Steel manufacture are calculated using 22 industrial process segments. The 11 segments for Kraft Pulping and their contribution to the Kraft Pulping total are shown in Table 7. *-85------- Table 7. Air Pollution Cost Detail by Segment for Kraft Pulping % of Total Annual Air Expenditures Paper Kraft Pulping Lime Kiln Smelting Tank Gas Incineration in Recovery Furnace Gas Incineration in Lime Kiln Boiler—Suspended Particulates Boiler—Sulfur Oxides Recovery Furnace Scrubber Black Liquor Oxidation Replacement Electrostatic Precipitator Industrial Fuel Combustion 9,3 0.10 0-08 0.10 0.10 0.28 3.53 0.03 0.28 1.03 0.57 3.20 Industry Investment The difficulties that a given industry faces in making pollution control expenditures are dependent upon many factors. Two of these factors are the size of the pollution control expenditures as a percentage of total output by the industry and the pollution control investment required as a percentage of the total expected investment by that industry. Data for 31 aggregate industries concerning each of these factors are shown in Tables 8 and 9. Table 10 summarizes this data for air, water* and total pollution control expenditures and investments for the 31 aggregate industries and also ranks the industries based on each percentage. 1-86------- Table 8. Relative Impacts of Required In-House Pollution Abatement Expenditures, 1976-1985 (Million 1975*) Air Water Air & Water Category Agriculture Mining Natural Gas Processing Meat & Poultry Da i r y Canned 8 Frozen Food Grain Milling & Feed Mills Beet S Cane Sugar Textsles Lumber S Wood Products Furni ture Pulp & Paper Builder's Paper Print ing Chemicals PertiIizers Plastics & Synthetics Petroleum & Asphalt Pai nts Rubber Products Leather Tanning Glass Asbestos. Clay, Lime, & Concrete Iron & Steel Nonferrous Metals Fabricated Metals & Electroplating Machinery Transportation Equipment Electr ic Ut i 1 i ties ... Wholesale & Retai1 Services Other Industries Totals Output Total X of Cost Output 1.260.713 ,-225.684 1 . 1 . 4. 5. 243.857 491 .305 189.350 226. 182 195,772 50.796 650.571 178.630 213.699 367,951 138.245 445.666 505.520 52.841 223.432 629.999 58,891 164.603 14.719 1 10.432 274,559 540.843 405.332 999,503 258, 102 763.120 792.675 721 .246 728.522 N.A 3. i . 9. 5 , 6, 5. 1 1 . 9. 1 . 24. 3. 24. 0 165 423 0 0 0 629 0 316 0 849 904 0 11 : 275 512 501 280 119 0 0 0 974 885. 784 0 148 471 538 317 305 237 0 0.07 0.17 0 0 1. 0. 0. 2. 0. 1 . 0. 0. 1 . 0. 2, 2. 2. 0. 0. 3. 0. 0. N 0 85 0 05 0 86 69 0 02 04 97 22 00 26 0 0 0 17 20 42 0 09 03 10 07 01 .A Total Cost 291 0 0 1,059 1.338 3.633 47 121 641 425 0 7.276 184 0 16.386 372 2,974 2.446 0 246 525 212 290 7,481 1 .506 32,451 21 ,710 11 .634 7.455 0 0 0 X of Output 0.02 0 0 0.22 0.71 1 .61 0. 0. 0. 0. 1 . 0. 3. 0. 1 . 0. 0. 3. 0. 0. 1 . 0. 3. 1 . 0. 0. N 02 24 10 24 0 98 13 0 24 70 33 39 0 13 57 19 11 38 37 26 73 67 94 0 0 .A Total Cost 291 165 423 1 .059 1 ,338 3,638 3.675 1 . 17. 21 . 3. a. 6, 19. 11 , 32. 22. 12. 31 . 3. 24. 121 957 425 849 181 184 11 1 661 884 476 725 1 1 9 246 525 212 264 366 290 «51 858 105 992 31 7 305 237 X Of Output o.oa 0.07 0.17 0.22 0.71 1 .61 1 .88 0.24 0.15 0.24 0.86 4.67 0.13 0 02 V m Was 4.29 1 .67 1 .56 1 .38 0.23 0. 13 3.57 0.19 2.28 3.58 2.79 3.26 1 .82 0.70 4.04 0 .07 0.01 N.A N.A 110.743 N.A 120,708 N.A 231.450 N.A «-87------- Table 9. Relative Impacts of Required In-House Pollution Abatement Investment, 1976-1985 (Million 1975 «) Category Agriculture Mi ning Natural Gas Processing Meat & Poultry Dai ry Canned & Frozen Food Grain Mi ) 1 ing & Feed Mil Is Beet & Cane Sugar Textiles Lumber & Wood Products Furni ture Pulp & Paper Builder's Paper Printing Chemicals Pert i1izers Plastics £ Synthetics Petroleum & Asphalt Paints Rubber Products Leather Tanning Glass Asbestos. Clay, Lime. S Concrete Iron & Steel Nonferrous Metals Fabricated Metals & Electroplating Machi nery Transportati on Equipment Electric Uti Hties Wholesale & Retai\ Services Other Industries Totals Total Investment 75,569 33,392 21 ,736 6.998 5,558 11,236 6.642 4,017 29.289 17.624 6.634 49,672 7,337 25,072 66,566 5.373 20,696 34,207 2,235 16,210 409 8.484 18,513 56.016 28,061 54,550 61,358 101 .169 127,174 229,612 201 ,538 N.A Air Abatement Investment X 0 134 51 0 0 0 1.021 0 88 0 90 2.030 0 ' 22 1.096 •98 140 1.121 12 0 0 0 628 2.019 1.157 - o- 118 131 7.906 1 .207 80 4.411 0 0.40 0.24 0 0 0 15.37 0 0.30 0 1 .36 4.09 0 0.09 1.65 1 .82 0.68 3.23 0.53 0 0 0 3.39 3.60 4.12 0 0.19 0.13 6.22 0.53 0.04 N.A Water Abatement Investment 112 0 0 492 516 1 ,740 13 31 378 71 0 5,024 123 0 5,404 243 1,560 1,670 0 130 280 102 91 2,321 224 8.298 7,317 3,451 5,376 0 0 0 % 0.15 0 0 7.04 9.28 15.48 0.19 2.91 1.29 0.40 0 10.12 1.68 0 8.12 4.52 7.54 4.88 0 0.80 68.43 1 .21 0.49 4.14 0.80 15.21 11.93 3.41 4.23 0 0 N.A Total Air & Water Investment 112 134 51 492 516 1,740 t,033 31 467 71 90 7,055 123 22 6,501 340 1.699 2,791 12 130 263 102 719 4,340 1 ,381 8,298 7,436 3,583 13,282 1 .207 60 4,411 N.A 23.560 N.A 44,967 68,529 0.15 0.40 0.24 7.04 9.28 15.48 15.56 2.91 1.59 0.40 1 .36 14.20 1 .68 0.09 9.77 6.34 8.21 8.16 0.53 » 0.80 68.43 1 .21 3.38 7.75 4.92 15.21 12.12 3.54 tO.44 0.53 0.04 N.A N.A 4-88 U-88------- Table 10. Hanking of Impacted Sectors by Total Abatement Expenditures as Percentages of Total output and by Abatement Investment as Percentages of other Planned Investment (1976-1985)* Investment Output Air Sank 4 9 2 5 •* - 3 6 1 17 8 - 1 1 7 10 - 18 12 - - • — _ 16 15 - - 13 14 19 — 20 X 4.09 "\ .65 6.22 3.60 — • - 4.12 3.39 15.37 0.19 1 .82 - 0.68 3.28 1 .36 - 0.13 0.53 - - - — 0.24 0.30 - - 0.53 0.40 0.09 — 0.04 Water Rank 5 7 12 13 1 3 19 21 23 4 ' 11 2 8 10 - 6 14 - 15 22 9 18 - 17 16 20 - •- - 24 - % 10.12 8.12 4.23 4.14 68.43 15.21 0.80 0.49 0.19 1 1 .93 4.52 15.48 7.54 4.88 - 9.28 3.41 - 2.91 0.40 7.04 1 .21 - 1.29 1 .68 0.80 - - - 0.15 - Both Rank 5 8 7 12 1 4 16 15 2 6 14 3 10 1 1 21 9 17 24 18 26 13 22 28 20 19 23 25 27 30 29 31 X 14.20 9.77 10.44 7.75 68.43 15.21 4.92 5.86 15.56 12.12 6.34 15.48 8.21 8.16 1.36 9.28 3.54 0.53 2.91 0.40 7.04 1 .21 0.24 1.59 1 .68 0.80 0.53 0.40 0.09 0.15 0.04 Air Rank 2 7 1 4 - _ 3 5. 6 14 9 - 12 8 10 - 18 11 _ .. - • - 13 17 - - 15 .16 19, — 20 X 2.69 1 .04 3.10 2.24 — _ 2.42 2.17 1.85 0.09 0.97 - 0.22 1.00 0.86 _ 0.03 0.26 - - - — 0.17 0.05 - - 0.07 0.07 0.03c — 0.01 Water Rank 4 3 9 7 1 2 14 21 23 5 1 1 6 8 13 - 10 12 - 15 16 17 18 - 22 19 20 - - - 24 - X 1 .98 3.24 0.94 1 .38 3.58 3.25 0.37 0,11 0.02 1.73 0.70 1 .61 .1.33 0.39 - 0.70 0.66 - 0.24 0.24 0.22 0.19 - 0.10 0.13 0.13 - - - 0.02 - Both Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 X 4.67 4.29 4.04 3. 62 3.59 3.25 2.79 2.28 1 .83 1.82 1.67 1 .61 1.56 1.38 0.86 0.70 0.69 0.26 0.24 0.24 0.22 0. $9 0.17 0.15 0.13 0.13 0.07 0.07 0.03 0.02 0.01 Pulp & Paper Chemicals Electric UtiIities Iron & Steel Leather Tanning Fabricated Metals and Electroplating Nonferrous Metals Asbestos. Clay. Line, and Concrete Grain Milling & Feed Mills Machinery Pert'1'zers Canned 4 Frozen Food Plastics & Synthetics Petroleum & Asphalt Furni ture Dai ry Transportation Equipment Paints Beet & Cane Sugar Lumber & Wood Products • Meat & Poultry Class Natural Gas Processing Textiles Bui 1der's Paper Rubber Products Wholesale & Retai1 Mi ning Print ing Agriculture Services This table, while analogous to Table 4 of the Executive Summary, does not include the adjustments to industries where specific studies were undertaken at a later date. 4-89------- Of the 31 industrial sectors shown in Table 10, thirteen require abatement expenditures for both air and water. Industries with high air pollution control costs often have significant water pollution control costs as well. However, industries with high water pollution expenditure control costs are less likely to also have air control expenditures. Water pollution control investments dominate the air pollution equipment investments, similar to the total expenditure pollution control cost patterns discussed above. Of the 10 largest investors, four have water pollution control investments only, including three of the top four. In the remaining six industries, three others show pollution control investments heavily weighted towards water, two show about even splits between air and water, and one is heavily weighted towards air. Finally, of the top 10 industries for air pollution control investments, nine also must make water pollution control investments; however, only five of the top 10 industries for water pollution investment must also make air pollution control investments. Considering air expenditures, the Grain Milling and Peed Mills industry will have to make a 15.1 percent addition to total expected investment during the 1976-85 period if it is to adequately control air pollution. Other industries with large air pollution investment requirements of greater than 3 percent of other investment requirements are: Electric Utilities (6.2 percent), Nonferrous Metals (4.1 percent). Pulp and Paper 1.1 percent). Iron and Steel 3.6 percent). Asbestos, Clay, Lime, and Concrete (3.4 percent), and Petroleum and Asphalt (3.3 percent). The 'total annual air pollution control costs during the 1976-85 period as percentages of the total output value for each sector are much smaller than the above ratios. The highest sectors for these annual cost ratios are: Electric Utilities (3.1 percent); Pulp and Paper (2.7 percent); Nonferrous Metals (2.* percent); Asbestos, Clay, Lime, and Concrete (2.3 percent); Iron and Steel (2.2 percent); and Grain Milling and Feed Mills (1.9 percent). Because some sectors are more or less capital-intensive than others in their air pollution abatement costs, this list is significantly different from the previous list. Similar percentages concerning water pollution abatement investment to those presented for air pollution control may be calculated. The comparison of water pollution control investment to other planned investment yields the following ranking for most heavily impacted industries: U-90------- Leather Tanning 68.43% Canned & Frozen Food 15.48% Fabricated Metals 6 Electroplating 15.21% Machinery 11.93% Pulp & Paper 10.12% Dairy 9.28% Chemicals 8.12% Plastics and Synthetics 7.54% Meat 6 Poultry 7.04% All other industries show percentages of less than 5 percent for this statistic. The ratio of total industrial plant expenditures for water pollution control (not including payments to municipalities for water pollution control) to total output again are much smaller percentages than those for investment. The most highly impacted industries using this statistic are: Leather Tanning 3.58% Fabricated Metals & Electroplating 3.25% Chemicals 3.24% Pulp & Paper 1.98% Machinery 1.73% Canned & Frozen Food 1.61% All other industries show percentages of less than 1.5 percent. As for air pollution control, the relative capital-intensity of pollution control costs for various industries causes the ranking of industries in this list to shift from the order of the previous list. A final consideration in impact evaluation is the total impact of the combination of air and water pollution control costs. Altogether, nine aggregate industries will require an investment level for pollution control over the decade that is more than 9 percent of other planned investment in each industry: 4-91------- Leather Tanning 68.43% Grain Milling & Feed Mills 15.56% Canned & Frozen Food 15.48% Fabricated Metals & Electroplating 15.21% Pulp & Paper 14.20% Machinery 12.12% Electric Utilities 10.44% Chemicals 9.77% Dairy 9.28% Leather Tanning is by far the most impacted industry according to this statistic, with pollution control investments equal to slightly more than two-thirds of other planned investment over the decade. All industries have a total pollution control cost as a percentage of sector output that is less than 5.0 percent. The most heavily impacted are: Pulp 6 Paper chemicals Electric Utilities Iron 6 Steel Leather Tanning Fabricated Metals & Electroplating Nonferrous Metals Asbestos, Clay, Lime, 6 Concrete 4.67% 4.29% 4.04% ,62% ,58% 3. 3, 3.25% 2.79% 2.42% The other industries are impacted at less than 2 percent of their total decade output. 4-92------- Chapter 5 Estimating Pollution control Costs COMPARISON OF SEAS INVESTMENT ESTIMATES FOR AIR POLLUTION CONTROL WITH ESTIMATES OF BEA The year-by-year estimates of air pollution control investment presented in Chapter 4, which are necessary to equip over half of the existing plants with required pollution control devices by the beginning of 1976 and to equip all existing plants with such devices by the end of 1978, appear to be optimistic when compared with the Bureau of Economic Analysis (BEA) estimastes of actual air pollution investment expenditures in 1973 and 1971 and of planned expenditures for 1975. Table 1 compares common estimates for both studies, showing BEA estimates of actual air pollution investments as a percentage of the SEAS forecast of investments for the three years. Table 1. Comparison of SEAS Forecast Investments and BEA Estimates of Actual Air Pollution investment Expenditures for 1973, 1974, and 1975 (BEA estimates as a percent of SEAS Forecasts) All Industries Electric Utilities Ferrous Metals Nonferrous Metals Stone, Clay, Glass Food Paper Chemicals Petroleum 1973 105% 182% 24% 129% 43% 32% 45% 155% 184% 1974 69% 139% 16% 49% 47% 17% 49% 105% 142% 1975 38% 123% 19% 46% 32% 17% 60% 106% 369% 1973-1975 57% 141% 19% 63% 39% 20% 52% 118% 144% In analyzing Table 1, note that according to SEAS forecasts of investments, industries in aggregate were spending about the right amount in 1973 (as estimated by BEA). Ferrous Metals; Food; Stone, Clay, and Glass; and Paper, however, were well behind schedule even at this point. By 1974, the total for all industries had slipped behind the pace estimated by SEAS as required to meet the pollution 4-93------- standards. Possibly as an aftermath of the economic recession, attempts to fight Federal regulations in the courts, or other factors, industries as a whole had dropped to less than 70 percent of the expenditure level needed in 1974. Ferrous Metals and Food dropped even further behind their respective schedules than they were in 1973. By 1975, the expenditures planned by industries had dropped to only slightly above a third of the amount needed to meet the expenditure schedule of the Reference Abatement Scenario. However, three industries (Electric Utilities, Chemicals, and Petroleum) planned to install more equipment than the SEAS investment schedule estimated as being needed. For example. Petroleum planned to spend at a level three and a half times greater than estimates indicated would be needed by 1975 to meet the compliance schedules discussed in Appendix B. A fourth sector. Paper, does not achieve the required investment pace during 1973 through 1975, but it does improve its percentage over time. In contrast to these industries, the other four industries in Table 1 exhibit declining investment schedule percentages over the full time period and are at less than 50 percent of required investment by 1974. These industries are Ferrous Metals; Nonferrous Metals; Stone, Clay, and Glass; and Food. ESTIMATING SIGNIFICANT ENVIRONMENTAL CONTROL COSTS Four types of environmental control costs are estimated by SEAS. These types, along with the receiving medium associated with each, are: • Industrial (air and water) • Mobile sources (air) • Municipal (water) • Government (air and water) The techniques used to develop cost estimates for each.of these types are presented in the following discussion.------- Estimating Air and Water Costs for Industrial sources All of the industrial control costs estimated by SEAS (except for Electric Utilities) are endogenously determined. These industrial costs are calculated using characteristics of existing plants and estimated characteristics of new plants to be built in response to overall economic activity forecast by the SEAS economic projections. Therefore, if one scenario has a 10 percent higher GNP than another by 1985, it will consequently forecast more new plants and higher pollution abatement costs. This factor explains a great deal of the differences between the Reference Abatement Scenario costs and previous estimates by EPA and other agencies. In addition, the composition of, as well as the amount of, GNP growth affects the industrial cost estimates. Further detail on the industrial cost estimation techniques is provided in Appendix D. Three additional types of environmental control costs besides industrial costs are important. These are the costs associated with mobile sources, municipal treatment, and governmental expenditures. These costs are determined outside the dynamics of the SEAS economic forecasting models, but are made consistent with the results of these models and, consequently, the industrial cost estimates. For example, the control costs associated with new automobiles!are very much dependent upon the forecast of new car sales. When national conditions change in such a way as to alter the baseline projection of new car sales from 1971 to 1985, the inputs to the mobile source control cost calculations are correspondingly adjusted. Estimating Air Costs for Mobile Sources Mobile source air pollution control costs are generated as a result of emission standards for light-duty vehicles (LDV) , heavy-duty vehicles (HDV), and aircraft, plus the impact of State Transportation Control Plans (TCP's). The Clean Air Act specifies national standards for mobile source emission levels for hydrocarbons, carbon monoxide, and nitrogen oxides. The costs to reach the national standards for emission levels by the target years contined in the Clean Air Act are estimated by a model that ages the present stock of vehicles, year by year. The model takes into account new vehicle sales, which are based upon the GNP and personal 4-95------- income figures provided by the scenarios discussed in the macroeconomic analyses, calculated mobile source control costs for the entire stock of vehicles are then fed back through the interindustry model. For example, the capital expenditures for automobile control devices are treated as additional expenditures for the Motor Vehicles and Parts sector while the operation and maintenance (O6M) expenditures are treated as additional expenditures for the Auto Repair sector. The total costs to achieve Federal mobile source emission standards during the 1976-85 period are estimated to be $129.3 billion. This is the largest single source of air pollution abatement costs. Concentrations of carbon monoxide and smog (caused by hydrocarbons and nitrogen oxides reacting in sunlight) are so high in several metropolitan areas that even the stringent stationary source controls and the Federal mobile source emission standards do not reduce emissions sufficiently to meet Federal ambient air quality standards. These areas have developed Transportation Control Plans (TCP*s) that involve combinations of additional mobile source controls (more retrofit devices for existing vehicles, strong inspection and maintenance measures, and vapor control systems for gas stations). The TCP costs (not adjusted to reflect savings from improved fuel economy) are estimated to be SO.7 billion over the 1976-85 period. Most of these costs are for inspection and maintenance of automobiles to insure that their pollution control devices are operating at the proper effectiveness. These are expenditures made primarily by automobile owners. However, increased engine maintenance results in significant fuel economy, which is a direct economic benefit to automobile owners. In offsetting the increased maintenance costs with these fuel savings, only a small net total cost of $0.1 billion is left for TCP's over the 1976-85 period. (Refer to Section 2, Transportation Control Plans, for further detail.) i Estimating Water Costs for Municipal Treatment: Municipal water pollution control expenditures comprise the largest single category of water pollution control expenditures. Municipal expenditures are divided into six types: 4-96------- • Construction of sewage treatment plants to provide secondary treatment • Construction of sewage treatment plants to provide tertiary treatment more stringent than secondary treatment (removal of phosphorus, ammonia, nitrates, and organic pollutants) • Rehabilitation of old sewers • Construction of new sewers i • Correction of overflow from combined storm and sanitary sewers • Provision for stormwater treatment Federal funds spent for municipal treatment are based upon past levels of expenditures and the present funding authority of $18 billion for municipal construction grants to states. State-local matching capital expenditures are expected to be a third of the Federal construction grant (i.e.. Federal funds will comprise about 75 percent of construction expenditures). Annualized capital expenditures are estimated to be $H6.0 billion over the 1976-85 period. O&M expenditures to be made by state and local governments are estimated to be $16,0 billion over the same period. Estimating Air and Water Abatement costs to Government Estimates of governmental expenditures for air pollution were made by using Office of Management and Budget (OMB) estimates of Federal expenditures and by calculating state and local expenditures through extrapolation of data for 15 sample states for which estimates of the costs of the State Implementation Plans were available. The governmental water control costs exclude Federal and state and local government expenditures for municipal treatment (covered elsewhere under the Municipal Expenditures title), but they do include expenditures for: • Monitori ng • Technical assistance • Grant assistance U-97------- • Research * Abatement at government-owned facilities. The total governmental expenditure for pollution control is estimated to be over $12 billion during the next decade. The expenditure for any year is never as high to one percent of the total estimated annual non-defense governmental expenditure, during the 1976-85 period. ESTIMATING POLLUTION CONTROL COST IMPACTS Previous estimates of the cost of air and water pollution control by EPA have been presented in separate reports. The Cost of Clean Air and The Economics of Clean Water. In these reports, costs were computed separately on an industry-by-industry basis for air and water and then summed to arrive at a total pollution control cost for air and water, respectively. The two reports, however, often differed in such assumptions as the growth in industrial capacity which would be subject to controls and the rate of interest. In addition, no estimates were developed in either report on the combined impact of air and water pollution control expenditures on the economy in terms of increased construction, equipment purchases, operating materials, energy demand, and employment. For this report, a consistent set of assumptions was developed and entered into SEAS for the computation of both air and water pollution control costs. Impacts were then estimated through the feedback of abatement-related purchases to the sectors that produce and sell those goods in the national economic forecasting model of SEAS. These feedbacks include direct impacts on the demand for abatement equipment and materials from supplying industries, as well as on abatement-related employment for operation and maintenance activities in the industries making the expenditures. Additional feedbacks were used to estimate the indirect effects of abatement costs on the capital required to finance construction and equipment purchases and on the amount of energy consumed. The estimated direct and indirect impacts resulting from these feedbacks are presented below. 4-98------- Capital and OSM Impacts Each air pollution device and each water pollution control technology has a capital and an O&M cost associated with it which can be treated as purchases of goods and services from selected sectors of the economy. For example, the three principal air pollution control devices for industrial sources - electrostatic precipitators (ESP), scrubbers, and fabric filters (baghouses) - have the capital and O&M feedback expenditure pattern shown in Table 2. The table shows that for every $100 of capital expenditure for precipitators, $48.90 goes to the New Construction sector, $19.00 goes to the Other Fabricated Metal Products sector, $10.00 goes to the Industrial Controls sector, $8.00 going to the Cement, Concrete, Gypsum sector, and so on down to $0.10 goes to the Paints Sector and to the Other Stone and Clay Products sector. Similarly, for every $100 in non- labor O&M spent on precipitators, $56.70 goes for maintenance, $42.80 goes for electricity and $.50 goes for paint materials. When the full set of feedback matrices shown in Table 2 are examined, one can get an a priori indication of which industries will be impacted positively (via increased sales) as a result of the pollution control expenditures. It appears that New and Maintenance Construction, as well as Electric Utilities, will experience significant positive impacts as a- result of investment and O&M expenditures for air pollution control. 4-99------- Table 2. Feedback Relationships for Three Common Air Pollution Control Technologies Precipi tators Wet Scrubbers MI tens Sectors New Construction Maintenance Construction Industrial Chemicals Cellolosic Fibers Noncellulosic Fibers Paints Structural Clay Products Cement, Concrete. Gypsum Other Stone & Clay ProdfAsbestos) Aluminum Plumbing & Heating Equip Structural Metal Products Pipes. Valves, Fittings Other Fabricated Metal Prod Material Handling Machinery Pumps. Compressors, Blowers Motors and Generators Industrial Controls Elec Lighting and Wiring Equip Electric UtiIities Water and Sewer Services Capital 48.9 0.1 8.0 0.1 0.5 2.9 4.7 1.0 19.0 1.5 1.8 0.5 10.0 1.0 Non-Labor :- 0<5M 56.7 0.5 42.6 Capital 52.0 0.1 t.o 1.7 0.1 6.7 3.1 3.5 12.6 3.0 6.7 1.6 4.0 4.9 Non-Labor O&M 28.7 0.1 0.5 Non- Labor Capita) 49.4 1.5 3.5 0.1 1.2 7.3 0.1 0.3 0.7 4.8 1.3 19.2 1.2 3.5 0.9 . 4.0 1.0 O&M 61.5 2.0 4.0 0.5 41.5 29.2 32.0 4-1 00------- To examine the feedback impacts on the key sectors listed in Table 2, the output of those sectors for several years is compared for the Reference Case scenarios with abatement and without abatement. As Table 3 shows, capital feedbacks affect industries most heavily prior to 1985, whereas the 06M feedbacks are strongest in 1980 and 1985 when most plants will be in compliance with air and water regulations. Table 3. Percent Increase in Output with Addition of Abatement to the Reference Case Sectors 1975 1980 1985 New Construction 14.94 6.15 1.21 Maintenance Construction 3.02 3.06 2.92 Cement, Concrete, Gypsum 12.78 3.41 0.76 Plumbing 5 Heating Equip 11.46 0.59 0.72 Structural Metal Products 8.01 2.94 0.91 Pipes, Valves, Fittings 21.41 16.94 2.45 Other Fabricated Metal 22.64 2.67 0.79 Pumps,compressors,Blowers 7.33 0.71 -0.11 Industrial Controls 22.34 1.13 0.40 Electric Utilities 3.17 3.80 3.20 Water and Sewer Services 2.25 3.57 2.98 These estimates should be viewed as projections of what would have to happen if the assumptions about the timing of pollution control expenditures specified in Appendix B are accepted. Specific sectors of the economic system may not actually be able to absorb the amount and timing of pollution investment shown to be necessary to meet the compliance schedules with the control procedures discussed in Sections Two and Three. Employment Impacts By the year 1985, the level of employment required for pollution control activities of the nation's industries and municipal waste treatment facilities is estimated at 445 thousand employees. The breakdown by pollution control category is as follows: 4-101------- Total Direct Pollution Control Employment (1985) Air Pollution control Water Pollution Control Municipal Industrial Machinery, Equipment, & Fabricated Metals Organic Chemicals Electropla ti ng Other Thousands of Workers 445.2 19.5 425.7 59.2 366.5 220.1 30.0 20.5 95.9 To provide an insight to the buildup of employment being used for operation and maintenance of pollution control equipment, the OSM employment levels for selected years are listed below: Total O&M Employment Industrial Air Pollution Control Thousands of Workers 1977 1980 1983 1985 16.5 21.0 20.3 19.5 Industrial water Pollution Control 150.3 211.1 237.9 366.5 Municipal Water Pollution Control 27.6 52.1 57.2 59.2 TOTALS 194.4 284.2 315.4 445.2 These levels of employment are calculated based on a detailed methodology for each specific industry and associated pollution control technologies that are operating in that year. For each technology, data concerning the amount of each O6M dollar spent includes the fraction spent for direct labor and the mean annual gross salary required, permitting determination of employment levels. Other effects on employment levels exist due to pollution control actions besides the direct effects noted above. These include employment generated by purchases related to pollution control construction, equipment and materials, plus general impacts of the induced change in final demand and industry demand mix on the GNP and industrial outputs. For example, it was noted earlier that the introduction of 4-102------- pollution control equipment in the Reference Case caused outputs of some sectors (e.g.. Machinery) to increase while dampening the outputs of others. To assess the combined direct and indirect impacts of pollution control on employment, changes in employment must be compared to those for direct pollution control employment. Total employment at the national level in 1985 is about 215,900 persons greater for abatement than without abatement, but 445,200 workers of the total with abatement are engaged in operating and maintaining pollution control equipment. Therefore, about 199,200 fewer workers in 1985 are producing output that contributes to GNP based on present definitions. This occurs because the 445,200 workers who are working toward "producing a cleaner environment" are not counted as "producing goods and services" as conventionally defined in national economic accounts. To compare direct and indirect employment impacts of pollution control over time. Table 4 below provides a listing of the change in employment between the Reference Scenario (S1) and the Reference Abatement (S2) Scenario for selected years. Table ». Employment Changes Resulting from Pollution Controls (Thousands of Workers)* Year Total Employment S1 S2 1977 1980 1983 1985 90,266.4 96,752.0 100,893.5 103,113.2 91,892.2 97,199.5 101,328.7 103,359.1 Difference S2-S1 1,625.8 447.5 435.2 245.1 Total O&M Pollution Cntrl Employment 194.4 284.2 315.4 445.2 »S1 = Reference Scenario; S2 = Reference Abatement Scenario. This table can be interpreted as follows: The difference between the two scenarios reflects the change in total employment due to the impact of pollution control on the general economy. A comparison of these figures with those 4-103------- shown in the last column indicates that the employment gains directly associated with pollution control dominate or exceed the more indirect employment effects in the later years. However, pollution control capital expenditures stimulating indirect employment are the primary factor causing increased total employment up to 1980. Energy Impacts The direct and indirect impacts of the air and water pollution controls on energy use can be determined by comparing the national energy consumption (in Btu's) in 1985 in the Reference Abatement Scenario (when controls are in place) with the energy consumption in 1985 for the Reference Scenario (with approximately the same 1985 GNP but no incremental abatement controls past 1971). This comparison, presented by consumer class in Table 5, reveals that total consumption increased by 4.13 percent with increased abatement controls. Almost half of this increase comes in the use of energy by electric utilities, which shows a net increase of 5.40 percent. Among industrial energy users in 1985, Industrial Chemicals accounted for the largest portion of the net increase of 3.57 percent. Other large increases in energy use were registered by Steel, Aluminum, and Petroleum, Several industries increased their electricity consumption dramatically when pollution abatement was adopted by all industries. For example. Chemicals increased its electricity consumption by 89 perent, Phosphate Fertilizer by 71 percent. Aluminum by 31 percent. Steel by 19 percent, and Plastics by 19 percent. -104------- Table 5 Increase in Energy Consumption with Addition of Abatement to the Reference Case Consumer 1985 Energy Use* Percent. Change Class (Trillions of Btu's) (S2-S1)/S1 x 100 S1 S2 Industrial 26,058.8 26,989.9 3.57 Transportation 24,635.8 25,669.6 4.20 Commercial 7,125.1 7,411.6 -0.19 Residential 9,779.5 10,108.3 3.36 Electric Utilities 41,110.2 43,328.7 5.40 TOTALS 109,009.3 113,507.4 4.13 »S1 = Reference Scenario; S2 - Reference Abatement Scenario. Ranking of sectors by Degree of Economic Change A final measure of pollution control cost impacts is the relative effects among economic sectors. Economic data used to assess these impacts include outputs, construction expenditures, capital investments, and personal consumption expenditures. Changes in these data for various sectors in going from the Reference Scenario to the Reference Abatement Scenario are given in Table 6 for the forecast years of 1977, 1980, 1983, and 1985. In Table 6 (A), the 10 industries with the greatest percentage increase in output when comparing the Reference Abatement Scenario to the Reference Scenario are given. The different impacts of capital investment and OSM purchases for pollution control during the four years can be noted in the rankings and the percentage changes. For example, the timing requirements for capital expenditures for pollution control equipment are evidenced by the New construction sector being stimulated by 13.0 percent in 1977 and then dropping to 6.2 percent in 1980, 3.3 percent in 1983, and 1.2 percent in 1985. A contrasting pattern is provided by a major OGM materials supplier. Industrial Chemicals. This 4-105------- sector is ranked eighth in 1977 (9.9 percent) but rises to third in 1980 (9.5 percent), second in 1983 (9.4 percent), and first in 1985 (10.2 percent). Sectors associated with the extraction of energy ores and sales of energy show trends similar to Industrial Chemicals. Similarly, the peaking and dropoff in ranking of equipment fabrication sectors is consistent with the New Construction sector pattern. For example, note the values and ranks for Pipes, Valves and Fittings, Special Industrial Machinery, and Electric Lighting and Wiring Equipment. The converse of positive output impacts are provided in Table 6 (B), which shows the six industries suffering the greatest percentage decrease in outputs for each year. The general categories impacted are mass transit equipment, minor transportation equipment, and personal clothing items. The level of impact for these sectors is much less than the level of impact for stimulated industries. During the late 1970's, the greatest negative impact is only one-third of the tenth greatest positive impact. For 1983, the level of negative impacts for the six industries is much higher than the level found in 1977 and 1980; yet even then the largest negatively impacted industry is impacted slightly less than the tenth largest positively impacted industry. Turning to pollution control cost impacts on construction. Table 6(C) provides a ranking of the construction industries that are most stimulated or depressed for the four years. The sector of Water Systems Construction is high-ranked throughout the period. The increased demand for energy to meet pollution control standards is reflected in the increasing demand for Gas Utilities and Pipeline Construction and Electric Utility Construction through 1985. The early combined demand for air pollution and water BPT pollution controls cause Industrial Construction to be ranked third in 1977. However, later output decreases for some industries cause industrial Construction to show minor declines from 1980 on. In addition. Telephone Construction is somewhat depressed in 1980 and 1983. To examine the positive stimulus on capital equipment investment, Table 6 (D) shows those industries with greatest percentage increases for capital investment. The highest- ranked industries for each year are usually industries that would provide equipment and/or maintenance products for pollution control. Therefore, for each of the four years, equipment industries appear in the top four: Motor Vehicles and Parts, and Hardware & Platings. 1-106------- Finally, Tables 6(E) and 6(F) provide the major impacted sectors in terms of percentage change in personal consumption expenditures (PCE). Table 6(E) lists all sectors having an increase of greater than 1 percent for the four years. For all four years, only four sectors achieve this level: Trucking Services, Natural Gas Sales, Auto Repairs, and Petroleum Refining. Table 6(F), on the other hand, shows the five greatest negatively impacted sectors for PCE»s, given that the sector has an annual PCE value of over 100 million dollars. Three sectors occur in all four years: Buses and Local Transit Services, Pottery, and Cycles and Minor Transporation Equipment. Other products represented in this negatively impacted group are other transportation services and, in the 1980»s, clothing products. Thus, the negatively impacted sectors for total output (Part B of Table 6) and for PCE are generally consistent. 4-107------- ic Variables scenario K Econoi erence f* 1LJ •H dl pt» 0>*O c e § « So •rl • 4J M g^Q C H S S X) « W n) ft £j ^j JJ C 10 (P fl} £ jj S *P* W ItJ 4^ g * •I "Ts ^? 1% ^M Ai S Q •ti 13 5 4) W "c * (1) O pj ||. r\ H4 *^ to 4) 10t* (9 t •* in CD 01 CO cn o CO cn r- cn Industrial 11.0 Chemicals 10.2 » , Valves ngs 10 •- -•» n— 0. U. o> CO ^ in 0) ^_ (0 > in - c in *^ Ol 4J -.- .«• a u. « o> ^ in 0> « > » a> . c . o o Complete Guided 5.7 Missiles 4.4 * c. 41 U. <0 o a *" C § c J£ Of U S ID in c. rr-a *» a. u. Crude Petroleum 9.4 Natural Gas 8.0 "io in *• U m — 3 E TJ 01 • C C. - W ^ « t_ 4-1 M 3 TJ c C- _ Ol 10 C u r 01 O a a PI IA *• ,«. a c. 44 HI 3 TJ C ^ *~~ Ol IX) C O -C 0) O a. 1- c. *« 10 PI r- E 3 O O W C. 10 01 a. — a 01 C- TJ 3 c. 10 u z U) Ol r— 10 ID £s (A •«- 3 E c i: «1 O ^ CO *• 1 , ^, 10 u « c in 3 4> 4-> O U 3 3 t> C. O *-• C L. Io c U £ 01 U a « M S m CD g * ,— O W C ID 01 a. — fl .41 (- TJ 3 3 «-• c a u z o PJ •- c o 4J U 3 C in c o o f a> z Chemical Pert 4 ' 6.6 Mining 6.3 L «S Q. 01 Q: O ^ < . Cl ID C O 4«* U L. u Ol C -1 t- • 3 u — c ui a o> o> « f~ c. o "io *— e. in •i TJ C d Petroleum 4.6 Refining 4.1 01 TJ O 41 VI a> — ^~ t. 0) a 41 Ol OJ 4* c u Ol a. 4^ at a 01 o • OJ co M U O _J T> 01c •^ **• -1 L . J O 01 T) ~ C va a Misc. Chemical 4.2 Products 4.0 «__ u x: in u *- u • 3 U TJ in o " C* S a. - in in 0) c ^^ o a CL cn r» TJ o 0 3 TJ 10 c a c ruction, ield Mac ^J tt. IA C — O •- u o (O CJ 1 c > c « SE *™ • 0 C (0 0 S *• TJ 0 — 3 41 t. •»- <•> U. in c *™ o — u a o »- 1 in C 10 t. t- c. O c 5 *-• C - Q| in e 51 Q. ,_. ..~ O 3 > CJ CJ UJ n o • c c — o c n t — 4- U. 00 n l "is TJ 10 *• 4A tA « C in a 3 C. COI- in n ' ^_ u o TJ C 10 4J v> ne Tools Forming — ^ O 4J ID a ES to n l c E a 3 O" id TJ O L ^~ '•- 10 (E CO o 1 *— 41 t- ------- 0 *• T o 4» w ! 2 •*4 4i e o o • to V 2 (0 ^ ariables > o E 8 w e •H 0> 9 o 4J § 2 *> S w 41 ? 2 (9 £ «d « .* o •d 8 CO 411 w. ferenc « « •o « o 1*4 U « S to «J e i 3 rerence Aba •o § c •rl . * 4-* I ** *> 0 fij *> § *m •S 0) to « O 1 & C7> 2 :est Percen « O t . o5 g5 » o e - 3 ® •- e- Z ff ~' 2? .£ .W S C in . £ S« ^? 2 O 44 O * o • II ^ £ n CD o> CM ^ ^ i I i c I . £ •- M t» t. E « 5 o5 g.? W til o *> ._ 3 S .5 *-S *5 »- 10 « CJ O C 10 * *• — — 01 M — £ * — C "« ° ** u • M » 4l >. t a S S U t- < •- •- 0> * » * ? ? • i i v> c us t. ^^ 0 _ c ti I s- M ' :! i is •— -^ id Ot > oa a » - > CT Q 4p —(0 tj ^ o s to O ft I U ij ** CO I c ^^J **1 en 0) ff m Q> tr 5 est Percen | I I +• *« to — n JT =g S S:5 •» in a ID (C - 3 O a 10 « n in - CM TJ C w u i a a| *^ V *-• ui —in > - 01 W) - C 44 — t- 3 — O 01 *• to a. 10 O — "3t o a. ID >- CO O> Ul P> / dater Systems iewer Systems Electric UtUitiea Ol d n 4^4 _ n ^w 4J 3 U C. «4 U 01 u w to T3 a at 0) 44 — 0) — 01 — c 4-» -— 01 +* a. tt> o M U 01 t. 3 01 — O D TJ — «i «•• e c (0(0 o I o I c u «-• 3 C c. a u. c. ra c. c. 01 «t 0) 3 C £ gi c o o n a Ol 01 M O » U ^ O (- in » I/I in «>• o HI s 01 4V in > i/> c 41 44 10 a n o> n c 0 tf> « 44 — a — 0) — c 4-* •- 0> vi a ------- 0> M 10 (D O • (M tn (0 IC, 10 10 4> y TJ 3t t «0 M — 4) IA TJ O 44 36 c 13 t. 44 c. TJ 4) CO n o« c c a o X SO. M u (JU. o c. i/t 01 c X u c. o c cam 10 E C3 a 3 o> « — CE — U Q i. O C. 3 44 4* 44 3 01 10 O o M IS u 3 41 10 cr Ol*" • c u C. H- 41 •- c c .- 91 c u uj- in n u> m o v •- (O o in in i in n o> CD 7 7 to o> G A •S2 •sa (C 0 «« u *r c c 0 g rd § o:o ^1 jj'Tj e c 19 0 0 C (J O 0 '-HO 0 W Table 6. Ireatest E Lbatement -S 0 n « [ncre !•» ercentage o CO Ol 3 t) 44 C Iff <0 C o>M c u 4> 44 C C .- 4) C U uj en in en 9 TJ- c a c 01 ** c JC o 3 (O 10 «*• IA Ol u 01 I/I ruck O) c 41 ec •a E a a 3 O 41 — cr — IQ O t- O C U 3. a* a. «- w O> U) O) c c. ac in CO (0 E O a. 3 (D ID — a — « O i- O C 3 CO oi Pe (N in Na IA c 41 u o m 111 3 m CT o ui to I c 41 41 C O c. o st CT I 41 a E -41 c. me a> o a 4> ^- .— 4- o a. o uj a a CD 7 CD 7 ? (0 (Q r« t~ CT) a 3 c t. 44 C Iff 10 10 C CL 0»" C U 4> C. u- t. Ol- IO 9) 44 i C C D - 01 c. Ov— 10 CO T uj in •a a c. in O 44 4J t to in c. a ^ c c •- o Iff 91 O 01 I/t o a c c. a: n « w E a a 3 o> «i — as — (o o <- O C. 3 m o 10 o c Ol a. 10 z in C 10 c 10 o o cr o uj in «3 ------- THE DYNAMIC NATURE OF TOTAL POLLUTION CONTROL EXPENDITURES Earlier in this analysis, the costs to control air and water pollution were stated in terms of dollars expended over a relatively short time period, 1976-1985. The amount and timing of expenditures during the next 10 years is important, but the impression should not be left that total expenditures decline radically after the first round of investments in pollution equipment. Figure 1 shows investment and total annual costs (annualized capital plus O6M) for air and water pollution control in the Reference Abatement Scenario. Although the year-by-year expenditures are assumptions, the general trends of the lines are reasonable estimates of expenditures, given the overall assumptions of the Reference Abatement Scenario. Table 7 shows the annual capital and OSM expenditures required of the industrial sector from 1972-1985. Note that in the case of air investment expenditures. Electric Utilities and other industrial sources demonstrate a peaking of capital expenditures during the 1973-78 period with very small annual increments to investment expenditures by 1985. The total annual costs for stationary sources also grow and then level off after 1980. No such leveling off is witnessed for water pollution total annual costs, but this might occur just a few years beyond 1985 since effluent regulations after 1983 may require lower increases in pollution costs after 1985.------- Year Table 7. Industrial Sector Annual Pollution Control Expenditures (Billions 1975 Dollars)* Air Annual. Capital OBM 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 0.5 1.3 2.5 3.6 4.0 4.7 5.5 5.9 6.1 6.3 6.5 6.5 6.6 6.7 0.4 1.0 1.8 2.8 3.5 4.1 4.6 5.0 5.2 5.3 5.3 5.3 5.3 5.3 Water Annual. Capital 06 M Total Annual. Capital OSM - - 0.7 1.6 2.1 3.0 3.6 4.4 5.4 6.3 7.2 7.9 8.0 8.2 - - 1.2 2.7 3.6 4.8 5.9 6.4 6.9 7.3 7.5 7.9 11.1 11.5 0.5 1.3 3.2 5.2 6.1 7.7 9. 1 10.3 11.5 12.6 13.6 14.4 14.7 14.9 0.4 1.0 3.0 5.5 7.1 8.9 10.4 11.4 12.1 12.6 12.9 13.2 16.4 16.8 1 Parts may not sum to total because of rounding. 4-112------- Figure 1. Annual Investments and Total Annual Costs for Air and Water Pollution Control, 1976-1985 s «• » . fctci roturm »r«. MUM. coin M (1 (I II 14 M TIM 4-113------- Considering O5M expenditures alone, these expenditures for industries are approximately $16.8 billion by 1985 for air and water pollution control combined (see Table 7). Water O&M expenditures make up the largest part of this total, 69 percent. The industrial sectors making the largest water pollution control OSM expenditures in 1985 are; O&M Expenses (Billion 1975$) Machinery and Equipment Chemicals , Fertilizers and Plastics Food Processing Ferrous Metals Pulp and Paper 6.45 1.83 0.77 0.68 0.61 Percent of Total Industrial Water OSM 55.9 15.8 6.7 5.9 5.3 A great part of these water pollution control OSM expenditures go for labor expenses. This is not true for air pollution control OSM expenditures however, as shown in Table 8. Table 8. 1985 O&M Expenditures and Direct Labor Requirements for Pollution Control by Industries Water Pollution Control Air Pollution control O&M (Billions 1975$) 11.5 5.3 Direct Labor (1,000's) 389 20 Employees/ Million $ 33.83 3.77 Based on these figures, the average water pollution control OSM expenditures in 1985 are stimulating direct employment of 33,830 jobs per billion dollars of water pollution control OSM expenditure. At the same time, the average air pollution control OSM expenditures are creating 3,770 jobs per billion dollars of air pollution control OSM expenditures. These figures give some idea of the potential H-11U------- employment impacts of 06M expenditures, which will continue beyond 1985. U-115-------------- Appendix A The SEAS System SEAS is a system of interdependent models and computer programs developed by EPA to assess the future economic and environmental consequences of Federal pollution control policies. Structurally, the system consists of a number of special-purpose models linked to the University of Maryland*s INFORUM, an interindustry input-output model of the economy. The INFORUM model develops economic forecasts through 1985 based on alternative sets of demographic and macroeconomic assumptions specified by the user. In turn, these forecasts form the basic economic inputs used by the other models in SEAS to develop their more specialized forecasts. A generalized overview of the SEAS system is presented in Figure A-1. As indicated by the dashed-lined box, two special-purpose SEAS models have been integrated into a common program with INFORUM: INSIDE, which provides greater detail on industrial sector output, and ABATE, which contains cost functions for abatement technologies. 'Together, these three models form the national economic forecasting program for the SEAS system.' This program is fed1 by two data bases: one contains economic and pollution abatement costs data; the other, data on commodity relative prices. A feedback: loop between the national economic program arid the PRICES model allows relative price adjustments to be reflected in the SEAS economic forecasts. The final output file, containing annual economic and abatement cost forecasts through 1985, provides input data for six other special-purpose. SEAS models: • RESGEN - Estimates the annual tonnage of pollutant residuals from various industrial sources. • PTRANS - Estimates the passenger transportation activity levels and residuals. • FTRANS - Estimates the freight transportation activity levels and residuals. • ENERGY - Develops forecasts of energy consumption by consumer class and fuel category. • STOCKS - Provides information on the price and availability of critical virgin stocks. • SOLRECYC - Estimates the annual tonnage of solid waste and recycled materials. A-1------- Summary output from these six models, as well as the national economic program, is then collected in a common file for the production of summary reports. A-2------- Figure A-1. Generalized Flowchart for the strategic Environmental Assessment System (SEASJ (As Applied for this Report) A-3 .------- A description of the major functions performed by each of the SEAS models shown in Figure A-1 is presented below. This discussion of SEAS models emphasizes the computation of abatement costs and their associated economic feedbacks as a subsystem of the overall model structure. THE INTERINDUSTRY ECONOMIC FORECASTING MODEL(INFORUM) The INFORUM model is a 185-sector input-output model which projects future economic activity using structural relationships between economic and demographic variables. These projections determine total demands for the outputs of 185 industrial sectors, and the model then allocates these demands to the specific markets, or buying sectors, to which these products are sold. Thus, the model differentiates between intermediate demands and final demands. Intermediate demands are generated by sales from one industry to other producing industries. Final demands consist of government expenditures, exports, imports (expressed as negative exports), purchases by consumers, changes in inventories, and savings and investment. These final demand components make up what is commonly referred to as the Gross National Product (GNP). Figure A-2 displays a flow diagram of the INFORUM model. The column of boxes on the far left of the diagram represent factors which are specified outside the model. The solution procedure used is as detailed below. A trial value of disposable income is coupled with a set of relative prices, allowing personal consumption expenditures to be calculated. These results, combined with the projections of households and interest rates, are used to determine expenditures for certain types of construction. Sales to construction investment by each industry are then determined by applying the C-matrix coefficients. In a similar manner, the sales by each industry to the government categories are determined by setting assumptions concerning government policy and defense planning into the G-matrix. Outputs of previous years and assumptions regarding the costs of capital are used to forecast investment in producer durable equipment and industry-related construction. Investment by industry is then determined by running these forecasts through the C- and B-matrices. This completes determination of total final demands.------- The A-matrix of coefficients serves to convert total final demands to total product outputs by individual industries. Net imports and inventory changes for each industry are computed simultaneously. Labor productivities are then derived from changes in output and capital investment. Employment is determined by dividing the product outputs by labor productivity. If this result, when subtracted from labor force projections, yields a level of unemployment inconsistent with the specified input to the model (i.e., less than 4 percent), the disposable income assumption is modified and calculations begin anew. Otherwise, the outputs generated by the model, coupled with the projections of factors outside the model, are applied to forecast the next year's economic activity. For most scenarios run for this report, official government forecasts of productivity and unemployment were used in place of those estimated by the INFORUM model and supplied by the University of Maryland. These higher productivity forecasts of the Bureau of Labor Statistics were entered into INFORUM exogenously. Personal disposable income was then adjusted as necessary in each scenario to calibrate unemployment to government forecasts. For these scenarios, INFORUM was thus used to compute the redistribution of intermediate sales among industrial sectors required to meet the government projections. A-5------- Figure A-2. Plow Diagram of the Inforum Model with Solution Procedure \* A-6------- THE SECTOR DISAGGREGATION MODEL (INSIDE) The INSIDE model performs two important functions: (1) it projects subindustry outputs at the level of detail required for environmental assessment; and (2) it forecasts changes in industrial growth due to technological substitution. INFORUM is an economic forecasting model which was not specifically designed to deal with environmental issues and detail. Hence, the different goods and services produced within any single INFORUM sector may have significantly different pollution or demand levels. Similarly, alternative processes may be available within a sector for producing the same material or product. Special equations, termed side equations, are introduced by the INSIDE model to enable SEAS to account for environmentally-important product and process technology details not available directly from INFORUM. These equations disaggregate the annual sector outputs in dollars from INFOROM into annual outputs in physical units at a more detailed subsector level. For example, there are several hundred major chemicals embedded within INFOROM Sector 55, which projects economic activity for all industrial chemicals. However, the manufacture of nitric acid generates the vast majority of nitrogen oxide emissions produced by this industry. About 80 percent of the nitric acid manufactured is sold to fertilizers and miscellaneous chemicals, whereas Sector 55 sells over 50 percent of its general output to plastics, non-cellulosic fibers, cleaning and toilet preparations, miscellaneous chemicals, and paints. As a result the growth rate of nitric acid alone does not parallel the aggregate growth of all industrial chemicals in Sector 55. Thus, relating nitrogen oxide residual generation to nitric acid demand in other sectors rather than to the aggregate growth of Sector 55 gives a more accurate projection of nitrogen oxide emissions and control costs. Technological substitutions in SEAS are treated in INSIDE by substitutions occurring among two to four alternative materials, processes, or products within a given industry. Examples of two-, three-, and four-way substitutions are presented below: A-7------- Table A-1. Example of Technological Substitutions in SEAS Type of Substitution 2-Way 3-Way 4-Way Commodity Chlorine Steel Non-Nuclear Electric Utilities Alternative Processes (1) (2) (1) (2) (3) (1) (2) (3) Mercury Cell Diaphragm Cell Electric Arc Basic Oxygen Open Hearth Coal Oil Gas Other The user specifies the substitution ratio for each material, product, or process as the fraction of a commodity produced by each alternative process. The rate of substitution based upon these initial fractions is also determined through user inputs. Thus, the INSIDE side equations can reflect the growth of the diaphragm cell manufacturing process for chlorine at the expense of the market share for the mercury cell process. THE ABATEMENT COST AND FEEDBACK MODEL (ABATE) The ABATE model estimates the investment costs and the operation and maintenance (OSM) costs associated with the control of air and water pollution for all significant polluting industries. It also provides feedback concerning the consequent increases in capital investments, employment requirements, consumption levels, and economic demands to INFORUM. The INFORUM model then uses this data to dynamically rebalance its forecasts of economic activity and produce revised estimates of such macrostatistics as GNP and unemployment, as well as relative shifts in interindustry demands and outputs. The input data required by the ABATE model was compiled through research into the technological control options and their associated costs to meet environmental standards. The data used in the model corresponds directly to the industry- A-8------- by-industry descriptions of abatement activity given in Sections Two and Three of this report. Some of the more important data inputs are discussed below: 1. All Categories Except Municipal Wastewater Treatment. The following data was developed for input to the ABATE model for all cost categories other than municipal wastewater treatment: a. An inventory of plants, including size distribution of the total capacity of the industry category for a base year, was developed using the best information available from one or more of the following sources: Researcher files Trade associations Professional societies Directories of plants Periodic publications Government research documents. b. Capital cost functions and O6M cost functions were specified for each standard (State Implementation Plans, Best Practicable Technology, Best Available Technology, and/or New Source Performance standards). These functions relate cost to the physical measure of plant capacity used in the plant inventory. For industry categories involved in water pollution abatement, cost functions were developed for both the full in-plant treatment and pretreatment options. c. For each industry category, capital and O&M costs were allocated as purchases from INFORUM sectors on the basis of the technology option (s) associated with the category. d. The average life of the abatement equipment and a nominal interest rate of 10 percent were specified for each industry category to enable the model to calculate annualized capital costs. e. Compliance years for each standard which applies to the industry category and also the year after which all new plant construction starts must meet New Source Performance Standards were specified. f. The number of years over which capital expenditures for each standard are expected to be spread and the fractions of expenditures for each of these years were specified. A-9------- g. For industry categories involved in water pollution abatement, the percent of total capacity in each plant capacity class for each industry which discharges pretreated wastewater to municipal system was specified. h. Annual investments and O&M costs for the control of air emissions from mobile sources and electric utilities were entered into the ABATE model exogenously for computation of feedback effects and aggregate air pollution abatement costs. i. Pollution control costs reflect only abatement equipment and O&M expenditures in these simulations. Therefore, if a less polluting production process is adopted by an industry, a decrease in pollution control costs results. 2. Municipal Wastewater Treatment Data. The following data were developed as inputs to ABATE for municipal wastewater treatment (Municipal expenditures for this report were exogeneously expressed based on projected Government appropriations for sewage treatment facilities. The ABATE model was thus not used to calculate municipal costs, but the feedback features of SEAS were used to estimate the economic, employment, and energy impacts of these costs.): a. Population served and per capita wastewater flow for each forecast year; b. Capital and O&M cost functions for primary and secondary treatment and the cost functions for upgrading of secondary treatment; c. Percent of wastewater flow to each treatment type and the average treatment plant size in each type; d. Percent of total population whose wastewater needs are met either by replacement of previous treatment or by upgrading from primary to secondary or from secondary to tertiary, by year; e. A similar collection of factors, percentages and cost curves for interceptor sewer costs, and for combined sewer overflow remedy costs; and f. The wastewater flow generated by industies which divert their wastewater to municipal facilities for treatment. The ABATE cost model uses the two types of data discussed above to generate aggregated abatement costs for each A-10------- industry and for municipal treatment facilities in a straightforward manner, as follows: 1. Industrial Abatement Costs. The model forecasts yearly capacity for each industry using growth rates calculated from the corresponding INFORUM sector or subsector and initial plant capacity class data. The new capacity is distributed among the industry's plant capacity classes as specified by the user. Capital costs are then calculated for the average plant in each plant capacity class using the appropriate cost function (depending on the year and whether the plant must meet New Source Performance Standards). The model then sums costs across classes to get total capital costs for the year. For water categories, the model derives the costs using both the pretreatment and full treatment cost functions, depending on the fraction of capacity in each plant size class using municipal facilities. For these water categories, ABATE also calculates the total volume of wastewater discharged to municipal facilities, which is used to estimate investment recovery and user charges. Finally, the model uses equipment life and a 10 percent interest rate to annualize the capital costs. ABATE performs a similar aggregation of O&M costs for industries. However, for existing plants, the expenditures do not begin until the compliance year is reached. Moreover, the model need not keep track of OSM expenditures spread over several years as it must do for capital costs. The O6M costs calculated by ABATE for a given year create a demand for resources that is reflected through feedbacks which modify the output levels for the affected INFORUM sectors. In turn, these changed output levels result in different sector growth rates, from which the abatement costs are recalculated for that year. ABATE and INFORUM are self-correcting as they use growth rates which are constantly being revised. 2. Municipal Abatement Costs. The municipal portion of ABATE calculates costs associated with building and upgrading treatment plants, with laying interceptor and collector sewer lines, and with the control of the combined sewer overflow problem. The new wastewater flow needing treatment in any year is based on incremental flow from industrial dischargers to municipal systems and that part of the non-industrial flow that needs replacement or upgrading. This new flow is allocated to treatment type (primary, secondary, or tertiary). Average plant sizes by type are then used to determine the number of new plants to be constructed. Capital and operating cost (minus the operating cost of plants replaced) functions are used to determine total cost based on plants to be constructed and A-11------- their average size. The amount of this cost to be fed back into INFORUM is adjusted by a user-specified factor indicating the proportion of this total not already accounted for in the INFORUM baseline. A similar procedure is used to determine costs for interceptors and collectors, and for correction of combined sewer overflow through use of incremental cost functions for these categories. Annualized costs for municipal wastewater treatment are partially allocated back to an industrial source based upon the fraction of total wastewater flow it contributes. This fraction is applied against the O&M charges for municipal treatment to yield user charges. Municipal investment recovery is computed by applying this fraction to capital costs, with payment in equal annual installments over a 30- year period with no interest applied. Calculations of abatement expenditures for sewers and for the combined sewer overflow (CSO) problem is similar except that population needing sewers is distributed among city sizes, and population needing CSO correction is distributed among population groups. Hence, ABATE aggregate costs are computed by city size and by population group to obtain total expenditures for correcting the sewer and CSO problems, respectively. For the pollution abatement scenarios run for this report, annual investments in municipal sewage treatment facilities were exogenously specified, based on the total projected funds available from Federal, state, and local governments. The computations of annualized municipal treatment costs and user charges were thus constrained by anticipated funding limitations. THE RELATIVE COMMODITY PRICE MODEL (PRICES) The SEAS PRICES model, also adopted from the University of Maryland, provides INFORUM with relative indexes of prices among commodities. Two runs of INFORUM for each scenario are required to make use of the PRICES model. The first run of INFORUM produces a different distribution of inter- industry sales than that assumed in creating the original set of price indexes. The PRICES model is then run to generate a modified set of relative prices to be used by INFORUM. The model modifies prices of output from each sector based on time-lagged constant-price output for the sector, lagged unit material costs, and lagged unit labor costs. Abatement impacts on prices are included in the A-12------- modifications as well as the impact of the redistribution of sales. Once the modified prices are determined, the INFORUM model is then rerun to provide a new forecast of the economy which takes into account the modified prices. THE INDUSTRIAL ENVIRONMENTAL RESIDUALS MODEL (RESGEN) RESGEN estimates the annual national pollutant residuals associated with industrial production, municipal treatment, and electric utility processes for six media: air, water, solid waste, leachates, pesticides, and radiation. It does not estimate motor vehicle emissions, storm water run-off residuals, or emissions from nonpoint sources of pollution (which consists of residuals associated with land use activities, such as agriculture, forestry, mining and drilling, and construction) . Residuals for these three types of pollution are currently estimated outside of SEAS except for motor vehicle emissions, which are forecast by FTRANS and FTRANS. For all other significant polluting industries and utilities, RESGEN initially forecasts the gross pollutant emissions that would occur from each if no abatement activity had occurred pursuant to the 1970 Amendments to the Clean Air Act or the 1972 Amendments to the Federal Water Pollution Control Act. Then it estimates primary net residuals, assuming that some specified level of pollution abatement activity (including none) is occurring. The difference between gross residuals and net residuals for each industry is the captured residuals, which include recyclable wastes. RESGEN also generates estimates of significant secondary residuals produced by the pollution treatment processes themselves. (See Figure A-3.) A-13------- Figure A-3. RE86EN Estimation Process Flowchart CAPTURED RESIDUALS INDUSTRIAL PROCESS GROSS RESIDUALS TREATMENT PROCESS ..PRIMARY NET RESIDUALS SECONDARY RESIDUALS CREATED BY TREATMENT (E.G., SLUDGES)------- AS in the case of ABATE, the input data used by RESGEN corresponds directly to the pollution emissions reductions discussed in the industry summaries in Sections Two and Three for and water residuals. The primary data consists of gross residual coefficients for specified years and associated fractions of total wasteload treated, average removal efficiencies, and rates at which waste materials are recycled or converted to secondary residuals as percentages of captured residuals. THE TRANSPORTATION MODELS (PTRANS AND FTRANS) The two transportation models, PTRANS and PTRANS, use annual forecasts of vehicle miles travelled by automobile, bus, truck, rail, commuter rail, and airplane to estimate the air pollution emissions for passenger and freight transportation vehicles in six residual categories: hydrocarbons, carbon monoxide, nitrogen oxides, sulfur oxides, lead, and particulates. For a given calendar year, the PTRANS model uses the disposable income forecast from INFOROM and the population forecast to determine the number of new vehicles on the road. It uses data from the 197* National Transportation Study for vehicle miles travelled by transportation mode and occupancy ratios to distribute the VMT forecast among intracity (auto, bus, rapid transit, railroad) and intercity (auto, air, bus, railroad) transportation modes. Then it uses EPA emissions factors to forecast net residuals for the year. In the case of automobiles, PTRANS also utilizes input data indicating the distribution of cars on the road by model year to forecast these residuals. Freight ton-mile projections are computed by the FTRANS model by applying INFORDM growth rates for freight sectors to base year data for freight ton-miles drawn from Department of Transportation studies. Modal splits and weight loading factors are then applied to develop forecasts of vehicle miles travelled for trucks, rail, water, air, and pipelines. Pollutant emissions are then estimated by applying emission factors to each freight transportation mode. Again, these emissions represent net residuals. A-15------- THE ENERGY USE MODEL (ENERGY) ENERGY estimates energy use by consumer class (industrial, commercial, residential, transportation, electric utility consumption, and electricity generation) and fuel category based on INFORUM annual output forecasts for the 185 economic sectors. For each fuel category, it also reports whether the fuel is used for combustion or as a raw material feedstock by the consumer class. The model provides a detailed accounting of all fuel usage in quadrillions (101S) of Btu's based on the interindustry relationships in INFORUM at the time the sector output forecasts are made. Because the energy forecasts are based on the INFORUM annual outputs, any supply constraints caused by relative price adjustments are introduced into the forecasts. The relative price adjustments might have resulted from changed fuel stock levels (STOCKS model) or from pollution abatement feedback into INFORUM (ABATE model). consequently, ENERGY is sensitive to a wide range of conservation and abatement assumptions. THE STOCKS RESERVES AND PRICES MODEL (STOCKS) The STOCKS model in SEAS provides information on raw material sources, reserve levels, and relative production costs under alternative assumptions regarding import, export, and inventory levels. The model maintains accounts for both domestic and world-wide reserves as a function of relative production prices. Currently, twelve stock categories are included, of which six are fuels and six are non-fuel minerals. Overrides for prices, investments, imports, and exports concerning these stocks are generated by STOCKS as optional feedbacks to the national economic models. THE SOLID WASTE AND RECYCLING MODEL (SOLRECYC) The SEAS SOLRECYC model estimates the annual tonnage of solid waste generated from non-industrial sources, the expected proportional use of various disposal methods, and the costs associated with each disposal method. The model A-16------- also projects estimated levels of recycling, which are fed to the STOCKS model for adjustment of raw material demands. THE SUMMARY REPORT GENERATORS (POSTCOMP, INFRPT AND CLEANSUM) As shown in Figure A-1, each of the special-purpose models discussed above produces its own detailed output report. In addition to these detailed reports, summary data from these models, as well as from the national economic program, are collected in a common data file for production of summary reports. Three types of report generators were used to assist in the assessment of pollution control impacts: • POSTCOMP, which provides annual data values and annualized percentage changes for significant parameters from every SEAS model, as well as comparative indexes for pollutant residuals produced by each of up to four scenarios; • INFRPT, which provides comparative percentage differences and sector rankings in INFORtJM economic results for selected scenario pairs; and • CLEANSUM, which provides annual abatement costs and residuals for each SEAS economic sector. Run books for the seven scenarios described in this Section are maintained on file at EPA. These books contain both the detailed model outputs as well as the summary reports produced for each scenario. A-17-------------- Appendix B Scenario Assumptions REFERENCE SCENARIO The comparative scenario approach of Section Four requires that a set of assumptions constituting a baseline or Reference Scenario, be developed and used for comparative analysis of scenarios. The consequences of alternative assumptions concerning public policy can then be measured against this baseline. The purpose of the Reference Scenario is thus to establish a useful benchmark of general assumptions for comparative analysis; it is not intended to provide predictions of the most probable future. The Reference Scenario for this study is based on assumptions about future trends and policies from 1976 through 1985. These assumptions, in general, represent official forecasts of the future made by appropriate government agencies in their specific areas of responsibility (e.g., population growth by the Bureau of the Census). Table B-1 presents the government agencies from which forecasts were obtained. Where appropriate, values for these forecasts are also given. B-1------- Table B-1. Reference Scenario Assumptions Assumption Population-Series E Projections (Millions of People) Labor Force (Millions of People) Labor Productivity Gross National Product (Trillions of 1975 Dollars) Forecast Time Period Unemployment Rate in 1985 (Full Employment Economy) Federal Expenditures in 1980 and 1985 Excluding Transfers and Pollution Control Programs (Millions 1975 Dollars) Federal Expenditures for Pollution Control Government Agency Department of Commerce, Bureau of the Census Department of Labor, Bureau of Labor Statistics Bureau of Labor Statistics Ford/Council of Economic Advisors (1975-1980) Bureau of Labor Statistics (1980-1985) EPA Bureau of Labor Statistics Department of Commerce, Bureau of Economic Analysis EPA Values 1975-213.9 1980-224.1 1985-235.7 1975- 93.8 1980-101.8 1985-107.7 Varies by Industry 1975-1.47 1976-1.57 1977-1.69 1978-1.81 1979-1.85 1980-1.99 1985-2.40 1/1/76- 12/31/85 4.0 to 4.5% 1980-156,400 1985-173,400 B-2------- The GNP and unemployment rate estimates selected for the Reference Scenario are intended to represent the current best estimates of what can be achieved nationally between 1975 and 1985, through a combination of public sector monetary and fiscal 'policies. The Reference Scenario target objectives for the GNP and its components for 1975 through 1985 represent a combination of the Council of Economic Advisors (CEA) and U.S. Office of Management and Budget (OMB) forecasts for the period of 1975 through 1980, and the Bureau of Labor Statistics (BLS) projected economic growth for the 1981-1985 period, as contained in The Structure of the U.S. Economy in 1980 and 1985 (U.S. Department of Labor, Bureau of Labor Statistics, Bulletin 1831, op.cit.). Assumptions about labor force and labor productivity used are those contained in the BLS projections with the greatest long-run likelihood based upon GNP supply-oriented (or potential-GNP) concepts. These projections are used since they are tempered by personal income, demand, and demographic change considerations. A steadily declining unemployment rate through the forecast period is required to be consistent with both the GNP forecasts and assumptions about labor force and productivity for the Reference Scenario. The unemployment rate thus declines monotonieslly over the period from the high rates of the mid-1970fs to a rate between 4.0 and 4.5 percent in the mid-1980's. The annual changes in productivity presented in the Reference scenario are those assumed in the BLS projections (Structure of the O.S. Economy in 1980 and 1985, op^cit.L Chapters 1 and 2 and Appendix A). These assumptions concerning GNP, the labor force, and labor productivity replace, for the Reference Scenario, those originally used in the INFORTJM projections (Almon, et al., 1985; Interindustry Forecasts of the American Economy, op.cit., Chapter 1). The Reference Scenario assumptions also include the setting of Federal expenditures for non-pollution-control activities in 1975 dollars (excluding transfers) at $156,400 million in 1980 ($106,060 million and $50,340 million, defense and non- defense, respectively) and 1173,400 million in 1985 ($115,200 million and $58,200 million, defense and non- defense, respectively), with interpolation used to generate forecasts for intervening years. In addition, personal disposable income per capita is adjusted to produce, using INFORUM, the desired GNP and unemployment targets specified above. The Reference Scenario represents a calibration of the SEAS system to the assumed GNP projections and unemployment rates in the absence of pollution control expenditures induced by B-3------- Federal legislation. This does not mean that there are no pollution control expenditures implied in the Reference scenario because there are substantial levels of such investments which would have been incurred even in the absence of federally legislated abatement policies. The levels for these expenditures were taken from forecasts developed by EPA. The Reference Scenario is intended to reflect neither an unusually high energy consumption rate nor an unrealistic energy conservation effort. The energy consumption assumptions contained in the Federal Energy Administrations Project Independence report for the "Business as Usual" case, with oil at $7 per barrel, were thus used in the Scenario. The assumptions are summarized in Table B-2 in terms of the projected total gross consumption of energy resources in trillions of Btu»s by fuel source. Table B-2. United states Total Gross Consumption of Energy Resources (Business-as-Osual Without conservation - $7/Bbl Oil)* Fuel 1972 1977 1980 1985 Coal 12,195 16,85* 18,074 19,888 Petroleum 32,966 37,813 11,595 17,918 Natural Gas 23,125 21,558 22,931 23,917 Nuclear Power 576 2,830 1,812 12,509 Other 2,916 3,513 1,011 1,797 Totals 72,108 82,598 91,159 109,059 Source: Project .Independence Report, Federal Energy Administration, Appendix A1, p.37, November 1971. » Data shown is in trillions of Btu's. REFERENCE ABATEMENT SCENARIO The Reference Abatement Scenario differs from the Reference Scenario in that it includes among its assumptions the incremental pollution control practices, along with their attendant employment, costs, and effects on residuals, necessary to achieve compliance with Federal legislation. (Municipal costs are based on available Federal subsidy funds rather than compliance regulations for purposes of this report.) Most of the unit cost data used for B-1------- calculation of these costs in SEAS was provided in constant 1973 doilars., Since the INFORUM data is currently expressed in constant 1971 dollars, it was necessary to first deflate the abatement cost input values from 1973 to 1971 dollars, and €hen to inflate the computed results back to 1975 dollars for presentation in this report. The deflation and inflation factors used for these purposes are presented in Table B-3. Abatement costs are computed and analyzed in terms of annual investment, annual OSM costs, annuaiized capital costs, capitai-in-piacef and number of employees directly engaged in pollution control activities. Total annual costs are computed as the sum of annual OSM costs and annuaiized capital costs. The annuaiized capital costs are derived by applying:. to the annual investment amounts a capital recovery factor of: N N where ^i11 is .the annual interest rate expressed as a fraction and ."N" is thek life of the abatement equipment in year.s. ,Epr. t'he'ase^ calcul"ati6ns, a nominal interest rate of 10 .ipefccent, is. ass'umied for both the private and public sectors 'and abatement equipment life varies with the type of control techno logy being applied. B-5 !------- Table B-3 Summary of Inflation and Deflation Factors' Type of Abatement Cost Water Air-Electrostatic Precipi tator Air-Bui 1 ding Evacuation Air-Fuel Switching, Afterburners, Incinerators Air-All Other Equipment Sources Engineering News Record Joy Manufacturing Co.. Nelson Electricity Cost Index Chemical Engineering Plant'Cost Index, Nelson Electricity Cost Index Chemical Engineering Plant Cost Index, Nelson Fuel Cost Index Chemical Engineering Plant Cost Index, Nelson Operating Cost Index Capital 1973-71 1971-75 0.879 0.708 0.943 0.943 0.943 1.330 2.136 1 .541 t .541 1.541 . O&M 1973-71 1971-75 0.898 0.909 0.909 0.892 0.939 1.295 1.718 1.718 2.138 1 .533 A General CNP Inflation Rate of 1.311 was used to convert GNP estimates from 1971 to 1975 dollars' (Source: Bureau of Labor Statistics) Deflation factors are for 1973 to 1971 dollars and inflation factors arc for 1971 to 1975 dollars. B-6------- Federal expenditures and non-defense Federal employment are both incremented in the Reference Abatement Scenario to account for Federally funded pollution control programs and activities. These increments, which are added to the corresponding values from the Reference Scenario, are presented in Table B-4. Table B-4. Federal Expenditure and Employment Increments for the Reference Abatement Scenario 1985 Federal Expenditure Increment Non-Defense (Millions of 1975 Dollars) +2,561 Defense (Millions of 1975 Dollars) +384 Federal Employment Increment (Millions of People) +0.2 Unemployment rates were calibrated in the Reference Scenario to near full-employment levels of 4.0 to 4.5 percent during the 1980's. The addition of pollution control investment capital, employment, and Federal expenditures tends to drive unemployment below these levels. When this occurs, the per capita disposable income is constrained in the Reference Abatement Scenario to reflect a typical inflation dampening fiscal policy. The scenario is then run again until unemployment is equal to or greater than 4.0 percent. The Reference Abatement Scenario assumes that all sources of pollution will fully comply with the EPA and state regulations and guidelines developed in response to the Clean Air Act of 1970 and the 1972 Amendments to the Federal Water Pollution Control Act. Detailed assumptions concerning such compliance may be found in Section Two (Air) and Section Three (Water) of this report. LOW PRODUCTIVITY SCENARIOS The Low Productivity and Low Productivity Abatement Scenarios differ from their Reference Case counterparts in that they make use of the productivity functions and growth assumptions contained in the INFORUM model as obtained from the University of Maryland. Compared with the Reference Scenarios, this reflects a slowing down of productivity B-7------- because of shifts toward service industries in the pattern of final demand, and because of a lessening of the rate of productivity increase in other industries. GNP estimates for the Low Productivity Scenario which correspond to these assumptions are shown in Table B-5 and are compared with those for the Reference Scenario. Table B-5. Comparison of GNP Estimates for the Low Productivity and Reference Scenarios (In Trillions of 1975 Dollars) 1975 1977 1980 1983 1985 Low Productivity GNP 1.53 1.67 1.84 1.99 2.09 Reference Case GNP 1.47 1.67 2.01 2.22 2.36 ENERGY CONSERVATION SCENARIO The two Energy Conservation scenarios approximate energy usage forecasts contained in the Federal Energy Administration's "Business-as-usual With Conservation" scenario where the import price of oil is $11 per barrel. (See Appendix A1, page 46 of the November 1974 Project Independence Report.) The energy consumption estimates in the Energy and Energy Abatement Scenarios each reflect a net reduction of approximately 13 quadrillion Btu's compared with their corresponding Reference Case scenarios. The following types of changes were introduced to achieve these energy savings: 1. A reduction in the household consumption of fossil fuels for air conditioning and heating to simulate raising the thermostat setting in the summer and lowering it in the winter. 2. A reduction in personal consumption expenditures for gasoline to simulate increased carpooling (with an automobile occupancy ratio of 1.96 persons per vehicle as compared to the Reference case occupancy ratio of 1.56). Increased shifts to mass transit are also included for the Energy Case scenarios, such as the B-8------- modal split comparison between the Reference and Energy Scenarios for 1985 shown below: Intracity Reference Energy Auto 0.9070 0.8690 Bus 0.0230 0.0610 Rapid 0.0350 0.0350 Rail 0.0350 0.0350 Intercity Reference Energy Auto 0.8650 0.8250 Air 0.0950 0.0950 Bus 0.0300 0.0500 Rail 0.0100 0.0300 3. A reduction in the interindustry fossil fuel use coefficients for energy-intensive inputs by substitution of less energy-intensive industries. These measures include: shifts to returnable beverage containers, reductions in the use of artificial fertilizers, reduced use of packaging materials, and some recycling of energy-intensive materials. H. Miscellaneous changes to reflect improved energy housekeeping activities by various industries. B-9-------------- Appendix C. Impact of Increased Federal Grants for Municipal Wastewater Treatment A companion scenario to the Reference Abatement Scenario was constructed which continued the Federal grant program for municipal wastewater treatment plants through 1977-85. The comparative Federal outlay data for this scenario and the Reference Abatement Scenario is provided in Table 3-14 of Section Three. This scenario is identified as the Municipal Scenario (or Scenario 2A) . Table C-1 provides a summary of relative macroeconomic impacts of the Municipal Scenario as compared to the Reference Abatement Scenario; the primary statistics show only small differences between the two scenarios. The additional funds injected into an economy operating at full- supply-GNP require that the disposable income per capita be reduced from 1980 to 1985 on the order of 0.31 percent, which reduces personal consumption expenditures on the order of 0.31 percent. The major large changes occur where expected, in state and local health and welfare expenditures growing by 12.00 percent in 1985 and stimulating public construction by 10.54 percent in 1985. Net water residuals, except for dissolved solids, decline by over 30 percent by 1980^ with a continuing increase in the efficiency treatment of suspended solids and nutrients over the decade. This reflects the continuing upgrading of municipal wastewater treatment plants. C-1------- Table c-1. comparison of the Macro- Statistics of the Municipal Scenario (SA) and the Reference Abatement Scenario (S2) £ (S2A-S2)/S2 in %Ji Statistic 1977 Gross National Product Disposable Income Per Capita Federal Expenditures Personal Consumption Expenditures Total Output Investment State & Local Health & Welfare Public Construction Net Water Residuals Biochemical Oxygen Demand Suspended Solids Dissolved Solids ' Mutri-ents Water Municipal Costs Annual i zed Costs Capital 1.93 04M 1.50 Capital in Place 1.93 Direct Employment 1.48 1980 1983 1985 0.03 0.00 0.00 0.00 0.03 0.02 0.10 0.69 30.63 14.59 0.02 14.98 ' 0.11 -0.51 0.00 -0.36 0.14 0.11 3.19 13.54 -31 .48 -22.59 0.01 -32.16 0.25 -0.56 0.00 -0.44 0.28 0.25 9.43 20.14 -32.72 -33.64 0.15 -51.10 0.09 -0.34 0.00 -0.31 0.08 -0.03 12.00 10.54 -31 .21 -42 . 99 0.15 -64.71 30.31 31.96 30.31 31.96 94.49 95.71 94.49 95.70 124.19 125. 45 124.19 125.47 C-2------- Appendix D. Estimating the Cost For Industries to Control Pollution COST ESTIMATION METHODOLOGY Industrial facilities are required to control their air pollution emissions if they are so regulated by a State Implementation Plan (SIP) or by Federal New Source Performance Standards (NSPS). Under the SIP program, states are obliged by the Clean Air Act to specify the emission controls required by each industrial sector to achieve the Federal ambient air quality standards throughout the state. Thus, significant interregional differences in treatment may exist due to existing ambient air quality at the time regulations are implemented in each state. For new plants, interregional treatment is more nearly identical because Federal Air NSPSfs apply to plants built or extensively modified after the particular NSPS guideline for that .industry is promulgated. As of August 1975, NSPS's had been published .for 17 industries. The NSPS allowable emission levels .are usually more stringent than those for existing sources; hence, quite often unit control costs for plants regulated by NSPS are greater than for plants regulated by SIP'S. The deadline for meeting the Federal ambient air quality standards was July 1, 1975. Industries have not yet made the expenditures necessary to achieve their part of the emissions reduction required to meet ambient standards. Industries are .continuing to install air pollution abating equipment, however, and for the purposes of this report, it was assumed that the required air abating investment needed by 197.8 .will be made by the end of 1978, when the final series of standards is to be met. It is also assumed that BPT standards for water pollution control will be met in 1977, and that BAT standards compliance will be achieved in 1983. Seventy-two industrial sectors have significant control costs .for either or both air and water pollution control. The .number of sectors within each aggregate industry classification is shown in Table D-1. D-1------- Table D-1. Distribution of Industrial Cost-Control sectors Aggregate Industry Agriculture Mining Food Processing Textiles Paper & Lumber Chemicals Petroleum Rubber Ferrous Metals Nonferrous Metals Stone, clay. Glass Machinery & Equipment Electric Utilities Trade 5 services Miscellaneous Total Total Industrial Sectors 1 3 9 2 6 12 3 1 4 9 8 5 1 2 6 72 Air Water Cost Cost Sectors Sectors 0 3 1 0 2 6 3 0 4 8 5 1 1 2 5 41 1 0 8 2 5 6 1 1 2 7 5 4 1 0 1 44 But this listing does not provide a good appreciation for the detail at which the abatement cost estimates.are made. For example, the steel-making industry, for purposes of air pollution control, is a single item under Ferrous Metals in the above table. However, 22 different industrial segments are actually defined, each with its own cost curve for capital expenditure and OSM as a function of plant size. There are 497 industrial segments within the 72 industrial cost-control sectors for which air or water control costs are estimated. INDUSTRIAL SEGMENTS: MODEL PLANTS, UNIT COSTS AND GROWTH In order to calculate pollution control costs, industries are represented by "segments" and "model plants". A '•segment11 is all or a portion of an industry that has: (1) the same production process, (2) the same pollution control technology, and (3) the same pollution control standards. For example, the Kraft Paper Industry is dealt with for purposes of air pollution control costs in terms of D-2------- 10 different segments. These segments are shown in Table D-2. "Model plants" are the building blocks of a segment; that is, a segment's capacity for production is comprised of capacity within a number of model plant size groupings that are classified as either "existing" or "new" (new facilities are those constructed after the date when the Clean Air Act or Clean Water Act first affects that industry). For example. Segment 7 for Kraft Paper (Smelting Tanks) has three model plant sizes (45*, 907, and 1,361 units of production per day). There are existing facilities in all three size groupings, but, during the 1976-85 period, new facilities are expected to be built in only the middle- size class. Kraft Table D-2. Paper Industry Segment Definitions Process 1, Power Boiler 2. Boiler 3. Recovery Furnace U. Recovery Furnace 5. Recovery Furnace 6 * Recovery Furnace 7. Smelting Tank Control Technology Electrostatic Preci pitator s Double Alkali Scrubber Electrostatic Precipitators Venturi Scrubber Recovery Furnace Replacement Black Liquor Oxidation Orifice Scrubber 8. Lime Kiln Venturi Scrubber 9. Stock Washer 10. Evaporator Incinerate in Recovery Furnace Incinerate in Lime Kiln Pollution Standard Federal Particulates Federal Sulfur Dioxide Wa sh i ngton/Oregon Particulates Washington/Oregon Particulates Washington/Oregon Total Reduced Sulfur Washington/Oregon Total Reduced Sulfur Was hington/Oregon Particulates wash i ngton/Oregon Particulates Washington/Oregon Total Reduced Sulfur Washington/Oregon Total Reduced Sulfur D-3------- The cost of controlling air pollution from industrial sources is estimated for model plants. All existing capacity is expressed in terms of the model plants, and all new growth in capacity is also expressed in terms of these model plants. For example, existing plants which are classified into the smallest model plant (size grouping) in Segment 7 for Kraft Paper (*t5* units of production per day) are assumed to spend, on the average, as much for capital equipment to control each residual as the 45tt-unit model plant. To calculate industrial costs of pollution control, each segment has a capital cost equation and an OSM cost equation that states dollar costs as a function of plant capacity or water use, based on the model plants. The air cost equations are derived from individual studies funded by EPA (see Section Two) and the water costs are obtained from the EPA.Development Documents (see Section Three). Each industrial segment is associated with one of the 185 industrial aggregate sectors of the INPOROM economic model via a side equation. These sectors and corresponding detailed subsectors of SEAS are shown in Tables D-3 and D-*, respectively. Due to this association, the growth of capacity or water use (and the accompanying growth in abatement costs) in each segment is dependent upon the dynamics of the interindustry model. Thus, if a user decreases the personal consumption purchases of automobiles, then the direct and indirect effects of this reduction in car sales will ripple throughout the system. The abatement costs for steel industries, aluminum industries and other industries indirectly impacted by the change in car sales will be calculated. In the same manner, additional purchases by a sector required for pollution control can be imposed and the specific direct and indirect impacts determined.-------LODGING PLACES 172 ADVERTISING 179 MOlCAl SERVICES IT* FEDERAL GOV.- ENTERPR1SSS 181 . NON-COMPETITIVE IMPORT! 164 UNIMPORTANT INDUSTRY I DUMMY I 2 POULTRY AND EGGS 5 GRAINS t FORESTRY AND FISHERY PROD. II IRON ORES I* COAL MINING IT CHEMICAL FERTILISER MINING 20 COMPLETE GUIDED MISSILES 23 MEAT PRODUCTS 26 GRAIN HILL PRODUCTS 29 CONFECTIONERY PRODUCTS 32 FATS AND OILS 35 4ROAC AND NARROW FABRICS 38 KNITTING 41 LUMBER AND WOOD PRODUCTS 44 UOQOEN CONTAINERS 47 PULP.MILLS 50 HALL AND BUILDING PAPER S3 PERIODICALS 56 BUSINESS FORMS, BLANK BOOKS 59 FERTILIZERS &2 PLASTIC MATERIALS AND RESINS 65 NON'CELLULOSIC FIBERS 68 PAINTS 71 PAVING MO ASPHALT 74 MISC PLASTIC PPOCIUCTS 7T OTHER LEATHER PRODUCTS »0 POTTERY 83 STEEL 86 ZINC 89 OTH NON-FER ROLL * DRAW 92 MFTAL CANS 95 STRUCTURAL METAL PRODUCTS 98 CUTLF.RVi HAND TOILS. HARDMR lOt OTM FABRICATED HSTAL PRODUCT 104 C?NSTR, MINING. CIL FIfcLD MA 1D7 MACHINE TOOLS, M€TAL fGRMlNG 110 PUMPS. C3«P«ESS^*S, BLOWERS 113 IMOUSTR1AL PATTfRNS 116 SERVICE INDUSTRY MACHINERY 119 TRANSFORMERS AND SWITCHGEAR 122 WELDING APP, GRAPMITF PROD 125 RA9IO AND TV «r:CCIVISG 12B ELECTRONIC COMPONENTS 131 X-PAY, ELEC EQUIP.NEC 134 AIRCRAFT 137 SHIP AND R04T BUILDING 140 TRAILER COACHES 143 OPTICAL • OPHTHALMIC GOODS 146 HATCHES AND CLCCKS 149 OFFICE SUPPLIES 1»2 BUSES AND LOCAL TRANSIT 159 AIRLINES na TELEPHON; AND TUEGPAPH 161 NATURAL GAS 164 RZTA1L TRADE 16T CunER-OCCUPlEO DWELLINGS 170 PERSONAL AND REPAIR SERVICES 173 AUTO REPAIR IT6 PRIVATE SCHOOLS AND NPtt 179 NO DEF'N 182 BUSINESS TRAVELCOUMNYI 183 COMPUTER RENTALS ------- Table D-1. The subsectors of SEAS SUSSECTOR NAMES 1 »«F CATTLE FEEOLOTS 5 | J WHEAT 7 1 I CITRUS 9 1 » SOLVENT BASED PAINTS CONSUNP 4 4 * GASOLINE CONSUMPTION 4 ]g 12 KUNICP SEWAGE-TERTIARY TREAT 9 33 35 OPEN BURNING 9 )6 38 CN-S1T5 INCINERATION * 34 14 1 COAL/SYNTHETIC COAL FUELS 14 30 14 32 SURFACE MINING-EASTERN 14 33 1* IS COAL . 14 36 14 II COAL-SMC 14 39 IS 2 NATURAL GAS PROCESSING It 3 15 90 SOUR NAT, CAS PROCESS PLANTS IS 31 IT I PHOSPHATE R3CK • 23 1 23 3 RED MEAT PROC-PROCESSORS 23 4 2J 31 COMPLEX SLAUGHTERHOUSES 23 32 14 1 FLUID MILK.f.OTTAGE CHEESE 24 2 24 4 ICE CREAM c FROZEN DESSERTS 2$ i « i POT*ties 2* 4 2» 6 APPLFS 25 T 2* , 2 INOUST COM8UST Of Cl L 24 3 26 5 KHEATtSTARCH & GLUTEN 24 6 2* $1 CCRN n*V MILLING 28 1 28 30 CANf SUCAft - CRYSTALLINE 28 31 »» 2 INOUST COMBUST OF OIL 35 3 If 3 MOVfN FABRIC FINISHING MILLS 35 6 35 »l KOVfN FABP. FINISH-SYNTHETICS ' J5 32 35 14 RAH*7 31 47 33 NSSC - A1MONIA 47 34 47 36 DE INK ING 47 37 47-72 iKPAFT. - PF(VFNT.SCRUBB5R> SO 1 53 2 INOUST COMBUST IF OIL »> 3 55 3 AC»YICNITAIIE 55 * 55 8 OIKfTHYL TERFPHTHALATE ' 55 1 35 tl PENTAERTTHHITOL $5 12 53 14 TOOPVLENF OXIDE 55 15 »3 17 ETHYLENE OXIDE 35 1* 55 20 CHLORINE 55 21 33 2J SUIFURIC ACIO . 55 24 33 2* TITANIUM DIOXIOE 5S 2T 35 30 ACET-MYDR06 OF -^THSNOL 55 31 S3 33 FQRMALOEHYDE-SILVER PROCESS 55 34 53 36 CHLQRINE-KERCURY CELL i 55 37 53 99 CHLO" EXTR-T1T»N DIOX-ILMEN 55 40 33 71 SUUimC ACIO-SULFUH BURNING :5 72 » 2 NITRATE FFRTILIZFR 51 30 5» S2 TRIPLE 50P«»PHOSPHATE 59 33 61 1 INDUST CO-BUST 3F COAL 61 2 •1 4 CARSON BLACK . 61 * 61 7 HYDROCHLORIC ACIO 61 • COM APPLES MUNICIPAL SEMAGE TOTAL Sm.I1 uASTf. GENERATION HUNICP SEWiGF.-P«|M»RY TS^tT K'JNICIPL SfHACE u/3 TRCATHNT OPEN OUMPING t LAMOfKl LANDFHL - F?OH mo G3NT40LS SUSf»CP Cr»L MIMING SURFACE «I»INC-«?STFRM COAL CLEANED t ORifo C01L-LCW PTU MS TRUOE OIL OOHESTIC PROPUCT. CTHFR N»T GAS P'OCtSS PIANTS »W MfAT P^r>t-St»UGHTEI 2 * 2 4 5 4 31 $YN TIMBFR PRODUCTS "BICFSSIS'G INOUST COX8JST OF NAT GAS NSSC - PULP PULP - OTHER NSSC - SOOIU1 QTHER HASTE PAPER KRAFT - ftF (ESPI INOUST COMBUST OF COAL AC fT ALDEHYDE CITRIC ACtO MALEtC ANHYDRIDE PLA$TICIZ?*S FORMALDEHYDE PHTHALIC ANHYDRIOE HYDROFLUORIC ACIO SODIUM CARBONATE DEFLUORINATEO PHOSPHATE ROCK" ACET-OXIO EtHYLEME H/A1* CHLORIN«-05APH«Aa« CELL SODIUM CiRBOIATC—SOLVAY PROC' SUI.FAT EXTR-TITAH OIOX-ILMEN PHOSPHATE FCRTlLIiER PHHSfHATE PRODUCTION PLANTS . NORMAL SUPERPHOSPHATE INDUST COMBUST Of NAT CAS CALCIUM CHLORIDE POTASSIUM DICHROMATE D-6 ------- Table D-1. (Continued) The Subsectors of SEAS 41 10 POTASSIUM SULFATE «1 11 61 II. SODIUM METAL «1 14 61 16 fTHYUNC/PUPPY L6NE 61 IT 4i 19 ACRYLATES 6i 20 »l M CENIEtE 61 21 61 10 JTX-HYWO TPEAT. PYROLYSIS 61 31 62. 2 PHEWLIC RESINS 62 i 62 9 LOM DENSITY POLYETHYLENE 62 6 61 1 SYNTHETIC HUBBE* 64 1 69 2 INOUST COMBUST OF OIL 6S 1 6T I SOAPS AN9 OFTERGENTS 68 1 6« 10 M20 :"ILU8L* PAINT TRAOE SALS 68 31 68 31 SOLViNT. SAS": PAINT INQUSTRIL 69 1 6« 1 INOUST f.lMBUST OF NAT GAS 69 4 6* 6 GASOLINE PRODUCT ION 69 30 6» 12 TOPPING PLANTS 6» 33 6* IS mROCHEHlCRACMMGiNO LUBESI 69 36 Tl I (SPHALT 72 1 73 2. IATSX MANUFACTURE 15 1 TS 11 OTMEP TANNING 7» 32 75 14 HAIR REMOVED/CmiNE TANNING 75 IS 71 17 SAVf HAIR/VEGETABLE 78 1 7« 3 PPESSE9 C SLOHN GLASS 78 4 78. $1 FLOAT GLASS 79 1 79 11 CTHFD STRUCTURAL CL»Y HI IMS »I 1 • 1 1 INOUST CCMAIJST OF NAT GAS 81 4 •1 10 CEMENT - MET GRINDING 81 » tZ 2 CRUSHED STOHS 82 1 81 2 INOUST CCMBUST OF OIL 83 3 81 * STEFl PPOOUCTIOS 83 6 81 • STEFL FOUNDRIES 83 9 II 31 BASIC OXY FURN-MTSGR. FACIL S3 32 •3 14 ELECT. APC-IC IN FOUNDRY "COO 83 35 I) IT OTWP FMPOALLOY *U4NACcS 83 38 83 60 BASIT rxV.N FUHNAC-'IO GROWTH B3 61 •1 61 ELECT ARC FllfNA^F-NI GROWTH gj 4* 83.66 IRON *CUNORY - CUPOLA 83 67 •1 69 FER'OALLOY PROO.-SCPUBBER 83 70 81 61 BLAST FUPNACSIPIG IRON PRODI 83 82 •4 1 COPPFft 04 10 I* 12 COPPER SMELTING 84 33 (4 IS SMELTING M/3 ROASTER 84 71 8» 1 IfAC 85 30 16 1 IINC ' 86 10 87 1 ' BAUXITE REFINING . 8T 2 •7 31 SrCOf'SARY ALU»INUM 87 32 • 7 34 MEBAKEO AN90E 17 IS 88 I BE^YUIUI 88 t 88 4 MANGANESE . 123 1 111 2 INTUIT COMBUST OF OIL L33 3 160 1 ELECTBICITY 8Y COAL 160 2 160' 4 ELECTRICITY BY NUCLEAR FUEL 160 5 160 31 ELECT BY HIGH SULFU* COAL 160 32 160 14 ELECT PY HTGt 160 IS 160 17 ELECT BY NATURAL GAS 160 38 161 1 SEWAGE SIUOC: INCINERATION 162 2 162 II OPEN BURNING 162 32 162 34 ON-SITE INCINERATION 162 35 162 37 NO OEF*N 162 38 163 30' GRAIN .MAND-SM.ALL RURAL FACII 163 si 161 11 GRAIN H4NO-TERM FACIUPORT) 170 1 17011 DRV CLEAN-PFTROl.EUr SOLVENTS 171 I 179 1 INDUST mxBUST-NtT GAS N.C.C 179 4 ,|7» * CONMtM/INSTITUT USE-NAT GAS 179 7 179 9 OTHEP INDUSTRIAL USE 174 JO .SODIUM CHLORIDE SODIUM SILICATE RTX AROKATICS AMMONIA ETHYL ENF BTX-SOLV €XTR FROM REFORMATE NYLON HIGH DENSITY POLYETHYLENE RAYON INDUST COMBUST OF NAT GAS SALE THAOE PAINTS SOLVENT 9ASE PAINT TflAOFSALE INOUST COMBUST OF COAL CRUDE QtL REFININS B-FINEH H/CATALYTIC CUCXING REFIHEIItES M/CRACKtNG LUBE OILICRACK.NQ PETROCHENI TIRES AND INNEP TUB?* LEATHER TANNING PULP MAIR/CH40M? TANNING PULP. SAVF HAIR,CH«OM°,NO TAN FIBERGLASS (INSULATtcm GLASS CONTAINERS STRUCTURAL CLAY PRODUCTS INOUST COMBUST OF COAL CEMENT CEMENT - 0"T GRINDING SANO ANO GRAVEL INDUST COM6UST OF NAT GAS FERROALLOY PRODUCTION H=TAL/CO:i SUeFiC-: COATING ELFCT ARC STFtL-lNTECR. "AC. OTHER I DON FOUNDRY FURNACES fltEHIVE COKING BASIC OXVGN FUANAC-GK3UTH EVFCT ARC FU<>N*CE~GR'JWTH IRON FOUNfBY - CLECT «»C FERROALLOY PROD. - ESP PFLLE*mNG PRIMARY COPPER HYDROMETALLURGY S*C BRASS C BRONZE-GROWTH PRIMARY LFAO PRIMARY ZINC ALUMINUM HALL-HFROULT PPRCESS HORIZONTAL SODERBFRG HOME APPLIANCES -SURFACE COAT INOUST COMBUST OF NAT GAS ELFCTRICITY BY OIL ELECTRICITY BY MYO°0 t. 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