December 8, 2010—Washington, DC—A study issued today finds that pollution from coal-fired power plants that have failed to install pollution controls is costing businesses in affected states nearly $6 billion annually – about $17 million per day – because of higher labor and insurance costs, lost work days, and lost productivity.   The report, “Expensive Neighbors: The Hidden Cost of Harmful Pollution to Downwind Employers and Businesses,” was authored by Charles J. Cicchetti, Ph.D, a Senior Advisor to Navigant Consulting, Inc. He quantifies the costs avoided by reducing sulfur dioxide (SO2) and nitrogen oxides (NOx) emissions in downwind states and concludes that under any reasonable set of assumptions, the benefits of the Environmental Protection Agency’s (EPA) proposed “Transport Rule” under the Clean Air Act far outweigh any associated compliance costs. 

The EPA’s proposed “Transport Rule” requires that by 2014, 31 states and the District of Columbia significantly reduce harmful power plant emissions that contribute to pollution in other states. Today, harmful emissions, primarily from coal-fired power plants that have failed to install pollution controls, are carried hundreds of miles in the air stream, causing massive health and economic losses in downwind regions. The proposed new rule is designed to reduce the concentration of these air pollutants while also controlling downwind transport by requiring plants to install pollution controls like scrubbers.  Most plants already comply but some owners have refused to make the investments.

“The EPA’s analyses of its Transport Rule understate its benefits and overestimate its costs by focusing almost exclusively on health-related benefits and not considering interstate pollution transfer costs,” said  Cicchetti. “Under any reasonable set of assumptions, the Transport Rule’s benefits far outweigh compliance costs: each dollar invested in necessary pollution controls avoids $50-100 in downwind costs annually.”

As a result of pollution created between 2005 and 2012, the report finds the following adverse impacts on business, government and jobs in downwind states:
• Businesses will suffer over $47 billion in costs;
• Over 360,000 jobs will be lost;
• State and local governments will lose $9.3 billion in tax revenue; and
• Families and businesses will pay $26 billion more for reformulated gasoline.

According to the EPA, the proposed rule would yield more than $120 to $290 billion in annual health and welfare benefits in 2014, including the value of avoiding 14,000 to 36,000 premature deaths. The healthcare costs alone far outweigh the estimated annual compliance costs of $2.8 billion.

“This report complements the Environmental Law & Policy Center’s (ELPC) analysis finding that pollution from just four coal plants in the Chicago area caused about $2 billion of health and related environmental damages over the past eight years,” said Howard Learner, Executive Director of ELPC.  “Based on a model developed by the National Research Council, Chicago area residents are paying for pollution from the Fisk, Crawford, State Line and Waukegan coal plants with our health and our wallets, and people in downwind states also bear these burdens.”

In addition to healthcare costs, businesses that generate emissions must pay more to locate in downwind “nonattainment areas,” which may cause companies to shift operations and jobs elsewhere to avoid these additional compliance costs if they want to expand or modernize.

“In effect, the airstream has operated as a free waste transfer system that transports air pollution from older, uncontrolled coal-fired power plants to downwind populations,” said Joseph Otis Minott, Esq., of the Clean Air Council, a co-sponsor of the report.   “The Clean Air Act was a landmark piece of legislation and has improved the environment and people’s health. The Transport Rule will prove to be an essential next step that will help ensure a healthy future for everyone.”

The Reverend Horace Strand from the Chester Environmental Partnership (CEP) in Pennsylvania, also a co-sponsor of the report, underscored the importance of the report’s findings, “The transport of air pollution to the poorest downwind communities directly violates the principles of environmental justice,” said Rev. Strand. “It is essential to protect low-income and minority communities because we are the least able to cope with missed school and work, higher health insurance costs, and job loss when businesses and jobs shift to less affected areas.”

Dr. Cicchetti concluded: “There is no economic rationale justifying further delay on implementing the Transport Rule. On the contrary, requiring the installment of pollution controls on the minority of plants that have failed to do so will stimulate the economies, increase employment and tax revenue, and hasten economic recovery in downwind areas.”

Other report sponsors include the Public Interest Law Center of Philadelphia and Eddystone Residents for Positive Change.  Third party review and feedback was provided by the Academy of Natural Science’s Center for Environmental Policy and A. Myrick Freeman III, the William D. Shipman Professor of Economics Emeritus at Bowdoin College.

A media teleconference to discuss findings from the study will take place today, Dec. 8, at 10 a.m. EST. To participate, use the following information:
Dial-In Number: (866) 562-5561
International Dial-In Number: (706) 679-1894
Conference ID: 29755364

To download a copy of the report, visit http://www.cleanair.org/DownwindPollutionHiddenCostStudy.pdf.

About Dr. Charles J. Cicchetti
Dr. Cicchetti recently retired as the Miller Chair of Government, Business and Economics at the University of Southern California and currently serves as a Senior Advisor to Navigant.    He previously was Professor of Economics and Environmental Studies at the University of Wisconsin, Madison, and Deputy Director of the Energy and Environmental Policy Center at Harvard University.  He has written numerous books and articles on both Benefit/Cost Analyses and electricity economics.

About Clean Air Council
Clean Air Council is a member-supported, non-profit environmental organization dedicated to protecting everyone’s right to breathe clean air. The Council works through public education, community advocacy, and government oversight to ensure enforcement of environmental laws.

About Public Interest Law Center of Philadelphia
The Law Center was founded in 1969 with the central goals of self-advocacy, social justice and equal protection under the law for all members of society. The mission of the Law Center’s Public Health and Environmental Justice Project is to provide legal and technical expertise and assistance to communities of color and poverty in Southeast Pennsylvania that seek to overcome disproportionately distributed burdens of environmental impacts.

About Chester Environmental Partnership
Chester Environmental Partnership was founded by Reverend Horace Strand in 2005 with the goal of improving health and environmental conditions in the City of Chester, Delaware County, Pennsylvania.  It is a cooperative effort between various businesses, academia, healthcare organizations, non-profits, local churches and every level of government.

About Eddystone Residents for Positive Change
Eddystone Residents for Positive Change works with local industry to encourage responsible operations that protect the health, safety, and well-being of Eddystone residents.