What’s the True Cost of New NAAQS Ozone Standards?

April 26, 2016

In October of 2015 the Environmental Protection Agency (EPA) finalized its newest revisions for the ozone National Ambient Air Quality Standards (NAAQS). These standards create new, more stringent rules that lower both the primary and secondary air quality levels from 75 parts per billion to 70 parts per billion. The goal of this change is to improve air quality by requiring companies to make significant changes to their business practices that lower their overall emissions to within the new guidelines. The outcry of the business community, however, has been overwhelming. Many have asserted that the standards pose an undue burden on businesses and have called the new requirements overbearing and unrealistic.

clouds-165894_1920Ozone is formed when nitrogen oxides (NOx) and volatile organic compounds (VOCs) react in the presence of sunlight. With the announcement of the new NAAQS standards, the EPA asserts that businesses must lower their emissions of NOx and VOCs below levels previously judged to be safe in order to adequately protect public health. Increased ozone levels have been shown to aggravate both heart and lung disease and have also been linked to premature death.

While the standards do not directly limit emissions of NOx and VOC at this time, they do create a process that is designed to identify areas that fall outside of the current guidelines. By implementing a series of monitoring initiatives, both states and the EPA can uncover areas of noncompliance before the new standards take effect in October of 2017. Most states have until 2020 to achieve compliance, though an extension to 2037 is available to those states facing the most extreme adjustments.

While few would argue against clean air, the true question at the heart of the matter is cost—and how clean is clean enough? Many organizations and individuals, including members of Congress, have questioned if the incurred cost of implementing these standards is justified. The EPA estimates that the cost of implementing these standards will stand at under $1.5 billion annually, but other private estimates range between $2.9 and $5.9 billion annually. There are also significant, as yet unanswered questions about the benefits of the new standards and whether they have been overstated by the EPA.

Over the last 40 years, overall air quality has improved dramatically. While pollution regulations have influenced emissions, the burden has been on America’s economic producers.

This significant change has come from industries investing heavily in improving their own production efficiencies and in turn reducing their environmental impact. And those investments are paying off. The oil and gas industry alone has poured $284 billion into improving its environment impact over the last 25 years. This type of dedication to change is easily visible in the form of improved technologies and enhanced business practices that are having an enormous, positive impact on air quality. Many feel that the trend of improvement will continue even without forcing new, costly standards across all industries.

The true cost of implementing the new NAAQS standards could be staggering. Some experts suggest that these standards would ultimately lower the annual Gross Domestic Product (GDP) by $1.78 trillion between 2017 and 2040, a change that could result in as many as 1.4 million fewer jobs. Other studies on the changes predict the losses to be two or even three times higher.

It’s a sobering thought for business owners, and it has spurred many to take the issue to the courts to fight for an alternative. We likely won’t know the final outcome anytime soon, however, and in the meantime business owners must prepare for the enforcement of these standards. If you need help understanding what the new NAAQs standards could mean for your business and how applying them could change your daily operations, PPM is ready to help.

Our team is highly trained and understands the realities you face in this ever-changing business and political world. We will help you find the peace of mind you need to stay competitive and keep focused on the future.