Brought to you by Winston & Strawn LLP and Environmental Resources Management.

Transcription

1 The Future of Electric Generating Units Under the EPA s New NSR Rules, Cross-State Air Pollution Rules, and New Clean Air Act Regulations Brought to you by Winston & Strawn LLP and Environmental Resources Management.

2 Today s Speakers Jay Holloway Ken Weiss Liz Williamson Peter Belmonte George Holder 2

3 Ken Weiss, ERM Liz Williamson, Winston & Strawn George Holder, ERM 12:00 p.m. 1:15 p.m. (PST) 1:00 p.m. 2:15 p.m. (MST) 2:00 p.m. 3:15 p.m. (CST) 3:00 p.m. 4:15 5p p.m. (EST) 3

4 4 Ken Weiss, ERM

5 NSR Reform Regulatory Scorecard Scorecard in Effect 10 yr Baseline Emissions Look back NA for Utilities Actual to Future Actual Methodology Netting a New Issue Actual PALS Clean Unit Test Pollution Control Project Exclusion Flexible Permitting and NSR Green Groups RMRR Bright-Line Test Aggregation Rule Hourly Test for EGU s Abandoned, Stayed, or Revoked Abandoned, Stayed, or Revoked Abandoned, Stayed,or Revoked Abandoned, Stayed, or Revoked Abandoned, Stayed, or Revoked Abandoned, Stayed, or Revoked 5

6 Utility Impacts RMRR remains a WEPCO Test Pollution Control Projects (i.e., SCR) may be subject to NSR NSR Reform was no help GHGs are in the mix 6

7 Thank you! Ken Weiss, ERM +1 (610)

8 PSD Applicability Calculations and Title V Considerations Liz Williamson, Winston & Strawn 8

9 New Source Review Program Significant Emission Rates Once a source is determined to be major, the significance of the emission increase must be evaluated. The CAA establishes Significant Emission Rates for the six original criteria pollutants plus any pollutant with a NAAQS standard. The SERs for the six criteria pollutants are as follows: Carbon monoxide (CO): 100 tons/year Nitrogen oxides (NOx): 40 tons/year Sulfur dioxide (SO 2 ): 40 tons/year Ozone: 40 tons of volatile organic compounds (VOCs)/year Lead: 0.6 tons/year PM10: 25 tons/year Other Pollutants that must be considered in an NSR analysis: H 2SO 4, H 2S, Municipal Waste organics and metals, Municipal Solid Waste emissions, GHGs (Defined in 40 CFR as significant ). 9

10 NSR Emissions Increases at New Sources At a new source, if the potential to emit for any one of the six criteria pollutants is at a rate equal to or higher h than the relevant Significant ifi Emissions Rate threshold specified in the CAA for that pollutant, the control of that pollutant is subject to NSR. Potential to emit is calculated as the emissions that would occur if the source operated 24 hours a day for 365 days a year (8760 hours). 10

11 NSR Emissions Increases at Existing Sources An existing source will not be evaluated under NSR unless there is a major modification at the source. A modification is a physical or operational change. A modification is major if the proposed physical or operational change results in a significant emissions increase and a significant net increase. Whether an emissions increase is significant is determined by comparing the baseline actual emissions of the pollutant to the projected actual emissions of the pollutant. Netting takes into account contemporaneous increases and decreases in emissions. 11

12 PSD NSR Permits If the project results in a significant net emissions increase at an existing source of a criteria pollutant, the source is subject to PSD and must obtain a permit for the project. The PSD permit will require the following: Installation of Best Available Control Technology (BACT) Air Quality Analysis Additional Impacts Analysis Public Involvement 12

13 Performing an Emissions Analysis Under the Reasonable Possibility Rule Analyze high two of five-year baseline compared to conservative projection of five years following the project If projection shows more than 50% of the significance threshold for an NSR pollutant, analyze whether the increase is as a result of emissions that could have been accommodated in the baseline period and that are unrelated to the particular change If reasonable possibility (50%) threshold is triggered, then pre-project emissions submission required EGUs must follow up with five years of annual emissions data, non-eusgus only report significant post-project annual actual emissions increases 13

14 The Final Tailoring Rule Issued on May 13, 2010 Published in Federal Register on June 3, 2010 Tailors the requirements to focus PSD and Title V permit requirements on the largest emitting facilities Subjects facilities responsible for nearly 70% of the national GHG emissions from stationary sources to CAA permitting requirements This includes the nation s largest GHG emitters power plants, refineries, and cement production facilities Small farms, restaurants, and commercial facilities are shielded by this rule 14 Source: EPA

15 Pollutants Covered Sets thresholds for GHG emissions, addressing emissions from six GHGs: Carbon dioxide (CO 2 ) Methane (CH4) Nitrous oxide (N 2 O) Hydrofluorocarbons (HFCs) Perfluorocarbons (PFCs) Sulfur hexafluoride (SF 6 ) The aggregate sum of these six GHGs is the identified air pollutant in EPA s Light-Duty Vehicle Rule, and the associated Endangerment Finding and Cause or Contribute Finding 15 Source: EPA

16 GHG Pollutants Covered To determine applicability, a source s GHG emissions are calculated as the sum of the six gases on a CO 2 equivalent (CO 2 e) basis and compared against the relevant threshold 16 Source: EPA

17 Phase-In Steps: Step 1 January 2, 2011 to June 30, 2011 No new permitting actions due solely to GHG emissions during this time period; only sources undertaking permitting actions anyway for other pollutants will need to address GHG PSD permitting applicability: Anyway sources will be subject to the PSD requirements only if they increase GHG emissions by 75,000 tpy CO 2e or more Title V permitting applicability: Only those sources currently with Title V permits will address GHGs, and only when applying for, renewing, or revising their permits No sources will be subject to CAA permitting i requirements based solely on GHG emissions Covers sources responsible for 65% of total national stationary source GHG emissions i 17 Source: EPA

18 Phase-In Steps: Step 2 July 1, 2011 to June 30, 2013 Sources subject to GHG permitting requirements under step 1 will continue to be subject to GHG permitting requirements In addition, sources that emit or have the potential to emit GHGs at or above 100,000 tpy CO 2 e will also be subject to GHG permitting requirements as follows PSD permitting applicability triggered with construction that increases emissions A newly constructed source (which is not major for another pollutant) will not be subject to PSD unless it emits 100,000 tpy or more on a CO 2e basis A modification project at a major stationary source will not be subject to PSD unless it results in a net GHG emissions increase of 75,000 tpy or more on a CO 2 e basis 18 Source: EPA

19 Phase-In Steps: Step 2 (cont d.) Title V permitting applicability A GHG emission source (which is not already subject to Title V) will not be subject to Title V unless it emits 100,000 tpy or more on a CO 2 e basis These newly subject sources must apply within one year after becoming subject to the program, unless the permitting i authority sets an earlier deadlinedli This means that newly subject sources must apply for a Title V permit on or before July 1, 2012 (which is one year from July 1, 2011) Covers sources responsible for nearly 70% of total national stationary source GHG emissions 19 Source: EPA

20 Phase-In Steps: Step 3 The rule establishes an enforceable commitment to complete another rulemaking no later than July 1, 2012 We will propose or solicit comment on a possible step 3 of the phase-in plan EPA will consider, during the implementation of step 2, whether it will be possible to administer GHG permitting programs for additional sources. EPA will establish that step 3 would take effect on July 1, 2013, so that permitting authorities and sources can prepare for any additional GHG permitting action. Step 3, if different from step 2, will not require permitting of sources with GHG emissions below 50, tpy CO 2 e We also commit to explore a wide range of streamlining options on which we plan to take comment in the step 3 proposal In addition, we plan to solicit comment on a permanent exclusion of certain sources from PSD, Title V, or both 20 Source: EPA

21 Phase-in Steps: Further Action EPA will not require permits for smaller sources until April 30, 2016, or later The rule establishes an enforceable commitment for EPA to complete a study within five years projecting the administrative burdens that remain for small sources after EPA has had time to develop (and states have had time to adopt) p) streamlining measures to reduce the permitting burden for such sources We will use this study to serve as the basis for an additional rulemaking that would take further action to address small sources, as appropriate. We are making an enforceable commitment to complete this rulemaking by April 30, 2016 We plan to solicit comment on a permanent exclusion of certain sources from PSD, Title V, or both 21 Source: EPA

22 Permitting Steps Under the Tailoring Rule Step 1: Source already subject to PSD anyway (tpy CO 2 e) New source: 75,000 tpyco2e and 100/250 tpy GHGs on a mass basis Modification: 75,000 Step 2: Continue step 1 sources plus other large GHG emissions sources New source: 100,000 tpyco 2 e and 100/250 tpy GHGs on a mass basis Modification: 75,000 Step 3: Implementation of potential ti additional phase in and streamlining options 5 year study: To examine GHG permitting for smaller sources Implementation of rule based on 5 year study Source: EPA Study Complete

23 Biogenic Sources CO 2 emissions from biomass-fired and other biogenic sources are generated during the combustion or decomposition of biologically based material Includes facilities that emit CO 2 as a result of burning forest or agricultural products for energy, wastewater treatment and livestock management facilities, landfills, and fermentation processes for ethanol production EPA will complete a rulemaking that will defer permitting requirements for biomass fired and other biogenic CO 2 emissions for three years (This was to be completed in July, but has been delayed.) 22 Source: EPA

24 New Source Review Summary Analyze Projects Critically to Avoid NSR Liability Is my project high h profile? Is project routine? Do I need to perform an emissions i analysis? Is my emissions increase due to demand growth? How do I add GHGs to my NSR emissions analysis? 24

25 Reasonable Possibility Analyses for GHGs Challenge: Need to develop five year baseline GHGs and CO 2 e PTE for all existing units Issues to Consider: Analyze causes of GHG fluctuations Focus on potential new sources of GHGs like chemical processes such as FGDs (CO 2 ) and new transmission equipment (SF 6 6) Analyze efficiency increases and potential contemporaneous creditable reductions in GHGs 25

26 Reasonable Possibility Analyses for GHGs: Closer Look Baseline is not one size fits all Options to develop baseline: Is there any direct emissions data for the GHG at the plant Formulas used in GHG Reporting Rule AP-42 Factors for GHGs Adjustments due to control equipment on unit Leak rates of GHGs that are held in containers at plant Essential to develop a baseline using calculations that will be used in future projections (Apples to Apples comparison) 26

27 Reasonable Possibility Analyses for GHGs: Closer Look Carbon Dioxide CO 2 Good news: Many plants have CEMS data, easy to develop a baseline Bad news: The top GHG constituent of concern Example: Scrubber upgrades (CO 2 created due to limestone use in scrubber) Result: Must perform actual to projected actual analysis and carefully consider CO 2 significant net emissions increases 27

28 Reasonable Possibility Analyses for GHGs: Closer Look Nitrous Oxide (N 2 O) Unlikely to have actual emissions data Evaluate how to calculate GHG Reporting Rule formula, AP-42 Consider SCR, SNCR, and apply to formula to show impact of NO x reduction 28

29 Reasonable Possibility Analyses for GHGs: Closer Look Methane (CH 4 ) Unlikely to have actual emissions data Evaluate how to calculate GHG Reporting Rule formula, AP-42 Probably bl not an issue for coal-fired combustion units Requires consideration of other projects at the major stationary source, e.g., landfill expansions 29

30 Reasonable Possibility Analyses for GHGs: Closer Look Sulfur Hexafluoride (SF-6) Unlikely to have actual emissions data Issue for transmission system Is there equipment at the stationary source that contains SF-6? Probably not an issue for coal-fired combustion units Requires consideration of leak rate of this gas and whether it can be measured Isolate as unaffected by the project being evaluated at the plant 30

31 Reasonable Possibility Analyses for GHGs: Closer Look The Fluorocarbons (HFCs and PFCs) Unlikely to have actual emissions data Industries of concern are not electric power industry (chemical processing, air conditioners, fire fighting) Is there equipment at the stationary source that contains HFCs or PFCs? Not an issue for coal-fired combustion units Requires consideration of leak rate if any is found on site Isolate as unaffected by the project being evaluated at the plant 31

32 32 Sample Typical NSR Actual to Projected Actual Analysis Format

33 How do GHGs fit into the Typical NSR Actual to Projected Actual Analysis Format? Some GHG pollutants fit (actual or calculated) and some do not Oh Other options for those that do not fit: In written NSR analysis, explain lack of relationship to the project in accompanying memorandum To do this, must have enough facts about those gases to make this case Calculate your CO e based on numbers only for those that t are actual or calculated l 33

34 Title V Under GHG Tailoring Rule EPA s guidance takes the position that GHG Reporting Rule Requirements should not be included d as Title V permit conditions Title V Petitions to Object Potential to accelerate BACT sooner than July 2011 NSPS proposal deadline State GHG requirements are a wild card Potential impact of EPA s delay on biomass rules? 34

35 Thank you! Liz Williamson +1 (202)

36 GHG BACT Review More than a case study what the limit should look like George Holder, ERM 36

37 BACT Definition an emissions i limitation i i (including a visible ibl emission i standard) based on the maximum degree of reduction for each pollutant subject to regulation under the Clean Air Act which would be emitted from any proposed major stationary source or major modification i which h the Administrator, on a case-by-case basis, taking into account energy, environmental, and economic impacts and other costs, determines is achievable for such facility through application i of production processes and available methods, systems, and techniques, including fuel cleaning, clean fuels, or treatment or innovative fuel combustion techniques for control of each such pollutant. 37

38 Guidance EPA guidance document PSD and Title V Permitting Guidance for Greenhouse Gases released November 2010; Revised March 2011 Heavy reliance on energy efficiency Add-on controls must be considered including CCS No Redefining the source Additional EPA guidance documents also released for seven sectors, including coal-fired EGU with more specific discussions of how to address BACT Documents focus on techniques to be considered as opposed to defining BACT (i.e., information source) 38

39 Experience to Date EPA Comment Letters on Proposed GHG Permitting Actions at: ml As of December permits issued 39

40 GHG BACT Issues Need a TPY limit? What averaging time? How do you demonstrate compliance? What does efficiency really mean? What in the world do we do with Startup and Shutdown efficiency? What happens to efficiency over time? If I perform maintenance on my unit to keep the efficiency up, is that RMRR? 40

41 Project Purpose Provide reliable and affordable power Defined power generation modes (Baseload, Core Load Following, Seasonal Load, Peaking, Reserve) Must maintain flexibility - A highly efficient unit that may be fully utilized, but operational capability to perform in a load following manner The business case for this unit depends on the flexibility to be able to respond to both scenarios. Therefore, the permitting case must account for the most conservative scenario for the deployment of the unit which includes the less efficient core load following or reduced d load mode of operation 41

42 Project Overview Entergy Ninemile Point Unit 6 Combined Cycle, Gas Turbine 2 x 1, 7FA Class Duct Firing Supplemental ULSD Firing Other GHG Sources: Natural Gas Auxiliary Boiler Diesel Emergency Generator Diesel Emergency Firewater Pump Decommissioned two existing natural gas fired boilers 42

43 BACT Overview CCS considered, available, technically infeasible, eliminated Step 2 (Note EPA has made clear that CCS is now considered feasible) Initially used Step 4 to further argue against CCS using other adverse environmental impacts, logistical issues, and relative expense, but that approach was rejected without a cost effectiveness number. Today that is the path forward. Note Wolverine Power used $5/ton Energy Efficiencyi Because of 2 x 1 configuration, power from steam turbine generator cannot be individually attributed to either GT capped approach used. 43

44 And, The Limit 7,630 BTU/kWHr 44

45 The Actual Permit Language From the PSD Permit: BACT for control of Greenhouse Gas emissions from the Ninemile CCGT project shall be to properly operate and perform necessary routine maintenance, repair, and replacement at Unit 6 to maintain heat efficiency so that the gross heat rate shall be at or below 7,630 BTU/kWHr (HHV) based on an annual average. 45

46 Monitoring? For mass based limits, CO 2 CEMS doesn t address other pollutants. Need the long term average to allow for periods of less efficient operation core load following, maybe wintertime operation. 46

47 The TV Monitoring Language Permittee shall measure and record both the total fuel input of Natural Gas and ultra low sulfur diesel (ULSD) ( wt%) fed to RLP025, CCGT-6A Combined Cycle Unit 6A, and RLP026 CCGT-6B Combined Cycle Unit 6B, using fuel flow meters certified in accordance with 40 CFR Part 75. The total gross power generation shall be directly measured at the units, RLP025 and RLP026. The total gross heat rate shall be determined by dividing the total gross power generation by the total fuel input. Total gross heat rate, gross power generation, and the fuel input data recordkeeping by electronic or hard copy monthly. Keep records of the total gross heat rate, gross power generation, and the fuel input each month, as well as the total gross heat rate, gross power generation, and the fuel input for the last twelve months. Submit report: Due annually, by the 31st of March. Report the total annual gross heat rate for the preceding calendar year. 47

48 How We Got There Design Heat Balance Operating Case Gross Power (kw) Gross Heat Rate (Btu/kWHr) (HHV) 1 Annual Operating Time (Hours) 2 Annual Fuel Input (MMBtu) Annual Gross Power (kw-hr) Gas Fired Operation w/ HRSG Duct Firing 564,103 6,766 3,500 13,357,747 1,974,360,500 Oil Fired Operation 575,878 7, ,038, ,939,000 Reduced Load Gas Fired Operation 3 303,160 7,949 4,237 10,209,423 1,284,397, Startup and Shutdown ,559 0 Subtotal - - 8,760 25,771,059 3,546,697,472 Total Annual Gross Heat Rate (Btu/kWHr) (HHV) 7,266 Degradation Penalty (5%) Total Annual Gross Heat Rate (Btu/kWHr) (HHV) 7,630 48

49 Footnotes/Assumptions 1. Gross Heat Rate Preliminary 2. DB Operation is inconsistent between this calcuation and the criteria pollutant calculation; Hours are not a limitation 3. Reduced load is greater than 60% operation but less and full load 4. SU/SD from typical vendor supplied curves and includes SU hold times 5. The degradation penalty envisions a natural decrease in unit efficiency i over time. Includes vendor provided d data on the GT and engineering judgment for other equipment including the HRSG and steam generator 49

50 What Says

51 How We Got There Design Heat Balance Operating Case Gross Power (kw) Gross Heat Rate (Btu/kWHr) (HHV) 1 Annual Operating Annual Fuel Time Input (Hours) 2 (MMBtu) Annual Gross Power (kw-hr) Gas Fired Operation w/ HRSG Duct Firing 564,103 6,766 3,500 13,357, ,974,360,500 Oil Fired Operation 575,878 7, ,038, ,939,000 Reduced Load Gas Fired Operation 3 303,160 7,949 4,237 10,209,423 1,284,397,972 Startup and Shutdown ,559 0 Subtotal - - 8,760 25,771,059 3,546,697,472 Total Annual Gross Heat Rate (Btu/kWHr) (HHV) 7,266 Degradation Penalty y( (5%) Total Annual Gross Heat Rate (Btu/kWHr) (HHV) 7,630 51

52 BACT for Other Sources 40 CFR Part 98 Tables C-1 and C-2 Source CO 2 (lb/mmbtu) CH 4 (lb/mmbtu) N 2 O (lb/mmbtu) Aux Boiler E Gen FW Pump Avoids a TPY limit Natural Gas fired Auxiliary Boiler Proper operation and good combustion practices produces two effects. The first is to minimize i i natural gas fuel consumption by reducing energy waste as much as possible. The second is to lower the GWP effect by converting more CH 4 into CO 2. 52

53 EPA s Comments EPA Comment Letters on GHG Permitting Actions It s not there 08/10/2011 CrawfordRenewable Energy (PDF) (2pp, 70k) 08/16/2011 Showa Denko (PDF) (2pp, 87k) 09/12/2011 Abengoa Bioenergy (PDF) (8pp, 402k) 53

54 Why it worked? Collaboration Team with LDEQ with EPA Two LDEQ meetings; hand-in-hand h d workflow through the approval process Preplanning Managing expectations Educating the Project Team Inherently green project Early? 54

55 Takeaways Universal Comments EPA except in very unusual circumstances will insist on CO 2 e emissions limits Averaging gtime for GHG should be 12-month rolling average The Agency will require consideration of CO 2 continuous emission monitors and documented approach to other GHGs Don t forget to specify test methods for all pollutants including GHGs Address emissions during startup and shutdown CCS must be considered d but is likely l not economical EPA must have a check-list for review 55

56 Takeaways (2) The Unusual NSCR may be preferable to SCR due to N 2 O reductions See U.S. Nitrogen Permit Don t forget non-traditional sources such as: Fire pumps and emergency generators See Crawford Renewable Energy Circuit Breakers which may be fugitive source of SF6 - See Hoosier Energy and TEC (draft IDEM permit) For uncertain GHG emissions, include a conservative emissions limit as BACT and adjust downwards based on stack testing See Elizabethtown Energy Permits should have ton per year and ton/megawatt-hour limits See Kennecott Repowering Project Carbon Capture is commercially available for low concentration streams (8 to 12%, such as gas turbines) See University of Wisconsin 56

57 Hopeful Recommendations Don t accept everything you hear With a little planning you can negotiate A good technical argument helps Work with your regulators (hopefully ) 57

58 Thank you! George Holder +1 (225)(