ISSUES AND OPTIONS FOR EMISSION REDUCTIONS

Transcription

1 BURRARD THERMAL GENERATING PLANT ISSUES AND OPTIONS FOR EMISSION REDUCTIONS THE REPORT OF THE BURRARD TASK FORCE SUBMITTED TO THE PROVINCE OF BRITISH COLUMBIA AND THE GREATER VANCOUVER REGIONAL DISTRICT MARCH 15,1993

2 The members of the Burrard Task Force are: Mr. Gordon MacLean Dr. Mark Jaccard Dr. Marvin Shaffer Mr. Lome Nelson Mr. Hu Wallis Mr. Morris Mennell Mr. Stuart Hertzog Director, Electricity Policy Branch Ministry of Energy, Mines and Petroleum Resources Chair and Chief Executive Officer B.C. Utilities Commission Assistant Secretary Capital Evaluation and Economic Analysis Crown Corporations Secretariat Production Manager Lower Mainland and Vancouver Island B.C. Hydro Manager, Air Policy and Assessment Air Resources Branch Ministry of Environment, Lands and Parks Administrator, Program Planning and Development Air Quality and Source Control Greater Vancouver Regional District Public member selected from the GVRD Air Quality Advisory Committee1 The members of the Task Force have worked together to bring their perspectives and knowledge to bear on the issues, and have produced a report based on a common understanding and as much of a consensus as possible. Mr. Hertzog has prepared an independent position, which is attached in Appendix 6. The individual participation of Task Force members does not necessarily bring with it the formal endorsement of their ministries or agencies for all comments made in the report, nor does it prejudge matters that are the responsibility of regulatory authorities. The work of the Task Force was supported by extensive efforts on the part of many other individuals. In particular, Mr. Les MacLaren, Senior Economist at the Ministry of Energy, Mines and Petroleum Resources served the Task Force by documenting its decisions, compiling material contributed by others, and providing much of the written analysis. Others who deserve special mention and appreciation are: Mr. Ken Spafford, Manager of Resource

3 Optimization at B.C. Hydro; Mr. Steve Sakiyama and Dr. Jia Zhang of the Air Resources Branch of the Ministry of Environment, Lands and Parks; Mr. Peter Calder, Project Manager of the Burrard Utilization Study for B.C. Hydro; Mr. Neptune Smith, Manager of Electrical Engineering at the B.C. Utilities Commission; Mr. John Due, Consultant to the Crown Corporations Secretariat; Mr. A1 Brotherston, Senior Environmental Coordinator at B. C. Hydro: and Dr. Kamal Bhattacharyya of the Greater Vancouver Regional District. Notes: 1. Mr. Hertzog was selected from a group of interested public members of the GVRD Air Quality Advisory Committee, which were convened by the Chair of that Committee after a request from the Task Force seeking a representative to liaise with the GVRD's public consultation body.

4 EXECUTIVE SUMMARY B.C. Hydro owns and operates the Burrard Thermal Generating Plant (Burrard) in Port Moody. In its June 1992 report on the B.C. Hydro/POWEREX Energy Removal Certificate Application, the B.C. Utilities Commission (BCUC) made a number of recommendations with respect to Burrard to address air quality issues in the Lower Mainland. In addition, B.C. Hydro's air emission permit issued by the GVRD will expire on April 30, In light of these circumstances, the Burrard Task Force was established to consider the environmental impacts of Burrard, and to develop options for the reduction of nitrogen oxides (NO,) emissions from the plant, consistent with regulatory targets and provincial policy. The Task Force reviewed the material prepared by the BCUC and other information available on air quality issues in the Lower Fraser Valley, which indicated that NOx is the pollutant of primary concern at Burrard. The Task Force also noted that C02 emissions are an emerging concern which, for Burrard, needs to be addressed in the context of alternative generating resources in the western interconnected electricity system. The Task Force considered B.C. Hydro's recently completed Burrard Utilization Study, and requested that B.C. Hydro undertake additional analysis using its system models. It reviewed the various regulatory roles and objectives which relate to Burrard, particularly the provincial best available control technology (BACT) policy, and the GVRD targets for emission reductions in the Lower Fraser Valley. The Task Force recognizes the importance of Burrard to the B.C. Hydro system in its role of providing displaceable firm energy. Compared to the option of retiring the plant, retaining and retrofitting the plant to reduce NOx emissions has a present value in excess of $500 million. The value is increased with a planned upgraded maintenance program which would reduce the forced outage rate and raise the maximum plant availability from 70 percent to 85 percent. The value can be augmented further by an increase in the rating of five of the six units from 150 MW to their full capability of 160 MW, once the units have been retrofitted with emission controls. The Task Force recommends a phased NOx reduction program for Burrard, based on provincial and regional air management policy, which requires that significant pollution sources be fitted with emission controls. For Burrard, the most cost-effective technology for reducing NOx emissions is Selective Catalytic Reduction (SCR), which would be installed as soon as practicable, with retrofit of the first unit expected to be complete by mid After an initial & testing period, a would decline in annual steps to 200 1, with the reductions corresponding to the phased installation of SCR emissions controls on the remaining units.

5 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

6 The Task Force supports the BUS recommendation that B.C. Hydro fbnd airshed modeling initiatives. The Task Force recommends that B.C. Hydro broaden the scope of this funding, in consultation with government and academic agencies, to include other studies, in areas such as emission trading and examining the damage costs of short-term air quality exceedances, that may also help to resolve the air quality issues related to Burrard. The Task Force also endorses B.C. Hydro's proposal to install continuous monitoring equipment on all the units by The report of the Burrard Task Force is advisory, and is intended both to support the Task Force recommendations, and to provide as much usefbl information as possible to the ongoing public and regulatory processes affecting the plant.

7 TABLE OF CONTENTS Foreword Executive Summary... iv Introduction Background of the Burrard Plant 2.1 History and Roles Within the System Environmental Considerations Emission Control Initiatives at the Burrard Plant Burrard Utilization Study Regulation of the Burrard Plant 3.1 Introduction Waste Management Act - GVRD and MELP Roles Bill 29: Amendments to the Waste Management Act Powers of the Minister and the Lieutenant Governor in Council Utilities Commission Act MEMPR BCUC Air Quality Issues in the Lower Fraser Valley 4.1 Characteristics of the Lower Fraser Valley Airshed Sources of Air Emissions Air Quality Issues Ground-Level Ozone and Urban Smog Fine Particulates and Visibility Carbon Monoxide Burrard Thermal Generating Plant Local Impacts Regional Impacts Global Impacts Emission Control Initiatives and Agreements 5.1 International Federal Provincial Regional Emission Reduction Options for Burrard 6.1 Baseline for Emission Reductions Technologies and Measures to Meet the GVRD Emissions Target vii.

8 Optimization at B.C. Hydro; Mr. Steve Sakiyama and Dr. Jia Zhang of the Air Resources Branch of the Ministry of Environment, Lands and Parks; Mr. Peter Calder, Project Manager of the Burrard Utilization Study for B.C. Hydro; Mr. Neptune Smith, Manager of Electrical Engineering at the B.C. Utilities Commission; Mr. John Due, Consultant to the Crown Corporations Secretariat; Mr. A1 Brotherston, Senior Environmental Coordinator at B. C. Hydro: and Dr. Kamal Bhattacharyya of the Greater Vancouver Regional District. Notes: 1. Mr. Hertzog was selected from a group of interested public members of the GVRD Air Quality Advisory Committee, which were convened by the Chair of that Committee after a request from the Task Force seeking a representative to liaise with the GVRD's public consultation body.

9 EXECUTIVE SUMMARY B.C. Hydro owns and operates the Burrard Thermal Generating Plant (Burrard) in Port Moody. In its June 1992 report on the B.C. Hydro/POWEREX Energy Removal Certificate Application, the B.C. Utilities Commission (BCUC) made a number of recommendations with respect to Burrard to address air quality issues in the Lower Mainland. In addition, B.C. Hydro's air emission permit issued by the GVRD will expire on April 30, In light of these circumstances, the Burrard Task Force was established to consider the environmental impacts of Burrard, and to develop options for the reduction of nitrogen oxides (NO,) emissions from the plant, consistent with regulatory targets and provincial policy. The Task Force reviewed the material prepared by the BCUC and other information available on air quality issues in the Lower Fraser Valley, which indicated that NOx is the pollutant of primary concern at Burrard. The Task Force also noted that C02 emissions are an emerging concern which, for Burrard, needs to be addressed in the context of alternative generating resources in the western interconnected electricity system. The Task Force considered B.C. Hydro's recently completed Burrard Utilization Study, and requested that B.C. Hydro undertake additional analysis using its system models. It reviewed the various regulatory roles and objectives which relate to Burrard, particularly the provincial best available control technology (BACT) policy, and the GVRD targets for emission reductions in the Lower Fraser Valley. The Task Force recognizes the importance of Burrard to the B.C. Hydro system in its role of providing displaceable firm energy. Compared to the option of retiring the plant, retaining and retrofitting the plant to reduce NOx emissions has a present value in excess of $500 million. The value is increased with a planned upgraded maintenance program which would reduce the forced outage rate and raise the maximum plant availability from 70 percent to 85 percent. The value can be augmented further by an increase in the rating of five of the six units from 150 MW to their full capability of 160 MW, once the units have been retrofitted with emission controls. The Task Force recommends a phased NOx reduction program for Burrard, based on provincial and regional air management policy, which requires that significant pollution sources be fitted with emission controls. For Burrard, the most cost-effective technology for reducing NOx emissions is Selective Catalytic Reduction (SCR), which would be installed as soon as practicable, with retrofit of the first unit expected to be complete by mid After an initial & testing period, a would decline in annual steps to 200 1, with the reductions corresponding to the phased installation of SCR emissions controls on the remaining units.

10 EXECUTIVE SUMMARY B.C. Hydro owns and operates the Burrard Thermal Generating Plant (Burrard) in Port Moody. In its June 1992 report on the B.C. Hydro/POWEREX Energy Removal Certificate Application, the B.C. Utilities Commission (BCUC) made a number of recommendations with respect to Burrard to address air quality issues in the Lower Mainland. In addition, B.C. Hydro's air emission permit issued by the GVRD will expire on April 30, In light of these circumstances, the Burrard Task Force was established to consider the environmental impacts of Burrard, and to develop options for the reduction of nitrogen oxides (NO,) emissions from the plant, consistent with regulatory targets and provincial policy. The Task Force reviewed the material prepared by the BCUC and other information available on air quality issues in the Lower Fraser Valley, which indicated that NOx is the pollutant of primary concern at Burrard. The Task Force also noted that C02 emissions are an emerging concern which, for Burrard, needs to be addressed in the context of alternative generating resources in the western interconnected electricity system. The Task Force considered B.C. Hydro's recently completed Burrard Utilization Study, and requested that B.C. Hydro undertake additional analysis using its system models. It reviewed the various regulatory roles and objectives which relate to Burrard, particularly the provincial best available control technology (BACT) policy, and the GVRD targets for emission reductions in the Lower Fraser Valley. The Task Force recognizes the importance of Burrard to the B.C. Hydro system in its role of providing displaceable firm energy. Compared to the option of retiring the plant, retaining and retrofitting the plant to reduce NOx emissions has a present value in excess of $500 million. The value is increased with a planned upgraded maintenance program which would reduce the forced outage rate and raise the maximum plant availability from 70 percent to 85 percent. The value can be augmented further by an increase in the rating of five of the six units from 150 MW to their full capability of 160 MW, once the units have been retrofitted with emission controls. The Task Force recommends a phased NOx reduction program for Burrard, based on provincial and regional air management policy, which requires that significant pollution sources be fitted with emission controls. For Burrard, the most cost-effective technology for reducing NOx emissions is Selective Catalytic Reduction (SCR), which would be installed as soon as practicable, with retrofit of the first unit expected to be complete by mid After an initial & testing period, a would decline in annual steps to 200 1, with the reductions corresponding to the phased installation of SCR emissions controls on the remaining units.

11 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

12 EXECUTIVE SUMMARY B.C. Hydro owns and operates the Burrard Thermal Generating Plant (Burrard) in Port Moody. In its June 1992 report on the B.C. Hydro/POWEREX Energy Removal Certificate Application, the B.C. Utilities Commission (BCUC) made a number of recommendations with respect to Burrard to address air quality issues in the Lower Mainland. In addition, B.C. Hydro's air emission permit issued by the GVRD will expire on April 30, In light of these circumstances, the Burrard Task Force was established to consider the environmental impacts of Burrard, and to develop options for the reduction of nitrogen oxides (NO,) emissions from the plant, consistent with regulatory targets and provincial policy. The Task Force reviewed the material prepared by the BCUC and other information available on air quality issues in the Lower Fraser Valley, which indicated that NOx is the pollutant of primary concern at Burrard. The Task Force also noted that C02 emissions are an emerging concern which, for Burrard, needs to be addressed in the context of alternative generating resources in the western interconnected electricity system. The Task Force considered B.C. Hydro's recently completed Burrard Utilization Study, and requested that B.C. Hydro undertake additional analysis using its system models. It reviewed the various regulatory roles and objectives which relate to Burrard, particularly the provincial best available control technology (BACT) policy, and the GVRD targets for emission reductions in the Lower Fraser Valley. The Task Force recognizes the importance of Burrard to the B.C. Hydro system in its role of providing displaceable firm energy. Compared to the option of retiring the plant, retaining and retrofitting the plant to reduce NOx emissions has a present value in excess of $500 million. The value is increased with a planned upgraded maintenance program which would reduce the forced outage rate and raise the maximum plant availability from 70 percent to 85 percent. The value can be augmented further by an increase in the rating of five of the six units from 150 MW to their full capability of 160 MW, once the units have been retrofitted with emission controls. The Task Force recommends a phased NOx reduction program for Burrard, based on provincial and regional air management policy, which requires that significant pollution sources be fitted with emission controls. For Burrard, the most cost-effective technology for reducing NOx emissions is Selective Catalytic Reduction (SCR), which would be installed as soon as practicable, with retrofit of the first unit expected to be complete by mid After an initial & testing period, a would decline in annual steps to 200 1, with the reductions corresponding to the phased installation of SCR emissions controls on the remaining units.

13 EXECUTIVE SUMMARY B.C. Hydro owns and operates the Burrard Thermal Generating Plant (Burrard) in Port Moody. In its June 1992 report on the B.C. Hydro/POWEREX Energy Removal Certificate Application, the B.C. Utilities Commission (BCUC) made a number of recommendations with respect to Burrard to address air quality issues in the Lower Mainland. In addition, B.C. Hydro's air emission permit issued by the GVRD will expire on April 30, In light of these circumstances, the Burrard Task Force was established to consider the environmental impacts of Burrard, and to develop options for the reduction of nitrogen oxides (NO,) emissions from the plant, consistent with regulatory targets and provincial policy. The Task Force reviewed the material prepared by the BCUC and other information available on air quality issues in the Lower Fraser Valley, which indicated that NOx is the pollutant of primary concern at Burrard. The Task Force also noted that C02 emissions are an emerging concern which, for Burrard, needs to be addressed in the context of alternative generating resources in the western interconnected electricity system. The Task Force considered B.C. Hydro's recently completed Burrard Utilization Study, and requested that B.C. Hydro undertake additional analysis using its system models. It reviewed the various regulatory roles and objectives which relate to Burrard, particularly the provincial best available control technology (BACT) policy, and the GVRD targets for emission reductions in the Lower Fraser Valley. The Task Force recognizes the importance of Burrard to the B.C. Hydro system in its role of providing displaceable firm energy. Compared to the option of retiring the plant, retaining and retrofitting the plant to reduce NOx emissions has a present value in excess of $500 million. The value is increased with a planned upgraded maintenance program which would reduce the forced outage rate and raise the maximum plant availability from 70 percent to 85 percent. The value can be augmented further by an increase in the rating of five of the six units from 150 MW to their full capability of 160 MW, once the units have been retrofitted with emission controls. The Task Force recommends a phased NOx reduction program for Burrard, based on provincial and regional air management policy, which requires that significant pollution sources be fitted with emission controls. For Burrard, the most cost-effective technology for reducing NOx emissions is Selective Catalytic Reduction (SCR), which would be installed as soon as practicable, with retrofit of the first unit expected to be complete by mid After an initial & testing period, a would decline in annual steps to 200 1, with the reductions corresponding to the phased installation of SCR emissions controls on the remaining units.

14 EXECUTIVE SUMMARY B.C. Hydro owns and operates the Burrard Thermal Generating Plant (Burrard) in Port Moody. In its June 1992 report on the B.C. Hydro/POWEREX Energy Removal Certificate Application, the B.C. Utilities Commission (BCUC) made a number of recommendations with respect to Burrard to address air quality issues in the Lower Mainland. In addition, B.C. Hydro's air emission permit issued by the GVRD will expire on April 30, In light of these circumstances, the Burrard Task Force was established to consider the environmental impacts of Burrard, and to develop options for the reduction of nitrogen oxides (NO,) emissions from the plant, consistent with regulatory targets and provincial policy. The Task Force reviewed the material prepared by the BCUC and other information available on air quality issues in the Lower Fraser Valley, which indicated that NOx is the pollutant of primary concern at Burrard. The Task Force also noted that C02 emissions are an emerging concern which, for Burrard, needs to be addressed in the context of alternative generating resources in the western interconnected electricity system. The Task Force considered B.C. Hydro's recently completed Burrard Utilization Study, and requested that B.C. Hydro undertake additional analysis using its system models. It reviewed the various regulatory roles and objectives which relate to Burrard, particularly the provincial best available control technology (BACT) policy, and the GVRD targets for emission reductions in the Lower Fraser Valley. The Task Force recognizes the importance of Burrard to the B.C. Hydro system in its role of providing displaceable firm energy. Compared to the option of retiring the plant, retaining and retrofitting the plant to reduce NOx emissions has a present value in excess of $500 million. The value is increased with a planned upgraded maintenance program which would reduce the forced outage rate and raise the maximum plant availability from 70 percent to 85 percent. The value can be augmented further by an increase in the rating of five of the six units from 150 MW to their full capability of 160 MW, once the units have been retrofitted with emission controls. The Task Force recommends a phased NOx reduction program for Burrard, based on provincial and regional air management policy, which requires that significant pollution sources be fitted with emission controls. For Burrard, the most cost-effective technology for reducing NOx emissions is Selective Catalytic Reduction (SCR), which would be installed as soon as practicable, with retrofit of the first unit expected to be complete by mid After an initial & testing period, a would decline in annual steps to 200 1, with the reductions corresponding to the phased installation of SCR emissions controls on the remaining units.

15 EXECUTIVE SUMMARY B.C. Hydro owns and operates the Burrard Thermal Generating Plant (Burrard) in Port Moody. In its June 1992 report on the B.C. Hydro/POWEREX Energy Removal Certificate Application, the B.C. Utilities Commission (BCUC) made a number of recommendations with respect to Burrard to address air quality issues in the Lower Mainland. In addition, B.C. Hydro's air emission permit issued by the GVRD will expire on April 30, In light of these circumstances, the Burrard Task Force was established to consider the environmental impacts of Burrard, and to develop options for the reduction of nitrogen oxides (NO,) emissions from the plant, consistent with regulatory targets and provincial policy. The Task Force reviewed the material prepared by the BCUC and other information available on air quality issues in the Lower Fraser Valley, which indicated that NOx is the pollutant of primary concern at Burrard. The Task Force also noted that C02 emissions are an emerging concern which, for Burrard, needs to be addressed in the context of alternative generating resources in the western interconnected electricity system. The Task Force considered B.C. Hydro's recently completed Burrard Utilization Study, and requested that B.C. Hydro undertake additional analysis using its system models. It reviewed the various regulatory roles and objectives which relate to Burrard, particularly the provincial best available control technology (BACT) policy, and the GVRD targets for emission reductions in the Lower Fraser Valley. The Task Force recognizes the importance of Burrard to the B.C. Hydro system in its role of providing displaceable firm energy. Compared to the option of retiring the plant, retaining and retrofitting the plant to reduce NOx emissions has a present value in excess of $500 million. The value is increased with a planned upgraded maintenance program which would reduce the forced outage rate and raise the maximum plant availability from 70 percent to 85 percent. The value can be augmented further by an increase in the rating of five of the six units from 150 MW to their full capability of 160 MW, once the units have been retrofitted with emission controls. The Task Force recommends a phased NOx reduction program for Burrard, based on provincial and regional air management policy, which requires that significant pollution sources be fitted with emission controls. For Burrard, the most cost-effective technology for reducing NOx emissions is Selective Catalytic Reduction (SCR), which would be installed as soon as practicable, with retrofit of the first unit expected to be complete by mid After an initial & testing period, a would decline in annual steps to 200 1, with the reductions corresponding to the phased installation of SCR emissions controls on the remaining units.

16 EXECUTIVE SUMMARY B.C. Hydro owns and operates the Burrard Thermal Generating Plant (Burrard) in Port Moody. In its June 1992 report on the B.C. Hydro/POWEREX Energy Removal Certificate Application, the B.C. Utilities Commission (BCUC) made a number of recommendations with respect to Burrard to address air quality issues in the Lower Mainland. In addition, B.C. Hydro's air emission permit issued by the GVRD will expire on April 30, In light of these circumstances, the Burrard Task Force was established to consider the environmental impacts of Burrard, and to develop options for the reduction of nitrogen oxides (NO,) emissions from the plant, consistent with regulatory targets and provincial policy. The Task Force reviewed the material prepared by the BCUC and other information available on air quality issues in the Lower Fraser Valley, which indicated that NOx is the pollutant of primary concern at Burrard. The Task Force also noted that C02 emissions are an emerging concern which, for Burrard, needs to be addressed in the context of alternative generating resources in the western interconnected electricity system. The Task Force considered B.C. Hydro's recently completed Burrard Utilization Study, and requested that B.C. Hydro undertake additional analysis using its system models. It reviewed the various regulatory roles and objectives which relate to Burrard, particularly the provincial best available control technology (BACT) policy, and the GVRD targets for emission reductions in the Lower Fraser Valley. The Task Force recognizes the importance of Burrard to the B.C. Hydro system in its role of providing displaceable firm energy. Compared to the option of retiring the plant, retaining and retrofitting the plant to reduce NOx emissions has a present value in excess of $500 million. The value is increased with a planned upgraded maintenance program which would reduce the forced outage rate and raise the maximum plant availability from 70 percent to 85 percent. The value can be augmented further by an increase in the rating of five of the six units from 150 MW to their full capability of 160 MW, once the units have been retrofitted with emission controls. The Task Force recommends a phased NOx reduction program for Burrard, based on provincial and regional air management policy, which requires that significant pollution sources be fitted with emission controls. For Burrard, the most cost-effective technology for reducing NOx emissions is Selective Catalytic Reduction (SCR), which would be installed as soon as practicable, with retrofit of the first unit expected to be complete by mid After an initial & testing period, a would decline in annual steps to 200 1, with the reductions corresponding to the phased installation of SCR emissions controls on the remaining units.

17 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

18 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

19 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

20 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

21 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

22 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

23 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

24 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

25 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

26 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

27 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

28 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

29 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

30 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

31 The Task Force supports the BUS recommendation that B.C. Hydro fbnd airshed modeling initiatives. The Task Force recommends that B.C. Hydro broaden the scope of this funding, in consultation with government and academic agencies, to include other studies, in areas such as emission trading and examining the damage costs of short-term air quality exceedances, that may also help to resolve the air quality issues related to Burrard. The Task Force also endorses B.C. Hydro's proposal to install continuous monitoring equipment on all the units by The report of the Burrard Task Force is advisory, and is intended both to support the Task Force recommendations, and to provide as much usefbl information as possible to the ongoing public and regulatory processes affecting the plant.

32 The Task Force supports the BUS recommendation that B.C. Hydro fbnd airshed modeling initiatives. The Task Force recommends that B.C. Hydro broaden the scope of this funding, in consultation with government and academic agencies, to include other studies, in areas such as emission trading and examining the damage costs of short-term air quality exceedances, that may also help to resolve the air quality issues related to Burrard. The Task Force also endorses B.C. Hydro's proposal to install continuous monitoring equipment on all the units by The report of the Burrard Task Force is advisory, and is intended both to support the Task Force recommendations, and to provide as much usefbl information as possible to the ongoing public and regulatory processes affecting the plant.

33 EXECUTIVE SUMMARY B.C. Hydro owns and operates the Burrard Thermal Generating Plant (Burrard) in Port Moody. In its June 1992 report on the B.C. Hydro/POWEREX Energy Removal Certificate Application, the B.C. Utilities Commission (BCUC) made a number of recommendations with respect to Burrard to address air quality issues in the Lower Mainland. In addition, B.C. Hydro's air emission permit issued by the GVRD will expire on April 30, In light of these circumstances, the Burrard Task Force was established to consider the environmental impacts of Burrard, and to develop options for the reduction of nitrogen oxides (NO,) emissions from the plant, consistent with regulatory targets and provincial policy. The Task Force reviewed the material prepared by the BCUC and other information available on air quality issues in the Lower Fraser Valley, which indicated that NOx is the pollutant of primary concern at Burrard. The Task Force also noted that C02 emissions are an emerging concern which, for Burrard, needs to be addressed in the context of alternative generating resources in the western interconnected electricity system. The Task Force considered B.C. Hydro's recently completed Burrard Utilization Study, and requested that B.C. Hydro undertake additional analysis using its system models. It reviewed the various regulatory roles and objectives which relate to Burrard, particularly the provincial best available control technology (BACT) policy, and the GVRD targets for emission reductions in the Lower Fraser Valley. The Task Force recognizes the importance of Burrard to the B.C. Hydro system in its role of providing displaceable firm energy. Compared to the option of retiring the plant, retaining and retrofitting the plant to reduce NOx emissions has a present value in excess of $500 million. The value is increased with a planned upgraded maintenance program which would reduce the forced outage rate and raise the maximum plant availability from 70 percent to 85 percent. The value can be augmented further by an increase in the rating of five of the six units from 150 MW to their full capability of 160 MW, once the units have been retrofitted with emission controls. The Task Force recommends a phased NOx reduction program for Burrard, based on provincial and regional air management policy, which requires that significant pollution sources be fitted with emission controls. For Burrard, the most cost-effective technology for reducing NOx emissions is Selective Catalytic Reduction (SCR), which would be installed as soon as practicable, with retrofit of the first unit expected to be complete by mid After an initial & testing period, a would decline in annual steps to 200 1, with the reductions corresponding to the phased installation of SCR emissions controls on the remaining units.

34 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

35 EXECUTIVE SUMMARY B.C. Hydro owns and operates the Burrard Thermal Generating Plant (Burrard) in Port Moody. In its June 1992 report on the B.C. Hydro/POWEREX Energy Removal Certificate Application, the B.C. Utilities Commission (BCUC) made a number of recommendations with respect to Burrard to address air quality issues in the Lower Mainland. In addition, B.C. Hydro's air emission permit issued by the GVRD will expire on April 30, In light of these circumstances, the Burrard Task Force was established to consider the environmental impacts of Burrard, and to develop options for the reduction of nitrogen oxides (NO,) emissions from the plant, consistent with regulatory targets and provincial policy. The Task Force reviewed the material prepared by the BCUC and other information available on air quality issues in the Lower Fraser Valley, which indicated that NOx is the pollutant of primary concern at Burrard. The Task Force also noted that C02 emissions are an emerging concern which, for Burrard, needs to be addressed in the context of alternative generating resources in the western interconnected electricity system. The Task Force considered B.C. Hydro's recently completed Burrard Utilization Study, and requested that B.C. Hydro undertake additional analysis using its system models. It reviewed the various regulatory roles and objectives which relate to Burrard, particularly the provincial best available control technology (BACT) policy, and the GVRD targets for emission reductions in the Lower Fraser Valley. The Task Force recognizes the importance of Burrard to the B.C. Hydro system in its role of providing displaceable firm energy. Compared to the option of retiring the plant, retaining and retrofitting the plant to reduce NOx emissions has a present value in excess of $500 million. The value is increased with a planned upgraded maintenance program which would reduce the forced outage rate and raise the maximum plant availability from 70 percent to 85 percent. The value can be augmented further by an increase in the rating of five of the six units from 150 MW to their full capability of 160 MW, once the units have been retrofitted with emission controls. The Task Force recommends a phased NOx reduction program for Burrard, based on provincial and regional air management policy, which requires that significant pollution sources be fitted with emission controls. For Burrard, the most cost-effective technology for reducing NOx emissions is Selective Catalytic Reduction (SCR), which would be installed as soon as practicable, with retrofit of the first unit expected to be complete by mid After an initial & testing period, a would decline in annual steps to 200 1, with the reductions corresponding to the phased installation of SCR emissions controls on the remaining units.

36 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

37 The Task Force supports the BUS recommendation that B.C. Hydro fbnd airshed modeling initiatives. The Task Force recommends that B.C. Hydro broaden the scope of this funding, in consultation with government and academic agencies, to include other studies, in areas such as emission trading and examining the damage costs of short-term air quality exceedances, that may also help to resolve the air quality issues related to Burrard. The Task Force also endorses B.C. Hydro's proposal to install continuous monitoring equipment on all the units by The report of the Burrard Task Force is advisory, and is intended both to support the Task Force recommendations, and to provide as much usefbl information as possible to the ongoing public and regulatory processes affecting the plant.

38 Table of Contents (Continued) 7.0 Regulatory Issues 7.1 BACT and Burrard Timing of Emission Control Installation Curtailment Provisions Regulatory Initiatives Regulatory Instruments Economic Instruments Permit Duration Studies of the Economic. System Capability and Emissions Impacts of Alternatives 8.1 Development of Options Modeling Methodology Description of Modeling Information Presented Economic Analysis Sensitivity Analysis Description of Gas Emissions Modeling Information Presented Gas Emissions Analysis Incremental Cost of NOx Reduction Summary and Analysis of Findings Minimum Margin for Burrard Operation 9.1 Introduction Environmental Externalities - A Background Experience in Monetizing Externalities in Other Jurisdictions Social Costing in British Columbia Derivation of a Minimum Margin for Burrard Operations Nextsteps Conclusions and Recommendations 11 1 APPENDICES 1. Burrard Task Force. Terms of Reference 2. Studies on Ozone Episodes in the Lower Fraser Valley 3. MELP Technical Memo. Emission Limits for Natural Gas Boilers Greater than 73 MW 4. GVRD Memorandum. NOx Emission Control at the Burrard Thermal Generating Plant 5. a. Residual impacts internalized by GVRD Emission Charges. Non-SCR Unit b. Residual impacts internalized by GVRD Emission Charges. SCR Unit 6. Independent Position of Mr.Stuart Hertzog.... Vlll.

39 The Task Force supports the BUS recommendation that B.C. Hydro fbnd airshed modeling initiatives. The Task Force recommends that B.C. Hydro broaden the scope of this funding, in consultation with government and academic agencies, to include other studies, in areas such as emission trading and examining the damage costs of short-term air quality exceedances, that may also help to resolve the air quality issues related to Burrard. The Task Force also endorses B.C. Hydro's proposal to install continuous monitoring equipment on all the units by The report of the Burrard Task Force is advisory, and is intended both to support the Task Force recommendations, and to provide as much usefbl information as possible to the ongoing public and regulatory processes affecting the plant.

40 Table of Contents (Continued) Regulatory Issues 7.1 BACT and Burrard Timing of Emission Control Installation Curtailment Provisions Regulatory Initiatives Regulatory Instruments Economic Instruments Permit Duration Studies of the Economic. System Capability and Emissions Impacts of Alternatives 8.1 Development of Options Modeling Methodology Description of Modeling Information Presented Economic Analysis Sensitivity Analysis Description of Gas Emissions Modeling Information Presented Gas Emissions Analysis Incremental Cost of NOx Reduction Summary and Analysis of Findings Minimum Margin for Burrard Operation 9.1 Introduction Environmental Externalities. A Background Experience in Monetizing Externalities in Other Jurisdictions Social Costing in British Columbia Derivation of a Minimum Margin for Burrard Operations Next Steps Conclusions and Recommendations APPENDICES Burrard Task Force. Terms of Reference Studies on Ozone Episodes in the Lower Fraser Valley MELP Technical Memo. Emission Limits for Natural Gas Boilers Greater than 73 MW GVRD Memorandum. NOx Emission Control at the Burrard Thermal Generating Plant a. Residual impacts internalized by GVRD Emission Charges. Non-SCR Unit b. Residual impacts internalized by GVRD Emission Charges. SCR Unit Independent Position of Mr. Stuart Hertzog

41 Table of Contents (Continued) Regulatory Issues 7.1 BACT and Burrard Timing of Emission Control Installation Curtailment Provisions Regulatory Initiatives Regulatory Instruments Economic Instruments Permit Duration Studies of the Economic. System Capability and Emissions Impacts of Alternatives 8.1 Development of Options Modeling Methodology Description of Modeling Information Presented Economic Analysis Sensitivity Analysis Description of Gas Emissions Modeling Information Presented Gas Emissions Analysis Incremental Cost of NOx Reduction Summary and Analysis of Findings Minimum Margin for Burrard Operation 9.1 Introduction Environmental Externalities. A Background Experience in Monetizing Externalities in Other Jurisdictions Social Costing in British Columbia Derivation of a Minimum Margin for Burrard Operations Next Steps Conclusions and Recommendations APPENDICES Burrard Task Force. Terms of Reference Studies on Ozone Episodes in the Lower Fraser Valley MELP Technical Memo. Emission Limits for Natural Gas Boilers Greater than 73 MW GVRD Memorandum. NOx Emission Control at the Burrard Thermal Generating Plant a. Residual impacts internalized by GVRD Emission Charges. Non-SCR Unit b. Residual impacts internalized by GVRD Emission Charges. SCR Unit Independent Position of Mr. Stuart Hertzog

42 Table of Contents (Continued) Regulatory Issues 7.1 BACT and Burrard Timing of Emission Control Installation Curtailment Provisions Regulatory Initiatives Regulatory Instruments Economic Instruments Permit Duration Studies of the Economic. System Capability and Emissions Impacts of Alternatives 8.1 Development of Options Modeling Methodology Description of Modeling Information Presented Economic Analysis Sensitivity Analysis Description of Gas Emissions Modeling Information Presented Gas Emissions Analysis Incremental Cost of NOx Reduction Summary and Analysis of Findings Minimum Margin for Burrard Operation 9.1 Introduction Environmental Externalities. A Background Experience in Monetizing Externalities in Other Jurisdictions Social Costing in British Columbia Derivation of a Minimum Margin for Burrard Operations Next Steps Conclusions and Recommendations APPENDICES Burrard Task Force. Terms of Reference Studies on Ozone Episodes in the Lower Fraser Valley MELP Technical Memo. Emission Limits for Natural Gas Boilers Greater than 73 MW GVRD Memorandum. NOx Emission Control at the Burrard Thermal Generating Plant a. Residual impacts internalized by GVRD Emission Charges. Non-SCR Unit b. Residual impacts internalized by GVRD Emission Charges. SCR Unit Independent Position of Mr. Stuart Hertzog

43 1.0 INTRODUCTION The Burrard Task Force was established in response to certain matters raised in the B.C. Utilities Commission (BCUC) Report and Recommendations to the Lieutenant Governor in Council on B.C. HydrolPOWEREX's Energy Removal Certificate App1ication.l The Report followed a public hearing in which the operation of the Burrard Thermal Generating Plant (Burrard) was a major issue. The BCUC Report identified the emission of oxides of nitrogen (NO,), a precursor pollutant to the formation of ground level ozone, as the prime matter of environmental concern, with the summer months being the critical period. The extensive deliberations of the BCUC panel led to the recommendation of a summer "emissions cap" for the plant as an approach to NOx reduction. In making its recommendations, the panel recognized that it did not have available the results of B.C. Hydro's Burrard Utilization Study (BUS), which was in preparation, nor did it have time to access B.C. Hydro's system models for hrther assessment of the assumptions used or the system impacts predicted. In responding to the BCUC recommendations, the provincial government noted that the Greater Vancouver Regional District (GVRD) is the authority responsible for the issuance of air emissions permits for Burrard, and that B.C. Hydro's current permit contains the condition that B.C. Hydro submit a plan, by February 28, 1993, for the implementation of NOx control measures to meet the GVRD's target. B.C. Hydro has requested an extension of the February 28 reporting deadline, and its current permit, for up to one year, to allow sufficient time for consideration of the Task Force report, and ensure adequate review, including public consultation, of a new permit application. The province endorsed a BCUC recommendation to establish the Burrard Task Force, with terms of reference (see Appendix 1) to consider the environmental impacts of Burrard and develop options for NOx reduction consistent with regulatory targets and provincial policy. Specifically, the Burrard Task Force was asked to examine and assess the technological and operational options, including the emission "caps" recommended by the BCUC as an alternative regulatory regime for NOx reduction at Burrard. Consideration is to be given to the costs which would be incurred, the system capability implications, and the emission reductions which would be realized. The Burrard Task Force would have available and incorporate as appropriate the results of B.C. Hydro's Burrard Utilization Study. The Burrard Task Force was asked to develop options for NOx emission reduction consistent with the targets of the GVRD (as noted in GVRD Permit No. VA-330, dated

44 April 29, 1 992), the policies of the Ministry of Environment, Lands and Parks (MELP), and national and international government objectives for the lower Fraser Valley. The BCUC panel also recommended that B.C. Hydro move towards the identification and incorporation of environmental costs in its dispatch decisions. In response to this, the Burrard Task Force has been asked as well to develop an estimate of the uncompensated damage costs associated with residual emissions from Burrard, after application of the Burrard Task Force's recommended NOx reduction strategy. This environmental externality value could then be applied as a minimum margin that must be recovered for Burrard to be able to operate for either domestic or export purposes. The Burrard Task Force was asked to provide a report to the GVRD and the province prior to February 28, 1993, to allow the GVRD sufficient time to consider the Burrard Task Force recommendations prior to issuing a new emission permit for Burrard. This deadline was subsequently extended to March 15, Those invited to participate on the Burrard Task Force were the GVRD, the BCUC, B.C. Hydro, the Crown Corporations Secretariat and the Ministries of Environment, Lands and Parks (MELP) and Energy, Mines and Petroleum Resources (MEMPR). The Burrard Task Force approached the GVRD Air Quality Advisory Committee (AQAC), an existing stakeholder advisory group involved in Lower Mainland airshed issues, from which interested public members selected a representative to sit on the Task Force. Due to the time frame of the Task Force, it was not possible to have the AQAC as a whole review this report. However, the Task Force anticipates presenting its findings to the AQAC, and allowing the Committee to review this report as an input into the process for a new air emissions permit for Burrard. The Burrard Task Force approached its work by reviewing the analysis of the issues undertaken by the BCUC, receiving presentations on the Burrard Utilization Study, enumerating the regulatory roles and responsibilities of various agencies and the targets and objectives in place, examining the best available control technology (BACT) policy, and requesting that B.C. Hydro undertake further analysis using its system models. This report provides background information on the Burrard Plant, a description of air quality issues in the Lower Fraser Valley, and a review of the applicable regulatory roles and initiatives. The results of the studies undertaken to evaluate the options for Burrard are presented, and the derivation of a minimum margin for Burrard operations is described. The Burrard Task Force has drawn on the information and understanding it has developed to recommend an approach to NOx reduction at Burrard that reflects the various

45 perspectives of the agencies involved and meets the objectives in a manner consistent with regulatory targets and provincial policies. Notes: 1. B.C. Utilities Commission, Report and Recommendations to the Lieutenant Governor in Council, B.C. Hydro and POWEREX Energy Removal Certificate Application, June 30, 1992.

46 2.0 BACKGROUND OF THE BURRARD PLANT 2.1 History and Roles Within the System The Burrard Thermal Generating Station was constructed initially by B.C. Hydro's predecessor company, B.C. Electric, during a period of very high growth in the province's demand for electricity. The six steam turbine generating units were placed in service between 1961 and B.C. Hydro was formed in 1962 to implement provincial initiatives to develop the Columbia and Peace Rivers. By the late 1960s, and all through the 1970s, substantial quantities of hydro-electric generation became available at an incremental cost that was generally lower than generation from the Burrard plant. Until 1977, the plant had some years of high use, when run-off was low within B.C. Hydro's hydro-electric system, and when new hydro-electric resources were constructed somewhat later than demanded by the province's load growth. In the early 1980s, the use of Burrard declined as load growth slowed considerably due to recession, and the Revelstoke hydroelectric project became available. This situation continued until 1988, when low run-off conditions, combined with renewed load growth, caused the plant to operate at its maximum historical output in the following year. The Burrard plant now provides up to approximately 12 percent of B.C. Hydro's firm energy capability, with the remainder coming from hydroelectric generation. For planning purposes, the firm energy attributed to hydroelectric resources is only that amount available under historically-low streamflow conditions. In addition to this firm, or assured, energy supply, the hydroelectric facilities provide what is termed "secondary energy" in all years except when there is minimum run-off This additional secondary hydroelectric energy permits generation at Burrard to be reduced because it is more efficient to use the water rather than burn natural gas fuel at Burrard. Consequently, the main role that Burrard now plays in the B.C. Hydro system is the provision of "displaceable firm energy." The plant also increases system reliability by providing stabilization to the Lower Mainland transmission system, and provides short-term energy supply in emergency conditions. Burrard's role supplying displaceable firm energy to assure adequate firm supply for B.C. Hydro's system continues. The importance of the Burrard plant is increasing because no major new sources of supply are planned for the next decade. In addition, new sources of supply would generally be more costly than Burrard's energy, so greater utilization now has efficiency advantages to B.C. Hydro's generation supply that are more significant than in the past. For all foreseeable gas price increases, this scenario is expected to continue in the future.

47 The Burrard plant was constructed with five units with a name-plate capacity of 150 MW, and a sixth MW unit, for a total of MW. However, at peak output, the plant is capable of producing at least MW. In past years of high demand for the plant, this generating capacity has been available for only 70 percent of the time, due to forced and scheduled outages. The MW at an annual availability of 70 percent, and with the inclusion of restrictions in gas availability, results in an assured supply of 5,270 GW.h per year of firm energy. Since 1989, the level of maintenance effort has been increased such that fbture duration and frequency of forced outages will be reduced and plans are proceeding to achieve an availability of 85 percent from each unit. With this increased plant availability and with reductions for interruption of gas supply on peak winter days, the plant is capable of producing 6,800 GW.h per year of firm energy at an output of MW. The actual energy generated at Burrard in past years has varied from zero in a number of years to 4,200 GW.h in 1989, with an average annual generation over the 32 year life of less than 1,000 GW.h (Figure 2.1). These wide variations in year to year need for the plant are expected to continue in the future, although according to B.C. Hydro's current Electricity Plan, peak annual use is planned at 6,450 GW.h, and average use is expected to be approximately 1,800 GW.h per year until 2001, and 3,500 GW.h thereafter. The intermittent use of the plant to date has resulted in each generating unit having only about 30 percent of the operating hours of similar plants of this age. 2.2 Environmental Considerations Air quality issues and Burrard emissions are described in detail in Section 4 of this report. The following is a brief summary of the discharges from the plant. The main air pollutant associated with the combustion of natural gas is nitrogen oxides. NOx is of particular concern as a precursor in the formation of ground-level ozone, which can be hadl to human health and vegetation above certain concentrations. While mobile transportation sources including motor vehicles produce the major portion of these air emissions in the Lower Mainland, available control technology to reduce NOx emissions has been developed for large point sources such as the Burrard plant. Under current natural gas supply and pricing conditions, plant operation, and consequently NOx emissions from Burrard, are most likely to occur in summer when the potential for formation of ground-level ozone is highest. From a global perspective carbon dioxide (C02) emissions have been identified as a contributing factor to enhanced greenhouse effects (global climate change). Thermal plants such as Burrard are significant emitters of C02 along with many other sources that

48 BURRARD THERMAL HISTORIC AND ESTIMATED FUTURE ANNUAL USE - HISTORIC ANNUAL ENERGY - GW.h USE FUTURE USE - CAPABILITY (MAXIMUM USE) EXPECTED -/ FUTURE USE % ACTUAL USE AVERAGE ACTUAL USE YEAR ROU February 1993 CAPABILITY BASED ON CURRENT ASSUMPTIONS

49 burn fossil hel. British Columbia's contribution to Canada's share of C02 emissions is significantly lower than other provinces in the area of power generation, because the system relies primarily on hydro-electric generation. C02 emissions from Burrard must be considered in the context of dispatch decisions throughout the integrated Northwest electricity system. In general, hydro-electric and nuclear sources in the Pacific Northwest are dispatched before the thermal sources because they have a lower operational cost. Therefore, when Burrard is operated, it may displace either coal, oil or natural gas thermal generation elsewhere in the integrated system. Besides air emissions, the plant uses large volumes of sea water obtained from Burrard Inlet for cooling purposes. This cooling water is chlorinated to prevent the formation of mussel growth in the cooling pipes. Residual chlorine remaining in the cooling water emissions can be hahl to aquatic life, and requires control to very low levels of concentration to avoid harmful effects. Current control programs at the plant aim to limit residual chlorine in its cooling water discharge to the minimum practical level below the permitted limit. In the early years of plant operation, a noise abatement program was implemented and, over the years of operation, occasional noise complaints have been received. 2.3 Emission Control Initiatives at the Burrard Plant Burrard was designed to operate with either natural gas or oil as hel. Total air emissions are significantly less when the plant is heled with natural gas. The option of using oil was precluded by regulatory actions in As concerns about NOx emissions increased in the latter part of the 1980's and the need to operate the plant increased, B.C. Hydro embarked on a program of modifications to the firing of the boilers that reduced NOx emissions by 40 percent. In 1991, B.C. Hydro recognized that hrther reductions in NOx emissions could be obtained by retrofitting control technology to the existing boilers. A contract was awarded to evaluate the available control technologies for these particular boilers. The work was completed in 1992 and identified selective catalytic reduction (SCR) as the most cost effective option.' In this process, a catalyst is added to the outlet ducting of the boiler and ammonia is injected into the flue gas upstream of the catalyst. The ammonia combines with the NOx over the catalyst to form nitrogen and water vapour. The SCR design must ensure that concentrations of ammonia emitted through the boiler stack, termed "ammonia slip", are limited to acceptable levels. The trade-off between reduced NOx emissions and the potential for some limited level of ammonia slip has been accepted in other jurisdictions where SCRs have been installed.

50 The B.C. Hydro Board of Directors has committed finding to install SCR on the first of the six units by To provide ongoing assurance that NOx emissions are minimized, the B.C. Hydro Board also committed fbnding to install continuous emission monitors for NOx and CO on all six units as soon as possible. Currently NOx levels are tested for compliance with the GVRD air emission permit on an annual basis. The Task Force endorses B.C. Hydro's plan to install continuous emission monitoring equipment for NOx and CO on all six units at Burrard as soon as possible. The monitoring equipment will be necessary to demonstrate compliance with the emission control strategy recommended later in this report. 2.4 Burrard Utilization Study The Burrard Utilization Study (BUS)2 was undertaken by B.C. Hydro to examine a full range of options for the plant, from shutdown to expanding the existing plant with the addition of combined cycle generation facilities. The study was completed in late The BUS is a technical analysis which provides a basis for examining the long-term fiture of the plant. The existing plant condition and performance were analyzed from existing records, and fiture performance and expected remaining life evaluated at an overview level. The value of the plant was analyzed from a broad perspective that included both environmental and economic considerations. Public and regulatory issues were reviewed as well as business opportunities and risks. Off-site mitigation opportunities for addressing airshed impacts from the plant were also identified as a potential option for NOx reduction. A B.C. Hydro action plan was recommended on the basis of the findings. The B.C. Hydro BUS team provided an extensive list of findings and recommendations to Hydro's Board of Directors including the following main items: the plant is capable of operating for at least another 25 years and, if required, could provide an increased energy output; the value of the plant to the Province and B.C. Hydro is very significant, including consideration of social costing aspects (the values have been updated in Section 8 of this Report); feasible NOx control technologies are available and applicable to reduce plant emissions by at least 80 percent; and a phased action plan that addresses installation of emission control technology at the plant, as part of an overall Burrard Thermal Upgrade Project, should commence as soon as possible.

51 The BUS, which includes a summary document, eleven supporting reports, and a discussion paper, was provided to each member of the Task Force. A non-technical summary of the BUS is being prepared, and is expected to be available in March, Key B.C. Hydro participants in the study were made available to respond to questions from members of the Task Force. Notes 1. ABB Combustion Services Division Canada, Mitsubishi Canada Ltd., Burrard Thermal Generating Plant. NOx Reduction Program. Unit 4 Final Report on Site Evaluation - Phase 1, April B.C. Hydro, Project Management Division, Burrard Utilization Studv, November 1992.

52 3.0 REGULATION OF THE BURRARD PLANT 3.1 Introduction The Canadian side of the Lower Fraser Valley (LFV) airshed is made up of four jurisdictions: Dewdney Alouette Regional District, Central Fraser Valley Regional District, Fraser Cheam Regional District, and the Greater Vancouver Regional District (GVRD). The GVRD is a partnership of 18 municipalities with 1.6 million inhabitants. While the GVRD is the major urban area in the LFV airshed, and has about one-half the population of British Columbia, the three Regional Districts to the east of the GVRD and Whatcom County in northern Washington State are home to a substantial portion of the population, economic activity and motor vehicle traffic. Air quality management in the three Regional Districts within the LFV outside the GVRD is carried out by the MELP's Surrey Regional Ofice. In August of 1992 air quality planning powers were granted under the Municipal Act to the other three Regional Districts to allow them to participate in planning studies with the GVRD and the Ministry. This is seen as a first step towards potential delegation of air pollution regulatory powers to a coordinated airshed authority. 3.2 Waste Management Act (WMA) - GVRD and MELP Roles Concern about air pollution led to the 1970 amendment of the Pollution Control Act (now the WMA), which established a provincial regulatory program for air emissions. Shortly afterwards, in 1972, the issuance of Letters Patent and a fbrther amendment of the Pollution Control Act established the GVRD as the single agency under which all provincial and municipal air pollution control activities in the Greater Vancouver urban area would be integrated. This delegation of responsibility for air quality management is continued under the current provincial WMA. Under this authority the GVRD has administered 300 emission permits (including permit VA-330 for Burrard) over more than 20 years. In July of 1990, the GVRD Board of Directors adopted as part of the District's Creating Our Future, Action #14, which sets an air quality goal of reducing the emissions of 5 major pollutants (oxides of sulphur and nitrogen, carbon monoxide, volatile organic compounds and particulates) to 50 percent of 1985 levels by the year In order to meet this goal, the GVRD has developed Stage 1 and Draft Stage 2 Air Quality Management Plans, passed an air quality bylaw, and established an emission fee system. Burrard is subject to these bylaws and fees. The Air Quality Management Plan

53 provides a review of potential air emission reduction strategies for Burrard. In addition, the current GVRD air emission permit for Burrard contains emission curtailment provisions which the GVRD may implement during episodes of poor air quality. Permit PE-7178 (amended May 7, 1990) issued by the MELP Surrey Regional Office under the provisions of the WMA, authorizes liquid effluent discharges from Burrard into Burrard Inlet under certain terms and conditions, including effluent temperature, levels of chlorine, total suspended solids, etc. Fisheries and Oceans Canada is included in any permit issuance process in order to satisfjr concerns within their jurisdiction. Part 5 of the WMA contains provisions whereby permits may be appealed. Permits issued by MELP Regional Managers may be appealed to the Director of the Air Resources Branch, and then to the provincial Environmental Appeal Board. Permits issued by the GVRD District Director are appealable directly to the Environmental Appeal Board Bill 29 - Amendments to the Waste Management Act The WMA was amended in 1992 by Bill 29, the Waste Management Amendment Act. With respect to the role of the GVRD and the Ministry, the amendment provides specific enforcement, regulatory and exemption powers in relation to the control of air pollution in the GVRD. It also clarifies the relationship between bylaws and permits of the GVRD under the WMA respecting sewage and air pollution and related legislation and controls Powers of the Minister and the Lieutenant Governor in Council In Section 3.3 of the WMA the Lieutenant Governor in Council may act in the public interest to manage wastes in a manner that is not limited to considerations taken by the GVRD or any Ministry personnel (such as Regional Managers) empowered under the WMA. Under Bill 29, the Minister has the authority to require that the GVRD amend, suspend or cancel any bylaw or part of a bylaw if the Minister deems it necessary in the public interest. In addition, the Environmental Management Act provides the Minister with powers to declare an environmental emergency and to enact programs for the purpose of preventing, lessening or controlling the hazard presented by the emergency. It is conceivable that, under a severe ozone episode in the Lower Fraser Valley, the Minister could issue an order for a general curtailment of emissions (including those from Burrard). 3.3 Utilities Commission Act (UCA) MEMPR has a regulatory role with respect to energy related facilities such as Burrard through its responsibility at the Cabinet level for administration of the UCA. The BCUC

54 is responsible, under the UCA, for the general regulation of public utilities, which includes B.C. Hydro Ministry of Energy, Mines and Petroleum Resources Pursuant to the UCA, MEMPR coordinates, in conjunction with the Ministry of Environment, Lands and Parks, the Energy Project Review process, and administers the review and awarding of Energy Removal Certificates (ERCs). As Burrard was in existence when the UCA was enacted in 1980, under Section 16 of the UCA it was exempted from designation as a regulated project, and was deemed to have an Energy Project and Energy Operation Certificate. Burrard has been an issue in the awarding of ERCs to B.C. Hydro. ERC-80(8403), issued in March 1984, excluded the output of Burrard from the firm removable surplus calculation, except under emergency or unforeseen situations. In 1987, after B.C. Hydro was awarded an emissions permit for Burrard under the WMA, the capability of the plant was included in the firm removable surplus calculation. The 1987 Amending Order deemed that energy from Burrard was being exported if it was operating for any reason while exports were taking place. At the 1992 ERC hearings before the BCUC, extensive evidence was heard on the role of Burrard, and the difficulty in allocating the output from a specific unit to exports from an integrated electrical system. For example, Burrard may be operated in the fall of the year when the level of snow-pack, and hence the water content of the hydroelectric system, is uncertain. If water conditions are above the level anticipated, the energy generated from Burrard in effect may subsequently be exported. The BCUC concluded that "the role of Burrard in export is a complex hnction of dispatch decisions based on water supply, economic advantage of the sale, the availability and cost of the gas he1 supply, and technical operational consideration^."^ The BCUC did not accept the argument that prohibiting the use of Burrard for export would be effective in achieving improved air quality in the Lower Mainland.2 As discussed later in this report, the firm capability of Burrard may be reduced in the short-term, owing to the phased shut-down of units to allow the installation of emission control technology, and may also be increased in the longer-term, through an upgraded maintenance program that may increase Burrard's availability, and through increased unit capability from the reversion to the pre-1989 firing configuration. The firm exportable surplus available to B.C. Hydro and POWEREX, as defined in the current ERC, will be affected by these modifications.

55 3.3.2 B.C. Utilities Commission Pursuant to Section 28 of the UCA, the BCUC has a general supervisory role over all public utilities in the province, and may make orders respecting the manner in which the utilities conduct their business or operate their facilities. Burrard is a significant component of the B.C. Hydro generating system, and its operation is subject to the BCUC's scrutiny during public hearings involving the utility's resource planning activities, system operations, and tariff charges. Such scrutiny normally takes the form of a prudency review of the dispatching of the plant, tested against other generation options or load management initiatives. Sections 30 and 3 1 of the UCA also provide the BCUC with the authority to entertain complaints about the operation of the plant, and to make a determination, after a hearing, on what operational changes by the utility are appropriate. In the absence of a complaint, the BCUC may, on its own volition, and after a hearing, prescribe changes to the manner in which the plant is to be operated. It is to be understood that no action by the BCUC should conflict with the regulatory requirements imposed on Burrard by the GVRD. Notes: 1. B.C. Utilities Commission, Report and Recommendations to the Lieutenant Governor in Council. B.C. Hvdro and POWEREX Energy Removal Certificate Application, June 30, 1992, p ibid, p. 97.

56 4.0 AIR QUALITY ISSUES IN THE LOWER FRASER VALLEY 4.1 Characteristics of the Lower Fraser Vallev Airshed The Lower Fraser Valley (LFV) forms an airshed which is characterized by its location, topography and meteorology. It can be described as an urban area situated at the entrance to a coastal valley, the upper reaches of which remain largely forested and agricultural. The airshed is bounded by the Coast Mountains to the north, the Cascade Mountains to the southeast and the ocean (Strait of Georgia) to the west. The prevailing winds are dominated by airflow from the east and southeast in all seasons of the year. Within this overall airflow trend, variations in air mass movement, both vertically and horizontally, are created by the interaction of topography and bodies of water. In the summer, during periods of clear skies and warm sunny weather, the differential heating between the land and the ocean results in a light, on-shore flow called a sea-breeze. This sea-breeze transports emissions inland during the day. During the night the flow can reverse, transporting emissions back to areas of their origin and potentially adding to the next day's transport cycle. The existence of temperature inversions is another important factor in determining air quality in the valley. Under an inversion any up and down motion of the air is suppressed, thus limiting any vertical mixing of pollutants. Nighttime inversions occur percent of nights throughout the year, and the elevation of daytime elevated temperature inversions (an inversion that exists above the ground) are normally low ( m). This effectively traps pollutants near the ground. The combination of light on-shore winds with low inversions and bounding mountain ranges result in restricted ventilation and produce an area with a high air pollution potential. Ambient air quality monitoring data and visual observation have confirmed the LFV air basin as an area susceptible to poor air quality. 4.2 Sources of Air Emissions There are literally millions of sources of pollutants in the LFV, ranging from industrial processes and motor vehicle exhausts to hrnaces for home and ofice space heating, personal care products, and household cleaners and paints. In addition, the LFV contains a number of forest and moss/shrub ecosystems that are capable of emitting photochemically active volatile organic compounds (VOCs) during the summertime.

57 The latest currently available inventory is for 1985 (Lower Mainland Emissions Inventory (LOMEI)' and Environment Canada's Residual Discharge Information System (RDIS)). A 1990 update is nearing completion. Figure 4.1 is from the LOME1 report, and summarizes the total emissions for a variety of compounds as a function of mobile, point, area and gas marketing sources. Mobile sources include all vehicular, aircraft and airports, rail and marine emissions. Point sources include all permitted industrial sources (Burrard is a point source, but did not operate in 1985, and was not included in the inventory), as well as any other point source emitting more than 50 tonnesly. Gas marketing emissions are from the distribution of gasoline from the refinery tank farm to the automobile gas tank. Area sources include all other emission sources with the exception of gasoline marketing. 4.3 Air Quality Issues In current regulatory approaches to air resource management, measured or mathematically modeled ambient concentrations of various pollutants are compared with corresponding ambient air quality objectives in order to establish whether an air quality concern exists. The Federal Government has established National Ambient Air Quality Objectives (NAAQOs) designed to protect public health and the environment. The GVRD uses these national objectives for total suspended particulate (TSP), carbon monoxide (CO), sulphur dioxide (S02), nitrogen dioxide (N02), and ozone (O3), as a component in its Draft Stage 2 Air Quality Management Plan2 The objective for each pollutant is designated in three levels as follows: Maximum Desirable: This level defines the long-term goal for air quality, provides a basis for a policy to protect pristine areas of the country, and spurs continuing improvement in control technology. Maximum Acceptable: This level is intended to provide adequate protection against adverse effects on human health, vegetation and animals. Maximum Tolerable: This level denotes time-based concentrations of air contaminants beyond which, due to a diminishing margin of safety, appropriate action is required without delay to protect the general population's health. Depending on air quality measurements and the frequency of exceedances of the three levels, an area may or may not have identified air quality concerns associated with one or more of the designated pollutants. The Provincial Government has also established a set of ambient objectives as defined in the Pollution Control Objectives for several industry sectors. In general, the objectives are

58 Figure 4.1 Total = 13,085 tonnes 1985 Emissions in the Lower Fraser Valley by Type and Source Sector (based on LOMEI) 1 Nitrogen Oxides (NOa Total = 58,412 tonnes Particulate Matter Total = 142,010 tonnes Carbon Monoxide (CO) Total = 412.W tonnes Volatile Organlc Compounds (VOCs) Total = 104,=8 tonnes Mobile Sources Area Sources I Point Sources I Gasoline Marketing

59 consistent with the NAAQOs, however the GVRD has continued to use the NAAQOs pending provincial review of the guidelines in the Pollution Control Objectives. Monitoring data for a wide variety of these pollutants, including wet deposition of sulphur and nitrogen species (acid rain), have shown that the major issue of concern currently in the LFV is ground-level ozone. The Maximum Acceptable Objective for ozone has been exceeded to varying degrees in each of the past ten years. However, the fkequency of exceedances of the Maximum Tolerable Objective has decreased from that experienced in the late 1970s and early 1980s. This is illustrated in Figure 4.2, which summarizes air quality data for stations within the GVRD. The GVRD Air Quality Management Plan Discussion Paper identified, in addition to ground-level ozone, that fine particulates, visibility, and carbon monoxide were other key issues of concern Ground-Level Ozone and Urban Smog The respective Federal, Provincial and Municipal (GVRD) governments are in consensus that ozone episodes in the LFV need to be reduced. Various programs, such as the Federal Government Green Plan, the Canadian Council of Ministers of the Environment (CCME) NOxNOC Management Plan, and the GVRD Draft Stage 2 Air Quality Management Plan have been developed with the goal of bringing the LFV into compliance. For example, the NOxNOC plan objective is to bring areas such as the LFV into consistent attainment of the maximum acceptable one-hour objective for ozone by Ground-level ozone is the major constituent of urban photochemical smog. This is a kind of chemical soup that contains chemical byproducts formed as a result of complex, nonlinear reactions. Ozone is formed in combination with elevated temperatures, strong sunlight and two primary ingredients called precursors - nitrogen oxides (NO,) and volatile organic compounds (VOCs). These conditions occur from May to September, and are usually accompanied by sea breezes which carry the urban NOx and VOC emissions, and the ozone by-product, up the valley. Due to this transport, and the fact that the photochemical reactions take time, ozone concentrations are lowest near the coast and increase with distance inland, often peaking in the afternoon in central or eastern areas of the Lower Mainland. These areas are downwind of Burrard during these periods. Studies related to the effects of ozone on human health, forest lands and agricultural production in the LFV were reviewed and summarized by Concord Environmental Cop3 These studies identifir that ground-level ozone is the major air quality concern in the LFV, and provide weight to the importance for action to control emissions of NOx and VOCs.

60 Figure TREND IN GVRD AIR QUALITY (OZONE)' MAXIMUM DESIFWBLE MAXIWM ACCEPTABLE W l W M TOLERABLE OBJECTIVE OBJECTIVE CaJECTM Data from GVRD air monitoring stations 11 through T9 " A Station Day is a day on which one or more exceedances of air quality objectives were measured at an air monitoring station

61 4.3.2 Fine Particulates and Visibility While air quality monitoring shows occasional exceedances of the Maximum Acceptable Objective for total suspended particulate, it is the fine particulate matter less than 10 micrometres in particle diameter (PM-10) that is more closely associated with the health and visibility impacts of particulate emissions. Standards of PM-10 exist in the United States, but no provincial or federal PM-10 Objective has been established, although the issue is currently under review. PM-10 is an important issue, since visibility impairment is evident in the LFV during periods of poor atmospheric dispersion in all seasons of the year. Although some PM-10 monitoring has been done, continuous measurements will be established within the GVRD in Carbon Monoxide Carbon monoxide in recent years has exceeded the Maximum Desirable Objective as frequently as 5 percent of the time in downtown Vancouver. Despite better control technology on new vehicles, anticipated increases in motor vehicle use and congestion indicate that carbon monoxide levels need to be closely monitored. 4.4 Burrard Thermal Generating; Plant Under the present GVRD permit, Burrard has the potential to emit up to 3,200 tonnes per year (tly) of NOx. At the 5,520 GW.h level of generation, 2,950 kilotonnesly of C02, 900 tly of CO, and small quantities of S02, VOCs and particulates are also emitted. Historical records show that actual emissions have ranged from near zero to an estimated 1747 t/y of NOx in Emissions of NOx from Burrard are primarily nitric oxide (NO), which oxidizes to nitrogen dioxide (N02) in the atmosphere. Given the key air quality issues in the LFV, and the amount and type of emissions from Burrard, concern has focused on NOx emissions, especially during the summer period, when strong sunlight and elevated temperatures increase the potential for ground-level ozone formation. In addition to the contribution of NOx to ozone formation, NO2 has health-related impacts, and federal air quality guidelines have been established for this pollutant. Based on 1985 emission inventory data, Burrard is estimated to contribute between 2 and 4 percent of all NOx emissions in the LFV. If all six boilers were to operate at maximum output during the summer months, Burrard's NOx contributions to the seasonal emissions inventory would be about 5.5 percent.

62 Airshed impact studies, using data from multiple monitoring stations and plume tracer tracking, have not demonstrated any specific impact other than the plant's overall NOx percentage contribution to the airshed. Development of an airshed model is under way to simulate the interaction of all sources in the Lower Mainland. However, this effort is expected to take another three years to complete. The model will provide additional scientific information on the roles of NOx and VOC sources in the formation of ozone. The Terms of Reference direct the Task Force to consider "the environmental impacts of Burrard." From an air quality perspective, these impacts can be classified as local, regional and global Local Impacts Direct NO2 impacts on health and vegetation in the vicinity of Burrard have been evaluated through a modeling and field study.3 The potential for exceedances of the hourly maximum acceptable objectives for NO2 in the local and surrounding area is low. Monitoring data in the area have not measured any NO2 exceedances, although a study by Runeckles concluded that the vegetation at one site near the plant (out of a series of sites studied in the area) may be negatively impacted by NO2 expo~ures.~ Regional Impacts In addition to the ozone, particulates and visibility issues described in Section 4.3, acid deposition is a potential regional air quality issue. On the basis of a simple modeling methodology, a 1983 study determined that Burrard was not contributing to any negative impacts associated with acid depositi~n.~ However, the situation with respect to its contribution to the ozone episodes is not so clear. The BCUC has concluded that the specific determination of how much the NOx emissions from Burrard contribute to ozone episodes in the LFV is presently very difficult, as the formation of ozone from precursor emissions is a very complex, nonlinear pro~ess.~ That is, to achieve a small decrease in ozone concentrations may require a very large decrease in NOx emissions (or VOC emissions, or both). In addition, this ozone decrease may only occur in certain areas, whereas other areas may not experience any change. Adding to the complexity of regional NOx management is the contribution of naturally occurring ozone, due to transport from the stratosphere or reactions with natural emissions of NOx and VOCs. It is important to note that, with respect to ozone episodes, even though Burrard is upwind of the areas experiencing elevated ozone, the incremental contribution of Burrard to an episode is not necessarily in proportion to its fractional contribution to emissions, owing to the non-linearities of the photochemical reactions associated with ozone formation.

63 One way to determine Burrard's contribution to ozone episodes is through the application of computer models. However, modeling this situation is extremely difficult and complex. Although urban photochemical modeling has been applied in different jurisdictions in the United States to assist in emissions reduction strategies, no such modeling on this level has been undertaken in the LFV. The BCUC found that modeling a specific plume that is imbedded in the larger urban plume has been done, but is still an emerging science and increases the level of modeling ~omplexity.~ In addition, the inputs required for such an exercise (such as speciation of VOC emissions) are presently not available. Given the lack of information concerning Burrard's contribution to ozone episodes, the BCUC concluded that to the extent that Burrard fbnctions during the critical summer period, it will contribute to the probability of ozone episodes in the LFV. Collaborative field study and modeling efforts coordinated by the University of British Columbia (U.B.C.) are now underway, which include the federal provincial and regional governments under the auspices of the Canadian Institute for Research in Atmospheric Chemistry. The objectives and budget/schedules for the inter-agency studies on episodic ozone pollution in the LFV are described in Appendix 2. A major milestone will be the air chemistry sampling program, to be performed with instrumented aircraft in the summer of In the Burrard Utilization Study, B.C. Hydro expressed the desire to help resolve Burrard's contribution to ozone episodes, and proposed contributing up to $1 million, along with other emitters and agencies, to the hnding of airshed modeling initiatives. The Task Force supports the BUS recommendation that B.C. Hydro fund airshed modeling initiatives. The Task Force recommends that B.C. Hydro broaden the scope of this funding, in consultation with government and academic agencies, to include other studies, in areas such as emission trading and examining the damage costs of short-term air quality exceedances, that may also help to resolve the air quality issues related to Burrard Global Impacts Burrard, at a generation level of 5,520 GW.h in a year, could emit 2950 ktly of C02. With the exception of combined cycle plants, Burrard C02 emissions in terms of mass per unit of energy are lower than other gas-, oil- and coal-fired thermal plants in the western interconnected electricity grid (see Section 9.5). C02 and other greenhouse gas emissions from Burrard should be considered within the context of the alternative generation resources within the western interconnected electricity system.

64 Global climate models do not have the capability to examine climate change in response to emissions from a particular source. Given the relative contribution of Burrard to global greenhouse gas emissions, and the fact that the effects of greenhouse gas emissions are seen on a global scale, Burrard's contribution to any climate change phenomena will be masked by all the other global sources. However, through international agreement Canada is committed to C02 caps (Section 5), although the provincial implications of this commitment are still under discussion. Within the province, MELP has directed proponents of major new sources to prepare plans to offset any increased emissions of C02. Based on provincial ratification of agreements to stabilize C02 emissions, these emissions are likely to be of greater concern in hture years. Notes 1. GVRD, 1985 Lower Mainland Emission Inventory, May, GVRD, Let's Clear the Air. Air Quality Management Plan, Discussion Paver, May, Concord Environmental Corporation, Burrard Thermal Generating Plant Utilization Studv, Air Quality Overview, February, Runeckles, V.C., Assessment of Possible Vegetation Effects of Airborne Emissions from the Burrard Thermal Generating Plant Operating on Natural Gas, Report to B.C. Hydro, Concord Environmental Corporation, Analysis of Nitrogen Oxides Air Quality Data for the Greater Vancouver Regional District , Prepared for B.C. Hydro, B.C. Utilities Commission, Report and Recommendations to the Lieutenant Governor in Council. B.C. Hydro and POWEREX Enerm Removal Certificate Application, June 30, 1992.

65 5.0 EMISSION CONTROL INITIATIVES AND AGREEMENTS The location of the Burrard thermal generating plant makes it subject to a number of different agreements, policies, targets and plans promulgated by international, federal, provincial, and municipal levels of government. The following is a list of these targets which are of relevance to Burrard. Specific emission goals are summarized in Table International United Nations Conference on Environment and Development (UNCED) At the 1992 UNCED meeting in Brazil, Canada committed to stabilizing greenhouse gas emissions at 1990 levels by the year Parliament has ratified this commitment, and a national action strategy on global warming is under way. United Nations Economic Commission for Europe (ECE) Convention on Long- Range Transboundary Air Pollution A Protocol to the 1979 Convention was added in November of 1988 for emissions of nitrogen oxides. The NO, Protocol obliges Canada to reduce national annual emissions of nitrogen oxides to 1987 levels by December National emissions standards based on best available control technology economically feasible are to be applied to new and substantially modified stationary sources. A technical annex discusses appropriate control technologies for measures which must be introduced for major existing stationary sources. A Protocol for VOC emissions requiring a 30 percent reduction by 1999 from 1988 levels was added in November Annex I to the VOC Protocol designates the Lower Fraser Valley, including the Greater Vancouver Regional District, to be a "Designated Tropospheric Ozone Management Area" (TOMA). Requirements for information exchange and annual reporting apply to TOMAs as well as national jurisdictions. CanadaJU. S. Air Quality Accord This Agreement signed by the Prime Minister and the President on March 13, 199 1, establishes a framework to deal with transboundary air pollution problems, and sets targets for the reduction of acid rain-causing emissions. It requires that Canada:

66 Air Emission Aereement Commitment Base Year Tareet Year INTERNATIONAL Greenhouse Gases UN Convention Stabilization of gases ECE Protocol Stabilization US. /Canada Accord Scheduled reductions from industry. Tighter standards for motor vehicles. voc ECE Protocol Stabilization of national total. 30% reduction in Tropospheric Ozone Management Areas (W is Canada's only such area) US. /Canada Accord National Cap of 3.2 million tonnes REGIONAL NOx,VOC,Q,CO, particulates NOx/VOC Management Plan National Plan to meet International committments. Targets for LFV to be developed for 2000 and Ozone compliance by GVRD Board Adoption of Region wide 50% reduction of the Creating our Future Action specified gases #14 TABLE 5.1 SUMMARY OF EMISSION TARGETS OF RELEVANCE TO BURRARD (Many of the protocols also contain other requirements.)

67 As an interim requirement, reduce by the year 2000 the annual emissions of nitrogen oxides from stationary sources by 100,000 tonnes below the year 2000 forecast level of 970,000 tonnes. By January 1, 1995, develop hrther annual national emission reduction requirements fiom stationary sources to be achieved by 2000 and/or By January 1995, develop and implement means affording levels of prevention of significant air quality deterioration and protection of visibility comparable to Part C of Title I of the U.S. Clean Air Act, with respect to sources that could cause significant transboundary air pollution. By January 1, 1995, estimate emissions from each new and existing electric utility unit greater than 25 MW using a method of comparable effectiveness to continuous emission monitoring, and to implement such continuous emission monitoring systems where appropriate. B.C./State of Washington Environmental Cooperation Agreement This Agreement, signed by Premier Mike Harcourt and Governor Booth Gardner on May 7, 1992, includes the following item on regional air quality management in the "Preliminary Action PlanIWork Priorities: " 1. Regional air quality management is considered to be a high priority issue in the Georgia BasinPuget Sound airshed, and requires timely joint attention. 2. Issues such as transboundary flows of sulphur dioxide, nitrogen oxides and volatile organic compounds should be addressed in an integrated manner through regional implementation of the Canada.$. Air Quality Agreement. 5.2 Federal CCME Management Plan for Nitrogen Oxides and Volatile Organic Compounds Environment Canada is facilitating the implementation of the Canadian Council of Ministers of the Environment (CCME) NOxNOC Management Plan to reduce exposure to elevated levels of ground-level ozone in the Lower Fraser Valley and in other regions in eastern Canada. The Phase I Plan, released in November 1990, proposes a national prevention program based on application of best available control technology economically achievable (BACTEA) to new mobile and new stationary sources of NOx and VOCs. Remedial control programs are to be developed for existing industrial facilities to ensure that interim (1995 and 2000) emission reduction targets are met. Emissions from thermal power plants are addressed in initiative N305 (National prevention program for new power plants) and N602 (Regional remedial program for new and existing power plants).

68 National Action Strategy on Global Warming As a result of agreements signed in Brazil in 1992, Canada is participating with its international partners in seeking a coordinated approach to limit or reduce emissions of greenhouse gases. The challenge of developing a national action plan for greenhouse gases is being developed under the auspices of the CCME, as outlined in a November 1990 report entitled "National Action Strategy on Global Warming." 5.3 Provincial Ministry of Environment, Lands and Parks BACT Policy The April 1992 Legislation Discussion Paper entitled "New Approaches to Environmental Protection in British Columbia" defines best available control technology (BACT) as "the currently available state-of-the-art control technology which is proven to be successfid in reducing waste discharges and has been applied for at least one year in similar facilities in the province or in relevant jurisdictions. Control technology refers to all of the following: raw materials, fiels, process technology and pollution control equipment or devices used to minimize both generation and discharge of wastes. " The Task Force notes that other jurisdictions use the terms "best available control technology" and "BACT" in somewhat different contexts. Under the provincial BACT policy, Regional Managers begin with a provincially derived BACT-based waste discharge criterion, or emission level, and define a more or less stringent discharge standard for individual facility permits, based on site-specific air quality and economic conditions, through a process summarized on the flow chart shown in Figure 5.1. British Columbia Strategy for Reducing Greenhouse Gases In October 1992, the Cabinet Committee on Sustainable Development endorsed Canada's ratification of the UNCED agreement on greenhouse gases. MELP is currently carrying out consultation for a provincial strategy on greenhouse gas emissions, which is outlined in the May 1992 B.C. Environment Report "Greenhouse Gas Inventory and Management Options."

69 Figure 5.1 SIMPLlRED FLOWCHART FOR SETTING A DISCHARGE STANDARD All New Sources waste discharge criteria * Existing soum undergoing major modifications Applicable to A11 other existing Y)IU[ES in an orderly phased-in manner t L v & Review site specific impacts on receiving environment, including 4 hcalth. using available data and modeling + Apply increasingly more stringent control and/or process modifications [ io d u e discharge I Consider possiblc trading, phasing or other options this a v viability? v 1 Consider only Dixhargc Trading or Waste Bubble ODtions dictate r standard less stringent than BACT? - GMC~ project Note: A standard Icss stringent than B AO hscd criteria may not b rpecificd for any pcmistcnt toxic substme fn r dixhargc.

70 5.4 Regional Creating Our Future Action #14 adopted by the GVRD Board in July 1990 "Continue to develop and implement the Greater Vancouver Air Management Plan with the objective of reducing by 50 percent total emissions of sulphur and nitrogen oxides, particulates, carbon monoxide and volatile organic compounds by the year 2000." This goal is based on 1985 emission levels. GVRD Air Quality Management Plan - Draft Stage 2 Report, May 1992 "The implementation of best available control technology for new stationary sources of emissions should be adopted as a policy in the GVRD. Retrofit of existing sources to best available technology standards should proceed as soon as possible." The draft report suggests that on the basis of an estimate of Burrard's annual emissions of 2,200 tonnes, NOx emission reductions of between 30 and 50 percent could be achieved by 1995, and reductions of 70 percent below current levels could be achieved by 2005.

71 6.0 EMISSION REDUCTION OPTIONS FOR BURRARD 6.1 Baseline for Emission Reduction A comprehensive evaluation of control technologies for Burrard, initiated by B.C. Hydro in 199 1/92 as part of BUS, reviewed a wide range of commercially-proven NOx reduction technologies.1 The firing characteristics of the existing boiler design were considered in the evaluation. Each viable technology was costed and the reduction in NOx emissions was estimated. In the BUS, the baseline for emission reduction was established on unit #4 at 150 MW output for the original design firing at a NOx emission level of 125 parts per million (ppm) at 3 percent oxygen (this level is equivalent to 238 milligrams per cubic metre (mg/m3)). To meet GVRD permit conditions requiring a plan to reach 55 mg/m3, a NOx reduction of 80 percent was determined to be achievable using selective catalytic reduction (SCR), to yield expected NOx emission concentrations of 25 ppm (48 mg/m3). In Section 8 of this Report, the Task Force has re-evaluated the costs and impacts of a baseline emission level at an overall plant output of MW, to meet a proposed new GVRD emission objective of mg/m Technologies and Measures to Meet the GVRD Emissions Target Reduction of NOx emission on existing natural gas fired electrical generation boilers using SCR has been addressed using two main approaches. In Germany, and more recently in California, boiler combustion modifications have been emphasized before applying SCR to the exhaust side of the boiler with the result that both the size and cost of installed SCRs have been kept to a minimum and in some cases installed within the confines of the existing boiler ducting. This approach is referred to as "in-duct SCR. " The other approach, sometimes referred to as "conventional SCR," involves construction of substantial new boiler ductwork and boiler firing usually matches more closely with original design conditions. While NOx emissions are minimized, the cost of the conventional SCR approach may be considerably more than the in-duct SCR, and the process requires considerable additional space around the boiler. Numerous SCR installations have been completed in the past 5 to 10 years in both Japan and Germany. California utilities are just commencing construction of SCR installations on large natural gas steam turbine electric generation units. Other methods of reducing NOx emissions involving modifications to the boiler combustion system were reviewed in studies completed by B.C. Hydro for the BUS.

72 None of these other methods were as effective in reducing NOx emissions as SCR. Beyond retrofitting all six of the existing boilers with SCR, there are three main alternatives that were considered as stand alone options and in combination with partial SCR installations. One alternative involves replacing the existing boilers with gas turbines and heat recovery steam generators to form what is termed an "unfired" combined cycle, with either the existing or new steam turbines. To achieve acceptable levels of NOx emissions, the new gas turbines may also require installation of SCR, involving similar trade-offs to applying SCR to the existing boilers. This alternative would result in decreased natural gas he1 consumption per unit of electrical energy produced, and would incur significantly higher capital investment requirements. There would be lower carbon dioxide and cooling water emissions due to a potential 30 percent higher overall thermal efficiency. The BUS recommended that B.C. Hydro continue to study this alternative as an option to installing SCR on the latter units. The minimum lead time for converting half the plant to combined cycle would be approximately 4 years, and 6 years would be required for the whole plant. Because the site installation would involve a multi-year shut-down of some existing generating units, B.C. Hydro would have to purchase replacement energy during this period. Future B.C. Hydro studies of combined cycle applications at the Burrard site are planned to address the merits of either using the existing steam turbines in the cycle or replacing them entirely. This decision has a significant impact on the capital requirements. Another alternative considered in BUS, and discussed in detail in Section 8, is to shut Burrard down and replace it with an alternative facility, likely outside the airshed. This option is also capital intensive and may also require new transmission and switching facilities. A third alternative that is being considered by regulators at the federal, provincial and regional level involves the application of economic incentives and off-site mitigation (i.e. emission trading) to implement cost-effective strategies for emission reduction. In the BUS, specific off-site mitigation opportunities were discussed, whereby NOx emission reductions from other sources, mainly mobile, would be acquired if the societal benefits of doing so exceeded the costs of installing NOx controls on the last two or three units at Burrard. This approach would require development of a statutory framework and regulatory acceptance before it could be used as a NOx reduction measure. The concepts related to emission trading are discussed in the next section of the Report. Notes 1. ABB Combustion Services Division, Canada, Mitsubishi Canada Ltd., Burrard Thermal Generating Plant, NOx Reduction Program. Unit 4. Final Report on Site Evaluation - Phase 1, April 1992.

73 7.0 REGULATORY ISSUES The implementation of emission controls at Burrard, given the air quality objectives and policies of the GVRD and MELP, and the importance of Burrard to the provincial electricity grid, raises a number of regulatory issues. These include; the GVRD's 50 percent emission reduction objective; the application of provincial BACT policy; the timing of implementation of controls; the applicability of curtailment provisions; the possibility that new air quality regulatory initiatives may be implemented in the region by the end of the decade; and the duration of the permit and its relation to the investments required. 7.1 BACT and Burrard The Task Force discussed extensively the application of the provincial BACT policy to Burrard. Key aspects of the BACT policy, announced in January, 1992, that apply to Burrard are: the roles of MELP and the GVRD in issuing permits, phasing-in of controls; the possibility of emissions trading; and the issue of economic viability (on which a policy has yet to be established, see Figure 5.1). The Task Force recommends that a declining 24-hour facility cap, or "plant bubble," is a phase-in approach consistent with provincial and regional air management policy for existing sources. Such a cap could be defined with reductions equivalent to the phased installation of SCR emission controls on the units at the plant. B.C. Hydro would have flexibility to meet the declining cap in the most cost-effective manner, while meeting regulatory requirements. In Burrard's system role of supplying displaceable firm energy, units at Burrard with emission controls may be preferentially operated, which would result in emissions being below the cap levels on an annualized basis in most years; any excess emissions above the cap could be offset with offsite mitigation, if approved by regulators at that time. In February, 1993, MELP issued a Technical Memo defining a draft provincial emission criterion of 52 mg/m3 for NOx emissions, over a one-hour averaging period, from gasfired boilers larger than 73 MW (Appendix 3). Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. On February 9, 1993, the GVRD issued a draft technical memorandum, based on a report by Energy and Environmental Research Gorp.,' proposing an emission limit of 3 1 mg/m3, averaged over 24 hours, specifically for Burrard (Appendix 4).

74 B.C. Hydro's efforts to date, such as the Burrard Utilization Study, have focused on a target of 55 mglm3, as noted in requirements for studies in the current GVRD permit. B.C. Hydro has indicated that the technical and economic feasibility of 3 1 mglm3 for NOx at Burrard can only be confirmed by in-field tests on a generating unit that has been retrofitted with SCR. However, if the capital costs that have been estimated to reach 3 1 mglm3 are accurate, and NOx abatement costs are $10,00O/t rather than $2,34O/t as defined in the provincial interim social costing framework, analysis provided later in this report indicates that it would be financially advantageous to meet the lower target. In addition, the economic viability of the emission control investment must be investigated, and would be much less attractive if the additional 50 MW of capacity that could be achieved in meeting a 55 mglm3 limit was not available. The Task Force notes that, at the end of its deliberations, it is faced with a range of proposed emission levels, with a minimum of mglm3 and a maximum of mglm3, where the ultimate limit may require technical studies on an installed SCR retrofit to establish feasibility. The Task Force recommends that a testing period be allowed on the initial unit to establish the technical and economic feasibility of the proposed GVRD NO, emissions limit, and that the design and construction of the first SCR should incorporate equipment to test the effectiveness of meeting a target range of mg/m3. The recommended testing period could also be an opportunity to optimize the engineering design of the retrofits, based on actual experience, potentially reducing the cost of applying emissions control technology to subsequent units. 7.2 Timing of Emission Control Installation The full output from Burrard is included, along with hydroelectric generation under critical water conditions, in determining the firm capability of the B.C. Hydro system to meet demand. If the capability of Burrard is significantly reduced by taking more than one unit at a time off-line to retrofit emission controls, there is an increased probability that energy will have to be purchased. Given that the phasing-in of emission controls on existing facilities is consistent with provincial BACT policy, such a program could accommodate the emission reductions sought by the GVRD with a minimum impact on the operation of the electrical system.

75 The maintenance upgrading recommended in BUS to increase the plant's availability from the current 66 percent to 85 percent of capability could allow a unit to be removed fiom service for retrofitting without a reduction in Burrard's current firm energy contribution to the system. On February 15, 1993, the B.C. Hydro Board of Directors approved a $3 1 million expenditure for Phase 1 of the Burrard maintenance and upgrade project to retrofit the first unit with SCR, and install continuous monitoring equipment on all units. It is expected that the time required for engineering design, ordering, delivery, and eight months of installation, would result in the first SCR-equipped unit being operative by the end of the second quarter of If a one-year demonstration and testing period met with GVRD approval, the declining facility cap could begin in June 1996, just prior to the summer period where the probability of ozone episodes occurring in the Lower Fraser Valley is highest. Annual reductions in the daily facility cap, equivalent to the installation of SCR on one unit per year, would achieve the level of plant-wide BACT emissions by June, As noted above, the Task Force recommends that the emission reduction steps be set after testing the first SCR-retrofitted unit. The Task Force recognizes that the pace of the phase-in of controls will be negotiated between B.C. Hydro and the GVRD. This regulatory model is depicted in Figure 7.1. Variations on this model, which may include seasonal restrictions, have been developed by the Task Force, and are discussed in the next section of the report. 7.3 Curtailment Provisions Schedule C of Burrard's current GVRD emissions permit contains provisions whereby Burrard operations may be curtailed if, in the opinion of the District Director, the plant is, or may be, materially contributing to unsatisfactory ambient air quality levels. Curtailment is required under the permit when air quality exceeds the Maximum Acceptable Air Quality Index level of 50 for five consecutive hours, which is designed to prevent exceedance of the Maximum Tolerable Air Quality Index of 100. Although the curtailment provision for Burrard has not been invoked, B.C. Hydro has voluntarily curtailed Burrard operations on occasions where air quality was approaching unacceptable levels. Currently there is no overall episode management plan in place in the GVRD, although a plan whereby all point sources would have to submit a curtailment schedule is under development. The curtailment provision in Burrard's permit, which is unique among GVRD-regulated point sources, represents a potentially significant cost to B.C. Hydro if operations were suspended for an extended period in a low-water year when maximum Burrard operations

76 BURRARD NOx CONTROL SCENARIOS,- REGULATION UNDER A 24-HOUR PLANT CAP PLANT NOx EMISSIONS (tonnes/24 hours) 2urrent Permit - t t / Decision Point (Spring 1996) - set emission level after testing first unit ommitment first SCR strofit First SCR PHASE 2 SCR on remaining units or off-site 4 ; PHASE Phased implementation of SCR on additional units to meet rn... + declining plant cap allowance n t per year after one-year demonstration with the first SCR retrofit I I I I I 1 1 b :30-35 mg/ma3 &m--m----"?m"-----""-m Ultimate Target - BACT (Plant cap based on 6 units with SCR) Plant Cap 55 mg/ma3 - " Plant Cap 35 mg/ma3

77 may be required. Conversely, the curtailment provision offers the GVRD a reduction in NOx emissions within a short period, although the significance of such a reduction with regard to the control of ozone episodes has yet to be firmly established. In the BUS, B.C. Hydro proposed that curtailment provisions be ended for units that have been equipped with BACT controls, or where the utility has secured approved off-setting emission reductions. This would then treat Burrard in a manner similar to other industrial point sources in the GVRD. The District Director would still have the authority to curtail industry-wide point sources and mobile sources if the ambient air quality level reached, or was predicted to reach, the Maximum Acceptable level. In addition, B.C. Hydro would still be responsible for developing a curtailment plan for Burrard, along with other point sources, as part of an overall GVRD episode management plan. The Task Force recommends that the unique compulsory curtailment provisions, as included in the current permit, should be discontinued for upgraded units that have met permitted emission levels through the application of control technology, or approved off-setting emission reductions. These units could then be curtailed in a manner consistent with other point-source emitters in the airshed. The Task Force notes that B.C. Hydro will still have the operational flexibility to adopt voluntary curtailment as has been done in the past. 7.4 Regulatory Initiatives The GVRD and MELP have at their disposal a variety of policy mechanisms for internalizing the residual impacts for a facility such as Burrard. Some of these mechanisms have been implemented, while others, which are under consideration or operative in other jurisdictions, may be implemented in the future. Policy mechanisms may be generally categorized as regulatory instruments, which are institutional measures that directly influence the environmental performance of firms and individuals, and economic instruments, where the decision making behaviour of individuals and firms is affected in such a way that alternatives are chosen independently that lead to a more environmentally desirable situation Regulatory Instruments Regulatory instruments have traditionally been utilized by governments for carrying out environmental policy. Examples are setting standards, regulating processes or products used, limiting residual discharges, and restricting the location or timing of economic activity. Setting ambient air and water quality standards, and setting emission criteria (i.e. provincial BACT-based criteria) are examples of such measures in British Columbia.

78 The basis for regulatory instruments is usually legislated authority, where conditions are imposed and penalties set out for non-compliance. The attractiveness of regulation for governments is that it gives authorities direct control over individuals and firms, and provides a relatively certain outcome in terms of environmental effectiveness. However, regulatory instruments, such as standard setting, are unlikely to produce an economically or environmentally appropriate level of residual impacts.2 Regulatory instruments tend to be static, inflexible, and, although they may be set with reference to some health-related criterion, the standards may not be related to the actual cost of damage, or the willingness on the part of society to pay for reduced residual impacts. In addition, regulations which focus on the concentration of pollutants in emissions may not result in overall emission reductions if new sources are introduced. The provincial BACT policy, while establishing emission criteria, also requires that residual emissions be examined in light of regional, provincial, and international stabilization agreements. Standard setting does not generally recognize the differences in costs faced by producers to reduce their residual impacts. Provincial BACT policy does incorporate economic viability in the final decision on permitted emission levels. However, the measures to incorporate economic viability are still under development. Given these drawbacks, and a desire on the part of governments to set more cost-effective policies, and to potentially generate revenue from the resolution of environmental problems, economic instruments have been developed in a number of jurisdictions, including British Columbia Economic Instruments Economic instruments include environmental charges, incentives and subsidies, and measures which focus on the creation of markets for rights to emit pollutants. Environmental charges may be considered as the price that must be paid for creating environmentally damaging residuals, and may be applied to effluents, products, or as an administration charge for permits or registration of products. The impact of environmental charges may be both as an incentive and redistributive. The incentive arises if the charge is set at a level which induces actions to reduce the impact of the charge. However, in practice, environmental charges have been set at a level that is low in comparison to estimates of residual damage, and the resulting impact is more redistributive in nature, with fees used to hnd air quality administration or other regulatory initiatives. An advantage to charges over standards is that, if the charges are set an appropriate level, polluters will be encouraged to search continually for technologies or operational innovations to reduce the costs of the charges. This incentive is not present for an emitter who reaches a set standard.

79 Both MELP and the GVRD introduced environmental charges in July, 1992, which include both emission charges and minimum annual and application administrative fee~,3>~ but these charges do not approach the level of estimated damage costs that are being implemented in British Columbia for the social costing of new electricity resources (see Section 9). Both programs are designed to recover the administrative costs of regulation. The GVRD fees that apply specifically to Burrard, and the MELP fees that would apply if Burrard was located elsewhere in the province, are shown below. The GVRD Bylaw describes a phase-in period, in which fees are capped at a maximum level per pollutant of $50,000 in 1993, $100,000 in 1994, and $150,000 in After 1995, the full fees apply. FEES IN $ PER TONNE PER ANNlTM GVRD MELP After 1995 Sevtf92-Aud93 After Aug/93 NH CO NOx SOX Particulates VOCs Other Both the GVRD and MELP provisions calculate the annual emission fees based on the permitted amount of discharge. Relevant to Burrard are provisions in the GVRD Bylaw that allow for the credit of one-half the fee difference between actual and permitted emissions. This credit is contingent on adequate (i.e. continuous) monitoring of emissions being in place. The expected effect of the credit may be calculated by multiplying one-half of the fee per tonne by the permitted amount, and adding one-half of the fee per tonne times the expected amount. This calculation, based on a range of expected long-term average operation scenarios for Burrard, is shown in Appendices 5a and Sb, for non-scr and SCR retrofitted units, respectively. Alternate charge-related measures include differentiation of the tax structure so that environmentally friendly products are more favourably priced, or unfriendly products priced higher. Regulatory authorities might also consider giving payments to firms or individuals who pollute below a certain prescribed level. However, these types of subsidies may not differentiate between firms with differing costs for residual reduction, and may, in the long run, attract new firms and increase the overall level of residuals.2 Other economic instruments focus on the creation of markets, which may be broad, such as the tradable permit schemes being implemented in the United States for SO2 and in the Los Angeles area for NOx and VOCs, or more specific "trades" between facilities and offor on-site emission reduction opportunities.

80 MELP and GVRD have been involved in the assessment of emission trading in Canada, and participated in the preparation of a Discussion Paper prepared for the Canadian Council of Ministers of the Environment (CCME).5 The Discussion Paper concluded, based on a preliminary assessment, that emissions trading would be feasible in the Lower Fraser Valley for the control of NOx and VOCs. Currently, the GVRD, MELP and Environment Canada are hrther investigating the application of emissions trading in the Lower Mainland. The application of broadly based emissions trading is also being investigated in Ontario. A recent study commissioned by the Ontario Ministry of Energy contrasted the predicted outcomes of reaching the emissions levels adopted by the CCME in their NOxNOCs Management Plan for 2005 through regulatory instruments and emissions trading.6 The study concluded that the level of environmental quality, in tonnes of pollutant emitted, could be achieved at a 41 percent lower cost through trading as compared to standards. Alternatively, a 33 percent improvement in tonnes emitted could be achieved through emissions trading at the same cost of standards. There are several policy, management andlor implementation issues related to either broad or focused emission trading that remain unresolved. These issues will affect the attractiveness of off-site mitigation opportunities. They include: cross-pollutant credits (for example, reduction in VOC emissions receive credits as NOx reduction); incrementality or recognition of credits (in the face of new and pending environmental regulations that may affect off-site emitters); mechanisms for attribution of credits (where costs of a measure are shared); and offset ratios (for uncertainty in realizable emission reductions). Emission offsets may generate benefits in addition to the strict "payback" in terms of NOx control savings. A social costing framework that takes into account costs and benefits outside of B.C. Hydro and non-nox environmental externalities has the potential to enhance the attractiveness of off-site mitigation from the perspective of society as a whole. Various focused off-site NOx emission mitigation opportunities in the Lower Fraser Valley were evaluated by B.C. Hydro in the BUS. Given the magnitude of the contribution from mobile sources to regional air quality, most emission offsets are found in the mobile source sector. In particular, the offset measures considered in detail included transportation demand measures (vanpools, carpools etc.), old vehicle buy back and trust hnd establishment. The analyses of potential emission offsets for Burrard illustrate that emission reduction cost-effectiveness (i.e. costs per tonne reduced) is very sensitive to assumptions and values underlying both costs and reduction potential.

81 While the BUS indicated that preliminary estimates of emission offsets generally provided similar quantities of NOx reduction opportunities as SCR, off-site mitigation options are not competitive with on-site retrofit of SCR at Burrard if only NOx emission offsets are recognized. Further inclusion of credit for VOC control, the remaining ozone precursor, still results in a marginal preference for on-site controls. The development of an off-site mitigation framework to provide credit for non-ozone related environmental externalities may improve the cost effectiveness of off-site measures, however the degree of improvement and acceptability is highly uncertain at this time. The Task Force does not propose to pre-empt existing initiatives to introduce economic measures to control emissions in the Lower Fraser Valley. However, these measures may be in place in the Lower Mainland during the implementation of emission control measures at Burrard. Given a lower probability of use for the fifth and sixth (and potentially the fourth) unit at Burrard, the application of SCR to these units results in a relatively higher cost per tonne of NOx abated than for the first units retrofitted. Further discussion of NOx abatement costs is provided in Section 8.8, and a graphical depiction of the incremental cost per tonne of NOx abated is shown in Figure 8.2. When more cost-effective opportunities to reduce emissions become available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options. These potential opportunities would favour flexibility in the latter stages of the implementation period with respect to specific technological applications, and the periodic review of the permit to assess the feasibility and acceptability of other options, while still meeting the objectives of a phased implementation of a facility emission cap. MELP has expressed the view that it is the GVRD's role to determine the acceptability of any phase-in proposal, but that the eventual operation of the facility should be consistent with provincial BACT policy. Although no policy for the calculation of plant caps has been developed, MELP has also expressed the view that periods of operation which result in emissions above a plant cap cannot be offset by periods of shut-down, only by offset mitigation. 7.5 Permit Duration The GVRD permitting process does not currently place expiry dates on permits. However, Burrard is currently operating under a one-year permit extension, pending the approval of an emission reduction program for the facility.

82 Optimization at B.C. Hydro; Mr. Steve Sakiyama and Dr. Jia Zhang of the Air Resources Branch of the Ministry of Environment, Lands and Parks; Mr. Peter Calder, Project Manager of the Burrard Utilization Study for B.C. Hydro; Mr. Neptune Smith, Manager of Electrical Engineering at the B.C. Utilities Commission; Mr. John Due, Consultant to the Crown Corporations Secretariat; Mr. A1 Brotherston, Senior Environmental Coordinator at B. C. Hydro: and Dr. Kamal Bhattacharyya of the Greater Vancouver Regional District. Notes: 1. Mr. Hertzog was selected from a group of interested public members of the GVRD Air Quality Advisory Committee, which were convened by the Chair of that Committee after a request from the Task Force seeking a representative to liaise with the GVRD's public consultation body.

83 EXECUTIVE SUMMARY B.C. Hydro owns and operates the Burrard Thermal Generating Plant (Burrard) in Port Moody. In its June 1992 report on the B.C. Hydro/POWEREX Energy Removal Certificate Application, the B.C. Utilities Commission (BCUC) made a number of recommendations with respect to Burrard to address air quality issues in the Lower Mainland. In addition, B.C. Hydro's air emission permit issued by the GVRD will expire on April 30, In light of these circumstances, the Burrard Task Force was established to consider the environmental impacts of Burrard, and to develop options for the reduction of nitrogen oxides (NO,) emissions from the plant, consistent with regulatory targets and provincial policy. The Task Force reviewed the material prepared by the BCUC and other information available on air quality issues in the Lower Fraser Valley, which indicated that NOx is the pollutant of primary concern at Burrard. The Task Force also noted that C02 emissions are an emerging concern which, for Burrard, needs to be addressed in the context of alternative generating resources in the western interconnected electricity system. The Task Force considered B.C. Hydro's recently completed Burrard Utilization Study, and requested that B.C. Hydro undertake additional analysis using its system models. It reviewed the various regulatory roles and objectives which relate to Burrard, particularly the provincial best available control technology (BACT) policy, and the GVRD targets for emission reductions in the Lower Fraser Valley. The Task Force recognizes the importance of Burrard to the B.C. Hydro system in its role of providing displaceable firm energy. Compared to the option of retiring the plant, retaining and retrofitting the plant to reduce NOx emissions has a present value in excess of $500 million. The value is increased with a planned upgraded maintenance program which would reduce the forced outage rate and raise the maximum plant availability from 70 percent to 85 percent. The value can be augmented further by an increase in the rating of five of the six units from 150 MW to their full capability of 160 MW, once the units have been retrofitted with emission controls. The Task Force recommends a phased NOx reduction program for Burrard, based on provincial and regional air management policy, which requires that significant pollution sources be fitted with emission controls. For Burrard, the most cost-effective technology for reducing NOx emissions is Selective Catalytic Reduction (SCR), which would be installed as soon as practicable, with retrofit of the first unit expected to be complete by mid After an initial & testing period, a would decline in annual steps to 200 1, with the reductions corresponding to the phased installation of SCR emissions controls on the remaining units.

84 The Task Force noted that the economic benefits from increasing plant availability to 85 percent, and the re-rating of five of the six units to 160 MW, could significantly off-set the costs of retrofitting emission controls. At the same time, long-term expected NOx emissions from the plant could be reduced by 75 percent. The Task Force recommends that, pending an assessment of actual SCR performance on the first unit, the emission cap be set with the plant in this configuration. B.C. Hydro would have flexibility, while satisfling regulatory requirements, to meet the declining plant cap in the most cost-effective manner. Alternatives to the installation of SCR on the latter units, which would be used less if the SCRequipped units are preferentially loaded, may be possible. If more cost-effective opportunities to reduce emissions became available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options, within the declining facility cap constraint. The emissions level that corresponds to provincial BACT policy was reviewed by the Task Force. The Task Force received a draft technical memo from the Ministry of Environment, Lands and Parks recommending a NOx emission limit of 52 mg/m3 as the general provincial BACT standard for natural-gas fired boilers. Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. The Task Force also received a draft technical assessment from GVRD staff recommending a limit of 3 1 mg/m3 for Burrard specifically, based on the application of selective catalytic reduction (SCR). The Task Force considered two levels, a higher range of mg/m3 and a lower range of mg/m3, and noted that although the lower range may be achievable for Burrard, tradeoffs between reduced NOx and possible increased ammonia slip may have to be assessed, along with economic factors. The Task Force recommends a design target of mg/m3 for the first unit, with performance to be confirmed by testing. Emissions reduction to the mg/m3 level should be seen as the minimum condition, with movement as close to the mg,m3 level as possible to be determined by B.C. Hydro and the GVRD. The Task Force was asked to examine the uncompensated damage costs associated with residual emissions from Burrard, and recommend a value that could be applied to domestic or export operations at Burrard as a minimum margin above incremental costs which would need to be recovered before Burrard energy was dispatched. The Task Force determined that the minimum margin for Burrard, based on the interim provincial social costing framework, would be 0.13 l$/kw.h for the dispatch of Burrard units that have not been retrofitted with SCR, and 0.03$/kW.h for units with SCR. This minimum margin recognizes local impacts, but not greenhouse gas emissions, which need to be addressed in concert with other jurisdictions, or through further policy direction.

85 The Task Force supports the BUS recommendation that B.C. Hydro fbnd airshed modeling initiatives. The Task Force recommends that B.C. Hydro broaden the scope of this funding, in consultation with government and academic agencies, to include other studies, in areas such as emission trading and examining the damage costs of short-term air quality exceedances, that may also help to resolve the air quality issues related to Burrard. The Task Force also endorses B.C. Hydro's proposal to install continuous monitoring equipment on all the units by The report of the Burrard Task Force is advisory, and is intended both to support the Task Force recommendations, and to provide as much usefbl information as possible to the ongoing public and regulatory processes affecting the plant.

86 TABLE OF CONTENTS Foreword Executive Summary... iv Introduction Background of the Burrard Plant 2.1 History and Roles Within the System Environmental Considerations Emission Control Initiatives at the Burrard Plant Burrard Utilization Study Regulation of the Burrard Plant 3.1 Introduction Waste Management Act - GVRD and MELP Roles Bill 29: Amendments to the Waste Management Act Powers of the Minister and the Lieutenant Governor in Council Utilities Commission Act MEMPR BCUC Air Quality Issues in the Lower Fraser Valley 4.1 Characteristics of the Lower Fraser Valley Airshed Sources of Air Emissions Air Quality Issues Ground-Level Ozone and Urban Smog Fine Particulates and Visibility Carbon Monoxide Burrard Thermal Generating Plant Local Impacts Regional Impacts Global Impacts Emission Control Initiatives and Agreements 5.1 International Federal Provincial Regional Emission Reduction Options for Burrard 6.1 Baseline for Emission Reductions Technologies and Measures to Meet the GVRD Emissions Target vii.

87 Table of Contents (Continued) Regulatory Issues 7.1 BACT and Burrard Timing of Emission Control Installation Curtailment Provisions Regulatory Initiatives Regulatory Instruments Economic Instruments Permit Duration Studies of the Economic. System Capability and Emissions Impacts of Alternatives 8.1 Development of Options Modeling Methodology Description of Modeling Information Presented Economic Analysis Sensitivity Analysis Description of Gas Emissions Modeling Information Presented Gas Emissions Analysis Incremental Cost of NOx Reduction Summary and Analysis of Findings Minimum Margin for Burrard Operation 9.1 Introduction Environmental Externalities. A Background Experience in Monetizing Externalities in Other Jurisdictions Social Costing in British Columbia Derivation of a Minimum Margin for Burrard Operations Next Steps Conclusions and Recommendations APPENDICES Burrard Task Force. Terms of Reference Studies on Ozone Episodes in the Lower Fraser Valley MELP Technical Memo. Emission Limits for Natural Gas Boilers Greater than 73 MW GVRD Memorandum. NOx Emission Control at the Burrard Thermal Generating Plant a. Residual impacts internalized by GVRD Emission Charges. Non-SCR Unit b. Residual impacts internalized by GVRD Emission Charges. SCR Unit Independent Position of Mr. Stuart Hertzog

88 1.0 INTRODUCTION The Burrard Task Force was established in response to certain matters raised in the B.C. Utilities Commission (BCUC) Report and Recommendations to the Lieutenant Governor in Council on B.C. HydrolPOWEREX's Energy Removal Certificate App1ication.l The Report followed a public hearing in which the operation of the Burrard Thermal Generating Plant (Burrard) was a major issue. The BCUC Report identified the emission of oxides of nitrogen (NO,), a precursor pollutant to the formation of ground level ozone, as the prime matter of environmental concern, with the summer months being the critical period. The extensive deliberations of the BCUC panel led to the recommendation of a summer "emissions cap" for the plant as an approach to NOx reduction. In making its recommendations, the panel recognized that it did not have available the results of B.C. Hydro's Burrard Utilization Study (BUS), which was in preparation, nor did it have time to access B.C. Hydro's system models for hrther assessment of the assumptions used or the system impacts predicted. In responding to the BCUC recommendations, the provincial government noted that the Greater Vancouver Regional District (GVRD) is the authority responsible for the issuance of air emissions permits for Burrard, and that B.C. Hydro's current permit contains the condition that B.C. Hydro submit a plan, by February 28, 1993, for the implementation of NOx control measures to meet the GVRD's target. B.C. Hydro has requested an extension of the February 28 reporting deadline, and its current permit, for up to one year, to allow sufficient time for consideration of the Task Force report, and ensure adequate review, including public consultation, of a new permit application. The province endorsed a BCUC recommendation to establish the Burrard Task Force, with terms of reference (see Appendix 1) to consider the environmental impacts of Burrard and develop options for NOx reduction consistent with regulatory targets and provincial policy. Specifically, the Burrard Task Force was asked to examine and assess the technological and operational options, including the emission "caps" recommended by the BCUC as an alternative regulatory regime for NOx reduction at Burrard. Consideration is to be given to the costs which would be incurred, the system capability implications, and the emission reductions which would be realized. The Burrard Task Force would have available and incorporate as appropriate the results of B.C. Hydro's Burrard Utilization Study. The Burrard Task Force was asked to develop options for NOx emission reduction consistent with the targets of the GVRD (as noted in GVRD Permit No. VA-330, dated

89 April 29, 1 992), the policies of the Ministry of Environment, Lands and Parks (MELP), and national and international government objectives for the lower Fraser Valley. The BCUC panel also recommended that B.C. Hydro move towards the identification and incorporation of environmental costs in its dispatch decisions. In response to this, the Burrard Task Force has been asked as well to develop an estimate of the uncompensated damage costs associated with residual emissions from Burrard, after application of the Burrard Task Force's recommended NOx reduction strategy. This environmental externality value could then be applied as a minimum margin that must be recovered for Burrard to be able to operate for either domestic or export purposes. The Burrard Task Force was asked to provide a report to the GVRD and the province prior to February 28, 1993, to allow the GVRD sufficient time to consider the Burrard Task Force recommendations prior to issuing a new emission permit for Burrard. This deadline was subsequently extended to March 15, Those invited to participate on the Burrard Task Force were the GVRD, the BCUC, B.C. Hydro, the Crown Corporations Secretariat and the Ministries of Environment, Lands and Parks (MELP) and Energy, Mines and Petroleum Resources (MEMPR). The Burrard Task Force approached the GVRD Air Quality Advisory Committee (AQAC), an existing stakeholder advisory group involved in Lower Mainland airshed issues, from which interested public members selected a representative to sit on the Task Force. Due to the time frame of the Task Force, it was not possible to have the AQAC as a whole review this report. However, the Task Force anticipates presenting its findings to the AQAC, and allowing the Committee to review this report as an input into the process for a new air emissions permit for Burrard. The Burrard Task Force approached its work by reviewing the analysis of the issues undertaken by the BCUC, receiving presentations on the Burrard Utilization Study, enumerating the regulatory roles and responsibilities of various agencies and the targets and objectives in place, examining the best available control technology (BACT) policy, and requesting that B.C. Hydro undertake further analysis using its system models. This report provides background information on the Burrard Plant, a description of air quality issues in the Lower Fraser Valley, and a review of the applicable regulatory roles and initiatives. The results of the studies undertaken to evaluate the options for Burrard are presented, and the derivation of a minimum margin for Burrard operations is described. The Burrard Task Force has drawn on the information and understanding it has developed to recommend an approach to NOx reduction at Burrard that reflects the various

90 perspectives of the agencies involved and meets the objectives in a manner consistent with regulatory targets and provincial policies. Notes: 1. B.C. Utilities Commission, Report and Recommendations to the Lieutenant Governor in Council, B.C. Hydro and POWEREX Energy Removal Certificate Application, June 30, 1992.

91 2.0 BACKGROUND OF THE BURRARD PLANT 2.1 History and Roles Within the System The Burrard Thermal Generating Station was constructed initially by B.C. Hydro's predecessor company, B.C. Electric, during a period of very high growth in the province's demand for electricity. The six steam turbine generating units were placed in service between 1961 and B.C. Hydro was formed in 1962 to implement provincial initiatives to develop the Columbia and Peace Rivers. By the late 1960s, and all through the 1970s, substantial quantities of hydro-electric generation became available at an incremental cost that was generally lower than generation from the Burrard plant. Until 1977, the plant had some years of high use, when run-off was low within B.C. Hydro's hydro-electric system, and when new hydro-electric resources were constructed somewhat later than demanded by the province's load growth. In the early 1980s, the use of Burrard declined as load growth slowed considerably due to recession, and the Revelstoke hydroelectric project became available. This situation continued until 1988, when low run-off conditions, combined with renewed load growth, caused the plant to operate at its maximum historical output in the following year. The Burrard plant now provides up to approximately 12 percent of B.C. Hydro's firm energy capability, with the remainder coming from hydroelectric generation. For planning purposes, the firm energy attributed to hydroelectric resources is only that amount available under historically-low streamflow conditions. In addition to this firm, or assured, energy supply, the hydroelectric facilities provide what is termed "secondary energy" in all years except when there is minimum run-off This additional secondary hydroelectric energy permits generation at Burrard to be reduced because it is more efficient to use the water rather than burn natural gas fuel at Burrard. Consequently, the main role that Burrard now plays in the B.C. Hydro system is the provision of "displaceable firm energy." The plant also increases system reliability by providing stabilization to the Lower Mainland transmission system, and provides short-term energy supply in emergency conditions. Burrard's role supplying displaceable firm energy to assure adequate firm supply for B.C. Hydro's system continues. The importance of the Burrard plant is increasing because no major new sources of supply are planned for the next decade. In addition, new sources of supply would generally be more costly than Burrard's energy, so greater utilization now has efficiency advantages to B.C. Hydro's generation supply that are more significant than in the past. For all foreseeable gas price increases, this scenario is expected to continue in the future.

92 The Burrard plant was constructed with five units with a name-plate capacity of 150 MW, and a sixth MW unit, for a total of MW. However, at peak output, the plant is capable of producing at least MW. In past years of high demand for the plant, this generating capacity has been available for only 70 percent of the time, due to forced and scheduled outages. The MW at an annual availability of 70 percent, and with the inclusion of restrictions in gas availability, results in an assured supply of 5,270 GW.h per year of firm energy. Since 1989, the level of maintenance effort has been increased such that fbture duration and frequency of forced outages will be reduced and plans are proceeding to achieve an availability of 85 percent from each unit. With this increased plant availability and with reductions for interruption of gas supply on peak winter days, the plant is capable of producing 6,800 GW.h per year of firm energy at an output of MW. The actual energy generated at Burrard in past years has varied from zero in a number of years to 4,200 GW.h in 1989, with an average annual generation over the 32 year life of less than 1,000 GW.h (Figure 2.1). These wide variations in year to year need for the plant are expected to continue in the future, although according to B.C. Hydro's current Electricity Plan, peak annual use is planned at 6,450 GW.h, and average use is expected to be approximately 1,800 GW.h per year until 2001, and 3,500 GW.h thereafter. The intermittent use of the plant to date has resulted in each generating unit having only about 30 percent of the operating hours of similar plants of this age. 2.2 Environmental Considerations Air quality issues and Burrard emissions are described in detail in Section 4 of this report. The following is a brief summary of the discharges from the plant. The main air pollutant associated with the combustion of natural gas is nitrogen oxides. NOx is of particular concern as a precursor in the formation of ground-level ozone, which can be hadl to human health and vegetation above certain concentrations. While mobile transportation sources including motor vehicles produce the major portion of these air emissions in the Lower Mainland, available control technology to reduce NOx emissions has been developed for large point sources such as the Burrard plant. Under current natural gas supply and pricing conditions, plant operation, and consequently NOx emissions from Burrard, are most likely to occur in summer when the potential for formation of ground-level ozone is highest. From a global perspective carbon dioxide (C02) emissions have been identified as a contributing factor to enhanced greenhouse effects (global climate change). Thermal plants such as Burrard are significant emitters of C02 along with many other sources that

93 BURRARD THERMAL HISTORIC AND ESTIMATED FUTURE ANNUAL USE - HISTORIC ANNUAL ENERGY - GW.h USE FUTURE USE - CAPABILITY (MAXIMUM USE) EXPECTED -/ FUTURE USE -=& ACTUAL USE 4 I ACTUAL YEAR ROU February 1993 CAPABILITY BASED ON CURRENT ASSUMPTIONS

94 burn fossil hel. British Columbia's contribution to Canada's share of C02 emissions is significantly lower than other provinces in the area of power generation, because the system relies primarily on hydro-electric generation. C02 emissions from Burrard must be considered in the context of dispatch decisions throughout the integrated Northwest electricity system. In general, hydro-electric and nuclear sources in the Pacific Northwest are dispatched before the thermal sources because they have a lower operational cost. Therefore, when Burrard is operated, it may displace either coal, oil or natural gas thermal generation elsewhere in the integrated system. Besides air emissions, the plant uses large volumes of sea water obtained from Burrard Inlet for cooling purposes. This cooling water is chlorinated to prevent the formation of mussel growth in the cooling pipes. Residual chlorine remaining in the cooling water emissions can be hahl to aquatic life, and requires control to very low levels of concentration to avoid harmful effects. Current control programs at the plant aim to limit residual chlorine in its cooling water discharge to the minimum practical level below the permitted limit. In the early years of plant operation, a noise abatement program was implemented and, over the years of operation, occasional noise complaints have been received. 2.3 Emission Control Initiatives at the Burrard Plant Burrard was designed to operate with either natural gas or oil as hel. Total air emissions are significantly less when the plant is heled with natural gas. The option of using oil was precluded by regulatory actions in As concerns about NOx emissions increased in the latter part of the 1980's and the need to operate the plant increased, B.C. Hydro embarked on a program of modifications to the firing of the boilers that reduced NOx emissions by 40 percent. In 1991, B.C. Hydro recognized that hrther reductions in NOx emissions could be obtained by retrofitting control technology to the existing boilers. A contract was awarded to evaluate the available control technologies for these particular boilers. The work was completed in 1992 and identified selective catalytic reduction (SCR) as the most cost effective option.' In this process, a catalyst is added to the outlet ducting of the boiler and ammonia is injected into the flue gas upstream of the catalyst. The ammonia combines with the NOx over the catalyst to form nitrogen and water vapour. The SCR design must ensure that concentrations of ammonia emitted through the boiler stack, termed "ammonia slip", are limited to acceptable levels. The trade-off between reduced NOx emissions and the potential for some limited level of ammonia slip has been accepted in other jurisdictions where SCRs have been installed.

95 The B.C. Hydro Board of Directors has committed finding to install SCR on the first of the six units by To provide ongoing assurance that NOx emissions are minimized, the B.C. Hydro Board also committed fbnding to install continuous emission monitors for NOx and CO on all six units as soon as possible. Currently NOx levels are tested for compliance with the GVRD air emission permit on an annual basis. The Task Force endorses B.C. Hydro's plan to install continuous emission monitoring equipment for NOx and CO on all six units at Burrard as soon as possible. The monitoring equipment will be necessary to demonstrate compliance with the emission control strategy recommended later in this report. 2.4 Burrard Utilization Study The Burrard Utilization Study (BUS)2 was undertaken by B.C. Hydro to examine a full range of options for the plant, from shutdown to expanding the existing plant with the addition of combined cycle generation facilities. The study was completed in late The BUS is a technical analysis which provides a basis for examining the long-term fiture of the plant. The existing plant condition and performance were analyzed from existing records, and fiture performance and expected remaining life evaluated at an overview level. The value of the plant was analyzed from a broad perspective that included both environmental and economic considerations. Public and regulatory issues were reviewed as well as business opportunities and risks. Off-site mitigation opportunities for addressing airshed impacts from the plant were also identified as a potential option for NOx reduction. A B.C. Hydro action plan was recommended on the basis of the findings. The B.C. Hydro BUS team provided an extensive list of findings and recommendations to Hydro's Board of Directors including the following main items: the plant is capable of operating for at least another 25 years and, if required, could provide an increased energy output; the value of the plant to the Province and B.C. Hydro is very significant, including consideration of social costing aspects (the values have been updated in Section 8 of this Report); feasible NOx control technologies are available and applicable to reduce plant emissions by at least 80 percent; and a phased action plan that addresses installation of emission control technology at the plant, as part of an overall Burrard Thermal Upgrade Project, should commence as soon as possible.

96 The BUS, which includes a summary document, eleven supporting reports, and a discussion paper, was provided to each member of the Task Force. A non-technical summary of the BUS is being prepared, and is expected to be available in March, Key B.C. Hydro participants in the study were made available to respond to questions from members of the Task Force. Notes 1. ABB Combustion Services Division Canada, Mitsubishi Canada Ltd., Burrard Thermal Generating Plant. NOx Reduction Program. Unit 4 Final Report on Site Evaluation - Phase 1, April B.C. Hydro, Project Management Division, Burrard Utilization Studv, November 1992.

97 3.0 REGULATION OF THE BURRARD PLANT 3.1 Introduction The Canadian side of the Lower Fraser Valley (LFV) airshed is made up of four jurisdictions: Dewdney Alouette Regional District, Central Fraser Valley Regional District, Fraser Cheam Regional District, and the Greater Vancouver Regional District (GVRD). The GVRD is a partnership of 18 municipalities with 1.6 million inhabitants. While the GVRD is the major urban area in the LFV airshed, and has about one-half the population of British Columbia, the three Regional Districts to the east of the GVRD and Whatcom County in northern Washington State are home to a substantial portion of the population, economic activity and motor vehicle traffic. Air quality management in the three Regional Districts within the LFV outside the GVRD is carried out by the MELP's Surrey Regional Ofice. In August of 1992 air quality planning powers were granted under the Municipal Act to the other three Regional Districts to allow them to participate in planning studies with the GVRD and the Ministry. This is seen as a first step towards potential delegation of air pollution regulatory powers to a coordinated airshed authority. 3.2 Waste Management Act (WMA) - GVRD and MELP Roles Concern about air pollution led to the 1970 amendment of the Pollution Control Act (now the WMA), which established a provincial regulatory program for air emissions. Shortly afterwards, in 1972, the issuance of Letters Patent and a fbrther amendment of the Pollution Control Act established the GVRD as the single agency under which all provincial and municipal air pollution control activities in the Greater Vancouver urban area would be integrated. This delegation of responsibility for air quality management is continued under the current provincial WMA. Under this authority the GVRD has administered 300 emission permits (including permit VA-330 for Burrard) over more than 20 years. In July of 1990, the GVRD Board of Directors adopted as part of the District's Creating Our Future, Action #14, which sets an air quality goal of reducing the emissions of 5 major pollutants (oxides of sulphur and nitrogen, carbon monoxide, volatile organic compounds and particulates) to 50 percent of 1985 levels by the year In order to meet this goal, the GVRD has developed Stage 1 and Draft Stage 2 Air Quality Management Plans, passed an air quality bylaw, and established an emission fee system. Burrard is subject to these bylaws and fees. The Air Quality Management Plan

98 provides a review of potential air emission reduction strategies for Burrard. In addition, the current GVRD air emission permit for Burrard contains emission curtailment provisions which the GVRD may implement during episodes of poor air quality. Permit PE-7178 (amended May 7, 1990) issued by the MELP Surrey Regional Office under the provisions of the WMA, authorizes liquid effluent discharges from Burrard into Burrard Inlet under certain terms and conditions, including effluent temperature, levels of chlorine, total suspended solids, etc. Fisheries and Oceans Canada is included in any permit issuance process in order to satisfjr concerns within their jurisdiction. Part 5 of the WMA contains provisions whereby permits may be appealed. Permits issued by MELP Regional Managers may be appealed to the Director of the Air Resources Branch, and then to the provincial Environmental Appeal Board. Permits issued by the GVRD District Director are appealable directly to the Environmental Appeal Board Bill 29 - Amendments to the Waste Management Act The WMA was amended in 1992 by Bill 29, the Waste Management Amendment Act. With respect to the role of the GVRD and the Ministry, the amendment provides specific enforcement, regulatory and exemption powers in relation to the control of air pollution in the GVRD. It also clarifies the relationship between bylaws and permits of the GVRD under the WMA respecting sewage and air pollution and related legislation and controls Powers of the Minister and the Lieutenant Governor in Council In Section 3.3 of the WMA the Lieutenant Governor in Council may act in the public interest to manage wastes in a manner that is not limited to considerations taken by the GVRD or any Ministry personnel (such as Regional Managers) empowered under the WMA. Under Bill 29, the Minister has the authority to require that the GVRD amend, suspend or cancel any bylaw or part of a bylaw if the Minister deems it necessary in the public interest. In addition, the Environmental Management Act provides the Minister with powers to declare an environmental emergency and to enact programs for the purpose of preventing, lessening or controlling the hazard presented by the emergency. It is conceivable that, under a severe ozone episode in the Lower Fraser Valley, the Minister could issue an order for a general curtailment of emissions (including those from Burrard). 3.3 Utilities Commission Act (UCA) MEMPR has a regulatory role with respect to energy related facilities such as Burrard through its responsibility at the Cabinet level for administration of the UCA. The BCUC

99 is responsible, under the UCA, for the general regulation of public utilities, which includes B.C. Hydro Ministry of Energy, Mines and Petroleum Resources Pursuant to the UCA, MEMPR coordinates, in conjunction with the Ministry of Environment, Lands and Parks, the Energy Project Review process, and administers the review and awarding of Energy Removal Certificates (ERCs). As Burrard was in existence when the UCA was enacted in 1980, under Section 16 of the UCA it was exempted from designation as a regulated project, and was deemed to have an Energy Project and Energy Operation Certificate. Burrard has been an issue in the awarding of ERCs to B.C. Hydro. ERC-80(8403), issued in March 1984, excluded the output of Burrard from the firm removable surplus calculation, except under emergency or unforeseen situations. In 1987, after B.C. Hydro was awarded an emissions permit for Burrard under the WMA, the capability of the plant was included in the firm removable surplus calculation. The 1987 Amending Order deemed that energy from Burrard was being exported if it was operating for any reason while exports were taking place. At the 1992 ERC hearings before the BCUC, extensive evidence was heard on the role of Burrard, and the difficulty in allocating the output from a specific unit to exports from an integrated electrical system. For example, Burrard may be operated in the fall of the year when the level of snow-pack, and hence the water content of the hydroelectric system, is uncertain. If water conditions are above the level anticipated, the energy generated from Burrard in effect may subsequently be exported. The BCUC concluded that "the role of Burrard in export is a complex hnction of dispatch decisions based on water supply, economic advantage of the sale, the availability and cost of the gas he1 supply, and technical operational consideration^."^ The BCUC did not accept the argument that prohibiting the use of Burrard for export would be effective in achieving improved air quality in the Lower Mainland.2 As discussed later in this report, the firm capability of Burrard may be reduced in the short-term, owing to the phased shut-down of units to allow the installation of emission control technology, and may also be increased in the longer-term, through an upgraded maintenance program that may increase Burrard's availability, and through increased unit capability from the reversion to the pre-1989 firing configuration. The firm exportable surplus available to B.C. Hydro and POWEREX, as defined in the current ERC, will be affected by these modifications.

100 3.3.2 B.C. Utilities Commission Pursuant to Section 28 of the UCA, the BCUC has a general supervisory role over all public utilities in the province, and may make orders respecting the manner in which the utilities conduct their business or operate their facilities. Burrard is a significant component of the B.C. Hydro generating system, and its operation is subject to the BCUC's scrutiny during public hearings involving the utility's resource planning activities, system operations, and tariff charges. Such scrutiny normally takes the form of a prudency review of the dispatching of the plant, tested against other generation options or load management initiatives. Sections 30 and 3 1 of the UCA also provide the BCUC with the authority to entertain complaints about the operation of the plant, and to make a determination, after a hearing, on what operational changes by the utility are appropriate. In the absence of a complaint, the BCUC may, on its own volition, and after a hearing, prescribe changes to the manner in which the plant is to be operated. It is to be understood that no action by the BCUC should conflict with the regulatory requirements imposed on Burrard by the GVRD. Notes: 1. B.C. Utilities Commission, Report and Recommendations to the Lieutenant Governor in Council. B.C. Hvdro and POWEREX Energy Removal Certificate Application, June 30, 1992, p ibid, p. 97.

101 4.0 AIR QUALITY ISSUES IN THE LOWER FRASER VALLEY 4.1 Characteristics of the Lower Fraser Vallev Airshed The Lower Fraser Valley (LFV) forms an airshed which is characterized by its location, topography and meteorology. It can be described as an urban area situated at the entrance to a coastal valley, the upper reaches of which remain largely forested and agricultural. The airshed is bounded by the Coast Mountains to the north, the Cascade Mountains to the southeast and the ocean (Strait of Georgia) to the west. The prevailing winds are dominated by airflow from the east and southeast in all seasons of the year. Within this overall airflow trend, variations in air mass movement, both vertically and horizontally, are created by the interaction of topography and bodies of water. In the summer, during periods of clear skies and warm sunny weather, the differential heating between the land and the ocean results in a light, on-shore flow called a sea-breeze. This sea-breeze transports emissions inland during the day. During the night the flow can reverse, transporting emissions back to areas of their origin and potentially adding to the next day's transport cycle. The existence of temperature inversions is another important factor in determining air quality in the valley. Under an inversion any up and down motion of the air is suppressed, thus limiting any vertical mixing of pollutants. Nighttime inversions occur percent of nights throughout the year, and the elevation of daytime elevated temperature inversions (an inversion that exists above the ground) are normally low ( m). This effectively traps pollutants near the ground. The combination of light on-shore winds with low inversions and bounding mountain ranges result in restricted ventilation and produce an area with a high air pollution potential. Ambient air quality monitoring data and visual observation have confirmed the LFV air basin as an area susceptible to poor air quality. 4.2 Sources of Air Emissions There are literally millions of sources of pollutants in the LFV, ranging from industrial processes and motor vehicle exhausts to hrnaces for home and ofice space heating, personal care products, and household cleaners and paints. In addition, the LFV contains a number of forest and moss/shrub ecosystems that are capable of emitting photochemically active volatile organic compounds (VOCs) during the summertime.

102 The latest currently available inventory is for 1985 (Lower Mainland Emissions Inventory (LOMEI)' and Environment Canada's Residual Discharge Information System (RDIS)). A 1990 update is nearing completion. Figure 4.1 is from the LOME1 report, and summarizes the total emissions for a variety of compounds as a function of mobile, point, area and gas marketing sources. Mobile sources include all vehicular, aircraft and airports, rail and marine emissions. Point sources include all permitted industrial sources (Burrard is a point source, but did not operate in 1985, and was not included in the inventory), as well as any other point source emitting more than 50 tonnesly. Gas marketing emissions are from the distribution of gasoline from the refinery tank farm to the automobile gas tank. Area sources include all other emission sources with the exception of gasoline marketing. 4.3 Air Quality Issues In current regulatory approaches to air resource management, measured or mathematically modeled ambient concentrations of various pollutants are compared with corresponding ambient air quality objectives in order to establish whether an air quality concern exists. The Federal Government has established National Ambient Air Quality Objectives (NAAQOs) designed to protect public health and the environment. The GVRD uses these national objectives for total suspended particulate (TSP), carbon monoxide (CO), sulphur dioxide (S02), nitrogen dioxide (N02), and ozone (O3), as a component in its Draft Stage 2 Air Quality Management Plan2 The objective for each pollutant is designated in three levels as follows: Maximum Desirable: This level defines the long-term goal for air quality, provides a basis for a policy to protect pristine areas of the country, and spurs continuing improvement in control technology. Maximum Acceptable: This level is intended to provide adequate protection against adverse effects on human health, vegetation and animals. Maximum Tolerable: This level denotes time-based concentrations of air contaminants beyond which, due to a diminishing margin of safety, appropriate action is required without delay to protect the general population's health. Depending on air quality measurements and the frequency of exceedances of the three levels, an area may or may not have identified air quality concerns associated with one or more of the designated pollutants. The Provincial Government has also established a set of ambient objectives as defined in the Pollution Control Objectives for several industry sectors. In general, the objectives are

103 Figure 4.1 Total = 13,085 tonnes 1985 Emissions in the Lower Fraser Valley by Type and Source Sector (based on LOMEI) 1 Nitrogen Oxides (NOa Total = 58,412 tonnes Particulate Matter Total = 142,010 tonnes Carbon Monoxide (CO) Total = 412.W tonnes Volatile Organlc Compounds (VOCs) Total = 104,=8 tonnes Mobile Sources Area Sources I Point Sources I Gasoline Marketing

104 consistent with the NAAQOs, however the GVRD has continued to use the NAAQOs pending provincial review of the guidelines in the Pollution Control Objectives. Monitoring data for a wide variety of these pollutants, including wet deposition of sulphur and nitrogen species (acid rain), have shown that the major issue of concern currently in the LFV is ground-level ozone. The Maximum Acceptable Objective for ozone has been exceeded to varying degrees in each of the past ten years. However, the fkequency of exceedances of the Maximum Tolerable Objective has decreased from that experienced in the late 1970s and early 1980s. This is illustrated in Figure 4.2, which summarizes air quality data for stations within the GVRD. The GVRD Air Quality Management Plan Discussion Paper identified, in addition to ground-level ozone, that fine particulates, visibility, and carbon monoxide were other key issues of concern Ground-Level Ozone and Urban Smog The respective Federal, Provincial and Municipal (GVRD) governments are in consensus that ozone episodes in the LFV need to be reduced. Various programs, such as the Federal Government Green Plan, the Canadian Council of Ministers of the Environment (CCME) NOxNOC Management Plan, and the GVRD Draft Stage 2 Air Quality Management Plan have been developed with the goal of bringing the LFV into compliance. For example, the NOxNOC plan objective is to bring areas such as the LFV into consistent attainment of the maximum acceptable one-hour objective for ozone by Ground-level ozone is the major constituent of urban photochemical smog. This is a kind of chemical soup that contains chemical byproducts formed as a result of complex, nonlinear reactions. Ozone is formed in combination with elevated temperatures, strong sunlight and two primary ingredients called precursors - nitrogen oxides (NO,) and volatile organic compounds (VOCs). These conditions occur from May to September, and are usually accompanied by sea breezes which carry the urban NOx and VOC emissions, and the ozone by-product, up the valley. Due to this transport, and the fact that the photochemical reactions take time, ozone concentrations are lowest near the coast and increase with distance inland, often peaking in the afternoon in central or eastern areas of the Lower Mainland. These areas are downwind of Burrard during these periods. Studies related to the effects of ozone on human health, forest lands and agricultural production in the LFV were reviewed and summarized by Concord Environmental Cop3 These studies identifir that ground-level ozone is the major air quality concern in the LFV, and provide weight to the importance for action to control emissions of NOx and VOCs.

105 Figure TREND IN GVRD AIR QUALITY (OZONE)' MAXIMUM DESIFWBLE MAXIWM ACCEPTABLE W l W M TOLERABLE OBJECTIVE OBJECTIVE CaJECTM Data from GVRD air monitoring stations 11 through T9 " A Station Day is a day on which one or more exceedances of air quality objectives were measured at an air monitoring station

106 4.3.2 Fine Particulates and Visibility While air quality monitoring shows occasional exceedances of the Maximum Acceptable Objective for total suspended particulate, it is the fine particulate matter less than 10 micrometres in particle diameter (PM-10) that is more closely associated with the health and visibility impacts of particulate emissions. Standards of PM-10 exist in the United States, but no provincial or federal PM-10 Objective has been established, although the issue is currently under review. PM-10 is an important issue, since visibility impairment is evident in the LFV during periods of poor atmospheric dispersion in all seasons of the year. Although some PM-10 monitoring has been done, continuous measurements will be established within the GVRD in Carbon Monoxide Carbon monoxide in recent years has exceeded the Maximum Desirable Objective as frequently as 5 percent of the time in downtown Vancouver. Despite better control technology on new vehicles, anticipated increases in motor vehicle use and congestion indicate that carbon monoxide levels need to be closely monitored. 4.4 Burrard Thermal Generating; Plant Under the present GVRD permit, Burrard has the potential to emit up to 3,200 tonnes per year (tly) of NOx. At the 5,520 GW.h level of generation, 2,950 kilotonnesly of C02, 900 tly of CO, and small quantities of S02, VOCs and particulates are also emitted. Historical records show that actual emissions have ranged from near zero to an estimated 1747 t/y of NOx in Emissions of NOx from Burrard are primarily nitric oxide (NO), which oxidizes to nitrogen dioxide (N02) in the atmosphere. Given the key air quality issues in the LFV, and the amount and type of emissions from Burrard, concern has focused on NOx emissions, especially during the summer period, when strong sunlight and elevated temperatures increase the potential for ground-level ozone formation. In addition to the contribution of NOx to ozone formation, NO2 has health-related impacts, and federal air quality guidelines have been established for this pollutant. Based on 1985 emission inventory data, Burrard is estimated to contribute between 2 and 4 percent of all NOx emissions in the LFV. If all six boilers were to operate at maximum output during the summer months, Burrard's NOx contributions to the seasonal emissions inventory would be about 5.5 percent.

107 Airshed impact studies, using data from multiple monitoring stations and plume tracer tracking, have not demonstrated any specific impact other than the plant's overall NOx percentage contribution to the airshed. Development of an airshed model is under way to simulate the interaction of all sources in the Lower Mainland. However, this effort is expected to take another three years to complete. The model will provide additional scientific information on the roles of NOx and VOC sources in the formation of ozone. The Terms of Reference direct the Task Force to consider "the environmental impacts of Burrard." From an air quality perspective, these impacts can be classified as local, regional and global Local Impacts Direct NO2 impacts on health and vegetation in the vicinity of Burrard have been evaluated through a modeling and field study.3 The potential for exceedances of the hourly maximum acceptable objectives for NO2 in the local and surrounding area is low. Monitoring data in the area have not measured any NO2 exceedances, although a study by Runeckles concluded that the vegetation at one site near the plant (out of a series of sites studied in the area) may be negatively impacted by NO2 expo~ures.~ Regional Impacts In addition to the ozone, particulates and visibility issues described in Section 4.3, acid deposition is a potential regional air quality issue. On the basis of a simple modeling methodology, a 1983 study determined that Burrard was not contributing to any negative impacts associated with acid depositi~n.~ However, the situation with respect to its contribution to the ozone episodes is not so clear. The BCUC has concluded that the specific determination of how much the NOx emissions from Burrard contribute to ozone episodes in the LFV is presently very difficult, as the formation of ozone from precursor emissions is a very complex, nonlinear pro~ess.~ That is, to achieve a small decrease in ozone concentrations may require a very large decrease in NOx emissions (or VOC emissions, or both). In addition, this ozone decrease may only occur in certain areas, whereas other areas may not experience any change. Adding to the complexity of regional NOx management is the contribution of naturally occurring ozone, due to transport from the stratosphere or reactions with natural emissions of NOx and VOCs. It is important to note that, with respect to ozone episodes, even though Burrard is upwind of the areas experiencing elevated ozone, the incremental contribution of Burrard to an episode is not necessarily in proportion to its fractional contribution to emissions, owing to the non-linearities of the photochemical reactions associated with ozone formation.

108 One way to determine Burrard's contribution to ozone episodes is through the application of computer models. However, modeling this situation is extremely difficult and complex. Although urban photochemical modeling has been applied in different jurisdictions in the United States to assist in emissions reduction strategies, no such modeling on this level has been undertaken in the LFV. The BCUC found that modeling a specific plume that is imbedded in the larger urban plume has been done, but is still an emerging science and increases the level of modeling ~omplexity.~ In addition, the inputs required for such an exercise (such as speciation of VOC emissions) are presently not available. Given the lack of information concerning Burrard's contribution to ozone episodes, the BCUC concluded that to the extent that Burrard fbnctions during the critical summer period, it will contribute to the probability of ozone episodes in the LFV. Collaborative field study and modeling efforts coordinated by the University of British Columbia (U.B.C.) are now underway, which include the federal provincial and regional governments under the auspices of the Canadian Institute for Research in Atmospheric Chemistry. The objectives and budget/schedules for the inter-agency studies on episodic ozone pollution in the LFV are described in Appendix 2. A major milestone will be the air chemistry sampling program, to be performed with instrumented aircraft in the summer of In the Burrard Utilization Study, B.C. Hydro expressed the desire to help resolve Burrard's contribution to ozone episodes, and proposed contributing up to $1 million, along with other emitters and agencies, to the hnding of airshed modeling initiatives. The Task Force supports the BUS recommendation that B.C. Hydro fund airshed modeling initiatives. The Task Force recommends that B.C. Hydro broaden the scope of this funding, in consultation with government and academic agencies, to include other studies, in areas such as emission trading and examining the damage costs of short-term air quality exceedances, that may also help to resolve the air quality issues related to Burrard Global Impacts Burrard, at a generation level of 5,520 GW.h in a year, could emit 2950 ktly of C02. With the exception of combined cycle plants, Burrard C02 emissions in terms of mass per unit of energy are lower than other gas-, oil- and coal-fired thermal plants in the western interconnected electricity grid (see Section 9.5). C02 and other greenhouse gas emissions from Burrard should be considered within the context of the alternative generation resources within the western interconnected electricity system.

109 Global climate models do not have the capability to examine climate change in response to emissions from a particular source. Given the relative contribution of Burrard to global greenhouse gas emissions, and the fact that the effects of greenhouse gas emissions are seen on a global scale, Burrard's contribution to any climate change phenomena will be masked by all the other global sources. However, through international agreement Canada is committed to C02 caps (Section 5), although the provincial implications of this commitment are still under discussion. Within the province, MELP has directed proponents of major new sources to prepare plans to offset any increased emissions of C02. Based on provincial ratification of agreements to stabilize C02 emissions, these emissions are likely to be of greater concern in hture years. Notes 1. GVRD, 1985 Lower Mainland Emission Inventory, May, GVRD, Let's Clear the Air. Air Quality Management Plan, Discussion Paver, May, Concord Environmental Corporation, Burrard Thermal Generating Plant Utilization Studv, Air Quality Overview, February, Runeckles, V.C., Assessment of Possible Vegetation Effects of Airborne Emissions from the Burrard Thermal Generating Plant Operating on Natural Gas, Report to B.C. Hydro, Concord Environmental Corporation, Analysis of Nitrogen Oxides Air Quality Data for the Greater Vancouver Regional District , Prepared for B.C. Hydro, B.C. Utilities Commission, Report and Recommendations to the Lieutenant Governor in Council. B.C. Hydro and POWEREX Enerm Removal Certificate Application, June 30, 1992.

110 5.0 EMISSION CONTROL INITIATIVES AND AGREEMENTS The location of the Burrard thermal generating plant makes it subject to a number of different agreements, policies, targets and plans promulgated by international, federal, provincial, and municipal levels of government. The following is a list of these targets which are of relevance to Burrard. Specific emission goals are summarized in Table International United Nations Conference on Environment and Development (UNCED) At the 1992 UNCED meeting in Brazil, Canada committed to stabilizing greenhouse gas emissions at 1990 levels by the year Parliament has ratified this commitment, and a national action strategy on global warming is under way. United Nations Economic Commission for Europe (ECE) Convention on Long- Range Transboundary Air Pollution A Protocol to the 1979 Convention was added in November of 1988 for emissions of nitrogen oxides. The NO, Protocol obliges Canada to reduce national annual emissions of nitrogen oxides to 1987 levels by December National emissions standards based on best available control technology economically feasible are to be applied to new and substantially modified stationary sources. A technical annex discusses appropriate control technologies for measures which must be introduced for major existing stationary sources. A Protocol for VOC emissions requiring a 30 percent reduction by 1999 from 1988 levels was added in November Annex I to the VOC Protocol designates the Lower Fraser Valley, including the Greater Vancouver Regional District, to be a "Designated Tropospheric Ozone Management Area" (TOMA). Requirements for information exchange and annual reporting apply to TOMAs as well as national jurisdictions. CanadaJU. S. Air Quality Accord This Agreement signed by the Prime Minister and the President on March 13, 199 1, establishes a framework to deal with transboundary air pollution problems, and sets targets for the reduction of acid rain-causing emissions. It requires that Canada:

111 Air Emission Aereement Commitment Base Year Tareet Year INTERNATIONAL Greenhouse Gases UN Convention Stabilization of gases ECE Protocol Stabilization US. /Canada Accord Scheduled reductions from industry. Tighter standards for motor vehicles. voc ECE Protocol Stabilization of national total. 30% reduction in Tropospheric Ozone Management Areas (W is Canada's only such area) US. /Canada Accord National Cap of 3.2 million tonnes REGIONAL NOx,VOC,Q,CO, particulates NOx/VOC Management Plan National Plan to meet International committments. Targets for LFV to be developed for 2000 and Ozone compliance by GVRD Board Adoption of Region wide 50% reduction of the Creating our Future Action specified gases #14 TABLE 5.1 SUMMARY OF EMISSION TARGETS OF RELEVANCE TO BURRARD (Many of the protocols also contain other requirements.)

112 As an interim requirement, reduce by the year 2000 the annual emissions of nitrogen oxides from stationary sources by 100,000 tonnes below the year 2000 forecast level of 970,000 tonnes. By January 1, 1995, develop hrther annual national emission reduction requirements fiom stationary sources to be achieved by 2000 and/or By January 1995, develop and implement means affording levels of prevention of significant air quality deterioration and protection of visibility comparable to Part C of Title I of the U.S. Clean Air Act, with respect to sources that could cause significant transboundary air pollution. By January 1, 1995, estimate emissions from each new and existing electric utility unit greater than 25 MW using a method of comparable effectiveness to continuous emission monitoring, and to implement such continuous emission monitoring systems where appropriate. B.C./State of Washington Environmental Cooperation Agreement This Agreement, signed by Premier Mike Harcourt and Governor Booth Gardner on May 7, 1992, includes the following item on regional air quality management in the "Preliminary Action PlanIWork Priorities: " 1. Regional air quality management is considered to be a high priority issue in the Georgia BasinPuget Sound airshed, and requires timely joint attention. 2. Issues such as transboundary flows of sulphur dioxide, nitrogen oxides and volatile organic compounds should be addressed in an integrated manner through regional implementation of the Canada.$. Air Quality Agreement. 5.2 Federal CCME Management Plan for Nitrogen Oxides and Volatile Organic Compounds Environment Canada is facilitating the implementation of the Canadian Council of Ministers of the Environment (CCME) NOxNOC Management Plan to reduce exposure to elevated levels of ground-level ozone in the Lower Fraser Valley and in other regions in eastern Canada. The Phase I Plan, released in November 1990, proposes a national prevention program based on application of best available control technology economically achievable (BACTEA) to new mobile and new stationary sources of NOx and VOCs. Remedial control programs are to be developed for existing industrial facilities to ensure that interim (1995 and 2000) emission reduction targets are met. Emissions from thermal power plants are addressed in initiative N305 (National prevention program for new power plants) and N602 (Regional remedial program for new and existing power plants).

113 National Action Strategy on Global Warming As a result of agreements signed in Brazil in 1992, Canada is participating with its international partners in seeking a coordinated approach to limit or reduce emissions of greenhouse gases. The challenge of developing a national action plan for greenhouse gases is being developed under the auspices of the CCME, as outlined in a November 1990 report entitled "National Action Strategy on Global Warming." 5.3 Provincial Ministry of Environment, Lands and Parks BACT Policy The April 1992 Legislation Discussion Paper entitled "New Approaches to Environmental Protection in British Columbia" defines best available control technology (BACT) as "the currently available state-of-the-art control technology which is proven to be successfid in reducing waste discharges and has been applied for at least one year in similar facilities in the province or in relevant jurisdictions. Control technology refers to all of the following: raw materials, fiels, process technology and pollution control equipment or devices used to minimize both generation and discharge of wastes. " The Task Force notes that other jurisdictions use the terms "best available control technology" and "BACT" in somewhat different contexts. Under the provincial BACT policy, Regional Managers begin with a provincially derived BACT-based waste discharge criterion, or emission level, and define a more or less stringent discharge standard for individual facility permits, based on site-specific air quality and economic conditions, through a process summarized on the flow chart shown in Figure 5.1. British Columbia Strategy for Reducing Greenhouse Gases In October 1992, the Cabinet Committee on Sustainable Development endorsed Canada's ratification of the UNCED agreement on greenhouse gases. MELP is currently carrying out consultation for a provincial strategy on greenhouse gas emissions, which is outlined in the May 1992 B.C. Environment Report "Greenhouse Gas Inventory and Management Options."

114 Figure 5.1 SIMPLlRED FLOWCHART FOR SETTING A DISCHARGE STANDARD All New Sources waste discharge criteria * Existing soum undergoing major modifications Applicable to A11 other existing Y)IU[ES in an orderly phased-in manner t L v & Review site specific impacts on receiving environment, including 4 hcalth. using available data and modeling + Apply increasingly more stringent control and/or process modifications [ io d u e discharge I Consider possiblc trading, phasing or other options this a v viability? v 1 Consider only Dixhargc Trading or Waste Bubble ODtions dictate r standard less stringent than BACT? - GMC~ project Note: A standard Icss stringent than B AO hscd criteria may not b rpecificd for any pcmistcnt toxic substme fn r dixhargc.

115 5.4 Regional Creating Our Future Action #14 adopted by the GVRD Board in July 1990 "Continue to develop and implement the Greater Vancouver Air Management Plan with the objective of reducing by 50 percent total emissions of sulphur and nitrogen oxides, particulates, carbon monoxide and volatile organic compounds by the year 2000." This goal is based on 1985 emission levels. GVRD Air Quality Management Plan - Draft Stage 2 Report, May 1992 "The implementation of best available control technology for new stationary sources of emissions should be adopted as a policy in the GVRD. Retrofit of existing sources to best available technology standards should proceed as soon as possible." The draft report suggests that on the basis of an estimate of Burrard's annual emissions of 2,200 tonnes, NOx emission reductions of between 30 and 50 percent could be achieved by 1995, and reductions of 70 percent below current levels could be achieved by 2005.

116 6.0 EMISSION REDUCTION OPTIONS FOR BURRARD 6.1 Baseline for Emission Reduction A comprehensive evaluation of control technologies for Burrard, initiated by B.C. Hydro in 199 1/92 as part of BUS, reviewed a wide range of commercially-proven NOx reduction technologies.1 The firing characteristics of the existing boiler design were considered in the evaluation. Each viable technology was costed and the reduction in NOx emissions was estimated. In the BUS, the baseline for emission reduction was established on unit #4 at 150 MW output for the original design firing at a NOx emission level of 125 parts per million (ppm) at 3 percent oxygen (this level is equivalent to 238 milligrams per cubic metre (mg/m3)). To meet GVRD permit conditions requiring a plan to reach 55 mg/m3, a NOx reduction of 80 percent was determined to be achievable using selective catalytic reduction (SCR), to yield expected NOx emission concentrations of 25 ppm (48 mg/m3). In Section 8 of this Report, the Task Force has re-evaluated the costs and impacts of a baseline emission level at an overall plant output of MW, to meet a proposed new GVRD emission objective of mg/m Technologies and Measures to Meet the GVRD Emissions Target Reduction of NOx emission on existing natural gas fired electrical generation boilers using SCR has been addressed using two main approaches. In Germany, and more recently in California, boiler combustion modifications have been emphasized before applying SCR to the exhaust side of the boiler with the result that both the size and cost of installed SCRs have been kept to a minimum and in some cases installed within the confines of the existing boiler ducting. This approach is referred to as "in-duct SCR. " The other approach, sometimes referred to as "conventional SCR," involves construction of substantial new boiler ductwork and boiler firing usually matches more closely with original design conditions. While NOx emissions are minimized, the cost of the conventional SCR approach may be considerably more than the in-duct SCR, and the process requires considerable additional space around the boiler. Numerous SCR installations have been completed in the past 5 to 10 years in both Japan and Germany. California utilities are just commencing construction of SCR installations on large natural gas steam turbine electric generation units. Other methods of reducing NOx emissions involving modifications to the boiler combustion system were reviewed in studies completed by B.C. Hydro for the BUS.

117 None of these other methods were as effective in reducing NOx emissions as SCR. Beyond retrofitting all six of the existing boilers with SCR, there are three main alternatives that were considered as stand alone options and in combination with partial SCR installations. One alternative involves replacing the existing boilers with gas turbines and heat recovery steam generators to form what is termed an "unfired" combined cycle, with either the existing or new steam turbines. To achieve acceptable levels of NOx emissions, the new gas turbines may also require installation of SCR, involving similar trade-offs to applying SCR to the existing boilers. This alternative would result in decreased natural gas he1 consumption per unit of electrical energy produced, and would incur significantly higher capital investment requirements. There would be lower carbon dioxide and cooling water emissions due to a potential 30 percent higher overall thermal efficiency. The BUS recommended that B.C. Hydro continue to study this alternative as an option to installing SCR on the latter units. The minimum lead time for converting half the plant to combined cycle would be approximately 4 years, and 6 years would be required for the whole plant. Because the site installation would involve a multi-year shut-down of some existing generating units, B.C. Hydro would have to purchase replacement energy during this period. Future B.C. Hydro studies of combined cycle applications at the Burrard site are planned to address the merits of either using the existing steam turbines in the cycle or replacing them entirely. This decision has a significant impact on the capital requirements. Another alternative considered in BUS, and discussed in detail in Section 8, is to shut Burrard down and replace it with an alternative facility, likely outside the airshed. This option is also capital intensive and may also require new transmission and switching facilities. A third alternative that is being considered by regulators at the federal, provincial and regional level involves the application of economic incentives and off-site mitigation (i.e. emission trading) to implement cost-effective strategies for emission reduction. In the BUS, specific off-site mitigation opportunities were discussed, whereby NOx emission reductions from other sources, mainly mobile, would be acquired if the societal benefits of doing so exceeded the costs of installing NOx controls on the last two or three units at Burrard. This approach would require development of a statutory framework and regulatory acceptance before it could be used as a NOx reduction measure. The concepts related to emission trading are discussed in the next section of the Report. Notes 1. ABB Combustion Services Division, Canada, Mitsubishi Canada Ltd., Burrard Thermal Generating Plant, NOx Reduction Program. Unit 4. Final Report on Site Evaluation - Phase 1, April 1992.

118 7.0 REGULATORY ISSUES The implementation of emission controls at Burrard, given the air quality objectives and policies of the GVRD and MELP, and the importance of Burrard to the provincial electricity grid, raises a number of regulatory issues. These include; the GVRD's 50 percent emission reduction objective; the application of provincial BACT policy; the timing of implementation of controls; the applicability of curtailment provisions; the possibility that new air quality regulatory initiatives may be implemented in the region by the end of the decade; and the duration of the permit and its relation to the investments required. 7.1 BACT and Burrard The Task Force discussed extensively the application of the provincial BACT policy to Burrard. Key aspects of the BACT policy, announced in January, 1992, that apply to Burrard are: the roles of MELP and the GVRD in issuing permits, phasing-in of controls; the possibility of emissions trading; and the issue of economic viability (on which a policy has yet to be established, see Figure 5.1). The Task Force recommends that a declining 24-hour facility cap, or "plant bubble," is a phase-in approach consistent with provincial and regional air management policy for existing sources. Such a cap could be defined with reductions equivalent to the phased installation of SCR emission controls on the units at the plant. B.C. Hydro would have flexibility to meet the declining cap in the most cost-effective manner, while meeting regulatory requirements. In Burrard's system role of supplying displaceable firm energy, units at Burrard with emission controls may be preferentially operated, which would result in emissions being below the cap levels on an annualized basis in most years; any excess emissions above the cap could be offset with offsite mitigation, if approved by regulators at that time. In February, 1993, MELP issued a Technical Memo defining a draft provincial emission criterion of 52 mg/m3 for NOx emissions, over a one-hour averaging period, from gasfired boilers larger than 73 MW (Appendix 3). Consistent with BACT policy, the GVRD District Director may issue a permit with a lower or higher emissions level than the applicable provincial BACT criterion, giving consideration to site-specific air quality and economic factors. On February 9, 1993, the GVRD issued a draft technical memorandum, based on a report by Energy and Environmental Research Gorp.,' proposing an emission limit of 3 1 mg/m3, averaged over 24 hours, specifically for Burrard (Appendix 4).

119 B.C. Hydro's efforts to date, such as the Burrard Utilization Study, have focused on a target of 55 mglm3, as noted in requirements for studies in the current GVRD permit. B.C. Hydro has indicated that the technical and economic feasibility of 3 1 mglm3 for NOx at Burrard can only be confirmed by in-field tests on a generating unit that has been retrofitted with SCR. However, if the capital costs that have been estimated to reach 3 1 mglm3 are accurate, and NOx abatement costs are $10,00O/t rather than $2,34O/t as defined in the provincial interim social costing framework, analysis provided later in this report indicates that it would be financially advantageous to meet the lower target. In addition, the economic viability of the emission control investment must be investigated, and would be much less attractive if the additional 50 MW of capacity that could be achieved in meeting a 55 mglm3 limit was not available. The Task Force notes that, at the end of its deliberations, it is faced with a range of proposed emission levels, with a minimum of mglm3 and a maximum of mglm3, where the ultimate limit may require technical studies on an installed SCR retrofit to establish feasibility. The Task Force recommends that a testing period be allowed on the initial unit to establish the technical and economic feasibility of the proposed GVRD NO, emissions limit, and that the design and construction of the first SCR should incorporate equipment to test the effectiveness of meeting a target range of mg/m3. The recommended testing period could also be an opportunity to optimize the engineering design of the retrofits, based on actual experience, potentially reducing the cost of applying emissions control technology to subsequent units. 7.2 Timing of Emission Control Installation The full output from Burrard is included, along with hydroelectric generation under critical water conditions, in determining the firm capability of the B.C. Hydro system to meet demand. If the capability of Burrard is significantly reduced by taking more than one unit at a time off-line to retrofit emission controls, there is an increased probability that energy will have to be purchased. Given that the phasing-in of emission controls on existing facilities is consistent with provincial BACT policy, such a program could accommodate the emission reductions sought by the GVRD with a minimum impact on the operation of the electrical system.

120 The maintenance upgrading recommended in BUS to increase the plant's availability from the current 66 percent to 85 percent of capability could allow a unit to be removed fiom service for retrofitting without a reduction in Burrard's current firm energy contribution to the system. On February 15, 1993, the B.C. Hydro Board of Directors approved a $3 1 million expenditure for Phase 1 of the Burrard maintenance and upgrade project to retrofit the first unit with SCR, and install continuous monitoring equipment on all units. It is expected that the time required for engineering design, ordering, delivery, and eight months of installation, would result in the first SCR-equipped unit being operative by the end of the second quarter of If a one-year demonstration and testing period met with GVRD approval, the declining facility cap could begin in June 1996, just prior to the summer period where the probability of ozone episodes occurring in the Lower Fraser Valley is highest. Annual reductions in the daily facility cap, equivalent to the installation of SCR on one unit per year, would achieve the level of plant-wide BACT emissions by June, As noted above, the Task Force recommends that the emission reduction steps be set after testing the first SCR-retrofitted unit. The Task Force recognizes that the pace of the phase-in of controls will be negotiated between B.C. Hydro and the GVRD. This regulatory model is depicted in Figure 7.1. Variations on this model, which may include seasonal restrictions, have been developed by the Task Force, and are discussed in the next section of the report. 7.3 Curtailment Provisions Schedule C of Burrard's current GVRD emissions permit contains provisions whereby Burrard operations may be curtailed if, in the opinion of the District Director, the plant is, or may be, materially contributing to unsatisfactory ambient air quality levels. Curtailment is required under the permit when air quality exceeds the Maximum Acceptable Air Quality Index level of 50 for five consecutive hours, which is designed to prevent exceedance of the Maximum Tolerable Air Quality Index of 100. Although the curtailment provision for Burrard has not been invoked, B.C. Hydro has voluntarily curtailed Burrard operations on occasions where air quality was approaching unacceptable levels. Currently there is no overall episode management plan in place in the GVRD, although a plan whereby all point sources would have to submit a curtailment schedule is under development. The curtailment provision in Burrard's permit, which is unique among GVRD-regulated point sources, represents a potentially significant cost to B.C. Hydro if operations were suspended for an extended period in a low-water year when maximum Burrard operations

121 BURRARD NOx CONTROL SCENARIOS,- REGULATION UNDER A 24-HOUR PLANT CAP PLANT NOx EMISSIONS (tonnes/24 hours) 2urrent Permit - t t / Decision Point (Spring 1996) - set emission level after testing first unit ommitment first SCR strofit First SCR PHASE 2 SCR on remaining units or off-site 4 ; PHASE Phased implementation of SCR on additional units to meet rn... + declining plant cap allowance n t per year after one-year demonstration with the first SCR retrofit I I I I I 1 1 b :30-35 mg/ma3 &m--m----"?m"-----""-m Ultimate Target - BACT (Plant cap based on 6 units with SCR) Plant Cap 55 mg/ma3 - " Plant Cap 35 mg/ma3

122 may be required. Conversely, the curtailment provision offers the GVRD a reduction in NOx emissions within a short period, although the significance of such a reduction with regard to the control of ozone episodes has yet to be firmly established. In the BUS, B.C. Hydro proposed that curtailment provisions be ended for units that have been equipped with BACT controls, or where the utility has secured approved off-setting emission reductions. This would then treat Burrard in a manner similar to other industrial point sources in the GVRD. The District Director would still have the authority to curtail industry-wide point sources and mobile sources if the ambient air quality level reached, or was predicted to reach, the Maximum Acceptable level. In addition, B.C. Hydro would still be responsible for developing a curtailment plan for Burrard, along with other point sources, as part of an overall GVRD episode management plan. The Task Force recommends that the unique compulsory curtailment provisions, as included in the current permit, should be discontinued for upgraded units that have met permitted emission levels through the application of control technology, or approved off-setting emission reductions. These units could then be curtailed in a manner consistent with other point-source emitters in the airshed. The Task Force notes that B.C. Hydro will still have the operational flexibility to adopt voluntary curtailment as has been done in the past. 7.4 Regulatory Initiatives The GVRD and MELP have at their disposal a variety of policy mechanisms for internalizing the residual impacts for a facility such as Burrard. Some of these mechanisms have been implemented, while others, which are under consideration or operative in other jurisdictions, may be implemented in the future. Policy mechanisms may be generally categorized as regulatory instruments, which are institutional measures that directly influence the environmental performance of firms and individuals, and economic instruments, where the decision making behaviour of individuals and firms is affected in such a way that alternatives are chosen independently that lead to a more environmentally desirable situation Regulatory Instruments Regulatory instruments have traditionally been utilized by governments for carrying out environmental policy. Examples are setting standards, regulating processes or products used, limiting residual discharges, and restricting the location or timing of economic activity. Setting ambient air and water quality standards, and setting emission criteria (i.e. provincial BACT-based criteria) are examples of such measures in British Columbia.

123 The basis for regulatory instruments is usually legislated authority, where conditions are imposed and penalties set out for non-compliance. The attractiveness of regulation for governments is that it gives authorities direct control over individuals and firms, and provides a relatively certain outcome in terms of environmental effectiveness. However, regulatory instruments, such as standard setting, are unlikely to produce an economically or environmentally appropriate level of residual impacts.2 Regulatory instruments tend to be static, inflexible, and, although they may be set with reference to some health-related criterion, the standards may not be related to the actual cost of damage, or the willingness on the part of society to pay for reduced residual impacts. In addition, regulations which focus on the concentration of pollutants in emissions may not result in overall emission reductions if new sources are introduced. The provincial BACT policy, while establishing emission criteria, also requires that residual emissions be examined in light of regional, provincial, and international stabilization agreements. Standard setting does not generally recognize the differences in costs faced by producers to reduce their residual impacts. Provincial BACT policy does incorporate economic viability in the final decision on permitted emission levels. However, the measures to incorporate economic viability are still under development. Given these drawbacks, and a desire on the part of governments to set more cost-effective policies, and to potentially generate revenue from the resolution of environmental problems, economic instruments have been developed in a number of jurisdictions, including British Columbia Economic Instruments Economic instruments include environmental charges, incentives and subsidies, and measures which focus on the creation of markets for rights to emit pollutants. Environmental charges may be considered as the price that must be paid for creating environmentally damaging residuals, and may be applied to effluents, products, or as an administration charge for permits or registration of products. The impact of environmental charges may be both as an incentive and redistributive. The incentive arises if the charge is set at a level which induces actions to reduce the impact of the charge. However, in practice, environmental charges have been set at a level that is low in comparison to estimates of residual damage, and the resulting impact is more redistributive in nature, with fees used to hnd air quality administration or other regulatory initiatives. An advantage to charges over standards is that, if the charges are set an appropriate level, polluters will be encouraged to search continually for technologies or operational innovations to reduce the costs of the charges. This incentive is not present for an emitter who reaches a set standard.

124 Both MELP and the GVRD introduced environmental charges in July, 1992, which include both emission charges and minimum annual and application administrative fee~,3>~ but these charges do not approach the level of estimated damage costs that are being implemented in British Columbia for the social costing of new electricity resources (see Section 9). Both programs are designed to recover the administrative costs of regulation. The GVRD fees that apply specifically to Burrard, and the MELP fees that would apply if Burrard was located elsewhere in the province, are shown below. The GVRD Bylaw describes a phase-in period, in which fees are capped at a maximum level per pollutant of $50,000 in 1993, $100,000 in 1994, and $150,000 in After 1995, the full fees apply. FEES IN $ PER TONNE PER ANNlTM GVRD MELP After 1995 Sevtf92-Aud93 After Aug/93 NH CO NOx SOX Particulates VOCs Other Both the GVRD and MELP provisions calculate the annual emission fees based on the permitted amount of discharge. Relevant to Burrard are provisions in the GVRD Bylaw that allow for the credit of one-half the fee difference between actual and permitted emissions. This credit is contingent on adequate (i.e. continuous) monitoring of emissions being in place. The expected effect of the credit may be calculated by multiplying one-half of the fee per tonne by the permitted amount, and adding one-half of the fee per tonne times the expected amount. This calculation, based on a range of expected long-term average operation scenarios for Burrard, is shown in Appendices 5a and Sb, for non-scr and SCR retrofitted units, respectively. Alternate charge-related measures include differentiation of the tax structure so that environmentally friendly products are more favourably priced, or unfriendly products priced higher. Regulatory authorities might also consider giving payments to firms or individuals who pollute below a certain prescribed level. However, these types of subsidies may not differentiate between firms with differing costs for residual reduction, and may, in the long run, attract new firms and increase the overall level of residuals.2 Other economic instruments focus on the creation of markets, which may be broad, such as the tradable permit schemes being implemented in the United States for SO2 and in the Los Angeles area for NOx and VOCs, or more specific "trades" between facilities and offor on-site emission reduction opportunities.

125 MELP and GVRD have been involved in the assessment of emission trading in Canada, and participated in the preparation of a Discussion Paper prepared for the Canadian Council of Ministers of the Environment (CCME).5 The Discussion Paper concluded, based on a preliminary assessment, that emissions trading would be feasible in the Lower Fraser Valley for the control of NOx and VOCs. Currently, the GVRD, MELP and Environment Canada are hrther investigating the application of emissions trading in the Lower Mainland. The application of broadly based emissions trading is also being investigated in Ontario. A recent study commissioned by the Ontario Ministry of Energy contrasted the predicted outcomes of reaching the emissions levels adopted by the CCME in their NOxNOCs Management Plan for 2005 through regulatory instruments and emissions trading.6 The study concluded that the level of environmental quality, in tonnes of pollutant emitted, could be achieved at a 41 percent lower cost through trading as compared to standards. Alternatively, a 33 percent improvement in tonnes emitted could be achieved through emissions trading at the same cost of standards. There are several policy, management andlor implementation issues related to either broad or focused emission trading that remain unresolved. These issues will affect the attractiveness of off-site mitigation opportunities. They include: cross-pollutant credits (for example, reduction in VOC emissions receive credits as NOx reduction); incrementality or recognition of credits (in the face of new and pending environmental regulations that may affect off-site emitters); mechanisms for attribution of credits (where costs of a measure are shared); and offset ratios (for uncertainty in realizable emission reductions). Emission offsets may generate benefits in addition to the strict "payback" in terms of NOx control savings. A social costing framework that takes into account costs and benefits outside of B.C. Hydro and non-nox environmental externalities has the potential to enhance the attractiveness of off-site mitigation from the perspective of society as a whole. Various focused off-site NOx emission mitigation opportunities in the Lower Fraser Valley were evaluated by B.C. Hydro in the BUS. Given the magnitude of the contribution from mobile sources to regional air quality, most emission offsets are found in the mobile source sector. In particular, the offset measures considered in detail included transportation demand measures (vanpools, carpools etc.), old vehicle buy back and trust hnd establishment. The analyses of potential emission offsets for Burrard illustrate that emission reduction cost-effectiveness (i.e. costs per tonne reduced) is very sensitive to assumptions and values underlying both costs and reduction potential.

126 While the BUS indicated that preliminary estimates of emission offsets generally provided similar quantities of NOx reduction opportunities as SCR, off-site mitigation options are not competitive with on-site retrofit of SCR at Burrard if only NOx emission offsets are recognized. Further inclusion of credit for VOC control, the remaining ozone precursor, still results in a marginal preference for on-site controls. The development of an off-site mitigation framework to provide credit for non-ozone related environmental externalities may improve the cost effectiveness of off-site measures, however the degree of improvement and acceptability is highly uncertain at this time. The Task Force does not propose to pre-empt existing initiatives to introduce economic measures to control emissions in the Lower Fraser Valley. However, these measures may be in place in the Lower Mainland during the implementation of emission control measures at Burrard. Given a lower probability of use for the fifth and sixth (and potentially the fourth) unit at Burrard, the application of SCR to these units results in a relatively higher cost per tonne of NOx abated than for the first units retrofitted. Further discussion of NOx abatement costs is provided in Section 8.8, and a graphical depiction of the incremental cost per tonne of NOx abated is shown in Figure 8.2. When more cost-effective opportunities to reduce emissions become available, either through a broad trading program, the approval of specific offset trades, or the emergence of new technologies, B.C. Hydro should have the opportunity to pursue these options. These potential opportunities would favour flexibility in the latter stages of the implementation period with respect to specific technological applications, and the periodic review of the permit to assess the feasibility and acceptability of other options, while still meeting the objectives of a phased implementation of a facility emission cap. MELP has expressed the view that it is the GVRD's role to determine the acceptability of any phase-in proposal, but that the eventual operation of the facility should be consistent with provincial BACT policy. Although no policy for the calculation of plant caps has been developed, MELP has also expressed the view that periods of operation which result in emissions above a plant cap cannot be offset by periods of shut-down, only by offset mitigation. 7.5 Permit Duration The GVRD permitting process does not currently place expiry dates on permits. However, Burrard is currently operating under a one-year permit extension, pending the approval of an emission reduction program for the facility.

127 The Task Force recommends that a long-term emission reduction plan for Burrard be recognized in an agreement between B.C. Hydro and the GVRD, which identifies plant cap emission levels in future years, and intervals for review of the specific means available for achieving them. If a substantial investment is to be made to control emissions at Burrard, a permit should be of sufficient duration to recover the costs of investment. The first review could be in early 1996, after the testing of the first SCR retrofit, to establish a feasible NOx emissions level, and resulting reductions in the facility cap. Other reviews could be tied to the commitment date for SCR on the fourth unit, and a comparison of the cost-effectiveness of meeting the required reductions with on- and offsite measures which may be available at that time. A review could also be triggered by a B.C. Hydro request to participate in a broad emissions trading program, or to utilize focused off-site trades. Additional reviews may be appropriate, and may be defined during the implementation of the emissions reduction program at the plant. Notes 1. Energy and Environmental Research Corp., Review of the NOx Reduction Technologies Applicable to B. C. Hydro's Burrard Plant, November 12, Pearce, D.W. and Turner, K.R., Economics of Natural Resources and the Environment, Johns Hopkins University Press, 1990, p Province of British Columbia, Order in Council 1264, B.C. Regulation , Waste Management Permit Fees Regulation, July 3 1, Greater Vancouver Regional District, Air Oualitv Management Bylaw No. 725, July 3 1, Emission Trading Working Group, Emission Trading: A Discussion Paver, published under the auspices of the Canadian Council of Ministers of the Environment, May, National Economic Research Associates, Emissions Trading Program for Stationary Sources of NOx in Ontario, prepared for The Advisory Group on Emissions Trading, and Commissioned by the Ontario Ministry of Energy, October 1992.

128 The Task Force recommends that a long-term emission reduction plan for Burrard be recognized in an agreement between B.C. Hydro and the GVRD, which identifies plant cap emission levels in future years, and intervals for review of the specific means available for achieving them. If a substantial investment is to be made to control emissions at Burrard, a permit should be of sufficient duration to recover the costs of investment. The first review could be in early 1996, after the testing of the first SCR retrofit, to establish a feasible NOx emissions level, and resulting reductions in the facility cap. Other reviews could be tied to the commitment date for SCR on the fourth unit, and a comparison of the cost-effectiveness of meeting the required reductions with on- and offsite measures which may be available at that time. A review could also be triggered by a B.C. Hydro request to participate in a broad emissions trading program, or to utilize focused off-site trades. Additional reviews may be appropriate, and may be defined during the implementation of the emissions reduction program at the plant. Notes 1. Energy and Environmental Research Corp., Review of the NOx Reduction Technologies Applicable to B. C. Hydro's Burrard Plant, November 12, Pearce, D.W. and Turner, K.R., Economics of Natural Resources and the Environment, Johns Hopkins University Press, 1990, p Province of British Columbia, Order in Council 1264, B.C. Regulation , Waste Management Permit Fees Regulation, July 3 1, Greater Vancouver Regional District, Air Oualitv Management Bylaw No. 725, July 3 1, Emission Trading Working Group, Emission Trading: A Discussion Paver, published under the auspices of the Canadian Council of Ministers of the Environment, May, National Economic Research Associates, Emissions Trading Program for Stationary Sources of NOx in Ontario, prepared for The Advisory Group on Emissions Trading, and Commissioned by the Ontario Ministry of Energy, October 1992.

129 8.0 STUDIES OF THE ECONOMIC, SYSTEM CAPABILITY AND EMISSIONS IMPACTS OF ALTERNATIVES At the request of the Task Force, B.C. Hydro carried out an analysis of impacts of alternative scenarios using a probabilistic computer model of future resources required to meet B.C. Hydro's projected system load growth. This analysis provided for the inclusion of the social costs of air emissions for a range of emission control and plant operation options. The results of the analysis performed by B.C. Hydro have not been evaluated other than by the Task Force. The intention was to clearly identifjr tradeoffs between project costs and other externalities, and to review the conclusions and recommendations contained in the BUS reports on system optimization1 and economic analysis.2 Since the BUS was completed, B.C. Hydro produced the 1992 Electricity Plan,3 released in January 1993, and an interim provincial social costing framework has been drafted. The computer model uses both of these aspects as part of the input framework. 8.1 Development of Options To evaluate the emission control options, and the impact of various regulatory alternatives on Burrard, a number of alternatives were identified to cover a broad range of future use of the plant. The seven options developed by the Task Force for analysis range from plant retirement through full replacement of the plant with combined cycle modules. With the exception of the plant retirement option, each option includes the use of technology to meet provincial and regional emission objectives. Within the range of social costs considered, the most cost-effective technology that will meet the required emission levels at Burrard would be the installation of selective catalytic reduction (SCR) equipment. The key aspects of each option incorporated in the model are: A. Retire Burrard by 2001 and Replace with Other Resources (No SCR Installation) Under this option, one unit would be decommissioned per year from 1996 until March 2001, after which the plant would be fully retired. No emission controls would be added, and the current staged combustion would continue. The inservice units would continue to operate at a maximum annual availability of 70 percent. Other resources would be obtained to replace the plant's role in meeting system requirements. B. Install SCR and Operate Burrard at 70 percent Availability This option would include the installation of the SCR equipment, in an annual sequence on all units by March 200 1, as shown in Figure 7.1. The long term

130 maximum plant availability would remain at 70 percent; however, during installation of the SCR equipment, the remaining five units would need to operate at 85 percent availability to maintain the plant's ability to firm up hydroelectric energy for B.C. Hydro system load requirements. The life of the plant would be extended, although for the purposes of modeling, decommissioning of the first two units is assumed in 20 16, the second two in 20 17, and full plant retirement by March The plant maximum NOx emission levels would be controlled on the basis of the decreasing daily cap. C. Install SCR and Operate Burrard at 85 percent Availability This option also includes the installation of the SCR equipment, in an annual sequence, on all units by March The maximum plant availability would be upgraded to 85 percent availability following installation of SCR on the last unit. The life of the plant would be extended, although for the purposes of modeling, decommissioning of the first two units is assumed in 2016, the second two in 201 7, and full plant retirement by March The plant maximum NOx emission levels would be controlled on the basis of the decreasing daily cap, reaching a final longterm level by March D. Install SCR and Operate Burrard at 85 percent Availability with Summer Restrictions Prior to the Installation of SCR As with Option C; SCR equipment would be installed by March 2001, the maximum plant availability would be upgraded to 85 percent availability and the plant life extended to for modeling purposes, In addition, the daily maximum NOx emission levels would be capped on a daily basis during the summer months from May through September, as shown on Figure 8-1. Those units without SCR would be derated to achieve emission levels equivalent to those with SCR, before reaching a final long-term daily cap by March E. Install SCR, Operate Burrard at 85 percent Availability and Increase Plant Capacity to MW As with Option C: SCR equipment would be installed by March 2001, the maximum plant availability would be 85 percent, and the plant life would be extended to 2018 for modeling purposes. In addition the maximum continuous rating of the five 150 MW units would be increased to 160 MW after the installation of SCR, leading to a total plant capacity of MW. The plant maximum NOx emission levels would be controlled on the basis of a decreasing daily cap reaching a long-term level by March The daily cap would be based on the same NOx concentration in the stack gases as other options, but due to a higher volume of stack gases the daily maximum NOx volume would be slightly higher.

131 POTENTIAL BURRARD CONTRO L SCENARIO NOx REDUCTION OVER IMPLEMENTA 'ION PERIOD WITH SUMMER RESTRlCTlC INS CURRENT PERMIT ALLOWNACE \C Summer caps May - Sept. proposed by BCUC Possible ongoing summer caps during implementation ALLOWANCE 1

132 F. Install SCR on Three Units and Replace Remaining Units with an Unfired Combined Cycle Module As with Option C three of the units would: have SCR equipment installed by March 1997, maximum unit availability would be 85 percent and the life of the units extended to The remaining three units would be replaced with a 430 MW combined cycle module consisting of two 150 MW gas turbines and an unfired boiler providing 130 MW of steam to one of the existing turbines by March, The two new gas turbines would be fitted with SCR to provide the same plant maximum NOx emission levels as the other options, reaching a final long-term level by March, G. Replace the Entire Plant with Unfired Combined Cycle Modules All six units would be replaced with two 430 MW combined cycle modules, each consisting of two 150 MW gas turbines, and an unfired boiler providing 130 MW of steam to one of the existing turbines. The earliest in-service date would be March 1998 for the first module, and March 2000 for the second. The new gas turbines would be fitted with SCR to provide the same plant maximum NOx emission levels as the other options, reaching a final long term level by March, However, to avoid derating the plant over the short term prior to 1998, the step reductions in NOx emissions shown in Figure 7.1 would have to be adjusted. The Task Force discussed the interaction of conservation with these options in meeting B.C. Hydro's system energy requirements. Current opportunities for energy conservation under B.C. Hydro's Power Smart initiatives covering demand-side management options are evaluated along with supply-side options to determine the most appropriate mix of reliable resources at least social cost. The nature of the B.C. Hydro hydroelectric system is such that resources, such as Burrard, which can provide displaceable firm energy, are required to meet demand, given variations in streamflows. Burrard's role of providing displaceable firm energy under variable streamflow conditions would accordingly continue along with B. C. Hydro's demand-side management initiatives. 8.2 Modeling Methodology Following consultation between the Task Force and B.C. Hydro, a modeling methodology was adopted based on the use of B.C. Hydro's Resource Planning Model (RPM), which incorporates the assumptions and processes used in the development of B.C. Hydro's recently released 1992 Electricity Plan. For each option, the base parameters for the plant in the RPM were modified in accordance with the descriptions in Section 8.1. Plant emissions of NOx are reduced as SCR equipment is installed, unit availability is reduced during the installation of the SCR

133 equipment, and the units are retired as described. The gas emissions of NOx and C02 were calculated based on kg1gw.h equivalents to the emission concentrations, which are presented in mg/m3 and ppm units. The other aspects included in the RPM, such as a range of estimated future system load requirements, gas prices, other gas emissions, and the mix of potential other resources were left unchanged from the 1992 Electricity Plan. The assumed dates for plant retirement have been adopted for the purposes of modeling; however, the existing plant may have significant value after To meet the range of estimated future system load requirements, the RPM selects additional resources on a least marginal social cost basis. The cost factors considered in selecting the timing of new resource construction include: capital cost, operational costs, and social cost of the externalities being considered. Cost factors considered in the dispatch of resources include incremental operating costs (he1 and variable maintenance) and incremental social costs of externalities. Burrard is one of the possible resource options, and is selected in the RPM for generation to meet system load requirements when it has the least marginal social cost of all the available resource options. For each Burrard option, the calculated present value total system cost of meeting the estimated fbture system loads for the estimated 25-year life of the facility is dependent on the following factors: - the social cost of NOx emissions at $2,34O/tonne, and C02 emissions at $3.1 /tonne; - plant availability and capacity; - the cost of the SCR equipment; - the cost of upgrading the plant availability; - the cost of extending the plant life; - the cost of repowering with Combined Cycle Modules; - the variable costs of operation and maintenance; and - the cost of required alternative resources if the plant is de-rated or retired. All of the costs were calculated in current 1992 dollars, and then discounted back to present value 1992 dollars using a discount rate of 8 percent. The 8 percent real discount rate has been established by the province for use by provincial agencies and Crown Corporations, as being the average pre-tax rate of return to public and private investment in Canada. The net benefit of each option was calculated by subtracting the present value total system costs with Option A (Plant Retirement by 2001) from the present value of the costs of meeting total system requirements over the life of Burrard to The key inputs and outputs from the RPM for each option are shown on Table 8.1.