REGULATING GREENHOUSE GASES: PSD FOR GHGS

Transcription

1 REGULATING GREENHOUSE GASES: PSD FOR GHGS Change picture on Slide Master Troutman Sanders LLP / Trinity Consultants January 27, 2011 PRESENTED BY Margaret Claiborne Campbell Charles S. Carter Troutman Sanders LLP Troutman Sanders LLP 600 Peachtree St. NE, Ste Fayetteville St., Ste Atlanta, GA Raleigh, NC (404) (919)

2 OVERVIEW PSD Applicability Timing Issues PSD Requirements: BACT 2

3 TAILORING RULE RECAP Purpose: To limit the number of sources subject to PSD by raising applicability thresholds Phased Approach: Jan. 2, 2011 anyway sources July 1, 2011 GHG-only sources July 1, 2013 lower thresholds? April 2016 smaller sources? Legal Justification: Avoid absurd results Administrative necessity One-step-at-a-time doctrine 3

4 PSD BASICS Preconstruction permitting program New major sources of regulated air pollutants Potential to emit > 100 / 250 tpy Existing major sources that undertake a major modification A physical or operational change resulting in a significant net emissions increase of a regulated pollutant 4

5 REGULATED GHGS EPA has designated 6 compounds to be regulated as a single class of pollutants known as GHGs: Carbon dioxide (CO2) Methane (CH4) Nitrous oxide (N2O) Hydrofluorocarbons (HFCs) Perfluorocarbons (PFCs) Sulfur hexafluoride (SF6) 5

6 GHG PSD APPLICABILITY Emissions of all six GHGs are summed on a mass CO2 equivalent basis (CO2e) Compared against applicable threshold Mass thresholds (statutory) Major source 100 / 250 tpy Modifications 0 tpy CO2e thresholds (Tailoring Rule) Major source 100,000 tpy Modification 75,000 tpy 6

7 PHASE-IN STEP 1: ANYWAY SOURCES January 2, 2011 to June 30, 2011 GHG PSD applicable only to sources that would have to get a PSD permit anyway for traditional regulated pollutants No PSD permit required solely for GHG emissions Applicability GHGs > 75,000 tpy CO2e 7

8 PHASE-IN STEP 2: GHG-ONLY SOURCES July 1, 2011 to June 30, 2013 Sources major for GHG only now PSD Major = 100k tpy / mod = 75k EPA expects > 900 PSD permits per year for projects not already subject to permitting Most likely major modifications of existing sources EPA estimates an application for a typical source = $84,500 (866 hours) Requires 42% increase in State permitting resources 8

9 PHASE-IN STEP 3: GHG-ONLY SOURCES EPA has committed to subsequent rulemaking to lower the threshold To 50,000 tpy Anticipated Rulemaking Schedule Proposal: 2011 Final: 2012 Effective:

10 TRANSITION PROVISIONS GHG PSD will not apply to Step 2 (GHG only) sources that begin actual construction prior to July 1, 2011 Commence construction (a binding contract) is not enough Departure from past EPA practice State minor NSR construction permits alone are not enough 10

11 TRANSITION PROVISIONS Begin Actual Construction PSD regulations provide actual construction of a major source or modification may not be begun without a PSD permit Regulations also define initiation of permanent physical on-site construction to include (but not be limited to) installation of building supports, foundations, underground pipe work, and permanent storage structures 11

12 TRANSITION PROVISIONS Implications & Options Obtain a PSD avoidance permit to limit emissions increases less than applicability thresholds Expedite construction Additional relief: nothing in this rule forecloses our ability to further address [unanticipated] impacts as necessary by adopting rule changes or using other available tools 75 Fed. Reg. at 31,594 (6/3/2010) 12

13 BIOMASS DEFERRAL EPA signaled intent to treat biomass differently in November Possible use of discounting to account for biomass contribution Based on info that waste decomposition impact minimal January 12, Admin. Jackson By July 1, EPA will complete rulemaking to defer for 3 years imposing permitting to biomass & other biogenic CO2 emissions Intended to provide time to evaluate science of biogenic CO2 emissions & account for them in sound manner 13

14 GHG PSD PERMITTING If a PSD permit is necessary Best Available Control Technology (BACT) Air Quality Analysis No GHG NAAQS or increments Additional impacts analysis Growth, soils & vegetation, visibility Class I Area Impacts No increments Air Quality Related Values 14

15 EPA GUIDANCE GHG BACT guidance White papers on control measures for 7 industry sectors Coal-fired EGUs, large industrial, commercial and institutional boilers, pulp and paper mfg, cement mfg, iron and steel, petroleum refineries, and nitric acid plants GHG mitigation strategies data base GHGs added to RACT/BACT/LAER Clearinghouse 3 hours of training videos 15

16 GUIDANCE MAIN POINTS Top-down BACT process No major changes Use traditional approaches States should look at energy efficiency measures as BACT Claims that efficiency as BACT is NOT a change in policy Great discretion to states on many fundamental issues 16

17 MAJOR GUIDANCE ISSUES Redefining the Source BACT historically has not been used to redefine the source or require a fundamental redesign Applicant defines the facility BACT is based on the designated type of facility An add-on control or a process improvement to reduce emissions BACT Guidance uses on-the-onehand / on-the-other-hand approach Leaves it a muddle 17

18 MAJOR GUIDANCE ISSUES Fuel-Switching (Clean Fuels) EPA says States have discretion to require fuel-switching if the decision is fully documented Moving from one coal to a lower CO2 emitting coal is not fuel-switching But, changing to natural gas as the primary fuel would fundamentally redefine a coal-fired boiler Much PSD controversy has focused on coal boilers, so not many new ones permitted. Key issue is how will affect proposed modifications. 18

19 MAJOR GUIDANCE ISSUES Carbon Capture & Sequestration EPA discounts CCS as BACT EPA recognizes significant hurdles that installation and operation of CCS system presents, concedes that CCS is different from add-on controls typically used as BACT for other regulated pollutants To be selected as BACT, EPA says CCS must be demonstrated to be technically feasible and cost-effective in all three steps of the CCS process capture, transportation and storage 19

20 MAJOR GUIDANCE ISSUES Carbon Capture & Sequestration But EPA also says CCS must be part of step 1 in Top Down What is the basis since CCS is only in very limited use in the U.S.? If included, a detailed analysis is needed to exclude it in steps 2 and 3 EPA goes on to state that while CCS is a promising technology, EPA does not believe that at this time CCS will be a technically feasible BACT option in certain cases When should it be selected? 20

21 MAJOR GUIDANCE ISSUES Outside the Fence Requirements Guidance: BACT for existing facilities only for units being modified For new facilities entire facility But Coal EGU White Paper includes combined heat and power and coal drying at a mine as considerations in BACT analysis Considering off-site activity would expand BACT with no clear limits 21

22 SATISFYING NEW GUIDANCE Justify everything Document purpose and why this particular facility is needed Justify fuel choice as intrinsic Discussion of energy efficiency Expect opponents to go through application item-by-item Bill Becker of NACAA: For the first time in history, EPA will require that facilities examine every piece of their operations and take actions to improve energy efficiency. 22

23 SATISFYING NEW GUIDANCE Work with agency staff to create reasonable boundaries Given broad discretion to States, agencies will be urged to consider so many factors in BACT analysis that process could be unending Limits must be drawn to move the process and bring it to conclusion 23

24 SATISFYING NEW GUIDANCE Politics matter more than ever Broad discretion for States to redefine source if they wish States will be urged by activists to reengineering proposed facilities Some State agencies may be more receptive than others On big issues like this, be prepared for agency staff to look to political appointees, boards and commissions to make the final calls 24