Workshop C. Clean Air Act Challenges New Source Review (NSR) Memoranda Proposals and the Affordable Clean Energy Rule on Ambient Air Quality Impacts

Transcription

1 Workshop C Clean Air Act Challenges New Source Review (NSR) Memoranda Proposals and the Affordable Clean Energy Rule on Ambient Air Quality Impacts Tuesday, March 26, :45 a.m. to 11 a.m.

2 Biographical Information George J. Schewe, CCM, QEP, Principal Consulting Meteorologist Trinity Consultants 1717 Dixie Hwy, Suite 900, Covington, Kentucky x109 Mr. Schewe is a Certified Consulting Meteorologist as well as a Qualified Environmental Professional who has 43 years of dispersion modeling and air quality management experience throughout the U.S. and prominently in Kentucky, Indiana, and Ohio. He has prepared permit applications, interfaced with state agencies, prepared overall air quality impact assessments as well as regulatory review requirements, prepared additional impacts analyses, and modeled both criteria and toxic chemical releases to assess potential air impacts. He has contributed to a wide variety of environmental assessment studies including Prevention of Significant Deterioration, non-attainment area net emission modeling, state and federal air toxics analyses and risk assessments, and State Implementation Plan (SIP) preparation. He has used modeling approaches for emergency as well as routine releases of air contaminants. He has prepared modeling studies covering plant wide point-source emissions as well as plant wide fugitives from roadways, materials handling, waste and scrap areas or other process related fugitive emissions. While with the U.S. EPA, he performed dispersion modeling in support of emission standards development and helped develop and improve industrial source dispersion models. He has conducted numerous workshops, seminars, and technical classes over the past 25 years for the U.S. EPA - Air Pollution Training Institute, Trinity s annual course offerings, CenSARA, MARAMA, WESTAR, Ohio EPA, and other regional air agencies. Michael E. Hopkins, P.E., Assistant Chief, Permitting Division of Air Pollution Control Ohio EPA, P.O. Box 1049, Columbus, OH (614) FAX: (614) mike.hopkins@epa.ohio.gov Michael Hopkins has been with the Ohio EPA since He is currently the Assistant Chief, Permitting of the Ohio EPA. His duties include the review and final approval for all air pollution permit-to-install, permit-to-install and operate, and Title V permitting in the State, the development of technical support for air pollution control regulations, litigation support, MACT program support, Tax Program support and general air pollution planning activities. He has been in this position since April Before this assignment, he was in charge of the Air Quality Modeling and Planning Section with similar duties as above from August 1993 through April Prior to that assignment, he was in charge of the engineering section of the Ohio EPA Central District Office air program. The engineering section is responsible for reviewing air pollution permit-to-install and permit-to-operate applications for compliance with air pollution regulations, facility inspections, complaint investigations, enforcement case development, policy and rule development, the Emissions Inventory Program, and other related duties in the central Ohio area. Mr. Hopkins earned his Bachelor s degree in environmental engineering from the Pennsylvania State University. He is a licensed Professional Engineer in the State of Ohio. He is a member of the Air and Waste Management Association, the National Society of Professional Engineers and the Ohio Society of Professional Engineers.

3 Biographical Information J. Michael Geers, P.E., Manager, Environmental Programs Duke Energy Corp., 139 E. 4th St., EM 740, Cincinnati, OH Fax: J. Michael Geers, P.E. is the Manager of the Environmental Programs Group for Duke Energy and is located in Cincinnati, Ohio. He has a diverse experience having been the Air Programs Manager, an EHS Manager, and other positions with Duke, Cinergy, and Cincinnati Gas & Electric for 38 years. He and his team analyze regulatory actions and identify their impacts on Duke, provide strategic and tactical guidance and then work with various groups to develop implementation programs and seek favorable outcomes for to the company. His specific areas of expertise include mercury, pollution control technologies, emission allowance programs, MACT, NAAQS, New Source Performance Standards, and climate. On many occasions he has represented Duke Energy and promoted its interests to Federal and state regulators, other utilities, trade groups and other organizations. He is also a program advisor to the Electric Power Research Institute. Previously Michael has many years of power plant operation, maintenance and engineering experience with Cinergy Corp and the Cincinnati Gas & Electric Co. In this role, he had his first of many experiences balancing competing technical, financial and environmental demands. He has a Chemical Engineering degree from the University of Dayton and an MBA from the University of Cincinnati. He is a Registered Professional Engineer in the State of Ohio.

4 Workshop C Clean Air Act Challenges NSR Memoranda Proposals and Affordable Clean Energy Rule on Ambient Air Impacts Tuesday March 26, George J. Schewe, CCM, QEP, Trinity J. Michael Geers, P.E., Duke Energy Michael E. Hopkins, OEPA, DAPC

5 Presenters George Schewe Trinity Covington J. Michael Geers Duke Energy Michael Hopkins Ohio EPA

6 Overview and Topic Areas Air quality impacts in NSR EPA s modeling guidance and effect on NSR memo proposals NSR proposals and effect on modeling Ambient air new proposed definitions Heat Rate Improvement projects under the proposed Affordable Clean Energy Rule 3

7 Why are air quality impacts important in NSR? A new air emissions permit cannot be granted until the related air quality impacts are calculated? These impacts are compared to NAAQS (all source impacts) PSD increments (only sources after ~1977) Additional impacts (soils, vegetation, visibility) 4

8 Why are air quality impacts important in EPA s NSR memos? Because each draft NSR change is related to emissions or ways to consider emissions and therefore AQ impacts 5

9 EPA s NSR memos 12/7/17 memo actual-to-projected-actual emissions 1/25/18 memo reclassification of major sources withdrawing once-in-always-in policy 3/13/18 memo emissions accounting 4/17/18 memo SILs for PM 2.5 & O 3 the problem with precursors and MERPs to the rescue 9/4/18 memo interpreting adjacent facilities 6

10 Class II PSD Modeling Requirements Primary Requirement of PSD: Must demonstrate no impacts that cause or contribute to violation of PSD Increment or NAAQS for pollutants emitted in significant quantities Generally no modeling for non-attainment areas for new source review (offsets) First step is to identify pollutants subjectto-review based on emissions (PSD applicability for the project) based on the significant increase level (tpy)

11 Significant Emissions Under PSD

12 Ambient air quality can be determined in two ways Monitoring, i.e., ambient field measurements Dispersion modeling 9

13 Problems with obtaining these AQ impacts Monitoring Can only capture existing sources Limited to one or a few locations Modeling can estimate impacts of existing and future sources (as in NSR) 10

14 What is Modeling? Modeling is the combined mathematical simulation of atmospheric processes which gives a convenient and physically meaningful way of relating sources/emissions to ambient air impacts.

15 Regulatory Background Why Models? U.S. Clean Air Act 1970 CAA, 1977 CAAA, 1990 CAAA

16 So what is EPA up to for air quality impact assessment under NSR? Outreach More guidance on specific areas and pollutants Updated versions of models Laying out a new game plan 13

17 NSR Created Obstacles Need an air quality permit to ensure Maintenance and improvement of air quality Installation of state-of-the-art technology What are the obstacles: Cost uncertainty Regulatory uncertainty Several attempts by several administrations to reform NSR Trump administration made it a priority None of the so-called Phase 1 memos have taken effect yet 14

18 First Step Ambient Air EPA issued a draft Revised Policy on Exclusions from Ambient Air dated November 2018 Existing definition New document mentions that stakeholders have identified situations that EPA may not have considered in 1980 fence or no fence? Water? Exclusion of public by other means 15

19 Existing Definition Ambient Air Ambient Air The portion of the atmosphere, external to buildings, to which the general public has access Ambient Air In general, ambient air is defined as any location at or beyond the fence line of the facility. The fence line must restrict public access by a continuous physical barrier, such as a fence or a wall. X X X X X

20 Proposed Ambient Air Ambient Air Ambient Air? Ambient Air?

21 Current Evaluation Ambient Air EPA has evaluated several key terms associated with the definition of ambient air, including: General public Access Building Draft document proposes to replace fence or other physical barriers with measures should provide greater flexibility (without changing the definition). EPA states that this policy should be implemented but further that it is not a regulation or final agency action 18

22 What s Up Next? Mike Hopkins slides highlighting NSR memos, Ohio actions as function of the NSR memos Mike Geers review of the CT MACT, MATS, ACE, NSR threshold hourly emissions increase test 19

23 But First EPA s Phase 2 NSR Possibilities (as of March 19, 2019) NSR errors correction rule Actual Construction Guidance (draft) RMRR Guidance (draft) PAL Guidance (draft) NSR Applicability Test Guidance (draft) 2010 NSR Reconsiderations (resoanable possibility, fugitives, ethanol? NSR e-guidance Compendium and Training 20

24 Questions George J. Schewe, CCM, QEP Trinity Consultants Michael Hopkins Ohio EPA J. Michael Geers Duke Energy Over to Mike Hopkins 21

25 New Source Review Memoranda Updates MEC Sustainability & Environmental Health and Safety Symposium March 26, 2019 Workshop C, 9:45 a.m. to 11:00 a.m. Michael E. Hopkins, P.E. Assistant Chief, Permitting Ohio Environmental Protection Agency Division of Air Pollution Control 50 West Town Street, Suite 700 Columbus, OH

26 Topics Explanation of four new U.S. EPA NSR guidance letters/memos Impact of new guidance 23

27 24 U.S. EPA GUIDANCE UPDATES

28 U.S. EPA guidance updates U.S. EPA systematically revising interpretations So far, rule changes not needed Ohio EPA can implement immediately Typically working to simplify complex interpretations of rules based on often conflicting U.S. EPA historical letters/memos 25

29 U.S. EPA guidance updates Hopkins discussion on memos that impact applicability of major NSR If major NSR applies, more complex rules, more complex modeling If avoid major NSR, still need state modeling, but easier Ohio EPA generally follows U.S. EPA modeling memos even for state only modeling 26

30 U.S. EPA Guidance Updates 27 Letters/Memos: Second guessing projected actual memo Project emissions accounting memo Common control letters (2) Major source adjacent memo Letters/memos can be found at: source reviewpolicy and guidance document index

31 Projected Actual Memo Part of determining if PSD or Non attainment NSR applies Compare past actual emissions to post change projected emissions Company must look at their expected production and resulting emissions 5 years after the change 28

32 Projected Actual Memo Projections are based on a lot of factors that can change There can be significant uncertainties In the past, U.S. EPA has pursued enforcement when the actual emissions exceeded the projections 29

33 Projected Actual Calculation 12/07/17 Pruitt Memo If owner/operator follows projected actual rule to calculate post construct rules correctly, U.S. EPA will not second guess the calculations Permittee is responsible for doing calc. Permittee is responsible for maintaining records 30

34 Projected Actual Impact Impacts U.S. EPA enforcement decisions if emissions higher than expected If made good faith effort to project emissions enforcement not likely Reduces uncertainty to use the option Less likely to fall into after the fact NSR 31

35 Project Emissions Accounting 03/13/18 Pruitt Memo Concerns Step 1 of major modification definition Physical change in or change in the method of operation of major stationary source Significant emissions increase reg. NSR poll (1) Significant net emissions increase (2) 32

36 Project Emissions Accounting Historically Step 1 looks at increases only New guidance can look at increases and decreases in Step 1 if the decreases are associated with the given project Decreases don t need to be creditable or enforceable as a practical matter Source defines the scope of the project Can t include non project reductions 33

37 Project Emissions Accounting Example K001 primer line K002 finish line New paint guns in finish line allows more production and increased finish line emissions New paint guns allow paint w/o primer so primer use drops. Step 1 now allows increase on finish line and decrease on primer line, not just increase 34

38 Project Emissions Memo Impact A little more logical look at the emissions impact of the project, both plus and minus, in Step 1 Old way split the project into increase and decreases Will only impact a few projects not too many have decreases in Step 1 Some projects will avoid major NSR 35

39 NSR Stationary Source definition (TV Major Source Similar): Same industrial grouping Same SIC Support Facility Located in one or more contiguous or adjacent properties Control of same person 36

40 Common Control Letter 4/30/18 Wehrum letter to PA Meadowbrook Energy on Keystone Sanitary Landfill property Landfill gas to pipeline gas Are they under common control? Historically one business controls the other in some way legally very broad 37

41 Common Control Letter New approach for control The power or authority of one entity to dictate decisions of the other that could affect the applicability of, or compliance with, relevant air pollution regulatory requirements. Narrows to control of air pollution regulatory requirements only not other business requirements. 38

42 Common Control Letter 2 10/16/18 Janesville City/Rock County Landfill/Ameresco Letter NSPS XXX applies to landfill NSPS imposes gas treatment requirements Ameresco operates treatment equipment Small activity under common control does not automatically mean common facility 39

43 Common Control Letter Impact More logical to look only at regulatory relationships rather than business relationships Unclear how many will be impacted If impacted, more likely not common control therefore less likely facility is considered a major facility 40

44 Adjacent 09/04/2018 Draft Wehrum Memo Does not apply to oil & gas facilities Located in one or more contiguous or adjacent properties Contiguous means properties are touching Adjacent means properties are nearby, but not necessarily touching 41 Lying near or close to; neighboring.

45 Adjacent Properties Adjacent 42 Contiguous Properties

46 Adjacent U.S. EPA did not bright line adjacent Still up for permitting authorities case by case determination Guidance: 43 Properties must be nearby, physically proximate Right of way between is adjacent Don t consider functional interrelatedness Neighborhood can still be adjacent

47 Adjacent Impact Draft out for comment could change Helps clarify some situations (right of way), but still lots of case by case Case by case gives flexibility, but opens up for second guessing Impact depends upon past interpretation, some the same, some now combined stationary source, some now split 44

48 Future Changes U.S. EPA expects to update other guidance memos Wait and see 45

49 Wrap up Questions??? 46

50 Current Air Topics J. Michael Geers Duke Energy

51 Agenda Duke Energy s path to cleaner energy Combustion Turbine MACT RTR Rule (CT MACT) Mercury & Air Toxics Standards (MATS) Affordable Clean Energy Rule (ACE) proposal Proposed New Source Review threshold hourly emissions increase test (part of ACE proposal) Duke Energy Annual SO 2 & NOx Emissions, tpy 65,433 46, ,555 1,109, , , , ,000 1,000,000 1,200,000 NOx tons SO2, tons Reduced air emissions of mercury by 94% between 2005 and 2018

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53 Maximum Achievable Control Technology (MACT) MACT standards regulate sources of hazardous air pollutants at major sources (>10 tpy of any one HAP, >25 tpy all HAPS). CAA 112 (d)(2) requires EPA to set technology based standards which are at least as stringent as the average performance of the top 12% performing units CAA 112(d)(6) requires EPA to review and revise standards as appropriate every 8 years CAA 112(f)(2) requires EPA to set health based (residual risk) within 8 years if necessary to protect public health with an ample margin of safety Risk and Technology Review (RTR) - EPA normally combines the last two steps into a single rulemaking EPA has missed the eight year RTR deadline for many source categories. Deadline suits have resulted in the court ordered compliance schedules.

54 Combustion Turbine MACT EPA issued the Combustion Turbine (CT) MACT rule in March, Regulated 4 out of 8 subcategories of new & reconstructed stationary CTs at major sources EPA stayed the rule in August, 2004 after receiving a delisting petition; it remains stayed. Subsequent court cases for other source categories have addressed a number of issues. Regulating startup & shutdown (SU/SD) periods Set emissions or work practice standards for all HAPS emitted from a source Set standards for all subcategories Delisting of individual subcategories EPA s CT proposal is expected in 2Q2019 with a final rule in 2Q2020. Preliminary analysis: risk is within ample margin of safety, & no technology developments EPA is expected to lift the stay on new CTs, & adopt work practice standards for SU/SD

55 2012 EGU Mercury & Air Toxics Standard (MATS) In 2015, the SCOTUS rules that EPA s original decision to regulate EGUs was flawed because it did not consider costs (which were far higher than the direct benefits). In its 2016, EPA concluded that MATS was still necessary & appropriate based on: An affordability test that compared compliance costs vs. industry s annual revenues & capital expenditures Co-benefits reductions of criteria pollutants not regulated under the MACT February 2019, EPA proposed that is not appropriate to regulated EGUs, but that it is bound by a previous court ruling to keep MATS in place. EPA s RTR determined that MATS provides an ample margin of safety given minimal risks, minimal benefits from further reductions and the lack of additional control options EPA is taking comments on these and other options Duke Energy and others strongly support retaining the MATS rule.

56 Clean Power Plan (CPP) Regulation of EGUs EPA used CAA Section 111(b) to regulate new, modified, and reconstructed units and 111(d) to regulate existing units. 111(b) standards for coal and combined cycle combustion turbine units (New Source Performance Standards) Super critical technology and included partial CCS for coal units CT Standards based on best performing units but without CCS 111(d) standard s Best System of Emissions Reductions (BESR) had four elements Heat rate (efficiency) improvements at affected coal and gas fired steam generating units Substitute lower emitting natural gas units for higher emitting coal units Substitute increased generation from new zero emitting renewables Increased end user energy efficiency Only the 111(d) rule s first step regulates the actual source, the rest are outside the fence.

57 Clean Power Plan - Subsequent Actions The rule was challenged, and the Supreme Court on February 9, 2016 ordered EPA to halt enforcement of the CPP until the lower court had a chance to rule on its legality. On March 28, 2017, President Trump ordered EPA to review the CPP rule. August 28, 2018, EPA proposed the Affordable Clean Energy Rule (ACE) to replace the CPP for existing sources. EPA also proposed a modification to the new source standard that removes CCS. Despite these developments, companies continue to reduce their GHG footprint. Continued retirement of coal units. Lower costs continue to drive more natural gas and renewable generation.

58 ACE Rule Components Heat Rate Improvements (HRI) are considered the Best System of Emissions Reduction BSER determined by evaluating technologies that applicable to, at, on the premises of the effected source Reduce CO 2 intensity in terms of lbs CO 2 /MW-hr of electricity generated Standards proposed for boiler fired boilers but not combustion turbines CCS not considered States provided with direction on implementation of emissions guidelines and have broad discretion. Proposed revisions to New Source Review (NSR) that would prevent NSR from being a barrier to implementing BSER projects.

59 Potential for EGU Heat Rate (Efficiency) Improvements Each EGU is unique with different size, capability, geography, fuel, emissions control and other equipment. A unit s best efficiency is locked in by its initial design with limited room for improvement. EPA proposed that the following measures would be evaluated as BSER: Neural Network/Intelligent Soot Blowing Boiler Feed Pumps Variable Frequency Drives Air Heater and Duct Leakage Control Steam Turbine Blade Path Upgrades Redesign/Replace Economizer

60 State Implementation of the ACE Rule For 111(d) standards, EPA establishes the basic framework while the states are delegated the responsibility to create implementation plans for EPA s approval. The state s analysis will result in an emissions standard for each unit: Determine the types of HRI projects to be considered Considers the unit s remaining useful life If a project is not cost effective after considering the remaining useful life, it would not be implemented States also make decisions on averaging time, form of the standard, and other forms of flexibility. It is imperative that standards consider how unit operation and maintenance cycles. A unit implementing the BSER projects should be able to achieve compliance.

61 Issues affecting standard achievability EGUs by nature are less efficient during lower load operation Planned maintenance outages occur over a multi-year cycle for system reliability. Standards must account for degradation between outages (typically up to 5 years). Cycling of units decreases average performance due to more time in transition and lower average load. Small changes in Heat Rate performance may be within the measurement uncertainty of Continuous Emissions Monitors.

62 New Source Review (NSR) NSR regulates new, modified, or reconstructed major sources of air pollution to maintain or improve ambient air quality and meet the NAAQS. Non Attainment NSR applies when the air quality does not meet the NAAQS for one or more criteria pollutants. Prevention of Significant Deterioration (PSD) applies in attainment areas, where the air quality is classified as meeting the NAAQS. NSR is triggered when a source makes a major modification which is: A physical change, or change in the method of operation, at a major stationary source that would result in a significant emissions increase of a regulated NSR pollutant 40 CFR 52.21(b)(2)(iii)(a). A major modification does not include routine maintenance, repair and replacement activities. 40 CFR 52.21(b)(2)(i).

63 New Source Review (cont.) NSR evaluates significant emissions increases on an annual basis. By comparison a modification under the New Source Performance Standards is triggered by increases in the hourly emissions rate. If a project triggers NSR, the result is that the source may need to: Install Best Available Control Technology (BACT) for pollutants in attaining areas Install Lowest Achievable Emissions Rate (LAER) for pollutants in non-attaining areas. Generally power plants have not undertaken projects that trigger NSR.

64 NSR Implications of the ACE Rule Heat Rate improvement projects can make a unit more economical to run compared to other generating units. Better economics can cause that unit to generate more electricity and increase its total annual emissions (CO 2, SO 2, NOx, etc.). Projects could be considered major modifications and the emissions increase could trigger NSR thus requiring installation of BACT, or LAER. BACT/LAER requirements can change a project s cost effectiveness making the ACE efficiency improvements infeasible.

65 ACE Rule Proposed NSR Changes EPA proposed three options for a threshold hourly emissions increase applicability test: Maximum achieved test, based on Upper Tolerance Limit UTL based on 10% highest heat input hours in a 365-day period in the five years before the change If any hourly reading after the project is higher, the change is considered a modification Maximum achieved test, based on highest hourly reading in 5 years before change Maximum achievable test, based on current NSPS test The two Maximum Achieved Tests have great potential for false positives due to measurement error and normal variability. Maximum Achieved Test based on the NSPS model is the best of the three options. A new test should require a causal link between the project being implemented and any emissions increase.

66 Questions? 63

67 64