Small Project PSD Cautions (Post-GHG Tailoring Rule)

Following U.S. EPA’s promulgation of the PSD and Title V GHG Tailoring Rule, electric utilities, facilities with large industrial boilers, and other heavy industry manufacturing operations should be aware that the Prevention of Significant Deterioration (PSD) significance threshold for greenhouse gases (GHGs) may be the most stringent PSD triggering threshold for certain projects.  Even minor upgrades (including projects affecting non-emissions generating equipment like steam turbines, heat transfer elements, cooling water systems, etc.) can encounter PSD permitting challenges.  Based on several project examples, this article evaluates the relative sensitivity of the PSD threshold for GHGs compared to traditional criteria pollutant for “modifications” or “projects” at existing industrial facilities.

PSD permitting requirements are triggered by an “event” that can comprise any of the following:

  • Construction of a new major “source”
  • Major expansion of an existing source
  • Physical or operational change representing a major modification at an existing major source (i.e. a “project”)

PSD applicability is evaluated on a pollutant-by-pollutant basis and emission increases for physical or operational changes at existing major sources must be compared to the PSD Significant Emission Rate (SER) thresholds for each pollutant.  Table 1 identifies the pre-Tailoring Rule criteria pollutant PSD SERs.  The compounds that historically have been the primary focus for PSD applicability for combustion equipment are highlighted in Table 1.

Following promulgation of the Tailoring Rule, GHGs and their carbon dioxide equivalent (CO2e) must also be evaluated for PSD applicability.  EPA established a 75,000 tpy CO2e threshold at which GHG increases from a proposed source modification can become subject to regulation under the PSD program.  Approximate fuel firing and unit output ratings comparable to a 75,000 tpy CO2e emissions increase for combustion equipment include the following:

  • 75 to 150 mmBtu/hr (fuel type dependent)
  • Approximately 140 mscf/hr, natural gas
  • Approximately 5 ston/hr, sub-bituminous coal
  • Approximately 8 to 20 MW (heat rate dependent)

As evidenced by the approximate fuel firing and unit output ratings noted above, relatively small projects at large industrial manufacturing facilities can trigger PSD new source review.  An additional, unique challenge for PSD applicability considerations for GHGs is the fact that, unlike the other criteria pollutants, emission control technologies are not readily available to significantly reduce GHG emissions and avoid PSD.  For example, emission controls commonly employed that can reduce other criteria pollutants to avoid PSD include:

  • Nitrogen Oxides (NOx) Low NOx burners, selective catalytic reduction, selective non- catalytic reduction, flue gas recirculation, overfire air
  • Carbon Monoxide (CO) Oxidation catalyst
  • Sulfur Dioxide (SO2) – Wet and dry scrubbers
  • Volatile Organic Compounds (VOC) – Thermal oxidizers, vapor recovery units
  • Particulate Matter (PM, PM10) – Fabric filters

Facilities should evaluate on a pollutant-by-pollutant basis and identify the site-specific criteria pollutant that would be the most sensitive pollutant for triggering PSD for potential future projects.  This analysis requires evaluating multiple parameters for each potential type of future project including:

  • Equipment/units affected by (and the nature of) the potential project
  • “Baseline” (historic actual) emissions for affected units/historic utilization
  • Permit limits
  • Options for fuels, alternate raw materials, alternative operating scenarios
  • Potential emission controls employed
  • Contemporaneous emission increases and decreases at the site

To help illustrate a preliminary PSD evaluation process, a simplified applicability analysis (Example 1) is provided for an electric utility generation facility.  In this example, an improvement project that could reduce periodic downtime for a steam boiler is evaluated for PSD applicability for NO2, CO, and CO2.  Details for this project include:

  • 700 MW natural gas fired boiler
  • Historic dispatch = peaking service
  • Controls = Selective catalytic reduction and low NOx burners
  • Permit Limits = no change
  • Reduction in future outages from one 2-week outage annually to one 1-week outage every other year
  • No contemporaneous emission increases or decreases at the site

In descending order of conservativeness, the approaches employed as the basis of calculating the project emissions (future emissions minus historic emissions) for the preliminary PSD applicability analysis include:

  1. Annual potential to emit (PTE)
  2. Outage hours/yr x daily permit limits
  3. Outage hours/yr x actual hourly emissions
  4. Consideration of projected actual emissions and potential exclusion of demand growth 

Table 2 presents the most conservative applicability approach.  This approach calculates the project emissions increase for each pollutant based on the affected equipment’s annual potential to emit minus the equipment’s historic annual emissions over a representative 24-month period (the “baseline”).  As evidenced in Table 2, under this conservative approach, GHGs/CO2 represent the largest pollutant increase when compared to the PSD major modification thresholds.

Table 3 presents a slightly less conservative approach to calculating project emissions.  This approach calculates the project emissions increase for each pollutant based on the affected equipment’s short-term permit limits (permit allowables) times the reduction in potential downtime that could be realized by the project.  As evidenced in Table 3, under this approach, GHGs/CO2 is again the largest pollutant increase when compared to the GHG PSD major modification threshold (75,000 tpy).

The approach summarized in Table 4 calculates the project emissions increase for each pollutant based on the affected equipment’s projected actual emissions (unit’s actual emissions performance to date) times the reduction in potential downtime that could be realized by the project.  Since the actual emissions for CO and NO2 are significantly less than their respective permit limits, tprojected increases of thse pollutants are less, while the projected emissions of GHG/CO2 do not change and GHG is again the largest pollutant increase.  An additional option that can be considered for PSD applicability purposes is the prospect of excluding the portion of a unit’s emissions that could have been accommodated that are unrelated to the proposed project, including increased utilization due to product demand growth.  An approach that accounts for and excludes demand growth in the PSD applicability determination represents the least conservative avenue and may encounter resistance from the regulatory authority.  Some considerations associated with this approach are listed in Table 6.

Example 1 (Tables 2 through 4) emphasize the fact that GHG emissions can represent a critical parameter that must be evaluated for prospective projects, even for projects that would seem to be small initiatives like plant downtime improvement projects.  As a result, in addition to evaluating and comparing the relative sensitivity of criteria pollutants to their respective PSD trigger thresholds (similar to Example 1), owner/operators should also tabulate relative levels of operation for each of their units that could trigger PSD for GHGs.

Example 2 summarized in Table 5 outlines an evaluation for an electricity generation facility that has multiple combined cycle combustion turbine units (CCCTs), steam boilers, and simple cycle combustion turbines (CTs).  Depending upon the industry sector, the most appropriate reference values for levels of operation can vary (tons per year or barrels of product manufactured, MW generated, etc).  For this example, the number of days operating per year per unit (and facility-wide) as well as the percentage of equipment capacity is compared to the GHG trigger threshold for PSD.  This analysis provides a big-picture understanding for management that the GHG trigger threshold for PSD equates to approximately 4 additopnal days per year of operation of the facility or 1% of the facility’s operational capacity.

In summary, important takeaways for industrial operators in the post GHG Tailoring Rule era include:

  • CO2 can be the most sensitive pollutant triggering PSD or Title V
  • Seeming small projects (minor upgrades) can trigger PSD for GHG
  • Influencing factors for the most sensitive pollutant for PSD include:
    • Controls for other pollutants
    • Permit limits
    • Options for alternative fuels, raw materials and/or operating scenarios
    • Historic utilization
  • Staff should proactively evaluate PSD triggering levels for each prospective project in the future
  • Staff should evaluate the level of operation that could trigger PSD on an equipment and facility-wide basis