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On September 20, 2013, EPA signed a revised proposal for regulating greenhouse gas (GHG) emissions from new electrical generating units (EGU) via the New Source Performance Standards (NSPS).  In addition to being the first NSPS for GHGs, and in addition to the potentially significant impact of future Emission Guidelines (EG) for EGU for GHG, the proposed rule has potential far reaching implications beyond the EGU as it further enmeshes GHG into Title I and Title V of the Clean Air Act (CAA).

Other than potential collateral impacts, the rule itself is simple.

  • For an EGU combusting coal, carbon capture and sequestration (CCS) is required
  • A combined cycle combustion turbine (CCCT) firing natural gas needs no add-on controls
  • A simple cycle combustion turbine (SCCT) will be capped at a 33% capacity factor
Recent History

On February 27, 2006, EPA issued revisions to NSPS Subpart Da, which regulates EGU. Environmental groups and eleven states subsequently objected to the exclusion of GHG from the NSPS, leading to a lawsuit in the DC Circuit Court of Appeals New York v. EPA. In August 2009, EPA requested a voluntary remand from that lawsuit, and on December 16, 2010, it announced a proposed settlement agreement with petitioners. The settlement agreement established the following actions by EPA.

  • NSPS under Section 111(b) for new and modified EGUs subject to Subpart Da
  • EG under Section 111(d) for existing EGU

The original proposed settlement was published in the Federal Register on December 30, 2010, and established deadlines for final rules in 2012, which were not met.

EPA first issued a proposed EGU NSPS for GHG on April 13, 2012 (77 FR 22392). A new Subpart TTTT would be established as a merged category from Subparts Da and KKKK (combustion turbines). However, EPA is formally retracting the initial 2012 proposal with a revised proposal (signed September 20, 2013 and published in the Federal Register on January 8, 2014).

EPA established a new schedule for GHG EGU regulations as a result of President Obama’s Climate Action Plan. The milestones from the Climate Action Plan are as follows.

  • For new sources (NSPS)
    • Directed EPA to issue revised proposal by September 20, 2013
    • Directed EPA to issue final rule in a timely fashion
  • For modified/reconstructed (NSPS) and existing (EG)
    • Requested EPA issue proposal by June 1, 2014
    • Requested EPA issue final standards by June 1, 2015
    • Requested EPA require states submit state implementation plans (SIPs) to implement EG no later than June 30, 2016

EPA met the Climate Action Plan deadline of September 20, 2013 with a signed rule and the rule was published in the Federal Register on January 8, 2014. The revised proposal reflects major revisions to the 2012 proposal in many ways, though not in the actual numerical limits considered.

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Impacts Beyond EGU

Once an NSPS regulates GHG, it will become a regulated air pollutant and no longer simply be subject to regulation. That change impacts several regulatory programs.

  • Prevention of Significant Deterioration (PSD)
    • Applicability
    • Best Available Control Technology (BACT)
  • Title V
    • Applicability
    • Fees
  • Mandatory Reporting Rule (MRR)

EPA’s position is that the GHG NSPS causes no change in applicability of GHG as a regulated pollutant under the PSD program, based on language included in the preamble to the Tailoring Rule. However, recognizing the lack of a regulatory basis, EPA has included a specific provision in the proposed rule that explicitly links the Tailoring Rule and the potential NSPS trigger provision to becoming a regulated air pollutant for PSD. EPA’s approach seems functional if inelegant, but its request for active responses from states with SIP-approved PSD programs regarding the feasibility of this approach on a state level is tacit acknowledgement of the uncertainty that this NSPS rule may create on future PSD applicability determinations.

For BACT, EPA acknowledges some impacts. First, EPA asserts that a BACT “floor” is only set once an NSPS is final. Then, EPA explores new territory with the assertion that the proposed NSPS only sets a floor for new EGUs, and does not set a floor for modified or reconstructed EGUs. The proposed rule does not appear to consider potential implications for combustion turbines, which may bear further review for SCCT since they are not able to meet the proposed emissions limit but are not, as a class, clearly exempted from a requirement to meet the floor.

For Title V applicability, the distinction in subject to regulation and regulated air pollutant has little significance. Although all NSPS sources must obtain a Title V permit unless otherwise exempted, the EGUs considered here would be required to obtain a Title V based on emissions regardless. EPA does propose to separate the definition of greenhouse gases from within the definition of subject to regulation in both 40 CFR 70.2 and 71.2.

The issue of Title V fees is more complicated with a potential for impacts. Some states use a presumptive fee calculation approach, and in those states, becoming a regulated air pollutant adds GHG to the fee list.  Sources with federal (Part 71) permits also would have to include GHG in fee calculations. Importantly, the addition of GHG to the emissions fee list would apply to all sources, and not just EGU.

To fix this problem, EPA defined a new term, regulated air pollutant (for presumptive fee calculation), which excludes GHG for presumptive fees. EPA does require those states (as well as Part 71 permit holders) to add costs for GHG program management into calculating overall fees; the proposed approach uses a staff hours and $/hour approach to adjust the overall presumptive fee result, with slightly different calculations for Part 70 versus Part 71. For sources in states using a presumptive fee approach, this area bears careful review.

Lastly, the Subpart PP of the GHG Mandatory Reporting Rule (MRR) would add reporting requirements for EGUs that capture a carbon dioxide (CO2) stream and transfer it to facilities subject to Subpart RR Geologic Sequestration of Carbon Dioxide.

Review of Proposed Requirements

Administratively, EPA has proposed two approaches for how to organize the new GHG requirements. Both are included in the proposed rule but only one will be finalized.

  • Option 1 – Amend existing subparts
    • Subpart Da – would add a new standard section 60.46Da
    • Subpart KKKK – would be a mix of new and amended sections
  • Option 2 – Consolidate in new GHG subparts
    • Subpart TTTT – Greenhouse Gas Emissions for Electric Utility Generating Units

While GHG is comprised of six pollutant types, and while three are emitted from EGU, EPA has proposed to regulate only CO2 via the NSPS. Nitrous oxide (N2O) and methane (CH4) are emitted from EGU, but only comprise approximately 0.8% of CO2e emissions. EPA is not proposing to regulate N2O or CH4 due to a lack of more precise data on the quantity of emissions and a lack of information on cost-effective controls.

There are two groups of regulated units – one under Subpart Da and one under Subpart KKKK. Note that reciprocating internal combustion engines (RICE) are not regulated by the proposed rule.  Key aspects for each applicable unit type are listed following.

  • NSPS Da
    • Steam generating units or IGCC
    • Design heat input > 250 MMBtu/hr of fossil fuel
    • Combusts fossil fuel > 10% of average annual heat input on a 3-year rolling average basis
    • Constructed for purpose of and supplies one-third or more of potential electrical output and more than 219,000 MW-hr to a utility distribution system on an annual basis
    • Stationary combustion turbines
    • Design heat input > 250 MMBtu/hr (nominally 25 MWe)
    • Combusts fossil fuel > 10% of average annual heat input on a 3-year rolling average basis
    • Constructed for purpose of and supplies one-third or more of potential electrical output and more than 219,000 MW-hr to a utility distribution system on a 3-year rolling average basis
    • Combusts over 90% natural gas on a heat input basis on a 3-year rolling average basis

Some key considerations resulting from the definitions impact biomass firing and SCCT. First, Subpart Da EGU that are predominantly biomass-fired are exempted, as few primarily biomass units would fire 10% fossil fuel on an annual average basis. Thus, the Subpart Da regulations are directed towards coal-fired boilers (though they would also be applicable to a gas- or oil-fired unit that met the other criteria). Second, SCCT that fire natural gas are effectively limited to a 33% capacity factor basis on a 3-year rolling average basis.  SCCT are effectively capped at this operating limit as they are not able to meet the emission limit for Subpart KKKK units, and thus must avoid reaching the electricity sales trigger.

In the 2013 proposal, EPA established two different Best System of Emission Reductions (BSER). For Subpart Da, BSER is partial implementation of carbon capture and storage, while for Subpart KKKK, it is modern efficiency gas combined cycle technology.

The precise value for emission limits in the proposed rule are of less importance than in many rules, as a coal-fired unit with CCS will meet the limit, as will a natural gas-fired CCCT without CCS.  A coal-fired unit without CCS cannot meet the limit, nor can an SCCT fired on natural gas. The relevant limits on a lb CO2 / MW-hr gross basis are as follows:

  • Boiler/IGCC – 1,100 lb CO2/MW-hr
  • Turbine <= 850 MMBtu/hr – 1,100 lb CO2/MW-hr
  • Turbine > 850 MMBtu/hr – 1,000 lb CO2/MW-hr

For comparison, a highly efficient coal-fired boiler without CCS would emit approximately 1,800 lb CO2/MW-hr. To meet the proposed Subpart Da limit, a gross efficiency of approximately 65% (5,200 Btu/kW-hr heat rate) would be required, which would require efficiency to match the ideal Carnot cycle (i.e., unreachable without CCS). Similarly, the turbine limits require an efficiency of approximately 38% (9,000 Btu/kW-hr heat rate), which is easily met via CCCT but not via SCCT.

Interestingly, EPA makes the bold assertion that even if requiring CCS limits coal-fired units to certain parts of the country (such as those where enhanced oil recovery makes CCS less costly), EPA can issue standards that effectively preclude construction of sources in certain areas. EPA makes this assertion based on Congress’ initial Section 111 (NSPS) standards that were issued, while recognizing that due to National Ambient Air Quality Standards (NAAQS) a new NSPS source could not be constructed at every location in the country. EPA then links the 1970 NAAQS-NSPS interaction to the present proposal, to state that if the emission limits established under Section 111 prevent locating sources in certain areas, such result would not be inconsistent with Congressional intent.

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Next Steps

The January 8 Federal Register publication set the deadline for comments (within 60 days of publication – March 10) and the date for a public hearing (January 28 in DC). Also, the docket is now open for inspection of the 80+ supporting documents used to develop the rule (EPA-HQ-OAR-2013-0495).

Lastly, remember that the NSPS is a prelude to the issuance of EGs, which will in turn impact existing EGU sources. The proposal for EGs is expected in Summer 2014, with a final rule following one year later. While EPA has not yet provided any examples for EG, there has been much public advocacy on this topic including multiple papers on EG for EGU for GHG.  Furthermore, regardless of industry concern over the potential costs of EG, EPA committed via the 2010 consent order to issue EG for EGU.

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