Transcript Proposed EPA Requirements for Existing Power Plants (FCAA

Proposed EPA Requirements for
Existing Power Plants under
FCAA 111(d)
Erik Hendrickson
Air Permits Division
Texas Commission on Environmental Quality
Advanced Air Permitting Seminar 2014
Disclaimer and
Acknowledgements
Disclaimer
Any opinions expressed during this
presentation are the sole opinions of the
presenter and not necessarily the TCEQ.
Agency comments related to the proposed
rule will be available on the TCEQ website
after they have been filed with EPA.
Acknowledgements
Roger Martella of Sidley Austin LLP
Terry Salem of TCEQ OLS
Mac McFarland of Luminant
Introduction
• 111(b) and 111(d) CO2 Standards
for EGUs.
• Four Building Blocks used as BSER
& Texas’ Goal Established by EPA.
• Disparity in State Goals.
• Problems with Proposed 111(d).
• Why 111(d) EGU Proposal is
Important to non-EGUs.
111(b) Addressing New
Sources
• Section 111(b) applies to new, modified, or reconstructed
sources.
• Requires EPA to issue NSPS for categories of sources that are
determined to cause, or contribute significantly to, air pollution
which can reasonably be anticipated to endanger public health
or welfare.
• EPA may distinguish among classes, types, and sizes within
categories of sources.
• Performance-based standards based on Best System of
Emission Reduction (BSER).
• Apply to any affected source constructed, reconstructed, or
modified after the date of proposal (beginning upon
promulgation). Standards effective upon promulgation.
111(d) Addressing Existing
Sources
Section 111(d) applies to source categories that EPA first regulated if
new:
• Directs EPA to establish a SIP approval procedure similar to NAAQS
SIPs; states must submit a plan to EPA to establish standards of
performance for any existing source for any air pollutant:
(1) for which there is no NAAQS; and
(2) is not emitted from a source category regulated under
Section 112.
• If a state does not develop a plan, EPA has the same authority as
it does for SIPs to impose a plan on the state.
• Standards of performance must take into consideration “among
other factors, the remaining useful life of the existing source to
which such standard applies.”
• EPA has used 111(d) for municipal solid waste landfills, municipal
waste combustors, sulfuric acid plants, primary aluminum
reduction plants and the phosphate fertilizer manufacturing plants,
manufacturing.
Best System of Emission
Reduction (BSER)
For New Sources:
• Reasonableness standard.
• Costs considered.
• Requirement for “adequately demonstrated.”
• Allows EPA/state plans to distinguish among types of sources.
For Existing Sources:
Regulations allow states/EPA to set less stringent standards or longer
compliance schedule for existing sources considering:
• Cost of control;
• Useful life of the facilities;
• Location or process design at a particular facility;
• Physical impossibility of installing necessary control equipment; or
• Other factors make less stringent limits or longer compliance
schedules appropriate.
111(b) and (d) Standards
FCAA, §111(b) – New,
Modified/Reconstructed
Sources:
• EPA must review and revise (if
appropriate) every 8 years.
• When revising, EPA must
consider emission limitations
and percent reductions achieved
in practice beyond what was
required under standard.
• EPA may distinguish among
classes, types and sizes within
categories.
• Does not provide authority for
EPA to require installation or
operation of any particular
system of continuous emission
reduction.
• States must develop procedure
to implement and enforce.
FCAA, §111(d) – Existing
Sources:
•
•
•
Requires EPA to develop process
similar to §110 SIPs.
Requires states to submit state
plans to establish the standard
of performance and
implementation and
enforcement of the standard.
States must be allowed, when
applying a standard, to consider
among other factors, the
remaining useful life of the
existing source.
111(b) and (d) EGU CO2 Rule
Timelines
111(b) – New,
Modified/Reconstructed
Sources:
• New Source Standard:
•
•
•
•
Originally proposed April 13,
2012; withdrawn.
January 8, 2014: New proposal
published 79 Fed. Reg. 1430
Comment closed.
Final rule anticipated.
• Modified/Reconstructed
Sources:
•
•
•
June 18, 2014: Proposal.
published 79 Fed. Reg. 34960
October 16, 2014: Comment
Closes.
June, 2015: Final Rule
anticipated.
111(d) – Existing Sources:
• June 18, 2014: Proposal
published 79 Fed. Reg. 34830
• December 1, 2014: Comment
Closes
• June, 2015: Final rule
anticipated
• June 30, 2016: State plans
due unless extension granted:
•
•
June 30, 2017: single-state
plans.
June 30, 2018: multi-state
plans.
111(d) Proposed Carbon Pollution
Emission Guideline for Existing EGUs
State Plans:
• May demonstrate compliance with state goal either individually or
with a multi-state approach.
• May adopt rate-based standard or mass-based standard.
• May demonstrate compliance through site-specific emission
standards or portfolio approach (statewide caps or lb/MWh levels).
• May incorporate renewable energy and energy efficiency into plans.
Compliance with Interim and Final Goals:
• Applies to all sources that commenced construction prior to
January 8, 2014.
• Proposed state-specific performance goals for CO2 emissions from
power sector that each state must develop a plan to meet. EPA also
proposed plan content requirements, including recordkeeping and
reporting obligations.
• Demonstrated on an average basis.
• Interim Goal for Texas: 853 lbs CO2/MWh based on ten year avg
2020-2029 for proposed goals; five year avg 2020-2024 for alternate
goal: 957 lbs CO2/MWh.
• Final Goal for Texas: 791 lbs CO2/MWh based on rolling three-year
avg; alternate goal: 924 lbs CO2/MWh.
111(d) BSER Blocks Used to Calculate
Proposed CO2 Guidelines for Existing
EGUs
State specific goals were determined through EPA’s evaluation of
emission reductions that were achievable from 4 categories:
•
•
•
•
Block 1-Heat Rate Improvement 6% or 4%.
Block 2-Electricity generation redispatch from coal to existing natural gas
combined cycle (NGCC) 70% or 65% capacity factor ceiling.
Block 3-Renewable Energy & Nuclear Energy improvements:
• Texas final target is 20% of generation by 2029; or 86 million MWh; or 15%
by 2029 or 65 million MWh.
• Goals adjusted for nuclear units under construction and for units at risk of
retirement using 5.8% of state’s nuclear capacity. Estimated at-risk for TX
is 290 MW; but smallest nuclear unit is 1200 MW.
Block 4-Increased Demand-Side Energy Efficiency (set increase rate/year
up to max target rate):
• Texas – incremental rate of 0.20% per year, 1.5% target rate; final
cumulative savings target is 9.9% of retail sales by 2029. Alternatively,
incremental rate of 0.15% per year, 1.0% target rate, final cumulative
savings target 4.4% of retail sales by 2024.
Emissions Rate Formula
(NGCC gen. x NGCC em.
Rate)
+
(coal gen. x coal em.
rate)
+
(OG gen. x OG em. Rate)
+
“other” emissions
NGCC gen.
+
Coal gen.
+
OG gen.
+
“other” gen.
+
Nuclear gen.
+
Renewable gen.
+
Energy efficiency gen.
Texas Electricity Generation:
2012
• Coal generation: 138.7 MMWh
Emissions rate: 2,239 lbs CO2/MWh
• NGCC generation: 148.0 MMWh
Emissions rate: 837 lbs CO2/MWh
• OG steam generation: 20.9 MMWh
Emissions rate: 1,377 lbs CO2/MWh
• 2012 fossil fuel emissions rate:
1,420 lbs CO2/MWh
Texas Emissions Rate: Block 1
• 6% reduction in coal emissions rate
• 2,239 lbs CO2/MWh x 0.94 = 2,104 lbs CO2/MWh
• Emissions Rate:
1,420 lbs CO2/MWh  1,366 lbs CO2/MWh
Texas Emissions Rate: Block 2
• 2012 NGCC Capacity Factor: 45%
• Adjustment to 70% Capacity Factor:
• NGCC generation: 148.0 MMWh  230.9 MMWh
• Coal generation: 138.7 MMWh  66.7 MMWh
• OG steam generation: 20.9 MMWh  10.1 MMWh
• Adjustment for NGCC under construction:
0 MW
• Emissions Rate:
1,366 lbs CO2/MWh  1,083 lbs CO2/MWh
Texas Emissions Rate: Block 3a
• Nuclear Capacity:
• New capacity: 0 MW
• At risk capacity: 290 MW
• Projected generation at 90% capacity:
2.29 MMWh
Texas Emissions Rate: Block
3b
• Renewable Capacity:
• 2012 generation: 34.0 MMWh
• Texas RPS: 5,880 MW (2015); 10,000 MW
(2020)
• Average regional RPS: 20%
• Projected 2030 renewable generation:
86.0 MMWh (20% total generation)
• Emissions Rate:
1,083 lbs CO2/MWh  861 lbs CO2/MWh
Texas Emissions Rate: Block 4
• Demand side energy efficiency:
• 2012 adjusted sales: 392.5 MMWh
• State generation as percent of sales: 98.12%
• 2030 energy efficiency potential: 9.91%
• Emissions rate:
861 lbs CO2/MWh  791 lbs CO2/MWh
• Overall emissions rate change:
1,420 lbs CO2/MWh  791 lbs CO2/MWh
Proposed Standards for Newly Constructed, Modified, and
Reconstructed Sources
Unit Type
Coal-Fired Boiler or
IGCC
Natural Gas-Fired
Combined Cycle
Turbines
Unit Type
Additional
Description of Unit
12 operating months
Proposed Standard
Basis of BSER
1,100 (lb CO2/MWh-net)
84 operating months
(7 years)
Large (> 850
MMBtu/hr)
1,000 – 1,050 (lb
CO2/MWh-net)
1,000 (lb CO2/MWhgross)
Partial Carbon
Capture and
Sequestration
Small (<850
MMBtu/hr)
1,100 (lb CO2/MWhgross)
Additional
Description of
Unit
Proposed Standard
Combined
Cycle Efficiency
Basis of BSER
Alternative #1
Modified Utility
Boiler and IGCC
Large (> 2,000
MMBtu/hr)
Small (<2,000
MMBTu/hr)
Modified Utility
Boiler and IGCC
Modified or
Reconstructed
Natural Gas-Fired
Turbine
Reconstructed
Utility Boilers and
IGCC Units
Same as Above
Large (> 850
MMBtu/hr)
Small (<850
MMBtu/hr)
Large (> 2,000
MMBtu/hr)
Small (<2,000
MMBTu/hr)
Unit specific emission limit based upon unit’s
best CO2 emission rate (from 2002 to date of
modification) plus 2 % reduction; Emission limit
will be no lower than:
1,900 (lb CO2/MWh-net)
Operating
Practices and
Equipment
Upgrades
2,100 (lb CO2/MWh-net)
Alternative #2
Same as Above for source modified Prior to
becoming subject to 111(d). Sources modified
After becoming subject to 111(d) would be
required to meet a unit specific emission limit
determined by the 111(b) implementing
authority from results of an energy improvement
audit.
The standard is the same for modified or
reconstructed Natural Gas-Fired Turbines.
1,000 (lb CO2/MWh-gross)
Energy Audit and
111(d) Building
Blocks
Combined Cycle
Efficiency
1,100 (lb CO2/MWh-gross)
1,900 (lb CO2/MWh-net)
Supercritical
Steam Cycle
2,100 (lb CO2/MWh-net)
Subcritical Steam
Cycle
Texas Energy Mix: 2012-2030
Block 3: State Impacts of EPA’s Assumed
Increases in Renewable Energy (RE)
EPA’s Assumed Changes in RE for Top 10 RE States
Million MWh/yr by 2030
Texas
California
Iowa
Minnesota
Oklahoma
2012 RE
Increase in RE
Decrease in RE
Illinois
Washington
Oregon
Colorado
North Dakota
Texas is assumed to increase from 34 million MWh in 2012 to 86 million MWh in
2030 (+153%); California increases 37%; Iowa and Minnesota decrease
Carbon Emission Reductions, 2020 vs. 2012
Millions of tons of CO2 per year (reductions by
2020 relative to 2012 baseline)
• Texas called upon to provide 18% of total U.S. CO2 reductions, despite being
•
60
only 11% of 2012 CO2 emissions.
Majority of annual CO2 reductions ‘frontloaded’ to 2020 despite 2030 target.
50
40
30
20
0
Texas
Florida
Arizona
Illinois
Arkansas
Louisiana
Oklahoma
Georgia
Michigan
Pennsylvania
Alabama
Minnesota
Missouri
Colorado
Indiana
Wisconsin
Ohio
North Carolina
Iowa
South Carolina
New York
Utah
Kentucky
Mississippi
Tennessee
West Virginia
New Mexico
Washington
Nevada
Wyoming
Nebraska
North Dakota
Kansas
New Jersey
Oregon
Maryland
Massachusetts
South Dakota
Montana
New Hampshire
Delaware
Virginia
Connecticut
Alaska
Hawaii
Maine
Idaho
Rhode Island
California
10
Source: From EPA worksheet: “20140602tsd state goal data computation” reflecting Block 1 and 2 changes to fossil fleet
Carbon Emission Rate Target by State in 2030
Pounds of CO2 per MWh
EPA’s 2030 state targets vary widely; Texas is 20+% more stringent than
the proposed average existing unit target and the proposed new unit
standard
2000
1500
New unit standard = 1,0501
1000
Average existing unit target = 991
0
Washington
Idaho
Oregon
Maine
New…
New Jersey
California
Connecticut
New York
Massachus…
Nevada
Mississippi
Arizona
Florida
South Dakota
South…
Rhode Island
Texas
Virginia
Georgia
Delaware
Minnesota
Louisiana
Oklahoma
Arkansas
North…
Alaska
New Mexico
Pennsylvania
Alabama
Colorado
Michigan
Tennessee
Maryland
Wisconsin
Illinois
Iowa
Hawaii
Utah
Ohio
Nebraska
Kansas
Indiana
Missouri
West Virginia
Wyoming
Kentucky
Montana
North Dakota
500
Per EPA’s proposed standards of performance for greenhouse gas emissions from new electric utility generating units (FRL-9839-4)
Source: From EPA worksheet: “20140602tsd state goal data computation”
1
Problems with Proposed
111(d) Rule for Existing EGUs
•
Authority to Regulate Sources under Section 111(d) that Are Subject to
Clean Air Act Section 112.
•
Authority to Promulgate Section 111 Rules without “Significant Contribution”
Endangerment Determination.
•
Is the Modified and Reconstructed Source 111(b) Rule the necessary
predicate for regulation of existing sources?
•
Defining BSER to look “outside the fence” vs. “inside the fence.”
•
Defining BSER to consider renewables, nuclear, and end use energy
efficiency. Directing energy policy for states.
•
Defining BSER to include gas and coal collectively.
•
Modified and Reconstructed Source Carve Out from 111(b) Rule –“Once in,
Always in.”
•
Authority to differentiate standards by state.
•
Is actual treatment of different states or EPA’s assumptions arbitrary and
capricious?
Problems with Proposed
111(d) Rule for Existing EGUs
• Achievability of Blocks 2, 3 and 4. Some state goals (like
Texas) are more stringent than proposed NSPS (1,100 lbs
CO2/MWh for new coal units and 1,000 lbs CO2/MWh for
new large NGCC units).
• Potential impacts to electric reliability and cost of electricity.
• State Legislative Action Required to Implement.
• EPA’s approach for setting renewable energy targets for
states seems to have little rational basis – South Central
Region target is based only on Kansas’ RPS of 20% of
generation.
• Some requirements for state plans are onerous and if
upheld, will grant EPA additional authority over energy
markets than envisioned by Congress.
Why 111(d) EGU Proposal is
Important to non-EGUs
• Environmental regulations now the chief
influencer of energy policy.
• Effect on price and availability of natural
gas.
• Cost of electricity will increase.
• Reliability concerns emerging given
anticipated coal-fired EGU shutdowns.
• Could establish a precedent for NSPS for
other sectors.
Precedent of Existing EGU CO2
Standard for Other Sectors
• Is there an NSPS currently in place for your source
category?
• Is there an NAAQS for CO2?
• Is the source category regulated under 112?
• Is there a CO2 performance standard in existing NSPS?
• Propose 111(d) standards for the source category.
• Propose standards based on “Four Blocks” as BSER.
• Block 1 - Efficiency improvements at site.
• Block 2 - Switch production to lower emitting or more
efficient process.
• Block 3 - Include Non-emitting production equipment in
calculating goals.
• Block 4 – Decrease emission related to equipment based
upon decreased demand for product.
• States can then propose plans.
Summary
• Proposed rule has numerous legal and
technical issues.
• Adverse impacts on cost and reliability of
electricity and no benefit to environment.
• Establishes BSER precedent contrary 40
plus years of NSPS.
• Our recommendation is to withdraw the
rule.
Questions?
Contact Information
Phone Number: (512) 239-1094
[email protected]