Ken Snell and Tim Krause, Sargent & Lundy
The U.S. Environmental Protection Agency (EPA) recently proposed two regulatory programs that could require significant pollution emission reductions from coal-fired power plants. The first proposal would reduce sulfur dioxide (SO2) and nitrogen oxide (NOX) emissions that are transported long distances and contribute to air quality problems in downwind areas. The second proposal is composed of two alternate regulations that would reduce mercury emissions. These proposals are summarized below.
Proposed interstate air quality rule
On Jan. 30, 2004, EPA published a proposal to reduce emissions of SO2 and NOX that contribute to downwind violations of the air quality standards for fine particulate matter (PM2.5) and/or ozone. This proposal, which is known as the Interstate Air Quality Rule (IAQR), would modify the existing acid rain SO2 cap-and-trade program, and establish a new NOX cap-and-trade program in 29 states and the District of Columbia.
The IAQR would be implemented in two phases. Total SO2 and NOX emissions in each state would be capped at certain levels beginning in 2010, and more stringent emission caps would apply beginning in 2015. Table 1 summarizes the approximate region-wide emission cap levels and the percent reduction that each cap represents from 2002 baseline emissions.
Each state would decide how to achieve its required emission reductions, but EPA believes the most cost-effective approach would be to obtain all reductions from electric generating units (defined as fossil-fuel fired boilers and turbines with a capacity of more than 25 MW and producing electricity for sale). Therefore, the IAQR includes proposed SO2 and NOX emission budgets for the electric generating units in each state.
The proposed SO2 budgets correspond to a 50 percent reduction in each state’s acid rain program SO2 emission allowances for 2010 and a 67 percent reduction for 2015. Existing acid rain allowances could be banked before the 2010 implementation date for use in the new program. Pre-2010 acid rain allowances banked before 2010 could be used at a one-to-one ratio for compliance at any time. Acid rain allowances allocated in later years would have reduced values, as follows:
“- Pre-2010 allowances to be used at a one-to-one ratio;
“- 2010 through 2014 allowances to be used at a 2:1 ratio;
“- 2015 and later allowances to be used at a 3:1 ratio.
EPA proposed to create new emission allowances for the NOX portion of the IAQR. NOX allowances would be allocated to the individual states in proportion to their total heat inputs. These heat inputs would then be multiplied by an emission rate of 0.15 lb/MBtu for the 2010-2014 phase of the program and an emission rate of 0.125 lb/MBtu for 2015 and later.
EPA is expected to finalize the IAQR by mid-2005 or sooner. States would be required to submit proposed state implementation plans (SIPs) for compliance no later than 18 months after the regulation is finalized. Implementation of the first phase of emission caps would begin January 1, 2010, and the second phase would begin January 1, 2015.
Proposed mercury regulations
Also on Jan. 30, 2004, EPA proposed two competing regulations for mercury emissions from coal-fired power plants. One regulation (the utility MACT rule) would regulate mercury as a toxic pollutant, in accordance with a determination EPA made several years ago. The other regulation (the mercury NSPS rule) would reverse EPA’s previous determination, adopt mercury New Source Performance Standard (NSPS) and implement a nationwide cap-and-trade program for mercury emissions. EPA intends to choose one of these proposals for final implementation.
Utility MACT rule
This rule requires coal-fired units to meet mercury emission limits that reflect maximum achievable control technology (MACT) as defined under the Clean Air Act. Oil-fired units are required to meet MACT limits for nickel, but the oil-fired requirements are not discussed in this article. The rule applies to steam generating units of more than 25 MW that produce electricity for sale.
The applicable mercury emission limits depend on the type of coal burned and whether a unit is considered to be “existing” or “new” (meaning that construction began before or after Jan. 30, 2004). Existing units have the option of meeting emission limits expressed either in pounds per trillion British thermal units (lb/TBtu) of heat input or 10-6 pounds per megawatt hour (lb/MWh) of power output. The proposed limits for existing units are shown in Table 2.
New units must meet an emission limit expressed in pounds per megawatt hour of power output, as shown in Table 3.
EPA established the proposed emission limits for new and existing units based on available emission data from the best-controlled operating units, in accordance with Section 112(d) of the Clean Air Act. For example, the limit for new bituminous-fired units was based on data from Stockton Unit 1, a 60 MW fluidized bed unit in California. The limit for new subbituminous-fired units was based on data from Clay Boswell Unit 2, a 75 MW pulverized coal unit in Minnesota. In all cases, the actual emission data was adjusted based on a statistical analysis of the data variability. The selection and adjustment of the emission data used to establish the proposed emission limits is expected to be an area of considerable controversy when EPA considers comments on the proposed rule.
New units must comply with their applicable emission limits upon startup. Existing units must comply with their limits within three years after the effective date of the final rule, but EPA can grant a one-year extension of that deadline. EPA is under a court order to finalize the utility MACT rule by December 15, 2004.
Mercury NSPS rule
As an alternative to the utility MACT rule, EPA proposed to establish mercury emission limits for coal-fired power plants under the New Source Performance Standards found in Subpart D. of 40 CFR Part 60. This proposal would also modifiesy Subpart C of 40 CFR Part 60 to create a nationwide cap-and-trade program for mercury emissions from coal-fired power plants.
The proposed NSPS mercury emission limits apply only to new units, and they are the same as the MACT emission limits shown in Table 3.
The proposed cap-and-trade program applies to both new and existing units. EPA proposed nationwide annual mercury emission caps of approximately 34 tons starting in 2010 and 15 tons starting in 2018. EPA believes the initial cap can be achieved through the “co-benefits” of installing SO2 and NOX controls to comply with the proposed IAQR. EPA requested comments on the appropriate mercury caps for both the secondphases of the program.
Each state would be given a specified share of the nationwide mercury emission allowances, which the state would then allocate to its utilities. The utilities would be permitted to buy, sell or trade allowances, and adjust their emissions accordingly. EPA proposed that mercury allowances be allocated to each unit based on the proportionate share of the unit’s baseline heat input to the total heat input of all affected units. Each unit’s baseline heat input would be adjusted to reflect the type of coal burned, using the following adjustment factors: 1.0 for bituminous coal, 1.25 for subbituminous and 3.0 for lignite. EPA requested comments on the appropriateness of these adjustment factors.
Based on an annual nationwide coal-fired heat input of 20,210,740,000 MBtu, and assuming that 55 percent of the total heat input is from bituminous coal, 40 percent from subbituminous and 5 percent from lignite, the “allowance equivalent emission rate” for each type of coal was calculated. The “allowance equivalent emission rate” is the emission rate that a unit would have to achieve in order to comply with the expected allowance allocation for that type of coal. The results are shown and compared to the proposed mercury MACT emission limit for existing units in Table 4.
If EPA chooses the NSPS alternative, the rule is expected to be finalized by Dec. 15, 2004, in accordance with the court-ordered deadline for the utility MACT rule.
Snell is an environmental engineer and attorney with more than 20 years of experience in the fields of environmental compliance, controls and permitting. He is currently a project associate in Sargent & Lundy’s environmental services division. He can be reached at 312-269-2318 or at email@example.com.
Krause is an environmental biologist with more than 28 years of experience in the power industry. He currently supervises Sargent & Lundy’s environmental permitting group. He can be reached at 312-269-6616 or at firstname.lastname@example.org.