Efficiency Favored in EPA Greenhouse Guidance To States

A long-awaited Clean Air Act regulatory guidance document released November 10 by the Environmental Protection Agency (EPA) recommends that state air regulators strongly emphasize energy efficiency in determining the most cost-effective and technically feasible greenhouse gas control technologies that must be used by utilities and other major industrial emitters when expanding existing facilities or building new ones.

The "best available control technology" (BACT) guidance is designed to help state air regulators prepare for the January 2 effective date of EPA’s controversial greenhouse gas tailoring rule, which requires states to address emissions of carbon dioxide (CO2) and other greenhouse gases in issuing "prevention of significant deterioration" (PSD) air permits to new or modified power plants and other big industrial plants.

The BACT guidance is not a regulation but a set of EPA recommendations on what emission control technologies states should consider as they address permit applications they receive on January 2 and thereafter. Despite its nonbinding nature, the guidance is a crucial piece of the EPA’s overall effort to trim U.S. greenhouse gas emissions under the tailoring rule.

Under the Clean Air Act, states have the responsibility to determine BACT on a plant-by-plant basis—meaning that BACT determinations are not uniform for every power plant but will be broadly different depending on a proposed plant’s configuration, the kind of fuel it burns, and many other factors.

Under a regulatory process developed jointly by states and the EPA over more than three decades, states undertaking BACT reviews consider a range of technology options, discard those they determine are technologically infeasible, rank the remaining options in terms of cost-effectiveness, and then select BACT for a given project. The project applicant then must use the chosen technologies in the new or modified facilities.

For example, the EPA noted that in some cases states should consider carbon capture and storage (CCS) technology in their BACT reviews because it is technologically feasible. However, the agency said that because CCS technology currently is so expensive, it is highly unlikely that states—at least in the near future—will require a coal-fired power plant to install CCS equipment.

Because states have never had to account for greenhouse gas emissions when they issue air permits, the guidance released Wednesday provides important signals to regulators—as well as to utilities and other industries—about what kinds of emission controls they should consider for new or modified facilities as they prepare for the January 2 effective date of the tailoring rule.

The guidance stresses that state regulators must emphasize the most efficient technologies when pondering BACT—a message clearly underscored in a Wednesday press briefing by EPA Assistant Administrator for Air and Radiation Gina McCarthy.

"Energy efficiency . . . isn’t a new concept and it’s been available as an option to reduce emissions in the BACT process all along," McCarthy said. "When we’re determining BACT for a new combustion source, we believe that permitting authorities should include in consideration measures that increase the overall efficiency of the source. In general, more efficient technology burns less fuel and as a result it produces less greenhouse gas emissions."

For example, the guidance notes that coal-fired boilers operating at "supercritical" steam conditions—which allow higher boiler temperatures and pressures—consume about 5% less fuel per megawatt-hour than boilers operating at "subcritical" steam conditions and thus will emit less CO2. Ultra-supercritical boiler technologies, which employ even higher boiler temperatures and pressures, use even less fuel than supercritical boilers and emit even less CO2, the agency said.

Although BACT determinations must be made on a plant-by-plant basis, it is reasonable to assume that many states will select supercritical or ultra-supercritical technology as among the best BACT options for new or modified coal plants. The guidance also notes that these technologies not only reduce greenhouse gas emissions, they also reduce emissions of other pollutants.

Since utilities face looming EPA rules requiring further reductions of sulfur dioxide, nitrogen oxides, and hazardous air pollutants such as mercury, it also is reasonable to expect that utilities seeking to build new coal plants in the future will likely face state BACT determinations that will require them to employ at least supercritical technology to facilitate reductions in a broad stream of pollutant emissions, including CO2.

However, state BACT determinations for supercritical technology at new coal plants may prompt more utilities to build plants fueled by natural gas, especially with gas prices expected to remain low for some time due to surging U.S. shale gas production.

The EPA also issued a set of companion "white papers" laying out in more detail information on a host of technology options states should consider for electric generating units and other facilities, such as large industrial and commercial boilers, pulp and paper mills, cement kilns, and refineries.

On a hot-button issue, the EPA deferred a decision on whether to include biomass co-firing in the list of technologies states should consider as they begin their BACT determinations, saying it will issue a separate guidance on this issue in January.

However, the EPA said that even before that separate guidance is issued, "permitting authorities may consider…the environmental, energy and economic benefits that may accrue from the use of certain types of biomass and other biogenic resources (e.g., biogas from landfills) for energy generation, consistent with existing air quality standards."

The EPA said that because the agency has determined in its annual inventory of U.S. greenhouse gas emissions that the land use, land-use change, and forestry sector is a net emissions sink, many stakeholders had asked the agency to omit biomass-related greenhouse gas emissions from calculations of emissions thresholds that would require a source to be subject to the tailoring rule. The EPA is likely to address that issue in the biomass guidance.

Agriculture Secretary Tom Vilsack praised the EPA for recommending that states consider the benefits of biomass as the agency finalizes its guidance document on that fuel.

"EPA’s step today acknowledges both the potential role of biomass in reducing greenhouse gas emissions and the need to ensure that energy policy properly accounts for both the sequestration and emissions associated with bioenergy," Vilsack said in a written statement Wednesday. "[The U.S. Department of Agriculture] will continue to work with EPA to ensure that the greenhouse gas benefits of biomass energy are properly accounted for under this Administration’s energy and climate policies."

The EPA’s tailoring rule faces a slew of lawsuits from industry and some states, who say the proposal will wreak havoc on the U.S. economy by forcing draconian and expensive technology options on new businesses. The EPA also likely will face an effort by congressional critics to overturn or delay the rule through legislation.

But McCarthy said the EPA is confident that the rule will survive the challenges.

"I guess I would be the first to say this is pretty much business as usual for the BACT process," she said. "There may be those who thought we would go outside the box of traditional BACT when looking at greenhouse gases, but this is a tool that has worked for the Clean Air Act for 30 years, it is well-established, it is known to states, and it will allow us to ensure that these largest emitters are as efficient as possible."

—Chris Holly is a reporter for The Energy Daily, where this first appeared.

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