EPA Issues GHG BACT Guidance

The Environmental Protection Agency (EPA) last week issued a long-awaited document that provides policy guidance to state agencies on how to start issuing permits to power plants and other stationary sources of greenhouse gases (GHG) when the rules take effect on Jan. 2. The document also provides technical information on how to implement the “Best Available Control Technology” (BACT) requirement for GHG sources applying to Prevention of Significant Deterioration (PSD) permits under the Clean Air Act—though it stops short of prescribing BACTs.

The action follows the EPA’s GHG Tailoring Rule, issued in May 2010, which focuses on the largest industrial sources—“those emitting nearly 70% of the greenhouse gas pollution from stationary sources.” The guidance serves as the next step in the rulemaking process, identifying what the EPA calls “cost-effective emission controls options for these large emitters.”

But though the guidance applies GHGs to long-standing PSD and Title V permitting requirements and processes—and it reiterates that BACT determinations will continue to be state- and project-specific decisions—it stops at prescribing GHG BACT for any source type. It also retreats from establishing a new approach for selecting BACT for GHG emissions—instead asking permitting authorities to continue using a five-step process used for other air pollutants.

“After taking into account technical feasibility, cost and other economic, environmental and energy considerations, permitting authorities should narrow the options and select the best one,” the EPA said in a press release last week. “EPA anticipates that, in most cases, this process will show that the most cost effective way for industry to reduce GHG emissions will be through energy efficiency.”

The agency also published a series of technical “white papers” summarizing available technologies. The documents focus on industrial sectors that emit the highest amount of GHGs and are expected to help states and local air pollution control agencies in BACT analyses.

Choosing BACT

As part of its analysis of technologies available to coal power plants, the agency notes that carbon capture and sequestration (CCS) is a “promising  technology.” However, because it is in the early stage of demonstration and commercialization—and though it should be identified as an available control measure in the first step of BACT selection—CCS “is currently an expensive technology and unlikely to be selected as BACT in most cases,” it said.

As for fuel switching—particularly from coal to natural gas—the guidance said,  “BACT should generally not be applied to regulate the applicant’s purpose or objective of the proposed facility.” It adds: “EPA continues to believe that permitting authorities can show in most cases that the option of using natural gas as a primary fuel would fundamentally redefine a coal-fired electric generating facility.”

Changing one type of coal for another is not considered to be a redefinition of the source, the guidance said, adding: “a permitting authority may consider that some types of coal can have lower emissions of GHG than other forms of coal, and they may insist that the lower emitting coal be evaluated in the BACT review.” This could mean, as law firm Troutman Sanders points out, that “plants burning subbituminous coal may now have to defend their fuel choice in future BACT determinations.”

Biomass, on the other hand, could be considered BACT “after taking into account environmental, energy, and economic considerations and state and federal policies that promote biomass for energy-independence and environmental reasons,” the agency said.

The EPA, which has been under fire because the Tailoring Rule did not exempt biomass power, last week explained it had not taken final action concerning the treatment of biomass combustion emissions for air permitting purposes because of a lack of “sufficient information.”

How the Rule Affects Title V Permits

According to the EPA, GHG-emitting sources with Title V permits will be required to address GHGs as part of their Title V permit actions starting Jan. 2. Existing sources would not need to include GHGs in their permits, however, until their permit is renewed or they make a major modification that increases emissions above 75,000 tons per year of carbon dioxide. “As a general matter, in the case of GHG emissions, the only applicable requirement a title V source would need to add to their permit would [be] best available control technology (BACT) requirements resulting from PSD review if the source triggered such requirements,” the EPA said. “Otherwise, there are some application requirements under title V that could require the source to describe or estimate their level of GHG emissions.”

The agency also said that no GHG-emitting facilities would be required to obtain Title V permits solely as a result of their GHG emissions until June 30, 2011. Starting July 1, 2011, a new source of GHG emissions that exceeds thresholds in the final Tailoring rule (100,000 tons per year of carbon dioxide for a new source and 75,000 tons per year resulting from a modification) would be required to get a Title V permit.

Evaluating BACT for GHGs along with other pollutants was expected to prolong permitting processes, the EPA admitted, though it added: “The amount of time required to address GHG permitting will vary from source to source just like it does for any pollutant subject to regulation.”

Concerns About Time, Money

The EPA noted in documents accompanying the guidance that it would work closely with permitting authorities to ensure they were ready to permit GHGs by Jan 2, 2011. “Only the largest emitters of GHGs, as outlined in the GHG Tailoring Rule, will need to obtain permits, necessary guidance, technical information, and support are available, and the states have the mechanisms in place to ensure permitting can occur without any interruptions,” it said.

But critics of rules governing GHG emissions expressed concerns about the guidance’s release just weeks before the Tailoring rule went into effect. Sen. Jay Rockefeller (D-W.Va.), a lawmaker who is sponsoring legislation to delay the EPA’s GHG rules by two years, said in a statement that he was concerned that the EPA has not provided [state agencies] enough time to process and understand rules that they will be required to comply with in just two months time. “Such an unstable regulatory environment prevents companies from making long range investment decisions that will put West Virginians back to work,” he said.

Senate Environment and Public Works ranking member James Inhofe (R-Okla.) also decried the rules’ potential effect on the economy, calling the guidelines "an important part of the Obama Administration’s backdoor cap-and-trade agenda, which seeks to impose the very rules and regulations that will make electricity more expensive, jobs more scarce, and keep the economy mired in stagnation.”  
The lawmakers’ concerns were echoed by industry groups. National Association of Manufacturers President John Engler said “manufacturers remain very concerned with the EPA’s overreaching agenda.” Manufacturing projects could be subject to a production moratorium of sorts since it is “questionable whether the state agencies have the resources or the capacity to expeditiously issue new permits,” he said.

Mounting Challenges

Texas officials said last week that they would refuse to implement the EPA’s GHG rules. The state, which has joined 16 other court challenges to the Tailoring Rule, said the EPA lacks the legal authority to regulate GHGs under the Clean Air Act.

Challenges to the rule are only expected to mount. Republicans are expected to attack the Obama administration’s environmental policies, dissecting the science that links carbon dioxide emissions to climate change.

Admitting that there were a number of different possible outcomes—including losing a legal challenge to the rule—the EPA said last week that it “can’t speculate about what the court will decide or how requirements to control GHG emissions may or may not be affected by the possible outcomes.”

Sources: POWERnews, EPA, Troutman Sanders, The Hill, Sen. Jay Rockefeller, Sen. James Inhofe, National Association of Manufacturers

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