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EPA’s Cross-State Air Pollution Rule

EPA’s Cross-State Air Pollution Rule. Air Quality Technical Advisory Committee August 4, 2011.

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EPA’s Cross-State Air Pollution Rule

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  1. EPA’s Cross-State Air Pollution Rule Air Quality Technical Advisory Committee August 4, 2011

  2. “Transport Rule” → “Cross-State Air Pollution Rule”(Note: this is now inaccurate according to the Federal Register version, but this presentation, prepared in July, will use the name in the pre-publication version.) • Overview • Upwind, Downwind: Significant Contribution to Nonattainment/Maintenance • How Does It Work? • FIPs and SIPs • Resources

  3. OVERVIEW

  4. Overview • Signed July 6, 2011. Published August 8, 2011 • Responds to the court ruling remanding the 2005 Clean Air Interstate Rule (CAIR) and the 2006 CAIR Federal Implementation Plans (FIPs). • Reduces emissions of SO2 and NOx from electric generating units (EGUs) over 25 MW in the eastern half of the United States (with some exemptions). • Its purpose is to address interstate transport for the 1997 ozone and 1997/2006 fine particulate National Ambient Air Quality Standards.

  5. Overview • Separate programs for SO2, annual NOx and Ozone Season NOx. Pennsylvania in all programs. • Total covered states (with supplemental rulemaking) to be 28. • Starts Jan. 1, 2012 when it replaces CAIR (May 1, 2012 for ozone season program). More stringent SO2 requirements in 2014 for some states (Group 1), including PA. • No carryover of allowances from Acid Rain Program, NOx SIP Call/NBP, or CAIR to CSPAR. • Covers 1081 facilities in region, 67 in Pennsylvania (172 units).

  6. Overview of Impacts • Cost/Benefit: “The $800 million spent annually on this rule in 2014, along with the roughly $1.6 billion per year in capital investments already under way as a result of CAIR, are improving air quality for over 240 million Americans and will result in $120 to $280 billion in annual benefits.” • Electricity Prices: “The effect on prices for specific regions or states may vary, but are well within the range of normal electricity price fluctuations.” Quotes from EPA presentation or preamble

  7. Effect on Air Quality: Interstate Transport and Local Attainment/Maintenance • Section 110(a)(2)(D)(i)(I) of the CAA requires the elimination of upwind state emissions that significantly contribute to nonattainment or interfere with maintenance of a NAAQS in another state. Elimination of these upwind state emissions may not necessarily, in itself, fully resolve nonattainment or maintenance problems at downwind state receptors. • “For the 2006 24-hour PM2.5 NAAQS, one area is projected to remain in nonattainment [after CSAPR](Liberty-Clairton) and three areas are projected to have remaining maintenance concerns after imposition of the Transport Rule (Chicago, Detroit, and Lancaster County).” • “While Houston is projected to still face nonattainment and Baton Rouge is projected to still face maintenance concerns with the 1997 ozone NAAQS, the Transport Rule improves air quality in these two areas and provides both health benefits and assistance for these local areas in meeting the NAAQS requirements.” Quotes from EPA presentation or preamble

  8. UPWIND, DOWNWIND Transport Effects Not Drawn to Scale

  9. Upwind/Downwind Linkages

  10. Significant Contribution to Nonattainment and Maintenance In Other States • State budgets for SO2, annual NOx, and ozone season NOx are directly linked to the measurement of each state’s significant contribution and interference with nonattainment and maintenance. • Significant contribution threshold is 1 percent of the NAAQS. • 18 states contribute 0.15 µg/m3 or more to downwind annual PM2.5 nonattainment. 12 states contribute 0.15 µg/m3 or more to downwind annual PM2.5 maintenance problems. PA’s contribution to nonattainment and maintenance of the annual PM2.5 standard is 0.54 µg/m3.  PA’s contribution to downwind nonattainment and maintenance is 2.85 and 2.29 µg/m3, respectively, for the 24-hour PM2.5 standard. • 26 states contribute 0.8 ppb or more to ozone maintenance problems in downwind states. PA’s contribution to downwind maintenance is 8.2 ppb. • Updated inventories and modeling tools led to updated conclusions regarding which states contribute to or interfere with maintenance.

  11. The Result: States Covered by CSAPR

  12. From Linkages to State Budgets • EPA accounts for both cost and air quality improvement, and gives independent meaning to “interfere with maintenance.” Unlike the NOX SIP Call and CAIR, where EPA’s significant contribution analysis had a regional focus, the methodology used in the Transport Rule focuses on state-specific factors. • There are four steps to EPA’s methodology: • identification of each state’s emission reductions available at ascending costs per ton as appropriate; • assessment of those upwind emission reductions’ downwind air quality impacts; • identification of upwind “cost thresholds” delivering effective emission reductions and downwind air quality improvement; and • enshrinement of the upwind emission reductions available at those cost thresholds in state budgets. • EPA revisited non-EGU reduction cost levels and verified that there are little or no reductions available from non-EGUs at costs lower than the thresholds that EPA has chosen ($500/ton for NOx and 2012 SO2, $2,300/ton for 2014 SO2).

  13. HOW DOES IT WORK?

  14. How the program works Group 1 SO2 Group 2 SO2 • Separate programs for NOx Annual, NOx Ozone Season, Group 1 SO2 and Group 2 SO2 • What’s a state budget? The remaining emissions from covered sources for the state in an average year once significant contribution to nonattainment and interference with maintenance have been eliminated. • An EGU source is required to hold one SO2 or one NOX allowance, respectively, for every ton of SO2 or NOX emitted during the control period. Banking of allowances for use or trading in future years is allowed.

  15. CSAPR Results Table III-2 – Projected SO2 and NOX Electric Generating Unit Emission Reductions in Covered States with the Transport Rule Compared to Base Case without Transport Rule or CAIR in million tons (Source: CSAPR Preamble, Executive Summary)

  16. Pennsylvania Emission Budgets

  17. Allocation of Allowances to Units • Once budgets were set for states, EPA used simple method to allocate allowances within state budgets. • New allocation method based on historic heat input but ensure that no unit’s allocations exceed that unit’s maximum historic emissions. • Change from emission-based approach proposed, which EPA acknowledges “would not be fuel-neutral or control-neutral.” • This approach maximizes transparency and clarity of allowance allocations, as it “relies on unmodified historic data reported directly by the vast majority of covered sources, whose designated representatives have already attested to the validity and accuracy of this data.” • Used in Acid Rain Program and NOx Budget Trading Program.

  18. Reductions and Budgets • EPA is setting aside a base 2 percent of each state’s budgets for allowance allocations for new (after 1/1/10) units plus an additional percentage on a state-by-state basis, ranging from 0 to 6 percent, for units planned to be built. There are none in PA, so PA’s New Unit Set Aside is 2 percent. • EPA establishes a procedure for making allocations for new units.

  19. “Air Quality Assured Trading” • EPA addresses inherent year-to-year variability in power generation, not related to controls or fuels. • EPA set a 1-year variability limit of 18 percent for the annual SO2 programs and 21 percent ozone-season for the ozone-season NOX program. • Allowances are allocated based on state-specific budgets without variability. • Interstate trading is allowed to account for variability but only within the states in a specific trading program (NOx annual or seasonal, SO2 Group 1 or 2). • In addition to covered sources being required to hold allowances sufficient to cover their emissions, the total sum of EGU emissions in a particular state cannot exceed the state budget with the state’s 1-year variability limit in any 1 year. State budget + variability limit = a state’s “assurance level.” • If any state’s EGU emissions in a control period exceed the state assurance level, then EPA applies additional criteria to determine which owners and operators of units in the state will be subject to an allowance surrender requirement. • If state exceeds assurance level, EPA requires surrender of additional allowances at a 2:1 ratio.

  20. FIPs and SIPs

  21. FIPs and SIPs • Approved CAIR SIPs will have no effect once CAIR sunsets. • EPA promulgated CSAPR Federal Implementation Plans to remain in place until/unless states have approved State Implementation Plans which could include: • Abbreviated CSAPR SIP to address allocation methodology only • Allowance allocation process only for 2013 • Full CSAPR SIP • Totally replace CSAPR with program to achieve required reductions • States may allocate allowances to CSAPR-covered units or “other entities.” States may address all or any one of the programs in a SIP and remain under the FIP for all or any of the programs. • Total amount of allowances allocated cannot exceed the budget, and state must adhere to EPA’s schedule for recordation purposes.

  22. FIPs and SIPs • State can bring in small EGUs (generator with a nameplate capacity equal to or greater than 15 MWe producing electricity for sale) but not non-EGUs. • For large non-EGUs, EPA will help states figure out how to meet NOx SIP Call obligations. • “States may want to address the CAIR NOX banks when developing the Transport Rule allowance allocations for control periods after 2012…” in SIP revisions under the budget.

  23. FIPs and SIPs • FIP will be in place for 2012. • For 2013 only, state can use narrower SIP revision, existing units only, if EPA is notified within 70 days after CSAPR publication and submit SIP revision to EPA by April 1, 2012. • SIP submittal deadlines: Dec. 1, 2012 for 2014 and 2015, Dec. 1, 2013 for 2016 and 2017, etc. • State must submit allowances to EPA by June 1, 2013 for 2014 and 2015, July 1, 2014 for 2016 and 2017, etc. • Pennsylvania does not have current regulatory authority to make allocations under CSAPR.

  24. WORK TO BE DONE

  25. Related Requirements • Interaction with existing PA rules will need to be analyzed. • EPA intends to conduct a technical analysis to determine if CSAPR satisfies Regional Haze BART-related requirements. • States will have the obligation to determine whether compliance with the Transport Rule would satisfy RACT requirements for EGUs in any nonattainment areas.

  26. CSAPR 2, 3, etc. • CSAPR lays out a process for determining each upwind state's emissions control responsibility. Each time the NAAQS are changed, EPA can apply this process and determine if interstate pollution transport contributes to the air quality problem and whether new emission reductions will be required from upwind states. • EPA has not yet determined whether the new fine particle NAAQS, currently scheduled to be proposed summer 2011, and the reconsidered ozone NAAQS, currently scheduled to be finalized in August 2011, will trigger additional emission reduction requirements from upwind states.

  27. RESOURCES

  28. Resources • www.epa.gov/airtransport • DEP: • Randy Bordner, Bureau of Air Qualityranbordner@state.pa.us or (717) 772-3921 • Kristen Furlan, Office of Chief Counselkfurlan@state.pa.us or 717-787-7060

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