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Clean Air Interstate Rule (CAIR) & Clean Air Mercury Rule (CAMR) in Texas

Clean Air Interstate Rule (CAIR) & Clean Air Mercury Rule (CAMR) in Texas. Kim Herndon TCEQ February 23, 2006. Air Quality Planning and Implementation Division. States controlled for fine particles (annual SO 2 and NO x ). States controlled for ozone (ozone season NO x ).

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Clean Air Interstate Rule (CAIR) & Clean Air Mercury Rule (CAMR) in Texas

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  1. Clean Air Interstate Rule (CAIR) & Clean Air Mercury Rule (CAMR) in Texas Kim Herndon TCEQ February 23, 2006 Air Quality Planning and Implementation Division

  2. States controlled for fine particles (annual SO2 and NOx) States controlled for ozone (ozone season NOx) States controlled for both fine particles (annual SO2 and NOx) and ozone (ozone season NOx) States not covered by CAIR CAIR: Affected Region and Emission Caps Emission Caps* (million tons) 2009/20102015 Annual SO2 3.6 2.5 (2010) Annual NOx 1.5 1.3 (2009) Seasonal NOx .58 .48 (2009) *For the affected region.

  3. CAIR Basics • CAIR will be implemented in two-phases for NOx and SO2 emission reductions with declining caps, affecting a total of 28 states and DC. • Regionwide caps are as follows (assuming all states choose to obtain reductions by controlling only EGUs): • -SO2 annual caps: 3.6 million tons in 2010 and 2.5 million in 2015 • Affects 23 states and DC • Texas’s annual cap is 320,946 tons in 2010 and 224,662 tons in 2015. • -NOx annual caps: 1.5 million tons in 2009 and 1.3 million in 2015 • Affects 23 states and DC • Texas’s annual cap is 181,014 tons in 2009 and 150,845 tons in 2015. • -NOx ozone season caps: 0.6 million tons in 2009 and 0.5 million in 2015 • Affects 25 states and DC • Texas not affected by the NOx ozone season program.

  4. CAIR Basics - continued • Applicability • A stationary, fossil-fuel-fired boiler or stationary, fossil-fuel-fired combustion turbine serving at any time, since the start-up of the unit’s combustion chamber, a generator with nameplate capacity of more than 25 MWe producing electricity for sale. • Any cogen unit serving a generator that supplies more than 1/3 of its potential electric output capacity and more than 25 MWe output to a utility power distribution system for sale (applied annually).

  5. Ozone Only Particles Only Ozone and Particles Not Subject to CAIR Region 6 State CAIR Budgets State budgets do not include estimates of banked emissions

  6. State Requirements under CAIR • States must submit a State Implementation Plan (SIP) that includes: • A description of control measures to meet the statewide NOx and SO2 budgets • Fully-adopted state rules for the reduction strategy with compliance dates providing for control by 2009 for NOx and by 2010 for SO2. • States may join the EPA administered trading program by adopting or referencing the model trading rule in state regulations or adopting regulations that mirror the necessary components of the model trading rule. • States’ responsibilities include: • Identification of sources, permitting and allocation of allowances • Verification of controls by reviewing monitoring plans and approving certification applications, and by observing QA testing and performing audits • Lead in pursuing enforcement actions

  7. State Requirements under CAIR - continued • SIPs are due September 11, 2006. • Mandatory emission monitoring and reporting for units begins on January 1, 2008 for NOx and January 1, 2009 for SO2. • Compliance begins on January 1, 2009 for NOx and January 1, 2010 for SO2. • State Budgets • State budgets are binding if a state does not choose to participate in the EPA-run cap and trade program. • Within the trading program, the budgets represent the number of allowances that a state receives and has discretion to allocate. • In any particular year, a state participating in the trading program may emit more or less than its budget, because EGUs can buy, sell or bank allowances.

  8. CAIR NOx Program • Phase I (2009-1014) Budget 181,014 tons annually • Phase II (2015-thereafter) Budget 150,845 tons annually • Per House Bill 2481, 2005 Texas Legislature • 9.5% of the NOx budget set-aside for new sources (in operation on or after 1/1/01) • New units receive allocations from the set-aside until 2015 based on a modified output basis that is defined in 40 CFR 96.142. • Heat Adjustment Factors - 90% for coal; 50% for natural gas, 30% for all others • Existing unit allocations are based on a the average of the three highest amounts of adjusted heat input from 2000-2004 and are adjusted for fuel type.

  9. CAIR NOx Program - continued • Beginning in 2015, new units with 5 years of historical data receive allocations based on converted output. Heat input will be multiplied by a btu/kWh conversion factor. • •Beginning in 2016, and every 5 years thereafter, allocations will be updated to reflect a revised baseline. • States must submit NOx allocations to EPA • • October 31,2006 for 2009 - 2014 • • June 1, 2011 for 2015 • • 18 months prior to the control period for 2016 and thereafter • • on an annual basis for allocations from the new source set-aside • If there are CAIR excess emissions, then the “tonnage equivalent” in CAIR allowances is deducted from the next year’s allocation, equal to 3 times the tons of excess emissions.

  10. CAIR Permits • Title V Permit will be required for each CAIR source as a complete and separable portion. • It must contain all applicable NOx Annual Trading Program and SO2 Trading Program Requirements for each CAIR unit at a CAIR source. • Must be submitted to the Executive Director by June 1, 2007 or 18 months prior to a new unit commencing operation. (Proposing to the Commission on March 1, 2006 for SO2.) • Renewals and revisions will be in accordance with the Title V operating permits regulations.

  11. CAIR Annual NOx Program: Early Emission Reduction Mechanism • Compliance Supplement Pool (CSP) • 200,000* CAIR annual NOx allowances of vintage 2009 • State shares of the CSP pool is based upon their share of the projected emission reductions. Texas’s share is 772 tons. • States can distribute CSP allowances based upon early emission reductions beyond existing requirements or need. • Distribution would be on a pro-rata basis should requests for CSP allowances exceed the State’s share of the CSP. • Qualifying early reductions take place in 2007 and 2008. • No restrictions on use of CSP allowances. * 200,000 total allowances includes the 1,503 Allowances that are the NJ and DE share of the CSP

  12. CAIR SO2 Program • Compliance is determined in 2 steps to meet the continuing requirements of Title IV and new requirements of CAIR. • Step 1: all Acid Rain deductions are made • Step 2: any additional deductions to complete CAIR compliance are done • If there are CAIR excess emissions, then the “tonnage equivalent” in CAIR allowances is deducted from the next year’s allocation, equal to 3 times the tons of excess emissions.

  13. CAIR SO2 Program: Retirement Ratios and Compliance • CAIR annual SO2 emission reductions achieved by requiring CAIR sources to retire title IV SO2 allowances at a ratio greater than one. • A “vintage year” is the first year in which an allowance can be used -- it is not the year in which a source uses it. • “CAIR SO2 Allowance” definition specifies different values based upon vintage years: • A compliance requirement, not a restriction on trading. • Retirement ratios do not apply to title IV sources outside the CAIR region. Vintage year…Authorizes…Implementing a ratio of… Pre-2010 SO2 allowance 1.00 tons of SO2 emissions 2010 – 2014 SO2 allowance 0.50 tons of SO2 emissions 2.00 - to - 1 2015 and Beyond SO2 allowance 0.35 tons of SO2 emissions 2.86 - to - 1

  14. Key Elements of CAMR • The Clean Air Mercury Rule establishes “standards of performance” limiting mercury emissions from new and existing coal-fired power plants in two phases and creates a market-based cap-and-trade program. • In the first phase, 2010-2017, the cap is 38 tons nationwide and emissions will be reduced by taking advantage of “co-benefit” reductions of CAIR for sulfur dioxide (SO2) and nitrogen oxides (NOx). • Texas’s Phase I cap is 4.657 tons. • In the second phase, 20018-thereafter, the cap is 15 tons nationwide. • Texas’s Phase II cap is 1.838 tons. • New coal-fired power plants (“new” means construction starting on or after January 30, 2004) will have to meet new source performance standards in addition to being subject to the caps. • EPA administered cap-and-trade program.

  15. State Requirements under CAMR • States must submit a State Plan: • A description of control measures to meet the statewide mercury budget. • Fully-adopted State rules for the mercury reduction strategy with compliance dates providing for control by 2010 • Plans are due November 17, 2006. • Each state must impose control requirements that demonstrate it will meet its assigned statewide mercury emissions budget. • States may join the trading program by adopting or referencing the model trading rule (40 CFR part 60, subpart HHHH) in state regulations or adopting regulations that mirror the necessary components of the model trading rule. Per HB 2481, Texas will be participating in the EPA administered cap-and-trade program. • States’ responsibilities include: • Identification of affected sources, permitting and allocation of allowances • Verification: reviewing monitoring plans and approving certification applications, observing QA testing and performing audits • Lead in pursuing enforcement actions

  16. State Requirements under CAMR - continued • Mandatory emission monitoring and reporting for existing units begins on January 1, 2009. • Compliance begins on January 1, 2010. • State Budgets • State mercury budgets are binding if a State does not choose to participate in the EPA-run cap and trade program. • Within the trading program, the mercury budgets represent the number of allowances that a state receives (and has discretion to allocate). • In any particular year, a state participating in the trading program may emit more or less than its budget, since it can buy, sell or bank allowances. • States that do not have existing coal-fired power were allocated a state budget of zero tons. • States can only control EGUs to meet their mercury budgets.

  17. CAMR State Budgets – Region 6

  18. Mercury Model Trading Rule: Allowance Allocations • Existing Units – In operation prior to January 1, 2001 • Heat input (adjusted for coal type) based allocations • Lignite multiplied by 3.0; Subbituminous coal multiplied by 1.25; and other types of coal multiplied by 1.0. • New Units - In operation January 1, 2001 or after • Modified output based allocations (heat input multiplied by a btu/kWh conversion factor) • New source set-aside • 5% 2010 through 2014, 3% 2015 and thereafter • Allocation Submittal Deadlines to EPA • October 31, 2006 for 2010 – 2014 • October 31, 2008, and each year thereafter, for the control period beginning seven years after the submittal deadline. • On an annual basis for allocations from the new source set-aside

  19. CAMR Permits • Title V Permit will be required for each CAMR source as a complete and separable portion. • It must contain all applicable Mercury Trading Program requirements for each CAMR source. • Must be submitted to the Executive Director by June 1, 2007 (Proposing to the Commission on March 1, 2006.) or 18 months prior to a new unit commencing operation. • Renewals and revisions will be in accordance with the Title V operating permits regulations.

  20. Coal Fired Power Plants in the U.S. • About 1,100 coal-fired generation units (~ 500 coal-fired power plants), representing about 305 GW of generation capacity • Existing Controls: • Almost all units have particulate matter (PM) control devices • About one-third of capacity has SO2 scrubbers • Most have initial NOx controls (low-NOx burners) • About one-third of the capacity (primarily in the east) will have advanced NOx control (SCR) when NOx SIP call is fully implemented (Information provided by the United States Environmental Agency.)

  21. CAIR and CAMR Implementation Timeline CAIR Phase I: CAIR NOx Programs (ozone-season and annual) (09) Early Reductions for CAIR NOx ozone-season program and CAIR SO2 program begin immediately because NOx SIP Call and title IV allowances can be banked into CAIR CSP Early Emission Reduction Period (annual CAIR NOx program) (07 and 08) SO2 Monitoring and Reporting Required (09) States develop SIPs (18 months) NOx Monitoring and Reporting Required (08) Phase II: CAIR NOx and SO2 Programs Begin (15) SIPs Due (Sep 06) Phase I: CAIR SO2 Program (10) CAIR Rule signed 08 05 06 07 09 10 11 12 13 14 15 16 17 18 Hg Monitoring and Reporting Required (09) CAMR Rule signed Phase II: Hg Program (18) SPs Due (Sep 06) Phase I: Hg Program (10) States develop SPs (18 months) CAMR Note: Dotted lines indicate a range of time.

  22. HB 2481 – Overview for CAIR & CAMR Implementation -Reductions for CAIR and CAMR may only come from electric generating units (EGUs); -Permanent allocations will be given to EGUs at no cost; -Use EPA’s allocation methodology for SO2 and mercury; -Use the Texas Legislature allocation methodology for NOx; -The commission shall maintain a special reserve for new EGUs (commencing operation after January 1, 2001) as defined by EPA for NOx; and -The bill only applies while federal rules are enforceable, and it does not limit the authority of the commission to implement more stringent emission controls, if needed.

  23. HB 2481 - continued • The commission was required to take “reasonable and appropriate” steps to exclude the West Texas Region and the El Paso Region, as defined by the Utility Code, from CAIR. • A Petition for Reconsideration was submitted to EPA on July 11, 2005. • The EPA should make a final decision by March 15, 2006 on all outstanding Petitions for Reconsideration.

  24. The commission is required to conduct a mercury study that will include: -cost of additional controls to both plant owners and consumers; -fiscal impact on the stated of higher levels of mercury emissions between 2005-2018; and - to consideration the impact of trading mercury emissions to local communities.The findings must be reported to the Texas legislature by September 1, 2006. HB 2481 - continued

  25. TCEQ CAIR and CAMR Timelines • Commission to consider proposal March 1, 2006. • Comment Period – March 17 – April 17, 2006. • Public Hearing – April 11, 2006 in Austin at TCEQ. • Commission to consider adoption July 12, 2006. • Submit CAIR SIP & CAMR State Plan to EPA by September 11, 2006. • Allocations due to EPA for EGUs by October 31, 2006 for CAIR and CAMR.

  26. CAIR and CAMR Updates • EPA is finalizing changes to CAIR that should be made available on March 15, 2006. • EPA has stated that decisions on pending Petitions for Reconsideration will be final March 15, 2006. • EPA is finalizing changes to CAMR. However, no time frame has been given when it will be available. • What does this mean? Texas will have to resubmit an amended CAIR SIP and CAMR State Plan.

  27. Contact Information • Kim Herndon TCEQ Air Quality Planning and Implementation Section 512/239-1421 kherndon@tceq.state.tx.us • CAIR/CAMR Web Page: http://www.tceq.state.tx.us/implementation/air/sip/caircamr.html

  28. ??? QUESTIONS ??? Air Quality Planning and Implementation Division

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