Calculating Emission Increases for Purposes of NSR Applicability

1
Calculating Emission Increases for Purposes of
NSR Applicability
2
Calculating Emission Increases

• Sources Must Use Annual Emission
• The calculation includes emissions increases
  related to projects to recapture lost utilization
  even if the maximum hourly rate is not increased.
  
• A Pre-Construction Requirement
• The projection of emissions must be made prior to
  any construction activities.
• Cinergy To allow otherwise would eviscerate
  the pre-construction nature of NSR.
• Actual emissions after are irrelevant where the
  pre-projection indicates a significant net
  emissions increase.

3
Calculating Emissions Increases

• Regardless of any such preconstruction
  projections, a major modification results if the
  project causes a significant emissions increase
  and a significant net emissions increase.
• See e.g., 40 CFR 52.21(a)(iv)(b).

4
PSD Applicability Tests

• PSD applies when the post-change emissions exceed
  the pre-change emissions by a significant amount.
  
• Pre- 2002 NSR Reform Emission Increase Test
• Non-EGUs Actual Emissions-to-PTE
• EGUs Actual Emissions-to-Representative Future
  Actual Emissions (re 1992 WEPCO rule)
• NOTE For changes made before the NSR I Reform
  rules.
• Post- 2002 NSR Reform Two Alternate Tests for
  all
• Baseline Actual Emissions-to-PTE
• Baseline Actual Emissions-to-Projected Actual
  Emissions
• NOTE Source can choose for existing units but
  new units must use Baseline-to-PTE test to
  calculate increases.

5
PSD Baseline Emissions

• Baseline Emissions
• One half of the applicability equation (i.e.,
  post-change emissions baseline emission
  increase or decrease).
• Baseline Emissions for Changes Prior to 2002 NSR
  Reform
• Actual Emissions determines the pre-change
  emissions.
• Baseline Emissions for Changes After 2002 NSR
  Reform
• Baseline Actual Emissions determines the
  pre-change emissions.
• Baseline Actual Emissions are different
  depending on whether the source is an EGU or not.

6
Baseline Emissions

• EGUs Baseline Actual Emissions
• Equal to the emissions from any 24 consecutive
  months within the 5 previous years
• Must be based on adequate emissions data
• Must be adjusted for non-compliant emissions
• Include quantifiable fugitive emissions and
• Include start-up, shutdown and malfunction
  emissions to the extent legally allowed.

7
Baseline Emissions

• Non- EGUs Baseline Actual Emissions
• Equal to the emissions from any 24 consecutive
  months within the 10 previous years
• Must be based on adequate emissions data
• Must be adjusted for non-compliant emissions
• Must be adjusted for currently applicable
  regulations
• Include quantifiable fugitive emissions and
• Include start-up, shutdown and malfunction
  emissions to extent legally allowed.

8
Baseline Emissions

• Key Principles for Baseline Actual Emissions
• Good emission data is needed to establish the
  baseline or pre-change emissions.
• Baseline emissions should be corrected for
  non-compliance (e.g., startups exceeding emission
  limits).
• For Non- EGUs, baseline emissions must be
  adjusted downward for currently applicable
  requirements (e.g., CD requirements)

9
Post Change Emissions

• Post-Change Emissions
• Other half of the applicability equation (i.e.,
  post-change emissions baseline emissions
  increase or decrease).
• Post-Change Emissions Prior to 2002 Reform
• Non-EGUs- PTE determines the post-change
  emissions- generally.
• EGUs- Representative Future Actual Emissions
  determines the post-change emissions.
• Post- Change Emissions After 2002 Reform
• PTE or
• Projected Actual Emissions

10
Post Change Emissions

• Projected Actual Emissions
• Maximum annual rate, in tons per year
• Projected for any one of
• The 5 years following the date the project
  resumes operation after the project OR
• The 10 years following the date the project
  resumes operation if
• The project increases the units design capacity
  or its potential to emit and
• Full utilization would result in a significant
  emissions increase.

11
Post Change Emissions

• Projected Actual Emissions (contd)
• Includes fugitive emissions only if the source is
  a CAA 302(j) listed source- see e.g.,
  52.21(b)(1)(iii).
• Portland cement plants
• Kraft pulp mills
• HF, H2SO4 plants
• Refinieries
• Start-up, shutdown and malfunction emissions
  included.

12
Post Change Emissions

• Projected Actual Emissions are calculated as the
  product of
• The hourly emission rate based on the units
  operational capabilities following the change
  taking into account any legally enforceable
  restriction that could affect the hourly emission
  rate following the change AND
• The projected level of utilization (historical
  annual utilization).
• 67 Fed. Reg. 80,186, 80,196.

13
Post Change Emissions The Demand Growth
Exclusion

• The owner/operator may exclude from its Projected
  Actual Emissions those emissions
• that an existing unit could have accommodated
  during the consecutive 24-month period used to
  establish the baseline actual emissions AND
• that are also unrelated to the particular
  project, including any increased utilization due
  to product demand growth.
• 40 CFR 52.21(b)(41)(ii)(c).

14
Post Change Emissions The Demand Growth Exclusion

• Thus, even if the operation of an emissions
  unit to meet a particular level of demand could
  have been accomplished during the baseline
  period, but the increase is related to the
  changes made at the unit, then the emissions
  increases resulting from the increased operation
  must be attributed to the project, and cannot be
  subtracted from the projection of the projected
  actual emissions.
• 67 Fed. Reg. at 80,203

15
Post Change Emissions The Demand Growth Exclusion

• Principles of the Demand Growth Exclusion from
  WEPCO
• Source must be legally and physically able to
  meet the utilization in the baseline without the
  change.
• Any change that significantly alters the
  efficiency of a facility must be included in the
  projected emissions.
• If efficiency improvements are the predominate
  cause of the emissions increase, then DGE doesnt
  apply.
• Must be consistent with the current assumptions
  regarding the sources emissions used in the SIP.
• 57 Fed. Reg. at 32,328

16
Post Change Emissions The Demand Growth Exclusion

• Principles of the Demand Growth Exclusion from
  2002 NSR Reform Premable
• Increase utilization that follows increases in
  reliability, lower operating costs or improving
  other operational characteristics should be
  attributable to the change.
• In discussion of the provisions, EPA made it
  clear that the source bears the burden of
  demonstrating that the DGE applies.
• A source may subtract emission increases from the
  projected actual emissions if the source can
  show that the unit could have achieved the
  necessary utilization and the increase in
  emissions is not related.
• It is important that the source retain a record
  of all information available to support its
  initial claim.

17
Post Change Emissions The Demand Growth Exclusion

• While EPA projected that it would be difficult
  to separate demand growth increases from a
  project, there are situations where the
  distinction can be clearly made.
• Skyrocketing demand because the product becomes a
  fad
• Mishaps at a factory , causing production
  increases at remaining supplier sources
• Opening of new markets and
• Decrease in raw material prices.
• Reconsideration TSD, pp. 18-19.

18
Post Change Emissions The Demand Growth
Exclusion

• New York I
• NSR requires a causal link between the proposed
  change and any post change increase in
  emissions.
• Not a per se exclusion for demand growth-
  emissions must be unrelated to the change to be
  excluded

19
Post Change Emissions The Demand Growth
Exclusion

• In re Tennessee Valley Authority (2000)
• EAB found that increased utilization and the
  resulting increased emissions were related to the
  change.
• EAB focused on whether TVA had a pre-project
  intention to operate more after the change.
• EPA used TVA pre-project pronouncements to show
  intent to operate more only after the change.

20
Post Change Emissions The Demand Growth
Exclusion

• Cinergy (S.D. Ind. 2005)
• Projects at issue increased the hours that the
  units were available to operate.
• DGE is another way of emphasizing, and
  clarifying, the causation element.
• Affirmed EPAs position that any excluded
  emissions must be completely unrelated to the
  physical change and caused entirely by
  independent factors.
• Rejected industrys claim that an increase is
  considered only if it could not have occurred
  but for the physical change.

21
Post Change Emissions

• Key Principles
• Inclusion of startup, shutdown and malfunction
  emissions should be scrutinized.
• Projection in the post change emissions occurs in
  the level of utilization, not the hourly
  emission rate.
• Emissions must be completely unrelated to the
  change to be excluded from the post-change
  emissions.