Clean Air Interstate Rule CAIR

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Clean Air Interstate Rule (CAIR) Clean Air
Mercury Rule (CAMR) in Texas
Kim Herndon TCEQ February 23, 2006
Air Quality Planning and Implementation Division
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CAIR Affected Region and Emission Caps
Emission Caps (million tons) 2009/2010
2015 Annual SO2 3.6 2.5 (2010) Annual
NOx 1.5 1.3 (2009) Seasonal NOx .58
.48 (2009) For the affected region.
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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
• Texass 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
• Texass 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.

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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
  units 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).

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Region 6 State CAIR Budgets
State budgets do not include estimates of banked
emissions
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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

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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.

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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.

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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 years allocation, equal
  to 3 times the tons of excess emissions.

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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.

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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.
  Texass 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 States
  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
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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 years allocation, equal
  to 3 times the tons of excess emissions.

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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
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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).
• Texass Phase I cap is 4.657 tons.
• In the second phase, 20018-thereafter, the cap is
  15 tons nationwide.
• Texass 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.

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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

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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.

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CAMR State Budgets Region 6
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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

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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.

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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.)

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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
05
06
07
08
09
10
12
13
14
11
15
18
17
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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.
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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 EPAs 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.

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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.

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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
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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.

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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.

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Contact Information

• Kim Herndon
• TCEQ
• Air Quality Planning and Implementation Section
• 512/239-1421
• kherndon_at_tceq.state.tx.us
• CAIR/CAMR Web Page
• http//www.tceq.state.tx.us/implementation/air/si
  p/caircamr.html

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