SS16: GHG BACT Threshold Brief Summary: This measure would lower
SS16: GHG BACT Threshold Brief Summary: This measure would lower the threshold at which facilities subject to the Air District’s New Source Review permit program must implement the “Best Available Control Technology” to control their greenhouse gas (GHG) emissions below the current 75,000 tons per year (tpy) CO2e. In addition, this threshold would apply to all regulated facilities, not just “major” facilities. Purpose: The purpose of this control measure is to lower GHG emissions in the Bay Area. Source Category: Stationary Source – all regulated facilities Regulatory Context and Background: The Air District’s New Source Review (NSR) program is a comprehensive air permitting program that applies to a wide-range of stationary source facilities within the Air District’s regulatory jurisdiction. The program requires a facility to obtain a permit and implement state-of-the-art air pollution control technology whenever a facility installs a new source of air emissions or makes a modification to an existing source. The federal NSR program requirements were established in the 1977 federal Clean Air Act (CAA) Amendments. The CAA requires local programs to implement requirements through the CAA’s system of “cooperative federalism,” under which each state or local agency develops and adopts an NSR program that meets (or exceeds) the minimum requirements of the federal NSR program. These programs are submitted to the United States Environmental Protection Agency (EPA) for review and approval. In 1988, the California legislature enacted the California Clean Air Act, which imposes additional state-law NSR permitting requirements that go beyond the federal NSR program in certain aspects. Each air district in California is required to adopt an NSR program that meets both the additional state-law requirements and the federal NSR program requirements; these programs are subject to review and approval by the California Air Resources Board. The Air District’s NSR program operates within the overlay of these state and federal requirements. The Air District’s NSR program is set out in Regulation 2-2 and is the Air District’s fundamental permitting requirement for regulating criteria pollutant emissions. It requires facilities to obtain an NSR permit for any new or “modified” source of air emissions, and to satisfy a number of air pollution control requirements in order to be eligible for the permit. 1 These requirements vary “Modified source” is defined in Regulation 2-1-234 as any physical change, change in the method of operation, increase in throughput or production, or addition to a source that will result in either (i) an increase in the source’s permitted emissions (or for “grandfathered” sources that are not subject to any permit limits, in increase in the source’s physical capacity to emit air pollutants); or (ii) a significant increase in the source’s actual emissions. The second element of this definition was added by the Air District in 2012 and will become effective upon approval by 1
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somewhat depending on the pollutant involved. For pollutants for which the region is not in attainment of the applicable air quality standards (“non-attainment” pollutants), the NSR requirements are generally more stringent. For pollutants for which the region is in attainment of the applicable air quality standards (“attainment” pollutants), the requirements are generally less stringent. The requirements for attainment pollutants are referred to as “Prevention of Significant Deterioration” (PSD) requirements and include: (i) using the “Best Available Control Technology” (BACT) to limit emissions; and (ii) conducting an air quality impact analysis to ensure that the source being permitted will not jeopardize continued attainment of the applicable air quality standards or cause other adverse air quality impacts. For historical reasons, NSR implementation in the Bay Area has always been split between the non-attainment NSR requirements, implemented through the Air District’s NSR program, and the attainment PSD requirements, administered under EPA’s federal PSD regulations. Among the Air District’s revisions to Regulation 2-2 in December 2012 was the adoption of the PSD requirements outlined in the federal NSR program into the Air District’s regional NSR program.2 The December 2012 amendments are currently under review by EPA, and they will take effect once EPA approves them. Once EPA approves the new PSD requirements in the Air District’s regulations, the Air District will take over administering the CAA’s PSD requirements under its own regulations, and there will be only one set of rules governing all aspects of NSR regulation in the Bay Area. It is important to note that PSD is the element of the NSR program under which GHGs are regulated by the EPA. The PSD provisions require new and modified sources at “major” facilities that will increase GHG emissions by 75,000 tpy or more of CO2e to go through the PSD permitting process and implement BACT to reduce their GHG emissions.3 More specifically, if a facility is a “major” facility under the federal CAA, it must comply with the PSD BACT requirement (i) for any new source that will emit 75,000 tpy or more CO2e, and (ii) for any modification to an existing source that will result in a net increase in emissions of 75,000 tpy or more CO2e. The Air District incorporated the federal 75,000 tpy CO2e threshold into its own NSR regulations in the 2012 Amendments to Regulation 2-2. Since these 2012 amendments, it has become apparent that a lower threshold may be appropriate for GHG permitting for the Bay Area. Specifically, an evaluation of all permit applications that the Air District has received over the past ten years indicates that reducing the threshold below the current 75,000 tpy CO2e will subject a substantial additional amount of GHG emissions to the BACT requirement. Staff continues to investigate an appropriate revised threshold.
EPA. In addition, this element applies only to facilities over the “major facility” thresholds (100 tpy or 250 tpy, depending on the facility). 2 Only the federal Clean Air Act imposes PSD requirements; this is not an element required by the California program. 3 A “major” facility is one that emits 100 tpy or more of a regulated air pollutant other than GHGs (or 250 tpy or more for certain source categories). 2
In addition, Air District staff is proposing to make the revised threshold apply at all facilities, not just facilities that have emissions of regulated air pollutants over the 100/250 tpy federal “major” facility threshold. Staff believes facilities under this latter threshold should be subject to regulation if their GHG emissions are of sufficient magnitude. While the EPA is limited to regulating GHG emissions only from major facilities, the Air District is not precluded from adopting the more stringent approach under its rulemaking authority under the California Health and Safety Code.4 It should be noted that the while a new lower threshold would require more sources to implement BACT to limit their GHG emission, as with the existing BACT requirement, the regulations will not prescribe exactly what technology must be applied in any particular case. Specifically, as with the current regulations, that determination will be made on a case-by-case basis by evaluating the most stringent level of GHG emissions control that can feasibly be implemented for each individual source being permitted, taking into account considerations such as energy impacts, any ancillary environmental impacts, and economic impacts. Therefore, the BACT requirement for GHGs under a revised CO2e threshold will work just as it does under the current threshold. Implementation Actions: The Air District would create a new subsection in Section 2-2-304, the provision in Regulation 22 that sets forth the PSD BACT requirement. Section 2-2-304, as enacted in the December 2012 amendments, incorporates the federal PSD BACT requirement by reference, including the 75,000 tpy CO2e thresholds discussed above. The proposed revisions would create two subsections in Section 2-2-304: (i) Subsection 2-2-304.1, which would continue to incorporate the federal PSD BACT requirement by reference; and (ii) Subsection 2-2-304.2, which would be the new requirement to apply BACT at a lower threshold. If adopted by the Air District’s Board of Directors, the proposed new CO2e threshold would take effect upon EPA approval of the December 2012 NSR program amendments. Any new CO2e threshold would build off of the Air District PSD program requirements that were adopted in those amendments, and in particular the PSD BACT requirements in Section 2-2-304 described above. As the proposed new CO2e threshold would be an element of those 2012 provisions, it could not take effect until the 2012 provisions take effect upon EPA’s approval. Emission Reductions: Emission reductions will result from additional sources being required to implement GHG BACT under the lower threshold. However, it is difficult to predict with certainty what the impacts will be for these sources, as the BACT requirement does not prescribe any specific emissions performance level. Generally speaking, however, Air District staff expect that overall GHG emission reductions from a new lower threshold will be modest at first, but will become
4
The 2014 Supreme Court’s decision in Utility Air Regulatory Group v. EPA (134 S.Ct. 2427) held that the EPA cannot regulate GHGs under the CAA from facilities that do not exceed this major facility threshold. 3
significant over time as new and more effective GHG emissions control technologies become available. Exposure Reductions: None. Emission Reduction Trade-Offs: None. Costs: This proposed change would be expected to result in cost impacts as additional sources would be required to implement BACT under the lower threshold. However, it is difficult to predict with certainty what the impacts will be for these sources, as the BACT requirement does not prescribe any specific course of action these sources must take to comply and what cost impacts would result. Overall, additional costs for regulated facilities will most likely be fairly limited in the near term for the same reasons that GHG emission reduction impacts will most likely be limited in this time frame. In the longer term, however, lowering the BACT threshold for GHGs may well involve increased compliance costs as new technologies become more widely used. It is worth noting, however, that the BACT requirement has a built-in cost-effectiveness test, as specified in CAA Section 169’s mandate to take into consideration “economic impacts and other costs.” Co-Benefits: For many facilities, reduction of GHG emissions will likely reduce criteria air pollutants frequently co-emitted in processes that typically generate GHGs (e.g., combustion), particularly if energy efficiency is selected as BACT. Issue/Impediments: None
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somewhat depending on the pollutant involved. For pollutants for which the region is not in attainment of the applicable air quality standards (“non-attainment” pollutants), the NSR requirements are generally more stringent. For pollutants for which the region is in attainment of the applicable air quality standards (“attainment” pollutants), the requirements are generally less stringent. The requirements for attainment pollutants are referred to as “Prevention of Significant Deterioration” (PSD) requirements and include: (i) using the “Best Available Control Technology” (BACT) to limit emissions; and (ii) conducting an air quality impact analysis to ensure that the source being permitted will not jeopardize continued attainment of the applicable air quality standards or cause other adverse air quality impacts. For historical reasons, NSR implementation in the Bay Area has always been split between the non-attainment NSR requirements, implemented through the Air District’s NSR program, and the attainment PSD requirements, administered under EPA’s federal PSD regulations. Among the Air District’s revisions to Regulation 2-2 in December 2012 was the adoption of the PSD requirements outlined in the federal NSR program into the Air District’s regional NSR program.2 The December 2012 amendments are currently under review by EPA, and they will take effect once EPA approves them. Once EPA approves the new PSD requirements in the Air District’s regulations, the Air District will take over administering the CAA’s PSD requirements under its own regulations, and there will be only one set of rules governing all aspects of NSR regulation in the Bay Area. It is important to note that PSD is the element of the NSR program under which GHGs are regulated by the EPA. The PSD provisions require new and modified sources at “major” facilities that will increase GHG emissions by 75,000 tpy or more of CO2e to go through the PSD permitting process and implement BACT to reduce their GHG emissions.3 More specifically, if a facility is a “major” facility under the federal CAA, it must comply with the PSD BACT requirement (i) for any new source that will emit 75,000 tpy or more CO2e, and (ii) for any modification to an existing source that will result in a net increase in emissions of 75,000 tpy or more CO2e. The Air District incorporated the federal 75,000 tpy CO2e threshold into its own NSR regulations in the 2012 Amendments to Regulation 2-2. Since these 2012 amendments, it has become apparent that a lower threshold may be appropriate for GHG permitting for the Bay Area. Specifically, an evaluation of all permit applications that the Air District has received over the past ten years indicates that reducing the threshold below the current 75,000 tpy CO2e will subject a substantial additional amount of GHG emissions to the BACT requirement. Staff continues to investigate an appropriate revised threshold.
EPA. In addition, this element applies only to facilities over the “major facility” thresholds (100 tpy or 250 tpy, depending on the facility). 2 Only the federal Clean Air Act imposes PSD requirements; this is not an element required by the California program. 3 A “major” facility is one that emits 100 tpy or more of a regulated air pollutant other than GHGs (or 250 tpy or more for certain source categories). 2
In addition, Air District staff is proposing to make the revised threshold apply at all facilities, not just facilities that have emissions of regulated air pollutants over the 100/250 tpy federal “major” facility threshold. Staff believes facilities under this latter threshold should be subject to regulation if their GHG emissions are of sufficient magnitude. While the EPA is limited to regulating GHG emissions only from major facilities, the Air District is not precluded from adopting the more stringent approach under its rulemaking authority under the California Health and Safety Code.4 It should be noted that the while a new lower threshold would require more sources to implement BACT to limit their GHG emission, as with the existing BACT requirement, the regulations will not prescribe exactly what technology must be applied in any particular case. Specifically, as with the current regulations, that determination will be made on a case-by-case basis by evaluating the most stringent level of GHG emissions control that can feasibly be implemented for each individual source being permitted, taking into account considerations such as energy impacts, any ancillary environmental impacts, and economic impacts. Therefore, the BACT requirement for GHGs under a revised CO2e threshold will work just as it does under the current threshold. Implementation Actions: The Air District would create a new subsection in Section 2-2-304, the provision in Regulation 22 that sets forth the PSD BACT requirement. Section 2-2-304, as enacted in the December 2012 amendments, incorporates the federal PSD BACT requirement by reference, including the 75,000 tpy CO2e thresholds discussed above. The proposed revisions would create two subsections in Section 2-2-304: (i) Subsection 2-2-304.1, which would continue to incorporate the federal PSD BACT requirement by reference; and (ii) Subsection 2-2-304.2, which would be the new requirement to apply BACT at a lower threshold. If adopted by the Air District’s Board of Directors, the proposed new CO2e threshold would take effect upon EPA approval of the December 2012 NSR program amendments. Any new CO2e threshold would build off of the Air District PSD program requirements that were adopted in those amendments, and in particular the PSD BACT requirements in Section 2-2-304 described above. As the proposed new CO2e threshold would be an element of those 2012 provisions, it could not take effect until the 2012 provisions take effect upon EPA’s approval. Emission Reductions: Emission reductions will result from additional sources being required to implement GHG BACT under the lower threshold. However, it is difficult to predict with certainty what the impacts will be for these sources, as the BACT requirement does not prescribe any specific emissions performance level. Generally speaking, however, Air District staff expect that overall GHG emission reductions from a new lower threshold will be modest at first, but will become
4
The 2014 Supreme Court’s decision in Utility Air Regulatory Group v. EPA (134 S.Ct. 2427) held that the EPA cannot regulate GHGs under the CAA from facilities that do not exceed this major facility threshold. 3
significant over time as new and more effective GHG emissions control technologies become available. Exposure Reductions: None. Emission Reduction Trade-Offs: None. Costs: This proposed change would be expected to result in cost impacts as additional sources would be required to implement BACT under the lower threshold. However, it is difficult to predict with certainty what the impacts will be for these sources, as the BACT requirement does not prescribe any specific course of action these sources must take to comply and what cost impacts would result. Overall, additional costs for regulated facilities will most likely be fairly limited in the near term for the same reasons that GHG emission reduction impacts will most likely be limited in this time frame. In the longer term, however, lowering the BACT threshold for GHGs may well involve increased compliance costs as new technologies become more widely used. It is worth noting, however, that the BACT requirement has a built-in cost-effectiveness test, as specified in CAA Section 169’s mandate to take into consideration “economic impacts and other costs.” Co-Benefits: For many facilities, reduction of GHG emissions will likely reduce criteria air pollutants frequently co-emitted in processes that typically generate GHGs (e.g., combustion), particularly if energy efficiency is selected as BACT. Issue/Impediments: None
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