With the January 2, 2011 start date for regulation of greenhouse gases (GHG) under the Clean Air Act fast approaching, the United State Environmental Protection Agency, on November 10, issued its much anticipated GHG permitting guidance. The document, titled “PSD and Title V Permitting Guidance for Greenhouse Gases” (“Guidance”), outlines how EPA plans to incorporate GHGs into its existing prevention of significant deterioration (PSD) and Title V permitting framework. The guidance describes how PSD applicability determinations will be conducted for GHG emitters and provides an early look into what EPA will consider as the best available control technology (BACT) for controlling GHG emissions. At this time, EPA proposes permit requirements only for those sources that have the potential to emit 75,000 tons per year (tpy) CO2 equivalent (CO2e). BACT determinations for GHG will continue to be case-by-case determinations, and the Guidance identifies two broad categories of controls: increased efficiency and carbon capture and sequestration.

Background

The path to the January 2, 2011 start date for regulation of GHGs began on December 15, 2009, when EPA found that the emission of GHGs endanger the public health and welfare and that the combined emissions of GHGs from new motor vehicles cause and contribute to air pollution that endangers public health and welfare. 74 FR 66496 (Dec. 15, 2009). Following soon on the heels of the so-called “endangerment” and “cause and contribute” findings, EPA issued the final light duty vehicle rule on May 7, 2010 that established GHG emission standards for vehicles under the Clean Air Act. 75 FR 25324 (May 7, 2010). Because GHGs were to be regulated under the Clean Air Act specifically through the light duty vehicle rule, they became subject to regulation generally for all sources, including through the PSD and Title V programs. In order to limit the potential effect of GHG regulations under the PSD and Title V programs, EPA issued the “Tailoring Rule” on June 3, 2010 to phase in implementation of GHG regulation under those programs. 75 FR 31514 (June 3, 2010).

PSD Applicability

EPA has identified the first two phases under the Tailoring Rule for applicability of GHG regulations. Beginning on January 2, 2011, the following sources will be subject to PSD permitting requirements for GHG emissions:

• For new sources, if the source is otherwise subject to PSD requirements for another regulated pollutant AND the source has a potential to emit (PTE) of equal to or greater than 75,000 tons per year (tpy) CO2 equivalent (CO2e).
• For modified sources, if the modification is otherwise subject to PSD requirements for another regulated pollutant AND has a GHG emission increase and net emissions increase that is both equal to or greater than 75,000 tpy CO2e AND is greater than zero tpy on a mass basis.

Beginning on July 1, 2011, additional categories of sources will be subject to PSD permitting requirements for GHG emissions:

• For new sources, if the PTE for GHGs is equal to or greater than 100,000 tpy CO2e AND the applicable major source threshold (100 or 250 tpy depending on source category) on a mass basis.
• For modified sources, if either (1) the existing source has a PTE equal to or greater than 100,000 tpy CO2e AND the applicable major source threshold (100 or 250 tpy depending on source category) on a mass basis AND the modification has a GHG emission increase and net emissions increase that is both equal to or greater than 75,000 tpy CO2e AND is greater than zero tpy on a mass basis; or (2) the source is an existing minor source for PSD AND the modification alone has actual or potential GHG emissions equal to or greater than 100,000 tpy CO2e AND the applicable major source threshold (100 or 250 tpy depending on source category) on a mass basis.

GHG BACT

Perhaps more important than the clarification of PSD applicability, the Guidance outlines BACT analyses for GHG emissions. EPA’s Guidance is clear that the determination of BACT for GHGs should be conducted in the same, case-by-case manner as is done for any other PSD regulated pollutant. EPA recommends using the five-step, top-down process originally identified in the 1990 NSR Workshop Manual for GHG BACT determinations.

In its analysis of how the five-step, top-down process would apply to GHG controls, EPA identified two broad categories of potential control measures: efficiency and carbon capture and sequestration (CCS). CCS is described as an add-on pollution control technology that is “available” for large CO2 emitters. As such, CCS should generally be included as a control technology in the first step of the BACT process – “Identify All Available Control Options.” However, EPA admits that it expects that for most sources, the cost of capture and sequestration technologies may, at this time, make them infeasible as BACT. As such, it is unlikely that at this time, CCS will be considered BACT for GHG emissions.

Efficiency measures, on the other hand, are likely to be considered both technologically achievable and economically feasible and are discussed at great length in EPA’s new guidance. EPA describes two types of efficiency measures in the guidance. First, there are those measures that maximize the efficiency of emissions units (i.e., using supercritical instead of subcritical steam pressures in coal-fired boilers). Second, EPA defines efficiency as the improved use of thermal energy and electricity generated and used on site. This focuses on increasing the efficiency of the loads at the facility that use the most electricity or thermal energy. In both situations, the purpose of the efficiency measures is to reduce the amount of fuel (coal, natural gas or other) necessary for a facility to generate the same output. By reducing the amount of fuel consumed, the amount of emissions of all pollutants, but in particular GHG emissions, will be reduced. Permit applicants subject to PSD requirements for GHG emissions will, therefore, likely be required to identify and evaluate possible efficiency improvements as part of their BACT analysis for controlling GHG emissions.

Along with the general guidance document, EPA issued seven technical white papers outlining basic information on GHG control measures for major source categories. These white papers are designed to assist state, local and tribal air pollution control agencies in conducting BACT analyses for GHG controls and to guide regulated entities in the design of their facilities. The source categories covered by the white papers are: electric generating units, large industrial/ commercial/industrial boilers, pulp and paper, cement, iron and steel industry, refineries, and nitric acid plants.

Conclusion

Control of GHG emissions presents a number of technical and regulatory challenges, the answers to which will not be known on January 2, 2011. As more and more sources are subject to BACT determinations for GHG emissions, and more technologies are identified as BACT, the industry knowledge base of what works to control GHG emissions will expand. Until that time, it will be critical for sources that will be subject to GHG regulation to keep tabs on BACT determinations and other permitting decisions made for similar sources.