NSR NSR Working Group Meeting Working Group Meeting March 11, 2009 March 11, 2009 1 1
Overall Strategy Overall Strategy Near- Near -term (2009 term (2009- -Early 2010) Early 2010) – Legislative Solution Legislative Solution – – Readoption of Rule 1315 and Amending 1309.1 and Rule 1309.2 Readoption of Rule 1315 and Amending 1309.1 and Rule 1309.2 – to exclude new power plants to exclude new power plants Intermediate (Late 2010) Intermediate (Late 2010) – Promoting Facility Modernization Promoting Facility Modernization – – Administrative Procedures Administrative Procedures – – – Regulation XIII amendments meeting current SB288 and CAA Regulation XIII amendments meeting current SB288 and CAA requirements requirements Long- -term (Post 2010) term (Post 2010) Long – Non Non- -traditional credit sources traditional credit sources – – – Replacement of offset requirements Replacement of offset requirements – Potential SB288 and Clean Air Act changes Potential SB288 and Clean Air Act changes – 2 2
Guiding Principles Guiding Principles Basic ground rules Basic ground rules – Maintain BACT requirement for all new and Maintain BACT requirement for all new and – modified sources modified sources – Quality offsets Quality offsets - - Real, quantifiable, Real, quantifiable, – enforceable, surplus, and permanent enforceable, surplus, and permanent Promote facility modernizations Promote facility modernizations Encourage innovative clean technologies Encourage innovative clean technologies Administrative efficiency Administrative efficiency 3 3
Objectives Objectives Resolve permit moratorium Resolve permit moratorium Increase availability and access to credits Increase availability and access to credits Enhance offset utilization Enhance offset utilization Stabilize price of credits Stabilize price of credits Encourage clean growth Encourage clean growth 4 4
Timeline of Events Leading to Timeline of Events Leading to AQMD Permit Moratorium AQMD Permit Moratorium Sept 8, 2006 Rule 1315 – – Federal New Source Federal New Source Sept 8, 2006 Rule 1315 Review Tracking System Adopted and Review Tracking System Adopted and Rule 1309.1 – – Priority Reserve Amended Priority Reserve Amended Rule 1309.1 Aug 3, 2007 Aug 3, 2007 Rule 1315, Rule 1309.1 Re- Rule 1315, Rule 1309.1 Re -adopted adopted Aug 31, 2007 State Lawsuit Filed Aug 31, 2007 State Lawsuit Filed Aug 18, 2008 Federal Lawsuit Filed Aug 18, 2008 Federal Lawsuit Filed Nov 3, 2008 Final Judicial Ruling; Judge stopped further use of Nov 3, 2008 Final Judicial Ruling; Judge stopped further use of credits and invalidated ~2000 permits credits and invalidated ~2000 permits Nov 28, 2008 AQMD Appeal Nov 28, 2008 AQMD Appeal Jan 2009 Moratorium on Issuing Permits Jan 2009 Moratorium on Issuing Permits Accessing Rule 1309.1 and Rule Accessing Rule 1309.1 and Rule 1304 1304 5 5
Current Permitting Status Current Permitting Status Up to 2000 permits issued between Up to 2000 permits issued between September 2006 and November 2008 that September 2006 and November 2008 that were subject to Rules 1309.1 or 1304 and were subject to Rules 1309.1 or 1304 and were potentially invalidated by the court were potentially invalidated by the court decision, but are temporarily stayed due to decision, but are temporarily stayed due to the appeal filed by District the appeal filed by District More than 1,100 pending permits subject More than 1,100 pending permits subject to Rules 1309.1 or 1304 cannot be issued to Rules 1309.1 or 1304 cannot be issued unless ERCs ERCs are provided by applicants are provided by applicants unless 6 6
PM10 ERC Supply & Average PM10 ERC Supply & Average Cost Trends (2000- -2008) 2008) Cost Trends (2000 Supply dropped by 54% since 2000 Cost increased by 3,755% since 2000 Highest Price of PM10 ERC sold in 2009 was $320,000 per lb/day 2,500 $160,000 2,123 $148,761 $140,000 1,998 2,000 $120,000 ERC Supply (lbs/day) ERC Average Cost ($/lb/day) $100,000 $103,499 1,500 1,187 1,145 $85,893 $80,000 941 984 1,000 872 $60,000 846 803 779 $25,372 $23,649 $49,053 $21,710 $40,000 $16,917 500 $3,859 $20,000 0 $- 2000 2001 2002 2003 2004 2005 2006 2007 2008 Three proposed power plants with SCE contracts (Sentinel in Palm Springs, Walnut Creek in City of 7 Industry, and NRG in El Segundo) 7 7 7 ERC Supply (lbs/day) ERC Cost ($/lb/day)
Potential Interference with Rule Potential Interference with Rule Compliance Compliance Alternative compliance option for coating Alternative compliance option for coating operations (e.g., after burners) operations (e.g., after burners) R1146, R1146.1, and R1147 – – Boilers and Boilers and R1146, R1146.1, and R1147 Misc. Combustion Misc. Combustion R1421 – – Dry Cleaning Operations Dry Cleaning Operations R1421 R1470 – – Diesel Diesel ICEs ICEs R1470 Consent Orders for site clean ups by other Consent Orders for site clean ups by other agencies agencies 8 8
Path Forward Path Forward Governor and Legislature to Address Governor and Legislature to Address Power Plant Issues Power Plant Issues Governor and Legislature to Address Governor and Legislature to Address Other Facility Needs or Other Facility Needs or AQMD to Re- -Open Offset Bank Once All Open Offset Bank Once All AQMD to Re Litigation Resolved Litigation Resolved 9 9
Potential Legislative Solution Potential Legislative Solution Proposed bill language subject to Governing Board approval Proposed bill language subject to Governing Board approval Objective: To resume AQMD permitting and address power plant Objective: To resume AQMD permitting and address power plant issues issues Allow use of credits in AQMD bank for R1304 and R1309.1(without Allow use of credits in AQMD bank for R1304 and R1309.1(without power plants) if AQMD rules require BACT, toxics protection power plants) if AQMD rules require BACT, toxics protection Allow power plant access with the following environmental safeguards ards Allow power plant access with the following environmental safegu in place in place – – Thermal power plants must be subject to CEQA review by the State Thermal power plants must be subject to CEQA review by the State Energy Resources Conservation Committee or other Lead Agency Energy Resources Conservation Committee or other Lead Agency – – Require mitigation fee for power plants Require mitigation fee for power plants – Require additional safeguards similar to Rule 1309.1(2007) Require additional safeguards similar to Rule 1309.1(2007) – – – CEC finds project is needed CEC finds project is needed Urgency clause Urgency clause Legislative findings Legislative findings 10 10
Concepts to Promote Concepts to Promote Facility Modernizations Facility Modernizations 11 11
Allow Facility to Aggregate Allow Facility to Aggregate Emission Sources Emission Sources Concept Concept – Allow facility to generate internal offsets by aggregating two – Allow facility to generate internal offsets by aggregating two or more emission sources within the facility by pollutant or more emission sources within the facility by pollutant – – New sources at BACT New sources at BACT – – No emission increase from aggregated sources No emission increase from aggregated sources – Existing emission PTE will be adjusted to BARCT, if applicable – Existing emission PTE will be adjusted to BARCT, if applicable Discussion Discussion – Encourages facility modernization Encourages facility modernization – – Potentially decreases use of older, higher emitting equipment Potentially decreases use of older, higher emitting equipment – – Decreases demand for ERCs Decreases demand for ERCs – – More efficient use of ERCs More efficient use of ERCs – Implementation: Requires rule amendment Implementation: Requires rule amendment Recommendation Recommendation – Further evaluation needed Further evaluation needed – 12 12
Example for Example for Aggregating Emission Sources Aggregating Emission Sources Existing Boiler #1 Internal Offset PTE: 75 lbs/day From Boiler #1: BARCT Adjustment: 50 lbs/day New Boiler #3 20 lbs/day New PTE: 30 lbs/day New PTE: 30 lbs/day PTE: 40 lbs/day PTE: 40 lbs/day Use 40 lbs/day offsets from Existing Boiler #2 Boilers #1 and 2 Internal Offset PTE: 75 lbs/day Boiler #2: BARCT Adjustment: 50 lbs/day 20 lbs/day New PTE: 30 lbs/day New PTE: 30 lbs/day Original PTE: New PTE: 150 lbs/day for Boiler #1 and #2 100 lbs/day for Boiler #1, #2 and #3 13 13
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