NSR Stakeholders NSR Stakeholders Working Group Working Group - - PowerPoint PPT Presentation

1 1

NSR Stakeholders NSR Stakeholders Working Group Working Group

April 16, 2009 April 16, 2009

2 2

Overview Overview

Status Report on NSR Activities Status Report on NSR Activities

– – State and federal court litigation State and federal court litigation – – Permitting status Permitting status – – State legislative update State legislative update – – Re Re-

• adoption of PR1315, R1309.1, & amend

adoption of PR1315, R1309.1, & amend R1309.2 R1309.2

Prioritization of strategies via Prioritization of strategies via Reg Reg XIII rule XIII rule amendments amendments

– – USEPA and CARB staff initial comments USEPA and CARB staff initial comments

3 3

Near Term Solutions Near Term Solutions

4 4

Timing of Surrendering Offsets Timing of Surrendering Offsets

Proposal Proposal

– – Surrender offsets Surrender offsets prior to start of equipment operation prior to start of equipment operation

Discussion Discussion

– – Consistent with federal NSR Consistent with federal NSR – – No variance for surrendering of offsets allowed No variance for surrendering of offsets allowed – – PC conditioned to require surrendering of offsets prior PC conditioned to require surrendering of offsets prior to start of operation to start of operation – – Cease of start of operation if in violation of offset Cease of start of operation if in violation of offset provisions provisions

Initial Agency Comments Initial Agency Comments

– – No anticipated issues No anticipated issues

5 5

Recall Shutdown Offsets to AQMD Recall Shutdown Offsets to AQMD Where No Offsets Previously Provided Where No Offsets Previously Provided

Proposal Proposal

– – Require offsets generated from shutdowns to be returned to the A Require offsets generated from shutdowns to be returned to the AQMD QMD if sources did not previously provide their own offsets (non if sources did not previously provide their own offsets (non-

• orphans)
• rphans)

Discussion Discussion

– – On an equipment On an equipment-

• by

by-

• equipment basis

equipment basis – – Offsets to be auctioned off to all sources Offsets to be auctioned off to all sources – – Offsets are non Offsets are non-

• tradable and can be leased from the district for the first

tradable and can be leased from the district for the first 5 years 5 years – – If unused, offsets to be returned to the district with applicabl If unused, offsets to be returned to the district with applicable discount e discount – – When equipment shuts down, offsets return to the district When equipment shuts down, offsets return to the district – – Open to long Open to long-

• term leasing discussion

term leasing discussion – – Fees collected to be re Fees collected to be re-

• invested for emission reduction projects in the

invested for emission reduction projects in the impacted communities impacted communities

Initial Agency Comments Initial Agency Comments

– – Does not regulate the ownership of offsets Does not regulate the ownership of offsets

6 6

Annual Credits Annual Credits

Proposal Proposal

– – Issue new ERCs and convert existing ERCs to annual instead Issue new ERCs and convert existing ERCs to annual instead

• f daily credits
• f daily credits

Discussion Discussion

– – ERC issuance in total #/year based on R1306(c)(1) and ERC issuance in total #/year based on R1306(c)(1) and modified (c)(4) modified (c)(4) – – Offset requirements also in #/yr (modified R1306 (b)) Offset requirements also in #/yr (modified R1306 (b)) – – Existing ERC conversion to annual credits based on prior Existing ERC conversion to annual credits based on prior records records If not available (orphan shutdowns), assuming 40 hrs/wk If not available (orphan shutdowns), assuming 40 hrs/wk and 52 wks/year (~ RECLAIM procedures) and 52 wks/year (~ RECLAIM procedures)

Initial Agency Comments Initial Agency Comments

– – All other air districts use annual credits All other air districts use annual credits – – CARB: SB288 demonstration needed CARB: SB288 demonstration needed

7 7

Pre Pre-

• Consultation Prior to

Consultation Prior to Generating ERCs Generating ERCs

Proposal Proposal

– – Establish procedures for pre Establish procedures for pre-

• consultation

consultation – – Define scope of pre Define scope of pre-

• consultation

consultation – – Flat fee for cost recovery Flat fee for cost recovery

Discussion Discussion

– – Efficiency improvement Efficiency improvement – – Can potentially lead to more credit generating Can potentially lead to more credit generating

• pportunities
• pportunities

– – Provides additional information for market participants Provides additional information for market participants – – Potential staff resource impacts Potential staff resource impacts – – Reg Reg III amendments for cost recovery III amendments for cost recovery

Initial Agency Comments Initial Agency Comments

– – None None

8 8

Aggregate Aggregate Emission Sources Emission Sources – – Functional Replacement Functional Replacement

Proposal Proposal

– – Allow existing equipment to lower its emission cap through Allow existing equipment to lower its emission cap through enforceable permit conditions enforceable permit conditions and such reductions not assumed in and such reductions not assumed in the SIP (see R1304(c)(2)(A) thru (D)) the SIP (see R1304(c)(2)(A) thru (D)) – – Emissions from new sources, at BACT, must be equal to or less Emissions from new sources, at BACT, must be equal to or less than reductions from existing sources (above) than reductions from existing sources (above) – – No offsets required from open market or AQMD account No offsets required from open market or AQMD account

Discussion Discussion

– – Equipment involved can be one to many or many to one and serve Equipment involved can be one to many or many to one and serve similar function similar function – – Onsite use only, not tradable Onsite use only, not tradable – – Limited banking (e.g., new permit applications filed within one Limited banking (e.g., new permit applications filed within one year year

• f reductions)
• f reductions)

– – Allow base Allow base-

• load power plants to

load power plants to peakers peakers that have higher that have higher generation capacity (MW), but lower load factor generation capacity (MW), but lower load factor

Initial Agency Comments Initial Agency Comments

– – No anticipated issues No anticipated issues

9 9

Example for Example for Aggregating Emission Sources Aggregating Emission Sources

Existing Boiler #1 PTE/BARCT: 50 lbs/day New PTE: 30 lbs/day Internal Offset From Boiler #1: 20 lbs/day New Turbines #1 PTE: 40 lbs/day Use 40 lbs/day

• ffsets from Boiler

#1 and Engine #1 Existing Engine #1 PTE/BARCT: 50 lbs/day New PTE: 30 lbs/day Internal Offset Engine #1: 20 lbs/day PTE: 40 lbs/day

10 10

Example for Replacement Example for Replacement by Equipment Family by Equipment Family

Existing Boiler – 40 MMBTU PTE/BARCT: 75 lbs/day New Boiler – 55 MMBTU PTE/BACT: <75 lbs/day

11 11

Concurrent Facility Modification Concurrent Facility Modification

Proposal Proposal

– – Expand R1304 (c)(2) Concurrent Facility Modification Expand R1304 (c)(2) Concurrent Facility Modification – – Remove R1306 reference Remove R1306 reference – – No offset required from open market or AQMD account No offset required from open market or AQMD account

Discussion Discussion

– – On On-

• site only, not tradable

site only, not tradable – – Emission reductions can occur prior to submittal of permit Emission reductions can occur prior to submittal of permit application, but not to exceed 12 months application, but not to exceed 12 months – – Existing equipment to lower its emission cap through enforceable Existing equipment to lower its emission cap through enforceable permit conditions and reductions meet the requirements permit conditions and reductions meet the requirements R1304(c)(2)(A) thru (D) R1304(c)(2)(A) thru (D)

Initial Agency Comments Initial Agency Comments

– – USEPA: Need to make sure this is not “internal netting” out of N USEPA: Need to make sure this is not “internal netting” out of NSR SR which is prohibited for “severe” non which is prohibited for “severe” non-

• attainment.

attainment. – – CARB: SB288 demonstration needed CARB: SB288 demonstration needed

12 12

Adjust NSR Debt to BARCT Adjust NSR Debt to BARCT

Proposal Proposal

– – Adjust positive NSR balance to reflect current Adjust positive NSR balance to reflect current BARCT level when paying back debt (i.e., at BARCT level when paying back debt (i.e., at the time of applying for ERCs) the time of applying for ERCs)

Discussion Discussion

– – May be implemented through policy change May be implemented through policy change

Initial Agency Comments Initial Agency Comments

– – USEPA: None USEPA: None – – CARB: SB288 concern if implemented through CARB: SB288 concern if implemented through rule amendment rule amendment

13 13

BARCT/BACT Discount Approach BARCT/BACT Discount Approach

Proposal Proposal

– – ERCs 2 ERCs 2-

• tiered discount at time of issuance

tiered discount at time of issuance

BARCT discount applicable for the first five years; BARCT= BARCT discount applicable for the first five years; BARCT= R1304 (c)(2)(A) thru (D) R1304 (c)(2)(A) thru (D) BACT discount from 6 BACT discount from 6th

th year and thereafter

year and thereafter

Discussion Discussion

– – Value of ERCs depending on when used Value of ERCs depending on when used – – Potentially creating 5 Potentially creating 5-

• year credit stream

year credit stream

Initial Agency Comments Initial Agency Comments

– – USEPA: Consistent with CAA NSR requirements of USEPA: Consistent with CAA NSR requirements of discount at time of use discount at time of use – – CARB: SB288 demonstration needed that it is not a CARB: SB288 demonstration needed that it is not a relaxation relaxation

14 14

Mid Mid-

• Term Solutions

Term Solutions

15 15

Innovative Credit Approach Innovative Credit Approach

Concept Concept

– – Evaluate additional mechanisms for increasing credit generating Evaluate additional mechanisms for increasing credit generating

• pportunities
• pportunities

Discussion Discussion

– – Rule 1625 Rule 1625 – – Generation of ERCs for Particulate Matter Generation of ERCs for Particulate Matter – – Rule 2511 Rule 2511 – – Credit Generation Program for Locomotive HEP Credit Generation Program for Locomotive HEP – – Bonnet system to capture emissions from Bonnet system to capture emissions from hotelling hotelling ships and ships and idling locomotives idling locomotives – – Port Sources Port Sources – – Restaurant PM Controls Restaurant PM Controls

Initial Agency Comments Initial Agency Comments

– – USEPA: Permit Life = Credit Life; 30 years USEPA: Permit Life = Credit Life; 30 years Permanent Permanent – – CARB: ? CARB: ?

16 16

Creation of Mobile Source Account Creation of Mobile Source Account

Concept Concept

– – Create a Mobile Source Account (Short Create a Mobile Source Account (Short-

• term Credits)

term Credits) – – Users pay a fee Users pay a fee – – AQMD manage Mobile Source Account where credits AQMD manage Mobile Source Account where credits can be used: can be used:

For compliance with mobile source offset requirements For compliance with mobile source offset requirements For non For non-

• NSR use such as CEQA mitigation

NSR use such as CEQA mitigation

Discussion Discussion

– – Can encourage generation of credits for non Can encourage generation of credits for non-

• traditional

traditional sources of equipment (e.g., off sources of equipment (e.g., off-

• road equipment)

road equipment) – – Fee based on technology and transaction costs Fee based on technology and transaction costs – – Need to define project life for permitted sources Need to define project life for permitted sources

Initial Agency Comments Initial Agency Comments

– – See “Innovative Credit Approach” See “Innovative Credit Approach”

17 17

Long Term Solutions Long Term Solutions

18 18

Issue Discrete Credits for Issue Discrete Credits for Limited Life Reductions Limited Life Reductions

Concept Concept

– – Issue ERCs as discrete credits for reductions with Issue ERCs as discrete credits for reductions with limited life reductions through protocol specific limited life reductions through protocol specific regulations regulations

Discussion Discussion

– – Greater flexibility of ERC use Greater flexibility of ERC use – – Can encourage generation of credits for equipment Can encourage generation of credits for equipment with limited life with limited life

Initial Agency Comments Initial Agency Comments

– – USEPA: May not meet the current CAA NSR

USEPA: May not meet the current CAA NSR requirements requirements – – AB288: Major change to NSR AB288: Major change to NSR

19 19

Example of Early Reductions Example of Early Reductions

5 10 15 20 25 30 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041

Use of Credits

lbs/yr

20 20

Example of 100 pounds Example of 100 pounds Distributed Over 30 years Distributed Over 30 years

5 10 15 20 25 30 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037

Use of Credits

lbs/yr

21 21

Mitigation Fee Mitigation Fee

Concept Concept

– – Replace offset requirements in Clean Air Act with a Replace offset requirements in Clean Air Act with a mitigation fee mitigation fee – – Mitigation fee to be invested in affected communities Mitigation fee to be invested in affected communities – – New sources must meet BACT New sources must meet BACT

Discussion Discussion

– – Generate current reductions to mitigate community Generate current reductions to mitigate community specific impacts specific impacts

Initial Agency Comments Initial Agency Comments

– – Clean Air Act amendments needed Clean Air Act amendments needed