On June 2, 2014, the same day that the Environmental Protection Agency (“EPA”) released its landmark proposed regulations for carbon dioxide (“CO2”) emissions from existing fossil fuel-fired electricity generating units (“EGUs”), EPA also released a second proposal that applies specifically to existing units subject to modification or reconstruction. (For more information on the first proposal, click here.) This second proposed rule includes CO2emissions limits for modified and reconstructed fossil fuel-fired power plants under the Clean Air Act (“CAA”) New Source Performance Standards (“NSPS”). EPA defines modification as “a physical or operational change that increases the source’s maximum achievable hourly rate of emissions.” EPA defines reconstruction as “the replacement of components of an existing facility to an extent that (1) the fixed capital costs of the new components exceeds 50 percent of the fixed capital costs that would be required to construct a comparable entirely new facility, and (2) it is technologically and economically feasible to meet the applicable standards.” Under the NSPS program, EPA must base standards of performance on a best system of emissions reduction (“BSER”) that the regulated facility can achieve.
Ordinarily, modified and reconstructed sources are treated as “new” sources under the NSPS program. However, EPA in its September 2013 proposal for CO2 emissions from new fossil fuel-fired EGUs expressly carved out modified and reconstructed sources. (See Sidley’s Environmental Update here.) Thus, this proposal closes a gap regarding how EPA intends to address modified and reconstructed sources.
Highlights of the proposal are as follows:
- Reconstructed coal-fired EGUs: EPA proposes to determine that BSER is the most efficient generating technology at the affected source, which may include boilers that operate at higher temperatures and pressures. Under EPA’s proposal, facilities with a heat input of greater than 2,000 MMBtu/h must meet an emission limit of 1,900 lbs CO2/MWh. Smaller facilities must meet an emission limit of 2,100 lbs CO2/MWh. In contrast to its September 2013 proposal for new sources, EPA does not propose carbon capture and storage (“CCS”) as BESR for reconstructed sources. Overall, the emissions limits are higher than the 1,100 lbs CO2/MWh standard that EPA proposed for new coal-fired power plants.
- Modified coal-fired EGUs: EPA proposes to determine that BSER is a combination of best operating practices and equipment upgrades. Each modified source would be required to meet a unit-specific emissions limit that is 2% lower than the unit’s best historical annual CO2 emissions rate since 2002. However, the unit-specific emissions limits for modified sources cannot be lower than the proposed standards for reconstructed sources. As an alternative proposal, facilities that are subject to regulation as existing sources under Section 111(d) of the Clean Air Act could be assigned a unit-specific emission limit by the Section 111(d) implementing authority based on an energy efficiency improvement audit.
- Natural gas-fired power plants: EPA determined that efficient natural gas combined cycle technology is BSER. This is the same determination that EPA made for new natural gas-fired power plants. As a result, EPA has proposed the same emissions limits for modified and reconstructed facilities as it did for new facilities. Under EPA’s proposal, facilities with a heat input of greater than 850 MMBtu/h must meet an emission limit of 1,000 lbs CO2/MWh. Smaller facilities must meet an emission limit of 1,100 lbs CO2/MWh.
EPA will accept public comments on the proposal for 120 days after the proposed rule is published in the Federal Register. EPA also intends to hold public hearings in late July in Atlanta, Denver, Pittsburgh and Washington, D.C. to discuss this proposal, as well as the proposed rule for existing power plants. Pursuant to the Presidential Memorandum that accompanied the Climate Action Plan, EPA must issue a final rule by June 1, 2015.