Background: 1990 Clean Air Act Amendments Affecting Utilities

NATURAL GAS SUPPLY ASSOCIATION

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Background: 1990 Clean Air Act Amendments Affecting Utilities

The Clean Air Act Amendments (CAAA) of 1990 were signed into law on November 15, 1990. The statute contains eleven Titles. A summary of the six Titles that most affect coal-burning utilities is shown below. They point out the regulatory uncertainties facing utilities today.

Title I (Ambient Air)

Title I (Provisions for Attainment and Maintenance of National Ambient Air Quality Standards) established standards for six criteria pollutants: ozone, carbon monoxide, particulate matter, lead, sulfur dioxide and nitrogen dioxide. Title I standards were developed to protect the public from the adverse health effects of air pollution. Ozone and particulate matter appear to be the pollutants most affecting utility compliance plans under Title I. Compliance with these standards, particularly ozone and particulate matter, could dominate the compliance scenario for the next few years.

Ozone non-attainment has received the most attention. However, determining the proper level and ratio of Volatile Organic Compounds (VOCs) and Nitrogen Oxides (NOx) reductions needed to achieve Ozone reduction is a major concern. Regional models that were supposed to have helped states with their State Implementation Plan (SIP) have clouded the picture on how to control ozone in some areas. Regional modeling by the Lake Michigan Ozone Study has revealed the surprising result that large reductions in nitrogen oxide emissions, including those from power plants, may not contribute significantly to ozone reduction.[i] This finding was based on the proposition that those non-attainment areas were affected by dominant effects of VOC reductions on reducing ozone levels . Houston and Baton Rouge modeling have shown similar results. The major emphasis for NOx/Ozone non-attainment is occurring in the Northeast in the Ozone Transport Region (OTR). Members of the OTR recently signed a Memo of Understanding that will reduce NOx emissions below the current RACT levels in 1999 and 2003. Nevertheless, utilities must continue to make plans to meet whatever regulation the states have selected to meet Title I compliance.

Existing sources and new sources must meet different standards under Title. Existing sources in non-attainment areas and in the Northeast Ozone Transport Region must meet Reasonably Available Control Technology (RACT) for nitrogen oxides (NOx) and volatile organic compounds (VOC). EPA has proposed RACT guidelines for certain coal, oil and gas-fired boilers. EPA will consider Low NOx Burners (LNBs) as RACT for coal-fired boilers although other solutions that meet the emission standards are acceptable. Existing sources in the OTR must also comply with Post RACT reductions in NOx emissions. New sources in ozone non-attainment areas or in the Northeast Ozone Transport Region may have to meet Lowest Achievable Emission Rate (LAER) technology determined on a case by case basis. The current accepted standard for LAER is Selective Catalytic Reduction (SCR) which can be used with coal or combustion turbines. However, levels achievable with combustion turbine and SCR are significantly less than with a coal boiler with SCR.

In July 1993, the EPA announced a policy allowing states to adopt rules that permit utilities to control NOx emissions by switching to cleaner fuels during the summertime ozone season. The rule stipulates that the NOx emission reductions must be equal to or greater than emission reductions that would have occurred had there been no switch to natural gas. Some utilities are using or considering this option because gas prices tend to be lower in the summer months.

The critical dates for NOx/Ozone compliance are shown in the following table.

Year	Event
1995	States in non-attainment areas to implement reductions in NOx emissions that are obtainable using Reasonably Available Control Technologies (RACT) for utility and large industrial boilers
1996	EPA plans to propose a decision on revising ozone standard
1997	EPA to issue a final decision on ozone standard EPA RACT guidelines for all boilers
1999	Ozone Transport Region MOU to cut emissions of NOx in stationary sources as follows: Inner zone - 65% reduction from base year by May 1, 1999 or NOx emission rate of 0.2 lbs/MMBtu, whichever is less stringent Outer zone -- 55% reduction from base year by May 1, 1999 or NOx emission rate of 0.2 lbs/MMBtu, whichever is less stringent Note: Base year to be determined by 3/1/95 otherwise defaults to 1990 EPA inventory
2003	Ozone Transport Region MOU to cut emissions of NOx in stationary sources as follows: Inner & outer zone -- 75% reduction from base year by May 1, 2003 or meet a 0.15 lbs/MMBtu whichever is less stringent Northern zone - 55% reduction from base year by May 1, 2003 or NOx emission rate of 0.2 lbs/MMBtu, whichever is less stringent Note: Base year to be determined by 3/1/95 otherwise defaults to 1990 EPA inventory

Particulate matter is also covered under Title I. PM-10 is important because of the recent emphasis on reducing visibility near the National Parks and Wildlife Refuge areas. EPA is currently considering augmenting this standard to include smaller particles (PM-2.5) due to recent epidemiological studies that demonstrate a causal relationship between the small particles and human mortality. The lower standard would likely expand the PM non-attainment areas to include much of the northeast and other highly industrialized areas. Because the finer particles are formed in both primary combustion and post combustion, the precursors SO2 and NOx will be likely targets for reduction. In the northeast OTR, Post RACT NOx controls may alleviate the need to reduce emissions further. However, the Title IV Acid Rain provisions may not go far enough - further reductions may soon be required.

Title III (Air Toxics)

Electrical generating facilities are not currently specifically listed as subject to Title III. Congress has required EPA to complete Utility Air Toxics and Mercury studies to determine whether a problem exists. The EPA has been given three years to study and decides whether the stacks of utility generating facilities should be regulated under Title III. The EPA might actually take up to a decade to study this problem and decide on regulations.[ii]

In November 1995, the EPA plans to release the results of the utility Hazardous Air Pollutant (HAP) study to Congress. The HAP study will determine whether Title III regulations should affect utility boilers and Independent Power Producers (IPPs). At that time, EPA will also give an update on the utility portion of the mercury (Hg) study. If Title III is determined applicable to utilities and IPP facilities (major sources), they will be required to meet Maximum Achievable Control Technology (MACT) standards for that source category. If EPA decides to regulate utility HAPs and mercury, regulations are likely to be implemented after 1999. A major source is one that emits 10 tons per year of any one toxic or an aggregate of 25 tons per year of all listed toxics.

Title III covers 189 compounds that are hazardous to human health or the environment but are not specifically covered under another portion of the Clean Air Act.

There are at least two HAPs that should concern coal-fired utilities. They are hydrogen chloride and mercury that are Class III elements. Hydrogen chloride forms during combustion from the chlorine in the coal. During combustion, over 95% of the chloride in coal is released, primarily in gaseous form.[iii] HCl has come under scrutiny due to the large quantity of emissions during combustion. For example: a 100 MW boiler operated at 60% capacity and burning coal containing approximately 0.004% chlorine would exceed the limit of 10 tons/year of HCl. Mercury, released in its vapor form as elemental Hg or as HgCl has the potential to accumulate in the food chain.

Title IV (Acid Rain)

The Title IV Acid Rain program to reduce sulfur dioxide (SO2) and nitrogen oxide (NOx) is well under way in terms of compliance. Most Phase I coal-burning utilities have a compliance strategy in place. Basically, utilities have selected strategies that push major capital decisions like scrubbing and SCR out into the future.

Phase II SO2 emissions will be cut in half from the Phase I requirements. This means coal switching, which was the predominant Phase I strategy, could be more difficult and costly for Phase II compliance. The industry as a whole appears to have created a bank of SO2 allowances that could push Phase II compliance for some utilities out beyond 2000. We believe utilities will continue to seek fuel switching and allowance trading strategies that defer capital investment. Most Phase I utilities have or are planning to install Low NOx Burners (LNBs) as required by the Phase I NOx standards. However, a federal appeals court ruled that EPA had overstepped their authority on requiring utilities to install control measures beyond LNBs. The court said a January 1, 1995 deadline (Phase I NOx--Title IV) would not be observed. Again, the implications of this ruling are not fully understood. Further NOx reductions for Phase II boilers, wet bottom boilers and cyclone boilers may be required by 2000. However, the standards for phase II are not scheduled to be set until 1997. While NOx allowance trading is also provided for in the Acid Rain program, no regulations have been written. It is not clear, if there will be trading regulations in effect in time for Phase II planning. NOx trading would favor fuel switching, particularly gas, and technological strategies, like gas reburning, that would create excess NOx emission reductions.

Emission limits required by the Act are as follows:

Pollutant	Affected Boilers	Max. Emissions Lbs/MMBtu	By
SO2 Phase I	110 Utilities	2.5	1/1/1995
SO2 Phase II	Utility Units - Output > 25 MW	1.2	1/1/2000
NOx Phase I	Tangential-fired dry bottom	0.45 (coal) 0.20 (gas/oil)	1/1/1995
NOx Phase I	Wall-fired dry bottom	0.50 (coal) 0.30 (gas/oil)	1/1/1995
NOx Phase II	Wet bottom, cyclone & others	Proposes Rules Standards Compliance	1/1/96 1/1/97 1/1/2000

Title V (Permits)

Title V simplifies the permitting process by combining permitting requirements for all pollutants into one permit. States must submit a permit program to EPA for approval. States will manage the permit program with oversight from EPA. Permits are to be issued for fixed terms, not to exceed five years. This allows for implementation of new regulations every 5 years.

Title VII (Enforcement)

Enforcement powers given to EPA by the CAAA of 1990 along with the ability of citizen suits to include civil penalties will keep pressure on utilities to comply with regulations. The enforcement provisions are as follows:

Citizen suits may now include the assessment of civil penalties, and EPA will be provided with sufficient notice to intervene in these suits. A fund will be established from the ensuing penalties which EPA can use for air compliance and enforcement activities. Monetary awards of up to $10,000 are available to citizens who provide information leading to a criminal conviction or a civil penalty.

Title VIII (Miscellaneous)

This Title deals with various miscellaneous requirements. Important to power generation are two key provisions that address visibility and other emissions sources.

The visibility provision requires EPA to:

A report from the Grand Canyon Visibility Transport Commission is due in November, 1995. The EPA is to propose rules for Regional Haze to help visibility in National Parks by 1996.

Note: Other legislation such as the Safe Drinking Water Act, Clean Water Act and legislation dealing with solid waste disposal as well as possible future CO2 legislation may have the potential to affect a utility's fuel decision. However, these topics are beyond the scope of this paper.

NOTES:

i. “Midwest Ozone Modeling Finds NOx is Not a Major Factor; Trading Plans Scuttled, ”Utility Environmental Report, February 18, 1994

ii.“Gas Marketing Opportunities From the Air Toxics Provisions of the Clean Air Act Amendments of 1990,” CHEM SYSTEMS, A report prepared for the Policy and Analysis Group, American Gas Association, May 1992

iii.Jones, C. “Consensus on air toxics eludes industry to date,” POWER, October 1994, Page 52

This page was placed October 6, 1996; last updated August 31, 1997.