# EGU GHG NSPS Proposal

Briefing for OMB / Interagency Working Group

July 1 1, 2013 **Kemper County**

**Energy F**  **acility –**  **75% complete in**  **Ap ril**  **2013 –**  **Coal IGCC**  **unit in MS wi**  **ll capture 65% CO**  **2 for**  **EOR. Great Plains**  **Sy nfuels Plant**  **– Coal gasification**  **facility in Beulah,**  **ND has been capturing**  **50 %**  **CO 2** 

**for EOR use since 2000.** 

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# Overview ► 

## Reaction to Original Proposal ► 

## New Approach for EGU GHG NSPS Rulemaking ► 

## Best System of Emission Reduction (BSER) ► 

## Standards for New Fossil Fuel -fired Boilers and IGCC Units ► 

## Standards for New Natural Gas -fired Stationary Combustion Tu rbines ► 

## Units Not Subject to a CO 2 

## Standard ► 

## Other Key Components of the Rule ► 

## Compliance flexibilities ► 

## Endangerment finding ► 

## Conventional coal projects currently under development (e.g. transitional sources) ► 

## Economic Analysis ► 

## Appendix

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# Reaction to Original Proposal ► 

# EP A received almost 2.7 million public comments on the proposed rule – the most ever received for any EP A proposal ► 

# Industry and some others opposed the approach of setting a “fuel neutral” standard ► 

## Opposed combining sources into a common subpart and finding NGCC to be the BSER for all new fossil -fired EGUs serving intermediate and baseload demand ► 

## Claimed that this was inconsistent with previous agency action ► 

## Claimed that EP

A should make separate BSER findings for natural gas -fired and coal -fired sources – and set separate standards ► 

# Environmental groups and some others generally supported proposed approach; some suggested that EP A should require deeper GHG reductions and cover all fossil -fired EGUs (e.g., also cover “peaking units”)
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# New Approach for EGU GHG NSPS Rulemak 

# ing ► 

# Issue a final action that rescinds previous proposal and, at the same time, issue a new proposal with a revised approach ► 

# Propose separate standards of performance for sources within existing subparts ► 

## Stationary combustion turbines within subpart KKKK ► 

## Fossil fuel -fired boilers and IGCC units within subpart Da ► 

# Make separate BSER findings for sources within each subpart ► 

# Do not set standards for modified or reconstructed units at this time ► 

## Preamble makes it clear that nothing in the proposal sets a floor for BACTfor modified and reconstructed units

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# Best System of Emission Reduction (BSER) ► 

## CAA § 111 - Standard of performance should reflect the degree of emission limitation achievable through application of the “best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements)... has been adequately demonstrated.” ► 

## Four Key Factors in BSER Determination ► 

## Feasibility – system of emission reductions must be technically feasible ► 

## Costs – costs of the system must not be unreasonable ► 

## Size of reductions – EP A may consider the amount of emission reductions the system wo uld generate ► 

## Te chnology – designed to promote the implementation and further development of technology

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# Standards for New Fossil Fuel -fired Boilers and IGCC Units (Subpart Da ) ► 

## Level of standard ► 

### Find that partial CO 2 

### capture using CCS is the BSER for these new units ► 

### Propose a limit of 1,100 lb CO 2

### /MWh based on partial capture from flue gas or syngas stream ► 

### Request comment on a range from 1,000 – 1,200 lb CO 2

### /MWh ► 

## Emission standard must be met on a 12 operating - month rolling average ► 

## Partial capture CCS meets the criteria of BSER ► 

### Feasibility – a number of examples in operation, under construction and or under development most notably : 

## • Great Plains Synfuels Plant – North Dakota

– Capturing 50% of CO 2 for more than 10 years

– Gasification component of IGCC 

## • Kemper County Energy Facility (582 MW IGCC) – Mississippi

– 65% capture

– Under construction (over 75% complete) 

## • Boundary Dam (rebuild;1 10 MW PC) – Canada

– 90% capture

– Expected to be in operation by Spring of 2014 ► 

### Costs – comparable to cost of other generation technologies meeting similar function (see next slide) ► 

### Size of reductions – range of CO 2 

### capture needed to meet standard (25 – 40%) ► 

### Te chnology – promotes development of CCS 6 Deliberative – Do Not Cite or Quote

# Standards for New Fossil Fuel -fired Boilers and IGCC Units (cont.) ► 

## Cost of generation when CCS is added to achieve the 1,100 lb/MWh standard of performance

7 Deliberative – Do Not Cite or Quote **Notes:** • Low EOR price = $20/ton + TSM costs; High EOR price = $40/ton + TSM costs • Cost for IGCC units based on GE gasifier using bituminous coal; coal price = $ 2.94MMBtu • Cost for coal -fired units does not reflects 3% cost adder to account for uncertainty regarding future carbon liability ( consistent with EIA methodology); with these adders, SCPC costs $92/MW h and IGCC costs $112/MW h **Te ch** **no lo**  **gy Co**  **st of E** **le ctr** 

**icity ($** **/M Wh)**  **Da ta Sou** **rc e**  Natu ral g as com bi ned cy cl e u ni t @ $5.0/

MMBtu 52 DO E/NETL Natu ral g as com bi ned cy cl e u ni t @ $10.0/

MMBtu 86 DO E/NETL Su percri ti cal pu lv eri zed coal u nit w/o C CS 81 DO E/NETL Su percri ti cal pu lv eri zed coal u nit + 39% C CS 110 DO E/NETL Su percri ti cal pu lv eri zed coal u nit + 39% C CS + l

ow EOR 96 DO E/NETL Su percri ti cal pu lv eri zed coal u nit + 39% C CS + Hig

h EO R 88 DO E/NETL Su percri ti cal pu lv eri zed coal u nit + 90% C CS 147 DO E/NETL In teg rated g asi fic ati on com bi ne d cy cl e w /oCCS 97 DO E/NETL In teg rated g asi fic ati on com bi ne d cy cl e u ni t + 25% C CS 109 DO E/NETL In teg rated g asi fic ati on com bi ne d cy cl e u ni t + 25% C CS + Low

EOR 101 DO E/NETL In teg rated g asi fic ati on com bi ne d cy cl e u ni t + 25% C CS + High EO R 97 DO E/NETL In teg rated g asi fic ati on com bi ne d cy cl e u ni t + 90% C CS 136 DO E/NETL Nu cl ear 103- 114 EIA Bi om ass 97- 130 EIA Ge oth erm al 80- 99 EIA

# Standards for New Fossil Fuel -fired Boilers and IGCC Units (cont) ► 

## Other options considered: ► 

## Based on super- critical boiler or IGCC unit • Does not result in meaningful emission reductions 

## • Does not help advance low GHG coal - based technologies (and may hinder them)



## – More difficult fo r man y regulated utilities to get rate recovery for emission levels not legally re quired ► 

## Based on full (i.e., 90%) implementation of carbon capture and storage (CCS) • Not as well demonstrated as partial capture 

## • Considerable cost ($136/ MWh to $147/ MWh without revenue from EOR)

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# Standards for New Natural Gas -fired Stationary Combustion Tu rbines ► 

## Propose standards for subcategories based on turbine size ► 

### Find modern, efficient NGCC units to be BSER ► 

### Propose a limit of 1,000 lb CO 2

### /MWh for units greater than 850 MMBtu/hr (~ 100 MWe turbine)
• Request comment on a range from 950 – 1,100 lb/MWh ► 

### Propose a limit of 1,100 lb CO 2

### /MWh for units less than or equal to 850 MMBtu/hr Request comment on a range from 1,000 – 1,150 lb/MWh ► 

### Consistent with emission data (which shows that smaller turbines are less ef ficient) and with existing subcategories in subpart KKKK (for criteria pollutants) ► 

### Compliance demonstrated on a 12 operating - month rolling average basis • New, modern NGCC units can meet these proposed emission limits with no add -on control technology ► 

### Reject CCS as BSER because we do not have the information to determine if it is technically feasible
• No large scale projects in operation or under development 

### • Challenges of implementing CCS on units with large amounts of cycling 

### • Differences in composition of flue gas stream
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# Compliance Flexibilities ► 

# EP A wanted to provide owners/operators flexibility on when and how they install and operate add -on CCS technology ► 

# Original proposal ► 

## Of fered 30 -year averaging alternative compliance option for new coal - and petcoke -fired EGUs ► 

# New proposal ► 

## Propose 60 operating - month rolling average alternative compliance option • Emission limit would be more stringent (request comment on a range between 1,000 - 1,050 lb CO 2

## /MWh)

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# Endangerment Finding ► 

# Original proposal ► 

## Determined that a new endangerment finding was not necessary ► 

# New proposal ► 

## No endangerment finding is necessary • Weare not proposing to list a new category of sources ► 

## Rationale will include: • Reliance on existing GHG endangerment record 

## • Brief review

of new a ssessments by the National Academies 

## • Brief summary and response to major arguments by commenters in preamble

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# Geologic Sequestration Requirements Ve rifying that captured CO 2 

# is geologically sequestered Providing a mechanism to demonstrate that use of captured CO 2 

# in enhanced oil recovery (EOR) can qualify as geologic sequestration (GS) ► 

# Original proposal ► 

## In original proposal, there were no requirements that tied existing GS regulations for accounting to NSPS compliance ► 

# New proposal ► 

## Subpart RR of EP

A’ s Greenhouse Gas Reporting Program (GHGRP) provides a mechanism for facilities to demonstrate GS using existing regulatory framework ► 

## This proposal includes provisions that CO 2 

## captured at an EGU must be reported in accordance with GHGRPunder subpart PP(CO 2 

## supply) and subpart RR (Geologic Sequestration) ► 

## Seek comment on this approach and on alternative uses of captured CO 2 

## • Propose that any

a lternative would need to demonstrate permanent storage to a similar degree as geologic sequestration 

## • Propose that alternatives could not be used until EP A finalizes a mechanism for that alternative to demonstrate permanent storage of CO 2 12

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# Conventional Coal Projects Currently Under Development ► 

# Three potential sources ► 

## One publicly stated it is still deciding whether to proceed: • Wo lverine (MI) ► 

## Two submitted information suggesting they have commenced construction for NSPS purposes: • Holcomb (KS) 

## • Wa shington County (GA) 

## ► 

# New Proposal ► 

## Wo lverine: • Specifically exclude Wo lverine and take comment on whether to later:

– Separately propose making project subject to 1,100 lb CO 2

### /MWh standard

– Separately propose subcategory with alternate CO 2 

### standard ► 

## Holcomb and Washington County: • Both are existing sources, if current information is correct 

## • Explain that, if they have NOT commenced construction, they would be treated like Wolverine 13

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# Economic Analysis ► 

## The economic analysis is based on projections (by EP A, EIA and others) that, at least through 2030, the only new, unplanned coal fired EGUs that will commence construction will include CCS ► 

## With these forecasts, the rule has no cost impact ► 

## Additional scenarios (e.g., higher gas prices and higher demand) provide similar results through 2020 ► 

## Performed comparison of costs and benefits of coal with and without partial CCS ► 

## Coal with partial CCS had positive net benefits when: • Revenue from EOR and social cost of carbon at the 3% discount rate with lower primary health co - benefit estimate 

## • No revenue from EOR and social cost of carbon at the 3% (95 th 

### percentile) discount rate with higher primary health co - benefit estimate

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# Appendix

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# Original Proposal ► 

# Published on April 13, 2012 (77 FR 22392) ► 

# Proposed to create a new subpart (TTTT) that includes certain sources from subparts Da (boilers and IGCC units) and KKKK (stationary combustion turbines) ► 

# Proposed a single “fuel neutral” standard of 1,000 lb CO 2

# /MWh ► 

# Found natural gas combined cycle (NGCC) technology to be the best system of emission reduction (BSER) for all new fossil fuel fired EGUs serving intermediate - and base - load demand ► 

# Proposed to exempt simple cycle turbines and all new EGUs in non - continental areas (Hawaii and U.S. territories) ► 

# Did not propose standards for modified or reconstructed units

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# Current Full - Scale CCS projects

17 Deliberative – Do Not Cite or Quote **Project Location**  **Ty pe**  **Status** Great Plains Synfuels Plant Beulah, ND Coal gasification w/ 50% CCS Has been capturing CO 2 for EOR since 2000 Kemper County Energy Facility Kemper Co, MS Coal IGCC w/ 65% CCS April 2013 - 75% complete Boundary Dam Integrated

Project Saskatchewan, Canada Coal -fired PC boiler w/ 90% CCS Under construction;

expected operation in 2014

Texas Clean Energy Project Odessa, TX Coal IGCC w/ 90% CCS Signed construction and plant

output contracts Hydrogen Energy California Kern Co, CA Coal/petcoke IGCC w/ 90% CCS Nearing decision on PSD permit

# Status of Potential Transitional Projects Identified in Original Proposal

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**Project (State) Project Type**  **Development Status Potential Transitional Sources with CCS**  Power County (ID) Gasifier with CCS Not an EGU Taylorville (IL) IGCC with CCS PSD permit withdrawn Cash Creek (KY) IGCC with CCS Converted to NGCC project Good Spring (PA) IGCC with CCS Converted to NGCC project Texas Clean Energy (TX) IGCC with CCS Announced contracts to commence construction; capable of meeting proposed standard Trailblazer (TX) SCPC with CCS Development status canceled; capable of meeting proposed standard **Potential Transitional Sources Without CCS** Washington County (GA) SCPC without CCS Announced contracts to commence construction (but no applicability determination) Holcomb (KS) SCPC without CCS Announced contracts to commence construction (but no applicability determination) De Young (MI) CFB without CCS Replaced by NGCC project Wolverine (MI) CFB without CCS Remains under development; no contracts announced Coleto Creek (TX) SCPC without CCS Canceled Limestone (TX) SCPC without CCS Canceled White Stallion (TX) CFB without CCS Canceled Bonanza (UT) CFB without CCS PSD permit never effective; developer submitted information to DOE identifying project as canceled Two Elk (WY) PC without CCS State agency has treated as having commenced construction **Other Sources Identified by Developers** Mesaba (MN) IGCC without CCS Converted to NGCC project Las Brisas (TX) CFB without CCS Permitting process suspended by developer

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# 2012 Proposal vs. 2013 Proposal

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## Category **2012 Pr oposal**  **2013 Pr oposal**  **Diff er** **ences** Standards : • Combustion Tu rbines • Utility Boilers and IGCCs • Same for both • Separate standards Utility Boilers and IGCCs • 1,000 lb CO 2/ MWh • 1,100 lb CO 2/ MWh Large vs. Small Combustion Tu rbines • Same for both : 1,000 lb CO 2/ MWh • Large: 1,000 lb CO 2/ MWh • Small: 1,100 lb CO 2/ MWh CFR Subparts • Create new subpart (TTTT) • Use separate existing subparts (KKKK and Da ) BSER Determination • No separate determination • Separate determination fo r gas turbines and boilers/IGCC units Remote non - continental EGUs • Exempted all units in non - continental areas • Non -ga s fired turbines exe mpted regardless of location 

## Similarities Source category contribution • Category significantly contributes to GHG emissions • Category significantly contributes to GHG emissions Primary economic analysis • No cost (because no new coal) • No impact on electricity prices • No cost (because no new coal) • No impact on electricity prices Treatment of modified and reconstructed sources • Standards do NOT apply • Standards do NOT apply

# Key Legal Considerations for BSER ► 

# Feasibility ► 

## Senate report makes it clear that it did not intend that the technology “must be in actual routine use somewhere.” T he essential question was, would the technology be available for installation on new plants ► 

# Costs ► 

## “EP A’ s choice [for BSER] will be sustained unless the environmental or economic costs of using the technology are exorbitant” ► 

# Size of reductions ► 

## Goal is “reducing emissions as much as practicable” ► 

# Te chnology ► 

## Goal is “forc [ing] the development of improved technologies”

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