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# OAR Box 1802 Prepped by Charmelle Mathews



## Document

Number: 

# 52 ) IV-E-4 7 Docket Number: 

# A-90-3 7

Printed 11/4/2008 11:57:59 AM Sheet 52 of 117P. 2

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### U S EVIRONMENTA L PROTECTION AGENCY Office of Air Qualit y Plannin g an

d Standard s Research Triangl e Park , Nort h Carolin a2771 1 

# "ffi-ET-4 7

Date : Februar

y 22,200 0 To : Ai r an d Radiatio n Docke

t #A-90- 3 7 From : Denni s Crumpler , Integrate d Implementatio n Group , ITPID , MD-1 2 Re : Meetin g wit

h Clea n Energy Grou

p O n Septembe

r 30,1999 , th e EP

A met wit h representative s o f

agrou p o f utilitie s calle d th e Clea n Energy Grou

p (attende e lis t

i s attached)
. Th e discussio n focused o n adraf t discussio n pape r of a n alternativ e ne

w sourc e review (NSR

) complianc e strateg y tha

t thi s grou p o f powe r generator s wa s developin g fo r utilities
. Th e proposa

l stemmed fromth e NS RRefor m rulemaking stakeholde

r meetin g o n Februar

y 2-3,1999
. Th e draf

t strateg y tha

t wa s presente d b y th e Clea n Energ y Grou

p i s als o attached
. cc : Pa mSmith , (MD-12 ) Jon Devine , OG

C Attendees : Pet e Jonker , Sempr

aEnerg y Michael Bradley , M.J
. Bradley & Associate s Bill Harnett , OAQP S Caro l Holmes , OECA Sa mWolfe , Publi c Servic e Electri c & Ga s Elle n Brown , OPA

R Jo e Miakisz , NiagaraMohaw k Chuc k Carlin , Norther

n Electri c Mik e Sewell , OAQP S Karen Blanchard , OAQP S Bruc e Buckheit , OEC

A John Bachman , OAQP S Ann aWood , OPA

R Jo n Devine , OG

C Sa mNapolitano , OA

P Mar k Brownstem , PS E & G Bruc e Alexander , PEC O Gre g Foote , OG

C EP A Office Abbreviations : OAQPS

- Office o f Air Qualit y Plannin g an

d Standards ; OGC

Offic e o f Genera l Counsel ; OECA-Offic e o f Enforcemen

t an d Complianc e Assurance ; OAP-Offic e of

Atmospheri c Programs ; an d OPAR-Offic e of

Polic y Analysi s an

d Regulations
. 

# lSEP-29-199 9 14:2 7 P.82/0 4



## DRAF T - FO RDISCUSSIO N PURPOSE S ONL Y

Gea n Energ y Group Integrate d Ai r Qualit

y Strategy fo r th e Powe r Generatio n Industr y Introductio n ' Th e followin g framework i s offered a s a startin g poin tt o initiate discussio n o f a national , voluntary progra m for th e powe r generation industr y tha twoul d integrat

e futur e emissio n reductio n target s wit h enhanced Ne w Sourc e Revie w (NSR ) flexibility (se e discussio n o f principle s below) , and i s offere d i n th e contex to f

EPA' s on-goin g effort

s t o develo p a

n enhanced NS Rprogram . Mor e specifically , thi s propose d alternativ e woul d allo w participatin g companie s flexibility unde r th e NS Rprogra

m i n exchang e for a n enforceabl e commitmen

tt o operat

e unde r a syste m o f

pollutan tcap s for NOx , SO * CQj , an d mercury . Th e objectiv e o f

th e framework i s t o achiev e substantia l air qualit

y beneit s i n a cost-effectiv e manner . Thre e basi c principle s hav e guide d tb e developmento f thi s framework t o date : 1 . Th e alternative framewor k ha s bee n designe d i n th e contex to f existin g Clea n Ai r Ac tauthorit y 2 . I tma y b e necessary t o hav e a critical mas s o f companie s opte d i n t o th e progra m befor e i twoul d tak e effec t 3 . Th e emissio n cap s develope d unde r th e progra

m ar e t o b e base d o n publi c healt h an d environmenta

l qualit y objective s I n additio n t o ensurin g environmenta l benefits , th e advantage s o f a n integrated regulator

y strateg y include : 1 . th e potentia

l t o provid e regulator

y stabilit y (ove r 10-1 5 years ) for ne w capital investments an d facilitate th e managemen

to f existin g assets ; 2 . facilitate s th e eliminatio n o f certai n existin g regulator y barrier s t o new sourc e developments an d efficiency improvement

s b y streamlinin g Ne w Sourc e Revie w (NSR ) requirements ; 3 . internalize s environmenta l cost s fo r al l generator

s in th e competitiv e market ; an d 4 . reduce s complianc e cost s an d help s protectasse tvalue . A s th e electri c generatin g industr y enter s a perio d O

f unprecedente

d chang e precipitate d b y restructurin g development

s an d technological progress , a premiu m ha s been place d o n regulator y certainty . Th e concept s envisione d in thi s framework woul d provid e a higher degre e o f regulator y certaint y b y allowin g electri c generatin g companie s th e optio n o f optin g i n t o a voluntar

y progra m o f declinin g pollutan tcap s ver y similar t o th e "plantwid e applicabilit y linn " concep ta s i tapplie s t o industria l sources . Framewor k Objective s

• Achiev e ai r qualit

y improvement

s tha twil l contribut

e t o th e attainmen

tan d maintenance o f

th e nation' s ai r qualit y standard

s an d goals .

-_•,' • -.' • '• • • Streamlin e NS Rrequirement s an d encourag e th e developmen to f new clea n energ

y generation .

• Establis h a

n integrated ai r pollutio n managemen tsyste m whic h relies o n marke tbase d mechanisms .

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• Implementation o f emissio n reductions atleas tcos t-

• Achiev e regulator

y certaint y ove r a perio d o f

1 0 t o 1 5 years . Framewor k Principle s Th e followin g principle s ar e suggeste d for discussio n when considerin g a multipl e poUutan tregulatory strategy : 1 ) nationa

l declinin g tonnage cap s fo r NOx , SO * mercur y an d CQ j t o b e achieve d b y date s certain ; 2 ) allocation s unde

r tonnag e cap s base d o n a portfoli o outpu tbasi s (Le- . total energy) , insurin g tha tne w an d existin g source s receiv e equa l treatment ; 3 ) NO x ca p shoul d var

y durin g tiie summa - ozon e seaso n versu s non-ozon e season ; 4 ) rewar d earl y reductions an

d efficiency ; 5 ) mercur

y control requirement

s shoul d avoi d a iommand-aod-control approach , base d o n a source-by sourc e contro

l requiremen

ttha twoul d limi

tcomplianc e option s an

d increas e costs ; 6 ) nationa

l trading an

d banking o f

allowances ; 7 ) withi n th e bounds o f

existin g Clean Ai r Ac tauthorit y revis e th e new sourc e revie w progra m t o enabl e source s t o operat

e unde r a serie s o f

emissio n cap s an

d t o us e a potential-to-potentia l tes tfo r NS R applicabilit

y determinations ; 8 ) a n allowanc e reserve shoul d b e se tasid e for ne w source s entering th e marke t Stnwmaj D Framewor k National tonnag e caps , implemente d ove r th e cours e o f

th e year s 2003-201 2 consisten twit h th e principle s outlined above , fo r NOx , SOa , mercur y an d COsb y dates certain . Th e pollutantcap s liste d belo w ar e based o n publi c healt

h an d environmenta

l qualit y objective s an

d promis e t o delive r significan tan d tunef y improvement

s i n ai r qualit y o n bot h a nationa

l an d internationa

l scale . Tonnag e cap s represen tnational target s fo r th e entir e electri c generating industry . "Performanc e target s woul d be establishe d consisten twith thes e targets . '." Reduction s proposed for NO x an d SO j emission s woul d significantly mitigat e th e problem s o f

fin e particulat e pollution , ground-leve

l ozone , aci d rain , regiona l haze , an d th e nitrificatio n o f

certai n bay s an

d estuaries . Th e nationa

l tonnag e cap s for NO x ar e propose d i n tw o phases . Th e firs tphas e woul d begi n i n 200 3 wit h th e implementatio

n o f th e NO x SI P Cal l i

n th e easter

n U.S . Beginnin g i n th e 2007-200 8 tim e frame bot

h NO x an

d S0 2 woul d b e limited t o annua l cap s nationwid e a

f a leve l 5 0 percen

tbelo w curren

t commitments . Thes e proposed target s ar e consistentwit

h EPA' s finding tha

tfurthe r reductions i n NO x an d SO 2 ar e require d t o addres s th e continued impact s o f aci d deposition . Reductions in^mission s o f mercur y ar e propose d l o addres s th e healt h effects currentl

y unde r investigatio n by EP A an d other researchers , an

d reductions i n CO

j emission s are proposed t o mitigat e th e risks o f climat e change . Th e performanc e targe tproposed forinercui y has been presented a s a two-phas e program , includin g a 5 0 percen

treduction b y 2005-200 6 an d a mor e significantreduction in 2010 . Thi s range o f value s i s presented in recognition o f EPA' s on-goin g effort

s t o investigat

e th e mercur

y emissio n inventory , potentia l healt h an d environmenta

l ris k o f mercury , an

d mercur y contro l technologies . Th e performanc e targe tfo r CO * emission s i s based upon th e targe testablished b y th e Ri o Accord , which wa s ratified b y Congress .

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B y addressin g thes e pollutant s unde rth e auspice s o f a n integrate d strategy , multipl e ai r quality objective s wil l b e achieve d whil e deliverin g substantia l economi c benefits relativ e t o a strateg y thataddresse s thes e ai r qualit y problem s separately . "Fp*.;«| l 

### Pollutan tcap s for NOx , mercury , an d CO 2 t o b e implemente d unde r a national , ca p an d trad e program , wit h allowanc e allocate d o n a tota l energy/outpu tbasi s an d credi tawarde d for carr y action . SO 2 reduction s t o b e implemente d unde rth e existin g Aci d Rai n program . Furthe r emissio n reduction s beyon d di e national , propose d target s ma y b e require d i n orde rt o insur e attainmen tan d maintenanc e o f existin g health base d standards . Pleas e not e tha tth e target s presente d hav e no tbee n endorse d b y th e Clea n Energ y Grou p companies , bu t ar e intende d a s a startin g poin tfo rdiscussions .
PoUutan t 

### NO .

r

- 

### SO ,
mercur y

CO j Natiooa l Toanag e Ca p Two-phas e program : 4.2 2 millio n tons

• r2.1 1 millio n ion s 4. 5 millio n tans Tw o phase program: ; • 2 6 ton s 5-1 6 tons Tw o phase program : 1,91 4 millio n ton

s
Unknow n Kcooctio a Targe t

'(astv_ia_fk

O iadtstr y partldpattw ) Two-phas e program : Reduction s consisten

twit h tiie objective

s o f tiie NO x SI P Cal l Rul e (0.1 5 Ibs/MMBt

u inthe22-stateSIPcaI l region ) 50 % reduction * 50 % reductio

n beyon d Phas e I T Acid Rai

n requirement

s Tw o phase program** : 50 % reductio

n 70%-90 % reductio

n *v * 1 Tw o pnaa c program * Stabilizatio

n a t199 0 emission level s Consisten tvnt h nationa l emission goa

l Schedal e

200 3

2007-0 8 2007-0 8

2005-0 6 201 0

200 8
201 2

* Environmenta

l benefit s resultin g fron Implementatio

n o f the NO x SIP.Cal l ar e no tt o b e aflecte d i n transitioning to a national/annua

l NO x program

. r

. .;•".*" "
* * Mercur y reductio n target s t o be consisten

twit h EPA' s on-going regulator y determinatio

n process .

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