July 30, 1993

MEMORANDUM

SUBJECT: Fuel Switching to Meet the Reasonably Available Control

Technology (RACT) Requirements for Nitrogen Oxides

(NOx)

FROM: Michael H. Shapiro 

Acting Assistant Administrator

 for Air and Radiation (ANR-443)

TO: Director, Air, Pesticides and Toxics

 Management Division, Regions I and IV

Director, Air and Waste Management Division,

 Region II

Director, Air, Radiation and Toxics Division, 

 Region III

Director, Air and Radiation Division, 

 Region V

Director, Air, Pesticides and Toxics Division,

 Region VI

Director, Air and Toxics Division,

 Regions VII, VIII, IX, and X

I. Purpose

The purpose of this memorandum is to provide guidance to

States on the use of fuel switching to meet the NOx RACT

requirements. As described below, States can meet the NOx RACT

requirements by adopting rules which use a long-term emissions

averaging approach in a manner consistent with the Environmental

Protection Agency's (EPA's) interim guidance for economic

incentive programs (EIP's). The EIP guidance was published in

the Federal Register (58 FR 11110, February 23, 1993).

II. Background

Title I of the Clean Air Act (Act) Amendments of 1990

contains new requirements for areas that have not attained the

national ambient air quality standards (NAAQS). These new

requirements include application of RACT on existing major

stationary sources of NOx in certain areas that have not attained

the ozone NAAQS and in the ozone transport region. The EPA 
2

guidance on these requirements is contained in 57 FR 55620,

November 25, 1992. 

The EPA guidance identifies presumptive RACT for certain

types of electric utility boilers in pounds of NOx per million

British thermal units (Btu) on a 30-day rolling average:

1. 0.45 for tangentially-fired coal burning.

2. 0.50 for dry bottom, wall-fired (other than cell burner)

coal burning.

3. 0.20 for tangentially-fired gas/oil burning. 

4. 0.30 for wall-fired gas/oil burning.

For other source categories, the EPA guidance states that NOx

RACT may be set at levels that are comparable to the above levels

for certain utility boilers. 

The EIP guidance is intended to stimulate the adoption of

incentive-based, innovative programs that will assist States in

meeting air quality goals through flexible approaches which allow

for less costly control strategies and which provide stronger

incentives for the development and implementation of innovative

emissions reductions technology. As described in that guidance,

long-term emissions averaging programs can be used by States to

meet the Act's RACT requirements. Key provisions of the EIP

guidance, with respect to the use of fuel switching to meet the

NOx RACT requirements, are described below.

III. Definitions

A. Fuel Switching

As used in this guidance, fuel switching refers to instances

where a unit historically burned one primary fuel, such as coal,

and under a "fuel switching" program the unit would burn a

cleaner fuel, such as natural gas, during the ozone season and

may switch back to the "historic" fuel for some or all of the

non-ozone season. 

B. Base Year Fuel

For purposes of this guidance, the historical fuel refers to

the fuel that a unit primarily used during calendar year (CY)

1990. The EPA believes that CY 1990 is appropriate since many

Act requirements (such as reasonable further progress) stem from
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this date. States are required to develop a comprehensive 1990

inventory, and the CY 1990 inventory is likely to be the most

accurate information readily available. Further, since this

guidance utilizes an annual emissions equivalency (described 

below), the historical fuel needs to be based on an annual

period. 

More precisely, the historical fuel is defined as the fuel

burned most, on a Btu-weighted basis, during CY 1990. Where CY

1991 or CY 1992 is demonstrated to be more representative of

historic actual operating conditions, those years may be used. 

For example, where a unit burned 90 percent coal during 1990-

1992, that unit is considered subject to the presumptive NOx RACT

limits for coal-fired units; if the same unit used 60 percent gas

in later years, it would still be subject to the presumptive NOx

RACT limits for coal-fired units.

C. Ozone Season

For purposes of this guidance, the ozone season generally

means the period of time that ozone monitoring is required for an

area as defined in 40 CFR part 58, appendix D, section 2.5.

D. Presumptive NOx RACT

For purposes of this guidance, presumptive NOx RACT means

the more stringent of the requirements:

1. adopted by the State into the State implementation plan

(SIP) to meet the NOx RACT requirements, or

2. defined in EPA's guidance published in 57 FR 55620,

November 25, 1992. 

IV. NOx RACT for Fuel Switchers

Limited data indicate that, in some cases, a switch to

natural gas from coal could result in emissions in the 0.10 to

0.40 (pounds of NOx per million Btu) range as compared to the EPA

presumptive NOx RACT emissions rates for gas/oil of 0.20 to 0.30

and for coal of 0.45 to 0.50. This is a relatively broad range

and is based on very little data. The EPA has determined that

there is not enough data available to establish a presumptive NOx

RACT level for a fuel-switcher category. 

As a result, units that switch, for example, from coal

(historic fuel) to gas could fall under either the presumptive

coal or gas/oil NOx RACT limits. However, if fuel-switcher units

were required to meet the presumptive gas RACT limits, those
4

units would face the costs of both fuel switching and add-on

controls, which would remove an important incentive for coal

units to switch to gas. In these cases, EPA believes that the

presumptive RACT limits for coal are appropriate for establishing

the program baseline in an EIP because it is consistent with the

EIP guidance, data are not available to set a fuel switcher

presumptive NOx RACT level, there are clear environmental 

benefits (noted below) when units switch to clean fuels, and fuel

switching might only occur under a coal baseline.

V. Fuel Switching to Meet NOx RACT Through Long-Term Averaging

A. EIP Approach

State rules which allow fuel switching to meet the NOx RACT

requirements are approvable where the rules are consistent with

the EIP guidance for long-term averaging and the guidance in this

memorandum. This approach is applicable to utility boilers as

well as any other source subject to the NOx RACT requirements. 

Any source which meets the NOx RACT requirements through a longterm averaging EIP must also meet all other relevant Act

requirements.

B. Emissions Limitation Requirements

The State rules must include emissions limits on both an

annual and ozone season basis, as described below. 

C. Annual Emissions Limit

The EIP guidance provides States with the flexibility to

meet new RACT requirements, such as the NOx RACT requirements,

through an EIP that yields reductions in emissions at least

equivalent to those which would result from unit-by-unit

compliance with the presumptive RACT limit for that source

category. Under a long-term emissions averaging EIP to meet NOx

RACT, annual emissions of NOx must be less than or equal to

annual emissions that would result from compliance with

presumptive NOx RACT. The specific calculation methodology for

determining annual equivalence is described in the enclosed

appendix to this guidance.

D. Ozone Season Emissions Limit

An EIP that uses long-term emissions averaging to meet the

RACT requirements must include long-term emissions requirements,

as described above, and other requirements to show that the EIP

is equivalent to the presumptive RACT on a short-term basis. For

purposes of NOx RACT, a short-term emissions limit, in
5

conjunction with an annual emissions limit, satisfies these EIP

requirements. The short-term emissions limit must be applicable

in the ozone season and at least as stringent as the presumptive

NOx RACT limit. The more stringent of the State-adopted or EPA

presumptive NOx RACT must be required during the ozone season. 

As discussed in the long-term averaging section of the EIP

guidance, a 24-hour averaging time is generally used to construct

attainment demonstrations in ozone nonattainment plans. 

Accordingly, EPA believes that daily emissions limits should be

considered in the development of the EIP short-term emissions

limit requirements. 

VI. EIP Cost/Environmental Considerations

In general, the EIP guidance indicates (58 FR 11121) that

savings in compliance costs can result from EIP's and that

consideration might be given to the sharing of that benefit

between the regulated sources and the environmental goals of the

Act. The EIP guidance also states (58 FR 11117) that new RACT

requirements must be based on an analysis that considers the

incentive mechanism upon which the EIP is based. The EPA's

assessment of these issues for fuel switching is summarized

below. 

A. Fuel-Switching Cost Considerations

In general, a fuel-switching program would provide new

flexibility to States and industry in meeting certain Act

requirements, including the NOx RACT requirements. Fuel

switching is a viable option for units where natural gas is

readily available since the price of natural gas in the ozone

season may be competitive with other fuels. While still meeting

the Act requirements, industry could, in some cases, avoid much

of the initial capital and operating costs associated with

combustion modifications.

As described above, fuel switching is expected to reduce the

cost to industry of meeting the NOx RACT requirements in some

cases. In other cases, the cost of a fuel-switching program may

exceed the cost of compliance with a presumptive RACT technology

such as a low-NOx burner and overfire air. The costs of a fuelswitching program to industry will vary greatly from unit to unit

due to the availability of gas, price of gas, extent of needed

modifications to the boiler, and monitoring requirements. 

B. Fuel-Switching Environmental Considerations
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The EPA has considered the relative environmental benefits

for fuel switching and presumptive NOx RACT. In terms of the

primary purpose of NOx RACT, that is reducing ozone effects in

areas of high concentrations, it is clear that the increased NOx

emissions reductions due to burning a cleaner fuel during the

ozone season would be much more effective than lesser emissions

reductions at the presumptive NOx RACT levels, which would be

evenly spread over an entire year. The use of natural gas

instead of coal could also substantially reduce annual and

summertime emissions of sulfur dioxide (SO2), carbon dioxide

(CO2), PM-10 (particles with an aerodynamic diameter less than or

equal to a nominal 10 micrometers), and associated toxic

emissions such as mercury. Further, emissions reductions of

these pollutants may be especially effective in the summer with

respect to reducing regional haze and sulfate-related PM-10, both

of which tend to peak in the summer. Thus, the potential

benefits that go beyond the title I ozone and NOx RACT goals

include helping attain/maintain the NAAQS for SO2 and PM-10,

reducing mercury and other air toxic emissions, improving

visibility, and cutting emissions of CO2, a global warming gas. 

The EPA has also considered evidence suggesting that, for

certain ecosystems, reductions in nitrogen deposition that occur

only during the summer would be less effective at reducing acid

deposition and nutrient impacts than reductions that occur

uniformly throughout the year. It is not possible at this time

to fully determine or quantify this relative ecological impact. 

Moreover, due to the inherent limits on the amount of fuel

switching that can occur and the effect of titles II and IV NOx

reductions, wintertime nitrogen deposition would be projected to

decrease in most areas regardless of fuel switching. In

contrast, the ozone related and many of the additional potential

benefits of fuel switching noted above are well known and

quantifiable. In EPA's judgment, substantial additional ozone

reductions occur from fuel switching; this benefit and the

accompanying improvements in visibility, PM-10, air toxics, and

global warming that also occur from fuel switching clearly

outweigh the reduced wintertime benefits. 

 C. Conclusion

The above environmental and cost considerations are

important in interpreting the EIP guidance for the use of fuel

switching to meet NOx RACT. Based on these considerations, EPA

believes that, in cases where fuel switching results in a lower

cost to the source, requiring further environmental benefits

would not be necessary for fuel switching. Moreover, the

potential cost savings may need to be preserved to provide some
7

incentive to sources to achieve these substantial environmental

benefits. 

VII. Enforcement

Each affected source in a long-term averaging program must

comply with all requirements imposed by the program. Each longterm averaging program must:

1. Specify credible, workable, replicable and otherwise

fully enforceable methodologies for appropriately determining

compliance at all emissions units participating in the averaging

program, including methodologies for quantifying emissions, where

appropriate.

2. Require recordkeeping and reporting, consistent with the

required compliance determination methodologies, including

emissions quantification methodologies sufficient for determining

and documenting compliance with the program. These requirements

must contain a mechanism for determining required data, including

emissions at subject emissions units when data are missing,

inadequate, or erroneous. This mechanism must ensure that owners 

of emissions units have a strong incentive to properly perform

monitoring, recordkeeping, and reporting in the first instance.

 

3. Provide adequate civil and criminal sanctions for

failure to comply with applicable program requirements, including

emissions limitations and monitoring, recordkeeping, and

reporting requirements. The program regulatory requirements and

enforcement authorities must preserve the level of deterrence to

noncompliance, at both the State and Federal levels, which would

have otherwise applied in the absence of the averaging program. 

VIII. Projected Results and Audit Procedures

A SIP revision that contains an EIP must include projections

of the emissions reductions the State expects to achieve through

implementation of the program. All EIP submittals must include

documentation which clearly states how sources in an EIP are or

will be addressed in the emissions inventory, reasonable further

progress (RFP) plan (i.e., where the 3 percent RFP plan includes

NOx substitution for required volatile organic compounds

reductions) and attainment or maintenance plan, as applicable.

All EIP's must also contain program audit procedures

designed to evaluate program implementation and track program

results in terms of the actual emissions reductions obtained

during program implementation. The program audit provisions must

include a State commitment to ensure timely implementation of
8

programmatic revisions or other measures which the State, in

response to the audit, deems necessary for the successful

operation of the program.

IX. Emissions Reduction Credits (ERC)

Annual emissions reductions achieved through the EIP that

exceed the annual emissions reductions that would result from

compliance with presumptive RACT may be used to establish ERC. 

However, this guidance does not address establishing or trading

of seasonal ERC.

OAQPS:AQMD:OCPMB:DGRANO:MBINGHAM:13392:7/29/93

FILE:FUELSWJY.BA2: DISK:DGRANO.JK
 Generally speaking, the term "historical" means calendar 1

year 1990 unless another 12-month period is more representative

of normal source operation. This alternative 12-month period

must fall between January 1990 and December 1992.

Appendix: Annual Equivalency Calculation Methodology

A. Emissions Averaging or Emissions Cap

As described below, a long-term averaging EIP may use either

an emissions averaging or emissions cap basis to establish annual

equivalency. Under emissions averaging, if production increases,

emissions may increase proportionately; and if production

decreases, emissions must decrease accordingly. Shutdowns and

curtailments do not provide credit under an emissions averaging

program. Where an emissions cap is set, actual emissions must be

within the emissions cap for all appropriate averaging periods in

the future. Shutdowns and curtailments may provide credit under

an emissions cap under circumstances that will be described in

future guidance.

Both of these options assume that the State has determined a

RACT emissions rate value for each fuel i (up to N fuels) burned

in equipment j (for M types of equipment). The constraints in

this guidance presume that RACT is designated as an emissions

rate per unit of production (in this case heat input). The RACT

may also be designated as a percent reduction from representative

historical emissions rates. If a source wishes to implement a 1

long-term average percent reduction, the values must be converted

to emissions rate limits per unit of production.

Note, where multiple fuels are used in the base year, EPA

generally expects the presumptive RACT to be applicable to the

one primary fuel, and that different emissions rate limits would

be used for other fuels. For example, where coal has been

historically used 80 percent and oil 20 percent of the time in a

wall-fired boiler, the EPA presumptive RACT emissions limit of

0.5 (pounds of NOx per million Btu) might be used in the coalfired portion of the calculation; however, the EPA presumptive

RACT of 0.30 for oil might not be appropriate for the oil-fired

portion of the calculation since the presumed low NOx burner

technology designed to meet 0.5 when burning coal might not be

designed to meet 0.3 when burning oil. In this example, 0.35

might be more appropriate to include in the oil-fired portion of

the calculation; the State needs to determine the appropriate

emissions rate for the secondary fuel(s), considering the control

equipment designed to meet the primary fuel limit.
2

B. Emissions Averaging

Emissions averaging allows an emissions unit to use a

production-weighted average to meet the prescribed emissions rate

limitation (in this case the presumptive RACT limit) on an annual

basis. Actual annual emissions in each future compliance period

(mass per year) must be less than the emissions that would have

occurred if the presumptive RACT limit was met.

If RACT is designated as an emissions rate limitation, then

mathematically the constraint that must be met for every annual

compliance period in the future is as follows:

Ei=16NEj=16MRACTij X Annual Heat Inputij $

Total Annual Actual NOx Emissions 

Where RACTij generally equals the lowest federally enforceable

emissions rate limitation that applies to unit j using fuel i. 

There are limited exceptions to this generalization where an

emissions rate lower than RACTij would apply (e.g., see the

baseline section of the EIP guidelines). Further guidance is

expected to be released on this soon.

C. Emissions Cap

An emissions cap is an averaging approach that imposes a

limit on annual mass emissions from an emissions unit. The cap

is set using historical production rates and RACT emissions rate

limitations as shown below:

Emissions Cap = Ei=16NEj=16MHistorical Production Rateij X RACTij

Where RACTij is defined the same as above.

D. Example Determinations of Annual Equivalency

a. Single Fuel Emissions Averaging Example

Ei=16NEj=16MRACTij X Annual Heat Inputij $

Total Annual Actual NOx Emissions 

i = 100% coal

j = wall-fired utility boiler

assume presumptive coal RACT = 0.5 (pounds NOx/MMBtu)

if 1996 actual annual heat input = 4 X 10 MMBtu 6

then actual 1996 annual emissions could not exceed:

(0.5) X (4 X 10 ) = 2 million pounds or 1000 tons NOx 6
3

b. Single Fuel Emissions Cap Example

i = 100% coal

j = wall-fired utility boiler

assume presumptive coal RACT = 0.5 (pounds NOx/MMBtu)

if historic (CY-90) production rates = 3 X 10 MMBtu/year 6

then the emissions cap is:

(3 X 10 ) X (0.5) = 1.5 million pounds or 750 tons NOx/year 6

Annual emissions must, therefore, not exceed 750 tons for all

future years.

c. Multiple Fuel Emissions Averaging Example

Ei=16NEj=16MRACTij X Annual Heat Inputij $

Total Annual Actual NOx Emissions 

i = 75% coal; 25% oil 

j = wall-fired utility boiler

assume presumptive coal RACT = 0.5 (pounds NOx/MMBtu)

assume the State has determined that the low NOx burner techn

ology

desig

ned

for

coal

will

resul

t in

a

0.35

emiss

ions

rate

when

burni

ng

oil

if 1996 actual annual heat input (coal) = 3 X 10 MMBtu and 6

 1996 actual annual heat input (oil) = 1 X 10 MMBtu 6

then actual 1996 annual emissions could not exceed:

(0.5) X (3 X 10 ) = 1.5 million pounds plus 6

(0.35) X (1 X 10 ) = 0.35 million pounds 6
4

which = 1.85 million pounds or 925 tons NOx

d. Multiple Fuel Emissions Cap Example

Emissions Cap = Ei=16NEj=16MHistorical Production Rateij X RACTij

i = 66.6% coal; 33.3% oil

j = wall-fired utility boiler

assume presumptive coal RACT = 0.5 (pounds NOx/MMBtu)

assume the State has determined that the low NOx burner techn

ology

desig

ned

for

coal

will

resul

t in

a

0.35

emiss

ions

rate

when

burni

ng

oil

if historic (CY 1990) production rates for coal = 2 X 10 

6

 MMBtu/year and 

historic (CY 1990) production rates for oil = 1 X 10 MMBtu/year, 6

then the emissions cap is:

(2 X 10 ) X (0.5) = 1 million pounds plus 6

(1 X 10 ) X (0.35) = 0.35 million pounds 6

which = 1.35 million pounds or 675 tons NOx

Annual emissions must, therefore, not exceed 675 tons for all

future years.