8
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## Chapter **8 Other Configurations and Fuels** 
**Contents** 8.1 General
................................ ................................ ................................ ................................ ............. 2 8.2 Combined Heat and Power and Industrial Cogeneration
................................ ................................ . 2 8.3 Biomass
................................ ................................ ................................ ................................ ............ 98
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### 8.1 **GENERAL Comment 8.1**  **- 1:**  One commenter (9471) stated that the proposed standards do not account for combined cycle units that have a two
- on - one or three
- on - one configuration that may operate while one combustion turbine is out of service for maintenance, which reduces efficiency d ue to reduced heat input into the steam cycle. Though the mass emissions may decrease during this mode of operation, the lbs CO 2 /MWh will increase, resulting in a violation of the standard despite the lower total emissions. One commenter (10693) stated th at EPA should not exempt power plants that combust solid waste, which contains a diverse mix of waste materials, some benign and some very toxic including trace metals and trace organics. Additionally , landfill gas consists primarily of carbon dioxide, methane, and non - methane organic compounds. **Response 8.1 -**  **1:** The purpose of this rulemaking is to establish CO 2 standards for fossil fuel
- fired EGUs. Municipal waste combustors have not been typically included in this source category . Therefore, even if one of those units me ets the general heat input and electric sales criteria , we are not finalizing CO 2 emission standards for municipal waste combustors subject to subpart Eb of 40 CFR part 60. 

### 8.2 **COMBINED HEAT AND PO WER AND INDUSTRIAL C**  **OGENERATION Comment 8.2**  **- 1:**  Citing the environmental benef its and efficiency

of adding cogeneration to an industrial steam sy stem and generating electricity from excess steam, one commenter (9201) agreed with EPA's proposal to exempt most industrial cogeneration units. **Response 8.2 -**  **1:** T he intent of this rulemaking is to cover utility CHP units since they serve essentially the same purpose as electric
- onl y EGU s (i.e., the sale of electricit y to the grid), but not industrial CHP units since they

serve a different primary purpose (i.e., pro viding useful thermal output with electric sales as a b yproduct). Based on public comments and after further anal ys is, the EPA makes two adjustments to the definition of applicability of this rule to CHP units. See section III.D.2 of the final rule preambl e. **Comment 8.2 -**  **2:** Several commenters (1898; 8994; 8952; 9002; 9503; 96 65; 9592; 10682; 9201; 10038; 10095; 10239; 10869) stated they were strong supporter of CHP plants and approved of EPA's support of CHP sources and their increased deplo ym ent and excluding them from th e emission standards. Commenter (10095) stated that they support EPA specificall y providing CHP facilities a 5% credit for avoided energy

loss in the transmission of electricity
. Two commenters (8944, 8952) stated that while recognizing that the propose d provisions for CHP reward the higher efficiency , the commenters stated the industry would be far better served and incentivized through an exemption of the technology from the proposed rule. Two commenters ( 9194; 9592) supported excluding CHP units th at generate greater than 25 MWs with an overall efficiency

greater than 70%. According to the commenter, CHP units have been built by several utilities and have provided combined heat and power energy with equivalent CO 2 emissions well below the proposed s tandard. It would be counterproductive to subject these units to a GHG NSPS standard.8
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One commenter (9665) believes that the agency should exempt from the GHG NSPS new CHP facilities that achieve a s ys tem efficiency of 75% (lower heating value) or highe r regardless of how much electricit y it supplies to the grid. According to the commenter, an exemption would not create a regulatory

loophole as any

CHP facility

that could achieve a s ys tem efficiency of 75% would easily meet the proposed emission limits. The benefit to a qualifying facility would be avoided time and expense of monitoring, recordkeeping, reporting, etc. One commenter (8952) stated that by not exempting CHP units, the proposed rule incentivizes the development of capacity that will remain outside the current grid s ys tem. The commenter stated that it would be a burden on the end
- user to catalog each unit of thermal energy reduced or estimate the resistive losses in the transmission sy stem. Because the rule would onl y apply to grid
- connected generation, the rule could cause CHP facilities to not connect to the grid s ys tem so as not to be captured by this requirement. This would result in the additional negative consequence that CHP facilities deny their capacity

to the grid foregoing their po tential role as s ys tem support in unusual events. Several commenters (10098, 10085, 9733, 10239) stated that given their energy efficiency

and environmental benefits and the fact that the Administration is actively promoting CHP in other contexts, EPA sh ould exclude CHP units from the rule. One commenter ( 7990) recommended that the Proposed Rule be modified to establish a reasonable level of CHP efficiency
. One commenter (10098) stated that for EPA to impose regulations here that could discourage new facilities. At a minimum, if EPA regulates CHP, it must fully recognize the benefits it offers b y applying an appropriate discount for avoided electricity losses through transportation and by counting all thermal energy toward gross energy

output. Severa l commenters (9733, 10098, 10239) stated that if EPA maintains, however, that industrial, commercial, and institutional CHP units should be included under the rule, the commenters supports the Agency 's proposal to apply a discount for avoided electricity l osses through transmission. However, based on data from the U.S. Energy Information Administration, the discount should be increased from 5% to 7%. One commenter (9733, 9002) stated that the final rule should exempt all CHP units where useful thermal out put accounts for at least 20 percent of the total useful output as EPA had considered in its April 2012 proposed rule. According to commenter 9733, the lower emission rates for CHP facilities means that new CHP boilers and new turbines will already m eet s ubpart D/KKKK/TTTT requirements. With the right policy

and economic conditions, CHP can represent a significant portion of U.S. electric capacity
. In 2008, the Department of Energy's Oak Ridge National Laboratory calculated that if CHP provided 20 percent of U.S. electric capacit y, carbon emissions could be reduced b y m ore than 800 million metric tons (MMT) per ye ar. In this 20 percent scenario, over 60 percent of the projected increase in CO 2 emissions between now and 2030 could be avoided. The commenter (9733) stated that by exempting CHP facilities meeting the proposed power and thermal energy minimum outputs, EPA would provide incentives for new generation facilities to consider co
locating at manufacturing and other steam hosts and to develop highl y - efficient CHP, as opposed to stand alone power generation. Such an exemption would provide a positive precedent for EPA's8
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guidelines for state plans for existing facilities under CAA section 111(d) as well as for policy makers who are continuously

examinin g their policies to incentivize CHP. The commenter (9733) stated that if EPA does not exempt all CHP units from, it should at least exempt industrial units as fundamentally different than EGUs. While the commenter does not agree with the proposal to continue to subject non
- utility units to other aspects of the standard of performance, such as recordkeeping, and relieving them onl y of their obligation to meet the emission limits, the commenter does appreciate that EPA is recognizing the distinctions be tween industrial and utility combustion turbines. The commenter stated that EPA should continue to make those distinctions in its EGU regulations, as appropriate, and that EPA's recognition of the distinction supports exempting industrial CHP units from re gulation. One commenter (10239) stated that in recognition of the benefits that CHP units offer, the DOE has adopted a number of initiatives to promote industrial distributed energy in the United States, and the Administration has set a national goal of increasing CHP deploy ment by 40 gigawatts (50%) b y 2020. Exempting entirely

industrial CHP units will promote adoption of efficient, reliable, and low
- emission distributed generation. Because industrial CHP units must meet source
- specific needs, the balanc e of thermal energy

and electricity

production vary

and may shift over any

given time period making calculation of thermal energy equivalence (conversion to kWh) extremely challenging for reporting and enforcement purposes. Regulation is further complicate d by the use of third party
- owned CHP units at adjacent industrial facilities. EPA also failed to assess whether industrial CHP units could meet the proposed standards rel yi ng instead on a h ypothetical example of a CHP. EPA should exclude industrial CHP un its from Section 111 until it can determine how CHP units could calculate their GHG emissions under real
- world conditions and how the proposed emission limitation would impact those units. One commenter (10239) stated that if EPA does not exempt all CHP units, EPA should exempt CHP units whose primary

purpose is not the production of electricity for sale in the retail market. Industrial CHP facilities provide thermal energy and, to a lesser degree, electric energy for internal facility operations and are ty

pically designed to maximize thermal energy output. The electric output to a utility power generation s ys tem is limited to residual electric power that cannot be used by the facility . The production of such electricity is not the primary

purpose of the C HP unit. The EPA should recognize that these facilities are not fossil fired EGUs and exclude them from the subcategories to which the proposed rule applies. To provide greater certainty for facilities, the commenter urged EPA to adopt a quantitative test that ensures that industrial CHP units used for manufacturing or oil and gas facilities are excluded from fossil fuel
- fired EGU subcategories. One commenter (10239) stated that using a variety of methods, EPA could exclude from this rulemaking:
 Any CHP f acility that supplies less than two thirds of its net combined thermal and electric output to a utility

power generation distribution system or to a utility steam sy stem distribution sy stem on an annual MMBtu basis.
 CHP units that simultaneously produce p ower and heat and, at the time the unit is placed into service, have an energy

savings of 10% or more when compared to units that produce heat and power separatel y.  CHP facilities based on Standard Industrial Classification or other codes to distinguish be tween the EGUs that are subject to the NSPS and manufacturing and oil and gas facilities that are excluded from it.8
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 CHP units that have total thermal energy production that approaches or exceeds the unit's electricit y production.
 Industrial CHP units by fu el ty pe. For example, the EPA could exempt all industrial CHP unit that are fired predominantly with biomass, are fired with gaseous fuels (i.e., pipeline, natural, field, and refinery

fuel bases). One commenter (9774) stated that the potential applicability of the rule to CHP units creates a significant disincentive for new projects that would only be viable if they

sell electricity to the grid. Applicability

of the NSPS standard may also result in the loss of current CHP capacity. The commenter gave an example of a facility that currently

operates solid fuel fired fluidized bed boilers to generate electricit y and to suppl y thermal heat to nearb y industry . CCS cannot be expected to be cost
- effective for this ty pe of electric supplier. Currentl y, the proposed regulation would likely prohibit the facility from replacing these units using the same fuels in the future. The result may be that the facility discontinues operation instead of efficientl y provi ding power and heat to end
- users at lower CO 2 rates than can be achieved b y separated dedicated power s ys tems serving each need. The commenter stated that EPA should exclude efficient CHP from regulation under the proposed NSPS rule. Exempt CHP could potentially

be defined as projects achieving a 75% overall efficiency although the appropriate level should be further evaluated. This recommended approach will actuall y encourage the addition of CHP electricity

to the grid. One commenter ( 9002) stated that **t**h e proposal appropriatel y does not cover the forest products industry CHP units. This is appropriate due to the substantial energy efficiency

and avoided GHG emission benefits provided b y this industry 's CHP units. One commenter ( 10554) stated that CHP fa cilities should be subject to the same requirements as electric
- only

generators under any

NSPS for GHGs. The CO 2 standard of performance should appl y to all sy stems including CHP facilities that supply more than one
- third of their energy output as electric ity
. One commenter (9503) urged EPA to add a fourth criterion for excluding CHP facilities for CHP facilities that are highl y efficient. This exclusion could make use of the definition of CHP already set forth in the Proposed Rule, and include an efficien cy benchmark. The commenter's recommendation is to set the benchmark for highl y efficient at 65 percent or greater overall plant efficiency , including thermal, mechanical and electric output. The reason is that this number is in use by several federal and state policies aimed at promoting efficient CHP. One commenter (8952) prefers to exempt a SC turbine, the prime mover in the CHP. One commenter (8918) stated that given the infinite potential heat
- to - power ratios of CHP facilities, the equivalency

approa ch used by

EPA may

limit the development of CHP facilities because the approach cannot fairl y assess all of the potential ratio configurations and requires that a separate heat and power base case be developed. In many cases, an accurate base case cannot b e established. Lastly , the EPA's equivalency

approach is predicated on the assumption that the steam host would have installed new equipment subject to a NSPS. **Response 8.2 -**  **2:** See section III.D.2 of the final rule preamble for the EPA’s response to this comment. **Comment 8.2 -**  **3:** One comm enter (9042) agreed that an affected facility should be able to use its non
emitting energy

generation to comply

with the emission standards. They suggested that EPA also8
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consider allowing affected facilities to utilize their off
- site non
- emitting energy g eneration to comply with the emission standards to the extent that it can be quantified and verified. **Response 8.2 -**  **3:** The final rule permits the use of integrated non
- emitting technologies as a means of reducing emission rates. **Comment 8.2 -**  **4:** One commenter (9733) stated that two recent distributed generation rules use different approaches than the 50% credit for thermal output used by the FERC and the 1997 utility NSPS. Stating that CHP is more environmentally beneficial than the existing NSPS approach, the commenter recommended the Re gulatory Assistance Project (RAP) approach using information such as the desired standard, total emissions, thermal emissions and electric output. They stated that one benefits of this approach is that CHP units that produce primaril y electricit y would have to operate at an input
- based emissions rate that is close to what utility units must achieve. CHP units producing primarily thermal output would be able to operate at an input
- based emissions rate that is close to what industrial boilers must achieve. **Response 8.2 -**  **4:** Based on further consideration and review of the comments submitted, the EPA is finalizing 100 percent credit for useful thermal output for all newl y constructed, modified, and reconstructed CHP sources. Full credit for useful thermal output appropriately recognizes the environmental benefit of CHP. See sections III.F.2 and III.D.2 of the final rule preamble. **Comment 8.2 -**  **5:** One commenter (9733) stated that they are very concerned about the precedent of a 75% factor for useful thermal output. Congress is considering an ov erhaul of tax incentives for clean energy and is deliberating whether CHP should receive tax credits, and whether and how to credit CHP thermal output. Congress likely will look to the final rule as an important precedent on this subject. Further, there ar e 42 states with either a Renewable Portfolio Standard (RPS) or an Energy Efficiency Resource Standards (EERS), 21 allow CHP to be used for compliance. CHP supporters continually are seeking to expand CHP opportunities in other states. EPA is well aware of these efforts and agency staff have helped provide technical resources to further the education of participants engaged in the legislative deliberations. It makes no sense for EPA to support these efforts on the one hand, but then to set an adverse nation al precedent for CHP on the other. **Response 8.2 -**  **5:** See Response 8.2
- 4 for the EPA’s response to this comment. **Comment 8.2 -**  **6:** One commenter (10682) stated that the vast majority of CHP projects will not be subject to the rule. The standard onl y applies to a facility that supplies more than one
- third of its potential electricity output and more than 219,000 MWh net electric output to the grid per year. Net electric output excludes power purchased b y the facility during the ye ar. As EPA recognizes, CHP sy stems are often owned and operated by third
- party

developers, who are distinct from the thermal host. This arrangement is necessary because of the substantial upfront cost and ongoing maintenance responsibilities for a CHP or WHP system. The commenter supports EPA's proposed solution of clarifying that applicability of the rule will be based on gross electric sales to the utility minus purchased power of the thermal host facility . This recognizes the reality that such sales do not constitute sales to the grid. One commenter (10095) stated th ey also support EPA's intent to subtract purchased power of adjacent facilities in calculating the 219,000 MWh applicability criteria threshold for CHP facilities. In order to subtract the purchased power of adjacent facilities, the commenter believes it i s EPA's intent not to8
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require the direct transmission of electricity to the adjacent facility. EPA needs to provide clarification regarding this calculation. One commenter (10095) stated that CHP facilities will potentially be dependent on third parties f or applicability

and compliance determinations. Due to uncontrollable third party risks, EPA needs to provide flexibility

to CHP facilities in the event an adjacent facility stops purchasing electricit y and/or thermal output or has an outage/malfunction. F or example, if an issue arises with a CHP facility's electricit y and/or thermal off
- taker, EPA should allow the CHP facility time to find a new off

- taker or reconfigure the facility

prior to making applicability and/or compliance determinations. **Response 8.2 -**  **6:** Based on p ublic comments and after further anal ys is, the EPA makes two adjustments to the definition of applicability of this rule to CHP units. See section III.D.2 of the final rule preamble. **Comment 8.2 -**  **7:** One commenter ( 10681) supports that an appropriate thermody namic calculat ion be made to determine the useful energy used rather than a simplified approach based on what could be possible. The thermodyn amic calculations for each CHP plant can be submitted in a report to the permitting authority for review. The report would propo se the equations and justifications supporting thermal energy

used and thermal energy lost. The report and the calculation methodology would then be approved for use b y the owner/operator of the unit. Simplified methods will provide a disincentive to a CHP facility

or cogeneration facility

from taking maximum benefit of the steam produced or energy contained in hot flue gases. **Response 8.2 -**  **7:** The EPA believes the final calculation is adequate. See final preamble. **Comment 8.2 -**  **8:** Several commenters (8918; 8972; 9503; 9665; 8972; 10038; 1 0682) stated that they encourage EPA to account for and encourage useful heat output from CHP and recommended that the rule should increase the thermal credit from 75 to 100% to account for all of the useful thermal output from a combined heat and power or waste heat to power s ys tem. One commenter (9665) stated that no reasons are given to limit to 75 percent the amount of useful thermal output that facilities can count towards its gross energy

output, despite allowing 100% of electric and mechanical output to be counted. EPA also solicits comment on whether the thermal "discount should instead be set "on a range of two
thirds to three
- fourths." According to commenter 9665, EPA has offered no justification for why thermal output should be discounted at all. According to commenter 9665, any thing less than 100% under values the true efficiency

of the facility

and runs counter to EPA's goal of maximizing energy efficiency
. Multiple commenters (9733, 10239) stated that they oppose the provision that would only co unt 75% of the useful thermal output of CHP units and if EPA does regulate CHP units, they should count 100% of useful thermal output for compliance determinations. One commenter (9733) stated that it is unclear why EPA discounted useful thermal output. EPA may have relied on previous CAA rulemakings in which it was concerned about so
- called "sham" CHP. The commenter stated that EPA had noted that the Federal Energy R egulatory

Commission (FERC) provided only a 50% credit for thermal output for "Qualifying Facilities." EPA may have believed that FERC was attempting to dissuade "sham CHP" units by not providing overly

generous benefits to them. If EPA included a 75% fact or to help prevent "sham" CHP units, the Proposal already has such provisions. First, to qualify as a CHP unit, 20% percent of the total gross useful energy output must consists of useful thermal output. Further, proposed section 60.4373(d) requires that " [i]f the affected stationary combustion turbine is a CHP stationary combustion turbine, you must also install, calibrate, maintain,8
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and operate meters to continuously determine and record the total useful recovered thermal energy ." By requiring continuous monitoring, this provision should help preclude so
- called "sham" CHP. One commenter (10239) stated that EPA recognizes that this may be incorrect and seeks comment on the appropriateness of crediting a range of two
- thirds to three
- fourths of the useful thermal output in the final rule. The commenter does not believe that any discount is appropriate. The commenter stated that the 2006 NSPS for Stationary Combustion Turbines awarded a full (100%) thermal credit and several states have awarded a 100% thermal credit. The EPA is aware of this precedent. The Proposed Stationary

Combustion Turbine Rule favorabl y cited Texas' permit
- by
- rule regulation, which gives facilities 100% credit for steam generation thermal output. Second, the Associations agree that a dis count for avoided electricity losses through transmission and distribution is warranted. However, as a practical matter, average national transmission and distribution losses are closer to 7%. Thus, if the EPA includes CHP in the final rule, the Associatio ns urge EPA to increase the discount factor from 5% to 7%. One commenter ( 7990) recommends that EPA align its regulation with the CHP performance standard under the Public Utility

Regulatory

Policies Act (PURPA) program, which uses a thermal discount fac tor of 0.5 for thermal energy output. **Response 8.2 -**  **8:** See Response 8.2
- 4 for the EPA’s response to this comment. **Comment 8.2 -**  **9:** Several commenters (9503, 8972, 9665, 10682) favor increasing the line loss credit for CHP. Commenters (8972
- 180; 9503
- 6748) stated that the proposed line
- loss credit does not accurately reflect avoided line losses and suggested that, based on information from the EIA, it be increased to 7 percent to reflect national average line losses. One commenter (9665; 10038) stated that EPA should increase the credit from 5 percent to 6 percent to reflect EIA's estimated national average line losses. The commenter (9665) stated that EPA does not explain why 5 percent is an appropriate credit in light of EIA's estimate and other studies that estimate losses at times to be a s much as three times higher than the national average. One commenter (8918) urges EPA to continue to recognize this benefit with its transmission factor in the proposed NSPS. One commenter (7990) stated that the transmission and distribution (T&D) loss fa ctor should appl y only to the electricity used on
- site. The electricity supplied to the grid should not be discounted as this exported electricity will experience T&D losses similar to other central station power generation. **Response 8.2 -**  **9:** CHP units are located closer to load centers than remote non
- CHP EGUs. This final rule only includes CHP units that sell a significant portion of their potential electric output to the grid. While it is not possible to precisel y identify the line loss benefits, but 5 percent is a reason able approximation. **Comment 8.2 -**  **10:** One commenter ( 10681) questioned the including an adjustment factor for avoided line losses. Being able to account for avoided line losses only makes sense when it is legall y possible for a plant with a CHP unit to utilize net metering. If EPA wants to further encourage, CHP, it could draft this rule to allow for the avoided line loss adjustment in states where large
- scale (in terms of 10s of MWs) net metering is allowed. **Response 8.2 -**  **10:** The line loss credit accounts for CHP units being located close to electric load centers, thus avoiding transmission losses. It is not related to net metering.8
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**Comment 8.2 -**  **11:** One commenter (9665) supports EPA's proposal to amend the definition of "net electric output" to ensure that third
- part y CHP developers are treated the same as CH Ps and adjacent "thermal host" facilities that are under common control. The commenter agrees that this addresses an existing inequity

found in the existing NSPS and would serve to further promote additional installations of CHP facilities. **Response 8.2 -**  **11:** The EPA apprec iates the support of the commenter. **Comment 8.2 -**  **12:** One commenter (9665) recommends that EPA revise the definition of "potential electric output," to allow CHP facilities to determine their potential electric output based not just on a unit's "maximum design heat input ca pacity ," but on its total system efficiency . Such an approach would reward units that maximize the efficient use of their fuel inputs and encourage others to do the same. Under the current definition, there is no incentive for facilities to improve overall system efficiency
. **Response 8.2 -**  **12:** See Response 8.2
- 6 for the EPA’s response to this comment. **Comment 8.2 -**  **13:** One commenter (10682) was very supportive of CHP and Waste Heat to Power (WHP) as cleaner, more cost
- effective and more efficient alternatives to traditional power generation. The commenter stated that maximizing waste heat capture and use from power generation (CHP) and industrial operations (WHP), and improving supply
- side energy efficiency , including both CHP and WHP, can reduce power sector greenhouse gas emissions while at the same time saving families and businesses money , cutting co
- pollutant emissions, stimulating local economies, and creating jobs. Mobilizing demand
- side energy efficiency , expanding renewable energy generation and shifting use to cleaner generation sourc es similarly offer significant potential to reduce emissions from conventional power plants. The commenter recommended that EPA adopt a system
- wide approach to carbon reduction from existing power plants reflecting the full range of solutions that can secu re meaningful and cost
- effective emissions reductions. The commenter cited the findings from a 2008 DOE study quantifying the environmental benefits of an increasing the presence of CHP and WHP capacity . The commenter provided examples of how CHP plants have both provided power to the grid and steam to nearb y industrial plants. **Response 8.2 -**  **13:** In making reference to carbon reduction from existing power plants , the comment appears to address the proposed carbon pollution emission guidelines for existing EGUs (79 FR 34830, June 18, 2014) rather than the proposed standards of performance for GHG emissions from new EGUs. As such, a response is not provided here as this comment is outside the scope of this rule. 

### 8.3 **BIOMASS Comment 8.3**  **- 1:**  Several commenters (9409; 9733; 9425; 1003 1; 10045; 10095 ; 10052; 11056) supported treating emissions from biomass differently than fossil fuels including exempting emissions from the combustion of biomass. One commenter (9733) stated that based on the GHG avoidance from the use of forest products manufacturing residuals, EPA should not regulate biogenic CO 2 emissions from the combustion of biomass in affected CHP units. The commenter recommended that EPA clarify that the rule is intended to exclude all biogenic CO 2 associated with burning biomass under the NSPS until EPA has completed its science review of biogenic CO 2 emissions. The commenter provided references to characterize the benefits of using biomass residuals for energy production, including the NCASIstudy providing8
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evidence of the impact of using resi dual biomass as fuel versus their disposal on global warming. They stated that disposal will produce more GHG than using the residuals for energy production. One commenter (9425) stated that in setting standards for units burning natural gas, EPA must re cognize that a unit converted to gas from coal or oil will not be phy sically capable of meeting the same standards as a new, green - field natural gas unit. Conversion to lower carbon intensive and/or carbon neutral fuels is being considered within our indu stry as an option to meet other non
- GHG regulations. New NSPS GHG standards should not discourage conversions to these other fuels. The commenter specifically requested that biomass be exempted and considered a carbon neutral fuel. One commenter (10031) stated that E PA sh oul d continue to exempt bi om ass - fir ed units from the s tandards in the rul e. Mor eove r, EPA should d evelo p an approach for crediting new unit s that c o - fire with biomass , thereby

equitably accounting
- in the final rule
- for the amount of CO 2 sequestered by the applicable bioma ss fuel. One commenter (10095) stated that they support EPA's proposal that an EGU that primarily fires biomass would not be subject to the proposed CO 2 emissions standards. This exclusion incentivizes the use of biom ass; however, EPA should further incentivize its use by excluding all biogenic CO 2 emissions from an affected facility's compliance calculation. Such an exclusion is consistent with 40 C.F.R. part 98 (the mandatory GHGRP) which requires separate reporting of CO 2 emissions from fossil fuels and biogenic sources. EPA should allow the use of the 40 C.F.R. part 98 calculation methodologies to determine a unit's biogenic CO 2 emissions for compliance with this proposal to be consistent with the metric tons of CO 2 that the unit will report to EPA under 40 C.F.R. part 98. Indeed, [a] long standing inventory convention adopted by

the IP CC, the UNFCCC [United Nations Framework Convention on Climate Change], the U.S. GHG Inventory , and many other reporting programs is separate treatment of emissions of CO 2 from combustion of biomass and biomass
- based fuels from emissions of CO 2 from the combustion of fossil
- based products. One commenter (10045) stated that emissions of Crop
- Derived CO 2 and any indirect CO 2 emissions ass ociated with production and gathering of crop residues as EGU fuel are harmless to the global warming process and, therefore, emissions of Crop
- Derived CO 2 must be excluded from compliance determinations under the instant NSPS once finalized. The commenter (10045) stated that they analyzed the changes in atmospheric CO 2 for four different industries: corn wet milling, corn dry milling, corn stover combustion , and wastewater treatment. For the industries studied, the changes are all positive, i.e., the cumulative effect of processing biogenic carbon at these facilities is to reduce atmospheric CO 2 levels. As part of their submittal, the commenter provided details of these analy ses. One commenter (9676) stated that EPA cannot on the one hand defer regulation of biogenic emissions under the Tailoring Rule because of the necessity to study the science while on the other hand adopt a regulation that draws an arbitrary limit on how much fossil fuel can be used at an affected facility under NSPS. One c ommenter ( 9409 ) stated that as the focus of the proposal is fossil fuel
- fired electric utility steam generating units and stationary combustion turbines, biomass
- fired EGUs do not fit within either of the source categories that EPA seeks to regulate here. Subpart Da applies onl y t o EGUs that combust minimum quantities of fossil fuels and biomass
- fired EGUs fall outside of the applicability requirements of subpart KKKK. Supra, biogenic CO 2 emissions are distinct from fossil fuel CO 2 emissions because biomass is p art of the natural carbon cycle and the carbon emitted from biomass
- fired EGUs is rapidly cycled between atmospheric and terrestrial carbon pools. Given these important distinctions, there is no basis to expand these source categories to include biomass
- fi red facilities in this proposed rule. Also, it8
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would be premature for EPA to impose standards on biomass
- fired EGUs under an y source category at this time because EPA is still in the process of developing a policy for how, if at all, it will account for bi ogenic CO 2 emissions in regulations designed to reduce atmospheric GHG concentrations. International and domestic regulators also have consistently recognized that biogenic CO 2 emissions have no net impact on atmospheric CO 2 concentrations. Until EPA completes this process and issues a final rule addressing how to account for biogenic CO 2 emissions, the Agency simpl y has no scientific or technical basis on which to set standards of performance for CO 2 emissions from biomass
- f ired EGUs. One commenter (9409) stated that EPA's proposed Tailoring Rule directed that sources should rel y on EPA's GHG Inventory

to calculate a source's GHG emissions. The GHG Inventory does not count CO 2 emissions from combustion of biomass at station ary sources. The final Tailoring Rule reversed course to regulate biogenic and fossil CO 2 emissions in the same manner. The commenter has petitioned EPA to reconsider the Tailoring Rule's treatment of biomass combustion. EPA granted petition for reconsider ation of its biogenic policy . EPA's decision to reconsider its Tailoring Rule appropriatel y was met with broad endorsement by the Obama Administration. EPA is conducting a thorough scientific review of the climate impacts of biogenic CO 2 emissions and plan s to develop a new regulatory approach to biogenic CO 2 emissions. One commenter (9409) described the uncertainty resulting from the proposed NSPS for sources using or considering using biomass as fuel. EPA's proposal to treat biogenic and fossil CO 2 emi ssions from co
firing EGUs in the same manner raises significant uncertainty for existing facilities that may consider co - firing biomass in the future and has the potential to foreclose any further expansion of biomass co
firing at coal
- fired EGUs. The commenter stated that until EPA establishes GHG standards for modified and reconstructed sources, fossil fuel
- fired EGUs that make changes to accommodate co
- firing of biomass will be at risk of triggering the proposed GHG emissions limits. The uncertainty cau sed b y such a provision could, as a practical matter, deter an y expansion of biomass co
- firing until the regulatory status of modified sources is clarified. Treating biogenic and fossil CO 2 emissions in the same manner will mask the GHG emission benefits that co
- firing with biomass can offer. The commenter also summarized the events surrounding EPA's deferred application of PSD and Title V to biogenic CO 2 emissions for three ye ars to allow a scientific review of biogenic CO 2 emissions and the court challeng es to that deferral. One commenter (9409) stated that EPA and the states should incorporate, to the fullest extent possible, the GHG emission mitigation benefits that biomass has to offer in forthcoming existing source NSPS rules. Recognizing the potential climate benefits, the commenter urges EPA to account for the role that biomass energy

can play in reducing net GHG emissions, both at a facility
- by
- facilit y level through co
firing with fossil fuels and at a broader utility or state level through construction of biomass
- fired EGUs in lieu of fossil fuel
- fired EGUs. The commenter stated that policies that promote additional afforestation or reforestation increase the amount of land that is activel y sequestering carbon from the atmosphere. Wood products store carbon throughout the entire life of the product, and in many cases, they can be substituted for more carbon intensive alternatives, such as concrete or steel. Thus, promoting a strong and healthy

forest products industry

is an effective way of reducing net GHG emissions. As it develops standards, regulations, or guidelines to address GHG emissions from existing sources under Section 111(d), the commenter urges EPA to work closely with the USDA and in particular the U.S. Forest Service to en sure that it fully and appropriately

incorporates the GHG mitigation benefits of forest biomass. The commenter also urges EPA to accommodate and promote existing state programs that recognize the climate benefits of forest biomass.8
- 12

Some commenters (10119; 10693) do not support the combustion of biomass for electricity generation nor an exemption of biomass
- fueled power plants. One commenter (10119) stated that e ven if net biogenic carbon cycle effects are taken into account, emissions from biomass power plants can increase atmospheric CO 2 concentrations for decades to centuries depending on feedstocks, biomass harvest practices, and other factors. Multiple studies have shown that it can take a very long time to discharge the "carbon debt" associated with bio energy production, even where fossil fuel displacement is assumed, and even where "waste" materials like timber harvest residuals are used for fuel. One study , using realistic assumptions about repeat bioenergy harvests of woody biomass, concluded that the resulting atmospheric emissions increase may even be permanent. EPA thus cannot assume that "biogenic" CO 2 emissions have no effect on the climate. "Biogenic" and fossil CO 2 are indistinguishable in terms of their atmospheric forcing effects. Rather, a fu ll and scrupulously

accurate life
- cycle anal ys is is essential to understanding the greenhouse gas implications of burning biomass for energy
. One commenter ( 10693) stated that the environmental and health impact of biomass power is directly related to the feedstock from which the energy is derived. For example, urban waste, such as construction or demolition debris, is usually inexpensive relative to other biomass feedstocks, and combusting this debris at a biomass plant diverts it away from landfills. Howe ver, such waste may be of low
- quality , meaning that more feedstock is required to produce a given amount of electricit y, or contain high
- levels of impurities, resulting in greater air emissions. Biomass combustion increases the risk of the emission of nonc arbon air pollutants releasing many of the same air pollutants as fossil
- fuel generation, although the quantities may differ substantially

on per MWh basis. Without controls, combustion of biomass for power production can result in PM emissions more than 2 0 percent higher than emissions from an uncontrolled coal plant. Emissions of carbon monoxide and VOCs can be more than 400 percent and 2,000 percent higher than emissions from a coal plant, respectively . In contrast, NOx emissions may

be nearl y 60 percent lower and SO 2 emissions are virtually eliminated. Combustion of wood wastes, such as construction and demolition debris, may also produce toxic air pollutants. One commenter (9198) stated that they are concerned that the rule may have negative, unintended consequences for renewable energy and materials management efforts, as well as their ability to market renewable alternative fuels to customers. The commenter was particularl y troubled that the proposed treatment of biogenic CO 2 emissions may set a preced ent for CO 2 emissions accounting in other Agency actions, such as the Section 111 rules for modified and existing power plants, as well as for permitting under the GHG Tailoring Rule. EPA proposes to apply the same accounting method for biogenic CO 2 emissi ons as is used for fossil fuel
- derived CO 2 emissions from new power plants for purposes of compliance with the NSPS. Although the Agency states that it is evaluating accounting for biogenic emissions from stationary sources, it does not indicate when it wi ll complete its evaluation or how it will develop a biogenic accounting framework. Further, EPA does not explain how such a framework will be reflected in the GHG NSPS for new power plants, or other Agency actions. The commenter (9198) stated that EPA's tr eatment of biogenic emissions has implications for new and existing power plants, and other stationary sources, as well as for federal and state renewable energy and fuels programs. The success of these regulatory programs will depend on EPA developing an accounting and compliance framework that can differentiate biogenic emissions from various biomass feedstocks (i.e., by using lifecycle analy sis or another approach). The commenter states that the Science Advisory Board (SAB) view that "EPA should not assume carbon neutrality for all biomass energy

absent a consideration of a particular feedstock's production and consumption cycle" and that the panel recommended that "not all sources of biogenic CO 2 emissions should be treated in the same manner."8
- 13

EPA has yet to initiate the promised rulemaking to address biogenic CO 2 emissions. EPA's 111(b) proposal indicates that the Agency intends to treat biogenic
- and fossil fuel
- derived CO 2 as equivalent in affecting the environment. The SAB conclusions do not support such an approach, and the commenter urges EPA to follow the SAB advice and promptly initiate a rulemaking to implement a workable and sound framework for accounting for the categories of emissions identified by the SAB as having a BAF of zero. If the Agenc y continues on its present course, it will significantl y harm the ongoing development of the biogas industry , which are delivering significant GHG reductions, as recognized in EPA's most recent U.S. Inventory of Greenhouse Gas Emissions and Sinks, which do cuments that U.S. methane emissions fell by 30 percent between 1990 and 2012. The Administration, Congress and the international community

recognizes that the use of LFG produced b y the decomposition of organic waste materials is a cost - effective and environmentally beneficial way

to reduce emissions of methane, a potent greenhouse gas. One commenter (9409) stated that EPA has committed to using the results of this scientific review process to develop new, permanent regulations that will address the applic ability of PSD and Title V to biogenic CO 2 emissions from stationary sources. However, EPA has offered no firm timeline for completing a policy

or rulemaking process for biogenic CO 2 emissions. Two commenters (9675; 10029) stated that they a long with the r est of the algae industry , urge the EPA to clarify that CO 2 beneficial reuse technologies using algae may be applied by

affected EGU's, alone or in combination with other technologies, to meet the proposed CO 2 emission limits. The commenter supports the comments developed b y Sapphire Energy . The commenters provide an extensive description of the benefits and opportunities of applying reuse technology using algae as a means of reducing and sequestering CO 2 :

- Al gae efficientl y converts CO 2 and sunlight into green crude oil that, once refined, is full y compatible with the existing transportation infrastructure. Importantl y, in its growth process, algae consume enormous amounts of CO 2 .

- While palm oil can yield 55 4 gallons of oil per acre, algae can yi eld 5,107 gallons per acre
tenfold more. Further, the production of algae
- based fuel does not require arable land or potable water and therefore does not create significant indirect land use effects.

- There has been a sharp acceleration in the pace of algae
- based fuel science and technology , which shows that the commercial
- scale production of algae
- based fuel is much more practical and is likely

to occur much sooner than previously thought.

- Construction began of the world's first commercial algae
- based fuel facility , the Integrated Algal Biorefinery

("IABR") in Columbus, New Mexico. One commenter ( 10681) stated that if EPA wants to exempt primarily biomass fueled facilities from applicability

of these requirements, the fossil fuel fraction should be increased from 10% to someplace between 25 and 33% of the total heat input to the utility boiler or cogeneration boiler. They gave the example of a cogeneration facility at a pulp and paper mill that uses coal for 15 to 20% (up to 33%) of its heat input is not primarily fired by biomass. Because this cogeneration unit sells all of its electrical output (more than 219,000 MWh/year and more than 1/3 of its equivalent thermal output), it would be subject to the proposed rule , if it were proposed as a new source. We do not believe that this is the outcome that EPA was intending.8
- 14

One commenter (9409) stated that they are concerned that EPA mistakenly has proposed to treat biogenic CO 2 emissions from fossil fuel
- fired EGUs that co - fire biomass in the same manner as fossil fuel emissions. This will discourage the expansion of biomass co
- firing and the carbon benefits that it can provide. We urge EPA to reconcile its position on co
- fired facilities with its position on biomass gen erall y and to defer regulation of these emissions until the Agency develops a final policy to account for biogenic CO 2 emissions. Given the aggressive standards that EPA has proposed for both coal
- and natural gas
- fired EGUs, facilities may be unwilling to co - fire biomass out of concern that doing so will jeopardize their ability

to comply

with the proposed emissions limits. Thus, given EPA's recognition of the climate benefits of biomass energy , the proposed rule's treatment of co
- fired biomass would likel y have the perverse effect of increasing rather than decreasing atmospheric GHG concentrations. One c ommenter ( 9733 ) states the combustion of biomass does not contribute to the "air pollution" that EPA intends to address through regulation of GHGs. Comment er concludes that biogenic CO2 emissions would not add to atmospheric carbon levels unlike fossil fuel emissions and, therefore, should be excluded from this rule. Commenter continues it would be arbitrary and capricious to regulate biogenic CO2 emissions from CHP units that burn forest products manufacturing residuals for energy recovery because there is no scientific basis to do so. Commenter explains that burning forest products manufacturing residuals releases CO2 (and minor amounts of methane and nitro us oxide) into the atmosphere from the oxidation of the biomass. Burning avoids GHG emissions that would occur anyway if these residuals were not burned because biodegradation can release more methane than combustion, and methane is considered to have a gr eater impact on global warming than CO2. **Response 8.3 -**  **1:** Applicability and emissions from non
- fossil sources are discussed in Section III.D of the preamble. **Comment 8.3 -**  **2:** Commenter 10131 stated that the EGU GHG states that the SAB report (regarding biogenic emissions) is currentl y und er review and that EPA will, "move forward as warranted once the review is complete." Commenter further stated that by enacting this rule, the EPA is moving forward in opposition to the recommendations made in 2012. Commenter further stated that L ow carbon fuels are available for use now. Commenter further stated that their use is tried and true and do not require new technology

or research to put into operation. Commenter further stated that in the EPA's efforts to reduce carbon emissions, it is important to use the resources at our disposal and to properl y account for operations that lower GHG emissions. Commenter further stated that the EPA should act now on the EGU GHG to incorporate the SAB's recommendations. Additionally , commenter 10131 stated that the EPA's Landfill Methane Outreach Program (LMOP) encourages the use of LFG as an energy resource. Commenter further stated that one of the primary reasons EPA launched LMOP was to reduce GHGs. Commenter further stated that according to EPA's LMOP website , "CO 2 emissions from MSW landfills are not considered to contribute to global climate change because the carbon was contained in recently living biomass. Commenter further stated that the same CO 2 would be emitted as a result of the natural decomposition of the organic waste materials outside the landfill environment." Commenter further stated that the EPA change this proposed rule to be consistent with the SAB report and assign a BAF of zero for landfill gas. **Response 8.3 -**  **2:** EPA developed the revised draft report, Frame work for Assessing Biogenic CO2 Emissions from Stationary Sources , to continue advancing our understanding of the role the use of biomass can play

in strategies to address greenhouse gas emissions. Specifically , the Framework was developed as a policy
- neutral framework for assessing biogenic CO 2 emissions from stationary sources
—it was not developed as technical guidance in conjunction with any specific policy

or program.8
- 15

The EPA is engaging in a second round of targeted peer review of the revised draft Framework with the SAB in 2015. 1 Applicability and emissions from non
- fossil sources are discussed in Section III.D of the preamble.

1 For more information regarding the Framework, see: http://epa.gov/climatechange/ghgemissions/biogenic
- emissions.html