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[Federal Register Volume 77, Number 176 (Tuesday, September 11, 2012)]
[Notices]
[Pages 55834-55837]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-22347]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OAR-2012-0636; FRL-9725-7]

Notice of Opportunity To Comment on a Methodology for Allocating 
Greenhouse Gas Emissions to a Combined Heat and Power Configuration 
Under the Renewable Fuels Program, and the Application of this 
Methodology to a Proposed Plant by Dakota Spirit AgEnergy in 
Spiritwood, ND

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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SUMMARY: EPA is evaluating a petition by Dakota Spirit AgEnergy for 
approval of a fuel pathway for its corn ethanol plant under the 
Renewable Fuels Standard (RFS) program. The corn ethanol plant would 
import process steam from a combined heat and power (CHP) system 
located at an offsite facility. EPA is inviting comment on the 
application of a certain methodology for allocating greenhouse gas 
(GHG) emissions for the steam and on the feasibility and 
appropriateness of using this allocation methodology for other similar 
CHP configurations under the RFS program.

DATES: Comments must be received on or before October 11, 2012.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2012-0636, by one of the following methods:
    www.regulations.gov: Follow the on-line instructions for 
submitting comments.
     Email: a-and-r-docket@epa.gov, Attention Air and Radiation 
Docket ID EPA-HQ-OAR-2011-0542.
     Mail: Air and Radiation Docket, Docket No. EPA-HQ-OAR-
2012-0636, Environmental Protection Agency, Mailcode: 6406J, 1200 
Pennsylvania Ave. NW., Washington, DC 20460.
     Hand Delivery: EPA Docket Center, EPA/DC, EPA West, Room 
3334, 1301 Constitution Ave. NW., Washington, DC 20460, Attention Air 
and Radiation Docket, ID No. EPA-HQ-OAR-2011-0542. Such deliveries are 
only accepted during the Docket's normal hours of operation, and 
special arrangements should be made for deliveries of boxed 
information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2012-0636. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
www.regulations.gov, including any

[[Page 55835]]

personal information provided, unless the comment includes information 
claimed to be Confidential Business Information (CBI) or other 
information whose disclosure is restricted by statute. Do not submit 
information that you consider to be CBI or otherwise protected through 
www.regulations.gov or email. The www.regulations.gov Web site is an 
``anonymous access'' system, which means EPA will not know your 
identity or contact information unless you provide it in the body of 
your comment. If you send an email comment directly to EPA without 
going through www.regulations.gov your email address will be 
automatically captured and included as part of the comment that is 
placed in the public docket and made available on the Internet. If you 
submit an electronic comment, EPA recommends that you include your name 
and other contact information in the body of your comment and with any 
disk or CD-ROM you submit. If EPA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, EPA 
may not be able to consider your comment. Electronic files should avoid 
the use of special characters, any form of encryption, and be free of 
any defects or viruses. For additional information about EPA's public 
docket visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the docket are listed in the 
www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy. 
Publicly available docket materials are available either electronically 
in www.regulations.gov or in hard copy at the Air and Radiation Docket 
and Information Center, EPA/DC, EPA West, Room 3334, 1301 Constitution 
Ave. NW., Washington, DC. The Public Reading Room is open from 8:30 
a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The 
telephone number for the Public Reading Room is (202) 566-1744, and the 
telephone number for the Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Venu Ghanta, Office of Transportation 
and Air Quality (MC6401A), Environmental Protection Agency, 1200 
Pennsylvania Ave. NW., Washington, DC 20460; telephone number: (202) 
564-1374; fax number: (202) 564-1686; email address: 
ghanta.venu@epa.gov.

SUPPLEMENTARY INFORMATION: 

Introduction

    As part of changes to the Renewable Fuel Standard (RFS) program 
adopted in a rule published on March 26, 2010,\1\ EPA specified the 
types of renewable fuels eligible to participate in the RFS program 
through approved fuel pathways. Table 1 to 40 CFR 80.1426(f) of the RFS 
regulations lists three critical components of an approved fuel 
pathway: (1) Fuel type; (2) feedstock; and (3) production process. Each 
specific combination of the three components, or fuel pathway, is 
assigned a renewable fuel category for use of the fuel in the RFS 
program. EPA may also independently approve additional fuel pathways 
not currently listed in Table 1 for participation in the RFS program, 
or a third party may petition for EPA to evaluate a new fuel pathway in 
accordance with Sec.  80.1416.
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    \1\ 75 FR 14670.
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    Pursuant to 40 CFR 80.1416, EPA received a petition from Dakota 
Spirit AgEnergy (``Dakota'') on October 15, 2011, requesting that EPA 
evaluate a new fuel pathway's lifecycle GHG reduction and provide a 
determination of the renewable fuel category for which the new pathway 
may be eligible. Dakota is proposing to build a dry-mill corn ethanol 
plant in Spiritwood, North Dakota, with a nameplate production capacity 
of 65 million gallons of ethanol per year. Dakota's proposed process is 
unlike those used in pathways modeled for the 2010 RFS rule in that 
they plan to meet their process steam needs by importing steam from the 
adjacent Spiritwood Station coal-fired power plant, which would operate 
in a combined heat and power (CHP) mode.
    EPA has not previously considered the treatment of steam from an 
offsite CHP plant in a lifecycle emissions accounting analysis under 
the RFS program. EPA is not aware of a previous regulatory context 
where an allocation approach has been applied to determine the 
emissions associated with process steam from an offsite facility. This 
notice describes the methodology EPA is considering to allocate 
emissions to the imported steam Dakota plans to use for biofuels 
production, as well as the Agency's rationale for selecting this 
methodology in the context of the RFS program and for the type of 
configuration being considered. EPA invites comment on the application 
of the GHG allocation methodology and on the feasibility and 
appropriateness of using this allocation methodology for other similar 
CHP configurations under the RFS program.

Background on CHP

    CHP is an efficient, clean, and reliable approach to generating 
power and thermal energy from a single fuel source. By installing a CHP 
system designed to meet the thermal and electrical base loads of a 
facility, CHP can greatly increase the facility's operational 
efficiency and decrease energy costs. CHP systems offer considerable 
environmental benefits when compared with purchased electricity and 
onsite-generated heat. By capturing and utilizing heat that would 
otherwise be wasted from the production of electricity, CHP systems 
require less fuel than equivalent separate heat and power systems to 
produce the same amount of energy.
    In the 2010 RFS rule, EPA evaluated a corn ethanol biorefinery that 
utilized an onsite CHP system as part of the ethanol production 
process. The process evaluated a CHP system installed at the 
biorefinery which generated process steam and electricity for use in 
the process for producing ethanol. Dakota's proposed approach is 
different in that they plan to import process steam from the adjacent 
Spiritwood Station power plant that will operate in CHP mode.
    The Spiritwood power plant combusts coal in a circulating 
fluidized-bed boiler that will generate steam at high temperature and 
pressure. This high pressure steam will be sent through a high-pressure 
steam turbine (HPST), where energy will be extracted to produce 
electricity. The steam will exit the HPST at lower pressure and 
temperature, at which point some of the steam will be diverted to the 
Dakota biorefinery plant to provide thermal energy for the ethanol 
production process. The remaining steam at Spiritwood will be sent 
through a low-pressure steam turbine (LPST) to produce additional 
electricity. The extraction steam diverted for use at the ethanol plant 
will result in a decrease in the amount of power to be generated from 
the power plant. Therefore, although the amount of electricity 
generated is reduced, the total fuel consumed and the resulting GHG 
emissions of the power plant remain unchanged.
    To determine the emissions associated with the extracted steam, the 
total emissions of the Spiritwood power plant need to be allocated to 
the power plant's power production and to the steam extracted for use 
at the biorefinery. EPA analyzed the Dakota CHP configuration and 
reviewed several different allocation methods, including

[[Page 55836]]

the GHG Protocol.\2\ EPA's review indicated that currently there is no 
one recommended allocation method for allocating emissions to the 
energy outputs (electrical and thermal) from a CHP system. EPA's review 
also indicated that the most appropriate allocation methodology for a 
CHP system will be dependent on the type of CHP configuration in use, 
as well as the primary use of the system's electrical and thermal 
outputs. Based on the plant configuration presented in the Dakota 
petition, EPA is considering using the ``work potential'' allocation 
approach to allocate emissions.
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    \2\ Jointly convened by the World Business Council for 
Sustainable Development (WBCSD) and the World Resources Institute 
(WRI), Allocation of emissions from a Combined Heat and Power Plant, 
September 2006.
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Work Potential Allocation Approach

    EPA considers the work potential allocation approach to be most 
appropriate for CHP systems that use heat to primarily produce 
mechanical work or power, such as the case at the Spiritwood plant 
where the primary use for the steam is for power generation.\3\ The 
work potential approach allocates emissions based on the useful energy 
\4\ represented by electric power and heat. For the configuration 
presented in the Dakota petition, the method allocates emissions to the 
extracted steam based on the amount of electricity that the steam would 
have produced had the steam not been diverted for use at the 
biorefinery.
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    \3\ The GHG Protocol recommends the use of this approach if the 
thermal output of the CHP system is to be used for mechanical power
    \4\ Useful energy is defined as the ability of heat to perform 
work.
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    The Spiritwood power plant is designed for the primary function of 
generating electricity. The total emissions at the Spiritwood plant are 
constant, whether steam is diverted or not. When steam is diverted to 
the Dakota biorefinery, the emissions associated with the diverted 
steam and the resulting loss in electricity production is evaluated via 
the work potential method. We can determine an emission factor for the 
power plant when it is just generating electricity and not diverting 
steam to the Dakota biorefinery (i.e., operating in a ``power only'' 
mode). The GHG emissions attributed to the extracted steam is 
determined by estimating the amount of power not generated by the power 
plant because the steam was diverted from the turbine, and applying the 
power plant's ``power only'' emissions factor to that value. The 
emission factor is unchanged since the total emissions at the 
Spiritwood plant are unchanged and only a small portion of the steam 
energy generated at the power plant is diverted to the biorefinery. The 
process for determining the steam GHG emission factor using the work 
allocation approach is summarized by the following steps:
    1. Calculate the GHG emission factor for the Spiritwood power plant 
without any steam extracted;
    2. Determine the amount of electricity that is not generated due to 
the extraction of steam for the Dakota plant; and
    3. Apply the Spiritwood emissions factor to the amount of 
electricity not generated due to steam extraction and calculate the 
associated emissions.
    This following example illustrates how the work potential method 
allocates emissions based on useful energy produced. In Dakota's 
petition, they presented an example where the Spiritwood plant 
generates 92 MW of electric power in power-only mode, but only produces 
82 MW of electric power in CHP mode due to the steam extraction. Thus, 
the steam extraction displaces about 11% of the total power production. 
Using the work potential allocation method, the extracted steam is 
allocated 11% of the total emissions from the Spiritwood plant, whereas 
the remaining 89% of emissions are allocated to electricity production.

Other Allocation Approaches

    EPA reviewed other allocation approaches to assess their 
appropriateness for allocating emissions for the Dakota petition. The 
other two most common methods to allocate emissions from a CHP system 
are:
    Efficiency Allocation Method--The efficiency method allocates GHG 
emissions based on the amount of fuel used to produce each final energy 
stream. Emissions are allocated based on the efficiencies of thermal 
energy and electricity production, and the emission allocation will 
vary based on how the electrical and thermal efficiencies are defined. 
The actual efficiencies of heat and power production are often not 
clearly defined for CHP systems, and assumed default values are 
typically used.
    Conversion or Energy Content Method--This method allocates 
emissions based on the relative amounts of power and thermal energy 
output. It makes no allowance for the relative value of the outputs or 
the relative efficiencies of generation and simply allocates emissions 
based on the relative energy content of each output.
    The efficiency and energy content allocation approaches are based 
on assumptions, either of the efficiencies with which steam and 
electricity are generated, or on the relative values of energy outputs. 
As an example, the emission allocation of the efficiency method will 
vary based on how the electrical and thermal efficiencies are defined. 
Under these approaches, the emissions allocated to the remaining 
electricity generation (in terms of lbs/MWh) at the Spiritwood plant in 
CHP mode would be lower than the original emissions factor for 
electricity generated by Spiritwood operating in power-only mode, 
indicating an over-allocation of emissions to the extraction steam.
    Since CHP system design and operating characteristics vary so 
widely, leading organizations in this field have not developed a 
consensus on one preferred allocation method. The California Air 
Resources Board issued a technical document as part of its Climate 
Change Reporting Requirements \5\ that reviewed several allocation 
methods but did not recommend any one allocation method in particular. 
The Climate Registry (TCR),\6\ the former EPA Climate Leaders program, 
and the GHG Protocol \7\ recommend the efficiency method, and that CHP 
facilities identify actual thermal energy and electricity production 
efficiencies. In the absence of actual emissions, default efficiencies 
of 35% for electricity (grid generation efficiency) and 80% for steam 
(stand alone boiler efficiency) are suggested. Neither the default nor 
calculated efficiencies appear representative of the Spiritwood 
operations. However, as stated above, the GHG Protocol \8\ also 
recommends the use of the work potential method if the thermal output 
of the CHP system is going to be used for mechanical power.
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    \5\ Cogeneration: Proposed Approach for Mandatory Greenhouse Gas 
Emissions Reporting. California Air Resources Board: Climate Change 
Reporting, Handout for ARB's GHG Technical Team Discussions, June 
2007.
    \6\ General Reporting Protocol, Version 1.1, The Climate 
Registry, May 2008.
    \7\ Jointly convened by the World Business Council for 
Sustainable Development (WBCSD) and the World Resources Institute 
(WRI), Allocation of Emissions from a Combined Heat and Power Plant, 
September 2006.
    \8\ Jointly convened by the World Business Council for 
Sustainable Development (WBCSD) and the World Resources Institute 
(WRI), Allocation of emissions from a Combined Heat and Power Plant, 
September 2006.
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    The Western Climate Initiative received various recommendations on 
the treatment of combined heat and power in its initial draft design 
guidance for recording greenhouse gas (``GHG'') emissions since it has 
implications in both the industrial and electricity sectors. The

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recommendations varied based on the type of CHP configuration. WCI in 
its final 2008 recommendation \9\ did not advance one allocation method 
over another, stating ``adequate quantification methods will be 
established for emissions sources prior to including them in the 
program''. The British Standards Institute (BSI)'s Publicly Available 
Specification (PAS) 2050 \10\ recommends using an approach based on the 
unit of useful energy delivered. The specification recommends ``the 
allocation shall be carried out in proportion to the amount of useful 
energy delivered in each form, multiplied by the intensity of GHG 
emissions associated with each unit of useful energy delivered as heat 
and electricity.'' This methodology acknowledges that each CHP system 
may have a different ratio of outputs of thermal and electrical energy.
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    \9\ The WCI Partner jurisdictions recognize the importance of 
combined heat and power (cogeneration) in the program scope and are 
continuing to evaluate its implications for the program design. 
Western Climate Initiative, Design Recommendations for the WCI 
Regional Cap-and-Trade Program. September 23, 2008, Corrected March 
13, 2009.
    \10\ British Standards Institute (BSI), PAS 2050: 2011, 
Specification for the assessment of the life cycle greenhouse gas 
emissions of goods and services, Section 8.5, Emissions from energy 
production using CHP.
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Application of the Work Potential Allocation Methodology to the Dakota 
Plant

    Under the RFS2 program, EPA is considering use of the work 
potential method for the configuration outlined in the Dakota petition 
because the primary purpose of the steam generated at Spiritwood power 
plant before extraction is to produce power. This method allocates the 
emissions to extracted steam based on the amount of power displaced 
(i.e., the electricity not generated).
    A Memorandum to the Docket explains in more detail how the work 
potential methodology would be applied to the plant configuration 
proposed for the Dakota plant, resulting in a specific GHG emission 
factor per mmbtu of steam energy. This emissions factor would be used 
in analyzing the total GHG emissions per mmbtu of ethanol produced by 
the Dakota facility, as part of determining whether the ethanol 
produced by the facility would qualify under the lifecycle GHG 
thresholds established in the RFS program. For the configuration 
outlined in the Dakota petition, EPA's analysis finds that the process 
steam has an emission factor of 53,175 grams CO2-eq/mmbtu steam.
    EPA invites comments on the proposed application of the work 
potential methodology to determine emissions associated with imported 
steam to the Dakota plant in the context of lifecycle emissions 
accounting. Furthermore, EPA invites comment on applying the work 
potential approach to other plants with similar CHP configurations 
under the RFS program. EPA also requests information on the 
appropriateness of applying alternative allocation approaches outlined 
in this notice to the Dakota plant, as well as any other approaches 
that could also be used to allocate emissions to steam for this 
specific CHP configuration under the RFS program.

    Dated: August 31, 2012.
Margo Tsirigotis Oge,
Director, Office of Transportation and Air Quality, Office of Air and 
Radiation.
[FR Doc. 2012-22347 Filed 9-10-12; 8:45 am]
BILLING CODE 6560-50-P
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