# Additional Tribal Consultation

**on Mercury and Air Toxics Standard (MATS) as Related to**  **Navajo Generating Station**

**October 6, 201**  **1**2 

# • Key Messages • What is MATS • MATS and the Integrated Planning Model (IPM) – What is IPM – How was IPM used for MATS 

# • Next Steps 

# To **pics to Be Covered**3 

## • MATS was proposed to reduce emissions of hazardous air pollutants (HAP), including mercury, acid gas HAP, and metal HAP from coal - and oil -fired power plants • EPA used IPM to analyze the power sector’s costminimizing response to meet electricity demand with MATS in place • IPM is a well -established analytical tool – A great deal of effort is expended to ensure high quality input data and assumptions 

## • EPA’s IPM analysis of MATS does not dictate what a given facility must do to comply with MATS – Each facility may determine its own compliance strategy to meet the emission rate limits in MATS 

# Key Messages

# What is MATS • Why was it proposed – To reduce emissions of HAP, including mercury, acid gases, and other metallic HAP – By consent decree, final rule must be signed by November 16, 2011 

## • What was proposed and who is affected – Affects coal - and oil -fired electricity generating units greater than 25 MW in size – Coal -fired units must meet emission limits for mercury, hydrochloric acid (acid gas HAP), and particulate matter (as a surrogate for the HAP metals) • Alternate limits for HAP metals (e.g., arsenic, lead) – Does not set emission limits for NOx or SO 2 • SO2 is an alternate for HCl from coal -fired units – Compliance within 3 years of promulgation • Option for 4th year at the discretion of the permitting authority 4

# What is MATS (cont’d) • EPA expects the new emission limits can/will be met with several well -established technologies – Electrostatic Precipitator (ESP) – uses charged electrical plates to pull particulate matter out of exhaust stream – Fabric Filters/Baghouses – uses a series of fabric bags to filter out particulate matter of varying sizes – Activated Carbon Injection (ACI) – injects activated carbon molecules into exhaust airstream. The activated carbon adheres to mercury molecules, increasing their diameter to a size that allows them to be captured by fabric filters – Wet- and dry-scrubbers – use lime or limestone to remove acid gases, including SO 2 

### and HCl 5

# What is MATS (cont’d) • When was it proposed – Proposed on May 3, 2011 – Public comment period closed on August 4, 2011 

## • Next steps for final agency action – Review, consider, and respond to comments – Signature of final rule by November 16, 2011 – Publish in the Federal Register by December 2011 – January 2012  Congressional review u nder the Congressional Review Act expected  Litigation expected 6

# What is IPM • The Integrated Planning Model (IPM) is used to analyze the electric power sector • IPM solves for the least-cost pathway to meet electricity demand subject to environmental, transmission, fuel, reserve margin, and other system operating constraints • EPA’s application of IPM is designed to inform system -level policymaking

– EPA’s applications are not set up to substitute for any specific utility’s individual unit-level operational decision - making

– Utilities will make their own determinations of the most economic way to satisfy electricity

d emand while achieving environmental compliance • Power purchase agreements, contractual arrangements, and other local variables (known privately to the unit operators) are not directly represented in EPA’s application of IPM 7

# IPM and the Mercury **and**

**Air Toxics Standards** • EPA used IPM to analyze the impacts of the MATS emission rate requirements on the power sector using IPM • The MATS emission rate requirements were developed separately from an Information Collection Request (ICR) dataset based upon the best performing units (maximum achievable control technology or MACT) • Ran model with final MATS emission rate limits to project the following outputs of interest – Retrofit technology deployment – Emission levels (subsequently used to conduct air quality modeling of the rule’s impacts) – Dispatch patterns of existing and new u nits to meet demand wh ile maintaining regional grid reliability 8

# NGS under MATS in IPM • Input assumptions about NGS
– Total plant capacity: 2.3 GW (net summer) – Unit heat rate: 10,460 – 10,777 Btu/KWh – MATS- relevant controls: wet scrubber, hot-side ESP 

### • Projected base case performance
– 1.5 lbs/Tbtu Hg – 0.002 lbs/MMBtu HCI 

### • Proposed MATS compliance requirements – 1.2 lbs/TBtu Hg; 0.002 lb/MMBtu HCI – Assumed that FF required to meet PM standard ($147/kW, or $110 million per unit in $2009) – Assumed that existing FGD would be upgraded ($100/kW, or $75 million per unit in $2009) 

### • MATS Policy Case Projection – Only unit 3 operates, increasing generation to cover reduction from units 1 and 2 (total plant generation roughly equivalent in base and policy) – Mercury reductions achieved with fabric filter; HCI reductions achieved with FGD upgrade – 0.8 lb/TBtu Hg; 0.001 lb/MMBtu HCI 9

# Further Information on EPA’s IPM • Regulatory and legislative analyses using IPM • Explanatory presentations • Comprehensive modeling documentation • http://www.epa.gov/airmarkt/progsregs/epaipm/index.html 10

# Next Steps • Schedule for MATS • Comments under consideration, possible changes made to assumptions, methodologies, etc. • Notification to Tribes (or any other follow up consultation) after final MATS rule issued 11

# Questions?13



# Appendices14



# How Has IPM Been Used **EPA has used IPM to** • Support rules: CSAPR, MATS, CAIR, CAMR, CAVR, Title IV, NOx SIP Call, Revised NAAQS, Cooling Water Standards • Evaluate effects of 1990 Clean Air Act amendments • Analyze environmental impacts of restructuring • Investigate CO 2 reduction strategies and programs • Analyze multi - pollutant control scenarios 

## Other users include • Ozone Transport Assessment Group (OTAG) • Clean Air Task Force and other environmental groups • National Coal Association • Edison Electric Institute • Electric Power Research Institute • Southern CAL Edison, PacifiCorp, AES, Florida Power, CINergy, and many other private power companies • Tennessee Valley Authority15 

# Questions IPM Can Inform (I) • On electric system operation – What types of new

g eneration wi ll be built  How much and when – How does the generation (or capacity) mix change over time – What changes in fuel (coal, natural gas, oil) production and use occur 

### • On emissions – How will emissions change over time – Where will emissions occur 

### • On emission control strategies – What emission controls will be installed  At what types of units – Does fuel switching occur  To what extent, and in what regions16 

# Questions IPM Can Answer (II) • On costs and related impacts – What is the annual incremental cost of meeting electricity demand with potential new

policy requirements in place – What price signals (on electricity, fuels, and allowances) wo uld the market experience – What is the comparative cost of dif ferent policy structures such as:  System -wide caps with trading and banking  Plant level emission limits  Region -specific emission caps 

### • Sensitivity analysis – How d o policy impacts change if improved energy ef ficiency helps lower the growth of electricity demand – How d oes the development of certain fuel supplies af fect grid dispatch and environmental compliance decisions – How would a given technological development af fect future costs17 

# Input Requirements for IPM • Detailed representation of – All existing generating units and their configuration – All available technology options for future deployment  Electric generating technologies  Emission control technologies 

### – All factors affecting operation, performance, and expansion or contraction of the power sector – Economic behavior of power sector – Emission constraints on power sector

# Overview of Section 112 • Section 112 of CAA mandates that EPA develop standards for hazardous air pollutants (HAP) for both major and area sources listed under section 112(c) – The section 112 definition of EGU does not distinguish between area and major sources – Major sources of HAP are those that have the potential to emit 10 tons per year (tpy) or more of any one HAP or 25 tpy or more of any combination of HAP 

### • Section 112(d)(2) states that major source standards must be based on the maximum achievable control technology (MACT) • Section 112(d)(3) sets minimum stringency criteria (MACT Floor) – costs may not be considered – For existing sources  “The average emission limitation achieved by the best performing 12 percent of existing sources...” – For new sources, the MACT floor is  “The emission control achieved in practice by the best controlled similar source” 18

# Overview of Section 112 (cont’d

# ) • EPA may regulate “beyond the floor” where justified – costs and other issues must be considered – MACT may differ for new and existing sources – Section 112(d)(1) provides EPA with authority to distinguish among classes, types, and sizes of sources – Section 112(d)(4) provides EPA with discretionary authority to establish health - based emission standards for HAP for which a health threshold has been established – Section 112(h) allows the use of work practice standards instead of emission standards if enforcement of an emission standard is “not feasible,” as that term is defined in that section 19

# Some Legal Constraints **on**

**Section 112 Rulemakings** • Emission standards must be established for EGUs that are located at major sources and at area sources • Voluntary or incentive- based approaches are not allowed • Emission standards must address all HAP emitted from EGUs • Standards must set technology- based limits – Viability of health -based emission standards and work practice standards wi ll be explored 

### • Method for determining the minimum level of emissions control (i.e., MACT floor) must be followed • Only units in the MACT floor may be used in determining variability unless a demonstrated relationship between the variability of sources outside the floor and the variability of sources within the floor can be shown • Regulatory options more stringent than the MACT floor must be considered 20