EPA has moved to step 3 of the greenhouse gas tailoring rule

Posted on July 12, 2012

Step 1 and 2 of the tailoring rule impacted a project resulting in an emission increase of 75,000 ton of greenhouse gas (GHG) per year of carbon dioxide equivalent (CO2e) and EPA is not lowering the threshold trigger for step 3!

The regulation of GHG under the prevention of significant deterioration (PSD) rule was considered unmanageable by EPA because the threshold to trigger the regulation (potential-to-emit a criteria pollutant of 100 ton per year for specific industrial categories and 250 ton per year for the rest) was so low for GHG emissions that regulating GHG under PSD would require the states to manage an estimated 6 million permits overnight. Many believed that Congress would step in and pass a cap-and-trade scheme similar to the European Union Emission Trading Scheme for GHGs to ensure this did not occur but that never happened. The EPA addressed this issue by “tailoring” the PSD rule to only cover large sources to avoid the “absurd results” (i.e. permit grid-lock) by the states attempting to process millions of new permits overnight. Much litigation followed with most believing that EPA’s rule would not survive the battle in the Supreme Court.

Well, the Supreme Court ruled that EPA can regulate GHG under PSD!

EPA implemented the rule in steps to ensure that each state’s permitting authority would be able to process all the new permit applications for GHG which they had not ever done previously. Step 1 and 2 of the rule impacted facilities with facility-wide potential GHG emissions of 100,000 ton CO2e per year that desired to implement projects increasing emissions by 75,000 ton CO2e per year (e.g. adding a 149 mmBTU per hour boiler). EPA previously committed to complete the step 3 by July 1, 2012, which could lower the threshold trigger to 50,000 ton COP2e per year and impact more than just large sources.

For step 3, EPA has determined that each state has not had sufficient time or has not added sufficient resources (i.e. staffing is the same or decreasing because of the condition of the U.S. economy) necessary to process additional GHG permit applications that would result by lowering the threshold, so the threshold remains the same as step 2.

EPA addresses the issue of plant-wide applicability limits (PAL) for GHG for PSD.

Another issue EPA had is how to handle PALs for GHG. PAL permits set a facility-wide emission limit for a specific pollutant which allows a facility to make changes rapidly without excessive delay due to the processing of permit applications. Very few PAL permits have been issued but they can be attractive to facilities where their business success is driven by their agility to make changes rapidly and they are willing to invest the capital to install the best available control technology.

In this rule-making the EPA has extended the same functionality of PALs to GHG on a CO2e basis. This means that a facility may establish a facility-wide PAL limit of 75,000 ton CO2e per year. EPA also revised the rule to allow a source that emits or has the potential-to-emit (PTE) GHG at levels above 100,000 ton CO2e per year but that has emissions of other PSD pollutants at minor source levels to apply for a GHG PAL while still maintaining its minor source status. The rationale is to make the PSD tailoring rule less burdensome for facilities that have not been subject to PSD previously for non-GHG emissions.
For help determining your facility’s PSD requirements associated with GHG, please contact Dell Majure at Dell.Majure@environmental360.com or David Owen at David.Owen@environmental360.com.

Source: E360 Old Site

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