South Coast Air Quality Management District

Report on the Rule 2009 and 2009.1 RECLAIM Compliance Plan Submittal

SYNOPSIS: 

On May 11, 2001, the Governing Board adopted Rule 2009-Compliance Plans for Power Producing Facilities, and Rule 2009.1-Compliance Plans and Forecast Reports for Non-Power Producing Facilities. Sources subject to these rules are required to submit compliance plans by September 1, 2001. This report provides the status of compliance plans submitted by the sources, estimated emissions reductions for compliance years 2001-2005, types of control options identified, cost information and whether the compliance plans demonstrate, in aggregate, overall programmatic compliance.

COMMITTEE: 

Stationary Source, October 26, 2001, Reviewed

RECOMMENDED ACTION:

Receive and file this report.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

On May 11, 2001, the Board adopted Rule 2009-Compliance Plans for Power Producing Facilities and Rule 2009.1-Compliance Plans and Forecast Reports for Non-Power Producing Facilities. The purpose of the Rule 2009 plan is to ensure timely installation of NO_x Best Available Retrofit Control Technology (BARCT) at each "Power Producing Facility," as defined by Rule 2000(c)(56). This rule requires each Power Producing Facility to submit a plan by September 1, 2001 to demonstrate compliance with BARCT by January 1, 2004 for turbines used as peaking units, and by January 1, 2003 for all other emission units. The RECLAIM program amendments also establish additional emission credit generation mechanisms via the Air Quality Investment Program (AQIP) and the Mitigation Fee Program. These real and surplus credits will be used to offset emissions from power producing facilities in order to maintain programmatic emission reductions targeted under RECLAIM.

The purpose of the Rule 2009.1 plan is to assist other RECLAIM facilities emitting 50 tons per year or more in compliance year 1999 or later in selecting and implementing their compliance methods to meet their annual NO_x allocation levels in a timely manner. This rule also requires each affected facility to submit a plan by September 1, 2001 to either demonstrate compliance with NO_x allocations between compliance years 2001 and 2005 based on the calendar year 2000 production rate (Option 1) or comply with BARCT by January 1, 2003 (Option 2).

RECLAIM facilities required to submit compliance plans under both Rule 2009 and Rule 2009.1 accounted for approximately 90 percent of the RECLAIM NO_x emissions in compliance year 2000. The compliance plan is an enforceable mechanism to ensure timely installation of emission controls and for meeting allocations.

RECLAIM facilities with NOx emissions that are greater than or equal to 25 tons per year, but less than 50 tons per year, will be required to submit forecast reports by the end of 2001. These forecast reports require projections on how emission reductions would be achieved in the future and are not enforceable. The forecast reports will, however, assist both the sources and the AQMD in planning for future compliance with RECLAIM allocations. RECLAIM facilities with NOx emissions less than 25 tons per year are exempt from Rule 2009.1.

As part of the May 11, 2001 RECLAIM amendment resolution, the Board directed staff to return to the Board in November 2001 with the status of compliance plan submittals, estimated emission reductions for compliance years 2001-2005, types of control options identified, cost information submitted, and whether the compliance plans demonstrate, in aggregate, overall programmatic compliance.

Status of Compliance Plan Submittal

All the facilities initially identified as subject to the compliance plan requirements have submitted the plan information. Power Producing Facilities subject to Rule 2009 must submit a plan demonstrating compliance with BARCT requirements. RECLAIM facilities subject to Rule 2009.1 compliance plans, however, have two options for demonstrating compliance. The first option is to demonstrate compliance with years 2001 through 2005 allocations. Alternatively, RECLAIM facilities may choose to comply with the rule by demonstrating that all permitted NO_x emitting equipment is equipped with BARCT or will achieve BARCT no later than January 1, 2003. Table 1 below summarizes the number of compliance plan applications that were expected and the actual number of applications received. Additionally, Table 2 shows the breakdown of Rule 2009.1 compliance plan options.

Table 1: Overall Summary of Plan Application Submittal

Table 2: Rule 2009.1 Compliance Plan Options

Compliance Plans submitted by Power Producing Facilities proposed to install BARCT on the base-load units (largely comprising of utility boilers) and peaking gas turbines. For utility boilers, Power Producing Facilities proposed to comply with Rule 2009 BARCT requirement by reducing NOx emissions to the concentration levels ranging between 5 to 36 parts per million (ppm) using the Selective Catalytic Reduction (SCR) technology, optimizing existing air pollution control equipment, or flue gas recirculation (FGR)/Low NOx burners (LNB). Although the proposed control technology will significantly lower emission rates from electric generation units, staff believes that emissions can be further reduced beyond the proposed levels with existing SCR technologies. Staff had evaluated proposals from power producing facilities and found that for many of these facilities, it is feasible and cost effective to further reduce NOx emissions from utility boilers to the concentration level of at least 5 ppm. For peaking gas turbines, Power Producing Facilities proposed NOx control strategies such as SCR, enhanced steam injection, dry low NOx burners, and removing equipment from service. Similar to the analysis of the utility boilers, AQMD staff believes it is technologically feasible and cost effective to reduce NOx emissions from peaking gas turbines to the levels of 5 to 9 ppm depending on the constrains of the equipment design and available space. As a result, AQMD staff approved compliance plan for one Power Producing Facility and disapproved compliance plan applications from thirteen Power Producing Facilities. Staff believes that emissions from Power Producing Facilities can be further reduced cost effectively through the utilization of the existing state-of-the art SCR technology or other equivalent NOx control strategies consistent with BARCT.

Non-Power Producing Facilities opted to comply with Rule 2009.1 by either proposing to reconcile their projected emissions with available NOx RTCs at the time of compliance plan submittal or making the BARCT demonstration. Thirty-six facilities selected the first option, while six remaining facilities chose the BARCT option.

Most facilities selecting the first option, chose to reconcile the projected emissions with available NOx RTCs by installing additional NOx control technologies such as process change and optimization, combustion modification, electrification, low NOx burners, non-selective catalytic reductions (NSCR), SCR, low temperature oxidation (LoTOx), and oxygen enriched fuel furnace. Many of the proposed control technologies have the capability of reducing emissions beyond the levels required by the compliance plan, leaving a potential for growth and expansion within the RECLAIM universe. AQMD staff has approved 36 Rule 2009.1 compliance plans and disapproved six compliance plan applications due to the facilities’ failure to demonstrate that there are sufficient NOx RTCs to reconcile the projected emissions, or the facilities’ failure to demonstrate that all permitted NOx emitting equipment can meet BARCT requirements.

Facilities that have not yet demonstrated compliance with Rule 2009 and 2009.1 due to disapproval of their compliance plan will have an opportunity, as specified in the rules, to provide additional information to demonstrate compliance prior to the end of 2001.

Overall Supply and Demand Forecast

Table 3 shows the year 2000 NOx emissions as reported by RECLAIM facilities. Based on the information provided in the compliance plans, the facilities subject to both Rule 2009 and Rule 2009.1 compliance plans will have significantly reduced emissions in the future years compared to the year 2000.

Table 3: Compliance Year 2000 NO_x Emissions as Reported
 

Power Producing Facilities: In response to the increased emissions from Power Producing Facilities due to the electricity supply shortage in California, the Board amended the RECLAIM program and adopted Rules 2009 and Rule 2009.1 to ensure continuing progress toward meeting clean air mandates. At the same time, the amendments contain measures that ensure air pollution regulations do not inadvertently hinder the State’s effort to provide adequate power supplies to residents and businesses in California. The key element of the program amendments is the requirement that Power Producing Facilities install BARCT as soon as practicable to reduce emissions. Considering the lead time required to order and install air pollution control equipment, Rule 2009 requires the base-load electricity generation units to operate with BARCT no later than January 1, 2003, and the peaking units to be equipped with BARCT no later than January 1, 2004.

Until all air pollution control equipment is installed, the Board recognizes the need to completely offset and mitigate emissions from Power Producing Facilities during the interim period. As part of the effort to mitigate power plant emissions, the Governing Board created a mitigation fees program that allows Power Producing Facilities to pay for emission reduction projects from mobile, stationary, and area sources to offset excess emissions. To ensure early reductions of emissions under the mitigation fees program, the AQMD has already initiated the marine vessel projects under the $5.3 million Rule 118 Executive Orders for NO_x and CO mitigation programs as shown in Table 4 below. This project is expected to begin generating credits as early as December 2001.

Table 4: Projected NO_x Emission Reductions from the Marine Vessels Projects
 

Consistent with the AQMD staff’s emission projections for the RECLAIM program amendment in May 2001, the projected NOx emissions submitted in the compliance plans by the Power Producing Facilities projected that NO_x emissions during compliance years 2001 and 2002 will need to be offset by emission reductions under the mitigation fees program. However, Power Producing Facilities are expected to be in full compliance and potentially have surplus NO_x RTCs after the compliance year 2002 when electric generation units are completely retrofitted with BARCT pursuant to the requirements of Rule 2009. Table 5 below shows projected NO_x emissions provided by the Power Producing Facilities in the compliance plan, the quantity of RTCs held by these facilities and the projected NOx.emission reductions needed under the mitigation fees program from the compliance years 2001 through 2005. It should be noted that if Power Producing Facilities installed BARCT at the staff recommended levels, staff expects additional NOx emission reductions of 460 tons, 291 tons and 195 tons in compliance years 2003, 2004 and 2005, respectively.

Table 5: Comparison of Projected Emissions
and Available RTCs at Power Producing Facilities
 

2009.1 Compliance Plan Facilities: The data submitted by facilities required to submit Rule 2009.1 compliance plans shows that, after implementing the proposed control strategies, these facilities can meet the overall programmatic reductions for all years except compliance year 2003 as shown in Table 6.

*Although data provided by RECLAIM facilities subject to Rule 2009.1 anticipated emissions of up to 319 tons in excess of RTCs in compliance year 2003, staff believes the projected NOx emissions may have been overestimated due to the following factors:

• Facilities demonstrating compliance through BARCT (Option 2) showed excess NOx emissions of 273 tons. Two of these compliance plans were disapproved by staff and must be modified to reflect lower emission rates.
  
  
• Staff's analysis of compliance plans submitted by a few facilities under Option 1 showed NOx emissions in excess of available RTCs. These plans must be modified to reconcile emissions with available RTCs.

Moreover, it should be noted that several facilities that have submitted Rule 2009.1 plans are proposing to install control equipment capable of reducing NO_x emissions beyond the level committed to in their plans. Therefore, it is also possible that additional emission reductions can be achieved to compensate for the projected NOx emissions in excess of RTCs in the compliance year 2003.

RECLAIM Facilities Not Required to Submit Compliance Plans: These facilities collectively emitted 2,509 tons of NO_x emissions during the compliance year 2000. If we assume that no additional emission reductions will occur within this group, there will be approximately 49 tons per year of NOx emissions in excess of RTCs. However, this assumption is overly conservative as the permit applications submitted to date show that a small number of these facilities have proposed additional emission reductions. Projected emissions and the available RTCs for all RECLAIM facilities are summarized in Table 7 below:

Table 7: Projected Emissions and Available NO_x RTCs for All RECLAIM Facilities
 

        # These are facilities not subject to the RECLAIM compliance plan requirements

        *Note: Emissions from Power Producing Facilities during compliance year 2001 and 2002 are 
          expected to be offset by emission reductions from the mitigation fees program pursuant to 
          Rule 2020. Also, facilities not subject to compliance plan had already applied to install 
          control equipment capable of reducing NOx emissions up to 40 tons per year.

The following methodology was used in the overall emissions/RTC forecast:

1. Determine the overall projected emissions for years 2001 through 2005.
   
   
2. Determine the total available RTCs for years 2001 through 2005.
   
   
3. Compare the projected emissions (Step 1) against the available RTCs (Step 2).

Projected emissions were determined according to the following methods:

• Projected emissions for the Power Producing Facilities were based on the emissions projection information submitted by these facilities.
  
  
• For Rule 2009.1 compliance plans, facilities opting to comply with the facility's annual NOx allocation for each compliance year beginning 2001 through 2005 (Option 1), emission projections were determined by the difference between the baseline emissions of calendar year 2000 and subtracting the proposed emissions reductions from compliance years 2001 through 2005.
  
  
• Projected emissions for Rule 2009.1 facilities opting to comply with the BARCT demonstration (Rule 2009.1- Option 2) were provided by these facilities.
  
  
• For all other RECLAIM facilities (not subject to the compliance plan requirements), staff assumed that no emission reductions would occur from the year 2000 reported emissions. This assumption, although overly conservative, was used since these facilities are not required to provide projected emissions for years 2001 through 2005.

Types of Control Options Identified and Cost Information

Staff has collected the cost data provided by the affected facilities, but has not had sufficient time to verify such data. However, Power Producing Facilities did not provide sufficient cost data and this report only shows partial cost as reported by some facilities. Of 48 proposed electric utility BARCT units (excluding proposed shutdowns), only 13 units provided BARCT cost data. The total control cost for these 13 units totaled $20 million. Staff has not yet received information for the remaining units. Power Producing Facilities have proposed to install either SCRs or a combination of flue gas recirculation (FGR)/Low NOx burners (LNB) to comply with BARCT limits, further reduce emissions by optimizing the current control equipment rather than installing new control equipment, or proposed to shutdown units that are no longer efficient.

Facilities required to submit Rule 2009.1 compliance plans opted to match uptheir emissions with available RTCs by installing various control equipment such as SCR, FGR/LNB and enriched oxygen combustion, or opted to install or improve the accuracy of Continuous Emissions Monitoring System (CEMS) to provide more accurate emission reporting. Table 8 below shows the total projected cost supplied by facility operators for the proposed control methods and Table 9 shows the costs and projected emissions reductions associated with various control methods.

Table 8: Total Cost of Control

Table 9: Various Control Methods and Associated Costs
 

Conclusion

Consistent with AQMD staff’s previous analysis for RECLAIM rule amendments, the information submitted by the RECLAIM facilities through their compliance plans projected the need for additional emission reductions through the mitigation fees program for compliance years 2001 and 2002 due to increase in production demands from Power Producing Facilities. However, the reported power plant emissions to date give an indication that the total emissions from these facilities are likely to be lower than the projected emissions in 2001 due to lower than expected electricity demand during the second half of calendar year 2001. Furthermore, AQMD staff has already initiated emission reductions from the marine vessel projects to achieve 175 tons of annual NO_x emission reductions to mitigate additional emissions from Power Producing Facilities

Overall, Non-Power Producing Facilities show emission reductions below the required level under RECLAIM. The projected emissions submitted by these facilities show higher emission levels than the levels that can be approved under Rule 2009.1, however, this projection is anticipated to be adjusted because a few of the proposed plans did not meet the requirements of Rule 2009.1. Staff anticipates compliance for this sector in 2003 after revised plans are submitted to show compliance with the rule. Finally, facilities not subject to Rule 2009.1 Compliance Plans are assumed to have no further reductions in emissions. However, staff has received control applications with a potential to reduce up to 40 tons per year of emissions. There are some uncertainties associated with assumptions, such as the in-basin electricity demands. Staff will continue to closely monitor production changes at the Power Producing Facilities and recommend any adjustments as necessary.

In addition, it is important to note that a number of control equipment proposed in the compliance plans submitted pursuant to Rule 2009 and Rule 2009.1 are capable of reducing emissions beyond the level committed in the plans. Therefore, further reductions beyond the proposed emission levels may be possible for future years.

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