Comments and Testimonies

January 19, 2004

33 Pa.B. 6226 (Advance Notice of Final Rulemaking, Small Sources of NOx, Cement Kilns, and Large IC Engines)

Clean Air Council submits the following comments to the docket for the above-captioned rulemaking. The rulemaking in question would produce changes in Chapters 121 (relating to definitions), 129 (relating to sources) and 145 (relating to interstate pollution transport reduction, NOx budget trading program) of Title 25 of the Pennsylvania Code.

The two major components of this rulemaking are the addition of regulatory requirements for small sources of NOx in the Southeast Region of the Commonwealth and for large stationary internal combustion (IC) engines and cement kilns statewide.

The changes to Chapter 129 apply emission standards and alternative compliance options to the following small sources of NOx: boilers with nameplate rated capacity between 100 and 250 million Btus/hour; boilers greater than 250 mmBtus/hour which are not subject to the Chapter 145 program; simple cycle and combined cycle stationary combustion turbines; and stationary IC engines rated greater than 1,000 horsepower which are not subject to Chapter 145.

The changes to Chapter 145 set emission standards for large, stationary IC engines of 2,400, 3,000 or 4,400 horsepower or greater, depending on the type of engine. The changes also set an emission standard for cement kilns.

Clean Air Council is generally supportive of the regulatory action, particularly with regard to the Zero Emission Renewable Energy Production Credit Provision. However, among other things, it is regrettable that the program for small source NOx control is limited to the ozone season. The Council believes that additional air quality benefit would be obtained by extending the program to the full year. Furthermore, areas beyond the Philadelphia region remain in non-attainment for ozone, and the Council strongly urges DEP to consider expanding the program to all OTR counties.

Chapter 129 Changes

NOx is a major contributor to ozone smog non-attainment in Southeastern Pennsylvania, and current emissions control programs in the area are not on course to meet the 2005 ozone health standard deadline. Consequently, a shortfall of approximately 3 tons per day during the ozone season must be obtained by additional reductions, according to the Department's public comment solicitation document for this docket. These small sources of NOx have long escaped emissions regulations and as a result have been allowed to emit significant amounts of the pollutant without use of reasonable pollution controls, to the detriment of regional air quality. It is in the public interest for these sources to reduce their emissions through pollution control, and Clean Air Council fully supports this effort.

The specific standards set are not particularly aggressive, for instance, 0.10 lbs.NOx/mmBtu heat input for natural gas-fired boilers, 0.17 lbs.NOx/mmBtu for natural gas-fired combined cycle turbines and 0.3 lbs.NOx/mmBtu for oil-fired simple cycle turbines. Nevertheless, the Council bears in mind that the standard must apply equally to old and new units, and therefore the averages will still deliver significant improvements over the status quo.

The program allows companies to average this emission rate among its other units in the region, and also allows the purchase of NOx allowances in order to meet the rate. Such practice is generally in keeping with Chapter 145, and it would be an inequity to allow large sources, in a better position to economically manage major investment in pollution control technology, to opt for allowance trading to comply while not affording the same flexibility to much smaller sources of NOx.

This regulation is needed to bring healthful air quality to Southeastern Pennsylvania and provides adequate flexibility to industry so that emissions reduction goals are achievable without economic hardship. The Council furthermore supports the Department's efforts to encourage reliance on CEMs data for emissions accountability (Section 129.204).

The Council also strongly supports the 129.204(f) measures which require 3 allowance submittals for every 1 ton of emissions for which no allowance is surrendered by the post-season deadline. Since averaging is allowed over the season, such measures are important. The Council also commends DEP's interpretation of excess emissions as a separate violation for each day of the 153-day season and preservation of traditional assessments for such violations.

Zero Emission Renewable Energy Credit Provision

Clean Air Council strongly supports the inclusion of the Zero Emission Renewable Energy Credit Provision in the changes to Chapter 129. It will have only a very small impact on other industries buying and selling NOx credits, but it will have a positive, significant impact on the ability of persons or companies to build renewable energy generation in Southeastern Pennsylvania. The financial boost provided to the generator of renewable energy can make the decision to build the renewable facility a good investment. The value of the credit is not a subsidy but rather a recognition of the benefit in improved air quality that the avoided NOx represents to society.

The submittal to DEP will be in the form of tradeable renewable certificates which represent the generation of a certain amount of renewable energy, produced in the current year in the five-county region, which is certified and issued by a DEP-recognized authority. It is essential that the Zero Emission character of this provision remain, which is feasible notwithstanding that the certifying authority may issue TRCs for forms of energy which do have some emissions. This is so because the certificate will categorize the type of energy source utilized and such information will be determinative of an emissions-free status.

The NOx source will pay the market value of a NOx allowance or portion thereof to the person or company that produced the renewable energy. The regulation contains a calculation to "transform" kilowatt-hours or megawatt-hours of renewable electric generation into pounds of nitrogen oxide avoided for the purpose of creating a financial production incentive to those who replace the need for polluting power in the Southeast region with clean renewables. Because the program is limited to generation in the Southeast, it is likely that solar photovoltaics will be the leading energy source, with commercial scale wind much less likely due to generally inadequate wind potential in this region. Based on NOx allowance prices, the likely financial incentive per installation will be high enough to encourage committed efforts but well short of the incentives that might prompt any sort of "rush" that could impinge on allowance availability for industrial sources.

The Council urges the DEP to maintain the Zero Emission Renewable Energy Credit Provision of this regulation and allow this rare opportunity to assess how well such a market-driven renewables program can function. The time to explore such a program is here, now, in an essentially pilot-scale, low risk vehicle. The opportunity should not be missed.

Chapter 145:

The inclusion of the IC engines and cement kilns brings Chapter 145 into alignment with the full scope of the EPA's NOx SIP Call in its contemplation of the necessary source categories for effective interstate transport reduction. Clean Air Council has long called for this inclusion in Pennsylvania.

Large IC Engines:

The Council supports NOx standards applied to large, stationary combustion engines. It is also important that the relatively frequent emission testing of 145.113(c)(2) remain for those engines without CEMs or an approved alternative. The Council believes it is a mistake, however, to allow these types of sources which are often used as "peaking" units during high electricity demand periods during the summer, to rely on a seasonal average to determine compliance. It is a fact that peak demand periods often coincide with high ozone days. The seasonal average will allow diesel peaking units to run at capacity during bad ozone days, churning out extremely high levels of NOx and exacerbating already unhealthy air quality. The Council urges DEP to devise an averaging system for these units that still provides some degree of flexibility but encourages either control technology or transition to less-polluting peaking unit technologies.

Cement Manufacturing:

The application of the Chapter 145 trading regime on a statewide basis to Portland cement kilns is welcomed by the Council, and we generally support the program's design. However, the emission standard of 6 lbs. NOx/ton of clinker produced is inadequate to produce significant reductions from these major sources of NOx. BAT in Pennsylvania for Portland cement kilns varies between 2 and 3 lbs. NOx/ton of clinker. While the Council does not expect a BAT level standard here, a lower number than that proposed would foster greater economic incentive to improve emissions. Such a step is necessary to provide healthy air quality in counties in and downwind of Pennsylvania's cement kilns.

The Council appreciates the opportunity to comment. Thank you for your consideration of these views.