Tom Ewing 2016-04-20 18:36:41
On October 1, 2015, EPA revised the federal air-quality standard for ground level ozone (O3), tightening the standard from 75 parts per billion (ppb) to 70. Ozone is set as a health-based standard, because at certain levels ozone can cause lung and respiratory problems. As most business people know, particularly business people who deal with energy issues, a new ozone standard is a big deal. The change starts a nationwide recalculation of pollution emission limits from industrial sources, mobile sources (cars, trucks, and other transport engines), and “area sources,” the mom-and-pop sector of the economy. Area sources include many relatively small sources such as dry cleaners and gas stations, which singularly may not be significant, but cumulatively can present a significant impact. Business operations are central within this air-quality recalculation. A more stringent ozone level inevitably requires managers to reexamine their facilities, raw materials, and processes with an eye toward meeting yet more stringent regulatory demands. With ozone, two classes of pollutants are of top concern: nitrogen oxides (NOx) and volatile organic compounds (VOCs). Ozone is not directly emitted; rather, it is formed on hot, sunny summer days from NOx and VOCs, referred to as “precursor pollutants.” VOCs are emitted from a wide range of sources, including motor vehicles, power plants, industrial operations, and consumer products. NOx results primarily from combustion—coal, oil, natural gas, wood, any common fuel, as well as from biogenic sources, such as forest fires. Keeping NOx and VOCs in check is the fundamental step in controlling ozone. The Clean Air Act (CAA) requires state environmental protection agencies to develop and implement the pollution control policies that keep ozone levels in check. These controls, formally presented as “state implementation plans,” or SIPs, largely focus on emission sources in cities and metropolitan regions. Ozone is measured and recorded throughout the ozone “season,” roughly from May to October. A city or region faces penalties if it exceeds the standard too many times—usually additional and tougher pollution control requirements. There is a geographic scope to ozone policy. Each city and region has limits on its own emissions from cars and trucks, industries, power plants, and area sources. But ozone levels can be impacted by interstate pollution—either ozone that formed elsewhere and was then carried great distances downwind, or ozone that results in a locality because the precursor pollutants (NOx and VOCs) blew in from somewhere else. Interstate pollution is tough for local environmental officials. It’s difficult to know the exact source of every pollutant within a regional “air shed”, but nevertheless, it is the recipient locality that must pay the regulatory price if ozone readings exceed the standard. This interstate dynamic is particularly important among the 23 states east of the Mississippi River. East Coast states have long complained that their cities struggle to comply with the ozone standard because of pollution transported from the Midwest—for example, from Ohio, Indiana, or Michigan. Midwest officials counter that local controls in East Coast cities are not aggressive enough, and that local officials are too quick to blame distant sources to avoid stricter local NOx and VOC controls. Controlling ozone is expensive, and it can be politically unpopular, presenting difficult choices for Governors and even state legislators. The CAA recognizes interstate transport and requires EPA to control upwind pollution sources that might prevent a downwind area from meeting or maintaining the standard. Local and interstate control strategies have to work in tandem. EPA uses air-quality models to determine and link downwind receptors to upwind sources. Finally, ozone is a weather-dependent pollutant. On hot, sunny summer days, ozone levels can climb, even if precursor concentrations are otherwise low. A state or region with strong pollution controls in place may nevertheless record high ozone levels because of atmospheric conditions. This, again, raises the possibility of even stricter controls. The CAA requires a standard protective of public health without consideration of cost. EPA tries to determine a safe exposure level after expert review from its Clean Air Science Advisory Council. As noted, EPA’s move last October starts a new round of pollution controls. For business energy managers these new proposals should be watched closely. In the past, NOx control for stationary sources has focused largely on utility electric generating units (EGUs). NOx sources external to the electrical generating system—i.e., non-EGUs—at cement plants, for example, or refineries, smelters, mills, and coking operations, have not been subject to the same level of scrutiny and control, at least regarding NOx. This report does not address NOx emissions from agricultural operations or forest fires, or smaller sources such as residential wood stoves. There are a number of reasons for this utility focus. EGUs are the biggest source of NOx, at least among stationary sources. Utility plants are easily identified and monitored. Tall stacks cause wide dispersion, a critical issue for interstate transport. Plus, utilities have a kind of quasi-public presence, making them somewhat more approachable regarding public policies. From 1980 to 2014, ozone levels dropped 33%. From 2000 to 2014, they dropped 18%. Utility NOx control has been a major contributor to that improvement, both at local and regional levels and from an interstate perspective. Mobile sources—cars and trucks—are the largest sources of NOx. However, substantial reductions in mobile source NOx are in the works, projected to occur by 2017. These reductions will result from new fuel standards, fuel economy, pollution controls, and repair and replacement of the existing fleet. As regulators and business managers contemplate a new ozone standard, inevitable questions arise: How much more will NOx have to be reduced? Can all (or most) of that reduction again come from EGUs, or is that a dead-end strategy? Will the NOx regulatory scope expand, pulling in a whole set of new NOx sources? It will take a few years before these questions are answered, but there are developments underway now that provide valuable insight into the direction of this critical policy debate. That insight comes from a proposed rule that EPA filed on December 3, a rule proposing updates to the “Cross-State Air Pollution Rule,” EPA’s regulatory policy that, in this case, focuses on interstate NOx transport within and across the 23 states east of the Mississippi. The Cross-State Rule is sometimes referred to as the “good neighbor provision” within the CAA. (This friendly image is frequently a bit forced considering the long history of tension from charges and counter-charges among state officials in downwind versus upwind states.) One might think that a Cross-State Rule Update makes sense considering the recent O3 revisions. But, in fact, the December Update was for the old 2008 ozone standard, not the new one. In the Update, EPA proposes the NOx cutbacks that EGUs still need to make to abet 2008 ozone levels in distant and downwind regions and cities. The cutbacks are substantial. To meet the 2008 standard, EPA wants to reduce aggregate eastern US NOx emissions from EGUs from 478,610 tons (2014), to 311,867 tons in 2017. That’s not equally divided among the states. Ohio, for example, would need to decrease NOx from 32,181 tons, to 16,660; Alabama: 21,075 to 9,979; Pennsylvania: 44,551 to 14,387. These are big changes. The reduction amounts are based on a cost of $1,300 per ton. If spending increased to $3,400 per ton, the 2017 aggregate drops from 311,867 to 302,028. That’s not much change for almost twice the money. So, the big question: If these volumes are required to meet the older standard, what additional NOx cutbacks might be required to meet the newer, more stringent 2015 ozone standard, and at what cost? Just as EPA had to update the Cross-state Rule for 2008, so too will the Agency eventually update the Rule for the 2015 standard. It’s an open question whether the next update could include non-EGU boilers. In fact, within the 2008 Update, the future regulatory status of non-EGUs is a priority question. The Agency repeatedly requests public comments about how, or whether, non-EGUs might fit into an expanded NOx regulatory scheme. As noted, there are concerns that utilities alone may not be able to deliver the necessary reductions among industrial sources. And, there are additional issues. The regulatory focus on NOx itself could intensify and shift. Some air-quality specialists, for example, argue that NOx is now the more important precursor pollutant, that VOC controls have reached their limits, that there are, for example, biogenic VOC sources (trees, forests) not amenable to “regulation.” In a proportional sense, then, future NOx demands could be higher. In a way, industrial boilers as well as other non-EGUs got a pass in the 2008 Update. They are not included within the inventory of sources said to contribute to cross-state air pollution. But this could change, a policy shift for which EPA seeks comments. EPA expects to present additional guidance this year (2016) on NOx sources and downwind receptors. EPA will conduct new modeling in 2016 to better understand upwind-downwind links and resultant O3 pollution. States with high NOx will face new demands for reductions. Non-EGUs, will be part of this review. One reason the 2008 Update does not include non-EGU NOx sources is because EPA itself faces a deadline, and not a popular one. Recall that a core purpose of the 2008 Update is to help states, cities, and metropolitan regions comply with the 2008 ozone standard. Compliance is a formal and deliberate process. It depends on actual air-quality readings. And, because ozone is a health-based standard, there are deadlines for compliance—in this case, it’s July 2018 for the cities and metropolitan areas designated as “moderate” for ozone. “Moderate” is one ranking within the CAA’s hierarchy of ozone problems. “Marginal” is the lowest ranking of non-compliance, followed by “moderate,” “serious,” “severe,” and “extreme.” A moderate area has six years to come into compliance. In this case, because classifications were set in 2012, the six-year deadline is 2018. Because of decisions from a lawsuit filed by North Carolina, EPA writes that it is compelled to align interstate transport deadlines with attainment deadlines for downwind states, such as North Carolina. Compliance depends on air-quality readings from three ozone “seasons.” For an evaluation in 2018, that means readings from 2015, 2016, and 2017. Therefore, the agency needs pollution reductions quickly. It’s too late, of course, to impact 2015, and probably 2016. But additional controls could help in 2017. This is critical for “moderate” cities and regions, because if they are judged as still “non-compliant” in 2018 those areas get bumped up to the next categorical level, from “moderate” to “serious,” and that higher ranking presents even tougher pollution controls for citizens and businesses. Last summer, EPA moved to redesignate 11 metropolitan areas as “moderate” for the 2008 standard, a move taken because those areas still had high ozone levels. Four of those areas—Atlanta, Chicago, Greater Connecticut, and New York-New Jersey-Long Island are within the eastern portion of the US covered by the 2008 Update. Moderate areas must be judged in compliance by 2018. Possibly, the NOx reductions required by the Cross-State Rule Update will help, at least for one summer—2017. In the 2008 Update EPA writes that it “is not proposing to address non-EGU emission reductions in its efforts to reduce interstate ozone transport for the 2008 ozone NAAQS [National Air Quality Standards] at this time.” EPA notes that while there are far more non-EGU sources than electric utilities, the non-EGUs are smaller, with fewer emission reductions to be gained from each source. Again, though, possible benefits by 2017 is an important factor. EPA writes that it is “uncertain that significant aggregate NOx mitigation is achievable from non-EGU point sources for 2017.” Nevertheless, EPA “requests comment on these issues, including how non-EGU reductions should be addressed and considered in fulfilling upwind states’ good neighbor obligations under the 2008 ozone standard in the future, as the control of non-EGUs may be a necessary part of addressing states’ full transport obligation.” Business managers should also keep in mind, of course, that decisions about NOx control are not just up to the Federal EPA. In fact, state authorities develop and write each state’s pollution control plans. In its notice, EPA points out that “states can always choose to reduce non-EGU emissions via good neighbor SIPs.” The Cross-State Update Rule includes a Technical Support Document (TSD) titled “Assessment of Non-EGU NOx Emission Controls, Cost of Controls, and Time for Compliance.” This document focuses solely on how and whether non-EGUs might become part of interstate NOx control policies. In the TSD, EPA identified a number of non-EGU categories with potential for significant NOx reductions. EPA’s focus excluded control options above $3,300 per ton, consistent with the cost range for EGUs. And EPA did not evaluate small sources, less than 1,000 tons per year. Finally, since time is a factor, EPA’s priority was reductions that could be made in time to affect the 2017 ozone season. Central to the TSD is the presentation of a core group of non-EGU sources with important NOx reduction potential. The categories are based on either common control technologies (categories 1–6), or similarity of source groups (category 7). (See the table below.) The TSD makes a range of observations about potential NOx reductions from these seven categories. But the bottom line concern for the Agency is that adding these controls takes too much time, new technologies, and processes, particularly for NOx monitoring and reporting, and would not help the 2017 ozone season. There are other issues, too, of course. EPA notes that “biosolid injection technology” has many unknowns. New NOx controls in Category 7 would require significant lead time for training and development. Additionally, in order to not disrupt pipeline capacity, outages must be staggered and scheduled during periods of low system demands for engines involved in natural gas pipelines. The bottom line is the potential for NOx reductions, but the 2017 deadline dominates this analysis. The conclusion: The above preliminary analysis performed by EPA indicates that uncertainty exists regarding whether significant aggregate NOx mitigation is achievable from non-EGU point sources by the 2017 ozone season. With all of these factors being considered, the limited available information points to an apparent scarcity of non-EGU reductions that could be accomplished by the beginning of the 2017 ozone season. As noted in the proposed rule, this conclusion has led EPA to focus the current proposed FIPs [federal implementation plan] on EGU reductions. The proposal acknowledges that this may not be the full remedy that is ultimately needed to eliminate an upwind state’s significant contribution to nonattainment or interference with maintenance of the 2008 ozone NAAQS (or, for that matter, the 2015 ozone NAAQS). Emissions reductions from the non-EGU categories discussed above may be necessary, though on a longer timeframe than the 2017 compliance deadline being proposed in this rulemaking. EPA intends to explore this question further in the near future and welcomes comment on any of the information in this TSD to assist with that effort (EPA Office of Air and Radiation 2015). The Clean Air Act is a labyrinthine legal and regulatory construct. To a large extent, its most significant parts are always moving and overlapping. NOx control policies, within the Cross-State Rule Update, as well as within other CAA programs, are in play right now. The Update provides valuable insight into future pollution control policies at the top of EPA’s agenda. This compendium of ideas will affect businesses across the country, and, not all equally, businesses in some regions will be far more impacted than others. For 2016, keep this set of issues on your radar! Reference EPA Office of Air and Radiation 2015. “Assessment of Non-EGU NOx Emission Controls, Cost of Controls, and Time for Compliance.” Technical Support Document (TSD) for the Cross-State Air Pollution Rule for the 2008 Ozone NAAQS Docket ID No. EPA-HQ-OAR-2015-0500: November 2015. www.epa.gov/sites/production/files/2015-11/documents/assessment_of_non-egu_nox_emission_controls_and_appendices_a_b.pdf. BE Tom Ewing is a writer specializing in energy and environmental subjects.
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