NSR Stakeholders NSR Stakeholders Working Group Working Group - PowerPoint PPT Presentation

NSR Stakeholders NSR Stakeholders Working Group Working Group April 16, 2009 April 16, 2009 1 1

Overview Overview Status Report on NSR Activities Status Report on NSR Activities – State and federal court litigation State and federal court litigation – – Permitting status Permitting status – – State legislative update State legislative update – – Re Re- -adoption of PR1315, R1309.1, & amend adoption of PR1315, R1309.1, & amend – R1309.2 R1309.2 Prioritization of strategies via Reg Reg XIII rule XIII rule Prioritization of strategies via amendments amendments – USEPA and CARB staff initial comments USEPA and CARB staff initial comments – 2 2

Near Term Solutions Near Term Solutions 3 3

Timing of Surrendering Offsets Timing of Surrendering Offsets Proposal Proposal – Surrender offsets Surrender offsets prior to start of equipment operation prior to start of equipment operation – Discussion Discussion – Consistent with federal NSR Consistent with federal NSR – – No variance for surrendering of offsets allowed No variance for surrendering of offsets allowed – – PC conditioned to require surrendering of offsets prior PC conditioned to require surrendering of offsets prior – to start of operation to start of operation – Cease of start of operation if in violation of offset Cease of start of operation if in violation of offset – provisions provisions Initial Agency Comments Initial Agency Comments – No anticipated issues No anticipated issues – 4 4

Recall Shutdown Offsets to AQMD Recall Shutdown Offsets to AQMD Where No Offsets Previously Provided Where No Offsets Previously Provided Proposal Proposal – Require offsets generated from shutdowns to be returned to the A Require offsets generated from shutdowns to be returned to the AQMD QMD – if sources did not previously provide their own offsets (non- if sources did not previously provide their own offsets (non -orphans) orphans) Discussion Discussion – – On an equipment On an equipment- -by by- -equipment basis equipment basis – – Offsets to be auctioned off to all sources Offsets to be auctioned off to all sources – Offsets are non Offsets are non- -tradable and can be leased from the district for the first tradable and can be leased from the district for the first – 5 years 5 years – If unused, offsets to be returned to the district with applicabl If unused, offsets to be returned to the district with applicable discount e discount – – – When equipment shuts down, offsets return to the district When equipment shuts down, offsets return to the district – – Open to long Open to long- -term leasing discussion term leasing discussion – Fees collected to be re Fees collected to be re- -invested for emission reduction projects in the invested for emission reduction projects in the – impacted communities impacted communities Initial Agency Comments Initial Agency Comments – Does not regulate the ownership of offsets Does not regulate the ownership of offsets – 5 5

Annual Credits Annual Credits Proposal Proposal – Issue new ERCs and convert existing ERCs to annual instead Issue new ERCs and convert existing ERCs to annual instead – of daily credits of daily credits Discussion Discussion – ERC issuance in total #/year based on R1306(c)(1) and ERC issuance in total #/year based on R1306(c)(1) and – modified (c)(4) modified (c)(4) – Offset requirements also in #/yr (modified R1306 (b)) Offset requirements also in #/yr (modified R1306 (b)) – – – Existing ERC conversion to annual credits based on prior Existing ERC conversion to annual credits based on prior records records If not available (orphan shutdowns), assuming 40 hrs/wk If not available (orphan shutdowns), assuming 40 hrs/wk and 52 wks/year (~ RECLAIM procedures) and 52 wks/year (~ RECLAIM procedures) Initial Agency Comments Initial Agency Comments – All other air districts use annual credits All other air districts use annual credits – – CARB: SB288 demonstration needed CARB: SB288 demonstration needed – 6 6

Pre- -Consultation Prior to Consultation Prior to Pre Generating ERCs Generating ERCs Proposal Proposal – Establish procedures for pre Establish procedures for pre- -consultation consultation – – Define scope of pre Define scope of pre- -consultation consultation – – Flat fee for cost recovery Flat fee for cost recovery – Discussion Discussion – Efficiency improvement Efficiency improvement – – Can potentially lead to more credit generating Can potentially lead to more credit generating – opportunities opportunities – Provides additional information for market participants Provides additional information for market participants – – Potential staff resource impacts Potential staff resource impacts – – Reg Reg III amendments for cost recovery III amendments for cost recovery – Initial Agency Comments Initial Agency Comments – None None – 7 7

Aggregate Aggregate Emission Sources – – Functional Replacement Functional Replacement Emission Sources Proposal Proposal – Allow existing equipment to lower its emission cap through – Allow existing equipment to lower its emission cap through enforceable permit conditions and such reductions not assumed in enforceable permit conditions and such reductions not assumed in the SIP (see R1304(c)(2)(A) thru (D)) the SIP (see R1304(c)(2)(A) thru (D)) – Emissions from new sources, at BACT, must be equal to or less Emissions from new sources, at BACT, must be equal to or less – than reductions from existing sources (above) than reductions from existing sources (above) – No offsets required from open market or AQMD account – No offsets required from open market or AQMD account Discussion Discussion – Equipment involved can be one to many or many to one and serve Equipment involved can be one to many or many to one and serve – similar function similar function – Onsite use only, not tradable Onsite use only, not tradable – – Limited banking (e.g., new permit applications filed within one Limited banking (e.g., new permit applications filed within one year year – of reductions) of reductions) – Allow base Allow base- -load power plants to load power plants to peakers peakers that have higher that have higher – generation capacity (MW), but lower load factor generation capacity (MW), but lower load factor Initial Agency Comments Initial Agency Comments – No anticipated issues No anticipated issues – 8 8

Example for Example for Aggregating Emission Sources Aggregating Emission Sources Existing Boiler #1 Internal Offset PTE/BARCT: 50 lbs/day From Boiler #1: New PTE: 30 lbs/day New Turbines #1 20 lbs/day PTE: 40 lbs/day PTE: 40 lbs/day Use 40 lbs/day offsets from Boiler Existing Engine #1 #1 and Engine #1 Internal Offset PTE/BARCT: 50 lbs/day Engine #1: New PTE: 30 lbs/day 20 lbs/day 9 9

Example for Replacement Example for Replacement by Equipment Family by Equipment Family Existing Boiler – 40 MMBTU New Boiler – 55 MMBTU PTE/BARCT: 75 lbs/day PTE/BACT: <75 lbs/day 10 10

Concurrent Facility Modification Concurrent Facility Modification Proposal Proposal – Expand R1304 (c)(2) Concurrent Facility Modification Expand R1304 (c)(2) Concurrent Facility Modification – – Remove R1306 reference – Remove R1306 reference – No offset required from open market or AQMD account No offset required from open market or AQMD account – Discussion Discussion – On On- -site only, not tradable site only, not tradable – – Emission reductions can occur prior to submittal of permit Emission reductions can occur prior to submittal of permit – application, but not to exceed 12 months application, but not to exceed 12 months – Existing equipment to lower its emission cap through enforceable Existing equipment to lower its emission cap through enforceable – permit conditions and reductions meet the requirements permit conditions and reductions meet the requirements R1304(c)(2)(A) thru (D) R1304(c)(2)(A) thru (D) Initial Agency Comments Initial Agency Comments – USEPA: Need to make sure this is not “internal netting” out of N USEPA: Need to make sure this is not “internal netting” out of NSR SR – which is prohibited for “severe” non- -attainment. attainment. which is prohibited for “severe” non – CARB: SB288 demonstration needed CARB: SB288 demonstration needed – 11 11

Adjust NSR Debt to BARCT Adjust NSR Debt to BARCT Proposal Proposal – Adjust positive NSR balance to reflect current Adjust positive NSR balance to reflect current – BARCT level when paying back debt (i.e., at BARCT level when paying back debt (i.e., at the time of applying for ERCs) the time of applying for ERCs) Discussion Discussion – May be implemented through policy change May be implemented through policy change – Initial Agency Comments Initial Agency Comments – USEPA: None USEPA: None – – CARB: SB288 concern if implemented through CARB: SB288 concern if implemented through – rule amendment rule amendment 12 12