February 28, 2011

BACT for GHG Permits

There is a great deal of justifiable concern in the regulated community about the recent federal requirement that new or modified major sources of GHGs obtain prevention of significant deterioration (PSD) permits to limit those emissions. The Clean Air Act (CAA) requires that the permitting authority—generally the state or local air agency—issue PSD permits that set emissions limits for each regulated pollutant based on the best available control technology (BACT) for that pollutant. Since GHGs, primarily CO2, have not previously been regulated under the CAA, businesses have been asking, “What constitutes BACT for GHGs?” In answering the question, probably the main term to keep in mind is energy efficiency.

Determining BACT is a well-established “top down” process that is conducted on a case-by-case basis. The review begins by identifying all available control technologies and then narrowing the list by eliminating technically infeasible or prohibitively costly options. For example, regarding emissions of CO2, one of the most talked about controls is carbon capture and sequestration (CCS), which may ultimately be the best solution for preventing large releases of CO2 into the atmosphere. But CCS does not yet exist in a commercially viable form. So while CCS would almost certainly be listed under “available control technologies,” it would be quickly eliminated from consideration unless the permit applicant makes a very strong and unusual argument, backed by extensive and detailed documentation, that CCS is workable and desirable at the facility. Even then, the permitting authority, not the applicant, must justify the selection of BACT in the final permit, and, with probably no other BACT provisions based on CCS, it is highly unlikely that a permitting authority would take a chance by approving CCS as BACT.

While EPA is requiring BACT for GHGs, the Agency very explicitly does not identify which BACT a permitting authority should select for any source. However, in its PSD and Title V Permitting Guidance for Greenhouse Gases, the Agency says it “expects permits issued after January 2, 2011, to initially place more of an emphasis on energy efficiency, given the role it plays in affecting emissions of GHGs.” The guidance further encourages permitting authorities to consider establishing an output-based BACT emissions limit or a combination of output- and input-based limits, wherever feasible and appropriate to ensure that BACT is complied with at all levels of operation.

In addition to a permit containing specific numeric emissions limits, a permit can also include conditions requiring the use of a work practice such as an environmental management system (EMS) focused on energy efficiency. The inclusion of such a requirement would be appropriate where it is technically impractical to measure emissions and/or energy use from all of the equipment and processes of a plant and apply an output-based standard to each of them. One candidate might be a factory with many different pieces of equipment and processes that use energy.

Again, while recognizing the authority of the permitting body to select BACT, EPA’s guidance frequently recognizes the benefit of using a clean burning fuel or a more efficient combustion practice as BACT. The Agency states: “In general, a more energy efficient technology burns less fuel than a less energy efficient technology on a per unit of output basis. For example, coal-fired boilers operating at supercritical steam conditions consume approximately 5 percent less fuel per megawatt hour produced than boilers operating at subcritical steam conditions. Thus, considering the most energy efficient technologies in the BACT analysis helps reduce the products of combustion, which includes not only GHGs but other regulated NSR pollutants (e.g., NOx, SO2, PM/PM10/PM2.5, CO, etc.).”

Furthermore, the guidance states that combined cycle combustion turbines, which have higher efficiencies than simple cycle turbines, should be listed as options when an applicant proposes to construct a natural gas-fired facility. In coal-fired permit applications, EPA believes that an integrated gasification combined cycle (IGCC) should also be listed for consideration when it is more efficient than the proposed technology.

A second category of energy efficiency improvements includes options that could reduce emissions from a new greenfield facility by improving the utilization of thermal energy and electricity that is generated and used on-site. BACT reviews for modified units at existing sources should focus on the emitting unit that is being physically or operationally changed. However, when reviewing a PSD permit application for the construction of a new facility that creates its own energy (thermal or electric) for its own use, EPA recommends that permitting authorities consider technologies or processes that not only maximize the efficiency of the individual emitting units but also improve processes that impact the facility’s energy utilization, assuming it can be shown that efficiencies in energy use by the facility’s higher–energy–using equipment, processes, or operations could lead to reductions in emissions from the facility.

The permit applicant can play a strong role in identifying BACT by providing the permitting authority with a thorough and credible assessment of all available technologies and explaining in detail which ones are not technically or economically feasible. One point to bear in mind is that permitting authorities will look favorably on an applicant’s BACT review that begins with a good assessment of technologies that have been demonstrated to achieve the highest levels of control for the pollutant in question, regardless of the source type in which the demonstration has occurred. In addition, BACT may not be selected if it disrupts the applicant’s basic business purpose for the proposed facility. Whether BACT actually causes this disruption has been a controversial topic even before GHG permitting entered the picture. Any facility that seeks to use this tactic as a way to avoid a type of BACT should, again, make sure the argument is well supported.