Published: August 30, 2011
August 30, 2011
The Honorable Gina McCarthy
Assistant Administrator for Air and Radiation
U.S. Environmental Protection Agency
1200 Pennsylvania Avenue, NW
Washington, DC 20460
Dear Assistant Administrator McCarthy:
Re: Greenhouse Gas New Source Performance Standards for Electric Utility Steam Generating Units, Docket No. EPA-HQ-OAR-2011-0090
Greenhouse Gas New Source Performance Standards for Petroleum Refineries, Docket No. EPA-HQ-OAR-2011-0089
In anticipation of the issuance by the Environmental Protection Agency (EPA) of a Notice of Proposed Rulemaking (NOPR) by September 30, 2011 on greenhouse gas (GHG) New Source Performance Standards (NSPS) for electric utility steam generating units (EGUs), and of a NOPR by December 15, 2011 on GHG NSPS for petroleum refineries, the Business Roundtable (Roundtable) submits these comments.
The Roundtable expects to comment on proposed GHG NSPS for EGUs and petroleum refineries upon publication of proposed standards. In the interim, however, the Roundtable urges the EPA, in the development of proposed standards, to fashion flexible, cost effective and common-sense requirements with reasonable and achievable compliance schedules.
The member companies of the Roundtable have a compelling interest in the anticipated GHG NSPS for EGUs and petroleum refineries. Those member companies include public utilities with EGUs and petroleum refineries.
A. GHGs From Stationary Sources Do Not Easily Fit Within The Clean Air Act Regulatory Scheme.
GHGs are ubiquitous, well-mixed and are unlike any other pollutants regulated by the Clean Air Act (CAA), e.g., the criteria pollutants for which EPA promulgates National Ambient Air Quality Standards under Section 109 of the statute. Thus GHGs do not easily fit within the regulatory scheme under the CAA for the remediation of local and regional air pollution. GHG emissions impact climate change, which should be addressed through comprehensive energy and climate change policy established by Congress.
GHG emissions pose a global challenge that cannot be met through unilateral regulation by EPA under a statute intended to address local and regional air pollution. In fact, such regulation will contribute to increased global GHG emissions if it results in U.S. industrial production being lost to overseas competitors operating where environmental protection may be lax or non-existent. Energy intensive, trade exposed sectors of our economy are particularly vulnerable. EPA should carefully analyze the effect of its proposed regulations on these sectors of our economy and seek to minimize the negative impact that its GHG regulations will have on employment and economic growth.
Health and welfare benefits of regulating GHGs through the NSPS program are expected to be extremely small, if quantifiable at all, and are likely to be secondary effects resulting potentially from reducing climate temperatures. Thus EPA would be acting on non-inhalation health effects and on welfare effects in order to justify regulation of GHGs. The de minimus quantifiable benefits of GHG regulation under NSPS should serve as a cautionary signal to EPA as it seeks to construct one of the most potentially expansive regulatory programs in the history of the CAA.
B. GHG NSPS regulations are only one of a suite of new regulations with which EGUs and refineries will soon have to comply. Some of these regulations are likely to impose new requirements on EGUs and refineries (e.g., cooling water intake structures rule, utility and industrial boiler MACT standards, and air transport rule) that will result in decreased unit efficiency and higher GHG emissions per unit of output.
EPA needs to carefully look at the cumulative impact of its proposed or anticipated rules to ensure that they are carefully balanced, coordinated and do not work at cross purposes with one another.
EPA also should carefully take into account the impact any regulations will have on electric system reliability, the cost of energy, its impact on downstream businesses and consumers, jobs creation and retention. Already, many EGUs are threatened with closure given the expected cumulative cost impact of anticipated final rules on clean air transport, national emissions standards for hazardous air pollutants applicable to utility boilers, and other EPA requirements. According to some estimates, 30,000-45,000 megawatts of electric capacity (13% of existing coal capacity) could be threatened with closure as a consequence of these regulations.
Similarly, refineries may be overwhelmed by the cumulative cost impact of anticipated rules on cooling water intake structures, national emissions standards for hazardous air pollutants applicable to industrial boilers and other EPA requirements, such as those anticipated in the upcoming refinery sector rulemaking. In today’s highly competitive economy many refineries, in particular smaller refineries that lack economy of scale as well as refineries owned and operated by small entities, may be unable to afford compliance with all of these new EPA requirements and may be forced to close.
Such a flexible and common-sense approach, moreover, will help to ensure that GHG NSPS for refineries will not undermine the development and production of cleaner burning gasoline to reduce GHG emissions in motor vehicles. If cleaner burning gasoline requires refineries to adopt industrial processes that emit more GHGs, then EPA should not impose requirements that would preclude those processes.
C. No commercially available technologies exist to control GHGs from fossil fuel based EGUs or petroleum refineries. In addition, EPA cannot mandate a specific technology to control GHGs.
The development of commercially available technologies to control GHG emissions from EGUs will require the resolution of significant technical, economic and regulatory issues. Some carbon dioxide (CO2) control technologies, e.g., carbon capture and storage, are still on the drawing boards and are not expected to become commercially available until 2020-2025, if then. EPA cannot mandate CO2 control technologies that are undeveloped, unproven and uneconomical.
Section 111 of the CAA requires that a standard of performance must be based on an “adequately demonstrated” system of emission reductions. This “best demonstrated technology” standard is quite different from the Best Available Control Technology or the Maximum Achievable Control Technology standards contained elsewhere in the CAA. In the absence of commercially available technologies to control GHG emissions, there are no “adequately demonstrated” technologies.
Section 111, moreover, is not a technology-forcing standard. With a limited exception, nothing in the statute “shall be construed to require, or to authorize [EPA] to require . . . any particular technological system of continuous emission reduction . . . .” Thus EPA cannot mandate specific technologies to control GHGs.
D. EPA also is not authorized under the CAA to mandate a specific fuel type or feedstock.
Section 111 does not authorize EPA to set NSPS for EGUs that require one particular type of fossil fuel to be burned, e.g., natural gas. The statute requires NSPS for each “category” of stationary sources listed by EPA under Section 111. The categories listed by EPA include (under 40 C.F.R. Part 60, Subpart Da) EGUs, which by definition combust more than 250 MMBtu/hr heat input “of fossil fuel (either alone or in combination with any other fuel.” Fossil fuel by definition includes coal, natural gas, or petroleum. Thus NSPS for EGUs must be applicable to EGUs that burn coal or petroleum as well as natural gas.
Similarly, the statute does not authorize EPA to dictate feedstocks for petroleum refineries. Different feedstocks, e.g., different types of crude oil, may be refined into gasoline, but the industrial process to refine heavier oils, for example, may require more energy, and emit more GHGs, than the process to refine light crude oil. GHG NSPS for refineries, however, cannot mandate particular feedstocks for gasoline in order to minimize GHG emissions. Further, mandating specific feedstocks could lead to crude oil supply shuffling and market disruptions without any global GHG benefits.
E. Any industry or sector "performance standards" established by EPA should recognize different types of fuels, boilers, process heaters, other fossil fuel containing equipment and facility configurations.
The diversity among EGUs and, in particular, petroleum refineries precludes the promulgation of workable NSPS that would apply across the board to all EGUs or to all refineries. EPA should follow its historic practice of recognizing subcategories when establishing GHG performance standards, and identify subsystems and particular emission units that can adopt readily available energy efficient designs to reduce emissions.
Petroleum refineries, for example, are complex and unique in their design, processes, and types of fuel, feedstocks, and products. Thus GHG emissions reductions cannot be achieved under a one-size-fits-all standard. Here, these reductions require case-by-case assessments at refineries to determine the most cost-effective approach to reduce GHG emissions. Refineries also are unique in their business models, with differing sizes, ownership structures, product lines and customer bases. This additional diversity, which affects the resources available for compliance with GHG NSPS, further complicates the promulgation of workable NSPS that would apply to all refineries.
F. Work practices, maintenance practices and cost-effective equipment upgrades can be used to establish achievable, cost-effective energy efficiency improvement standards.
Reductions in GHG emissions from EGUs can be achieved through increases in energy efficiency. Such increases would permit the same level of electric power to be generated with less fossil fuel, which means reduced GHG emissions. Achievable and cost effective increases in EGU energy efficiency, through improved work practices, improved maintenance practices, and equipment upgrades, provide a flexible and common-sense alternative to EPA-mandated technologies to control GHG emissions or an EPA-mandated fuel type.
Increases in EGU energy efficiency also can be achieved through reductions in parasitic losses. EGUs consume a portion of the electric power they generate to operate auxiliary equipment, e.g., pumps and fans. Parasitic losses can consume up to 6% of the output of an EGU. Those losses could increase if additional emissions control equipment is required to be installed in the next few years. Such equipment, therefore, simply increases GHG emissions.
Petroleum refineries also can achieve reductions in GHG emissions through increases in energy efficiency and have an established record of voluntary efficiency improvements. U.S. refineries have remained competitive in the face of stiff overseas competition in large part because they have reduced their operational costs through increases in energy efficiency.
G. NSR is a problem with equipment upgrades to increase unit efficiency. EPA should clearly state that equipment upgrades to increase unit efficiency in order to address GHG emissions will not trigger NSR.
There is a Catch-22 associated with equipment upgrades intended to increase energy efficiency (and thus reduce GHG emissions). EPA may deem the upgrades to be major modifications that require new source review. Such review discourages the upgrades. To promote equipment upgrades designed to increase EGU energy efficiency and reduce GHG emissions, EPA thus should state that such equipment upgrades will not trigger new source review.
The Roundtable appreciates this opportunity to comment and the consideration that EPA gives to its views.