Fact Sheet - Revisions to Definition of Cogeneration Unit in Clean Air Interstate Rule (CAIR), CAIR Federal Implementation Plan, Clean Air Mercury Rule (CAMR), and CAMR Proposed Federal Plan; Revision to National Emission Standards for Hazardous Air Pollutants for Industrial, Commercial, and Institutional Boilers and Process Heaters; and Technical Corrections to CAIR and Acid Rain Program Rules (Cogeneration Unit Proposal)

ACTION

On April 25, 2007, the U.S. Environmental Protection Agency (EPA) proposed to revise the applicability provisions for cogeneration units in the Clean Air Interstate Rule (CAIR) model trading rules, CAIR Federal Implementation Plan (CAIR FIP), Clean Air Mercury Rule (CAMR), and CAMR Proposed Federal Plan.

The CAIR model trading rules, the CAIR FIP, CAMR and the CAMR Federal Plan proposal – all include an exemption for certain cogeneration units. To qualify for this exemption, a unit must, among other things, meet the definition of cogeneration unit in each rule. In all of these, this definition includes an efficiency standard, the purpose of which is to close a potential loophole. With the standard, a unit has to send a measurable amount of thermal energy to a process and achieve efficiency gains through cogeneration, in order to qualify as a cogeneration unit and thus, potentially qualify for an exemption for certain cogeneration units. Making it possible for a number of non-fossil fuel cogeneration units to qualify for the exemption seems to be consistent with EPA objectives.

EPA is proposing a change to the efficiency standard in the cogeneration unit definition in these rules. Specifically, EPA is proposing to revise the efficiency standard in the cogeneration unit definition so that the standard would apply only to the fossil fuel portion of a unit’s energy input rather than to all energy input. (As an alternative, EPA is proposing to revise the standard to specifically exclude energy input from biomass fuels.)

Information recently received by EPA indicates that a group of biomass cogeneration units may be unable to meet the efficiency standard (without burning significantly more fossil fuels) because of the technical differences that may exist between biomass cogeneration units and other units.

EPA believes that the vast majority of existing biomass cogeneration units are operated by the pulp and paper industry, and that existing biomass cogeneration units as a group may have a unique set of characteristics that together make it very difficult for the typical unit to meet the efficiency standard in the cogeneration unit definition unless the unit co-fires significant amounts of fossil fuel, such as coal. These characteristics are: fuels with relatively high moisture content (e.g., wood waste); units designed for relatively low pressure and temperature conditions; and relatively small boilers and steam turbines that are inherently less efficient due to their size.

The cogeneration unit definition finalized in the CAIR model trading rules, the CAIR FIP, CAMR, and in the proposed CAMR Federal Plan includes all energy input in the efficiency calculation, which EPA believes has the unanticipated and unintended consequence of making it very difficult for existing biomass cogeneration units to qualify as cogeneration units (unless they co-fire significant amounts of fossil fuel, such as coal). Preventing these existing units from qualifying as cogeneration units does not seem to be consistent with the purposes of the efficiency standard.

The proposed change to the cogeneration unit definition in the CAIR model trading rules, the CAIR FIP, CAMR, and the proposed CAMR Federal Plan would likely make it possible for some additional units to qualify for the cogeneration unit exemption in these rules. This would have little effect on the projected emissions reductions and the environmental benefits of these rules.

The use of biomass as a fuel is becoming an increasingly attractive energy choice in the United States due to high fossil fuel prices, the need to lessen the environmental impact of energy production, and concerns about national energy security. Allowing existing biomass cogeneration units to qualify for the exemption is consistent with EPA objectives including reducing greenhouse gas intensity, improving air quality, and encouraging energy independence.

This action also proposes minor technical corrections to the CAIR and Acid Rain Program rules and revisions to National Emission Standards for Hazardous Air Pollutants for Industrial, Commercial, and Institutional Boilers and Process Heaters (“boiler MACT”).

EPA will accept public comment for 45 days following publication of this proposal in the Federal Register and will hold a public hearing on the proposal before the close of the comment period if a hearing is requested (see below).

EPA is not requesting comments on CAIR, the CAIR FIP, CAMR, or the proposed CAMR Federal Plan or reopening any issue decided in those actions for reconsideration or comment. We are requesting comment only on the efficiency standard in the cogeneration unit definition as applied to biomass cogeneration units and on the minor technical corrections to CAIR and the Acid Rain Program Regulations.

Background on CAIR & the CAIR FIP

On March 10, 2005, EPA announced CAIR, a rule that will achieve that largest reduction in air pollution in more than a decade. CAIR regulates SO2 and/or NOX emissions from 28 eastern States and the District of Columbia that contribute to levels of fine particles (PM2.5) and/or ozone in areas above the air quality standards in downwind States.

The emission reductions are required in two phases. The first phase of NOX reductions starts in 2009 (covering 2009–2014) and the first phase of SO2 reductions starts in 2010 (covering 2010–2014); the second phase of reductions for both NOX and SO2 starts in 2015 (covering 2015 and thereafter).

States must develop State Implementation Plans (SIPs) to achieve the emission reductions required by CAIR and may choose what measures to adopt to achieve the necessary reductions and which sources to control. CAIR included model rules for SO2 and NOX emissions cap-and-trade programs, covering fossil-fuel-fired power plants, that States can choose to adopt to meet the emission reduction requirements.

In 2006, EPA published CAIR FIPs for all 28 States and the District of Columbia covered by CAIR to ensure the required emission reductions are achieved on schedule. As the control strategy for the FIPs, EPA adopted the model SO2 and NOX cap-and-trade programs for fossil-fuel-fired power plants that EPA provided in CAIR as a control option for States. EPA intends to withdraw the FIP for any State in coordination with approval of that State’s SIP that meets the CAIR requirements.

Background on CAMR & the Proposed CAMR Federal Plan

On March 15, 2005, EPA announced CAMR, establishing standards of performance limiting mercury emissions from new and existing coal-fired power plants and creating a market-based emissions cap-and-trade program that reduces nationwide utility emissions of mercury in two distinct phases. CAMR sets emission reduction requirements for each State, the District of Columbia, and Indian Country.

The emission reductions are required in two phases. The first phase of mercury reductions starts in 2010 (covering 2010–2017); the second phase of reductions starts in 2018 (covering 2018 and thereafter).

States must develop State Plans to achieve the mercury emission reductions required by CAMR and may choose what measures to adopt to achieve the necessary reductions. Unlike CAIR, under which States may choose which sources to control, CAMR requires that States control emissions from coal-fired power plants. CAMR included a model rule for a mercury emissions cap-and-trade program, covering coal-fired power plants, that States can choose to adopt to meet the emission reduction requirements.

In 2006, EPA published a proposed CAMR Federal Plan for coal-fired power plants located in all jurisdictions covered by CAMR to ensure the required emission reductions are achieved on schedule. As the control strategy for the Federal Plan, EPA proposed to adopt the model mercury cap-and-trade program for coal-fired power plants that EPA provided in CAMR as a control option for States. EPA will not adopt the Federal Plan for any State with a timely submitted and approved State Plan that meets the CAMR requirements, and will withdraw the Federal Plan for any State after the Agency approves a State Plan that meets the CAMR requirements for that State.

New coal-fired power plants (“new” means construction starting on or after January 30, 2004) will have to meet new source performance standards (NSPS) in addition to being subject to the CAMR emission caps.

PUBLIC HEARING AND PUBLIC COMMENT ON THE PROPOSAL

This proposed rule will be open for public comment for 45 days after it is published in the Federal Register.

The text of this proposal, including information on how to submit comments, is available on EPA’s website at www.epa.gov/cair or www.epa.gov/camr.

If requested, EPA will hold a public hearing on today’s proposed rule in Washington, DC, at least 30 days prior to the end of the public comment period. Any person may request a hearing by calling Elyse Steiner at (202) 343-9141 before 5 p.m. on [insert date]. See www.epa.gov/cair or www.epa.gov/camr.

To comment on the proposal, submit your comments, identified by Docket ID Number EPA-HQ-OAR-2007-0012, by one of the following methods:
- Federal Rulemaking Portal: www.regulations.gov. Follow the on-line instructions for submitting comments.
- Email: A-AND-R-Docket@epa.gov
- Mail: Air Docket, ATTN: Docket Number EPA-HQ-OAR-2007-0012, Environmental Protection Agency, Mail Code: 6102T, 1200 Pennsylvania Ave., NW, Washington, DC 20460
- Hand Delivery: EPA Docket Center, 1301 Constitution Avenue, NW, Room 3334, Washington, DC. Such deliveries are only accepted during the Docket’s normal hours of operation, and special arrangements should be made for deliveries of boxed information.

FOR MORE INFORMATION

To download the proposal and related information, go to the following address: www.epa.gov/cair or http://www.epa.gov/camr

For more information, call Elyse Steiner at EPA’s Office of Atmospheric Programs, (202) 343-9141.

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