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Presentation for EPRI CEM User Group Meeting May 14, 2008 Beth Murray

Update on CAIR Implementation. Presentation for EPRI CEM User Group Meeting May 14, 2008 Beth Murray U.S. Environmental Protection Agency. Clean Air Interstate Rule. Overview State Response Timeline Source Response What’s New/ Reminders. CAIR Overview. Affects 28 States + DC

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Presentation for EPRI CEM User Group Meeting May 14, 2008 Beth Murray

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  1. Update on CAIR Implementation Presentation for EPRI CEM User Group Meeting May 14, 2008 Beth Murray U.S. Environmental Protection Agency

  2. Clean Air Interstate Rule • Overview • State Response • Timeline • Source Response • What’s New/ Reminders

  3. CAIR Overview • Affects 28 States + DC • Annual SO2 and NOx requirements to mitigate interstate transport of fine particles • Annual SO2 cap • 3.7 million tons in 2010 – 2014 • 2.6 million tons in 2015 and beyond • Annual NOx cap • 1.5 million tons in 2009 – 2014 • 1.3 million tons in 2015 and beyond • Summertime NOx requirements to mitigate interstate transport of ozone precursors • Ozone season NOx cap • 0.58 million tons in 2009 – 2014 • 0.48 million tons in 2015 and beyond

  4. States controlled for fine particles (annual SO2 and NOx) States controlled for ozone (ozone season NOx) States controlled for both fine particles (annual SO2 and NOx) and ozone (ozone season NOx) States not covered by CAIR CAIR Region

  5. SO2 Forecast with ARP and CAIR/CAMR/CAVR Annual SO2 Emissions (1,000 t/yr) Electric Power Industry

  6. NOx Forecast with ARP, NBP, and CAIR/CAMR/CAVR Annual NOx Emissions (1,000 t/yr) Electric Power Industry

  7. State Responses to CAIR • All States have chosen participation in the regional trading program • 4 States and DC remain under the full Federal Implementation Plan (FIP) • 2 States + DC are working to replace FIP this year • 11 States have chosen to replace only certain provisions of the FIP (abbreviated SIP) • 7 temporarily until full SIP is approved • 4 have no plans to submit full SIP* • 14 States have a full SIP approval* *1 State in both these categories

  8. State Flexibilities under CAIR • Allocation methodology • 10 States using essentially model rule approach • 19 States chose their own approach • Allocation updating varies from permanent (unless State amends their rule) to initial 3 year allocation followed by annual updating • Compliance Supplement Pool (CSP) • 2 out of 23 States chose not to distribute it • 4 out of 21 slightly modified the model rule methodology

  9. CAIR: NOx allocation status * DC, DE, and PA plan to convert to State allocations in 2010

  10. State Flexibilities under CAIR, cont. • Opt-ins • 13 States chose to include opt-in provisions • In all these cases • States included them in all CAIR programs in which they participate • States included both allocation methodologies • 16 States chose not to include opt-ins • Expanding applicability to include NOx SIP Call trading nonEGUs in the CAIR ozone season trading program • 15 out of 20 States chose to include them

  11. CAIR Implementation Timeline CSP Early Emission Reductions Start (annual CAIR NOx program) (‘07 and ‘08) CAIR NOx Programs Annual: 01/01/09 Ozone: 05/01/09 CAIR SO2 Program Jan 1, 2010 NOx Monitoring and Reporting Required (‘08) SO2 Monitoring and Reporting Required (‘09) 07 07 08 09 10

  12. 300 250 Projected 2020 200 Projected 2020 Projected 2010 150 Committed 2006-2010* Projected 2020 Projected 2010 100 Committed 2006-2010* Proj. 2010 2006-2010* 50 Installed by 2006 Installed by 2006 Installed by 2006 0 Scrubbers SCRs Scrubbers + SCRs Installed, Committed and Projected Advanced SO2 and NOx Controls for Coal-Fired Generation Gigawatts 83 Units** 112 Units** 69 Units 129 Units 83 Units 48 Units** 63 Units 13 Units 28 Units 229 Units 153 Units 132 Units Source: EPA 2006 Base Case for CAIR, CAMR, and CAVR results from IPM and 2004 and 2006 NEEDS data sets for IPM *Committed 2006-2010 based on reports from selected major companies. It is an understatement of controls going in place now. **Total Units for Projected 2020 does not include new units or IGCC.

  13. Further Source Response to CAIR • Sources have established Designated Representatives for CAIR programs • Facility allowance accounts have been established and allocations recorded* • Sources have begun monitoring and reporting NOx emissions • Reporting began this year with first quarter reports due in April 2008 • Some sources are earning early reduction credits in the annual program

  14. What’s New: NOx • NOx compliance begins in 2009 for both the annual and ozone season programs • Allowance transfer deadlines for 2009: • November 30, 2009 for ozone season • March 1, 2010 for annual • NOx Budget Trading Program under NOx SIP Call ends after this year • 2009 allowances allocated under the NBP have been converted, via State’s rules, into CAIR NOx ozone season allowances • All banked allowances from the NBP will be transferred into the CAIR NOx ozone season program after 2008 compliance completed

  15. What’s New: NOx, cont. • NOx annual and ozone season programs are two separate and distinct programs • Allowances are not fungible between the two programs • The NOx annual program accounts for emissions during the entire calendar year, not just the months outside of the ozone season

  16. What’s New: SO2 • CAIR SO2 compliance begins in 2010 • Allowance transfer deadline for 2010 is Mar. 1, 2011 • SO2 compliance uses existing Acid Rain allowances at higher than 1:1 ratios • 2010 – 2014 allowances are deducted at a 2:1 ratio • 2015 and beyond allowances are deducted at a 2.86:1 ratio • Only whole allowances will be deducted • It’s complicated – sources need to be prepared

  17. CAIR SO2 Compliance Example Source W has 100 tons of SO2 emissions in 2012 • It is holding 70 vintage 2009 allowances and 50 vintage 2012 allowances • For Acid Rain: • 70 vintage 2009 allowances and 30 vintage 2012 allowances are deducted: compliance complete • For CAIR: • the tonnage equivalent of the above deductions is 85 tons (70 1-to-1 and 30 2-to-1= 70+15=85) • the remaining 20 vintage 2012 allowances are deducted at 2-to-1 (a tonnage equivalent 10 tons) = 95 tons accounted for = 5 tons excess emissions • 5 tons excess emissions = 15 ton penalty • 15 tons deducted from 2013 allocation at 2:1 ratio = 30 allowances deducted

  18. Important Reminders • CAIR compliance is at the facility level • Allowances need to be held in one facility account for all units at the facility • Allowances need to be held for each program to which the facility is subject • Keep a “buffer” of allowances in the facility compliance account for each program

  19. Visit the Clean Air Markets web site to view: • Emissions data • Allowance transfers • Program rules and guidelines • Studies and reports • Clean Air Markets • www.epa.gov/airmarkets

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