PSD Netting: Reformed or the Same Old Story?
Posted: January 12th, 2012Author: All4 Staff
The New Source Review Reform Rules, codifed at 40 CFR Part 52.21, provide facilities an additional option for evaluating the applicability of Prevention of Significant Deterioration (PSD) to modifications using the baseline actual emissions (BAE) to projected actual emissions (PAE) PSD applicability test. Evaluating a modification for PSD applicability is a two step process:
- Calculate the emissions increase that is associated with the project; and
- For all NSR regulated pollutants with a PSD significant project emissions increase, calculate the net emissions increase.
For existing major sources, all pollutants with both a significant project emissions increase and net emissions increase are subject to PSD requirements. Although it may appear that the BAE to PAE applicability test applies to calculating emissions increases and decreases within both steps, the BAE to PAE applicability test applies to Step 1 only, while the procedure for Step 2, calculating the net emissions increase, has not changed. Each step of the process and the associated Reform Rule impacts are described below. Note that the following sections address the Federal PSD rules, and that variations may exist in approved State Implementation Plan (SIP) PSD and Nonattainment New Source Review (NNSR) programs.
Step 1: Project Emissions Increase
When a facility physically modifies or changes the method of operation of an existing emission unit, the emissions increase that is associated with the change must be compared to PSD significance levels for each NSR regulated pollutant. The Reform Rules allow facilities to evaluate the emissions increase by comparing BAE (pre-change) to PAE (post-change).
The BAE are equal to the maximum annual emission rate, in tons per year (tpy), occurring in any consecutive 24-month period during the 10 years prior to submittal of a complete permit application for the project. PAE are equal to the maximum annual emission rate projected in the five (5) or 10 years after completion of the proposed project. Modifications that involve an increase in design capacity or PTE of an emissions unit, and operation of that unit at full capacity would result in a significant emission increase, must base their PAE over a 10 year period following the project. If the project emissions increase is below the PSD significance levels, then PSD requirements do not apply and the analysis is complete. If the project emissions increase exceeds the PSD significance levels, then Step 2 is required to finalize the PSD applicability evaluation.
Step 2: Net Emissions Increase
The net emissions increase is determined by calculating the sum of the creditable emissions increases and decreases associated with projects that occur during the contemporaneous period, which is defined as a period beginning five (5) years prior to the commencement of construction for the project and extending to the date when the emissions increase from the modification occurs. These emissions increases and decreases are then summed with the project emissions increase calculated in Step 1 to determine the net emissions increase.
For each individual project during the contemporaneous period, emissions increases and decreases are not calculated using the BAE to PAE applicability test described in Step 1 above. Rather, these emissions increases and decreases must be calculated by comparing BAE (pre-change) to the project’s potential to emit (PTE) (post-change). BAE may still be calculated as described in Step 1 above. The PTE must be based on the maximum capacity of the emission unit and can include federally enforceable limits on emissions or operation. The BAE to PTE comparison must be applied to all contemporaneous projects, even if those projects were originally evaluated using the BAE to PAE applicability approach during their respective permitting efforts.
Example PSD Project
The Initial Project (Burner Modification)
A facility is expanding and needs additional steam on a short term basis to provide comfort heating for new building space. To achieve the additional short term steam demand, the facility will modify a burner on an existing natural gas-fired boiler to increase the maximum heat input of the boiler from 190 MMBtu/hr to 230 MMBtu/hr.
The facility elects to use the BAE to PAE applicability test to evaluate whether PSD requirements apply to this boiler modification. Focusing first on NOX emissions, the facility calculates BAE and PAE as follows:
Baseline Actual Emissions: The maximum actual emissions over a consecutive 24-month period in the 10 years prior to submitting the permit application for the new burner occur during the two (2) most recent calendar years, during which the annual emissions equaled 60 tpy.
Projected Actual Emissions: The facility receives a NOX emissions guarantee from the burner vendor of 0.1 lb/MMBtu for the proposed burner. The facility projects that over the next five (5) years, they will average an hourly heat input of 150 MMBtu/hr during the highest steam production year. Therefore, the calculated PAE are (150 MMBtu/hr) x (8,760 hr/yr) x (0.1 lb/MMBtu) / (2,000 lb/ton) = 65 tpy.
Despite increasing the short term capacity of the boiler by over 20%, the facility projects only a five (5) tpy NOX emissions increase associated with the project (65 tpy minus 60 tpy) on an annual basis. Since the project emissions increase does not exceed the 40 tpy PSD significance level for NOX, the evaluation is complete and NOX emissions are not subject to PSD requirements.
The Next Project (Boiler Installation)
Two years after the burner modification project, as a result of continued growth, the facility needs to install a new natural gas-fired boiler. Since the emissions unit is new, the project emissions increase is equal to the PTE of the new natural gas-fired boiler, which is calculated to be 44 tpy of NOX based on the maximum heat input of the boiler. Since the project emissions increase exceeds the 40 tpy PSD significance level (Step 1), the facility must calculate the net emissions increase of NOX to finalize the PSD applicability evaluation (Step 2). This is performed by evaluating emissions increases and decreases associated with projects that fall within the contemporaneous period.
The facility finds that there are two (2) projects that fall within the contemporaneous period:
- The removal of a process heater that will no longer be required after the installation of the new natural gas-fired boiler. The facility estimates that removing the process heater will result in a 10 tpy NOX actual emissions decrease.
- The burner modification described in the previous section. Although the increase associated with the burner modification was calculated as five (5) tpy using the BAE to PAE applicability approach, the project must now be evaluated using the BAE to PTE approach as a contemporaneous project as follows:
Baseline Actual Emissions (pre-change): The calculation is the same as during the initial permitting of the burner installation, which is the maximum actual emissions over a consecutive 24-month period in the ten years prior to submitting the permit application, or 60 tpy.
Potential to Emit (post-change): Now the post change emissions must be based on the PTE using the maximum heat input of the boiler and the 0.1 lb/MMBtu NOX emission rate as follows: (230 MMBtu/hr) x (8,760 hr/yr) x (0.1 lb/MMBtu) / 2,000 (lb/ton) = 101 tpy.
Therefore, the emissions increase associated with the burner installation is 41 tpy (101 tpy minus 60 tpy) with respect to the current boiler installation project.
The resulting net emissions increase for the new boiler installation project is 75 tpy, equal to the sum of the following:
- The project emissions increase, equal to the PTE of the new natural gas fired boiler (+44 tpy);
- The contemporaneous emissions increase associated with the previous burner modification (+41 tpy);
- The contemporaneous emissions decrease associated with the removal of the process heater (-10 tpy).
Since the net emissions increase for the new boiler installation exceeds the 40 tpy significance level, the project is subject to PSD requirements for NOX.
Had the use of a BAE to PAE analysis been incorrectly applied for the contemporaneous projects, the 41 tpy burner modification emissions increase (BAE to PTE) would be replaced with a five (5) tpy increase calculated during the initial permitting (BAE to PAE). This approach would result in a 39 tpy net emissions increase for the new boiler installation, which would incorrectly identify the ability for the facility to avoid PSD requirements for the project.
As the example project demonstrates, projects that are considered relatively minor (i.e. with a project emissions increase that is only a fraction of the PSD significance level) during initial permitting based on the BAE to PAE applicability test can have a significant impact on future permitting efforts, including different results of a PSD applicability determination. The BAE to PTE element of evaluating contemporaneous projects will make PSD avoidance difficult for current projects that require the calculation of a net emissions increase. Therefore, it is important to address and plan for future activities where possible and, during the permitting of any current project, to evaluate the impact that comparing BAE to PTE could have on those future activities. In all cases, it is recommended that the PSD applicability determination approach be discussed with the appropriate permitting agency prior to preparing a permit application in order to address issues associated with specific projects.