demand growth exclusion understanding and...

3/7/16 Demand Growth ExclusionUnderstanding and Examples

Demand Growth ExclusionUnderstanding and Examples

Lan Barlow, P.E.Jessica Little, E.I.T.


Demand Growth Exclusion (DGE)

• What is Demand Growth Exclusion?

• Regulatory Citations

• Background

• Key Elements for Using DGE

• Examples

• Summary


What is Demand Growth Exclusion?A general description of Demand Growth Exclusion (DGE) is:

• Annual emission increases that are unrelated to your project that your unit can accommodate above the unit’s baseline emissions.

DGE = COA – BAEWhere:

COA: Capable of Accommodating

BAE: Baseline Actual Emissions


What is Demand Growth Exclusion?

Modified from a Graph taken from David I. Rosenbaum, Ph.D., Demand Growth Exclusions in Estimating Projected Actual Emissions in a PSD Review For Non-Electric Generating Units, 2005


What is Demand Growth Exclusion?Why we care about DGE?:

• DGE emissions can be excluded from your PSD/NNSR applicability determination using the actual-to-projected-actual NSR Applicability Test.

EI = PAE-BAE-DGEWhere:

EI: Emission Increase

PAE: Projected Actual Emissions


Regulatory CitationsThe “Demand growth exclusion” is included in the definition of Project Actual Emissions

40 CFR §52.21(b)(41):(i) Projected actual emissions means the maximum annual rate, in tons per year, at which an existing emissions unit is projected to emit a regulated NSR pollutant in any one of the 5 years (12-month period) following the date the unit resumes regular operation after the project, or in any one of the 10 years following that date, if the project involves increasing the emissions unit's design capacity or its potential to emit that regulated NSR pollutant and full utilization ofthe unit would result in a significant emissions increase or a significant net emissions increase at the major stationary source.

(ii) In determining the projected actual emissions under paragraph (b)(41)(i) of this section (before beginning actual construction), the owner or operator of the major stationary source:

…

(c) Shall exclude, in calculating any increase in emissions that results from the particular project, that portion of the unit's emissions following the project that an existing unit could have accommodated during the consecutive 24-month period used to establish the baseline actual emissions under paragraph (b)(48) of this section and that are also unrelated to the particular project, including any increased utilization due to product demand growth.


Background on DGE• Wisconsin Electric Power Co. (WEPCo) vs. Reilly. 1991 Court Case

üEstablishes new definition of Baseline Emissions

üSeventh Circuit Court struck down EPA’s “actual-to-future-potential” test.

EPA vs Seventh Circuit Court’s interpretation of PTE

ü1992 EPA instituted “actual-to-future- actual” (ATFA) test for emissions changes for power plants.

Project Increase =PAE-BAE- Excludable Emissions

üExcludable Emissions - EPA allowed utilities to exclude increase in emissions not caused by the change/project that the plant could accommodate physically and legally in the baseline period. Most common factor for utilities is growth in demand. Thus, the exclusion is referred to as “demand growth exclusion”.


Background on DGE (Continued)• 2002 PSD Rule:

üEPA restored uniformity between utility and non-utility sources by allowing the use of “actual-to-projected- actual” test.

Project Increase =PAE-BAE- DGE

Note that DGE cannot be used with PTE per 40 CFR §52.21(b)(41)(ii)(d).


PTE vs. PAE - 40 CFR 52.21(b)(41)(ii)(d)

(ii) In determining the projected actual emissions under paragraph (b)(41)(i) of this section (before beginning actual construction), the owner or operator of the major stationary source:

(a) Shall consider all relevant information, including but not limited to, historical operational data, the company's own representations, the company's expected business activity and the company's highest projections of business activity, the company's filings with the State or Federal regulatory authorities, and compliance plans under the approved State Implementation Plan; and

(b) Shall include fugitive emissions to the extent quantifiable, and emissions associated with startups, shutdowns, and malfunctions; and

(c) Shall exclude, in calculating any increase in emissions that results from the particular project, that portion of the unit's emissions following the project that an existing unit could have accommodated during the consecutive 24-month period used to establish the baseline actual emissions under paragraph (b)(48) of this section and that are also unrelated to the particular project, including any increased utilization due to product demand growth; or

(d) In lieu of using the method set out in paragraphs (a)(41)(ii)(a) through (c) of this section, may elect to use the emissions unit's potential to emit, in tons per year, as defined under paragraph (b)(4) of this section.


Key Elements for Using DGE

§ Existing Unit

§ Capable of Accommodating Test§ Emissions the unit could have physically and legally emitted during the baseline

period.

§ Unrelated to the Project Test


Capable of Accommodating Test§ In many cases, an emission unit’s design capacity defines its maximum capabilities.

§ The EPA agreed with the historical operations approach when Georgia-Pacific Wood Products LLC used the approach to determine that a change at its Mississippi facility did not qualify as a major modification (March 2010).

“We acknowledge that Georgia-Pacific may use the highest demonstrated average monthly operating level during the baseline period as an approximation of the level of operation that the units "could have accommodated" during the baseline period.”

§ During EPA’s review of Columbian Chemicals’ PSD applicability analysis (March 2013), the EPA noted that there were additional approved methods for determining “capable of accommodating”. EPA stated that:

“…Columbian could identify actual production rates over some period of time that the unit could consistently achieve, and then annualize those rates…”, or that

“…Columbian could identify the physical constraints at the unit that limits its production and determine the unit’s capability based on the maximum rates allowed by these constraints.”


Unrelated to the Project Test

§ The second part of the test involves determining whether an emissions increase is related or unrelated to the change, even if the emissions increase could be accommodated during the baseline period.

§ Case by Case


Georgia-Pacific (GP) Wood Products LLC, Columbia, Mississippi

EPA Region 4’s March 18, 2010 letter to Georgia-Pacific (GP) Wood Products LLC, Columbia, Mississippi

• GP used the highest demonstrated monthly throughput (annualized) as a basis for the projected maximum emissions before the project modification.

• Emissions the unit “could have accommodated” and unrelated to the project were subtracted from the calculated projected actual emissions.

• EPA agreed with GP’s use of DGE in determining PSD applicability for the “Vortex Burners” project.


GP’s VOC Emissions with DGE for Kilns 2 and 3 (Figure 2)

Graph taken from Georgia-Pacific Wood Products LLC’s letter to Mississippi Department of Environmental Quality, November 16, 2009


Example 1 – Petroleum Marketing Terminal Modification ProjectThe project includes removing old tanks, adding new tanks, and increasing gasoline throughput capacity. The terminal is located in severe ozone nonattainment area.

§ Basis for Determining Excludable Emissions on Tanks and Loading

Projected emissions on past demonstrated maximum throughputs [Georgia-Pacific Wood Products memo (dated March 18, 2010)]

• Current permitted capacity 50,000 BPD.

• Proposed capacity 60,000 BPD.

• Baseline throughput 40,000 BPD.

• Annualized max. monthly throughput 45,000 BPD.


Example 1 – Emissions Increase ComparisonTerminal Emissions Increase Calculations With DGE VOC

BAE Baseline 30 COA Capable of Accommodating 35 PAE Projected Actual 38DGE Demand Growth (DGE=COA-BAE) 5

EI Emissions Increase (EI=PAE-BAE-DGE) 3 NNSR Triggering Level 5 NNSR Netting Required NoNNSR Review No

Terminal Emissions Increase Calculations Without DGE VOCBAE Baseline 30 PAE Projected Actual 38EI Emissions Increase (EI=PAE-BAE) 8

NNSR Triggering Level 5 NNSR Netting Required YesNNSR Review Maybe


Example 2 – Refinery Crude Increase ProjectThe project includes increase heaters’ firing rates, and tank throughputs.

§ Basis for Determining Excludable Emissions on Heaters

Projected emissions on past demonstrated maximum monthly fuel rate [Georgia-Pacific Wood Products memo (dated March 18, 2010)]

NOx emissions based on current legal limit applied to the heater

• Permit representation

• BACT Determination from most recent approved project

• NOx factor for heater


Example 2 – Refinery Crude Increase Project (Continued)

§ Basis for Determining Excludable Emissions on Tanks

Projected emissions on engineering analysis [Columbian Chemicals memo (dated March 25, 2013)]

Tanks

– Historical pump data to show pumps frequently operated near design; or

– Timing Simulation to show production not tankage & pumping limited


Example 2 – Emissions Increases Comparisons Heater Emissions Increase Calculations With DGE NOx


EI Emissions Increase (EI=PAE-BAE-DGE) 8 PSD SER 40 PSD Netting Required NoPSD Review No

Heater Emissions Increase Calculations W/out DGE NOxBAE Baseline 37 PAE Projected Actual 92EI Emissions Increase (EI=PAE-BAE) 55

PSD SER 40 PSD Netting Required YesPSD Review Maybe


Example 2 – Emissions Increases Comparisons Tank Emissions Increase Calculations With DGE VOC


EI Emissions Increase (EI=PAE-BAE-DGE) 1 PSD SER 40 PSD Netting Required NoPSD Review No

Tank Emissions Increase Calculations Without DGE VOCBAE Baseline 3 PAE Projected Actual 11EI Emissions Increase (EI=PAE-BAE) 8

PSD SER 40 PSD Netting Required NoPSD Review No


Example 3 – Heater Modification ProjectThe project includes modification of a heater to increase heater’s capacity rate. Heater subject to Ja from a recent project.

§ Basis for Determining Excludable Emissions on Heater

Projected emissions on past demonstrated maximum monthly fuel rate [Georgia-Pacific Wood Products memo (dated March 18, 2010)]

Adjust downward NOx emissions for heater based on Ja limit

• NOx factor during baseline years was 0.06 lb/MMBtu

• Must use Ja NOx factor (in this case 0.04 lb/MMBtu) for BAE, COA & PAE


Example 3 – Heater Modification Emissions IncreaseHeater Emissions Increase Calculations With DGE NOx Baseline Ann. Avg. FR= 50 MMBtu/hrBAE Baseline 9 NOx factor= 0.06 lb/MMBtuCOA Capable of Accommodating 11 BAE= 13.14 tpyPAE Projected Actual 12 Adjusted BAE= 8.76 tpyDGE Demand Growth (DGE=COA-BAE) 2

EI Emissions Increase (EI=PAE-BAE-DGE) 2 Max Month Avg. FR= 60 MMBtu/hrPSD SER 40 Baseline NOx factor= 0.06 lb/MMBtuPSD Netting Required No COA= 15.77 tpyPSD Review No Adjusted COA= 10.51 tpy

Heater Emissions Increase Calculations Without DGE NOx Projected Annual Avg.FR= 70 MMBtu/hrBAE Baseline 9 Ja NOx factor= 0.04 lb/MMBtuPAE Projected Actual 12 COA == 12.26 tpyEI Emissions Increase (EI=PAE-BAE) 4

PSD SER 40 PSD Netting Required NoPSD Review No


Considerations When Using DGE§ Is the 30-day demonstrated period in the 24-mo baseline period?

[Georgia-Pacific Wood Products memo (dated March 18, 2010)] vs. [Columbian Chemicals memo (dated March 25, 2013)]

§ Are there any MACT, SIP, CD limit effected after the baseline period?If Yes, must adjust the BAE and COA based on the CD/SIP limit. Adjustment based on MACT limit only if the State has taken credit for demonstration attainment or reasonable further progress.

§ Do BAE and COA incorporate the same legal limits as projected emissions?New limits (Ja lb NOx/MMBtu)

§ Are business projections based on multiple cases for PAE?May need to combine/consider multiple cases to capture highest throughputs for multiple products


Summary

• Project emissions increase can be lower than a federal NSR triggering level by using the Demand Growth Exclusion approach and not triggering federal NSR review.

• Facilities must maintain adequate data to justify use of DGE, COA, BAE.

• Facilities maintain adequate records to demonstrate compliance with PAE (could trigger major NSR if you exceed). • 10 years if your PAE increases capacity or permitted rate

• 5 years otherwise


Questions?

Jessica Little, [email protected]

512-937-5735

Lan Barlow, P.E.

[email protected]

512-745-5658

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