the environmental regulatory landscape; tomorrow is here! john j. fumero lewis, longman, and walker...

The Environmental Regulatory The Environmental Regulatory Landscape; Tomorrow is Here! Landscape; Tomorrow is Here!

John J. FumeroLewis, Longman, and Walker

ASQ-EED ConferenceOrlando, FL

September 12-15, 2004

Albany Analytical, Inc 2004 2

Clean Air Act InitiativesClean Air Act Initiatives

• Clean Air Act of 1977

• CAA amendments of 1990 brought significant revisions designed to curb three major threats– acid rain– urban air pollution– toxic air emissions



• CAA amendments of 1990

• Set national ambient air quality standards• Established tighter emissions for cars and

trucks• Included list of 189 toxic air pollutants that

had to be reduced



• Clean Air Rules of 2004

• Designed to dramatically improve the air quality

• Interstate Air Rule

• Mercury Rule



• Clean Air Rules encompasses the following:

• Interstate Air Rule – provides states with a solution to the problem of power plant pollution that drifts from one state to another.

• The rule uses a cap and trade system to reduce the target pollutants by 70%.



• Clean Air Rules encompasses the following:

• Mercury Rule – will regulate the mercury from power plants; the largest domestic source of mercury emissions.

• First time power plant mercury emission will be regulated.



Mercury Rule

• EPA proposed two alternatives for controlling mercury:

• Maximum achievable control technology (MACT)-under 112-would reduce mercury by 14 tons or about 30% by 2008

• Market-based “cap and trade” program – when fully implemented would reduce mercury by 33 tons.

SS


Mercury RuleMercury Rule

MACT• MACT standards generally require industries to meet

limits that are currently being demonstrated by a number of existing facilities.

• Currently there are no adequately demonstrated control technologies specifically designed to reduce mercury emissions.

• EPA has data that indicate controls for SO2 and NOx emissions also reduce mercury emissions.


Mercury RuleMercury Rule

• States may choose to adopt the cap and trade program to maintain the necessary emissions.

• EPA has already acted to substantially cut emissions of mercury by more than 90 percent form large industrial sources including municipal waste combustors and medical waste incinerators.

• Coal-fired plants are the largest remaining source of human-generated mercury emissions.


More Clear Air RulesMore Clear Air Rules

• Nonroad Diesel Rule – change the way diesel engines function to remove emissions and the way diesel fuel is refined to remove sulfur.

• Ozone Rule – will designate those areas whose air does not meet the health-based standards for ground-level ozone.

• Will classify the seriousness of the problem and require states to submit plans for reducing the levels of ozone in areas where the ozone standards are not met.


More Clear Air RulesMore Clear Air Rules

• Fine Particle Rule – will designate those areas whose air does not meet the health-based standards for fine-particulate pollution.

• This will require states to submit plans for reducing the levels of particulate pollution in areas where the fine-particulate standards are not met.


Clean Water ActClean Water Act

• Growing public awareness and concern for controlling water pollution led to enactment of the Federal Water Pollution Control Act Amendments of 1972.

• As amended in 1977, this law became commonly known as the Clean Water Act.

• The Act established the basic structure for regulating discharges of pollutants into the waters of the United States.



• It gave EPA the authority to implement pollution control programs such as setting wastewater standards for industry.

• The Clean Water Act also continued requirements to set water quality standards for all contaminants in surface waters.

• The Act made it unlawful for any person to discharge any pollutant from a point source into navigable water, unless a permit was obtained under it provisions.



• Revisions in 1981 streamlined the municipal construction grants process, improving the capabilities of treatment plants built under the program.

• Changes in 1987 phased our the construction grants program, replacing it with the State Water Pollution Control Revolving Fund, more commonly known as the Clean Water State Revolving Fund.

• This new funding strategy addressed water quality needs by building on EPA-State partnerships.



• Over the years, many other laws have changed parts of he Clean Water Act.

• Title I of the Great Lakes Critical Programs Act of 1990, for example put into place parts of the Great Lakes Water Quality Agreement of 1978, singed by the U.S. and Canada, where the two nations agreed to reduce certain toxic pollutants in the Great Lakes.



Law required EPA to establish water quality criteria for the Great Lakes addressing 29

toxic pollutants with maximum levels that are safe for humans, wildlife, and aquatic life.



• CWA Elements

• Water quality standards – established standard for named pollutants with water body monitoring to determine whether WQS is met.

• Aimed at translating broad goals of the CWA into water-body specific objectives

• Apply to water of the U.S. which include:

– Interstate waters– Intrastate waters used in interstate or foreign trade– Tributaries of the above– Territorial seas– Wetlands adjacent to all of the above



• NPDES-covers point source discharging into a surface waterbody

• Effluent limitation guidelines and standards are established for different non-municipal categories

• Guidelines developed based on the degree of pollutant reduction attainable by an industrial category through the application of pollutant control technologies



• Best Conventional Pollutant Control Technology (BCT) – for conventional pollutants and applicable to existing discharges.

• Best Practicable Control Technology Currently Available (BPT) – for conventional, toxic and non-conventional pollutants and applicable to existing discharges.

• New Source Performance Standards (NSPS) – for conventional pollutants and applicable to new sources.



• § 319 – covers non-point sources of pollution such as farming and forestry operations

• § 404 – regulates the placement of dredge and fill material into wetlands and other waters

• § 401 – requires federal agencies to obtain certification from the state or territory before issuing permits that would result in increased pollutant loads to a waterbody

• State Revolving Funds – provides large amounts of money in the form of loans for municipal point sources, non-point sources, and other activities


• Balance of Regulation and Reliability of Power

• Balance of Economics and the Environment

What does this mean to the energy business?

What does this mean for the cost of energy?

Yesterday’s Power Resource Yesterday’s Power Resource Technology Meeting Tomorrow’s Technology Meeting Tomorrow’s

Environmental DemandsEnvironmental Demands

Karen A. BranickAlbany Analytical, IncASQ-EED Conference

Orlando, FLSeptember 12-15, 2004


Power Resource TechnologyPower Resource Technology• ~811,000 MW of total power installed in the US.

• ~314,700 MW (nearly 40%) are supplied by coal plants.

• Nearly all of these coal plants are over 30 years old.

• A few new plants utilize new CFB technology resulting in almost negligible SO2 and NOx emissions.

Today’s resources are really Yesterday’s Technology!


Current SituationCurrent Situation

Between 1970 and 2002, GDP increased 164 %, vehicle miles traveled increased 155 %, energy consumption increased 42 %, and U.S. population increased 38 %.

At the same time, total emissions of the six principal air pollutants decreased 48 %.


Current Situation cont.Current Situation cont.

We’re doing pretty good, aren’t we? What’s the problem?


The Sheriff's back in town, and The Sheriff's back in town, and things are about to change!things are about to change!

EPA


What’s Driving the Change?What’s Driving the Change?

• Public demands cleaner Air and Water

• Health implications– Respiratory Problems– Abnormal Fetal

Development


Proposed RulesProposed Rules

• Clean Air Rule of 2004 – addresses ozone and fine particle pollution, nonroad diesel emissions, and power plant emissions of sulfur dioxide and nitrogen oxides and mercury.

• Clean Air Rule includes:

– Interstate Air Quality Rule– Utility Mercury Reduction Rule

EPA


Interstate Air Quality RuleInterstate Air Quality Rule

• Focuses on 29 states in eastern US and DC.

• Addresses the natural occurrence of pollutants drifting downwind across state lines.

• Proposes to use a cap and trade system to reduce the target pollutants by 40% in 2010 and 70% when fully implemented.

EPA


Utility Mercury Reduction RuleUtility Mercury Reduction Rule

• Control mercury emissions from coal-fired power plants

• FIRST time ever that power plants would be regulated for mercury.

• Reduce mercury emissions by nearly

70 % when fully implemented.EPA


How do we Measure up?How do we Measure up?

• According to EPA’s 1999 National Emissions Inventory, coal-fired power plants are the largest source of human-caused mercury air emissions in the U.S.

• Power plants account for about 40% of total U.S. manmade mercury

emissions.

EPA


Why Mercury and Why Power Why Mercury and Why Power Plants?Plants?

• Mercury concentrations in the air are usually low and of little direct concern.

• It is when mercury enters water, either directly or through deposition from the air, biological processes transform it into methyl mercury, a highly toxic form of mercury.


Why Mercury and Why Power Why Mercury and Why Power Plants?Plants?

• Methyl mercury bioaccumulates in fish and other animals that eat fish.

• Bioaccumulation - concentration as it moves through the food chain.


The Debate?The Debate?• Bush Admin. and energy

industry – moving too aggressively to reduce mercury emissions from power plants would cost jobs while having little impact on the environment.

• EPA staff proposal called for 90% reduction in mercury emissions at coal-fired power plants by 2012 vs. 70% by 2018.

Source: Energy Daily News – Monday, August 9, 2004 – a report on the CBS evening news


The Debate?The Debate?• EPA Administrator Mike Leavitt

– “We don’t have technology available to do it faster. That’s at the heart of this whole debate.”

• Dale Heydlauff of AEP, Gavin plant in Ohio – It’s gonna take billions of dollars to be able to retrofit these plants to meet the same type of emissions performance that this plant enjoys today.

Source: Energy Daily News – Monday, August 9, 2004 – a report on the CBS evening news


The Debate?The Debate?• Power companies have

said that the billions in spending that would be required to meet the proposed standards may have little effect.

• Power companies have argued that much of the mercury contamination in the U.S. waterways comes from Asian sources. Source: Energy Daily News – Monday, August 9, 2004 – a report on the

CBS evening news


What’s next?What’s next?

Analyze the potential solutions!

• Economic vs. Environmental

• Prioritize

• Plan

Final Rule expected in March 2005. Outcome of 2004 election will influence Rule emission reduction goals.


How do we get there?How do we get there?• Shut down all of the old

polluting coal-fired power plants. Knock them down and start over.

• Install the necessary pollution control equipment on all of the old polluting power plants.

• Stop burning coal.


Practical?Practical?

• Shut down all of the old polluting coal-fired power plants. Knock them down and start over. No way! Remember, nearly half of our power is generated by coal-fired plants.

• Install the necessary pollution control equipment on all of the old polluting power plants. What pollution control equipment? It doesn’t exist!

• Stop burning coal. There were about 75,500 mining employees in the U.S. in 2002.


Power Company OptionsPower Company Options

• Fuel Switching

• Burner Technology and Controls

• Pollution Control Equipment


Fuel SwitchingFuel Switching• May or may not be

feasible – only a partial solution.

• Long-Term fuel contracts may limit ability to switch.

• Long-Term fuel contracts may include large $ penalties for reducing take and/or switching to another supplier.


Fuel SwitchingFuel Switching• Switch from Bituminous

coal to Powder River Basin Coal

• Impact on Boiler configuration and operation

• Results:

• Will lower NOx and SO2, but minimal impact on mercury

• Still not enough to meet Interstate Utility Rule for NOx, SO2, Ozone and PM.


Burner Technology and Burner Technology and ControlsControls

• Nearly all of the incremental gains from burner optimization, controls and operation have been realized.

• Low NOx burners lower NOx, but no tangible effect on SO2 or mercury.


Pollution Control TechnologyPollution Control Technology

• Selective Catalytic Reduction – controls NOx and Ozone. Up to 98% effective.

• Scrubber – controls SO2. >90% effective.

• Electrostatic Precipitators – controls particulate matter. ~95%effective.

• Baghouse – controls particulate matter. Up to 99% effective.


Conclusions:Conclusions:• Multi Billions of $ required

for investment in existing plants to meet the Rule requirements.

• Who will pay? RATEPAYERS

• Close down old plants and build new, cleaner plants?


Conclusions:Conclusions:

• The analysis becomes…

…an Economic Analysis: Retrofit vs. New Clean Coal Technology


How do they go about doing How do they go about doing this?this?

• With these uncertainties, but at the same time, the expectations of the Rules, the power companies need:– a structured, well defined process

– consideration all of the outside influences, and internal and external customers

– balance between corporate economic goals and objectives and the environment.

The The BeeLineResultsBeeLineResults™™ Approach Approach to Six Sigma Deploymentto Six Sigma Deployment

Penny MondaniAlbany Analytical, IncASQ-EED Conference

Orlando, FLSeptember 12-15, 2004


Challenges Facing the Energy Challenges Facing the Energy BusinessBusiness

• Public Pressure for Cleaner Air and Water continue to grow

• Reduction in Pollutants is Certain; to what level is unknown

• Regulations and Rules are driving large $ expenditures

• Interpretations and Enforcement varies across locations and time

• Time & Resources Constrained


The ChallengeThe Challenge

• It is a HIGH $$ Stakes Game

• The Rules of the Game are unclear

• The Goals are moving targets

• The only certainty is that both the Game and the Goals will change

We need an Agile, Proactive method to Stay Ahead in the Game


One Approach: Six SigmaOne Approach: Six Sigma

• Disciplined Method for Problem Solving, evolved from the Scientific Method

• Considers – Internal and External Customers– Outside Influences

• Balances External (Government) and Internal (Corporate) Goals

But will it work for us?


Ten Myths of Six SigmaTen Myths of Six Sigma

1. Interested only in the bottom line: Ignores the Customer2. Creates a parallel organization3. Is an added effort to existing Quality efforts4. Requires massive training5. Requires large teams and large organizations6. Creates bureaucracy that bogs down results7. Just another [quality] program8. Uses complicated statistics; is difficult to understand9. Six Sigma process performance is not cost effective10. Only an elite few can learn and use it


Myths and Challenges: Myths and Challenges: BeeLineResultsBeeLineResults™™ addresses both addresses both

• A new approach to implementation of a proven methodology – not a new methodology

• A response to tighter resources, less time, and a rapidly changing environment


Myth 1: Ignores the CustomerMyth 1: Ignores the Customer

• Project Selection considers both Business and Customer needs

• Project Goals almost always include “Reduce Defects” (Customer Focus)

Policy Deployment Ensures Customer and Business Focus

Note: Design for Six Sigma is highly Customer focused


Myth 2: Parallel OrganizationMyth 2: Parallel Organization

• BeeLineResults™ keeps Six Sigma efforts inside the day to day operations

• BeeLineResults™ is highly interactive with local personnel

• BeeLineResults™ Six Sigma organizations can not field a baseball team


Myth 3: Added Effort to existing…Myth 3: Added Effort to existing…

• BeeLineResults™ builds on the existing skills of personnel

• BeeLineResults™ Six Sigma takes place on real projects – not in training exercises – progress is made with little extra effort


Myth 4: Requires Massive TrainingMyth 4: Requires Massive Training

• BeeLineResults™ provides bites of training in pieces that can be swallowed without choking

• BeeLineResults™ “training” is effective, so less is required


Myth 5: Large teams, OrganizationsMyth 5: Large teams, Organizations

• All teams should be manageable in size• BeeLineResults™ optimizes team efforts; the

size of the organization is not a critical factor

• BeeLineResults™ does not require enough people to “fill the class”


Myth 6: Creates BureaucracyMyth 6: Creates Bureaucracy

• Rigorous attention to the Six Sigma problem solving process does NOT slow down results

• The road is littered with “obvious solutions” that didn’t work

• BeeLineResults™ gives results before everyone loses patience and interest

When are we going to see some results?


Myth 7: Just Another ProgramMyth 7: Just Another Program

• Anything that works will stay around• BeeLineResults™ works!


Myth 8: Complicated; DifficultMyth 8: Complicated; Difficult

• Most projects achieve great results with basic tools

• BeeLineResults™ introduces “complicated statistics” only when they are valuable

r2

xi

df

IV

f(x)2

E=mc2


Myth 9: 6Myth 9: 6 not cost effective not cost effective

• Not all processes need to have 6 performance for Six Sigma to be useful – BeeLineResults™ tells you which processes are critical and do need to be 6

• BeeLineResults™ yields positive results quickly, so “cash” inflows soon overtake cash outflows

USL


Myth 10: Only for the Elite Few Myth 10: Only for the Elite Few

• Because BeeLineResults™ relies heavily on teams, more people are exposed to methods, tools, and good results

BeeLineResults™ coaching and non-classroom training at the project site removes the fear and rumors, uncertainty and resistance


The Traditional ApproachThe Traditional Approach

• Training and Project Work are Batch Processed• Set-Up (between Training and Project Work) Effort is HIGH• Slow Feedback loop: L – E – A – R – N , D - OL – E – A – R – N , D - O• Participants removed from Workplace, diminished local Buy-In and

Support

Typical: Improvements Realized and Second Project Launched at 6-7 months

Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8

1st ProjectLaunched

2nd ProjectLaunched

$ $$Training Project Work Set-Up Coaching


Traditional Approach ShortcomingsTraditional Approach Shortcomings

• Requires large numbers of personnel to optimize training classes

• Enormous front-end costs of training• Significant resources removed from

productive activity for first four months• Inefficient learning curve – application of

tools not in sync with training• Training resources often take priority over

Coaching resources


The The BeeLineResultsBeeLineResults™™ Approach Approach

• Intensive Coaching Reduces False Starts and Project Rework• Alignment of Project and Tools; Rapid Feedback loop: LEARN,DO, LEARN,DO…LEARN,DO, LEARN,DO…• Eliminates Training Overload• Learning takes place in Real Environment – Everyone sees Progress• Increased Buy-In and Commitment

Training Project Work Set-Up Coaching


1st ProjectLaunched

2nd ProjectLaunched

3rd ProjectLaunched

$ $$ $$


Coaching is the DifferenceCoaching is the Difference

• BeeLineResults™ replaces “Fire Hose” Training with Intensive Coaching

• BeeLineResults™ Coaching is – Specific – Real-time – Relevant

“Training” is given in palatable doses during coaching and short duration

sessions


Coaching is Coaching is NOTNOT……

Doing the project Telling the team what to do Reviewing what has already been done


Coaching Coaching ISIS……

• Guiding the project in the right direction

• Mentoring the team members

• Transferring knowledge to the team

An approach that has been employed successfully for centuries.

•The Master trains an Apprentice until the Apprentice becomes a Master.

•The cycle is repeated, and the integrity of the knowledge is maintained from generation to generation.


The Beginning and End: The Beginning and End: Often ForgottenOften Forgotten

• Policy Deployment – The Beginning– Aligning Project Selection with Customer

and Business Needs

• Process Management – The End– Sustaining the Gains of each project– Closely aligned with ISO efforts

•Coaching enables resources to be spent on these critical anchors of any Six Sigma deployment

•Coaches are familiar with ALL efforts – across the organization – which ensures efficient efforts

•Coaches guide Management in project selection, as well as Teams in project execution


Tools When You Need ThemTools When You Need Them

When building a house, you don’t buy and store the wallpaper and carpet until the foundation, walls, and roof are complete.

Focusing your money and storage space on what you need NOW is a fundamental Lean Production concept.

1 2First, Build… Then, Decorate


More Tools are Not BetterMore Tools are Not Better

• Simple Tools Solve Complex Problems – the Pareto Principle applies

• Rigorous Process (DMAIC) is critical to success

• Focus on tools reduces focus on Process, resulting in longer and less successful projects

BeeLineResults™ applies tools in context - where they’re needed, when they’re needed.


The The $$avings are Clear…avings are Clear…

Traditional:

BeeLineResults™:

1st ProjectLaunched

2nd ProjectLaunched

$ $$

1st ProjectLaunched

2nd ProjectLaunched

3rd ProjectLaunched

$ $$ $$



What is GainedWhat is Gained

• Cash Flow Improvement - $ gained sooner, less paid out up front

• Buy-in – Positive results evident early • Fast Learning Cycles – Can adapt tools, timing, roles,

resources to organizational needs• Learning Takes Place – Learn-Do-Learn-Do leads to

Retention of concepts and tools• Wrong Turns Unlikely – Coaching keeps projects on

track• Involvement – Management Responsible and

Interactive throughout the process • Flexibility – Can adapt as environment changes.

Coaching is Robust; Training is not


What is NOT lostWhat is NOT lost

• Depth of knowledge – Participants learn a broader scope of tools and more in-depth knowledge AFTER experience of a project or two, when they have a better appreciation and can absorb the information

• Efficiency of Group Training – For widely-used tools, employ short workshops, topic discussions, lunch sessions…

• Full Time dedication when desired or able to provide that level of resource dedication


BeeLineResultsBeeLineResults™™:: The LeanThe Lean Approach Approach to Six Sigma to Six Sigma

DeploymentDeployment

Lean Production SystemsSix Sigma + = Traditional Six Sigma

with Lean Tools

BeeLineResults™ uses Lean Thinking to put Six Sigma in place

Including Lean Tools in Six Sigma training does not alter the approach or accelerate the results of traditional Six Sigma

deployment which is training-intensive; It is Just More Tools!

No More

Tools!


Six Sigma: Six Sigma: Yes!Yes!

• Yes! It will work for us!• BeeLineResults™ answers the Challenges

facing the Energy Business…


Challenge: Public Pressure Challenge: Public Pressure • BeeLineResults™ gets you to solutions that

don’t just meet regulations, but solutions that will render regulations inconsequential.


Challenge: Reduction Goals Challenge: Reduction Goals ??

• BeeLineResults™ affords short learning cycles so you can adjust efforts and focus to the changing priorities of the environmental calendar – can you really commit to four weeks of training?


Challenge: Rules & Regs = Challenge: Rules & Regs = $$$$

• BeeLineResults™ gives you the statistical tools you need…– Environmental Compliance– Energy Production– Energy Delivery

• …Not the tools everyone else might need

• Money not wasted on unusable training


Challenge: Interpretation Challenge: Interpretation ??

• BeeLineResults™ allows you to react quickly or be ahead of the curve.


Challenge: Time, Resources Challenge: Time, Resources • BeeLineResults™ requires very few people

(one team will do) to achieve success• BeeLineResults™ puts money in the bank in

less than 6 months• BeeLineResults™ keeps vital personnel “on

the job”


BeeLineResults™ allows those Affected by Environmental Legislation

and Constrained by Energy Technology

to find Cost Saving Solutions to

Seemingly Unsolvable Problems.

the environmental regulatory landscape; tomorrow is here! john j. fumero lewis, longman, and walker...

Documents

emissions of mercury

albany analytical

mercury rule states

generated mercury emissions

toxic air pollutants

ozone rule

tighter emissions

x emissions