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As described in previous posts in this series, the Environmental Protection Agency (EPA) may soon take action that would subject certain stationary sources, such as coal-fired power plants, to the requirement for Best Available Control Technology (BACT) for CO₂ emissions under the Clean Air Act.  There are numerous technical and policy issues associated with this development. 

Other than energy efficiency measures, which generally will reduce the fuel consumption rate of the facility or unit for which BACT for CO₂ emissions are being determined, the control options under consideration will involve capturing and sequestering this CO₂.  (This is generally referred to as “carbon capture and storage” or “CCS.”)  Depending on the type of facility, a number of capture technologies are available for consideration.  Similarly, depending on the facility location, there may be several available options for sequestration, most of which involve transportation over significant distances.  Because of very limited commercial demonstration to date, all of these capture technologies and most of the sequestration options are considered developmental and are not likely to be considered “technically feasible” by most permitting authorities under Step 2 of the widely applied top-down BACT analysis methodology.  If technical feasibility were established through the demonstration projects currently underway, agencies would be faced with the decision whether to require that a proposed facility apply those technically feasible control technologies.

The Clean Air Act requires that BACT for a proposed facility be determined on a case-by-case basis, taking into account energy, environmental and economic impacts and other costs.  This includes both beneficial impacts of an available control technology, such as the direct environmental benefit resulting from an avoided increase in emissions of the target pollutant, and adverse impacts, such as the economic cost to the permittee.  The legislative history is clear that the permitting authority, which in most instances is a state agency, is responsible for weighing the identified impacts and reaching a conclusion regarding BACT based on its reasoned consideration of those impacts.

In the case of CCS, as applied to a proposed stationary source, the beneficial impacts in many instances will be difficult to quantify and the adverse impacts will be substantial.  This is illustrated by the two questions that we believe will be the most vexing to permitting authorities.

To what extent, if any, should decreases in CO₂ emissions be required at the expense of increases in emissions of conventional air pollutants?

Available CCS technologies are highly energy intensive, especially in the majority of cases where compression of CO₂ to a supercritical state will be required in order to facilitate pipeline transportation to a suitable site for sequestration.  The 2005 IPCC Special Report on Carbon Dioxide Capture and Storage indicates that for coal-fired power plants, the increase in fuel usage to support CCS would range from 24 to 40 percent for natural gas-fired combined-cycle (NGCC) plants, the increase is 11 to 22 percent.  Using the low end of the range and applying current BACT levels for conventional pollutants, application of CCS to a nominal 850 MW coal-fired plant would decrease CO₂ emissions by 6 million tons per year while increasing emissions of nitrogen oxides by more than 400 tons per year, sulfur dioxide by more than 500 tons per year and particulate matter by approximately 300 tons per year.  For a 600 MW NGCC plant, application of CCS would decrease CO₂ emissions by 1.5 million tons per year while increasing emissions of nitrogen oxides by 13 tons per year and emissions of particulate matter by 23 tons per year.  These collateral increases in emissions of conventional pollutants are substantial, especially for coal-fired plants, and they have well-defined impacts on air quality in the area immediately surrounding the proposed facility.  Permitting authorities making BACT determinations for CO₂ emissions will have to weigh these and other adverse impacts against whatever beneficial impacts they believe will accrue from avoided CO₂ emissions.

What is the economic value of avoided CO₂ emissions from a proposed stationary source in the United States?

For emissions of conventional air pollutants, most permitting authorities do not establish bright lines for acceptable cost effectiveness in the context of BACT determinations.  Relatively few NSR permits, however, have required use of control technologies that would involve an incremental cost of more than $10,000 per ton of avoided emissions, and there is a general understanding among air quality professionals of the economic value of avoided emissions from various types of emission sources in various locations.

There is no such precedent for CO₂ emissions.  In addition to being energy intensive, CCS is also exorbitant in cost compared to other air pollution control technologies.  Given the lack of commercial demonstration mentioned previously, cost estimates vary widely, but are at least $50 to $100 per ton of CO₂ avoided.  While these values are lower on a per-ton basis than the costs of control technologies for conventional air pollutants, this effect is dwarfed by the relative magnitude of the emissions.  Even at the low end of the cost range, application of CCS to a 600 MW coal-fired power plant would represent an incremental cost of $300 million per year.  This is well outside the range of absolute costs contemplated in BACT analyses over the past thirty years.  Even for facilities that produce only electricity, for which overseas production is not a realistic alternative, requiring CCS as BACT would certainly affect the economic viability of proposed projects. 

Further complications arise for facilities other than electric power plants.  Again using a rough low-end estimate of $50 per ton of CO₂ avoided through CCS, the incremental costs for a 200,000 barrels/day oil refinery would be more than $150 million per year and those for a 4,000 tons/day portland cement plant would be more than $50 million per year.  A permitting authority making a BACT determination for such a facility would have to weigh the beneficial impacts of avoided CO₂ emissions against these economic costs, and the considerable energy usage required for operation of the CCS systems.  To get a full picture of the impacts of requiring CCS, the permitting authority might also consider the adverse environmental impacts associated with the generation of the required electric power.  Finally, the agency might also consider the likelihood that the incremental cost of the CCS requirement would render such a facility not economically viable in its proposed location.  Refined transportation fuels, portland cement and other commodities can be produced overseas and transported to the U.S. at generally competitive cost, even without the economic burden of CCS as BACT for U.S. facilities.  Even in the European Union, where there is an established market, the cost of carbon credits is only $15 per ton, well below the range of costs associated with CCS.  Accordingly, it is reasonable to conclude that a BACT determination requiring CCS for a facility other than a power plant would simply shift the production of the proposed facility to an international location where CCS would not be applied.  Because CO₂ is not a pollutant for which locally increased concentrations are a concern, there is no quantifiable environmental benefit of such a BACT determination.

In sum, under the current state of the law, notwithstanding the administrative actions that the EPA may soon undertake, we do not anticipate that the EPA or state permitting authorities will determine that CCS represents BACT for CO₂ emissions from stationary sources because of the substantial costs and uncertain environmental benefits of such determinations.

For more information on the implications of regulating CO₂ as an NSR pollutant, please read Part I, Part II, Part III and Part IV in the five-part series of posts by Akin Gump attorney Paul Gutermann and Colin Campbell, a  project manager at RTP Environmental Associates, Inc.

This entry was posted on Thursday, April 9th, 2009 at 9:49 AM and is filed under GHG Regulation, US Law and Policy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.