Welcome Clarity and Few Surprises in EPA's Guidance on Greenhouse Gas Permitting

Last week the EPA released its “PSD and Title V Permitting Guidance For Greenhouse Gases.” This Guidance was designed to give the states direction in how to implement permitting requirements for new sources for other criteria pollutants that also produce greenhouse gases on January 2, 2011, and new sources of greenhouse gases following in May, 2011, under the Clean Air Act’s Prevention of Significant Deterioration Program.

The Guidance does an excellent job of summarizing and explaining how the EPA’s current PSD permitting program works (it is the best succinct and correct explanation I have seen), and explains how the procedure applies with the addition of greenhouse gases to the list. Importantly, it reaffirms the current five-step standard for determining what is “Best Available Control Technology” under the PSD program. The Guidance first advises permitting authorities in making an applicability determination based on whether there is an emissions increase under the complex regulatory formulae (and subject to the de minimis current requirements and the new ones for greenhouse gases). Then the Guidance moves on to the five-step process, which requires the permitting authority to evaluate what the best processes are for reduction, rank them in order, then evaluate them one by one for excessive environment, energy, or economic cost until one is deemed sufficient to implement for the BACT.

The Guidance goes on to suggest that energy efficiency is certainly likely to be the most promising BACT for most greenhouse gas producers. The EPA suggests that permitting authorities who require energy efficiency initiatives look at design features as well as end-of-pipe requirements, and favorably comments on more efficient boiler designs such as boilers with supercritical and ultra-supercritical steam pressures. Importantly, the agency does not endorse fuel switching as a BACT for coal fired power plants, though neither does it rule it out, leaving the possibility open for states to require it.

Moreover, while not endorsing it specifically, the Guidance suggests that carbon capture and sequestration (CCS) be considered for coal-fired power plants.

A couple of other important points: first, the agency leaves open the possibility of excluding biomass-fired power from the permitting requirement entirely because life-cycle calculations can show no net increase of GHGs. Even if no biomass is not excluded, the Guidance notes that the very act of burning the bio-mass could be seen as BACT for such facilities, giving biomass facilities a way to propose BACT to the regulators that may not be very costly for them.

The other important point is that while EPA acknowledges the states’ primacy in setting BACT if the state is operating the program, the EPA still clearly asserts its authority pursuant to Alaska Dept. of Environmental Conservation v. EPA to overrule any determination of the state that it doesn’t agree with. Overall though, as long as the states play nice (pay attention, Texas), it seems that the EPA will let them operate with some flexibility.