Exclusion A False Sense of Security? Everard Ashworth Principal - - PowerPoint PPT Presentation

4/3/2018 Page 1 A False Sense of Security Using the Demand Growth

Bart Leininger, P.E. Principal Ashworth Leininger Group Camarillo, CA Everard Ashworth Principal Ashworth Leininger Group eashworth@algcorp.com

EPA’s Demand Growth Exclusion – A False Sense of Security?

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Objectives

• Why is this Topic Important to YOU?
• Basics of Capable of Accommodating (COA) and the Demand Growth

Exclusion (DGE)

• Relevant Guidance in Applying DGE
• Practical Application of DGE to Project Permitting Analyses
• Summary of Key Points

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Why is this Topic Important to YOU?

• Securing a PSD permit is time consuming, costly and painful
• DGE can be a powerful tool for PSD permit avoidance
• Our direct experience indicates that DGE may be widely

misapplied/abused

• A strong grounding in the DGE principles is essential

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The Basics - Terminology

• “Could Have Accommodated” / Capable of Accommodating (COA)

Level of utilization a unit could have achieved during the consecutive 24-month period (within 10 year baseline) used to establish the baseline period

• Demand Growth Exclusion (DGE)

Portion of the emissions that is unrelated to your Project and can be excluded

DGE is widely misapplied/abused

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The Basics - Calculus

• Applied at Step 1 of the PSD analysis (Significant Emissions Increase)
• Emissions Increase (E) = C – A – D; where:
• A. Baseline Actual Emissions
• B. Could Have Accommodated (COA) Emissions
• C. Projected Actual Emissions
• D. Demand Growth Emissions (D = B – A)

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The Basics – Calculus (cont)

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The Basics – Calculus (cont)

No DGE Using DGE Baseline Emissions A 100 100 COA B 150 Projected Emissions C 175 175 DGE D = B - A Not Used 50 Emissions Increase E = C - A - D 75 25 PSD Triggered? Yes No TPY (NOx)

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Relevant Guidance – 2002 NSR Reform

“….when a project increase in equipment utilization is in response to a factor such as growth in market demand, you may subtract the emission increase from the unit’s project actual emissions if:

(1) The unit could have achieved the necessary level of utilization during the consecutive 24-month period you selected to establish the baseline actual emissions; and (2) the increase is not related to the physical or operational change(s) made to the unit.”

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Relevant Guidance – Georgia Pacific Letter*

• DGE can only be used for the actual to projected actual test
• EPA rejected use of PTE as COA
• Highest demonstrated monthly average used as COA in the DGE

calculations

*EPA Region IV Letter to Mark Robinson, Plant Manager, Georgia-Pacific Wood Products LLC (March 18, 2010)

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Relevant Guidance – Recent Court Cases*

• Increases in operational uptime resulting from the project are not

excludable

• Documentation must show that the excluded emissions are unrelated to

the project

• Non-applicability determination and documentation must be made prior to

commencement of construction

*US v. DTE Energy Company (Decided January 10, 2017) and US v. Ameren Missouri (Dated January 23, 2017)

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Relevant Guidance – 12/7/17 EPA Memo*

• The NSR applicability analysis must be prepared prior to construction
• Records must be maintained pursuant to the regulations
• EPA will not “second guess” the pre-project emissions projections unless

there is a clear error

• EPA to enforce based on post-project actual emissions recordkeeping

*December 7, 2017 Memorandum issued by E. Scott Pruitt to Regional Administrators

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Applying the Demand Growth Exclusion

• Do I have a defensible basis for a COA that is above the baseline?
• Is the highest monthly rate sustainable over the Project?
• Would I be better off using highest annual rate to establish COA?
• Is my project wholly unrelated to the demand growth?
• Does my project improve reliability/uptime?
• Would the COA level of activity happen anyway without the project?
• Is my project driver independent of demand?

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Applying the Demand Growth Exclusion

• Examples where DGE can be used
• Emissions from affected sources – utilities, cogen, etc.
• Modifying a process line to add a new product
• Examples where DGE may be hard to apply
• Projects designed to provide additional output to meet increased demand
• Reliability projects
• Capacity increases

Difficult, but essential, to separate a project from demand growth

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Summary of Key Points

• The NSR applicability analysis must be prepared prior to construction
• Most projects will likely not qualify for the demand growth exclusion
• If demand growth is used in the applicability analysis:
• Use a defensible and sustainable basis for the COA
• Prepare a detailed analysis showing how the project is unrelated to demand

growth

• Post-project recordkeeping must demonstrate that PSD is not triggered

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Contact Information

EVERARD ASHWORTH | PRINCIPAL T: 805.764.6017 | F: 805.764.6011 601 E. Daily Dr. Ste. 302 Camarillo CA 93010 eashworth@algcorp.com | www.algcorp.com