1. The Regulatory Assistance Project 177 Water St. Gardiner, Maine USA 04345 Tel: 207.582.1135 Fax: 207.582.1176 50 State Street, Suite 3 Montpelier, Vermont USA 05602 Tel: 802.223.8199 Fax: 802.223.8172 Website: http://www.raponline.org Emissions Standards for Distributed Generation Harrisburg, PA 16 June 2003

2. Baseline Issue: New vs Existing DG  New DG: –Addressed by proposed model rule  Existing: –What is the environmental driver/concern? –What is the affected inventory? –What are the compliance options? –Approaches for addressing the issue

3. Treatment of New DG  Model Emissions Rule for New DG Projects –Funded by DOE/NREL –Developed by a public/private stakeholder group over a 2 year period –Available at www.raponline.org

4. The Model Rulemaking: Purpose  Recognizing the role of DR in existing and restructured electricity markets  What concerns are being addressed? –Environmental protection and promotion of clean DR –Administrative simplicity and consistency between states –Promoting certification of small engine conformance to clean standards –Promoting environmental technology advances by setting clear targets

5. Principles Guiding Development of the Rule  The model emissions standards should: –Lead to improved air quality, or at least do no additional harm –Be technology-neutral and fuel-neutral, to the extent possible –Promote regulatory consistency across states Reduced barriers  improved economic efficiency  greater environmental benefit

6. Principles Guiding Development of the Rule  The model emissions standards should: –Promote technological improvements in efficiency and emissions output Encourage the use of non-emitting resources Account for the benefits of CHP and the use of otherwise flared gases –Be easy to administer Facilitate the development, siting, and efficient use of DR

7. Key Issues: Applicability  What types of sources should be covered? –New only  What sizes of generators should be addressed? –Anything not covered by federal NSR  What functions should be covered? –Emergency and non-emergency

8. Key Issues: Emissions  What are “appropriate” emissions standards? –Better than grid average, as good as new BACT for large combined cycle sources, LAER? A middle ground that pushes technology to beat expected improvements over the next decade  Credits for flared fuels, CHP, renewables and end-use efficiency  Pollutants: NO X, PM, CO, CO 2, SO 2

9. Proposed Emissions Limits  Emergency Generators –300 hours annual operation –50 hours annual maintenance (included in the 300 total) –EPA off-road engine standards, expressed in pounds/MWh

10. Proposed Emissions Limits  For NO X, PM, CO, CO 2 : –Output-based limits: pounds per MWh  For SO 2 : –Diesel is the issue –Ultra-low sulfur fuel requirement following EPA on-road requirements  Technology review prior to Phase Three

11. Proposed NO X Limits (lbs/MWh) * Subject to Technology Review

12. Proposed PM Limits Non-Gas only (lbs/MWh) * Subject to Technology Review

13. Proposed CO Limits (lbs/MWh) * Subject to Technology Review

14. Proposed CO 2 Limits (lbs/MWh) * Subject to Technology Review

15. Treatment of Existing DG  What is the environmental driver/concern? –Most often non-emergency use of diesels  What inventory is affected? –Is there much non-emergency DG to be addressed?  What are the control options/cost? –Typically fewer options/higher cost than new DG or existing larger sources

16. Issues with Expanded Use of Diesel Gensets  Poor inventory of existing diesels  Existing diesel units changing from strict emergency use to: –Participation in demand response programs –Reliability and ancillary services  Does this create an environmental problem?  What are the current permit conditions?

17. Addressing Expanded Use of Diesel Gensets  Require registration of all units  Clearly prohibit non-emergency use for uncontrolled units  Establish appropriate tracking protocols  Set additional compliance requirements for non-emergency uses

18. Other Existing DG  Inventory of sources may be an issue  Likely to be many fewer non-emergency than emergency sources  How much of an environmental concern is there?  Historic approach to existing sources has been technology-specific and cost-limited (RACT)

19. Addressing Other Existing DG  Small DGs may have very limited compliance options and high costs  Environmental impact may be low  Conventional RACT approach may yield minimal compliance requirements - NY rule  Alternative approach: Connecticut considering model rule’s attainment standards for existing DG

20. Conclusions  The model rule provides an appropriate air regulation framework for new sources  Existing sources can be addressed through a mix of permit restrictions and conventional regulatory programs