BOARD MEETING DATE: December 10, 1999 AGENDA NO. 27
PROPOSAL:
Amend Rule 2506 - Area Source Credits for NOx and SOx
SYNOPSIS:
The proposed amendment to Rule 2506 will lower the emission rate from 450 lbs. NOx/1000 gallons to 291 lbs. NOx/1000 gallons for diesel-fired internal combustion engines. The amendment is based on source tests conducted on diesel-fired internal combustion engines and will lower the emission rate to calculate Area Source Credits from such engines.
COMMITTEE:
Stationary Source, October 15, 1999, Reviewed
RECOMMENDED ACTION:
Adopt the attached resolution:
- Certifying the Notice of Exemption.
- Amending Rule 2506 – Area Source Credits for NOx and SOx.
Barry R. Wallerstein, D.Env.
Executive Officer
Background
Rule 2506 - Area Source Credits for NOx and SOx was originally adopted on May 11, 1997. The rule established a voluntary emission reduction credit program for unpermitted sources in order to accelerate the introduction of lower-emitting technologies. The rule created a mechanism to translate emission reductions from stationary sources that do not require AQMD operating permits into tangible emission credits.
An area source is any non-permitted stationary source of emissions. Area sources include a wide variety of sources, such as small combustion equipment including engines, heaters and boilers. Area Source Credits (ASC) represent the amount of NOx or SOx per year of emission reduction credit from an area source.
Rule 2506 includes a methodology for calculating the ASCs generated by an eligible source category. The quantity of ASCs for an emission reduction is based on the comparison of the post-reduction emission rate to the baseline emission rate which would have occurred during the same time period if the emission-reducing activity had not occurred. The methodology to determine the baseline emission rate and post-reduction emission rate, expressed as mass of emissions per unit of production or throughput, is outlined in Rule 2506(g). There are basically three methods for calculating ASCs: (1). Use of emission rate from Rule 2506, Table 1 which lists the types of sources and their emission rates for NOx and SOx; or (2). Use of source test data based on source test methods described in Table 1; or (3). Use of source test data based on source test methods not listed in Table 1 but approved by the AQMD Governing Board, EPA, and ARB.
This proposed amendment would change the NOx emission rate in Table 1 of the rule for a diesel-fired internal combustion (I.C.) engine. The current emission rate of 450 lbs. NOx/1000 gallons for an I.C. engine was based on the AQMD’s Annual Emissions Reporting Program. The emission rates in Table 1 for different source categories represented the best data available at the time the rule was adopted. Specifically, the following references were used to establish the emission rates: EPA’s Compilation of Air Pollution Factors (AP-42), 5th Edition; AQMD’s 1996 EFB program; AQMD’s Regulation IV (Prohibitions); AQMD’s Regulation XI (Source-Specific Standards); and control measures with 1997 implementation dates in the 1994 and 1997 AQMPs.
The proposed change to the NOx emission rate for a diesel fueled I.C. engine is based on the source test data of 16 engines provided by the Southern California Edison Company (SCE). Thirty-two duplicate test runs on each of the 16 engines were conducted by an independent source-testing contractor in 1991. The original purpose of the source testing was to provide mitigation, at the request of the AQMD, of emission increases that would have resulted from the proposed merger of SCE and San Diego Gas and Electric Company. The same data were later used by the AQMD, at SCE's request after the failure of the merger, for processing of Emission Reduction Credits (ERCs). The AQMD evaluated and used the source test data to issue ERCs which were discounted by the BACT levels pursuant to Regulation XIII. However, BACT discounts are not applicable to ASC plans.
In view of the source test data submitted by SCE for ASC application, the staff has concluded that Table 1 is not representative of the NOx emission rate for diesel-fired I.C. engines. Fourteen of the 16 source tested I.C. engines show NOx emission rates lower than the current emission rate in Table 1. Therefore, the revision to NOx emission rate for diesel-fired I.C. engine is proposed based on SCE's source test data. The median emission rate (Attachment A) computed from this data is 291 lbs./1000 gallons which is 35% lower than the current emission rate of 450 lbs. NOx/1000 gallons.
Proposal
Effective upon adoption of this amendment, Table 1 of Rule 2506 will be revised to reflect a NOx emission rate of 291 lbs./1000 gallons for diesel-fired I.C. engine based on source test data. This change will revise the current NOx emission rate of 450 lbs./1000 gallons.
Rule 2506 is strictly a voluntary credit generation rule. This rule provides for a mechanism to convert emission reductions from stationary sources, which do not require AQMD operating permits, into tangible emission credits. The current rule allows conversion of ASCs into RECLAIM Trading Credits (RTCs) for the Regional Clean Air Incentives Market (RECLAIM) program, with a 10% discount for environmental benefit. The emission rate change for NOx from 450 lbs. to 291 lbs. per 1000 gallons of diesel fuel would further reduce the ASCs available for RTCs.
AQMP and Legal Mandates
There is no impact on the Air Quality Management Plan (AQMP) from the proposed amendment. Rule 2506 was adopted by the AQMD to implement the requirements of SB 1098 regarding credit programs (California Health and Safety Code §40714.5) and AB 1054 regarding market incentive programs (California Health and Safety Code §39616 and §40440.1).
Policy Issues
There are no policy issues identified with this proposed amendment.
Statement of Findings
Before adopting, amending, or repealing a rule, the AQMD is required by Health and Safety Code §40727 to adopt written findings of necessity, authority, clarity, consistency, non-duplicity and reference. Draft findings are provided in the Attachment D.
Health and Safety Code §40727.2 also requires a comparison of the proposed amended rule with existing regulations imposed on the same equipment. There are no federal or local air pollution regulations that affect this type of equipment.
CEQA & Socioeconomic Analysis
The AQMD has reviewed the proposed project pursuant to state CEQA Guidelines §15002 (k)(1), the first step of a three-step process for deciding which document to prepare for a project subject to CEQA. It is concluded that the proposed project has no potential to adversely impact air quality or any other environmental area. Therefore, it is exempt from CEQA pursuant to state CEQA Guidelines 15061(b)(3) - Review for Exemption. A Notice of Exemption will be prepared pursuant to state CEQA Guidelines Section 15062 - Notice of Exemption. The Notice of Exemption will be filed with the County Clerks of Los Angeles, Orange, Riverside, and San Bernardino Counties immediately following the adoption of the proposed amendment.
The proposed amendment to Rule 2506 will lower the NOX emission rate for diesel-fired IC engines. As a result, the eligible sources would generate fewer ASCs than what the existing Rule 2506 allows when switching to cleaner fuels or converting to low or zero-emitting equipment. Under Rule 2506, ASCs could be converted to RTCs or used as an alternative means to comply with non-RECLAIM source specific regulations. If ASCs are converted to RTCs, compared to the existing Rule 2506, the proposed amendment would likely result in lower supply of RTCs, and thus higher price of RTCs. If ASCs are used to comply with non-RECLAIM source specific rules, compared to the existing Rule 2506, additional ASCs will be needed as a result of the proposed amendment.
Implementation Plan
Rule 2506 is a voluntary program and will not impose any additional regulatory burden on regulated communities. Staff will be available to assist any parties electing to participate in the Area Source Credit program.
Resource Impacts
Implementation of the proposed amendment is not expected to have impacts on staff or fiscal resources.
A. Emission Rates from Source Test data: Internal Combustion Engine-Diesel Fuel
B. Summary of Proposed Amendment to Rule 2506-Area Source Credits for NOx and SOx
C. Draft Findings
D. Resolution
E. Rule Language
F. Notice of Exemption
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