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Parts 222, 200 and Subpart 227-2 Revised Job Impact Statement

Distributed generation (DG) sources are engines used by a host site to supply electricity outside that which is supplied by the electric grid and used either in non-emergency situations to reduce demand on the electric grid and preserving the overall reliability of the grid, or when the usual supply of power becomes unavailable. There may be more than 15,000 DG sources in the state, many of which are not currently regulated. DG sources produce air pollution, including nitrogen oxides (NOx), a precursor to ground-level ozone, and particulate matter (PM) - both of which have been linked to adverse public health impacts. The increasing use of uncontrolled DG sources, if left unchecked, will exacerbate public health impacts and make it very difficult for New York to meet its obligations under the Clean Air Act (CAA) to attain the 2008 8-hour ozone National Ambient Air Quality Standard (NAAQS).

Therefore, the Department of Environmental Conservation (Department) is proposing to adopt a new regulation, 6 NYCRR Part 222, 'Distributed Generation Sources', and make conforming revisions to Part 200, 'General Provisions' and Subpart 227-2, 'Reasonably Available Control Technology (RACT) for Oxides of Nitrogen (NOx)' to establish emission standards, monitoring requirements and record keeping requirements for certain DG sources in New York State. The proposed rule will apply generally to DG sources which are not currently regulated under Subpart 227-2 or a federal New Source Performance Standard (NSPS), as long as the federal standards are less than or equal to the Part 222 emission limits.

I. Nature of Impact

Part 222 may impact jobs and employment opportunities at a wide range of businesses in New York State. Discussion of the potential impacts are presented in the following subsections.

A. Facilities with Existing DG Sources

Northeast States for Coordinated Air Use Management (NESCAUM) released a study in 2003 indicating there may be as many as 15,000 diesel generators in New York State.1 Most of these sources are believed to be emergency generators which are currently exempt from permitting requirements. Though owners and operators of emergency generators will be subject to annual tune-up and record keeping requirements under the proposed rule, the Department presumes that these activities are already being conducted as part of the facility's standard business practices. Therefore, the Department does not anticipate any additional compliance costs or negative impacts on jobs or employment opportunities in cases where a facility exclusively uses DG sources as emergency generators.

DG sources not used exclusively for emergencies will be subject to the proposed NOx emission limits. Diesel-fired sources will be required to comply with either a PM emission limit or a pollution control device standard. Owners or operators of DG sources that meet the proposed emission limits without post-combustion controls will have minimal compliance costs. For example, stack testing is estimated at $15,000 per source at a frequency of once every 10 years. In such cases, the proposed rule should have no negative impacts on jobs or employment opportunities.

However, in cases where DG sources are required to use pollution control systems to meet the proposed emission limits, the rule may negatively impact jobs or employment opportunities depending upon the compliance strategy utilized. In some cases, the capital and operational costs for pollution control systems may impact jobs or employment opportunities directly. Owners or operators of existing DG sources that do not meet the emission standards may choose to replace existing DG sources with new DG sources. In cases where the owners or operators of existing DG sources are planning to replace units near or past their useful life, regardless of proposed Part 222, the negative impacts to jobs or employment opportunities would be minimal. Replacement of units not near the end of their useful life could constitute a previously unplanned cost that may have an impact on jobs and employment opportunities. Existing DG sources that cannot meet the emission standards, but could be used as emergency generators, are expected to have minimal impacts on jobs and employment opportunities.

B. Impacts to Energy Services Companies

Energy services companies (ESCOs) enroll facilities into demand response (DR) programs sponsored by the New York Independent System Operator (NYISO) and transmission operators. ESCOs' demand response portfolios include curtailment, load shifting, energy efficiency and DG resources. Most DG resources in these portfolios are uncontrolled, diesel-fired engines that will be subject to the NOx and PM emission standards proposed in Part 222. These standards will take effect on May 1, 2017. The Department anticipates that owners and operators of DR sources that cannot, or choose not to, meet the emission standards would be dropped from ESCOs' DR portfolios, resulting in a reduction in income for both the ESCO and the source owner or operator.2 DG resources comprised 13 percent of the resources enrolled in the NYISO's Emergency Demand Response Program and Special Case Resources Program (combined) as of May 2011.3 Therefore, it is expected that the provisions of Part 222 will minimally impact employment opportunities with ESCOs.

C. Impacts to Professional Services Companies and Vendors of Pollution Control Systems

DG sources that commenced operation prior to the effective date of Part 222 may need to be equipped with pollution control systems in order to meet the emission standards set forth in the rule. Stack testing will be required to demonstrate compliance with Part 222 emission standards. Therefore, employment opportunities with consultants and vendors specializing in design and installation of pollution control equipment and stack testing are expected to increase as a result of the adoption of Part 222.

D. Impacts to the NYSDEC

There will be an additional work load for the Department to implement Part 222, including preparing new and modified air permits, reviewing stack test reports and creating compliance reports in the Air Facility System database. It is estimated that it will take one staff-year to initiate the program to implement Part 222 and five staff-years annually to implement Part 222. The Department does not anticipate hiring additional staff to implement Part 222.

II. Categories and Numbers of Jobs or Employment Opportunities Affected

Distributed generation can be used at a wide range of facilities including, but not limited to, hospitals, financial institutions, colleges, shopping centers, farms, apartment complexes and office buildings. It is estimated that as many as 26,000 sites in New York could potentially use a combined heat and power (CHP) application.4 Although not all of those sites will use CHP applications, this estimate provides insight as to the number of sites where DG applications might be used.

The adoption of Part 222 may lead to increased employment opportunities with professional services companies that provide environmental monitoring and compliance services (such as stack testing) as well as for vendors who sell and install pollution control systems.

III. Regions of Adverse Impact

It is anticipated that most of the facilities subject to the proposed rule will be located in the New York City metropolitan area where the cost of electricity is higher than the rest of the state. Facilities located in upstate areas, such as shopping centers, colleges and hospitals, may also be affected by the proposed rule.

IV. Minimizing Adverse Impact

There are three alternate compliance options in proposed Part 222 available to facilities with existing DG sources which are subject to emission standards. Affected facilities will have greater flexibility to control their compliance costs than would occur if only one compliance option was included in the rule.

NOx emission limits for new DG sources were considered but are not included in the proposed rule. Emission limits stricter than those set forth in the EPA's New Source Performance Standard (NSPS)5 rules which would have been specific to New York and would have been a deterrent to investing in DG applications, especially in cases where post-combustion controls would be required to meet DEC's standards but not EPA's standards. Therefore, by not adopting stricter standards than those set forth in the NSPS rules, Part 222 will not adversely impact employment opportunities at facilities investing in new DG applications.

Livestock farms use animal waste digesters as a means of odor control. One of the by-products of these systems is biogas (fuel gas containing methane and other compounds) that can be used to fire DG sources. As of April 2010, there were an estimated 151 farms in 31 states6 (including New York) generating electricity via biogas-fired DG sources. Biogas contains impurities which erode engine gaskets and other components which reduce the useful life of an engine. Since biogas-fired engines need to be replaced more often than engines fired with fossil fuels, the Department has determined that these engines do not need to be subject to Part 222. Replacement biogas-fired engines will be subject to 40 CFR 60 Subpart JJJJ.

V. Self-Employment Opportunities

The adoption of Part 222 is not expected to result in negative impacts to self-employment opportunities.

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1 "Stationary Diesel Engines in the Northeast: An Initial Assessment of the Regional Population, Control Technology Options and Air Quality Policy Issues", NESCAUM, June 2003, pg. 26.
2 Demand response revenue is not the primary source of income for DR source owners or operators.
3 "Semi-Annual Compliance Report on Demand Response Programs", NYISO, June 1, 2011.
4 "NYSERDA's CHP Program: Moving the Market Forward", Dana Levy and Brian Platt. Presentation at the NYSDPS CHP Technical Conference, May 13, 2013.
5 The NSPS rules applicable to DG sources are: 40 CFR 60 Subparts IIII, JJJJ, and KKKK.
6 http://bradpennsgeo.com/wp-content/uploads/2012/07/BRADPENN_ANAEROBIC_DIGESTION_-PAPER_SEPT_10.pdf


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