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Regulatory Impact Statement Summary Parts 251 and 200

Introduction

Governor Andrew M. Cuomo has established a State goal of reducing carbon dioxide (CO2) emissions from the energy sector by 40 percent by 2030. To help achieve this goal, New York State must ensure that electric generating units (EGUs) burning coal are repowering to a cleaner fuel or closed no later than 2020.

The Department is proposing to revise 6 NYCRR Part 251, CO2 Performance Standards for Major Electric Generating Facilities and 6 NYCRR Part 200, General Provisions. The revisions to Part 200 update incorporated references to federal rules. This is not a mandate on local governments. It applies equally to any fossil fuel fired major electric generating facility. Part 251 does not mandate any particular project or activity by any local government.

Statutory Authority

The statutory authority to promulgate revisions to Part 251 is derived from the Department's obligation to prevent and control air pollution, as set out in the Environmental Conservation Law (ECL) at Sections 1-0101, 1-0303, 3-0301, 19-0103, 19-0105, 19-0107, 19-0301, 19-0303, and 19-0305.

Legislative Objectives

The proposed revisions to Part 251 would mitigate higher CO2 emission rates from the State's existing fleet of fossil fuel-fired electric generating facilities, while retaining more stringent CO2 performance standards for new and modified sources. Part 251 and the proposed revisions work in conjunction with other State programs - such as the Regional Greenhouse Gas Initiative (RGGI) as implemented by the Department in 6 NYCRR Part 242, CO2 Budget Trading Program - in order to minimize CO2 emissions from the power sector in the State. This in turn serves to lessen the State's contribution to atmospheric concentrations of GHGs. Increased atmospheric concentrations of GHGs are contributing to global climate change, and hence endangering public health and welfare in the State.

Part 251 will serve to prevent the operation of high-carbon sources of energy, such as coal-fired major electric generating facilities that do not utilize carbon capture and sequestration (CCS) or some other advanced CO2 emission reduction technology.

To meet the State's commitments, and consistent with existing legislative enactments, the Department is empowered to promote the safety, health and welfare of the public, protect the State's natural environment, and also help ensure a safe, dependable and economical supply of energy to the people of the State. There is strong scientific evidence that the earth's climate is changing and that greenhouse gases (GHGs) from fossil fuel combustion and other human activities are the major contributor to this change. Climate change represents an enormous environmental challenge for the State because, unabated, it will have serious adverse impacts on the State's natural resources, public health and infrastructure.

Among the GHGs, CO2 is the chief contributor to climate change. Emission sources that fire carbon-containing material, such as fossil fuels, emit significant quantities of CO2. Electricity generation is responsible for approximately 17 percent of all GHGs emitted in New York State. In 2014, fuel combustion by the electricity generation sector in New York State emitted approximately 33.5 million tons of CO2 into the atmosphere.1 In 2016, electric generating units in the State subject to RGGI emitted approximately 30.7 million tons2 of CO2 into the atmosphere.

Needs and Benefits

As part of Governor Cuomo's 40 percent by 2030 CO2 emission reduction goal, the State must ensure that EGUs burning coal are repowering to a cleaner fuel or closed no later than 2020. Climate change represents one of the most pressing environmental challenges for the State, the nation, and the world, and reducing GHG emissions, including CO2 is a means to reduce or stem the pace of climate change. The proposed revisions to Part 251 serve to further CO2 emissions reductions from the power sector, in order to mitigate the State's contribution to climate change.

Stakeholder Outreach

The Department held stakeholder meetings on August 21, 2017 and August 28, 2107 to discuss the likely elements of the proposed revisions to Part 251, and to obtain feedback. The stakeholder group consisted of the regulated community (electric generating facility representatives) to be affected by the proposed regulation, consultants (both technical and legal), and interested environmental advocacy groups. The Department reviewed these comments, and incorporated considerations of issues discussed at the stakeholder meeting, in further developing the revisions to Part 251.

CO2 Emission Standards and Requirements

The proposed revisions will establish CO2 emissions standards for non-modified existing major electric generating facilities, while leaving unchanged the existing CO2 emission standards for new and modified major electric generating facilities. All non-modified fossil-fuel fired existing major electric generating facilities that are not currently subject to Part 251 would be required to meet an emissions limit of either 1,800 lbs/MW-hr gross electrical output or 180 lbs/mmBTU of input.

Costs

Potential Impacts on Electricity Prices and Reliability

No existing coal-fired electric generation emission sources are expected to continue operating in New York beyond December 31, 2020 based in part on the proposed revisions to Part 251. Such a unit could apply CCS technology to reduce its CO2 rate to comply with the proposed emission standard. The required application of CCS technology would create a significant increase in capital and operation costs when compared to base coal without CCS technology. Natural gas and oil-fired units will be able to meet the proposed emissions standards, and thus will not have to contend with CCS technology.

The Department does not anticipate any reliability issues as a result of affected electric generating facility closings attributable to the proposed Part 251 revisions. The 2016 NYSIO Reliability Needs Assessment analyzed various scenarios to determine their impact. The scenario in which there were no coal-fired power plants operating in New York State found a relatively small increase in the loss of load expectancy (LOLE) from 0.04 to 0.06 days per year in 2017. This scenario assesses the retirement of the last coal plant in New York State, which would represent the loss of approximately 687 MW of capacity.

Costs to the Regulated Community

Existing coal-fired major EGUs will not be able to meet the proposed CO2 emission standard without the installation of controls (such as CCS). CCS technology would add significantly to the cost of construction and operation of existing coal-fired EGUs, and ultimately this expenditure would be anticipated to be passed along as increased electricity costs for the end user. Natural gas and oil-fired units will be able to meet the proposed emission limits, and thus will not have to contend with CCS technology. Absent the installation of CCS or other technology, coal-fired major EGUs will need to repower to a cleaner fuel or cease operations. Either option will impose associated costs upon the facility, and possibly the surrounding community.

The communities surrounding Cayuga and Somerset could incur significant tax implications if the facilities cease operations beyond 2020. Both of these facilities, however, have other compliance options under the proposed revisions to Part 251, including repowering to a cleaner fuel or employing CCS or another advanced CO2 abatement technology. Further, even absent these revisions and as previously stated, market forces have already resulted in a shift away from coal generation toward other generating technologies. In particular, for both of the facilities impacted by the proposed revisions, a review of available operating data shows a significant decline in their operating capacities over the past few years.

Costs to the Department

The Department will not incur additional costs associated with the implementation of the proposed revisions and can properly administer the proposed revisions with the application of existing resources. Current Department staff will review permit applications and monitoring plans, as well as executing and modifying permits and inspecting subject sources.

Paperwork

This rule will impose minimal additional paperwork for recordkeeping and monitoring to demonstrate compliance with the annual CO2 emission standards, but it is not expected to be unduly burdensome. Facilities subject to this regulation are already required to meet regulatory requirements for CO2 emissions under Subpart 202-2 and Part 242, and are already required to meet emission standards for other air contaminants and have systems in place to monitor emissions and submit annual and semi-annual reports to the Department. The facility owner may need to modify the data acquisition handling system software, in order to compute and report CO2 monitoring data in pounds per gross electric output rate in terms of megawatt/hr, or fuel input rate in terms of million Btu per hour. Facilities subject to the proposed revisions to Part 251 are already subject to Subpart 202-2 and Part 242, and would already have to compute and report CO2 emissions data under Subpart 202-2 and Part 242. The records and reports will be required to be kept and submitted in the same formats used to track other pollutants with emission standards.

Local Government Mandates

This is not a mandate on local governments. It applies equally to any entity that owns or operates a subject source. Local governments have no additional compliance obligations as compared to other subject entities. There are currently three municipally owned major electric generating facilities in New York State. All three facilities are non-modified existing major electric generating facilities that would be subject to the proposed revisions to Part 251. Since all three facilities burn gas or oil, and have CO2 emission rates less than the proposed limits, they are already in compliance with the proposed revisions to Part 251.

Duplication

Facilities subject to Part 251 are also be subject to the Part 242 requirements. Therefore, this proposed regulation does not duplicate any existing monitoring or record keeping requirements.

Alternatives

The following alternatives have been evaluated to address the goals of Part 251 as set forth above:

(1) Take no Action: This option was rejected as it would not prevent the most carbon intensive existing non-modified sources of electricity generation.

(2) RGGI Cap Adjustment: A reduction of the RGGI annual cap would increase CO2 allowance prices, making it less economically feasible for the most carbon intensive electric generating facilities to continue to operate. However, the allowance price increase may not be sufficient to ensure that the most carbon intensive existing electric generating facilities would cease operation or repower to a cleaner fuel by 2020. Therefore, this option was rejected.

(3) Establish a different CO2 emission limit or specific CO2 emission standard for each source and fuel type. However, a single CO2 emission standard that applies equally to all non-modified existing major electric generating facilities best serves the Department's objective of furthering CO2 emission reductions.

Federal Standards

As a result of several actions by EPA, GHGs, including CO2, became "subject to regulation" under the Act as of January 2, 2011. EPA modified the relevant applicability thresholds for GHGs for purposes of PSD and Title V permitting under the Act in the GHG Tailoring Rule. The Department incorporated these modified thresholds into its Parts 200, 201, and 231. This means that new major stationary sources, and major modifications at existing stationary sources, are subject to BACT for GHGs under the PSD permitting program, if the source emits GHGs above the relevant applicability threshold. While the applicability provisions are separate and not identical, a source that is subject to Part 251 may also be subject to BACT for GHGs under the PSD permitting program.

There currently is no specific federal CO2 emission standard for stationary sources. Therefore, the proposed revisions may be considered more stringent than the current federal standards. The proposed Part 251 standards are protective of public health and the environment in the absence of similar federal emission standards. The potential adverse impact to global air quality and New York State's environment from CO2 emissions necessitates that New York State take action now to halt the increase in CO2 emissions that contribute to climate change.

Compliance Schedule

The CO2 emission limit applicable to non-modified existing sources in the proposed revisions to Part 251 will be effective as of December 31, 2020. Owners or operators of non-modified existing major electric generating facilities will not be required to comply with the proposed CO2 limits until December 31, 2020. Notwithstanding this compliance schedule, pursuant to Article 19 of the ECL, the revisions to Part 251 will be effective thirty days after its filing with the Department of State.

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1 New York State Greenhouse Gas Inventory: 1990-2014 and Forecast 2012-2030. Final Report, December 2016, Revised February 2017, New York State Energy Research and Development Authority, Albany, NY.
2 https://rggi-coats.org/eats/rggi


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