February
23,2001
MEMORANDUM
WESTERN
TO:
Staff
Council
GOVERNORS'
State
Environmental
Directors
'
­­­~
,_..
.
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Ix
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,
,

ASSOCIATION
State
Air
Directors
LA&
*:
p:~

FROM:
Jim
Souby
Dirk
Kempthorne
SUBJECT:
Energy
and
Air
Quality
Issues
Governor
of
Idaho
Chairman
As
many
of
you
are
aware,
recent
events
related
to
energy
supply
problems
in
the
West
have
led
to
questions
regarding
the
impact
of
Jane
Dee
Hull
various
environmental
policies.
One
of
the
questions
that
has
come
up
is
Governor
of
Arizona
whether
or
not
the
sulfur
dioxide
(
S02)
emission
reduction
milestones
Vice
Chairman
recently
proposed
by
the
Western
Regional
Air
Partnership
(
WRAP)
will
present
unreasonable
obstacles
to
the
construction
of
new
coal­
fired
power
plants
in
the
West.
These
concerns
were
highlighted
in
a
February
1
letter
to
the
Governors
from
the
Western
Regional
Council
(
WRC).

In
the
last
couple
of
weeks,
WGA
staff
participated
in
a
constructive
James
M.
Souby
meeting
with
members
of
WRC's
Energy
and
Clean
Air
Committees.
We
Executive
Director
have
also
completed
an
analysis
of
the
SO2
milestones
and
their
impact
on
the
construction
of
new
coal­
fired
plants.
A
copy
of
this
analysis
is
attached.

The
conclusion
is
that
the
sulfur
dioxide
emission
reduction
milestones
Headquarters:
should
in
no
way
impede
the
construction
of
new
coal­
fired
power
plants
15
15
Cleveland
Place
in
the
West
as
long
as
we
continue
to
make
progress
in
reducing
SO2
Suite
200
Denver,
Colorado
80202­
5114
emissions
from
the
existing
units,
as
called
for
by
the
Governors
in
the
final
recommendations
of
the
Grand
Canyon
Visibility
Transport
303­
623­
9378
Commission
and
required
by
the
federal
regional
haze
rules.
Fax
303­
534­
7309
Washington,
D.
C.
Office:
Please
do
not
hesitate
to
contact
me
or
Patrick
Cummins
with
any
400
N.
Capitol
Street,
N.
W.
questions.
Suite
388
Washington,
D.
C.
20001
202­
624­
5402
:
ax
202­
624­
7707
www.
westgov.
org
February
22,200
1
MEMORANDUM
TO:
Jim
Souby,
Executive
Director
Western
Governors 
Association
FROM:
Patrick
Cummins
Air
Quality
Program
Manager
SUBJECT:
Energy
and
Air
Quality
Issues
Concerns
about
meeting
increased
energy
demand
in
the
West
have
led
to
questions
about
the
Western
Regional
Air
Partnership s
(
WRAP)
 
Voluntary
Sulfur
Dioxide
Emissions
Reduction
Program
and
Backstop
Market
Trading
Program, 
which
was
submitted
to
EPA
in
October
2000.
This
program
was
submitted
as
an
Annex
to
the
1996
final
report
of
the
Grand
Canyon
Visibility
Transport
Commission,
in
accordance
with
the
requirements
of
the
federal
regional
haze
rules.

The
specific
question
that
has
arisen
is
whether
the
sulfur
dioxide
emission
reduction
milestones
contained
in
the
Annex
will
prohibit
the
construction
of
new
coal­
fired
power
plants
in
the
West.
I
have
conducted
an
analysis
of
this
question
and
the
results
are
presented
in
the
attached
Technical
Memorandum.
The
conclusions
of
the
analysis
are
as
follows:

0
With
an
SO2
emission
control
rate
of
between
77%
and
85%
on
existing
power
plants
subject
to
the
 
Best
Available
Retrofit
Technology 
(
BART)
requirements
of
the
Clean
Air
Act,
it
is
possible
to
build
approximately
7,000
megawatts
of
new
coal­
fired
gheration
at
any
time
between
now
and
2018
without
exceeding
the
milestones.
This
is
the
level
of
control
assumed
by
the
WRAP
in
the
Annex.

Recent
information
indicates
that
there
are
about
5,000
MW
of
potential
new
coal­
fired
power
plants
under
discussion
in
the
nine­
state
region
covered
by
the
milestones.

0
Based
on
discussions
with
representatives
of
the
coal
industry,
we
have
also
evaluated
a
scenario
where
the
total
SO2
control
level
at
existing
plants
is
increased
to
85%.
Under
this
scenario,
it
is
possible
to
build
11,000
megawatts
of
new
coal­
fired
generation
between
now
and
2012,
and
another
8,000
megawatts
after
2012,
for
a
total
of
19,000
megawatts
without
exceeding
the
milestones.

This
analysis
suggests
that
the
sulfur
dioxide
emission
reduction
milestones
contained
in
the
Annex
should
in
no
way
impede
the
construction
of
new
coal­
fired
power
plants
in
the
West
as
long
as
we
continue
to
make
progress
in
reducing
SO2
emissions
fiom
the
existing
units.

I
would
be
happy
to
answer
any
questions
or
provide
additional
information
on
this
topic.
I
can
be
reached
at
(
303)
623­
5635
ext.
112
or
pcummins@
westgov.
org.
February
22,2001
TECHNICAL
MEMORANDUM
ANALYSIS
OF
NEW
COAL­
FIRED
POWER
PLANTS
UNDER
THE
PROPOSED
SULFUR
DIOXIDE
EMISSION
REDUCTION
MILESTONES
FOR
THE
NINE­
STATE
GRAND
CANYON
VISIBILITY
TRANSPORT
REGION
BACKGROUND
In
accordance
with
the
recommendations
of
the
Grand
Canyon
Visibility
Transport
Commission
and
the
requirements
of
EPA s
Regional
Haze
Rules,
the
Western
Regional
Air
Partnership
(
WRAP)
submitted
a
set
of
sulfur
dioxide
emission
reduction
milestones
to
EPA
in
October
2000.
EPA
will
go
through
a
formal
rule­
making
process
this
year
to
incorporate
this
voluntary,
market­
based
program
into
section
309
of
the
Regional
Haze
Rules.

Nine
Western
states
(
Oregon,
California,
Nevada,
Idaho,
Utah,
Wyoming,
Colorado,
New
Mexico,
and
Arizona)
have
the
option
of
satisfying
their
Best
Available
Retrofit
Technology
Requirements
(
BART)
for
sulfur
dioxide
under
the
Regional
Haze
Rules
by
participating
in
this
voluntary,
market­
based
program,
which
was
prepared
as
an
 
Annex 
to
the
original
report
of
the
Grand
Canyon
Commission.
These
states
may
also
choose
not
to
participate
in
the
program,
in
which
case
they
must
apply
BART
through
the
traditional
source­
by­
source
approach
for
regulating
industrial
source
emissions.

The
milestones
contained
in
the
Annex
cover
sources
of
SO2
with
emissions
of
more
than
100
tons
per
year.
Compliance
with
the
milestones
is
to
be
achieved
through
voluntary
emission
reductions,
with
a
backstop
market
trading
program
that
will
take
effect
if
any
of
the
milestones
are
exceeded.
The
purpose
of
this
analysis
is
to
estimate
the
amount
of
new
coal­
fired
electric
generating
capacity
that
can
be
added
in
these
states
while
remaining
under
the
milestones.

SCENARIOS
Two
scenarios
have
been
evaluated
in
order
to
provide
a
range
of
estimates
for
the
amount
of
new
coal­
fired
plants
that
could
be
built
while
remaining
under
the
milestones
(
see
attached
charts).

Scenario
1:
WRAP
Annex
Scenario
­
This
scenario
uses
the
assumptions
regarding
growth,
retirements,
and
control
levels
developed
by
the
WRAP SMarket
Trading
Forum
(
MTF).

Scenario
2:
Alternative
Scenario
­
This
scenario
assumes
a
higher
level
of
control
on
existing
plants
in
order
to
create
more
room
under
the
milestones
for
new
plants.
SCENARIO
1
:
WRAP
ANNEX
SCENARIO
Combined
Heat
and
Power
(
Co­
Gen)
Facilities:
SO2
emissions
from
these
sources
are
projected
to
remain
constant
at
8,000
tons
per
year
through
2018.

Smelters:
SO2
emissions
from
these
sources
are
projected
to
remain
constant
at
48,000
tons
per
year
through
2018.
The
Annex
contains
provisions
to
automatically
increase
the
milestones
by
up
to
38,000
tons
in
the
event
that
two
currently
suspended
smelters
resume
operations.

Other
Sources:
This
category
includes
SO2
sources
such
as
refineries
and
cement
kilns.
Using
information
developed
by
the
Grand
Canyon
Commission,
the
analysis
conducted
by
the
WRAP
indicates
that
the
net
effect
of
growth
and
retirements
in
this
category
will
lead
to
a
slight
decrease
in
emissions
between
now
and
2018
(
from
162,000
tons
in
1998to
141,000
tons
in
2018).
In
addition,
there
are
several
facilities
in
this
category
that
are
subject
to
the
BART
requirements.
The
additional
reductions
from
these
BART­
eligible
sources
is
estimated
at
16,000
tons
per
year,
resulting
in
a
final
emissions
estimate
in
2018
of
125,000
tons
per
year.

Utilities:
SO2
emissions
from
existing
coal­
fired
power
plants
were
projected
based
on
an
85%
nameplate
capacity
factor,
which
represents
a
12%
increase
from
1999
generation
levels
and
a
reasonable
upper­
bound
for
the
annual
generating
capacity
of
the
existing
system.
Current
controls
and
already
committed
future
controls
were
also
applied.
This
resulted
in
an
emissions
estimate
of
42
1,500
tons
per
year
in
2018.
Based
on
the
BART
control
levels
agreed
to
in
the
Market
Trading
Forum,
utility
emissions
are
assumed
to
decrease
by
30,000
tons
in
2013
and
by
an
additional
117,000tons
by
2018
for
a
final
emissions
estimate
in
2018
of
275,000
tons
per
year.
This
analysis
assumes
no
retirements
of
existing
plants.
(
See
attached
table.)

New
Coal:
Emissions
from
new
coal
plants
were
projected
assuming
that
the
Best
Available
Control
Technology
requirements
which
apply
will
result
in
90%
control
of
SO2
emissions.
Based
on
feedstock
that
contains
0.9
#/
mmbtu
of
sulfur,
the
emission
rate
for
new
plants
was
calculated
at
0.09
#/
mmbtu.
Using
a
heat
rate
of
9500
btu/
kwh
and
an
annual
capacity
utilization
rate
of
90%
yields
an
emission
rate
of
3.4
tons/
MW/
year
for
new
coal
plants.

Result
As
shown
in
the
attached
graph
and
table,
this
scenario
indicates
that
it
is
possible
to
build
approximately
7,000
megawatts
of
new
coal­
fired
generation
at
any
time
between
now
and
2018
without
exceeding
the
milestones.
This
represents
a
24%
increase
over
current
levels
of
coal­
fired
generating
capacity
in
the
nine­
state
region.
SCENARIO
2:
ALTERNATIVE
SCENARIO
Based
on
discussions
with
representatives
of
the
coal
industry,
an
alternative
scenario
was
evaluated
modifyingjust
two
of
the
assumptions
used
in
the
WRAP
Annex
scenario
described
above.
The
two
assumptions
used
in
this
scenario
are:

0
No
reductions
from
1998
SO2
emission
levels
from
the
 
other 
source
category,
including
no
additional
controls
on
the
BART­
eligible
sources
in
this
category.
This
has
the
effect
of
increasing
emissions
in
2018
by
37,000
tons
compared
to
the
WRAP
&
mex
scenario.

Assumes
an
overall
SO2
emission
control
rate
of
85%
on
existing
coal­
fired
power
plants.
This
has
the
effect
of
reducing
emissions
in
2018
by
78,000
tons
compared
to
the
WRAP
Annex
scenario. 
This
level
of
reduction
from
the
existing
plants
could
be
achieved
through
some
combination
of
increased
control
at
the
BART­
eligible
plants
and
adding
controls
to
the
currently
uncontrolled
plants
that
are
not
subject
to
BART.

0
Result
As
shown
in
the
attached
graph
and
table,
this
scenario
indicates
that
it
is
possible
to
build
1
1,000
megawatts
of
new
coal­
fired
generation
between
now
and
2012,
and
another
8,000
megawatts
after
2012,
for
a
total
of
19,000
megawatts
without
exceeding
the
milestones.
This
represents
a
65%
increase
over
current
levels
of
coal­
fired
generating
capacity
in
the
nine­
state
region.
