Greenhouse Gas Update Ohio EPA, Air Program Workshop December 7, 2010

1. Greenhouse Gas UpdateOhio EPA, Air Program WorkshopDecember 7, 2010 Robert Hodanbosi, Chief, DAPC

2. Topics on GHG • Federal Regulatory Actions • Federal Reporting Requirements • Federal Permitting Requirements • State Action

3. Summary of GHG Regulation(Federal) • Reporting Rule – Effective on December 29, 2009 • Requires facilities that emit over 25,000 metric tons per year of CO2e to annually report emissions to US EPA. First reporting period is 2010, with submittal due to US EPA on March 31, 2011. • US EPA has added additional categories of sources to report for reporting year 2011 • Magnesium production • Underground coal mines • Industrial Wastewater Treatment • Industrial Waste Landfills

4. Summary of GHG Regulation(Federal) • Endangerment Finding for Greenhouse Gases (GHGs) – Effective 01/14/2010 – Formal determination that GHGs are having an impact on public health and welfare in the United States. • Endangerment Finding for Greenhouse Gases (GHGs) cont’d. – Six specific gases – carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride.

5. Summary of GHG Regulation(Federal) • Johnson Memo Reconsideration – Issued on March 29, 2010 – Determines when US EPA will consider GHGs to be controlled under the Clean Air Act, setting the stage for stationary source control. Date is January 2, 2011 • Light Duty Vehicle Emission Standards – Signed 04/01/2010 – For the first time, US EPA sets specific limits on the amount of GHGs that can be emitted from new vehicles – beginning with model year 2012.

6. Summary of GHG Regulation(Federal) • Tailoring Rule – Issued on June 3, 2010 - sets up final requirements on the size of sources that will be covered by the Prevention of Significant Deterioration rules and the Title V permitting rules

7. Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule(Federal) • PSD would be required under the CAA when GHGs are controlled under another section of the Act-Johnson Memo • US EPA Projects January 2011 effective date of PSD in conjunction with motor vehicle regulations • Current PSD threshold is 250/100 TPY (Ohio rule) • Without rule changes permitting system would be gridlocked with over 6-million permits nationwide

8. Tailoring Rule • Phase 1 – January 2, 2011 to June 30, 2011 • For any new source that falls under PSD and increases GHGs greater than 75,000 TPY – PSD & BACT Required • No grandfathering, applies to PSD permits issued after January 2, 2011 • Title V – Only sources currently with Title V permits, and only when applying for, renewing or revising permit

9. Tailoring Rule • Phase 2 – July 1, 2011 to June 30, 2013 • New sources covered under Phase 1 and any source that has potential greater than 100,000 tons of GHGs will fall under PSD • Modification of existing major that increases emissions by 75,000 tons per year • Title V permits will be needed for sources of greater than 100,000 TPY GHG if not already covered by Title V

10. Tailoring Rule • Phase 2 – July 1, 2011 to June 30, 2013 • Sources with existing PSD Permits • Can fall under Phase 2 • If the source did not “begin actual construction” prior to July 1, 2011, permit must be modified to include BACT for GHG • Same for synthetic minors if 100,000 ton/yr is tripped

11. Tailoring Rule • Phase 3 • Making study to determine if lower threshold should be used.

12. Tailoring Rule • What is BACT? • US EPA assembling data on sources • •GHG technical white papers that will provide information on control techniques and measures for the largest GHG emitting industrial sectors (e.g., power plants, industrial boilers, cement plants, refineries, iron and steel, pulp and paper and nitric acid plants)

13. Tailoring Rule (cont’d) • Guidance Documents issued November 10, 2010 • General Guidance and industry sector white papers

14. Summary of GHG Regulation (Federal) • Authority Rule – Proposed September 2, 2010 • States that U.S. EPA believes have/have not authority to issue permits for GHGs • Ohio identified in Table 2 (State appears to have authority)

15. Summary of GHG Regulation (Federal) • Ohio may have authority – but what is threshold? • Current state rules are 100/250 tons per year versus 75,000/100,000 tons per year federal threshold • Do rules need to be changed? – State Tailoring Rule • Is a policy memo sufficient?

16. Summary of GHG Regulation (Federal) • U.S. EPA to issue “Narrowing” Rule before January 2, 2011 • Limits approval of State SIP to federal thresholds…. • But we never requested change in SIP or approval at federal thresholds

17. Summary of GHG Regulation (State) • DAPC issued draft “Tailoring Rule” • Received significant comment • Received commitment for alternative from regulated community • Taking longer than anticipated • January 2, 2011 is coming…

18. Ohio RFP: Greenhouse Gas Emissions Inventory and Climate Change Impact Analysis • Collaborative effort by Ohio University and Ohio State University to develop package for State of Ohio government to be prepared for GHG regulation. Includes following elements: • Emission Inventory • Assess Opportunities and Risks • Evaluation Period • Suite of Climate Change Policies Best Suited for Ohio • Expand Energy Policy Tools to Incorporate GHG Emission Reduction Scenarios

19. CO2 Controls for Power Plants • Very expensive • Controls for power plants only on trial basis • 30 mw of 1300 mw (2.3%) • 90% capture on slipstream • Approximately 30% energy penalty

20. CO2 Controls for Power Plants • CO2 solution injected into Mt. Simon Formation • About 1 ½ miles deep • Will need UIC permit

21. Mountaineer Plant – CO2 Controls