On February 21, 2011, the U.S. Environmental Protection Agency (EPA) finalized four related rules that will impose new emission limitations and work practice standards on industrial boilers, process heaters, and incinerators fueled with fossil fuels, biomass, natural gas, producer gas, and solid waste fuels. The new air rules will affect:

• Refineries;
• Chemical and manufacturing plants;
• Steel and paper mills;
• Commercial and institutional facilities that provide steam to heat buildings, for example at colleges and universities; and
• Incinerators that burn commercial or industrial solid waste

After extensive internal review and consideration of industry and public stakeholder interests, EPA came out with rules that are overall more lenient than the proposed rules and are expected to result in lower compliance costs, particularly for small boilers. Compliance requirements will be more stringent and costly for larger liquid and solid fuel fired boilers.

Wait! Not Actually Done Yet

Because of the rush to meet a court-ordered deadline to finalize the rules, EPA is also issuing a “notice of reconsideration” to allow for additional public comment. Since the EPA may make further changes to the final rules based on these comments, the reconsideration process prolongs the uncertainty of some compliance requirements. This situation does not help those who will be impacted by the new rules and need to get started with their compliance planning today.

What’s Required

The new air rules will apply to both existing and new boilers and process heaters. The four interrelated rules are

• 40 CFR 63 Subpart DDDDD—National Emission Standards for Hazardous Air Pollutants (NESHAP) for Major Sources: Industrial, Commercial, and Institutional Boilers and Process Heaters
• 40 CFR 63 Subpart JJJJJJ—NESHAP for Area Sources: Industrial, Commercial, and Institutional Boilers
• 40 CFR 60—Standards of Performance for New Stationary Sources and Emission Guidelines for Existing Sources: Commercial and Industrial Solid Waste Incineration (CISWI) Units
• 40 CFR 241—Identification of Non-Hazardous Secondary Materials that are Solid Waste

The first two rules cover units that burn conventional fuels, such as coal, oil, natural gas, and biomass. The CISWI rule covers the combustion of nonhazardous solid waste materials.

The rule that will have the most far reaching impact in terms of the number of affected units is the NESHAP for major sources. This rule establishes numerical emission limits for certain units for

• Mercury
• Dioxin
• Particulate matter (PM) (as a surrogate for non-mercury metals)
• Hydrogen chloride (HCl) (as a surrogate for acid gases)
• Carbon monoxide (CO) (as a surrogate for non-dioxin organic air toxics)

In addition, various work practice standards will apply, such as the performance of boiler tune ups.

Initial compliance requirements, such as initial notification and boiler tune ups, will start to phase in over the next year, with final compliance with emission limits required by March 2014 for existing boilers. The rules are more stringent for liquid and solid fuel fired boilers, whereas natural gas fired boilers are affected minimally.

How the Rules Will Change Thinking

As mentioned above, the new rules will have the greatest impact on combustion units at major sources that fire solid fuels. Owners and operators will be required to make investment decisions ranging from upgrading air pollution control systems on older units to fuel switching or repowering.

The future of natural gas will be central to these evaluations because many people view natural gas as the solution to balancing infrastructure heat and power requirements with the compliance requirements of these new rules. For a growing number of people, the rapid increase in domestic natural gas supplies gained from unconventional shale gas production will be the “silver bullet,” albeit a transitional phenomenon. Time will tell. If the expected future demand for natural gas cannot be met with domestic supplies, fuel costs will increase, widening the gap with coal. Pro forma analyses of variable fuel costs will underpin capital expenditure decisions related to fuel switching or repowering.

Given the bias of these rules towards natural gas and newer combustion technologies, these rules will probably accelerate the retirement of older solid fuel fired units for which the economics of upgrading air pollution control systems cannot be justified.

These rules also raise the ante for what Forbes Magazine refers to as the “fifth fuel”—energy efficiency. More stringent regulatory requirements and the attendant cost of compliance, along with rising fuel costs, will drive renewed investment in reducing energy consumption, i.e., energy efficiency improvements. As professed by many, the lowest cost kilowatt is the kilowatt never used.

The Path Forward—Strategic Considerations

The first step often taken in dealing with new rules is avoidance. Many owners and operators will implement operational, process, or fuel changes, or a combination of these changes, to avoid applicability altogether or to reduce the regulatory burden of complying with these rules.

Owners and operators, particularly of larger solid fuel fired boilers, will need to take a long-term view of their power generation strategy. Many options will be assessed, from extending the life of some units with investment in air pollution control system upgrades to fuel switching or repowering; all driven by the results of a priori analyses of facility-wide energy demand and efficient electricity consumption.

Finally, some will view these rules as a business opportunity and take on higher capital investment costs in boiler technology (e.g., gasification) and air pollution control systems so they can use lower-cost solid fuels and waste materials to produce power while meeting regulatory compliance requirements.

In the long run, those who are inventive and who are broad thinkers will fare the best.

About the Author

Peter H. Anderson is a partner in the Boston, U.S.A. office of Environmental Resources Management. His areas of expertise include characterizing environmental releases from combustion and industrial processes, evaluating the impacts of environmental regulations on business operations, conducting multimedia environmental permitting and compliance audits, providing litigation and expert witness support, developing greenhouse gas analyses and reports, and negotiating regulatory enforcement actions. Peter has extensive experience in the electric and gas utilities, waste-to-energy, chemicals, forest products, petroleum, textiles, and electronics industries.

Photograph: The Light by Carmen Cordelia, U.S.A.

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