Nitrogen Oxides and Electric Utilities:
Revising the NSPS

Larry Parker
Specialist in Energy and Environmental Policy
Environment and Natural Resources Policy Division

Updated July 25, 1997

96-737 ENR

Why Regulate NOx?

Nitrogen oxides (NOx) are a family of brownish gases that enter the air through a variety of natural and human activities. In general, any activity that involves combustion creates some NOx, including electric power generation, automobile and truck engines, and many industrial processes. Of the 23.4 million tons of NOx emitted in the U.S. during 1993, 7.8 million tons (33%) were from electric utilities, 7.4 million tons (32%) from highway vehicles, 3.2 million tons (14%) from industrial combustion, 3.0 million tons (13%) from off-road vehicles, and 0.9 million tons (4%) from industrial processes. U.S. NOx emissions have remained roughly constant over the past 10 years, as increases in vehicles and power generation have been offset by new equipment meeting more stringent emission standards.1

Nitrogen oxides, both directly and because they contribute to formation of ozone, raise human health and environmental concerns that bring them under the purview of the CAA. Nitrogen dioxide(NO2), the index compound for nitrogen oxides, can irritate the lungs and lower human resistance to various respiratory infections, such as influenza. In combination with volatile organic compounds (VOCs) and in the presence of heat and sunlight, NOx forms ozone, for which human health concerns include lung damage, chest pain, coughing, nausea, throat irritation, and congestion. Ozone also exacerbates the effects of bronchitis, heart disease, emphysema, and asthma.2 In addition, nitrogen oxides are precursors of fine particulates, which are suspected of significant human mortality and morbidity effects. EPA recently established a fine particulate NAAQS.

Environmental concerns about NOx emissions include its transformation into nitric acid, a component of acid precipitation; visibility impairment; and known effects of ozone on plant life.3 In addition, EPA estimates that up to 40% of the nitrogen "loading" in the Chesapeake Bay, resulting in excessive nutrient enrichment, is the result of deposition of air-borne nitrogen oxides. In the West, nitrogen oxides contribute to visibility impairment, particularly in southern California.

How is NOx Regulated?

The multiple effects resulting from NOx emissions have led to their control under several different parts of the CAA; these are discussed below, concluding with a discussion of the NSPS, which has a crucial role in setting the floor for other technological standards for emissions from new facilities such as steam electric generating facilities.

Primary National Ambient Air Quality Standards (NAAQS) set maximum levels of permitted pollution concentrations nationwide. NAAQS are federally enforceable with specific deadlines for compliance; they are required by Section 109 of the CAA to protect the public health with an "adequate margin of safety." They are periodically reviewed to take into account the most recent health data. Three NAAQS may result in NOx controls:NAAQS for nitrogen dioxide, ozone, and fine particulates.

In 1994, all monitoring locations in the U.S. were in compliance with the NO2 NAAQS; however, compliance with the ozone NAAQS remains elusive in several parts of the country, particularly in southern California, the Texas Gulf Cost, and the Northeast corridor (from Virginia to Maine). Because NOx is a precursor to ozone formation, NOx control represents an important component in reducing ozone pollution. In recognition of the multi-state nature of the ozone problem in the Northeast, the 1990 CAA Amendments created an Ozone Transport Commission (OTC) to develop and coordinate emission reduction efforts for the area. (It will be years before the new NAAQS for fine particulates results in NOx controls.)

For areas in attainment with the NOx or ozone NAAQS, the CAA mandates states to require new sources, such as powerplants, to install Best Available Control Technology(BACT) as the minimum level of NOx control required of a new powerplant.4 State permitting agencies determine BACT on a case-by-case basis, taking into account energy, environmental and economic impacts. BACT can be much more stringent than the federal NSPS, but can not be less stringent than NSPS.

For areas not in attainment with the NOx or ozone NAAQS, the CAA mandates states to require new sources to install Lowest Achievable Emissions Rate (LAER) technology. Along with offset rules, LAER ensures that overall emissions do not increase as a result of a new plant's operation. LAER is based on the most stringent emission rate of any state implementation plan or achieved in practice without regard to cost or energy use. It may not be less stringent than NSPS.

A Prevention of Significant Deterioration (PSD) program (Part C of the CAA) focuses on ambient concentrations of pollutants (including N02) in areas of the country where air quality is better than the NAAQS. The provision allows some increase in clean areas' pollution concentrations depending on their classification. In general, historic or recreation areas (e.g., national parks) are classified class 1 with very little degradation allowed while most other areas are classified class 2 with moderate degradation allowed. Class 3 areas may be permitted to degrade up to the NAAQS. New sources in PSD areas must undergo preconstruction review and must install BACT; state permitting agencies determine BACT on a case-by-case basis, taking into account energy, environmental, and economic impacts. More stringent controls can be required if modeling indicates that BACT is insufficient to avoid violating PSD emission limits, or the NAAQS itself

The acid deposition control provisions of title IV of the 1990 Amendments focus on total emissions from existing sources of sulfur dioxide and nitrogen oxides. For nitrogen oxides, section 407 of title IV requires tangential- and wall-fired (dry bottom, not cell burner equipped) boilers (group 1 boilers) designated to meet 1995 phase 1 reductions to meet an emission limitation based on low-NOx burner technology. Regulations for phase 1 NOx reductions were finalized in 1995 For phase 2 in the year 2000, remaining group 1 boilers are required to meet the same standard (or more stringent if technology and costs permit) as those covered in phase 1, and boilers with other firing configurations (group 2 boilers) are required to meet standards based on available technology that is comparable in costs to low-NOx burners. EPA finalized regulations for phase 2 group 1 and group 2 boilers in 1996. (61 FR 245, pp 67112-67164).

Mobile source standards, set under title II of the CAA, establish statutorily determined emission rates for NOx (and other emission gases) for automobiles and trucks, with specific deadlines and provisions for inspection and maintenance (I&M) programs for ozone non-attainment areas to ensure emission rates are maintained over the expected life of the vehicle.

New Source Performance Standards (NSPS) are federal standards defining the minimum controls necessary for new sources regardless of their location-~in contrast to the PSD and NAAQS standards that focus on ambient concentrations of pollutants. EPA's NSPS determinations represent the floor for state BACT and LAER determinations in case-by-case situations.

Required under Section 11 ~ of the CAA, NSPS require major new sources to install the best system of continuous emission reduction which has been adequately demonstrated. In making such an assessment, the CAA requires EPA to take into account "the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements." Also, Section 111 explicitly permits EPA to "distinguish among classes, types, and sizes within categories of new sources for the purposes of establishing such standards." To take into account technological innovations, the CAA originally required EPA to review and revise NSPS every four years. But at the time of enactment of the 1990 CAA Amendments, the last revision of the NOx NSPS for electric and non-electric steam generating units had occurred in 1979. With substantial technological improvements in controlling NOx having occurred during the 1980s, the 1990 Amendments (title IV, section 407(c)) required EPA to promulgate a new NOx NSPS for electric and non-electric steam generating units by l994 - a deadline EPA did not meet.

Thus, for constructing new powerplants, the CAA envisions the NSPS as the baseline for control efforts - with BACT potentially more stringent than NSPS in given situations, and LAER potentially more stringent than BACT. However, for NOx, because technological developments since 1979 have outstripped the current standard, the NSPS is virtually irrelevant as a "floor." As discussed later, current BACT determinations are typically more stringent than the current NOx NSPS.

Technical Inadequacy of the Current NOx NSPS

For utility coal-fired boilers, the current NOx NSPS is 0.6 lb. of NOx per million Btu (lb./mmBtu) for bituminous coal and 0.5 lb./mmBtu of NOx for subbituminous coal. Since the NOx NSPS was last revised in 1979, major advancements have been made in NOx control technology. Indeed, the NOx standard for existing tangential-fired coal boilers covered under the acid deposition title of the 1990 Amendments (0.45 lb./mmBtu) is more stringent than the 1979 NSPS. Added refinements to existing low-NOx burner technology or some new clean coal technologies, such as fluidized bed combustion (FBC) could lower the current NOx NSPS to about half its existing standard (to around 0.3 lb./mmBtu). The addition of more sophisticated control technology, such as Selective Catalytic Reduction (SCR), could reduce emission rates even fi~rther (to around 0.1 lb./mmBtu). Likewise, Integrated Gasification Combined Cycle (IGCC) technology could meet a NOx standard in the vicinity of 0.1 lb./mmBtu. Various ammonia injection technologies could make other technologies, such as circulating fluidized-bed (CFB), capable of meeting a 0.1 lb./mmBtu standard or less.

Likewise, the current NSPS for natural gas-fired boilers and combustion turbines (including combined-cycle units) do not reflect current advancements in control technology. The current NSPS for natural gas-fired boilers is 0.2 lb./mmBtu. The NOx NSPS for utility gas turbines is expressed in terms of volume, and is current 75 parts per million (ppm) (roughly equivalent to 0.24 lb./mmBtu). Because the 1990 CAA Amendments refers to "steam generating units," it would appear that the mandate for a new NOx NSPS would only include the steam-generating portion of a combined-cycle unit. This is important as combined-cycle is the current technology of choice for new electric generating additions. In any case, the current NSPS for gas turbines or boilers does not reflect the current state of technology. Manufacturers currently will guarantee new combined cycle units at 25 ppm (0.08 lb./mmBtu) with some offering units at 9 ppm (0.03 lb./mmBtu). These levels are achieved with only combustion modifications ("dry" controls); the addition of inside combustor catalysts, steam injection or SCR would reduce these levels even further (to 2 ppm or less). In the case of SCR, the cost would be about half that required to add SCR to an equivalent coal-fired unit.

Controversy over EPA Proposal

EPA's proposed revised NOx NSPS has raised controversy with respect to the current structure of the NSPS. The existing NOx NSPS is stratified according to fuel-type and combustion configuration, and based on the performance of a particular control technology applied to each fuel boiler type combination. EPA's proposal, however, provides for a "fuel-neutral," performance-based NOx NSPS of 0.15 lb./mmBtu, which all utility boilers would have to meet regardless of fuel source. 5  EPA argues that this approach expands available control options by allowing the use of clean fuels (e.g., natural gas) as a control method.

Coal interests consider this performance-based approach to be a subsidy for natural gas as natural gas combined-cycle technology could meet this standard with no additional control technology or compliance costs. In contrast, coal would be faced with either adding SCR to conventional steam boilers or moving to currently more expensive clean coal technologies with or without additional NOx control technologies.

In fact, a 0.15 lb./mmBtu NOx NSPS standard would not represent the best available control technology (BACT) for either coal or natural gas boilers. BACT for coal would be in the range of 0.1 lb./btu, reflecting the capabilities of IGCC, SCR, and other control combinations. Concern about costs and operational flexibility could justify a less stringent standard for small boilers, or when boilers are running at low load factors. BACT for natural gas turbines or combined-cycle units would be in the range of 0.03 lb./mmBtu (9 ppm), reflecting the current availability of units that can met that standard, or an even more stringent 0.005 (2 ppm) that would reflect the additional capability of SCR or other wet controls. Of course, EPA could set a less stringent NSPS standard after assessing economic and other factors.

Does the NSPS Matter?

NSPS represents the floor for determining BACT under the various NOx control provisions of the CAA. At the current time, most BACT determinations result in considerably more stringent NOx controls than the NSPS (generally as a result of PSD provisions). Based on EPA-compiled permit data for recent coal-fired powerplants, BACT determinations fell into the following ranges: 0.07-0.15 lb./mmBtu for fluidized-bed combustors with selective non-catalytic reduction (SNCR), 0.17 lb./mmBtu for pulverized coal boilers with SCR or SNCR, and 0.3-0.5 lb./mmBtu for pulverized coal boilers with low-NOx burners and overfire air. Only one cogeneration facility reported no NOx control and a BACT determination of 0.6 lb./mmBtu. The situation with natural gas was even more telling with no BACT determinations above 42 ppm. Based on control technology employed, BACT determinations for natural gas-fired facilities fell into the following ranges: 25-42 ppm for facilities using water (steam) injection, 3.5-9 ppm for facilities using SCR, and 9-42 ppm for facilities using dry controls.6

From these data, it would appear that a 0.15 lb./mmBtu standard would primarily have the effect of adding greater incremental cost to the construction of coal-fired powerplants relative to those fired by less NOx emitting fuels, such as natural gas. All else being equal, this would result in coal becoming less economic compared with these other fuels for new powerplant construction, and a corresponding reduction in NOx emissions compared with current standards.

However, the actual effect of a 0.15 lb./mmBtu NSPS on both fuel choice and NOx emissions may be small, given current realities in the electric generating sector and regulatory regime. First, natural gas, not coal, is the current fuel of choice for new electric generation, a choice reinforced by environmental considerations (acid deposition, global warming, smog), economic considerations (fuel price, technology), and changes occurring in the electric utility industry (competition in the generating sector, non-utility generators). An NSPS that is less stringent than performance levels currently achieved by gas-fired electric generating technologies would arguably have little effect on this trend in the industry.

Second, as indicated above, not only have many areas already moved beyond the current NSPS in their BACT determinations, but some areas, like in California and parts of the Northeast, new facilities have to meet standards that are often more stringent than those being considered by EPA. For these areas, a 0.15 lb./mmBtu NSPS would be essentially irrelevant to the actual permitting process.

The controversy over the proposed NOx NSPS standard may involve less than would first appear, both in terms of possible NOx emissions reductions or in terms of influencing fuel choice for new construction. Recent data indicate that many states (and manufacturers of generating equipment) have already moved to or beyond the range of NOx control being considered by EPA in their BACT determinations, making the proposed NOx NSPS or anticipated emissions reductions essentially moot. In terms of fi~el mix, for at least the near-term, the existing dynamics within the electric utility industry appear sufficiently robust that it would seem unlikely that the proposed NOx NSPS would have any significant effect on them. These dynamics would have to change substantially for the NSPS to affect fuel choice and potential future emissions.

ENDNOTES

1 U.S. Environmental Protection Agency. National Air Quality and Emissions Trends Report, 1993. Research Triangle Park: Office of Air Quality, October 1994. p.41.

2 For a discussion of human health effects of air pollution, see Lippmann, Morton. "Health Benefits from Controlling Exposure to Criteria Air Pollutants," in Blodgett, John. Health Benefits of Air Pollution Control: A Discussion. CRS Report for Congress, 89-161 ENR, February 27, 1989. pp.75-144

3 For a discussion of ozone and acid precipitation effects on vegetation, see Shriner, David S., et. al. Response of Vegetation to Atmospheric Deposition and Air pollution: State of Science and Technology Report 18. Washington, D.C.: National Acid Precipitation Assessment Program, December 1990.

4 More stringent controls can be required if modeling indicates tha  BACT is insuf ficient to avoid violating the NAAQS.

5 EPA's proposed standard is expressed in terms of output, not input. It has been converted to input (assuming a 38% efficiency factor) to make it comparable to other numbers presented.

6 Based on data from the BACT/LAER clearinghouse for the last five years, as complied by EPA. EPA. Analyzing Electric Power Generation under the CAAA. Office of Air and Radiation, July 1996. Appendix B.