DEP Bureau of Air Quality Releases Draft RGGI Regulations Plan Offers Set Aside for Waste Coal Burners

The Pennsylvania Department of Environmental Protection Bureau of Air Quality has released preliminary rulemaking language which will create a cap and trade program designed to limit carbon dioxide emissions from coal and gas fired electric generating stations in Pennsylvania. The goal is to enroll Pennsylvania into a multi-state regional consortium based in the Northeast and Mid-Atlantic region of the United States.

The Regional Greenhouse Gas Initiative or RGGI is a market-based collaboration among 10 Northeast and Mid-Atlantic states to reduce greenhouse gas emissions while generating economic growth. Governor Tom Wolf issued an Executive Order in October 2019 instructing DEP to begin the regulatory process of participating in RGGI.

The preliminary draft is consistent with the RGGI Model Rule however, it has several specific distinctions. First, it adds a waste coal set-aside allowance allocation. Secondly, it adds a qualifying offset for abandoned well plugging and it provides flexibility for on-site generation tied to manufacturing facilities. Further, it includes an auction provision, indicating that DEP will determine whether to participate in a multi-state auction based on certain factors or hold a Pennsylvania-run auction.

Under the proposed regulations, Pennsylvania’s waste coal power generators will join a lengthy list of power producers from other states that have also been carved out by their respective states. According to the DEP proposal, to be eligible for a waste coal exemption a facility must meet three criteria.

First, the units must be located in Pennsylvania and subject to the CO2 budget trading program. Second, the facility must meet the definition of a waste coal-fired unit per Pennsylvania regulations. Meaning that waste coal must comprise 75% or greater of the annual heat input on a Btu basis. It must utilize a circulating fluidized bed (CFB) boiler and a fabric filter particulate removal system. Finally, waste coal is defined as coal disposed or abandoned prior to July 31, 1982 or disposed thereafter in a permitted coal refuse disposal site.

Under the proposed plan, the DEP will use the highest amount of CO2 emissions in tons equal to the highest calendar year from the last three years, 2017-2019. By using this calculation, the DEP is offering 7.9 million to credit to be divided among the industry. However, if emissions exceed that amount then individual power plants would be required to purchase carbon credits from RGGI.

However, the DEP has added “use it or lose it” language in the regulation that states, “If no allowances are used in any year due to the fact that there were no CO2 emissions from waste coal-fired units subject to this subchapter, then the CO2 allowances remaining in the waste coal set-aside account will be transferred to the air pollution reduction account and auctioned in equal installments during the next four auctions. No additional allowances will be allocated to the waste coal set-aside account and the Department will close the waste coal set-aside account, as well as the waste coal exceedance general accounts if any exist.”

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