and the bulk of America’s power plants
at retirement age, the country is faced
with a unique opportunity to clean the
air while providing reliable power. As
states and the federal government address
electricity restructuring and ways to mitigate pollutants responsible for acid rain,
ground-level ozone and climate change,
output-based approaches to regulating
emissions are gaining greater attention.
Decision makers can look to these win-win-win strategies to help advance the
nation’s mutual goals of cleaning the air;
protecting public health and welfare;
and providing affordable, reliable and
secure energy supplies.
Various federal, state and regional
agencies have adopted or are proposing
output-based initiatives. These efforts
have been made under a variety of air-quality policies: distributed-generation
permitting programs, new source review,
emissions performance standards for
power plants, multi-pollutant legislation
and regulations, and the NOx Budget
Trading Program. Although these initiatives and models vary in their applications and the factors they employ, each
suggests that output-based methods are
the preferred way to recognize a power
facility’s energy efficiency and address
the electricity sector’s air emissions.
Some models and state initiatives see output-based approaches as a means to level
the playing field among all fossil-fuel-burning power generators old and new.
Federally, an output-based approach
falls in line with the George W. Bush
administration’s energy policy. In May
2001, the National Energy Plan recommended that the administrator of the
U.S. Environmental Protection Agency
(EPA) promote CHP through flexibility in
environmental permitting. The EPA put
forth draft output-based guidance for
CHP in accordance with this recommendation. Output-based standards also can
inherently showcase zero-emissions
power supplies, such as wind, hydrogen,
solar and other renewable resources
within emissions ‘cap-and-trade’ programs. The National CHP Roadmap, developed in conjunction with the U.S.
Combined Heat and Power Association,
U.S. Department of Energy and the EPA,
identifies output-based regulations as the
only way to give full value to useful heat
and power produced from CHP systems.
States have prepared rules for the
adoption of output-based standards in
primarily three areas: ( 1) for electric-generating units (focusing on distributed
generation); ( 2) for one or multiple pollutants and for some or all generating facilities involved in the retail sale of electricity; and ( 3) for nitrogen oxide (NOx)
allocations within NOx trading programs.
The first approach sets limits on the
amount of air pollution from distributed
generators, in turn protecting public
health from a potential influx of cheap
and highly polluting diesel generators,
while providing incentives to CHP and
renewable technologies. The second
mechanism encourages energy efficiency
on a wider scale and moves the retail
electricity market to newer, cleaner technologies that emit less pollution for the
same amount of fuel used. The third pertains to summertime NOx emissions and
mostly to states in the Northeast that are
in non-attainment for air quality.
Taking Action
As for some states in action, the
California Air Resources Board (CARB)
established a distributed-generation certification program that uses output-based
standards for NOx, carbon monoxide (CO),
volatile organic compounds and particulate matter. Effective October 2002, the
regulation applies to distributed-generation units that were otherwise exempt
from air-pollution-control requirements.
CARB set emissions standards for 2003
and 2007, and offers limits for units with
and without CHP. In the California regulation, the air-quality benefits of cogeneration applications were given special
consideration. The guidance states that
‘efficient’ CHP systems receive an emissions credit for thermal output. Efficient
CHP applications must maintain a minimum efficiency of 60 percent in the conversion of the energy in the fossil fuel to
electricity and process heat. CARB has a
midterm technical review under way to
determine if any modifications to its certification standards are necessary and is
expected to complete its report July 2005.
In Texas, the Commission on
Environmental Quality established a
standard air-emissions permit for NOx
from distributed generation to encour-
age the most energy-efficient configurations, such as CHP. The Texas standard
distributed-generation permit applies to
all electric-generating units that emit air
contaminants, regardless of size, and it
reflects the best available control technology for electric-generating units on
an output basis in pounds of NOx per
megawatt-hour, adjusted to reflect a
simple-cycle power plant.
For purposes of this permit, the state
is divided in two regions – East Texas and
West Texas – to address the ozone non-attainment problem in the East. The East
Texas emissions requirements become
even more stringent for systems installed
as of 2005. The statewide permit allows
CHP units to take credit for useful thermal
output at the rate of 1 MWh/3.4 MMBtu
of heat recovered. If a CHP unit is not
pre-certified, the owner or operator may
submit documentation of the system to
receive a CHP credit. The credit is
designed to encourage users to install
and use CHP to improve the efficiency
of generating units where there is a valid
need for the recovered heat.
Nongovernmental organizations have
also been instrumental in the development
of output-based models for distributed
generation, including determining criteria to accurately credit CHP. An October
2001 report by the American Council for
an Energy-Efficient Economy, the Natural
Resources Defense Council and the
Center for Clean Air Policy provided a
model for certifying CHP systems that
recognized the emissions produced in
relation to the usable thermal and electric products generated. In October
2002, the Regulatory Assistance Project
(RAP) released a draft model emissions
rule for distributed generators. RAP's
model rule contains output-based emissions standards in pounds per megawatt-hour for NOx, particulate matter, CO and
carbon dioxide (CO2) for power-generating
units too small to trigger new source
review. The model rule contains a credit
for concurrent emissions reductions that
pertains to CHP facilities, as long as certain requirements are met.
States in the Northeast are considering the RAP model rule as a template for
their own distributed-generation emissions
rules. Massachusetts is moving forward
on an output-based rule, but unlike the
