GREENHOUSE GAS REGULATION AND POTENTIAL IMPACTS TO INDUSTRY
What about the science?
The “greenhouse effect” enables the earth to maintain sufficient warmth to establish our current living conditions.
The greenhouse gases (GHG), primarily consisting of carbon dioxide (CO2), methane (CH4), nitric oxide (N2O),
and fluorinated gases, absorb (and trap) heat which the earth would otherwise reflect back to the atmosphere.
The concern is that as a result of increased anthropogenic activities including but not limited to fossil fuel burning
and tropical deforestation, increased GHG emissions would lead to supplemental absorption of infrared radiation,
affecting (increasing) planet temperatures. This creation of additional heat energy as a direct result of human
activities is often referred to as the “enhanced greenhouse effect.”
What about the evidence, the politics?
The simplified concepts above form the basic foundation precipitating
the debate regarding the efficacy of the “enhanced greenhouse
effect.” Proponents state that the historical evidence already
mandates a conclusion that the earth is undergoing “climate change”,
and that the long-term ramifications to the planet could be
devastating in nature. Opponents contend that evidence is
inadequate to support a finding that the current pathway would lead
to “climate change”, or that human activities represent any significant
contribution. The scientific interpretation of the evidence appears to
be linked closely with the politics. As the scientists continue to
analyze/argue the data, political officials continue to debate the
necessity for government intervention.
With the federal government (and many state governments) actively involved in evaluating, debating, and dealing
with this issue, KU Resources will focus on assisting our industrial clients in attaining and maintaining compliance
with GHG regulation, when and as promulgated by the U.S. Environmental Protection Agency (EPA) and at the
state level, as applicable. Part of this effort will obviously require attention to pending regulation and
corresponding operational impacts, such that our clients can best prepare and advance strategies to achieve
compliance. Based on the existing EPA promulgations, proposals, pending actions, and overall agency stance, it
would appear likely that at a minimum, some degree of regulation will be set forth regarding the emissions, control,
and reporting of GHG.
What is the origin of the EPA authority to regulate GHG?
Prior to April of 2007, the EPA contended that it lacked the authority to regulate GHG. However, as the result of
an April 2, 2007 United States Supreme Court action (Massachusetts versus the EPA), the Court declared that
GHG meet the definition of a “pollutant”, thereby enabling the EPA to regulate GHG under the Clean Air Act.
In order to establish the necessity for such regulation, the EPA published an April 24, 2009 “Proposed
Endangerment and Cause or Contribute Findings for Greenhouse Gases,” a necessary step in order to enable the
promulgation of rules regarding GHG emissions and controls. The final rule was published December 15, 2009,
effective January 14, 2010. It was the promulgation of this rule that could “open the floodgates” to new standards
regarding the emission, control, and reporting of GHG.
What regulations have been promulgated?
On October 30, 2009, the EPA set forth a final rule entitled “Mandatory Reporting of Greenhouse Gases”, effective
December 29, 2009. This rule requires the reporting of actual GHG emissions beginning with calendar year 2010,
reportable by March 31, 2011. Generally speaking, applicable sources will be specifically listed by source
category and will emit greater than or equal to 25,000 metric tons of CO2 in a given calendar year (actual
emissions). Note that a metric ton equates to approximately 2,200 pounds. >>
For more information about KU Resources, please visit our website at www.kuresources.com.
GREENHOUSE GAS REGULATION AND POTENTIAL IMPACTS TO INDUSTRY
EPA estimates that approximately 13,000 facilities (nationwide) will be determined to be subject to this reporting
for calendar year 2010. Further, and perhaps more important, these GHG “inventories” could establish an initial
baseline for individual sources, helping to determine applicability to pending and future regulatory standards as
and when they would be promulgated.
What key regulations are pending?
From an industry perspective, the “Prevention of Significant Deterioration
(PSD) and Title V Greenhouse Gas Tailoring Rule”, proposed October 27,
2009, could result in significant impacts to major sources of CO2 emissions.
Essentially, this proposal provides for the incorporation of a CO2 threshold to
existing federal programs, Title V and PSD, and thereby eliminating a
substantial administrative headache. Implementation of these programs is
already being handled by states with approved operating permit programs.
However, existing potential emission thresholds for criteria pollutants are 100
tons per year (Title V) and 250 tons per year (PSD). To fairly represent a
major source of CO2 emissions, the “tailored” threshold will initially be set at
25,000 tons per year as a “carbon dioxide equivalent” for determination of Title
V and PSD applicability. For those sources determined to be subject to PSD
(new and modified sources exceeding the CO2 threshold), best available
control technology and/or energy efficient control measures could be required,
as determined to be necessary on a case-by-case basis. This regulation is
projected to be published final by May or June of 2010.
EPA estimates that approximately 14,000 sources could need to obtain operating permits to accommodate the
GHG emission component, with approximately 400 new or modified sources subject to the more involved PSD
process.
Is this the complete summary? Should I stay abreast of pending regulatory initiatives?
What has been presented above may well be only the beginning of regulation associated with the control/reduction
of GHG. As an example, and although not especially directed toward industrial facilities, the EPA and the National
Highway Safety Administration have already combined on a joint final rule (April 1, 2010), establishing a program
to reduce GHG emissions from light-duty vehicles, including passenger cars and light-duty trucks, and covering
model years 2012 through 2016. As a guideline, applicable vehicles would need to achieve approximately 35
miles per gallon, assuming that the automobile industry were to meet the required standard solely through fuel
economy improvements.
Further, the current legislative climate includes a myriad of initiatives and programs already set forth by the EPA,
Congress, and the White House Council, together with supporting court filings from 15 states and a number of
environmental groups. These initiatives are not without opposition including members of the Senate itself, multiple
petitions for reconsideration (legal foundations and individual corporations), and opposing court filings by at least
15 entities (states, industry associations, individual corporations). Even the “endangerment finding” itself, albeit a
final rule, remains in legal dispute.
Clearly, from a legislative as well as a scientific perspective, the story relating to GHG emissions and their
potential impact on climate change has not as yet been written. Industrial facilities will need to stay abreast of
regulatory promulgation, pending proposals, and government program initiatives as they change and unfold, in
order to place themselves in a best position to strategically react in an efficient and cost-effective manner.
Finally, most states appear to be awaiting a clearer picture regarding the future of climate change and associated
GHG regulation, as the program evolves through the federal government. This appears to be particularly true
regarding Pennsylvania and Ohio. Nonetheless, in addition to tracking the federal program, KU Resources intends
to stay on top of local state positions and initiatives, providing that information (here on our website) in the event
that there should be meaningful developments.
For more information about KU Resources, please visit our website at www.kuresources.com.