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The assessment of the net change may also account for emissions decreases. For replacement of equipment, the net emissions change is estimated as the difference between the PTE for the proposed new unit and the historical actual emissions from the unit being shut down. In order to take credit for past decreases, all contemporaneous increases and decreases must be aggregated. A netting analysis will extend to a historical period of five years.

The following procedures are used to determine the net emissions change at a source:

1. Determine emissions increases resulting only from the project in question. If they do not trigger a major source or major modification threshold, the project generally can be permitted without PSD review. If they are in excess of the major modification threshold, further analysis is needed.

2. Determine the relevant time period.

3. Determine which equipment has or will experience a creditable increase or decrease in emissions during the relevant period.

4. Determine, on a pollutant-by-pollutant basis, the amount of each emissions increase and decrease.

5. Aggregate all contemporaneous and creditable increases and decreases to determine if a significant net emissions increase will occur.

After a regulatory analysis has been performed to determine applicability, the PSD permit application process generally consists of the following:

• Baseline air quality monitoring for the site.

• A case-by-case Best Available Control Technology (BACT) analysis, which considers all technically feasible air emissions control options with respect to economic, energy, and environmental impact.

• An air quality impact analysis through modeling to determine if the emissions from the proposed source would cause or contribute to exceeding an applicable PSD air quality increment.

• An assessment of the direct and indirect effects on the environment.

BACT Requirements

A BACT analysis is used to determine the control strategy required for each regulated pollutant emitted in significant amounts from a major new source or major modification. The CAAA defines BACT as "an emissions limit based on the maximum degree of emissions reductions for each pollutant, which the permitting authority determines on a case-by-case basis, taking into account economic, energy, and environmental impacts, is achievable for such facility through the application of production process and available methods, systems, and techniques."

BACT is not a control technology, but an emissions limit that is based on available integral and/or add-on control technology. It is not a static standard. Each new control technology introduced for a similar source and demonstrating a new lower level of emissions must be considered in subsequent BACT analyses.

For a technology to be considered as BACT, it must be technically feasible. This can mean that it has been used in other similar applications or is proven on a pilot scale. BACT compliance may include the use of alternate equipment, so that if a different type of equipment can do the job, it can also be used. Alternative fuel source usage may also be considered as part of a BACT determination or may even be BACT.

A key factor in the BACT determination is that it considers economic factors. This allows individual states some flexibility in permitting. BACT in one state may be considered too economically harmful in another. EPA oversight does provide for some degree of consistency, however.

The current application of BACT analyses is based on what is termed a "top-down" approach. This starts with the most stringent technology that has been applied elsewhere to the same or similar emissions source category and provides a basis for either accepting it as BACT or rejecting it in favor of another (equal or less stringent) technology. This top-down approach, coupled with cost-effectiveness evaluation of each technology, helps to determine which technology must be installed.

The basic steps in a top-down BACT analysis are:

1. Identify all potential control technologies applicable to each pollutant subject to PSD. This includes any technique that has been applied to a similar source. Also, consult the local air agency and obtain any BACT determinations for the type of equipment.

2. Evaluate the technical feasibility of the identified alternatives and reject those that are demonstrably unfeasible based on a documented engineering evaluation or on chemical or physical principles.

3. Assess and document the emissions limit achievable with each technically feasible alternative, based on the operating conditions of the unit under review and rank the alternatives.

4. Evaluate the top-ranked (most stringent) technically feasible control option to determine its economic, energy, and environmental impact. If it is proposed, the analysis is virtually complete. If it is rejected, the second-ranked control option is evaluated and so on until an acceptable option is proposed.

5. Evaluate any collateral air toxic effects of the proposed control option. If the air toxic impacts are sufficient to reject the option, Step 4 is repeated.

These steps must be completed as part of the permit application. The following is a list of the typical technologies that must be considered in BACT review for nonutility equipment:

Controls to be Considered for Boilers

• Particulates — Baghouses and/or electrostatic precip-itators or the use of natural gas, which has inherently low particulates

• SOx— Lower-sulfur fuel or add-on scrubbers (dry or wet with various chemistries)

• NOx — Combustion control (low excess air, overfire air, staged combustion), natural gas reburn, selective catalytic reduction (SCR), selective non-catalytic reduction (SNCR)

Controls to be Considered for Gas Turbines

• CO, VOC, Particulates — Good combustion control

• NOx — Low-NOx combustor design, water or steam injection, SCR

Controls to be Considered For Reciprocating Engines

• VOC, CO — Air/fuel adjustment, timing, add-on oxidation catalyst

• Particulates — Fuel quality, combustion control, traps

• NOx — Air/fuel adjustment, ignition retard, lean-burn combustion, SCR, SNCR, or non-selective catalytic reduction (NSCR)

BACT Cost-Effectiveness Test

Cost-effectiveness is a critical factor in the selection process. A typical BACT cost-effectiveness analysis should include the following steps:

1. Calculate the annual emissions reductions that will occur as a result of installing the control technology under evaluation. The annual emissions reductions may be calculated in several ways. It may be based on the daily emissions reduction achieved by the BACT method times 365 days per year. If the permit applicant is willing to accept a permit that has conditions to limit operation to fewer hours than this, adjustments are made to the calculation. For new equipment, the amount of pollutant removed will be the difference between maximum uncontrolled and maximum controlled emissions.

2. Calculate an equivalent annual cost from the capital cost. This may be done with the following equation:

Where:

A = Equivalent annual capital cost of the control equipment P = The control equipment installed cost i = Interest rate (set at the prevailing applicable rate) n = Equipment life (this may be fixed or set on a case-by-case basis)

Assuming an installed cost of $300,000, an interest rate of 10%, and an equipment life of 10 years, the equation would simplify to:

3. Add to this figure the annual operating cost related to the control equipment. This may include labor, fuel, maintenance, other utilities or resources, and ongoing capital cost requirements.

4. Divide this annualized cost by the annual emissions reduction achieved and compare that value to the state's threshold value of annualized cost-effectiveness per ton of each regulated pollutant removed. For example:

In this case, if the annual operating costs were $20,000 and 10 tons were removed, the value would be:

If this value is lower than the value established by the control agency for annual cost-effectiveness per ton, the measure is considered acceptable as BACT under consideration of economic factors. If it is not, the same calculations are performed on the next (less costly) available control measure on the top-down list.

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