Non-Utility Floor Allocation for Sulfur Dioxide

1. Non-Utility Floor Allocation for Sulfur Dioxide May 21, 2002 Presentation to the WRAP Market Trading Forum

2. Source Specific Allocations • Source Specific Allocations have two components • Floor Allocation • Reducible Allocation

3. Floor Allocation • The Floor allocation is defined as that portion of the facility's allocation that will not be reduced, it is the minimum allocation that the source would need to operate if it was controlled at a defined level. That defined level is either BACT, BART, LAER or is some cases NSPS. The floor allocation will be determined by the state on a source by source basis, based upon the methodology developed by the MTF for the non-utility sources. Those allocations will be allocated to the source prior to the allocation of the reducible portion.

4. Reducible Allocation • This is the portion of the sources allocation over and above the floor allocation. It is that portion of the sources allocation that will be reduced over time in order to meet the milestones. The reducible portion will first be aggregated across the region and then distributed across both utility and non-utility sectors to meet the milestones.

5. Distribution Order of Allocations • 20,000 ton for the tribes • 9,000 ton for new sources • California RECLAIM • Floor Allocations • Renewable energy allocations • Early reduction bonus allocations • Reducible allocation for existing sources

6. Non-Utility Source Categories • Smelters • Refineries • Natural Gas Processing Plants • Oil & Gas Production Plants • Lime Plants • Cement Plants • Utility Boilers (cogens, CHP) • Industrial Boilers • Pulp and Paper

7. Analysis Steps: • Assume CA sources at the floor. • Copper smelter allocations already determined. • Focus on non-CA, non-smelter sources >100 tpy. • Define floor by source category. • Gather data. • Estimate floor amounts by source category/plant.

8. SO2 Emissions of Interest - Annual Tons in 2000

9. Issues: Sulfur can be in the fuel, or the feedstock material. Old information on factors/controls in AP-42. Some simple relationships: Boilers Some complex relationships: Lime Cement

10. Floor Calculation Methodology Smelters • Smelter-by-smelter analysis. • Hidalgo smelter is the only BART-eligible source. • Double-contact acid plant. • Fugitive SO2 capture system at Hidalgo satisfies BART.

11. Copper Smelters

12. Floor Calculation Methodology Refineries There are four sources of SO2 emissions at the refinery level. Floor based upon NSPS where applicable.

13. Petroleum Refining 10 refineries, 4 States. Floor built up from applying emission limits/factors at 4 primary SO2 sources.

14. Floor Calculation Methodology Natural Gas Processing Plant

15. Floor Calculation Methodology Oil and Gas Production units

16. Floor Calculation Methodology Cement Plant • Two SO2 sources: feed material sulfur and kiln fuels (coal, gas, tires, wood, petroleum coke). • Calculating the floor fuel source = coal control via five-stage calciner assuming 85% control.

17. Cement Wide variety of emission rates. Difficult to estimate control technology effect on complex sources.

18. Floor Calculation Methodology Lime Plants • No additional reduction. • Approximately 50% control inherent in the process. • Additional SO2 controls are not typically applied.

19. What do we know now? Floor is close to recent historical emissions.