Acid Rain Program - Implications for Cogeneration Projects, 1999 Environmental Conference Proceedings

Russell Bailey
Trinity Consultants

Bob Wilson
U.S. Alliance Coosa Pines Corporation

The U.S. Alliance Coosa Pines Mill recently completed a PSD permitting project for a stand-alone power island. Though thermally driven, the project, as originally permitted, includes significant cogeneration capacity (up to approximately 234 MW). Electrical power will be directly generated by a single gas turbine, which will exhaust to a heat recovery steam generator (HRSG) with supplemental duct burners. Additional power will be generated by two steam turbines, fed from a combined header receiving steam from a recovery boiler, a multifuel boiler, a gas-fired boiler, and the HRSG.

The Acid Rain program potentially applies to any unit burning a fossil fuel, generating more than 25 MW, and selling more than one-third of its potential output. Because all of the combustion devices in the project combust some fossil fuel, all could potentially be considered subject to the Acid Rain Program (ARP). The ARP is an attempt by Congress to control emissions, primarily of sulfur dioxide (SO2), through market-based costs. Affected units must buy an allowance for each ton of SO2 emitted. Allowances are purchased on the commodities exchange, with past prices averaging about $100/tonne although recent rates have been significantly higher.

Principal lessons learned from the permitting experience include the following:

1. USEPA’s Acid Rain staff are relatively unfamiliar with Pulp and Paper manufacturing facilities.

2. Combustion of any amount of fossil fuel in a boiler can subject it to Acid Rain Affected Unit status.

3. Allowances must be obtained for all SO2 emissions from an affected unit, not just the SO2 produced by fossil fuel combustion.

4. The two-year statutory lead time for an Acid Rain permit application requires careful long-range planning.

5. For third-party projects, business structure can have a critical impact on ARP coverage of both new and existing boilers and other combustion units.