Generators Laud South Coast Air Credit Move – With Exception

By Published On: April 20, 2007

Industry representatives praised Southern California air regulators for proposing to make emissions offset credits available for power plants – although the new two-tiered system would double the cost of credits in certain areas. At the same time, generators expressed concern about the 635 MW limit in the most polluted areas during an April 19 South Coast Air Quality Management District hearing. “Access would be allowed in all areas,” Larry Bowen, air district planning and rules manager, told power industry managers. However, he explained, those wishing to site plants in “environmental justice areas” and the most polluted zones would have to limit the size of their facilities to 635 MW or less. They also would have to demonstrate that the need for power could not be met by renewable energy and meet more stringent limits on toxic emissions. A previous plan would have denied credits to projects slated for the highly polluted areas. The region faces tight power reserves and a lack of open-market air pollution credits for building new power plants. Under the latest proposal, companies in the most polluted areas would pay twice as much for credits as those in the cleanest areas. For instance, in highly polluted zones, credits for particulate matter would cost $100,834 per pound, compared to $50,417 per pound in the cleanest areas. Fine particulate is the primary pollutant of concern because health studies show that it causes thousands of premature deaths a year in the populous region among those suffering heart and respiratory ailments. “The proposed limitation of 635 MW affects only Vernon,” said Donal O’Callaghan, Vernon Power & Light director. The city has proposed a 914 MW combined-cycle power plant in an area surrounded by working-class neighborhoods predominantly of color. The neighborhoods have long been home to Southern California’s environmental justice movement. However, the limitation also could affect Reliant Energy, which earlier this week proposed a new 650 MW combined-cycle facility at the site of its existing Etiwanda power plant. “You don’t get the needed capacity, you don’t get it where it’s needed,” said Bob Long, Reliant environmental compliance director, complaining about the size restriction. He explained that generators must base the size of their plants on the needs of utilities, economics, and available turbines, which come in a limited number of standard sizes. Air-quality officials agreed to discuss the proposed limit further. The South Coast district would use the money to reduce emissions as much as possible in the surrounding communities, Bowen said, including spending one-third of it on renewable energy projects. The agency also would earmark $4 million for research on new technologies to control fine-particle pollution from power plants. It would dedicate another $1 million for research on perfecting alternatives to gas-fired generating technologies. The air district hopes to bring the proposal to its board for adoption as early as July 13 after completing an environmental assessment on the project. Air regulators hope their new proposed amendments to the district’s Rule 1309.1 will resolve what has seemed like an intractable controversy that has stymied construction of numerous power plants throughout the Los Angeles region for eight months. The controversy first erupted late last summer, when SCAQMD tried to head off a potential electricity shortage in smoggy Southern California by opening a pool of air credits normally reserved for public agencies to the power industry (Circuit, Sept. 15, 2006). In polluted areas, the federal Clean Air Act’s New Source Review provisions require builders of power plants and other major industrial facilities to offset their new pollution with emissions reduction credits. They can either purchase the credits on the open market from others who have overcontrolled their emissions or earn them by cutting their own emissions more than required at an existing plant. After the South Coast air district opened its own credit pool to the power industry, the Natural Resources Defense Council joined with three other environmental organizations in asking a judge to overturn the air board’s action (Circuit, Dec. 8, 2006). The suit is still pending, but the air district hopes that adopting the new proposal in place of the one adopted last year will make it moot.

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