The Obama administration's plan to create another set of limits on greenhouse gases under the Clean Air Act makes more sense for the power sector than it does for refineries, representatives of the oil and gas industry told U.S. EPA officials today.
Late last year, EPA struck a deal with environmental groups, which had threatened to go to court if the agency did not craft a set of rules called New Source Performance Standards for both industry sectors. The rules, which have been created for types of air pollution, would limit emissions by deciding the acceptable emissions for each megawatt of power that is generated or each barrel of oil that is processed.
The planned Clean Air Act rules are the wrong way to set climate policy, oil industry trade groups and the owners of individual refineries said during a listening session at EPA headquarters this morning. But if the agency wants to achieve pollution reductions that way, the oil and gas industry is the wrong place to look, they told EPA air chief Gina McCarthy and her deputies.
"You really don't need to come after the refinery sector," said Howard Feldman, vice president for regulatory and scientific affairs at the American Petroleum Institute.
Power plants are the largest emitter of greenhouse gases in the United States, releasing about 40 percent of the nation's total, while refineries, the second-largest source, produce about 4 percent. Environmental and public health groups have applauded the decision to set standards for both sectors, saying the industries should do as much as they can to limit emissions that are contributing to climate change.
But if the goal is making a dent in total emissions, the power sector is the best place to start, oil and gas representatives said.
"We might be the biggest kids in the pee-wee league, but we're not on the same level with them," Feldman said.
Under the December settlement, EPA needs to propose the rules for power plants by July 26, 2011, and finalize them by May 26, 2012. The proposed standards for refineries would need to be released by Dec. 10, 2011, with the final rule due on Nov. 10, 2012.
Utilities have been split in their response to the plan, largely depending on where they get their power. Companies that rely heavily on coal-fired power have suggested that energy prices could spike as older plants become uneconomical, while utilities that lean more heavily on renewables and nuclear have been more supportive (E&ENews PM, Feb. 4).
But refiners took a united front against the performance standards today, arguing they could push production overseas and cause an overall increase in greenhouse gas emissions. Those concerns came from larger companies such as Exxon Mobil Corp., which oversees the whole process from oil wells to gas stations, as well as Lion Oil Co., which employs about 600 workers at its only refinery in El Dorado, Ark.
Though power plants need to be located near electricity customers, refining is an industry with global competition, the companies said.
New costs could lead companies to move their production to places without climate rules. They could end up releasing more greenhouse gases while producing the same amount of fuel, said David Friedman, senior director of regulatory affairs at the National Petrochemical and Refiners Association.
"There is no guarantee that the United States' domestic refining manufacturing base will continue to be in existence two or three decades from now," his group told EPA in a letter. "Our members' gasoline, diesel fuel and jet fuel manufacturing plants could well go the way of many domestic auto plants, virtually all of our domestic textile mills, and many domestic steel plants over the next two or three decades."
McCarthy seeks more details
With climate legislation off the agenda in Congress, greenhouse gas rules from EPA are the primary way that President Obama can move toward his goal of reducing U.S. greenhouse gas emissions by 17 percent from 2005 levels by 2020.
The performance standards are particularly important to refineries because unlike the permit requirements that took effect on Jan. 2, they would touch both new and existing facilities. A new refinery has not been built in the United States in 35 years, and under the permitting rules, existing refineries only need a permit for their greenhouse gas emissions if they undergo a major modification.
Refiners argue that the rules would add an unnecessary layer of bureaucracy because companies cannot do anything but improve efficiency, and market forces already make refiners highly attuned to their energy usage.
McCarthy said there are places that refiners can improve their efficiency and disagreed with their suggestion that greenhouse gases are not as important as the chemicals that cause cancer or asthma.
"I'm not in agreement that greenhouse gases aren't as immediate a public health concern as other pollutants," McCarthy said. "I recognize that they're not a toxic pollutant, but I do think there's a responsibility to consider the public health concerns and to do that aggressively, as soon as we can."
With regard to new plants, McCarthy said the performance standards would provide certainty because they would set a floor for the emissions limits that now need to be set during the permitting process.
She pressed the companies today to give EPA some specifics on the best way to approach existing facilities, saying it seemed that they would not get into the details "because of the overriding concern that you do not want us to do the rules."
It makes sense to look at greenhouse gases now because EPA is already updating the performance standards for other types of air pollution from refineries, she said.
"I'm hoping that there is some sense among the group that it makes sense to look at all of the pollutants at the same time -- that you could be driving reductions," she added.