New York’s First Emissions Regulations for Distributed Generation Will Slash Diesel Pollution

diesel generator NavyNRDC’s Miles Farmer and Jackson Morris look at an effort in New York to reduce emissions for distributed generation and what it would mean for diesel generators.

The New York State Department of Environmental Conservation (DEC) is soliciting comments on its newly proposed emissions regulations for distributed generators. The regulations (which have been wallowing in administrative purgatory for more than a decade, but are finally moving forward thanks to Governor Cuomo’s leadership), will establish New York’s first-ever limits on two types of air pollution emitted from distributed, onsite generation (DG) sources like large, dirty diesel-powered generators. The proposed regulations include maximum emissions rates for nitrogen oxides (NOx), harmful pollutants that contribute to acid rain and smog, and cause dangerous health problems like loss of lung function, as well as particulate matter (PM), which can cause serious health problems like respiratory failure and heart attacks. In particular, these regulations will be a strong step forward in addressing pollution in environmental justice communities that already suffer disproportionately from environmental and public health impacts.

Part 222 will clean up existing DG and prevent dirty diesel from taking over the grid.

In December 2015 when Governor Cuomo directed the DEC to finalize these regulations, known as Part 222, he appropriately called them “a critical step towards protecting air quality, as well as the health of New Yorkers. These new standards will reduce pollution, further encourage the development of renewable resources and support this state’s efforts to combat climate change.”

New York City and many other counties across the state do not meet federal standards for ozone pollution (a byproduct of NOx), so Part 222 will help bring the city into compliance. Just as (if not more) importantly, it will protect the entire state from the threat of a rapid expansion of diesel generation and other dirty resources in the future.

Through its Reforming the Energy Vision (REV) initiative (explained here, here and here), the New York Public Service Commission wants to create markets for distributed energy resources to spur the rapid growth of zero-emitting technologies such as solar photovoltaic panels and energy efficiency, as well as relatively clean technologies like fuel cells and combined heat and power. REV holds great potential to benefit the environment, but without proper market design and appropriate safeguards, its mechanisms could also inadvertently incentivize the rapid deployment of dirty distributed generators like diesel-fired units, which can emit some categories of pollution at rates far higher than even coal-fired power plants. According to analysis conducted by the Northeast States for Coordinated Air Use Management, in 2003 an estimated 15,000 diesel generators already were located in New York State. (Because, to date, many of these generators have not been covered by DEC regulations, that study is the most recent data available.)

While the vast majority of these generators are intended for use only during blackouts, market mechanisms implemented through REV could provide them with an incentive to run more regularly. Part 222 is one essential measure to guard against such a perverse outcome, which would run counter to REV’s core clean energy objectives.

Part 222 won’t jeopardize system reliability

In response to Governor Cuomo’s proposal, some owners of diesel generators have raised a concern that Part 222 could heighten the risk of blackouts. In our view, the proposed rule already contains explicit, well-intentioned provisions to preserve reliability that are actually overly broad. But understanding why the diesel owners are wrong requires some background on the electricity market.

In order to keep the lights on, we have grid operators in place with rigorous planning and sophisticated protocols to match electric supply with forecasted demand. Here in New York the NYISO fulfills that function for the bulk transmission system. Under NYISO’s federally approved protocols, utilities like Con Ed and National Grid are required to plan ahead and buy sufficient “capacity” to meet the forecasted demand from their customers. Buying capacity from power plants obligates those plants to provide electricity whenever called upon to do so. Alternatively, electricity customers can also provide “capacity” by promising to reduce consumption at times when electricity demand is highest and the grid is most stressed – a practice known as “demand response.”

Some demand response is clean, like when customers reduce their electricity usage without replacing it with some off-grid source (known as “curtailment”). But if an electricity customer owns a diesel generator, running it can reduce the amount of electricity pulled from the grid. This dirty demand response emits harmful pollution and can further compromise air quality on the very days when conditions already threaten public health (i.e. hot, hazy summer days).

Some diesel generator owners that participate in grid operators’ programs to reduce peak demand contend that Part 222 should not apply to them, stating that their generators are needed to prevent a grid blackout during these “emergency conditions.” But that would only be the case if their generators were the only resources that could possibly fill the grid operators’ needs. They aren’t. Utilities can procure the needed capacity from other sources, including cleaner demand response.

As the independent market monitor for the nation’s largest grid operator explained to the U.S. Court of Appeals to the D.C. Circuit regarding a similar exemption proposed for backup generators participating in demand response programs, such an exemption is “totally unnecessary to support reliability.” (The court struck it down.) Instead, exempting dirty generators from the emissions regulations that everyone else must abide by would effectively give them an unfair subsidy.

NRDC takes reliability very seriously, but Part 222 has a reliability exception that’s overly broad

At NRDC, we take the reliability of the grid very seriously. It’s a public safety issue, and we would oppose a regulation that didn’t allow sufficient lead time to ensure the reliability of the system. But Part 222 already contains a reliability exception, and it’s actually significantly broader than necessary. For any resource that enrolled in grid operator peak demand response programs in 2014 or 2015, the proposed regulations delay the new emissions limits until May 1, 2017, with a possible extension to May 2019 if the DEC determines the source is needed for reliability purposes.

But an extension is only necessary where a resource is already committed to run if called upon for future periods (i.e. can’t be replaced), and should only last until a replacement can be procured or the capacity is no longer needed. In practice, in NYISO that means that the extension should only be available for participation in 2016 summer DR programs. After that, if an owner decides it’s not economic for them to either retrofit (or replace) their generator to comply and continue participation in the NYISO DR programs, then they can’t promise to run in the future. Period. The NYISO can then plan accordingly, procure alternative capacity (including other potential DR resources than cancomply), and maintain reliability. That decision by the generator owner is purely an economic one, and will have no bearing whatsoever on keeping the lights on.

Finally, Part 222 doesn’t apply in true emergencies where there is a grid blackout. Under these conditions, owners can freely run diesel generators even without pollution control technology.

So, to sum it up, DEC has built into Part 222 measures that are more than adequate to ensure the reliability of the grid. It should tighten those measures, not loosen them. Providing a blanket exemption for diesel generators participating in peak demand response market programs would defeat the point of the emissions limits, because it would allow a large number of generators to continue emitting dangerous pollution (and collecting significant revenue), even where those generators aren’t necessary to serve the grid’s needs. We commend Governor Cuomo and the DEC for proposing Part 222 to finally close a major loophole in the state’s regulations (which has unfairly allowed these generators to emit pollution at higher levels than other sources that are regulated). We urge the agency to strengthen and finalize the rule without delay.

This blog originally appeared on Switchboard, the staff blog of the Natural Resources Defense Council. Miles Farmer is a legal fellow for NRDC’s Energy & Transportation Program, New York City. Jackson Morris is NRDC’s director for eastern energy in Danville, Penn.

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