EPA officials and environmentalists are raising concerns with plans by Midwestern states to permit a growing number of coal-fired ethanol plants as “minor” emissions sources not subject to federal rules, saying the plants’ emissions may exceed thresholds for minor sources, which could prompt future agency enforcement actions.
Many ethanol manufacturers are expanding their operations to meet growing demand for the renewable fuel due to a series of factors, including a growing number of state bans on methyl tertiary butyl ether (MTBE), an alternative fuel additive, along with high fuel prices and the recent energy law mandate for 7.5 billion gallons of renewable fuel production by 2012.
But sky high natural gas prices are prompting a growing number of ethanol companies in several Midwestern states to build new plants that use coal as a fuel source to power their operations rather than traditional natural gas. Using coal rather than natural gas is expected to make the plants at least 30 percent less expensive to run, according to a Minnesota state source.
However, states are moving to permit the facilities as “minor” sources, which do not require stringent emissions controls, even though the facilities’ emissions are likely to be significantly higher than if they relied on natural gas. EPA rules generally set a 100-ton emissions threshold for minor sources.
At least three coal-fired ethanol plants — one in Minnesota and two in Iowa — have already won state permits to be constructed as minor sources. Officials in Nebraska, Wisconsin and Missouri are also informally discussing similar approaches for new facility constructions there, according to EPA, state and environmentalist sources.
Both Iowa and Minnesota accepted data from the companies showing that their emissions will be less than 100 tons per year (tpy) of any criteria pollutant and less than 10 tpy of any hazardous air pollutant or less than 25 tpy of all hazardous pollutants, which is the major source threshold.
An EPA Region VII source says the agency is keeping a close eye on plans by states to allow coal-fired ethanol, particularly because the ethanol industry was subject to an earlier, high-profile EPA enforcement action that found many gas-fired plants were exceeding their minor source permit limits.
“Our experience hints that these plants are at or near [federal permit] thresholds,” known as prevention of significant deterioration (PSD) requirements, the source says. “Coal-fired is not typical and causes us to ask questions. Coal-fired power is not nearly as clean as gas. We have asked questions of our states about these projects and asked the states to keep us apprised.”
EPA and environmental groups cannot object to coal-fired generation simply based on the fuel source. But EPA can require states to ensure that they do not allow a slew of minor sources to degrade a region’s air quality cumulatively — though that is more difficult to do than if the sources were regulated under federal law. And environmentalists can challenge coal-fired ethanol permits based on their emissions profile as they are doing in a legal challenge to the Minnesota permit.
If the new coal-fired ethanol plants do end up over the minor source limit, EPA would consider taking enforcement action against them, the agency source says. The plants’ options would include adding pollution controls to get below the 100-ton threshold or go through a PSD permit review, which is more rigorous than what states require for minor sources.
Environmental groups are also concerned with the the idea of using coal to create renewable energy. A source with Bluewater Network, which is one of just a handful of environmental groups that support ethanol, says the group is “disappointed” ethanol producers are not using a cleaner energy source. A Minnesota environmentalist involved in the legal challenge of the state permit says coal-fired ethanol “kind of wrecks the brand of pitching it as a renewable clean fuel.” A second source with the group says it is “more than a bit ironic” to burn coal to create a renewable fuel.
But a source with the Renewable Energy Action Project says the trend toward coal is “an unfortunate consequence of high natural gas prices,” although the source also says that in the long run it does no good to oppose ethanol plants. The source adds that using coal to produce thermal energy for ethanol rather than electricity is more environmentally friendly.
In Minnesota, the group Minnesotans for an Energy Efficient Economy (ME3) has filed an appeal in state court of the Minnesota Pollution Control Agency’s (MPCA’s) decision to grant a minor source permit to Heron Lake BioEnergy, which broke ground on its plant earlier this month. Relevant documents are available on InsideEPA.com.
ME3 also narrowly lost a legislative fight earlier this year after state lawmakers adopted MPCA-supported language exempting ethanol plants from requirements to conduct state environmental impact statements (EIS) as part of a bill that upped the state’s commitment to ethanol to 20 percent by 2013. The group sought to have coal-fired ethanol subject to the state EIS requirements.
“We are concerned about air quality and carbon impacts moving in the wrong direction,” an ME3 source says. “We saw the market moving toward coal-fueled ethanol and raised policy questions about whether you are losing some of the significant environmental benefits you are getting.”
The group helped lead the fight against the EIS exemption in the legislature but says pro-ethanol supporters prevailed on the hotly debated issue after warning that if they weren’t exempted, the industry would move to other states with lower environmental review standards.
ME3 hired an engineering expert to review the Heron Lake application who raised questions about whether it would meet the minor source requirements. The group is challenging those findings and MPCA’s acceptance of them. If ME3 prevails, the facility would have to go through the PSD permit process and would likely need more stringent pollution controls than what the state required.
The case is being briefed and should be heard by the Minnesota Court of Appeals sometime early next year.
In Iowa, a state source says two coal-fired ethanol plants are expected to come online by next March. Since the state does not have public participation in minor source permit decisions, there was no objection.
But the source admits that EPA has expressed its concern that the state is “overly optimistic that they will stay minor sources. . . . The office is a little skeptical.”
Officials with Heron Lake and ethanol industry representatives could not be reached for comment.
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