6 Steps to Manage Your Company’s Physical Climate Change Risks

President Obama has recently stated that climate change must become a high priority. He wants the US to be a world leader in addressing climate change, such as reducing greenhouse gas (GHG) emissions significantly. Many polls show that a solid majority of Americans support this movement. A growing number of companies, cognizant of this fact, have tasked their Environmental Groups to address climate change.

A number of articles in CCES have discussed the many financial benefits to a company that reduces its GHG emissions. That aside, another climate change issue that companies must address is the impact of the physical and financial effects of climate change on their business; in other words, to assess climate change risk. Nearly all businesses have assets, operations, and a supply chain vulnerable to the effects of climate change, not to mention its effects on markets. How does one develop the ways to assess the degree of and for developing strategies to minimize climate change risk?

This is not meant to be an exhaustive analysis of climate change risk. Software and other options exist to be more exact. This is meant to be a guide for those starting out. Here are 6 steps to effectively begin to assess and address your climate change risk.

1. Determine your current climate change risk factors. Develop an analysis of your company’s assets, operations, supply chain, and customers and which ones are most at risk to the likely adverse effects of climate change (i.e., extreme storms, rising sea levels, shortages of water or other natural resources, etc.). List these specific areas in writing, including their location, and determine which hazards are likely to increase in particular geographic areas. For example, if you have a manufacturing plant or a key supplier has one in, say Florida or the Caribbean, then you need to be concerned about the probability of a growing frequency of extreme storms. Begin by assessing risk qualitatively, but eventually attempt to quantify or at least rank the business areas of greatest adverse risk. Rankings should be made in business terms: such as risks that are existential, those that may affect worker lives, those that may cost your business market share or reputation, as well as those resulting in direct costs (asset damage).

2. Assess where you stand now. Part of this ranking of your key areas of climate change risk is to determine if impacts are already occurring or may come soon. For each critical risk area identified, research recent and historic events to determine if the impacts are already occurring. For example, research the historical extreme weather events of a potentially vulnerable plant over the last 50 to 100 years (if data is available) to determine whether extreme weather events are already occurring more frequently.

3. Now look forward to assess future risk of climate change impacts. Assess those assets, operations, etc. identified for potential climate change risk for projected changes caused by climate change in the future. How far into the future is up to your firm. For example, computer models exist to predict temperature rise in many areas of the world caused by climate change and can be used to predict future yields of necessary supplies provided by agriculture. Projections have been estimated for sea level rise. Determine if your assets or supply chain may be even more vulnerable in the future to flooding or damage if sea level rises by the amount projected.

4. Go back, re-rank and plan for your riskiest vulnerabilities. Given the historical and potential future adverse impacts of climate change that have been determined, now re-rank these at-risk assets, operations, supply chain, etc. using your criteria above (existential, reputational, asset damage). Estimate which of these are of potentially greatest risk to loss or damage in the future.

5. Determine reasonable steps to effectively reduce risk. There are likely multiple options that can be implemented to reduce your risk. Each may reduce risk differently or by a different amount and each has a cost (although there may be side benefits, too). Remember, it is essentially impossible to reduce risk to zero (“Mother Nature”). And of course, you will be limited by budgetary factors. Therefore, determine what level of risk may be acceptable to your company. For example, what are the costs involved and risk reduced of building a sea wall to protect an asset in a coastal, hurricane zone? What may the costs be to “raise” that facility or its key assets a number of feet to avoid flooding? What may the costs be to relocate some of its operations to a different facility in a much lower risk zone? What may the costs be to shut down the plant altogether and move all operations elsewhere? This information and good what-if scenarios will enable your company to better direct resources for more effective risk reduction.

6. Climate change risk should be a part of your total business risk determination. One thing that is certain is that as businesses and the Earth change, climate change risk will also change. As a company changes its customer base, supply chains, acquires other companies or sheds products, this will affect their climate change risk. Of course, the science of climate change and knowledge of risk will change, too. Therefore, this risk analysis should not be “stored away.” This must be re-examined and re-calculated every few years or if the company undergoes major changes. Climate change risk should be part of overall corporate business risk assessments.

For example, when determining whether to buy a company, its climate change risk should be assessed. Does that company have many assets or suppliers in vulnerable areas? Do they use coal, for example, to produce power for its operations? Might your company need to spend a large quantity of resources to address the risks it is taking on or comply with potential future climate change or energy regulations? A robust climate change risk assessment may affect your offer price. I managed a project where a company wanted us to assess the climate change risk of one it was considering to acquire that operated a number of coal-fired power plants. Their greatest concern was what might its future costs be due to potential future climate change or environmental rules that would require expensive controls on emissions? These costs, we showed, could be quite significant, and were presented to the client. Understanding the need to spend many of millions of additional dollars per year in the future, they reduced their bid price. They lost the bid, but afterwards contacted our firm and thanked us. Given the huge potential future cost and risk, this was the best “loss” of a bid they ever had.

CCES can help your firm assess climate change risk and determine and implement common-sense strategies to reduce the risks and get other financial benefits at the same time. Contact us at karell@CCESworld.com or at 914-584-6720.

Energy Efficiency It’s For Business, Not Being Cool

Energy efficiency is being recognized in many quarters as more than just a “feel good”, environmentally-beneficial business activity, but as a positive financial investment goal itself. After all, what is an investment; any kind of an investment? It is spending money so that you get that money back and a lot more. Investing in energy efficiency is an effective way of making money invested in saved costs and other financial benefits.

How do we define a good investment? Making the most money within a risk – reward paradigm. If you are risk averse, you invest money in T-bills are similar instruments. You make a great yield, but it is understood that the US government is behind the investment, and at worst, you are unlikely to lose the money you invested. Or if you wish to entertain risk, there are many investments that could pay a high yield, but there is a risk that business conditions will change, you don’t make that yield, and, in fact, you could lose all or some of the principal; a high risk.

Smartly investing money in energy efficiency projects is the best of all worlds. The risk is low. The technologies are known; if implemented correctly, they will work in lowering your energy use. And if a particular technology fails, the vendor should replace or repair it. They are simple; a lower wattage light bulb uses less electricity than a higher one. Period. And if designed right, provide you with the same (or better) light.

And the savings are potentially great. LED lights in many cases produce the same light using less than half the electricity of many current conventional lamps. In addition, these new technologies often last longer than those replaced, saving the user much in O&M risks, costs and improving worker flexibility (reassign workers to other tasks and fewer trips up the ladder to replace lights). I recently performed an evaluation of a large light replacement project. The client’s investment would conservatively (overestimating costs and underestimating savings) have a rate of return of 14%/year for at least 7 years. And the likely rate would be higher, with no risk (the lights work). What investment on Wall St. results in such a return?! Really! Tell me one. Many other strategies – if planned well for your particular building – will result in similar yields and benefits.

Some say: “This is great, but where do I get the upfront capital to buy the technologies I need to be more energy efficient?” Given the high rate of return and low risk, many financial institutions would be happy to lend money at low interest knowing their risk of default is low. Several government agencies have set up low-interest loan programs geared to cost savings, enabling companies to have only positive cash flow in these projects. Principal / interest are paid back only when energy cost savings are achieved.

The organization The American Council for an Energy Efficient Economy (www.aceee.org) has compiled many financial studies and case studies on energy efficiency upgrades. See the following graph comparing the risk-reward of a typical energy upgrade with that for other monetary investments. If the graph does not appear, then note that typical energy efficiency projects have a risk index of about 5% (comparable to US T bills), yet a typical rate of return of over 20% (comparable to small company stocks).

 

 

See how energy efficiency projects – again, if designed and implemented professionally – has a low risk index, yet high annual rate of return.

CCES can perform an energy evaluation and manage the implementation of energy efficiency projects you select for your buildings and operations to maximize your financial benefits. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Short Primer on Effective Energy Upgrades For You Part 4: Variable Speed Fans and HVAC

Here is another simple, effective energy upgrade that will not only save you significant energy costs (if done right), but will also result in other benefits. As discussed last month, one of your biggest users of energy is cooling. Moving heat from a relatively cool place, such as an office or a data center, to a hotter place (the outside) goes against the norms of physics, and, therefore, requires energy. A study from Lawrence Berkeley National Laboratory (https://publications.lbl.gov/islandora/object/ir%3A158674) found that upgrading fans and adding fan speed controls significantly reduces a facility’s electrical energy usage and reduces average and peak electric demand. In this day and age of many utilities around the country encouraging users to reduce their peak electricity demand, any way to do this will result in major cost savings. Many utilities now require large users to pay for peak demand, as well as usage, making reducing demand on weekdays during the 2 to 6 pm period a major cost savings.

The study focused on the cooling of a data center, which often needs cooling performed 24/7. What ways can energy efficiency be improved? The facility used for this initiative was a 135,000 square foot data center in El Segundo, Calif. The project focused on replacing constant speed scroll fans with electronically commutated motor (ECM) variable speed fans of a more efficient design and deploying an energy management system to control fan speeds and air handler output.

Deployment of the control’s software system resulted in a 66% drop in cooling energy usage, freeing stranded capacity while simultaneously expanding reserve cooling capacity. Varying the fan speed based on actual space needs in time and utilizing software to control it fairly accurately is a large energy saver compared to old style fans set at the same speed at all times.

In addition, the software saved the facility 2.9 million kWh annually and provided a pictorial view of the heat profile in the room, identifying and addressing “warm spots”. Not only is this a significant energy saver (identifying “warm spots” and addressing them), but it leads to better worker comfort and productivity.

Potentially overcooling a data center or other location to reduce cooling during the peak period in the summertime by adjusting fan speed (but still utilizing cooling if needed) can save a facility much costs.

CCES has the experts to help you evaluate new technologies and approaches to maximize savings not only in energy usage, but in peak demand shaving, as well, to maximize your financial gains. Contact us today at 914-584-6720 or karell@CCESworld.com.

8 Ways to Protect Your Operations From Severe Weather Impacts

Well, we made it through another hurricane season without one damaging a major US populated area, the 2nd consecutive such season. Superstorm Sandy is becoming a distant memory for some. But, severe weather impacts are still a threat to your business all year round. This is the time to implement common-sense strategies to safeguard your property from the physical and financial effects of severe weather. Here are 8 easy-to-implement ideas that will have direct financial benefits for you.

1. Create a Severe Storm Culture. Don’t think your building or business is immune from the devastating effects of a severe storm. Even if it is not a headline-making hurricane, blizzard, or earthquake, severe weather literally impacts property in all 50 states. Don’t assume a severe storm will not come; be prepared for the worst case.

2. Damage is Beyond the Physical. A large number of businesses fail to re-open after severe weather events. Many, of course, sustained physical damage to the building or to its inventory. But many also went out of business because of a profound loss of computer data (sales lists, business data, codes, etc.). Realize that it is important to not just secure physical property, but your business systems, too.

3. Therefore, Identify Vulnerable Business Entities. What items are critical to your business that may be compromised by severe weather? First, should be your people, followed by buildings, computer systems, heavy equipment, inventory, etc.

4. Anticipate Worst-Case Scenarios. Actually record in writing potential worst case scenarios based on your location, such as hurricanes, tornadoes, floods, blizzards, earthquakes, thunderstorms, etc. Record all severe incidents of the last 25 years.

5. Go back and Identify Vulnerable Business Entities. For each potential severe weather type, which areas are most vulnerable and how bad may losses be? Look at people, property, inventory, computer systems, equipment, etc. Estimate potential losses and the time and cost for full business recovery for each scenario.

6. What Reasonable Protections Can You Install? Of course, budgets are limiting. You can’t do everything. And besides, there is no such thing as zero risk against the fury of Mother Nature. But what effective, affordable measures can you install – both physical and cultural – to reduce risk of loss? From physical safeguards to your buildings (i.e., construct escape paths, send water away from buildings and paths, raise critical equipment above basement/ground floor) to conducting drills.

7. Back Up Data. As discussed earlier, your data very much defines your business. Make sure you have back up to all of your data in a secure location, such as the ”cloud” or secure location safe from floods, fire, etc.

8. Create Living Emergency Response / Business Continuity Plans. Put all of this in writing: plans to determine how you will respond to severe weather to protect your people, assets, and data plus procedures to bring your business back up again as soon as possible after a disaster. Make sure these documents are reviewed and updated regularly and the right leaders are aware of what needs to be done.

CCES has the experts to help your business and buildings develop a disaster preparedness program to help minimize impacts of severe weather and to enable you to bounce back. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Use PACE for Successful Energy Upgrades

As we are getting out of a recession, the overwhelming building stock in the US is existing buildings, built well before recent energy efficient technologies were made practical. How can such building owners afford upgrades of old energy systems? Ironically, the older the building, the more need there is for upgrades and the more money is needed for such upgrades. But, older buildings are likely “poorer” (attract fewer premium tenants), and may have less money “in the bank” or access to fund needed to invest in upgrades. To address this conundrum, a number of states are subsidizing a program called Property Assessed Clean Energy or PACE to simplify access to finance specific energy efficiency upgrades.

In PACE, the building owner has access affordably to low-cost capital needed to begin energy efficiency projects. The building is the collateral, not the person or business. Unique PACE conditions make this attractive to lending institutions to participate.

PACE financing is typically used for entire facility upgrades, not individual projects. A PACE loan enables the building owner to perform pre-approved energy upgrades with little or no up-front payments. Before financing is approved, proposed projects are vetted technically and financially for success and will provide a given return based on estimated cost savings. The degree of the loan and a schedule is determined to allow repayment primarily from cost savings, to attain positive cash flow for the owner at all times. The owner is less likely to skip payments because it comes from savings.

In most communities, PACE repayment is tied to the building’s property tax payments; it is a line item in their municipal or state property tax bill. The government entity collects payments and transfers it to the PACE agency or directly to the bank. Payment tied to its tax bill also allows the owner, if desired, to spread the cost among tenants.

PACE does have a number of requirements for it to work, such as the local municipality or state formally signing on to participate and willing to add it as a line item and collect and manage payments. The building owner must not be in bankruptcy, and must not have failed to pay property taxes and mortgage, generally, for the previous 3 years. PACE loans are also often limited to 10 to 20% of the total assessed property value.

Might a PACE long-term loan be an anchor around an owner’s neck, complicating a desired sale of the building along the way? While the loan and the potential lien is tied to the building and the buyer must agree to continue to make payments, the new owner should understand that future PACE payments are for upgrades that reduce other costs (energy) in an overall positive cash flow, and raise the building’s value.

Most important, PACE can remove the strong obstacle many owners have to performing an energy upgrade, and allow access to needed upfront capital in an affordable way.

CCES is an approved PACE technical provider in New York under the Energize-NY program. We can help you determine which energy efficiency projects can benefit you the most, determine the scope of useful projects, estimate project costs and energy cost savings, and help determine the right financing approach involving PACE or similar vehicle. Contact us today at 914-584-6720 or karell@CCESworld.com.

Energy Trends in 2014 and Beyond

It’s hard to measure change when you are living through it. But I believe we will look back on 2014 as a year of major change and progress in energy. While many people, companies, governments looked askance at new (and some not so new) energy technologies, it seems like in 2014, entities were more interested in discovering more and listening. Renewable energy definitely became mainstream. Evidence of this is that even in some red states with governors and legislators against heavy restrictions, few if any states have rolled back their renewable portfolio standards of their utilities. And many even raised the percentage that a utility must obtain power from renewable sources. Also, several major financial institutions (Citigroup, Deutsch Bank, etc.) openly advised their best clients to consider renewable energy because it works, has many advantages, and the companies that supply them and infrastructure around them are now stable. And a lot of it is the people speaking. According to the US EIA, installation of solar PV in the US increased by 4-fold (400%) from 2010 to 2014. A lot of this growth is due to financial. Solar PV prices have dropped due to the drop in silicon prices and the greater competition for larger projects. But much is also due to entities and companies looking at solar more seriously and accepting it. And all this despite the drop in oil and natural gas prices due to excess supply.

Looking ahead to 2015 and later, if prices of fossil fuels continue to drop, will that cause a reduction in renewable energy and energy efficiency projects? Many analysts believe that renewable power, and particularly solar PV, will remain competitive even in this environment because of continued competition, improvements in battery technology, and greater renewable financing capabilities to satisfy the public and businesses. It is also recognized that fossil fuel prices will only drop a certain amount. Once oil, for example, drops below a certain price, many projects become non-profitable (such as Alberta tar sands and deep sea drilling) and will be halted, reducing the supply and raising the price again. Thus, as energy efficiency projects use less energy and renewable uses free sources (i.e., the sun, wind), fossil fuels will likely be positioned somewhere compared to renewables.

Renewable power will likely grow even more in the future once enhanced inexpensive technology for energy storage is made available. Given the growing acceptance of climate change and the effects of more frequent droughts and severe storms, energy storage to keep operating in case of a disaster is of greater importance, and will be addressed when reliably and affordably developed.

Another energy trend that became very public in 2014 is the need to conserve electricity usage and peak demand nationwide or at least reduce its growth very soon. From urban to rural areas, governments and utilities have understood that if growth of peak demand is not better managed, it will cost regions across the country many billions of dollars in infrastructure upgrades, added costs that will be difficult to pass on to consumers. Therefore, many governments and utilities have expanded their incentive programs greatly to reduce both electricity usage and demand during peak times (summer weekdays from 2 to 6 pm). Probably the biggest outcome of this concern is the mainstreaming and encouragement of entities to implement combined heat and power (CHP or co-generation). With some adjustments, a building’s boiler can also produce electricity from the leftover heat from steam or hot water production that would otherwise be wasted. This home-grown electricity can reduce costs (generating your own electricity, not taken and bought from the grid) and reduce reliance on the grid in case of a failure, which will both provide the building with backup power during a weather emergency or utility problem and lessen the need of the utility to implement a large infrastructure expansion. While CHP has a large upfront investment component, many utilities are offering very large incentives to make it cost effective, as well as reducing the risk of upheavals and losses during an emergency. 2014 will also go down as the year where CHP, although in existence for quite some time, became acceptable and taken seriously.

ConEdison Solutions recently published a white paper with a hypothetical example, using a 1.2 million square foot building in New York City (http://go.conedsolutions.com/l/51452/2014-10-27/h74w#.VJSPvl4AAB). Such a building after investing $3 million in upfront costs for a CHP system and backup generator, would realize annual savings and revenue from reducing their peak demand of nearly half a million dollar per year. This hypothetical installation would also qualify for about $1 million in incentives through the government and utility, for a rough simple payback of 4 years, as well as reliable backup power in case of an emergency.

With these developments and the growing mainstreaming of creative energy solutions and upgrades, 2015 promises to be a greater year for adoption of energy technologies to save you costs, reduce risk from emergencies, free up staff, and otherwise benefit you! Have a happy, healthy, and peaceful New Year!

CCES has the experts to help you assess how well you will do with new energy technologies, such as renewable power, combined heat and power, microturbines, and/or energy efficiency throughout your buildings and portfolio. We can assess not only what will be your immediate financial gains from each perspective upgrade (energy cost savings), but also the ancillary gains, such as reduced O&M costs, making your properties more attractive to renters or buyers, and risk reduction by producing your own electricity. Contact us today at 914-584-6720 or at karell@CCESworld.com.

Case Study: Energy Audit and Retro-commissioning for Large Apartment Complex

Climate Change & Environmental Services (CCES) led a team of energy specialists in performing an energy audit and retro-commissioning study for two large apartment buildings, part of the East River Housing complex on the Lower East Side of Manhattan. The effort was done to comply with New York City’s Local Law 87, requiring all large buildings to perform an ASHRAE Level II energy audit and a retro-commissioning study once every 10 years.

An energy audit was performed for two 20-story apartment buildings and their base heating system. Data from the boiler house was collected to estimate how much steam and domestic hot water was used by the apartment buildings in question, and from that, how much natural gas and No. 2 fuel oil was used annually. Two years of electricity bills were then evaluated from common functions (lobby and hall lighting, elevators, pumps) and aggregated bills for cumulative electricity use by residents. A month-by-month energy profile for a recent year was determined for both electricity and fuel usage.

Energy conservation measures (ECMs) were then determined, strategies that if implemented would result in energy cost savings. Specialists in lighting and elevator motors were brought on to the team to provide specific insight. These areas, although functioning well, were evaluated for potential upgrades to more energy efficient equipment to reduce usage, demand, and costs. For each ECM strategy, estimated upfront and O&M costs, energy savings (kWh or therms of natural gas), cost savings, and simple payback were estimated. Local Law 87 does not require a building manager to implement any ECM; only to consider it. Several were found for the complex.

A retro-commissioning (RCx) study was performed for the two buildings. Local Law 87 contains 25 criteria that must be tested for RCx. For apartment buildings like these, the most important (and time-consuming) item to consider is steam trap testing. At least 10% of all representative steam traps must be tested to determine whether steam is entering the condensate line. If less than 90% of these 10% pass, then all steam traps must be tested. Even testing 10% of steam traps is problematic, as that means likely entering people’s apartments. If less than 90% pass, then it becomes very time-consuming and troublesome. Therefore, in preparation for such a step, it is a good idea to perform pre-testing of selected steam traps and/or upgrading of old units. This complex has an informal pre-testing process. To comply with Local Law 87, they made it a more formal process, including cataloging all steam traps and ensuring they test a representative sample regularly and replace when necessary. Building management saw this as a good process, to stay ahead of the curve in terms of heat delivery.

Not meeting any of the 25 criteria is considered a “deficiency” by Local Law 87, generally low/no cost fixes or upgrades that will likely save energy or prevent damage. Local Law 87 does require all labelled “deficiencies” to be addressed and verified by the RCx professional. Several deficiencies were detected and building management did successfully address them.

CCES has the experts to help you perform an energy audit or retro-commissioning study to comply with Local Law 87 or to find ways to reduce energy costs and ensure that the equipment you paid good money for are operating optimally. We can help you get the best use of your energy systems, to ensure you get your money’s worth, and make your tenants more comfortable. Contact us today at karell@CCESworld.com or at 914-584-6720.

Short Primer on Effective Energy Upgrades For You Part 3: Improve HVAC Operation

Here is another smart, effective energy upgrade that will not only save you significant energy costs (if done right), but will also result in other benefits. One of the biggest users of energy is your heating, ventilation and air conditioning (HVAC) systems. A lot of building managers buy boilers, rooftop units, etc., install them, and then leave them alone or just have an outside contractor look at them occasionally. Perhaps people think they work automatically. But HVAC operation should be taken seriously – to minimize energy costs and to reliably provide proper temperature control for your workers to be efficient or your customers to be comfortable and buy.

The first item to consider is the design and efficiency of the system. Since HVAC systems often last a decade or more, when buying a new or replacement system, it is important to consider the right size (for the area treated) and its rated efficiency. Saving a few bucks now to buy a relatively inefficient system will cost your company a lot in the future. Efficiency is indicated by the energy efficiency rating (EER) or SEER. Many units now are available with an EER of 14 or higher. If you are currently using one with an EER under 9, it may be cost-effective to replace it now with a more efficient one, even if it has not reached its end of life. The difference in electricity costs may justify it.

Just as important is to ensure you operate your HVAC units optimally. All HVAC units contain filters to filter dust and other items from the outside air that is drawn in. While one may simply follow manufacturer’s recommendations on how often to replace the filters, it is important to not blindly follow the recommendation, but instead, physically go onto the roof and look at your units in action, and check the filters themselves. Every situation is different. I worked with a facility which followed the manufacturer’s direction of replacing filters once every 6 months. However, the filters from the biggest units (drawing in more outside air) were filthy with caked-on dust well before 6 months. Was the manufacturer wrong? Not necessarily. The building was located across from a facility that stores different rocks, sand, and other materials. It is probable that dust from this facility brought in by the wind caused the filters to cake up sooner than normal. A dirty, caked filter has two effects on an HVAC unit. It causes the fan to work harder to bring in more air to meet system requirements. One study showed that a dirty filter results in an increase in a unit’s electricity usage by about 9%. Plus, dust that penetrates the filter can damage the interior parts of the unit (condenser coils, etc.), reducing its life and efficiency. More filters and the labor to change them are fairly cheap and worth it to avoid these issues.

One more thing to consider periodically is whether the conditioned air is reaching the zone it is supposed to service. Sometimes internal duct work is partially obstructed, shunting warm or cool air out certain vents and not others. Building management should occasionally monitor whether changes of this nature occur periodically. Again, you want to get the most out of the equipment you paid a lot for. If conditioned air is not distributed properly, a simple inspection of the ductwork could find and allow correction of the problem.

CCES has the experts to help you assess your boilers, air conditioning, and related systems, and advise you on planning new systems and how to better maintain your current ones. We can help you get the best use of your system, to get your money’s worth, and make your workers and customers comfortable. Contact us at karell@CCESworld.com or at 914-584-6720.

USEPA Announces Proposed Rule To Reduce Smog

The USEPA recently announced a proposed new rule to reduce smog, the cacophony of compounds that build up in the atmosphere, triggered by sunlight and the presence of nitrogen oxides and volatile organic compounds (VOCs). Smog causes haze, making it difficult to see a landscape. More important, many components of smog are harmful to human health. Areas with high ground-level ozone levels have been linked to asthma and cancer. We measure smog by an indicator compound, ozone. This is ozone in our atmosphere, not to be confused by the necessary ozone in the stratosphere. Few processes emit ozone; it is formed by chemical reactions of nitrogen oxides and VOC that occur in the atmosphere catalyzed by sunlight.

There are currently National Ambient Air Quality Standards (NAAQS) for ozone, above which a monitored area is at risk of adverse public health effects. The agency is proposing to reduce (strengthen) ozone’s NAAQS from 75 ppb to within a range of 65 to 70 parts per billion (ppb); and taking comment on a level as low as 60 ppb. This is part of the USEPA’s job to review all NAAQS standards every five years, as stated in the Clean Air Act, passed by Congress and signed by the President.

USEPA scientists examined numerous scientific studies of health effects of ozone exposure in the last five years, over 1,000 new, mainly peer-reviewed studies published since the last update. A number of these studies indicated that exposure to ozone at levels below 75 ppb — the level of the current standard — can still pose serious threats to public health and the environment.

If this rule is promulgated and the NAAQS standard is lowered, a number of additional communities around the nation will be considered not in attainment with the new standard. States with these areas will be required to promulgate and enforce stricter rules pertaining to emissions of smog’s forerunners, nitrogen oxides and VOCs, in hopes of reducing ambient concentrations of ozone to the new standard in these non-attainment areas. The good news is that a number of recently finalized or proposed federal air pollution rules, including new light duty vehicle emission and fuel standards (“Tier 3”), will help to significantly cut emissions of smog-forming compounds, lessening the burden on the states to promulgate new rules to meet the proposed standards.

Not surprisingly, a number of business and manufacturing groups oppose the proposed lowering of the ozone NAAQS, stating that the resulting tightening of emission regulations would adversely affect how industry operates and may cause many firms to halt expansion plans in the US, jeopardizing the recent comeback in manufacturing.

CCES has the experts to help your facility assess your nitrogen oxide and VOC emissions, and determine, design, install, and test cost-effective options to minimize emissions of these and other compounds to provide greater operating flexibility in the wake of potential new rules. Contact us at 914-584-6720 or at karell@CCESworld.com.

USEPA Revises Policy On High Priority Violations

In September 2014, the USEPA issued a revision of its Clean Air Act policy on “Timely and Appropriate Enforcement Response to High Priority Violations.” Last issued in 1998, the new enforcement policy applies primarily to major and synthetic minor stationary sources of air pollutants with aggressive actions on accelerated timetables.

The new policy makes two major changes from the 1998 policy. First, the new policy replaces the matrix used to identify high priority violations (HPV) with the following six categories of violations that will receive high priority enforcement response:

1. Failure to obtain a New Source Review (NSR) permit and/or install Best Available Control Technology (BACT) (attainment areas) or Lowest Achievable Emissions Reductions (LAER) (non-attainment areas).

2. A violation of any federally-enforceable emission limit, standard, or required operating parameter issued under Prevention of Significant Deterioration (PSD) or nonattainment area provisions, where such violation occurs continuously, regularly, or intermittently for at least 7 days (Seven Day Violation).

3. A Seven Day Violation of any emission limit, standard or required operating parameter in an applicable New Source Performance Standard (NSPS).

4. A Seven Day Violation of any emission limit, standard, or required operating parameter of an applicable National Emission Standard for Hazardous Air Pollutants (NESHAP).

5. A violation of any federally-enforceable work practice, testing, monitoring, recordkeeping or reporting requirement that the agency deems to substantially interfere with its ability to enforce or monitor a source’s compliance.

6. Any other violation the enforcement agencies determine is appropriately treated as a high priority violation.
While the first five criteria are very specific, the 6th criteria does add some uncertainty if the agencies rely heavily on it. The new policy became effective on October 1, 2014.

The other major change made under the new policy is flexibility in the treatment of HPV enforcement. Under the former policy, once a violation was determined to be a HPV, it could only be resolved through an enforceable agreement. Under the new policy, a HPV may be removed from HPV enforcement and not require such an agreement if the enforcement agencies conclude the evidence of a HPV is weak or if the HPV does not involve continuing violations or a threat to public health. This change is presumed to be an incentive to a violating facility to quickly return back to compliance. The USEPA is giving itself broad discretion to remove a violation from HPV enforcement.

CCES has the technical experts to help your facility prepare the appropriate permit applications and the technical expertise to meet Clean Air Act PSD, NSR, NSPS, and NESHAP program requirements and the technical expertise to resolve any alleged violations. Contact us today at 914-584-6720 or at karell@CCESworld.com.