By Jacob Elkin

Credit: http://www.quotecatalog.com/

On June 30, 2022, the New York Department of Environmental Conservation denied Greenidge Generation LLC’s application to renew a Title V air quality permit for the Greenidge Generating Station. The facility, previously permitted as a natural gas-fired “peaker” plant, has recently ramped up its power generation to provide behind-the-meter power to Greenidge’s proof-of-work cryptocurrency mining operations.

The denial cites a Sabin Center white paper published in March 2022 that argues that the New York Executive Branch has the legal authority to implement a moratorium on the permitting of fossil fuel power plants that are providing behind-the-meter energy to proof-of-work cryptocurrency miners. As the paper discusses in more detail, proof-of-work cryptocurrency mining requires significant energy consumption and thus produces large quantities of greenhouse gas (GHG) emissions. Researchers have recently estimated that Bitcoin mining is responsible for 65.4 megatonnes of carbon dioxide emissions per year. Other estimates put Bitcoin’s annualized carbon footprint at 72.05 megatonnes of carbon dioxide, comparable with that of Greece, with a single Bitcoin transaction generating 805.77 kilograms of carbon dioxide, equivalent to the emissions generated by 1,785,864 VISA transactions.

In order to power such operations, a trend has arisen of former coal power plants transitioning to natural gas generation to deliver behind-the-meter power to mining facilities. Greenidge Generation is one such facility, operating as a coal-fired power plant in the 1930’s before ceasing operations in 2011, then receiving a new permit to restart operations as a natural gas-fired plant in 2016. When applying for that 2016 permit, Greenidge indicated that it would operate solely to provide power to the grid in a “peaking” capacity, but since 2020, Greenidge has begun utilizing the energy it produces to power an on-site cryptocurrency mining operation. As a result of this change in function, Greenidge’s GHG emissions have increased considerably, with Greenidge predicting its emissions to continue to increase going forward. Greenidge’s permit renewal application has thus drawn a significant amount of attention state- and nation-wide.

DEC’s denial rests primarily on the permit application’s incompatibility with the climate goals enshrined in New York’s Climate Leadership and Community Protection Act (CLCPA). In a separate statement on the denial, DEC summarized the decision as follows:

“Based on DEC’s review of the specific facts and circumstances presented, this natural gas-fired facility’s continued operations would be inconsistent with the statewide greenhouse gas emission limits established in the Climate Act. Among the factors considered was the dramatic increase in greenhouse gas emissions from the facility since the passage of the Climate Act, driven by the change in the primary purpose of its operations. Rather than solely providing energy to the state’s electricity grid, the power plant now primarily provides energy behind-the-meter to support the demands of Greenidge’s energy-intensive proof of work cryptocurrency mining operations.”

While much of DEC’s denial letter pertains to the specifics of Greenidge’s permit application and facility emissions, the letter also contains several key takeaways pertaining to the meaning and effect of the CLCPA more broadly. These takeaways primarily apply to Section 7(2) of the CLCPA, which provides that all state agencies must consider whether permit decisions and other administrative approvals are inconsistent with or will interfere with statewide GHG emissions limits and, where such decisions are deemed inconsistent, provide a detailed statement of justification for the approval and require alternatives or emissions mitigation measures for the project. The main takeaways from the denial are as follows.

  • First, DEC made clear in the denial letter that Section 7(2) applies to permit renewal applications as well as applications for new permits. This is important, as the state’s GHG emission reduction targets will require mitigating emissions from existing sources.
  • Second, DEC rejected Greenidge’s argument that Section 7(2) does not apply to permit renewal applications prior to DEC’s promulgation of CLCPA-implementing regulations, which is important in ensuring that the CLCPA has a meaningful impact on agency action prior to the promulgation of such regulations.
  • Third, DEC rejected several arguments related to a single source’s potential inconsistency with the CLCPA’s emissions limits. Greenidge had argued that its facility could not be inconsistent with those limits, as its emissions only represent a small portion of the state’s overall emissions. Greenidge had also focused on the fact that it currently emits less than it did when it burned coal in the 1990’s. Finally, Greenidge had argued that, since DEC renews its permit in five-year intervals, this current permit renewal could not conflict with emissions limits that the CLCPA has set for 2030. Any of these arguments, if successful, would risk severely limiting the strength of the CLCPA as a tool for mitigating emissions from individual sources.
  • Fourth, DEC stated that, at least in this instance, the CLCPA is a material change in applicable law that DEC was required to consider when reviewing the permit renewal application. As outlined in the Sabin Center’s March 2022 white paper, the existence of a material change in application law grants DEC authority to treat a renewal application as an application for a new permit and grants all agencies authority to require a new environmental review of a project under the State Environmental Quality Review Act. This section of the decision letter may prove relevant to other permit renewal applications when the reviewing agency issued or most recently renewed a permit before the CLCPA’s enactment.
  • Finally, DEC indicated that it will stringently review proposed emissions mitigation measures before approving a permit that is otherwise inconsistent with the state’s GHG emissions reduction targets. As DEC stated in the denial letter, “[w]hile Greenidge did propose limited GHG mitigation measures in a supplemental submission to DEC after the close of the public comment period, these measures are also insufficient,” since “they would only provide minimal GHG mitigation and not fully account for the substantial increase in GHG emissions due to the Facility’s change in its primary purpose of operation.”

Greenidge has stated that it will appeal DEC’s decision and will “continue running uninterrupted under [its] existing Title V Air Permit” in the meantime.

Separate from this specific permit application, the New York Legislature recently passed a bill that would put in place a moratorium on the approval of new or renewed permit applications for facilities fossil fuel power plants that supply behind-the-meter energy to proof-of-work mining operations. While the moratorium would apply to all new permit applications, it would only apply to renewal applications when the application seeks to increase or will allow or result in an increase in the amount of energy that a cryptocurrency mining operation consumes or utilizes. That bill is currently awaiting Governor Hochul’s signature.

You can read more about the Greenidge Generation Station’s permit renewal application and New York State’s authority to establish a moratorium on the permitting of such facilities in the Sabin Center’s March 2022 white paper, A Pause on Proof-of-Work: The New York: The New York State Executive Branch’s Authority to Enact a Moratorium on the Permitting of Consolidated Proof-of-Work Cryptocurrency Mining Facilities.

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