February 15, 2003

Iron and Steel Foundries NESHAP Docket

EPA Docket Center (Air Docket)

U.S. EPA West,

Room B-108,

1200 Pennsylvania Avenue NW

Washington, DC 20460

 

Attention Docket OAR-2002-0034

From: Fred S. Cannon, Associate Professor,

Environmental Engineering,

The Pennsylvania State University

212 Sackett Engineering Bldg.

University Park, PA 16802

Re: Economically Elastic Incentives for Reducing Air Pollution from the
Foundry Industry: The Environmental Laggards pay the Environmental
Leaders

Dear Honorable EPA Leaders:

May we recommend the following economically elastic incentives for
diminishing air emissions from the foundry industry. This incentive is
based on the concept that the environmental laggards pay the
environmental leaders.

Many current environmental regulations are written in an inelastic
manner: usually, there is one specific level that is established as an
emissions standard. Either an industry meets the specific level and
therefore complies, or it exceeds the regulation and pays fines. This
regulatory climate offers no gradation or elasticity; and it is contrary
to the elastic forces that govern the making or selling of products.

In contrast to this current regulatory climate, the plan that we propose
herein is an elastic one, and it includes incentives for industries to
diminish pollution. This letter particularly addresses air pollution
from the foundry industry, since that is the industry that we are most
familiar with. More specifically, this letter addresses volatile organic
compounds (VOCs) that are emitted during the pouring, cooling, and
shakeout of iron in green sand foundries. These operations generally
represent the greatest emissions source in a green sand foundry. Much
heated discussion has recently addressed what should be the Maximum
Available Control Technology (MACT) standard for this source of air
pollution, and the current recommendation of 20 ppmv is under
considerable debate. What we recommend is that we need not have
consensus, nor arrive at a single MACT standard, if we adopt the plan
herein.

This letter addresses the emissions from foundries; but in a broader
manner, the principles herein could apply to many industries, and
numerous sources of pollutants. In general terms, the air pollution
reduction protocol could be as follows:

1\. A panel of regulators, foundries, and other interested parties
select a "mid-point" air pollution target.

2\. If a foundry on average releases more unit air pollution than this,
it must pay to a Foundry Emissions Pool, based on a graduating scale.

3\. If a foundry on average releases less unit air pollution than this,
then it receives compensation from the same Foundry Pollution Pool,
based on a graduating scale.

4\. The mid-point air pollution target is initially selected such that
the Foundry Emissions Pool will receive slightly more funds than it
distributes.

5\. The mid-point air pollution target progresses downward with each
successive year or decade, in response to the balance of receipts and
disbursements from this Pool. With properly applied incentives, market
forces will inherently drive this midpoint target downward.

6\. The Foundry Emissions Pool should be distinct from other money
sources, so as to nurture environmental competition amongst foundries
who make common products that compete in a common arena.

7\. The United States encourages (or requires) other countries that want
to be trading partners to adopt a similar air pollution protocol, so as
to achieve a level playing field, from an international environmental
perspective.

For example, an initial "straw man" mid-point air pollution target from
the pouring, cooling and shakeout of iron in green sand foundries might
be 0.9-1.3 pounds of volatile organic compounds (VOC's) per ton of iron
poured, as determined by EPA Method 18. This unit VOC level is about
half to two-thirds of the VOC emissions that a high-performance foundry
would emit if they operate with a moderate core loading while having no
VOC emissions reduction strategy in place (per our recent studies).
These are VOC's as hexane, over the C6 to C16 span as determined by gas
chromatography (although other protocols for analyzing and defining VOCs
could be used). Per Method 18, the emissions are captured via slip
stream from the foundry's exhaust ducts onto activated carbon and/or
XAD-2 resin traps, and then extracted and analyzed on gas
chromatography-FID. (A different, and perhaps 3 times higher midpoint
would be employed when foundries employ EPA Method 25, since this method
monitors a broader range of pollutants).

It is noted that we recommend that emissions standards should be
normalized to emissions per ton of metal poured; and it is not useful to
normalize emissions as parts per million parts (volumetric) of exhaust
air flow. Under this latter scenario, the solution to pollution can be
dilution; and this does not necessarily help the environment.

The average VOC emissions from a given foundry could be discerned by
conducting certified stack tests while the foundry is operating at its
average core loading and average production rate. This is more favorable
than continuous emissions monitoring, which would be unnecessarily
costly and unwieldy to foundries. Emissions would be monitored from the
ducts that exhaust air from the pouring, cooling, and shakeout areas.

If a foundry releases more emissions than the targeted 0.9-1.3 lb VOC
per ton of iron poured, then they would pay to the Foundry Emissions
Pool, in accordance with a graduating scale that is linked to the tons
of iron the foundry pours. As a straw man, initially: the foundry pays
one money unit/ton of iron if the foundry releases an average 1.5 lb
VOC/ton iron. Moreover, the foundry would pay 3 money units/ton if it
releases 1.7 lb VOC/ton; 6 units/ton for 1.9 lb VOC/ton; etc.

If a foundry releases less VOC emissions than the midpoint target, then
they would be compensated from the Foundry Emissions Pool in accordance
with a graduating scale. As a straw man, initially: the foundry is
compensated one money unit per ton of iron poured if it releases only an
average 0.7 lb VOC/ton iron. Moreover, it would receive 3 units/ton if
it only released 0.5 lb VOC/ton; 6 units/ton if at 0.3 lb VOC/ton; 9
units/ton if at 0.1 lb VOC/ton; etc.

The actual dollar value that is assigned to these money units, as well
as the slope of the graduating scale, could be decided based on
economics, politics, and environmental expedience. These values could be
decided by a panel of folks who hail from the federal EPA, legislative
branch, state health departments, and foundry industry. Alternatively,
it could be decided by an act of Congress. As a straw man, 10 units/ ton
could initially be linked to the amortized capital cost plus operations
and maintenance cost that would be accrued for the most efficient (but
expensive) means of diminishing VOC air pollutants from this source.

Likewise, a panel that includes both federal EPA, state Health, and
foundry industry personnel could facilitate the stack-testing protocol,
emissions appraisal, and fund collection/ disbursement. The foundry
industry panelists could be elected by the various foundries.

As this emissions protocol is becoming established in the United States,
the US should in turn aggressively seek the establishment of similar
protocols in other countries, so that the whole world could experience a
more level playing field from an environmental perspective.

It is noted that conceptually, this same concept could be used for an
emissions standards that are based on parts of emissions per million
parts of air (volumetric), as is currently proposed by the EPA. However,
pragmatically, an emissions standard based on volumetric flow is not a
useful way to compare one foundry to another, because air dilution can
confound the comparison.

# Rationale for Establishing an Elastic Emissions Reduction Protocol

There are numerous rationale for establishing an elastic standard for
air emissions in this manner: (1) It provides an economic incentive for
creatively diminishing emissions, whereas a MACT-type approach can
nullify incentive. (2) It allows a foundry to place emissions-reduction
decisions into the same arena of economic decision-making that the
foundry employs for all of its other decisions. (3) It facilitates
survival of the American foundry industry while global competition rages
on. (4) It diffuses the mentality of "us foundry folks" versus "those
EPA folks" (and vice versa).

**Elastic Standards for Economic Incentive:** Numerous technologies and
schemes have been proposed for diminishing emissions from the foundry
industry. Some of these approaches diminish emissions somewhat while
costing little (or while indeed saving money), while other approaches
diminish emissions greatly while costing an excessive amount. Under the
current Maximum Available Control Technology (MACT) approach, when a
certain fraction of the industry employs a particular technology that
achieves the highest emissions reduction, all other foundries must adopt
that technology or comparable ones so as to achieve the equivalent level
of emissions reduction. In cases where such a particular technology is
very expensive, the current MACT climate causes all other foundries to
discourage their counterparts from employing such a technology; because
if a few do, all must. Thus, highly effective-but-expensive technologies
do not get employed. Moreover, somewhat effective-but-cheap technologies
also do not get employed, because if that magic number of foundries
adopts the effective-but-expensive technology, all other technologies
would become obsolete. The net effect is that foundries have great
incentive to do nothing. Indeed, a foundry could become black-balled as
one that ruins the game for everyone else if they implement any
substantial pollution control. This is negative competition.

Alternatively, with an elastic emissions standard, foundries will have
great incentive to try a whole host of emissions-reducing technologies:
from within-process pollution prevention, to materials substitutions, to
end-of pipe solutions. This is positive competition. It is likely that
all of these technologies will become more effective with time,
practice, and perfection. This will be particularly true when they are
pitted against one another in a climate of elastic emissions standards.

**Emissions Reduction tied to Elastic Economics:** It is appropriate to
bring emissions reduction into the economic arena, because foundries and
other industries make most of their decisions on the basis of economic
trade-offs. Emphasis is placed on creating elastic standards, because
inelastic conditions do not manifest themselves very often in the
foundry setting: rarely does the situation arise where there is a
concretely limited supply of one product, and all have great need to buy
that one product.

**Emissions Standards in the Midst of a Global Economy**: There are two
factors that can give overseas companies an "unfair advantage" over
American companies when competing to manufacture and market the same
product: (1) Lax environmental regulations or enforcement overseas, and
(2) Their low pay to workers overseas. The latter is not directly
addressed herein. The obvious ultimate way to eliminate all pollution is
to not manufacture anything. But then we cease to be viable. "Where no
oxen are, the manger is clean, but much increase comes by the strength
of an ox." Pr.14:4. America cannot exist as a leading nation if we
become one huge shopping mall that imports everything from overseas.

The words "unfair advantage" have been placed in quotes above, because
in reality, it is America's careful environmental protection and
accommodating pay that continually attracts the world's most creative
people to America. This attraction of creative people is our greatest
economic strength. To continue capitalizing on this, we need to
progressively increase environmental protection while also nurturing
free-market growth of our economy. The one must be an integral part of
the other; and the proposed plan herein aims to accomplish that.

As in perhaps all industries, there are indeed end-of-pipe technologies
available to green sand foundries that could eliminate most of the
emissions that are released during pouring, cooling, and shakeout. If
one throws enough money at any given emission, one can almost always
eliminate it. However, at least some of these end-of-pipe technologies
are so excessively expensive, that if they became required by law in
cold-turkey fashion, they would place the American foundries at a
tremendous cost disadvantage against those foundries outside the United
States; and nearly all our foundries would emigrate overseas. This would
decimate a very important US industry---one that is vital to our
national security, and one that directly employs hundreds of thousands
of Americans.

What we want to do is encourage positive competition amongst American
foundries in a manner that capitalizes on free-market forces so as to
improve overall world-wide environmental health. This gradual evolution
is preferred over two alternative extremes: namely (a) imposing such
strict inelastic standards that no foundry can survive against overseas
competition, or (b) relinquishing any meaningful environmental
protection in America.

**Teamwork between the Foundry Industry and the EPA to reach Common
Goals:** When we together embark on this incentive-based protocol, at
least half the foundry industry will whole-heartedly embark on teaming
with the EPA and State Health departments to devise creative means of
diminishing emissions. This is because it is in the direct economic best
interest of the environmentally-leading foundries to do so. Moreover,
the lagging half of the foundry industry will be drawn by free-market
forces to join the thrust towards diminished emissions. Otherwise, the
laggards loose twice: (1) they must pay funds to the Foundry Emissions
Pool, and (2) their competitor draws these same funds out of the Pool,
and this causes the environmentally-friendly company's product to cost
less.

This will eliminate the mentality of "us foundry folks" versus "those
governmental folks" (and vice versa). In the thrust to diminish
pollution while also maintaining a healthy foundry industry via the plan
herein, elected foundry personnel will be motivated to bring much to the
table. This will be valuable, since these individuals are intimately
familiar with how foundries work, and what could be gained or lost by
implementing specific changes. Likewise, the EPA and environmental
specialists can bring much to the table because these individuals
understand what impacts cleaner air can offer our country.

Moreover, the EPA and State Health departments can assume more of a
"social worker" or "priest" role, rather than solely that of a
"policeman" role. Indeed, the environmentally progressive foundries will
be economically motivated to police their own kin, so as to render
effective the Foundry Emissions Pool program.

Parenthetically, this elastic gradation plan will also relieve the
government from having to play "Father Knows Best" in choosing a
specific emissions standard that is somehow magically better than a
higher number or lower number. It rather emphasizes the general notion
that continually lowering emissions is better than not lowering them;
and it gives companies self-imposed motivation for moving toward lower
emissions.

Perhaps the following riddle sheds relevance to this issue. "It seems
there was a great sheik who had an attractive eligible daughter. The
sheik recognized two suitors who sought his daughter's hand in marriage.
Since the sheik was in no hurry to relinquish his daughter, he devised a
riding contest: Whichever suitor's camel arrived last at the great gates
of Medina would receive his daughter's hand. So each of the two suitors
mounted his own camel and lethargically ambled in the general direction
of Medina, while frequently stopping at every distraction. After
numerous exasperating months of no apparent progress towards Medina, a
wise old man whispered something in the two suitor's ears. After hearing
this, the two suitors jumped on the camels, and raced them quickly to
Medina. What did the wise old man whisper?"

"Trade camels."

We hope that the above plan offers a framework within which foundries
can trade roles with regulators. The foundries will inherently
capitalize on this free-market-based climate to race toward an
environmentally friendly world, while maintaining a healthy American
foundry industry.

Sincerely,

Fred S. Cannon

Associate Professor, Environmental Engineering

The Pennsylvania State University