SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost and Cost Effectiveness Analysis October 8, 2009 

APPENDIX C 

COMPLIANCE COSTS AND COST EFFECTIVENESS ANALYSIS FOR 

REVISED PROPOSED AMENDMENTS TO RULE 4692 

October 8, 2009 

 C-1 Final Staff Report with Appendices 

For Revised Proposed Amendments to Rule 4692
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost and Cost Effectiveness Analysis October 8, 2009 

APPENDIX C 

COMPLIANCE COSTS AND COST EFFECTIVENESS ANALYSIS 

I. INTRODUCTION 

The California Health and Safety Code 40920.6(a) requires the San Joaquin Valley 

Unified Air Pollution Control District (District) to conduct both an "absolute" cost 

effectiveness analysis and an “incremental” cost effectiveness analysis of available 

emission control options prior to adopting each Best Available Retrofit Control 

Technology (BARCT) rule. The purpose of conducting a cost effectiveness analysis is 

to compare the cost of emission reductions across source categories. The analysis also 

serves as a guideline in developing the control requirements of a rule. Absolute cost 

effectiveness of a control option is the added annual cost, in dollars per year ($/year), of 

a control technology or technique, divided by the emission reduction achieved, in tons 

reduced per year. The costs include capital equipment costs, engineering design costs, 

labor and maintenance costs. 

Incremental cost effectiveness (ICE) is intended to measure the change in costs (in 

$/year) and emissions reductions (in tons reduced/year) between two progressively 

more effective control options or technologies. ICE compares the differences in costs 

and the differences in emissions reductions of candidate control options. ICE does not 

reveal the emission reduction potential of the control options. Unlike the absolute cost 

effectiveness analysis that identifies the control option with the greatest emission 

reduction, ICE does not present any correlation between emissions reductions and cost 

effectiveness. Therefore, the relative values produced in the ICE analysis are not 

comparable and cannot be evaluated in the same way as absolute cost effectiveness 

numbers. 

II. SUMMARY 

Determining the cost effectiveness of a control technology involves two elements: the 

cost to install and operate an emission control system and the emission reductions 

associated with the control device. The reduction in directly emitted PM2.5 emissions 

has been estimated by District staff in Appendix B of this staff report, along with a 

discussion of the emission reduction calculations and underlying assumptions. Costs 

for the installation and operation of the control device are detailed later in this appendix. 

District staff estimates that the compliance costs are about $1,990 per year and the 

absolute cost effectiveness is about $19,800 per ton PM2.5 reduced. 

 C-2 Final Staff Report with Appendices 

For Revised Proposed Amendments to Rule 4692
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost and Cost Effectiveness Analysis October 8, 2009 

III. ESTIMATED COMPLIANCE COSTS 

When an operator considers equipment, there are two parts to the costs – 

equipment/installation costs and operating/maintenance costs. Equipment and 

installation costs are one-time costs. Operating and maintenance costs are on-going. 

For the compliance cost analysis, District staff combines the capital costs and on-going 

costs into a single number so that options with differing capital and operating costs can 

be compared. Capital costs were converted to annualized costs using a five year 

equipment life and ten percent (10%) interest and assuming that the equipment would 

have no salvage value at the end of its useful life. The annualized capital cost was 

added to the estimated annual operating and maintenance (O&M) costs. 

Operators of chain-driven charbroilers have a very straightforward way to comply with 

the rule requirements – the addition of a catalyst unit. Reconfiguration of the unit would 

most likely be minimal since units are sold with the catalyst chamber built into the unit. 

See Figure 1 for an example. Operators buy the catalyst insert, if required, or leave the 

chamber empty if the catalyst is not required. According to the Bay Area AQMD staff 

report, the catalyst costs about $4,700 and lasts for five years. Using a factor of 0.2638, 

the annualized capital cost of the catalyst is about $1,240 per year. 

For this type of control device, maintenance consists of cooling the catalyst to room 

temperature, then soaking it in water for about one hour per month. Using a labor-andoverhead cost of $60 per hour and $2.50 per month for cleaning products means a total 

annual O&M cost of $750 per year. 

For the total annual cost of the control technology, the annual operating costs are added 

to the annualized capital cost. For catalytic oxidizer, the total annual cost of compliance 

is $1,240 (annualized capital cost) plus $750 (annual operating cost) to yield a total 

annual cost of about $1,990 per year. While the rule allows operators to choose a 

control option that is not a catalyst, District staff does not believe that alternative control 

systems would be as inexpensive as a catalytic oxidizer. 

 C-3 Final Staff Report with Appendices 

For Revised Proposed Amendments to Rule 4692
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost and Cost Effectiveness Analysis October 8, 2009 

Figure 1 – Example of Catalyst Installation 

Source: BASF Charcat 900 

Catalyst chamber integral to 

chain-driven charbroiler 

Catalyst 

IV. ABSOLUTE AND INCREMENTAL COST EFFECTIVENESS ANALYSIS 

A. Absolute Cost Effectiveness Analysis 

Absolute cost effectiveness is the expected annual cost of compliance divided by the 

estimated emission reduction in tons per year. District staff divided the annualized 

compliance costs from Section IV above by the estimated annual emission reductions 

per-charbroiler as determined in Appendix B of this staff report to estimate the cost 

effectiveness of the control technology. The results of that calculation are shown in 

Table 1 above. 

B. Incremental Cost Effectiveness Analysis 

As noted above, the District staff calculates the incremental cost effectiveness as the 

difference in the dollar costs divided by the difference in the emission reduction 

potentials between each progressively more stringent control option as compared to the 

next less expensive control option. District staff believes that the provisions of Revised 

Proposed Rule 4692 meet Best Available Retrofit Control Technology as well as All 

Feasible Control Measures for chain-driven charbroilers, and therefore there is no more 

 C-4 Final Staff Report with Appendices 

For Revised Proposed Amendments to Rule 4692
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost and Cost Effectiveness Analysis October 8, 2009 

stringent option than the proposed provisions. For this reason, an incremental cost 

effectiveness analysis would serve no useful purpose because there is no more 

stringent option available. 

Staff also assessed the cost effectiveness of particulate matter controls under-fired 

charbroilers as part of this project. For this analysis, staff considered the compliance 

costs and the associated emission reductions on a per-restaurant basis. Capital costs 

were converted to annualized costs by assuming a 10-year equipment life, a 10% rate 

of return, and that the equipment has no salvage value at the end of its useful life. 

Table 1 summarizes the compliance cost calculations and Table 2 summarizes the 

incremental cost effectiveness. Based on this analysis, the incremental cost 

effectiveness for under-fired charbroilers has a range of about $22,300 per additional 

ton to $58,200 per additional ton of PM2.5 removed. 

Table 1 – Under-fired Charbroiler Incremental Cost 

 

One-time 

Cost ($) 

Ongoing Cost 

($/yr) 

Total Annual Cost 

(ongoing plus annualized 

one-time) ($/yr) 

Electrostatic Precipitator (Vendor 1) 

Equipment $30,000 

Installation ** $27,000 

Operation & Maintenance $5,364.42 

TOTAL ANNUAL COST ($/YR) $14,638.32

HEPA system (Vendor 2) 

Equipment $54,611 

Installation ** (new includes ductwork) $49,150 

Operation & Maintenance $9,497.23 

TOTAL ANNUAL COST ($/YR) $26,379.18

HEPA system (Vendor 3) 

Equipment $38,900 

Installation (retrofit) $7,100 

Operation & Maintenance $8,664.00 

TOTAL ANNUAL COST ($/YR) $16,148.20

Wet scrubber (multi-stage) (Vendor 4) 

Equipment $32,350 

Installation (retrofit) $5,090 

Operation & Maintenance $4,017.00 

TOTAL ANNUAL COST ($/YR) $10,108.49

** Assume that installation costs are 90% of equipment costs 

 C-5 Final Staff Report with Appendices 

For Revised Proposed Amendments to Rule 4692
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost and Cost Effectiveness Analysis October 8, 2009 

Table 2 – Under-Fired Charbroiler Incremental Cost Effectiveness 

Control Technology 

Incremental 

Annualized 

Cost ($/yr) 

Add’l PM 2.5 emission 

reduction 

(add’l ton/yr/restaurant) 

Incremental Cost 

Effectiveness 

$/add’l ton 

reduced 

ESP Vendor 1 $14,638.32 $32,314.17

HEPA Vendor 2 $26,379.18 $58,232.19

HEPA Vendor 3 $16,148.20 $35,647.24

Wet Scrubber Vendor 4 $10,108.49

0.453 

$22,314.54

V. REFERENCES 

1. Bay Area Air Quality Management District – Staff Report for Regulation 6, Rule 2: 

Commercial Cooking Equipment, dated November 2007. 

2. BASF Catalyst Division - 

http://www.catalysts.basf.com/Main/stationary_emissions/stationary_sources/coo

king_catalysts/charcat_catalysts.be

 C-6 Final Staff Report with Appendices 

For Revised Proposed Amendments to Rule 4692