p.1 

OAR Box 1828 

Prepped by Ollie Stewart 

Document Number: 

163) ll-K-(B)-162 

Docket Number: 

A-83-27 

Printed 11/12/2008 11:12:54 AM Sheet 163 of 325 
P.2 

ENERGY AND ENVIRONMENTAL ANALYSIS, INC. 

1655 NORTH FORT MYER DRIVE ARLINGTON, VIRGINIA 22209 703/528-1900 A-83-27 

April 18, 1985 

II-K-(B)-162 

Mr. Robert Short 

Economic Analysis Branch 

U.S. Environmental Protection Agency 

MD-12 

Research Triangle Park, NC 27711 

Subject: EPA Contract No. 68-02-4202, Work Assignment #3 

Distribution of Large Industrial Boiler SO2 Emissions Control 

Cost-Effectiveness Ratios (Part 2) 

Dear Robert: 

On April 5, 1985 I forwarded to you a short report which was titled 

"Distribution of Large Industrial Boiler SO2 Emissions Control CostEffectiveness Ratios." This letter provides additional information on 

Figure 2 in the April 5th report. Figure 2 (attached) shows a 

significant number of large new industrial boilers in two categories, 

$200-400/short ton and $1,400-2,000/short ton (1982 $) . This letter 

presents additional distributions for these two categories. 

The attached table indicates that the Figure 2/$200-400 category 

includes 41 large new industrial boilers which switched fuel types 

between the 0.8/1.2 run and the 0.3/0.6 run and 74 large new industrial 

boilers which did not switch fuel types. The Figure 2/$l,400-2,000 

category has 97 units which did not switch fuel types. 

$20O-4O0/SWITCHED FUELS 

Out of the 41 records in this group, 37 boilers (all with capacity 

utilization rates of 25 percent and in Federal regions 3 and 5) switched 

from residual fuel oil to natural gas. They switched because the 

projected industrial natural gas prices are between the projected prices 

for 0.8 and 0.3 percent sulfur residual fuel oil (and, as a result, 0.3 

percent sulfur residual fuel oil is not the least-cost alternative) and 

the low capacity utilization rate does not promote scrubbing high sulfur 

residual fuel oil types as economical alternatives. The incremental SO2 

emissions control cost-effectiveness ratios are in the $200-400/short 

ton (1982 $) range because (1.) the fuel cost increase is small (the 

MANAGEMENT / ECONOMICS / ENGINEERING 
P.3 

Ltr. to Mr. Robert Short 

Page Two 

annualized industrial natural gas price is $0.24/MMBtu larger than the 

annualized industrial 0.8 percent sulfur residual fuel oil price, 

(2.) the natural gas boiler capital cost is slightly smaller than the 

estimate for residual fuel oil, (3.) the N0X emissions control annual 

O&M costs are slightly smaller for natural gas than for 0.8 percent 

sulfur residual fuel oil and (4.) the SO2 emission reduction is 99.9 

percent. 

The remaining four boilers switched from coal combustion under the 

0.8/1.2 run to natural gas under the 0.3/0.6 run. In general, switching 

from coal to natural gas results in low (and sometimes negative) 

incremental C-E ratios (see the BACKGROUND section of the April 5th 

report). 

$20O-4OO/N0 FUEL SWITCHING 

There were 74 large new industrial boilers with incremental C-E ratios 

in the $200-400/short ton category which did not switch fuel types. All 

of these boilers selected scrubbers in both the 0.8/1.2 and 0.3/0.6 runs 

(since most of these units have very high capacity utilization rates) 

and the annualized cost increase is due solely to a higher SOg emissions 

removal rate (with larger scrubber 0&M costs). The higher scrubber 0&M 

costs reduced SO2 emissions for $200-400/short ton. 

$1,400-2,OOO/NO FUEL SWITCHING 

There were 97 large new industrial residual fuel oil boilers with 

incremental C-E ratios in the $1,400-2,000/short ton category which did 

not switch fuel types. In 44 cases, they switched compliance strategies 

from burning 0.8 percent sulfur residual fuel oil to scrubbing a higher 

sulfur residual fuel oil type. In 22 other instances, they had residual 

fuel oil PM SIP's of 0.1 lb/MMBtu; these units selected 0.8 percent 

sulfur residual fuel oil in the 0.8/1.2 run and decided to scrub 0.8 

percent sulfur residual fuel oil rather than scrub a higher sulfur 

residual fuel oil type and install an ESP to control PM emissions in the 

0.3/0.6 run. The remaining 31 boilers switched from 0.8 to 0.3 percent 

sulfur residual fuel oil because they have low capacity utilization 

rates which makes scrubbing an uneconomical alternative. For these 31 

units, the annualized fuel cost increase is about $0.37/MMBtu (1982 $) 

and the SO2 emission reduction is about 0.5 lb/MMBtu; 0.37/0.5 = 

$0.74/pound or $l,480/short ton. 

Call me if you have any questions or if you would like more information. 

Sincerely, 

Tim Hogan (/ 

TH/ce 

Enclosures 

cc: Dr. A. Wehe 
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P.5 

DISTRIBUTION OF INCREMENTAL SO2 EMISSIONS CONTROL 

COST-EFFECTIVENESS RATIOS FOR LARGE NEW INDUSTRIAL BOILERS* 

(Number of boilers) 

SO2 emissions 

control C-E ratio Fuel Switching 

(1982 $/short ton) Yes No Total 

<0 

0- 200 

200- 400 

400- 600 

600- 800 

800-1000 

1000-1200 

1200-1400 

<0 

200- 400 

400- 600 

1000-1200 

1200-1400 

1400-2000 

>2000 

<0 

200- 400 

400- 600 

600- 800 

800-1000 

1000-1200 

1200-1400 

1400-2000 

>2000 

jure 

10 

37 

61 

0 

0 

0 

0 

0 

jure 

3 

41 

30 

0 

0 

0 

8 

-igu 

19 

41 

33 

2 

11 

20 

0 

0 

8 

1. 0.8/1.2 Run 

6 

5 

27 

20 

29 

37 

6 

13 

2. 0.3/0.6 Run 

2 

74 

0 

6 

40 

97 

18 

re 3. 90* Run 

0 

70 

0 

0 

6 

49 

43 

26 

3 

16 

42 

88 

20 

29 

37 

6 

13 

5 

115 

30 

6 

40 

97 

26 

19 

111 

33 

2 

17 

69 

43 

26 

11 

aData presented in bar charts in EEA's April 5th report,