p.1 

OAR Box 1828 

Prepped by Ollie Stewart 

Document Number: 

164) ll-K- (B)-163 

Docket Number: 

A-83-27 

Printed 11/12/2008 11:12:54 AM Sheet 164 of 325 
P.2 

ENERGY AND ENVIRONMENTAL ANALYSIS, INC. 

1655 NORTH FORT MYER DRIVE ARLINGTON, VIRGINIA 22209 703/528-1900 i 

, II-K-(B)-163 

April 29, 1986 | 

Mr. Robert Pahel-Short 

U.S. Environmental Protection Agency 

Economic Analysis Branch (MD-12) 

Research Triangle Park, North Carolina 27711 

Subject: EPA Contract No. 68-02-4202, Work Assignment No. 12 

IFCAM Projections by Capacity Utilization Rate 

Dear Robert: 

Enclosed are tables which summarize the environmental, cost and 

energy impacts of two alternative SO? NSPS for industrial fossil fuelfired boilers greater than 100 MMBtu/hr. These results are derived from 

IFCAM runs which were prepared in 1984 using the Reference fuel price 

(high oil penetration) scenario. These tables present national impacts 

for new industrial boilers by annual capacity utilization (CU) rate 

class. 

The regulatory baseline and the alternative control level results 

are based on: 

• The proposed PM NSPS for new coal boilers 

• Staged combustion air for high sulfur residual fuel oil and 

pulverized coal boilers 

t Low excess air for natural gas, distillate fuel oil, low and 

medium sulfur residual fuel oil and spreader stoker coal 

boilers. 

The regulatory baseline forecasts include the current SO2 NSPS. The 

alternative control level II projections include a low sulfur fuels 

standard (0.8 lb S02/MMBtu for residual fuel oil and 1.2 lb S02/MMBtu 

for coal). The alternative control level VI forecasts include a 90 

percent SO2 emissions removal requirement for residual fuel oil and coal. 

FUEL MIX 

Table 1 shows: 

• No demand for coal when the annual capacity utilization is 

less than 30 percent 

• Very little coal demand when the annual capacity utilization 

rate is greater than 30 percent 

MANAGEMENT / ECONOMICS / ENGINEERING 
P.3 

Ltr. to Mr. Short 

April 29, 1986 

Page Two 

Total fuel demand in new industrial boilers with annual 

capacity utilization rates less than 30 percent is a small 

fraction of total fuel use demand 

Residual fuel oil demand decreases and natural 

increases when low sulfur residual fuel oil or 

all residual fuel oil boilers is required. 

gas demand 

scrubbers on 

A few new industrial boilers (>250 MMBtu/hr, >30 percent CU), which 

selected low sulfur residual fuel oil under alternative control level II, 

chose coal with a scrubber under alternative control level II. They 

chose coal rather than scrub 0.8 percent sulfur residual fuel oil or 

scrub 3.0 percent sulfur residual fuel oil with an ESP or scrub 1.6 

percent sulfur residual fuel oil with an ESP. In these IFCAM runs it 

was assumed that scrubbers do not reduce PM emissions and that an ESP is 

necessary to meet the current PM NSPS for 3.0 and 1.6 percent sulfur 

residual fuel oil. 

EMISSIONS AND COSTS 

Table 2 presents results for total SO? emissions and annualized 

costs. Total annualized costs include boiler and pollution control 

equipment capital, O&M and fuel expenses and are based on a ten percent 

discount rate and a 15-year investment period. 

The S02 emissions reductions between the regulatory baseline and 

alternative control level VI are greater than 90 percent because one of 

the compliance strategies is to select natural gas, an option which 

reduces SO2 emissions by 99 percent if oil or coal is selected in the 

regulatory baseline. 

C-E: ALTERNATIVE CONTROL LEVEL II 

Table 3 summarizes national average S0o emissions reduction costeffectiveness (C-E) ratios for large new industrial fossil fuel-fired 

boilers. These ratios were derived from the estimates presented in 

Table 2. 

The national average C-E ratio for alternative control level II 

versus the regulatory baseline is $326/short ton; this is an average for 

251 new units between 100 and 250 MMBtu/hr which selected coal or oil in 

the regulatory baseline and have SIP emission limits that are higher 

than the low sulfur alternative control level II emission standards. 
P.4 

Ltr. to Mr. Short 

April 29, 1986 

Page Three 

There were 108 boilers which selected a different fuel type under 

alternative control level II in comparison with the regulatory baseline. 

These units have lower-than-average C-E ratios because: 

• Selecting natural gas results in a 99 percent SO2 emission 

reduction (and, therefore, the denominator in the C-E ratio is 

relatively large) 

t Natural gas has lower N0X emissions control costs (LEA) than 

high sulfur residual fuel oil (SCA) and, as a result, a 

reduction in NOx emissions control cost partially offsets the 

increase in fuel costs between high sulfur residual fuel oil 

and natural gas 

t Seven boilers, which chose coal under the regulatory baseline 

and natural gas under alternative control level II, have 

relatively small (or negative) total before-tax annualized 

cost impacts because they switched from a capital-intensive 

compliance strategy to a low sulfur compliance strategy 

• Two boilers, which selected residual fuel oil under both sets 

of NSPS assumptions, have negative total before-tax annualized 

cost impacts because they also changed compliance strategies 

from a capital-intensive option in the regulatory baseline 

(high sulfur residual fuel oil with a scrubber in one case and 

with an ESP in the other case in order to meet SIP requirements) to a low sulfur residual fuel oil option. 

Some boilers have lower before-tax total annualized costs under alternative control level II than under the regulatory baseline because IFCAM 

makes fuel choice decisions on an after-tax basis. 

Most boilers which selected residual fuel oil under both environmental regulations have higher-than-average C-E ratios. Ignoring 

differences in N0X emissions control costs, the increase in total 

annualized costs is simply the difference in oil prices. If a unit 

selected 3.0 percent sulfur residual fuel oil in the regulatory baseline, 

the average C-E ratio is the difference in fuel prices between 3.0 and 

0.8 percent sulfur residual fuel oil divided by the difference in 

emission rates: $0.68/MMBtu divided by 2.2 lb S02/MMBtu = $0.31/lb or 

$620/short ton. If a unit selected 1.6 percent sulfur residual fuel oil 

in the regulatory baseline (because of SIP's) the average C-E ratio is 

$0.38/MMBtu divided by 0.8 lb S02/MMBtu = $0.47/lb or $940/short ton 

(1982 dollars). 

Table 3 also shows that there is no difference in the national 

average C-E ratios for all units versus only units with capacity utilization rates greater than 30 percent. If alternative control level II 
P.5 

Ltr. to Mr. Short 

April 29, 1986 

Page Four 

included an exemption for units with less than 30 percent capacity 

utilization rate, the national average C-E ratio is $324/short ton, 

instead of $326/short ton. There is \/ery little difference because: 

• The units with capacity utilization rates less than 30 percent 

are a small fraction of total new units (see Tables 1 and 2) 

• There are fuel mix shifts in units with capacity utilization 

rates less than and greater than 30 percent (see Table 1). 

C-E: ALTERNATIVE CONTROL LEVEL VI 

Table 3 indicates that the national average C-E ratio for alternative control level VI versus II is $847/short ton; this is an average 

for 331 boilers which selected residual fuel oil or coal under alternative control level II. 

Nineteen units switched to natural gas with a reduction in total 

annualized costs (and, therefore, negative incremental C-E ratios): 

three from coal and 16 from residual fuel oil. All 16 residual fuel oil 

boilers selected ESP's in order to comply with PM SIP's. The incremental 

C-E ratios are negative because they moved from capital-intensive 

(ESP's) compliance options to a "clean" fuel, natural gas. 

Not all boilers that switch fuel types have lower-than-average or 

negative C-E ratios. For example, Table 3 shows that units >250 MMBtu/hr 

and >30 percent CU have higher-than-average C-E ratios for alternative 

control level VI versus II. This occurs because eight boilers select 

low sulfur residual fuel oil under alternative control level II and coal 

(with a scrubber and fabric filter) under alternative control level VI 

(as opposed to scrubbing high sulfur residual fuel oil with an ESP or 

scrubbing low sulfur residual fuel oil without an ESP). These eight 

units have incremental C-E ratios larger than $2,000/short ton. Switching to a capital-intensive alternative (coal) results in higher-thanaverage C-E ratios. 

Table 3 also shows that there is no difference in the national 

average C-E ratios for all units versus only units with capacity utilization rates greater than 30 percent. If alternative control level VI 

included an exemption for units with less than 30 percent capacity 

utilization rate, the national average C-E ratio is $843/short ton, 

instead of $847/short ton. There is very little difference because: 

t The units with capacity utilization rates less than 30 percent 

are a small fraction of total new units (see Tables 1 and 2) 

• There are fuel mix shifts in units with capacity utilization 

rates less than and greater than 30 percent (see Table 1). 
P.6 

Ltr. to Mr. Short 

April 29, 1986 

Page Five 

Table 3 indicates that units with annual capacity utilization rates 

less than 50 percent have a national average C-E ratio which is largerthan-average, $925/short ton versus $847/short ton. If there was a 

capacity utilization exemption at 50 percent, the national average C-E 

ratio would drop from $847/short ton to $776/short ton. 

MORE INFORMATION 

Tables 4-6 present additional details by capacity utilization rate. 

Tables 4-6 supplement Tables 1 and 2; Tables 1 and 2 show aggregate 

results for all units with capacity utilization rates greater than 30 

percent whereas Tables 4-6 list estimates for 45, 55, 65, and 75 percent. 

Additional information about these IFCAM projections is presented 

in Projected Impacts of Alternative Sulfur Dioxide New Source Performance 

Standards for Industrial Fossil Fuel-F1red Boilers, March 1985; Distribution of Large Industrial Boiler SO2 Emissions Control Cost-Effectiveness 

Ratios, April 5, 1985; letter from T. Hogan (EEA) to R. Short (EPA) 

dated April 18, 1985. 

Please call me if you have any questions. 

Sincerely, 

/ . 

Tim Hogan 

TH:sm 

Enclosures 

cc: Dr. A. Wehe 
P.7 

TABLE 1. NEW INDUSTRIAL FOSSIL FUEL-FIRED 

BOILER FUEL DEMAND IN 1990 

(IO12 Btu) 

Boiler size 

(MMBtu/hr) 

100-150 

100-150 

150-200 

150-200 

200-250 

200-250 

>250 

CU 

<30% 

>30% 

<30% 

>30% 

<30% 

>30% 

<30% 

Fuel type 

Natural gas 

Residual fuel oil 

Coal 

Total 

Natural gas 

Residual fuel oil 

Coal 

Total 

Natural gas 

Residual fuel oil 

Coal 

Total 

Natural gas 

Residual fuel oil 

Coal 

Total 

Natural gas 

Residual fuel oil 

Coal 

Total 

Natural gas 

Residual fuel oil 

Coal 

Total 

Natural gas 

Residual fuel oil 

Coal 

Total 

(Continued) 

Regulatory 

baseline 

10 

22 

0 

32 

16 

76 

4 

96 

0 

a 

0 

a 

24 

86 

1 

111 

0 

0 

0 

0 

15 

46 

6 

67 

16 

16 

0 

32 

Alternat 

contro 

level 

II 

14 

18 

0 

32 

42 

51 

3 

96 

0 

a 

0 

a 

50 

60 

1 

111 

0 

0 

0 

0 

33 

34 

0 

67 

16 

16 

0 

32 

ive 

1 

VI 

32 

0 

0 

32 

53 

43 

0 

96 

a 

0 

0 

a 

60 

51 

0 

111 

0 

0 

0 

0 

35 

32 

0 

67 

28 

4 

0 

32 
P.8 

TABLE 1. (Continued) 

Boiler size 

(MMBtu/hr) 

>250 

>100 

>100 

CU 

>30% 

<30% 

>30% 

Fuel type 

Natural gas 

Residual fuel oil 

Coal 

Total 

Natural gas 

Residual fuel oil 

Coal 

Total 

Natural gas 

Residual fuel oil 

Coal 

Total 

Regulatory 

baseline 

70 

77 

12 

159 

26 

38 

0 

64 

125 

285 

24 

434 

Alternat ive 

control 

leve" 

II 

70 

77 

12 

159 

30 

34 

0 

64 

194 

223 

17 

434 

VI 

85 

49 

25 

159 

61 

3 

0 

64 

233 

126 

25 

434 

aLess than 50 billion Btu. 
P.9 

TABLE 2. NEW INDUSTRIAL FOSSIL FUEL-FIRED BOILER 

S02 EMISSIONS IN 1990 AND TOTAL ANNUALIZED COSTS 

Boiler size 

(MMBtu/hr) 

100-150 

100-150 

150-200 

150-200 

200-250 

200-250 

CU 

<30% 

>30% 

<30% 

>30% 

<30% 

>30% 

SO? emissions 

(IO3 short tons) 

Total annualized costs 

(IO6 $1982) 

SO? emissions 

(IO3 short tons) 

Total annualized costs 

(IO6 $1982) 

SO? emissions 

(IO3 short tons) 

Total annualized costs 

(IO6 $1982) 

SO? emissions 

(IO3 short tons) 

Total annualized costs 

(IO6 $1982) 

SO? emissions 

(IO3 short tons) 

Total annualized costs 

(IO6 $1982) 

SO? emissions 

(IO3 short tons) 

Total annualized costs 

(IO6 $1982) 

(Continued) 

Regulatory 

baseline 

22.0 

255.7 

82.7 

645.2 

0.3 

2.9 

81.3 

725.6 

0 

0 

52.1 

445.3 

Alternative 

control level 

II VI 

7.2 

260.8 

20.7 

665.4 

0.2 

3.0 

23.7 

746.3 

0 

0 

13.7 

455.6 

a 

266.8 

3.6 

677.9 

a 

3.1 

4.1 

759.9 

0 

0 

2.7 

460.8 
P.10 

TABLE 2. (Continued) 

Boiler size 

(MMBtu/hr) 

>250 

>250 

>100 

>100 

CU 

<30% 

>30% 

<30% 

>30% 

SO? emissions 

(IO3 short tons) 

Total annualized costs 

(IO6 $1982) 

SO? emissions 

(IO3 short tons) 

Total annualized costs 

(IO6 $1982) 

SO? emissions 

(IO3 short tons) 

Total annualized costs 

(IO6 $1982) 

SO? emissions 

(IO3 short tons) 

Total annualized costs 

(IO6 $1982) 

Regulatory 

baseline 

5.9 

243.0 

34.9 

1,031.6 

28.3 

501.6 

251.0 

2,847.6 

Alternative 

control level 

II VI 

5.9 

243.0 

34.5 

1,031.7 

13.3 

506.9 

92.5 

2,898.9 

0.2 

248.6 

5.8 

1,064.6 

0.2 

518.4 

16.1 

2,963.3 

aLess than 50 short tons. 
TABLE 3. COMPARISON OF NATIONAL AVERAGE S02 

EMISSIONS REDUCTION COST-EFFECTIVENESS RATIOS 

(1982 $/short ton) 

p.11 

Boiler size (MMBtu/hr) 

100-150 150-200 200-250 >250 >100 

Alternative control level II 

versus regulatory baseline 

<30% CU 

>30% CU 

Total 

345 

326 

329 

789 

359 

360 

N/Aa 

268 

268 

N/Ab 

N/Ab 

N/Ab 

353 

324 

326c 

Alternative control level VI 

versus II 

<30% 

>30% 

CU 

CU 

Total 

<50% 

>50% 

CU 

CU 

833 

731 

761 

993 

470 

503 

694 

692 

970 

347 

N/Aa 982 878 

473 l,146d 843 

473 l,119d 847e 

545 980 925 

398 l,194d 776 

aThere are no boilers in this group. 

^Essentially no difference in regulations. 

c0n an individual boiler basis, the range is -$466 to $l,369/short ton., 

^Relatively high because a few boilers chose coal with scrubbers in 

alternative control level VI and those same units chose low sulfur 

residual fuel oil in alternative control level II. This type of change 

in compliance strategies can lead to relatively high incremental costeffectiveness ratios because a coal boiler with a scrubber is more 

capital-intensive than a residual fuel oil boiler without a scrubber. 

e0n an individual boiler basis, the range is -$1,367 to $3,118/short ton. 
P.12 

TABLE 4. REGULATORY BASELINE 

S02 EMISSIONS (SHORT TONS) 

25% CU 

45% CU 

55% CU 

65% CU 

75% CU 

TOTAL 

100-150 

22048. 

34817. 

0. 

18804. 

29095. 

104763. 

BOILER 

150-200 

328. 

42180. 

0. 

0. 

39104. 

81612. 

SIZE (MMBTU/HR) 

200-250 

0. 

16557. 

7166. 

0. 

28343. 

52066. 

>250 

5920. 

7172. 

2190. 

8276. 

17294. 

40652. 

>100 

28295. 

100725. 

9356. 

27060. 

113837. 

279293. 

TOTAL ANNUALIZED COSTS (000 »1982) 

25* CU 

45% cu 

55% CU 

65% CU 

75% CU 

TOTAL 

255652. 

274613. 

0. 

126071. 

244543. 

900878. 

2879. 

432486. 

0. 

0. 

293099. 

728465. 

0. 

210067. 

71458. 

0. 

163760. 

445305. 

243042. 

261569. 

52254. 

241043. 

476681. 

1274588. 

501573. 

1178735. 

123712. 

367114. 

1176102. 

3349234. 

FUEL MIX (10**9 BTU) 

25% 

45% 

55% 

65% 

75% 

CU 

6AS 

RESID 

COAL 

CU 

6AS 

RESIO 

COAL 

CU 

6AS 

RESID 

COAL 

CU 

SAS 

RESID 

COAL 

IEIID 

COAL 

9855. 

22174. 

0. 

7884. 

32522. 

0. 

0. 

0. 

0. 

1424. 

13523. 

4271. 

sSIB: 

0. 

0. 

383. 

0. 

15667. 

48979. 

0. 

0. 

0. 

0. 

0. 

0. 

0. 

1150. 

0. 

0. 

0. 

6209. 

24835. 

0. 

3252. 

6504. 

1084. 

0. 

0. 

0. 

4435. 

16370. 

15659. 

0. 

21780. 

17936. 

0. 

1566. 

6263. 

0. 

14804. 

20356. 

1651. 

11811: 

10676. 

26225 

36216 

0 

51739 

124272 

0 

4616 

12768 

1084 

16226 

33879 

6121 

Am 

16261 
P.13 

TABLE 5. ALTERNATIVE CONTROL LEVEL II 

S02 EMISSIONS (SHORT TONS) 

25% CU 

45% CU 

55% CU 

65% CU 

75% CU 

TOTAL 

100-150 

7222. 

7866. 

0. 

5670. 

7120. 

27878. 

BOILER 

150-200 

153. 

13291. 

0. 

0. 

10452. 

23896. 

SIZE (MMBTU/HR) 

200-250 

0. 

6626. 

1603. 

0. 

5462. 

13691. 

>250 

5920. 

7172. 

2190. 

8276. 

16826. 

40384. 

>100 

13295. 

34955. 

3792. 

13946. 

39860. 

105848. 

TOTAL ANNUALIZED COSTS (000 «1982) 

25% CU 

45% CU 

55% CU 

65% CU 

75% CU 

TOTAL 

260649. 

283612. 

0. 

128804. 

252926. 

926190. 

3017. 

442777. 

0. 

0. 

303501. 

749295. 

0. 

215239. 

72025. 

0. 

168382. 

455646. 

243042. 

261569. 

52254. 

241043. 

476794. 

1274701. 

506909 

1203197 

124279 

369847 

1201601 

3405630 

FUEL MIX (10M9 BTU) 

25% 

45% 

55% 

CU 

GAS 

RESID 

COAL 

CU 

6AS 

RESID 

COAL 

CU 

6AS 

RESID 

COAL 

65% CU 

75% 

SAS 

RESID 

COAL 

CU 

SAS 

RESIO 

COAL 

13961. 

18066. 

0. 

19710. 

20696. 

0. 

0. 

0. 

0. 

4271. 

12100. 

2647. 

18068. 

16889. 

0. 

0. 

383. 

0. 

28974. 

35872. 

0. 

0. 

0. 

0. 

0. 

0. 

0. 

20696. 

24145. 

1150. 

0. 

0. 

0. 

14191. 

16852. 

0. 

6504. 

4336. 

0. 

0. 

0. 

0. 

11626. 

13304. 

0. 

16370. 

15659. 

0. 

21780. 

17936. 

0. 

1566. 

6263. 

0. 

14804. 

20356. 

1851. 

32029. 

32029. 

10676. 

30332 

34109 

0 

84654 

91356 

0 

6070. 

10600, 

0. 

19075, 

32456. 

4698. 

62618. 

68367, 

11826. 
•V 

TABLE 6. ALTERNATIVE CONTROL LEVEL VI 

P.14 

100-150 

BOILER SIZE (MMBTU/HR) 

150-200 200-250 >250 >100 

S02 EMISSIONS (SHORT TONS) 

25% CU 

45% CU 

55% CU 

65% CU 

75% CU 

TOTAL 

ZED COSTS 

25% CU 

45% CU 

55% CU 

65% CU 

75% CU 

TOTAL 

10. 

1563. 

0. 

783. 

1266. 

3621. 

(000 *1982) 

266764. 

291098. 

0. 

132117. 

254657. 

944656. 

0. 

2497. 

0. 

0. 

1613. 

4110. 

3094. 

453320. 

0. 

0. 

306568. 

762982. 

0. 

1138. 

405. 

0. 

1141. 

2683. 

0. 

218229. 

73196. 

0. 

169406. 

460830. 

151. 

416. 

127. 

816. 

4389. 

5903. 

248554. 

268333. 

53689. 

247812. 

494814. 

1313201. 

160 

5616 

531 

1601 

8409 

16317 

518433 

1230979 

126865 

379929 

1225445 

3461669 

FUEL MIX (10»*9 BTU) 

25% CU 

6AS 

RESID 

COAL 

45% 

55% 

CU 

GAS 

RESID 

COAL 

CU 

GAS 

RESIO 

COAL 

65% CU 

6AS 

RESIO 

COAL 

75% 

COAL 

32029. 

0. 

0. 

21681. 

18725. 

0. 

9965. 

9253. 

0. 

Iffil: 

363. 

0. 

0. 

35872. 

28974. 

0. 

0. 

0. 

0. 

2*1*5-

21845. 

16852. 

14191. 

0. 

6504. 

4336. 

0. 

Mttt: 

28470. 

3559. 

0. 

29466. 

10249. 

0. 

4698. 

3132. 

0. 

16655. 

20356. 

0. 

25623. 

60882 

3559 

0 

103872 

72139 

0 

11202 

7468 

0 

26619 

29609 

0 

tm 

25623