UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REGION 5

MEMORANDUM AIR AND RADIATION DIVISION 77 WEST JACKSON BOULEVARD CHICAGO, IL 60604-3590

REPLY TO THE ATTENTION OF:

SUBJECT: Review ofCost Effectiveness ofSelective Noncatalytic Reduction (SNCR) at St. Marys Cement's (SMC) Facility in Charlevoix (SMC-Charlevoix)

FROM: John Summerhays

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. Attainment

## Planning~dMaintenance

## Sec~ TO: Files

THRU: Douglas Aburano, Chief

# ~ Attainment Planning and Maintenance Section

In a notice published August 6, 2012, at 77 FR46912, the United States Environmental Protection Agency (EPA) proposed a limit on nitrogen oxides (NOx) emissions from SMCCharlevoixthat EPA anticipated would be metwith the use ofSNCR. EPA received extensive comments onthis proposal from SMC. Most ofthese comments, including comments on assorted elements ofthe evaluation ofthe cost effectiveness ofthis emission control system, are to be addressed in the notice offinal rulemaking. However, this technical support document is intendedto provide additional detail on the evaluation ofcost effectiveness ofseveral options for using SNCRto achieve the limits EPA is finalizing.

SMC commentedthat the emission limit shouldbe predicated onthe upper end ofthe distribution ofbaseline emissions, rather than on average emissions. While EPA assumed at proposal that SNCR at SMC-Charlevoix could achieve 50 percent reduction inNOx emissions

on average and 60 percent control onoccasions with above average baseline emissions, EPA is finalizing limits that are predicated on 50 percent reduction from 95th percentile emissions. In orderto provide for close to 50 percentNOx emissionreduction at all times rather thanjust during occasions with elevated emissions, EPA is promulgating a 12-month average emission limit as well as a 30-day rolling average emission limit. The two limits would be expected to involve the same purchase costs, butthe 12-month average would require more emission reduction and thus more reducing reagent for much ofthe time than the 30-day average limit. Therefore, the cost effectiveness estimates in this technical support document are based onthe 12-month average limit.

The 12-month average limit is 2.4 pounds ofNOxperton ofclinker. Compared to the average emissions from 2006 to 2008, 4.5 pounds ofNOxperton ofclinker, this requires an average 47percent emission reduction, which for 2006 to 2008 would have been a reduction of 1182 tons ofNOxperyear. Thus, the cost effectiveness estimates in this technical support document are predicated on the achievement ofa reduction of 1182 tons ofNOxper year.

A key cost ofusing SNCRis reagent costs. Cost estimates were developed both using urea
as the reagent and using ammonia as the reagent for reducing NOx emissions. Reagent costs
were based onreagent prices provided by Fuel Tech, Inc., a reagent supplier. Most ofthe cost estimates derived below assumed that ammonia costs $600 perton. This price represents the cost ofanhydrous ammonia. The price of 19 percent ammonia solutiontranslates to a price per ton ofammonia ofabout $1,050, so costs based onthis price was also examined. Fuel Tech stated thaturea, delivered to Central Michigan, would cost between $1.60 and $1.80 per gallon of50 percent solution. The upper end ofthis range was used in these cost evaluations. At 9.5 pounds per gallon of50 percenturea solution, $1.80 per gallon of50 percent urea solution translates to $758 per ton ofactual urea.

In all cases, the quantity ofreagent was estimated in directproportion to the quantity ofNOx emission removed. The quantity ofNOx emission removed per mole ofreagent used expresses the efficiency ofthe reagent, which varies by reagent used andby conditions atthe facility. SMC's comments express concernthat, with the use ofurea, SNCR at SMC-Charlevoix is relatively inefficient and is prone to cause material buildup and ammonia slip atproblematic levels. Similar comments are presented in a paper by Joe Horton ofSuwanee American Cement/ Votorantim Cimentos NorthAmerica, a sister company to SMCNotorantim Cimentos North America. 1 Thispaper describes problems from the use ofurea, which upon decomposition forms carbonmonoxide as well as ammonia, and concludes that the use ofammonia is likely to be substantially more effective.

SMC submittedresults oftests using urea at SMC-Charlevoix 

### in which a representative efficiency is that the number ofmoles ofNOxreduced is 40 percent ofthe number ofmoles ofammonia that would result from decomposition ofinjected urea. (Urea, which has the chemical formula CO(NH2) 2, decomposes to form two moles ofammoniaper mole ofurea.) No test results were available using ammonia at SMC-Charlevoix. Therefore, the best available evidence regarding the efficiency ofSNCR at SMC-Charlevoix using ammoniais from tests using ammonia at other facilities. The notice ofproposed rulemaking relies ontests using ammonia conducted at SMC's facility in Dixon, Illinois (SMC-Dixon), which showedthat injection of0.62 moles ofammonia per mole ofNOx inthe flue gas sufficed to reduce NOx emissions by 50 percent. That is, these test results indicatedthat each mole ofinjected ammonia reduced approximately 0.81 moles ofNOx. Similarly, for "PlantA," a plantwith a design similarto the design ofSMC-Charlevoix, the Horton paper reports that ammonia injection achieved an average of0.92 moles ofNOxreduction permole ofinjected ammonia, with values ranging from 0.85 moles to 0.96 moles ofNOxreduction per mole ofammonia.

This technical support document evaluates cost effectiveness ofusing SNCRto meet this reduction requirement based on a variety ofassumptions and approaches. The first set of scenarios reflects minimal modifications to the facility. Inthe first ofthese scenarios, SMC

1 Joe Horton, Suwannee American Cement/Votorantim Cimentos North America, Al Linero, Florida Department of Environmental Protection, and F. MacGregor Miller, Cement Etc., Inc, ''SNCR Emission Control," International Cement Review, August 2006.uses ammonia as the NOx reducing reagent, and the efficiency ofthis reagent in reducing NOx is similar to the efficiency found in tests at SMC-Dixon. The second scenario also assumed the use ofammonia and the efficiency found at SMC-Dixon but assumed an ammonia price of $1,050 per ton. While the efficiency ofNOxreduction found at "Plant A" inthe Horton paper could equally well represent the prospective efficiency ofammonia inreducing NOx emissions at SMC-Charlevoix, the use ofthe SMC-Dixontest results provides a conservative estimate ofcosts that may be incurred from use ofSNCR at SMC-Charlevoix. Inthese scenarios, the

use ofammoniais considered to avoid the material buildup problems SMC anticipates would

occur with the use ofurea, and in particular no additional expenses are incurred to modifY the facility to mitigate material buildup and no production losses are incurred. Nevertheless, a third scenario is the same as the first scenario except that the ammonia efficiency inreducing NOx

was assumed to reflect the efficiency that was found intests using urea at SMC-Charlevoix. A similar scenario using urea could have been evaluated as well, butthe achievement of50 percent NOx reduction is more clearly feasible with use ofammonia, and ammoniais cheaper permole ofreducing reagent, so that the cost effectiveness ofusing urea in this approach wasjudged not to be germane.

These scenarios assumed that SMC replaced its SNCR equipment with new SNCRequipment,

as well as upgrading its reagent storage. However, SMC may be able to use its existing SNCR equipment, and so an additional scenario assumed that SMC would need to spend $400,000 to upgrade its reagent storage system (the cost estimated by SMC for a winterized urea storage system) but would incur no expense installing SNCR equipment. This scenario conservatively assumed thattrials to facilitate effective SNCRdesign and upgrades to the reagent storage system would incur the same ancillary costs (such as engineering and contingency costs) that

were assumed for scenarios involving SNCR installation.

A second set ofscenarios also assumes only modest modifications ofSMC-Charlevoix's kiln systembut assumes more expenses incurred to address material buildup issues that SMC anticipates occurring. These expenses are unlikely to occur, since experience at otherplants suggests thatmaterial buildup issues can be avoided orminimized with proper design and management ofreagent injection and kiln operating conditions (e.g. management ofkiln gas chemistry), and available evidence suggests that the problems that SMC asserts occurred during its tests using urea are less likely and in fact are expected not to occur withthe use ofammonia. Nevertheless, to assess cost effectiveness under a range ofoptions that might be applied to meet the limits under consideration, these scenarios are analyzed to assess the cost effectiveness of SNCR application should material buildup prove more problematic than expected.

Inthis set ofscenarios, the first scenario examined an option in which SMC adds lime. The purpose ofadding lime would be to reduce the sulfur dioxide concentration in the flue gas, which would be intendedto reduce sulfate formation in the flue gas and condensation on surfaces within the kiln system. SMC has indicated that it operates a bypass systemthat is intended to achieve similarpurposes, but the information itprovided does not expressly describe adding lime. Therefore, this scenario is evaluated both to evaluate the cost effectiveness ofthis possible approach to minimizing material buildup issues and to provide a sample cost effectiveness evaluationthat represents a range ofactions that the company might use to address material buildup issues.

The second scenario in this set ofscenarios assumes a combination ofstructural changes to the facility (e.g. additional air cannons to remove material buildup or reconfigurations to change airflow) and assumes that material buildup issues lead to loss ofproduction. The cost estimates assumed here are cost estimates that SMC used in its comments. The estimated cost ofstructural changes was halfthe estimated cost ofSNCRequipment. SMC criticized this estimate as unjustifiedbut nevertheless used this estimate in its own cost estimates. This estimate is used to represent costs ofany ofa range ofrelatively significant structural changes, so as to evaluate whether SNCR in combination with relatively significant structural changes is cost effective.

SMC's comments statedthat the most effective approach to addressing material buildup issues at SMC-Charlevoix may be to replace the pre-calciner at the facility. Therefore, cost effectiveness

was estimated for a third set ofscenarios involving SMC installing a replacementpre-calciner. SMC estimated that the cost ofa replacement pre-calcinerto be $18,000,000. Although SMC did not document the basis ofthis estimate, this evaluation ofcost effectiveness used SMC's estimate. The first ofthese scenarios assumed use ofammonia, and a second scenario assumed

use ofurea. SMC implied that conditions for use ofurea to reduce NOx would be more favorable with a replacement pre-calciner, so both ofthese scenarios assumed the efficiency of NOxremoval found at SMC-Dixon.

SMC applied for a permitfor a replacement pre-calciner, and then cancelled this permit. SMC did not comment onthis permit or explain the cost analysis which ledthe company to take these actions. Nevertheless, these actions indicate that the replacement pre-calciner was initially expectedto provide sufficientreturn onthe investment, whether through improvements inplant efficiency, capacity to use cheaper fuels, or increase in plant capacity, in effect to offsetthe cost ofthis investment. SMC's decision to cancel the permit suggests that the company then decided that the economic benefits ofthe projectwould be less thanthe cost. EPA does not have the information necessary to do its own analysis ofhowmuch ofthe cost ofa replacement precalciner would be offsetby its economic benefits, butpresumably mostbutnot all ofthe costs of

a replacementpre-calciner would be offset by its economic benefit. Therefore, cost effectiveness

was estimated for an additional scenario in which the costs ofa replacementpre-calciner are entirely offset. A more accurate estimate ofthe cost effectiveness ofmeeting the candidate limit would likely lie betweenthe estimate assuming the replacement pre-calciner cost is fully offset and the estimate assuming none ofthis cost is offset.

The above scenarios assume that the replacementpre-calciner has no effect on NOx emissions. However, SMC's comments suggest that they expect that a replacement pre-calciner would reduce baseline NOx emissions from 4.5 pounds perton ofclinkerto 3.9 pounds per ton of clinker. This suggests that less reagent would be needed to achieve a 12-month average limit of 2.4 pounds per ton ofclinker. Based on emissions data from 2006 to 2008, using this estimate of the emissionreduction resulting from replacement ofthe pre-calciner, the replacement would be expectedto reduce average annual NOx emissions by 336 tons peryear, and SNCRwould only need to achieve a reduction of846 tons ofNOxperyear. Thus, the SNCRwould only need to achieve 72 percent as much emission reduction, and SMC would need 28 percentless reagent. Cost effectiveness for this scenario was estimated assuming no offset ofthe pre-calciner cost and assuming the use ofammonia as the reagent.

A fourth set ofcost effectiveness calculations was based on a different approach for estimating the costs ofinstalling airpollution control equipment. The EPA Air Pollution Control Cost Manual recognizes that different types ofair pollution control equipment have differenttypes and magnitudes ofinstallation on operation costs and therefore warrant different assumptions regarding these costs. Inthe evaluation ofBART that SMC provided to Michigan, SMC'sconsultantusedthe set ofassumptions applicable to installation and use ofgas absorbers, which are similarto the assumptions for various other types ofcontrol equipment as well. This approach may be labeled the gas absorber approach. EPA also used the gas absorber approach in estimating costs in its proposed rulemaking, except that EPA observed inits notice ofproposed rulemaking that overhead costs, which are assumed to be substantial inthe gas absorber approach, are assumed to be negligible for SNCR.

The review ofcomments led to a finding that the approach underlying the proposed rulemaking significantly overestimatedthe costs ofinstalling and operating SNCR. For example, the gas absorber approach assumes significant installation costs for erection, handling and piping, with total installation costs being estimated at adding over 150 percent ofthe cost ofthe SNCR equipment beyond the cost ofthe SNCR itself. In contrast, the EPA Air Pollution Control Cost Manual recommends assuming a different set ofcosts for installing SNCRequipmentthat add up to only about 40 percent ofthe cost ofthe SNCR equipmentbeyondthe cost ofthe SNCR equipment itself.
Althoughuse ofthe gas absorber approach in estimating costs ofinstalling and operating SNCR mustbe considered erroneous, cost estimates using this approach (except considering overhead costs to be negligible) were nevertheless obtained. These cost estimates were obtained for the purpose of judging whether EPA would have found SNCRto be cost effective even using the cost estimation approach used inthe proposed rulemaking, as otherwise modified in response to comments. Inresponse to comments regarding the inefficiency ofurea in reducing NOx emissions, costs were estimated using ammonia as the reagent. One scenario assumed the efficiency found at SMC-Dixon, and a second scenario assumed the efficiency found using urea at SMC-Charlevoix.

Tables I to 4 presentdetailed cost estimates and estimates ofcost effectiveness for the scenarios described above. Table I presents cost information for the first set scenarios, involving the existing configuration at SMC-Charlevoix. Table 2 presents cost information for the second set ofscenarios, in which relatively expensive supplemental efforts are needed for successful SNCR operation. Table 3 presents cost information for the third set ofscenarios, involving replacement ofthe pre-calciner. Table 4 presents cost information for the fourth set ofscenarios, in which costs are estimated in most respects using the gas absorber approach to cost estimation.

The estimated cost effectiveness ofoperating SNCRusing ammonia inthe existing configuration ofSMC-Charlevoix, assuming the efficiency demonstrated at SMC-Dixon and assuming purchase ofa new SNCRto replace the existing SNCR, is $475 perton ofNOxremoved. Estimates for other scenarios examined range from $398 to $2,252 perton ofNOxremoved. These estimates support a conclusionthat implementation ofSNCR at SMC-Charlevoix is cost effective.Table 1. Cost Effectiveness using ammonia with existing configuration

Dixon Costlier Charlevoix No new SNCR efficiency Ammonia efficiency Capital costs Notes SNCR $1,371,630 $1,371,630 $1,371,630 $400,000 Includes winterizing cost General facilities $68,582 $68,582 $68,582 $68,582 5% Engineering $137' 163 $137,163 $137,163 $137' 163 10% Process contingency $68,582 $68,582 $68,582 $68,582 5% Project contingency $246,893 $246,893 $246,893 $246,893 15% Subtotal SNCR $1,892,849 $1,892,849 $1,892,849 $921,219 Preproduction $37,857 $37,857 $37,857 $37,857 2% Ammonia inventory $12,465 $21,813 $25,130 $12,465 2 weeks inventory Total Capital cost $1,943,171 $1,952,519 $1,955,837 $971,541 Annual costs Ammonia $324,970 $568,697 $655,181 $324,970 Maintenance $28,393 $28,393 $28,393 $28,393 1.5% Reagent heating $8,600 $8,600 $8,600 $16,427 Power loss $16,427 $16,427 $16,427 $8,600 Total direct Annual $378,389 $622,117 $708,601 $378,389 Capital recovery $183,435 $184,318 $184,631 $91,713 Amortizes

over 20 years Total $561,825 $806,434 $893,232 $470,103 Emission reduction 1182 1182 1182 1182 (ton/year) Cost per ton $475 $682 $756 $398Table 2. Cost Effectiveness assuming costs from problems with SNCR use

Lime Structural Injection mod, prod. loss Capital costs Notes SNCR $1,371,630 $1,371,630 Includes winterizing cost General facilities $68,582 $68,582 5% Engineering $137,163 $137,163 10% Process contingency $68,582 $68,582 5% Project contingency $246,893 $246,893 15% Subtotal SNCR $1,892,849 $1,892,849 Preproduction $37,857 $37,857 2% Ammonia inventory $25,132 $25,132 2 weeks inventory Lime injection system $300,000

-- Structural

-- 685,815 modifications

Total Capital cost $2,255,839 $2,641,654 Annual costs Ammonia $655,239 $655,239 Maintenance $28,393 $28,393 1.5% Reagent heating $8,600 $8,600 Power loss $16,427 $16,427 Production loss

-- $387,200 Total direct Annual $1,008,658 $1,095,858 Capital recovery $212,951 $249,372 Amortizes over 20 years Total $1,221,610 $1,345,231 Emission reduction 1182 1182 (ton/year) Cost per ton $1,034 $1,138Table 3. Cost effectiveness for replacement pre-calciner options

Ammonia, Urea, Dixon Urea, pre- Ammonia, Dixon efficiency calciner preefficiency costs calciner offset reduces NOx to 3.9 Capital costs Notes SNCR $1,371,630 $1,371,630 $1,371,630 $1,371,630 Includes winterizing cost General facilities $68,582 $68,582 $68,582 $68,582 5% Engineering $137,163 $137,163 $137,163 $137,163 10% Process contingency $68,582 $68,582 $68,582 $68,582 5% Project contingency $246,893 $246,893 $246,893 $246,893 15% Subtotal SNCR $1,892,849 $1,892,849 $1,892,849 $1,892,849 Preproduction $37,857 $37,857 $37,857 $37,857 2% Replacement pre- $18,000,000 $18,000,000

-- $18,000,000 Company calciner estimate Reagent inventory $12,465 $27,789 $27,789 $8,922 2 weeks inventory Total Capital cost $19,943,171 $19,958,495 $1,958,495 $19,939,629 Annual costs Reagent $324,970 $724,492 $724,492 $232' 613 Maintenance $28,393 $28,393 $28,393 $28,393 1.5% Reagent heating $8,600 $8,600 $8,600 $8,600 Power loss $16,427 $16,427 $16,427 $16,427 Total direct Annual $378,389 $777,911 $777' 911 $286,033 Capital recovery $1,884,082 $1,882,635 $184,882 $1,882,301 Amortizes over 20 years Total $2,661,993 $2,2467,147 $962,793 $2,168,333 Emission reduction 1182 1182 1182 1182 (846 (ton/year) by SNCR) Cost per ton $1,901 $2,252 $815 $1,835Table 4. Cost effectiveness using gas absorber cost estimation approach Ammonia, Ammonia, Dixon Charlevoix efficiency efficiency Capital costs Notes Purchased equipment SNCR $1,371,630 $1,371,630 Includes winterizing cost Instrumentation $137,163 $137,163 10% Freight $68,582 $68,582 5% Subtotal $1,577,375 $1,577,375 Installation Foundations $189,285 $189,285 12% Handling, erection $630,950 $630,950 40% Electrical $15,774 $15,774 1% Piping $473,212 $473,212 30% Insulation $15,774 $15,774 1% Painting $15,774 $15,774 1% Subtotal $1,340,768 $1,340,768 85% of equipment Subtotal Indirect costs Engineering $157,737 $157,737 10% Construction $157,737 $157,737 10% Contractor fees $157,737 $157,737 10% Start-up $15,774 $15,774 1% Performance test $15,774 $15,774 1% Contingencies $34,734 $34,734 3% Total capital costs $3,470,224 $3,470,224 Annual costs Operator $12,690 $12,690**~** hr/shift $25.38 Supervisor $1,904 $1,904 15% of operator Reagent $324,970 $655,181 Maintenance

- labor $8,885 $8,885 Materials $8,885 $8,885 100% of labor Reagent heating $8,600 $8,600 Administrative $69,404 $69,404 2% Insurance $34,702 $34,702 1% Capital recovery $381,031 $381,031 Amortizes over 15 years Annualized total $851,071 $1,181,282 Emission reduction 1182 1182 (ton/year) Cost per ton $720 $999