0226.04.020 1

MEMORANDUM 

TO: Brian Shrager/SPPD 

FROM: Graham Gibson, Amanda Singleton, and Lauren Stanulis, ERG 

DATE: January 2011 

SUBJECT: Revised New Unit Analysis Industrial, Commercial, and Institutional Boilers and 

Process Heaters National Emission Standards for Hazardous Air Pollutants – 

Major Source 

1.0 INTRODUCTION 

This memorandum describes the estimation of new major source boilers and process 

heaters projected to be built by 2013 and 2015 from the baseline year of 2008. The results of 

this analysis are used to estimate costs and impacts for new sources for a national emission 

standard for hazardous air pollutants (NESHAP) for industrial/commercial/institutional boilers 

and process heaters. The years 2013 and 2015 were selected because they are five years from 

the originally projected proposal and promulgation dates of the boiler NESHAP. The analyses 

would not be expected to change dramatically if an adjustment was made to 2015 and 2016, the 

dates 5 years from the actual proposal and promulgation dates. 

This memorandum is separated into the following sections: 

1.0 Introduction 

2.0 Data Sources 

3.0 Methodology for Estimating New Units 

4.0 Analysis Conducted in Response to Comments on Projection of New Biomass 

Units 

5.0 Results 

6.0 References 

Appendix A – Distribution of Model Units between Industrial and Commercial Sectors 
0226.04.020 2

2.0 DATA SOURCES

The existing units reported in the 2008 Combustion Survey were subcategorized into 

model units in order to project future units1. Units were classified based on fuel, size category, 

and whether the facility is in the commercial/institutional or industrial sector. Specific fuels 

were categorized into one of the following categories: Coal, Bagasse, Wet Biomass, Dry 

Biomass, Heavy (Residual) Liquid, Light (Distillate) Liquid, Process Gas (Gas 2), Natural Gas, 

Refinery Gas, and Other on-specGases (Gas 1), and Waste. The development of these fuel 

categories and the individual fuels they characterize are detailed in another memorandum2. For 

the purpose of this analysis the Biomass fuel category includes Bagasse, Wet Biomass, and Dry 

Biomass. It was assumed that all new boilers and process heaters designed to burn gas 1 would 

only burn natural gas and no other fuels associated with the Natural Gas and Other Non-Process 

Gases fuel category. To assign each facility to either the commercial/institutional or industrial 

sector, we used the three digit NAICS code that was reported for the facility in the 2008 

Combustion Survey. Then, an average design capacity and annual hours of operation were 

calculated based on all the units within each group in order to obtain general operational 

estimates for each model. The energy consumption forecasts were provided by the Energy 

Information Administration (EIA) of the U.S. Department of Energy3

. The EIA provides 

forecasts of the fuel consumption of coal, renewable energy (including biomass), residual oil, 

distillate oil, and natural gas according to sector and source. EIA divides energy use up into 

commercial, industrial, residential and 

transportation. The EIA commercial sector includes units considered to be in the institutional 

sector for this rulemaking. 

3.0 METHODOLOGY FOR ESTIMATING NEW UNITS

The methodology involved in this analysis was consistent with a previous analysis 

completed for the 2004 vacated boiler NESHAP and the 2010 proposal and it consists of two 

parts: 1) Calculating the predicted percent changes in fuel consumption in the industrial and 

commercial/institutional sectors, and 2) Calculating the expected fuel consumption in future in 

boilers and heaters and predicting the number of new units required to fire a particular fuel4

. 

Since the 2008 Combustion survey represents the inventory of affected boilers and process 
0226.04.020 3

heaters, the base year for this analysis is 2008. The steps required to perform this analysis are 

described below. 

3.1 Calculating Percent Change in Fuel Consumption 

Existing boilers and process heaters were grouped into one of the following fuel types: 

coal, biomass, residual liquid, distillate liquid, process gas, and natural gas. Projected fuel 

consumption by the industrial and commercial sectors for each of these fuels for 2013 and 2015 

could then be used to calculate percent differences in fuel consumption2

. The EIA fuel 

consumption projections, along with calculated percent differences for 2013 and 2015, are given 

in Table 3-1. These calculations were performed as follows: 

 

 EIA data was gathered for industrial and commercial fuel use in 2008, 2013, and 2015 in 

the following fuel categories: coal (all, including Coke), residual liquids, distillate 

liquids, natural gas and renewable energy. The renewable energy definition at the EIA 

includes consumption of energy produced from hydroelectric, wood and wood waste, and 

other biomass sources, excluding ethanol blends. Renewable energy growth rates were 

used as a proxy for projection of the future rate of increase in biomass fuels since 

biomass is assumed to follow the same growth rates of other renewable resources. 

 Equation 1 was applied to the EIA data to calculate the percent change from 2008 to the 

target years. 

o PCTY = 100 * (EIATY – EIA2008) / EIA2008 Equation 1

o Where: 

o PCTY = Percent change in consumption of fuel for target year (2013 or 2015) 

o EIATY = Consumption of fuel from EIA data for the target year (2013 or 2015) 

o EIA2008= Consumption of fuel from EIA data for 2008 

EIA fuel consumption data was not available for process gases, so it was assumed that 

the natural gas fuel consumption projections applied to all gaseous fuels. Natural gas 

consumption was also used to project new metallurgical furnaces. Fuels with negative percent 

changes were assumed to have no new units projected to come on-line by the end of target years 

2013 or 2015. 

 
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Table 3-1. Expected Fuel Consumption Differences by Sector3

Industrial Sector Fuel Consumption (Quadrillion Btu per year) Percent Difference from 2008 

Fuel 2008 2013 2015 2013 2015 

Natural Gas 6.83 6.76 6.62 -1.2% -3.1% 

Coal 1.84 1.71 1.80 -7.2% -2.2% 

Residual oil 0.22 0.16 0.16 -23.4% -25.9% 

Distillate oil 1.20 1.22 1.19 1.7% -0.8% 

Biomass* 1.66 1.57 1.56 -5.9% -6.0% 

Commercial Sector Fuel Consumption (Quadrillion Btu per year) Percent Difference from 2008 

Fuel 2008 2013 2015 2013 2015 

Natural Gas 3.22 3.25 3.29 0.8% 2.1% 

Coal 0.07 0.06 0.06 -2.0% -2.0% 

Residual oil 0.07 0.08 0.08 19.1% 24.0% 

Distillate oil 0.38 0.36 0.35 -5.1% -8.9% 

Biomass* 0.12 0.12 0.12 0.0% 0.0% 

*Based on renewable energy fuel consumption. 

3.2 Fuel Consumption and New Boiler Forecasting 

To predict the number of new boilers and process heaters in operation by 2013 and 2015, 

the percent difference for each fuel calculated in Table 3-1 was applied to the fuel consumption 

represented by the generated models in the industrial and commercial sectors. This was done 

using the following steps: 

 First, all existing boilers were determined to be at a commercial or industrial facility. 

This classification was based on the reported North American Industry Classification 

System (NAICS) code for the facility. Existing major source boilers and process heaters 

were subcategorized into model groups by sector, fuel, and size classification. Size 

classifications were based on the reported design capacity of the combustion unit. 

Categories were generated for the following sizes, based on the various size thresholds 

that would be expected to affect compliance requirements. For example, units greater 

than 250 MMBtu/hr are required to install continuous emission monitors for PM. The 

following size thresholds were used to develop model units: 

o Less than 5 MMBtu/hr 

o Greater than or equal to 5 to less than 10 MMBtu/hr 

o Greater than or equal to 10 to 30 MMBtu/hr 

o Greater than 30 to less than 100 MMBtu/hr 

o Greater than or equal to 100 to 250 MMBtu/hr 

o Greater than 250 MMBtu/hr 
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These size thresholds were selected to be consistent with size cutoffs in the New Source 

Performance Standards (NSPS) for Industrial/Commercial/Institutional boilers (40 CFR 

part 60 subparts Db and Dc) in order to consider variations in compliance costs for new 

units that may be subject to both this rule and the NSPS. 

 Next, the annual fuel consumption from 2008 (MMBtu/yr) was calculated for each model 

group using Equation 2. 

FC2008 = DCavg * Ophours,avg * Ni Equation 2

Where: 

FC2008 = Fuel consumption in 2008, MMBtu/yr 

DCavg = Average design capacity for all units in model subcategory, MMBtu/hr 

Ophours,avg = Average annual hours of operation for all units in model subcategory 

Ni = Number of existing units in model subcategory 

The fuel consumption values calculated for the model units in this step were then used as 

the 2008 basis for new unit predictions. 

 Forecasts of annual fuel consumption for each subcategory were calculated for the target 

years (2013 or 2015) by applying the percent differences calculated in Table 3-1 to the 

2008 fuel consumption calculated above using Equation 3. 

FCTY = FC2008 * [1 + (PCTY / 100)] Equation 3

Where: 

FCTY = Projected fuel consumption in target year (2013 or 2015), MMBtu/yr 

FC2008 = Fuel consumption in 2008, MMBtu/yr 

PCTY = Percent change in consumption of fuel for target year (2013 or 2015) 

 The number of units in the target year (2013 or 2015) was calculated using Equation 4. 

NTY = [ (FCTY - FC2008) / DCavg ] / Ophours,avg Equation 4 

Where: 

NTY = Projected number of units in the target year (2013 or 2015) 

FCTY = Projected fuel consumption in target year (2013 or 2015), MMBtu/yr 

FC2008 = Fuel consumption in 2008, MMBtu/yr 

DCavg = Average design capacity for all units in model subcategory, MMBtu/hr 

Ophours,avg = Average annual hours of operation for all units in model subcategory, hr/yr 

Values were rounded up to the nearest integer because it was assumed that fractions of 

units would equate to a new unit operating at a fraction of the design capacity. If the resultant 
0226.04.020 6

value was negative, it was assumed no new units for that subcategory would be in operation in 

the target year. 

5.0 ANALYSIS CONDUCTED IN RESPONSE TO COMMENTS ON PROJECTION 

OF NEW BIOMASS UNITS 

The proposed analysis projects no new solid fuel boilers to come on-line by 2013. After 

reviewing comments received on the projection of new major source boilers and process heaters, 

the majority of commenters stated that the proposed rule's estimate of no new biomass major 

source boilers was unrealistic considering the support for biomass in federal and state renewable 

energy policies. Only one commenter, Biofuelwatch5

, had included specific examples of the 

number of proposed biomass projects in the near term. Biofuelwatch's comment referenced 

Environmental Working Group's June 2010 report Clearcut Disaster: Carbon Loophole 

Threatens U.S. Forests6. The report claimed that "at least 118 new biomass power plant and cofiring proposals that would use wood as fuel are currently in various stages of permitting or 

approval in at least 30 states." This claim is not cited, but through e-mail correspondence with 

one of the authors, Dr. Mary S. Booth, it was determined that this number was obtained via 

Resource Information Systems Inc.'s (RISI) North American Wood Biomass Projects Database7. 

The database is available for purchase and includes over 200 wood biomass projects recently 

started, or currently under construction. According to the website, information regarding 

operator, location, project type, capacity, estimated start up data and cost of construction is also 

included in the database. Without purchase of the database it cannot be determined whether or 

not the 118 biomass plants are co-fired or dedicated plants or what the size of the boilers are. 

Without information on the co-fired status and size, it is difficult to determine if the units would 

be regulated under the utility MACT or the boiler NESHAP, or whether or not the plants would 

be area or major sources. The report also cites examples of projects more generally referenced 

within the Biofuelwatch's comment. Examples included nine project proposals in Florida totaling 

279 MW (unknown which plants are co-fired or dedicated), 14 project proposals totaling 846 

MW in Georgia (unknown which plants are co-fired or dedicated) and one proposal for a direct 

fire biomass plant in Ohio. 

We conducted further research into new biomass unit projections using data from EIA 

April 2009 report An Updated Annual Energy Outlook 2009 Reference Case Reflecting 
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Provisions of the American Recovery and Reinvestment Act (ARRA) and Recent Changes in 

Economic Outlook8. Table 17 outlines projections for 2010, 2020 and 2030 with a 2007 baseline 

for renewable energy consumption by sector and source considering the impact of the ARRA. 

This data is visually displayed in the Figure 1 below. 

Figure 1: Projected Consumption of Biomass, by Sector with ARRA9
0226.04.020 8

Figure 2: Projection Consumption of Renewable Energy with Stimulus Package10

The new unit analysis referenced in the proposed rule was based on the AEO 2009 

reference case considering the provisions of the ARRA. The source data for the proposed 

analysis was Table 2 Energy Consumption by Sector and Source. This data is visually displayed 

in Figure 2 above. In that analysis commercial consumption of biomass was flat between 2008 

and 2013, and industrial consumption of biomass had a negative growth rate. These low growth 

rates in fuel consumption between 2008 and 2013 were closely related to the ongoing recession. 

Growth in the electric power sector was not considered in the proposed analysis since the 

majority of that sector’s energy consumption is outside the scope of the boiler NESHAP. 

Since the focus of the commenters increased growth in new biomass power plants, the 

same AEO 2009 reference case considering the provisions of the ARRA were reviewed but the 

energy projects were obtained from another table, Table 17 Renewable Energy Consumption by 

Sector and Source to identify near-term growth in the marketed renewable energy sector. This 

data can be seen in Figure 1 above. Based on this table, commercial biomass usage is projected 

to remain flat between 2008 and 2013. For industrial biomass usage, in quadrillion Btu per year, 

there was a 6% decrease from 2008 to 2013. Industrial biomass usage includes all electricity 
0226.04.020 9

production by industrial and other combined heat and power for the grid and for industry use. 

This decrease and flat growth are consistent with our findings for the proposal analysis. 

For the electric power sector there was a 69 percent increase from 2008 to 2013 in 

consumption from both dedicated biomass plants and co-firing plants. The electric power sector 

includes consumption by electricity-only and combined heat and power plants whose primary 

business is to sell electricity, or electricity and heat, to the public. Of this total increase, there 

was a 44% increase in biomass used to fuel dedicated biomass power plants from 0.19 

quadrillion Btu in 2008 up to 0.27 quadrillion Btu in 2013. The majority of the projected growth 

in biomass was for co-fired plants. There was a 214% increase in biomass used at co-firing 

applications in the electric power industry, from 0.03 quadrillion Btu in 2008 to 0.1 quadrillion 

Btu in 2013. However, co-firing units within the electric power sector were responsible for 45% 

of the growth from 2008 to 2015. Since co-firing of biomass is most common at large coal 

plants, those plants marketing electricity are often utility-scale boilers that would not be covered 

under this Industrial/Commercial/Institutional boiler NESHAP and we have not included new 

growth in units from the electric power sector in our estimates 

The Handbook of Biomass Combustion & Co-firing11published in 2008 stated that the 

DOE "expects that in the short term, biomass power generation will mainly take place by 

biomass co-firing with coal." This is consistent with EIA’s projections and the book also 

displays electricity production projections for both co-firing and dedicated plants from the DOE's 

Biomass Power Program from 2003 to 2030 in Figure 3 below. 

Figure 3: Projected Electricity Production from Biomass in the US11
0226.04.020 10

In conclusion: 

 No commenters provided a specific number or location of new major source biomass 

boilers planned to be installed by 2013. 

 Further, a review of readily available cited sources and energy data do not provide 

overwhelming support of new major source biomass boilers in the near-term to contradict 

the analysis of projected new boilers in the industrial and commercial sectors included in 

the proposal. On the contrary, the literature suggests growth in new co-firing installations 

and new growth in dedicated biomass electricity production. 

 Based on receipt of recent boiler test data received during the comment period most of 

these dedicated biomass electric power plants are classified as area source facilities and 

not major sources. The area source new unit projection analysis at proposal estimated 200 

new area source biomass boilers on-line by 2013. The proposal analysis included an 

estimated 140 new model boilers less than 10 MMBtu/hr and 60 new model biomass 

boilers greater than 10 MMBtu/hr. Together these 200 new model boilers account for 

0.06 quadrillion Btu/year, compared to the EIA growth projection of 0.08 quadrillion 

Btu. The area source projections could potentially be revised slightly to adjust for the full 

0.08 quadrillion Btu growth but the current projections are a reasonable estimate for the 

basis of this analysis and the original projections contained in the area source proposal 

serve as the basis of the estimates for the final area source rule. 

 Given that the final rule includes a solid fuel subcategory, it is a realistic assumption that 

some existing units would increase co-firing of biomass in their boilers as a compliance 

mechanism, but the solid fuel subcategory, in and of itself is not expected to create new 

momentum for new biomass boilers and the EIA projections remain a relevant method 

for estimating the number of new boilers and process heaters expected on-line by 2013. 

5.0 RESULTS

The results of the new boiler analysis by model and year for the industrial and 

commercial sectors are presented in Appendices A-1 and A-2, respectively. The combined total 

number of new boilers for 2013 is estimated to be 47. Likewise, the total number of new 

industrial, commercial, and institutional boilers for 2015 is 86. The majority of all new boilers 

and process heaters are expected to be gas-fired, which is true for both target years. No new coal 

or biomass fired boilers are projected to come online by 2015.
0226.04.020 11

6.0 REFERENCES

1. Survey Database containing Results of the 2008 Questionnaire for Boilers, Process 

Heaters, & Other Combustion Units (ICR No. 2286.01). 

2. Singleton, A. and G. Gibson, ERG. Revised Development of Baseline Emission Factors 

for Boilers and Process Heaters at Commercial, Industrial, and Institutional Facilities. 

January, 2010.

3. U.S. Department of Energy. Energy Information Administration. Annual Energy 

Outlook 2009. Table 2. Energy Consumption by Sector and Source. Available on-line at: 

http://www.eia.doe.gov/oiaf/aeo/aeoref_tab.html 

4. Jason Huckaby, ERG. New Unit Analysis for Industrial, Commercial, and Institutional 

Boilers and Process Heaters National Emission Standards for Hazardous Air Pollutants. 

October, 2002. 

5. Public comment received from Rachel Smolker, Biofuelwatch. See document number 

EPA-HQ-OAR-2002-0058-2805.1 in the docket for National Emission Standards for 

Hazardous Air Pollutants for Major Sources: Industrial, Commercial, and Institutional 

Boilers and Process Heaters. 

6. Booth, Mary S., and Richard Wiles. "Clearcut Disaster: Carbon Loophole Threatens U.S. 

Forests." Environmental Working Group (EWG). June, 2010. 

<http://static.ewg.org/pdf/EWG-clearcut-disaster.pdf>. 

7. North American Wood Biomass Projects Database. Resource Information Systems Inc. 

(RISI). <http://www.risiinfo.com/risi-store/do/product/detail/wood-biomass-projectsdatabase.html>.

8. "An Updated Annual Energy Outlook 2009 Reference Case Reflecting Provisions of the 

American Recovery and Reinvestment Act (ARRA) and Recent Changes in Economic 

Outlook." U.S. Department of Energy. Energy Information Administration (EIA) (April 

2009). <http://www.eia.doe.gov/oiaf/servicerpt/stimulus/pdf/sroiaf(2009)03.pdf>. 

9. Table 17. Renewable Energy Consumption by Sector and Source. "An Updated Annual 

Energy Outlook 2009 Reference Case Reflecting Provisions of the American Recovery 

And Reinvestment Act and Recent Changes in the Economic Outlook." U.S. Department 

of Energy. Energy Information Administration (EIA). (April 2009). 

10. Table 2. Energy Consumption by Sector and Source. "An Updated Annual Energy 

Outlook 2009 Reference Case Reflecting Provisions of the American Recovery And 

Reinvestment Act and Recent Changes in the Economic Outlook." U.S. Department of 

Energy. Energy Information Administration (EIA). (April 2009). 
0226.04.020 12

11. Van, Loo Sjaak., and Jaap Koppejan. "Policies: Trends in Selected OECD Member 

Countries." The Handbook of Biomass Combustion and Co-firing. London: Earthscan, 

2008. 381-82. 
0154-01-01/EPA COMMENTS MJR-NEW UNITS 123010-ARS.DOC

Appendix A 

Distribution of Model Boiler Units between Industrial and Commercial Sectors

(See Excel spreadsheet)