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From: "Palazzolo, Michael A." <Michael.Palazzolo@alcoa.com> To: David Putney/RTP/USEPA/US@EPA Cc: Rochelle Boyd/RTP/USEPA/US@EPA, "Shelby, Laurie M." <Laurie.Shelby@alcoa.com> Date: 05/24/2011 08:42 AM Subject: Presentation from our meeting yesterday

D avid, Thank you again for arranging our meeting yesterday. The Aluminum Association and Alcoa presentations are attached. We plan to evaluate the available COS data further and will be in touch to arrange further discussion. Best Regards, Mike Micha el Palazzolo Alcoa, Inc. 201 Isabella Street Pittsburgh, PA 15212 - 5858 Ph: 412 - 553 - 4832 <<COS Meeting - EPA and AA May 23 2011.pdf>>

# Primary Aluminum Production and COS Emissions Charles Johnson May 23 rd , 20112 

# Aluminum Smelter COS Emissions
• Source of COS Emissions • Health Effects Data • COS Emissions from US Smelters • Current Industry Permit Limits

# Source of COS Emissions

• Carbonyl sulfide (COS) is produced during the consumption of carbon anodes • Process involves electrolytic reduction of alumina to aluminum: 2Al 2 O 3 + 3C - > 4Al + 3CO 2 • Large blocks made from petroleum coke are source of carbon

Molten Aluminum

Cathode Electrolytic bath

and alumina

# Source of COS Emissions

• Carbon anodes contain sulfur as thiophene ( C 4 

## H 4 

## S ) or similar carbon - sulfur species • Carbon - sulfur species form COS in the gases below the anode • COS oxidizes to SO 2 

## and CO 2 

## as the anode gases pass up through the electrolyte bath: 2COS + 3O 2 

## - > 2SO 2 

## and 2CO 2 

## • COS formation in the smelting process is not preventable

# Health Effects Data

• COS is the most abundant sulfur compound naturally occurring in the atmosphere

– Emitted by oceans, soils, volcanoes, salt marshes, etc. 

## • A listed hazardous air pollutant • Little toxicological data available for health effects on humans and animals

– Concerns about COS exposure due to acute toxicity

– Central nervous system effects in lab animals at very high concentrations (>1000 ppm )

– Limited data show no chronic effects on lab animals at low concentrations (50 ppm ) 

## • COS concentrations:

– Smelter stack gas concentration ~ 8 ppm

– Ambient air (24 - hr average) ~ 8 ppb

– Natural background – 0.5 ppb

# COS Emissions in US Smelters
• Limited data available on COS emissions • Design and operating factors that impact COS emissions are not fully understood

– Additional data needed to define appropriate COS standards 

# • Standard based on low coke sulfur content not workable for industry long - term

– Availability of low sulfur coke in question

– Cost of Low S Coke affects global competitiveness

– Control technology not economically feasible

– Shutdowns possible

## Aluminum Smelter COS Emissions May 23, 20118 

## Aluminum Smelter COS Emissions 

# Factors Affecting Emissions COS Emission Controls Industry Emission Factor Approach Summary of Alcoa COS Data Options for COS Regulation Coke Market and Availability Suggestions for COS MACT

## Factors Affecting Emissions Formation of COS in the smelting process is not preventable Total COS emissions depend on:  Smelting pot design (pot size and anode configuration)  Anode gas residence time  Pot operating temperature  Type and amount of sulfur compounds present in the coke 

### Impact of design and operating practices on COS have not been studied extensively by the aluminum industry

 No demonstrated work practices for the control of COS 

### “No control floor” concluded as part of original Subpart LL MACT

### COS Emission Controls Not Cost - Effective No add - on controls currently installed specifically to control COS Alumina dry scrubbers do not reduce COS emissions  All sulfur in raw materials released as either COS or SO2 

### Massena Soderberg operates a wet scrubber for SO2 control

 Wet scrubber allowed installation of alumina dry scrubber system  Sodium bicarbonate reagent  Limited data suggests 34% COS removal (one test run) 

### No other smelters operate wet scrubbers for SO2 or COS control

 Wet scrubbing not economically viable for existing smelters  Capital cost >$200 to $250 million per smelter  Operating cost > $40 million/year  Annual cost to control SO2 would be ~$9000/ton SO2 removed  Annual cost to control COS would be ~$230,000/ton COS removed

### Industry Emission Factor Approach: “%S as COS” Factors based on “% S emitted as COS”

 Provides estimate of COS emissions  Assume “%S as COS” does not change with anode sulfur content  Assume average factor applies for different pre - bake smelters 

### Alcoa emission tests at several smelters:  Simultaneous measurement of COS and SO2 at dry scrubber stack  Extractive FTIR procedure (high level of QA/QC)  Not an EPA Reference Test Method 

### Calculate %S emitted as COS: Mass balance for potline total sulfur

 Measure baked anode sulfur content  Track number of anodes consumed

### Variation in COS emission across pot types Large variability in short - term emission rates% Sulfur as COS

Center - work Prebake Soderberg Side - work Center - work Prebake Soderberg Side - work

### COS emissions strongly correlated with smelting pot size COS emissions do not correlate with coke sulfur level Emissions based on “lb COS/ton Al” strongly correlated with pot design

 Larger pots have lower emission in terms of “lb COS/ton Al” 

### Coke sulfur level not a good basis for predicting COS emissions

 No clear correlation between COS emissions and coke sulfur levels • Pot design dominates differences  No data available to compare COS emission rates from same potline with different coke sulfur levels

### COS emission rate strongly correlates with smelting pot sizelb COS/ton Al



### Increasing Prebake Pot Size 

### COS emissions do not correlate with coke sulfur levellb COS/ton Al



### %S in coke (Prebake potlines)

### Options for COS Emission Standard 

## Existing MACT floor for COS is “no control”

 Except possibly wet scrubber at HSS potline 

## Option 1: Provide aluminum industry time to develop a suitable basis for COS standard

 Thorough evaluation of design and operating approaches for minimizing COS emissions  Subcategorize pot types where appropriate  Set emission standards by subcategory 

## Option 2 – Set standard based on coke sulfur content

 Simple, pollution prevention limit  However, such standard also must consider long - term availability of anode quality coke  Standard based on coke sulfur content <3% not workable for industry long - term

## A 2% sulfur limit in CPC will curtail aluminum production due to lack of supply

### Anode grade CPC is defined by more than the % sulfur

18 Pet coke can have 3 types of structures that dictate use

Shot coke Sponge coke Needle coke 23 2 67 Demand for GPC

Calcinable Electrode Fuel 3 main end use markets for pet coke Fuel

- Any sulfur level

- No constraints on other parameters

- Main consumer of shot coke. Can consume any grade Calcinable

- Low to mid range sulfur

- Specification constraints based on application

- Main consumer of sponge coke. Non anode application can consume shot in the blend Electrode

- Typical .5% sulfur

- Very low impurities including metal

- Primarily used for EAF electrodes

- High premium product produced at 5 locations globally 20 1 2 Demand for calcinable GPC

Aluminum TiO2 Other Million metric tons Source: Team analysis- Not all the crude drilled is refined in a manner that produces coke

- The blend of crudes selected by a refinery is the cheapest usable blend available

- The cheapest blend today typically include more sour crudes such as from Canada

- The blend used in a refinery determines the quality of the pet coke waste stream 

### The availability and quality of petroleum coke is not determined by the needs of the aluminum industry

19 EXPLORATION & DRILLING OF CRUDE OIL

SIMPLE REFINERIES WITHOUT COKERS Light Products Gasoline Diesel.. Fuel Oil/ Asphalt COMPLEX REFINERIES WITH COKERS

Green Pet Coke

- ~2% of refinery revenue

- 1.33 MT needed per MT CPC Light Products Gasoline Diesel..

73% 16%

Fuel grade Aluminum smelting Met coal blending Other Only ~16% of green coke goes to aluminum Low sulfur coke

Pet coke is a waste stream in the production of light distillates and accounts for <2% of the revenues of a coking refinery - The coke that goes to the aluminum industry is composed of a large spectrum of sulfur levels

- The coke consumed for met coal blending is characterized by sulfur levels of 2% and below only The souring of crude slates is projected to increase fuel grade material at the expense of anode grades To Calciner to produce anode grade CPC

Source: Team analysis6,323 10,321 4,073 2,164 1,590 179 2011 GPC demand

5 - 6% S 4 - 5% S 3 - 4% S 2 - 3% S 1 - 2% S 0 - 1% S 

### 2011 demand from the global aluminum industry will challenge existing supply of anode grade GPC

20 Source: Jacobs Consulting, Team analysis There is insufficient supply of GPC at the <2% sulfur level to meet the current demand for anode grade material 2% level With a forecasted degradation of sulfur levels in crude blends refined, there will be insufficient coke to meet a 2% limit to the sulfur levels. Global Supply Demand

Million metric tons

### The cost of coke increases significantly as the % sulfur goes down

45% increase in raw material cost to move from 2.5% to 1.9% sulfur 31% increase in raw material cost to move from 1.9% to 1.3% sulfur

 The green coke price increase translates to ~$39/ MT increase in the cost of aluminum produced

21 Source: Jacobs Consulting US Gulf Coast blend prices, Team analysis Smelting aluminum in the United States will materially cost disadvantaged relative to other regions if the max allowed sulfur is lowered. $307 $235 $162 $120 $157 $128

1.3 1.9 2.5 3.3 3.5 4.1 % Sulfur in green coke blend Q4 2010 Green Coke Pricing, $/DST

### Summary The souring of crude slates and the underlying economics of the petroleum industry is resulting in a fall in production of low sulfur green coke. Since the 2007 review, refining economics has exacerbated the situation for the aluminum industry with refineries curtailing the production of anode grade green petroleum coke

 North America has lost ~16% of anode grade green coke production in the last 18 months alone due to refinery shut downs or switch to higher sulfur crudes Aluminum demand is expected to grow at ~5% annually to ~70M MT by 2020 from the current level of ~45M The cost of green coke and CPC increases disproportionately as the sulfur level is reduced There is no viable scenario we are aware of that will allow for sufficient growth in the availability of CPC at or below a 2% sulfur limit to meet the demand for aluminum

 China and Brazil are the only regions of the world where there is a growing availability of low sulfur GPC. However strong GDP growth in these regions has resulted in self sufficient markets with low volumes available for export to other regions There is insufficient 2% sulfur CPC available to meet current and projected global aluminum demand globally and regionally

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### Smelters with coke sulfur limits <3% have long - term issue



## • Smelters with coke sulfur limits below 3% have long - term issue

– Seek permit revision – SO2 NAAQS may prevent this

– Install wet scrubbers for SO2 – not economically feasible

– Shutdowns possible 

## • Coke limits below 3% may also effect viability of wet scrubbing

– The lower cost of high sulfur coke may offset portion of wet scrubber operating costs

– Low sulfur coke limits eliminate this cost offset

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# Recommendations for COS MACT
• Provide aluminum industry time to develop a suitable basis for COS standards

– Account for differences in pot type or pot design

– Define operating parameters and practices that minimize emissions 

## • Standard for COS based on low sulfur coke not workable for industry long - term 

## :

– Level of sulfur in anode quality coke is increasing

– Expect long - term shortage of lower sulfur anode coke



### – 3% sulfur in coke recommended as viable long - term limit