# Memorandum

To: Jason Price, IEc and Ellen Kurlansky, U.S. EPA

From: Jim Wilson, Maureen Mullen and Jackson Schreiber, SC&A, Inc.

Date: 9/30/2014

Re: Assessment of Employment Impacts of NOx Co ntrols, EPA Contract No. EP-D-09-054, WA 4-09

I. Introduction

A. Study Purpose

EPA and the states have taken actions since the 1990 Clean Air Act Amendments that have forced

stationary sources to implement control techniques to reduce their NOx emissions. It is expected that

there will be continuing actions to reduce stationary source NOx in the United States to assist areas to

comply with the ozone NAAQS, especially if the level of the standard is reduced when EPA re

‐ proposes

this NAAQS. The purpose of this project is to investigate the per unit employment impacts associated

with future stationary source NOx control initiatives. This memorandum describes the analysis that

SC&A performed to develop estimates of the direct employment impacts related to the installation and

operation of selected NOx control technologies.

B. Focus on Industrial Boilers and Cement Kilns

While we considered examining future NOx controls for electricity generating units, it was determined

that such an analysis was already under development by EPA’s Clean Air Markets Division. Therefore,

this analysis focuses on NOx control that might be applied at industrial boilers (EPA typically refers to

this source type as industrial, commercial and institutional boilers, or ICI boilers, with industrial boilers

as shorthand for the source category) and cement kilns. For each of these source categories, the analysis

focuses primarily on a single, or dominant, control technology. For ICI boilers, that dominant control

technology is expected to be selective catalytic reduction (SCR), while for cement kilns the dominant

control technique is expected to be selective non

‐ catalytic reduction. These selections were based in

part on recommendations from EPA

‐ OAQPS staff in the Air Economics Group who are working on the

ozone NAAQS review regulatory impact analysis. ICI boilers and cement kilns are both source types that

are affected by the NOx SIP Call, so there is some experience with applying these NOx control

techniques to achieve the emission reductions required by that rule. However, their selection is based

on the expectation that they will be the most frequently selected control option by sources that have to

install NOx controls in the near future as part of implementation of the revised ozone NAAQS.

C. Key studies and data sources used/consultedSeptember 2014 2 The methods applied in this analysis draw from a number of previous EPA sponsored analyses and data

on control technology costs and cost components. One of these previous analyses was the March 31,

2011 analysis by IEc and ERG for the EPA Office of Policy Analysis and Review that estimated the

employment impacts associated with the manufacture, installation, and operation of scrubbers. That

analysis examined employment impacts associated with installing scrubbers at coal

‐ fired power plants

and ICI boilers. For the purposes of the analysis performed herein for NOx controls, the IEc/ERG analysis

mostly provided a structure for examining and reporting labor costs and associated full

‐ time equivalent

labor utilization. The IEc/ERG analysis relied on the EPA Air Pollution Control Cost Manual and the

related CUECost model to develop labor costs and associated man hours to develop, install, and operate

new control techniques. The analysis presented in this document also relies on these sources, though

we note that they have not been updated since 2000 and may not be fully representative of control

techniques applied today and in the future. This limitation is less important for SO2 scrubbers which are

an older technology. Limited NOx control experience was available when these references/tools were

developed. SC&A also sought to obtain vendor data on labor costs, as labor costs were not explicitly

reported in many of the references used in this analysis.

Because the EPA

‐ CAMD has developed its own routine for estimating the employment opportunities

associated with adding new control equipment at EGUs, we also considered the references that were

developed in support of this activity. The EPA CAMD analysis relies on a report that was originally issued

by EPA’s Office of Research and Development in 2002 (EPA, 2002), an update to that report that was

published in 2011 (Staudt, 2011), and a 2014 analysis that estimates the labor effects of heat rate

improvements for EGU boilers (Staudt, 2014). All of the cost estimates in this memorandum are

presented in 2011 dollars. Many of the studies cited in this analysis are for utility boilers, and provide

information using megawatts

‐ electric (MWe) as the key size indicator. Industrial boiler sizes are

expressed in million Btus per hour. The conversion factor for converting MWe to MMBtu/hr is 9.8. So,

100 MWe is 980 MMBtu/hr.

D. Labor components included in the analysis

Direct employment effects for the selected control technologies are broken down among the following

components: manufacturing (or fabrication) labor, direct installation labor, and operating and

maintenance labor. Where possible, the operating and maintenance labor is identified as operating

labor, maintenance labor, or administrative support labor.

E. Summary of findings

Table 1 summarizes the direct labor impacts, in terms of full time equivalents (FTEs), for the industrial

boiler model plants. The FTEs are summarized by one

‐ time FTEs required for the manufacture and

installation of the SCR controls and FTEs required each year for the operation and maintenance of the

SCR control. This table shows that the FTEs are not linear with the size of the unit, as well as a slight

variation in the estimated FTE depending on the fuel fired. The recurring FTEs are relatively constant forSeptember 2014 3 all fuel types and sizes, at approximately 1 FTE for operation and maintenance of the SCR equipment.

Table 2 provides the same information for the cement kiln SNCR analysis.

Table 1. Summary of Direct Labor Impacts for SCRs at Industrial Boilers

Plant Type Boiler Size

(MMBtu/hr) One

‐ Time

Employment Impacts 1

(Annual FTEs) Recurring Annual

Employment Impacts 2

(FTEs per year)

Coal

‐ fired 750 19.5 1.2

500 15.2 1.1

400 13.6 1.0

250 10.7 0.9

Oil

‐ fired 250 9.8 0.9

150 7.3 0.9

100 5.5 0.8

50 3.2 0.8

Natural Gas

‐ fired 250 10.5 0.9

150 11.0 0.9

100 8.4 0.9

50 6.5 0.8

1. Includes Fabrication and Installation Labor

2. Includes Operations, Maintenance and Administrative Support

Table 2. Summary of Direct Labor Impacts for SNCRs at Cement Kilns

Kiln Type Kiln Size

(ton

clinker/hr) One

‐ Time

Employment Impacts 1

(Annual FTEs) Recurring Annual

Employment

Impacts 2

(FTEs per year)

Preheater/Precalciner 125

‐ 208 2.4 0.1

1. Includes Fabrication and Installation Labor

2. Includes Operations, Maintenance and Administrative Support

II. Industrial Boiler Analysis

This analysis examines the potential labor involvement associated with SCR retrofits on coal, oil and

natural gas

‐ fired ICI boilers. Among NOx control technologies, SCR is expected to be the most

commonly used by ICI boilers to control their NOx emissions for purposes of meeting the revised ozone

NAAQS

, and is also the most difficult NOx control technology to install. It is, therefore, the most

important NOx control technology to understand from both a NOx reduction and resource requirement

perspective. The SCR process operates by reacting ammonia with NOx in the exhaust gas in the presence

of a catalyst at temperatures of typically around 315 to 370 C (600 to 700 F). For most applications, this

temperature range makes it necessary to locate the SCR reactor adjacent to the boiler—immediately

after the boiler and before the air preheater.September 2014 4 A. Model sizes for industrial boiler applications

This analysis estimates the employment impacts associated with the manufacture, installation, and

operation of a selective catalytic reduction (SCR) system for NOx control in industrial boilers. The labor

required for these systems varies according to fuel type and boiler size. The size categories used for this

analysis come from the EPA NOx SIP call analysis and are displayed in Table 3, below, which accounts for

coal

‐ fired boilers typically being larger than boilers running on natural gas or residual oil in industrial

applications.

Table 3. Model ICI Boiler Sizes (MMBTU/hr)

Coal-Fired Boilers 750 500 400 250

Natural Gas-Fired Boilers 250 150 100 50

Residual Oil-Fired Boilers 250 150 100 50

B. Labor components

Total SCR capital costs of industrial boilers were based on the capital costs of ICI boilers in the Central

and Northeast regions, estimated by EPA using its Control Strategy Tool (CoST) model. These costs

were then divided into size categories appropriate to each fuel type based on the model plant sizes used

in the EPA NOx SIP call analysis. For all three fuel types

– coal, natural gas and residual oil, the average

cost per MMBTU/hour per unit is lowest for the larger units.

Total labor costs are estimated as a function of total capital costs and boiler size in the EPA’s Coal Utility

Environmental Cost (CUECost) model. The total labor requirements of an SCR system can be divided

into three parts: fabrication, installation, and operations and maintenance. The primary components of

fabricating an SCR system are steel, catalyst, and reagent. SC&A reached out to various SCR vendors and

while they provided some valuable information, they did not provide a complete picture of the labor

requirements of these three components.

SCR installation requires a significant amount of labor. Most of the labor is needed for on

‐ site

construction. However, engineering and project management labor are also needed. In the 2002 EPA

report, the total construction labor for an SCR system installed on a utility boiler of 500 MW was

estimated to be in the range of 333,000 to 350,000 man hours. Typically, about 40 to 50 percent of the

labor is for boilermakers. This percentage varies by project. Some projects require a higher degree of

boiler integration and less erected steel and therefore have a higher percentage of boilermaker labor.

Engineering and project management are about 5 percent of the total cost, while construction is about

50 percent of the total cost.

The 2011 update to the 2002 report examined the experience with SCR via the NOx SIP Call and CAIR in

order to better quantify the labor needs—especially boilermakers—for SCR using a larger sample of

projects. The 2011 update found that SCR retrofits require boilermakers to perform about 440 man

‐September 2014 5 hours per megawatt. The update also found that boilermakers comprise a large proportion of the total

labor, and that the 40 percent estimate in the 2002 report is still reasonable. This results in a total

estimated labor need for SCR installation of 1,100 hours per MW (440 hours per MW/40%=1,100).

The 2002 report found that steel needed for SCRs was in the range of 2.2

‐ 2.6 tons per MW. This

estimate for SCR steel was found to be reasonable in the 2011 update. Some SCR installations will

require more steel than others—with this being a function of the plant layout.

Availability for SCR catalyst was not an issue for SCRs built in response to CAIR because there was ample

SCR catalyst manufacturing capacity built in response to the NOx SIP Call. SCR reagents did not prove

limiting during industry’s response to CAIR and are not envisioned to be limiting in the future because

these reagents are already widely used elsewhere in our economy.

The capital and O&M costs of an SCR system are outlined in Table 4 below.

Table 4. Capital and O&M Costs of an SCR System

Fabrication Costs Reactor Components, such as housing, ductwork

and ammonia and flue gas handling

Instrumentation, monitoring equipment and

controls

Taxes

Freight

Installation Costs Retrofitting existing systems to create space for

an SCR system

Contingency Capital

Other Capital Costs Initial Catalyst and Reagent Inventory

O&M Costs Operations Cost

Maintenance and Repair Costs

Administrative Support

1. Fabrication

The labor requirements for SCR fabrication were estimated to be consistent with those of scrubber

fabrication, which were estimated to make up 24.1% of total capital costs. This calculation is based on

the information in Staudt, 2011 for a scrubber installation at a 500 MW coal

‐ fired utility boiler. This

dollar figure was then converted into Full Time Equivalents (FTEs) based on the average annual salary of

Mechanical/Chemical Engineers and Steel Workers, as was outlined in the 2011 IEC memo. The annual

compensation figures come from the Bureau of Labor Statistics, and are displayed in Table 5 below. The

Mean Annual Salary figures were adjusted to account for total annual compensation (which includes

paid leave, insurance, and other benefits), based on BLS data for the average benefits of manufacturingSeptember 2014 6 jobs. The total fabrication expenditures were divided by the average fabrication labor compensation (as

seen in Table 5), to estimate the number of full time equivalent workers in SCR construction. Here is an

example calculation of the fabrication labor required for a 750 MMBTU/hr coal boiler:

1. Estimated capital costs of $3,816,030 are multiplied by the percentage of capital costs from

fabrication labor (24.1%) to estimate expenditures on fabrication labor ($919,663).

2. These fabrication labor costs were then divided by the average annual compensation for a

fabrication worker ($134,625), as can be seen in Table 5 below.

3. This provides an estimate of 6.8 FTEs for fabrication of an SCR system for a 750 MMBTU/hr coal

boiler.

Table 5. Annual Wages and Total Compensation for Labor in SCR Construction

Labor Type Occupation Total Annual

Compensation % of labor costs

in subcategory

Fabrication Mechanical/Chemical Engineers $141,000 85%

Fabrication Structural Iron and Steel Workers $98,500 15%

Fabrication Fabrication Labor Average $134,625 100%

Installation Boilermakers $78,500 45%

Installation Other Construction Trades $78,500 50%

Installation Engineering and Construction

Management $141,000 5%

Installation Installation Labor Average $81,625 100%

O&M Operating $68,640 N/A

O&M Maintenance $68,640 N/A

O&M Administrative Support $54,560 N/A

Source: Bureau of Labor Statistics, 2011 and 2014.

2. Installation

To estimate the labor required for SCR installation, we applied the following four

‐ step scaling process:

1. First, we estimated the labor costs associated with SCR installation at utility boilers. The 2011

update (Staudt, 2011) found that SCR retrofits require boilermakers to perform about 440 man

‐

hours per megawatt, along with an additional 660 man

‐ hours for other labor. This results in a

total estimated labor need for SCR installation of 1,100 hours per MW. These 1,100 hours per

MW were converted into a dollar figure using the total annual compensation outlined in Table 5

above.

2. Second, this figure was then compared against the total capital cost of a 500 MW coal plant

(Staudt, 2011) to estimate a total installation labor portion of total capital costs of 27%.September 2014 7 3. Third, we applied the ratio of labor costs to capital costs as estimated in Step 2 to the capital

costs of ICI boilers to estimate the total installation labor expenditures for fabrication and

installation.

4. Fourth, the total installation labor expenditures were then converted into labor FTEs based on

the average annual compensation for an installation employee ($81,625).

3. Operating and maintenance

There is mixed evidence regarding labor costs associated with operating and maintaining an SCR system.

In our evaluation we considered the information in the EPA Air Pollution Control Cost Manual, CUECost,

and the latest SCR cost development methodology for the Integrated Planning Model (Sargent & Lundy,

2013) in developing an approach for estimating labor costs and associated FTEs.

The EPA Air Pollution Control Cost Manual notes that the SCR reactor is a stationary device with no

moving parts. Further, the SCR system incorporates only a few pieces of rotating equipment (e.g.,

pumps, motors, etc.). Therefore, the existing plant staff can operate the SCR from an existing control

room. In general, operation of an SCR system does not require any additional operating or supervisory

labor (EPA, 2002).

The EPA CUECost model has algorithms that estimate the operating labor requirements of an SCR to

range from one FTE for a 100 MW boiler to two FTEs for a 500 MW boiler.

The Sargent and Lundy analysis says that one additional operator is required for all installations.

However, the Sargent and Lundy analysis is for EGUs, which typically have larger boilers than industrial

applications, so it is possible that a facility with a small industrial boiler would not have to hire an

additional operator. Given the above, this analysis uses the CUECost equations for SCR utility boiler

applications to estimate the labor needed for ongoing SCR system industrial applications. These CUE

Cost equations are largely consistent with the Sargent and Lundy analysis, which is the most recent of

the three assessments.

Total Operation, Maintenance, and Administrative Support Labor were estimated using the

methodology outlined in CUECost. Annual operating labor is estimated based on boiler capacity,

whereas the labor requirements for maintenance and administrative support are estimated as a fraction

of total plant costs. The operating labor requirements in CUECost are estimated to be 1341 hours per

SCR unit per year, plus an additional 5 hours per MW of capacity. These hours were then converted into

FTEs. Annual maintenance costs are estimated in CUECost to be 1.5% of total fabrication and

installation costs, but it is uncertain what portion of these costs are labor. This analysis assumes that

40% of costs come from labor, and 60% come from materials, as was assumed in CUECost for Low NOx

burners. This cost figure is then converted into annual FTEs using the annual compensation of $68,640

for maintenance staff. CUECost does not include a separate estimate of administrative support labor

costs for an SCR system, and therefore the formula for Low NOx Burners was used instead, which

indicates labor hours to be 30% those of maintenance hours. It is possible that these hours should beSeptember 2014 8 negligible for SCR systems on industrial boilers, but the current administrative support estimate is a

relatively small portion of the total O&M hours.

C. Results summary and discussion

Coal Fired Boilers

Table 6 below shows the total labor requirements, including fabrication, installation and operation of an

SCR system for a model coal

‐ fired ICI boiler. Coal fired boilers are on average larger than natural gas and

oil boilers, and estimated to range from 750 MMBTU/hr for the largest units to 250 MMBTU/hr for the

smallest boilers.

Table 6. Total Labor Requirements of SCR system for a Coal

‐ Fired ICI Boiler

(Full Time Equivalents, unless otherwise specified)

Boiler Size (MMBTU/hr) 750 500 400 250

Total Capital Cost Required ($ Dollars) $3,816,030 $2,977,277 $2,664,864 $2,096,408

Manufacturing Labor 6.8 5.3 4.8 3.8

Installation Labor 12.6 9.8 8.8 6.9

Boilermakers 5.0 3.9 3.5 2.8

Other Labor 7.6 5.9 5.3 4.2

Total Operation, Maintenance, and

Administrative Support Labor 1.2 1.1 1.0 0.9

Operating Labor 0.9 0.8 0.8 0.8

Maintenance 0.2 0.2 0.2 0.1

Administrative Support 0.1 0.1 0.0 0.0

Natural Gas Boilers

Table 7 below shows the total labor requirements, including fabrication, installation and operation of an

SCR system for a model natural gas

‐ fired boiler. Natural gas

‐ fired boilers are estimated to range from

250 MMBTU/hr for the largest units to 50 MMBTU/hr for the smallest boilers. Overall capital costs for

natural gas

‐ fired boilers are lower than they are for a comparable boiler burning oil.September 2014 9 Table 7. Total Labor Requirements of SCR system for a Natural Gas ICI Boiler

(Full Time Equivalents, unless otherwise specified)

Boiler Size (MMBTU/hr) 250 150 100 50

Total Plant Cost Required ($ Dollars) $1,918,961 $1,437,666 $1,087,661 $621,219

Manufacturing Labor 3.4 2.6 1.9 1.1

Installation Labor 6.3 4.8 3.6 2.1

Boilermakers 2.5 1.9 1.4 0.8

Other Labor 3.8 2.9 2.2 1.2

Total Operation, Maintenance, and

Administrative Support Labor 0.9 0.9 0.8 0.8

Operating Labor 0.8 0.7 0.7 0.7

Maintenance 0.1 0.1 0.1 0.0

Administrative Support 0.0 0.0 0.0 0.0

Oil

‐ Fired Boilers

Table 8 below shows the total labor requirements, including fabrication, installation and operation of an

SCR system for a model oil

‐ fired boiler. Oil boilers are estimated to range from 250 MMBTU/hr for the

largest units to 50 MMBTU/hr for the smallest boilers. A 250 MMBTU/hr oil

‐ fired boiler is estimated to

be more expensive than a boiler burning natural gas, but less expensive than one burning coal. The

manufacturing and O&M labor requirements are estimated to be slightly higher for an oil

‐ fired boiler

than a natural gas boiler.

Table 8. Total Labor Requirements of SCR system for an Oil

‐ Fired ICI Boiler

(Full Time Equivalents, unless otherwise specified)

Boiler Size (MMBTU/hr) 250 150 100 50

Total Plant Cost Required ($ Dollars) $2,063,345 $2,150,908 $1,640,334 $1,267,542

Manufacturing Labor 3.7 3.9 2.9 2.3

Installation Labor 6.8 7.1 5.4 4.2

Boilermakers 2.7 2.8 2.2 1.7

Other Labor 4.1 4.3 3.3 2.5

Total Operation, Maintenance, and

Administrative Support Labor 0.9 0.9 0.9 0.8

Operating Labor 0.8 0.7 0.7 0.7

Maintenance 0.1 0.1 0.1 0.1

Administrative Support 0.0 0.0 0.0 0.0September 2014 10 III. Cement Kiln Analysis

There are a number of NOx control techniques that can be applied to cement kilns. This analysis focuses

on SNCR applications because this is estimated to be the dominant NOx control technique applied to

existing kilns in the U.S. to meet any future NOx control requirements.

A. Model sizes for cement kiln applications

Cement kilns are generally grouped into four types: wet kilns, long dry kilns, preheater kilns, and

precalciner kilns. Of these, SNCR is considered an appropriate control technology for the preheater and

precalciner kiln types. SNCR is not an effective control measure for wet and long dry kilns due to the

specific temperature requirements needed for SNCR to be effective. Most newer kilns and kilns now

being built are of the preheater or precalciner type. Therefore, this analysis focuses on preheater and

precalciner kilns. SC&A contacted several SNCR equipment vendors in an attempt to obtain information

about the labor components of the costs for fabrication and installation of SNCR at cement kilns. One

vendor, De

‐ NOx Technologies, LLC, was able to provide an estimate of labor associated with the

application of SNCR based on their experience of providing SNCR systems for a number of cement kilns

(Wojichowski, 2014). Presented in Table 9, this estimate applies to North American cement kilns with

preheaters/precalciners with production ranging from 3,000 to 5,000 tons clinker per day, or 125 to 208

tons clinker per hour. This range of kiln capacities represents mid

‐ size cement kilns of the

preheater/precalciner type. The primary fuel in most U.S. kilns is coal, although some kilns burn

secondary fuels, such as tires, biomass, or waste.

The NOx reduction efficiency with SNCR is dependent upon the temperature, residence time, and the

concentration of ammonia and NOx in the flue gas. The NOx control efficiency resulting from applying

SNCR to cement kilns can range from 20 to 90 percent (EPA, 2010). The NOx reduction rate can be

adjusted by selecting the appropriate ratio of reagent to NOx. For example, a 35 percent NOx reduction

can be achieved from SCNR at a cement kiln using an ammonia to NOx ratio of 0.5. By doubling this

ammonia to NOx ratio to 1.0, the NOx reduction rate can be increased to about 63 percent (EPA, 2010).

At high ratios of ammonia to NOx, some of the ammonia may not react with the NOx, causing ammonia

slip. For this analysis, a fairly typical value of 50% reduction was selected, which represents a

reasonable level of performance for SNCR over its expected lifetime.

B. Labor components

The labor and cost information provided by the SNCR vendor are presented in Table 9. The time

required from issuing a request for quotations to completion of compliance testing of the installed SNCR

system is 47 to 51 weeks, with actual installation taking approximately 8 to 12 weeks (ICAC, 2006).September 2014 11 Table 9. SNCR System Costs for 3,000

‐ 5,000 tpd Cement Kilns based on Vendor Experience

Equipment Supply Field Installation Total System

Total Capital $300,000 $150,000 $450,000

Labor Component $200,000 $75,000 $275,000

Annual Operating and Maintenance N/A N/A 200 man

‐ hours/year

Labor Percentage of Total System

Capital Cost 44.4% 16.7% 61.1%

Source: Wojichowski, 2014

Prior to obtaining this vendor information, SC&A evaluated the availability of cost equations or cost

models for determining the capital and labor costs associated with installing SNCR controls at cement

kilns. EPA’s Air Pollution Control Cost Manual provides an equation for estimating the cost components

of SNCR systems. However, that equation is based on the application of SNCR to large industrial boilers

(greater than 250 MMBtu/hr) and was developed in the late 1990s when only a small number of SNCR

systems had been installed. The 2007 ACT update for cement kilns (EPA, 2007) provides information

from a number of SNCR systems applied to cement kilns. However, of the examples for which a capital

cost is provided in the ACT update document, many of these are based on model data, such as the

Control Cost Manual, or are for cement kilns located outside of the U.S. Thus, SC&A believes that,

although the vendor data provides only one data point, because the vendor data are specifically

applicable to installations of SNCR at cement kilns and represent data gathered from recent experience

at multiple installations, the vendor data offer a better and more current illustration of the labor

impacts associated with SNCR applications at cement kilns than cost models based on less

representative and older data.

1. Fabrication

The capital cost requirements for SNCR systems primarily include the cost of an injection system for the

reagent, the delivery systems, storage tanks for the reagents, and the control instrumentation (EPA,

2007). Based on the data in Table 9, fabrication labor needed for equipment supply accounts for 44% of

the total capital cost of an SNCR system for cement kilns. Using the average annual wage data from

Table 5 for fabrication of control equipment, the manufacturing labor cost was converted to FTEs.

2. Installation

The data from Table 9 show that 17% of the SNCR system capital costs are needed for the labor to install

the SNCR system. The average annual wage associated with installation of control equipment, as

shown in Table 5, was used to convert the system installation costs to FTEs.

3. Operating and maintenance

Based on the vendor experience for SNCR applied to a preheater/precalciner kiln type in the range of

3,000 to 5,000 tons clinker per day, approximately 200 hours of labor are needed on an annual recurringSeptember 2014 12 basis for operation and maintenance of the SNCR system. This value was converted to FTEs assuming

1,900 labor hours per FTE.

C. Results summary and discussion

Table 10 shows the results of this direct labor analysis for preheater/precalciner cement kilns within the

range of 125 to 208 tons clinker per hour. Approximately 2.4 FTEs are needed on a one

‐ time basis to

manufacture and install the SNCR control system. Additionally, 0.1 FTEs are needed on an annual

recurring basis over the lifetime of the SNCR equipment for operation and maintenance.

Table 10. Estimated Direct Labor Impacts for SCNR Applied to Cement Kilns

Kiln Type PH/PC

Kiln Capacity (ton clinker/day) 3,000

‐ 5,000

Kiln Capacity (ton clinker/hr) 125

‐ 208

NOx Reduction 50%

Total Capital Investment (Note 1) $450,000

Manufacturing Labor (Note 1) $200,000

Installation Labor (Note 1) $75,000

Labor % of Capital Cost 61%

Manufacturing % of Capital 44.4%

Installation % of Capital 16.7%

Manufacturing Average Worker Annual Salary ($) (Note 2) $134,625

Installation Average Worker Annual Salary ($) (Note 3) $81,625

Manufacturing FTE 1.5

Installation FTEs 0.9

O&M Annual Labor (hours/year) (Note 1) 200

O&M Annual Recurring FTE 0.11

Notes:

1: Source: Wojichowski, 2014

2: 85% Mechanical/Chemical Engineers; 15% Structural Iron and Steel Workers (includes overhead)

3: 45% Boilermakers; 50% Construction; 5% Engineering and Construction Management

The SNCR capital cost shown in Table 10 is much lower than the ACT document shows, but, as discussed

above, many of the cost estimates included in the ACT document are based on cost models. The 2007

ACT update summarizes SNCR costs applied to cement kilns as cost burdens ranging from $0.40 to $2.50

per ton of clinker (EPA, 2007). The midpoint capacity of the vendor data is 4,000 tons per day (or

1,460,000 tons clinker per year). At this capacity, the associated range of capital costs using the ACT

cost burden data would be $584,000 to $3,650,000, compared to $450,000 from the vendor data. The

vendor data illustrates that more cost

‐ effective approaches and technologies for SNCR control systems

may now be available. Although the vendor data represents a limited sample size, SC&A opted to useSeptember 2014 13 the vendor data in this analysis as it represented real data rather than model data based on possibly

outdated cost assumptions.

IV. Upstream Indirect Analysis

In addition to the labor required to manufacture control equipment, the purchased input materials to

the equipment manufacturing process also require labor. By breaking out the materials cost paid by the

control manufacturer to the various industries that manufacture the specific parts used in control

technology equipment, the upstream labor impacts of a control system purchase can be estimated. In

addition, consumables such as ammonia or urea that may be used in these control devices also create

an upstream labor impact.

SC&A developed a rough analysis to estimate these upstream labor costs. Data from the US Census

Bureau’s 2012 Economic Census were used in this analysis. This census includes information at the 6

‐

digit NAICS code including the value of primary products shipments as well as the number of employees

in the industry and the payroll for these employees. From these data, SC&A estimated the value of

primary products shipments per employee for industries supplying materials to control manufacturers.

SCR Upstream Cost Analysis

To analyze the upstream labor impacts of SCR, the primary material components included are reagent

(typically ammonia or urea), catalyst, and steel. The purchased material cost of each of these

components was estimated for installing SCR at a 750 MMBtu/hr coal

‐ fired industrial boiler. These

component costs were estimated as shown in Table 11 in the column labeled Value Purchased per SCR

Control Equipment.

Except for the catalyst, most of the material/equipment used to assemble an SCR system is either

standard mechanical and electrical components or is largely manufactured for other plant applications

and has been adopted for use in SCR systems. The catalyst, however, is a specialized product designed

specifically for this purpose. The catalyst is typically a ceramic material that, in most cases, is either

extruded into a ceramic honeycomb structure or is coated onto plates. The catalyst is assembled into

modules at the factory. The modules are shipped to the site and installed into the SCR reactor in layers.

Each layer of catalyst is comprised of several individual modules that are installed side

‐ by

‐ side.

The material used in the largest quantity, aside from catalyst or reagent, is steel. The amount of steel

required for an SCR system in the range of 300

‐ 500 MWe (2940

‐ 4900 MMBtu/hr) is about 800 to 1200

tons, or about 2.4 to 2.6 tons per MWe. The steel used for an SCR includes large structural members,

plates, or sheets. These steel pieces are used to fabricate the catalyst reactor, the ductwork, and the

support steel. There is typically less of a requirement for corrosive resistant alloys for an SCR installation

when compared with a scrubber installation. Steel is also needed for boiler modifications, because large

pieces of steam piping or other large steel boiler components may need to be replaced. The catalyst

reactor is often fabricated on

‐ site. Sections of the catalyst reactor and ductwork may be fabricated off

‐September 2014 14 site and shipped in pieces to the site for final assembly, or they may be fabricated on

‐ site into sub

‐

assemblies and lifted into place during erection.

Steel manufacturing costs in this upstream analysis are estimated based on an average of 2.5 tons of

steel per MW multiplied by current steel costs of $736/metric ton ($811/short ton) (SteelBenchmarker,

2014). Based on information from BASF Corporation (Mack, 2014), we used a benchmark of 2 cubic

meters of catalyst per MW of capacity to estimate the total quantity of catalyst required for a 750

MMBTU/hr SCR unit. A cost of $8,000 per cubic meter was used to estimate total catalyst costs (Sargent

& Lundy, 2013). The materials cost for ammonia comes from CUECost. As can be seen in Table 11,

catalyst costs are more than an order of magnitude larger than either steel or ammonia costs.

These material costs were divided by the value of primary product shipments per employee to estimate

the associated FTE. Table 11 shows the industries used in this analysis, the value of primary products

per employee, the value of products purchased per SCR control system and the resulting FTE for the

purchased equipment. In addition, reagent is needed on a regular basis, so the FTE estimate for the

inorganic chemical manufacturing industry is an annual FTE estimate to account for the use of ammonia

or urea. In addition to the initial catalyst needed for SCR startup, the catalyst needs to be replaced on a

recurring basis. With a catalyst lifetime of 24,000 hours (EPA, 2002) and a typical boiler capacity factor

of 0.65, the catalyst would need to be replaced every 4.2 years. This can be accomplished by either

replacing a portion of the catalyst modules on a regular basis or replacing the entire catalyst at the end

of its lifetime. Table 11 shows this replacement cost on a per

‐ year basis. Since SCR can be operated on

a seasonal basis if NOx reductions are only required during the ozone season (which is typically May

through September), Table 11 shows what the recurring labor requirements would be for 5

‐ month

operation, as well as for year

‐ round operation. It should be noted that additional transportation and

delivery labor would also be needed on a regular basis to supply the reagent. The final column in Table

11 shows the resultant FTEs from this analysis.September 2014 15 Table 11. Estimate of Indirect Labor FTEs Needed to Supply Materials to SCR Vendor

2012

NAICS

Code Description of 2012 NAICS Code Value of Primary

Products

Shipments and

Receipts for

Services Per

Employee ($1000

per employee) Value

Purchased

per SCR

Control

Equipment* Estimated

FTEs

One-Time Costs

327110 Pottery, ceramics, and plumbing fixture

manufacturing $145 $1,224,490 8.46

331110 Iron and steel mills and ferroalloy manufacturing $1,056 $155,180 0.15

Recurring Annual Costs (Assuming Year-Round SCR Operation)

325180 Other basic inorganic chemical manufacturing $853 $141,086 0.17

327110 Pottery, ceramics, and plumbing fixture

manufacturing $145 $290,510 2.01

Recurring Annual Costs (Assuming 5-Month Seasonal SCR Operation)

325180 Other basic inorganic chemical manufacturing $853 $58,786 0.07

327110 Pottery, ceramics, and plumbing fixture

manufacturing $145 $121,046 0.84

One Time FTE 8.60

Annual Recurring FTE--Year-Round SCR Operation 2.17

Annual Recurring FTE--5-M onth SCR Operation 0.90

*Analysis is for SCR at a 750 MMBtu/hr coal plant

SNCR Upstream Cost Analysis

A similar upstream labor analysis was performed for an SNCR control system. EPA’s Control Cost

Manual provides a detailed listing of the equipment needed for urea

‐ based SNCR system equipment

(EPA, 2002). Key items in this list include: storage tanks, stainless steel pipes and tubing, electric

heaters, instrumentation and controls, pumps, and other equipment and materials.

Table 12 illustrates an example based on the costs of applying SNCR to a preheater/precalciner cement

kiln of 3000 tons clinker per day or 125 tons clinker per hour. The SNCR vendor data from Table 10 was

used to estimate the capital cost. The total costs for labor were subtracted from the capital cost. Based

on data in the EPA Control Cost Manual, and other cost model data used in BACT analyses, SC&A

estimated that 50 to 75 percent of the remaining capital cost (after labor is subtracted) goes towards

the purchase of materials by the vendor. Table 12 summarizes the breakdown of costs for this example.

The reagent cost was obtained from a Best Available Control Technology Analysis for the Sumter

Cement plant. For this 3,000 tons clinker per day capacity cement kiln, this analysis provides the

expected reagent quantity and cost for year

‐ round operation of an SNCR system at this kiln (Spectrum,

2011) at a 30 percent NOx reduction. The quantity of reagent was scaled to achieve 50 percent

reduction. In cases where NOx controls are needed only for ozone precursor emission reductions, it is

likely that the SNCR control system would only be operational during the five

‐ month ozone season.

Therefore, the cost of reagent needed for five

‐ month operation was also estimated, as shown in Table

12.September 2014 16 Table 12. Upstream Equipment/Materials and Reagent Costs for a 3,000 tpd Cement Kiln with SNCR

Cost Component Cost ($)

SNCR Capital Cost $450,000

SNCR Labor Cost $275,000

Remaining Non

‐ Labor Cost $175,000

Estimated Equipment/Materials Purchase Cost (at 50% to 75% of non

‐ labor cost) $87,500

‐ $131,250

Estimated Reagent Cost (1,445 tons per year required for year

‐ round operation

at 8,760 hr/yr at $0.12/lb) $364,900

Estimated Reagent Cost (602 tons per year required for ozone season operation

at 3,650 hr/yr) $240,900

Source of reagent cost for a 3,000 tpd cement kiln: Spectrum, 2011.

The next step in this analysis was to identify the industries likely to supply the equipment, materials, and

reagent needed for an SNCR system. The equipment and materials needed for SNCR are varied and

include: storage tank for the reagent, piping materials, pumps, pump valves, and monitoring and

control equipment and instrumentation. SC&A identified industries that might be likely to manufacture

these materials. These are shown in Table 13. The reagent is expected to be manufactured by the

inorganic chemical manufacturing industry. For each of the identified industries, the Economic Census

data provides the total 2012 Value of Primary Products Shipments and Receipts for Services and the

number of employees in the industry. By dividing the value of the primary products shipments by the

number of employees, SC&A estimated the value of primary products shipments per employee for each

of these industries. These values are shown in Table 13. For the SNCR materials and equipment, no

estimate was available of the quantity purchased by industry or the distribution of equipment/materials

costs among the industries likely to supply the materials for an SNCR system. Therefore, SC&A

calculated the average of the value of primary product shipment per employee for the industries

expected to supply equipment and materials needed for an SNCR system, for an average value of

primary product shipment per employee of $390,000 for the equipment and materials needed for an

SNCR system.September 2014 17 Table 13. Value of Annual Products Shipment per Employee for Materials Needed for SNCR

Component 2012

NAICS

Code Description of 2012 NAICS Code Value of Primary

Products Shipments

and Receipts for

Services Per Employee

($1000 per employee)

Reagent 325180 Other basic inorganic chemical manufacturing $853

Equipment and

Materials 326122 Plastics pipe and pipe fitting manufacturing $431

331210 Iron and steel pipe and tube manufacturing from

purchased steel $534

332911 Industrial valve manufacturing $307

333911 Pump and pumping equipment manufacturing $388

334513 Instruments and related products manufacturing for

measuring, displaying, a nd controlling industrial

process variables $289

Average for Equipment and Materials $390

The equipment/materials and reagent costs shown in Table 12 were divided by the average of the value

of primary product shipments per employee to estimate the associated FTE with the production of these

materials from Table 13. The final column in Table 14 shows the resulting FTE for the purchased

equipment and reagent. Since reagent is needed on a continual basis when the SNCR system is

operating, the FTE estimate for the inorganic chemical manufacturing industry is an annual recurring FTE

estimate. It should be noted that additional transportation and delivery labor would also be needed on

a regular basis to supply the reagent.

Table 14. Estimate of Indirect Labor FTEs Needed to Supply Materials to SNCR Vendor

Component Value of Primary

Products

Shipments and

Receipts for

Services Per

Employee

($1000 per

employee) V alue of

Materials

Purchased

per SNCR

Control

System at a

3,000 tpd

PC/PH

Cement Kiln Estimated FTEs

Required for

Production

Reagent (year-round operation) $853 $346,900 0.41 (recurring

annual FTE

requirement)

Reagent (5-month operation) $853 $240,900 0.28 (recurring

annual FTE

requirement)

Equipment and Materials Average $390 $87,500-

$131,250 0.22-0.34 (onetime FTE

requirement)September 2014 18 V. Analysis Uncertainties

Most of the information about the labor components of SCR costs comes from utility applications. That

information is being scaled in this analysis to much smaller sized industrial units. Such scaling may not

be appropriate for the smallest sizes. We have not collected information that is specific enough to the

smallest sizes to allow us to determine what the potential error range may be in such an assumption.

The labor estimates for SCR installation at industrial boilers are least uncertain for installation labor, and

most uncertain for fabrication labor and operating labor.

The cement kiln SNCR analysis provided herein is based on recent control cost estimates from a single

vendor. That information shows much lower capital costs than is estimated in published EPA reports.

The information in this analysis should be confirmed with other SNCR vendors. In addition, costs for

smaller or larger kilns would be useful to determine whether there are economies of scale associated

with the capital or labor costs associated with SNCR controls at industrial facilities.

In addition, the labor mix for SNCR fabrication, installation, and operations is assumed to be the same

mix as that for SCR. If the labor mix for SNCR is significantly different than that for SCR, this could

change the estimate of FTEs needed for fabrication and installation of SNCR.

It is recommended that future control cost algorithm development break

‐ out more of the labor

components of the purchased equipment cost and the installation cost. It would also be useful to have

more information about the costs of the key materials that make

‐ up the control equipment/control

technique.

References

Bureau of Labor Statistics, 2011. “National Compensation Survey: Occupational Earnings in the United

States, 2010.” Located online at: http://www.bls.gov/ncs/nc swage2010.htm#Wage_Tables

Bureau of Labor Statistics, 2014. “Employer Costs for Employee Compensation”. Released September

10, 2014. Located online at: http://www.bls.gov/news.release/ecec.toc.htm

EC/R, 2000: EC/R Incorporated, NOx Control Technologies for the Cement Industry, Final Report,

prepared for EPA, Office of Air Quality Planning and Standards, Air Quality Strategies and Standards

Division, September 19, 2000.

EPA, 2002: Engineering and Economic Factors Affecting the Installation of Control Technologies for

Multipollutant Strategies, EPA

‐ 600/R

‐ 02

‐ 073, prepared by ARCADIS Geraghty & Miller, Prepared for U.S.

Environmental Protection Agency, Office of Research and Development, Washington, DC, October 2002.

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‐ 02

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EPA

‐ 453/R

‐ 07

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Economics Group, to J. Wilson SC&A, spreadsheet of ICI Boiler control cost estimates for the Central and

Northeast Regions of the United States, September 3, 2014.

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http://www.epa.gov/nrmrl/appcd/co mbustion/cec_models_dbases.html

.

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– Updates to Cost and Performance for APC Technologies

‐‐ SCR Cost

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Applications Corporation

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