**Final Draft Staff Report for**

**Revised Proposed Rule 4308** SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

FINAL DRAFT STAFF REPORT

Revised Proposed Rule 4308

(Boilers, Steam Generators, and Process Heaters

- 0.075 MMBtu/hr to 2.0 MMBtu/hr)

October 20, 2005

Prepared by: Daniel Garcia, Air Quality Specialist

Reviewed by: Joven R. Nazareno, Senior Air Quality Engineer

George Heinen, Supervising Air Quality Engineer

Maria Stobbe, Planning Manager

I. SUMMARY

A. Reasons for Rule Development and Implementation

The California Air Resources Board (ARB) and the U.S. Environmental Protection

Agency (EPA) classify the San Joaquin Valley Air Basin (SJVAB) as a nonattainment

area for the state and federal health based ambient ozone and particulate matter

10 microns in size and smaller (PM1 0) standards. Currently, the SJVAB is classified as

serious nonattainment for the 24

- hour and annual National Ambient Air Quality

Standards (NAAQS) for PM10, serious nonattainment for federal ozone standards, and

severe nonattainment for the state ozone s tandard.

The San Joaquin Valley Unified Air Pollution Control District (District) adopted its 2003

PM10 Attainment Demonstration Plan on June 19, 2003, which projects attainment of

the NAAQS for PM10 at the earliest practicable date of December 31, 2010. As part of

its PM10 attainment strategy, the District is required to reduce directly emitted PM10

and the PM10 precursors, oxides of nitrogen (NOx). The 2003 PM10 Plan commits the

District to develop new rules or amend existing rules to achieve these emi ssion

reductions. Additionally, the California Clean Air Act (CCAA) requires the District to

adopt all feasible control measures to attain the standards.

As a serious ozone nonattainment area, the SJVAB is required by the federal Clean Air

Act (CAA) to attain the NAAQS for ozone by June 15, 2013. In order to achieve

attainment by 2013, the District is required to prepare a new ozone plan that will need

additional commitments to reduce emissions of ozone precursors, [NOx, and volatile

organic compounds ( VOCs)].SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Final Draft Staff Report Rule 4308 October 20, 2005

2 **Final Draft Staff Report for**

**Revised Proposed Rule 4308**  B. Description of the Project

The primary objective of this project is to develop new Rule 4308 (Boilers, Steam

Generators, and Process Heaters

– 0.075 MMBtu/hr to 2.0 MMBtu/hr) to establish NOx

emissions limits. The District is proposing to de velop Rule 4308 to achieve emission

reductions committed to in the 2003 PM10 Plan.

II. BACKGROUND

A. Source Description

Based on a survey of the SJVAB conducted by Pacific Environmental Services (PES) in

2001 there are an estimated 4,228 units with a h eat input rating between 0.075

MMBtu/hr and 2.0 MMBtu/hr located in the District. According to the PES survey:

• These units are usually found in manufacturing facilities, government

facilities, general merchandise stores, restaurants, hotels, rooming hou ses

and camps, cleaning service facilities, hospitals, educational institutions,

religious organizations, and refineries.

• 97% of the boilers are fueled by natural gas; other fuels reported were

liquefied propane and distillate oil. Those devices surveyed by PES that

do not use natural gas are in operation at schools. The fuel type is

important when considering control technology.

• The survey reported that the median age for all unit types in the SJVAB

was 13 years.

In the PM10 Plan, the District estima tes that 39.8 tons per day (tpd) of NOx and 5.1 tpd

of SOx are emitted in the SJVAB from this source category. Staff discussions with

stakeholders and a review of the South Coast Air Quality Management District

(SCAQMD) emissions analysis for Rule 1146.2 indicated a need for District staff to

improve the estimated number of units in the SJVAB and emissions associated with this

source category. District staff has further refined the estimated number of units and the

annual emissions for this source categor y in the emission reduction analysis

(Appendix B).

B. BACM (Best Available Control Measures) Analysis

According to the 2003 PM10 Plan, NOx and SOx emissions from industrial, commercial,

industrial and institutional small boilers, steam generators, proces s heaters and water

heaters exceed the “de minimus threshold” levels and are therefore subject to federal

BACM requirements. BACM is defined as the maximum degree of emission reductions

considering technical feasibility, economic feasibility and environme ntal impacts ofSAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Final Draft Staff Report Rule 4308 October 20, 2005

3 **Final Draft Staff Report for**

**Revised Proposed Rule 4308**  available emission controls. The CAA requires nonattainment areas for PM10 to

implement BACM on all significant sources of PM10 and PM10 precursors.

District staff prepared a BACM analysis; staff used the EPA Technology Transfer

Network C lean Air Technology Center Clearinghouse and other rules and regulations to

identify BACM controls and limits for this source category. The emission control

strategies currently utilized by smaller units (0.075 MMBtu/hr to 0.3 MMBtu/hr) include

radiant, t wo

- stage, non

- aerated, and ribbon burner technologies. These technologies

work by lowering peak flame temperature and reducing the amount of air flowing to the

burner. These emission control strategies are also used in larger units (0.3 MMBtu/hr

up to b ut not including 2.0 MMBtu/hr). Completion of the BACM Analysis demonstrated

that units subject to proposed Rule 4308 must meet or exceed the federal BACM level

of emission controls.

C. All Feasible Control Measures

To satisfy the requirements of the Cal ifornia Clean Air Act the ARB mandates that “At a

minimum, a district consider regulations that have been successfully implemented

elsewhere.” Additionally, ARB states “They (districts) should also consider going

beyond what has already been accomplished by evaluating new technologies and

innovative approaches that may offer potential emission reductions.” Further, ARB

includes “districts should consider not only technological factors, but also social,

environmental economic, and energy factors which prev ail in the district, along with the

resources realistically available to the district to adopt, implement, and enforce the

measures.” To meet those requirements, the District has identified all feasible control

measures and has determined that proposed Ru le 4308 does meet every feasible

control measure.

The SCAQMD has an existing NOx emission limit of 0.093 lb/MMBtu of heat input for

units with a heat input rating between 0.075 MMBtu/hr and 0.4 MMBtu/hr and

manufactured after January 1, 2001. The SCAQMD also has an existing NOx emission

limit of 0.036 lb/MMBtu of NOx (corrected to 3% O 2, dry) for units with a heat input rating

between 0.4 MMBtu/hr and 2.0 MMBtu/hr and manufactured after January 1, 2000.

Considering the attainment status of the SJVAB, it is necessary for the District to

implement similar or equally stringent emission limits as those set by the SCAQMD,

which is nonattainment for federal PM10 and ozone standards, and nonattainment for

state PM10 and ozone standards.

III. DISCUSSION

A. Source Category

The technology required to reduce NOx emissions is currently available. Most small

boiler manufacturers offer at least one model that meets or exceeds the limits proposedSAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Final Draft Staff Report Rule 4308 October 20, 2005

4 **Final Draft Staff Report for**

**Revised Proposed Rule 4308**  in draft Rule 4308. A boiler or water heater typically has a life span of over a decade

before it needs to be replaced. Based on an implementation study conducted by the

SCAQMD the average useful life of boilers, with a rated heat input between 0.4

MMBtu/hr and 2.0 MMBtu/hr, is 15 years. The implementation study d oes not define

the average useful life of boilers, with a rated heat input between 0.075 MMBtu/hr and

0.4 MMBtu/hr, because the requirements set

- forth in the SCAQMD Rule 1146.2 for this

size range of boilers are attrition based. Survey results, published in 2001 by PES,

concluded that the median age of existing small boilers and water heaters in the

SJVAB, with heat input ratings of 5.0 MMBtu/hr and less, is 13 years of age. Due to the

age of these boilers and water heaters, PES found that many lack emiss ion controls

common to currently manufactured units.

B. Control Technology

Emission control strategies generally fall into two categories. Typically, these control

systems are successful in simultaneously attaining low

- NOx and CO emission levels.

Low

– NOx technology is available for smaller units (less than 0.3 MMBtu/hr) and larger

units (between 0.3 MMBtu/hr and 2.0 MMBtu/hr). These technologies work by lowering

peak flame temperature and reducing the amount of air flowing to the burner.

• Control Technology for Units With a Heat Input From 0.075 MMBtu/hr up to but

not including 0.3 MMBtu/hr

There are several burner technologies that have been available for commercial units

prior to 1982. The burner technologies that are available to meet the pro posed NOx

emission limits include radiant, two

– stage, non

- aerated, and ribbon burners. These

technologies work by lowering the peak flame temperature and reducing the amount of

air flowing to the burner.

• Control Technology for Units With a Heat Input Gr eater than 0.3 MMBtu/hr up to

but not including 2.0 MMBtu/hr

For units with a rated heat input that is greater than 300,000 Btu/hr manufacturers add a

fan to force combustion air into the unit. A fan assists in adjusting the distribution of air

and fuel to the combustion zone (staging combustion). Decreasing excess oxygen (or

air) decreases NOx emissions. This mechanism reduces heat loss through the stack.

A reduction in air that is combusted decreases the quantity of air that must be heated,

therefor e less heat is required. The reduction of excess air and other types of low

- NOx

strategies also improve fuel efficiency.

Lowering the peak flame temperature of combustion and/or reducing the oxygen

available at the peak flame temperature are achieved t hrough burner design. This is

usually accomplished by delaying the introduction of a portion of the combustion air to

the flame or by spreading the flame out across a surface so that it burns cooler.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Final Draft Staff Report Rule 4308 October 20, 2005

5 **Final Draft Staff Report for**

**Revised Proposed Rule 4308**  There are two primarily low

- NOx burner designs: forced draft low

- NOx and power

premix. In the forced draft low

- NOx, burner the unit is designed such that air and fuel

are delivered separately to the burner. The combustion process is controlled inside the

burner, creating a good mix of air and fuel for comple te combustion. This process

lowers the peak temperature with sufficient air to burn all of the natural gas. Power

premix low

- NOx burners are designed such that air and fuel are mixed outside of the

boiler. A fan is used to push air into the unit and the gas is mixed in an air pipe. The

combined air and fuel mixture is combusted on a porous substrate that acts as a burner,

which holds and stabilizes the flame. This design controls the amount of air in the

mixture and allows the flame to be distributed bro adly across a surface. This design

also lowers the peak flame temperature.

C. Summary of the Proposed Rule 4308

District Rule 4308 is designed to limit NOx emissions from commercial, industrial and

institutional small boilers, steam generators, process heaters and water heaters. Rule

4308 addresses both adequate control and mitigation requirements. The proposed rule

is summarized in the following paragraphs.

• Section 1.0

- Purpose

The purpose of the rule is to limit emissions of oxides of nitrogen (N Ox) from boilers,

steam generators, process heaters and water heaters.

• Section 2.0

- Applicability

The rule applies to any person who supplies, sells, offers for sale, installs, or solicits

the installation of any new small boiler, steam generator, pro cess heater or water

heater with a rated heat input capacity greater than or equal to 0.075 MMBtu/hr up to

but not including 2.0 MMBtu/hr. Other existing or proposed District rules address units

2.0 MMBtu/hr and greater.

• Section 3.0

- Definitions

Th is section details key definitions used in this rulemaking:

Boiler or Water Heater: any external combustion equipment fired with a liquid or

gaseous fuel to produce hot water or steam.

Humidifier: a device or system that uses an air stream heated by a direct contact

combustion process in combination with a water spray to produce warm air of high

humidity in order to maintain or increase the moisture content of the material being

processed or conveyed by the air stream.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Final Draft Staff Report Rule 4308 October 20, 2005

6 **Final Draft Staff Report for**

**Revised Proposed Rule 4308**  Process Heater: any combustion equipment fired on liquid or gaseous fuel, which

transfers heat from combustion gases to water or process streams. Process heaters

exclude kilns or ovens used for drying, baking, cooking, calcining, heat treating or

vitrifying.

• Section 4.0

– Exemptions

This section exempts manufactured homes and humidifiers, which is an exemption

commonly found in similar rules. Humidifiers are being exempted from this rule based

on the premise that they do not fall within the definition of boilers, process heaters and

steam generators. However, humidifiers would be evaluated as a potential control

measure in the 8

- hour ozone plan.

• Section 5.0

– Requirements

The requirements in section 5.0 will satisfy all feasible control measures. Section 5.0

Prohibits a person fr om supplying, selling, offering for sale, installing or soliciting the

installation of any new unit after January 1, 2007 that does not meet the NOx and

CO emissions limits in Table 1.0.

• Section 6.0

– Administrative Requirements

This section details emission certification testing requirements for manufacturers and

District certification requirements. Table 1.0

- NOx and CO limits for Proposed Rule 4308

Boiler/Heater Size

Heat Input Capacity

(MMBtu/hr) NOx Limit CO Limit

0.075 < X < 0.4 0.093 lb of NOx/MMBtu of

heat output at 3% stack gas

oxygen by volume on a dry

basis. Not Applicable.

0.4 < X < 2.0 0.036 lb of NOx/MMBtu of

heat input at 3% stack gas

oxygen by volum e on a dry

basis. 400 ppm at 3% stack

gas oxygen by volume

on a dry basis.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Final Draft Staff Report Rule 4308 October 20, 2005

7 **Final Draft Staff Report for**

**Revised Proposed Rule 4308**  • Section 7 .0

– Compliance Schedule

The rule provisions are effective January 1, 2007, to allow time for certification of

units and “sell

- through” of existing stock.

IV. RULE DEVELOPMENT PROCESS

District staff conducted first workshops on June 8 and 9, 2005 to pr esent the first draft

rule and draft staff report. After the first workshops, staff gathered data on the cost of

complying with the draft rule requirements. State law requires a socioeconomic study,

which demonstrates the potential effects of a rule, so that these impacts may be

considered and mitigated if necessary. District staff conducted a socioeconomic

analysis and presented the socioeconomic report at a second workshop held on August

2 and 3, 2005. Staff found that Rule 4308 will minimally impact stakeholders in part due

to the ready availability of the applicable burners that comply with the requirements of

the proposed rule.

V. EMISSION INVENTORY AND POTENTIAL EMISSION REDUCTIONS

District staff used capacity factor information and average emis sion rates derived by the

SCAQMD to determine baseline emissions and emission reductions pertinent to

Proposed Rule 4308. The SCAQMD calculated capacity factors and emission rates for

units subject to SCAQMD Rule 1146.2 (Large Water Heaters and Small Boil ers) by

gathering data from boiler manufacturers and conducting a statistical survey. Proposed

District Rule 4308 will regulate the same class and size of units like those subject to

Rule 1146.2. Therefore, District staff has used capacity factors, emiss ion rates and

population estimates for the emissions analysis that are similar to those used in the

SCAQMD final staff report on Rule 1146.2. The calculated NOx emissions baseline for

this source category is 3.3 tpd. The overall estimated NOx emissions r eduction is 2.0

tpd. The emissions and emissions reductions analysis from sources affected by this

draft rule can be found in Appendix B of this staff report.

VI. COST EFFECTIVENESS ANALYSIS

In an effort to provide that public and the District’s Govern ing Board with concise

information on the possible cost scenarios for this proposed rule, District staff has

conducted a cost effectiveness analysis, which can be found in Appendix C of this staff

report. The estimated cost effectiveness ranges from a cos t savings of $1,108 to $2,775

per ton of NOx reduced for larger units, and the cost effectiveness for smaller units range

from $187 to $5,385 per ton of NOx reduced.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Final Draft Staff Report Rule 4308 October 20, 2005

8 **Final Draft Staff Report for**

**Revised Proposed Rule 4308**  VII. SOCIOECONOMIC ANALYSIS

Pursuant to state law, the District is required to perform a socioeconomic impact

analysis prior to the adoption, amendment, or repeal of a rule, which has significant air

quality benefits as a consequence of more stringent emission control requirements.

Staff has conducted an in

- house socioeconomic study of this rule’s impact on the

regional economy. The study includes the following information: (1) compliance options

that affected stakeholders will most likely choose in order to comply with the

requirements, (2) costs incurred to comply with the rule, and (3) po tential stakeholder

responses to cost. The analysis indicated that the rule would not produce a significant

impact on affected sources. The socioeconomic analysis can be found in Appendix D of

this staff report.

VIII. ENVIRONMENTAL IMPACT ANALYSIS

No significant adverse impacts are expected as a result of this proposed rule. Pursuant

to the California Environmental Quality Act (CEQA), staff will prepare a Notice of

Exemption for this project.

IX. RULE CONSISTENCY ANALYSIS

Pursuant to state Health a nd Safety Code, Section 40272.2, District staff has prepared

a rule consistency analysis of draft Rule 4308. The rule consistency analysis for draft

Rule 4308 can be found in Appendix E of this draft staff report.

X. REFERENCES

Emissions Inventory Imp rovements for Selected Source Categories prepared by Pacific

Environmental Services Inc. on External Combustions Boilers, Steam Generators and

Process Heaters, published July 6, 2001.

Santa Barbara County Air Pollution Control District Rule 360 (Emissions of Oxides of

Nitrogen from Large Water Heaters and Small Boilers), Adopted October 17, 2002.

SCAQMD Final Staff Report for Rule 1146.2 adopted January 9, 1998.

SCAQMD Rule 1146.2 (Emissions of Oxides of Nitrogen from Large Water Heaters and

Small Boile rs), Adopted January 9, 1998 and Amended January 7, 2005.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Responses for Rule 4308 October 20, 2005

A

- 1 **Final Draft Staff Report for**

**Revised P roposed Rule 4308**  

# APPENDIX A

Comments and Responses for

Rule 4308 (Boilers, Steam Generators, and Process Heaters

- 0.075 MMBtu/hr to 2.0 MMBtu/hr)

October 20, 2005SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Responses for Rule 4308 October 20, 2005

A

- 2 **Final Draft Staff Report for**

**Revised P roposed Rule 4308**  

### SUMMARY OF C OMMENTS AND RESPONSES

FROM OPEN COMMENTING PERIOD PRIOR TO GOVERNING BOARD

ADOPTION OCTOBER 20, 2005

EPA Comments:

No comments received.

ARB Comments:

No comments received.

Industry Comments:

Stakeholder’s verbal and written comments:

California Cot ton Ginner Association (CCGA)

1. Comment: Humidifying units used to add moisture to cotton in the final ginning

stage are unique in that the products of combustion come into direct contact with

water to create steam which is in turn directly emitted int o the flow of cotton lint.

The nature of this process prohibits the installation and operation of any type of

flue gas re

- circulation or exhaust gas control system. This limits controls on

cotton gin humidifying units to only burner modifications, which may or may not

exist and that may have significantly higher costs than existing conventional

burners (CCGA).

Response: The Districts has determined that humidifiers operate in such a

manner that the combustion gas directly contacts the material that is b eing

processed. Thus, humidifiers do not fall within the definition of a boiler, steam

generator, or process heater. The humidifying process is similar to that of kilns

and smelters that are currently exempt in existing SIP

- approved Rule 4305

(Boilers, Steam Generators and Process Heaters

– Phase 1) and existing Rule

4306 (Boilers, Steam Generators, and Process Heaters

– Phase 2). Provided

the definition of humidifiers and the precedent rules the District will exempt

humidifiers from the Revised Propos ed Rule 4308. District staff will evaluate the

technological feasibility of lower emitting humidifying units as a separate control

measure during the development of the District’s 8

- hour ozone attainment plan.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Responses for Rule 4308 October 20, 2005

A

- 3 **Final Draft Staff Report for**

**Revised P roposed Rule 4308**  

### SUMMARY OF COMMENTS AND RESPONSES

FROM THE WORKSHOPS

HELD ON AUGUST 2 & 3, 2005

EPA Comment:

No comments were received.

ARB COMMENT:

No comments were received.

INDUSTRY COMMENTS:

Stakeholders Submitting Comments:

Building Industry Association (B.I.A.)

1. Comment: Stakeholders expressed a concern regarding the availability of

instant water heaters that are capable of meeting the NOx emissions limits

proposed by the District in Rule 4308 (B.I.A.).

Response: There is a number of instant water heating units that are compliant

with Propose d Rule 4308 and that are available from manufacturers. Some of

these units are listed by the SCAQMD certification list for Rule 1146.2. Proposed

Rule 4308 accepts units that are listed by the SCAQMD certification list as

compliant units.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix A: Comments and Responses for Rule 4308 October 20, 2005

A

- 4 **Final Draft Staff Report for**

**Revised P roposed Rule 4308**  

### SUMMARY OF COMMENTS AND RESPONSES

FROM THE WORKSHOPS

HELD ON JUNE 8 & 9, 2005

EPA Comment:

1. Comment: The purpose (Section 1.0) of the rule is to limit NOx and SOx

emissions, however, the draft rule does not contain any limits for SOx emissions.

Resp onse: The NOx emission limits that the District is currently proposing

require the units subject to Rule 4308 to be run on natural gas and which does

not contain any SOx emissions. According to a 2001 survey taken by Pacific

Environmental Service Inc. (P ES) approximately 3% of the total boiler population

in the SJVAB utilizes either liquefied propane or distillate oil. Thus, the District

does intend to reduce a limited quantity of SOx emissions from units that are do

not run on natural gas. Since the ru le specifically does not contain SOx limits,

the reference to a SOx reduction has been removed.

2. Comment: The last sentence of Subsection 6.2.1 should refer to Section 6.3

instead of 5.3.

Response: District staff has made the necessary changes.

ARB COM MENT:

No comments were received.

INDUSTRY COMMENTS:

Stakeholders Submitting Comments:

R.F. MacDonald C.O. (R.F.)

3. Comment: The industry has requested that the District allow specific units that

exceed the proposed NOx limits but are more fuel

- effici ent than some units that

are capable of meeting the proposed limits. (R.F.)

Response: There are a number of compliant units available from

manufacturers, which are listed by the SCAQMD certification list for Rule 1146.2.

While some units may be more fue l

- efficient than those that utilize low

- NOx

technology the emissions may be greater depending on the use of the unit.

Additionally, the District may be unable to enforce the use of a fuel

- efficient unit

standard due to source test requirements and fuel. The District is open to

additional suggestions and information on this subject.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix B: Emission Reduction A nalysis for Rule 4308 August 2, 2005

B

- 1 **Final Draft Staff Report for**

**Revised Proposed Rule** 

# APPENDIX B

Emission Reduction Analysis for

Rule 4308 (Boilers, Steam Generators, and Process Heaters

- 0.075 MMBtu/hr to 2.0 MMBtu/hr)

October 20, 2005SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONT ROL DISTRICT

Appendix B: Emission Reduction Analysis for Rule 4308 October 20, 2005

B

- 2 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** ESTIMATED EMISSIONS FROM BOILERS, STEAM GENERATORS, AND

PROCESS HEATERS

- 0.075 MMBtu/hr to 2.0 MMBtu/hr

SUMMARY

The District estimated in its 2003 PM10 Plan that 39.8 tpd of NOx and 5.1 tpd of SOx

are emitted in the SJVAB from this source cat egory. Stakeholders have indicated to

staff that the emissions baseline and projected emission reductions from this source

category should be refined to appropriately represent the inventory of units in the

SJVAB and their emissions. In order to better r eflect the emissions generated from

commercial water heaters District staff researched the issue and revised the emissions

baseline and projected emissions reductions for this source category. The District

estimates that the NOx emissions from commercial water heaters are 3.3 tpd and the

SOx emissions are 0.4 tpd.

CALCULATION METHODLOGY

District staff gathered data from stakeholders, manufacturers and the SCAQMD to

determine emission capacity factors, emission rates, average unit size and unit

populati on. District staff extrapolated data from the SCAQMD’s staff report on Rule

1146.2 (1997) to estimate the number of units located in the SJVAB. District staff

calculated the population

- to

- unit ratio in order to derive the number and size of units

needed to support the human population in the SJVAB. District Staff found that for

every 350 people there is one unit in the size range of 0.075 MMBtu/hr to 0.4 MMBtu/hr

and that for every 750 people there is one unit in the size range of 0.4 MMBtu/hr to 2.0

MMB tu/hr. Multiplying Valley’s population of 3.6 million people by the population

- to

- unit

ratios, District staff estimated the unit inventory shown in Table B

- 1.

Table B

- 1: Estimated Unit Inventory

Total inventory of Units 15,300

Inventory between 0.075 and 0.4 MMBtu/hr 10,470

Inventory between 0.4 and 2.0 MMBtu/hr 4,829

District staff also used the average emission rates derived by the SCAQMD. Due to the

difference in emission rates for tank

- type water heaters and water tube recirculating

units, t he baseline emissions were estimated separately for units below or above

300,000 Btu/hr. For the smaller units, baseline emission rates from the SCAQMD Rule

1146.2 development effort were used (74 nanograms/joule or 0.137 lb/MMBtu). For

units above 0.4 M MBtu/hr, an emission rate of 0.17 lb/MMBtu was used. A summary of

emission factors derived from South Coast rulemaking efforts are provided in Table B

- 2

that is provided below.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONT ROL DISTRICT

Appendix B: Emission Reduction Analysis for Rule 4308 October 20, 2005

B

- 3 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** Table B

- 2: Emission Rates from Various Sources

Data Source Emission Rate

PPM lb/MMBtu

Manufacturers 100

- 180 0.12

- 0.22

SCAQMD Rule 1146.1 165 0.20

VCAPCD Rule 74.15.1 165 0.20

A capacity factor of 0.22 was used to develop baseline emissions. The capacity factor

was derived by the SCAQMD and represents the fraction of fuel actually burned or

consumed by the unit in a year compared to the theoretical maximum amount of fuel

that a unit could be in a year. The latter amount would be calculated by assuming a unit

operates and burns fuel continuously at its rated capacity. A 22% capacity factor was

determined from the statistical survey conducted by the South Coast AQMD and was

developed from unit operation and fuel usage information provided in that survey.

District staff used the unit population, the emission rates and c apacity factor to calculate

the estimated NOx and SOx emission reductions upon the implementation of the draft

rule requirements.

Equations 1 and 2 below show the calculations to estimate baseline emissions. The

methodology for the equations is also gi ven. The number of units is based on a percent

breakdown of the total unit inventory, which was derived by the SCAQMD. The break

down estimates that 54% of the units (8,261 units) are less than 0.3 MMBtu/hr and that

46% of the units (7,038 units) are gre ater than 0.3 MMBtu/hr.

Equation 1.

- Emissions for Units < 0.3 MMBtu/hr

Emissions = (No. of units) x (average rating) x (emission rate) x (capacity factor)

x (hours/day) x (lb/ton)

Emissions = 8,261 x 0.174 MMBtu/hr x 0.137 lb NOx/MMBtu x 0 .22

x 24 hr/day x 1 ton/2,000 lb

Emissions = 0.5 tons NOx/day

Equation 2.

- Emissions for Units >0.3 MMBtu/hr

Emissions = (No. of units) x (average rating) x (emission rate) x (capacity factor)

x (hours/day) x (lb/ton)

Emissions = 7,038 x 0.9025 MMBtu/hr x 0.17 lb NOx/MMBtu x 0.215

x 24 hr/day x 1 ton/2,000 lb

Emissions = 2.8 tons NOx/day

Total baseline emission inventory of 3.3 (0.5 + 2.8) tons NOx per day tpd is estimated

for this proposed rule.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONT ROL DISTRICT

Appendix B: Emission Reduction Analysis for Rule 4308 October 20, 2005

B

- 4 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** EMISSION REDUCTION C ALCULATIONS

Using the rule limits for units < 0.4 MMBtu/hr and units > 0.4 MMBtu/hr and their

associated capacity factor and baseline emissions, the emissions reduction can be

estimated as follows:

Emissions Reductions

=



### lb tons

× day hrs

× factor capacity × emissionsΔ 

### × rating average × Units of No.

For Units ≥ 0.075 MMBtu/hr to < 0.3 MMBtu/hr:

Emissions Reductions 1

=

day ton 0.2

= 1 Reductions Emissions lbs 2,000 ton 1

× day hr

24 × 0.22 × MMBtu lb 0.074)

- ( 0.137 × MMBtu 0.174 × 8,261

For Units > 0.3 MMBtu/hr to < 0.4 MMBtu/hr:

Emissions Reductions 2

=

day tons 0.2 = 2 Reductions Emissions lbs 2,000 ton 1

× day hrs

24 × 0.22 × MMBtu lb ) 0.074

- ( 0.17 × MMBtu 0.35 × 2,209SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONT ROL DISTRICT

Appendix B: Emission Reduction Analysis for Rule 4308 October 20, 2005

B

- 5 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** For Units > 0.4MMBtu/hr to < 2.0 MMBtu/hr:

Emissions Reductions 3

=

day tons 2.0 = Reductions Emissions Total day tons 1.6 = 3 Reductions Emissions lbs 2,000 ton 1

× day hrs

24 × 0.22 × MMBtu lb

* .032) 0

- ( 0.17 × MMBtu 0.9025 × 4,829

Based on the start date and the age of the existing units, approximately 20% or 0.4 tpd

NOx reductions should occur by the end of 2010. Full implementation is anticipated 15

years after rule implementation or 2016.

*Considers 10% improvement in fuel efficiency. This leads to less fuel burned

compared to older units. Thus, (1.0

- 0.10) (0.036 lb/MMBtu) = 0.032 lb/MMBtu

equivalent emissions.

A better understanding of the emission inventory, and staff’s emissions reduction

calc ulations indicate that this emission control will translate to a 2.0 ton per day

reduction, compared to the 0.2 tpd reduction that is stated in the Districts 2003 PM10

Plan for this source category. The implementation of Rule 4308 will surpass the

emissio ns reductions of 0.2 tpd that the District has committed to in the 2003 PM10

Additional emission reductions will occur in the future due to replacement of units.

Ultimately, a 60% emissions control reduction should be achieved.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONT ROL DISTRICT

Appendix B: Emission Reduction Analysis for Rule 4308 October 20, 2005

B

- 6 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** This page intentionally blank.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4308 October 20, 2005

C

- 1 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** 

# APPENDIX C

Cost Effectiveness Analysis for

Rule 4308 (Boilers, Steam Generators, and Process Heaters

- 0.075 MMBtu/hr to 2.0 MMBtu/hr)

October 20, 2005SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4308 October 20, 2005

C

- 2 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** CO ST EFFECTIVENESS ANALYSIS FOR

RULE 4308 (BOILERS, STEAM GENERATORS, AND PROCESS HEATERS

– 0.075 MMBtu/hr to 2.0 MMBtu/hr)

I. INTRODUCTION

A cost effectiveness assessment is a requirement of the California Health and Safety

Code (CH&SC) Section 40703 in adop ting any regulation. Staff has completed the

following analysis and believes that such an assessment will assist the public and the

Governing Board in understanding the costs associated with this rulemaking effort.

II. DISCUSSION

A. Cost Effectiveness

The cost effectiveness of a control option is calculated as the added annual cost (in

$/year) of the control technology or technique, divided by the emission reduction

achieved (in tons/year). The cost can include capital equipment costs, engineering

desi gn costs, additional labor and maintenance costs. The cost effectiveness also

accounts for any monetary savings realized by the implementation of the pollution

control techniques.

Rule 4308 would prohibit the sale of commercial water heaters that do not have low

NOx technology in the SJVAB. Most commercial water heater manufacturers offer for

sale units that meet or exceed the requirements of Rule 4308. The cost effectiveness

for Rule 4308 was calculated using the incremental price difference between a low

- NOx

compliant unit and non

- compliant atmospheric unit.

B. Cost Effectiveness Analysis Procedure

Following is the procedure used by District staff in conducting the cost effectiveness

analysis of a rule:

(1) Identify typical equipment settings affecte d by the rule;

(2) Identify the control technologies or control option that can achieve the

proposed emission limits;

(3) Estimate the average annualized cost of each control option;

(4) Calculate the average emissions reduction of each control option and

(5) Calculate the average cost effectiveness of a given control option of a given

equipment setting.

As previously mentioned, cost effectiveness of a control technology is calculated by

dividing the annualized cost of a control technique with the annual emission reduc tion

achieved by the control technique. The cost effectiveness is expressed in dollars per

ton of pollutants reduced per year ($/ton).SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4308 October 20, 2005

C

- 3 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** C. Sources of Cost Data

The cost estimate data is based on similar cost data from other air districts cost

effectiveness a nalyses including SCAQMD, Ventura County APCD and Santa Barbara

APCD to derive cost data from manufacturers and vendors. District staff has solicited

for written and verbal cost data from stakeholders. District staff has also incorporated

verbal comments provided by stakeholders into the cost effectiveness analysis. The

District encourages manufacturers, vendors and other stakeholders to provide cost data

pertinent to Rule 4308.

D. Assumptions Used in Calculating Cost Effectiveness

Following are assump tions used by District staff in conducting the cost effectiveness

analysis for Rule 4308:

1. The total annual compliance cost will include annual operation and maintenance

costs as well as annualized capital costs.

2. The total annualized compliance cost for all compliance scenarios include all the

appropriate annualized capital costs as well as any additional annual operation and

maintenance costs.

3. The life of an affected unit is 10 years.

III. REFERENCES

1. Santa Barbara County APCD Staff Report for Rule 360, dated October 2002.

2. SCAQMD Staff Report for Rule 1146.2, dated December 1997.

3. Ventura County APCD Staff Report for Rule 74.11.1, dated August 1999SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4308 October 20, 2005

C

- 4 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** ATTACHMENT 1

COST EFFECTIVENESS CALCULATIONS

In calculating the cost effe ctiveness for proposed Rule 4308, District staff assumed that

the compliance cost consists of the differential purchase price of new compliant low

NOx commercial water heaters compared to a non

- compliant unit. Low

- NOx technology

for commercial water heate rs in the size range 0.075 MMBtu/hr up to but not including

2.0 MMBtu/hr is available from several manufacturers as provided in the SCAQMD list

of certified models for Rule 1146.2. Based on conversations with stakeholders, and an

analysis of other air dis trict staff reports District staff found a range of compliance costs

for commercial water heaters based on size and manufacturer. Table C

- 1.0 provides a

list of the Districts estimated range of costs for compliant units of a specific size based

on the S CAQMD 1997 survey of capital cost estimates.

Table C

- 1.0: Range of Capital Cost of Units.

Units Size

(MMBtu/hr) Capital Cost of Compliant

Low

- NOx

Unit ($) Differential Capital Cost of

Low

- NOx Compared to

Non

- Compliant Units ($)

0.4 $6,000

- $10,000 $0

- $4,000

0.65 $7,500

- $12,000 $0

- $4,000

1.0 $9,500

- $15,000 $1,500

- $5,000

2.0 $4,500

- $20,000 $2,000

- $10,000

The SCAQMD averaged the capital costs of new compliant low

- NOx units and the

estimated base capital cost of a non

- compliant atmosph eric units that are in the size

range between 0.075 MMBtu/hr and 2.0 MMBtu/hr. This data was used to derive the

differential capital cost for compliance with Rule 1146.2. These costs are provided in

Table C

– 2.0.

Table C

- 2.0: Average Capital Cost of Compliant Unit vs. Non

- Compliant Unit.

Units Size

(MMBtu/hr) Capital Base Cost of

Compliant Low

- NOx Unit ($) Differential Capital Cost

of Unit ($)

0.15 Less than $6,000 $10

0.4 $6,000 $2,000

1.0 $9,500 $2,850

1.9 $16,300 $4,900SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4308 October 20, 2005

C

- 5 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** The SCAQMD conducted a n implementation study in 2003 and reported (Phase III

Implementation Report) that the average capital cost for new non

- compliant units

between 0.4 MMBtu/hr and 1 MMBtu/hr is $9,200 and for new low

- NOx compliant units

is $9,800. The average differential c apital cost for these units is approximately $630.

For a more conservative cost effectiveness value and compliance cost District staff

utilized the compliance cost estimated in the SCAQMD Staff Report for Rule 1146.2

(1997), which are provided in Table C

- 2.0. Table C

- 3.0 provides the cost

effectiveness for units subject to Rule 4308 based on South Coasts projected costs of

new compliant low

- NOx replacements which are listed in table C

- 2.0 and the Districts

estimated emissions reductions.

Table C

- 3.0: Compliant Low

- NOx Unit Cost Effectiveness.

Unit (X) Size Range (MMBtu/hr) Estimated Cost Effectiveness

($/ton)

X < 0.3 $250/ton

0.3 < X < 0.4 $5,600/ton

0.4 < X < 1.0 $

- 1,1087/ton (cost savings)

1.0 < X < 2.0 $

- 2,775/ton (cost savings)

Overal l Cost Effectiveness for Rule 4308

Using the cost

- effectiveness values for each different unit category District staff

calculated overall average cost effectiveness of Rule 4308 and found that Rule 4308 will

lead to a cost savings of $1,900 per ton of NOx reduced each year (Please see table C

- 4.0). This cost savings is primarily due to the fuel efficiency in the compliant low

- NOx

burner units. The cost effectiveness values are based on a 10

- year life span of each

unit size range, and financed at 10 yea rs with a 10% interest rate. Table C

- 4.0

summarizes the calculations used to determine the overall rule cost effectiveness.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4308 October 20, 2005

C

- 6 **Final Draft Staff Report for Revised Proposed Rule 4308** Table C

– 4.0: Overall Cost Effectiveness of Rule 4308.

Unit (X) Size Range

(MMBtu/hr) Number of

Complying Units Annualized

Ca pital Cost Per

Unit ($/yr) Annual

Maintenance

Costs per

Unit ($/yr) Total Annual

Compliance

Costs per Unit

($/yr) Total Annual

Compliance Cost

for Rule 4308 ($/yr)

X < 0.3 8,261 $2 $0 $2 $16,522

0.3 < X < 0.4 2,201 $320 - $40

(Cost Savings) $280 $616,2 80

0.4 < X < 2.0 4,829 $620 - $ 1,025

(Cost Savings) - $405

(Cost Savings) - $1,955,745

Totals 15,299

- $1,322,943

Estimated Total Annual Reductions (tons/yr) 702 tpy

Total Rule Cost Effectiveness ($/ton)

- $1,900

Note 1: Total Annual Compliance Costs = Number of Units x Total Annual Cost per Unit

Note 2: Total Rule Cost Effectiveness = Total Annual Compliance Cost / Total Annual Reductions

Note 3: Calculations for the data indicated in Table C

– 4.0 is shown on Pages C

- 7 through C

– 10.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule4308 October 20, 2005

C

- 7 **Final Draft Staff Repor t for** 

**Revised Proposed Rule 4308** Cost Effe ctiveness Calculations for Various Units.

The following calculations provide a overall cost effectiveness value (Cost in $/NOx

Reductions in tons) for units subject to Rule 4308 based on the differential capital cost

and annual maintenance cost given the size and emissions associated with that specific

unit.

New Replacement Unit Analysis

A. Unit Size: 0.15 MMBtu/hr

Boiler Specification: Value

Boiler Rating 0.15 MMBtu/hr

Capacity Factor 22%

Uncontrolled NOx 0.137 lb/MMBtu

Controlled NOx 0.0764 lb/MMBtu

∆ Cost for a Low

- NOx Unit $10

Formula 1:

Annualized Capital Cost are calculated using the following formula

i(1+i) n

A = P ________ where;

(1+i) n

- 1

A = Equivalent Annual Control Equipment Capital Cost

P = Present value of the control equipme nt, including installation cost

i = interest rate (use 10%, or demonstrate why alternate is more

representative of the specific operation).

n = equipment life (assume 10 years or demonstrate why alternate is more

representative of the specific operation)

Applying formula 1 to the ∆ Cost = $10 produces an annualized capital cost of $2 per

year.

The emission reduction ( ∆ NOx) for this unit is calculated using the following formula.



### ( )

yr tons .008 0 = NOxΔ lb 2,000 ton

× 0.22 × MMBtu lbs 0.0764

- 0.137 × yr hrs 8,760 × hr MMBtu 0.15 = NOxΔSAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4308 October 20, 2005

C

- 8 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** The cost effectiveness for this unit is calculated as follows.

Cost Effectiveness = $2/yr

0.008 tons/yr

Cost Effectiveness = $250

0.008 ton

Similar calculations were performed for three larger unit sizes.

B. Unit Size: 0.4 MMBtu/hr

Boiler Specification: Value

Boiler Rating 0.4 MMBtu/hr

Capacity Factor 21.5%

Uncontrolled NOx 0.17 lb/MMBtu

Controlled NOx 0.0328 lb/MMBtu

Base Unit Cost $6,000

Low

- NOx Unit Cost $8,000

∆ Cost for a Low

- NOx Unit $2,000

Fuel Cost $0.5/Therm

Efficiency Gain (low

- NOx) 10%

Annual Tun e

- up Cost $300/yr

Cost for Electric Fan (low

- NOx) $40/yr

Base Cost

Capital = $6,000

$3,800/yr = Costs Fuel 0.22 × MMBtu 0.1 $0.5

× yr hr 8,760

× hr MMBtu 4 0.

= Costs Fuel

Low

- NOx Cost

Capital = $8,000

∆ Capital C ost = $8,000

- $6,000

= $2,000

Applying formula 1 to the ∆ Cost = $2,000 produces an annualized capital cost of $320

per year.

Fuel Savings = 

### ( ) 0.10 × $3,800

= - $380/yr

Electric Fan

= +$40/yr

Annual Tune

- up = +$300/yr

Net Annual Cost

= - $40/yrSAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4308 October 20, 2005

C

- 9 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** 

### ( )

yr tons 0.05 = NOxΔ 000

, 2 1

× 22

. 0 × MMBtu lb * 0328

.

_ 17

. 0

× 760

, 8 × hr 0.4MMBtu

= NOxΔ 0

Cost Effectiveness = $320/yr

- $40/yr

0.05tons/yr

Cost Effectiveness = $5,600

ton

C. Unit Size: 1.0 MMBtu/hr

Boiler Specification: Value

Boiler Rating 1.0 MMBtu/hr

Capacity Factor 21.5%

Uncontrolled NOx 0.17 lb/MMBtu

Controlled NOx 0.0328 lb/MMBtu

Base Unit Cost $9,500

Low

- NOx Unit Cost $12,350

∆ Cost for a Low

- N Ox Unit $2,850

Fuel Cost $0.5/Therm

Efficiency Gain (low

- NOx) 10%

Annual Tune

- up Cost $300/yr

Cost for Electric Fan (low

- NOx) $40/yr

Base Cost

Capital = $9,500

$9,400 = 0.22 × MMBtu 0.1 $0.5

× yr hr 8,760

× hr MMBtu 1

= Costs Fuel

Low

- NOx Cost

Capital = $12,350

∆ Capital

= $12,350

- $9,500

= $2,850

Applyi ng formula 1 to the ∆ Cost = $2,850 produces an annualized capital cost of $456

per year.

Fuel Savings = 

### ( ) 0.10 × $9,400

= - $940/yr

Electric Fan

= $40/yr

Annual Tune

- up = + $300/yr

Net Cost

= - $600/yrSAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4308 October 20, 2005

C

- 10 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** ( )

yr tons .13 0 = NOxΔ 000

, 2 1

× 22

. 0 × MMBtu lb * 0328

. 0.17

× 760

, 8 × hr 1MMBtu

= NOxΔ 0

-



### ( )



## ( ) Savings Cost

ton $1107

-

= ess Effectiven Cost tons/yr 0.13 /yr $600

- $456/yr

= ess Effectiven Cost

D. Unit Size: 1.9 MMBtu/hr

Boiler Specification: Value

Boiler Rating 1.9 MMBtu/hr

Capacity Factor 21.5%

Uncontrolled NOx 0.17 lb/MMBtu

Controlled NOx 0.0328 lb/MMBtu

Base Unit Cost $16,300

Low

- NOx Unit Cost $21,200

∆ Cost for a Low

- NOx Unit $4,90 0

Fuel Cost $0.5/Therm

Efficiency Gain (low

- NOx) 5%

Annual Tune

- up Cost $300/yr

Cost for Electric Fan (low

- NOx) $40/yr

Base Cost

Capital = $16,300

$17,900 = Costs Fuel 22

. 0 × MMBtu 0.1 0.5

× yr hr 8,760

× hr MMBtu 1.9

= Costs Fuel

low

- NOx Cost

Capital = $21,200

∆ Capital

= $21,200

- $16,300

= $4,900

Applying formula 1 to the ∆ Cost = $4,900 produces an annualized capital cost of $784

per year.

Fuel Savings = 

### ( ) 0.10 × $17,900

= - $1,790/yr

Electric Fan

= +$40/yrSAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4308 October 20, 2005

C

- 11 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** Annual Tune

- up = + $300/yr

Net Cost

= - $1,450/yr

( )

yr tons 0.24 =Δ Δ

NO 000

, 2 1

× 22

. 0 × MMBtu lb * 0.0328

- 0.17

× 760

, 8 × hr MMBtu 1.9

= NOxΔ

Cost Effectiveness = $784/yr

- $1450/yr

0.24 tons/yr

Cost Effectiveness = $2,775

tonSAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis for Rule 4308 October 20, 2005

C

- 12 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** .

This page intentionally blankSAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioeconomic Analysis for Rule 4308 October 20, 2005

D

- 1 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** 

# APPENDIX D

Socioeconomic Analysis for

Rule 4308 (Bo ilers, Steam Generators, and Process Heaters

- 0.075 MMBtu/hr to 2.0 MMBtu/hr)

October 20, 2005SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioeconomic Analysis for Rule 4308 October 20, 2005

D

- 2 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** SOCIOECONOMIC ANALYSIS FOR

RULE 4308 (BOILERS, STEAM GENERATORS, AND PROCESS HEATERS

- 0.075 MMBtu/hr to 2.0 MMBtu/hr)

I. SUMMARY

Draft Ru le 4308 implements the District’s control measure commitment in the 2003

PM10 Plan. Rule 4308 is a new rule developed to control NOx emissions from new or

replacement commercial water heaters. Draft Rule 4308 implements the District’s

BACM requirements f or this source category. Full implementation of Rule 4308 will

result in a NOx reduction of 730 tpy.

II. INTRODUCTION

Section 40728.5 of the State Health and Safety Code requires the Air Pollution Control

District (District) to perform a socioeconomic impact assessment for any new or

amended rules and regulations that will significantly affect air quality or emission

limitations. Rule 4308 prohibits the sale of old atmospheric units that exceed low

- NOx

emissions as defined in the rule. Full implementa tion of Rule 4308 will result in a NOx

reduction of 730 tpy based on a 10% per year attrition rate. The full implementation of

Rule 4308 will begin in January of 2007. This report contains the District’s assessment

of the socioeconomic impacts of propose d District Rule 4308 (Commercial Water

Heaters).

III. NECESSITY OF RULE ADOPTION

The SJVAB exceeds both federal and state ambient air quality standards for PM10 and

is classified as serious nonattainment for the 24

- hour and annual NAAQS for PM10.

The NO x emissions for commercial water heaters (3.3 tpd) exceed the SJVAB de

minimus threshold of 1.3 tpd; therefore the District is required by the CAA to adopt

BACM that includes BACT. The BACM affects new commercial, industrial, or

institutional water heater s with a rated heat input capacity greater than and including

0.075 MMBtu/hr and less than but not including 2.0 MMBtu/hr. The Districts 2003 PM10

Plan considers the reduction of NOx emissions as an effective strategy for reducing the

formation of the amm onium nitrate component of PM10.

IV. IMPACT ASSESMENT

As specified in the Health and Safety Code, “socioeconomic impact” means the

following:SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioeconomic Analysis for Rule 4308 October 20, 2005

D

- 3 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** 1. The type of industries or business, including small business, affected by the rule

or regulation.

2. The range of probable costs, including costs to industry or business, including

small business, of the rule or regulation.

3. The impact of the rule or regulation on employment and the economy of the

region affected by the adoption of the rule or regulation.

The Facil ities Affected by Rule 4308 (Commercial Water Heaters)

A. Industry Profile

Draft Rule 4308 would prohibit the sale of non low

- NOx units and requires that boiler

manufacturers sell only low

- NOx units in the SJVAB. The requirements of Rule 4308

will not d irectly impact boiler manufacturers since most manufacturers currently produce

a low

- NOx unit. Rule 4103 will indirectly impact a variety of public and private

businesses, organizations and institutions in the SJVAB that have commercial water

heaters. A 2001 survey conducted by PES reported that there are a number of

industrial, commercial and institutional facilities in the SJVAB with units that will

potentially be subject to Rule 4308 (See table D

- 1.0). The number of boilers and boiler

size per facil ity is variable among stakeholders. The largest number of units identified

by PES per facility was 15. These units are typically used as centralized devices that

provide hot water to many users in a building, or provide steam for heating and steam

for pr essing machines at dry cleaners and other cleaning services.

Table D 1.0: Affected Industries

SIC Code Industry Category

20 Miscellaneous Manufacturers

22

- 29 Manufacturers

46 Pipelines

54 General Merchandise Stores

5812 Eating Places

70 Hotels

7 21 Housing and Camps

7542 Cleaning Services

806 Hospitals

82 Educational Services

8661 Religious Organizations

91 Executive, Legislative, &General GovernmentSAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioeconomic Analysis for Rule 4308 October 20, 2005

D

- 4 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** The uncontrolled NOx emissions rate for standard units with a rating of 0.075 MMBtu/hr

and l ess than 0.3 MMBtu/hr is 0.137lb/MMBtu, and 0.170lb/MMBtu for those units that

are greater than or equal to 0.3 MMBtu/hr in size but less than 2.0 MMBtu/hr. The

controlled NOx emissions rates for compliant low

- NOx units are 0.074 lb/MMBtu for

units greate r than and including 0.075 MMBtu/hr but less than and including 0.4

MMBtu/hr. For compliant low

- NOx units larger than 0.4 MMBtu/hr and smaller than 2.0

MMBtu/hr the controlled low

- NOx emission rate is 0.032 lb/MMBtu. Using the estimated

number of units i n this source category with their corresponding heat input rating District

staff has estimated that the NOx emissions baseline for this source category is 3.3 tpd.

Based on boiler manufacturer claims that these units have an average life span of 10

years and consideration of the proposed NOx limit for new units the District estimates

that the emission reductions from Draft Rule 4308 is 2.0 tpd.

B. Compliance Cost Estimates

Draft Rule 4308 specifies the NOx emission limit for commercial water and references a

list of commercial water heaters certified by the SCAQMD that meet the proposed limit.

The implementation of these controls range in capital cost and maintenance costs.

However, it is important to note that certified compliant units are significantly m ore fuel

efficient than standard non

- compliant units. On average for units that are between

0.4 MMBtu/hr and 2.0 Btu/hr there is a significant annual cost savings over the 10

- year

life span of the unit due to increased fuel efficiency. For smaller un its there is an

insignificant increase in annual costs as provided in Table D

- 2.0.

Table D

- 2.0: Total Average Annual Compliance Costs.

Unit (X) Size Range

(MMBtu/hr) Annualized

Capital Cost Per

Unit ($/yr) Annual

Maintenance

Costs per

Unit ($ /yr) Total Annual

Compliance

Costs per

Unit ($/yr)

X < 0.3 $2 $0 $2

0.3 < X < 0.4 $320 - $40

(Cost Savings) $280

0.4 < X < 2.0 $620 - $ 1,025

(Cost Savings) - $405

(Cost Savings)SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioeconomic Analysis for Rule 4308 October 20, 2005

D

- 5 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** V. ECONOMIC AND EMPLOYMENT IMPACTS

The District is not requir ing operators to change out their existing units by a specific

deadline. Rule 4308 is an “attrition based” rule, which prohibits the sale of commercial

water heaters that do not meet specific emission limits. While compliant low

- NOx units

have a slightly higher capital cost, their increased fuel efficiency leads to an annual cost

savings and insignificant annual costs in some cases. Therefore, it is understood that

no economic or employment impacts will be associated with the implementation of Rule

4308.

VI. BENEFITS AND EMISSION REDUCTION POTENTIAL

The annual baseline NOx emissions from commercial water heaters in the SJVAB are

estimated to be about 3.3 tpy. Implementation of Rule 4408 would result in an annual

NOx emissions reduction of about 2.0 tpd , or approximately a 61 percent reduction for

this source category.SAN JOAQUIN UNIFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix D: Socioeconomic Analysis for Rule 4308 October 20, 2005

D

- 6 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** This page intentionally blank.SAN JOAQUIN UN IFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix E: Rule Consistency Analysis for Rule 4308 October 20, 2005

E

- 1 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** 

# APPENDIX E

Rule Consistency Analysis for

Rule 4308 (Boilers, Steam Generators, and Process Heaters

- 0.075 MMBtu/hr to 2.0 MMBtu/hr)

October 20, 2005SAN JOAQUIN UN IFIED VALLEY AIR POLLUTION CONTROL DISTRICT

Appendix E: Rule Consistency Analysis for Rule 4308 October 20, 2005

E

- 2 **Final Draft Staff Report for**

**Revised Proposed Rule 4308** RULE CONSISTENCY ANALYSIS FOR

RULE 4308 (BOILERS, STEAM GENERATORS, AND PROCESS HEATERS

- 0.075 MMBtu/hr to 2.0 MMBtu/hr)

I. REQUIREMENTS OF ANALYSIS

Pursuant to Section 407 27.2 of the California Health and Safety Code, prior to adopting,

amending, or repealing a rule or regulation, the District is required to perform a written

analysis that identifies and compares the air pollution control elements of Draft Rule

4308 (Boiler s, Steam Generators and Process Heaters

– 0.075 MMBtu/hr to

2.0 MMBtu/hr) with the corresponding elements of existing or proposed District and

United States Environmental Protection Agency (EPA) rules, regulations, and guidelines

that apply t o the same source category.

II. RESULTS OF ANALYSIS

A. District Rules

There is no other District prohibitory rule or regulation tailored specifically for

commercial water heaters as a source of NOx or other PM10 precursors.

B. US EPA Rules and Guidelines

There is no specific federal guideline applying to commercial water heaters as a source

of PM10 precursors, in terms of the following: New Source Performance Standards

(NSPS), Control Technique Guidelines (CTG), Maximum Achievable Control

Technology (MAC T) and National Emission Standards for Hazardous Pollutants

(NESHAP).