SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

FINAL STAFF REPORT

2008 PM2.5 PlanAmendment to Extend the Rule 4905 (Natural Gas-Fired, FanType Residential Central Furnaces) Amendment Schedule

June 17, 2010

Prepared by: Nic hole Corless, Air Quality Specialist Jessi Fierro, Senior Air Quality Specialist

Reviewed by: Kevin Wing, Air Quality Specialist Joven Nazareno, Senior Air Quality Engineer George Heinen, Supervising Air Quality Engineer Lucinda Roth, Supervising Air Quality Specialist Errol Villegas, Planning Manager Scott Nester, Senior Projects Manager Morgan Lambert, Director of Compliance Samir Sheikh, Director of Strategy and Incentives

I. SUMMARY

A. The Amendment to the 2008 PM2.5 Plan

The United Stated Environm ental Protection Agency has designated the San Joaquin Valley Air Basin (Valley) as nonattainm ent for the national ambient air quality standards (NAAQS) for particulate matter wit h an aerometric diameter of 2.5 microns or less (PM2.5). The San Joaquin Valley Air Pollution Control Dis trict’s (District) 2008 PM2.5 Plan , adopted by the District Governing B oard on April 30, 2008, sets forth a strategy for bringing the Valley into attainment for PM2.5.

As part of the PM2.5 attainment strat egy, the District committed to amending Rule 4905 (Natural Gas-Fired, Fan-Type Reside ntial Central Furnaces) in the second quarter of 2010. Rule 4905 reduces emissions of oxides of nitroge n (NOx), which in turn reduces the formation of ammonium nitrate particulates. However, based on information obtained during the rule devel opment process, District staff has determined that additional time is necessary to explore potential for developing an incentive program for residential furnaces , assist with the development of new low NOx burner (LNB) technologies through t he District’s Technology Advancement Program (TAP), and benefit fr om findings of the South Coast’s technology assessment for residential furnaces expec ted April of 2013. These efforts would better position the District to develop a rule based on the best and latest available technology and potentially achieve more re ductions from Amended Rule 4905 than would otherwise be possible. Therefore, District staff proposes to amend the 2008

Final Staff Report for the 2008 PM2.5 Plan Amendment, Rule 4905 1SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Final Staff Report: 2008 PM2.5 Plan Amendment, Rule 4905 June 17, 2010

Final Staff Report for the 2008 PM2.5 Plan Amendment, Rule 4905 2 PM2.5 Plan to extend the rule adoption schedule fo r this rule no later than the fourth quarter of 2014. Since the District did not quantify projected emissions reductions from this control measure in the 2008 PM2.5 Plan , this rule amendment extension would not impact any reasonable further progress demonstrations made for the 2008 PM2.5 Plan.

B. Reasons for the Rule Adoption Date Extension

Current Rule 4905 applies to fan-type, resident ial central furnaces fired by natural gas. The rated heat input capacity for thes e units is less than 175,000 British thermal units (BTU) per hour, or a rated cooling capacity of less than 65,000 BTU per hour for combination heating and cooling units.

Rule 4905 requires any new or replacement natural gas-fired, f an-type residential central furnace to have NOx emissions less than or equal to 0.093 pounds per million BTU (lb/MMBtu) heat output, or 55 parts per million (ppm) NOx at 3.00% O2 stack gas by volume (dry). This equates to an emissions limita tion of 40 nanograms of NOx perJoule (ng/J), the unit of measure commonly us ed in rulemaking for this category.

Exemptions to Rule 4905 include:

• Units installed in manufactured homes

• Units using fuels other than natural gas; and

• Non-fan-type residential central furnaces

Several California air distri cts have adopted natural gas residential furnace rules with emissions standards equal to those in the cu rrent District Rule 4905 (40 ng/J), such

as:

• Bay Area Air Quality Management Dis trict Regulation 9, Rule 4

• San Diego County Air Poll ution Control District (APCD) Rule 69.6

• San Luis Obispo County APCD Rule 428

• Ventura APCD Rule 74.22

• Yolo Solano AQMD Rule 2.44.

In November 2009, South Coast amended Ru le 1111 for residential, natural gas furnaces, lowering the NOx emission lim it to 14 ng/J, based on the current understanding of anticipated tec hnology. However, as noted in the South Coast staff report, there is currently no currently ava ilable technology to achieve this 14 ng/J limit. South Coast included a provision in their rule adoption to, by April 2013, complete an assessment of applicable NOx c ontrol technologies that can meet the emission limit (14 ng/J) and adj ust the rule, if necessary.

In lieu of developing a rule based on tec hnology not yet developed or commercially available, the District proposes to partner with South Coast to fund technology advances such as LNB prototypes for re sidential furnaces and explore incentiveSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Final Staff Report: 2008 PM2.5 Plan Amendment, Rule 4905 June 17, 2010

Final Staff Report for the 2008 PM2.5 Plan Amendment, Rule 4905 3 allel

. DISCUSSION

. Affected Source Category

ule 4905 applies to fan type residential centra l furnaces fired by natural gas. These

. Technology Advan cement Program

he District’s Governing Board recently approved the Technology Advancement

he

h

. Incentive Program

ebates are available for California homeowners installi ng higher-efficiency furnace

many situations, District incentiv e programs are necessary to encourage the

s

h the

compliance schedules determined during the rule development process. options to expedite the availability of LNB technology. The District proposed to extend the Rule 4905 amendmen t timeframe to the fourth quarter of 2014 in par with the technology assessment timeline estab lished by South Coast in their rule. Through the efforts made during this period, the District would develop a rule based on the most advanced proven technology and associated emission limits feasible.

II

A

R units are less than 175,000 British thermal un its (BTU) rated heat input capacity per hour, or a rated cooling c apacity of less than 65,000 BTU per hour for combination heating and cooling units. The United Stat es Department of Energy regulates the efficiency standards for these units and re cently amended the national efficiency standard to 80% Annual Fuel Utilization Effi ciency (AFUE, the indicator of percent energy input that is turned into usable heat).

B

T Program (TAP) to support the research and advancement of low NOx emissions technologies, such as those being developed for residential furnaces. As part of t TAP initiative, District st aff recommends that the Go verning Board authorize the District to actively partner with South Coast and to contribute $50,000 to the Sout Coast technology assessment project for LNB technology research and prototypes. The District’s active involvement will help ex pedite the commercial availability of this control technology and thus the resultant emission reductions that will be achieved from this technology.

C

R units (units with above 90% AFUE). Federal tax credits are currently available for many furnaces with at least a 95% AF UE through the Energy Star program.

In further commercial development and wides pread use of new technology, such a LNB in the Valley. Once the technol ogy has been developed, District staff will investigate the potential of designing a residential furnace incentive program to provide incentives for natural gas-fired, fan-type central fu rnaces that comply wit 14 ng/J emissions limit before the regulatory compliance date. The incentive amount and distribution dates would be determi ned based on the regulatory controls andSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Final Staff Report: 2008 PM2.5 Plan Amendment, Rule 4905 June 17, 2010

Final Staff Report for the 2008 PM2.5 Plan Amendment, Rule 4905 4 . Potential Regulation Controls

ARB) nor the U.S. Environmental rotection Agency (EPA) has established a bes t available control technology (BACT)

e D

Neither the California Air Resources B oard ( P for this source category. Possible controls for this source category could involv adaptations of current boiler technology, including combustion modification and exhaust gas treatment.

Combustion Modification

ystems reduce t hermal NOx formation by reducing peak

ame temperature. Such controls include low excess air operation, staged

tra Low

lone or in combination with Flue Gas ecirculation (FGR). FGR recycles a por tion of the exhaust stream back into the Combustion modification s fl combustion, overfire air ports, biased firing, and placing selected burners out-ofservice. Combustion modification is al so achieved through Low NOx and Ul NOx burners, including staged air burners, staged fuel burners, pre-mix burners, internal recirculation, and radiant burners.

Combustion control systems may be used a R burner windbox, mixing low oxygen air with combustion air before it enters the combustion chamber. Reducing peak tem perature and oxygen in the combustion zone reduces thermal NOx formation.

Exhaust Gas Treatment

Adding an Exhaust Gas T reatment (EGT) syst em after the boiler firebox reduces

Ox to molecular nitrogen. EGT uses Se lective Catalytic Reduction (SCR) and by

ms

may

such as LNB technologies may be identified through the istrict’s technology assessment for boile rs, South Coast’s technology assessment N Selective Noncatalytic Reduction (SNCR). EGT reduces NOx in the exhaust gas injecting urea or ammonia into the post-combustion zone of the boiler. SCR syste store ammonia in aqueous form or anhydrous form, generated on demand or released from urea. S CR systems can be prone to oper ating problems and ammonia emissions if not operated per SCR manufacture r instructions. Therefore, EGT not be practical for use in residential fur naces due to high capital equipment costs and operations/maintenance cost s including technical challenges for homeowners to operate the technology.

Additional control options D for boilers, and work funded thr ough the District’s TAP program.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Final Staff Report: 2008 PM2.5 Plan Amendment, Rule 4905 June 17, 2010

Final Staff Report for the 2008 PM2.5 Plan Amendment, Rule 4905 5 III. RULE DEVELOPMENT PROCESS

The District presented the objectives and project milestones for the Rule 4905 rulemaking project at scopi ng meeting in May 2009. Stakeholder comments, District staff background research, and the South Coast’s Rule 1111 technical information indicate that the necessary technology fo r the planned Rule 4905 amendment is not yet commercially available. Therefore, t he rule development completion date in the 2008 PM2.5 Plan should be amended from the second quarter of 2010 to the fourth quarter of 2014. District sta ff is asking the District Governing Board to approve this extension at the June 17, 2010 public hearing. A public re view period for this staff report is being held from May 18 – June 1, 2010.

Even with the rule amendment rescheduling, Dis trict staff will continue to work on this project in several ways:

• Monitor South Coast implementation of Rule 1111 and evaluate their 2014 assessment residential furnace control technologies.

• Assess new control technologies as they become available.

• Hold workshops on and proceed with document preparation to adopt the amendment before the new fourth quarter 2014 deadl ine, if South Coast completes their 2014 technology assessment early or if techno logy availability allows.

• Evaluate potential emission reductions fr om this source category in future attainment plans (2011 – 2014).

• With Governing Board authorization, partner with South Coast and to contribute $50,000 to the South Coast te chnology assessment project for LNB technology research and prototypes to help expedite the commercial availability of this control technology.

• With Governing Board authorization, design a residential furnace incentive program for natural gas-fired, fan-type central furnaces that comply with the 14 ng/J emissions limit before t he regulatory compliance date.

By no later than the fourth quarter of 2014, after a public rule development process, the District will bring a Ru le 4905 amendment to the District Governing Board for approval. This rule will incorporate all f easible control measures and take into consideration new technolog y and incentive programs.

IV. CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) PROCESS

District staff does not expect the Rule 4905 deadline extension to adversely impact the attainment goals of the District’s 2008 PM2.5 Plan . Therefore, extending the adoption deadline for Draft Amen dments to Rule 4905 is not a “project” under CEQA and an environmental impact analysi s is not required.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Final Staff Report: 2008 PM2.5 Plan Amendment, Rule 4905 June 17, 2010

Final Staff Report for the 2008 PM2.5 Plan Amendment, Rule 4905 6 

### . REFERENCES

Air Pollution Control District, 2008 PM2.5 Plan, April 30,

2008. ( http://www.valleyair.org/Air_Quality_Plans/PM_Plans.htm 

### V

1. San Joaquin Valley Unified )

2. ns from NaturalGas-Fired, Fan-Type Central Furnaces), amended November 6, 2009.

3. Amendments to Rule 1111 (NOx Emissions from Natural- Gas-Fired, Fan-Type Central Furnaces),

4. gy, Energy Star Program. ( http://www.energystar.gov South Coast Air Quality Management Distri ct, Rule 1111 (NOx Emissio

South Coast Air Quality Management District, Staff Report for Proposed

October 28, 2009.

Department of Ener )

xides from Fan Type Residential Furnaces), adopted December 7, 1983.

6. ral Gas Fired Fan-Type Central Furnaces), a dopted June 17, 1998.

7. l District, Rule 428 (Control of Oxides of Nitrogen from Residential Natural Gas-Fired Water Heaters and Furnaces), adopted July

8. ir Pollution Control District, Rule 74.22 (Natural-Gas-Fired, Fan-Type Central Furnaces), adopted November 9, 1993.

9. trict, Rule 2.44 (Central Furnaces), adopted May 13, 2009. 5. Bay Area Air Quality Management District, Regulation 9, Rule 4 (Nitrogen O

San Diego County Air Pollution Control District, Rule 69.6 (Natu

San Luis Obispo County Air Pollution Contro

7, 1995.

Ventura A

Yolo Solano Air Quality Management Dis