MEMORANDUM

Date : June 25, 2015

To : Docket EPA-HQ-OAR-2010-1042

From : Susan Fairchild

OAQPS/SPPD/NRG (D243-02) U.S. Environmental Protection Agency Research Triangle Park, NC 27711

Subject : Control Cost Evaluation for Glass-Melting Furnaces a nd

Manufacturing Lines - Final Wool Fiberglass Manufacturing NESHAP Residual Risk and Technology Review Amendments

1.0 Introduction This memorandum presents the control cost analysis for the final Risk and Technology Review (RTR) amendments to the Wool Fiberglass Manufacturing N ESHAP. Section 2 presents the control cost analysis for glass-melting furnaces and Sect ion 3 discusses the cost analysis for flame attenuation (FA) and rotary spin (RS) manufacturi ng lines.

2.0 Glass-Melting Furnaces

2.1 Particulate Matter Control

The EPA is finalizing the emission limits (0.33 lb/ton of glass pulled) for particulate matter (PM), as proposed in the November 13, 2014 supplemental notice , for all existing, reconstructed, and new glass-melting furnaces located at wool fiberglass manufacturing facilities that are major sources. As noted in the November 2014 proposal (79 FR 68026), and as shown in the graph below, data indicate that all sources currently meet t he final PM limit and no additional controls will be needed. Therefore, the EPA did not conduct a co ntrol cost analysis for reducing PM emissions. Figure 1 shows the available furnace PM emiss ions data.**Figure 1. Furnace PM Emission Rate Data**

2.2 Chromium Compound Control

As discussed in the November 13, 2014 supplemental proposal (79 F R 68020-68022), we evaluated the cost of the following options identified by industry representatives as potential compliance approaches to meet the proposed emission lim it for chromium compounds from existing, reconstructed, and new gas-fired glass-melting fur naces located at wool fiberglass facilities that are major sources:

• Furnace rebuild, when chromium emissions approach the lim it.

• Raw material substitution (reduced use of glass cullet i n the raw material furnace charge).

• Installation of high efficiency particulate air (HEPA) filters at the outlet of the dry electrostatic precipitator (DESP).

• Installation of a venturi scrubber at the outlet of t he DESP.

• Installation of a 3-stage filter at the outlet of the DESP.

• Installation of a 3-stage filter with water cleaning at the outlet of the DESP.

• Installation of a membrane baghouse at the outlet of the DESP.

• Installation of a caustic scrubber at the outlet of t he DESP.

The control options analysis developed for the November 2014 supplemental proposal is presented in the memorandum, “Control Cost Evaluation f or Glass-Melting Furnaces” (docket EPA-HQ-OAR-2010-1042-0329). As noted in the 2014 supplemental proposal (79 FR 68021),
we used the furnace rebuild as the cost basis for the c hromium standards.

In response to the 2014 proposal, we received comments sta ting that the EPA’s use of the Net Present Value (NPV) approach to estimate the cost of re building a gas-fired glass-melting
furnace before its useful service life to reduce emissions of chromium compounds was inappropriate. We agreed with the commenter’s findings tha t the NPV approach was not 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45PM (lb/ton) **Furnace PM**

**Emission Rates (lb/ton glass pulled)**

PM Baghouses and Fabric
Filters Batch
Wetting Baghouse + Secondary
Control

ESPappropriate for estimating the costs of rebuilding the f urnace. Consequently, the EPA revised the costing methodology from the NPV to the replacement co sting approach described in section
2.5.5.6 of the EPA Air Pollution Control Cost Manual. We also revised the capital cost estimate for rebuilding a furnace to include the cost ($700,000) of tran sferring production to another facility while the furnace is being rebuilt, based on info rmation provided by the commenter. 1 Based on the revised cost-estimating procedure and capital cost ($10.7 million), we estimated the total annualized cost for rebuilding a furnace to be $462,000.

For this cost analysis, the replacement cost method us es the following assumptions:

• Furnace rebuild cost = $10.7 million;

• Furnace life cycle = 10 years;

• Furnace life cycle for compliance = 7 years; and

• Interest rate = 7%. 2 The replacement cost method determines the incremental capital recovery cost as the difference between the annualized capital recovery cost (CRC) of r ebuilding the furnace in 7 years versus 10 years. The CRC is calculated by multiplying the total ca pital cost ($10.7 million) by the capital recovery factor (CRF):

CRC = Total Capital Cost x CRF

Where CRF is defined according to the formula:



## ( ) ( ) 

      

− + +

= 1 1 1

n n

i i i CRF

Using the 10- and 7-year furnace campaign lengths a nd a 7% interest (discount) rate, the CRF
values 3 are 0.1424 (for 10 years) and 0.1856 (for 7 years) . The table below shows the calculations used to determine the incremental capi tal recovery cost.

Description Furnace Rebuild

10 Years 7 Years Furnace rebuild cost (total capital cost) $10,700,000 $10,700,000

Furnace life with rebuild (yr) 10 7
Interest rate 0.07 0.07 Capital recovery factor 0.1424 0.1856 Annualized capital recovery cost
of furnace rebuild $1,523,680 $1,985,920

Incremental capital recovery costs $462,240

1 Comment submitted by Angus E. Crane, Executive Vice Preside nt, General Counsel and Christopher C. Martin, Assistant Legal Counsel, North American Insulation Manufac turers Association (NAIMA). Appendix 2. EPA-HQOAR-2010-1042-0348.

2 7% interest rate is in accordance with OMB guidance under Circular A-4.

3 Table A-2: Capital Recovery Factors (from EPA Air Po llution Cost Manual, EPA/452/B-02-001, January 2002).(CRC 7yr – CRC 10yr )
Total annual cost for furnace rebuild ($/yr) $462,240

Because the wool fiberglass companies operate more than one furnace at each facility, and operate several facilities in the U.S., and numerou s facilities worldwide, industry practice is to move production from a furnace rebuild to other ope rating furnaces, in order to avoid loss of production. Therefore, this calculation includes th e cost of moving production of wool fiberglass products to other facilities, a cost that was expla ined and accounted for by industry comments. Note that the calculation using the replacement cos t method does not include any improvements in productivity and energy efficiency, among other factors, resulting from rebuilding a furnace, factors that would typically come into play when a wool fiberglass company assesses the need for a furnace rebuild using this approach.

3.0 Manufacturing Lines

3.1 FA Lines

The EPA is finalizing the emission limits for forma ldehyde, methanol, and phenol, as proposed in the November 13, 2014 supplemental notice, for e xisting, reconstructed, and new FA lines located at wool fiberglass manufacturing facilities that are major sources. As noted in the preamble to the November 2014 proposal (79 FR 68025 -68026), none of the existing FA lines will require additional controls to comply with the final emission limits. Therefore, the EPA did not conduct a control cost analysis for reducing em issions of formaldehyde, methanol, and phenol from FA lines.

3.2 RS Lines

As discussed in Section V.H of the promulgation pre amble of the RTR amendments for wool fiberglass manufacturing, the EPA has issued an Inf ormation Collection Request (ICR) under Clean Air Act (CAA) section 112(d)(6) to obtain upd ated emissions and process information for
RS lines because we do not believe that the data cu rrently available to the EPA are representative of the current operation in the industry. The EPA w ill analyze the ICR data and evaluate RTR limits for RS lines at wool fiberglass manufacturin g facilities at a future date. Consequently, we did not conduct a control cost analysis for RS line s.