p.1 

OAR Box 1865 

Prepped by Charmelle Mathews 

Document Number: 

113)lV-K-(B)-8 

Docket Number: 

A-83-27 

Printed 12/3/2008 3:22:17 PM Sheet 113 of 198 
P.2 

ENERGY AND ENVTOONMENTAL ANALYSIS, INC. 

1655 NORTH FORT MYER DRIVE ARLINGTON, VIRGINIA 22209 703/528-1900 IV^K-(B)-8r. 

October 27, 1986 

Mr. Robert Pahel-Short 

Economic Analysis Branch (MD-12) 

U.S. Environmental Protection Agency 

Research Triangle Park, N.C. 27711 

Subject: EPA Contract No. 68-02-4202, Work Assignment No. 18 

Summary of Recent IFCAM Runs 

Dear Robert: 

In September, EEA ran IFCAM with four regulatory scenarios and two 

new sets of industrial fuel price forecasts: 

• the new 1986 EEA high oil prices, non-carriage market natural 

gas prices 

• the new 1986 EEA low oil prices, non-carriage rigid market 

natural gas prices. 

Reference my letter to you dated September 30, 1986. 

In October, EEA ran IFCAM with three regulatory scenarios and three 

new sets of industrial fuel price forecasts: 

• the new 1986 EEA high oil prices, carriage market natural gas 

prices 

• the new 1986 EEA low oil prices, rigid carriage market natural 

gas prices 

• the new 1986 EEA low oil prices, flexible carriage market 

natural gas prices. 

Recall that before any of these runs were executed, there were 

several changes in assumptions (reference my letter to you dated 

September 11, 1986). All of these new IFCAM runs used the revised 1986 

ICF industrial coal price projections. 

The enclosed table presents a comparison of IFCAM results for these 

five new fuel price forecasts plus a set of IFCAM runs which were 

performed in 1984. The results for the non-carriage market natural gas 

prices are discussed in my letter to you dated September 30, 1986. 

MANAGEMENT / ECONOMICS / ENGINEERING 
Mr. Pahel-Short 

October 27, 1986 

Page Two 

The carriage market natural gas prices results have relatively 

smaller cost-effectiveness ratios because of a larger level of fuel 

switching from residual fuel oil to natural gas. The SO2 emission 

reduction, 0.8 v. 0.3, for the carriage market natural gas prices/1986 

high oil and 1986 low oil (flexible market) is relatively small, only 

3-4,000 short tons. This is small because 98 percent of the fuel use is 

natural gas for the 0.8 lb. S02/MMBtu residual fuel oil standard. Only 

two percent of the fuel use is residual fuel oil for the 0.8 lb. 

S02/MMBtu standard and, as a result, the incremental SO2 emission 

reduction is very small for a standard which is tighter than 0.8 lb. 

S02/MMBtu. 

For the carriage market natural gas price runs, IFCAM projects 

demand only for natural gas when the residual fuel oil regulation is 0.3 

lb. S02/MMBtu. Therefore, there are no incremental differences between 

a mandatory scrubbing standard and 0.3 emission regulation. 

Call me if you have any questions. 

Tim Hogan 

TH:lmh 

enclosure 

cc: Dr. A. Wehe 
COMPARISON OF IFCAM PROJECTIONS3 

1 

Baseline v. 0.8 

SO2 emission red. (10^ short tons) 

Tot. ann. cost increase ($1985 106) 

Incremental C-E (1985 $/short ton) 

0.8 v. 0.3 

SO2 emission red. (10-5 short tons) 

Tot. ann. cost increase ($1985 106) 

Incremental C-E (1985 $/short ton) 

0.3 v. all scrub 

SO2 emission red. (10-5 short tons) 

Tot. ann. cost increase ($1985 106) 

Incremental C-E (1985 $/short ton) 

Baseline v. all scrub 

SO2 emission red. (10-5 short tons) 

Tot. ann. cost increase ($1985 IO6) 

Average C-E (1985 $/short ton) 

1984 

Ref.b 

173 

63 

364 

67 

78 

1,164 

22 

6 

273 

263 

148 

563 

Non-Carriage Market 

Natural Gas Prices 

1986 

High Oil 

120 

55 

456 

50 

35 

702 

6 

19 

3,220 

176 

109 

618 

1986 

Low Oilc 

282 

60 

212 

60 

37 

612 

13 

76 

5,953 

355 

172 

485 

Carriage Market 

Natural Gas Pr 

1986 

High Oil 

126 

5 

43 

4 

-1 

-

0 

0 

-

130e 

4

e 

33e 

1986 

Low Oilc 

313 

47 

150 

44 

-2 

-

0 

0 

-

357e 

44e 

125e 

ices 

1986 

Low Oild 

324 

29 

91 

3 

0 

0 

0 

0 

-

327e 

2 9 e 

89e 

c 

d 

e 

New industrial fossil fuel-fired boilers larger than 100 MMBtu/hr and installed between 1985 

and 1990. 

"High Oil Demand" scenario. Projected Impacts of Alternative Sulfur Dioxide New Source 

Performance Standards for Industrial Fossil Fuel-Fired Boilers. EEA. March 1985. Baseline 

and alternative control levels II, IV and VI. 

Rigid market natural gas prices. 

Flexible market natural gas prices. 

Also applicable to Baseline v. 0.3.