SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

APPENDIX C: Cost Effectiveness Analysis for Solvent Cleaning September 20, 2007

C

- 1 Final Staff Report with Appendices
for Proposed Amendments and Revised Proposed Amendments

to the Solvent Cleaning Portion of Eleven District Rules 

# APPENDIX C

COSTS AND COST EFFECTIVENESS ANALYSIS FOR

THE SOLVENT CLEANING PORTION OF ELEVEN DISTRICT RULES

SEPTEMBER 20, 2007SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

APPENDIX C: Cost Effectiveness Analysis for Solvent Cleaning September 20, 2007

C

- 2 Final Staff Report with Appendices
for Proposed Amendments and Revised Proposed Amendments

to the Solvent Cleaning Portion of Eleven District Rules I. SUMMARY

The proposed changes for solvent cleaning fall into three categories. These categories

are:

Remov ing exemption for cleaning architectural coating application equipment, Lower VOC content limits for solvents used to clean printing presses, and Lower VOC content limit for solvents used in general cleaning operations.

Table 1 shows the total estimated c osts and cost effectiveness for the proposed changes to the solvent cleaning portions of the District’s rules.

Table 1

– Summary of Costs and Cost Effectiveness

Net Annual Cost ($/yr) Cost Effectiveness ($/ton VOC reduced)

Low End High End Low

- End H igh

- End

Remove exemption for architectural solvent cleaning $307,165 $3,474,807 $536 $6,059

Printing industry changes $115,325 $115,325 $3,052 $3,052

Other solvent cleaning changes $0 $0 $0 $0

Totals $422,490 $3,590,132 $347 $2,948

II. REASON FOR AN ALYSIS

The California Health and Safety Code 40920.6(a) requires the San Joaquin Valley

Unified Air Pollution Control District to conduct both an "absolute" cost effectiveness analysis and an “incremental” cost effectiveness analysis of available emission control options prior to adopting each Best Available Retrofit Control Technology (BARCT) rule. The purpose of conducting a cost effectiveness analysis is to evaluate the economic reasonableness of the pollution control measure or rule. The analysis als o serves as a guideline in developing the control requirements of a rule.

Absolute cost effectiveness of a control option is the added annual cost, in dollars per year ($/yr), of a control technology or technique, divided by the emission reduction

achie ved, in tons reduced per year. The costs include capital equipment costs, engineering design costs, labor and maintenance costs. Incremental cost effectiveness is intended to measure the change in costs, in $/yr, and change in emissions reductions

in ton s reduced/year between two progressively more effective control options or technologies. The incremental cost effectiveness compares the differences in costs and the differences in emissions reductions of candidate control options. Incremental cost

effec tiveness does not reveal the emission reduction potential of the control options. Unlike the absolute cost effectiveness analysis that identifies the control option with the greatest emission reduction, incremental cost effectiveness does not present anySAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

APPENDIX C: Cost Effectiveness Analysis for Solvent Cleaning September 20, 2007

C

- 3 Final Staff Report with Appendices
for Proposed Amendments and Revised Proposed Amendments

to the Solvent Cleaning Portion of Eleven District Rules correlation between emissions reductions and cost effectiveness. Therefore, the relative values produced in the incremental cost effectiveness analysis and the absolute cost effectiveness values are not comparable and cannot be evaluated similarly.

II I. COSTS AND COST EFFECTIVENESS

A. Source of Cost Data

Typically, VOC emission control systems utilize a regenerative thermal oxidizer (RTO) as the VOC destruction device. A single RTO costs hundreds of thousands of dollars to buy and install and tens o f thousands of dollars to operate each year. It is believed that operators will comply with the VOC content limits proposed by this rule project by reformulating or diluting the current cleaning solvent, since it would be more economical to change solvent s rather than install capital equipment like a RTO to meet rule requirements.

The proposed amendments for this rule project can be divided into three categories. The first category is the changes to the various cleaning operations associated with printin g/graphic arts. Based on District staff’s research, the cost of cleaning solvent in 55 gallon quantities is $7 per gallon and $10 per gallon of current and proposed VOC
content, respectively.

The second category is the removal of the exemption for the cl eaning of architectural coating equipment. In November 2003, SCAQMD staff revised SCAQMD Rule 1171 (Solvent Cleaning Operations) to remove an exemption for the cleaning of architectural coating application equipment. This report also cited a California A ir Resources Board (ARB) survey done in 2000 related to coatings usage in the state. District staff used similar assumptions as those used in the SCAQMD report to determine the gallons of cleaning solvent used annually and the cost of replacing high

- VOC c leaning solvent with

low

- VOC cleaning material.

The final category is the VOC content change from 50 g/L to 25 g/L for general cleaning and certain other cleaning operations. Based on an informal survey of cleaning solvent
vendors, there would be no ad ditional material cost for the change. Operators would reduce the VOC content of the currently used material by thinning it with additional water or other exempt solvent (e.g., acetone or methyl acetate).

B. Cost Calculations

1. Remove exemption for c leaning of architectural coating equipment

Based on the SCAQMD staff report, high

- VOC solvent cleaner averaged $5 per gallon.

The low

- VOC cleaner ranged in price from $6 to $21 per gallon. Operators would already be using the high

- VOC material, so the d ifference between the low

- VOC andSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

APPENDIX C: Cost Effectiveness Analysis for Solvent Cleaning September 20, 2007

C

- 4 Final Staff Report with Appendices
for Proposed Amendments and Revised Proposed Amendments

to the Solvent Cleaning Portion of Eleven District Rules the high

- VOC cleaners multiplied by the estimated annual cleaning material solvent would be the cost to operations from the proposed rule amendments. This means that the cost of compliance for removing the exemption for c leaning architectural coating application equipment is estimated between $1 and $16 per gallon. Current estimated usage of high

- VOC solvent is about 190,000 gallons per year. Acetone is an exempt compound that has some solvent properties, but also is mor e volatile than many of the solvents it would replace. District staff assumed that 10% more acetone/methyl acetate would be used compared to current solvent usage or about 211,000 gallons per year of

low

- VOC material. By subtracting the current annual co st of high

- VOC solvent cleaning material from the projected low

- VOC cleaning material cost, estimated annual compliance cost would range from $310,000 and $3.4 million.

Table 2

– Annual Costs for Removal of Architectural Cleaning Exemption

Annual usage (gallons/yr) Cost per

gallon Annual Cost

($/yr) Net cost

increase ($/yr)

Current high

- VOC solvent 191,978 $5 $959,892

---
low

- cost option 211,176 $6 $1,267,057 $307,165

high

- cost option 211,176 $21 $4,434,699 $3,474,807

2. Change in VOC content limits for printing/graphic arts cleaning operations

Current solvent usage was taken from emission inventory statements that certain facilities are required to file with the District. It was assumed that annual solvent usage would not change with the change in VOC content limit. The annual solvent usage was multiplied by the difference in cost between the current solvent and solvent with the interim VOC content limit as proposed in Proposed Rule 4607. As shown in Table 4, the annual cost for the proposed chan ge totals about $115,000.

Table 3

– Annual Costs for Graphic Arts Applications

Print Process Current Usage

(gal/yr) Solvent Cost ($/gal)

Total Annual Compliance Cost ($/yr) Current

solvent After rule

adoption

Flexography 1,078 $7 $10 $3,235

Lithogra phy 36,750 $7 $10 $110,249

Gravure 614 $7 $10 $1,841

Total $115,325

3. Change general cleaning VOC content limit from 50 g/L to 25 g/L

District staff conducted research to find compliant cleaning solvent with 25 g/L VOC. It

was found that the d ifference between 50 g/L solvent and 25 g/L solvent is the amount of dilution. Therefore, the difference in cost between the current compliant cleaningSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

APPENDIX C: Cost Effectiveness Analysis for Solvent Cleaning September 20, 2007

C

- 5 Final Staff Report with Appendices
for Proposed Amendments and Revised Proposed Amendments

to the Solvent Cleaning Portion of Eleven District Rules solvent and the proposed cleaning solvent is zero, since the operator could use water to

dilute the cur rent cleaning solvent to meet the lower VOC content limit.

C. Absolute Cost Effectiveness Analysis

The absolute cost effectiveness is the added cost of implementing the proposed amendments divided by the estimated emission reductions. As outlined above, there are three different areas where VOC emission reductions are expected: the removal of the exemption for cleaning of architectural application equipment, changes in the VOC content limit for cleaning printing/graphic arts application equipment, and c hanges in all other solvent cleaning VOC content limits. Table 4 below summarizes the costs and cost effectiveness for each of these changes. For architectural coatings, the range in cost effectiveness is about $540 to $6,000 per ton VOC removed. Cost e ffectiveness for changes to printing cleaning is estimated at $3,100 per ton. All other solvent cleaning changes have no net annual cost; therefore the cost effectiveness is $0 per ton

VOC removed.

Table 4

– Costs and Cost Effectiveness Analysis

Net Ann ual Cost ($/yr)

Estimated VOC

Emission Reductions (tpy) Cost Effectiveness ($/ton VOC reduced)

Low End High End Low

- End High

- End

Remove exemption for architectural solvent cleaning $307,165 $3,474,807 573.5 $536 $6,059

Printing industry changes $115, 325 $115,325 37.8 $3,052 $3,052

Other solvent cleaning changes $0 $0 606.7 $0 $0

Totals $422,490 $3,590,132 1,218.0 $347 $2,948

D. Incremental Cost Effectiveness Analysis

Incremental cost effectiveness is intended to measure the change in costs, in $ /yr, and change in emissions reductions in tons reduced/year between two progressively more effective control options or technologies. For this rule project, the limits are considered the lowest achieved in practice. Installing VOC control equipment woul d not reduce emissions beyond that mandated by the low VOC content limits. This means that there are no additional VOC emission reductions to be realized by installing a VOC emission control device. Therefore, no incremental cost effectiveness analysis w as conducted.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

APPENDIX C: Cost Effectiveness Analysis for Solvent Cleaning September 20, 2007

C

- 6 Final Staff Report with Appendices
for Proposed Amendments and Revised Proposed Amendments

to the Solvent Cleaning Portion of Eleven District Rules This page intentionally blank.