SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis September 20, 2007

Final Staff Report with Appendices for Revised Proposed Amendments to Rule 4682 

# APPENDIX C

Cost Effectiveness for Revised Proposed Amendments to Rule 4682 (Polystyrene Foam, Polyethylene, and Polypropylene Manufacturing)

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

Appendix C: Cost Effectiveness Analysis September 20, 2007

Final Staff Report with Appendices for Revised Proposed Amendments to Rule 4682 C - 2 I. INTRODUCTION

The California Health and Safety Code 40920.6(a) requires the San Joaquin Valley
Unified Air Pollution Control District to c onduct both an "absolute" cost effectiveness analysis and an incremental cost effectivene ss 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 also serves as a guideline in developing the control requirements of a rule.

Absolute cost effectiveness of a control opti on is the added annual cost (in $/year) of a control technology or technique, divided by the emission reduction achieved (in tons reduced/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 tons reduc ed/year between two progressively more effective control options or technologies. Fo r this rule project, the limits are considered the lowest achieved in practice. Insta lling VOC control equipment would 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 was conducted.

It is estimated that stakeholders will s pend about $5.1 million annually to meet the proposed rule requirements. With estima ted VOC emission reductions of 137.9 tons per year, the overall cost effectiveness would be about $37,000 per ton VOC reduced.

III. COST EFFECTIVENESS ANALYSIS

The cost data for this analysis was taken from information submitted by stakeholders. The proposed changes to Rule 4682 allow an operator to minimize VOC emissions through a menu of choices. For this analysis, three different compliance options were
evaluated:

• Modify or add more control to a manufacturing process;

• Vent the air from an existing war ehouse to a new regenerative/recuperative thermal oxidizer (RTO);

• Build a new warehouse that vents to a new regenerative/recuperative thermal

oxidizer.

District staff then estimated how the affect ed facilities would comply with the proposed rule provisions. The two extruded polystyrene facilities will make minor modifications to
meet the new limits. One fa cility will continue to maintain its exemption from the VOCSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis September 20, 2007

Final Staff Report with Appendices for Revised Proposed Amendments to Rule 4682 C - 3 limits. The EPS cup molder will meet the r equirements by installing a new RTO in an existing warehouse, and the remainder will build a warehouse with new RTO.

As shown in Table 1, stakeholders will s pend about $5.1 million annually to meet the proposed rule requirements. With estima ted VOC emission reductions of 136.9 tons per year, the overall cost effectiveness would be about $37,000 per ton VOC reduced.

Table 1 – Annualized Costs and Cost Effectiveness

Facility Type Proposed Control Estimated Annualized Cost $/yr
EPS Cup Molder New RTO $574,050
recycled plastics Remain exempt from rule $0
polyethylene facility Already meet - no cost $0
EPS Shape Molder New warehouse $795,263

XPS Already meet - no cost $0

high/low density polyethylene resin, polypropylene New RTO $574,050
EPS Shape Molder New warehouse $795,263

XPS Already meet - no cost $0
EPS Shape Molder New warehouse $795,263
EPS Shape Molder New warehouse $795,263
EPS Shape Molder New warehouse $795,263

Total Annualized Cost $5,124,415

Estimated Emission Reductions 136.9

Overall Cost Effectiveness $37,438.65SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis September 20, 2007

Final Staff Report with Appendices for Revised Proposed Amendments to Rule 4682 C - 4 This page intentionally blank.