SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis September 17, 2009 

C-1 Final Staff Report with Appendices 

for Rule 4695

APPENDIX C 

COST EFFECTIVENESS ANALYSIS 

FOR RULE 4695 

September 17, 2009 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis September 17, 2009 

C-2 Final Staff Report with Appendices 

for Rule 4695

APPENDIX C 

Cost Effectiveness Analysis 

I. INTRODUCTION 

The California Health and Safety Code (CH&SC) 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 as it 

applies to operators in the San Joaquin Valley Air Basin. The analysis also serves as a 

guideline in developing the control requirements of a rule. 

II. SUMMARY AND CONCLUSION 

Wine Aging 

An emissions capture and control system consisting of a Permanent Total Enclosure 

(EPA Method 204) and an emissions control device (regenerative thermal oxidizer) was 

found to offer a cost effectiveness of $26,700 per ton for wine aging operations with 

uncontrolled Potential to Emit of 30 tons-ethanol per year or more. Since thermal 

oxidation offers a VOC destruction efficiency (98%) which is greater than that of the 

other available control technology options, an incremental cost effectiveness analysis 

was not applicable. 

Brandy Aging 

An emissions capture and control system consisting of a Permanent Total Enclosure 

(EPA Method 204) and an emissions control device (regenerative thermal oxidizer) was 

found to offer a cost effectiveness of $24,600 per ton for brandy aging operations with 

uncontrolled Potential to Emit of 4 tons-ethanol per year or more. Since thermal 

oxidation offers a VOC destruction efficiency (98%) which is greater than that of the 

other available control technology options, an incremental cost effectiveness analysis 

was not applicable. 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis September 17, 2009 

C-3 Final Staff Report with Appendices 

for Rule 4695

III. COST EFFECTIVENESS ANALYSIS 

Introduction

District staff used available technical and cost information contained in technical reports, 

EPA’s Air Pollution Control Cost Manual, District permit files for existing brandy aging 

operations and information supplied by equipment manufacturers and the wine and 

brandy aging industry to conduct a cost effectiveness analysis of the proposed 

requirements of Rule 4695. 

A previous review of the available VOC control technologies has indicated that the 

following would be potentially applicable to the control of ethanol emissions from wine 

and brandy aging operations: 

1. Thermal Oxidation (conversion of the VOC to CO2) – 98% Control Efficiency (CE) 

2. Catalytic Oxidation (conversion of the VOC to CO2) – 95% Control Efficiency (CE) 

2. Absorption (“scrubbers”, which transfer the VOC in air emissions to a liquid waste 

stream) – 90% CE

3. Adsorption (often using activated carbon, which transfers the VOC in the air onto a 

solid substrate) – 95% CE

4. Condensation (conversion of the VOC gases into liquids) – 90% CE 

5. Biological control systems (e.g., bio-filters or bio-scrubbers) – 90% CE

While any of the above technologies could potentially be applied for control of VOC 

emissions from wine and brandy aging facilities, this cost effectiveness analysis will be 

based only on the use of regenerative thermal oxidation (RTO) technology due to: 

• All existing brandy aging facilities in the San Joaquin Valley which have been 

modified to install controls have used RTO technology. As of the date of this 

analysis, six brandy aging warehouses in the District, which represent in excess of 

95% of the brandy aging capacity in the San Joaquin Valley, have been retrofit 

with RTO-based VOC controls. 

• The wine and brandy aging industry in the San Joaquin Valley has indicated a 

preference for RTO technology for both wine and brandy aging operations and all 

cost information which has been supplied by the industry to support this analysis 

is based on use of an RTO. 

• Thermal and catalytic oxidation, condensation, and biological control were 

previously found to offer similar cost effectiveness in this application while 

absorption and adsorption were found to be significantly more expensive due to 

operating costs associated with either waste water disposal or regeneration of 

spent activated carbon. In general, it has been found that the cost effectiveness 

analysis is relatively insensitive with respect to selection of the control device 

largely due to the significant costs associated with the PTE, ducting, induced draft 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis September 17, 2009 

C-4 Final Staff Report with Appendices 

for Rule 4695

fan, instrumentation and other scope items which are independent of the control 

technology selection. No control technology was found to offer better cost 

effectiveness than RTO technology largely due to its low operating cost (high 

thermal efficiency). Therefore, the evaluation can be based on RTO technology 

without a loss of generality. 

• An RTO provides the highest thermal efficiency and lowest collateral emissions of 

NOx and greenhouse gases when compared to other types of thermal oxidation 

systems. 

In addition, all potential control options listed above are classified as capture and control 

systems and therefore all share a common requirement for a capture system consisting 

of an enclosure for the barrel aging operation, ducting and an induced draft fan to 

deliver the captured emissions from the enclosure to the control device. Based on the 

existing brandy storage operations currently operating within the District, an enclosure 

that meets the criteria for a Permanent Total Enclosure (PTE), pursuant to U.S. EPA 

Method 204, is considered to be an Achieved-in-Practice capture system for wine and 

brandy aging. By definition the capture efficiency for a PTE is considered to be 100%. 

However, since wine and brandy aging operations (and their emissions) are a 

continuous 24 hour/day operation throughout the year, it would be difficult and 

expensive to continuously maintain the warehouse in “PTE” status due to on-going 

requirements to transport product into and out of the warehouse and due to 

requirements for maintenance during which the warehouse must be opened or the 

control device must be shut down. During such periods, uncontrolled emissions are 

delivered to the atmosphere in the absence of expensive air lock systems and 

redundant control devices. 

As mentioned above, all existing brandy aging facilities in the District utilize an RTO for 

the control device. Additionally, based upon existing brandy aging operations currently 

permitted in the SJV, the District has determined that a PTE in this application can 

achieve an on-line availability of 95%, i.e., access and maintenance requirements will 

not exceed 5% of the total operating time for the warehouse. Annual downtime for 

control device maintenance is potentially 10 days per year during which time the 

emissions are also uncontrolled. Overall capture and control efficiency (CCE) is thus 

calculated as: 

CCE = CE x (days on-line per year) ÷ (total days per year) 

CCE = CE x (365 - 10 - 5% x (365 - 10)) ÷ 365 = CE x 92% 

Since this analysis will only consider thermal oxidation, CE = 98%. Therefore, 

CCE = 98% x 92% = 90.2% 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis September 17, 2009 

C-5 Final Staff Report with Appendices 

for Rule 4695

Basis and Assumptions

The following are assumptions used for the cost effectiveness analysis: 

1. Existing wine and brandy aging operations are assumed to be conducted in 59 and 

50 gallon wooden barrels respectively, stored in dedicated warehouses. The 

warehouse construction typically features concrete tilt-up walls with insulated woodframe roof covered with composition roofing. The warehouse space is commonly 

conditioned with refrigerated air conditioning and humidification to minimize 

evaporative loss during the aging process. 

2. Wine loss from barrel storage is 1.4% per year for wine aging warehouses with 

conditioned storage space based on data provided by industry. Average ethanol 

content is assumed to be 14 vol% yielding an emission factor of 0.764 lb-VOC per 

59 gallon barrel per year. 

3. The emission factor for brandy aging is 9.93 lb-VOC per barrel per year based on an 

average loss of 3 proof gallons per year per 50 gallon barrel for permitted facilities in 

the SJV and 3.31 lb-ethanol per proof gallon. 

4. The Total Capital Investment (TCI) for installation of controls on wine or brandy 

aging operations is based on the following scope: 

• Modify an existing warehouse to convert it to a PTE for wine or brandy aging. 

• Install a control device equipment package consisting of the control device, a 

variable speed controlled induced draft fan, and stack with associated 

interconnecting ducting, controls and instrumentation. 

• Install ducting as required for collection of emissions and connection of the PTE 

to the control device package. 

5. Warehouse size in square feet, as a function of the number of barrels stored, was 

determined based on the typical existing warehouse floor space versus barrel 

capacity for brandy aging operations currently permitted by the District. Based on 

typical industry practice, it was assumed that wine barrels are stored in metal racks 

in horizontal position and stacked up to 6 barrels high. For brandy, the barrels are 

palletized and stacked vertically up to six barrels high. A wine aging warehouse with 

an uncontrolled Potential to Emit of 30 tons per year was determined to consist of a 

150,800 square feet warehouse space housing 78,493 barrels (59 gallons each). A 

brandy aging warehouse with an uncontrolled Potential to Emit of 4 tons per year 

was determined to consist of a 2,940 square feet warehouse space housing 806 

barrels (50 gallons each). 

6. Determination of the required air flow capacity per square foot of warehouse space 

(for estimation of electricity and fuel consumption) was made based on rated air flow 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis September 17, 2009 

C-6 Final Staff Report with Appendices 

for Rule 4695

capacities of existing brandy aging facilities currently permitted by the District. Since 

the air rate is primarily set by the ability to seal the existing structure to minimize the 

air flow, the rated capacities as determined from the brandy operations are assumed 

to be applicable to wine aging as well. Using typical values, rated air flow for a 

150,800 ft2 warehouse was estimated at 9,950 scfm (66 scfm/1000 sq ft). Rated air 

flow for a 2,940 ft2 warehouse was estimated at 280 scfm (95 scfm/1000 sq ft). 

5. The actual detailed scope and the associated actual Total Capital Investment which 

was required for a previous conversion of two large existing brandy aging 

warehouses to PTE’s and the installation of RTO-based controls on these 

warehouses was provided to the District by the Wine Institute as confidential 

information. District staff applied the “six tenths factor rule” (a commonly used 

estimating technique) to the industry supplied cost data to estimate the Total Capital 

Investment required for the specific size of operations being evaluated. Per the “sixtenths-factor rule”, if a new piece of equipment is similar to one of another capacity 

for which cost data are available, the cost of the new unit with X times the capacity 

of the first is approximately (X)0.6 times the cost of the initial unit: 

Cost of equip. A = cost of equip. B ((cap. of equip. A)/ (cap. of equip. B))

0.6 

Applying this equation to the two cases in this analysis yields: 

TCI (150,800 ft2) = $2,469,400 x (150,800 ft2/155,600 ft2)

0.6 = $2,423,400 

TCI (2,940 ft2) = $2,469,400 x (150,800 ft2/2,940 ft2)

0.6 = $228,200 

6. Annual Cost was estimated in accordance with the cost estimation template 

provided in the EPA Control Cost Manual, Table 2.10 with the following exceptions: 

• Unit costs given in Table 2.10 for labor were escalated to 2009 at a rate of 3% 

per year. 

• Annual maintenance cost was estimated at 3% of TCI based on typical ranges 

given by Peters & Timmerhaus1

. 

7. The Capital Recovery Factor is 0.163 based on 10-year amortization at 10% annual 

interest rate. 

8. Electricity cost was calculated for the energy consumption by the induced draft fan, 

based on the rated flow of the RTO, a pressure differential of 10 “WC, fan efficiency 

of 65% and electric motor efficiency of 90%. A unit price of $0.12 per kWh was 

applied based on published average rates for California. 

 

1

 Peters, Max and Klaus Timmerhaus, Plant Design and Economics 

for Chemical Engineers, McGraw-Hill, New York, 1968, p. 132. 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis September 17, 2009 

C-7 Final Staff Report with Appendices 

for Rule 4695

9. Natural gas requirements were estimated based on the following: 

• The RTO operates at 1,400 oF 

• Thermal efficiency is 95% 

• Ethanol is assumed to provide 50% of the thermal requirements for brandy 

operation and 8% is assumed for wine operations. 

• Natural gas is priced at $8.00/MMBtu based on the average published NYMEX 

Henry-Hub price for 2008. 

Cost Effectiveness Analysis

Table 1 presents the evaluated Total Capital Investment (TCI), Annual Cost and the 

Cost Effectiveness each for the wine and brandy operations. As shown, a cost 

effectiveness of $26,700 per ton is applicable to the installation of VOC controls on a 

wine aging warehouse with an uncontrolled Potential to Emit of 30 tons per year. A cost 

effectiveness of $24,600 per ton is applicable to the installation of VOC controls on a 

brandy aging warehouse with an uncontrolled Potential to Emit of 4 tons per year. 
Table 1 

C-8 Final Staff Report with Appendices 

for Rule 4695

Cost Effectiveness for Wine and Brandy Aging Warehouses 

Case Wine Aging Warehouse Brandy Aging Warehouse 

Uncontrolled PE, tons per year 30.0 4 

Warehouse Size ft2 150,800 2,940 

Barrel Aging Capacity (bbls) 78,493 806 

Total Capital Investment (TCI) $2,423,400 228200 

Direct Annual Costs 

Operating Labor (0.5 hr/shift @ 

$28.35/hr)) $15,500 $15,500 

Supervision @ 15% $2,300 $2,300 

Operating Materials @ 15% of 

maintenance $10,900 $1,000 

Maintenance @ 3% of TCI $72,700 $6,800 

Utilities 

Natural Gas $48,700 $700 

Electricity $21,000 $600 

Total Direct Cost (TDC) $171,100 $26,900 

Indirect Annual Cost 

Overhead @ 60% of Operating 

Labor and Maintenance $60,800 $15,400 

Administrative Charges, 2% TCI $48,500 $4,600 

Property Tax, 1% TCI $24,200 $2,300 

Insurance, 1% TCI $24,200 $2,300 

Capital Recovery (CRF = 0.163) $395,000 $37,200 

Total Indirect Annual Cost (TIAC) $552,700 $61,800 

Total Annual Cost (TDC + TIAC) $723,800 $88,700 

Destruction Efficiency % 90.2% 90.2% 

Annual Emissions Reduction - tons 27.06 3.61 

Cost Effectiveness ($ per ton) $26,700 $24,600