# 1 MEMORANDUM

TO: Jim Eddinger, U.S. Environmental Protection Agency, OAQPS/SPPD

FROM: Amanda Singleton and Graham Gibson, ERG

DATE: April 2010

SUBJECT: New Unit Analysis for the Industrial, Commercial, and Institutional Boilers National Emission Standards for Hazardous Air Pollutants – Area Source

1.0 INTRODUCTION

This memorandum describes the estimation of new area source boilers projected to be built by 2013 from the baseline year of 2004. The results of this analysis are used to estimate costs and impacts for new sources for a national emission standard for hazardous air pollutants (NESHAP) for industrial/commercial/institutional boilers. The year 2013 was selected because it is five years from the expected proposal and promulgation dates of the boiler NESHAP. The methods used for this are similar to the methods used to project new major source boilers. 1 

# This memorandum is separated into the following sections:

1.0 Introduction

2.0 Data Sources 3.0 Methodology for Estimating New Units

4.0 Results

5.0 References Appendix A – Distribution of Model Boilers between Industrial and Commercial Sectors Appendix B – EIA Fuel Consumption Appendix C – Boiler Inspector Data: Boiler Installation Dates Appendix D – Distribution of New Units to Affected Sectors

# 2 2.0 DATA SOURCES

The number of existing area source boilers categorized into model boilers according to fuel type and boiler size. 2 

# A 13-state boiler inspector inventory that was compiled in 2005 and 2006 was used to estimate the number of existing model boilers nationwide 3 

# . These data served as the baseline for estimating new units expected to be installed. The inspector inventory also included boiler installation dates. The energy consumption forecasts were provided by the Energy Information Administration (EIA) of the U.S. Department of Energy 4 

# . The data forecasted energy consumption according to fuel type.

3.0 METHODOLOGY FOR ESTIMATING NEW UNITS

3.1 Distillate Liquid Units Similar to the projections made for major source boilers, the estimated number of new distillate liquid fuel boilers was estimated using fuel consumption data from the Energy Information Administration (EIA). The expected percent difference in fuel consumption was calculated for petroleum between 2004 and 2013. Appendix B shows the details of the EIA data.

Table 3-1. Expected Fuel Consumption Differences by Sector 4



### Fuel Consumption (Quadrillion Btu per year) Percent Difference from 2004 Fuel 2004 2013 2013

Petroleum 40.13 44.80 11.6%

Source: U.S. Department of Energy. Energy Inform ation Administration. Annual Energy Outlook 2006 with Projections to 2030. Figure 3. Energy Consumption by Fuel, 1980-2030 (quadrillion Btu).


# Next, the projected fuel consumption was divided by the average capacity of the model boiler in each size range in order to estimate the total number of projected units. Finally, in order to get an estimate of the new units, the existing number of distillate oil fired boilers was subtracted from the total projected number of units in each target year. A summary of the results of this boiler forecast analysis is shown in Table 3-1. The methodology involved in estimating new liquid-fired area source boilers is identical to the method used in the major source analysis 1 

# . No new boilers were projected burning gaseous fuels because they are not subject to the NESHAP and would have no effect on

# 3 regulatory impacts analyses. The EIA fuel cons umption projections for liquid fuels, along with calculated percent differences for 2013, are given in Table 3-1.

3.2 Coal, Wood, and Residual Liquid Units There are only a small amount of solid fuel and residual oil fired-boilers with installation data in the boiler inspector database. This installation data does not provide any indication of an upward trend in installation of boilers with these fuel types over recent years. As a result, the fuel consumption estimates and trends from the EIA were not deemed to be the most appropriate predictors of new solid fuel or residual oil fired boilers. Using engineering judgment, units burning these three fuel types were calculated based on the annual average number of units installed over a recent 10-year period. A summary of the installation dates of boilers in the boiler inspector dataset based on fuel type, and size category is presented in Table 3-2. Details of the installation dates are shown in Appendix C.

Table 3-2 Distribution of Installation Dates in the Boiler Inspector Dataset

Fuel Category Size Category No Installation Year Information Percentage of Units

with Installation Data 1900 to 1950 1951 to 1960 1961 to 1970 1971 to 1980 1981 to 1990 1991 to 2002 Post 2002*

Residual Oil 234 54.91% 34 72 75 27 44 21 12 Wood/ Biomass 473 41.68% 121 30 16 35 91 43 2

Coal 281 46.48% 61 26 20 40 51 40 6

Total < 10 mmBtu/hr

180,741 4,439 10,717 21,401 22,790 46,753 94,854 12,509

Residual Oil 7 65.00% 0 3 4 0 2 3 1 Wood/ Biomass 26 84.24% 22 8 20 23 39 23 4 Coal 14 60.00% 4 9 2 2 4 0 0 Total ≥ 10 mmBtu/hr

2,682 141 354 1,164 1,107 964 1,895 208

*Boilers installed between 2003 and 2006 listed in the boiler ins pector database were not included in the forecasting analysis because the total number of annual installations was not deemed to be a complete dataset of units installed in the states during these years.

# 4 Since the data collection activities for the area source boiler standard were conducted between 2004 and 2006, the boiler inspector dataset was deemed to be incomplete for certain states starting with the year 2003. Therefore, the time frame selected for the basis of calculating the average annual number of installations was the most recent 10-year period between 1993 and

2002. As shown in Table 3-2, some of the units in the boiler inspector dataset did not provide data on the year the boiler was installed. In order to adjust for this data gap, the average number of annual installations for each fuel type and size category was adjusted to reflect the distribution of units without an installation date. The adjusted value represents an estimate of the annual number of units installed for each fuel and size category in the thirteen states which are contained in the boiler inspector dataset. Equations 1 and 2 were used to distribute the units with

unknown installation dates.

% Installation 

# = 100 * ( Σ N i 

# ) / N 2008 

# Equation 1

Where: % Installation 

# = Percentage of units expected to not have a known installation date Σ N i 

# = Sum of number of boilers with a known installation date between 1900 and 2006 N 2008 

# = Number of boilers in operation in 2008.

This percentage was then applied to the average number of boiler installations between 1993 and 2002 in order to account for any boilers with unknown installation dates. An average number of installations per year was calculated for the 10-year period between 1993 and 2002 using Equation 2.

N avg 

# = X avg 

# / ( % Installation 

# / 100 ) Equation 2

Where: N avg 

# = Average number of all known boilers installations between 1993 and 2002 X avg 

# = Average number of known boiler installations between 1993 and 2002 % Installation 

# = Percentage of units expected to not have a known installation date

# 5 Since this boiler inspector data was representative of only 13 states, the average annual number of boiler installations was extrapolated to be representative of all 50 states. This was done by multiplying the average number of known boiler installations by a ratio of 50 over 13. Since this average was generated for a recent 10-year period, it was assumed to be a constant predictor of the annual number of new boiler installations for the next 10-year period. The results of this forecast analysis indicate that approximately 31 new coal, 40 new wood, and 28 new residual oil fired units will be installed each year. Next, the number of projected new boilers in a target year (2013) was calculated using Equation 3.

N TY 

# = X extrapolated 

# * (TY – 2008) Equation 3

Where: N TY 

# = Number of new boiler installations in the target year (2013) X extrapolated 

# = Average number of boiler installations per year, nationwide TY = Target year (2013)

Based on the data available, no growth trend in the number of installed coal, wood, and residual-oil fired units was identified over the last 10-year period. As a result, the projected number of annual installations is estimated to stay constant between 2004, the base year of this forecast analysis, and 2013.

Table 2-2 Forecasted Solid Fuel and Residual Oil Fired Units

Fuel Size Category Average Annual Number of New Boiler Installations Projected Number of New Units by

2013 < 10 mmBtu/hr 19 95 Residual Oil ≥ 10 mmBtu/hr 9 45 < 10 mmBtu/hr 28 140 Wood/ Biomass ≥ 10 mmBtu/hr 12 60 < 10 mmBtu/hr 31 155

Coal ≥ 10 mmBtu/hr 0* 0



### *No coal units at area source facilities ≥ 10 mmBtu per hour are listed in the boiler insp ector database with an installation date since 1989. Additionally several Pennsylva nia school board officials cited regional air pollution control regulations, increas ing insurance costs, and maintenance issues as other reasons why th ere has not been a trend to replace old coal units with newer c oal units. These officials noted that the units have switched to ga s-fired units in recent years. Based on the average number of units installed each year over the last 10 year period, and other fact ors which have limited the number of new coal units in recent years, no new coal units at area source facilities ≥ 10 mmBtu/hr are predicted to come online by 2013.

# 6 3.3 Assigning Affected Sectors to New Units After the 2013 projections were estimated for each fuel category, the units were distributed according to affected sector, either co mmercial or industrial. In order to distribute the projected models to a sector, the SIC distribution of existing area source boilers was multiplied by the total number of projected units assigned to each new model boiler. The distribution of SIC codes and the resulting new model units assigned to each sector is shown in Appendix D.

4.0 RESULTS

The results of the new boiler analysis by model and year for the industrial and commercial sectors are presented in Appendices A-1 and A-2, respectively. The combined total number of new boilers for 2013 is expected to be 6,779. The majority of all new boilers are expected to be liquid-fired boilers in the commercial sector.

5.0 REFERENCES

1. Gibson, G., ERG. New Unit Analysis for Industrial, Commercial, and Institutional Boilers and Process Heaters National Emission Standards for Hazardous Air Pollutants – Major Source. April, 2010.

2. Singleton, A. ERG. Methodology for Developing Model Units for Industrial, Commercial, and Institutional Boilers National Emission Standards for Hazardous Air Pollutants – Area Source. April 2010.

3. Thirteen-state Boiler Inspector Inventory. Data compiled 2005-2006. For a description of the dataset see April 2010 Memorandum: Development of Model Units for Area Source Boilers. ERG, April 2010.

4. U.S. Department of Energy. Energy Info rmation Administration. Annual Energy Outlook 2006 (Early Release) with Projections to 2030. Figure 3. Energy Consumption by Fuel, 1980-2030 (quadrillion Btu).

## Appendix A: EIA Fuel Consumption Data Annual Energy Outlook 2006 (Early Release) Release Date: December 12, 2005 Next Release Date: December 2006 (Full report available early 2006)

Figure 3. Energy Consumption by Fuel, 1980-2030 (quadrillion Btu)

Petroleum Natural Gas Coal Nuclear Hydropower Renewable/Other(excl. Hydro.) 1980 34.20236 20.3941 15.38779 2.739169 2.900144 2.594276 31.93104 19.92776 15.89158 3.007589 2.757968 2.712606 30.23161 18.50509 15.29993 3.131148 3.265558 2.719794 30.05392 17.35679 15.87882 3.202549 3.52726 2.960638 31.05133 18.50699 17.05914 3.552531 3.385811 3.044835 30.92215 17.83393 17.46494 4.075563 2.970192 3.062536 32.19608 16.70793 17.24367 4.380109 3.071179 3.060363 32.86505 17.74434 18.01708 4.753933 2.634508 3.052424 34.22199 18.55244 18.88587 5.586968 2.334265 3.154384 34.21111 19.71169 19.10017 5.602161 2.837263 3.456946 33.55253 19.72959 19.17742 6.10435 3.046391 3.086181 32.84536 20.14893 19.00137 6.422132 3.015943 3.142144 33.52659 20.83508 19.15709 6.479206 2.617436 3.289711 33.84148 21.35117 19.86225 6.410499 2.891613 3.264345 34.67027 21.84202 19.96779 6.693877 2.683457 3.381322 1995 34.55347 22.78427 20.14979 7.075436 3.205307 3.463953 35.75685 23.19692 21.02473 7.086674 3.589656 3.547143 36.26565 23.32851 21.49186 6.596992 3.640458 3.434695 36.93354 22.93558 21.72283 7.067809 3.297054 3.263578 37.95965 23.01009 21.68023 7.610256 3.267575 3.331056 38.40362 23.91645 22.64488 7.862349 2.811116 3.347116 38.33315 22.90578 21.94353 8.032697 2.241858 3.086492 38.40135 23.6282 21.96475 8.143089 2.689017 3.146319 39.0473 23.06872 22.37145 7.958858 2.824533 3.257195 2004 40.13009 22.99105 22.52786 8.231732 2.725219 3.391071 2005 40.22358 22.86413 23.36663 8.080544 2.684348 3.199024 2006 40.37086 22.82558 23.44147 8.219225 2.9446 3.411935 2007 41.31838 23.04497 23.83594 8.409397 3.02649 3.681045 2008 41.8396 23.54848 24.28613 8.422953 3.026717 3.746748 2009 42.43158 23.73113 24.82422 8.438003 3.026791 3.837737 2010 43.14035 24.04343 25.08521 8.441965 3.026791 4.053943 2011 43.77956 24.54411 25.19279 8.453347 3.026791 4.083359 2012 44.33028 25.14415 25.52124 8.463369 3.026791 4.102375 2013 44.79918 25.65771 25.541 8.466047 3.026789 4.187376 2014 45.28099 26.06837 25.59385 8.54078 3.029312 4.282938 2015 45.68502 26.66649 25.66214 8.658575 3.029312 4.397181 46.18589 27.08545 25.89554 8.795967 3.029313 4.519976 46.70186 27.25442 26.23202 8.944653 3.029313 4.610708 47.23509 27.43787 26.64282 9.038681 3.029313 4.699439 47.72386 27.63786 27.01812 9.085279 3.029313 4.817065 48.14332 27.70358 27.64628 9.089217 3.038146 4.964722 48.58918 27.72145 28.24059 9.089217 3.038146 5.073628 49.03895 27.71264 28.91274 9.089217 3.038146 5.210188 49.46225 27.7791 29.54434 9.089217 3.038146 5.323104 50.04314 27.78877 30.26782 9.089217 3.038147 5.476065 50.57268 27.77851 30.88905 9.089217 3.038146 5.569607 51.17701 27.78358 31.57012 9.089217 3.038145 5.703391 51.81902 27.70945 32.33249 9.089217 3.038146 5.782818 52.42754 27.63842 33.14792 9.089216 3.038145 5.868527 53.01973 27.5401 33.92978 9.089216 3.038145 5.911229 2030 53.5784 27.65664 34.48717 9.0881 3.038145 5.985361Appendix B-1: Calculation of Projected Number of New Industrial Boilers in 2013Annual EnergyConsumption(MMBtu/yr)Percentage ofBoilers withKnownInstallationDateProjected AnnualEnergyConsumption(MMBtu/yr)EstimatedNumber of NewUnitsAverage Number ofAnnual BoilerInstallationsEstimatedNumber of NewUnitsNew Biomass Unit 2Industrial Biomass 3,746 8,760 7.4 0.65 <= 1041.7% 7.20 70New Biomass Unit 3Industrial Biomass 2,806 8,760 131.0 0.65 > 1084.2% 3.12 49New Coal Unit 2Industrial Coal 1,882 8,760 6.7 0.65 <= 1046.5% 7.96 93New Distillate Unit 2Industrial Liquid 10,926 8,760 6.8 0.5 <= 103.24E+08 3.61E+08 407New Distillate Unit 4Industrial Liquid 1,863 8,760 25.3 0.5 > 102.07E+08 2.31E+08 90Total 5.30E+08 57.5% 5.92E+08 497 1.83E+01 212709Design CapacitySize Category(mmBtu/hr)Capacity FactorModel Identifier SectorStandard FuelCategoryAverageAnnualOperationHoursTotal Number of New Area Source BoilersNumber ofBoilers in20082013 - Installation DateProjections20082013 - Fuel ConsumptionProjectionsAverage DesignCapacity(mmBtu/hr)Appendix B-2: Calculation of Projected Number of New Commercial Boilers in 2013Annual EnergyConsumption(MMBtu/yr)Percentage ofBoilers withKnownInstallationDateProjected AnnualEnergyConsumption(MMBtu/yr)EstimatedNumber of NewUnitsAverage Number ofAnnual BoilerInstallationsEstimatedNumber of NewUnitsNew Biomass Unit 1Commercial Biomass 3,746 8,760 7.4 0.65 <= 1041.7% 7.20 70New Biomass Unit 4Commercial Biomass 660 8,760 21.0 0.65 > 1084.2% 3.12 11New Coal Unit 1Commercial Coal 1,255 8,760 6.7 0.65 <= 1046.5% 7.96 62New Distillate Unit 1Commercial Liquid 145,787 8,760 6.8 0.5 <= 104.32E+09 4.82E+09 5,435New Distillate Unit 3Commercial Liquid 7,290 8,760 25.3 0.5 > 108.08E+08 9.02E+08 352New Residual Unit 1Commercial Liquid 2,061 8,760 5.9 0.5 <= 105.37E+07 6.00E+07 95New Residual Unit 2CommercialLiquid 76 8,760 17.6 0.5 > 105.85E+06 6.53E+06 45Total 5.18E+09 57.5% 5.79E+09 5,927 1.83E+01 1436,070Total Number of New Area Source BoilersNumber ofBoilers in20082013 - Installation DateProjections20082013 - Fuel ConsumptionProjectionsAverage DesignCapacity(mmBtu/hr)Design CapacitySize Category(mmBtu/hr)Capacity FactorModel Identifier SectorStandard FuelCategoryAverageAnnualOperationHoursAppendix C: Boiler Installation Dates from 13-State Boiler Inspector InventoryTable 1: Units < 10 mmBtu/hrFuel CategoryNo InstallationYear Information 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005% units withInstalled DatesTotal Units inCategoryAverage AnnualInstallations(1993 to 2002)Average Annualinstallations(adjusted)NationalAverageInstallationsGas 172,263 5594 6459 6532 7320 7668 8824 8568 8755 8385 7690 6395 4633 970 51.5% 355,065Distillate Liquid 7,490 618 699 604 701 825 853 777 796 633 516 320 160 9 79.9% 37,284Residual Liquid 2341 4 1 2 4 3 4 1254.9% 519 2.71 4.94 19Biomass 47343412325331141.7% 811 3.00 7.20 28Coal 281313114386732146.5% 525 3.70 7.96 31Grand Total180,7416219 7163 7147 8024 8498 9684 9350 9568 9030 8220 6731 4796 980Table 2: Units≥10 mmBtu/hrFuelCategoryNo InstallationYear Information 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005% units withInstalled DatesTotal Units inCategoryAverage AnnualInstallations(1993 to 2002)Average Annualinstallations(adjusted)NationalAverageInstallationsGas 2,434 102 120 118 165 146 146 152 161 161 157 91 71 22 65.8% 7,117Distillate Liquid 201 20 18 11 19 12 30 11 18 13 15 12 4 3 82.9% 1,178Residual Liquid 7 1 2 1 65.0% 20 1.50 2.31 9Biomass 26423271 11 12184.2% 165 2.63 3.12 12Coal 1460.0% 35 - - -Grand Total2,682126 140 132 186 165 178 163 180 175 174 105 77 26Table 3: Summary of Projected New UnitsFuel Size Category< 10 mmBtu/hr>= 10 mmBtu/hr< 10 mmBtu/hr>= 10 mmBtu/hr< 10 mmBtu/hr>= 10 mmBtu/hrNotes:The percent of units with installation dates include other boilers that were installed prior to 1993. Since the data collectionactivities for the area source boiler standard were conducted between 2004 and 2006,the boiler inspector dataset was deemed to be incomplete for certain states starting with the year 2003. Therefore, the time frame selected for the basis of calculating the average annual number of installationswas the most recent 10-year period between 1993 and 2002.Residual LiquidBiomassCoal31120 015560Average AnnualNumber ofInstallations19928 1404595Projected Number ofUnits in 2013

### Appendix D: Sector Distribution of Existing Boilers

FuelCategory Boiler Capacity Range Sector* Number of Boilers Percent Total Number of Boilers Percentage of Fuel and Capacity in Sector

less 10 mmBtu/hr Commercial/Institional 880 0.93023 894 93% Industrial 66 0.06977 67 7% ≥ 10 mmBtu/hr Commercial/Institional 130 0.79755 137 80% Industrial 33 0.20245 35 20%

less 10 mmBtu/hr Commercial/Institional 23 1.00000 23 100% ≥ 10 mmBtu/hr Commercial/Institional 3 1.00000 3 100%

less 10 mmBtu/hr Commercial/Institional 9 0.50000 15 50% Industrial 9 0.50000 15 50% ≥ 10 mmBtu/hr Commercial/Institional 4 4 19% Industrial 17 17 81%

less 10 mmBtu/hr Commercial/Institional 1 0.33333 2 40% Industrial 2 0.66667 3 60%

≥ 10 mmBtu/hr Commercial/Institional 4 1.00000 4 100%

2013 Area Source Model Boilers - NEW UNITS Number of Boilers Design Capacity Boiler Size Category Sector New Biomass Unit 1 70 7.45 <= 10 Commercial New Biomass Unit 2 70 7.45 <= 10 Industrial New Biomass Unit 4 11 21.04 > 10 Commercial

New Biomass Unit 3 49 131.00 > 10 Industrial New Coal Unit 1 62 6.68 <= 10 Commercial New Coal Unit 2 93 6.68 <= 10 Industrial New Distillate Unit 1 5,435 6.76 <= 10 Commercial New Distillate Unit 2 407 6.76 <= 10 Industrial New Distillate Unit 3 352 25.31 > 10 Commercial New Distillate Unit 4 90 25.31 > 10 Industrial New Residual Unit 1 95 5.95 <= 10 Commercial New Residual Unit 2 45 17.56 > 10 Commercial Distillate Liquids

*Distribution of new boilers in industrial or commercial sectors were expected to be similar to the distribution of existing bo ilers. * SIC 0 to 39 are considered Industrial and 40 to 99 considered Commercial/Insitutional; Unknown SIC codes were divided up acco rding to the distribution of the sectors for known SIC codes. The sector distributions were based on units from Nebraska, India Coal Wood/ Biomass Residual Liquids