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MEMORANDUM

Date: September 8, 2014

Subject: Costs and Emission Reductions for the Wool Fiberglass Manufacturing NESHAP -

Area Sources

RTI Project No. 0213199.002.009

From: Dave Reeves, RTI International

To: Susan Fairchild

OAQPS/SPPD/NRG (D243-02)

U.S. Environmental Protection Agency

Research Triangle Park, NC 27711

The purpose of this memorandum is to present the estimated costs for the wool fiberglass 

manufacturing industry to comply with the proposed area source rule requirements. Major sources 

are regulated under Part 63 Subpart NNN; area sources will be regulated under Part 63, Subpart 

NN. 

I. BACKGROUND

Based on the information provided by the wool fiberglass manufacturing industry and their 

primary trade association, North American Insulation Manufacturers Association (NAIMA), there 

are currently 30 facilities in the U.S. producing wool fiberglass. A letter from NAIMA dated June 

8, 2011, stated “non-formaldehyde binder products represent the vast majority of the industry” and 

“all major sources have already converted or have announced plans to convert to non-phenol 

formaldehyde binders.” Based on a review of the current permit status of all sources and recent 

information provided by industry, 10 facilities are major sources (subject to the existing MACT 

rule, subpart NNN) and 20 facilities are area source facilities. These 30 facilities operate a total of 

54 glass-melting furnaces. Five of the area source facilities operate eight furnaces which meet the 

applicability requirements in the proposed area source NESHAP (subpart NN). Based on our 

current emissions data, two of the area source facilities, operating a total of three furnaces will be 

required by the rule to reduce chromium compound emissions. 

Industry comments on the proposed major source rule amendments (76 FR 72770) stated that 

some of the major source facilities have already switched some or most of their lines to non-HAP 

binders and would no longer be subject to subpart NNN . With the phase-out of phenolformaldehyde binders, these sources will also be redesignated as area sources. While industry 

sources also predicted before proposal of the RTR amendments to NNN that no major sources 

would exist by the end of 2012, we now believe this to be inaccurate. Table 2 provides further 

information on wool fiberglass furnaces by furnace type and whether furnaces would currently be 

subject to the area source rule under subpart NN. The following cost impacts are based on the
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estimated five facilities and eight gas-fired glass-melting furnaces that would be subject to the 

proposed area source rule requirements. 

II. GAS-FIRED GLASS-MELTING FURNACES

 

We estimate that there are currently eight gas-fired furnaces located at five facilities designated as 

area sources. We also estimate that there are currently three gas-fired furnaces located at two 

facilities that emit chromium compounds above the proposed chromium emission limit. We have 

estimated the cost impact for those facilities based on the assumption that those furnaces will have 

a shortened operational life cycle and be rebuilt (or replaced) earlier than they might have been 

otherwise. The associated costing of this scenario is referred to as the net present value (NPV)

approach which is described in the EPA Air Pollution Control Cost Manual (EPA/452/B-02-001), 

January 2002. 

The furnace age and chromium emissions data show that furnaces may operate into their 10th year 

and still emit chromium at levels below the proposed chromium emission limit. The data also 

show that all furnaces older than 10 years emitted chromium at levels exceeding the proposed 

emission limit. We considered basing the NPV on an expected 12-year furnace life and an early 

rebuild at 10 years. While supported by the available data and resulting in a lower cost estimate

(i.e., NPV Incremental Cost = $643,000 and Capital Recovery Cost = $119,000 per furnace), we 

decided to use a more conservative approach (e.g., more likely to overstate control costs) and 

based our costs on an expected 10-year furnace life1and an early rebuild at 7 years which is 

described in the following analyses.

For this cost analyses, the NPV approach uses the following assumptions: 

1) furnace rebuild cost = $10 million ($10M); 

2) normal furnace life cycle = 10 years; 

3) Cr compliant furnace life cycle = 7 years; and 

4) industry interest rate = 7%. 

The following example is provided to illustrate the net present value approach. A company

expects a furnace to last at least 10 years and they consider the cost of replacing the furnace lining 

(Cr refractories) in the 10th year (at a cost of $10 million). The present value (today) of the capital 

cost 10 years in the future is $10M / (1+r)^10 where r is the interest rate. If the lining would 

instead be replaced in 7th year, the present value (today) of the same capital cost is $10M / (1+r)^7

The incremental cost today would be computed as: 

NPV Incremental Cost = [

$10M

(1 + r)

7

] − [

$10M

(1 + r)

10]

 

1 Letter dated August 6, 2014 from A. Crane, NAIMA to S. Fairchild, EPA states “Please note that a typical life span of an 

oxy-fuel furnace is 6 to 10 years.”
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Assuming an annual interest rate (r) of 7%, the approximate value to the company (today) of 

waiting to install the lining additional 3 years. 

NPV = [$10M / (1.0 + 0.07)7] – [$10M / (1.0 + 0.07)10] = [$10M / 1.6058] – [$10M / 1.967151] 

NPV = $1.144M.

The capital recovery cost (CRC) is calculated by multiplying the NPV incremental cost by the 

capital recovery factor (CRF):

CRC = NPV x CRF

Where CRF is defined according to the formula:

 

 

















 





1 1

1

n

n

i

i i

CRF

Using the 7-year furnace life and a 7% interest (discount) rate2, CRF = 0.185553; therefore, the 

annualized capital recovery cost was calculated to be:

Annualized CRC = $1,144,005 x 0.18555 = $212,000 (per furnace)

The total cost for the five facilities to comply with the area source rule is estimated to be $716,000 

per year with an overall cost effectiveness of $13,500 per pound of chromium compounds 

reduced.

It should be noted that the calculation using the NPV approach does not include any improvements 

in productivity and energy efficiency, among other factors, resulting from rebuilding a furnace, 

factors that would typically come into play when a wool fiberglass company assesses the need for 

a furnace rebuild using this approach. Some of the highest chromium compound emitting furnaces 

are located at major source facilities and those cost impacts are attributed to subpart NNN.

 

2 7% interest rate is in accordance with OMB guidance under Circular A-4.

3 Table A-2: Capital Recovery Factors (from EPA Air Pollution Cost Manual, EPA/452/B-02-001, January 2002).
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III. COMPLIANCE TESTING COSTS 

The annual cost for compliance testing is estimated below in Table 1.

Table 1. Summary of Compliance Testing Costs (2013 Dollars)

Emission 

Source HAP

EPA Test 

Method

Test 

Costs

4

Test 

Frequency

Annualized 

Test Costs 

Gas-Fired

GlassMelting 

Furnace

Chromium 

Compounds

29 $10,000 Annual $10,000

IV. EMISSION REDUCTIONS

Based on the 2010 test data provided by all of the facilities, the eight gas-fired furnaces emit 

approximately 75 pounds of chromium compounds annually. We identified three gas-fired 

furnaces with emission rates above the emission limit and their associated annual emissions of 5, 

25, and 35 pounds of chromium compounds, respectively. With the assumption that reduced life 

cycle for the three furnaces will reduce chromium compound emissions to a level that would meet 

the emission limit, approximately 54 pounds of chromium compounds would be reduced annually 

at area sources – which represents a 70 percent reduction compared to baseline emissions.

The annualized control costs for the gas-fired furnaces ($716,000) divided by the emission 

reduction (54 pounds of chromium compounds) results in a cost effectiveness of $13,300 per 

pound of chromium compounds reduced (2013 dollars).

Table 2 summarizes the above information and associated cost impacts.

 

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Personal communication with Mr. Steffan Johnson, US EPA Measurement Policy Group, March 2014. 
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Table 2. Summary of Costs for Wool Fiberglass Manufacturing Facilities to Comply with Proposed Area Source Rule

Glass-Melting Furnaces Total Facility Cost

Annual 

O&M 

Costs

Cr 

Testing 

Cost

Cost 

Effectiveness 

($ / lb Cr 

Company reduced)

Facility 

Location

Source 

Type*

Electric Gas-Fired Total 

# 

# 

subject 

to area 

rule

Annualized 

Capital 

Cost*

Total 

Annual 

Facility 

Cost

Steel 

Shell

Cold 

Top

Air 

Gas

Oxy 

Fuel

1 CertainTeed Athens, GA Area 1 1 2 1 0 0 10,000 10,000 NA

2 CertainTeed Chowchilla, CA Area 1 1 1 0 0 10,000 10,000 NA

3 Guardian Kingman, AZ SynMnr 1 1 0 0 0 0 0 -

4 Johns Manville McPherson, KS Area 5 5 0 0 0 0 0 -

5 Johns Manville Penbryn, NJ Area 3 3 0 0 0 0 0 -

6 Johns Manville Richmond, IN Area 1 1 0 0 0 0 0 -

7 Johns Manville Waterville, OH Area 6 6 0 0 0 0 0 -

8 Johns Manville Willows, CA Area 6 6 0 0 0 0 0 -

9 Johns Manville Winder, GA Area 5 5 0 0 0 0 0 -

10 Knauf Lanett, AL Area 2 2 2 424,000 0 20,000 444,000 10,000

11 Knauf Shasta Lake, CA Area 1 1 0 0 0 0 0 -

12 Owens-Corning Delmar, NY Area 2 2 2 212,000 0 20,000 232,000 29,000

13 Owens-Corning Eloy, AZ Area 2 2 0 0 0 0 0 -

14 Owens-Corning Fairburn, GA Area 3 3 0 0 0 0 0 -

15 Owens-Corning Kansas City, KS Area 1 2 3 2 0 0 20,000 20,000 NA

16 Owens-Corning Mount Vernon, OH Area 3 3 0 0 0 0 0 -

17 Owens-Corning Salt Lake City, UT SynMnr 2 2 0 0 0 0 0 -

18 Owens-Corning Santa Clara, CA Area 2 2 0 0 0 0 0 -

19 Owens-Corning Nephi, UT SynMnr 2 2 0 0 0 0 0 -

20 Owens-Corning Lakeland, FL Area 2 2 0 0 0 0 0 -

21 CertainTeed Kansas City, KS Major 2 2 0 0 0 0 0

22 Guardian Albion, MI Major 4 4 0 0 0 0 0

23 Guardian Inwood, WV Major 2 2 0 0 0 0 0

24 Guardian Mineral Wells, MS Major 2 2 0 0 0 0 0

25 Guardian Winnsboro, SC Major 1 1 0 0 0 0 0

26 Johns Manville Cleburne, TX Major 2 1 3 0 0 0 0 0

27 Johns Manville Defiance, OH Major 1 3 2 6 0 0 0 0 0

28 Knauf Shelbyville, IN Major 2 2 0 0 0 0 0

29 Owens-Corning Newark, OH Major 2 2 4 0 0 0 0 0

30 Owens-Corning Waxahachie, TX Major 2 1 3 0 0 0 0 0

Totals 42 25 4 12 83 8 $636,000 $0 $80,000 $716,000 $13,300

Table 2 notes: - Major sources will not be subject to the area source rule requirements and any associated control/compliance costs are not included.

. - JM Waterville, OH facility also has 40 pot & marble furnaces which are not included in this analysis. 

 - Capital cost = $1.144M per furnace (using NPV); annualized capital cost based on 7% interest rate and a reduced equipment (furnace) life from 10 to 7 years.