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MEMORANDUM

Date: September 8, 2014

Subject: Costs and Emission Reductions for the Proposed Wool Fiberglass Manufacturing 

NESHAP - Residual Risk and Technology Review (RTR) Amendments

Wool Fiberglass Manufacturing RTR

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 RTR amendments.

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.” After conducting 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 furnace and 31 manufacturing lines that will have to comply with the 

RTR amendments to the NESHAP (subpart NNN) requirements. Based on our current emissions 

data, two of the major source facilities, operating a total of three gas-fired glass-melting 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, those sources will become area sources. While industry sources also 

predicted before proposal of the RTR amendments that no major sources would exist by the end of 

2012, we now believe this to be inaccurate. The following cost impacts are based on the estimated 

10 facilities that were identified as major sources in the most recent industry information provided 

in December 2012. 
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II. GLASS-MELTING FURNACES

 

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

major 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, an analysis 

supported by industry comments and 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%.2 

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]

Assuming an annual interest rate of 7%, the approximate value to the company (today) of waiting 

to install the lining additional 3 years yields the following calculation:

 

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.”

2 7% interest rate is in accordance with OMB guidance under Circular A-4.
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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) rate, CRF = 0.185553; therefore, the 

annualized capital recovery cost was calculated to be:

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

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.

III. ROTARY SPIN AND FLAME ATTENUATION MANUFACTURING LINES 

As noted previously, several facilities have already switched all or most of their rotary spin (RS) 

manufacturing lines to non-PF binders. Based on the most recent information provided by 

industry, we estimate that there will be 10 facilities subject to the proposed rule requirements with 

18 RS manufacturing lines making bonded product. Two of those facilities also have 13 bonded 

flame attenuation (FA) lines producing heavy density products and/or pipe insulation. Based on 

facility information collected in the survey responses, most facilities currently have thermal 

oxidizers and we assumed that the estimated 6 facilities currently not meeting the proposed

emission limits have thermal oxidizers (or scrubbers) on their bonded product lines. Therefore, 

there are no additional capital costs to comply with the new RS emission limits and we estimated 

operation and maintenance (O & M) costs for a thermal oxidizer at each facility to be $125,000 

annually. All 10 major source facilities with bonded lines will incur additional testing costs to 

demonstrate compliance with the new phenol and methanol emission limits for forming and curing 

operations. 

 

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

The annual cost estimates 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

(in 2013 $)

Test 

Frequency

Annualized 

Test Costs 

(in 2013 $)

Comment

Gas-Fired

Furnace

Chromium 

Compounds

29 $10,000 Annual $10,000 PM testing part 

of current 

requirements. 

Collection/ 

Curing 

(combined)

Phenol and 

Methanol 

(already testing 

formaldehyde)

318

(part of 

M318 

FTIR)

$4,000 

(combined 

phenol & 

methanol)

Every 

5 years $800

Current rule 

specifies 

Method 316 or 

318 for 

formaldehyde.

V. EMISSION REDUCTIONS

A. Gas-Fired Glass-Melting Furnaces

Based on the recent test data provided by the facilities, the eight gas-fired furnaces emit 

approximately 588 pounds of chromium compounds annually. We identified three gas-fired 

furnaces with emission rates above the proposed emission limit and their associated annual 

emissions of 12, 16, and 555 pounds of chromium compounds, respectively. With the assumption 

that the reduced operational life for the three furnaces will reduce chromium compound emissions 

to a level that would meet the proposed emission limit, approximately 567 pounds of chromium 

compounds would be reduced annually at major sources – which represents a 96 percent reduction 

compared to baseline emissions.

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

reduction (567 pounds of chromium compounds) results in a cost effectiveness of $1,300 per 

pound of chromium compounds reduced (2013 dollars).

B. Combined Collection/Curing Operations

Based on the recent test data provided by the facilities, the 31 manufacturing lines located at the 

10 major source facilities emit approximately 600 tons of organic HAP (i.e., formaldehyde, 

phenol, and methanol) annually. We identified eight manufacturing lines with emission rates 

above the proposed emission limits. With the assumption that additional controls on the eight 

rotary spin (RS) manufacturing lines will reduce organic HAP emissions to a level that would 

meet the proposed emission limits, approximately 123 tons of organic HAP would be reduced 

 

4 Personal communication with Mr. Steffan Johnson, US EPA, Measurement Policy Group, March 2014.
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annually at major sources. That represents a 20 percent reduction compared to current baseline 

emissions.

The annualized control costs for the RS manufacturing lines ($774,800) divided by the total 

emission reduction (123 tons of organic HAP) results in a cost effectiveness of $6,300 per ton of 

organic HAP reduced (2013 dollars). On an individual facility basis, the cost effectiveness for the 

RS and FA manufacturing lines ranged from $1,132 to $14,000 per ton of organic HAP reduced.

The total annualized costs to the industry for this proposed rule are $1.49 million (2013 dollars).

Table 2 summarizes the above information and associated cost impacts.

 
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Table 2. Summary of Costs for Wool Fiberglass Mfg Facilities to Comply with Proposed RTR Amendments (2013 dollars)

Source 

Type

Gas-Fired Furnaces Rotary Spin (RS) and Flame Attenuation (FA) Lines

Total 

Facility 

Cost 

($)

Annualized 

Capital 

Cost*

Annual 

O&M 

Cost

# Gas

Fired 

Furnaces

Cr 

Testing 

Cost

Cost 

Effectiveness 

($ /lb Cr 

reduced)

RS

Mfg 

Bonded

Lines

Addt’l RS 

Control 

(O & M) 

Costs***

Flame Atten. 

(FA) Mfg 

Bonded 

Lines

RS and 

FA Mfg 

Line 

Testing 

Cost

Cost Effectiveness 

($/ton HAP

Company reduced)

Facility 

Location

1 CertainTeed Kansas City, KS Major 424,000 0 2 20,000 800 1 0 0 800 NA 444,800

2 Guardian Albion, MI Major 0 0 0 0 - 2 0 0 1,600 NA 1,600

3 Guardian Inwood, WV Major 0 0 0 0 - 2 125,000 0 1,600 8,440 126,600

4 Guardian Mineral Wells, MS Major 0 0 0 0 - 1 0 0 800 NA 800

5 Guardian Winnsboro, SC Major 0 0 0 0 - 1 125,000 0 800 2,567 125,800

6 Johns Manville Cleburne, TX Major 0 0 1 10,000 NA 1 125,000 2 2,400 14,020 137,400

7 Johns Manville Defiance, OH Major 0 0 2 20,000 NA 4 125,000 11 12,000 2,803 157,000

8 Knauf Shelbyville, IN Major 0 0 0 0 - 4 0 0 3,200 NA 3,200

9 Owens-Corning Newark, OH Major 212,000 0** 2 20,000 10,500 1 125,000 0 800 1,500 357,800

10 Owens-Corning Waxahachie, TX Major 0 0 1 10,000 NA 1 125,000 0 800 1,132 135,800

11 Guardian Kingman, AZ SynMnr 0

12 CertainTeed Chowchilla, CA Area 0

13 CertainTeed Athens, GA Area 0

14 Johns Manville McPherson, KS Area 0

15 Johns Manville Penbryn, NJ Area 0

16 Johns Manville Richmond, IN Area 0

17 Johns Manville Waterville, OH Area 0

18 Johns Manville Willows, CA Area 0

19 Johns Manville Winder, GA Area 0

20 Knauf Lanett, AL Area 0

21 Knauf Shasta Lake, CA Area 0

22 Owens-Corning Delmar, NY Area 0

23 Owens-Corning Eloy, AZ Area 0

24 Owens-Corning Fairburn, GA Area 0

25 Owens-Corning Kansas City, KS Area 0

26 Owens-Corning Mount Vernon, OH Area 0

27 Owens-Corning Salt Lake City, UT SynMnr 0

28 Owens-Corning Santa Clara, CA Area 0

29 Owens-Corning Nephi, UT SynMnr 0

30 Owens-Corning Lakeland, FL Area 0

636,000 $0 8 $80,000 $1,300 18 $750,000 13 $24,800 $6,300 $1,490,800

Table 2 notes: * 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.

** One (high-emitting) furnace already scheduled for replacement.

*** There are no HF/HCl testing costs since the proposed rule requires work practice standards.