SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis March 30, 2007

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**Final Staff Report for Rule 4565** 

# APPENDIX C

COSTS AND COST EFFECTIVENESS ANALYSIS FOR REVISED PROPOSED NEW RULE 4565 (BIOSOLIDS, ANIMAL MANURE, AND POULTRY LITTER OPERATIONS)

MARCH 30, 2007SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis March 30, 2007

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**Final Sta ff Report for Rule 4565**  I. SUMMARY

Rule 4565 (Biosolids, Animal Manure, and Poultry Litter Operations) would require operators who manage these materials to reduce VOC emissions through mitigation measures which are a combination of management practices (Class One measures) and emission controls systems (Class Two measures). In the case of composting

opera tions, small facilities would be required to implement management practices. The large facilities would be required to install and operate controlled composting systems vented to VOC emission control devices in addition to the management practices. Cost effectiveness is the estimated annualized cost of control divided by the estimated

emission reductions.

Operators who landfill or land

- apply biosolids, animal manure, or poultry litter would be required to adopt management practices to reduce VOC emission s. For landfill operations, District staff expects that no compliance costs will be associated with rule provisions, since biosolids are not currently used as alternative daily cover, the only landfill operation affected by rule requirements. Operators w ho land

- apply biosolids, animal manure, or poultry litter would also have no compliance costs, since implementation of the control measures would only require that the operator schedule the material to arrive at the facility at an appropriate time or to co ver the material if land incorporation is delayed.

Composting/co

- composting facilities would be required to implement a certain number of Class One mitigation measures, with operators at larger facilities required to adopt more measures than operators at smaller facilities. Class One mitigation measures are management practices that have been shown to promote efficient composting and still result in VOC reductions. No additional cost is associated with implementing these practices, since they are inheren t in good composting practice at a well

- managed facility.

The largest operations, meaning those with at least 100,000 wet tons per year (tpy) throughput, would also be required to implement at least one Class Two mitigation measures, in addition to the Cl ass One mitigation measures. Class Two mitigation measure limit emissions from composting utilizing controlled composting systems (either an aerated static pile or in

- vessel composting) along with VOC emission control system to collect and destroy the col lected VOCs. District staff estimates that the total annualized costs to these eight large facilities range from $5.8 million per year to $25 million per year. Based on 595 tons per year of VOC emission reductions, the cost effectiveness for these larges t compost facilities ranges from about $10,000 to $41,000 per ton VOC reduced.

For composting facilities with a throughput of less than 100,000 wet tons per year, the cost effectiveness value ranges from $ 48,000 to $870,000 as shown in Table 2.

Therefo re, District staff believes that it is not cost effective to require facilities with throughputs less than 100,000 wet tons per year to implement Class Two mitigationSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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**Final Sta ff Report for Rule 4565**  measures. It should be noted, however, that the rule provides operators of small
compost ing facilities with the flexibility to comply by implementing Class One measures only or a combination of a specified number of Class One and Class Two measures.

II. REQUIREMENTS OF COST EFFECTIVENESS ANALYSIS

The California Health and Safety Code 4092 0.6(a) requires the San Joaquin Valley Unified Air Pollution Control District to conduct a cost effectiveness analysis of available emission control options before adopting each Best Available Retrofit Control Technology (BARCT) rule. The purpose of condu cting 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 listed in a

rule. Absolute cost effectiveness of a con trol option is the added annual compliance cost in dollars per year divided by the emission reduction achieved in tons VOC reduced per year. This report presents the District staff's analysis of the absolute cost

effectiveness of Rule 4565.

Incremental c ost effectiveness is intended to measure the change in costs, in dollars per year, and emissions reductions, in tons of VOC reduced per year, between two progressively more effective control options or technologies. Incremental cost effectiveness compares the differences in costs and the differences in emissions reductions of the two candidate control options. Incremental cost effectiveness does not reveal the emission reduction potential of the control options, merely the additional cost of adding the ne xt most effective control to a given control measure. Unlike the absolute cost effective analysis that identifies the control option with the greatest emission reduction, incremental cost effectiveness does not present a meaningful

correlation between emi ssions reductions and cost effectiveness. Therefore, the relative values produced in the incremental cost effectiveness analysis and the absolute cost effectiveness values are not comparable and cannot be evaluated using similar

standards.

Rule 4565 woul d provide compost facility operators with the flexibility to comply with the VOC control requirements by choosing the listed controls or developing mitigation measures of their own not specified in the rule, provided they could demonstrate that

such measur es could achieve specified VOC emission reductions. Since operators have the flexibility to develop their own methods of achieving the required reductions, operators will choose the option with the best cost

- effectiveness for their particular operation. As a result, only the absolute cost effectiveness is presented in this analysis.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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**Final Sta ff Report for Rule 4565**  III. SOURCES OF COST DATA

Costs for composting facilities were taken from three sources.

• The first is a United States Environmental Protection Agency (EPA) Office of

Wate r document titled “Biosolids Technology Fact Sheet” (EPA 832

- F

- 02

- 024). The fact sheet compares three composting methods and has estimates of cost for aerated static piles and in

- vessel composting.

• The second document is a final report titled “Knox Coun ty Co

- Composting Pilot Study” dated December 2001. This document was used to determine the cost of a windrow composting facility relative to aerated static pile composting.

• The final document is an article by Jim Boswell from Chemical Engineering Progre ss dated December 2002, titled “Understand the Capabilities of Bio

Oxidation.” The author compared biofilters and regenerative thermal oxidizers, showing capital costs, operational costs, and estimated emission reductions from each technology.

IV. COSTS AND COST EFFECTIVENESS ESTIMATES

Proposed VOC control requirements would require operators to implement various mitigation measures, based on the operation type and facility size. Operators who

landfill or land

- apply biosolids, animal manure, or poultry litter would be required to adopt management practices to reduce VOC emissions. If the biosolids, animal manure, or poultry litter is sent to the landfill for disposal, the material is typically covered with other wastes or moved and compacted within a s hort amount of time. Even the very last truckload of material received on a given day would be covered within a short amount of time, since, under California Code of Regulations for solid waste management, the landfill operator is required to cover all la ndfilled material at the end of each operating day. For landfill operations, District staff expects that no compliance costs will be associated with rule provisions, since biosolids are not currently used as alternative daily cover by any landfill within the District, the only landfill operation affected by rule requirements. Operators who land

- apply biosolids, animal manure, or poultry litter would also have no compliance costs, since implementation of the control measures would only require that the ope rator schedule the material to arrive at the facility at an appropriate time or to cover the material if land incorporation is delayed.

Composting/co

- composting facilities would be required to implement a certain number of Class One mitigation measures, w ith operators at larger facilities required to adopt more measures than operators at smaller facilities. Class One mitigation measures are management practices that have been shown to allow efficient composting. No cost is associated with implementing th ese practices, since they are inherent in goodSAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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**Final Sta ff Report for Rule 4565**  composting practice. The Class One mitigation measures have already been implemented by 50% of the facilities with throughputs less than 100,000 wet tons per year (tpy).

The largest operations, meaning tho se with at least 100,000 wet tpy throughput, would also be required to implement at least one Class Two mitigation measures, in addition to the Class One mitigation measures. Class Two mitigation measures limit emissions from composting by utilizing contr olled composting systems (either an aerated static pile or in

- vessel composting) along with VOC emission control system to collect and destroy the collected VOCs. It is most likely that operators will install aerated static piles with biofilters to meet t his provision of the rule. This was deemed Best Available Control Technology (BACT) for the last two facilities that were proposed in the District. This report presents the expected additional costs for existing facilities to implement Class Two mitigati on measures.

Table 1 summarizes the estimated annualized costs for a large composting facility. As noted in Section III above, the costs were taken from published sources. District staff assumed a 250 dry tons per day composting facility as the model facility. This equates to a throughput of about 200,000 wet tpy. The annualized cost for construction and

maintenance of an un

- aerated windrow composting facility was subtracted from the

ASP or in

- vessel costs, since operators would have built such a fac ility in the absence of the proposed rule provisions and the District’s Rule 2201 (New and Modified Stationary Source Review Rule).

Table 1

– Summary of Per

- Facility Annualized Costs for Facility Processing 250 dry tons per day

Lowest Cost Scenario: A SP & Biofilter Total Capital Cost $7,775,000
Total annualized capital cost (10%

- 10 years) $1,265,345

Total Annual O & M Cost $124,305

Total Annualized Cost

- ASP & Biofilter $1,389,650

Windrow Annualized Cost

- $660,798

Net Low

- End Annual Costs ( $/yr/facility) $728,852

Highest Cost Scenario: In

- Vessel and RTO Total Capital Cost $21,185,000
Total annualized capital cost (10%

- 10 years) $3,447,761

Total Annual O & M Cost $285,910

Total Annualized Cost

- In

- Vessel & RTO $3,733,671

Windr ow Annualized Cost

- $660,798
Net High

- End Annual Costs ($/yr/facility) $3,072,873SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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**Final Sta ff Report for Rule 4565**  Table 2 summarizes the cost effectiveness for all size composting facilities. For the large composting facilities, the cost effectiveness ranges from about $9,800 to $41, 000 per ton VOCs removed. Since it is much less costly to install and operate an ASP with biofilter compared to other control options, it is most likely that operators will use the ASP/biofilter combination to meet rule requirements and, therefore, the ac tual cost effectiveness is best characterized by the lower end of this range. Based on this analysis, it is cost effective for the large composting facilities to implement Class Two mitigation measures.

The same capital cost and operating cost assumption s were made for the small and medium composting facilities as for the large composting facilities. Small and medium composting facilities were modeled as a five dry ton per day and a 30 dry ton per day facilities, respectively. Cost effectiveness for imp lementing Class Two mitigation measures at facilities with throughput less than 20,000 wet tpy ranged from $400,000 to $850,000 per ton VOC removed. For composting facilities of 20,000 to 100,000 wet tpy, the cost effectiveness is estimated at $48,000 to $150,000 tons per year.

District staff believes that the capital costs and operating costs are understated for small and medium composting facilities. EPA did their study on relatively large facilities

– the model was 250 dry tons per day or about 200, 000 wet tpy. The actual capital costs and annual operating costs for the small and medium composting facilities would be higher than calculated since small and medium facilities could not take advantage of economies of scale for building and operations cr eated by large composting facilities. This would push the cost effectiveness to even higher numbers for facilities with throughputs less than 100,000 wet tpy. Therefore, implementing Class Two mitigation measures is not cost effective for composting faci lities with throughputs less than 100,000 wet tpy. These smaller facilities may choose to implement controlled composting systems for reasons unrelated to air quality or the rule. For smaller facilities that do employ Class Two mitigation measures, the r ule allows the operator to put fewer Class One mitigation measures into place.

Table 2

– Cost Effectiveness Analysis

Number

Facilities Annualized Cost of Compliance ($/year) Estimated

VOC

Reductions (tpy) Estimated Cost

Effectiveness ($/ton VOC reduce d)

Low End High End Low End High End

Composting Facilities

100

- 20,000 tpy 12 $1,727,429 $3,829,169 4.4 $392,597 $870,266

20,000

- 100,000
tpy 9 $1,853,275 $5,771,966 38.4 $48,262 $150,312

At least 100,000
tpy 8 $5,830,818 $24,582,988 595.2 $9,796 $41,301SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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**Final Sta ff Report for Rule 4565**  V. REFERENCES

1. Boswell, Jim, Understand the Capabilities of Bio

- Oxidation, Chemical Engineering Progress, December 2002.

2. California Integrated Waste Management Board

– Board Meeting Agenda Item 4; April 13

- 14, 2004

3. Compos t and Technology Solutions, Inc. Final Report: Knox County (TN) Co

Composting Pilot Study. December 2001.

4. Iowa State University and The University of Iowa Study Group, “Concentrated Animal Feeding Operations Air Quality Study,” February 2002; availa ble on

- line

at http://www.public

- health.uiowa.edu/ehsrc/CAFOstudy.htm

5. United States Environmental Protection Agency, “Biosolids Technology Fact Sheet: Use of Composting for Biosol ids Management” EPA 832

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- 024, September 2002.SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

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