1 | P a g e MACT Task Force

MEMORANDUM

Date: December 5 , 2013

To: Jeff Telander, EPA/SSPD

From: Susan Miller, Brick Industry Association

Subject: Review of EPA ACI Cost Model

EPA presented estimated control costs to add activated carbon injection (ACI) to an existing fabric fi lter at the June 26, 2013 Outreach M eeting with Small Entity Representatives for the Brick MACT. BIA’s

r eview of the supporting model cost spreadsheet provided by EPA entitled, “ACI costs”, revealed that
the total capital investment esti mation may be grossly underestimated. It is BIA’s estimation that the
model unit cost is anywhere from twice to an order of magnitude higher than reported.

Per the footnote provided, the equation used to estimate the total capital investment was taken fro m March 2011 Sargent & Lundy memo used to develop costs for the Boiler MACT and referenced by EPA
for the Brick MACT

. 1 As explained in the Sargent & Lundy memo, t he equation
, provided below , was established based on the actual anticipated activated carbo n feed rate and not on boiler size . Cost data for several ACI systems was reviewed and a relationship was developed for the capital costs of the system on a carbon fee rate basis. This cost module does not include the additional cost of a particulate
col lection device

. BMC($) = 1,350,000*B*(M^0.15)

Where : BMC($) = Base ACI module including all equipment from unloading to injection

B = Retrofit Factor

M = Carbon Feed Rate (lb/hr)

For the Brick MACT evaluation, EPA assumed a carbon feed rate need of 2 lb/ MM acf consistent with Sargent & Lundy’s model with an existing baghouse. The model costs were broken down for small and large kilns with average exhaust flow rates of 24,100 and 42,500 acfm, respectively. This information
was used in EPA’s version of th e equation:

1 IPM Model

- Revisions to Cost and Performance for APC Technologies: Mercury Control Cost Development Methodology, Final, March 2011. Sargent & Lundy, LLC. Project 12301

- 0092 | P a g e

TCI($) = 1.05*1.15*1,350,000*(carbon feed rate/1e6*60min/hr*exhaust flow)^.15 x

(exhaust flow/2,068,502 acfm)^.6 *cost index ratio

To simplify the discussion, let ’s break the equation into two parts. Let :
BMC($) Cost Module = 1.05*1.15*1,350 ,000*(carbon feed rate/1e6*60min/hr*exhaust flow)^.15

a ssuming the 1.05 and 1.15 factors account for retrofit and additional engineering management costs for the project

6/10 Scaling Rule = (Exhaust flow/2,068,502 acfm)^.6

BIA takes issue with the use of both of these terms simultaneously for the following reasons:

1. If EPA is assuming the Sargent and Lundy BMC($) cost module is appropriate to use, then
the 6/10 Scaling Rule is not necessary since the cost module is based on r equired carbon feed rate regardless of unit size . The Sargent and Lundy authors clearly determined that carbon feedrate was the appropriate factor.
2. If EPA deems that scaling for different flows is appropriate, then the carbon usage for
the boiler should b e used in the BMC($) Cost Module and then scaled using the appropriate flow rates in the 6/10 Scaling Rule

.

To continue to use both of these terms is to double discount the costs and underestimate the overall

costs. As shown in Table 1 below, the total an nualized cost to install an ACI system could be underestimated by as much as 60% just from this one calculation.

Table 1. Impact of EPA Costing Approach of ACI Costs



## Cost Current EPA

Estimate BMC Module

Without 6/10 Scaling (Using carbon feed rate for brick) BMC Module

With 6/10 Scaling from boiler cost to brick cost
Small Kiln Large Kiln Small Kiln Large Kiln Small Kiln Large Kiln TCI ($) $148,356 $227,030 $2,145,303 $2,335,847 $289,302 $406,606

Capital Recovery ($) $14,004 $21,430 $202,501 $220,487 $27,308 $38,381

Total Annual Cost ($/yr) $96,774 $143,535 $285,272 $342,592 $110,078 $160,4853 | P a g e

Estimated nationwide impacts are provided in Table 2.

Table 2. BIA Minimum Nationwide Costs Estimates



## Cost Current EPA

Estimate BMC Module

Without 6/10 Scaling (Using carbon feed rate for brick) BMC Module

With 6/10 Scaling from boiler cost to brick cost

Nationwide Costs a Small

Entities Capital Investment $13,000,000 $176,000,000 $26,000,000

Small Entities Total Annual Cost $9,000,000 $24,000,000 $10,000,000

Total Industry Capital Investment $34,000,000 $413,000,000 $64,000,000

Total Industry Annual Cost $22,000,000 $58,000,000 $25,000,000

a Nationwide costs estimated by BIA . Note that these cost estimates do not reflect the additional costs of a particulate matter (PM) control device such as a fabric filter (FF) for those facilities that may not have an existing FF in place or may requir e one for
PM control.

BIA asserts that the costs estimated above are unde rstated and represent minimum incremental costs from the addition of ACI systems. In addition to this one calculation error, EPA may be further underestimating the cost to install ACI systems for the brick industry. EPA is assuming that existing baghouse s can be used for streams containing both lime and carbon particulates. To date, EPA has not demonstrated that existing systems can achieve the necessary mercury reductions without considerable upgrades or supplemental systems. For example, a s discussed in the BIA memo, “Review of Activated Carbon Injection and the Applicability to the Brick Industry “ 2 , c ollection of oxidized mercury in the form

2 Review of Activated Carbon Injection and Applicability to the Brick Industry . Brick Industry Association MACT Task Force. December 3, 2013.4 | P a g e

of mercury chloride using ACI requires a specific temperature range and chlorine concentration such
that mercu ry chloride is created in the exhaust of a brick kiln . BIA is aware of no informat ion to support that these conditions are obtained in a brick kiln

. Clearly
, the costs of upgrades that may be required to make this technology feasible have not been consid ered . Also not considered is the additional disposal
costs of a combined waste stream of lime and mercury laden carbon, which may be considerably more expensive than either waste product alone. All of these considerations will further increase the
nation wide cost impacts to the industry. Furthermore, the EPA has yet to demonstrate that any ACI system , even with possible upgrades, will actually be able to achieve the emission reductions necessary to comply with the MACT. If controls do not work, then any estimate is an underestimate, as the costs
would be infinite.

BIA asserts that EPA has not adequately demonstrated the technical feasibility of these controls or reasonably estimated the costs of the controls, based on the information provided to the br ick industry
at this time. Additional evaluation is required and should be completed before EPA makes any regulatory decisions based on the current information.