Document ID: EPA-HQ-OAR-2009-0734-0173
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2014-02-03T05:00Z

What Factors Influence the Size of the Estimated Benefits of This Rule?
The estimated monetized benefits of the draft NSPS are substantial. While several factors contribute to the size of these benefits, the two most influential are: (1) the level of expected emission reductions and (2) the dollar per-ton estimate used to monetize the benefits. Following our meeting on August 21, 2013, we reviewed the key inputs used in estimating the benefits, and conclude that they are still appropriate. Note that the estimates of emission reductions are based on the best available data and are more likely to be understated than overstated. The dollar per ton estimate is also based on the best available data and is slightly greater than the median estimate for all sectors.
The estimated benefits are directly proportional to the expected emission reductions for the options outlined in the draft NSPS versus the baseline per type of heater affected. Not surprisingly, the anticipated reductions are greatest for heaters than have not yet been regulated by a national standard.

Emission reductions from unregulated heaters will be significant
Unlike adjustable burn rate wood stoves, which reduced their emissions by more than 70% under the 1988 NSPS, many heaters not yet subject to federal standards remain dirty even today. Under the 2013 draft NSPS, these heaters (e.g. single-burn-rate stoves, hydronic heaters and forced-air furnaces), would need to make sizeable  -  yet relatively easy and very cost-effective  -  "catch-up" emission reductions as they move from the current little or no control status to today's best systems of emission reduction, which often achieve a 90-95% reduction.
The estimated numbers of heaters that would be affected in 2014 are large: 
      * 84,000 wood stoves;
      * 27,000 single-burn-rate stoves; 
      * 87,000 pellet stoves ; 
      * 27,000 forced-air furnaces; and 
      * 9,000 hydronic heaters. 

Unregulated heaters currently are less than 27% of annual sales but account for over 96% of the emission reductions and benefits. (See Figure 7-2 on page 7-11 of the RIA.)  The emission reductions that would be required for these previously unregulated heaters will yield benefits that outweigh those from affected heaters covered under the 1988 rule  -  even though significantly more of the previously affected heaters are sold each year. This is attributable to both that most of the unregulated heaters are still dirty and that the hydronic heaters and forced-air furnaces have larger burn rates. A single hydronic heater or forced-air-furnace burns much more wood than a single woodstove, because they are designed to heat whole houses, whereas wood stoves tend to be room heaters. 
   
Note: We conservatively assume for the baseline that 100% of new adjustable burn rate stoves already meet the tighter Washington State 1995 emission limits and that 80% of new pellet stoves already meet Alternative Approach Step 2. If our estimates are too conservative and fewer stoves meet these limits already, emission reductions from the draft NSPS will be larger.   

Wood smoke emissions contribute to violations of the PM2.5 standards. Numerous U.S. counties have annual and/or daily ambient air quality levels that approach or are above the PM2.5 NAAQS and have significant contributions from wood smoke emissions. See cover note and spreadsheet provided on August 16, 2013.

Emissions inventory estimates are based on best available data

As discussed during the August 21, 2013 presentation on emission estimates, the emission inventory estimates are based on the following equation: E= n (number of appliances) x b (burn rate) x d (density of wood) x EF (emission factor). The inventory estimates use the best available data for each of these variables. For example, the estimates start with American Housing Survey data and are improved when better, more detailed data are available via regional or state or multi-county special surveys focused on wood combustion appliances.

In addition, the NSPS analyses for this proposal use more detailed annual sales data from the Hearth Patio and Barbecue Association, market analyses and projections by Frost & Sullivan, data from Internet searches of manufacturer websites, and confidential business information from manufacturers of specific types of appliances (such as forced-air furnaces, hydronic heaters, and single-burn-rate stoves). Sales vary considerably from year to year with variations in the economy, housing starts, and oil prices. For example, pellet stove sales were 141,000 in 2008 and 46,000 in 2009. We adjusted for the slow economy in 2009 and 2010 and then used growth projections of 2% to match current published real GDP projections by the Conference Board in November 2012. (See Chapter 4 of the RIA.) The growth rate assumption is not as large a factor as some other factors, i.e., if we were to assume 0% growth, the emission reduction would only be 35% less and would still be significant in many states and local areas.

The baseline and options use the same estimates for number/proportion of appliances. We are not aware of any reason why manufacturers would overestimate numbers of appliances affected when characterizing the magnitude of the emission problems, but if they did, the emission reductions (and costs) would be reduced proportionally. For example, if the sales of single-burn-rate stoves were only half of the estimate the manufacturers provided us, the emission reductions would be half of the values presented in the RIA, but would still be significant to the states and local agencies that are very concerned about these sources. To the degree that manufacturers shift production to cleaner appliances already in the marketplace, the emission reductions would be higher (and costs would be lower).
   
The New York State Office of the Attorney General, NESCAUM and others have stated that hydronic heater sales are much larger than our estimates, which are based on industry data. However, we believe our estimates better reflect the significant declines in annual sales that occurred after 2007, when EPA launched its voluntary hydronic heater program, several states developed emissions regulations and numerous local authorities banned new hydronic heaters amid increasing concerns about emissions.

Our estimates are informed by annual sales data from manufacturers that participate in the EPA voluntary partnership program to qualify cleaner hydronic heaters. If hydronic heater sales are indeed greater than we have estimated, emission reductions from the NSPS would be greater in turn  -  potentially by a factor of 2 to 10.
   
The PM2.5 benefit per ton estimate for the residential wood combustion sector is slightly greater than the median estimate for all sectors 
The substantial size of the benefit per ton estimates is influenced by the characteristics of residential wood combustion. Certain attributes of wood stove combustion tend to increase the size of the benefit per ton estimate of this sector compared to other sectors for which EPA has recently estimated benefits. These factors include:
* This sector directly emits a large fraction of total PM2.5 mass (direct PM2.5), and so there are no additional chemical transformations before the PM2.5 reaches human populations.
* People live in close proximity to these sources, which contributes to their PM2.5 exposure.
* Wood heaters tend to have short stacks, low gas velocities and low stack gas temperatures -- each of which tends to disperse PM2.5 near the source and populations.

The direct PM2.5 benefit per ton estimate for the residential wood combustion sector is $360,000 -- slightly greater than the median estimate for all sectors. See attached table for a list by sector.
                                       

                                       
                                  Attachment
   

Copied below is Figure 3 from Fann, N, Baker KR & Fulcher CM, 212. Characterizing the PM2.5-related health benefits of emission reductions for 17 industrial, area and mobile emission sectors across the U.S. Environment International, 49 pp 141-51. Available at: http://www.ncbi.nlm.nih.gov/pubmed/23022875.