United State* Office of Air Quaity
Environmental Proocbor Planning and Standards EPA-45
-------
EPA-450/3-89-17
PROJECTED IMPACTS OF ALTERNATIVE
NEW SOURCE PERFORMANCE STANDARDS FOR
SMALL INDUSTRIAL-COMMERCIAL-INSTITUTIONAL
FOSSIL FUEL-FIRED BOILERS
Emission Standards Division
U.S. Environmental Protection Agency
Office of Air and Radiation
Office of Air Quality Planning and Standards
Research Triangle Park, N.C. 27711
May 1989
-------
This report has been reviewed by the Emission Standards Division of the
Office of Air Quality Planning and Standards, EPA, and approved for
publication. Mention of trade names or commercial products 1s not intended
to constitute endorsement or recommendation of use. Copies of the report are
available through the Library Service Office (MD-35), U.S. Environmental
Protection Agency, Research Triangle Park, N.C. 27711, or from National
Technical Information Services, 5285 Port Royal Road, Springfield,
Virginia 22161.
1i
-------
TABLE OF CONTENTS
Page
1. INTRODUCTION 1-1
2. EMISSIONS. COST AND ENERGY IMPACTS OF ALTERNATIVE NSPS 2-1
2.1 Methodology 2-1
2.2 Baseline A1r Emissions and Fuel Mix Forecasts 2-3
2.3 National Impacts 2-17
References 2-46
3. ECONOMIC IMPACTS: COMMERCIAL/INSTITUTIONAL SECTOR 3-1
3.1 Introduction 3-1
3.2 Selected Sectors 3-2
3.3 Generic Buildings 3-18
References . 3-38
4. ECONOMIC IMPACTS: INDUSTRIAL SECTOR ,4-1
4.1 Steam Users 4-1
4.2 Selected Industries 4-32
References . 4-38
APPENDICES
APPENDIX A: PROFILE OF BOILERS IN COMMERCIAL BUILDINGS A-l
APPENDIX B: HISTORICAL NEW BOILER SALES DATA B-l
-111-
-------
LIST OF TABLES
(contlniiad)
Page
2-20 Projected Coal Boiler Emissions Reductions 2-28
2-21 Projected Annualized Cost Increases for Coal Boilers 2-30
2-22 Projected Coal Boiler Emissions
Control Cost-Effectiveness Ratios 2-31
2-23 Projected Residual Fuel 011 Boiler SOj Emissions Reductions . . 2-33
2-24 Projected Residual Fuel 011 Boiler PM Emissions Reductions . . . 2-34
2-25 Projected Annualized Cost Increases for Oil Boilers 2-35
2-26 Projected Annualized Cost Increases for Oil Boilers 2-36
2-27 Projected Oil Boiler S02 Emissions Control
Average Cost-Effectiveness Ratios 2-37
2-28 Projected 011 Boiler SO2 Emissions Control
Incremental Cost-Effectiveness Ratios 2-38
2-29 Projected Annualized Cost Increases for Oil Boilers 2-39
2-30 Projected Annualized Cost Increases for Oil Boilers 2-41
2-31 Projected Oil Boiler SOj Emissions Control
Average Cost-Effectiveness Ratios 2-42
2-32 Projected 011 Boiler SOj Emissions Control
Incremental Cost-Effectiveness Ratios 2-43
2-33 Summary of Expected SO: Emissions Reductions 2-44
2-34 Summary of Expected PM Emissions Reductions 2-45
3-1 Elementary and Secondary Schools 3-6
3-2 Hospitals 3-7
3-3 Laundries 3-9
3-4 Hotels . . 3-11
-v-
-------
LIST OF TABLES
Page
2-1 Crude Oil Price Projections 2-4
2-2 Alternative NSPS 2-5
2-3 Residual Fuel Oil Boiler Sales in 1987 2-7
2-4 Baseline Residual Fuel Oil Boilers 2-8
2-5 Coal Boiler Sales in 1987 . 2-9
2-6 Baseline Coal Boilers 2-11
2-7 Baseline Distillate Fuel 011 Boilers 2-12
2-8 Basel 1ne Natural Gas Boilers 2-13
2-9 Baseline Fuel Mix 2-14
2-10 Baseline S02 Emissions 2-15
2-11 Baseline PM Emissions 2-16
2-12 Projected Residual Fuel Oil Boiler S02 Emissions Reductions . . 2-18
2-13 Projected Residual Fuel Oil Boiler PM Emissions Reductions . . . 2-19
2-14 Projected Annualized Cost Increases for
Residual Fuel Oil Boilers 2-21
2-15 Projected Residual Fuel Oil Boiler Average S02
Emissions Control Cost-Effectiveness Ratios 2-22
2-16 Projected Residual Fuel 011 Boiler Incremental S02
Emissions Control Cost-Effectiveness Ratios 2-23
2-17 Projected Annualized Cost Increases for
Residual Fuel 011 Boilers . 2-25
2-18 Projected Residual Fuel 011 Boiler Average S02
Emissions Control Cost-Effectiveness Ratios 2-26
2-19 Projected Residual Fuel Oil Boiler Incremental S02
Emissions Control Cost-Effectiveness Ratios 2-27
-iv-
-------
LIST OF TABLES
(continued)
Page
3-5 Colleges and Universities 3-12
3-6 Selected Sectors Economic Impacts: FGO
(Without Monitoring and Testing Costs)- 3-15
3-7 Monitoring and Testing Cost Estimates 3-16
3-8 Selected Sectors Economic Impacts: FGO
(With Monitoring and Testing Costs) 3-17
3-9 Selected Sectors Economic Impacts: Very Low Sulfur Regulation
(With Monitoring and Testing Costs) 3-19
3-10 Generic Buildings Boiler Configuration Data
for Boston, Massachusetts 3-22
3-11 Generic Buildings Typical Boiler Configurations
for Boston,. Massachusetts 3-23
3-12 Generic Buildings Boiler Configuration Data
for Washington, D.C 3-24
3-13 Generic Buildings Typical Boiler Configurations
for Washington, D.C 3-26
3-14 Generic Buildings Boiler Configurations 3-27
3-15 Estimates of Generic Buildings Annual
Fossil Fuel Consumption 1n Boilers 3-28
3-16 Energy Consumption In Coranercial Buildings 1n 1983 3-29
3-17 Generic Buildings Annual Rental Costs 3-31
3-18 Derivation of Estimates of Total Annualized Pollution Control
Costs per Building for the Very Low Sulfur Fuel Standard .... 3-33
3-19 Derivation of Estimates of Total Annual1zed Pollution Control
Control Costs per Building for the Scrubber Requirement .... 3-34
3-20 Comparisons of .Estimates of Total Annualized
Pollution Control Costs per Building ........ 3-35
-vi -
-------
LIST OF TABLES
(continued)
3-21 Impacts of Total Annualized Pollution Control Costs on
Rental Rates (With Monitoring and Testing Costs) 3-36
3-22 Impacts of Total Annualized Pollution Control Costs on
Rental Rates (Without Monitoring and Testing Costs) 3-37
4-1 An Overview of the Use of Boilers
in Manufacturing Industries 1n 1979 4-2
4-2 Federal Reserve Board Index of Industrial Production 4-5
4-3 Average Rates of After-Tax Profit on
Stockholders' Equity by Industry Group 4-9
4-4 Average Rates of After-Tax Profit on
Total Assets by Industry Group 4-10
4-5 Average After-Tax Profits per Dollar
of Sales by Industry Group 4-11
4-6 Employment by Industry Group . . 4-13
4-7 Historical Trends: Food and Kindred Products (SIC 20) 4-15
4-8 Historical Trends: Textile Mill Products (SIC 22) 4-17
4-9 Historical Trends: Paper and Allied Products (SIC 26) 4-19
4-10 Historical Trends: Chemicals and Allied Products (SIC 28) ... 4-21
4-11 Historical Trends: Petroleum and Coal Products (SIC 29) .... 4-22
4-12 Historical Trends: Iron and Steel Industry 4-24
4-13 Steam-Intensity Ratios 4-29
4-14 National Impacts 4-30
4-15 Estimated Return on Assets for Model Plants 4-37
- v i i -
-------
LIST OF TABLES
(continued)
Page
A-l Commercial Buildings in 1983 A-5
A-2 Commercial Buildings in 1986 A-6
B-l Historical Cast Iron Boiler Sales B-2
B-2 Historical Residentlal/Commerclal/Institutional
Cast Iron Boiler Sales Estimates B-3
B-3 Historical Flretube Boiler Sales B-4
B-4 Historical Watertube Boiler Sales B-5
-viii-
-------
LIST OF FISURES
Page
4*1 Federal Reserve Board Index of Industrial Production 4-4
4-2 Rates of After-Tax Profit on Stockholders' Equity 4-6
4-3 Rates of After-Tax Profit on Total Assets 4-7
4-4 After-Tax Profits Per Dollar of Sales 4-8
4-5 Derivation of Estimated Increase in National Average
Industrial Product Prices Due to Pollution Control Costs .... 4-27
A-l U.S. Census Regions and Divisions A-4
-ix-
-------
1. INTRODUCTION
This report presents projected environmental, cost, and energy impacts
of alternative air emission standards for new small (<29 MW, <100 MMBtu/hr)
industrial-comnercial-Institutional fossil fuel-fired boilers. These draft
standards would revise the emission regulations that currently exist in
Subpart D of 40 CFR Part 60. The effects of alternative sulfur dioxide (S02)
and particulate matter (PM) emission standards are assessed 1n this report.
The methodology used to examine environmental, cost, and fossil fuel results
projected under current and alternative air emission regulations also is dis-
cussed.
For individual boilers, air emission regulations can play a significant
role in determining boiler fuel choice and the levels of air emissions. Air
emission regulations can result in measurable national and regional environ-
mental, cost, and energy impacts, including changes in the types of fossil
fuels combusted and changes in the level of air pollutant emissions generated
by new small fossil fuel-fired boilers.
This analysis examines projected Impacts 1n the fifth year following
proposal of standards. The analysis of alternative regulations is designed to
highlight potential environmental, cost, and energy impacts. These impacts
are measured in terms of the projected change under current versus alternative
air emission regulations. The analysis of environmental impacts focuses on
expected reductions 1n levels of air emissions. Cost impacts are evaluated in
terms of incremental changes 1n the total annualized costs for boiler and
pollution control equipment capital, operating, and fuel costs. Energy
impacts are evaluated 1n terms of shifts 1n the demand between fuel types
(e.g., coal or residual fuel oil versus natural gas).
This report addresses only fossil fuel (coal, oil and natural gas)
consumption in small (<29 MW, <100 MMBtu/hr) new boilers. It does not analyze
non-foss1l fuel-fired steam generating units (i.e., wood or municipal solid
waste combustion).
i 1
-------
The balance of this report is presented in three parts. Section 2
presents the approach employed to analyze the alternative standards and
describes key assumptions and inputs. The potential national environmental,
cost and energy impacts for the alternative standards are also summarized in
Section 2. The methodology and results of the economic impact analyses for
the commercial/institutional sector are presented in Section 3. The
industrial sector economic impact analyses are sunmarized in Section 4.
1 *»
-------
2. EMISSIONS, COST AND ENERGY IMPACTS
OF ALTERNATIVE NSPS
The methodology and results of the projections of national S02 and PM
emissions reductions, total pollution control costs and energy Impacts of
alternative NSPS for new small (<29 MW, <100 MMBtu/hr) industrial-commercial -
institutional boilers 1n the fifth year after proposal are summarized 1n this
section.
2.1 METHODOLOGY
2.1.1 Scope
This analysis addresses only fossil fuel (coal, fuel oil and natural
gas) combustion 1n new small boilers. It does not include emissions from the
combustion of fuels like wood or municipal solid waste.
Alternative NSPS for S02 and PM emissions control from the combustion of
coal and fuel oil are assessed. NOx emissions control is not analyzed in this
report.
The projected number, sizes and types of new industrial-commercial -
institutional boilers <29 MW (<100 MMBtu/hr) and constructed over the next
five years are based on recent sales levels. These sales estimates are not
available by type of purchaser (industrial versus commercial/institutional).
As a result, the results are estimated for the total Industrial-commercial-
institutional sector.
The projected fuel mix by boiler type, size and alternative air emission
regulation is based on recent sales data and exogenous assumptions. These
estimates are not based on a Hfe-cycle analysis of the least-cost fuel
type/pollution control compliance option and they are not based on a statis-
tical analysis of historical sales data.
The boiler types are cast iron, firetube, firebox and watertube units.
The boiler size classes are:
• <1 MW (<3 MMBtu/hr)
• 1-3 MW (3-10 MMBtu/hr)
• 3-9 MW (10-30 MMBtu/hr)
• 9-29 MW (30-100 MMBtu/hr)
2-1
-------
The SOj emissions control options are compliance low sulfur fuel types.
The PM emissions control options for coal combustion are dual mechanical
collectors and fabric filters.
The national impacts are measured in terms of the projected change under
current versus alternative national air emissions regulations. The analysis
of environmental impacts focuses on projected decreases in SOj and PM emis-
sions in the fifth year after the proposal of the NSPS. Cost impacts are
evaluated 1n terms of increases 1n the total annualized costs for new boiler
and pollution control equipment capital, operating and maintenance and fuel
costs. Energy impacts are assessed in terms of potential shifts in the demand
between fuel types in small new boilers in the next five years.
2.1.2 Analytical Approach
The estimates of baseline S02 and PM emissions under current air
emissions standards are based on recent sales data by boiler size and fuel
type and assumptions about representative air emissions rates and annual
capacity utilization rates. American Boiler Manufacturers Association (ABMA)
data for 1987 firebox, firetube and watertube boiler sales and recent
Hydronics Institute cast iron boiler sales data were multiplied times five to
project the total capacity of new small industrial-commercial-institutional
boilers constructed by the fifth year after proposal of NSPS. This assumes
that recent sales levels will not change over the next five years.*
The sales data are national; therefore, only national projections are
presented in this report.
It 1s assumed that all new small boilers have a 26% capacity factor with
the concurrence of the American Boiler Manufacturers Association. These
boilers have relatively low annual capacity utilization rates due to the
seasonal nature of space heating requirements. PEDCo Environmental, Inc.
reviewed commercial boiler data from Indiana, New York and Ohio. For 324 coal
boilers with an average size of 15 MW (50 MMBtu/hr), the average capacity
factor was 23.6 percent. For 5,615 oil/gas boilers with an average size of 4
MW (13 MMBtu/hr), the average capacity factor was only 10.4 percent.1 Some
Historical boiler sales data are summarized 1n Appendix B.
2-2
-------
industrial boilers may have higher capacity utilization rates because they are
used to provide process steam as well as space heating.
In this analysis, the fuel costs are estimated based on projected
regional delivered fuel prices over a fifteen-year period beginning in 1992.
Given that the standard is proposed in 1989 and this analysis focuses on
projecting fifth year impacts, 1992 is the mid-point of this five-year period.
These fuel prices have been annualized using a ten percent discount rate.
Naturally, there is uncertainty related to energy market conditions over
the next twenty years. EEA developed two forecasts of fuel prices in order to
evaluate the sensitivity of the projected impacts of alternative air emissions
standards to this exogenous assumption, fuel prices.
Two crude oil price forecasts (reference the Low 011 Price Scenario and
the High Oil Price Scenario 1n Table 2-1) were developed by EEA in 1986 with
the U.S. Department of Energy (Office of Policy, Planning and Analysis) WOIL
forecasting model. Table 2-1 compares EEA's two 1986 forecasts with other
recent projections. EEA estimated regional conmerclal and industrial distil-
late and residual fuel oil and natural gas prices for the Low Oil Price
Scenario and the High Oil Price Scenario 1n Table 2-1 .2'3 The Low Oil Price
Scenario and the High Oil Price Scenario fuel prices have been used in this
national impacts analysis.
The alternative air emissions standards are summarized in Table 2-2.
These regulations are preliminary options; they are not an exhaustive,
complete compilation of possible combinations of S02 and PM emissions stan-
dards. It was assumed that flue gas desulfurizatlon (FGD) systems are
relatively expensive for these small boiler sizes and low annual capacity
utilization rates. Therefore, the S02 emissions control compliance strategy
is selecting low sulfur coal or oil types in response to the alternative NSPS
or choosing natural gas. The cost impacts reflect the associated Increased
fuel costs and monitoring and testing costs.
2.2 BASELINE AIR EMISSIONS AND FUEL HIX FORECASTS
The baseline air emissions and fuel mix forecasts are based on recent
new boiler sales data. These estimates are multiplied times five to project
national impacts in the fifth year after proposal of NSPS. ABMA expects
-------
TABLE 2-1. CRUDE OIL PRICE PROJECTIONS'
(1985 $/bb1)
Low 011 High 011
Price Price
Year Scenar1ob Scenario" GRIC DOE/EIAd DOE/EIA"
1985
actual
27
27
27
27
27
1986
actual
14
14
14
14
14
1990
14
24
19
13-19
12-17
1995
20
27
22
17-26
15-22
2000
25
31
25
23-38
20-32
2005
31
37
32
N.A.
N.A.
8 Average U.S. refiner acquisition cost of crude oil.
b Energy and Environmental Analysis, Inc. 1986. Reference 2.
e Gas Research Institute. 1988. Reference 7.
d U.S. Department of Energy, Energy Information Administration. 1988.
Reference 8.
• U.S. Department of Energy, Energy Information Administration. 1989.
Reference 9.
2-4
-------
TABLE 2-2. ALTERNATIVE NSPS
Emissions ceiling
ng/J (lb/HMBtu)
Fuel type S02 PM
Fuel oil
688 (1.6)
43 (0.1)
344 (0.8)
215 (0.5)
129 (0.3)
Coal
515 (1.2)*
129 (0.3)
.
21 (0.05)
* 30-day rolling average.
2-5
-------
short-term industrial-commercial-Institutional boiler sales to remain rela-
tively constant at recent levels.
New boiler sales data do not distinguish residual (heavy) fuel oil
versus distillate (light) fuel oil. ABMA used their own burner sales data to
estimate this distribution for firebox, firetube and watertube boilers. 011-
fired cast iron boilers were assumed to bum only distillate fuel oil.
Table 2-3 summarizes ABMA's 1987 data for small new residual fuel oil
boiler sales. ABMA estimated that there were no residual fuel (heavy) oil
boiler sales for new low pressure steam or hot water boilers <1000 HP in 1987.
The average boiler size for the new high pressure steam watertube/firebox/
firetube boilers <1000 HP in 1987 was about 2 MW (7 MMBtu/hr). The average
boiler size for the stationary watertube boilers 10,000-80,000 pounds of
steam/hour (PPH) in 1987 was about 16 MW (55 MMBtu/hr).
The actual locations of these boiler sales 1s not known and, as a
result, the distribution of local air emissions regulations for these small
new boiler sales is not known. It 1s assumed that the average baseline
emissions rates for the new high pressure steam watertube/firebox/ firetube
boilers <1000 HP with no alternate fuel was 709 ng SOj/J (1.65 lb SOj/MMBtu)
and 56 ng PM/J (0.13 lb PM/MMBtu). These estimates were reduced for the
oil/gas combination boilers. The average baseline emission rates for the
larger stationary watertube boilers were assumed to be 1,096 ng SO2/J (2.55 lb
S02/MM8tu) and 99 ng PM/J (0.23 lb PM/MMBtu); these estimates were also
reduced for the oil/gas combination boilers. These estimates may overstate
average "baseline" emissions to the extent that some of these new small
boilers may be located 1n urban areas with very low sulfur local air emissions
-standards.
Table 2-4 presents an estimate of the distribution of new small residual
fuel oil boiler sales by size class. Recall that this estimate represents the
data in Table 2-3 for 1987 times five years. This size boiler distribution is
an EEA estimate; the 1987 sales levels 1n these boiler size categories were
not provided by ABMA.
Table 2-5 summarizes ABMA's estimates of new small (<29 MW, <100
MMBtu/hr) coal boiler sales in 1987. ABMA estimated 44 new coal boilers <1000
2-6
-------
TABLE 2-3. RESIDUAL FUEL OIL BOILER SALES IN 1987"
Number
of boilers6
S02
em1ss1onsb
metric (short
tons tons)
PM
emissions
metric (short
tons tons)
High pressure steam
watertube/firebox/firetube
<1000 HP (<40 MMBtu/hr)
oil with no alternate fuel
84
868
(957)
83
(91)
oil/gas combination
144
864
(952)
74
(82)
Stationary watertube boilers
10,000-80,000 PPH
(12-100 MMBtu/hr)
oil with no alternate fuel
8
1,068
(1.177)
87
(96)
oil with gas/alternate fuel
35
2,812
(3,100)
291
(321)
gas with oil/alternate fuel
1,374
(1.515)
121
(135)
Total
301
6,986
(7,701)
656
(723)
* American Boiler Manufacturers Association data categories.
b Reference 4.
2-7
-------
TABLE 2-4. BASELINE RESIDUAL FUEL OIL BOILERS'
1-3
(3-10)
Boiler Size,
3-9
(10-30)
MU (MMBtu/hr)
9-29
(30-100)
1-29
(3-100)
Number of boilers
1,020
205
280
1,505
S02 emissions6
metric tons, Mg
5,801
6,169
22,961
34,931
(short tons)
(6,395)
(6,800)
(25,310)
(38,505)
PM emissions6
metric tons, Mg
485
694
2,100
3,279
(short tons)
(535)
(765)
(2,315)
(3,615)
¦ Boiler sales over a five-year period. Reference 6.
b In the fifth year assuming current air emissions regulations.
2-0
-------
TABLE 2-5. COAL BOILER SALES IN 1987
Number of boilers 50"
S02 emissions
metric tons, Mg 3,620"
(short tons) (3,990)*
PM emissions
metric tons, Mg 509b
(short tons) (561)b
• American Boiler Manufacturers Association. Reference 4.
b Reference 5.
2-9
-------
HP with an average size of 4 MW (15 MMBtu/hr) and 6 new stationary coal
boilers <29 MM (<100 MMBtu/hr) with an average size of 17 MW (60 MMBtu/hr) in
1987.
The average baseline emission rates for these new coal boilers are
assumed to be 1,526 ng SOj/J (3.55 lb SOj/MMBtu). For the small coal boilers
<1000 HP, the baseline emission rate estimate is 193 ng PM/J (0.45 lb
PM/MMBtu); 250 ng PM/J (0.6 lb PM/MMBtu) 1s assumed for the larger stationary
coal boilers.
Table 2-6 presents an estimate of the size distribution of new small
coal boilers by size class after five years of sales. This boiler size
distribution is an EPA estimate; the 1987 sales levels in these boiler size
categories were not provided by ABMA.
Distillate fuel oil boilers are also sources of S02 and PM emissions.
Table 2-7 summarizes the baseline estimates for this fuel type. The average
emissions estimates are 129 ng SOj/J (0.3 lb SOj/MMBtu) and 4 ng PM/J (0.01 lb
PM/MMBtu).
Cast iron boiler sales data were provided to EPA by the Hydronics
Institute (see Appendix B). EEA estimated residential versus commercial/in-
stitutional cast iron boiler sales. Distillate versus residual fuel oil cast
iron boiler sales data were not available. It was assumed that oil-fired cast
iron boiler sales were distillate fuel oil units. Table 2-7 includes oil-
fired commercial/institutional cast iron boilers, oil-fired low pressure steam
and hot water watertube/firetube/flrebox light oil boilers <1000 HP and light
oil stationary watertube boilers <29 MW (<100 MMBtu/hr).
Baseline estimates for new small natural gas boilers are summarized 1n
Table 2-8. Table 2-8 Includes commercial/Institutional cast Iron boilers as
well as watertube/flretube/firebox units <1000 HP and stationary watertube
units <29 MW (<100 MMBtu/hr). The average emission rates estimates are 0.26
ng SOj/J (0.0006 lb SOj/MMBtu) and 4 ng PM/J (0.01 lb PM/MMBtu).
The baseline fuel mix is shown In Table 2-9. Natural gas and distillate
fuel oil are the predominant fuel types for new units <9 MW (<30 MMBtu/hr).
The baseline S02 and PM emissions estimates by fuel type and boiler size
class are summarized in Tables 2-10 and 2-11, respectively.
2-10
-------
TABLE 2-6. BASELINE COAL BOILERS*
1-3
(3-10)
Boiler Size,
3-9
(10-30)
MW (MMBtu/hr)
9-29
(30-100)
1-29
(3-100)
Number of boilers
145
85
20
250
S02 em1ssionsb
metric tons,
Mg
5,014
7,215
5,869
18,098
(short tons)
(5,527)
(7,953)
(6,470)
(19,950)
PM emissions"
metric tons,
Mg
636
915
993
2,545
(short tons)
(701)
(1,009)
(1,095)
(2,805)
• Boiler sales over a five-year period.
b In the fifth year assuming current air emissions regulations.
2-11
-------
TABLE 2-7. BASELINE DISTILLATE FUEL OIL BOILERS*
<1
(<3)
Boiler Size, MW (MMBtu/hr)
1-3 3-9 9-29
(3-10) (10-30) (30-100)
<29
(<100)
Number of boilers
60,575
5,690
375
55
121,835
S02 emissions6
metric tons, Mg
18,774
7,607
2,286
767
29,434
(short tons)
(20,695)
(8,385)
(2,520)
(845)
(32,445)
PM emissionsb
metric tons, Mg
626
295
100
36
1,057
(short tons)
(690)
(325)
(110)
(40)
(1,165)
' Boiler sales over a five-year period. References 5 and 6. Excludes
estimates of residential boilers.
b In the fifth year assuming current air emissions regulations.
2-12
-------
TABLE 2-8. BASELINE NATURAL GAS BOILERS'
Boiler Size, MW (MMBtu/hr)
<1 1-3 3-9 9-29 <29
(<3) (3-10) (10-30) (30-100) (<100)
Number of boilers
62,325
7,400
580
115
70,420
S02 emissions"
metric tons, Mg
39
23
8
5
74
(short tons)
(43)
(25)
(9)
(5)
(82)
PM emissions6
metric tons, Mg
644
381
145
77
1,247
(short tons)
(710)
(420)
(160)
(85)
(1,375)
• Boiler sales over a five-year period. References 5 and 6. Excludes
estimates of residential boilers.
b In the fifth year assuming current air emissions regulations.
2-13
-------
TABLE 2-9. BASELINE FUEL MIX"
Fuel Type
A A
t*> ¦
Boiler Size, MW (MMBtu/hr)
1-3 3-9 9-29
(3-10) (10-30) (30-100)
<29
(<100)
Natural gasb
62,325
7,400
580
115
70,420
Distillate
fuel oilc
60,575
5,690
375
55
66,695
Residual
fuel oi1c
0
1,020
205
280
1,505
Coal
0
145
85
20
250
Total
122,900
14,255
1,245
470
138,870
" Boiler sales over a five-year period; total number of boilers from Tables
2-4 through 2-8.
b Single-fuel units.
c Single-fuel and oil/gas units.
2-14
-------
TABLE 2-10. BASELINE S02 EMISSIONS"
Fuel Type
A A
Boiler
1-3
(3-10)
Size, MW (MMBtu/hr)
3-9 9-29
(10-30) (30-100)
<29
(<100)
(metric tons, Mg)
Natural gas
39
23
8 5
74
Distillate fuel oil
18,774
7,607
2,286 767
29,434
Residual fuel oil
0
5,801
6,169 22,961
34,931
Coal
o
18.090
Total
18,813
18,445
15,678 29,601
82,537
(short tons)
Natural gas
43
25
9 5
82
Distillate fuel oil
20,695
8,385
2,520 845
32,445
Residual fuel oil
0
6,395
6,800 25,310
38,505
Coal
0
5.527
7.953 6.470
19.950
Total
20,738
20,332
17,282 32,630
90,982
1 In the fifth year assuming current air emissions regulations. Excludes
estimates from residential boilers. Reference Tables 2-4 through 2-8.
2-15
-------
TABLE 2-11. BASELINE PN EMISSIONS'
Fuel Type
<1
(<3)
Boiler
1-3
(3-10)
Size, MW (MMBtu/hr)
3-9 9-29
(10-30) (30-100)
<29
(<100)
(metric tons,
Mg)
Natural gas
644
381
145
77
1,247
Distillate fuel oil
626
294
100
36
1,057
Residual fuel oil
0
485
694
2,100
3,279
Coal
Ǥ
—£15
W3
2.545
Total
1,270
1,797
1,854
3,207
8,128
(short tons)
Natural gas
710
420
160
85
1,375
Distillate fuel oil
690
325
110
40
1,165
Residual fuel oil
0
535
765
2,315
3,615
Coal
0
701
i,Q0?
1,995
2.805
Total
1,400
1,981
2,044
3,535
8,960
• In the fifth year assuming current air emissions regulations. Excludes
estimates from residential boilers. Reference Tables 2-4 through 2-8.
2-16
-------
2.3 NATIONAL IMPACTS
This section presents projections of national air emissions reductions
and increases 1n total annualized pollution control costs from alternative S02
and PM NSPS for new small (<29 MW, <100 MMBtu/hr) Industrial-commercial -
institutional boilers 1n the fifth year after proposal of NSPS. Results are
presented assuming that the fuel mix under the alternative NSPS assumptions is
identical to the baseline estimates 1n Section 2.2 and also assuming that the
fuel mix under the alternative NSPS assumptions is different than the baseline
estimates. Results are presented for the Low 011 Price Scenario and the High
011 Price Scenario.
2.3.1 Alternative NSPS Fuel Mix 1s the Same as the Baseline Fuel Mix
2.3.1.1 Residual Fuel Oil: Low Oil Prices
Table 2-12 presents projected residual fuel oil boilers S02 emissions
reductions by boiler size class. It was assumed that small residual fuel oil
watertube/flretube/firebox boilers burned medium sulfur oil in the baseline;
therefore, there is very little projected SO2 emission reduction for a 688 ng
SO2/J (1.6 lb SOj/MMBtu) emission regulation for sizes <3 MW (<10 MMBtu/hr).
The baseline residual fuel oil boiler S02 emissions estimate is 34,931 metric
tons (38,505 short tons), see Table 2-4. A 688 ng SOj/J (1.6 lb S02/MMBtu)
standard is expected to reduce new small residual fuel oil boiler baseline S02
emissions by 28 percent. A 344 ng SOj/J (0.8 lb SOz/MMBtu) control level is
forecasted to reduce new small residual fuel oil boiler baseline S02 emissions
by 36 percent. A 215 ng SOj/J (0.5 lb SOj/MMBtu) regulation is projected to
reduce baseline S02 emissions by 78 percent. A 129 ng SO^J (0.3 lb
SO^MMBtu) limit will reduce baseline S02 emissions by 87 percent.
Lower sulfur residual fuel oil types are also expected to reduce PM
emissions without the addition of any particulate matter emissions control
equipment. Table 2-13 summarizes these expected PM emissions reductions.
The annualized cost Impacts without monitoring and testing costs
represent the fuel price Increases associated with purchasing low sulfur
residual fuel oil types. It is assumed that the fuel price increase (1985
dollars) for the stationary watertube boilers burning high sulfur residual
?-17
-------
TABLE 2-12. PROJECTED RESIDUAL FUEL OIL BOILER
S02 EMISSIONS REDUCTIONS'
Alternative S02 Boiler size, MW (MMBtu/hr)
control level 1-3 3-9 9-29 1-29
ng/J (lb/MMBtu) (3-10) (10-30) (30-100) (3-100)
688 (1.6) 176
344 (0.8) 2,989
215 (0.5) 4,043
129 (0.3) 4,747
688 (1.6) 194
344 (0.8) 3,295
215 (0.5) 4,457
129 (0.3) 5,233
(metric tons, Mg)
1,320 8,554 10,050
3,745 15,757 22,491
4,654 18,458 27,156
5,260 20,259 30,266
(short tons)
1,455 9,429 11,078
4,128 17,370 24,793
5,130 20,347 29,934
5,798 22,332 33,363
a In the fifth year following proposal of NSPS; reductions from baseline
estimates presented in Table 2-4; alternative NSPS fuel mix is assumed to
be the same as the baseline fuel mix.
2-18
-------
TABLE 2-13. PROJECTED RESIDUAL FUEL OIL BOILER
PM EMISSIONS REDUCTIONS*
Alternative S02 Boiler size, MW (MMBtu/hr)
control level 1-3 3-9 9-29 1-29
ng/J (Ib/HMBtu) (3-10) (10-30) (30-100) (3-100)
(metric tons,
Mg)
688
344
(1.6)
(0.8)
0
176
130
281
901
1,351
1,031
1,808
215
(0.5)
246
342
1,531
2,119
129
(0.3)
317
403
1,711
2,430
(short tons)
688
344
(1.6)
(0.8)
0
194
143
310
993
1,489
1,136
1,993
215
(0.5)
271 '
377
1,688
2,336
129
(0-3)
349
444
1,886
2,679
• In the fifth year following proposal of NSPS; alternative NSPS fuel mix is
assumed to be the same as the baseline fuel mix.
2-19
-------
fuel oil in the baseline Is J0.63/GJ (50.66/MMBtu) to comply with the 129 rig
SO2/J (0.3 lb SOj/HHBtu) limit.3 It is assumed that the fuel price Increase
is S0.44/GJ (S0.46/MMBtu) for the smaller watertube/firetube/firebox boilers
burning medium sulfur residual fuel oil in the baseline.3 Slightly smaller
fuel price premiums were used for the 215 ng SO2/J (0.5 lb SOj/MMBtu)
scenario. For the 344 ng SOj/J (0.8 lb SOj/MMBtu) control level, it is
assumed that the fuel price increase is S0.47/GJ (50.50/MMBtu) for the
stationary watertube boilers and SO.28/GJ (SO.30/MMBtu) for the smaller
watertube/firetube/firebox boi1ers.
The annualized cost impacts for the Low Oil Price Scenario range from 54
million to $22 million (1985 dollars). Table 2-14 presents estimates by
boiler size class.
Cost-effectiveness is the annualized pollution control cost increase
divided by the expected annual emissions reduction. It is assumed that the PM
emissions reductions are Incidental and that the total annualized pollution
control cost Increases can be compared with the expected S02 emissions
reductions. If the total annualized pollution control cost increases were
divided between the S02 and PM emissions reductions, then the S02 emissions
control cost-effectiveness ratios in Tables 2-15 and 2-16 would be reduced.
Cost-effectiveness ratios can be calculated as average or incremental.
"Average" is calculated by comparisons with the baseline. "Incremental"
ratios can be derived by comparing the results for the 215 ng SOj/J (0.5 lb
SOj/MMBtu) limit with the 688 ng SOj/J (1.6 lb SOj/MMBtu) standard and by
comparing the estimates for the 129 ng SOj/J (0.3 lb S02/MM8tu) regulation
with the 215 ng SOj/J (0.5 lb SOj/MMBtu) scenario. Tables 2-15 and 2-16 show
the average and incremental S02 emissions control cost-effectiveness ratios
for residual fuel oil boilers by boiler size category.
2.3.1.2 Residual Fuel Oil: Hioh Oil Prices
It 1s assumed that the fuel price Increase (1985 dollars) for the
stationary watertube boilers burning Mgh sulfur residual fuel oil in the
baseline 1s S0.55/GJ (S0.58/MMBtu) to comply with the 344 ng SOj/J (0.8 lb
SO^MMBtu) limit; for this group of boilers, the fuel price increase is
-------
TABLE 2-14. PROJECTED ANNUALIZED COST INCREASES
FOR RESIDUAL FUEL OIL BOILERS"
(000 $1985)
Alternative S02 Boiler size, MW (MMBtu/hr)
control level 1-3 3-9 9-29 1-29
ng/J (lb/MMBtu) (3-10) (10-30) (30-100) (3-100)
Without
moni tori ng
and testing
costs
688
344
(1.6)
(0.8)
0
2,326
575
2,577
3,970
9,926
4,545
14,829
215
(0.5)
3,101
3,245
11,911
18,257
129
(0.3)
3,566
3,646
13,102
20,314
With
moni tori ng
and testing
costs"
683
344
(1.61
. (0.8)
1,020
3,346
780
2,782
4,250
10,206
6,050
16,334
215
(0.5)
4,121
3,450
12,191
19,762
129
(0.3)
4,586
3,851
13,382
21,819
a In the fifth year following proposal of NSPS; alternative NSPS fuel mix is
assumed to be the same as the baseline fuel mix; Low Oil Price Scenario.
b Assumed to be 51,000 per year per boiler. These estimates da not include
the aggregate monitoring and testing costs for distillate fuel oil boilers.
2-21
-------
TABLE 2-15. PROJECTED RESIDUAL FUEL OIL BOILER
AVERME S02 EMISSIONS CONTROL COST-EFFECTIVENESS RATIOS9
Alternative SO,
Boiler size, MW (MMBtu/hr)
control
level
1-3
3-9 9-29
1-29
ng/J
(lb/MMBtu)
(3-10)
(10-30) (30-100)
(3-100)
(1985 S/Mg)
688
(1.6)
...
591 497
602
344
(0.8)
1,119
743 648
726
215
(0.5)
1,019
741 660
728
129
(0-3)
966
. 732 661
721
(1985 S/short ton)
688
(1.6)
_ _ _
536 451
546
344 .
(0.8)
1,015
674 588
659
215
(0.5)
925
672 599
660
129
(0.3)
876
664 599
654
• Comparisons with the baseline; with monitoring and testing costs; alterna-
tive NSPS fuel mix is assumed to be the same as the baseline fuel mix; Low
Oil Price Scenario.
2-22
-------
TABLE 2-16. PROJECTED RESIDUAL FUEL OIL BOILER
INCREMENTAL S02 EMISSIONS CONTROL COST-EFFECTIVENESS RATIOS*
Alternative Boiler size, MW (MMBtu/hr)
control level 1-3 3-9 9-29 1-29
ng/J (1b/MMBtu) (3-10) (10-30) (30-100) (3-100)
(1985 S/Mg)
688
(1•6)b
632
497
618
344
(0.8)c
827
827
827
827
215
(0.5)d
735
735
735
735
129
(0.3)*
661
661
661
661
(1985 S/short
ton)
688
(1.6)b
• • -
574
451
561
344
(0.8)
750
750
750
750
215
(0.5)d
667
667
667
667
129
.(0-3)e
600
600
600
600
* With monitoring and testing costs; alternative NSPS fuel mix is assumed to
be the same as the baseline fuel mix; Low Oil Price Scenario.
b Compared with the baseline.
c Compared with the results for 688 ng/J (1.6 1b/MMBtu).
d Compared with the results for 344 ng/J (0.8 1b/MMBtu).
e Compared with the estimates for 215 ng/J (0.5 1b/MMBtu).
2-23
-------
S0.73/GJ ($0-77/MMBtu) to comply with the 129 ng SOj/J (0.3 lb SOj/MMBtu)
regulation.3 It 1s assumed that the fuel price Increase is S0.34/GJ
(50.36/HMBtu) for the smaller watertube/firetube/firebox boilers to comply
with the 344 ng SOj/J (0.8 lb SOj/MMBtu) standard and S0.52/GJ (50.55/MMBtu)
to comply with the 129 ng SOj/J (0.3 lb SOj/MMBtu) level.3
The annualized cost impacts for the High Oil Price Scenario range from
$5 million to $24 million (1985 dollars). Table 2-17 summarizes the estimates
by boiler size class. Average and incremental residual fuel oil boiler S02
emissions control cost-effectiveness ratios are shown in Tables 2-18 and 2-19,
respectively.
2.3.1.3 Coal
Table 2-20 sunmarizes the projected emission reductions for coal boilers
by boiler size category. It was assumed that the average annual S02 emission
rate is 430 ng SO2/J (1-0 lb SOj/MMBtu) under the alternative regulation.
Variability in SOj emission rates exists when burning coal without a
scrubber. This variability 1s due to many factors, Including the lack of
uniformity in coal seams (geological or natural factors), as well as coal
mining, processing, cleaning, transportation and storage practices which may
result 1n some degree of "blending" or mixing.
EPA has adopted a continuous 30-day rolling average period (recomputed
daily) for drafting S02 NSPS for coal boiler combustion sources. EPA believes
that this is long enough to minimize variability (variability declines as the
averaging period Increases), 1n order to yield results that are representative
of real performance, but also permits timely enforcement (i.e., dally) of
compliance with standards.
EPA has estimated a ratio of about 1.20 between the maximum expected
daily average SOj emission rate (computed from 30 days of data) and the long-
term (i.e., annual) average emission rate. Therefore, a coal type with an
average annual sulfur content of 430 ng SO2/J (1-0 lb SO^MMBtu) is expected
to comply with the alternative regulation.
2-24
-------
TABLE 2-17. PROJECTED ANNUALIZED COST INCREASES
FOR RESIDUAL FUEL OIL BOILERS*
(OOO $1985)
Alternative S02 Boiler size, MW (MMBtu/hr)
control level 1-3 3-9 9-29 1-29
ng/J (lb/MMBtu) (3-10) (10-30) (30-100) (3-100)
Without
monitoring
and testing
costs
688
344
(1-6)
(0.8)
0
2,791
630
3,035
4,367
11,514
4,997
17,340
215
(0.5)
3,643
3,770
13,697
21,110
129
(0-3)
4,264
4,190
14,491
22,945
With
monitoring
and testing
costsb
688
344
(1-6)
(0.8)
1,020
3,811
835
3,240
4,647
11,794
6,502
18,845
215
(0.5)
4,663
3,975
13,977
22,615
129
(0.3)
5,284
4,395
14,771
24,450
" In the fifth year following proposal of NSPS; alternative NSPS fuel mix is
assumed to be the same as the baseline fuel mix; High Oil Price Scenario.
b Assumed to be $1,000 per year per boiler. These estimates do not include
the aggregate monitoring and testing costs for distillate fuel oil boilers.
2-25
-------
TABLE 2-18. PROJECTED RESIDUAL FUEL OIL BOILER
AVERAGE S02 EMISSIONS CONTROL COST-EFFECTIVENESS RATIOS8
Alternative SO2 Boiler size, MW (MMBtu/hr)
control level 1-3 3-9 9-29 1-29
ng/J (1b/MMBtu) (3-10) (10-30) (30-100) (3-100)
(1985 S/Mg)
688
(1.6)
5,796
633
543
647
344
(0.8)
1,275
865
748
838
215
(0.5)
1,153
856
757
833
129
(0.3)
1,113
836
729
808
(1985 S/short
ton)
688
(1.6)
5,258
574
493
587
344
(0.8)
1,157
785
679
750
215
(0.5)
1,046
775
687
755
129
(0-3)
1,010
758
661
733
a Comparisons with the baseline; with monitoring and testing costs; alterna-
tive NSPS fuel mix is assumed to be the same as the baseline fuel mix; High
Oil Price Scenario; reference Tables 2-12 and 2-17.
2-26
-------
TABLE 2-19. PROJECTED RESIDUAL FUEL OIL BOILER
INCREMENTAL S02 EMISSIONS CONTROL COST-EFFECTIVENESS RATIOS3
Alternative S02 Boiler size, MW (MMBtu/hr)
control level 1-3 3-9 9-29 1-29
ng/J (Ib/MMBtu) (3-10) (10-30) (30-100) (3-100)
(1985 S/Mg)
688
(1.6)b
5,796
633
543
647
344
(0.8)c
992
992
992
992
215
(0.5)d
808
808
808
808
129
(0.3)'
882
693
441
590
(1985 S/short
ton)
688
(1.6)b
5,258
574
493
587
344
(0.8)c
900
900
900
900
215
(0.5)d
733
733
733
733
129
(0.3)'
800
629
400
535
* With monitoring and testing costs; High Oil Price Scenario; reference
Tables 2-12 and 2-17.
b Compared with the baseline.
c Compared with the results for 688 ng/J (1.6 Ib/MMBtu).'
d Compared with the results for 344 ng/J (0.8 lb/MMBtu).
8 Compared with the estimates for 215 ng/J (0.5 lb/MMBtu).
2-27
-------
TABLE 2-20. PROJECTED COAL BOILER EMISSIONS REDUCTIONS'
Alternative Boiler size, MW (MMBtu/hr)
control level 1-3 3-9 9-29 1-29
ng/J (lb/MMBtu) (3-10) (10-30) (30-100) (3-100)
oUj
516b (1.2)b
3,602
5,184
4,214
13,000
(3,971)
(5,714)
(4,645)
(14,330)
PM
129 (0.3)
212
305
496
1,013
(234)
(336)
(547)
(1,117)
21 (0.05)
560
819
911
2,290
(617)
(903)
(1,004)
(2,524)
a In the fifth year following proposal of NSPS; reductions from baseline
estimates presented in Table 2-6; alternative NSPS fuel mix is assumed to
be the same as the baseline fuel mix.
b 30-day rolling average.
2-28
-------
Table 2-21 shows the projected annualized pollution control cost
increases for coal boilers by boiler size class. The S02 emissions control
costs without monitoring and testing are based on a fuel price increase of
$0.31/GJ ($0.33/fWBtu), 1985 dollars.3 The S02 emissions control monitoring
and testing costs are assumed to be $31,000 per year per boiler.*
The PM emissions control costs for the 129 ng PM/J (0.3 lb PM/MMBtu)
standard is based on the annualized capital and 0&M costs for a double
mechanical collector; a fabric filter is the applicable control equipment type
for the 21 ng PM/J (0.05 lb PM/MMBtu) regulation. The PM emissions control
monitoring and testing costs are assumed to be $15,000 per year per boiler."
The coal boiler emissions control cost-effectiveness ratios are summarized in
Table 2-22.
2.3.1.4 Distillate Fuel Oil
Significant S02 and PM emissions reductions from distillate fuel oil
combustion are not expected. The baseline average emissions estimates are 129
ng SOj/J (0.3 lb SOj/MMBtu) and 4 ng PM/J (0.01 lb PM/MMBtu).
2.3.2 Alternative NSPS Fuel Mix 1s Different than the Baseline Fuel Mix
Very low sulfur residual fuel oil may not be readily available in all
areas of the country with access to medium or high sulfur residual 'fuel oil
supplies. In order to comply with the alternative S02 emission limits where
very low sulfur residual fuel oil is not available, flue gas desulfurization
(FGD) systems could be installed or other compliance fuels (e.g., distillate
fuel oil or natural gas) could be purchased.
The national projections of the annualized cost increases and emissions
reductions associated with alternative NSPS will be different (than the
estimates presented 1n Section 2.3.1) if the compliance strategies are a mix
of.very low sulfur residual fuel oil and other alternatives. For sensitivity
analyses purposes, it was assumed that half of the residual fuel oil demand in
the baseline would select compliance very low sulfur residual fuel oil and
half would choose distillate fuel oil under the alternative NSPS.
These monitoring and testing cost estimates do not necessarily reflect the
average costs associated with the proposed standards.
-------
TABLE 2-21. PROJECTED ANNUALIZED COST INCREASES
FOR COAL BOILERS3
(000 $1985)
Alternative
control level
ng/0 (lb/MMBtu)
Monitoring
and
testing
1-3
(3-10)
Boiler size
3-9
(10-30)
, MW (MMBtu/hr)
9-29
(30-100)
1-29
(3-100)
so2
516b
(1.2)b
No
1,027
1,478
1,202
3,707
Yes
5,522
4,113
1,822
PM
11,457
129
(0.3)
No
2,755
1,870
645
5,270
Yes
5,075
3,230
965
9,270
21
(0.05)
No
5,945
5,860
2,830
14,725
Yes
8,265
7,310
3,150
18,725
a In the fifth year following proposal of NSPS; alternative NSPS fuel mix is
assumed to be the same as the baseline fuelmix.
k 30-day rolling average.
2-30
-------
TABLE 2-22. PROJECTED COAL BOILER EMISSIONS CONTROL
COST-EFFECTIVENESS RATIOS3
1985 $/Mg (1985 $/short ton)
A1 ternative
Boiler size
, MW (MMBtu/hr)
control level
1-3
3-9
9-29
1-29
ng/J (1b/MMBtu)
Type
(3-10)
(10-30)
(30-100)
(3-100)
so2
516b (1.2)b
Average
1,533
793
432
881
(1.391)
(720)
(392)
(800)
PM
129 (0.3)
Average
23,940
10,590
1,950
9,150
(21,690)
(9,610)
(1,760)
(8,300)
21 (0.05)
Average
14,760
8,930
3,460
8,180
(13,400)
(8,100)
(3,140)
(7,420)
21 (0.05) ]
Incrementalc
9,170
7,940
5,270
7,400
(8,330)
(7,200)
(4,780)
(6,720)
a With monitoring and testing costs.
b 30-day rolling average.
c Compared with the results for 129 ng PM/J (0.3 lb PM/MMBtu).
2-31
-------
The average emissions estimates for distillate fuel oil are 129 ng SOj/J (0.3
lb SOj/MMBtu) and 4 ng PM/J (0.01 lb PM/MMBtu).
Tables 2-23 and 2-24 summarize the projected emissions reductions.
Compared with the projections In Tables 2-12 and 2-13, these estimates are not
substantially different.
2.3.2.1 Low 011 Price Scenario
The baseline projection of new small residual fuel oil boilers is not
available by location or by economic sector (industrial versus commercial/in-
stltutlonal). The fuel price differences between residual and distillate fuel
oils may vary by location and economic sector. As a result, two estimates
(Tables 2-25 and 2-26) of the projected annualized cost increases have been
prepared. The cost assumptions in Table 2-25 reflect Midwest industrial
distillate fuel oil prices, whereas the cost assumptions in Table 2-26 are
illustrative of higher East Coast commercial distillate fuel oil prices.3
The monitoring and testing costs are assumed to be applicable to
distillate fuel oil boilers for the 129 ng SOj/J (0.3 lb SO^MMBtu) regula-
tion, but not for the 215 ng SO^J (0.5 lb SOj/MMBtu) standard. Distillate
fuel oil is assumed to be a compliance fuel for the 215 ng SO^J (0.5 lb
SOz/WiBtu) emission limit without the expense of fuel sampling or certif-
ication.
The projected S02 emissions control cost-effectiveness ratios in Tables
2-27 and 2-28 reflect monitoring and testing costs, fuel price increases and
S02 emissions reductions for the baseline residual fuel oil boilers as well as
the monitoring and testing costs (without any expected S02 emissions reduc-
tions) for the baseline distillate fuel oil boilers. It 1s assumed that the
PM emissions reductions are incidental and that the total annualized pollution
control cost Increases can be compared with the expected S02 emissions
reductions. If the total annualized pollution control cost increases were
divided between the S02 and PM emissions reductions, then the 502 emissions
control cost-effectiveness ratios in Tables 2-27 and 2-28 would be reduced.
2.3.2.2 High 011 Price Scenario
As above, two estimates of the projected annualized cost increases have
been developed; Table 2-29 reflects Midwest industrial distillate fuel oil
?-3?
-------
TABLE 2-23. PROJECTED RESIDUAL FUEL OIL BOILER
S02 EMISSIONS REDUCTIONS'
Alternative SO,
Boiler size, MW (MMBtu/hr)
control
level
1-3
3-9 9-29
1-29
ng/J
(lb/MMBtu)
(3-10)
(10-30) (30-100)
(3-100)
(metric tons, Mg)
344
(0.8)
3,868
4,502 18,009
26,379
215
(0.5)
4,394
4,956 19,358
28,709
129
(0.3)
4,745
5,259 20,258
30,263
(short tons)
344
(0.8)
4,264
4,963 • 19,851
29,078
215
(0.5)
4,844
5,463 21,339
31,646
129
(0.3)
5,231
5,797 22,331
33,359
1 In the fifth year following proposal of NSPS; reductions from baseline
estimates in Table 2-4; alternative NSPS fuel mix is assumed to have less
residual fuel oil and more distil late.fuel oil than the baseline fuel mix.
2-33
-------
TABLE 2-24. PROJECTED RESIDUAL FUEL OIL BOILER
PM EMISSIONS REDUCTIONS"
Alternative SO,
Boiler size, MW (MMBtu/hr)
control
level
1-3
3-9 9-29
1-29
ng/J
(lb/MMBtu)
(3-10)
(10-30) (30-100)
(3-100)
(metric tons, Mg)
344
(0.8)
291
381 1,646
2,318
215
(0.5)
327
411 1,736
2,473
129
(0.3)
361
442 1,826
2,629
(short tons)
344
(0.8)
321
420 1,814
2,555
215
(0.5)
360
453 1,914
2,727
129
(0.3)
398
487 2,013
2,898
3 In the fifth year following proposal of NSPS; alternative NSPS fuel mix is
assumed to have less residual fuel oil and more distillate fuel oil than
the baseline fuel mix.
2-34
-------
TABLE 2-25. PROJECTED ANNUALIZED COST INCREASES
FOR OIL BOILERS'
(000 $1985)
Alternative S02 Boiler size, MW (MMBtu/hr)
control level 1-3 3-9 9-29 1-29
ng/J (Ib/MMBtu) (3-10) (10-30) (30-100) (3-100)
Without
monitoring and testing costs
344
215
(0.8)
(0.5)
4,884
5,271
4,781
5,115
16,476
-17,468
26,141
27,854
129
(0.3)
5,504
5,315
18,064
28,883
With monitoring and testing costs
344
215
(0.8)
(0.5)
5,394b
5,781b
4,883b
5,217b
- 16,616b
17,608b
26,893b
28,606b
129
(0.3)
12,214c
5,895c •
18,399c
36,508c
* In the fifth year following proposal of NSPS; alternative NSPS fuel mix is
assumed to have less residual fuel oil and more distillate fuel oil than
the baseline fuel mix; Low 011 Price Scenario.
b $1,000 per year per residual fuel oil boiler.
c $1,000 per year per residual and distillate fuel oil boiler.
2-35
-------
TABLE 2-26. PROJECTED ANNUALIZED COST INCREASES
FOR OIL BOILERS"
(OOO $1985)
Alternative S02
Boiler size, Ml*
1 (MMBtu/hr)
control
level
1-3 3-9
9-29
1-29
ng/J
(1b/MMBtu)
(3-10) (10-30)
(30-100)
(3-100)
Without monitoring
and testing
costs
344
(0.8)
7,711 7,220
23,722
38,653
215
(0.5)
8,101 7,554
24,714
40,369
129
(0.3)
8,331 7,757
25,310
41,398
With monitoring
and testing
costs
' 344
(0.8)
8,221b 7,322b
23,862b
39,405b
215
(0.5)
8,611b "7,656b
24,854"
41,121b
129
(0.3)
15,041c - 8,337c
25,64 5C
49,023c
a In the fifth year following proposal of NSPS; alternative NSPS fuel mix is
assumed to have less residual fuel oil and more distillate fuel oil than
the baseline fuel mix; Low Oil Price Scenario.
b 51,000 per year per residual fuel oil boiler.
c $1,000 per year per residual and distillate fuel oil boiler.
2-36
-------
TABLE 2-27. PROJECTED OIL BOILER S02 EMISSIONS CONTROL
AVERAGE COST-EFFECTIVENESS RATIOS'
Alternative
S02 control
Boiler Size, MW
(MMBtu/hr)
level
1-3
3-9
9-29
1-
•29
ng/J (Ib/MMBtu)
(3-10)
(10-30)
(30-100)
(3-
-100)
344 (0.8) 1,394-2,125
215 (0.5) 1,316-1,959
129 (0.3) 2,574-3,169
(1985 S/Mg)
1,084-1,626
1,053-1,545
1,121-1,585
923-1,325
909-1,284
908-1,265
1,019-1,494
996-1,432
1,206-1,620
344 (0.8) 1,265-1,928
215 (0.5) 1,193-1,777
129 (0.3) 2,335-2,875
(1985 S/shQrt ton)
984-1,475
955-1,401
1,017-1,438
837-1,202
825-1,164
824-1,148
925-1,355
904-1,299
1,095-1,470
a With monitoring and testing costs; alternative NSPS fuel mix is assumed to
have less residual fuel oil and more distillate fuel oil than the baseline
fuel mix; Low Oil Price Scenario.
2-37
-------
TABLE 2-28. PROJECTED OIL BOILER S02 EMISSIONS CONTROL
INCREMENTAL COST-EFFECTIVENESS RATIOS*
Alternative S02 Boiler size, MW (MMBtu/hr)
control level 1-3 3-9 9-29 1-29
ng/J (Ib/MMBtu) (3-10) (10-30) (30-100) (3-100)
(1985 S/Mg)
215
(0.5)b
735
735
735
735
129
(0.3)c
18,324
2,243
879
5,085
(1985 S/short
ton)
215
(0.5)b
667
667
667
667
129
(0.3)e
16,623
2,034
797
4,613
* With monitoring and testing costs; alternative NSPS fuel mix is assumed to
have less residual fuel oil and more distillate fuel oil than the baseline
fuel mix; Low Oil Price Scenario.
b Compared with the results for 344 ng/J (O.B Ib/MMBtu).
c Compared with the estimates for 215 ng/J (0.5 lb/MMBtu).
2-38
-------
TABLE 2-29. PROJECTED ANNUALIZED COST INCREASES
FOR OIL BOILERS*
(000 $1985)
Alternative S02 Boiler size, MW (MMBtu/hr)
control level 1-3 3-9 9-29 1-29
ng/J (1b/MMBtu) (3-10) (10-30) (30-100) (3-100)
Without
monitoring
and testing
costs
344
215
(0.8)
(0.5)
6,279
6,705
6,041
6,408
20,446
21,537
32,766
34,650
129
(0.3)
7,016
6,675
22,331
36,022
With
monitoring
and testing
costs
344
215
(0.8)
(0.5)
6,789b
7,215
6,143Kb
6,510
20,586b
21,677b
33,518b
35,402b
129
(0.3)
13,726c
7,255c
22,666c
43,647c
* In the fifth year following proposal of NSPS; alternative NSPS fuel mix is
assumed to have less residual fuel oil and more distillate fuel oil than
the baseline fuel mix; High 011 Price Scenario.
b SI,000 per year per residual fuel oil boiler.
c 51,000 per year per residual and distillate fuel oil boiler.
2-39
-------
prices and Table 2-30 is based on higher East Coast commercial distillate fuel
oil prices.3
The monitoring and testing costs are assumed to be applicable to
distillate fuel oil boilers for the 129 ng SO2/J (0.3 lb SO^MMBtu) regula-
tion, but not for the 215 ng SO^J (0.5 lb SO^MMBtu) standard. Distillate
fuel oil is assumed to be a compliance fuel for the 215 ng S02/J (0.5 lb
SO^/MMBtu) emission limit without the expense of fuel sampling or certif-
ication.
The projected S02 emission control cost-effectiveness ratios in Tables
2-31 and 2-32 reflect monitoring and testing costs, fuel price increases and
S02 emission reductions for the baseline residual fuel oil boilers as well as
the monitoring and testing costs (without any expected S02 emissions reduc-
tions) for the baseline distillate fuel oil boilers. It is assumed that the
PM emissions reductions are Incidental and that the total annualized pollution
control cost increases can be compared with the expected S02 emissions
reductions. If the total annualized pollution control cost increases were
divided between the S02 and PM emissions reductions, then the S02 emissions
control cost-effectiveness ratios 1n Tables 2-31 and 2-32 would be reduced.
2.3.3 Summary of Projected Emissions Reductions
Tables 2-33 and 2-34 summarize the expected S02 and PM emissions
reductions in the fifth year following proposal of NSPS. These forecasts may
be understated if residual fuel oil and coal boiler sales increase above
recent levels.
2-40
-------
TABLE 2-30. PROJECTED ANNUALIZED COST INCREASES
FOR OIL BOILERS9
(000 $1985)
Alternative S02
control level
ng/J (lb/MMBtu)
Boiler size, MW (MMBtu/hr)
1-3 3-9 9-29 1-29
(3-10) (10-30) (30-100) (3-100)
Without monitoring and testing costs
344
215
129
(0.8)
(0.5)
(0.3)
9,222
9,649
9,959
8,580
8,948
9,215
27,990
29,082
29,876
45,792
47,679
49,050
With monitoring and testing costs
344
215
129
(0.8)
(0-5)
(0.3)
9,732b
10,159b
16,669c
8,682b
9,050b
9,795c
28,130b
29,222b
30,21lc
46,544b
48,431b
56,675c
' In the fifth year following proposal of NSPS; alternative NSPS fuel mix is
assumed to have less residual fuel oil and more distillate fuel oil than
the baseline fuel mix; High 011 Price Scenario.
b SI,000 per year per residual fuel oil boiler.
c SI,000 per year per residual and distillate fuel oil boiler.
2-41
-------
TABLE 2-31. PROJECTED OIL BOILER S02 EMISSIONS CONTROL
AVERAGE COST-EFFECTIVENESS RATIOS1
Alternative ¦
S02 control
level 1-3
ng/J (Ib/MMBtu) (3-10)
Boiler Size, MW (MMBtu/hr)
3-9 9-29 1-29
(10-30) (30-100) (3-100)
344
215
129
(0.8)
(0.5)
(0.3)
1,755-2,516
1,642-2,312
2,893-3,513
(1985 S/Mg)
1,365-1,928
1,314-1,826
1,380-1,863
1,143-1,562
1,120-1,510
1,119-1,491
1,271-1,764
1,233-1,687
1,442-1,873
344 (0.8) 1,592-2,282
215 (0.5) 1,489-2,097
129 (0.3) 2,624-3,187
(1985 S/short ton)
1,238-1,749
1,192-1,657
1,252-1,690
1,037-1,417
1,016-1,369
1,153-1,601
1,119-1,530
1,015-1,353 1,308-1,699
With monitoring and testing costs; alternative NSPS fuel mix is assumed to
have less residual fuel oil and more distillate fuel oil than the baseline
fuel mix; High Oil Price Scenario.
2-42
-------
TABLE 2-32. PROJECTED OIL BOILER S02 EMISSIONS CONTROL
INCREMENTAL COST-EFFECTIVENESS RATIOS'
Alternative S02
Boiler size, MW (MMBtu/hr)
control
level
1-3
3-9 9-29
1-29
ng/J
(Ib/MMBtu)
(3-10)
(10-30) (30-100)
(3-100)
(1985 S/Mg)
215
(0.5)b
809
809 809
809
129
(0.3)c
18,547
2,459 1,099
5,305
(1985 S/short ton)
215
(0.5)b
734
734 734
734
129
(0.3)e
16,822
2,231 997
4,813
8 With monitoring and testing costs; alternative NSPS fuel mix is assumed to
have less residual fuel oil and more distillate fuel oil than the baseline
fuel mix; High Oil Price Scenario.
b Compared with the results for 344 ng/J (0.8 Ib/MMBtu).
c Compared with the estimates for 215 ng/J (0.5 Ib/MMBtu).
2-43
-------
TABLE 2-33. SUMMARY OF EXPECTED
S02 EMISSIONS REDUCTIONS'
Alternative S02 Boiler size, MW (MMBtu/hr)
control level 1-3 3-9 9-29 1-29
Fuel type ng/J (lb/HMBtu) (3-10) (10-30) (30-100) (3-100)
(103 metric
tons)
Residual
688
(1.6)
0.2
1.3
8.6
10.1
fuel oil
344
(0.8)
2.9-3.9
3.7-4.5
15.8-18.0
22.5-26.4
215
(0.5)
4.0-4.4
4.7-5.0
18.4-19.4
27.2-28.7
129
(0.3)
4.7
5.2
20.3
30.3
Coal
516
(1.2)b
3.6
5.2
4.2
13.0
(103 short
tons)
Residual
688
(1.6)
0.2
1.5
9.4
11.1
fuel oil
344
(0.8)
3.3-4.3
4.1-5.0
17.4-19.9
24.8-29.1
215
(0.5)
4.4-4.8
5.1-5.5
20.3-21.3
29.9-31.6
129
(0.3)
5.2
5.8
22.3
33.4
Coal
516
(1.2)*
4.0
5.7
4.6
14.3
" In the fifth year following proposal of NSPS; reductions from baseline
estimate.
b 30-day rolling average.
2-44
-------
TABLE 2-34. SUMMARY OF EXPECTED
PN EMISSIONS REDUCTIONS'
Fuel type
Alternative
control level 1-3
ng/J (Ib/MMBtu) (3-10)
Boiler size, MW (MMBtu/hr)
3-9 9-29 1-29
(10-30) (30-100) (3-100)
Residual
fuel oil
SO,
688
344
215
129
(1.6)
(0.8)
(0.5)
(0.3)
(103 metric tons)
0
0.2-0.3
0.2-0.3
0.3-0.4
0.1
0.3-0.4
0.3-0.4
0.4
0.9
1.4-1.6
1.5-1.7
1.7-1.8
1.0
1.8-2.3
2.1-2.5
2.4-2.6
PM
Coal
129
21
(0.3)
(0.05)
0.2
0.6
0.3
0.8
0.5
0.9
1.0
2.3
Residual
fuel oil
SO;
688
344
215
129
(1.6)
(0.8)
(0.5)
(0.3)
PM
(103 short tons)
0.2-0.3
0.3-0.4
0.3-0.4
0.1
0.3-0.4
0.4-0.5
0.4-0.5
1.0
1.5-1.8
1.7-1.9
1.9-2.0
1.1
2.0-2.6
2.3-2.7
2.7-2.9
Coal
129
21
(0.3)
(0.05)
0.2
0.6
0.3
0.9
0.5
1.0
1.1
2.5
In the fifth year following proposal of NSPS; reductions from baseline
estimate.
2-45
-------
REFERENCES
1. Program Office Support: Environmental Impacts of Fossil Fuel Utiliza-
tion. PEDCo Environmental, Inc. Cincinnati, Ohio. Prepared for the
U.S. Environmental Protection Agency, Industrial Environmental Research
Laboratory. Draft Final. 1980. p. 2-16.
2. Projections of Industrial Fuel 011 and Natural Gas Prices. Energy and
Environmental Analysis, Inc., Arlington, Virginia. Prepared for the
U.S. Environmental Protection Agency, Office of Air Quality Planning and
Standards. October 1986.
3. Letter and attachments from Hogan, T. (EEA) to Link, T. (EPA/EAB).
Regional Commercial Oil and Gas Price Forecasts. July 16, 1987.
Letter and attachments from Hogan, T. (EEA) to Link, T. (EPA/EAB).
Annualized Commercial Oil and Gas Prices. July 28, 1987.
Letter and attachments from Hogan, T. (EEA) to Link, T. (EPA/EAB).
Annualized Industrial Fuel Prices. June 5, 1987.
4. Letter from Hogan, T. (EEA) to Pahel-Short, R. (EPA/ESD). Revised Small
Boiler Baseline S02 Emissions. October 17, 1988.
5. Letter from Hogan, T. (EEA) to Pahel-Short, R. (EPA/ESD). Small Boiler
Baseline PM Emissions Estimates. November 3, 1988.
6. Letter from Hogan, T. (EEA) to Pahel-Short, R. (EPA/ESD). Revised
Baseline Estimates for New Small Boilers by Fuel Type. October 18,
1988.
7. Holtberg, P. et al. Baseline Projection Oata Book. 1988 GRI Baseline
Projection of U.S. Energy Supply and Demand to 2010. Gas Research
Institute. Washington, O.C. Oecember 1988. p. 14.
8. Annual Energy Outlook 1987 With Projections to 2000. U.S. Department of
Energy, Energy Information Administration. DOE/EIA-0383(87). March
1988.
9. Annual Energy Outlook 1989 With Projections to 2000. U.S. Department of
Energy, Energy Information Administration. DOE/EIA-0383(89). January
1989.
2-46
-------
3. ECONOMIC IMPACTS: COMMERCIAL/INSTITUTIONAL SECTOR
3.1 INTRODUCTION
The assessment of the potential economic impact of a NSPS on commer-
cial/institutional (C/I) boilers was organized two ways. One set of analyses
focused on the impact of new regulations on "generic" buildings where boilers
are used only for space and hot water heating -- the predominant use of
boilers in commercial/institutional buildings. Here the impacts of potential
regulatory costs are related to the operating budgets and rental rates of
commercial buildings. A second set of analyses focused on selected commercial
sectors where economic impacts might be more severe than for "generic" build-
ings. For example, applications such as laundries or hospitals, where steam
is used for specialized purposes other than space heating, could lead to more
significant economic impacts for those sectors.
This analysis is focused on the impacts of "model plants" intended to be
representative of various situations where boilers are used in the C/I sector.
In most instances, the model plant is actually one building where boilers
provide various energy services, depending on the activities of the building
occupants. An example.of this situation is a building where boilers are used
exclusively for space and hot water heating. In some commercial sector
applications, such as hotel chains or large commercial laundries, one firm may
own several buildings or "model plants." In these cases, we have tried to
focus on the specific building or boiler Installation as our model unit for
analysis. We have done so because a business with multiple plants will
consider the economic viability of each of its plants.
An Important aspect of the economic analysis for C/I boilers is that it
should be viewed as a "worst case" analysis intended to identify the limits of
possible adverse consequences of a NSPS. The reasons why this should be
viewed as a "worst case" analysis are:
• Only very stringent regulatory scenarios are considered such as
very low sulfur residual oil or installation of flue gas desul-
furization equipment.
• These stringent regulations are applied to all boiler sizes in the
model building analyses, ignoring the effect of a boiler size cut-
off; the proposed NSPS may not be applicable to all of these
boiler sizes.
-------
• In buildings with mere than one boiler Installed, we have assumed
that ill boilers in the building would be subject to the NSPS. In
factj most new boilers would be replacements in existing build-
ings and not all of the existing boilers would necessarily be
replaced at the same time.
• We have made no allowance for the fact that several urban areas
already have regulations. In effect, the baseline for considering
impacts of the NSPS implies no (or very lax) regulatory controls
are currently in place.
• The analysis assumes that the boilers are firing a dirty fuel
(e.g. residual oil) rather than natural gas. The impacts pre-
sented here would be applicable only when such dirty fuels are
fired. In fact, natural gas is currently the predominant fuel
choice in C/I boilers.*
All of these considerations tend to overstate the likely economic impacts of
any NSPS, emphasizing that this is a "worst case" type of analysis.
3.2 SELECTED SECTORS
3.2.1 Approach
The goals in this phase of the study are threefold: 1) identify those
boiler applications which would likely incur economic Impacts from a New
Source Performance Standard for small boilers used in coirenercial/institutional
buildings; 2) select from each sector several "example" firms for which suf-
ficient data on boiler use and establishment sales could be obtained; and 3)
examine pollution control cost impacts for each selected firm/sector.
Several factors were considered in selecting specific end uses. One
factor was to try to Identify applications which use boilers for other
purposes beside space heating, such as cooking, baking, sterilization. To the
extent that energy usage is more Intensive (Btus per dollar of sales),
economic Impacts would tend to be greater. Another consideration might be an
application which tends to have a low ratio of business sales/revenue per
square foot of building space. In such instances, increases of building
operating costs would tend to have a more significant effect on price
increases needed to sustain profitability. Motels or hotels and some labor
service activities could be examples where building operating costs are a more
See Appendix A
-------
significant element in the total costs of the firm. Still another factor
would be to consider public entitles, such as schools, which are widespread
and where the economic impacts take the form of increases in local government
budgets.
Important examples of consnerc1al/1nstitutional establishments that use
boilers for applications other than space heating include laundries, hospitals
and some hotels. These three groups have been included in this analysis
because they have dally special steam demand requirements that are distinct
from the seasonal space heating requirements in generic buildings.
Colleges and universities have also been included in this selected
sectors analysis. This group uses relatively large boilers in central heating
facilities and sends steam or hot water through underground pipes to most or
all of the numerous buildings on campus. This group is distinct from the
generic buildings discussed 1n Section 3.3 because the typical college/uni-
versity boiler sizes are substantially larger than the typical boilers in
commercial "generic" buildings.
Elementary and secondary schools are another "selected sector." Elemen-
tary and secondary schools use boilers for seasonal space heating purposes
like generic buildings. They are analyzed in this section (as opposed to
Generic Buildings, Section 3.3) because comparing pollution control costs to
building rental rates 1s not appropriate for this group.
3.2.2 Data Sources and Descriptions of Selected Sectors
Data on the boiler configuration and total annual costs/revenues per
establishment for large and small firms within each selected sector have been
gathered through telephone contacts and reviews of published company financial
statements. (In performing this part of the analysis, effort has focused on
publicly-owned companies due to government rules limiting contacts with
individual fHrras^. Specifically, the following information has been obtained:
Number and size of boilers per establishment
Annual hours of operation per boiler
Boiler fuel type
Annual boiler fuel use and expenditures
-------
Building (or establishment) size (sq. feet)
Annual total revenues (or total expenditures) per establishment
In some Instances data on annual boiler fuel use, annual boiler fuel
expenditures and/or establishment-specific total annual revenues were unavail-
able. Therefore, estimates of these data were made using the following pro-
cedures:
• Annual Boiler Fuel Consumption
Data are collected on: 1) boiler heat input (in ftlBtu/hr), 2)
average daily number of hours of boiler operation, and 3) average
number of days per year of boiler use for establishments in each
selected sector. The product of these three variables yields an
estimate of total boiler fuel consumption for an establishment.
• Annual Boiler Fuel Expenditures
Where data on total annual boiler fuel expenditures are not
forthcoming, Information has been obtained on the average mix of
fuels used in the boiler and average annual fuel prices per MMBtu.
These data have been used in conjunction with the boiler fuel use
estimates to calculate total fuel expenditures.
• Annual Total Revenues for Expenditures) per EstablIshment
As noted earlier, information on establishment-specific total
sales (or total costs) is a key requirement for evaluating —
economic impact. This also 1s the Information most difficult to
obtain from individual companies and institutions. Therefore,
estimates have been made using a variety of approaches and other
data as follows:
Elementary and Secondary Schools:
Total Cost per School - (pupils/school) * (cost/pupil)
Hospitals
Total Cost per Hospital • (beds/hospital) * (cost/bed)
Hotels
Total Sales - (rooms/hotel) * (average occupancy rate)
* (average daily room rate) * 365 days/year
Total Sales per facility -
- (total company sales) * (facility sq. ft)/
— (total sq. ft of all company facilities)
Elementary and Secondary Schools
Boiler configuration data for 100 boilers in elementary and secondary
schools In Illinois, provided by the Illinois Environmental Protection Agency,
show that all of the boiler sizes are smaller than 4 MW (15 MMBtu/hr) and most
of these boilers are smaller than 3 MW (10 MMBtu/hr).
-------
Table 3-1 presents a range of data on the boiler configurations of four
typical elementary and four secondary schools located in urban mid-Atlantic
cities. The boilers range from 125 hp to ISO hp and are used primarily for
space heating during the winter. As shown in Table 3-1, the boilers provide
heat for buildings ranging in size from about 47,000 to 200,000 square feet.
The fuel used to fire the boilers constitutes a relatively small percentage of
the total school budget -- 0.4-1.7 percent.
HospHals
Generally, boilers used in hospitals provide steam for the preheat coils
in air handling units, and for heat exchangers which provide hot water for
perimeter heating (fan coils and convectors), zone control heating, domestic
hot water, humidification and sterilization. Boiler configuration data for 73
boilers in hospitals in Illinois (provided by the Illinois Environmental
Protection Agency), 76 boilers in hospitals in Minnesota (provided by the
Minnesota Pollution Control Agency) and 92 boilers in hospitals in Boston
(provided by the Commonwealth of Massachusetts, Department of Environmental
Quality Engineering, Division of Air Quality Control) indicate that most of
the boilers are smaller than 9 MW (30 MMBtu/hr).
Table 3-2 provides statistics on the boiler configurations of three
hospitals ranging in size from 365,000 square feet to 760,000 square feet.
All of these hospitals are equipped with multiple boilers. Typically, one
boiler is used only as a back-up. The others are used for various lengths of
time throughout the year depending on need. As shown in Table 3-2, the
boilers are sized between 5 and 14.2 MW (17 MMBtu/hr and 48.5 MMBtu/hr).
Depending on the extent to which the boilers are operated, annual fuel
consumption ranges from 44.3 TJ (42,000 MMBtu) to 180.4 TJ (171,000 MMBtu).
Although hospitals are more energy-intensive, the annual cost of fueling a
boiler Is a relatively insignificant portion of the total annual costs of
operating a hospital: 0.3 -1.4 percent. The relatively low share of fuel
costs 1n hospital budgets is due to the high costs of highly-trained doctors
and auxiliary personnel plus increasingly expensive medical equipment.
¦» ¦;
-------
TABLE 3-1. ELEMENTARY AND SECONDARY SCHOOLS
Junior High
School*
Elementary
School®
Boiler
Configuration
Building Size
Annual Fossil Fuel
Use (MMBtu)
Boiler Fuel Costs
(x 1000)
Enrollment
(No. of pupils)
Annual Building
Operating Costsb
(xl,000)
Boiler Fuel as
% of Total Costs
3 steam boilers
125 hp each
(5 MMBtu/hr each)
125,000 -
185,000 sq. ft.
5,606 - 7,984
$22.9 - 32.6
455 - 1,450
51,727 - 5,504
2 steam boilers
150 hp each
(6 MMBtu/hr each)
47,000 -
104,000 sq. ft.
3,177 - 5,872
$13.0 - 35.9
0.4 - 1.7
460-670
51,746 - 2,543 .
0.5 - 1.7
4 Range for four schools.
b 53,796/pupil times the total number of pupils.
3-6
-------
TABLE 3-2. HOSPITALS
Hospital
A
Hospital
B
Hospital
C
Boiler
Configuration
Bl: 29.1 MMBtu/hr
B2: 29.1 MMBtu/hr
Bl: 16.7 MMBtu/hr
B2: 25.1 MMBtu/hr
B3: 25.1 MMBtu/hr
Bl: 48.5 MMBtu/hr
B2: 48.5 MMBtu/hr
B3: 29.1 MMBtu/hr
Building Size
460,000 sq. ft
365,000 sq. ft
760,000 sq. ft
Annual Fossil
Fuel Use
(MMBtu)
42,048
170,820
121,300
Boiler Fuel
Costs (x 1000)
$204
$827
$642
Annual
Building
Operating
Costs (xl,000)
$76,303
$59,818
$136,696
Boiler Fuel
as % of
Total Costs
0.3
1.4
0.5
3-7
-------
Laundries
Coninerclal laundries require substantial quantities of steam for
washing, drying and finishing operations. Wash water heating is probably the
major source of boiler load in a commercial laundry. Boiler configuration
data for 15 boilers in laundries in Illinois, 4 boilers in laundries in
Minnesota and 18 boilers 1n laundries in Boston show that all of the boiler
sizes are smaller than 15 MM (50 MBtu/hr) and most are smaller than 6 MW (20
MMBtu/hr). Commercial laundry boilers are characterized by relatively high
capacity utilization rates: about 55 percent.
The boilers in Table 3-3 range in size from 2.9 - 7.3 MW (10.0 to 25.1
MMBtu/hr). Many laundry establishments are equipped with at least one back-up
boiler although, as noted 1n the table, some are only single-boiler opera-
tions.
Since boilers are used relatively intensively in laundry operations, one
would expect that the cost of fueling a boiler might be a significant fraction
of total Establishment sales. Given the estimates of total annual boiler fuel
expenditures obtained from three laundry plants (shown in Table 3-3), this
appears not to be the case. Using these data, boiler fuel costs range from
1.8 to 2.7 percent of total plant revenues. However, the total boiler fuel
expenditures reported by the laundry plants listed in Table 3-3 imply fuel
prices which were only 50 percent of the national average price for natural
gas in 1986. Using the latter price, as more representative of most laun-
dries, and the estimates of annual boiler fuel use in Table 3-3, boiler fuel
costs range from 4.2 percent to 8.3 percent of total plant revenues.
Hotels
Boiler applications 1n hotels vary broadly. In some hotels boilers are
used to provide steam for general space and hot water heating in guest rooms
as well as driving turbines for summer cooling, running water pumps, laundry,
heated swimming pool and restaurant facilities on the premises. In other
hotels, boilers are used only for very specific applications and are therefore
very small. For example, a medium-sized hotel in Washington, O.C. relies on a
80 kW (0.3 MMBtu/hr) boiler to provide steam for an on-site laundry facility
that 1s operated 14 hours/day and 6 days per week. Boiler configuration data
3-8
-------
TABLE 3-3. LAUNDRIES
Laundry A
Plant
1
Plant
2
Laundry
B
Boiler
Configuration
Bl: 23.4 MMBtu/hr
B2: 16.7 MMBtu/hr
Bl: 10.0 MMBtu/hr
B2: 10.0 MMBtu/hr
Bl: 25.1 MMBtu/hr
Building Size 75,000 sq. ft
65,000 sq. ft
N. A.
Annual Fossil 109,500
Fuel Use
(MMBtu)
47,400
125,750
Annual Plant $11,100
Sales (xl,000)
$5,600
$7,500
Boiler Fuel
as % of
Total Sales
2.7 - 4.9
2.7 - 4.2
1.8 - 8.3
3-9
-------
for 21 boilers 1n hotels in Boston indicate that all boilers are smaller than
7 MW (25 MMBtu/hr).
Boiler configuration data for a large and a small hotel are presented in
Table 3-4. Both hotels rely on boilers primarily to supply space and hot
water heating for guest rooms, laundry and kitchen facilities particularly
during the winter. As shown 1n the table, the annual boiler fuel consumption
varies widely between the two hotels -- a reflection of different building and
boiler sizes and different degrees of boiler usage. Despite the difference in
the absolute values for boiler fuel consumption and hotel revenues, boiler
fuel costs are roughly the same percentage of total sales (1.6-2.0 percent)
for both the large and the small hotel.
Colleges and Universities,
Boiler configuration data for 72 boilers in colleges/universities in
Illinois, 90 boilers in colleges/universities in Minnesota and 86 boilers in
colleges/universities in Boston show that boiler sizes range from very small
(<1 MW, <5 MMBtu/hr) to large (>29 MW, >100 MMBtu/hr).
Boiler configuration data for a large university and a small college are
presented in Table 3-5. In both cases, boilers are used to provide steam for
hot water and space heating for a number of buildings at various times
throughout the year. Generally, the boilers are operated one at a time except
during peak periods (1,e., winter) when additional capacity is needed.
With respect to the large university shown in Table 3-5, two of the
boilers are sized above the 29 MW (100 MMBtu/hr) level (currently defined as
the cut-off for "small" boilers). The other two boilers are only slightly
below the cut-off point. For this reason, this example has not been included
in the cost Impact analysis presented below. However, it is interesting to
note that the proportion of total operating costs contributed by annual boiler
fuel expenditures 1s very low (1.4 percent) and essentially similar to that of
the small college listed in Table 3-5.
3.2.3 Worst Case Economic Impacts
Boiler fuel expenditures as a percentage of total revenues per
establishment provide an indication of the overall importance of steam in
relation to total sales (or budgets) for selected corranercial/institutional
3-10
-------
TABLE 3-4. HOTELS
Large Small
Hotel Hotel
Boiler Bl: 8.35 MMBtu/hr 5 steam boilers
Configuration B2: 11.70 MMBtu/hr 0.7 MMBtu/hr each
Building Size 685 rooms 227 rooms
Annual Fossil 72,010 8,486
Fuel Use (MMBtu)
Boiler Fuel $294 $53
Costs (x 1000)
Annual Building $14,883 $3,430
Revenues (xl.000)
Boiler Fuel as % 2.0 1.6
of Total Revenues
3-11
-------
TABLE 3-5. COLLEGES AND UNIVERSITIES
Large
University
Smal 1
College
Boiler
Configuration
Bl: 145 MMBtu/hr
B2: 121 MMBtu/hr
B3: 97 MMBtu/hr
B4: 85 MMBtu/hr
Bl: 24 MMBtu/hr
B2: 29 MMBtu/hr
B3: 10 MMBtu/hr
Annual Fossil
Fuel Use (MMBtu)
922,000
107,383
Boiler Fuel
Costs (x 1000)
$4,000
$444
Annual Building
Operating Costs
(xl,000)
$293,291
$29,585
Boiler Fuel as %
of Total Costs
1.4
1.5
3-12
-------
sectors. To evaluate the economic impacts of a NSPS, 1t also is essential to
examine the ability of a firm to pay for the costs of pollution control. In
this respect, a useful measure is the annualized cost of pollution control as
a percentage of total annual revenues per establishment.
The objective is to use relatively high (not necessarily the most
likely) compliance costs estimates in order to delimit the magnitude of
possible adverse economic impacts. The "worst case" cost impact is calculated
by assuming full pass-through of compliance costs. Most commercial/insti-
tutional buildings do not use boilers (see Tables A-l and A-2) and, therefore,
will not be subject to any economic impacts due to a NSPS.
A "worst case" cost estimate for coal combustion would be patterned
after the promulgated PM and NO, NSPS for large (>29 MW, >100 MMBtu/hr)
industrial-commercial-institutional boilers (51 FR 42768) and the promulgated
S02 NSPS for large industrial-commercial-Institutional boilers (52 FR 47827).
It would include a sodium scrubber (other feasible and demonstrated, but more
expensive alternatives are dual alkali and lime spray drying FGD systems), a
S02 monitor at the FGO inlet, a S02 monitor at the FGO outlet, a PM emissions
control device (an electrostatic precipitator or a fabric filter—because the
wet FGD system may not, 1n and of itself, remove enough of the PM emissions),
an opacity monitor, a low excess air system to control N0„ emissions, a NO,
monitor, and an O^COj outlet diluent monitor. However, relatively few coal-
fired boilers smaller than 29 MW (100 MMBtu/hr) have been used in the commer-
cial/institutional sector. Even fewer coal-fired boilers may be ordered in
the next five years because of the drop in oil prices since early 1986.
Most of the boilers in the commercial/institutional sector fire natural
gas (see Table A-l). Natural gas 1s not subject to the proposed S02 and PM
emissions standards. Therefore, adverse economic impacts are not expected for
new small package boilers firing natural gas.
Given that coal 1s not a representative new small boiler fuel type in
the commercial-institutional sector and that adverse economic impacts are not
expected from new small boilers firing natural gas, this analysis has focused
on distillate and residual fuel oil combustion compliance options.
•> n
-------
An expensive control compliance option would be to require a scrubber
for fuel oil combustion 1n new small boilers. EPA has determined that sodium
scrubbing systems, a conventional wet flue gas desulfurlzatlon (FGD) system,
have been widely applied to small oil-fired steam-generating units and are
considered demonstrated for purposes of developing NSPS.1
EPA has prepared estimates of the annualized capital and operating costs
for various sizes of scrubbers.2 In applying these costs, some assumptions
concerning boiler operation 1n multiple boiler establishments are necessary.
Specifically, in sizing the scrubbers it is assumed that multiple boiler
establishments: 1) operate boilers one at a time; 2) use the largest boiler
most of the time; and 3) employ the other boilers as back-up units. These
assumptions reflect the standard boiler operating procedures stated by most of
the respondents who provided data for this analysis. The assumption of single
boiler operation in multiple boiler establishments also is verified by the
relatively low boiler capacity utilization rates characteristic of most of the
selected sectors.
Table 3-6 Incorporates the selected sector data'from Section 3.2.2 with
Information on the annualized capital and operating costs for various sizes of
scrubbers. Boiler fuel expenditures account for from 0.5 percent to as much
as 8 percent of the. total annual revenues of a commercial/institutional
establishment. The incremental costs of pollution control are under 5 percent
of total annual revenues for each of the selected sectors. The results
suggest that this very stringent control requirement could lead to potential
Increases of 2-4 percent 1n the prices of (or budgets for) some laundries,
hotels and schools.
The impacts of this very stringent control scenario did not Include the
costs of monitoring and testing, which can be a significant expense.3 Table
3-7 sunmarlzes EPA estimates for these parameters. The cost estimates in
Table 3-7 do not necessarily reflect the average expenses associated with the
proposed standards. Table 3-8 shows the impacts of including monitoring and
testing costs. The result Indicates potential price Increases (or budget
increases for schools) of from 3 to 8 percent for some laundries, hotels and
schools.
* n
-------
TABLE 3-6. SELECTED SECTORS ECONOMIC IMPACTS: FGD
(Without Monitoring and Testing Costs)
Sector
Annual
Revenues
(x 1,000 J)
Scrubber
Size
(MMBtu/hr)
Annualized
Scrubber
Cost*
(x 1,000 S)
Boiler
Fuel
Cost
Percentb
Pol 1ution
Control
Percentc
Laundry A:
Plant 1
11,100
23.4
120.4
2.7-4.9
1.1
Plant 2
5,600
10.0
93.1
2.7-4.2
1.7
Laundry B
7,500
25.2
120.4
1.8-8.3
1.6
Hospital A
76,303
29.1
140
0.3
0.2
Hospital B
59,818
50d
200
1.4
0.3
Hospital C
136,696
100d
285
0.5
0.2
Large Hotel
14,883
20d
120.4
2.0
0.8
Small Hotel
3,430
5*
70
1.6
2.0
Small College
29,585
53d
200
1.5
0.7
Jr. High
1,727-5,504
5
70
0.4-1.7
1.3-4.1
El em. School
1,746-2,543
6
70
0.5-1.7
2.8-4.0
• Rough extrapolation of estimates"in Reference 1 converted to 1985 dollars;
assumes low annual capacity utilization rate and a 0.13147 capital recovery
factor (10 percent interest and 15 years); excludes monitoring and testing.
b Boiler fuel costs divided by annual revenues (see Tables 3-1 through 3-5).
c Annualized scrubber cost divided by annual revenues.
d Two largest boilers
• Sum of all five boilers
3-15
-------
TABLE 3-7. MONITORING AND TESTING
COST ESTIMATES*
(000$)
Capital
Annual O&M
Annualizedb
Opacity monitor
59
8
16
SOg/diluent monitor
55
46
53
PM/S02 test
_a_
0
JL
Total
122
54
70
a Reference 3.
b Annual O&M plus (0.13147 times capital cost); this capital recovery factor
is based on a 10 percent interest rate and 15 years.
3-16
-------
TABLE 3-8. SELECTED SECTORS ECONOMIC IMPACTS; F6D
(Kith Monitoring and Testing Costs)
Annualized
Scrubber and
Boiler
Pollu-
Annual
Scrubber
Monitoring
Fuel
tion
Revenues
Size
Cost-
Cost
Control
Sector
{x 1,000 $)
(MMBtu/hr)
(x 1,000 $)
Percent*
Percent®
Laundry A:
Plant 1
11,100
23.4
190.4
2.7-4.9
1.7
Plant 2
5,600
10.0
163.1
2.7-4.2
2.9
Laundry B
7,500
25.2
190.4
1.8-8.3
2.5
Hospital A
76,303
29.1
210
0.3
0.3
Hospital B
59,818
50d
270
1-4
0.5
Hospital C
136,696
100d
355
0.5
0.3
Large Hotel
14,883
20d
190.4
2.1
1.3
Small Hotel
3,430
5*
140
1.6
4.1
Small College
29,585
53d
270
1.5
0.9
Jr. High
1,727-5,504
5
140
0.4-1.7
2.5-8.1
El em. School
1,746-2,543
6
140
0.5-1.8
5.5-8.0
* Includes annualized scrubber costs from Table 3-6 and annualized monitoring
and testing costs from Table 3-7.
b Boiler fuel costs divided by annual revenues (see Tables 3-1 through
3-5).
s Annualized scrubber and monitoring and testing costs divided by annual
revenues.
d Two largest boilers
* Sum of all five boilers
3-17
-------
The significant Impacts due to this stringent control scenario requiring
scrubbers and monitoring requirements occur due to the very high capital costs
assumed for scrubbers on these smaller sized boilers, and expensive monitoring
requirements which significantly increase the costs of using boilers. The
most severe impact Mould be experienced 1n places like schools which utilize
very small boilers only for space heating purposes.
A less expensive but still stringent SOj emissions control standard
would be a very low sulfur fuel regulation; This regulation may require fuel
sampling and/or initial PM/SOj tests. This 1s assumed to cost $1,000 per
year. The fuel price Increase 1s estimated to be no larger than S0.73/GJ or
S0.77/MMBtu (1985 dollars). This estimate 1s based on the projected dif-
ference In commercial residual fuel oil prices between high (3.0 percent)
sulfur and very low (0.3 percent) sulfur.4,5 Table 3-9 summarizes the poten-
tial price impacts of a very low sulfur fuel requirement (0.3 percent sulfur)
on boilers firing residual fuel oil. In this regulatory scenario (with
monitoring and testing costs), some laundries could experience price (or
budget) increases of about 1 percent.
3.3 GENERIC BUILDINGS
3.3.1 Scone
The generic buildings analysis addresses the potential impact of a
revised NSPS in buildings where the primary use of the boiler is space
heating. Representational boiler configurations for five different building
size ranges were developed from a small sample of actual configurations in
different cities. In order to capture the effects of regional (climatic)
differences, the data collection and analysis were performed separately for an
area in the northern and an area 1n the southern United States.
Generic buildings use boilers primarily for space heating, although a
small portion of boiler energy use may be for.water heating. The list of
generic buildings excludes buildings with a significant additional process
requirement for steam. Offices, assembly halls, religious institutions and
-------
TABLE 3-9. SELECTED SECTORS ECONOMIC IMPACTS:
VERY LOU SULFUR REGULATION
(With Monitoring and Testing Costs)
Sector
Annual
Revenues
(x 1,000 S)
Annual Fossil
Fuel Consumption
(MMBtu/yr)
Annual
Pollution
Control Cost*
(x 1,000 S)
Pollution
Control
Percent"
Laundry A:
Plant 1
11,100
109,500
85
0.8
Plant 2
5,600
47,400
37
0.7
Laundry B
7,500
125,750
98
1.3
Hospital A
76,303
42,048
33
0.1
Hospital B
59,818
170,820
133
0.2
Hospital C
136,696
121,300
94
0-1
Large Hotel
14,883
72,010
56
0.4
Small Hotel
3,430
8,486
8
0.2
Small College
29,585
107,383
84
0.3
Jr. High
1,727-5,504
5,606-7,984
5-7
0.1-0.4
El em. School
1,746-2,543
3,177-5,872
3-6
0.1-0.3
* (Annual fossil fuel consumption times 50.77/MMBtu) plus $1,000.
b Annual pollution control costs divided by annual revenues.
3-19
-------
retail space use boilers primarily for space heating and are Included in this
analysis."
Data from two regional areas are studied separately in order to under-
stand how boiler configurations vary with climatic area. Boston, Massa-
chusetts was selected as the northern study area. Boiler use 1n a southern
area is represented In this study by data from Washington, D.C. The generic
buildings economic impact analysis provides estimates of potential cost
impacts of specific alternative air emissions standards for new commercial/
institutional boilers in five building size classes and two regions. The cost
impacts are measured by comparing the annualized pollution control costs of
regulatory scenarios to estimates of the annual building operating budget.
The annual building operating budget 1s estimated to be the building size (in
square feet) times the rental rate (dollars per square foot). This analysis
assumes full cost pass-through of the total annualized pollution control
costs.
This approach measures the potential increase in building rental rates
to tenants as a consequence of worst case NSPS control scenarios. The
economic impact on the tenant would obviously depend on the nature of the
business activity of each tenant. Tenants whose business Implies a very high
ratio of sales per square foot of floor space rented (grocery store, Wall
Street brokers) would tend to see very little impact on profit margins since
building control costs would be such a small percentage of sales. Other
tenants with a relatively low ratio of sales per square foot of space would
tend to experience relatively greater impacts on their cost structure.
Essentially, the objective in focusing on the Impact of the NSPS on building
rental rates is intended to provide an Indicator which any building tenant can
relate to 1n assessing whether they might be significantly affected by a NSPS.
3.3.2 Approach
A different data collection strategy is necessary for each city because
data availability 1n Boston Is different from data availability 1n Washington,
D.C. The Boston data on boiler use were provided by the Division of A1r
Quality Control, Department of Environmental Quality Engineering of the
Schools were included in the selected sectors analysis in Section 3.2.
3-20
-------
Commonwealth of Massachusetts. This office tracks the generation of air
pollution by source, frequency of use, and fuel type. Information is avail-
able on the number, size, frequency of use, address and purpose of establish-
ment for boilers within the Boston city limits. Building size data were not
available from this data source. In addition, data were acquired on commer-
cial building vacancies, rental rates and building sizes from three real
estate agencies.6,7,8 These rental data were matched with the boiler Informa-
tion to develop a data set on boiler use 1n generic buildings in Boston.
In Washington, D.C. data were collected from the D.C. Boiler Inspector's
Office. From these records pf boiler registration and safety inspection, data
on address, number of boilers and boiler size were gathered. From the D.C.
Tax Assessor's Office information was collected on building address, type of
occupant, and building size. These two data sources were matched by building
address to create a data set on boiler use 1n generic buildings in Washington,
D.C.
Boston Data
Collection and compilation of data on boiler use in Boston, Massa-
chusetts resulted in the set of 21 data points shown in Table 3-10. These are
all office buildings. From these data we see that boiler size ranges from 1-4
MW (3 to 13 MMBtu/hr) in generic buildings and that there is only one building
with a boiler larger than 3 MW (10 MMBtu/hr). Small buildings tend to have
fewer boilers than larger buildins. In most Boston buildings with multiple
boilers, the average annual capacity utilization rate is low. This suggests
that the additional boilers serve as backup and not as primary boilers.
Based on these data, the typical configurations shown in. Table 3-11 were
developed. In these configurations, all additional boilers in a building are
considered to be the same size as the first. The number and size of these
boilers were calculated from the average number and size in each building size
range.
Washington. D.C. Data
Collection and compilation of data on boiler use in Washington, O.C.
resulted in the set of 12 data points shown 1n Table 3-12. These are mostly
office and apartment buildings; there are a few churches and small retail
-------
TABLE 3-10. GENERIC BUILDINGS BOILER CONFIGURATION DATA
FOR BOSTON, MASSACHUSETTS
Building
Size Boiler 1 Boiler 2 Boiler 3 Boiler 4
(1000 sq.ft.) (MMBtu/hr) (MMBtu/hr) (MMBtu/hr) (MMBtu/hr)
22
3
30
3
32
3
50
6
10
60
6
4
64
4
66
6
6
72
8
72
6
82
4
4
90
9
100
4
4
110
5
5
110
3
120
6
6
150
4
4
196
13
12
200
9
9
280
10
7
333
7
7
580
7
7
3-22
-------
TABLE 3-11. GENERIC BUILDINGS TYPICAL BOILER CONFIGURATIONS
FOR BOSTON, MASSACHUSETTS'
Building Size
Boiler Size
Range
Total Number
of Each
(1000 sq.ft.)
of Boilers
(MMBtu/hr)
1-25
1
3
26-50
1
5
51-100
2
5
101-200
2
6
201+
2
7
* Derived from Table 3-10.
3-23
-------
TABLE 3-12. GENERIC BUILDINGS BOILER CONFIGURATION DATA
FOR WASHINGTON, D.C.
Building
Size
(1000 sq.ft.)
Boiler 1
(MMBtu/hr)
Boiler 2
(MMBtu/hr)
Boiler 3
(MMBtu/hr)
Boiler 4
(MMBtu/hr)
22
1
34
3
81
2
2
129
3
3
139
5
186
5
4
202
6
6
245
6
6
285
6
6
287
7
4
345
12
8
875
13
13
3-24
-------
stores. Specific average capacity utilization rates for each building are
unavailable. These data show that boiler size ranges from 0.3 to 4 MW (1 to
13 MMBtu/hr). Only two buildings have boilers larger than 3 MW (10 MMBtu/hr)
and these buildings are both over 300,000 square feet. As with the Boston
data, small buildings tend to have smaller and fewer boilers than large
buildings.
Table 3-13 shows the typical boiler configurations drawn from the
Washington data. It was assumed that all boilers in any given building are
the same size. The original data are subdivided into the defined building
size ranges. Typical configurations are drawn from simple averages of the
number and size of boilers in each building size range.
Boston and Washington Configurations Compared
Boston and Washington show similar boiler use patterns. Both Boston and
Washington have an Identical number of boilers in each building size range.
The Washington buildings, in general, tend to have slightly smaller boilers
than.the Boston buildings (see Table 3-14). This assumption is consistent
with Washington's relatively warmer climate.
Table 3-15 presents estimates of annual fossil fuel consumption in
boilers in generic buildings. Actually, there is considerable variability in
energy consumption per square foot 1n commercial buildings due to building
design characteristics, HVAC equipment differences and energy conservation
measures. In general, there are economies of scale - energy consumption per
square foot decreases as building size increases.
Table 3-16 summarizes other comparable estimates of annual fossil fuel
consumption in commercial buildings which Include a boiler.9 The average
values in Table 3-16 show that the estimates in Table 3-15 for small buildings
are reasonable.
Office Building Rental Rates
Office building annual rental rates vary over a wide range, from $10-
60/square foot. Typical rental rates may be $15-30/square foot.6,7,8 For this
analysis, the selection of a relatively high rental rate will bias the
economic analysis toward minimizing the cost Impacts of pollution control
costs. Therefore, a relatively low rental rate, $15/square foot, has been
3-25
-------
TABLE 3-13.
GENERIC BUILDINGS TYPICAL BOILER CONFIGURATIONS
FOR WASHINGTON. O.C.*
Building Size
Boiler Size
Range
Total Number
of Each
(1000 sq.ft.)
of Boilers
(MMBtu/hr)
1-25
1
1 .
26-50
1
3
51-100
2
2
101-200
2
4 '
201+
2
8
4 Derived from Table 3-12.
3-26
-------
TABLE 3-14. GENERIC BUILDINGS BOILER CONFIGURATIONS*
Washinoton.
D.C.
Boston.
Massachusetts
Boiler
Boiler
Building
Number
Size
Number
Size
Size Range
of
of Each
of
of Each
(1000 sq.ft.)
Boilers
(MMBtu/hr)
Boilers
(MMBtu/hr)
<25
1
1
1
3
25-50
1
3
1
5
51-100
2
2
2
5
101-200
2
4
2
6
>200
2
8
2
7
¦ See Tables 3-11 and 3-13.
3-27
-------
TABLE 3-15. ESTIMATES OF GENERIC BUILDINGS
ANNUAL FOSSIL FUEL CONSUMPTION IN BOILERS
Building
Washington. D.C.
(1,000 sq. ft.)
GJ/yr
(MMBtu/yr)
GJ/yr
(MMBtu/yr)
<25
1,160
(1,100)
1,320
(1,250)
25-50
2,560
(2,300)
3,340
(3,000)
51-100
2,954
(2,800)
4,220
(4,000)
101-200
3,480
(3,300)
5,275
(5,000)
>200
6,330
(6,000)
8,440
(8,000)
3-28
-------
TABLE 3-16. ENERGY CONSUMPTION IN COMMERCIAL BUILDINGS IN 1983
Fuel Type
Northeast
North Central
Natural Gas*
No. of Buildings'*
113,000
212,000
Avg. Building Size (sq. ft.)b
15,700
22,500
Avg. Annual Gas Consumption
per Building (MMBtu)c
1,168
2,055
Fuel Oi1d
No. of Buildings*
101,000
Qf
Avg. Building Size (sq. ft.)*
23,800
Q
Avg. Annual Fuel Oil Consumption
per Building (MMBtu)9
1,389
Q
Reference 9, p. 106, 109.
Buildings which use natural gas to fire boilers.
Includes natural gas consumption .in boilers and other equipment.
Reference 9, p. 119, 122.
Buildings which use fuel oil only to fire boilers.
Data withheld because the relative standard error was greater than 50% or
fewer than 20 buildings were sampled.
Includes'fuel oil consumption in boilers and other equipment.
3-29
-------
chosen in order that the cost Impacts will not be understated for most office
building tenants. The annual building rental cost estimates are summarized in
Table 3-17.
3.3.3 Results of th« Regulatory Analysis
Scooe
The generic buildings economic Impact analysis provides estimates of
potential cost impacts of specific alternative air emissions standards for new
commercial/Institutional boilers in the five building size classes and two
regions. The cost Impacts are measured by comparing the annualized pollution
control costs to estimates of the annual building rental costs.
The baseline 1s assumed to be high (3.0 percent) sulfur residual fuel
oil. This is not an appropriate baseline assumption for many municipal areas.
For example, New York City, Philadelphia and Boston require very >ow sulfur
fuel oil. Therefore, this analysis overstates the potential cost impacts for
buildings in these communities. This economic analysis also tends to be a
"worst case" analysis of specific alternative air emissions standards. It 1s
using a relatively low building rental rate which overstates the economic
Impacts of increased pollution control costs for many tenants. In addition,
there is no significant cost Impact for most generic buildings because most
these buildings do not use boilers and many of the rest use natural gas (which
is not subject to the cost impacts presented 1n this section)." Furthermore,
this analysis assumes that there will be no boiler size cutoff; the altern-
ative air emissions standards are assumed to be applicable to new boilers as
small as 0.3 MW (1 MMBtu/hr). Finally, this analysis Includes monitoring and
testing costs which may not necessarily be part of the alternative air
emission standard.
Cost Estimates
Two regulatory scenarios have been evaluated:
t a very low sulfur fuel standard, 129 ng SOj/J (0.3 lb SOj/MMBtu),
with a $1,000 per year per boiler monitoring and testing cost
assumption
See Appendix A.
3-30
-------
TABLE 3-17. GENERIC BUILDINGS ANNUAL RENTAL COSTS
Building
Size Range
(1000 sq.ft.)
Representative
Building Size
(1000 sq.ft.)
Annual
Rental
Costs8
<25
12
S 180,000
25-50
37
555,000
51-100
75
1,125,000
101-200
150
2,250,000
>200
380b
5,700,000
¦ Representative building size times $15/sq.ft.
b In 1983, there were 7,000 office buildings which were larger than 200,000
square feet with a total area of 2,671 million square feet; or an average
of 2,671,000,000/7,000 or 380,000 square feet. Nonresidential Buildings
Energy Consumption Survey: Characteristics of Coirenercial Buildings 1983.
U.S. Department.of Energy, Energy Information Administration. D0E/EIA-
0246(83). July 1986. p.55,57.
3-31
-------
• a flue gas desulfurlzatlon (FGD) or scrubber requirement with a
$70,000 per year per boiler (see Table 3-7) monitoring and testing
cost assumption
Table 3-18 shows the estimates of the total annualized pollution control
costs for the very low sulfur fuel requirement. The sulfur premium is
estimated to be 50.73/GJ or $0.77/MMBtu (1985 dollars) for 3.0 to 0.3 percent
sul fur.5,6
Table 3-19 presents estimates of the total annualized pollution control
costs for scrubbers. The monitoring and testing cost estimates are larger
than the estimates used 1n Table 3-18. These total annualized pollution
control cost estimates are summarized in Table 3-20.
Impacts on Building Rental Rates
The Impacts of total annualized pollution control costs on building
rental rates are summarized in Table 3-21. The range is large, 1-67 percent.
Table 3-21 suggests significant economies of scale - the cost impacts are
small for large buildings.
The cost Impacts 1n Table 3-21 are relatively large for buildings
smaller than 50,000 square feet for the scrubber scenario. It is important to
note that the overwhelming share (88 percent)* of commercial buildings which
have boiler installations were less than 50,000 square feet in size.
Table 3-22 presents estimates of the projected Impacts of annualized
pollution control costs (without monitoring and testing costs) on building
rental rates. The impacts are negligible for the very low sulfur fuel
standard.
See Table A-l in Appendix A.
3-32
-------
TABLE 3-18. DERIVATION OF ESTIMATES OF TOTAL
ANNUALIZED POLLUTION CONTROL COSTS PER BUILDING
FOR THE VERY LOM SULFUR FUEL STANDARD*
(000$)
Washington. D.C. Boston. MA
Building
Size Range
(000 sq. ft.)
Monitoring
and
Testing
Fuel Cost
Ihcreaseb
Total6
Fuel Cost
Increase"
Totalc
<25
1
0.8
1.8
1.0
2.0
25-50
1
1.8
2.8
2.3
3.3
51-100
1
2.2
3.2
3.0
4.0
101-200
1
2.5
3.5
3.9
4.9
>200
1
4.6
5.6
6.2
¦7.2
• 129 ng SOj/J (0.3 lb SOj/MMBtu).
b Annual fuel consumption from Table 3-14 times S0.73/GJ or $0.77/MMBtu
(S1985).
c Monitoring and testing costs plus fuel cost increase.
3-33
-------
TABLE 3-19, DERIVATION OF ESTIMATES OF TOTAL ANNUALIZED
POLLUTION CONTROL COSTS PER BUILDING
FOR THE SCRUBBER REQUIREMENT*
(000$)
Building
Size Range
(000 sq. ft.)
Monitoring
and
Testingb
Washinaton. D.C.
Boston.
MA
Scrubber
Cost6
Total"
Scrubber
Cost6
Totald
<25
70
40
110
50
120
25-50
70
50
120
70
140
51-100
70
50
120
70
140
101-200
70
70
140
70
140
>200
70
80
150
75
145
J Scrubber is required.
b See Table 3-7.
c Estimates extrapolated from Reference 1 converted to 1985 dollars; assumes
low capacity utilization rate and a 0.13147 capital recovery factor (10
percent interest and 15 years).
d Monitoring and testing plus scrubber costs.
3-34
-------
TABLE 3-20. COMPARISON OF ESTIMATES OF TOTAL ANNUALIZED
POLLUTION CONTROL COSTS PER BUILDING*
(000$)
Building Washington. D.C. Boston. Massachusetts
Size Range
(1000 sq. ft.)
Very Low
Sulfur
Scrubber
Very Low
Sulfur
Scrubber
<25
1.8
110.0
2.0
120.0
25-50
2.8
120.0
3.3
140.0
51-100
3.2
120.0
4.0
140.0
101-200
3.5
140.0
4.9
140.0
>200
5.6
150.0
7.2
145.0
" See Tables 3-18 and 3-19. Includes monitoring and testing costs.
3-35
-------
TABLE 3-21. IMPACTS OF TOTAL ANNUALIZED POLLUTION CONTROL COSTS
ON RENTAL RATES (WITH MONITORING AND TESTING COSTS)"
(percent Increases)"
Building
Size Range
(1000 sq. ft.)
Washinaton. D.C.
Boston.
Massachusetts
Very Low
Sulfur
Scrubber
Very Low
Sulfur
Scrubber
<25
1
61
1
67
25-50
e
22
1
25
51-100
C
11
c
12
101-200
c
6
c
6
>200
c
3
c
3
* Total annualized pollution control cost estimates from Table 3-20 divided
by annual building rental costs in Table 3-17.
b Total annualized pollution control costs as a percent of annual building
rental costs.
c Less than 0.5 percent.
3-36
-------
TABLE 3-22. IMPACTS OF TOTAL ANNUALIZED POLLUTION CONTROL COSTS
ON RENTAL RATES (WITHOUT MONITORING AND TESTING COSTS)3
(percent Increases)"
Building Washington. O.C. Boston. Massachusetts
Size Range Very Low Very Low
(1000 sq. ft.) Sulfur Scrubber Sulfur Scrubber
<25 c 22 c 28
25-50 c 9 c 13
51-100 c 4 c 6
101-200 c 3 c 3
>200 c 1. c 1
a Annualized pollution control cost estimates (excluding monitoring and
testing) from Table 3-20 divided by annual building rental costs in Table
3-17.
b Annualized pollution control costs as a percent of annual building rental
costs.
c Less than 0.5 percent.
3-37
-------
REFERENCES
1. 51 FR 22402, 22412.
Summary of Regulatory Analysis for New Source Performance Standards:
Industrial-Commercial-Institutional Steam Generating Units of Greater
than 100 Million Btu/hr Meat Input. Radian Corporation, Research
Triangle Park, North Carolina. EPA-450/3-86-005. Prepared for the U.S.
Environmental Protection Agency, Office of A1r Quality Planning and
Standards. June 1986. p. 5-50, 5-51, 5-55, 5-56 and 5-57.
2. Model Boiler Cost Analysts for Controlling Sulfur Dioxide (S0?)
Emissions from Small Steam Generating Units. U.S. Environmental
Protection Agency, Research Triangle Park, N.C.
EPA Publication No. EPA-450/3-89-14. May 1989.
3. Memorandum and attachments from Copland, R. (EPA/SOB) to Link, T.
(EPA/EAB). Revised Regulatory Alternatives for Small Boiler Impacts
Analysis. July 2, 1987.
4. Letter and enclosure from Hogan, T. (EEA) to Link, T. (EPA/EAB).
Regional Commercial Oil and Gas Price Forecasts.. July 16, 1987.
5. Letter and attachments from Hogan, T. (EEA) to Link, T. (EPA/EAB).
Annualized Commercial 011 and Gas Prices. July 28, 1987.
6. Boston Trend. Cushman and Wakefield, Boston. 1986.
7. Hunneman Office Market Survey. Hunneman, Boston. 1986.
8. The Spaulding & Sly Report. Spaulding & Sly, Boston. 1986.
9. Nonresidential Buildings Energy Consumption Survey: Commercial Build-
ings Consumption and Expenditures 1983. U.S. Department of Energy,
Energy Information Administration. DOE/EIA-0318(83). September 1986.
3-38
-------
4. ECONOMIC IMPACTS: INDUSTRIAL SECTOR
This section summarizes the economic impact analyses for the industrial
sector. Because the number of industries affected by the proposed standards
is large, a two-fold approach has been used. The first component focuses on
major steam using industries and the second component addresses smaller
industrial groups.
4.1 MAJOR STEAM USERS
Boilers are used in all manufacturing groups. This section discusses
trends in the financial and economic characteristics of a subset of manufac-
turing industries labeled "major steam users."
The major steam users consist of the following manufacturing groups:
• Food (SIC 20}
• Textiles (SIC 22)
• Paper (SIC 26)
• Chemicals (SIC 28)
• Petroleum (SIC 29)
• Primary metals (SIC 33)
These industries have been selected because:
• as a group, they account for most of the total number of
industrial boilers and industrial boiler annual fuel consumption;
and
• individually, they represent those Industrial classes with the
greatest number of boilers.
Table 4-1 shows that this group of major steam users accounted for 79 percent
of the total number of large (greater than 14.7 MW or 50 MMBtu/hr) boilers, 90
percent of the total annual fuel consumption in large boilers, and 71 percent
of the total number of boilers between 14.7 and 29.3 MW (50-99 MMBtu/hr) in
the manufacturing sector in 1979.1 Data are not available for boilers smaller
than 14.7 MW (50 MMBtu/hr) by industry group.
This section also summarizes the projected short-term economic impacts
on each of these major steam user groups of the alternative air emissions
4-1
-------
TABLE 4-1. AN OVERVIEW OF THE USE OF BOILERS IN
MANUFACTURING INDUSTRIES IN 1979*
>14.7 MW f>50 MMBtu/hr)b
14.7-29.3 MW
Manufacturing Group
(SIC Code)
Number of
Boilers
1979 Fuel
PJ
Consumption
(1012 Btu)
(50-99 MMBtu/hr)e
Number of Boilers
Food and kindred
products (20)
1,122
338.7
(321.0)
593
Textile mill
products (22)
382
74.8
(70.9)
286
Paper and allied
products (26)
1,239
1,661.9
(1,575.2)
331
Chemicals (28)
1,783
1,290.4
(1,223.1)
618
Petroleum (29)
653
493.1
(467.4)
241
Primary metals (33)
647
596.3
(565.21
207
Subtotal for major
steam users
5,826
4,455.3
(4,222.8)
2,276
Total manufacturing
7,408
4,928.4
(4,671.2)
3,203
Subtotal/total
79%
90%
90%
71%
* Unweighted data: Includes only establishments which responded to the
survey (Form EIA-463); does not Include estimates for establishments which
did not respond to the survey. Includes natural gas, coal, fuel oil,
pulping liquor, blast furnace gas, "coke oven gas, refinery off-gas, wood
and miscellaneous other fuels.
b Reference 1, p. 5.
e Reference 1, p. 28.
4-2
-------
standards for new small industrial fossil fuel-fired boilers. A "worst case"
analysis has been conducted in order to delimit the magnitude of possible
adverse economic Impacts.
Overview. The six aforementioned major steam users accounted for 40
percent of total product shipments by the manufacturing sector in 1986.3 They
represent a collection of manufacturing industries which have experienced
sharply different trends in output, profitability and general economic perfor-
mance to date.
Figure 4-1 and Table 4-2 compare, for example, the growth in output for
each of the six Industries since 1977.4 In general, output in the food,
chemicals and paper Industries grew relatively consistently at or above the
industrial annual average of 2.6 percent over the past ten years. In 1987 the
quantity of goods produced in these three sectors was up 38-44 percent over
1977 levels and 20-35 percent over the levels experienced during the 1982 eco-
nomic recession. Output in the food sector, in particular, appeared to be
relatively Insensitive to economic recession.
In contrast, production in the textile, petroleum and primary metals in-
dustries fell 10-35 percent below 1977 levels during the recession of 1982.
Although output for these three industries recovered in the post-1982 period,
this group has lagged behind the food, chemicals and paper industries and has
continued to experience problems. For instance, primary metal production
dropped between 1984 and 1986 due to continued competition from steel imports
and steel substitutes.
Figures 4-2 through 4-4 and Tables 4-3 through 4-5 review the profit-
ability and the financial performance of each of the six major steam using
sectors. Figure 4-2 measures trends in the after-tax rate of return which
accrued to investors 1n each of the six industries during the eight quarters
of 1985 and 1986. Investments in the food and kindred products (SIC 20)
industry yielded the highest after-tax rates of return over these eight
quarters -- a reflection of the strong growth in food production observed
earlier in Figure 4-1. Rates of return on equity in the paper (SIC 26),
chemicals (SIC 28) and textile (SIC 22) industries also exceeded the all man-
ufacturing average in 1985 and 1986. In contrast, the primary metals (SIC 33)
4,§.l Economic Profiles
4-3
-------
FIGURE 4-1
Federal Reserve Board Index Of
Industrial Production
INDEX BY MANUFACTURING GROUP
1977 = 100
160
140
120
Food
100
Primary Mtbla
1977 1978 1979 1980 1981 1982 1983 . 1984 1985 1986 1987
A A
-------
TABLE 4-2. FEDERAL RESERVE BOARD
INDEX OF INDUSTRIAL PRODUCTION*
(1977 - 100)
Year
Food
Textiles
Paper
Chemicals
Petroleum
Primary
Metals
Total
Industrlal
1987
137.8
115.9
144.4
140.2
93.5
81.3
129.8
1986
134.4
109.2
136.5
132.0
92.7
75.1 .
125.1
1985
130.2
103.2
127.6
127.1
86.8
80.5
123.8
1984
126.9
104.2
127.2
121.6
87.4
82.3
121.4
1983
120.4
100.9
119.8
114.0
84.0
73.0
109.2
1982
114.9
89.2
109.4
103.8
84.2
65.8
103.1
1981
113.7
98.1
112.4
112.6
89.4
95.0
111.0
1980
111.4
100.8
110.6
106.4
94.0
90.4
108.6
1979
106.7
104.4
110.8
111.4
101.7
108.5
110.7
1978
104.3
102.8
106.8
106.8
102.5
107.0
106.5
• Reference 4. Also see Figure 4-1.
4-5
-------
FIGURE 4-2
Rates Of After-Tax Profit On
Stockholders' Equity
PERCENT BY INDUSTRY GROUP
Percent
Q
-25"
-30
1966.4
19662
19662 1965.3 1985.4 1966.1
YEAR. QTR
1965.1
4-6
-------
FIGURE 4-3
Rates Of After-Tax Profit On Total Assets
PERCENT BY INDUSTRY GROUP
Percent
10
8
6
4
2
0
•2
-4
¦6
-1.0
•12
PrnaiyUauli
1965.1 19652 1965J 1965.4 1986.1
YEAR. QTR
19862 1986J 1966.4
4-7
-------
FIGURE 4-4
After-Tax Profits Per Dollar Of Sales
CENTS BY INDUSTRY GROUP
PrrtwyMtfada
1905.1 19B6L2 1965J 1985.4 1906.1 19062 1966J 1966.4
YEAR. QTR
4-8
-------
TABLE 4-3. AVERAGE RATES OF AFTER-TAX PROFIT ON
STOCKHOLDERS' EQUITY BY INOUSTRY GROUP"
(Percent)
Food &
Kindred
Products
Textile
Mill
Products
Paper
& Allied
Products
Chemicals
& Allied
Products
Petroleum
& Coal
Products
Primary
Metals
All
Manuf.
4Q
1986
19.6
17.0
12.3
8.2
4.5
- 4.0
8.6
3Q
1986
15.5
14.3
10.6
15.4
1.0
- 30.7
8.5
2Q
1986
15.7
14.6
12.1
14.9
11.5
- 2.0
12.2
1Q
1986
12.9
12.0
7.9
12.8
7.4
- 2.6
9.0
4Q
1985
16.9
13.5
9.4
3.1
8.8
- 13.3
9.3
3Q
1985
16.5
7.8
8.1
8.7
9.3
- 7.3
9.9
2Q
1985
15.0
7.4
11.7
13.4
5.2
- 8.1
10.9
1Q
1985
12.8
5.7
9.8
12.5
10.5
- 3.0
10.5
" Quarterly Financial Report for Manufacturing, Mining and Trade Corpora-
tions. U.S. Department of Commerce, Bureau of the Census. Various issues.
4-9
-------
TABLE 4-4. AVERAGE RATES OF AFTER-TAX PROFIT ON TOTAL ASSETS
BY INDUSTRY GROUP*
(Percent)
Food &
Kindred
Products
Textile
Mill .
Products
Paper
& Allied
Products
Chemicals
& Allied
Products
Petroleum
& Coal
Products
Primary
Metals
All
Manuf.
4q
1986
7.5
7.9
5.5
3.8
1.9
- 1.4
3.8
3Q
1986
6.0
6.6
4.8
7.2
0.4
- 10.3
3.8
2Q
1986
6.5
6.7
5.6
7.0
4.9
- 0.7
5.5
1Q
1986
5.3
5.4
3.7
5.9
3.1
- 0.9
4.0
4Q
1985
7.1
6.1
4.5
1.5
3.7
- 4.9
4.2
3Q
1985
7.3
3.5
3.8
4.4
3.9
- 2.7
4.5
20
1985
6.6
3.5
5.7
7.0
2.2
- 3.0
5.0
1Q
1985
5.6
2.7
4.7
6.4
4.6
- 1.1
4.8
® QuarterTy Financial Report for Manufacturing, Mining and Trade Corpora-
tions. U.S. Department of Commerce, Bureau of the Census. Various issues.
4-10
-------
TABLE 4-5. AVERAGE AFTER-TAX PROFITS PER DOLLAR OF
SALES BY INDUSTRY GROUP"
(Cents)
Food &
Kindred
Products
Textile
Mill
Products
Paper
& Allied
Products
Chemicals
& Allied
Products
Petroleum
& Coal
Products
Primary
Metals
All
Manuf.
4Q
1986
5.2
4.6
4.8
4.1
3.0
-1.2
3.3
3Q
1986
4.0
3.9
4.4
7.6
0.7
-9.4
3.4
2Q
1986
4.1
4.0
5.0
7.0
7.3
-0.6
4.7
1Q
1986
3.6
3.3
3.4
6.1
4.0
-0.8
3.5
4Q
1985
4.6
3.5
3.9
1.5
4.0
-4.3
3.4
3Q
1985
4.6
2.2
3.3
4.4
4.3
-2.4
3.7
2Q
1985
3.9
2.1
4.8
6.5
2.4
-2.6
4.0
1985
3.4
1.7
4.0
6.3
5.2
-1.0
4.0
a Quarterly Financial Report for Manufacturing, Mining and Trade Corpora-
tions. U.S. Department of Commerce, Bureau of the Census. Various issues.
4-11
-------
industry continued to be a poor investment with losses reported during each of
the eight quarters in 1985/1986. Investments 1n the petroleum industry (SIC
29) also have suffered recently as a consequence of the slide in crude oil
prices. The after-tax rate of profit on stockholders' equity 1n the petroleum
sector fell from 11.5 percent in the second quarter of 1986 to 1.0 percent in
the following quarter and then rose slightly to 4.5 percent by the end of the
year.
Figure 4-3 illustrates trends in the productivity of assets 1n terms of
producing Income 1n each of. the six major steam using sectors. As of the
fourth quarter of 1986, both the textile mill products and the food and
kindred products industries were the most productive in the use of assets.
Rates of return in the two industries averaged 7.9 percent and 7,5 percent,
respectively. Asset productivity also has remained strong in the paper and
chemicals industries (except for a weak fourth quarter performance in the
latter). Neither the petroleum nor the primary metals industries has performed
well in relation to the other four. As shown in Figure 4-3, the after-tax
profit rate on total assets in the petroleum industry fell to 0.4 percent in
the third quarter of 1986 and the primary metals sector suffered a 10.3
percent loss during that same time period.
Data on the after-tax profits per dollar of sales paint a similar
picture to that provided in the earlier figures. Figure 4-4 shows that,
except for the fourth quarters, the chemicals industry has turned in the
highest level of after-tax profits per dollar of sales (6-8 cents) 1n
1985/1986. Generally, the after-tax profits per dollar of sales have been
roughly similar (3-5 cents) for the food, textile and paper industries
especially during 1986.
In 1983 the food and kindred products industry employed the largest
number of workers (1,635,000 laborers) and the petroleum and coal products
sector employed the fewest (192,000) of the s.1x manufacturing groups
considered 1n this study. As shown in Table 4-6, this distribution is
expected to continue through the mid-1990s with one exception: the number of
jobs in the paper and allied products industry will exceed that in the textile
industry in 1995 as the latter declines in importance. In addition, the
4-12
-------
TABLE 4-6. EMPLOYMENT BY INDUSTRY GROUP*
(Thousands of Jobs)
1983
1990
1995
Food and kindred products
1,635
1,663
1,646
Textile mill products
753
725
680
Paper and allied products
663
699
705
Chemicals and allied products
1,051
1,098
1,115
Petroleum and coal products
192
191
192
Primary metals industries
834
950
975
1 Reference 5.
4-13
-------
number of jobs in the food and kindred products industry also is projected to
reach a peak in 1990 and then decline by 17,000 through 1995.5
In the remainder of this section, U.S. Department of Commerce data are
summarized for the last ten years for each of the major steam users.3,6,7 Data
items of interest include trends 1n:
• value of shipments
• employment
« significance of imports and exports
• new plant and equipment expenditures
Food. The Food and Kindred Products industry (SIC 20) is a relatively
large and diverse sector consisting of about 25 major sub-industries which
process food and beverages for human and animal consumption. In 1986 this
industry accounted for the second highest level of product shipments among 14
manufacturing industries classified by 2-digit SIC.3
As shown 1n Table 4-7, the real (1985 5) value of total shipments by the
food industry stayed relatively constant in the late 1970s and then dropped
about 11 percent to 5301.6 billion 1n 1985 before picking up slightly 1n the
following year.
Total employment 1n this sector also has been declining. From 1979 to
1985 the labor force dropped from 1,733,000 to 1,602,000 and then rose to
1,617,000 in 1986. Despite this drop in employment; labor productivity in the
Food and Kindred Products industry has grown faster than the rest of the
manufacturing industries due largely to significant technological improvements
in food processing machinery.8
In recent years the U.S. has maintained a deficit in the balance of
trade for food and kindred products. Nevertheless, this deficit has been
declining. In 1986, U.S. exports of processed food and beverages rose over 5
percent to S10.8 billion while imports rose only 2.5 percent to $16.4 billion.
As shown in Table 4-7, imports in recent years accounted for about 4 percent
of the total volume of shipments of food and kindred products. The U.S. also
has exported about 4 percent of the total supplies of food and kindred
products.
4-14
-------
TABLE 4-7. HISTORICAL TRENDS: FOOD AND KINDRED PRODUCTS (SIC 20)
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
Value of Shipments ()109)
192.9
216.0
236.0
256.2
272.1
280.5
287.1
300.0
301.6
314.5
(1985 $109)
319.6
333.6
334.8
333.3
322.8
312.8
308.1
310.0
301.6
306.3
Total Employment (000)
1,711
1,724
1,733
1,708
1,671
1,636
1,615
1,619
1,602
1,617
Import/new supply ratio"
.03
.04
.04
.04
.04
.03
.03
.04
.04
.04
Export/shipment ratiob
.04
• 04
.04
.05
.05
.04
.04
.04
.03
.04
New plant and
equlpnent ($109)
n/a
4.8
5.0
5.8
6.0
6.7
5.8
6.4
7.0
N.A.
(1985 $109)
n/a
7.4
7.1
7.5
7.1
7.5
6.2
6.6
7.0
N.A.
* Value of imports/(value of Imports plus domestic shipments).
b Value of exports divided by value of domestic shipments.
-------
According to a recent study, the continuation of favorable consumer
purchasing habits, increases in disposable income and changing demographics
all point towards increased industry shipments in the future. In addition,
the recent wave of mergers and acquisitions will provide benefits in terras of
Increased economies of scale and improved efficiency in this industry. These
factors, in conjunction with favorable outcomes on food and agricultural
issuesin multilateral trade negotiations, indicate continued economic health
in the Food and Kindred Products industry.9
Textiles. Shipments by the textile mill industry (SIC 22) rose 2.4 per-
cent between 1985 and 1986 after having dropped 4.0 percent below the pre-
ceding year. Despite the recent expansion in demand, domestic textile product
shipments have tended towards a pattern of long term decline in real terms.
Between 1977 and 1985, textile mill product shipments (measured in constant
dollars) fell 21 percent. This was largely attributable to the intense
competitive atmosphere generated by a rising volume of imports in recent
years.10 As shown in Table 4-8, the ratio of imports to the total new supply
of textile products doubled over the 1977-1986 time frame. During the same
time period, the ratio of textile exports to total shipments generally
declined.
Industry restructuring, plant closings and consolidations in the wake of
increased import competition made an impact on employment. As shown in Table
4-8, textile mill employment dropped 22 percent from 910,000 in 1977 to
705,000 workers in 1986.
Investments in new plant and equipment in the textile industry
averaged $2.0 billion a year (in 1985 $) in the late 1970s. These capital
expenditures dropped to $1.6-1.8 billion per year (in 1985 $) in the mid-1980s
due to a downturn in profits.
Paa«r and Allied Products. The Paper and Allied Products industry (SIC
26) produces pulp, paper, paperboard and converted paper products. Primary
paper products (pulp, paper and paper board) account for about 44 percent of
the total output of this industry. Some of the primary product output is sent
directly to end-users. However, most of it is sold to firms in the allied
conversion sector for further processing into paper products. These firms,
4-16
-------
TABLE 4-8. HISTORICAL TRENDS: TEXTILE HILL PRODUCTS (SIC 22)
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
Value of Shtpnents ($10*)
(1985 $10*)
40.6
67.4
42.3
65.4
45.1
64.1
47.2
61.6
50.1
59.8
47.5
52.7
53.4
56.2
55.5
56.9
53.3
53.3
54.6
53.2
Total Employment (000)
910
899
885
848
823
749
741
746
702
705
Import/new supply ratio*
Export/shipment ratiob
.04
.04
.04
.04
.04
.05
.04
.06
.05
.05
.05
.04
.05
.03
.06
.03
.07
.03
.08
.03
New plant and
equipment (S109)
(1985 )109)
1.2
2.0
1.3
2.0
1.4
2.0
1.5
2.0
1.7
2.0
1.6
1.7
1.6
1.7
1.9
2.0
1.8
1.8
1.6
1.6
• Value of Imports/(value of imports plus domestic shipments)
b Value of exports divided by value of domestic shipments.
-------
and those in the primary products sector, collectively operate more than 6,500
establishments nationwide. Establishments Involved largely in the relatively
capital-Intensive primary products sector have increasingly concentrated in
the South close to abundant timber reserves. Establishments in the more
labor-intensive allied conversion industries have tended to be more widespread
and closer to end-users.11
Except for the recession of 1982, the total value of shipments by the
Paper and Allied Products sector Increased steadily over the past 10 years.
The total value of shipments more than doubled between 1977 and 1986 at an
average annual rate of 8.0 percent. In real terms, the total value of ship-
ments grew 1.7 percent per year over the 1977-1986 time period (see Table
4-9).
During this time period, total Industry employment reached a peak of
707,000 workers in 1979 and then declined to 661,000 by 1983 as a result of
economic recession 1n 1982 and the restructuring of firms through Increased
merger and acquisition activity. Total employment in this industry rose from
1983 to 1986 as a result of Increased output and profitability. By 1986
employment stood at 674,000 workers or 1.8 percent above the l.evel of 1983.
Imports of pulp (primarily from Canada) constituted a major, albeit
declining, source of supply for this sector during the past 9 years. The
import share of new pulp shipments held steady at about 31 percent in the late
1970s and then declined to 24 percent in 1986. Imports of paper and board
also held steady at about 10 percent of total supply throughout the late 1970s
and early 1980s and then jumped to 13 percent by 1985. The decline in the
strength of the dollar has since caused Imports of paper and board to drop
back to 12 percent of total new supply.
Annual expenditures for new plant and equipment (measured in 1985 S)
rose almost 47 percent between 1977 and 1979 and then fell 26 percent to $6.3
billion during the 1982 economic recession. Coincident with the growth in
output and profits since the recession, annual new capital expenditures also
rose and stood at S8.7 billion (1n 1985 S) in 1986.
Chemicals and Allied Products. Firms in this manufacturing group
produce basic materials and chemical feedstocks for use by other industries;
4-18
-------
TABLE 4-9. HISTORICAL TRENDS: PAPER AND ALLIED PRODUCTS (SIC 26)
1
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
Value of Shipments ($109) .
(1985 $109)
52.1
86.5
57.0
88.2
65.2
92.6
72.8
94.8
80.2
95.3
79.0
88.2
85.1
91.6
95.9
99.1
93.4
93.4
103.8
101.1
Total Employment (000)
692
699
707
693
689
662
661
681
677
674
Pulp mills (SIC 2611)
Import/new supply ratio"
Export/shipments ratio6
0.33
0.38
0.31
0.35
0.33
0.38
0.31
0.45
0.31
0.44
0.29
0.41
0.29
0.40
0.31
0.38
0.27
0.36
0.24
0.37
Paper and board
(SIC 262,263,266)
Import/new supply ratio*
Export/shipments ratio6
0.10
0.05
0.11
0.05
0.11
0.05
0.10
0.08
0.10
0.07
0.10
0.06
0.10
0.05
0.11
0.05
0.13
0.04
0.12
0.04
New plant and
equipment (S109)
(1985 $109)
3.5
5.8
3.8
5.9
5.2
7.4
6.5
8.5
6.1
7.2
5.6
6.3
5.9
6.3
7.2
7.4
8.6
8.6
8.9
8.7
8 Value of {reports/(value of imports plus domestic shipments).
b Value of exports divided by value of domestic shipments.
-------
they also manufacture consumer goods such as cosmetics, perfumes and drugs.
The chemical Industry ranks fifth 1n contribution to GNP among manufacturing
industries. It 1s extremely diverse both in terms of the large number of
chemical products and 1n terms of the firms producing the chemicals.12
Like the paper Industry, the chemicals Industry is its own best
customer. Only 13 percent of industrial chemical shipments go to final
customers; 46 percent go to other sectors of the chemical industry; and 41
percent go to the manufacturing industry.13
Measured in 1985 dollars, the total value of shipments by the chemicals
industry Increased at a 2.2 percent annual rate between 1977 and 1981. The
1982 economic recession took a toll on the chemicals industry as the real
value of shipments dropped 10 percent in one year to 193.0 billion dollars --
a level lower than that of 1977 (see Table 4-10). The real value of shipments
peaked again in 1984 at 218.8 billion dollars and then dropped to 193.1 bil-
lion dollars 1n 1986.
Total employment in the chemical and allied products sector reached a
peak of 1,109,000 laborers 1n 1981. As a result of the 1982 economic reces-
sion, subsequent mergers and industry restructuring, the number of workers in
the chemicals industry fell 7.8 percent below the 1981 peak to 1,022,000 by
1986.
The chemical and allied products industry has been a net exporter of
chemicals to the rest of the world. As shown in Table 4-10, imports averaged
about 5 percent of the total supply of chemicals in the late 1970s and early
1980s. Recently, however, the Import share edged up to 7 percent in 1986.
The export share of total shipments has dropped from 14 percent in 1980 to 11
percent in 1986.
Petrol«mi Refining. As shown 1n Table 4-11, the real value of petroleum
and coal products shipments in the U.S. grew 13.2 percent per year between
1977 and 1981 --largely a reflection of the doubling in real crude oil prices
which occurred 1n that time period. Between 1981 and 1985, the real value of
shipments dropped 9.4 percent per year as a result of slackening demand.
Shipments tumbled a further 30 percent from 1985 to 1986 due to the collapse
in crude oil prices 1n that time frame.14
4-">0
-------
TABLE 4-10. HISTORICAL TRENDS: CHEMICALS AND ALLIED PRODUCTS (SIC 28)
1977 1976 1979 1980 1981 1982 1983 1984 1985 1986
Value of Shipments ($109)
(1985 $109)
118.2
196.2
129.4
200.2
147.7
209.9
162.5
211.7
180.5
214.4
170.7
193.0
183.2
204.7
198.2
218.8
197.3
197.3
198.3
193.1
Total Employment (000)
1,074
1,096
1,109
1,107
1,109
1,075
1,043
1,049
1,044
1,022
Import/new supply ratio*
Export/shipment ratio6
.04
0.10
.05
0.10
.05
0.13
.05
0.14
.05
0.13
.05
0.12
.05
0.10
.06
0.11
.06
0.10
.07
0.11
New plant and
equipment ($109)
(1985 $109)
7.4
12.3
7.8
12.1
9.8
13.9
11.6
15.1
13.1
15.5
12.7
14.2
13.0
14.0
15.3
15.8
16.4
16.4
17.1
16.7
* Value of imports/(value of Imports plus domestic shipments).
b Value of exports divided by value of domestic shipments.
-------
TABLE 4-11. HISTORICAL TRENDS: PETROLEUM AND COAL PRODUCTS (SIC 29)
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
Value of Shipments ($109)
(1985 $109)
97.5
161.9
103.9
160.7
148.4
210.0
198.7
258.9
224.1
266.2
206.4
230.5
191.6
206.2
200.6
207.2
179.1
179.1
129.3
125.9
Total Employment (000)
202
208
210
198
214
201
196
189
179
168
Petroleum refining
(SIC 2911)
Import/new supply ratio*
Export/shipment ratio"
0.09
0.01
0.07
0.01
i
0.07
0.01
0,07
0.01
0.07
0.02
0.07
0.03
0.09
0.03
0.11
0.03
--
New plant and
equipment ($109)
(198S $109)
11.8
19.6
13.2
20.4
15.2
21.6
19.6
25.5
26.0
30.9
26.4
29.5
23.1
24.9
25.5
26.3
26.7
26.7
18.7
18.2
* Value of Imports/(value of Imports plus domestic shipments).
b Value of exports divided by value of domestic shipments.
-------
Employment trends in the petroleum and coal products sector (SIC 29)
have essentially mirrored the changes in shipments. Employment peaked in 1981
at 214,000 workers and then declined to 179,000 in 1985 at a compound annual
rate decline of 4.5 percent. This rate of decline Increased to 6.1 percent
between 1985 and 1986 as a result of: 1) curtailments in oil and gas explora-
tion brought on by the sharp decline in crude oil prices; and 2) industry
retrenchment due to increased corporate merger and acquisition activity.
The drop in crude oil prices in 1985/1986 had a significant impact on
new plant and equipment expenditures for the petroleum and coal products
industry. Between 1981 and 1985, new plant and equipment expenditures (in
$1985) generally dropped S3-5 billion below the 1981 peak of 530.9 billion.
In 1986, capital expenditures plummeted 32 percent to $18.2 billion.
Iron and Steel. Since 1982, the iron and steel industry has been
embedded in a long term slump due to slow growth in domestic demand coupled
with world-wide market saturation and low productivity improvements.15 Steel
shipments 1n 1986 were S46.2 billion (in 1985S) or 44.5 percent below the 1981
level of S83.2 billion (see Table 4-12). Pig iron production in 1986 also was
down 40 percent below 1981 levels.
Structural shifts in the pattern of steel consumption, aging capital
stock and high labor costs have, in large part, been responsible for the steel
industry plight. Even though the quantity of steel mill product shipments
generally rose from 1982 through 1985, the industry permanently cut 12
percent of domestic steel making capacity and 20 percent of domestic Iron
making capacity over this time period. Despite these cuts, the industry still
operated at less than two-thirds capacity in the mid 1980s.16
Higher levels of steel mill product imports also contributed to the in-
dustry's problens. Imports soared from 15 percent of total steel mill
products supplied 1n 1979 to 26 percent in 1984 before falling slightly in
1985/1986 as a result of the President's Steel Import Restraint program.
The iron and steel industry slashed its work force by nearly 25 percent
or 102,000 workers during the 1981/1982 economic recession. The labor force
has continued to decline since that time period. In 1986 a total of 175,000
4-23
-------
TABLE 4-12. HISTORICAL TRENDS: IRON AND STEEL INDUSTRY"
1977 1978 1979 1980 1981 1982 1983 1984 1985 1986
Value of Shipments ($109)
(1985 $10*)
50.6
83.8
59.1
91.3
67.3
95.5
61.5
80.0
70.1
83.2
47.3
52.7
48.2
51.7
53.8
55.6
52.5
52.5
47.4
46.2
Pig iron production
(10& short tons)
81.3
87.7
87.0
68.7
73.6
43.3
48.7
51.9
50.4
44.0
Raw steel production
(10* short tons)
125.3
137.0
136.3
111.8
120.8
74.6
84.6
92.5
88.3
81.6
Raw steel production
capability
utilization rate (%)b
78
87
88
73
78
48
56
68
66
64
Total steel mill
products shipments
(106 short tons)
91.1
97.9
100.3
83.9
88.5
61.6
67.6
73.7
73.0
70.3
Total Employment (000)
452
449
453
399
391
289
243
236
208
175
Market penetration of
Imported steel mill
products (%)c
18
18
15
16
19
22
21
26
25
23
* American Iron and Steel Institute and U.S. Department of Commerce.
b Tonnage capability to produce raw steel for a full order book based on the current availability of raw
materials, fuels and supplies, and of the industry's coke, iron, steelmaking, rolling and finishing
facilities.2
c lmports/(imports plus domestic production); in terms of short tons.
-------
TABLE 4-12. HISTORICAL TRENDS: IRON AND STEEL INDUSTRY*
(continued)
.1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
Capital expenditures
($10*)
(1985 $109)
n/a
n/a
n/a
n/a
2.5
3.6
2.7
3.5
2.4
2.9
2.3
2.6
1.9
2.0
1.2
1.2
1.6
1.6
0.9
0.9
Net incone ($109)
n/a
n/a
0.8
0.7
1.7
-3.4
-2.2
0
-1.8
-4.1
a American Iran and Steel Institute and U.S. Departnent of Commerce.
-------
laborers were employed 1n the iron and steel 1ndustry--down 61 percent from a
1979 high of 453,000 workers.
Operating losses have further frustrated the Industry's attempt to
modernize aging plant and equipment. As shown 1n Table 4-12, new capital
expenditures (in 1985 $) averaged SI.2-1.7 billion 1n 1984-1985 and were
concentrated largely on productivity and quality enhancing equipment such as
continuous casters. Although these expenditures (1n 1984/1985) were made in
the face of continuing operating losses, they were nevertheless down more than
50 percent below the amounts expended in the late 1970s and early 1980s.
After five consecutive years of losses, total net Income in 1987 was
S1.0 billion. Production of raw steel and steel mill products increased in
1987 over 1986 levels-and total employment declined in 1987. Raw steel
production capability utilization rate rose to 80 percent in 1987.17
4.1.2 Projected Impacts on Product Prices
The economic impact analysis for the major steam user groups 1n the
industrial sector focuses on presenting aggregate Incremental annualized
pollution control costs as a percent of 1985 average product prices. This
analysis assumes full passthrough of pollution control costs.
The effect of a regulatory option on 1985 average product prices 1s
calculated by finding the product of the change 1n the cost of new steam, the
share of steam affected by the regulatory option and the amount of steam
consumed per dollar of 1985 output (see Figure 4-5). The cost impacts are
stated in real terms. The only real cost Increase 1s assumed to be due to new
boiler, pollution control and fuel costs. All other production costs are held
constant in real terms at 1985 levels.
When regulatory options are applied, the first component of the product
price calculation (the change 1n the cost of new steam) is affected. The cost
of new steam changes due to an option's effect upon annualized boiler and
pollution control capital costs, annualized non-fuel operating and maintenance
(0&M) costs, and annualized fuel costs. When this new steam cost change is
multiplied by the ratio of annual steam consumed (per unit of output) to
annual dollar value of shipment (per unit output) a gross change in product
price is derived. Because a certain percentage of the product is produced
4-26
-------
FIGURE 4-5
Derivation Of Estimated Increase
In National Average Industrial Product Prices
Due To Pollution Control Costs
A Product
Price
Steam
Intensity X
Ratio
% Of Total
Steam Affected By v
Alternative Control
Level
Maximum
Cost
Impact
Where...
Steam Intensity Ratio
Industrial Boiler
Total Fuel Consumption in 1985
1985 Value Of Shipments
% Of Total Steam
Affected By Alternative
Control Level
New Small Industrial Boiler
Total Fossil Fuel Consumption
Total Fuel Consumption
From All Boilers
Maximum Cost Impact
increase In Total
Annualized Costs
Total Fossil Fuel Consumption
From New Small Industrial Boilers
A^(%) = (GJ/$) x (%) x ($/GJ)
4-27
-------
with steam generated from existing boilers, the cost estimate is reduced by
the proportion of new boiler steam to total steam used within each industry
group, which results In an average steam cost for the industry.
The ratio of annual total industrial boiler fuel consumed to annual
dollar value of shipment by industry is assumed to remain constant over time.
Ratios employed in this analysis are listed 1n Table 4-13. This table shows
that the paper industry 1s a relatively steam-Intensive group.
An analysis of average cost impacts would involve allocating the
projected increases in total annualized costs 1n Section 2 by industry group
(which 1s not available) and dividing by the consumption of all fuels in new
small industrial bailers. This assumes full cost pass-through. Next,
multiply by a small fraction which represents the amount of total steam
requirements met by new small boilers. This type of analysis was conducted
for the large (>29 MW, >100 MMBtu/hr) industrial boiler NSPS analysis and the
average change in product price was estimated to be less than 0.1 percent for
each of the major steam user groups.2
This analysis for small boilers focuses on the marginal. not average,
costs. The marginal costs are the maximum, worst case annualized cost
Increases per unit of annual boiler fuel demand. The maximum, worst case
annualized cost Increase per unit of annual boiler fuel demand is derived from
the national Impacts analysis in Section 2. Table 4-14 presents the deriva-
tion of this parameter for coal and residual fuel oil. Because of the fabric
filter requirement for PM emissions control, coal is expected to have a
relatively larger average annualized cost impact per unit of annual fuel
demand than residual fuel oil.
The "% of total steam affected by the alternative control level" is 100%
if all of the boilers at the Industrial facility are new, smaller than 29 MW
(100 MMBtu/hr) and burn coal or residual fuel oil. Otherwise (and usually),
this parameter 1s less than 100 percent because some portion of the total
steam demand Is met by larger and/or older boilers.
The worst case marginal cost impact analysis assumes the industry group
with the largest steam intensity ratio in Table 4-13 (paper), the fuel type is
coal and all of the boilers are new coal-fired units <29 MW (<100 MMB-tu/hr) -
4-28
-------
TABLE 4-13. STEAM-INTENSITY RATIOS
Industry
1985
Industrial boiler
total fuel
consumption*
PJ (1012 Btu)
1985
Value of
shipments6
($10')
Industrial boiler
total fuel
consumption per $ of
value of shipments
GJ (106 Btu)
Food
716
(679)
301.6
0.0024
(0.0023)
Textiles
176
(167)
53.3
0.0033
(0.0031)
Paper
2,027
(1,921)
93.4
0.0217
(0.0206)
Chemicals
1,382
(1,310)
197.3
0.0070
(0.0066)
Petroleum Ref.
589
(558)
179.1
0.0033
(0.0031)
Iron and Steel
398
(377)
52.5
0.0076
(0.0072)
Includes natural gas, distillate and residual fuel oil, coal, wood, black
liquor, LPG, refinery gas, blast furnace gas and coke oven gas. EEA
estimates.
U.S. Department of Commerce; reference Tables 4-7 through 4-12.
4-29
-------
TABLE 4-14. NATIONAL IMPACTS'
Average Annualized Cost
Annual Annualized Increase Per Unit of
Fuel Demand Cost Increase Annual Fuel Demand
Fuel Type PJ (102 Btu) 10* $1985 1985 S/GJ (1985 S/MMBtu)
Coal
8.65
(8.20)b
18.2456
2.11
(2.23)
Residual
27.993
(26.532)b
29.248*
1.04
(1.10)
fuel oil
* Boiler size 3-29 MW (10-100 WIBtu/hr) in the fifth year following proposal
of NSPS.
b Assumes a 26 percent average annual capacity utilization rate. A larger
average annual capacity utilization rate would result in smaller marginal
annualized cost Impacts per unit of fuel demand.
6 From Table 2-21, with monitoring and testing costs, $5,935 (4.113 + 1.822)
million for S02 emissions control and $12.31 (8.67 + 3.64) million for
complying with the 21 ng PM/J (0.05 lb PM/MMBtu) control level.
d From Table 2-29, with monitoring and testing costs for the 129 ng SO^/J
(0.3 lb SOr/MMBtu) control level, $29,921 (7.255 + 22.666) million less
$0,673 million for distillate fuel oil monitoring and testing costs, or
$29,248 mil 1 ion.
4-30
-------
so that 100% of the total steam demand 1s affected by the alternative control
level. In this case, the expected change 1n product price Is (0.0206
MMBtu/dol1ar) * 100% * ($2.23/MMBtu) - 4.6% (as outlined in Figure 4-5).
This 1s a worst case analysis for several reasons:
• The coal annualized cost impacts in Table 4-14 Include the
estimates for fabric filters for new boilers 3-9 MW (10-30
MMBtu/hr) and this is not required by the proposed coal PM NSPS.
• A steam plant composed of only small new coal-fired boilers
(without any older and/or larger boilers) 1s not typical; less
than 100 percent of total steam requirements is affected by the
NSPS 1s more typical.
• The cost impacts 1n Table 4-14 may be overstated 1f local air
emissions standards are more stringent than the baseline assump-
tions presented 1n Section 2.
• The cost impacts in Table 4-14 may include monitoring and testing
costs which are not required by the proposed standards.
• The average annualized cost Increase per unit of annual fuel
demand 1s overstated for new boilers with average annual capacity
utilization rates larger than 26 percent.
• Small coal boiler sales are much lower than oil or gas boiler
sales (see Table 2-9); therefore, the pertinent marginal cost
impacts for most affected facilities will be much smaller than
$2.11/GJ (52.23/MMBtu).
The marginal impact on product prices is smaller than 4.6% for other
industry groups, other fuel types (residual fuel oil, distillate fuel oil,
natural gas), and situations where less than 100 % of the total steam demand
is affected by the alternative control level. For example, 1f the food
industry is selected with residual fuel oil as the fuel type and only 20% of
the total steam requirements at the plant are met by new units <29 MW (<100
MMBtu/hr), then the expected marginal product price impact is (0.0023
MMBtu/dollar) * 20% * (51.10/MMBtu) - 0.05% (obviously much smaller than
4.6%).
Therefore, the marginal annual costs of compliance with the proposed
standard are expected to increase product costs by less than five percent for
each of the major steam user groups.
A 11
-------
4.2 SELECTED INDUSTRIES
4.2.1 Introduction
The major steam users analysis focuses on aggregate two-digit SIC code
industries (I.e., SIC 28, Chemicals). The selected Industries analysis
addresses several smaller groups at the four-d1g1t SIC code18 level.
Industries most likely to experience cost-related Impacts are those with
a high steam cost to production cost ratio. A high ratio usually stems from
one of two factors: 1) the production process 1s steam-intensive or 2) the
firm or industry has cyclic steam requirements, resulting in a low capacity
utilization of the boiler equipment. Low capacity utilization causes the
capital cost component of steam costs to rise, yielding high annualized costs
per unit of steam.
Capital availability constraints occur when the cost of acquiring funds
is so high that a firm considers a project to be unecononic or financially
unattractive. Capital availability 1s most often a problem for relatively
small firms. Although some large firms may have excessive debt burdens, lack
of access to organized capital markets 1s more often characteristic of small
fi rms.
Three four-digit SIC code industries were evaluated:
• rubber reclaiming (SIC 3031)
• automobile manufacturing (SICs 3711, 3713 and 3714)
• liquor distilling (SIC 2085)
The economic analysis of selected Industries focused on cost Impacts, capital
availability and profitability Indicators.
4.2.2 Methodology
4.2.2.1 Cost and profitability impacts. The following three steps are used
to estimate the cost Impact of regulatory options on a selected Industry:
• Step One -- Define a model plant for the selected industry.
t Step Two -- Evaluate the cost Impacts for the model plant,
assuming full cost absorption.
• Step Three -- Evaluate the impacts on the profitability of the
model plant.
4-32
-------
Each step 1s described below.
The selected Industries analysis focuses on model plants to measure the
economic Impact of regulatory options on each Industry. The model plant
represents a typical plant for the segment of each Industry that might be
considering a boiler Investment either as boiler expansion or replacement. A
model plant 1s used since 1t 1s difficult to obtain precise details about the
expansion and replacement plans of actual firms.
The following production characteristics for the model plant are
estimated:
• Plant Output/Year -- average product output per year 1n those
plants more likely to invest in new boilers.
• Price (Cost)/Un1t of Output -- the historic, average selling price
per unit
• Plant Sales/Year -- plant output per year multiplied by price per
unit of output.
• Plant Earnings/Year -- plant sales per year multiplied by a
derived profit margin (percent return on sales). The figure
estimates the profitabllity. of the model plant.
The effect of regulatory options on product cost is calculated by
finding the product of the change in the cost of new steam, the share of steam
affected by the new regulation, and the amount of steam consumed per dollar of
output. The cost impacts are stated 1n real terms. The only real cost
increase Is due to new boiler and fuel costs; all other real production costs
are held constant.
The additional costs due to a regulatory option will affect the profita-
bility of an industry. This Impact will be assessed by examining the follow*
1ng two financial Indicators for the model plant:
• Net Profit After Taxes (Net Income). Profit after all costs and
taxes have been deducted.
• Return on Assets. Net income divided by total assets, converted
to a percent form.
The change 1n Indicators due to regulatory options 1s a measure of the
ability of the model plant to absorb the additional costs of a regulatory
option.
4
-------
Net income 1s calculated by subtracting expenses from total sales to
derive gross profit and then taxes are subtracted from gross profit to equal
net Income. Regulatory options could affect the amount of expenses, which
would alter net Income. Return on assets 1s derived by dividing net income by
total assets for the model plant and converting to a percent form. Altern-
ative regulatory options could affect net Income, resulting in a change in
return on assets.
4.2.2.2 Capital availability. Capital availability constraints may result if
regulatory options create a need for financing additional pollution control
investments. The following two steps are used to evaluate whether capital
availability will be a constraint on a selected Industry:
• Step One — Define financial Indicators for a model firm.
• Step Two -- Evaluate the ability of a firm to finance pollution
control Investments.
The firm Is the focus of the capital availability analysis because
decisions Involving large capital expenditures are made at the corporate
level. Depending upon the state' of corporate cash reserves and the relative
costs of various financing tools, a firm will choose a combination of internal
and external financing instruments to meet the additional investments required
to comply with regulatory options.
The capital availability analysis focuses on the following two financial
indicators, which measure each Industry's financing ability:
• Coverage Ratio -- the number of times operating Income (earnings
before taxes and Interest expenses) covers fixed obligations
(annual Interest on debt instruments and long-term leases).
• Debt/Equity Ratio -- a measure of the relative proportions of two
types of external financing.
These two indicators are analyzed for both the base case and the
regulatory options. The change 1n indicators due to regulatory options is
analyzed to determine how difficult 1t will be for the firm to meet financial
requirements for the pollution control equipment investment.
The cash flow coverage ratio 1s calculated by dividing operating income
by fixed obligations, both of which could change as a result of alternative
regulatory options. If the coverage ratio remains above the 3.0 standard
4-34
-------
benchmark, the cost of capital can be assumed to be above "acceptable" levels.
However, as the coverage ratio falls, the cost of obtaining capital will rise.
The debt/equity ratio is calculated by dividing total debt by total
equity of the firm (book values). The Incremental debt incurred from financ-
ing the pollution control required by the regulatory options 1s added to the
base debt; the incremental equity issued to finance the remainder of the
Investment is added to the base case equity. A new debt/equity ratio then is
calculated and the change is analyzed to assess the effect of the regulatory
options on the firm's capital structure.
To determine the coverage and debt/equity ratios under alternative
regulatory options, five financing strategies, which differ by the percentages
of the Investment financed by debt versus equity, are considered. (Note that
for the changes in coverage ratios and debt/equity ratios,' 100 percent
external financing is assumed.) The external financing scenarios are:
¦ zero percent new debt, 100 percent new equity
¦ 25 percent new debt, 75 percent new equity
• 50 percent new'debt, 50 percent new equity
• 75 percent new debt, 25 percent new equity
• 100 percent new debt, zero percent new equity.
4.2.3 Model Plant Descriptions19
The typical rubber reclaiming industry plant has an annual output of
18,000 metric tons (20,000 short tons). The typical plant's boiler house
contains three boilers that have a combined capacity of 62 MW (211 MMBtu/hr)
and all boilers are assumed to operate at 45 percent of rated capacity. One
26 MW (87 MMBtu/hr) coal-fired boiler was assumed to be replaced.
The model automobile manufacturing plant is assumed to be part of a 26-
plant firm. Total annual firm production 1s 2.3 million vehicles. The model
plant boiler house consists of four coal-fired boilers with a total capacity
of 102 MW (348 MMBtu/hr). It was assumed that a 26 MW (87 MMBtu/hr) boiler
operated at a 25 percent average annual capacity utilization rate would be
replaced.
The typical liquor distilling plant produces 17 million liters (4.5
million gallons) of distilled liquor annually. It was assumed that two older
4-35
-------
boilers would be replaced by a 26 MW {87 MMBtu/hr) coal-fired boiler and a 18
MW (62 MMBtu/hr) boiler, both operated at an average annual capacity utiliza-
tion rate of 45 percent.
4.2.4 Regulatory Option
The three selected industry analyses all Involve new coal-fired boilers
18-26 MM (60-90 MMBtu/hr). The regulatory option examined is a scrubber.
4.2.5 Sunwarv of the Economic Impacts20
The change in product cost was estimated to be less than one percent for
each of these three selected Industries (assuming full cost pass-through).
The expected change in return on assets 1s summarized 1n Table 4-15.
The analysis of capital availability examines the ability of the model
firm to finance the new boiler investment. The coverage ratios and
debt/equity ratios did not vary significantly due to the pollution control
costs. It was concluded that these Industries should be able to absorb
additional, financing of new boiler Investments without undue weakening of the
solvency position of the industries.
4-36
-------
TABLE 4-15. ESTIMATED RETURN ON ASSETS
FOR MODEL PLANTS'
(percent)
Selected Industry
Base Case
Scrubber Requirement
Rubber reclaiming
4.1
1.0
Automobile manufacturing -
8.1
8.0
Liquor distilling
1.3
0.5
* Reference 19, p. 9-33.
4-37
-------
REFERENCES
1. Report on the 1980 Manufacturing Industries Energy Consumption Study and
Survey of Large Combustors. U.S. Department of Energy, Energy Informa-
tion Administration. D0E/EIA-0358. January 1983.
2. Projected Impacts of Alternative Sulfur Dioxide New Source Performance
Standards for Industrial Fossil Fuel-Fired Boilers. Energy and Environ-
mental Analysis, Inc., Arlington, Virginia. Prepared for the U.S.
Environmental Protection Agency, Office of A1r Quality Planning and
Standards. March 1985. p. 4-12.
3. U.S. Department of Commerce, Bureau of Economic Analysis. Survey of
Current Business. Volume 67, No. 6, June 1987, p. S-3.
4. Federal Reserve Board, Statistical Release. Industrial Production.
January 16, 1987; U.S. Department of Commerce, Bureau of Economic
Analysis. Survey of Current Business. Volume 68, No. 12, December 1988,
p. S-2.
5. 1985 OBERS BEA Regional Projections, Volume 1: State Projections to
2035. U.S. Department of Commerce, Bureau of Economic Analysis. 1985.
p. 3.
6. 1987 U.S. Industrial Outlook. U.S. Department of Commerce, Inter-
national Trade Administration. January 1987.
7. Business Statistics: 1984. U.S. Department of Commerce, Bureau of
Economic Analysis. September 1985.-
8. Prospects for U.S. Basic Industries, 1986-2000: Implications for Elec-
tricity Demand. Electric Power Research Institute, Palo Alto,
California.
EPRI P/EM-4502-SR. March 1986. p. 6-8.
9.
Reference 6,
P.
39-1.
10.
Reference 6,
P.
41-1.
11.
Reference 6,
P.
5-1; Reference 8, p. 4-1 through 4-16.
12.
Reference 6,
P-
11-1.
13.
Reference 8,
P-
3-1 through 3-28.
14.
Reference 6,
P.
10-1.
15.
Reference 8,
P-
1-1 through 1-20.
16.
1985 Annual
Statistical Report. American Iron and Steel
Washington, D.C.
4-38
-------
17. 1987 Annual Statistical Report. American Iron and Steel Institute,
Washington, O.C.
18. Standard Industrial Classification Manual 1987. Executive Office of the
President, Office of Management and Budget.
19. Fossil Fuel Fired Industrial Boilers - Background Information Volume 1:
Chapters 1-9. EPA-450/3-82-006a. U.S. Environmental Protection Agency,
Office of Air Quality Planning and Standards. March 1982. Chapter 9.
20. Reference 19, p. 9-31.
4-39
-------
APPENDIX A.
PROFILE OF BOILERS IN COMMERCIAL BUILDINGS
This appendix summarizes information on the number and location of
boilers in commercial buildings. This information is significant because most
commercial buildings in the United States do not include a boiler and,
therefore, will not be subject to an economic impact due to a NSPS.
The U.S. Department of Energy/Energy Information Administration (Office
of Energy Markets and End Use) has conducted the Nonresidential Buildings
Energy Consumption Survey (NBECS) three times. The 1979 NBECS collected data
during 1979 and 1980 from a statistical sample of 6,222 buildings. The 1983
NBECS collected data during 1983 for a statistical sample of 7,140 buildings:
5,845 from the 1979 NBECS and 1,295 new buildings constructed between 1979 and
1982. The 1986 NBECS collected data during 1987 for 9,189 buildings. The
1986 NBECS excluded buildings smaller than 1,000 square feet and those whose
primary use is residential (the 1979 and 1983 NBECS did not). Commercial
buildings in the 1979, 1983 and 1986 NBECS exclude buildings on military
installations and exclude buildings in which industrial or agricultural
activities occupied more of the total floor space than any other type of
activity.
The 1983 NBECS estimated that 73,000 (plus or minus 21,000*) commercial
buildings constructed before 1980 had new (replacement) boilers installed
between January 1980 and July 1983.1 The 1983 NBECS also estimated that there
were an average of 1.38 boilers per building which included a boiler.2
Therefore, about 100,000 (plus or minus 30,000) new (replacement) boilers were
installed between January 1980 and July 1983 in commercial buildings con-
structed before 1980. The 1983 NBECS also estimated that 26,000 new.boilers
were installed in new commercial buildings constructed in the four-year period
between 1980 and 1983.2 The total average annual commercial/institutional new
boiler sales level estimate is 100,000/3.5 years (or 28,600 annual replace-
ments) plus 26,000/4 years (or 6,500 boilers per year in new buildings), or a
total of about 35,000 new boilers per year for the 1980-1983 period.
This represents DOE/EIA's estimate of the 95 percent confidence interval.
A-l
-------
The 1983 NBECS estimated that there were more than 1 million boilers in
commercial buildings 1n 1983.* Less than 20 percent of the commercial build-
ings in the U.S. in 1983 had boilers {reference Table A-l). Natural gas is
the primary commercial boiler fuel type in the North Central, South and West
Census regions (see Figure A-l). However, fuel oil and natural gas have equal
market shares in the Northeast Census region.
Larger commercial buildings are more likely to use a boiler for space
heating in comparison with small buildings. Only 10 percent of the commercial
buildings less than 5,000 square feet each include boilers. However, at least
40 percent of the commercial buildings larger than 25,000 square feet include
boilers in 1983.
The average number of boilers per building is related to the building
size. There is an average of three boilers per building for buildings larger
than 200,000 square feet which use boilers (see Table A-l: 45,000 boilers in
14,000 buildings). The average number of boilers per building 1s less than
1.2 for buildings smaller than 10,000 square feet which use boilers (see Table
A-l: 450,000 boilers in 385,000 buildings).
The categories with the largest total number of boilers in 1983 were
mercantile/sales/personal services, offices, educational and assembly. The
area with the largest number of boilers in commercial buildings in 1983 was
the Northeast Census region (374,000 boilers), followed closely by the North
Central region (325,000 boilers). Table A-l also shows that 39 percent of the
commercial buildings in the Northeast 1n 1983 used boilers versus 21 percent
for the North Central, 14 percent for the West and 9 percent for the South.
Table A-2 summarizes estimates for 1986. The total number of buildings
with boilers in 1986 (627,000) is smaller than the estimate for 1983 (733,000)
because the 1986 estimates exclude residential buildings and buildings smaller
than 1,000 square feet.
Table A-2 shows that very few new buildings use boilers. Less than 10
percent of the commercial buildings constructed after 1970 use boilers.
For comparison, PEDCo estimated that there were 1,295,130 commercial
boilers in the U.S. in 1977.
A-2
-------
In 1986, 11 percent of the commercial buildings were not heated. Warm
air furnaces were used 1n three times as many buildings as those with boilers.
Individual space heaters or electric baseboards were used in more commercial
buildings than were boilers. Other alternatives to boilers were packaged
heating units, heat pumps and district heating.4
A-3
-------
FIGURE A-1
U.S. Census Regions And Divisions
NORTH
CENTRAL
SOUTH
A-4
-------
TABLE A-l. COMMERCIAL BUILDINGS IN 1983'
No. of
Bldgs. buildings (103)
w/boilers that fire Total
All Bldgs. All boilers with no. of
bldgs. w/boilers bldgs. Nat. Fuel boilers
Characteristic (10s) (103) (%) Gasb Oilb Other" (103)
All Buildings
3,948
733
19
497
216
48
1,015
Square Footage
<5,000
2,248
227
10
159
50
Qc.
267
5,001-10,000
725
158
22
105
56
Q
183
10,001-25,000
567
169
30
109
56
15
242
25,001-50,000
222
90
41
62
22
7
133
50,001-100,000
107
49
46
32
17
5
86
100,001-200,000
50
27
54
19
10
3
58
>200,000
29
14
48
11
5
1
45
Principal Activity
Assembly
457
116
25
85
34
Q
146
Educational
177
83
47
60
26
8
157
Food sales/service
380
42
11
27
Q
Q
54
Health care
61
15
25
10
6
Q
29
Lodging
106
31
29
23
8
Q
50
Mercantile/personal
1,071
133
12
83
49
Q
175
Office
575
128
22
88
32
8
161
Residential"1
236
87
37
59
26
Q
102
Warehouse
425
53
12
33
15
Q
74
Other
179
25
14
16
7
Q
40
Vacant
281
19
7
13
4
Q
26
Census Region
-
Northeast
670
263
39
132
132
Q
374
North Central
1,211
251
21
222
23
8
325
South
1,493
138
9
79
46
17
213
West
574
82
14
64
Q
Q
103
8 Reference 2.
b The sum of natural gas; fuel oil and other is larger than column 2,
"buildings with boilers," because some buildings use more than one fuel
type.
e Data withheld by DOE/EIA because the relative standard error was greater
than SO percent or because fewer than 20 buildings were sampled.
d Primarily residential, but with some evidence of a commercial establishment
on-site.
A-5
-------
TABLE A-2. COMMERCIAL BUILDINGS IN 1986'
All
buildings
(103)
Buildings
with boilers
(10*)
with boilers
as % of all
buildings
All buildings
4,154
627
15
Square footage
1,001-5,000
2,220
151
7
5,001-10,000
931
173
19
10,001-25,000
557
133
24
25,001-50,000
242
91
38
50,001-100,000
123
40
33
100,001-200,000
52
22
42
200,001-500,000
23
12
52
>500,000
6
3
50
Census region
Northeast
663
253
38
Midwest6
1,096
184
17
South
1,570
115
7
West
825
75
9
Principal building activity
Assembly
575
118
21
Education
241
87
36
Food sales
102
Food services
201
19
9
Health care
52
12
23
Lodging
137
' 33"
24
Mercantile and service
1,287
170
13
Office
614
98
16
Public order and safety
55
14
25
Warehouse
549
33
6
Other
103
13
13
Vacant
238
18
8
* Reference 4.
b Same as North Central in Table A-l and Figure A-l.
c Data withheld because the relative standard error was greater than 50
percent, or fewer than 20 buildings were sampled.
-------
TABLE A-2. COMMERCIAL BUILDINGS IN 1986*
(continued)
All
buildings
(10s)
Buildings
with boilers
(103)
Buildings
with boilers
as % of all
buildings
Year constructed
1900 or before
188
62
33
1901-1920
255
71
28
1921-1945
629
120
19
1946-1960
878
147
17
1961-1970
730
115
16
1971-1973
243
22
9
1974-1979
572
41
7
1980-1983
350
28
8
1984-1986
309
20
6
" Reference 4.
-------
REFERENCES
1. Nonresidential Buildings Energy Consumption Survey: Characteristies of
Commercial Buildings 1983. U.S. Department of Energy, Energy Informa-
tion Administration. DOE/EIA-0246(83). July 1985. p. 36-37.
2. Reference 1, p. 113.
3. Devitt, T. et al. Population and Characteristics of Industrial/Commer-
clal Boilers in the U.S. PEDCo Environmental, Inc. Cincinnati, Ohio.
Prepared for the Industrial Environmental Research Laboratory, U.S.
Environmental Protection Agency. EPA-600/7-79-178a. August 1979.
4. Nonresidential Buildings Energy Consumption Survey: Characteristics of
Commercial Buildings 1986. U.S. Department of Energy, Energy Informa-
tion Administration. DOE/EIA-0246(86). September 1988. p. 164-166.
A-8
-------
APPENDIX B.
HISTORICAL NEW BOILER SALES DATA
This appendix presents historical new boiler sales data for units
smaller than 29.3 MW (100 MMBtu/hr).
There are three major types of boilers: cast Iron, firetube, and water-
tube. Cast iron boilers produce hot water or low pressure steam. They are
fired by gas or oil. Most of these units have firing rates which are smaller
than 59 kW (200,000 Btu/hr). Table B-l summarizes annual cast iron boiler
sales data (provided to EPA by the Hydronics Institute, Berkeley Heights, New
Jersey). Annual boiler sales have fluctuated over a wide range, from 155,400
units in 1975 to 347,900 units in 1980.
Cast iron boilers are used in houses, apartment buildings and com-
mercial/Institutional buildings. It was assumed that all boilers smaller than
59 kW (200,000 Btu/hr) were residential.1 It was further assumed that about
75 percent of the boilers larger than 59 kW (200,000 Btu/hr) were in the
commercial/institutional sector (see Table B-Z).
Firetube boilers produce hot water and low and high pressure steam and
are larger than cast iron boilers. They are fired primarily by gas or oil;
however, a small number of coal and wood units have been sold. Firetube
boiler sales data (provided to EPA by the American Boiler Manufacturers
Association, Arlington, Virginia) are summarized in table B-3. In the ten-
year period presented 1n Table B-3, annual sales levels have ranged from a low
of 5,878 units in 1982 to a high of 8,739 units in 1977.
Watertube boilers are available 1n many sizes (including units larger
than 29.3 MW or 100 MMBtu/hr) and are fired by many fuel types. Table B-4
summarizes watertube boiler sales data for boilers smaller than 100,000 pounds
of steam per hour capacity (provided to EPA by the American Boiler Manufac-
turers Association, Arlington, Virginia). Recent watertube boiler sales
levels are less than half of the 1970's sales levels.
B-l
-------
TABLE B-l. HISTORICAL CAST IRON BOILER SALES'
(Thousands of Units)
Year
<59
(<200)
kW (thousand Btu/hr capacity)
59-73 73-132 132-220
(200-250) (250-450) (450-950)
>220
(>950)
Total
1975
128.5
11.0
8.0
4.2
3.7
155.4
1976
160.7
14.5
10.1
5.4
4.0
194.6
1977
174.1
15.8
11.2
5.7
4.3
211.1
1978
184.5
16.4
11.1
5.1
4.2
221.3
1979
251.5
19.6
11.2
5.4
4.3
292.0
1980
297.4
21.3
19.2
5.3
4.7
347.9
1981
186.8
15.0
10.4-
•4.6
4.5
• 221.4
1982
174.4
13.5.
10.1
3.9
4.3
206.0
1983
169.6
12.4
10.0
3.9
4.0
200.0
1984
205.7
13.5
10.3
4.0
4.4
237.9
• Hydronics Institute. Includes residential, commercial/institutional and
Industrial boilers.
B-2
-------
TABLE B-2. HISTORICAL RESIDENTIAL/COMMERCIAL/INSTITUTIONAL
CAST IRON BOILER SALES ESTIMATES
(Thousands of Units)
Commercial/Institutional
kW (thousand Btu/hr)
Residentialb
59-220*
(200-950)
>220*
(>950)
Total
1975
135.2
17.4
2.8
155.4
1976
169.2
22.4
3.0
194.6
1977
183.3
24.6
3.2
211.1
1978
193.7
24.4
3.2
221.3
1979
261.6
27.2
3.2
292.0
1980
310.0
34.4
3.5
347.9
1981
195.4
22.6
3.4
221.4
1982
182.3
20.5
3.2
206.0
1983
169.6
27.4
3.0
200.0
1984
213.7
20.9
3.3
237.9
a Estimates derived from Table B-l. Includes 75 percent of the boilers
larger than 59 kW (200,000 Btu/hr).
b Estimates for single-family homes and apartment buildings. Derived from
data presented in Table B-l. (Includes all boilers less than 59 kW
[200,000 Btu/hr capacity] plus 25 percent of the boilers larger than 59 kW
[200,000 Btu/hr capacity].)
B-3
-------
TABLE B-3. HISTORICAL FIRETUBE BOILER SALES*
(Number of Units)
Year
<0.3
(<1)
¦--Boiler Size MW(MMBtu/hr)-•
0.3-1
(1-3)
1-12
(3-40)
Total
1975
1,533
2,317
3,360
7,210
1976
2,031
2,607
3,620
8,258
1977
2,062
2,798
3,879
8,739
1978
2,054
2,634
3,753
8,441
1979
2,112
2,860
3,729
8,701
1980
1,902
2,600
3,131
7,633
1981
1,377
2,408
2,922
6,707
1982
1,261
2,068
2,549
5,878
1983
1,470
2,165
2,755
6,390
1984
1,483
2,298
2,902
6,683
a American Boiler Manufacturers Association. Includes residential, commer-
cial/institutional and industrial boilers. Includes firebox boilers.
Includes hot water, low pressure steam and high pressure steam boilers.
8-4
-------
TABLE B-4. HISTORICAL WATERTUBE BOILER SALE5®
-Rnilar fKPPH^b-
10-
25
"DDI ier oue ^Nrrn^
25-50
50-100
Total
Year
Units
KPPH
Units
KPPH
Units
KPPH
Units
KPPH
1975
107
2,033
150
5,691
102
7,716
359
15,440
1976
93
1,793
119
4,415
71
5,331
283
11,539
1977
110
2,101
140
5,144
100
7,435
350
14,680
1978
76
1,525
138
5,001
115
8,599 .
329
15,125
1979
67
1,264
153
5,811
95
6,595
315
13,670
1980
57
1,051
128
4,915
76
5,477
261
11,443
1981
64
1,159.
98
3,660
72
5,081
234
9,900
1982
42
740
60
2,179
61
4,467
163
7,386
1983
37
663
55
2,121
47
3,620
139
6,404
1984
37
664
56
2,259
41
3,070
134
5,993
* American Boiler Manufacturers Association; stationary, industrial-type.
Includes commercial/institutional and industrial boilers smaller than
100,000 pounds of steam per hour capacity.
b Thousand pounds of steam per hour capacity.
B-5
-------
REFERENCES
1. Devltt, T. et al. Population and Characteristics of Industrial/Com-
mercial Boilers in the U.S. PEDCo Environmental, Inc. Cincinnati,
Ohio. EPA-600/7-79-178a. Prepared for the Industrial Environmental
Research Laboratory, U.S. Environmental Protection Agency. August 1979.
B-6
-------
TECHNICAL REPORT DATA
/ (Pttate md Instructions on tht rtvtrst before completing/
no.
EPA-450/3-89-17
2.
i title ano subtitle
Projected Impacts of Alter
Standards for Small Indust
Fossil Fuel-Fired Boilers
native New Source Performance
S. REPORT DATE
Mav lQfiq
rial-Commercial-instltutlona'
6. PERFORMING ORGANIZATION CODE
7. AUTHOR
Energy and Environmental Analysis, Inc.
Arlington, VA 22209
8. PERFORMING ORGANIZATION REPORT NO.
B. PERFORMING ORGANIZATION NAME AND AOORESS
Emission Standards Division
Office of Air Quality Planning and Standards
U.S. Environmental Protection Agency
Research Triangle Park, North Carolina 27711
10. PROGRAM ELEMENf n6. ~
11. CONTRACT/GRANT NO.
68-02-43B4
12. SPONSORING AGENCY NAME AND AOORESS
Office of Air Quality Planning and Standards
Office of Air and Radiation
U.S. Environmental Protection Agency
Research Triangle Park, North Carolina
13. type of report and period covered
Final
14. SPONSORING AGENCY CODE
EPA/200/04
18. SUPPLEMENTARY NOTE5
P1«. ABSTRACT
This report presents projected national environmental cost and energy impacts
of alternative sulfur dioxide (SO?) and particulate matter (PM) air emission
standards for new small industriaT-corrmercial-Institutional steam generating units
(small boilers) firing coal, oil, and natural gas. The analysis examines projected
Impacts in the fifth year following proposal of the standards. The report was
prepared during development of proposed new source performance standards (NSPS)
for small boilers.
17. KEY WORDS AND DOCUMENT ANALYSIS
•. DESCRIPTORS
b-identifiers/open enoeo terms
c. cosATi Field/Croup
Air Pollution
Pollution Control
Standards of Performance
Steam Generating Units
Industrial Boilers
Small Boilers
Air Pollution Control
ia distribution statement
Release unlimited
1». SECURITY CLASS (Thu Report)
Unclassified
31. NO. of pages
VS7
30. SECURITY CLASS {This pmgtl
Unclassified ^
22. PRICE / jy,C
EPA Pan. 2220-1 <*•». 4-771
------- |