South Coast Air Quality Management District
South Coast Air Quality Management District
BOARD MEETING DATE: December 15, 2000 AGENDA NO. 18
Report on Implementation Study for Rule 1146.2 – Emissions of Oxides of Nitrogen from Large Water Heaters and Small Boilers
SYNOPSIS:
Rule 1146.2 establishes NOx emission limits for large water heaters and small boilers rated between 75,000 and 2,000,000 Btu per hour heat input. The rule requires an implementation study 18 months prior to each compliance date. This report summarizes the second phase of the Implementation Study for equipment rated between 1-2 million Btu per hour.
COMMITTEE:
Stationary Source, December 1, 2000, Reviewed
RECOMMENDED ACTION:
Receive and file.
Barry R. Wallerstein, D.Env.
Executive Officer
Background
Rule 1146.2 – Emissions of Oxides of Nitrogen from Large Water Heaters and Small Boilers was adopted on January 9, 1998. Rule 1146.2 establishes NOx emission limits for large water heaters and small boilers ranging from 75,000 Btu per hour up to and including 2 million (MM) Btu per hour. Under Rule 1146.2(i), staff is required to work in cooperation with the public, industry and trade associations to conduct an implementation study 18 months before each compliance date. This report fulfills the requirement for the implementation study. There are no rule changes being considered. The study includes the following eight elements.
Consistent with Rule 1146.2(i) and the study’s intent, the Implementation Study is being conducted in three phases. This report represents Phase II of the Implementation Study, which covers existing units between 1 to 2 MM Btu per hour and must be presented to the Governing Board on or before January 1, 2001, eighteen months prior to the compliance date. Phase I of the implementation study was completed in July 1999 and covered new units 75,000 to 400,000 Btu per hour and Phase III, which must be completed by July 1, 2004, will cover existing units 400,000 to 1 MM Btu per hour.
Process
During the development of the implementation study, AQMD staff worked with a Steering Committee that is comprised of manufacturers, end-users, utilities, and other interested parties. Through this phase of the implementation study, the Committee met eight times. In addition, an independent third party contractor, GE EER, was hired to verify information and data collected, and to provide input on development of the final report. The Committee provided extensive input on the draft staff report. Appendix D includes specific recommendations from many of the Committee members.
Data and Resources Used
A variety of data was used to assess the eight study elements. Data collected and analyzed for the 1998 Rule 1146.2 Staff Report was used as a basis for the study. In addition, new information provided by the Southern California Gas Company (SoCalGas) was also used. Surveys, interviews and site visits with manufacturers, service representatives and end-users were also conducted.
Study Scope
This phase of the Implementation Study is focused specifically on existing units between 1 and 2 MM Btu per hour. Under Rule 1146.2, owners or operators with water heaters or boilers greater than 1 MM Btu per hour and up to and including 2 MM Btu per hour must meet a NOx emission limit of 30 ppm. The compliance date is July 1, 2001 for units manufactured prior to 1992, and January 1, 2002 for units manufactured after 1992. Compliance with the NOx emission limit can be achieved through retrofitting the existing unit with a low-NOx burner or replacement of the existing unit with a new low-NOx unit. Units that have an annual fuel usage less than 9,000 therms per year are exempt from the NOx emission limits.
Findings
In 1993, Ventura County Air Pollution Control District (APCD) adopted Rule 74.15.1, which established a 30 ppm NOx emission limit for boilers between 1 and 5 MM Btu per hour, similar to Rule 1146.2. AQMD staff visited several sites in Ventura County with units that have been retrofitted to meet the 30 ppm NOx emission limit, as demonstrated through source tests. Operators at these sites reported no problems with these retrofits.
Since Rule 1146.2 was adopted in 1998, manufacturers have responded to the emission limits. Over 10 manufacturers are providing or plan on providing low-NOx burners and retrofit kits that can achieve the 30 ppm NOx emission limit. Although manufacturers have not yet submitted applications to certify these units through the AQMD’s certification program, as the compliance date approaches and upon completion of this implementation report, applications for certifications are anticipated. Four original equipment manufacturers and 6 burner manufacturers have informed staff that they will have retrofit kits available.
Regarding new units, approximately 125 new models of low-NOx boiler and water heaters are available and have been certified through the AQMD’s certification program to meet the 30 ppm NOx emission limit. The availability of low-NOx technologies for retrofits and new units, in addition to the low-NOx retrofit units in Ventura County, are strong indications that the 30 ppm NOx emission limit is achievable within the July 2002 and January 2005 compliance dates.
The cost of retrofits and new units are consistent with cost estimates from the 1998 Rule Staff Report. The current average cost differential between a standard and a new low-NOx unit is approximately $4,800, and the current cost estimates for retrofits is $6,000 to $30,000. Based on these cost estimates, the cost-effectiveness for retrofits is expected to range between $3,500 - $8,500 per ton and for replacement units is expected to range between $3,300 - $7,100 per ton of NOx reduced, for a typical 1.5 MM Btu per hour unit. These cost-effectiveness estimates are based on a range of emission reductions of 260 to 375 pounds NOx per year, per unit, a 73 to 80 percent reduction.
Regarding the fuel use exemption, a threshold of 9,000 therms is expected to require reductions from approximately 23 percent of the units between 1 and 2 MM Btu per hour, while capturing approximately 80 percent of the NOx emissions. In addition, this fuel use threshold will exempt most units that are used seasonally, particularly those units used in schools and colleges for comfort heating during winter months. Sources below the fuel use threshold can use fuel flow meters, hour meters, or gas usage records to demonstrate compliance. Other non-profit organizations or small businesses that are above the fuel use threshold will be required to meet the 30 ppm NOx emission limit. AQMD staff will continue outreach activities to provide assistance.
Key Issues
Throughout the implementation study, staff worked with the Steering Committee and contractor to incorporate information and input. The draft report was reviewed thoroughly by the Committee and many changes were made in response to Committee input. Despite extensive efforts to resolve issues, there are still areas where different opinions remain.
The Committee developed a set of findings and recommendations for the Board to consider (Appendix C of the report). While many of the areas are similar to staff recommendations in this report, 3 issues remain:
Certification Status
The Steering Committee has expressed concern that there are no retrofit kits certified yet and therefore concludes that equipment is not and may not be commercially available. Ventura has had a 30 ppm NOx requirement for equipment in this size range from 1995 – 1998. Ventura requires a permit and individual source tests for this equipment, so no certification is required. Staff visited several facilities where equipment has been retrofitted, with positive experiences. It is common practice by manufacturers to submit applications for certifications within 6 to 9 months prior to an implementation deadline. Manufacturers are not required to submit applications for approximately 1 year (6 months before the compliance date). Some manufacturers may be awaiting action on this status report as well. Lastly, previous experience with certification programs for other equipment in Rule 1146.2 showed that manufacturers sent in applications much closer to the deadline. Certifications were typically processed by AQMD in 3-4 weeks.
The Steering Committee recommends another report to the Board in six months and a delay in the rule requirements if certified retrofits are not available for more than half of the existing boilers. Staff’s recommendation is that we continue to monitor certifications and return to the Board after certification applications are due if a problem occurs. This will help reinforce the need for development work by manufacturers and prevent sending the wrong signal that delay is likely.
Time for Strengthening Safety Provisions
AQMD staff agrees with the Committee that achieving NOx emissions should not compromise the safe operation of boilers and water heaters. AQMD staff is recommending to continue working with the Committee to monitor any potential safety issues associated with retrofit burners that might arise.
Staff does not support the committee recommendation of 45 days to resolve changes relative to strengthening safety procedures that are outside of AQMD’s jurisdiction or delay rule implementation. Staff is committed to assist the industry in addressing this issue in an expeditious manner and will facilitate 4 half-day meetings at 2 week intervals in January and February so the industry may finish this work. This proposed schedule will have changes finalized 15-16 months before the compliance deadline.
Cost Effectiveness
Some of the committee recommendations relate to assumptions used in the cost analysis, such as the baseline emission factor, capacity factor, and fuel savings. Staff used ranges for many parameters to accommodate all information in the analysis to estimate cost-effectiveness and was conservative in its assumptions. Relative to the baseline emission factor, the analysis in this report used a range of 110-140 ppm. The lower value is based on SoCalGas data from a sample of boilers. The 140 ppm value was used in the 1998 staff report, based on information from manufacturers, data from Rule 1146.1 rule development work and data from Ventura County’s Rule 74.15.1 rule work for equipment in this size range.
The capacity factor used in the 1998 staff report was 21.5%, which was retained in the range of analysis for this current effort. SoCalGas data indicated 20.3%, which was used as the lower end of the range.
Regarding fuel savings, some Committee members questioned the use of fuel savings data because it was not based on field measurements. The contractor collected direct data from manufacturers, service, and installer representatives, and end users and suggested conservative estimates of fuel savings. Staff concurs with the contractor’s assessment but agreed to use a range, including a highly unlikely value of zero, in the cost analysis to address this issue. Using worst-case assumptions would move values toward the higher end of the cost-effectiveness estimates, but the overall conclusions would not be affected.
Staff Recommendations
Based on the findings of the Implementation Study, the original implementation schedule is appropriate and no changes to the rule are recommended. AQMD staff will continue to work with the Committee to help the industry address safety concerns expressed by some members and will monitor progress on AQMD emissions certification. During this process, staff will recommend any changes to the Board if necessary. It is further recommended to proceed with Phase 3 of the implementation study (units greater than 400,000 up to and including 1 M Btu/hr) which will be submitted to the Governing Board by June 1, 2004.
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