Industrial Boilers After Maximum Achievable Control Technology (MACT)
The following presentation was delivered at the 80th General Meeting Monday afternoon session, May 9th, by Robert D. Bessette. It has been edited for content and phrasing. An accompanying slide presentation of his address can be accessed here.
The EPA has been actively seeking national emissions standards that would dramatically impact industrial, commercial, and institutional (ICI) boilers. Representing the industry constituents across America, the Commercial Industrial Boiler Owners Association (CIBO) has been at the forefront of this issue to minimize what can certainly result in dire economic consequences. Robert D. Bessette has been president of CIBO since 1995. Through CIBO he represents the interests of America's industrial energy users and producers on energy, environmental, and technology development issues. In this capacity he works very closely with the U.S. Congress, the Environmental Protection Agency (EPA), the Department of Energy (DOE), state governments, and trade associations. In this regard he promotes his membership as well as the nation's energy needs and objectives. For 36 years Mr. Bessette has worked in all aspects of the industrial energy sector from equipment design and development to all types of fuel application and use. Mr. Bessette graduated from the West Virginia Institute of Technology with a Bachelor of Science in Physics and a minor in Economics. He is the author of numerous publications, presentations, and editorials. In this address he discusses the latest and important developments on the Maximum Achievable Control Technology Standards, or MACT.
Mr. Bessette: I can remember a long time ago, I think it was 1972, I was working for Riley Stoker who designed boilers, and they sent me to Chicago to become a boiler salesman. One of my first trips after selling some boilers was to check on one of Riley's boilers in downtown Indianapolis, and I met a guy named Morris Kelsey. There was Morey testing boilers, and I had designed boilers. I had a degree in physics and had designed package boilers. Yeah, they worked real well. I hadn't really seen one. And there happened to be an inspector there, and they were testing safety valves. And Morey sort of takes me under his wing and moves me over to the side and says, “Are you sure you want to stay in here?”
“Well, yes, I want to stay in here.”
“We’re testing safety valves. Is it allowed?” he replied.
“Yeah . . .”
The next thing I know, I'm standing over to the side and the safety valve popped, and I was ready to get the heck out of there!
I appreciate everything you inspectors do because you make it possible for us to be in business. You make it safe for us. And the slogan this year, Safety: Consider the Alternative, is right. Sometimes we get in Washington, and people don't quite understand what boilers do and how powerful they are. I had a service guy who said, “You sell nothing but steel and iron and water. It's not until I breathe the fire of life into your boiler that we have something that works.” And you keep that fire of life going.
What I want to do today is ask a few questions to start with. I want to set a frame of understanding so we are on the same playing field. I want to provide our short summary of the boiler rule and give you some thoughts about compliance and what's going to happen in the industrial and institutional boilers. Then I’d like to talk a little bit about uncertainty and the litigation that's going to create a mess for everybody. Finally, I’ll end with an old Greek saying.
A Few Questions
Please raise your hands: How many of you would sell a product if it cost more to make than for which you could sell it? No hands. Should you be able to make a profit on a product? Do shareholders and investors and banks deserve a return on their investments? If I invest money in a company, do you think I should get my money back? Maybe a little bit more? I do.
Should you have to buy something if there is no guarantee it will actually do what you are buying it to do? No. I think, as everybody will agree – and I guess it’s the American way – you have to make a profit to be able to grow a product or a business. If you don't make a profit, pretty soon you are gone. Now, you can break even for a little while. But in the long run, you still have to make a profit to grow. If you don't make a profit, eventually the product line or the business is going to die. And this is fundamental to the way industry and everybody is thinking about how we have to live in today's economy.
Short MACT Summary
I have been involved with Boiler MACT since September 1995. We had a meeting with EPA, and we started what is called the Combustion Coordinated Rulemaking. It was a Federal Advisory Committee Act (FACA) group that began to assess putting together the dioxin rules, the New Source Performance Standards (NSPS) rules, and the Sanitary and Phytosanitary (SPS) dioxin. We moved forward until a point where we stopped. We made headway: if you burned energy or you burned anything to energy (generating electricity or energy), that product was a fuel, not a waste. They killed that, and EPA went into the process of rulemaking.
In 2003 they came out with a final rule for Boiler MACT. The final rule was something industry and pretty much everybody begrudgingly said, “I can live with this, I can make it work,” and they began to go down the path of spending money to do it. The environmentalists at that point didn't quite think it was good enough, so they filed suit within the courts, and we filed suit on behalf of EPA. The litigation went from 2003 to 2007. Compliance with Boiler MACT is a three-year process, so litigation was running in line with compliance. The rule was never stopped, so everybody had to work towards compliance.
In 2007 the courts vacated the Boiler MACT rule published in 2003 because they said you can't say if you burn something to make energy it's been called a waste. If you burn a waste to make energy, you can't – it's got to be an incinerator. So they said any waste makes you an incinerator and not a boiler. They vacated the existing rule, and by doing that, they vacated the Boiler MACT rule without ever looking at the merits of the case, and we started the process all over again.
Last year EPA came out with a proposed rule. After going through it, we found out there was nobody who understood how to comply with the proposed rule. Lots of comments went through, and we now have a final rule published March 21st of this year. The original proposed rule was not achievable, period. For some reason, the word "achievable" within Maximum Achievable Control Technology, affectionately called MACT, seems to have been lost – or its meaning seems to have been lost by EPA and the people publishing the rules, because we don't think it's technically achievable again. The final rules are better than the proposed rules; however, there are still some things unchanged and actually some things made worse.
There is good news and bad news in the final rules. In the final rules, EPA kept what they called a Gas 1 Work Practice Standard (there are different categories, and I will go through those in a little bit). Work practice standards don't have limits, but they have to do something in order to make sure the boiler is running the way it's supposed to be running.
They allowed a test that allowed some of the Gas 2 units. Gas 2 required some control technologies or control limits. They allowed you to say if it looks like a gas, burns like a gas, acts like a gas, and has emissions like a gas, then its gas, just like if it looks like a duck, it walks like a duck, it is a duck. It allows you to say that in the Gas 1 Work Practice Standards.
And then they put in another category that said limited use. Up until that time if you had a boiler that would only run 10 percent of the time per year, 870 hours a year, you had to put a full screen of controls and read the emissions limits at any time. They made these changes; it impacted the rule a little bit and changed the overall outcome. And I will tell you a little bit about the outcome later.
Other than natural gas, we do not believe the new rules are achievable. They added standards for dioxin and furans. We don't even know how to guarantee dioxin level control in boilers, and they found dioxin and furans in every class of boiler based on the testing. They wrote a materials/fuels definition that was supposed to allow you a way of defining if you had a fuel or a waste. If I have a fuel, I can burn it in a boiler and it can be controlled as a boiler. If I have a waste, I become an incinerator, and nobody wants to be an incinerator. We won't go that way, though.
They wrote a particulate matter (PM) standard [also known as particle pollution], but when they put it from the proposed rule to the final rule, they lumped the biofuel, biomass boilers, and coal boilers together for a PM, mercury, and chlorine, and then lumped them together. They dropped it by 80 percent.
We find most of the wood-fired boilers in the United States didn't need a bag house in order to meet the PM standards. They added some things called energy assessment and energy use systems and an energy audit requirement for all gas-fired units and all work practice units. And I think that's important, because for you people here, you are the only people I truly know of who actually see just about every boiler in the United States over the course of a one- or two-year period. You actually get to touch it. I get to go out in the field about once a year and remember what a boiler is and touch it and feel that thing working. You guys get to do that every day. That's going to become extremely important. And based on the last presentation (Michael Zdinak’s), your job may get easier. Maybe there won't be as many boilers around as there have been in the past.
The carbon monoxide (CO) limits for a biomass unit is still not achievable. People will tell you, if a little CO is good, a lot is better. Well, we all know that is not quite the truth. We know it can cause some problems when trying to run a boiler. That's going to be extremely important as we start looking at biofuel combustion and the kind of numbers and emissions EPA is trying to drive us to that we don't believe can be achieved in a safe and reliable way.
PM and 02 requirements, including new continuous emission monitoring controls or monitoring systems, are usually more onerous – they are going to be a bit of a problem. And there was a piece in the old rule that allowed for a health-based compliance alternative saying if I could show you there are no health-based problems outside of my fence line, I shouldn't have to put on a scrubber for hydrochloric acid, for HCO. If I show you there are problems, then I have to put a scrubber on it. That's a big cost for virtually no health benefits. EPA eliminated that, so right now we have a situation where just about every boiler in the United States running solid fuel with any chlorine in it is going to have to put a scrubber on the back end, which is going to make the actual operation of that boiler much more complicated. And I think the old days of looking at single-point positioning control systems are gone.
The biggest problem we have with the rule is we have to comply with all aspects of the rule simultaneously, yet EPA wrote the rule based on the best-performing units in each of the pollutant subcategories. There are 1,594 solid fuel oil-fired boilers left in the United States bigger than 10 million British Thermal Units (BTUs) per hour in major sources. They went to all of those units – that's all. There used to be 3,000 of them when I started in the business a long time ago, and ten years ago we were down to 2,800. When we did the original proposed Boiler MACT, there were 2,000, and now we are down to 1,500.
Less boilers, less work for you guys. Now, gas-fired boilers are probably going up. People are looking at ways of doing that but have to comply simultaneously when the rules are written on an individual basis. They took the best CO units, the best mercury units, the best units for PM, and the best units for dioxin and furan, and took all of the data (the best-performing 12%), took the average of that, which is 6% of the units able to comply without having to do anything.
Boilers and Process Heaters at Major Sources
A major source unit is a facility that emits (or has the potential to emit) 10 or more tons per year (tpy) of any single hazardous air pollutants (HAP), or 25 tpy or more of any HAP combination. If you are a major source, you probably know it; it's usually a pretty big boiler at a fairly good-sized facility. This is expected to apply to 13,800 boilers at 1,600 facilities. Those are all the boilers you guys see on an annual or semi-annual basis, and it includes boilers at universities.
More than 80 percent of those units are natural gas-fired boilers. That's why it was really important we supported the work practice standards for natural gas-fired boilers to minimize cost impacts for technology applications and use. And the standards apply to all existing units and new units. There are separate standards for existing and new units. Within those standards, they apply to 15 different subcategories. The solid fuel units they lump-summed for mercury, chlorine, and CO; then they have pulverized coal vessel elements for dioxin and PM, and the same elements for CO for fuel, so you have some variances across the 15 subcategories. Those 15 are important, and EPA has the ability, based upon what the court says, to subcategorize until their heart's desire. They say they tried to do it as little as possible, but they couldn't do it less than this.
Boiler MACT: Compliance Requirements
Clean Gas Units: For clean gas units, an annual tune-up is required. That's important, but it has no numerical emission limits; it’s just tuned up for efficiency and safe operation. Efficiency and safety may be things you, the National Board and ASME, would work on because you actually see those units on an annual basis. And finally, there is a one-time energy assessment for clean gas units that look at efficiency and those things that can improve the overall performance and operation of the unit. I don't believe they can do it without your input, because the safety of that operation is the primary requirement for everybody here. And there are some people in Washington that haven't the foggiest idea of what combustion is. They don't even understand efficiency, and they are trying to tell us how to do that.
Solid Fuel: Solid fuel (coal and biomass), oil, processed gas that's not clean gas. Landfill gas is processed gas that's not clean gas. There are some containing gases coming out of processes that may have a little bit of mercury, may have a little CO, or may have some other solids in it. Those gases are not what are called clean gases. They fall under this Gas 2 subcategory. They actually have numerical limits for mercury, dioxin, PM, chlorine, and carbon monoxide, and they have one-time energy assessments.
Limited Use: The limited use units operate less than 870 hours a year – not by capacity, actual hours.
New Units. New units are basically the same as old units, but the single best-performing unit in the United States sets the standard for that particular emission limit. When you take the best-performing standards for CO, dioxins, mercury, CL, and PM, and you look at the best performance on an individual basis, it’s comparable to looking at the best athletes in the world in football, basketball, baseball, soccer, and weight lifting. Pick the best five and you need one person who can do all of those sports at the same time. It’s impossible.
There is no single unit in the United States that can meet EPA's requirements for new units coming out in the Boiler MACT. Does that bode well for the prognosis for the future of coal or solid fuel boilers in the United States? Does the market for coal and boilers you have from now on exist with what you already see? Get to know your boiler well, because you may want it. When it starts to get old and it goes away, it's not coming back, at least the way it was.
Existing Unit Compliance with Final Standards
What we are seeing is future growth (if there is going to be future growth) coming from gas-fired boilers and boiler operations – as long as the work practice standards are withheld in the courts. When I looked at the database of the 1,594 units out there, we found 31 total boilers in the United States that could comply on their own without anybody having to do anything to them.
Of that list – remember I said they took the average of the top 12%, 6%? The test I use: there should be 6% of the units in a given subcategory that should be able to comply without having to do anything. If they had done that, I don't have a complaint. It's going to cost money and it still doesn't make decisions going forward -- "Can I keep the unit or the plant operating?" -- but at least it says I have something reasonable.
There are 26 biomass units out of 466. That's 5.58% – almost 6%. For coal-fired units (this administration and EPA – or this EPA, doesn't particularly like coal), we looked at the whole implication and found two units. One is a fluid-bed unit; the other is a pulverized coal-fired unit. That’s two out of 544 for a total of 0.37%. Only two units in the universe of coal-fired boilers can comply without having to spend any money. It should be 6%. This is not necessarily what we call an achievable rule.
For processed gas (Gas 2 units), there are two units out of 71 that comply without incurring costs (about 4.93%). It's not quite as good as we'd like, but at least it's getting someplace better than coal. Liquid units (heavy oils, light oils), are burning liquid more than 10 percent of the time a year – if you burn a fuel more than 10 percent of the time in a year, you are that fuel, so the worst fuel becomes your classification. Of those liquid units, there is only one unit that can comply, and there are 513 of those total units, so that's a 0.19 percent of the total universe that complies simultaneously with all the rules.
Compliance: Timeline for Decision Making
We believe the country has a problem with the Boiler MACT. There is a timeline in place companies must follow – companies must begin making decisions now in order to be in compliance by March 21, 2014 (three years from the date of publication). The actual date when it is finalized in the Federal Register is May 21 – the last day we have to file with the courts to see if we can make some modifications to this rule. I will talk a little bit about how we move forward, and where uncertainties are going to show up.
Businesses are currently thinking about what they have to do. By the time they get to August of next year, they need in their hands a solid decision on a given boiler, a given plant, and what they need to do to gain compliance to meet the law. Some of those people are actually thinking about how much it's going to cost. “Can my plant actually survive and be profitable if I add ten million dollars', twenty million dollars' worth of control technologies on an old 1960 Stoker fired boiler?” Remember – I can't afford to sell a product at something less than it costs me to make it.
We will begin to see that decision come out by August of next year. As you hear the economic news of the day, none of this is helping the economy and the businesses and the universities get strong and look at positive recoveries.
Boilers at Area Sources
Area source boilers are units inspectors see as well. They have, for the most part, work practices, and I will go through those really quickly. About 3,700 of them are coal-fired. These are little ones still in the schools. Pennsylvania, Illinois, Indiana, Ohio – you could go to some of the high schools and they still have the coal-fired units. There are about 11,000 area source boilers still fired by biomass, and these are usually less than 10 million BTUs per hour. There are bigger ones, but usually less than 10 million. There are about 168,000 of those units fired by oil. Standards are slightly different for existing and they are not really too bad.
But when you add in the major source units and these units, it’s about 200,000 boilers that will need to be looked at beyond what you inspectors currently do on a daily basis to look at safety, but they will need to be looked at in terms of safety and the ability for optimizing performance through boiler tune-ups and energy assessments.
Coal-fired units are still the small ones. They won’t have to worry so much about dioxin and furans and PM. They will have to look at two emissions, mercury and carbon monoxide. If their mercury numbers are high, they will probably need activated carbon injection at a bag house. That's very expensive. Their CO numbers are being driven down to numbers that are relatively low, where if you have wide swing operations, you may not be able to make it and still stay in safe operation. We know very well we can meet any CO number on just about any boiler if we don't have to worry about anything else. But the day I start worrying about anything else, like putting out the flame that I can't put back on again, what happens if there is extra fuel in that boiler?
Boiler MACT – Rule Requirements/Work Practice Standards
I think it's important for the National Board and ASME to look at work practice standards and how you might integrate them. It may be a new route for the National Board and ASME to pursue as we move forward into a new world of environmental overall boiler operations. [Refer to slide for Work Practice Standards.]
Thoughts on the ICI Boiler Future
I was on Capitol Hill sitting down with senate staff – I don't talk to the senators and congressmen, I talk to the staff people. They are actually more like us; they actually do things for a living. I guess the other guys do – they vote. We were sitting there talking, and she said, “Well, why steam?” I was sitting there, and I didn't have an answer. It's something fundamental. I know steam is the most efficient, effective way of using energy directly from solid fuels. I know that. But try to tell somebody brought up in an electronic world; they see electricity as the ultimate energy source.
Why steam? In a newsletter I wrote, I said, I will give anybody a $100 American Express gift card for an answer to the question (in 100 words or less), “Why steam?” I still don't have an answer.
It's a very simple question we assume, but it is not assumed in the world today. You ask a kid what steam is, it comes off the teapot. Well, that's where steam comes from, so boilers are teapots. They don't understand. There is not a perceived need. If there is no steam, I don't have boilers, and I don't have a job. I think parochial about that. If there is no steam and you don't have boilers, you guys have a lot less work, but you still have other pressure vessels that don't necessarily apply to steam, that have water. So you might still have a job and your workload might be a lot easier, but the boilers would be gone. And how many new solid fuel boilers will there be? If we don't get some changes to the rule, I won't make a bet on it here or any place else. It would be like betting on that 30-to-1 horse.
Now, the existing population – remember, there are 1,594 total large fired boilers – they are going to have to spend roughly at this point in time, $14.2 billion in capital costs to get those 1,594 units up to compliance (not necessarily guaranteeable compliance on dioxin or CO or a few others, but up to what we feel would be compliance with the Boiler MACT rule).
The original proposed rule was $22.6 billion. That $22.6 billion attributed to 230,000 jobs by an IHS Global Insights report. Using the same basic calculus that came up with the first report, we think this is about 220,000 jobs that will probably be lost in the manufacturing/institutional sector because of these Boiler MACT rules. That's a scary proposition, and we are a little bit worried about it.
Uncertainty and Litigation
We believe litigation can happen – if it can happen, it will. I am going to be filing suit and CIBO will be filing suit. We will be filing petitions for administrative review with the courts and the EPA, and we will be filing for a stay and see if we can push these rules out for a little bit while the reconsiderations are all underway.
There may be a chance the rule will move forward maybe one to two years, but we are still looking at rules that are for all practical purposes not achievable unless we have major changes in one or two years that will have to be complied with until now and 2016. So 2016, as things go on, the EPA is not at all in favor of doing anything that will tend to support the use of any coal or solid fuel in the future. They don't want to use oil. They want to use natural gas, and they don't want you getting any natural gas out of the thing.
The Fox and the Hedgehog
I remember back in about 1975, I used to read Harvard Business Review, and there was one little box on the side of page. The writer said, “The fox knows many things, but the hedgehog knows but one great thing.” And I'm reading it, and I said, “Yes, I'm an engineer/physicist-type person. What?” The writer went on to explain that the fox goes out and eats hedgehogs, and he's pretty sly and does everything he can to make sure he's going to get fed that day. If there is only a limited supply of hedgehogs, there comes a day when the fox eats the last hedgehog, and all of a sudden the next day he wakes up and he says he's still hungry and is looking for a hedgehog, and there's no more hedgehogs. Eventually the fox dies.
The hedgehog, on the other hand, doesn't eat all of his plants; he takes the outer shoots. And while he's doing that, he musses up the soil to make sure the shoots are alive and well, and he tends to fertilize it as he goes. So he supports his product source and food, and in the process, he survives for a long time.
What we know, and based on May 21, 2011 (the deadline for litigation), everybody is going to be filing, and if the environmentalists don't file any litigation on this rule, that means the work practices are probably safe and gas-fired boilers are probably safe. If they do file with the gas-fired boilers, we have a problem, and we don't know how we are going to handle it, but we will be spending a lot of money with lawyers. We will know more about what will happen on the 21st. The question I leave you with is, “Who is the fox and who is the hedgehog?”
We will know more on May 21, 2011, following the deadline for filing with EPA and the courts.