Progress

Project Summary

Here is what EPA said (Boiler MACT Rule, pp. 100-101): 

[W]e determined that fuel switching was not an appropriate control technology for purposes of determining the MACT floor level or beyond the floor level of control for any subcategory. This decision is based on the overall effect of fuel switching on HAP emissions, technical and design considerations discussed previously in the preamble to the proposed June 2010 rule (75 FR 31896), and concerns about fuel availability. This determination is discussed in the memorandum “Development of Fuel Switching Costs and Emission Reductions for Industrial, Commercial, and Institutional Boilers and Process Heaters National Emission Standards for Hazardous Air Pollutants – Area Source” [“2010 Cost Memo”] located in the docket. 

It’s hard to know where to begin.  

“Concerns about fuel availability.”  Last I heard we were drowning in gas, to say nothing of the fact that EPA claims this in the context of deciding whether there is enough fuel for the 578 coal-fired boilers to join the 11,000 gas boilers already out there. (Regulatory Impact Analysis, “RIA”, p. 3-2.)  ANGA commented extensively on this issue, but to no avail. 

Operating costs.  EPA puts the annual costs of operating those 578 boilers at $8.122 billion.  2010 Cost Memo, p. 2.  EPA modeled gas at $11.66/MMBtu, and coal at $54/ton.  2010 Cost Memo, p. 10. Today’s Henry Hub spot for gas is $3.71, and NYMEX Central App coal is over $70.  

Capital Costs.  EPA puts the capital cost of switching all 578 of those coal boilers to gas at $1.171 billion. (2010 Cost Memo, p. 2). These numbers came from earlier work: “The same base costs and cost sources that were used for the 2002 analysis for the vacated rule were also used in this analysis, but escalated to 2008 costs.” (Id. p. 8).  In turn, the 2002 analysis relied on "a feasibility study from 1986 on converting oil- and coal-fired utility boilers".  (2002 Cost Memo, p. 5). In other words, EPA’s fuel-switching cost analysis is based entirely on data from 1986 (which is also cited directly in the 2010 Cost Memo, p. 8, n 3). 

Moreover, that 1986 study examined “the technical feasibility and capital costs retrofitting oil- and coal-fired utility boilers to burn intermittently natural gas (NG) and the parent fuel”, and then looked at a total of four boiler conversions, each of which actually burned oil, not coal.  Thus all of EPA’s cost data for deciding whether to fuel switch from coal to gas comes from looking at converting four oil-burning boilers to run on both oil and gas a quarter century ago.  And when EPA copied the 1986 cost data, it actually took the figures from just 3 of those 4 boiler conversions, and accidentally used a separate cost estimate for one of those three boilers as the fourth “conversion”. (Compare Cost Memo Appendix A-3 Cost Breakdown for Boilers 1-4 with 1986 Study Tables 9-13.)  

Moreover, while EPA claims that its regulatory requirements for multiple post-combustion controls on coal-fired boilers will achieve roughly the same emissions reductions as switching to gas (2010 Cost Memo, Appendix A-7), EPA does not compare the capital cost for its plan -- $4.5 billion – even to the assumed $1.171 billion cost of fuel-switching. (RIA, p. 3-2).  

CO2.  The Boiler Rule is completely silent as to the CO2 reduction benefits of fuel switching. This is a large oversight.