Industrial Sector Integrated Solutions Model

Report

National Emission Standards for Hazardous Air Pollutants 

Portland Cement Manufacturing Industry

U.S. Environmental Protection Agency

Office of Air Quality Planning and Standards

Research Triangle Park, NC 27711

April 2009

Contents

Section	Page

  TOC \o "1-3" \u  1	Overview										  3

2	Mathemathical Formulation								  5	

3	The U.S. cement Industry								12

	3.1 	Cement Types and Categories							12

	3.2	Overview of the Cement Manufacturing Process					13

4	Cement-related Data used in the Industrial Sectors Integrated
Solutions Model		16

4.1	Industry and Emissions Control Technologies					16

	4.2	Emissions Abatement Approaches						24

4.3	Policy and Economic Parameters						26

5	Portland Cement NESHAP Analysis							28

6	Results											31

7	References										37

	

 

The Industrial Sectors Integrated Solutions (ISIS) Model

1	Overview

EPA is developing the Industrial Sector Integrated Solutions (ISIS)
modeling framework, which will include more detailed techno-economic
information for some of the key sectors, including cement, pulp and
paper, iron and steel and petroleum refining. ISIS will allow EPA to do
a more in depth analysis of firm or facility response to future EPA
policies and rules.  

ISIS, a dynamic linear programming model, will facilitate analysis of
emission reduction strategies for multiple pollutants, while taking into
account plant-level economic and technical factors such as the type of
kiln, associated capacity, location, cost of production, applicable
controls, and their costs. ISIS’ design allows for incorporating
multiple industries within a multi-market, multi-product,
multi-pollutant, and multi-region emissions trading framework. For the
emission-reduction strategies under consideration, the model has been
designed to provide information on: 1) optimal (least cost) industry
operation, 2) cost-effective controls to meet the demand for commodities
produced by the sectors under consideration, and 3) the emission
reduction requirements over the time period of interest. Accordingly,
the objective function in ISIS minimizes the cost of production and any
emission control requirements over the time horizon of interest, while
meeting the projections of demand for applicable commodities and
emissions constraints. Note that “leakage” of emissions by way of
foreign imports is currently not considered in the model.  

ISIS has a modular architecture as shown in Figure 1-1. Input data is
organized in various spreadsheets of an Excel Workbook. The ISIS code is
written in the General Algebraic Modeling System (GAMS) language. Input
data is passed on to the GAMS files. Input data consists of cement
industry database, which provides unit-level production, capacity,
production cost, and emissions information. The controls database
provides information regarding applicable air pollution control
technologies and their cost and emission control characteristics. A
policy module is used to specify various parameters of interest to the
analyst, such as emissions caps, emission reduction scenarios, and
discount rate. The input data, control data, and policy parameters are
then transmitted to the optimization part of the ISIS model, where they
are used to solve the selected base and policy cases. After solving, the
results are post-processed to calculate values of various outputs of
interest. The output data is exported to Excel spreadsheets for further
analyses and graphical representation of selected results.

The current version of ISIS includes data and modeling algorithms
describing the U.S. cement industry. This version has undergone a peer
review and more detailed information can be found elsewhere (EPA 2008a).
Comments and suggestions offered by peer reviewers have not been
incorporated into ISIS at this time, but will be as part of subsequent
model development.    A discussion of the current version of the ISIS
model and associated results of the analysis for the Portland cement
National Emission Standard for Hazardous Air Pollutants (NESHAP) are
presented in this document.  

Figure 1-1.	Architecture of the Industrial Sectors Integrated Solutions
Model

2	Mathematical Formulation

ISIS can be used to simulate the operation and costs of the chosen
sectors under reference case and policy cases. Policy cases may include
cap-and-trade, emissions taxes, and emissions limits as emission
reduction requirements. 

In the reference case, the model minimizes the total discounted cost
over the horizon of interest while meeting regional market demands for
the applicable commodities. Total cost includes the costs associated
with operation of production units, imports, and transportation
associated with inter-market trading of the commodities. While
determining optimal annual operation schedules for the production units,
levels of imports, and quantities of inter-regional-market trades, ISIS
is constrained by the capacities of the production units. These
capacities are dynamically optimized by endogenously installing new
production capacity, replacing or expanding the existing capacity, and
retiring non-competitive existing units.

In the policy case, the objective function of the model is modified to
include the cost of operation of emission control technologies on the
kilns to meet the applicable emissions requirement (e.g., emission cap
or limit). Thereby, optimal operation and cost of the sector are not
only affected by the variable costs of production units, but also by the
corresponding pollution control costs, and capital costs that have not
yet been incurred.  

Key equations within ISIS are described below. These include the
objective function and the constraints associated with regional demands,
production capacities, and emission reduction requirements. While ISIS
is designed to accommodate multiple sectors and commodities, for
simplicity, the description below is in the context of a single sector
and a single product.

The Objective Function and Constraints

The objective function is,

 	(  SEQ Equation \* ARABIC  1 )

Where,

dis(t) is the discount factor,

pc(t, i) is the annual production cost of unit i in year t, (dollars)

totalcontrolcost(t, i ,k) is the annual control cost of control k on
unit i in yeat t, (dollars)

ic(t, r) is the annual cost of foreign imports into region r in year t,
(dollars)

  is the annual cost of transport from region r to rr in year t,
(dollars) and 

 is the quantity of commodity supplied from region r to rr in year t
(tons).

The above objective function is solved with the following constraints.

Regional Supply and Demand

Total regional demand for the commodity can be met by regional
production, inventory from prior periods, imports in the current year,
and net trade from other regions. Thus,

 			(  SEQ Equation \* ARABIC  2 )

Where,

tp_r(t, r) is regional production (tons clinker) and the mass ratio of
clinker to cement is 0.92,

tinv_r(t-shlf, r) is regional inventory of commodity with shelf life
shlf (years), 

imports(t, r) is quantity of imports in region r in year t, (tons
cement)

nettrade(t, r) is net quantity of regional trade in region r in year t
(tons cement), and

d(t, r), is the demand for the commodity in region r in year t (tons
cement).

Emissions Reduction Requirements 

As mentioned before, ISIS is designed to allow evaluation of policy
cases including cap-and-trade, emissions taxes, and emissions limits as
emission reduction requirements. Cap-and-trade and emissions limit
formulations are presented here. Under the cap-and-trade mechanism,
controlled emissions in a year cannot exceed the emission cap for
pollutant j and any available banked allowances in that year. Thus,

 					(  SEQ Equation \* ARABIC  3 )

Where,

totalemissions(t, j) is the total annual controlled emissions of
pollutant j in year t (tons),

ec(t, j), is the emission cap for pollutant j in year t (tons),

bnk(t, j) is the quantity of banked allowances of pollutant j available
in year t (tons), and

bnk(t+1, j) is the quantity of banked allowances of pollutant j
available in year t+1 (tons).

For modeling emissions limit based policy, annual emissions of a
regulated pollutant have to be below the emissions limit and, therefore,
for new and existing kilns, the following constraints have to be
satisfied: 

  							(  SEQ Equation \* ARABIC  4 )

 							(  SEQ Equation \* ARABIC  5 )

where,

PlantEmissions(t,i,j) refer to the annual emissions of pollutant j by a
unit i,

emslmtExist(t,i,j) is emission limit proposed by the regulation for
existing units, and 

emslmtNew(t,i,j) is the emission limit proposed by the regulation for
new units.

The formulation of various costs in the objective function is described
below.

Production Cost

pc(t, i) is calculated by multiplying the specific cost of production
(i.e., cost for producing one unit of commodity) with the unit’s
production level in a given year. The specific cost of production is
comprised of fixed and variable costs. Fixed costs include annualized
capital costs and annual fixed operation and maintenance costs. Variable
cost has five components: (1) raw material cost, (2) labor cost, (3)
operation and maintenance cost, (4) electricity cost, and (5) fuel
consumption cost. Fuel type and annual consumption for each production
unit is determined endogenously by the model. Model chooses the
appropriate fuel based on the relative costs of fuels; under policy,
this choice is also influenced by fuel-specific emission factors. The
annual quantity of fuel is based on the level of production and
unit-specific fuel intensity (i.e., mmBtu needed to produce one unit of
product). This formulation allows the model to switch fuels in response
to changes in the relative fuel prices and emission reduction policies.

Annual Fixed Cost

The annual fixed cost ($), including annualized capital cost and annual
fixed operation and maintenance cost (FOM) cost, in year t for
replacement units, expansion units, and new capacity is calculated using

 		(4)

Annual Variable Cost

The annual variable cost ($) at a unit is calculated using

 				(5)

The annual fuel cost ($) for a unit is calculated as follows.

  	(6)

Where,

CRFplant is the capital recovery factor associated with capacity growth
and is determined using a plant economic life of 25 years and an
interest rate of 7%,

capital cost is the capital requirement in $/ton of clinker,

FOM is the fixed operation and maintenance cost contribution expressed
as a percentage of capital cost, RMT(i) is the raw material cost ($/ton
clinker) at kiln i,

VOM(i) is the cost of operation and maintenance ($/ton clinker) at kiln
i,

LBR(i) is the cost of labor ($/ton clinker) at kiln i,

ELC(i) is the cost of electricity use ($/ton clinker) at kiln i,

escfacrmt(t), escfacvom(t), escfaclbr(t), and escfacelc(t) are
escalation factors for raw material(s), operation and maintenance,
labor, and electricity,

eintensity(i) is the energy intensity (mmBtu/ton clinker) for kiln i,

fuelcost(i, f) is the cost of fuel f ($/mmBtu) at unit i,

escfacfuel(t, f) is the escalation factor for fuel f, and

prodnfuelrmt(t, i, f, m) is the production variable (tons clinker)
associated with use of fuel, f, and raw material, m, at unit i.

The sum of prodnfuelrmt (t,i,f,m) over all the fuels and raw-materials,
is equal to the total production by the unit, prodn(t,i) 

  							(7)

Production Capacity

Total annual production from a unit cannot exceed its rated production
capacity.

 										(8)

Where prodn(t, i) is the production level of unit i in year t, and
prt(t, i) is the annual production capacity of the kiln i in year t.

Annual Cost of Imported Cement

The cost of regional imports of cement is calculated using

 							(9)

Where importsprice(t, r) is the price of imports ($/ton of cement) in
region r. Import prices are exogenous to the model.

Emissions

Emissions can be generated from fuel firing and also from use of raw
materials (e.g., CO2 emissions from calcining of limestone in cement
kiln). As such, both of these emission generation mechanisms are
included in ISIS. Further, the ISIS framework includes algorithms to
estimate effects including uncontrolled emissions, controlled emissions,
and pollution prevention from process modifications and energy
efficiency measures. These algorithms are described below.

 		(10)

Where, polbasefuel(t,i,f,j) is the fuel-use-related baseline pollution
intensity (tons pollutant per ton clinker), polbasermt(t,i,m,j) is the
raw material-use-related baseline pollution intensity (tons pollutant
per ton clinker), and noretprodn(t,i,f,m,) is the production variable
associated with unit i using fuel f and raw material m in year t. 

 	(11)

Where retprodn(t, i, f, m, j, k) is the production variable associated
with use of kth control for jth pollutant at unit i using fuel f and raw
material m in year t, and cp(i, j, k), is the reduction efficiency of
control technology k for pollutant j at unit i.

  account for pollution prevention resulting from reduction in fuel
and/or raw material inputs with use of some controls (e.g., CEMstar). If
CEMstar is installed, its cost is calculated and reflected in the cost
of controls installed.

Annual pollution reduction from fuel input displacement (e.g., in
Mid-Kiln Firing) is

 	(12)

Where energydispl(i,k) is the displaced energy intensity (mmBtu per ton
clinker) from primary fuel to secondary fuel, polbaseprifuel(t,i,f,j) is
primary fuel emission intensity (tons per mmBtu), and
polbasesubfuel(t,i,sf,j) is substitute fuel emission intensity (tons per
mmBtu) 

Also,

 						(13)

Now total emissions from all units are

 					(14)

Note that production associated with each pollutant is the same;
therefore

 					(15)

Where,

 		(16)

Also,

 						(17)

Controls and Costs

ISIS includes algorithms for costs associated with a number of controls
and process modification options. In general, these costs are comprised
of the following components: (1) capital costs, (2) costs associated
with any reagent and/or catalyst consumption, (3) costs associated with
any reduction in fuel and/or raw material use, and (4) cost associated
with electricity consumption. This section describes the treatment of
these costs.

 			(30)

The model chooses least-cost control option to meet the regulatory
emissions requirements (by satisfying constraints in equation 4 and 5
above) such that over the horizon of the policy system cost of
production and installing controls is minimized. Annualized capital cost
is determined based on the total capital cost of the control, and a
capital recovery factor which is a function of discount rate and the
life of equipment which can be specified by the user in appropriate
input spreadsheet. 

	

The size of control equipment depends on several factors, including
flue-gas volume and production rate. For a given production rate, flue
gas volume can differ significantly among various kiln types. For
example, for wet kilns, typical exhaust gas flow rate (EGFR) is about
109 thousand standard cubic feet (SCF) per ton of feed, whereas it is
only about 45 thousand SCF for precalciner kilns. Further, if the
optimal control installation does not require the control to operate at
its full rated efficiency for the whole year, the model can allow the
control to be operated partially such that it meets the emission limits
at minimum cost.

Demand Response

Demand for cement is relatively inelastic.  The model is solved under
base and policy case. In the policy case, the shift in the supply curve
resulting from installation of controls results in higher market
clearing prices. The price difference in the base and policy case for
each market is used to calculate new value of demand in each market. The
policy module is then re-solved to obtain new price of the commodity in
an iterative loop until a user defined tolerance for variation in
successive iterations is met, to provide the user with new equilibrium
level of demand and price of commodity in each market. 

Detailed formulation of various cost components of the objective
function is described in details elsewhere (EPA, 2008a). 

The U.S. Cement Industry

3.1 	Cement Types and Categories

Cement is a finely ground powder which, when mixed with water, forms a
hardening paste of calcium silicate hydrates and calcium aluminate
hydrates. Cement is used in mortar (to bind together bricks or stones)
and concrete (bulk rock-like building material made from cement,
aggregate, sand, and water). Concrete production uses the majority of
cement produced.  

Portland and blended cement are both are used in concrete production but
Portland cement is by far the most common type of cement used for
concrete production. By modifying the raw material mix and, to some
degree, the temperatures utilized in manufacturing, slight compositional
variations can be achieved to produce Portland cements with slightly
different properties. In the U.S., the different varieties of Portland
cement are denoted per the American Society for Testing and Materials
(ASTM) Specification C-150. The ASTM standard C-150 recognizes eight
types of Portland cement:

Type I is for use in general construction (e.g., buildings, bridges,
floors, etc.)

Type IA is similar to Type I with the addition of an air-entraining
agent

Type II generates less heat at a slower rate and has a moderate
sulfate-attack resistance

Type IIA is similar to Type II with the addition of an air-entraining
agent

Type III is used when concrete must set and gain strength rapidly

Type IIIA is similar to Type III with the addition of an air-entraining
agent

Type IV has low heat of hydration and slow strength development

Type V is used when concrete must resist high sulfate concentration in
soil and groundwater

Portland cements are usually gray, but a more expensive white Portland
cement (generally within the Type I or II designations) can be obtained
by processing only raw materials with very low iron and
transition-elements content. In addition to the eight types of Portland
cement listed above, small volumes of specialty cements are also
manufactured. Other types of specialty cement include blended cement
(Portland cement mixed together with blast furnace slag or other
pozzolan), pozzolan-lime cement, masonry cement, and aluminous cement
(PCA, 2008a). The common industry practice, and that of the United
States Geological Survey (USGS), includes, within the Portland cement
designation, a number of other cements not within ASTM C-150, which are
composed largely of Portland cement and are used for similar
applications (e.g., concrete) (USGS, 2005). These include blended
cement, block cement, expansive cement, oil well cement, regulated fast
setting cement, and waterproof cement. Plastic cements and Portland-lime
cements are being grouped within the masonry cement designation. Because
Portland cement accounts for approximately 95% of the cement
industry’s total production (van Oss, 2008) and because the costs and
trends of this industry sector can be adequately captured by describing
the market processes associated with the production, distribution, and
use of Portland cement, in this work we are going to be focusing on
Portland cement.  In 2006, Portland cement’s market share in the
United States was 96%, while masonry cement’s market share comprised
the remaining 4%.

3.2	Overview of the Cement Manufacturing Process

Portland cement is produced from raw materials such as limestone, chalk,
shale, clay, and sand, which are quarried, crushed, finely ground, and
blended to the correct chemical composition. Small quantities of iron
ore, alumina, and other minerals maybe added to adjust the raw material
composition. The fine raw material is fed into a large rotary kiln
(cylindrical furnace) where it is heated to extremely high temperatures
[about 2640 °F (about 1450 °C)]. The high temperature causes the raw
material to react and form a hard nodular material called “clinker”.
Clinker is cooled and ground with approximately 5% gypsum and other
minor additives to produce Portland cement. The main steps in the cement
manufacturing process are illustrated in Figures 3-1 and 3-2. 

Traditionally, the heart of the clinker-production stage is the rotary
kiln. The rotary kiln is approximately 20 to 25 ft in diameter and 150
ft to well over 300 ft long; it is set at a slight incline and rotates 1
to 3 times per minute. The kiln is most often fired at the lower end
(sometimes, mid-kiln firing is used), and the cement materials move
toward the flame as the kiln rotates. The materials reach temperatures
between 2500 and 2700 °F (1370 and 1480 °C) in the kiln. Three
important processes occur with the raw material mixture during
pyroprocessing. First, all moisture is driven off from the materials.
Second, the calcium carbonate in limestone dissociates into carbon
dioxide and calcium oxide (free lime); this process is called
calcination. Third, the lime and other minerals in the raw materials
react to form calcium silicates and calcium aluminates, which are the
main components of clinker. This third step is known as clinkering or
sintering.

 

Figure 3-1. 	Schematic of the Wet Cement Process

Source: CEMBUREAU, 1999

Figure 3-2. 	Schematic of the Dry Cement Process with Cyclone Preheater
(schematic for a precalciner kiln would be essentially identical)

Source:  CEMBUREAU, 1999

4  	Cement-related Data used in the Industrial Sector Integrated
Solutions Model (ISIS)

ISIS is currently populated with data and information on the U.S. cement
industry. This cement industry model under ISIS is hereafter referred to
as ISIS-cement. The inputs to the ISIS-cement can be broadly categorized
into three main components: industry, fuel, and emissions database;
emissions abatement approaches database; and policy and economic
parameters database. The base year selected for the ISIS-cement is 2005.


4.1	Industry and Emissions

Existing, Planned/Committed, and Potential Units

In the ISIS-cement, the “industry, fuel and emissions” database,
contains information on 181 cement kilns that were in existence in 2005
and PCA’s projected capacity expansions thru 2010, as shown in Table
4-1 (PCA, 2006). The database also provides regional representative kiln
characteristics as inputs to the model to determine addition of new
production capacity (by facility), expansions (by facility), and
replacements (by kilns) beyond 2010. 

Table 4-1. Summary of Kilns Modeled in ISIS.

Kiln Population	Number of Kilns

Existing Kilns (2005)	181

PCA’s Projected New Kilns (through 2010)	27



Each kiln modeled in ISIS-cement is characterized by its location,
design (i.e., wet, long-dry, dry preheater, or dry
preheater/precalciner), clinker capacity (tons per year), vintage, and
retirement information when available (PCA, 2006). In addition each kiln
is characterized by its average variable costs components (Depro, 2007).

In previous economic analyses, five variables inputs in cement
production have been identified to determine kiln-level average variable
cost (AVC) function: raw materials; repair and maintenance; labor;
electricity; and fuel (Depro, 2007). Raw materials serve as the kiln
feed, and repair and maintenance are required for periodic upkeep of the
kiln. Labor is used in the quarry, operation, and for packing.
Electricity is consumed mainly by the auxiliary equipment, and fuel is
largely consumed in the kilns. The AVC for raw materials, labor, repair
and maintenance and electricity was determined following the methodology
in the EPA regulatory impact analysis of the cement kiln dust rulemaking
(EPA, 1998). In ISIS-cement, the AVC of fuel is determined in the model.
For each kiln, fuel intensity is calculated based on the calibrated
average variable primary fuel input (Andover Technologies, 2008a).
Regional fuel cost for various fuel types is obtained from the Energy
Information Administration (EIA)’s State Energy Data System (SEDS)
database (EIA, 2008a). The ISIS-cement model chooses the appropriate
fuel based on the relative costs of fuels; under policy, this choice is
also influenced by fuel-specific emission factors. The annual quantity
of fuel is based on the level of production and unit-specific fuel
intensity (i.e., mmBtu needed to produce one unit of product). This
formulation allows the model to switch fuels in response to changes in
the relative fuel prices and emission reduction policies.

Model Markets 

The U.S. cement industry is regional in nature. However, as reported by
the Potland Cement Association (PCA), regional markets are not
independent entities in themselves, and can face competition from firms
located in another markets (APCA. 1997). These markets are interlinked
in ISIS-cement by inter-market transportation matrix. Thereby allowing
kilns located in a given market to supply its output to another market
by inter-market trade. In ISIS-cement, each modeled kiln is located in
one of the 20 regional markets for the cement industry, shown in Figure
4-1. The characterization of these markets is based on EPA’s
regulatory impact analysis for the cement kiln dust rulemaking (EPA,
1998). The regional markets are driven by regional demand for cement.
PCA reports that the vast majority of cement produced in the United
States is being shipped fewer than 300 miles by truck due to its low
value and high cost of transport but cement plants typically face
competition from plants located outside of their markets, especially
when plants have access to less expensive rail and water transportation
(APCA, 1997). Further, cement manufacturers also face competition from
imports in several markets. In ISIS-cement, cement markets are modeled
as perfectly competitive. A transportation cost matrix enables
inter-market trades thereby linking all the markets. 

Figure 4-1.	Regional cement markets in the U.S.

Cement Demand Modeling

Cement demand projections through 2030 were obtained from the PCA
Long-Term Cement Consumption Outlook (PCA, 2008c). This demand is a
function of gross domestic product (GDP) growth, interest rates, special
construction projects (e. g., highways), and public sector construction
spending.  Portland cement plus masonry cement demand was 140.7 million
tons in 2005.  PCA expects cement demand will reach 201 million short
tons by 2030 which reflects an increase of nearly 61 million short tons
with a compound annual growth rate of 1.5%. For ISIS-cement model, PCA
demand data were aggregated into the 20 regional cement markets. PCA
projections of cement demand by market for years 2005 through 2030, in 5
year increments is shown in Table 4-1.

Table 4-1 Portland cement Demand by Cement Markets (Millions of Metric
Tons)

Market	Year

	2005	2010	2015	2020	2025	2030









Atlanta 	11.65	12.25	13.44	14.97	16.57	18.03

Baltimore/Philadelphia	8.37	8.43	8.95	9.68	10.38	10.78

Birmingham 	5.20	5.27	5.53	5.91	6.39	6.93

Chicago 	6.82	6.61	6.87	7.35	7.82	8.06

Cincinnati 	3.70	3.48	3.62	3.90	4.17	4.30

Dallas 	10.02	11.00	11.56	12.00	12.74	14.15

Denver 	4.45	4.53	4.83	5.23	5.60	5.80

Detroit 	4.49	3.99	3.90	4.12	4.49	4.90

Florida 	11.06	10.65	12.04	14.74	17.54	19.30

Kansas City 	4.44	4.23	4.42	4.80	5.16	5.30

Los Angeles 	11.20	11.29	12.21	13.49	14.72	15.55

Minneapolis 	3.57	3.47	3.69	4.10	4.52	4.74

New York/Boston	5.78	5.74	6.01	6.41	6.79	7.00

Phoenix 	6.85	6.84	7.92	9.62	11.49	13.09

Pittsburgh 	3.49	3.40	3.49	3.67	3.82	3.86

St. Louis 	4.80	4.69	4.95	5.42	5.90	6.17

Salt Lake City 	3.16	3.34	3.72	4.23	4.77	5.26

San Antonio 	9.95	10.39	11.51	12.94	14.41	15.69

San Francisco 	5.86	5.90	6.44	7.23	8.03	8.60

Seattle 	2.79	3.17	3.57	4.02	4.56	5.22

Total	  =SUM(ABOVE)  127.65 	  =SUM(ABOVE)  128.67 	  =SUM(ABOVE) 
138.67 	  =SUM(ABOVE)  153.83 	  =SUM(ABOVE)  169.87 	  =SUM(ABOVE) 
182.73 



Transportation-Interregional Trade

The cost of transporting cement is highly dependent on shipping
distances and access to less expensive (with respect to road
transportation) modes of transportation such as rail and water
transportation. In general, the cement markets can be interlinked
through inter-regional trade but competition is generally maintained on
a regional level because of the relatively high cost of transporting
cement.

In ISIS-cement, a transportation and inter-regional trade cost matrix
was developed based on inter-market distances and average transportation
costs reported in the literature by U.S. producers (Ryan, 2006). In
1994, American University’s Trade and Environment Database (TED) case
study on Cemex average transportation costs reported by U.S. producers
for shipments within 50 miles (80 km) of the plant were $5.79 per ton
(American University, 2008). These costs increased to $9.86 per ton for
shipments within 51 to 100 miles, $14.53 per ton for 101 to 200 miles,
and to $18.86 per ton for 201 to 300 miles. Transportation costs for
shipping from 301-499 miles is $22.36 per mile. For shipments 500 miles
or greater from the plant, transportation costs increased to $25.85 per
ton. These costs were escalated to base year 2005, based on changes in
the price of diesel from 1994 to 2005 obtained from the EIA (EIA,
2008b).

Imports

Historically, imported cement has met about 20 to 27% of total US demand
(based on data from 1998-2005). In ISIS-cement, the selected base year
(2005) regional import information was used to estimate import levels in
future years. In ISIS, imports are treated as perfectly elastic with an
upper bound on supply in a given market based on historical data.  PCA
reported that the industry arranges imported cement when domestic
production capacity is insufficient to meet demand (APCA, 1997).  Table
4-2 shows the regional import levels for 2005, estimated by using USGS
data (USGS, 2007a).  

Table 4-2. Portland Cement and Clinker Imports in Million Metric Tons by
Market and Customs District in 2005.

Market	USGS Customs District	Quantity, 

million metric tons

Atlanta	Charleston, SC	1.1

	Norfolk, VA	0.7

	Savannah, GA	0.1

	Wilmington, NC	0.4

Baltimore/Philadelphia	Baltimore, MD	0.1

	Philadelphia, PA	0.5

Birmingham	Mobile, AL	0.5

	New Orleans, LAa	1.7

Chicago	Chicago, IL	0.0

	Milwaukee, WI, Canada	0.2

Dallas	New Orleans, LAa	2.4

Detroit	Detroit, MI	1.3

Florida	Miami, FL	2.3

	Tampa, FL	3.5

	U.S. Virgin Islands	0.1

Kansas City	St. Louis, MO	0.0

Los Angeles	Los Angeles, CA	3.1

	San Diego, CA	0.7

Minneapolis	Duluth, MN, Canada	0.2

	Minneapolis, MN, Canada	0.0

	Pembina, ND, Canada	0.2

New York/Boston	Boston, MA	0.1

	New York, NY	1.3

	Ogdensburg, NY	0.3

	Portland, ME	0.2

	Providence, RI	0.7

	St. Albans, VT, Canada	0.1

Pittsburgh	Buffalo, NY	0.8

	Cleveland, OH	0.8

Salt Lake City	Great Falls, MT	0.1

San Antonio	El Paso, TX, Mexico	0.7

	Houston-Galveston, TX	2.6

	Laredo, TX, Mexico	0.1

	Nogales, AZ, Mexico	1.1

San Francisco	Honolulu, HI	0.4

	San Francisco, CA	2.4

Seattle	Anchorage, AK	0.1

	Columbia-Snake, OR	0.9

	Seattle, WA	1.5

Total

33.3

a Imports for New Orleans are distributed between Birmingham and Dallas
markets using baseline domestic production levels.

Source: USGS, 2007a

Capacity Retirement and Growth

Cement plants have a relatively long lifespan, typically 50 years or
more (FLSmidth, 2007).  Various factors, including (but not limited to)
raw material availability in the quarry, technology changes,
productivity, efficiency, longevity, reliability, maintenance and
long-term costs can affect the lifespan of a cement kiln. In
ISIS-cement, projected retirements of certain existing kilns were based
on information from PCA on capacity expansion estimates and supplemented
with information from individual cement companies on their plans for
shut-downs, new construction and kiln consolidation. Note that in ISIS
capacity growth can also lead to retirement of kilns. In this context
note that typical project for a greenfield site (includes permitting for
mining and construction) has a timeframe of 4-6 years and 1-3 years for
an existing site (includes permitting for capacity additions,
replacements, or repowering) (Andover Technologies, 2008b).

Fuel Intensity

In 2005, the cement sector consumed 451.2 trillion Btu (476 trillion kJ)
of energy (EIA, 2008c).  The Annual Energy Outlook (2008) energy use
profile for 2005 is shown in Figure 4-2. The primary fuel being burned
in kilns is coal. Coal is projected to remain the dominant fuel used by
the U.S. cement industry. However, there has been an increasing trend
towards using other fuels, particularly alternative fuels, such as coke,
waste tires, and other wastes, especially oily wastes. 

	Figure 4-2.	Commercial Fuel use profile by US cement industry in 2005.

Source: USGS, 2007a

PCA’s data on the heat input to various kilns by type of kiln was used
to develop kilns’ fuel intensities (PCA, 2004). The data, expressed in
heat input per unit of clinker [specific fuel consumption (SFC)) and
exit gas flow (wet) (EGFW)] are summarized in Table 4-3.  A kiln’s
specific fuel intensity is used to calculate fuel cost for each kiln.
For each individual kiln, the ISIS model determines the optimal fuel
type (to achieve emissions and production constraints at the lowest cost
possible) based on the regional cost of the chosen fuel and the kiln’s
specific fuel intensity. For example, under a carbon-constraint, natural
gas may be chosen as optimal fuel (though it many not be the cheapest
fuel).

Table 4-3.	Specific Fuel Consumption (SFC) and Total Exit Gas Flow (Wet)
(EGFW) Rate for Various Kiln Types.

Kiln Type	SFC	EGFW





	Million Btu/tona	Nm3/kg	SCF/tona

Wet	6.0	3.4	108,990

Dry	4.5	1.8	57,701

Preheater	3.8	1.5	48,084

Precalciner	3.3	1.4	44,878

a short ton

Note: SFC=specific fuel consumption; Source: EPA, 2007 (Table 3-3) 

EGFW=exhaust gas flow rate (wet): Source: PCA, 2004 (original data in
metric units)

Source: PCA, 2004

Emissions

The design of the ISIS Model can accommodate any number of pollutants of
interest. In the ISIS-cement, each kiln is characterized by its Nitrogen
Oxides (NOX), Sulfur Dioxide (SO2), and Carbon Dioxide (CO2) emissions
(tons per year). NEI 2002 NOX and SO2 emissions were grown to year 2005
by multiplying by the ratio of clinker production in 2005 to clinker
production in 2002 (EPA, 2005; EPA, 2006; USGS, 2007b). The CO2
emissions in 2005 were estimated based on 2005 clinker production and
USGS emission factors for calcination and combustion CO2 (van Oss,
2008).  The ISIS cement industry model uses emission intensities (ton
pollutant/ton clinker) to arrive at NOX, SO2, and CO2 emission
projections (Andover Technologies, 2008a).

For the Portland cement NESHAP analysis each kiln in the model is also
characterized by its mercury, total hydrocarbons (THC), particulate
matter (PM) and hydrochloric acid (HCl) emissions.  The characterization
by kiln of the Hg, THC, PM and HCl emissions is presented in the Summary
of Environmental and Cost Impacts of Proposed Revisions to Portland
Cement NESHAP (40 CFR Part 63, subpart LLL), April 17, 2009.

NOX emissions from cement kilns result primarily from the following
combustion process: oxidation of fuel nitrogen (fuel NOX) and the
oxidation of nitrogen in the combustion air (thermal NOX). Oxidation of
nitrogen in the feed materials (feed NOX) can also influence total NOX
emissions. Table 4-4 shows NOX emission intensities for cement kilns in
lb/ton of clinker and in lb/million Btu (mmBtu) (EPA, 2007).

Table 4-4. Estimated Uncontrolled NOx Emissions (lb/MMBtu) for Cement
Kilns.

Kiln Type	Heat Input,

Million Btu/ton of clinker	Uncontrolled NOx Emissions



lb/ton of clinker *	lb/mmBtu

Wet	6.0	9.7	1.62

Long Dry	4.5	8.6	1.91

Preheater	3.8	5.9	1.55

Preheater/Precalciner	3.3	3.8	1.15

* Average

Source: EPA 2007 (Table 3-3 and Table 6-1)

SO2 emissions from cement kilns are the product of sulfur in the fuel as
well as sulfur in the feed materials. Sulfur in the fuel will oxidize to
SO2 during pyroprocessing, and a significant amount is likely to be
captured in the form of sulfates as the gas passes through the
calcination zone. Compared to long dry and wet kilns, preheater and
precalciner kilns tend to be more effective at capturing fuel-generated
SO2. Accordingly, oxidation of sulfur in the feed materials is likely to
be a major component of total SO2 emissions. Table 4-5 shows median SO2
emissions for each kiln type for each market, and the color indicates
whether or not the emissions rate is above or below the median (Andover
Technologies, 2008a). Because several locations show that their
emissions are consistently above or below the median for all or nearly
all kiln types, location (i.e., limestone) appears to have a significant
role in SO2 emissions from cement kilns.

Table 4-5.	Median SO2 Emissions for Each Kiln Type in Each Market

  = above the median for that kiln type

  = below the median for that kiln type

CO2 emissions from cement kilns result from limestone calcination and
fuel combustion. It can be shown that the calcination releases 0.52 tons
of CO2 per ton of clinker produced, while fuel-based CO2 emission
factors range from 199.52 lb CO2/mmBtu for coal to 105.02 lb CO2/mmBtu
for natural gas (Andover Technologies, 2008a). 

4.2	Emissions Abatement Approaches

The Emissions Abatement Approaches database in ISIS-cement contains
information on abatement approaches for NOx, SO2, PM, mercury, HCl, and
THC available for application on various kilns types. Suitability of an
approach for a specific kiln is dependent on the kiln type. 

The three major categories of abatement approaches considered in
ISIS-cement are: combustion technologies, gas treatment technologies,
and process modification technologies. Combustion technologies operate
by reducing emissions or otherwise improving operation by making changes
to the firing process, such as by deploying a Low-NOx burner. Gas
treatment technologies, such as wet scrubber (WS), treat the gas and
remove the pollution by the addition of a reagent or by otherwise
treating the gas without affecting the pyroprocessing portion of the
kiln. Process modifications, such as CEMStar, actually change the
process or change the feed materials.

Cost, performance, and impacts of controls for cement kilns for NOx and
SO2 controls, as well as energy-saving approaches were developed
(Andover Technologies, 2008b), and built in ISIS-cement. For mercury,
THC, PM and HCl control cost, performance, and impacts of controls for
cement please refer to the Summary of Environmental and Cost Impacts of
Proposed Revisions to Portland Cement NESHAP (40 CFR Part 63, subpart
LLL), April 17, 2009.  For each control technology or emission abatement
approach, the following parameters are used in the model: 

Capital Cost 

Fixed Operating Cost

Variable Operating Cost 

Emission reductions (if any) 

Fuel Savings or increase (if any) 

Electricity Consumption Increase or Decrease 

Calcination CO2 impact (if any) 

By product benefits (if any) 

Water usage 

Table 4-6 shows the emissions control technologies available in
ISIS-cement. The table reflects the impacts of these technologies on
pollution reduction, electricity use, and water use where information
was available. Correspondingly, Table 4-7 shows the process
modifications available in ISIS-cement and their impacts.

Table 4-6. Control Technologies for Cement Kilns

↓ (30%)

↑





	Mid-Kiln Firing-Tiresa	*	↓ (35%)

↓ (0.94%)



↑

	Low NOX Burner + Mid-Kiln Firing- Tiresa	*	↓ (55%)

↓ (0.94%)



↑

	Low NOX Burners + Tire Derived Fuela	*	↓ (51%)

↓ (1.26%)



↑

	Low NOX Burners + CEMStarb	↓	↓ (51%)

↓**



↓

	Low NOX Burner + Selective Non Catalytic Reduction

↓ (65%)





↑	↑

Low NOX Burner + Selective Catalytic Reduction

↓ (90%)





↑

	Wet Scrubber (WS)	↓ (95%)

	↑

↓ 

(99.9%)	↓

(80%)	↑	↑

Dry Lime Injection	↓ (50%)

*

	↓ 



↑

	Activated Carbon Injection (ACI) + FF

	↓

(99.9%)

↓

(80%)

↓

(90%)



Regenerative Thermal Oxidizer (RTO)



↑	↓

(98%)

	↑

	WS+ RTO	↓ (95%)

	↑	↓

(98%)	↓ 

(99.9%)	↓

(80%)	↑	↑

Fabric Filter (FF)

	↓

(99.9%)







Membrane Bags

	↓

(99.9%)







* 	May be affected

** 	Raw material: 7.5%, fuel: 3%

a.	Tires are made of biomass, so there is an incremental CO2 emission
benefit. Because of the high heating value of tires compared to commonly
used fuels, CO2 emissions are lower. Tires produce slightly less CO2
than coal.

b. 	Combination of control and process modification

Table 4-7. Process Modifications.

Process Modifications	SO2

Change	NOx Change/

(Reduction %)	PM	CO2 

Change/

(Reduction %)	Hg	Electricity Use

Change	Water Use

↓	↓ (30%)	*	↓ **	*	↓

	Wet to precalciner	*	↓	*	↓ (46.8%)+

↑	↓

Long Dry to Precalciner	*	↓	*	↓ (34.6%)+

↑

	Preheater to Precalciner	*	↓	*	↓ (4.9%)+

↑

	*May be affected

** Raw material: 7.5%, fuel: 3%

+ Fuel based component

4.3	Policy and Economic Parameters

Policy Parameters

The ISIS model framework allows the user to select the policy case to be
evaluated. The user can select from cap-and-trade policy (with or
without deminimus requirements) emissions charge, or rate-based
(emission limit) policies. The user can specify the policy horizon (time
period) and the base year to be used for the model runs. Finally, the
user may choose to run ISIS such that blocks of years (e.g., every 5
years) are simulated instead of every year. This is accomplished by
choosing different step-sizes (time slices) in ISIS. The base year,
simulation horizon, and step-sizes can be chosen by the user depending
upon availability of the input data. 

For the Portland cement NESHAP analysis, ISIS analyzed a emission limit
policy (i.e., command-and-control policy) with specific emission limits
for each kiln for mercury, THC, PM and HCl.  

Economic Parameters

In the ISIS framework, the following economic parameters are needed:
discount rate, annual escalation rates, economic life for capital
recovery, and demand elasticity. For ISIS-cement, the default discount
rate has been chosen to be 7%, as recommended by the U.S. Office of
Management and Budget (OMB) for project evaluation (OMB, 1993). The
annual escalation rates used in ISIS-cement are shown in Table 4-8
below.

Table 4-8. Annual Escalation Rates Used in the ISIS Cement Industry
Model

Cost Component	Annual Escalation* Rate, %	Remark

Labor	0.65	BLS, 2008

Variable O&M	3.09 (BEA, 2008)	Cumulative average rate based on GDP
deflator from 1997-2006.

Coal	-0.01	EIA, 2008c

Coke	-0.01	Assumed same as coal.

Coal + TDF	-0.01	Assumed same as coal.

Natural gas	-0.21 (EIA, 2008c)

	Electricity	-0.08 (EIA, 2008c)

	Limestone	1.24 (USGS, 2008a)

	Gypsum	2.52 (USGS, 2008b)

	Construction materials 

(e.g., steel)	5.16

	* User can modify these parameters by going to the “EconImpacts”
workbook.

To estimate capital recovery factor for capital costs associated with
kilns and control technologies, economic life values of 50 and 15 years,
respectively, are used. Demand for cement is relatively inelastic and a
value of -0.884 is used for modeling demand elasticity. The value of
-0.884 is a short-run price elasticity of demand estimated as part of
econometric modeling (EPA, 1998).  

5	Portland Cement NESHAP Analysis

Affected Sources

The proposed Portland cement NESHAP affects kilns that are non-hazardous
waste kilns.  Based on 2005 data, 93 Portland cement manufacturing
facilities located in the U.S. and Puerto Rico are expected to be
affected by the proposed rule.  In 2005, these 93 facilities operated
163 cement kilns.  Even though the Portland cement NESHAP affects only
non-hazardous waste kilns, in ISIS-cement, all cement kilns in the U.S.
were modeled to meet demand but the emission limits are applicable only
to the kilns affected by the policy.  

Proposed Limits

Table 5-1 shows the emission limits of the proposed Portland cement
NESHAP being analyzed in ISIS-cement.  In Table 5-1 emission limits are
shown as 30 day average limits while Table 5-2 shows the emission limits
on an annual basis.  ISIS modeled emission limits on an annual basis.   

Table 5-1.  Proposed Emission Limits: 30 day average

Pollutant	Recommended Emissions Limit

	Existing Source	New Source

Mercury	61 lb/MM ton clinker	20 lb/MM ton clinker

THC (Surrogate for Organic HAP)	13 parts per million volume dry (ppmvd)
10 ppmvd

PM	0.074 lb/ton clinker	0.069 lb/ton clinker

HCl (major sources)	2 ppmvd	0.1 ppmvd



Table 5-2.   Proposed Emission Limits: Annual 

Pollutant	ISIS Input

	Existing Source	New Source

Mercury	28 lb/MM ton clinker	12 lb/MM ton clinker

THC (Surrogate for Organic HAP)	8 ppmvd 	6 ppmvd 

PM	0.01 lb/ton clinker	0.005 lb/ton clinker

HCl (major sources)	0.031 ppmvd	0.002 ppmvd



Control Technology Matrix

Under the proposed rule, kilns are expected to add one or more control
devices to comply with the proposed emission limits. Table 5-3 shows
control technologies and control efficiencies available in ISIS for the
Portland cement NESHAP analysis.  The control cost for these
technologies can be found in the Summary of Environmental and Cost
Impacts of Proposed Revisions to Portland Cement NESHAP (40 CFR Part 63,
subpart LLL), April 17, 2009.  Under the proposed rule, in addition to
meeting the emission limits, each kiln would be required to install
Continuous Emission Monitoring Systems (CEMS) to monitor mercury, THC
and HCl while bag leak detector (BLD) would be required to monitor
performance of all baghouses (fabric filters).  In ISIS each kiln
affected by this proposed rule was required to install the corresponding
monitoring devices.  Cost of such devices can also be found at the
Summary of Environmental and Cost Impacts of Proposed Revisions to
Portland Cement NESHAP (40 CFR Part 63, subpart LLL), April 17, 2009.

Table 5-3.  Control Technology Matrix by Pollutant with Control
Efficiency

Control Technology	Pollutants

	Hg	THC	HCl	PM	SO2

Wet Scrubber (WS)	80%

99.9%

95%

Activated Carbon Injection (ACI)	90%	80%

99.9%

	Regenerative Thermal Oxidizer (RTO)

98%



	Membrane Bags



99.9%

	Fabric Filter (Baghouse)



99.9%

	Wet Scrubber + ACI	80%	80%	99.9%	99.9%	95%

Wet Scrubber + RTO	80%	98%	99.9%	-	95%



ISIS Analysis

For the Portland cement NESHAP analysis, the time horizon chosen was
2013-2018.  In the reference case (base-case) the industry optimizes to
meet demand at the lowest cost while in the policy case optimization
happens to meet both the cement demand as well as the emission limits. 
ISIS-cement uses the input industry data in 2005 and optimizes in 2013
taking into account retirements, replacements, and expansions that
occurred from 2005 to 2009 plus those projected by PCA for 2010.  Beyond
2010, retirements, replacements and expansions are endogenously
determined by the model.

 

In the policy case, new demand and market prices are obtained using the
demand elasticity value of -0.884, and equilibrium quantity of demand
and prices are obtained by following an iterative convergence procedure.

6	Results

For the policy under analysis, ISIS simultaneously estimated 1) optimal
industry operation to meet the demand and emission reduction
requirements, 2) the suite of control technologies needed to meet the
emission limits, 3) the engineering cost of controls, and 4) the
economic impacts of the policy, taking in to account the effects of
demand response to cement price.  

Cement Demand

As mentioned earlier, in ISIS the demand for cement is regional and can
be met by local production, foreign imports, or by inter-market trading
(i.e., shipping from other regional markets).  Table 6-1 shows the
demand for cement in the reference and policy cases of the Portland
cement NESHAP analysis.  As shown in Table 6-1, under policy, cement
demand is estimated to drop 1.87 percent in 2013 or 2.5 million metric
tons, with an average annual drop of 1.55 percent or 2.2 million metric
tons per year during the 2013-2018 time period.

Table 6-1.  Projected Cement Demand 

Cement Demand

Year	Reference Case

(metric tons)	Policy Case (metric tons)	Change in Demand

(metric tons)	% Change

2013	133,830,720	131,323,560	-2,507,161	-1.87

2014	136,136,169	133,603,908	-2,532,261	-1.86

2015	138,679,477	136,407,678	-2,271,798	-1.64

2016	141,427,405	139,027,701	-2,399,704	-1.70

2017	144,346,692	142,945,367	-1,401,325	-0.97

2018	147,404,050	145,442,510	-1,961,540	-1.33

Average	140,304,086	138,125,121	-2,178,965	-1.55



Cement Imports

Since no emissions are associated with imports in the current version of
ISIS, under an emissions reduction policy, in general, import levels
will be higher than those in the reference case. Table 6-2 shows the
cement imports in the reference and policy case of the Portland cement
NESHAP analysis.  As shown in table 6-2, imports are estimated to rise
in 2013 by 1.39 percent or 0.44 million tons with an annual average of
0.4 percent or 0.13 million tons per year during the 2013-2018 time
period.

Table 6-2.  Projected Cement Imports

Cement Imports

Year	Reference Case

(meric tons)	Policy Case

(metric tons)	Change in Imports

(metric tons)	% Change

2013	31,499,143	31,938,182	439,039	1.39

2014	32,448,862	32,583,298	134,436	0.41

2015	33,502,556	33,578,114	75,558	0.23

2016	34,645,043	34,413,585	-231,459	-0.67

2017	35,501,369	35,501,369	0	0.00

2018	35,767,847	36,152,738	384,890	1.08

Average	33,894,137	34,027,881	133,744	0.39

Portland Cement Prices by Market 

ISIS-cement estimated the average national price for Portland cement in
the 2013-2018 time period.  Table 6-3 shows average cement prices by
market ($/metric ton cement) from 2013 to 2018.  ISIS estimated the
average national cement price to be 1.16 percent higher with the NESHAP,
or $0.92 per metric ton.  However, some markets could see an increase by
up to 6.7 percent.  Table 6-4 shows the average cement price by market
in the first year of the policy (2013). In some markets, where imports
or the units not affected by the proposed regulation, provide the
marginal unit of cement, there is no change in price of cement.

Table 6-3.  Average Cement Price by Market ($/metric ton cement)
(2013-2018)

Market	Reference  Case	Policy Case	% Change

Atlanta	$90.36	$91.11	0.83

Baltimore/Philadelphia	$92.08	$93.28	1.30

Birmingham	$66.12	$67.89	2.69

Chicago	$79.74	$80.51	0.97

Cincinnati	$72.69	$73.37	0.94

Dallas	$81.15	$82.38	1.52

Denver	$83.18	$83.86	0.82

Detroit	$76.16	$77.10	1.23

Florida	$97.17	$97.33	0.16

Kansas City	$75.88	$80.96	6.70

Los Angeles	$87.46	$88.20	0.84

Minneapolis	$84.33	$85.11	0.92

New York/Boston	$86.89	$87.73	0.96

Phoenix	$86.68	$87.44	0.87

Pittsburgh	$86.37	$87.70	1.55

Salt Lake City	$81.42	$82.17	0.92

San Antonio	$83.52	$84.05	0.63

San Francisco	$82.34	$82.61	0.33

Seattle	$86.34	$86.34	0.00

St. Louis	$74.38	$74.38	0.00

National Average	$82.71	$83.68	1.16



Table 6-4.  Average Cement Price by Market ($/metric ton cement) (2013) 

Market	Reference Case	Policy Case	% Change

Atlanta	$89.43	$90.81	1.54

Baltimore/Philadelphia	$91.22	$93.27	2.25

Birmingham	$65.32	$67.10	2.72

Chicago	$78.97	$80.33	1.72

Cincinnati	$67.91	$71.47	5.24

Dallas	$81.10	$82.51	1.73

Denver	$82.36	$83.34	1.20

Detroit	$76.26	$77.56	1.70

Florida	$95.83	$95.83	0.00

Kansas City	$73.90	$79.84	8.04

Los Angeles	$83.47	$83.47	0.00

Minneapolis	$83.47	$84.87	1.68

New York/Boston	$86.12	$87.21	1.26

Phoenix	$85.99	$87.38	1.61

Pittsburgh	$86.22	$87.62	1.63

Salt Lake City	$80.72	$82.09	1.70

San Antonio	$82.80	$83.74	1.14

San Francisco	$77.69	$79.45	2.26

Seattle	$85.46	$85.46	0.00

St. Louis	$73.43	$73.43	0.00

National Average	$81.38	$82.84	1.79



Control Technology Installations

Table 6-5 shows control technology installations in the U.S. Portland
cement industry in 2013 under the Portland cement NESHAP, as projected
with ISIS-cement.  To meet the emission limits, a combination of
controls are projected to be installed.  Installation of controls occurs
in 2013 and additional controls are installed throughout the horizon
analyzed (2013-2018) as new kilns come online to meet demand 

Table 6-5.  Control Technology Applications (2013)

WS	ACI	LWS+ACI	RTO	MB	WS+RTO

7	34	107	10	17	11



In 2013, ISIS projects a total population of 139 kilns.  ISIS projects
total annualized control cost for the proposed Portland cement NESHAP to
be $222 million in 2013.  Table 6-6 shows the total variable control
cost, annualized capital cost, annualized monitoring cost and the total
annualized cost for the Portland cement NESHAP under analysis.

Table 6-6.  Control Cost

Control Cost (Million $/year)	Million $/ year

Variable Control Cost 	63

Annualized Capital Cost 	131

Annualized Monitoring Cost	27

Total Annualized Control Cost 	222



Capacity Changes

One important characteristic of the ISIS model is that capacities are
dynamically optimized by endogenously installing new production
capacity, replacing or expanding the existing capacity, and retiring
non-competitive existing units.  Figure 6-1 shows capacity changes
projected by ISIS throughout 2013 to 2018.  Table 6-7 shows kiln
retirements in 2013.  With respect to the reference case in 2013, ISIS
identified a net retirement of 2.4 million metric tons of existing
capacity.  These retirements affect two kilns that have been determined
may close due to not being able to meet the mercury emission limits due
to unusually high mercury contents in their proprietary quarries (i.e.,
the mercury content of the raw material at limestone quarries).

Figure 6-1.  Capacity Changes (2013-2018)

Table 6-7.  Kiln Retirements and Capacity Replacement 

	Reference Case (2013)	Policy Case          (2013)

Kiln Retirements (2013)	13	17

Net Kiln Retirements in Policy Case	4



Emission Reductions

Table 6-8 shows the estimated emission reductions for mercury, THC, PM,
HCl and SO2 as a result of the Portland cement NESHAP as projected in
ISIS. In 2013, ISIS estimated reductions of 5.8 tons of mercury; 7,011
tons of THC; 2,687 tons of HCl; 8,618 tons of PM; and 85,078 tons of SO2
from corresponding emissions in the reference case 2013.

Table 6-8.  Estimated Emission Reductions

Pollutant	Emissions in 2005

(Tons)	Emissions in the Reference-Case (2013)

(Tons)	Emissions in the Policy-Case (2013)

(Tons)	Emission Reductions in Policy -Case (2013 baseline)

(Tons)	Percentage of Emission Reductions (2013)

Mercury	7	7	1.2	5.8	82%

THC	15,542	10,883	3,871	7,011	64%

PM	10,999	9,086	468	8,618	95%

HCl	2,963	2,872	185	2,687	94%

SO2	177,441	102,518	17,439	85,078	83%



Total Industry Cost  

In ISIS total industry cost, in the policy case, is estimated as the net
present value (2005$) of total cost of production, cost of imports,
installation of controls, inter-market transportation, and cost of
monitoring equipments installed over the policy horizon, to meet the
exogenously specified demand for cement.

As a result of the proposed Portland cement NESHAP, ISIS-cement projects
the cost to produce a ton of cement (including costs associated with
production, imports, transportation and control technology) to increase
from $56.11 per ton in the reference case to $57.47 per ton in the
policy case, or an increase of about 2.68 percent over the analysis
period of 2013 to 2018. Table 6-9 shows total industry cost for
reference and policy case ISIS’ runs.

Table 6-9.  Total Industry Cost ($/ton cement)

Total Industry Cost ($/ton cement)

Reference Case	Policy Case	% Change

56.11	57.47	2.68



Revenue

With respect to the reference case in 2013 ISIS projects the revenue of
the cement industry to fall by 1.2 percent or about $91 million (2005
dollars). The drop in demand in the policy case with respect to base
case is 1.87%. However, some of the drop in revenue is offset by higher
prices, leading to a smaller fall in revenues for the industry.

Estimate of Health Benefits 

The summary of benefits results using the emission reductions estimated
by the ISIS model for the proposed Portland cement NESHAP is shown in
Table 6-10.  We apply the same approach to estimating benefits resulting
from the ISIS-estimated emission reductions and the emission reductions
quantified in the Regulatory Impact Analysis of the Portland cement
NESHAP.

Table 6-10.  Summary of Health Benefits of the Proposed Portland Cement
NESHAP using Emission Reductions from ISIS* 

 	 	3% Discount Rate	7% Discount Rate

Pollutant	Emissions Reductions (tons)	Benefit per ton    (Pope)	Benefit
per ton    (Laden)	Total Monetized Benefits (millions 2005$)	Benefit per
ton    (Pope)	Benefit per ton    (Laden)	Total Monetized Benefits
(millions 2005$)

Direct PM2.5 	4,739	$180,000	$440,000	$860	to	$2,100	$160,000	$400,000
$780	to	$1,900

PM2.5 Precursors





 





SO2 	160,001	$23,000	$57,000	$3,800	to	$9,100	$21,000	$52,000	$3,400	to
$8,300

	Grand Total

$4,600	to	$11,000	 

$4,200	to	$10,000

*All estimates are for the analysis year (2013), and are rounded to two
significant figures so numbers may not sum across columns.  All fine
particles are assumed to have equivalent health effects, but the benefit
per ton estimates vary between precursors because each ton of precursor
reduced has a different propensity to form PM2.5.  The monetized
benefits incorporate the conversion from precursor emissions to ambient
fine particles, but they do not incorporate additional emission
reductions that would occur if cement facilities temporarily idle or
reduce capacity utilization as a result of this regulation or the
unquantifiable amount of reductions in condensable PM.  



7	References 

American University (2008). TED Case Studies: Cemex Case.   HYPERLINK
"http://www.american.edu/TED/cemex.htm" 
http://www.american.edu/TED/cemex.htm , accessed October 21, 2008.

Andover Technologies (2008a). NOx, SO2 and CO2 Emissions from Cement
Kilns. Andover Technology Partners, Memorandum to Ravi Srivastava,
September 23, 2008.

Andover Technologies (2008b). Cost and Performance of controls. Andover
Technology Partners, Memorandum to Ravi Srivastava, September 25, 2008.

APCA (1997). Comments on EPA’s Draft Economic Analysis of Air
Pollution Regulations for the Portland Cement Industry (May 1996),
prepared for American Portland Cement Alliance by Environomics, January
29, 1997.

BEA (2008). Current-Dollar and "Real" Gross Domestic Product. Bureau of
Economic Analysis, National Economic Accounts.   HYPERLINK
"http://www.bea.gov/national/index.htm" 
http://www.bea.gov/national/index.htm , accessed October 28, 2008.

BLS (2008). Annual percent change in unit labor cost (Manufacturing
Sector). Series Id: PRS30006112. Bureau of Labor Statistics.   HYPERLINK
"http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_nu
mbers&series_id=PRS30006112" 
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_num
bers&series_id=PRS30006112 , accessed October 28, 2008.

CEMBUREAU (1999). Best Available Techniques for the Cement Industry,
CEMBUREAU Report, The European Cement Association, December 1999.
D/1999/5457/December, Brussels.   HYPERLINK "http://www.cembureau.be" 
http://www.cembureau.be  

Depro, B.M. (2007). RTI International. “Documentation for Portland
Cement Kiln Cost Functions (2005)”, Memorandum to Keith Barnett, US
EPA, August 31, 2007.

EIA (2008a). State Energy Data System (Table 4). Energy Information
Administration, U.S. Department of Energy (USDOE).    HYPERLINK
"http://www.eia.doe.gov/emeu/states/_seds.html" 
http://www.eia.doe.gov/emeu/states/_seds.html , accessed October 21,
2008.

EIA (2008b). U.S. Diesel Retail Sales by All Sellers (Cents per Gallon).
Energy Information Administration, DOE.   HYPERLINK
"http://tonto.eia.doe.gov/dnav/pet/hist/ddr001a.htm" 
http://tonto.eia.doe.gov/dnav/pet/hist/ddr001a.htm , accessed October
21, 2008. 

EIA (2008c) Annual Energy Outlook 2008, DOE/EIA-0383(2008), June 2008.  
HYPERLINK "http://www.eia.doe.gov/oiaf/aeo/pdf/0383(2008).pdf" 
http://www.eia.doe.gov/oiaf/aeo/pdf/0383(2008).pdf , accessed October
21, 2008.

EPA (1998). June 1998. Regulatory Impact Analysis of Cement Kiln Dust
Rulemaking. Washington, DC: U.S. Environmental Protection Agency.  
HYPERLINK
"http://www.epa.gov/osw/nonhaz/industrial/special/ckd/ckd/ckdcostt.pdf" 
http://www.epa.gov/osw/nonhaz/industrial/special/ckd/ckd/ckdcostt.pdf ,
accessed October 21, 2008.

EPA (2005). EPA 2002 National Emission Inventory v3.   HYPERLINK
"http://www.epa.gov/ttn/chief/net/2002inventory.html" 
http://www.epa.gov/ttn/chief/net/2002inventory.html , accessed October
21, 2008 

EPA (2006). EPA 2005 National Emissions Inventory Version 2.   HYPERLINK
"http://www.epa.gov/ttn/chief/net/2005inventory.html" 
http://www.epa.gov/ttn/chief/net/2005inventory.html  accessed November
17, 2008

EPA (2007). November 2007. Alternative Control Techniques Document
Update - NOx Emissions from New Cement Kilns. EPA-453/R-07-006. Research
Triangle Park, NC. US Environmental Protection Agency. 

EPA (2008). AP 42, Fifth Edition, Compilation of Air Pollutant Emission
Factors, Volume I, Chapter 11: Mineral Products Industry.   HYPERLINK
"http://www.epa.gov/ttn/chief/ap42/ch11/final/c11s06.pdf" 
http://www.epa.gov/ttn/chief/ap42/ch11/final/c11s06.pdf , accessed
October 21, 2008. Complete document:   HYPERLINK
"http://www.epa.gov/ttn/chief/ap42/"  http://www.epa.gov/ttn/chief/ap42/
, accessed October 21, 2008. 

EPA (2008a). “Industrial Sector Integrated Solutions Model”. Model
Peer Review Documentation, prepared by ARCADIS U.S. Inc. for U.S.
Environmental Protection Agency, Air Pollution Prevention and Control
Division, Research Triangle Park, NC 27711. December, 2008.

FLSmidth & Co. A/S (2007). Q2 Report 2007. August 2007   HYPERLINK
"http://hugin.info/2106/R/1148414/219358.pdf" 
http://hugin.info/2106/R/1148414/219358.pdf , accessed October 21, 2008.

NAS (2004). Air Quality Management in the United States. National
Research Council (U.S.), Committee on Air Quality Management in the
United States, National Academies Press, Washington, 2004.   HYPERLINK
"http://books.nap.edu/catalog.php?record_id=10728" 
http://books.nap.edu/catalog.php?record_id=10728 , accessed October 21,
2008.

OMB (1993). US OMB, Circular A-4, September 17, 2003. 

PCA (2004). Innovations in Portland Cement Manufacturing. Portland
Cement Association. Edited by J. I. Bhatty, F. M. Miller, and S. H.
Kosmatka. 2004.

PCA (2006). U.S. and Canadian Portland Cement Industry: Plant
Information Summary. Portland Cement Association, Skokie, IL, 2006.

PCA (2008a). History & Manufacture of Portland Cement. Portland Cement
Association.   HYPERLINK
"http://www.cement.org/basics/concretebasics_history.asp" 
http://www.cement.org/basics/concretebasics_history.asp , accessed
October 21, 2008.

PCA (2008b). Practical Application of PCA Economic Forecast and Market
Assessments. Portland Cement Association, Education & Training, August
12-13, 2008, Skokie, IL. (Ed Sullivan PowerPoint presentation).

PCA (2008c). Forecast Report: Long-Term Cement Consumption Outlook. By
Ed Sullivan  January 31, 2008.   HYPERLINK
"http://www.cement.org/econ/pdf/Long-TermFlashwinter2007nonmember.pdf" 
http://www.cement.org/econ/pdf/Long-TermFlashwinter2007nonmember.pdf ,
accessed October 21, 2008. 

Ryan, S. (2006). The Costs of Environmental Regulation in a Concentrated
Industry. Department of Economics, MIT, Cambridge, MA, October 5, 2006. 
 HYPERLINK "http://econ-www.mit.edu/files/1166" 
http://econ-www.mit.edu/files/1166 , accessed October 21, 2008.

USGS (2005). Background Facts and Issues Concerning Cement and Cement
Data. U.S. Geological Survey, Open-File Report 2005-1152.   HYPERLINK
"http://pubs.usgs.gov/of/2005/1152/2005-1152.pdf" 
http://pubs.usgs.gov/of/2005/1152/2005-1152.pdf , accessed October 21,
2008.

USGS (2007a). 2005 Minerals Yearbook: Cement. U.S. Geological Survey, p.
16.2, February 2007,   HYPERLINK
"http://minerals.usgs.gov/minerals/pubs/commodity/cement/cemenmyb05.pdf"
 http://minerals.usgs.gov/minerals/pubs/commodity/cement/cemenmyb05.pdf
, accessed October 21, 2008

USGS (2007b). Mineral Commodity Summaries: Cement, U.S. Geological
Survey, pp. 40-41, January 2007.   HYPERLINK
"http://minerals.er.usgs.gov/minerals/pubs/commodity/cement/cemenmcs07.p
df" 
http://minerals.er.usgs.gov/minerals/pubs/commodity/cement/cemenmcs07.pd
f , accessed October 21, 2008.

USGS (2008a). Stone ( crushed) Statistics, U.S. Geological Survey (Last
Modified: November 2007).   HYPERLINK
"http://minerals.usgs.gov/minerals/pubs/commodity/stone_crushed/" 
http://minerals.usgs.gov/minerals/pubs/commodity/stone_crushed/ ,
accessed October 28, 2008.

USGS (2008b). Gypsum Statistics,  U.S. Geological Survey (Last Modified:
December 2007). Link:   HYPERLINK
"http://minerals.usgs.gov/minerals/pubs/commodity/gypsum/" 
http://minerals.usgs.gov/minerals/pubs/commodity/gypsum/ , accessed
October 28, 2008.

van Oss, H.G. (2008). Personal communication from Hendrik G. van Oss,
USGS, to Elineth Torrens, US EPA, on July 7, 2008.

Yates, J.R.. et al. (2003) CemStar Process and Technology for Lowering
Greenhouse Gases and Other Emissions while Increasing Cement Production.
  HYPERLINK
"http://www.hatch.ca/Environment_Community/Sustainable_Development/Proje
cts/Copy%20of%20CemStar-Process-final4-30-03.pdf" 
http://www.hatch.ca/Environment_Community/Sustainable_Development/Projec
ts/Copy%20of%20CemStar-Process-final4-30-03.pdf   accessed February 27,
2009.

$

;

T

V

X

Y

Z

[

\

-



!

#

$

%

&

-

:

;

";

<

=

G

N

P

Q

S

V

W

Y

[

a

b

›

œ

§

¹

\

]

^

_

`

a

b

›

œ

§

hˆi

gdˆi

hˆi

hˆi

h2E

hˆi

hˆi

hˆi

␃愁Ĥ摧濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

Ȁ

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

hç

h 

f

f

f

f

f

f

f

f

kd

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

f

␃ᐁ¤愀Ĥ摧濫

f

h7

h7

h7

h7

h7

h7

h7

h7

h7

h7

h7

h7

§

瑹濫

瑹濫

§

瑹濫

§

瑹濫

§

瑹濫

§

瑹濫

§

瑹濫

§

瑹濫

§

瑹濫

§

瑹濫

瑹濫

§

瑹濫

§

瑹濫

§

瑹濫

§

瑹濫

§

瑹濫

§

瑹濫

§

瑹濫

§

瑹濫

§

瑹濫

瑹濫

§

瑹濫

§

瑹濫

瑹濫

瑹濫

gd

h

h

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

h 

 

h

h

h

h

 

@

摫ť

h

h

h

h

摫Ǫ

 

@

摫ɯ

 

@

摫˴

 

@

€

€

X

摫ҁ

€

X

摫ԋ

€

X

摫֙

€

X

摫أ

€

X

kd(	

	ô

摫ߕ

摫ࡺ

摫ट

摫ৄ

摫੩

摫଎

摫ள

h

h

h

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

̀

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

瑹濫

h

摫䭈

摫䰸

 h

h

  h

h

 h

 h

h

  h

h

h

h

kd(M

yt

gd

kdïM

yt

kd¶N

yt

kd}O

yt

yt

h

摫儋

h

摫冎

”ÿG

³

摫刓

h

摫劆

摫匿

摫史

摫咥

摫啘

摫嘋

h

h

瑹濫

瑹濫

瑹濫

摫変

摫妁

摫媟

晆搉

晆弫

愀Ĥ摧䲗o

晆棗

摫濛

瑹珮s

晆浩

Ѐ&摧昷ò

Ȩ脈樃煸

Ȩ脈樃灓

ᔀ㕨᝿ᘀ瑨顜唀Ĉț脈樃玑

C

D

˜

™

š

à

á

!

'

,

-

R

S

ƒ

ȟ脈樃璀

ý

!

摧恹%ᨀƒ

„

Ñ

Ò

Ó

Ȩ脈樃瞶

Ȩ脈樃瘩

 In a “cap-and-trade” policy a cap on total emissions by the source
population under consideration is set by the regulator, and sources are
allowed to trade emission credits.

 Also referred to as “command-and-control” approach in the
environmental economics literature.

 Economic life of a plant is used to calculate the capital recovery, and
can be different from technical life of plant. 

 Use of escalation factor for variable cost components is to account for
“real” change in the value of input resource or economic rent over
time, and not to calculate nominal costs. 

 PCA does not specify if “coke” is metallurgical coke or petroleum
coke. Authors believe it is the latter.

  In the CEMStar process, steel or iron slag is introduced as feed
material into the kiln.  The steel is generally added at the inlet to
the rotary kiln, regardless of kiln type does not require any special
material processing beyond crushing to 3/4 to 1-1/2 inch pieces. CEMStar
generally has the potential to increase clinker production by up to 15%,
reduce NOx emissions by about 40%, and to reduce CO2 emissions by about
7%. (Yates, 2003).

 PAGE   

 PAGE   38 

