





Date:		May 2012

Subject:	Impacts of Nitric Acid NSPS Review -- NOX (Updated Memo for Final NSPS)
		Nitric Acid NSPS Review
      EPA Contract No. EP-D-11-084; Work Assignment No. 0-01  
        RTI Project No. 02103199.000.001

From:			Melissa Icenhour
							
To:			Nathan Topham
        OAQPS/SPPD/MICG (D243-02)
        U. S. Environmental Protection Agency
      Research Triangle Park, NC  27711

The EPA is required by section 111(b)(1)(B) of the Clean Air Act (CAA) to review and, if appropriate, revise existing New Source Performance Standards (NSPS) at least every 8 years.

The nitric acid NSPS (part 60, subpart G) has been reviewed in the past but the last review was more than 8 years ago. As a result of this, the EPA has received a citizen suit from Sierra Club and Environmental Integrity Project prompting a review of the standards.

The purpose of an NSPS review is to determine if the standards reflect the "degree of emissions limitation achievable through application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated."

The EPA requested information from companies operating nitric acid plants under CAA Section 114 authority to obtain short term NOX emissions data using EPA Methods 7, 7A, 7B, 7C, 7D, 7E (modified version), or 320 and long term NOX emissions data using NOX continuous emissions monitoring systems (CEMS). The EPA also collected cost data for NOX abatement technologies, including nonselective catalytic reduction (NSCR), selective catalytic reduction (SCR), and H2O2 injection. Cost data were received from 9 facilities with a total of 12 nitric acid production trains. This information was summarized in Summary of Cost Data Received from Section 114 ICR (NOX Summary) dated November 22, 2010. The capital recovery factor was based on 7% interest and 15 year useful life.

The purpose of this memo is to calculate the expected cost impacts for new and modified sources to meet a standard of 0.50 lb NOX/ton nitric acid.

The NOX Summary memo contained production data ranging from 40 tons per day (tpd) to 1,600 tpd of nitric acid. The data supports the use of two model plants to represent the nitric acid production industry. The first model plant size is 300 tpd and the second model plant size is 1,000 tpd. In the NOX Summary memo, the cost data were normalized based on the production rate at the facility (cost per ton of nitric acid produced). Table 1 shows the results of the cost data analysis for NOX control. These cost estimates are based on the installation costs gathered through the Section 114 request for information. They are shown here for comparison. Their inclusion is not an indication of the level of control that can be achieved with these control devices. CEMS data, as summarized in Statistical Evaluation of CEMS Data to Determine the NOX Emission Standard (Updated Memo for Final Standard), indicate that SCR and some NSCR units achieve a 30 day rolling emission rate of 0.50 lb NOX/ton acid. Available CEMS data from 1 facility using H2O2 injection indicate that the unit has emissions greater than 0.50 lb NOX/ton acid,  However, due to the limited data set (only from 1 facility), installing H2O2 injection may meet 0.50 lb NOX/ton acid. 

Table 1.  Normalized NOX Control Costs by Model Plant for New Sources 

                                    Control
                                300 tpd ($/ton)
                               1,000 tpd ($/ton)
NSCR
                                                                         $20.02
                                                                          $7.80
SCR
                                                                          $3.93
                                                                          $1.10
H2O2 Injection
                                                                          $2.06
                                                                          $1.36


The conclusion that selective catalytic reduction (SCR) is BSER has not changed from proposal. The justification includes the following reasons: (1) SCR is the only known NOX control technology being installed in new NAPUs; (2) SCR has been determined to be BACT; (3) SCR technology is less expensive and more cost-effective than NSCR for control of NOX emissions; and (4) SCR produces minimal secondary environmental impacts.

Table 2 shows the control device cost (annual cost per ton of acid) for an SCR installed at Agrium North Bend as part of a modification to the nitric acid plant. The plant produces 288 tons acid per day. SCR costs associated with a modification of a 1,000 tpd plant were not supplied. 


Table 2.  Normalized SCR Costs by Model Plant for Modified or Reconstructed Sources
                                    Control
                                    288 tpd
                                 ($/ton acid)
                                   1,000 tpd
                                 ($/ton acid)
SCR
$3.52
-----
  
Nitric acid production was estimated beginning with 2006 production data (TSD for Greenhouse Gas Reporting Rule), using the production growth of 6.5% from 2006 to 2007 (ICIS), the predicted production growth rate of 3% for 2007 through 2017 (ICIS), and the exclusion of plants that were not operating in 2010. These estimates are shown in Table 3. In the period from 2012 through 2017, the growth is expected to be approximately 1.48 million tons of nitric acid. Assuming 365 days per year, this equals approximately 4,000 tpd of nitric acid production. Using the model plants, the estimate roughly equals 3 production trains that produce 300 tpd, and 3 production trains that produce 1,000 tpd over the five year period after promulgation.

For purposes of this cost assessment, the growth will consist of five newly constructed production trains and one modification of an existing production train. These six production trains will become subject to the Subpart Ga limit of 0.50 lb NOX/ton acid between 2012 and 2017.

Table 3.  Nitric Acid Production Growth
                                     Year
                      Nitric acid produced (metric tons)
                          Nitric acid produced (tons)
                                Increase (tons)
                                                                           2010
                                                                      6,729,836
                                                                      7,419,644
                                                                    -----------
                                                                           2011
                                                                      6,931,731
                                                                      7,642,233
                                                                        222,589
                                                                           2012
                                                                      7,139,683
                                                                      7,871,500
                                                                        229,267
                                                                           2013
                                                                      7,353,873
                                                                      8,107,645
                                                                        236,145
                                                                           2014
                                                                      7,574,489
                                                                      8,350,874
                                                                        243,229
                                                                           2015
                                                                      7,801,724
                                                                      8,601,401
                                                                        250,526
                                                                           2016
                                                                      8,035,776
                                                                      8,859,443
                                                                        258,042
                                                                           2017
                                                                      8,276,849
                                                                      9,125,226
                                                                        265,783

For the five new production trains predicted from 2012 to 2017, the annualized costs of controlling NOX emissions for the 3 types of control equipment outlined in The NOX Summary were calculated using the costs in Table 1. The control costs are shown in Table 4. These are the costs for each of the control devices in the 5[th] year after promulgation of these standards.

Table 4.  Annualized Control Costs for New Production Trains in 2017
                               Model Plant (tpd)
                               Number of Plants
                              Nitric Acid (tons)
                                     NSCR
                                      SCR
                                     H2O2
                                                                            300
                                                                              2
                                                                        220,000
                                                                     $4,400,000
                                                                       $860,000
                                                                       $450,000
                                                                          1,000
                                                                              3
                                                                      1,100,000
                                                                     $8,500,000
                                                                     $1,200,000
                                                                     $1,500,000

For the 1 production train that will undergo modification or reconstruction from 2012 to 2017, the annualized costs of controlling NOX emissions for SCR were calculated using the costs in Table 2. The control costs are shown in Table 5. The capacity, emission reductions, and control costs for the modified plant are based on actual data submitted to the EPA by a modified facility. These are the costs for each of the control devices in the 5[th] year after promulgation of these standards.


Table 5.  Annualized Control Costs for Reconstructed or Modified Trains in 2017
                                  Plant (tpd)
                               Number of Plants
                              Nitric Acid (tons)
                                      SCR
                                                                            288
                                                                              1
                                                                        105,000
                                   $370,000


The production trains could use any of the three control types to control NOX emissions but we assumed that SCR would be universally applied as this is BSER. While hydrogen peroxide injection has the lowest potential costs, this control may not be feasible for all production trains. Also, some H2O2 and NSCR installations may not be able to achieve emissions less than or equal to 0.50 lb NOX/ton acid.

The potential NOX emission reductions were calculated in Table 6. The baseline emissions were calculated as 3.0 lb NOX/ton acid (the level of the existing NSPS). The controlled emissions were calculated as 0.50 lb NOX/ton acid.

Table 6.  NOX Emission Reductions for All New, Modified, or Reconstructed Production Trains with SCR Control in 2017
                                  Plant Type
                               Model Plant (tpd)
                                 Days per year
                               Number of Plants
                              Nitric Acid (tons)
                                 Baseline NOX
                                   (tons NOX)
                                Controlled NOX
                                   (tons NOX)
                        NOX Emission reductions (tons)
                                      New
                                      300
                                      365
                                       2
                                    220,000
                                      355
                                      55
                                      300
                                      New
                                     1,000
                                      365
                                       3
                                   1,100,000
                                     1,779
                                      274
                                     1,506
                                   Modified
                                      288
                                      365
                                       1
                                    105,000
                                      315
                                      17
                                      299
                                       
                                       
                                       
                                       
                                       
                                       
                                       
                                       
                                    TOTALS
                                       
                                     2,449
                                      345
                                     2,104
      

The last step in calculating impacts for sources to meet the revised standard of 0.50 lb NOX/ton acid is to calculate the costs and reductions per year over the 5 year period after promulgation. In addition to control equipment, each modified or reconstructed production train will be required to install the following: a stack gas flow monitor and a dual range NOX concentration monitor. The capital costs are $39,000 and $23,000, respectively. The annualized costs are $15,000 and $9,000, respectively. These costs were calculated using the CEMS Cost Model.

In addition to these costs, each new or modified production train will be required to perform an annual stack test according to Appendix F to Part 60. These testing costs were inadvertently excluded from the proposed rule. These tests are estimated at $12,000 per test. 


The costs for monitoring and testing are consistent with comments received from The Fertilizer Institute (TFI). The requirement of a NOX CEMS was included in the existing NSPS so its cost is not included in this analysis.

The SCR is already being used to control NOX emissions to the current NSPS level of 3.0 lb NOX/ton acid. As shown in Statistical Evaluation of CEMS Data to Determine the NOX Emission Standard (Updated Memo for Final Standard), there are at least 3 production trains using SCR that already meet the revised NSPS level of 0.50 lb NOX/ton acid. The control device costs are based on current usage where sources are only required under an NSPS to meet 3.0 lb NOX/ton. Sources are not likely to have spent additional money to meet a limit of 0.50 lb NOX/ton acid when they were only required to meet a limit of 3.0 lb NOX/ton. Therefore, we believe that the lower limit is achievable without additional cost impacts.

Accordingly, there is no incremental control cost to control NOX emissions for a facility that triggers Subpart Ga compared to the controls that would likely be installed if that same facility triggered Subpart G. The costs of monitors and operation and maintenance costs in the 5[th] year after promulgation are shown in Table 7 and Table 8.
      
Table 7.  Incremental Costs in 5[th] Year after Promulgation for All New Production Trains
                               Model Plant (tpd)
                               Number of Plants
                                   SCR Cost
                             ($2010-2[nd] quarter)
                                    Annual 
                                  stack flow 
                                 monitor cost
                             ($2010-2[nd] quarter)
                                       
                                       
                          Dual range NOX monitor cost
                           Annual stack testing cost
                            Total Annualized Costs
                              ($2010-2nd quarter)
                                      300
                                       2
                                      $0
                                    $30,000
                                    $18,000
                                    $24,000
                                    $72,000
                                     1,000
                                       3
                                      $0
                                    $45,000
                                    $27,000
                                    $36,000
                                   $108,000


Table 8.  Incremental Costs in 5[th] Year after Promulgation for All Modified or Reconstructed Production Trains
                                  Plant (tpd)
                               Number of Plants
                                   SCR Cost
                             ($2010-2[nd] quarter)
                                    Annual 
                                  stack flow 
                                 monitor cost
                             ($2010-2[nd] quarter)
                                       
                                       
                          Dual range NOX monitor cost
                           Annual stack testing cost
                            Total Annualized Costs
                              ($2010-2nd quarter)
                                      288
                                       1
                                   $370,000
                                    $15,000
                                    $8,900
                                    $12,000
                                   $406,000


Using the total monitoring costs, the cost effectiveness was also calculated. These numbers are shown in Table 9.  




Table 9.  Total Incremental Cost Effectiveness in 5[th] Year after Promulgation for All New, Reconstructed, and Modified Production Trains
                                  Plant (tpd)
                                     Type
                               Number of Plants
                            Total Annualized Costs
                             ($2010-2[nd] quarter)
                         NOX Emission reductions (tpy)
                              Cost effectiveness
                                  ($/ton NOX)
                                      300
                                      New
                                       2
                                    $72,000
                                      300
                                     $240
                                     1,000
                                      New
                                       3
                                   $108,000
                                     1,500
                                      $70
                                      288
                                      Mod
                                       1
                                   $406,000
                                      300
                                    $1,400
                                       
                                       
                                       
                                       
                                       
                                       
                                      All
                                     ----
                                       6
                                   $585,000
                                     2,104
                                     $280


For the new 300 tpd model plants, total annualized costs in the 5[th] year after promulgation are $72,000. The amount of NOX reductions expected in the 5[th] year after promulgation is approximately 300 tpy. This results in a cost effectiveness of approximately $240.

For the new 1,000 tpd model plants, total annualized costs in the 5[th] year after promulgation are $108,000. The amount of NOX reductions expected in the 5[th] year after promulgation is approximately 1,500 tpy. This results in a cost effectiveness of approximately $70.

For the modified 288 tpd plant, total annualized costs in the 5[th] year after promulgation are $406,000. The amount of NOX reductions expected in the 5[th] year after promulgation is approximately 300 tpy. This results in a cost effectiveness of approximately $1,400.

Overall, total annualized costs in the 5[th] year after promulgation are $585,000. The amount of NOX reductions expected in the 5[th] year after promulgation is approximately 2,104 tpy. This results in a cost effectiveness of approximately $280.


References
      
CEMS Cost Model. Updated March 2007. Accessed November 17, 2010.

Memorandum from W. C. Herz, Vice President of Scientific Affairs, The Fertilizer Institute.  TFI Comments on New Source Performance Standards Review for Nitric Acid Plants, Docket No. EPA-HQ-OAR-2010-0750. Document number EPA-HQ-OAR-2010-0750-0098. November 28, 2011.

Memorandum from M. Icenhour, RTI International, to B. Neuffer, EPA. Summary of Cost Data Received from Section 114 ICR. Document number EPA-HQ-OAR-2010-0750-0060. November 22, 2010.

Memorandum from M. Icenhour, RTI International, to B. Neuffer, EPA. Statistical Evaluation of CEMS Data to Determine the NOX Emission Standard (Updated Memo for Final Standard). May  2012.
  
U. S. EPA. Technical Support Document for the Nitric Acid Production Sector: Proposed Rule for Mandatory Reporting of Greenhouse Gases, January 22, 2009.
http://www.epa.gov/climatechange/emissions/archived/downloads/tsd/TSD%20Nitric%20Acid%20_EPA%201-22-09.pdf.






