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NOx Control Technologies

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How to Profit from Texas SIP Rules

On Dec 6, 2000, the Texas Natural Resource Conservation Commission (TNRCC) adopted new stringent SIP rules to reduce nitrogen oxides (NOx). The good news is that the TNRCC has pushed back the reduction schedule. For the Industrial sector, 40% of NOx reductions are required by 3/31/2004, additional 40% reductions by 3/31/2005, and the final 10% reductions by 3/31/2007 (total reduction 90%). For the Utility sector, the first 44% reductions are required by 3/31/2003, additional 44% reductions by 3/31/2005, and the final 5% reductions by 3/31/2007 (total reduction 93%). Beginning in Jan 2002, TNRCC will allocate allowances to a site depending on the baseline emissions limit established from the average 1997-1999 levels. Although TNRCC uses emissions specification of each point source to calculate the site allowable emission level, each point source does not have to meet that level. It is up to the plant to decide on how to spend the allowance. For example, depending on the site economics, the plant may opt to “over control” the large emitters and “under control” the smaller ones. Most plants are subject only to mass cap on an annual basis (30 day rolling average and a daily limit for utilities). TNRCC has also adopted emissions banking and trading rules that go into affect Jan 2002. These rules offer flexibility in generating, using, banking and trading Emissions Reduction Credits (ERC’s) and Discrete Emissions Reduction Credits (DERC’s). Any NOx reduction beyond the state or federal limits can be banked as DERC’s, which will not have an expiration date. The DERC’s can be used to offset new projects, to trade in the market, or to supplement future requirements. After Jan 2002, facilities operating under the Cap and Trade program can bank any reduction in emissions beyond their allocated levels as unused allowances or as ERC’s with a life of 5 years. Unused allowances have a life expectancy of one year (the year it is generated and the following year).

The TNRCC allows trading between sites. New and modified sources will have to purchase allowances from the market to offset increases in NOx emissions. Actual cost of allowance will depend upon the market demand and availability. The present price of NOx is about $ 2,000 per ton. Recent reports from California indicate that NOx has been traded as high as $ 100,000 per ton. Although this may not happen in Texas, the potential for the price to escalate cannot be ruled out. The new rules are expected to reduce approximately 750 TPD of NOx from the Houston Galveston Area alone. With the projected prices, the NOx market can be expected to be in the range of $ 0.5 to 12 billion/year. This huge market has created a unique opportunity for plants to profit, provided they act fast. Entropy Technology and Environmental Consultants (ETEC) has conducted a study to understand how plants can profit from the new SIP Trading rules. Our study indicates that early NOx reduction to generate emission credits is the easiest option to profit from new regulations.

Potential values of NOx emission credits generated through Mar 2004 from early NOx reductions are shown in Figure 1.


In our study, a baseline NOx emission of 0.3 lb/MMBtu was assumed. Although for gas and oil fired units, ETEC has demonstrated that IFGR technology can reduce NOx up to 80%, the present analysis assumed a reduction of 70%. The potential value of NOx emission credits generated through Mar 2004 was calculated from the present NOx value of $ 2,000 per ton. Clearly to maximize profit potential, early NOx reduction is the only option. As the installation is delayed, the potential to profit from the new regulations is reduced. IFGR systems are very cost-effective; our calculations (based on NOx value of $2,000/ton) indicate that for a typical installation, the payback period is less than 4 months. For larger units, the payback is expected to be in less than 2 months! If you expect the price of NOx to escalate, the case to install a cost-effective NOx reduction system as soon as possible becomes even stronger.

Clearly, to profit from the new rules the time to act is NOW! Now is the time to assess your situation and develop a strategic plan. Assess your baseline emission levels and calculate allowances for 2002-2007 based on existing business plans. Select the most cost effective approach and install it at the earliest to profit from the new rules. Include trading ERC’s/DERC’s/allowances in your plans. Identify existing voluntary reductions that have not been banked. Also identify potential voluntary or early reductions that can be made and bank them as DERC’s. Remember, the incremental costs to reduce NOx from 70% levels to 90% levels increases exponentially due to high cost of SCR. To delay major capital expenses such as installation of SCR, it will be of great value to bank ERC’s/DERC’s/allowances now, either to cash them in at a later date or to trade them at a higher value. To profit from the new rules, the time to act is NOW.

“Early installation of cost-effective NOx reduction systems is a “no-brainer” option to profit from the new regulations”
.... Dr. R. K. Agrawal

For the price of a NOx Control Study, we will install a system that can reduce NOx by up to 80%. AND if you act soon, the system will not only pay for itself in a couple of months, but will continue to generate profits in terms of emission credits!
.... S.C. Wood, President, ETEC

Entropy Technology & Environmental Consultants, Inc. (ETEC) offers a cost-effective technology- Induced Flue Gas Recirculation (IFGR) that eliminates the need for a separate FGR fan and wind box mixing devices. ETEC’s proprietary IFGR technology is based on utilizing the capacity of the existing forced draft fan to pull (induce) about 5 – 25 % of flue gas into the combustion air at the fan inlet. IFGR technology requires very minor modifications and has relatively little or no impact on performance and operation. IFGR systems cost about one third of low NOx burner systems and can be installed during a one-day turnaround! Unlike other combustion control systems, IFGR system improves fuel and air mixing inadequacies and improves the combustion efficiency. IFGR technology is best suited for gas and low sulfur oil fired units with forced draft fan. ETEC has been responsible for pioneering the installation of IFGR at the first electric utility boiler (see Reliant Energy Induced Flue Gas Recirculation Program: Final Report, June 2000, Electric Power Research Institute (EPRI), Palo Alto , CA). Since then, ETEC has successfully applied its proprietary IFGR technology on over 24 units ranging in size from 40 MM Btu/hr through 6,000 MMBtu/hr (600 MW) units.

To evaluate if IFGR technology is suitable for your needs, or if you need additional information on ETEC, IFGR and other NOx reduction technologies, please visit us at http://www.etecinc.net or contact us at (281) 807-7007 or by e-mail at: info@etecinc.net.