BOARD MEETING DATE: November 6, 2009
AGENDA NO. 30
PROPOSAL:
Amend Rule 1111 - NOx Emissions from Natural Gas-Fired, Fan type Central Furnaces
SYNOPSIS:
The proposed amendment would implement 2007 AQMP control measure CMB03 - Further NOx Reductions from Residential Heating Furnaces through the use of low NOx burner technology and improvements to heat exchange components in residential furnaces. The proposed amendment would lower the NOx emissions limit for the majority of new residential heating furnaces and for the first time establish a NOx limit on new furnaces used in mobile homes. The implementation is proposed to be phased in over a six-year period beginning 2012 with a financial incentive for early compliance and a technology assessment commitment prior to the effective dates. Other minor clarifications and reporting requirements are also proposed.
COMMITTEE:
Stationary Source, September 25, 2009, October 16, 2009, Reviewed
RECOMMENDED ACTIONS:
Adopt the attached resolution:
Certifying the Final Environmental Assessment (EA) for Proposed Amended Rule 1111 - NOx Emissions from Natural Gas-Fired, Fan type Central Furnaces; and,
Amending Rule 1111 - NOx Emissions from Natural Gas-Fired, Fan type Central Furnaces.
Allocate up to $4,000,000 from Fund 27, Air Quality Investment Fund (Rule 1121 – Control of Nitrogen Oxides From Residential Type, Natural Gas-Fired Water Heaters) for the following purposes:
$3,000,000 for early compliance with Rule 1111 emission limits, and
$1,000,000 for technology contracts in support of Rule 1111.
Barry R. Wallerstein, D.Env.
Executive Officer
Background
The purpose of Proposed Amended Rule 1111 – NOx Emissions from Natural Gas-Fired, Fan type Central Furnaces (PAR 1111) is to reduce emissions of nitrogen oxides (NOx) from gas-fired fan-type residential furnaces. The rule applies to manufacturers, distributors, sales outlets and installers of gas-fired furnaces. Natural gas fired fan-type central furnaces are used in residential and small commercial buildings to provide comfort heating.
Rule 1111 was adopted by the AQMD Governing Board in December 1978. Beginning January 1, 1984, the rule required residential furnaces to meet a NOx emission limit of 40 nanograms per joule (ng/J) of heat output (equivalent to 55 ppm at 3% oxygen). The rule requires manufacturers to certify that the emissions of a furnace are below the rule limit before it can be installed in the District. At the time of adoption, the AQMD Board also considered a requirement that furnaces meet a 12 ng/J NOx emission limit by 1995.
Rule 1111 was amended by the AQMD Board in July 1983 in order to place an upper limit on the size of equipment. The rule amendment limited applicability to furnaces with a heat input of less than 175,000 Btu per hour, or for combination heating and cooling units, a cooling rate of less than 65,000 Btu per hour. The 1983 amendment also revised the definition of efficiency, exempted units manufactured for use in mobile homes (manufactured housing), and clarified testing procedures.
Proposed Amended Rule (PAR) 1111 is based on Control Measure CMB-03 of the AQMD 2007 Air Quality Management Plan (AQMP). Control Measure CMB-03 proposed NOx emission reductions of 50 to 75 percent based on existing burner technologies that can achieve lower NOx emissions of 20 to 10 ng/J of heat output (30 to 15 ppm) in residential appliances and other equipment. There are at least three types of burners that can achieve these lower emission levels and could potentially be employed in the redesign of these units.
Public Process
The rule development effort for PAR 1111 is part of an ongoing process to reevaluate low NOx technologies for combustion equipment. To date, AQMD staff has held seven Rule 1111 Task Force meetings to discuss burner technology, implementation issues and other topics with representatives from affected manufacturers, trade organizations and other interested parties. At these meetings, low NOx technology, emission limits, emission testing and compliance dates were discussed. In addition, a Public Workshop for PAR 1111 was held on September 9, 2009 and PAR 1111 was discussed at the Stationary Source Committee on September 25, 2009 and October 16, 2009.
Affected Facilities
Proposed Rule 1111 affects manufacturers and distributors, wholesalers, builders and installers of residential furnaces. The Air Conditioning Heating and Refrigeration Institute (AHRI), the manufacturer’s trade organization, indicates that there are currently no manufacturers of fan-type gas-fired residential furnaces within the AQMD jurisdiction. However, these companies do maintain regional sales offices and distribution centers in the District. Manufacturers of mobile homes are also affected by PAR 1111. New mobile homes delivered to locations in the AQMD must have heating furnaces installed that comply with PAR 1111.
Summary of Proposal
The proposed amendments will establish a new NOx limit of 14 ng/J (20 ppm at 3% oxygen) for new furnaces, which reflects a 65% reduction from the current limit of 40 ng/J. The three main categories of furnace, condensing, non-condensing and weatherized, must meet the 14 ng/J limit in 2014, 2015 and 2016 respectively. New mobile home units, which are currently unregulated, will be required to meet 40 ng/J in 2012 and 14 ng/J in 2018. Because an average lifetime for a residential furnace in Southern California is about 20 to 25 years, replacement with 14 ng/J furnaces will not be completed until after 2043.
In an effort to encourage the early introduction of the 14 ng/J units into the marketplace and provide manufacturers with a means of partially recovering their product development costs, PAR 1111 provides an incentive for early compliance. Specifically, manufacturers will be eligible to receive a rebate payment of $75 for each 14 nanograms per Joule standard efficiency furnace sold and delivered into the District 90 days prior to the applicable compliance date. Further, to promote the introduction of not just compliant but also more energy efficient units, the proposal offers manufacturers a rebate payment of $90 for each 14 ng/J high efficiency furnace (greater than or equal to 90 percent annual fuel utilization efficiency) delivered and sold into the District 90 days prior to the compliance date. As funds are limited, payments for early compliance will be on a first come first served basis. PAR 1111 proposes a cap of $3,000,000 on early compliance rebates to all manufacturers.
Because of industry’s concern regarding the proposed emission limits and compliance dates, the proposed rule also includes a requirement for staff to prepare a technology assessment by April 1, 2013 to determine if emission limits or compliance dates should be revised. In support of the technology assessment, AQMD staff is proposing to make available $1,000,000 to fund up to four projects that will develop prototypes of 14 ng/J furnaces.
Further, PAR 1111 updates references to test methods, continues the AQMD program for manufacturers to certify the emission level of their products, and also provides more specificity in product labeling. To facilitate a smooth transition to the new units and allow depletion of existing equipment inventories, PAR 1111 also provides a temporary 10 month sell through period for units meeting the current emission limit and delivered into the AQMD prior to the compliance date.
Emission Reductions and Cost Effectiveness
Based on gas usage data from the California Energy Commission and the Southern California Gas Company, annual average NOx emissions from residential heating using natural gas were 9.7 tons per day in 2002 and estimated to be 11.1 tons per day in 2023 (2007 AQMP). Based on an average equipment life of 20 to 25 years, the proposed rule is estimated to reduce annual average emissions of NOx by 2.5 to 3.1 tons per day in 2023. It should be noted that because an average lifetime for a residential furnace in Southern California is about 20 to 25 years, replacement with 14 ng/J furnaces will not be completed until 2043 and the complete emission reduction benefit of this amendment is estimated to be about 6.8 tons per day (annual average). Since residential heating furnaces in Southern California are typically used between October and May, daily emissions and reductions for 2023 in these months can potentially be 5 to 6 tons per day. Staff estimates the cost effectiveness for PAR 1111 to be between $8,600 and $19,000 per ton.
Key Issues
District staff received many comments on the proposed rule at the public workshop, consultation meeting, and working group meetings. In addition, attendees provided letters summarizing their comments at the workshop and other meetings. From these comments, the following key issues have been identified: (1) the compliance schedule and technology studies, (2) labeling requirements, (3) high efficiency units, and (4) an alternate compliance option. These key issues are summarized in Attachment B.
AQMP and Legal Mandates
The California Health and Safety Code requires the AQMD to adopt an Air Quality Management Plan to meet state and federal ambient air quality standards and adopt rules and regulations that carry out the objectives of the AQMP. The Health and Safety Code also requires the AQMD to implement all feasible measures to reduce air pollution. This proposed amendment of Rule 1111 implements Control Measure CMB-03 of the 2007 AQMP to further reduce NOx emissions. The NOx reductions from this proposed rule amendment will help achieve compliance with federal and state ambient air quality standards for ozone, PM10 and PM2.5.
California Environmental Quality Act (CEQA) Analysis
Pursuant to California Environmental Quality Act (CEQA) Guidelines § 15252 and AQMD Rule 110, the AQMD has prepared an Environmental Assessment (EA) for proposed amended Rule 1111. The Draft EA was released for a 30-day public review and comment period from September 24, 2009 to October 23, 2009. No comment letters were received from the public regarding the Draft EA. The environmental analysis in the Draft EA concluded that proposed amended Rule 1111 would not generate any significant adverse environmental impacts.
Since the release of the Draft EA, minor modifications have been made to the document. However, none of the modifications alter any conclusions reached in the Draft EA, nor provide new information of substantial importance relative to the draft document. As a result, these minor revisions do not require recirculation of the Draft EA pursuant to CEQA Guidelines § 15073.5. Therefore, the Draft EA is now a Final EA and is included as an attachment to this Governing Board package.
Socioeconomic Analysis
The proposed amendments would affect manufacturers, distributors, and installers of natural-gas-fired, fan-type central furnaces. No manufacturers are located in the four-county area. Residential and commercial property owners and new construction builders would also be affected. About 180,000 furnaces are replaced or installed in the District each year. The proposed rule will increase the cost of a furnace by about $174. The average annual cost (from 2011 to 2025) of the proposed amendments is projected to be $30.4 million, of which residential and commercial property owners would incur $22.9 million (75 percent) due to projected higher cost. It is estimated that an average of 221 jobs would be forgone annually across all industries in the four-county area, which is 0.002 percent of the average baseline jobs during the same period.
Resource Impacts
Existing staff resources are adequate to implement the proposed amendments.
Attachments (EXE, 1.4m)
Summary of Proposal
Key Issues and Responses
Rule Development Process
Key Contacts List
Resolution
Proposed Amended Rule
Final Staff Report with Socioeconomic Impact Assessment
Final Environmental Assessment