BOARD MEETING DATE: October 1, 2010
AGENDA NO. 15

PROPOSAL:

Recognize Funds from San Joaquin Valley Air Pollution Control District to Promote Development of Natural Gas-Fired, Fan-Type Central Furnaces with Reduced NOx Emissions  

SYNOPSIS:

In November 2009, the Board approved amendment of Rule 1111, which regulates natural gas-fired, fan-type central furnaces, to lower the NOx emission limit from 40 to 14 nanograms per joule of useful heat with phased effective dates beginning October 2014. In amending the rule, the Board also dedicated $1,000,000 to assist industry in developing furnaces that can meet the new NOx limit. The San Joaquin Valley Air Pollution Control District is also engaged in rulemaking to lower NOx emissions from this type of furnace and has offered to contribute $50,000 to the AQMD’s furnace development program to expedite commercial availability of furnaces with reduced NOx emissions and so that its rulemaking can benefit from information as it becomes available. 

COMMITTEE:

Technology, September 24, 2010, Recommended for Approval

RECOMMENDED ACTION:

Recognize upon receipt $50,000 from the San Joaquin Valley Air Pollution Control District (SJVAPCD) and place in Fund 27, Air Quality Investment Fund (Rule 1121 – Control of Nitrogen Oxides from Residential Type, Natural Gas-Fired Water Heaters) to cofund the development of Natural Gas-Fired Fan-Type Central Furnaces with reduced NOx emissions.
 

Barry R. Wallerstein, D.Env.
Executive Officer

Background

At the November 6, 2009 meeting, the Board amended Rule 1111 – Reduction of NOx Emissions from Natural-Gas-Fired, Fan-Type Central Furnaces by lowering the NOx emission limit to 14 nanograms per joule (ng/J) of useful heat from 40 ng/J of useful heat, which it had been since 1984. This action implemented control measure CMB-03 of the 2007 Air Quality Management Plan—“Further NOx Reduction from Space Heaters.” The new NOx emission limit is phased in for several furnace categories that are defined in the Rule, beginning October 1, 2014.

During rule development, staff found that there were no commercial products currently available that could meet the new NOx limit, although some major manufacturers expressed confidence that compliant products could be developed. To expedite these development efforts so that compliant products will be available as the new NOx limit takes effect, staff was directed by the Board to issue a Request for Proposals (RFP) in an amount of up to $1,000,000 to develop a natural-gas-fired, fan-type central furnace compliant with the 14 nanograms per joule NOx limit that conforms to all applicable safety requirements.

Technology Furnace Development Projects

RFP #P2010-17 was issued February 5, 2010. The RFP solicited bids from qualified applicants with experience and expertise in development of small, low-NOx natural gas burners and integration with fan-type central furnaces. Four proposals were received from the following bidders: the Gas Technology Institute with a team of five furnace manufacturers, Beckett Gas, Inc. with a team of two furnace manufacturers, Nordyne and Ingersoll Rand. A total of $1,447,737 was requested by the four bidders.

The proposals were evaluated by a technical panel consisting of one AQMD Program Supervisor-Planning and Rule Development; one AQMD Air Quality Engineer-Monitoring and Source Testing; one AQMD Air Quality Engineer-Best Available Control Technology; one retired AQMD Program Supervisor-combustion expert; and one Senior Engineer from the California Energy Commission / lead for the CEC Building Energy Efficiency Research and Development Team. Breakdown of the five panelists is one African-American, one Asian-Indian, and three Caucasian; five male.

All four proposed projects were judged qualified for funding, and the five panel members agreed that all four had good potential for success. Staff concluded that funding all four proposals would maximize the probability that multiple compliant products would be developed, especially since the four proposals contained significant differences in technologies and technical approaches.

The Southern California Gas Company (SoCalGas) reviewed the proposals and, concluding that its customers would be best served if all four proposed projects would proceed, offered to contribute $447,737 so that all four projects could be fully funded.

At its July 9, 2010 meeting, the Board recognized the SoCalGas funds and authorized the Chairman to execute contracts with all four bidders for a total not to exceed $1,447,737 from the Rule 1121 portion of the Air Quality Investment Fund (27).

Offer to Contribute Funds

The San Joaquin Valley Air Pollution Control District (SJVAPCD) Rule 4905 regulates NOx from natural gas-fired, fan-type central furnaces. SJVAPCD had committed, in its 2008 PM2.5 Plan, to amend its Rule 4905 in the second quarter of 2010. At its June 2010 meeting, the SJVAPCD Board approved extension of the Rule 4905 amendment to the fourth quarter of 2014 and authorized the Executive Director to contribute $50,000 to AQMD’s furnace development projects. This action was taken for the purpose of promoting development of furnaces with lower NOx emissions and to allow SJVAPCD’s rulemaking to obtain expedited information and maximum benefit from AQMD’s development projects.

Staff has received a letter from the SJAVPCD Executive Director/Air Pollution Control Officer, dated September 2, 2010 formally offering to contribute $50,000 to AQMD’s projects to develop natural gas-fired, fan-type central furnaces with reduced NOx emissions and requesting that SJVAPCD be provided with copies of project reports. 

Proposal

Staff recommends that AQMD accept the contribution of $50,000 from the SJVAPCD and fulfill the agency’s request to receive the reports following project completion. 

Benefits to AQMD

The additional funding reduces AQMD funding needed for the four projects to develop natural gas-fired, fan-type central furnaces with reduced NOx emissions, with no reduction in the planned scopes of work.

Resource Impacts

The additional $50,000 funding reduces the amount of Rule 1121 funds in the Air Quality Investment Fund (27) dedicated to the four projects to develop natural gas-fired, fan-type central furnaces with reduced NOx emissions from $1,000,000 to $950,000.