Consider the Boost to Jobs

Issue 2 and Volume 115.

By Randy Rawson, President and CEO, American Boiler Manufacturers Association

Over the last several months, the U. S. Environmental Protection Agency (EPA) has been aggressive in promulgating air quality initiatives on a variety of levels, most of which will sooner or later have some affect on industrial-type boiler systems. When taken together these initiatives present some substantial, sometimes conflicting, but not insurmountable challenges.

Not the least of these far-reaching initiatives are those seeking to regulate the emissions of greenhouse gases (GHGs) from stationary industrial sources. Those existing rules coming into force in early 2011 will be joined later in 2011 and 2012 by EPA proposals declaring regulatory war—in the absence of specific congressional legislation to the contrary—against GHG emissions from power plants and refineries.

But the keystone of new boiler emissions regulations are the standards scheduled to become final in mid-February 2011 known as the Boiler MACT, the National Emission Standards for Hazardous Air Pollutants for Area and Major Sources: Industrial, Commercial and Institutional Boilers. Proposals in April 2010 by EPA—after years of delay—underwent a rigorous and boisterous public review process that generated much new data and information; so much so that EPA asked the court, under whose aegis EPA is acting, for even more time to process what it learned and permission to re-propose the Boiler MACT to better reflect all relevant information EPA received. The court denied EPA’s request and ordered the agency to publish final standards by Feb. 21, 2011.

No reason to be coy here: EPA’s air quality regulations (once completely finalized, litigated and assuming they are technically achievable in conventional or innovatively integrated ways) present some enormous business opportunities for the boiler and boiler-related equipment industry. Technically achievable regulatory standards at the local, state and federal levels have long been a linchpin of new business for this industry and it will be no less the case in this instance.

No one doubts that, in sum, whatever standards are finally promulgated by EPA will require substantial, one-time capital investments by some businesses and institutions of all sizes. But a lot of that cost cannot be pegged to ambitious or so-called over-reaching regulations; a lot of that cost is attributable to outdated boiler rooms to which new, otherwise-achievable technology cannot be easily retrofitted, to deferred and/or run-to-failure maintenance conduct and to inadequate operation of existing boiler systems. Too many have for too long neglected the types of capital expenditures and energy infrastructure improvements, upgrades and modernizations necessary and customarily required of any boiler system to ensure its continued safe, clean, efficient and costs-effective performance. This is why many older boiler systems cannot be retrofitted to meet tough new standards that are otherwise achievable and that can be retrofitted to newer units. In those instances, complete new and modern systems may be necessary. But we won’t know the real impact of these rules until they are finalized, until all technical deficiencies in them are addressed, until the inevitable litigation is settled and until boiler rooms are evaluated in light of actual mandates.

ABMA did not entirely support the Boiler MACT standards as proposed by EPA last April. We made multiple efforts to counsel EPA on how the rules can be made more achievable and less problematic. ABMA’s strength is in its members’ collective and widely varied technical expertise and experience in the generation of steam and hot water. Using its strengths, ABMA analyzed the original EPA Boiler MACT proposals to determine whether the emission limits, goals and objectives were technically achievable and appropriate to current technology capabilities. To the extent we were also objectively able to conclude that any limits were unachievable through the combustion process alone, ABMA sought to provide EPA with its counsel and know-how on whether changes in fuel, added emissions controls equipment or system replacement would be required, and whether such measures would be appropriate given current technical constraints.

In ABMA’s view, the cornerstone of whether a technical requirement is achievable is the proposition that if those who design and make commercial, institutional and industrial boilers can provide commercial performance guarantees to their customers warranting that the equipment and systems in question can sustainably meet or exceed specified requirements and operational parameters (when operated and maintained in strict accordance with manufacturers’ specifications and other contractual mandates), then those requirements (or emissions limits) should be considered achievable.

Conversely (and although a limit may be technically reachable in a limited or transient way), if the manufacturer is not able to guarantee sustainable performance within the confines of that limit, it becomes pragmatically and de facto unachievable.

Boiler-standard opponents have labeled EPA’s air quality regulations as ill-timed and scientifically unnecessary.They have formulated all sorts of analyses and studies arguing the rules will have disastrous effects on economic recovery, unemployment, productivity and America’s ability to compete globally.

Regardless of the models or methodologies used, however, the fact is no one has a definitive handle on the costs or the impacts associated with regulations currently being contemplated, including the Boiler MACT of yesterday or February 2011. Potential costs are either inflated or deflated (including those by EPA) according to whose ox is being gored and who’s paying for the analysis. Estimates are based on unreliable and outdated censuses of boiler systems and have no idea of the state of technology that exists in any of them.

More importantly, and as ABMA has pointed out before, not one of the jobs-lost or economic-calamity studies made public so far takes into consideration the potential for job creation these standards represent to the boiler, combustion equipment, boiler-related equipment, emissions controls, controls & instrumentation and boiler repair/installation/aftermarket services industry, and to a host of other ancillary industries. These are high-paying, professional engineering, skilled and unskilled domestic manufacturing jobs. They are very real gains to communities all across the United States that need to be recognized as meaningful offsets to months of unemployment. As a source of new domestic manufacturing jobs in this and other industries, rules delayed are also jobs delayed.

Nor can one accurately predict how known or unknown final standards— layered together and on top of existing or prospective local, state and regional mandates—will be implemented in the diverse boiler rooms of thousands of differing industrial plants, businesses and institutions, all with their own needs, operational realities and ways of assimilating the impact of regulatory mandates. According to state air officials, many potentially affected entities are already meeting the initial, but now defunct, limits proposed by EPA for Boiler MACT or are close to meeting them. Some critics (all outside the boiler industry) have even claimed that boiler sales will go down as a result of EPA regulations. All they need do is look at the swell of customer inquiries to ABMA member companies in the last half of 2010 to understand the market’s potential reaction.

ABMA wants the EPA to get it right every time. Those ultimately affected by these and other industrial boiler standards will be using our equipment, products and services to comply with whatever is finalized, so we want these EPA standards to be achievable, effective and open to a wide variety of design responses. ABMA has encouraged EPA to undertake its boiler rulemaking and possible reconsideration processes as responsibly, yet as swiftly, as possible to minimize the delay in boiler and associated industry job creation resulting from the EPA initiatives, as well as to minimize the negative effects that added delay could have on the costs of complying with mandated requirements.

In addition to heightening uncertainty, delay in inevitable regulations only serves to potentially increase ultimate compliance costs. To avoid the inherent cost escalations of delay, we strongly encourage all those large and small entities potentially affected by these standards to work with their chosen boiler and combustion equipment professionals as early as possible to find integrated solutions that are not only achievable but are cost-effective and realistic. This could include everything from simple boiler tune-ups to systemic upgrading, optimization or system replacements, depending on needs and available resources.

Absent immediate EPA directives, boiler manufacturers can help boiler users assess their needs and help to transform both aging and inefficient boilers and boiler systems, as well as newer systems to state-of-the-art, efficient and environmentally compliant sources of steam and hot water. Modernizing boiler rooms is good not only for the environment, but, as fuel prices take on new volatility and as fuel-flexibility becomes the order of the day, it also contributes to a much healthier and robust long-term bottom line for every business that makes the right decisions. Any delay in the boiler rules should not be seen as an excuse for continued inaction.It should be viewed as an opportunity to take advantage of current raw-material and manufacturing-capacity stability and to avoid increased costs that may come with time.

Rather than pushing and shoving with competing, disingenuous and questionably relevant and methodologically flawed cost and impact studies—and attempting to prolong delay—everyone involved (including eager to please politicians) needs to strive for rules, standards and mandates that are responsibly flexible to diverse needs that also encourage and demand safe, efficient and environmentally conscious, state-of-the-art energy systems. In so doing we not only bring meaningful American manufacturing jobs back to the domestic boiler and combustion equipment industry, but we also help to establish long-term stability to the energy bottom lines of businesses in general.

Whether it’s compliance with new federal ozone requirements, greenhouse gas emissions mandates, a new 2011 Boiler MACT or state or local air quality directives, contact your boiler or combustion equipment professional to help you analyze your situation and to assist you in charting the full range of integrated solutions that best fits your needs.

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