3.1. Main drivers of ex ante cost estimates

The main drivers of plant-level ex ante costs were the characteristics used to define the model plant categories and the respective equations used to estimate capital and operating costs for new and existing MWC plants. The model plants captured design characteristics such as combustion technologies, APCD, and capacity. For existing MWCs, the EPA assigned a combustion technology, capacity, and baseline APCD to each model plant category. The model plant category for NSPS MWCs is distinguished only by its combustion technology and capacity.

While the standards and guidelines for new and existing MWCs did not mandate specific technologies, the U.S. EPA (1994a) set maximum achievable control technology, or MACT, standards and guidelines for new and existing MWC plants based on control technologies that would meet emission limits. The EPA found that emissions limits could be achieved if new MWCs used a spray dryer (SD) and fabric filter (FF) configuration (i.e., SD/FF), while existing MWCs could comply with limits by retrofitting with either a SD/FF configuration or a SD and electrostatic precipitator (ESP) configuration (i.e., SD/ESP) to reduce dioxin/furans, SO₂, PM, and metals. The technology limits for Hg and NO_x emissions were set based on MWCs using activated carbon injection (CI) for controlling Hg emissions and selective noncatalytic reduction (SNCR) to control NO_x emissions (U.S. EPA, 1995). Contingent on the model plant baseline APCD, the EPA assigned one or more of these control technologies to each model plant category to meet emission limits. The estimated incremental capital and annual operating costs were the difference between this APCD configuration compared to the baseline control technology.

3.2. Main sources of uncertainty in ex ante cost estimates

For the 1995 rule, the EPA did not estimate the number of planned MWCs whose construction might be canceled or the number of existing plants that might shutdown due to the regulation. At the time the rule was promulgated, the U.S. EPA (1995) acknowledged new data suggested fewer MWCs were being constructed, which would reduce the aggregate costs of meeting the standards. The EPA also recognized that if the regulation raised tipping fees, that is, fees paid to dispose waste, then some MWCs might switch to less costly options for disposing municipal waste. For any of these scenarios, aggregate costs and emissions would be lower than reported in the economic analysis of the rule. The EPA recognized its estimates potentially misestimated the effect of the rule, and as a result, it characterized the estimated impacts of the final rule as the worst-case scenario when implementing the new standards.

5.1. Regulated universe

Recall the EPA expected 179 existing plants and 72 new plants would be subject to the 1995 rule. But changes to the original 1991 rule resulted in a decrease in the regulated universe. When the rule was promulgated in 1995, only 128 MWC plants were operating, of which 81 plants were classified as large (Cone & Kane, Reference Cone and Kane1997). The 1997 court vacatur resulted in the reclassification of 18 plants from the large to small plant category. As a result, the revised 1995 inventory lists 63 large plants and 65 small plants (Cone & Kane, Reference Cone and Kane1997). However, at the time of compliance with the rule, the 2000 inventory of large MWCs (Huckaby, Reference Huckaby2002a) lists 66 MWC plants subject to the EG. The increase from 63 to 66 large MWC plants between 1995 and 2000 resulted from (i) the addition of four, new large plants, (ii) the closure of seven large plants, (iii) the reclassification of three plants from the large MWC category to the small MWC category, and (iv) the reclassification of nine plants from the small to large MWC category.Footnote ^7, Footnote ⁸ The name, location (by state), and plant characteristics of the 66 large MWC plants operating in 2000 are listed in Table 2.

Table 2. Characteristics of 66 large MWCs operating in 2000.

Note: Plant ID refers to DOE/EIA ORIS Plant Code. See Morgan and Pasurka (Reference Morgan and Pasurka2021, Table 1) for more detailed information about this table. Baseline APCD configurations: (ESP) – plants whose started construction prior to 1990, but started operation in 1990 or later are assumed to have ESP as baseline APCD.

Abbreviations: COHPAC, compact hybrid particulate collector; DSI, dry sorbent injection; EGB, electrified gravel bed.

^a Berenyi and Gould (Reference Berenyi and Gould1988);

^b U.S. DOE, EIA Form 860 (2013);

^c Berenyi (Reference Berenyi2006);

^d Fenn and Nebel (Reference Fenn and Nebel1992) are sources of baseline APCD configurations.

* NSPS (subject to subpart Ea).

^** NSPS (subject to subpart Eb).

^*** According to the EIA-860, French Island (WI) installed SD/FF APCDs in 2002. When calculating ex ante and ex post costs for French Island, we use the SD/FF configuration reported by GAA and EIA-860 as its 2000 APCD configuration instead of the 2000 APCD configuration of DSI/EGB reported by Huckaby (Reference Huckaby2002a, Reference Huckaby b).

Source: Huckaby (Reference Huckaby2002a, Reference Huckaby b) for Total Plant Capacity, Combustion Technology, and 2000 APCD.

By comparing plants from the 2000 EPA MWC inventory to the 1991 EPA MWC inventory, we identified seven plants subject to NSPS. These plants are shown in Table 2 with NSPS in parentheses next to the facility name. For several plants, we modified the classification listed in the 1991 inventory, which affected whether a plant was classified as NSPS. For example, Union County RRF (NJ), was included in the 1991 EPA inventory of existing MWC plants. However, because both the 1995 and 2000 EPA inventories state construction on Union County (NJ) started in 1992, we include it as a new source subject to subpart Ea.Footnote ⁹ Another plant, Hudson Falls (NY), is not listed in the 1991 EPA MWC inventory. While the 1995 EPA inventory does not provide a construction date, it lists the startup date as 1992, while other sources (Berenyi & Gould, Reference Berenyi and Gould1988, Reference Berenyi and Gould1991; Kiser, Reference Kiser1990) list its startup date in either 1990 or 1991. Based on this information, we decided to classify the Hudson Fall plant as an existing MWC. Finally, the SEMASS Resource Recovery Facility (MA) added a third boiler in 1993 that is subject to NSPS. And one new unit – unit 3 of the Central Wayne (MI) plant – appears to also be subject to NSPS in 2000.Footnote ¹⁰ Hence, it is the eighth plant in Table 2 with units classified as NSPS.

5.2. Baseline information

For each existing model plant, the EPA assigned one or more APCD that served as its baseline APCD. The baseline APCDs for model plants were either ESP, SD/ESP, or SD/FF, the control technologies designed to control PM and SO₂ emissions. Even though the rule proposed in 1989 and finalized in 1991 underwent modifications from legal challenges, the control technologies the EPA used to set the emission limits of the rule never changed. As a result, APCDs installed on or before December 20, 1989, are the baseline APCDs used in our assessment. Approximately 30% of existing MWC plants were under construction prior to December 20, 1989, and did not start operating until the early 1990s. While we do not have data on the baseline APCDs for these plants, we know they needed to comply with existing standards under the Clean Air Act. The permits they received from the state authorizing their construction and operation would have specified the pollution control equipment needed to meet emission limits. At the time of construction, these plants would have needed to install ESP to comply with existing standards under the Clean Air Act for PM and SO₂. For our analysis, these plants are assigned ESPs as their baseline APCD configuration.

The baseline APCDs for each plant are reported in Table 2. While baseline APCDs identified in the 1991 EPA inventory for MWCs operating prior to 1989 varied, most plants were using ESP technology to control PM and SO₂ emissions. However, the baseline APCD for 15 plants was SD/FF.Footnote ¹¹ Given the APCDs in use at the time of the 1989 rulemaking were either ESP or SD/FF, the baseline APCD the EPA used for their existing model plant categories appear to comport with what most MWC plants were using at the time. Only three plants in California had installed SNCR, the technology used to reduce NO_x emissions, prior to 1990.Footnote ¹² Although the 1991 EPA inventory does not list APCD devices to control Hg or NO_x emissions, we assume the SNCR units installed at these MWCs are part of the baseline and not counted as costs of the MWC rule.

5.3. Compliance costs

For the ex post assessment of compliance costs for each MWC plant, we assign the 67 large MWC plants in Table 2 to one of the model plant categories using four characteristics: (i) existing or NSPS plant, (ii) combustion technology, (iii) capacity, and (iv) baseline APCD.Footnote ^13, Footnote ¹⁴ The MWC plants using mass burn waterwall (MB/WW) or mass burn rotary combustor (MB/RC) combustion technology are assigned to a small, mid-size, or large model plant category based on their combustion capacity. The MWC plants using refuse-derived fuel (RDF) combustion technology are assigned to either RDF (large) or RDF (small) model plants based on their combustion capacity. The assigned model plant category for each of the 67 large MWCs are found in Table 2.

From the EIA and GAA surveys, we have information on the APCD installed, the year it was installed and the reported capital cost of the technology. Because we only have capital cost data, our ex post assessment for existing MWCs compares the ex ante capital costs associated with the assigned model plant category to the ex post capital costs of APCD installed by 2000. The difference in costs represents the compliance costs of the rule for the MWC plant. Ex ante costs for new and existing MWC plants that install SNCR and CI are also based on the model plant category to which the MWC is assigned.

5.4. SO ₂ and PM capital expenditures (EIA)

As shown in Table 2, of the 59 existing MWC plants, 15 plants using SD/FF did not change their APCD configuration between 1991 and 2000.Footnote ¹⁵ While the 1991 inventory lists a SD/FF configuration for Union County (NJ), because it is classified as new MWC, it is not included among the 15 plants. Another four plants listed SD/ESP as their baseline APCDs and maintained that configuration through December 2000. Because these 19 plants made no changes to their baseline APCDs, they incur no capital costs related to the MWC rule for reducing SO₂ and PM emissions.

Of the remaining 40 existing MWC plants, 10 plants submitted neither FGD nor FGP capital cost data on their EIA survey form, 23 plants submitted both FGD and FGP data, five plants submitted only FGD data, and two plants submitted only FGP data. Because the seven plants that submitted only FGD or only FGP data were already using the other device, these plants are included in the analysis. Of the eight NSPS MWC plants, only one plant, Montgomery County (MD), submitted no data, while the other seven submitted data for both FGD and FGP costs. As a result, we can compare ex ante and ex post capital costs for 30 existing and 7 NSPS MWC plants.Footnote ¹⁶

Instead of providing absolute ex ante and ex posts capital costs for these 37 plants, we present ratios of ex post to ex ante capital costs. The ratios for FGD and FGP systems are summarized in Table 3. Seventeen of the 37 MWCs have ratios greater than unity, while the other 20 MWCs have a ratio less than one. The mean ratio of 1.16 indicates that, on average, ex post and ex ante capital costs are similar in magnitude. However, the maximum and minimum ratios suggests that for some plants, there are substantial discrepancies between ex ante and ex post costs. The MWCs with the highest ratios are Delaware Valley (PA) and Lake County (FL), with ratios of 3.43 and 3.00, respectively, while Greater Detroit (MI) has the lowest ratio of 0.01. It is worth noting that Greater Detroit reports $813,000 as the sum of its ex post costs for FGD and FGP. While we are unable to confirm, it is possible the plant misreported this cost value on the EIA Survey.

Table 3. Comparison of ex ante and ex post capital costs FGD and FGP (PM and SO₂).

Source: EIA-860, 2013 and EIA-767, 2006.

5.5. Mercury and NO _x capital expenditures (GAA and EIA)

Both EIA and GAA (Berenyi, Reference Berenyi2006) collect data on the year of installation and costs of NO_x and Hg control systems. From GAA, we have ex post capital costs of SNCR systems for 11 MWC plants and ex post capital costs of CI systems for 19 MWC plants, where six of these plants reported ex post costs for both SNCR and Cl systems.Footnote ¹⁷ Eight additional MWC plants that installed both SNCR and CI systems reported their combined ex post capital costs on the GAA survey. From EIA, we have the ex post capital costs of SNCR systems for 34 plants and CI systems for 33 plants, of which 28 MWCs reported costs for both SNCR and CI systems.Footnote ¹⁸

The comparison of the ratios of ex post to ex ante capital costs using data from GAA is summarized in Table 4. Of the 19 MWCs reporting capital expenditures for Hg abatement, 18 have ratios greater than unity. A mean ratio of 4.74 for the 19 MWCs suggests the reported ex post capital costs for Hg abatement are significantly higher than the predicted ex ante costs. Only Essex (NJ), with a ratio of 0.60, has an ex post value less than its ex ante cost estimate. For most plants, the EPA estimated ex ante costs of $310,000 for carbon injection to reduce Hg emissions. However, costs reported by GAA ranged from $0.19 to $1.78 million.Footnote ¹⁹

Table 4. Comparison of ex ante and ex post capital costs (Hg and NO_x).

Source: Berenyi (Reference Berenyi2006).

For the 11 MWCs reporting capital expenditures for NO_x abatement, 10 have ratios less than unity. The mean ratio of 0.50 indicates the ex post costs of NO_x abatement are not as costly as predicted by the EPA. The ex ante costs ranged from $1.36 to $5.32 million, while the ex post costs reported by GAA ranged from $0.68 to $1.91 million.

The ratios are less than unity for two of the eight MWCs reporting a combined capital expenditure value for Hg and NO_x control equipment. For comparison, we combined the ex post costs for the six MWCs that report separate cost values for Hg and NO_x abatement and found the magnitude of costs is similar to combined ex posts costs reported by the eight MWCs. While we are unable to confirm our hypothesis because we are comparing sums, the similarity in the sums of ex post costs suggest costs for Hg abatement were higher than expected, while the costs of NO_x abatement were lower than expected for these eight MWC’s.

The ratios of ex post costs to ex ante cost for Hg and NO_x control equipment using data from the EIA are shown in Table 5. The ratios from EIA follow a similar pattern as the ratios found using data reported by GAA. Of the 33 MWCs reporting capital expenditures for Hg abatement, all have ex post to ex ante ratios greater than unity. The mean ratio is 7.60 with reported costs ranging from $0.22 to $10.66 million. The MWCs with the highest ratios are Haverhill (MA) and Union County (NJ), with ratios of 34.38 and 27.97, respectively. It is worth noting both MWCs report the same ex post costs for both Hg and NO_x abatement, raising questions of potential misreporting.

Table 5. Comparison of ex ante and ex post capital costs (Hg and NO_x).

Source: EIA-860, 2013.

Of the 34 MWCs reporting capital expenditures for NO_x abatement, 29 have ex post to ex ante ratios less than unity. The mean ratio is 0.69 for the 34 MWCs, with reported ex post costs ranging from $36,000 to $11.65 million. For the five MWCs that reported ex post costs higher than ex ante costs, ex post costs ranged from $5.46 to $11.65 million. Again, it is worth noting three of the five MWCs (Haverhill (MA), Union County (NJ), and Alexandria/Arlington (VA)) report identical ex post costs for Hg and NO_x abatement, again raising questions of potential misreporting.

For some plants, capital expenditure data are reported by both sources. While the magnitude of the difference between the ex ante and ex post costs may differ, the direction of the difference is usually the same. In fact, of the 26 ex post cost values reported for either SNCR or Cl systems separately or combined on both surveys, the direction of the difference between ex post and ex ante costs diverges between the two data sources for only three MWCs (Bristol, Essex, and Lake County). That is, if the ex post costs reported on GAA are higher than ex ante costs, then the ex post costs reported for the same plant are lower than the ex ante costs on EIA, and vice versa.

Summarizing, the ratios indicate that ex post capital costs are almost always greater than ex ante capital costs for Hg controls, whereas ex post capital costs are almost always less than ex ante capital costs for NO_x controls. Why did the EPA substantially underestimate the capital costs of Hg controls and overestimate the cost of NO_x controls? In both cases, there are compelling reasons why the EPA may have misestimated the costs. First, the use of activated carbon to remove mercury was new to the United States. At the time the rule was promulgated, the EPA assumed plants would inject activated carbon into the flue gas of their APCD to reduce mercury emissions. The carbon would capture the mercury, which would be collected on a FF and disposed. Because a plant would use existing capital equipment to capture mercury, it was believed the associated incremental capital cost would be low. One plant in British Columbia reported that their preliminary capital cost estimates of installing a carbon absorption system was $200,000 (1990 dollars) (Nebel & White, Reference Nebel and White1991).

Even though it appeared the cost of using carbon adsorption might be low, it was unclear if and how other factors would influence the overall cost of reducing mercury emissions. For example, the costs of using carbon absorption varied per ton of municipal waste combusted and the amount of mercury in the waste being incinerated. As Shaub (Reference Shaub1993) showed, the mercury content of incinerated waste varied based on the consumer products being disposed. Shaub stated the cost of using carbon absorption ranged from $0.50 to $1.00 per ton of MSW combusted. Hence, if the mercury content in waste combusted was between 0.5 and 5.0 g/ton, then the cost to control mercury emissions ranged between $100,000 and $2,000,000 per ton of mercury removed. Given this range of costs, Shaub argued the cost of removing mercury using carbon injection was uncertain and required further investigation. Unfortunately, we were unable to determine the EPA’s assumptions regarding mercury content in the waste, but the evidence suggests the costs of using carbon adsorption for mercury removal were significantly higher than the EPA anticipated ex ante.Footnote ²⁰

Like the mercury control technology, there were also uncertainties associated with the cost of installing a SNCR system at the time the MWC rule was promulgated. Selective noncatalytic reduction is an add-on post-combustion APCD (FFs and spray dryers remove some NO_x) that reduces NO_x to N₂ without the use of a catalyst. It requires the injection of a reducing agent such as ammonia or urea into the furnace that reacts with the NO_x to form N₂. While the capital costs associated with using ammonia tend to be lower, urea has several advantages over ammonia. For example, urea is less toxic and less volatile, which means it can be handled and stored more safely. The capital cost to install or retrofit a combustor with the SNCR technology typically increases as the size of the plant increases (as measured by combustion capacity). However, the capital cost can vary with the difficulty associated with retrofitting the current APCD system, the reducing agent used, and method of residual disposal.

In late 1980s, three MM/WW California plants installed SNCR technology using ammonia as the reducing agent (U.S. EPA, 1989b). Information from these three California plants were used to develop algorithms to estimate costs of SNCR devices for the model plants used by the EPA in its economic analysis. The costs varied across combustion technology and plant capacity. By the mid-1990s several additional MWCs had installed SNCR devices, and several used urea as opposed to ammonia as the reagent (White et al., Reference White, Nebel, Gundappa and Ferry1994). For plants using ammonia, many used aqueous ammonia instead of anhydrous ammonia. Aqueous ammonia is less volatile but requires a larger storage tank, which leads to slightly higher capital costs. However, we could locate no estimates of differences in capital costs between systems using the two reagents.

Using information from MWCs with installed SNCR systems, White et al. (Reference White, Nebel, Gundappa and Ferry1994) developed cost estimates for three model combustors (100, 400, and 750 tpd) using MB/WW combustion and aqueous ammonia as the reagent. Comparing the capital cost per ton for these three model combustors to the capital costs of the same model combustors from a report released in the late 1980s (US EPA, 1989b), model plant costs decreased. However, it should be noted that at the time of the 1994 study, new technologies, such as furnace temperature monitoring and ammonia monitoring, were being tested as ways to improve the performance of SNCR and lower the costs of the technology.

Given that the NO_x and Hg abatement technologies the EPA expected MWCs to employ were just beginning to be adopted in the United States, the assumptions used to develop the cost estimates for each model plant may not have captured all costs of the technologies. While limited, the evidence suggests the model plant cost equations did not adequately capture the capital costs associated with carbon injection and SNCR. Unfortunately, the data needed to evaluate the design parameters of the model plant are not available (US EPA, 1989a), so we are unable to quantitatively assess which elements of the capital cost equations were higher or lower than the EPA predicted.

5.6. Total capital expenditures across APCD

Instead of reporting capital expenditures for the individual abatement technologies, GAA (Berenyi, Reference Berenyi2006) reports total capital expenditures for FGD and FGP for 10 MWC plants as well as total expenditures for FGD, FGP, SNCR, and CI systems for an additional 10 MWCs. The summary statistics for these MWCs are reported in Table 6. For the 10 MWC plants reporting combined cost estimates for FGD and FGP systems, nine have ex post to ex ante ratios greater than unity. For the 10 MWC plants reporting combined costs for their FGD, FGP, SNCR, and CI systems, five have ex post to ex ante ratios greater than one.Footnote ²¹

Table 6. Comparison of ex ante and ex post aggregate capital costs for existing MWCs.

Source: Berenyi (Reference Berenyi2006).

For the 10 plants reporting capital expenditures for FGD and FGP systems, we identified eight that also report capital cost data on the EIA survey. The combined capital expenditures for FGD and FGP reported by GAA for three plants – Hillsborough County (FL), Saugus (MA), and Wilmarth (MN) – are lower than the sum reported on the EIA survey, while the combined expenditures reported by the other five plants – McKay Bay (FL), SEMASS (units 1–2) (MA), Greater Detroit (MI), Alexandria/Arlington (VA), and Southeastern Public Service (VA) – are higher than the sum reported on the EIA survey.Footnote ²²

While there are differences between the reported values on GAA and EIA for Saugus (MA), Wilmarth (MN), and Alexandria/Arlington (VA), the discrepancies are not substantial. However, the differences are more significant for the other five MWCs. For example, Hillsborough County (FL) reported the same capital cost value for FGD and FGP on EIA. The sum reported by GAA is similar to the cost reported on EIA for either FGD or FGP. Given the similarities, it is possible Hillsborough reported its combined costs for FGD or FGP as the individual costs of FGD and FGP, respectively, on the EIA Survey. Finally, the costs reported by GAA for McKay Bay (FL), SEMASS (units 1–2) (MA), Greater Detroit (MA), and Southeastern Public Service (VA) are more than double the cost reported by EIA. Unfortunately, we were unable to find any explanation for the large discrepancy between the costs reported by the two surveys.

Of the 10 plants reporting combined costs for their FGD, FGP, SNCR, and CI systems on the GAA survey, six also reported ex post capital costs for each technology (FGD, FGP, SNCR, and CI systems) on the EIA survey. Summing the EIA ex post capital costs of these APCDs, four plants – Haverhill (MA), North Andover (MA), Concord (NH), and Westchester (NY) – report total costs on the EIA survey that are 25–58% higher than the combined costs reported by GAA. On the other hand, the combined costs reported on the EIA survey by Pinellas County (FL) and Baltimore (MD) are 7 and 24% less, respectively, than the combined costs reported by GAA. Again, we were unable to explain the discrepancies between the reported costs.

5.7. Pictorial summary of the data

Figures 1–3 show box and whisker plots of the ex post to ex ante cost ratios for the various APCDs using the EIA and GAA data. These plots offer a pictorial summary of the characteristics of the ratio of ex post to ex ante costs including the mean (represented by an x), median (shown by a horizontal line), the interquartile range (IQR) (shown by the box), the outer range (shown by the whiskers) and any outliers (shown by dots). These graphs convey information about variation in the data and allow side-by-side comparisons of the ratios generated by EIA and GAA data that are not captured by our tables.

Figure 1. Box and Whisker plot of the ratio of ex post to ex ante technology costs for FGD and FGP.

Figure 1 depicts the side-by-side comparison of the boxplot of the ratio of ex post to ex ante costs of FGD and FGP systems for the EIA and GAA data. As can be seen by the boxes, there is little overlap between the ratios for the two sources of data. The IQR range, representing the middle 50% of ex post to ex ante cost ratios, is higher for the GAA data. The length of the whiskers, representing the outer range of values – excluding outliers, show the spread of the EIA data is slightly larger.Footnote ²³ As shown by the length of the upper whisker, the range beyond the upper quartile is much larger for the EIA data, while the range beyond the lower quartile is much larger for GAA, as shown by the length of the lower whisker. That is, the ratio using the EIA data is right-skewed or positively skewed while the ratio using the GAA data is left-skewed or negatively skewed.

For Hg controls (see Figure 2), the side-by-side comparison shows the dispersion of the ratios, as depicted by the IQR, is not as large for the GAA data compared to the EIA data. That is, the length of the box is smaller. Unlike the ratios calculated using GAA data, the EIA data yields ratios that are skewed to the right. Figure 3 shows a similar picture for the cost ratios associated with NO_x pollution controls. As shown by the length of the IQR box, the ratio of ex post to ex ante costs exhibits larger dispersion for the EIA data than GAA data. The EIA data also have more outliers (outside the upper whisker), yet the data are skewed to the left as shown by the lower whisker. As can be seen by the horizontal line, the median ratio is similar for both datasets, while the mean ratio is much higher using the EIA data due to the outliers.

Figure 2. Box and Whisker plot of the ratio of ex post to ex ante technology costs for Hg.

Figure 3. Box and Whisker plot of the ratio of ex post to ex ante technology costs for NO_x.