1. Non-Utility Floor Allocation for Sulfur Dioxide May 21, 2002 Presentation to the WRAP Market Trading Forum

2. Source Specific Allocations Source Specific Allocations have two components –Floor Allocation –Reducible Allocation

3. Floor Allocation The Floor allocation is defined as that portion of the facility's allocation that will not be reduced, it is the minimum allocation that the source would need to operate if it was controlled at a defined level. That defined level is either BACT, BART, LAER or is some cases NSPS. The floor allocation will be determined by the state on a source by source basis, based upon the methodology developed by the MTF for the non-utility sources. Those allocations will be allocated to the source prior to the allocation of the reducible portion.

4. Reducible Allocation This is the portion of the sources allocation over and above the floor allocation. It is that portion of the sources allocation that will be reduced over time in order to meet the milestones. The reducible portion will first be aggregated across the region and then distributed across both utility and non-utility sectors to meet the milestones.

5. Distribution Order of Allocations 20,000 ton for the tribes 9,000 ton for new sources California RECLAIM Floor Allocations Renewable energy allocations Early reduction bonus allocations Reducible allocation for existing sources

6. Non-Utility Source Categories Smelters Refineries Natural Gas Processing Plants Oil & Gas Production Plants Lime Plants Cement Plants Utility Boilers (cogens, CHP) Industrial Boilers Pulp and Paper

7. Analysis Steps: 1.Assume CA sources at the floor. 2.Copper smelter allocations already determined. 3.Focus on non-CA, non-smelter sources >100 tpy. 4.Define floor by source category. 5.Gather data. 6.Estimate floor amounts by source category/plant.

8. SO 2 Emissions of Interest - Annual Tons in 2000 StateCHPsNon-Utility Point Arizona04,196 California88337,329 Colorado2,5836,856 Idaho11727,646 Nevada0743 New Mexico036,934 Oregon08,988 Utah3,5886,798 Wyoming040,147 Totals7,171169,637 Non-California Totals6,288132,308

9. Issues: Sulfur can be in the fuel, or the feedstock material. Old information on factors/controls in AP-42. Some simple relationships: Boilers Some complex relationships: Lime Cement

10. Floor Calculation Methodology Smelters Smelter-by-smelter analysis. Hidalgo smelter is the only BART-eligible source. Double-contact acid plant. Fugitive SO 2 capture system at Hidalgo satisfies BART.

11. Copper Smelters StateFacility 1990 Annual Tons SO 2 2018 Allocation Annual Tons SO 2 ArizonaASARCO-Hayden29,81421,000 BHP-San Manuel15,90014,000 Cyprus Miami Mine5,6768,000 New MexicoPhelps Dodge-Chino Mines28,05814,200 Phelps Dodge-Hidalgo41,43320,000 UtahKennecott Utah Copper26,8291,000 Total Copper Smelters148,51078,000

12. Refineries There are four sources of SO 2 emissions at the refinery level. Floor based upon NSPS where applicable. Floor Calculation Methodology

13. Petroleum Refining 10 refineries, 4 States. Floor built up from applying emission limits/factors at 4 primary SO 2 sources.

14. Natural Gas Processing Plant Floor Calculation Methodology

15. Oil and Gas Production units Floor Calculation Methodology

16. Cement Plant Two SO 2 sources: feed material sulfur and kiln fuels (coal, gas, tires, wood, petroleum coke). Calculating the floor fuel source = coal control via five-stage calciner assuming 85% control. Floor Calculation Methodology

17. Cement Wide variety of emission rates. Difficult to estimate control technology effect on complex sources.

18. Lime Plants No additional reduction. Approximately 50% control inherent in the process. Additional SO 2 controls are not typically applied. Floor Calculation Methodology

19. What do we know now? Floor is close to recent historical emissions.

20. Source Categories/SectorsSO 2 Year 2000 Annual Tons Petroleum Refining16,944 Lime Manufacturing2,316 Cement Manufacturing7,495 Natural Gas Processing50,323 Elemental Phosphorus Production15,861 Glass Manufacture363 Pulp and Paper9,628 CHPs6,288 Compressor Stations2,927 Industrial/Commercial Boilers20-25,000 *Non-California, non-smelter.