Page Nav





Breaking News


Pollution control costs

 POLLUTION CONTROL COSTS The costs shown in table 3.1 include some pollution control costs in recent years in the labor and electric power i...

 POLLUTION CONTROL COSTS The costs shown in table 3.1 include some pollution control costs in recent years in the labor and electric power inputs. Pollution control requirements, however, will be increased during the next several years, and, consequently, they will have a greater effect upon costs in the future than they have had in the past. This appendi~,i5 an inquiry into the relative impact of pollution control upon steel operating costs in the U.S. and Japan. 

Uni ted States In the U.S., the greatest impact of pollution control requirements on the steel industry will occur between 1977 and 1983. These standards are based on the Clean Air Act of 1970 and the Federal Water Pollution Control Amendments of 1972. The year s since then have been occupied with the design and approval of Federal and State standards, court challenges of the standards, and the development of specific schedules for installation of pOllution control equipment. For future years, the program calls for substantially greater expenditures for pollution control by 1983. According to a survey by the Commerce Department, the U.S. steel industry's capital expenditures for pollution ~ -140- control equipment averaged 13.7 percent of its total capital expend i tures from 1973 through 1975. II A survey by the Census Bureau (37) indicates that the operating costs for pollution control in the U.S. steel industry amounted to $241.8 million in 1973, $321.9 million in 1974, and $408.5 million in 1975. In terms of cost per ton of steel products (after adj ustment for inventory reductions), these costs amounted to $2.52 in 1973, $3.37 in 1974, . ..~- . -.- and $5.40 in 1975. 

Two major studies have been publ ished on the future impact of pollution control regulations on the U. S. steel ii See U.S. Department of Commerce (38, July 1975, p. 15; and July 1976, p. 16). The first year covered by this survey was 1973. There are other estimates of pollution control equipment costs for earlier years, but they involve definitional problems. The Commerce Department states that for its survey "the types of questions asked and the definitions of what constitutes pollution abatement expenditures. . . were more precise than those used in similar surveys conducted by trade associations and other private organizations" (38, July 1974, p. 58). In another survey, the Census Bureau (37) reported that the steel industry's capital expenditures for pollution control equipment were $189.0 million in 1973, $321.9 million in 1974, and $418.7 million in 1975. The Census Bureau attributes the differences from the survey conducted by the Bureau of Economic Analysis of the Commerce Department to normal sampling variations and to the use of a company basis for the Bureau of Economic Analysis survey versus an establ ishment basis for the Census Bureau survey. The American Iron and Steel Institute also reports steel industry capital expenditures for pollution control: $100.1 million in 1973, $267.2 million in 1974, and $453.1 million in 1975. These figures total $820.4 million, whereas those from the Bureau of Economic Analysis total $871 mill ion for the same 3 years, and those from the Census Bureau total $929.6 million. The AISI reports total steel industry capital expenditures of $2,189.4 million for air and water quality control from 1967 through 1976. -141- industry. The first of these was conducted by Arthur D. Little, Inc. (ADL) (2), for the American Iron and Steel Institute. It found that compliance with the pollution control regulations for 1983 would increase operating costs by 9.7 percent. This would amount to about $25- 30 per net ton of steel shipped (2, pp. VI-8 and I-5J. The second major study was conducted by Temple, Barker, & Sloane, Inc. (TBS) (33J, for the Environmental Protection Agency. The TBS study concluded that operating costs . "'~ . would be increased by 2.8 percent beyond the pollution control costs incurred in 1974 (33, p. 5-4 and table 3J. This increase would amount to about $8.72 per net ton of steel shipped. ~/ Thus, the TBS study indicates that pollution control regulations for 1983 would increase operating costs by 3.8 percent, or about $11.66 per net ton of steel shipped. The major differences between these two estimates are in different assumptions for the control of fugitive emissions and storm runoff, and for the retirement of existing facilities, especially open hearth furnaces. The ADL study was based on more stringent standards, and the TBS study assumed that approximately 65 percent of existing open hearth furnaces would 2/ Obviously, estimates of pollution control operating costs expressed interms of tons of steel shipped are affected by the forecast made for 1983.

 The forecast used here is that contained in the TBS report, shipments of 119.2 million net tons. When TBS compared their forecast with other recent forecasts for 1980 shipments, they found that the differences were less than 7 percent. These forecasts were done by AISI, the 'International Iron and Steel institute, Arthur D. Little (for AISI), Booz, Allen & Hamilton, Chase Econometrics, Data Resources, Inc., and the Bureau of Labor Statistics. See (33, p. 2-3J. "..;;;' -142- be closed rather than fitted with more emissions control equipment. l/ The TBS estimates are probably closer to the actual costs of implementing pollution control standards for the steel industry than the AOL estimates. The TßS study is more recent and, therefore, was able to incorporate a development in pollution standards that occurred after the ADL report was completed. This involved a change in the storm runoff standards .~ . so that runoffs from the entire plant site need not be contained anã treated, as assumed in the ADL study. The revised standard requires containment and treatment of storm runoffs from only the piles of coal, iron ore, and limestone on the plant site (33, p. 3-10). Another major cause of different cost estimates in the two studies is the different assumptions concerning emissions control for open hearth furnaces (33, p. 4-7). Since the basic oxygen furnace is lower-cost than the open hearth (in both capital cost and operating cost as well as air pollution control cost), it seems reasonable to assume that some proportion of existing open hearth furnaces will be closed rather than fitted with equipment to comply with more stringent emissions standards. This assumption is based partly on the fact that several open hearth units have been closed in recent years rather than equipped with pollution control hoods. This assumption is also based partly on an interview with an officer of l/ Telephone interview with EPA staff member and (33, p. 2-3). -143- one U. S. steel company. He said that the deciding factor which induced his company to build a new basic oxygen unit and close an open hearth unit was that pollution control equipment for the open hearths would cost $12 million compared to $4 million for this type equipment for the basic oxygen furnaces, even though their steelmaking capacities were comparable

No comments