The time and resources required to install air pollution control equipment has historically been one of the primary subjects of debate for proposed environmental regulations. That debate has again arisen in some of US EPA’s more recent regulatory efforts including the Clear Skies Initiative and Interstate Air Quality Rule (IAQR). More specifically, the resource that EPA has identified as the most limiting in regards to the implementation of regional or national emission reduction programs is boilermaker labor. Predominantly employed in the power industry, boilermakers are skilled laborers that perform welding, rigging and hoisting for the construction and maintenance of boilers and high pressure vessels. They are an integral part of the
construction of certain types of air pollution control equipment. During the late 1990s, their numbers declined significantly raising concerns during the NOx SIP call as to whether there would be enough boilermaker laborers to complete the installation of air pollution control equipment.
The concern that there will be enough boilermaker laborers to implement the proposed EPA rules has again been raised. The following discussion will provide information indicating that there will be enough boilermaker labor available to implement the Interstate Air Quality Rule.
Further, it is projected that there will be enough boilermaker labor to implement the 2015 targets of the IAQR rulemaking in the 2010 timeframe. Below is a short list of topics that will be discussed in further detail supporting these statements.
• Installation Experience
• Trade Crossover
• Labor Utilization
• Installation Timing Installation Experience
The air pollution control (APC) industry has extensive
experience both in the US and worldwide with the installation of SO2 and NOx control technologies for the electric power sector. This experience has resulted in improved designs and higher equipment reliability.1 Over the last three decades in the US, vendors and power plant operators have gained experience with the control of SO2 from coal-fired power plants through
Table 1. SCR Start-Up Dates on Coal-Fired Units in U.S.
1660 L Street NW Suite 1100
Washington, DC 20036-5603 Telephone 202.457.0911 Fax 202.331.1388
David C. Foerter, Executive Director Email: [email protected]
Chad S. Whiteman, Deputy Director Email: [email protected]
2
1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008
Capacity (GW)
Figure 3. Natural Gas Capacity Additions from 1960 - 2010a
the installation and operation of over 100 GW of flue gas desulfurization (FGD) systems. For SCR systems in the US, a few installations were in place in the mid-1990s with the majority of the close to 100 GW of SCR installations taking place in the last four years. According to the National Association of Construction Boilermaker Employers (NACBE), the boilermaker labor demands due to the NOx SIP call accounted for about 38 million union boilermaker man-hours between 2000-2004, with an estimated 22 million (close to 60%) being used in the 2001-2002 time period. This is significant, in that the requirements for the IAQR will require a large
number of control installations in a similarly short time period. Table 1 demonstrates that the air pollution control industry has the ability and labor force available as 63 GW of SCR,
approximately 111 units, were started-up from 2001 through 2003. The overall experience gained from SCR installations equates to almost ten years of operational and installation experience with SCR systems on coal-fired power plants in the US alone.2
Outside of the US, there is also extensive experience with the installation of SO2 and NOx controls on coal-fired units. It is estimated that over 125 GW of FGD installations and close to 90 GW of SCR installations have been completed in Japan and Europe.3 Figure 2 exemplifies that Germany has installed a large numbers of SCR systems over a short period of time as 97 of their 137 units were installed during two consecutive years (1989-1990).4 This pattern of installations demonstrates that the air pollution control industry is able to quickly respond to environmental regulations that require a surge of control installations in a short period of time.
In addition to the large number of SCRs installed from 2001 to 2004, boilermakers were also working on an unusually high number of natural gas-fired power plants during the same period.
In the three decades prior to 2000, an average of 5 GW of new natural gas capacity was
constructed in the United States per year. However, in the period from 2000 to 2004 there was on average 41 GW of new natural gas-fired power plant builds for a total of 205 GW as shown in Figure 3. Even more impressive is the fact that the peak year for new gas power plant builds, 60 GW in 2003, coincides with the peak year for SCR start-ups for the NOx SIP call. The surge in builds was due to a number of market forces including lower natural gas prices making gas power plants cost effective builds and increased consumer demand for electricity combined with low electricity reserve margins. The reserve margins have increased to levels where a large number of the natural gas plants planned for the next several years have been canceled. The
0
1985 1986 1987 1988 1989 1990 1991 1992
# of Installations Per Year
Figure 2. SCR Installations on Coal-Fired Units in Germany
3
future projections for new gas power plant demand by the Department of Energy, suggest that natural gas power plant builds will return to the approximate levels, 8 GW per year, seen before the building surge that began in 2000.
Trade Crossover
In general, boilermakers in the construction division are trained to assemble, erect and maintain boilers, tanks, pressure vessels, heat exchangers, pollution control systems, furnaces and other pieces of equipment that require hoisting, rigging, and welding. Boilermakers are used in
numerous industries but are predominantly used in the electric power sector which has accounted for between 52 – 73 % of their demand over the last decade. During the last several years, due to the installation of SCRs for the NOx SIP call, electric power sector demand for boilermaker labor has been as high as 73 % of their total demand.
In order to become a union journeyman, the prospective worker will typically enroll in a 3.5 to 4 year training program offered by the International Brotherhood of Boilermakers, Iron
Shipbuilders, Blacksmiths, Forgers and Helpers. The apprenticeship program provides both classroom as well as on-the-job training. Membership in the boilermaker union has varied considerably over the last decade depending on the market demand for their services. During the past several years the boilermaker numbers have quickly expanded due to the demand exerted by the construction of SCRs required for the NOx SIP call and construction of natural gas power plants to meet the increasing demand for electricity. As shown in Figure 4, there was more than a 10,000 member increase in the union boilermaker numbers in a two year period from 1999 -2001. The rapid increase in membership over a short period of time demonstrates that the boilermaker union is able to respond to abrupt changes in market demand. Additionally, the boilermaker’s union in Canada has 4000 members of which some workers would be available to work on these environmental projects. Air pollution control vendors have made arrangements to use Canadian labor and have expedited immigration agreements in place to quickly move
Canadian boilermakers to the US should a labor shortage arise.
The number of boilermakers in the construction division is expected to decrease slightly in 2004 to approximately 26,000 members but is expected to rise to between 28,000 to 30,000 members by 2006. The expected increase in numbers are in large part due to the projected number of jobs
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000
1994 1996 1998 2000 2002 2004 2006 2008 2010
Active Members
Figure 4. Boilermaker Union Membershipa
4
due to air pollution control equipment work from EPA’s proposed rule and less significantly to new power plant construction. This demand will provide long term work opportunities that will attract and maintain workers in this field. When the demand for labor in the construction division grows, members of the other boilermaker divisions such as the iron, steel, and ship builders divisions are able to move to the construction division. The sister divisions have skilled laborers that perform similar work as the construction division which would negate the need for the full four years of apprenticeship training that is typically required in order to become a journeyman. There are around 150,000 members in the iron and steelworkers division and another 30,000 members in the ship builders division providing a large field of potential labor.5 The higher pay found more recently in the boilermaker construction division would also be an incentive for this crossover into the boilermaker division. With the drastic increase of 10,000 new boilermakers in such a short period of time, there were instances where the cost of construction increased due to overtime pay or wage increases to boilermaker laborers. Due to these increases, EPA adjusted their cost estimates for SCR installations in their modeling analysis for the IAQR. Labor cost increases are not expected to occur under the IAQR as EPA projects that only a 2,000 member increase in boilermaker numbers may occur during the first few years of control technology installations.
Labor Utilization
Another part of the labor equation that needs to be accounted for is the type of construction method implemented for air pollution control equipment. In general, performing fabrication work on the ground reduces the amount of field labor hours needed for a project. Large sections of equipment can be assembled into modules in less time on the ground than if each individual piece were hoisted into the air by a crane and welded or bolted into place. If modular
construction is chosen, up to a 30% savings in boilermaker labor may be realized on a particular project. The decision to use modular construction is typically driven by cost so as the labor demand increases, the pressure to perform modular construction will likely increase with it.
Modularization will look especially favorable in states that have deregulated electricity markets.a In these States, there will be an added incentive to cut costs as the cost of air pollution controls cannot be passed on to the ratepayer. EPA projects that there will be approximately 26 GW of SCR and 37 GW of FGD installations, displayed in Figure 5 below, required in these states by 2015.b
a The States affected by the IAQR program that have retail electricity markets include: Connecticut, Delaware, Illinois, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania, Texas, and Virginia. The retail market information was obtained from a February 2003 EIA document at
http://www.eia.doe.gov/cneaf/electricity/chg_str/regmap.html.
b This includes the cumulative total number of control installations due to the current set of regulations modeled in the IPM model (e.g. NOx SIP call, State specific regulations, Acid Rain Program, etc.) as well as the proposed IAQR and UMRR.
SCR by 2015 FGD by 2015
Figure 5. Projected SCR and FGD Installations in States with Deregulated Electricity Markets
SCR by 2015 FGD by 2015
Figure 6. Projected FGD Installations in States with Traditional Non-Union Labor Markets
5
Additionally, some states have less union presence than others which means that less union labor is used in certain States than in others. This means that the labor pool for skilled crafts such as boilermakers, electricians, etc., is larger than merely the national number for union members.
For instance, it is estimated that as much as 50% of heavy machinery construction labor is performed by non-union members. Non-union members are also employed in merit shops, where craft workers and subcontractors are hired regardless of their labor union affiliation. It is estimated that merit shop workers will help reduce demand by 30-40% in non-union areas. For the IAQR, there are ten States that have traditionally relied on non-union labor.c Figure 6 demonstrates that in these States, there are approximately 42 GW of SCR and 25 GW of FGD installations projected to occur under the IAQR by 2015.
Installation Timing
One of the constraining assumptions that EPA makes concerning the usage of boilermakers is the assumed time that boilermakers will have to construct the equipment so that it will be in place for the compliance deadline. When EPA proposed the IAQR, they expected to release the final rule in June 2005 but EPA has since moved up that timeline by six months to a December 2004 release of the final rule.6 The purpose for doing this was to harmonize the release of the IAQR final rule with the release of the final Utility Mercury Reduction Rule (UMRR). According to the proposal, EPA plans to give States 18 months to have approved SIPs in place, this would mean that affected sources would know their compliance obligations by July 2006 with
compliance starting in January 2010. This has increased the time window for compliance from 36 to 42 months as shown in the Figure 8 scenario titled “EPA Revised.” EPA further assumes that during the first 15 months of the 42 month compliance period there will be no boilermaker construction work taking place. EPA assumes that this 15 month period will be used for designing the control equipment and installing foundations. They assume that boilermaker construction period will consist of 24 months from October 2007 lasting until September 2009.
EPA also assumed that only 18 months of the 42 month compliance period would allow for boilermaker construction activities. With the release of the supplemental rule information, EPA moved the release date for the final rule forward six months to December 2004. This increases the time for boilermaker construction activities from 18 to 24 months thus spreading out their demand over a longer period of time. Beginning in October 2009, EPA assumed that all
boilermaker construction will be complete allowing for three months of testing and optimization of the technologies before compliance starts in January 2010.
In order to increase the time available for control equipment construction beyond 24 months, ICAC would recommend that EPA provide a 12 month window as opposed to the proposed 18 month window for States to get their SIPs approved. This would increase the compliance
window from 42 to 48 months and provide 30 months, an additional six months, for boilermaker construction activities. As recently as a few years ago, EPA allowed States 12 months to submit their SIPs under the NOx SIP call requirements. Since all of the affected States are currently participating in the Acid Rain Program, a national SO2 trading program, and all but ten States are participating in the NOx SIP call, a northeastern regional NOx trading program, it will be easier for States to complete their rules. Additionally, the affected sources have been monitoring
c Alabama, Arkansas, Florida, Georgia, Iowa, Kentucky, Louisiana, North Carolina, South Carolina, and Texas are States that have traditionally been non-union States. Some of these States (e.g. Alabama, Georgia, Iowa and Texas) use a mix of union and non-union labor.
6
and reporting their emissions and complying with the SO2 trading program, Acid Rain Program, for almost 10 years and with NOx trading programs for 6 years so they are familiar with market based cap and trade programs.
Another aspect of the installation timing that is often discussed with the installation of air pollution control technologies is the time needed to connect, or hook-up, the control equipment to the power plant. This is the time in the construction process when the existing flue gas ductwork is connected to the duct work of the control equipment. The boiler is able to continue operating during the construction process except during the hook-up time period which typically lasts several weeks. Electric power companies typically schedule these hook-up times outside of the peak electricity demand months that occur during the summer and in conjunction with their planned maintenance schedules. On average, the planned outage time for coal-fired power plants has decreased over the last several years along with the simultaneous installation of SCRs for NOx SIP call. The planned outage times for coal-fired units from 2000-2002 decreased by over eight percent compared to the previous five years from 1995-1999.7 On average, this indicates that the installation of control technologies has not affected the availability of base loaded coal-fired electricity generation.
EPA Analysis of Boilermaker Demand Estimates
The economic analysis performed by EPA using the Integrated Planning Model (IPM) projects that a considerable number of flue gas desulfurization (FGD) and selective catalytic systems (SCR) would be cost effective to install on coal-fired units in order to achieve the regional SO2 and NOx caps of the proposed IAQR. The control installation projections expected under the current set of Federal and State regulatory programs as well as the total number of installations under the proposed IAQR are given in Table 1. A number of current regulatory programs including State specific rules, Acid Rain Program, NOx SIP call as well as enforcement actions will require a base level of control installations out into the future. The IAQR would require additional control installations over the number of base level controls projected. For the proposed IAQR, the number of incremental FGD installations under the proposed EPA rules would require 49 GW by 2010 and 63 GW by 2015. Likewise, the number of incremental SCR installations under the proposed rules would require 24 GW by 2010 and 46 GW by 2015.
Table 1. Air Pollution Control Installation Projections for proposed Interstate Air Quality Rule Total with Current
Regulatory Programs Total due to Proposed
IAQR Total with Addition of Proposed IAQR
2010 2015 2010 2015* 2010 2015
FGD 115 120 49 63 164 183
SCR 116 125 24 46 140 171
* The IAQR will require a total of 63 GW of FGD and 46 GW of SCR by 2015. The incremental number of projected control equipment installations between 2010 and 2015 is 14 GW of FGD and 22 GW of SCR for a combined total of 36 GW of controls. Including the IAQR projected control equipment installations for 2010, there is a total of 109 GW of combined installations expected by 2015.
The projected control technology installations on coal-fired units require significant amounts of material and human resources. Skilled laborers such as boilermakers, electricians, and teamsters may be employed in the construction of air pollution control equipment. Estimates of the required boilermaker labor can be made and compared to the membership numbers to determine if the available labor pool will be sufficient to meet the demand. It is estimated that 23.3 million
7
boilermaker man-hours will be needed to complete 49 GW of FGD and 24 GW of SCR for a combined 73 GW of control equipment installations by 2010.d For the period between 2010 and 2015, an additional 12 million boilermaker man-hours will be needed to complete 14 GW of FGD and 22 GW of SCR for a combined 36 GW of control equipment installations. The larger portion of the control installation projects are for FGD installations which are installed away from the boiler on the cold side of the unit. Because FGD systems are less integral to the boiler, they require less high temperature welding and therefore less boilermaker labor.
The next step is to compare the demand for boilermakers to the estimated labor pool. EPA assumed that 35% of the boilermaker labor force will be available to work on environmental retrofit work.8 EPA also assumed that approximately 19% of the average boilermaker’s man-hours would be lost due to factors such as sickness, travel between job sites, inclement weather, and vacation time.e Taking these assumptions into account, EPA demonstrated that the labor
The next step is to compare the demand for boilermakers to the estimated labor pool. EPA assumed that 35% of the boilermaker labor force will be available to work on environmental retrofit work.8 EPA also assumed that approximately 19% of the average boilermaker’s man-hours would be lost due to factors such as sickness, travel between job sites, inclement weather, and vacation time.e Taking these assumptions into account, EPA demonstrated that the labor