O

Oil Analysis
Some plants have oil-sample analysis done on oil samples taken from oil drains on their turbomachinery packages. Metallic particulate content is trended for a clue as to what problems may occur. For instance, rising content of babitt may indicate bearing wear and/or incipient bearing failure. The problem of using this technique with rotating machinery is that most of this machinery turns so fast, the machine may fail between sampling analyses. Oil analysis has a far better chance of detecting deterioration in slower reciprocating machines, provided the samples are analyzed expeditiously.

Oil Sands; Synthetic Crude; Tar Sands; Shale

Oil sands and tar sands are synonyms for the same material. Synthetic crude results from processing oil sands. Shale is similar to oil sand in that it is a category of soil/rock that contains oil that can be extracted. Certain areas of the world have large deposits of oil sands (northern Alberta, Canada) or shale (China and the United States) that oil can be extracted from, either by mining the soil and processing it or directing leaching steam into the ground. The latter process recovers only about 60 percent of the oil. The former process can recover more oil but is expensive to design and build because of the high level of corrosion and erosion problems experienced. This technology is signicant to process engineers in that it provides useful information on what equipment can survive the harshness of this process: such equipment would be suitable for similarly demanding processes elsewhere. Figure O-1 is a simplied line diagram of synthetic crude manufacture from processing oil sands.

Reference and Additional Reading

1. Soares, C. M., Environmental Technology and Economics: Sustainable Development in Industry, Butterworth-Heinemann, 1999.

Oxygen Analysis
Oxygen analyzers used to have applications in turbine and boiler design; they monitored fuel/air ratios. Now the zirconium oxide probe for oxygen analysis is found to have applications in process operations as well, where turbines are involved. These applications give the probe some predictive solving potential, which most rotating machinery engineers might depend on other indicators (such as vibration analysis) for.
O-1

O-2

Oxygen Analysis

FIG. O-1 The production of synthetic crude oil. (Source: Syncrude Canada Limited.)

Oxygen Analysis Produces Protable Power Plants* A recent survey of instrument engineers from European power companies has indicated that many have expanded the utility of the ZrO2 oxygen probe beyond its traditional use as a tool to optimize fuel/air ratios. Most operators of large boilers have come to realize that signicant stratication can exist in the ductwork carrying ue gases. (See Fig. O-2.) By installing an array of O2 probes, and averaging the outputs, an average signal is generated that is suitable for use in automatically trimming fuel/air ratios. While averaging for control purposes is increasingly common, many operators demand a trend display of each individual probe. By watching the relative O2 values, many operators feel that they can detect problems with fouling at individual burners, slag accumulation, or even problems with coal nes at a pulverizer. The O2 measurement is increasingly taking on a predictive maintenance function. Air heater leakage. An increasing number of customers are utilizing the O2 measurement to detect seal leakage at air preheaters. This is particularly effective when utilized with rotating units. Air leakage at the preheater is not only a strong indicator that maintenance is required, it negatively affects thermal heat rate efciency. See Fig. O-3.

* Source: Adapted from extracts from Simmers, Oxygen Analysis Produces Protable Power Plants, IPG, January 1998.

Oxygen Analysis

O-3

FIG. O-2 Most operators realize that signicant stratication can exist in ductwork carrying ue

gases. (Source: Simmers.)

FIG. O-3 Oxygen measurement can be used to detect seal leakage in air heaters. (Source:

Simmers.)

Flue gas recirculation. One NOx reduction strategy is to mix some ue gas into the combustion air prior to the burner, preventing the formation of thermal NOx. An O2 analyzer placed downstream of the mixing point can be utilized to maintain a specic nal O2 set-point. (See Fig. O-4.) It should be noted that the ZrO2 sensing cell is mildly sensitive to pressure changes, whereby each 10 mm of H2O pressure = 1 percent change in reading (not a 1 percent change in O2). Some windboxes may experience pressures high enough to require a pressure balancing accommodation to compensate. NOx predictor. Thermal NOx is dependent in great part on the amount of O2 available, as well as temperature at the burner. Increasing numbers of stations are watching O2 levels as an indication of NOx production. (See Fig. O-5.)

O-4

Ozone

FIG. O-4 Using O2 measurement to control NOx formation. (Source: Simmers.)

FIG. O-5 Using O2 to predict NOx formation. (Source: Simmers.)

Ozone*
Industrial activity and motor vehicle emissions produce ozone, a greenhouse gas. As desired ozone levels are legislated toward, its effects need to be familiar to process and industrial engineers. Two problems to be considered are ground-level and stratospheric ozone. (As a sample country for data comparisons, Canada has been selected.) It is important not to confuse the problem of ground-level ozone pollution with
* Source: Environment Canada. Adapted with permission.

Ozone

O-5

FIG. O-6 Urban smog. (Source: Environment Canada.)

the thinning of the stratospheric ozone layer. About 90 percent of atmospheric ozone occurs in the stratosphere, a layer that extends from about 15 to 50 km above the Earths surface. There it performs the critical function of absorbing harmful ultraviolet (UV) radiation emitted by the sun. At present the stratospheric ozone is thinning and providing plants and animals with less protection from the harmful effects of excess UV radiation than in the past. This is an urgent problem; however, it is not the topic of the fact sheet. The ozone problem at the Earths surface is accumulation rather than depletion. The normal state of affairs at ground level is for ozone to form and almost immediately break down, at the same rate at which it is being produced, by releasing one oxygen atom. Figure O-1 shows the chemical cycle involving oxygen (O2) and two of the nitrogen oxides (NOx) (in this case, nitric oxide and nitrogen dioxide), sunlight, and high temperatures that governs the formation and breakdown of ground-level ozone. Problems arise when volatile organic compounds (VOCs) (see Chemical precursors of ground-level ozone for a description of VOCs) are added to the mix (Fig. O-6). Because the buildup of ozone at ground level depends upon the concentration of other pollutants, as well as temperature and sunlight, ozone levels usually peak in the late afternoon of hot summer days and can persist into the evening and night. Just how much ozone builds up varies considerably from year to year and from region to region, but summers that are hotter than normal generally produce more episodes of ozone pollution. Chemical Precursors of Ground-Level Ozone Ozone is a secondary pollutant in that it is not emitted directly to the atmosphere. Nitrogen oxides and VOCs, both of which are emitted by natural processes and human activities, are called ozone precursors because they must be present for ozone to form (Fig. O-7).
Nitrogen oxides

This group of nitrogen-oxygen compounds includes the gases nitric oxide, nitrogen dioxide, and nitrous oxide. Natural sources of nitrogen oxides are forest res, lightning,

O-6

Ozone

FIG. O-7 In unpolluted air, ground-level ozone forms and breaks down in a steady cycle. Scenario b shows one way that pollutants disrupt the natural equilibrium. (Source: Environment Canada.)

and bacterial action in the soil. About 95 percent of human-caused emissions of nitrogen oxides come from the combustion of gasoline, diesel fuel, heavy fuel oil, natural gas, coal, and other fuels, notably in motor vehicles, heavy equipment, turbines, industrial boilers, and power plants (Fig. O-8).
Volatile organic compounds

The term volatile organic compounds (VOCs) is used to describe carbon-containing gases and vapors that are present in the air, with the major exceptions of carbon dioxide, carbon monoxide, methane, and chlorouorocarbons. VOCs are given off by trees and other vegetation, particularly in heavily forested areas. The combustion of fossil fuels, especially in cars and trucks; certain industrial processes; and the evaporation of some liquid fuels and solvents found in cleaning solvents, oil-based paints, varnishes, stains, and thinners are important sources of human-caused VOCs (Fig. O-9). Releases of VOCs lead to ground-level ozone pollution when these emissions occur in the presence of nitrogen oxides (Fig. O-7). Effects of Ground-Level Ozone
Effects on human health

Ozone is a very irritating and harmful gas. It adversely affected lung function in young, normal subjects who exercised for 6 h in concentrations as low as the present Canadian 1-h objective of 82 parts per billion (ppb). (A part per billion is a unit of measure used to describe the concentration of atmospheric gases. In this case, the unit represents one molecule of ozone in one billion molecules of all gases in the

Ozone

O-7

FIG. O-8 Estimates of nitrogen oxide emissions due to human activities in Canada during 19852005. (Source: Environment

Canada.)

FIG. O-9 Estimates of VOC emissions due to human activities in Canada during 19852005. (Source: Environment Canada.)

O-8

Ozone

air.) When lung function is affected, ozone has probably caused inammation in the lung. Scientic studies show that after a few days of continuous exposure to ozone, respiratory discomfort disappears. However, although little is known of the longterm effects of repeated ozone exposure on humans, recent research on animals suggests that it may lead to irreversible changes in lung function. When ozone levels exceed 82 ppb, there is evidence that more people are admitted to hospitals with acute respiratory diseases. In 1987 it was reported that high ozone levels coincided with increased admission of patients with acute respiratory disease to 79 hospitals in southern Ontario. However, it is difcult to separate the effects of ozone from those of sulfate in these epidemiological studies. Furthermore, the health effects of individual pollutants may be intensied when two or more pollutants occur together. High concentrations of ozone may affect the health of people and vegetation and corrode materials. Heavy exercise for 2 hours at an exposure of 120 ppb may lead to coughing, shortness of breath, and pain on deep inhalation in healthy adults. Exposures above 120 ppb have resulted in dryness of the throat, shortness of breath, chest tightness and pain, wheezing, fatigue, headache, and nausea. People working or exercising outdoors inhale larger quantities of air and may suffer more during episodes of ozone pollution. Children are more susceptible because they spend more time outside than adults. Studies showed that children at summer camps in Canada and the United States where they were exposed to a typical summer mix of pollutants, including ozone, experienced a measurable decline in lung function. Ozone causes similar decreases in lung function in people who have asthma as in those who do not, but the loss is more likely to be serious in those whose lungs are already unhealthy. In clinical studies, people with asthma do not respond to ozone differently than any other population. However, there is recent evidence that when asthmatics are exposed to ozone their sensitivity to allergens is heightened. Lung function is known to decline with age. Studies of the exposure of human populations to ozone have noted an increase in the rate at which lung function declines. Scientists are researching whether long-term exposure is causing changes in human cells and tissues. The savings that could be achieved by cutting ground-level ozone pollution are likely considerable.
Effects on vegetation

Ozone is now viewed as the most important pollutant affecting vegetation. Canadian research on the impact that ozone is having on farming has focused mainly on southern Ontario, where ozone levels are typically highest. Estimates of the cost of reduced yields in southern Ontario range from $17 to $70 million, depending on the number of ozone events. Ozone damage to crops also occurs in other regions. Value of lost production in the Fraser Valley has been estimated as $8.8 million annually. Ozone damages leaf tissue. Leaves may become mottled with yellow, exhibit small black or white spots, develop larger bronze-colored, paper-thin areas, or exhibit other visible symptoms. Inside the leaf, ozone can inhibit metabolic activity, destroy the walls of cells, damage chlorophyll, and reduce photosynthesis. The plant as a whole may grow 1040 percent more slowly, age prematurely, lose its leaves during the growing season, and produce pollen with a shorter life span.

Ozone

O-9

FIG. O-10 Grape leaf with ozone exposure damage. (Source: Environment Canada.)

The effects of ozone on ecosystems are difcult to measure, because species vary in their susceptibility. In forest ecosystems, exposure to ozone may lead to increased vulnerability to disease and other stresses, increased mortality of individuals, and eventually to overall decline of affected species. Both the degree of, and reasons for, the decline in forest health in eastern North America are still debatable, but ozone is believed to be partly responsible for the reported decline of red spruce, sugar maple, and white birch. (See Fig. O-10.)
Damage to materials

Ozone can lead to the development of cracks in products made of rubber or synthetic rubber, such as tires, boots, gloves, and hoses. Continued exposure to high levels of ozone can cause these products to disintegrate completely. Ozone accelerates the fading of dyes; damages cotton, acetate, nylon, polyester, and other textiles; and accelerates the deterioration of some paints and coatings. It is difcult to pin down the costs of this type of ozone damage. The economic impact in the United States has been estimated at $1 billion, but a similar estimate has yet to be prepared for Canada. Ambient Air Quality Objective for Ozone An air quality objective is a statement of the concentration of a specied air pollutant that should not be exceeded beyond a specied length of time, in order to provide adequate protection against adverse effects on humans, animals, plants, and materials. Pollution control agencies routinely monitor the levels of air pollutants and compare the levels with air quality objectives. This allows them to measure their progress in controlling air pollution. The maximum acceptable level for ground-level ozone in Canada is set at 82 ppb over a 1-h period (see Fig. O-11). An episode occurs when the average ozone concentration exceeds 82 ppb for 1 h or more. Ozone episodes in Canada typically last from one to a few days. It is considered that natural levels of ozone in unpolluted conditions would range between 15 and 25 ppb.

O-10

Ozone

FIG. O-11

Maximum 1-h ozone concentrations for Canadian cities, based on an average of the three highest years during 198390. (Source: Environment Canada.)

The federal government has provisionally adopted the number of days per year when ozone concentrations exceed the 1-h air quality objective as its indicator for ground-level ozone (Environment Canada, Indicators Task Force 1991). The objective of the National Environmental Indicators Project is to develop credible, understandable indicators of environmental conditions. These numbers will help decision-makers to make choices consistent with sustainable development and to evaluate the countrys progress toward that goal. Emission Control Options Measures to control ground-level ozone concentrations focus on the reduction of emissions of nitrogen oxides and VOCs. Because ground-level ozone is a secondary pollutant, formed by the reaction of primary pollutants, measures to control ground-level ozone concentrations focus on the reduction of emissions of nitrogen oxides and VOCs. The amount of ozone formed depends on the ratio of nitrogen oxides to VOCs in the atmospheric mixture. Under certain conditions, ozone formation could be limited more effectively by controlling nitrogen oxides more than VOCs, and under other conditions the reverse could be true. The complex nature of the problem has made evaluation of control strategies difcult. Computer models are needed to predict the degree of ozone formation based on particular atmospheric conditions. As warm temperatures and

Ozone

O-11

sunlight are needed for ozone formation, it is especially important to reduce summer daytime emissions.
International focus for the control of nitrogen oxides and VOCs

International protocols: In 1988, Canada and 24 other countries signed a protocol to stabilize emissions of nitrogen oxides at 1987 levels by 1994. Canada, the United States, and 19 European countries signed another protocol in November 1991 to reduce the emission of VOCs and their transport across international boundaries. The protocol commits Canada to a 30 percent reduction in annual VOC emissions in the Lower Fraser Valley and WindsorQuebec Corridor by 1999 based on 1988 levels. Canada is also committed to a national freeze on VOC emissions at 1988 levels by 1999 (United Nations Economic Commission for Europe 1991). The CanadaU.S. Air Quality Accord: In March 1991, Canada and the United States signed an Air Quality Accord. This agreement addresses the acid rain problem and provides for the study and control of those air pollutants that commonly move across the CanadaU.S. border. Annexes will be developed to specically address urban smog. International Joint Commission recommendations on air quality in the Detroit WindsorPort HuronSarnia Region: In March 1992, the International Joint Commission (IJC) highlighted the need for governments to phase out emissions of air toxics in the region. Among 19 recommendations, the IJC promoted development of a joint regional ozone control strategy that includes emission controls for mobile and stationary sources, including coke ovens. A common ground-level ozone standard has also been recommended for the region.
Canadas management plan for nitrogen oxides and VOCs

A national plan has been developed for the management of nitrogen oxides and VOCs. A national plan for the management of nitrogen oxides and VOCs has been developed by federal and provincial governments through the Canadian Council of Ministers of the Environment. Initiated in 1988 as a coordinated approach to reducing levels of ground-level ozone throughout the country, the plan was developed in consultation with industry, public interest groups, and environmental groups. It aims for consistent attainment of the 1-h ground-level ozone air quality objective of 82 ppb by the year 2005. Implementation is occurring in several phases: Phase I (in place by 1995): a. National Prevention Program: The program outlines 31 initiatives that will reduce emissions of nitrogen oxides and VOCs, including the following: Energy-conservation and product-improvement measures: Energy efciency standards in equipment and appliances Energy audits by industry Reductions in emissions when surface coatings are applied and when adhesives, sealants, and general solvents are used Public education to promote informed consumer choice and an environmentally responsible lifestyle including: Energy-conserving driving habits and alternative transportation modes, such as cycling, walking, and ridesharing Energy conservation The use of energy-efcient products The construction of energy-efcient homes and businesses Improved solvent use and recycling

O-12

Ozone

Source control initiatives: New emission standards for cars and light trucks Caps on emissions of nitrogen oxides from trains Emission guidelines for new sources, i.e., power plants, industrial boilers, and compressor engines, as well as for storage tanks for volatile liquids, chemical processes used by industry, commercial and industrial coating applications, printing, degreasing, and dry cleaning. b. Remedial programs: The plan identies 27 sample regional initiatives for reducing ozone, which could be implemented in the three ozone problem areas: the Lower Fraser Valley, the WindsorQuebec Corridor, the Southern Atlantic Region. Most initiatives involve the installation, retrot, or enhancement of emission-control technologies for existing sources. c. Study initiatives: The plan outlines 24 research initiatives aimed at determining the most effective control strategies for limiting the formation of ground-level ozone. Ambient air monitoring, modeling, and studies of industrial processes and emission sources will help to determine what controls on emissions of nitrogen oxides and VOCs will be necessary in Phases II and III of the plan. d. Federalprovincial agreements: Federalprovincial agreements will establish the responsibilities of the respective governments for specic remedial actions required to reduce ground-level ozone concentrations. The agreements will also set out interim targets for emission reductions. Phases II and III: Phase II of the management plan will establish emission caps for problem areas for the years 2000 and 2005. To meet these caps, it is likely that additional steps, over and above the initiatives laid out in Phase I, will be needed. Phase III will make nal adjustments to emission caps and control programs. Implementation of Phase I of the NOx/VOC management plan should be a signicant step toward solving the countrys ground-level ozone problem by 2005. Maximum ground-level ozone concentrations should be reduced by 1535 percent as a result of predicted Canadian and U.S. emission reductions. In addition, joint CanadaU.S. emission reductions will lead to a 4060 percent reduction in the time during which the maximum acceptable ground-level ozone objective (82 ppb) is exceeded in the regions of greatest concern.

Some regional remedial measures already underway

The Montreal Urban Community has passed regulations that require dry cleaning and printing facilities, surface-coating applications, and metal degreasing operations to control emissions. Substantial reductions have been achieved. The B.C. Motor Vehicle Branch is implementing mandatory vehicle emission testing starting in late 1992 under the Air Care Program. As a condition of annual license renewal, all light-duty vehicles in the provinces Lower Mainland will be inspected for exhaust emissions and emission-control systems. Those not meeting the standards will undergo repairs. Global efforts to address stratospheric ozone depletion have been underway since 1981. The Vienna Convention for the Protection of the Ozone Layer entered into force on September 22, 1988. As of March 1, 1989, thirty-seven countries, representing the vast majority of the industrialized nations of the world, had ratied this Convention. The Convention provides the framework for cooperative activities, including the exchange of data or information related to the ozone layer. This Convention provides for the subsequent creation of protocols (free-standing

Ozone

O-13

treaties) for matters such as control of specic pollutants or families of pollutants. The rst such protocol created was the Montreal Protocol on Substances that Deplete the Ozone Layer. The Montreal Protocol was signed in Montreal, Canada on September 16, 1987. It is clearly a watershed in cooperative and collaborative international undertakings. It introduces many new features never before established in international law. The Montreal Protocol had two requirements for entry into force; namely, 11 signatures of ratication by countries and these countries must represent at least two-thirds of global consumption of the controlled substances. The Montreal Protocol entered into force on January 1, 1989, and as of March 1989 had already attained 33 ratications, again representing most of the industrialized states of the world. On May 1988, Environment Canada published its rst Control Options Report, titled: Preserving the Ozone Layer: a rst step. This report set out a series of options to implement regulations to meet Canadas obligations under the Montreal Protocol. The Montreal Protocol calls for a 50 percent cutback in the 1986 levels of consumption of ve chlorouorocarbons (CFC 11, 12, 113, 114, and 115) and a freeze at 1986 consumption levels of three brominated uorocarbons called Halons (Halon 1211, 1301, and 2402). At a series of United Nations Environment Programme (UNEP) meetings held in The Hague, Netherlands, in October 1988, the worlds leading scientists expressed the consensus viewpoint that the Antarctic hole will remain unless the emissions of controlled CFCs are reduced by at least 85 percent from 1986 levels. The target reductions contained in the Montreal Protocol are currently undergoing international review. This review is expected to culminate in amendments that will tighten the Montreal Protocol. Canada contributed to both the organization and conduct the UNEP meeting in The Hague and fully supports the notion of reducing consumption further. On February 20, 1989, the Federal Government of Canada announced that it had set as its objective the complete elimination of controlled CFCs within the next 10 years. It also called on the rest of the world to set as its common target a reduction of no less than 85 percent by no later than 1999. The Minister of the Environment further announced that the following actions would be taken to achieve the Canadian objective.
1. Implement the protocol

As a rst step, regulations will be enacted under the Canadian Environmental Protection Act to implement the current control requirements set out in the protocol. These are a freeze in consumption at 1986 levels (CFCs on July 1, 1989, and Halons on January 1, 1992) and a two-step reduction in annual consumption of CFCs to 50 percent of 1986 levels by 1999.
2. Regulate a reduction in chlorouorocarbon consumption of at least 85 percent

Draft regulations recently released call for at least an 85 percent reduction of the controlled CFCs by no later than 1999. Consultation on what is achievable is expected to increase the percentage reduction and tighten the time frame.
3. Prohibit specic CFC uses

As a third step, draft regulations have been released for discussion purposes that would prohibit the use of ozone-depleting substances for nonessential uses or where substitutes are available. For example, the import, manufacture, and sale of aerosol

O-14

Ozone

products containing controlled CFCs (with the exception of certain medical and industrial applications for which alternatives are not yet available or for which re safety is a particular concern); food packaging foam including food and beverage containers containing or manufactured with controlled CFCs; portable handheld re extinguishers for home use containing Halons; and small pressurized canisters that contain CFCs, including refrigerants, air horns, and party streamers, will be prohibited by January 1, 1990. As safe alternatives become available, a similar prohibition will apply to the following aerosol products: release agents for molds used in the production of plastic and elastomeric materials, cleaners and solvents for commercial use on electrical or electronic equipment, and products used in mining applications where re hazard is critical.

4. Further control measures

As a fourth step, this comprehensive control options report has been prepared to focus discussion on the earliest possible prohibition dates for remaining CFC uses. Some examples of prohibition dates proposed in this report are as follows: 1. Rigid foams a. Insulating foams Polyurethane (19921994) Polystyrene (19901991) Phenolic (19911992) b. Packaging Food (1990) Other (19901991) 2. Flexible foams a. Car seats, furniture cushions, etc. (19901992) 3. Refrigeration a. New refrigeration and air-conditioning equipment (19941999) b. Existing equipment maintenance (as replacements are available) 4. Solvents a. Electronic (19911994) b. Metal cleaning (19901991) c. Dry cleaning (19911992) 5. Others a. Hospital sterilants, optical coatings (19901994) As these remaining uses are prohibited, the total allowable quantities of controlled CFCs produced and consumed in Canada will be lowered. This Control Options Report, Preserving the Ozone Layer: A Step Beyond the Montreal Protocol, describes the most promising options to control ozone-depleting substances for each process group and product group including rigid and exible foams, refrigeration and air conditioning, solvents, sterilants, aerosols, and re suppression systems in which controlled CFCs and Halons are used. The control options comprise three main categories: Emission controls Chemical and process substitutes Product substitutes

Ozone

O-15

Depletion of Ozone in the Stratosphere As excess ozone at lower atmospheric levels is a problem, reduced ozone in the stratosphere is also dangerous to life. Industry is therefore being pressured to take steps to alleviate this problem. Some background information follows. Figure O-12* describes effects of ozone on vegetation and health.
Benets and costs

The benets of the Montreal Protocol consist of two components. For benets associated with reduced damage to materials, reduced damage to agricultural productivity, and reduced damage to sh stocks, estimates of the dollar amounts of benets are shown. For health impacts, including reduced incidence of skin cancers, reduced fatal skin cancers, and reduced cataract incidence, estimates of averted health effects are shown. In both cases, the framework for producing the estimates is the same. Effects are estimated for the scenario in which no controls on the consumption of ozone-depleting substances are implemented relative to the alternative scenario represented by the introduction of the Montreal Protocol. The overall benets of the Montreal Protocol are shown in summary form in Table O-1. This table shows quantied dollar benets of $459 billion plus a reduction in skin cancer cases of 3.4 million, 129 million fewer cataract cases, and more than 330,000 reduced fatalities. Montreal Protocol costs are also substantial but small relative to benets. The present discounted value of protocol costs over the time period from 1987 to 2060 total $235 billion. Although substantial, these costs are less than the quantiable benets from reduced damages to agriculture, shing, and materials. The benets from averted health effects are extremely large in relation to the costs. If reduced fatalities from skin cancers alone are considered, the number of cases averted from 1987 to 2060 is 333,500. Costs of Replacing Ozone-Depleting Substances
Overview and methodology

The methodology for assessing the costs of implementing the Montreal Protocol focuses on the economic costs of the controls that have been introduced. In the economics literature, this is frequently referred to as assessing the real resource costs of the policy. See Table O-2. As an example, consider refrigeration and air-conditioning services. Assume in this example that a constant quantity of these services will be producedthat is, there are no price impacts on this quantity. Prior to the regulation, CFCs are used as refrigerants throughout this sector. As a result of the introduction of the Montreal Protocol, a number of changes are made in this sector to reduce and then eliminate CFCs. The economic cost of the regulation is the difference in the cost of producing these outputs prior to the control and after it is introduced. In this cost methodology, the real resource costs that are relevant consist of the additional quantity of resources needed to produce this constant level of output.
* Source: Environment Canada, Preserving the Ozone Layer: A Step Beyond, April 1989. This report was written with specic reference to Canada, but provides applications information for readers anywhere.

Source: Adapted from extracts from Environment Canada, Montreal Protocol 1987 to 1997: Global Benets and Costs of the Montreal Protocol on Substances That Deplete the Ozone Layer. Source: Environment Canada SOE Sheet 92-1, written with specic reference to the U.S.Canada Air Quality Agreement and Ozone Levels in Canada.

O-16

Ozone

FIG. O-12 Effects of ozone on vegetation and health. (Source: Environment Canada.)

Other private sector costs may be incurred that are not reected in the economic costs described above. If the price of CFCs increases, for example, due to regulatory restrictions on quantity, some private sector users will register this as an increased cost. This is not a economic cost, however, because no additional input resources are required to produce the output in question. Viewed somewhat differently, the price increase is not an economic cost because the additional costs of the purchasers are exactly offset by the additional revenues of the producers. In any regulatory scenario, we would expect to observe both real resource cost impacts and price impacts as described above. Economists refer to the price effects as transfers in that they involve transfers from one group in society to another. In

Ozone
TABLE O-1 Benets and Costs of the Montreal Protocol, 19872060

O-17

BENEFITS Health benets Reduced cases of nonmelanoma skin cancer Reduced cases of melanoma skin cancer Reduced cases of cataracts* Reduced skin cancer fatalities* Dollar benets Reduced sheries damage Reduced agricultural damage Reduced damage to materials Total dollar benets COSTS Overall costs NET BENEFITS Benets minus costs

19,100,000 1,500,000 129,100,000 333,500 $238 billion $191 billion $30 billion $459 billion $235 billion $224 billion plus health benets

* Mean of upper- and lower-bound estimates. Base case discount rate is 5 percent. Note that overall benets are the sum of the health effects and the benets that are expressed in dollar terms. SOURCE: ARC estimates.

TABLE O-2

Global Consumption of Ozone-Depleting Substances (1986) Developed Countries 1,010.0 169.9 11.0 9.9 10.2 581.6 92.2 42.6 1,927.4 Article 5(1) Countries 111.0 13.4 2.7 1.2 n.a. 27.4 4.4 10.8 170.9 Total Kilotonnes 1,121.0 183.3 13.7 11.1 10.2 609.0 96.6 53.4 2,098.3 Total ODP Units 1,065.0 9.2 41.1 111.0 61.2 67.0 106.3 32.0 1,492.8

ODS CFCs HCFCs Halons

Mean ODP 0.95 0.05 3.00 10.00 6.00 0.11 1.10 0.06

1,211 1,301 2,402 Methyl chloroform Carbon tetrachloride (dispersive, nonfeedstock uses) Methyl bromide Total units (kt)

SOURCE: Estimates by ARC, based on data from U.S. Environmental Protection Agency and UNEP. Note that small quantities of halon 2,402 were used in some Article 5(1) countries.

this case, the transfer is from users of CFCs to producers. Economic costs exclude transfers and in this way focus on the additional real resource costs associated with the regulation. In this way of assessing costs, there are no incremental costs associated with rms that continue to use CFCs, with no change in their production process. They may pay higher CFC prices but this is not a real resource cost to society. The clearest example of costs is the case in which the rm switches to a new HCFC or HFC refrigerant. The refrigerant itself may be more expensive and it may also involve system or process changes. If there are capital costs, these must be amortized over the life of the equipment and in this way, these costs are divided among a range of current and future end users. This means that rms that convert away from CFCs will have incremental costs that must be measured. Other rms may try to reduce

O-18

Ozone

the quantity of CFCs used per unit of output. Others may try to recycle or otherwise capture CFCs that are used. All of these adjustments involve economic costs.

Costs of CFC replacement Aerosols. In this section we estimate the cost of controls applied on the use of CFCs in aerosols as a result of the Montreal Protocol for both developed countries and the Article 5(1) countries. Prior to the protocol, signicant reductions in CFC use in aerosols had taken place in Canada, the U.S., and a number of European countries following a ban on certain uses of CFCs in aerosols that became effective in 1979. Following the application of controls under the Montreal Protocol, consumption has declined steadily in most developed countries and is now accounted for only by essential uses, primarily in the medical eld. The consumption of ozone-depleting substances in aerosols for the period 1986 to 1995 is based on estimates provided in the 1994 Report of the Aerosols, Sterilants, Miscellaneous Uses and Carbon Tetrachloride Technical Options Committee. The forecast use without controls is based on the observed and expected growth of aerosol products in general. This market is essentially a mature market that would grow more slowly than GDP. So an overall growth rate of 1 percent per year was applied for the No Control scenario for the developed countries. In the Article 5(1) countries, consumption without controls is assumed to grow at 10 percent per year until 2005 and then at 5 percent. In the Montreal Protocol controls scenario, some minimal amount is still used to support certain vital applications, mostly in the medical eld, for which substitutes are only slowly appearing on the market. That amount is assumed to decline to zero by the year 2010, when CFC use for these applications is mandated to cease. From a material cost standpoint, the use of hydrocarbons as a substitute for CFCs in developed countries has cut the material cost of aerosol propellant material signicantly, in some cases by as much as 80 percent. Overall, we have used an estimate of two thirds saving across all affected aerosol products. That saving is reected as a negative cost differential for each year in our analysis, which extends to 2060. We assume that pumps and other ODS substitutes generate comparable cost savings. The main sources of additional costs as a result of replacing CFCs by hydrocarbons in aerosols were:

Upgrading of sprinkler systems and ventilation in production and storage facilities, and extra storage space for segregated storage of ammable materials, in aerosol manufacturing plants R&D for new formulations Changes in labels New permits These were all one-time costs. Except for changes in material costs, it does not appear that operating costs were affected. Industry sources indicated that, once the appropriate re protection steps were taken, insurance premiums did not rise appreciably. Aerosol cans themselves did not have to be changed. Based on this information, we estimate that the total one-time cost in developed countries for R&D and the other items listed above will have been more than offset by operating cost savings from lower propellant costs. We have estimated an actual saving of $0.88 per kilogram of CFC displaced. That is, the present value of the

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reduced cost of propellant exceeds the present value of the costs of converting to the use of hydrocarbons and other alternatives for developed countries. The relative ease and low cost of the transition away from CFCs to hydrocarbons, particularly in the developed countries is closely related to the ban on CFCs as aerosol propellants in many countries in the late 1970s and early 1980s. This ban reduced the quantities of CFCs that had to be replaced as a result of the Montreal Protocol. More importantly, it also provided a rm base of technical knowledge on the use of hydrocarbon alternatives to CFC propellants. The area within the aerosol sector in which the conversion process has been most difcult is in the phase-out of CFCs in metered dose inhalers (MDIs). Although the global quantities of CFC use are relatively small, the application is a critical one and has consumed substantial resources in the development of alternatives. In this study, we assume that development and testing costs for MDIs will total $2.5 billion in 1997 U.S. dollars. This offsets some of the cost reductions for other aerosol application areas in developed countries. For Article 5(1) countries, the picture is somewhat different. In many of these countries, access to hydrocarbons may be a problem and the small scale of enterprises will make the up-front conversion costs more of a burden. The available evidence indicates substantial diversity in control costs in Article 5(1) countries. We estimate that 35 percent of consumption reduction in these countries will generate the same cost savings as described for developed countries. Another 35 percent will have no incremental costs while 30 percent will involve the average cost of $2.68 per kilogram described in the TEAP Replenishment Report (1996). Overall, this produces a cost per kilogram of $0.50. Overall, our assessment is that for aerosols, the Montreal Protocol was responsible for reduced consumption of 29.9 million tonnes of CFCs in the developed countries and a reduction of 12.5 million tonnes in the Article 5(1) countries for the time period from 1987 to 2060. The controls and no-controls scenarios for CFCs in aerosols are shown graphically in Fig. O-13. Due to lower propellant costs in developed countries, the costs of meeting the protocol requirements translate into an overall cost saving of $6.5 billion. This gure nets out the R&D costs for MDIs. In the Article 5(1) countries, the adjustment cost is estimated to be $1.2 billion. In 1986, consumption of CFCs by the foam plastics manufacturing industry was extremely varied; however, the dominant volume uses were in polyurethane and polystyrene foam applications. Polyurethane foam is produced as the result of a chemical reaction of a polyol, isocyanate, and blowing agents. In some foam plastics, the resulting cells are closed, trapping the blowing agent inside, while in others the cells are produced open and the blowing agent escapes. Used in a large variety of products, polyurethane foams can be classied into three major categories: rigid (closed cell), exible (open cell), and integral skin. Product applications include insulating materials for buildings and appliances, cushioning products for furnishings and automobiles, packaging for protection of high-value products, and automobile bumpers and instrument panels. Extruded polystyrene foam is produced by melting polystyrene resin in an extruder and injecting a blowing agent into the resin under high pressure. Dispersed into the molten polystyrene, the blowing agent volatizes as a mixture leaves the extruder, causing the plastic to foam. There are two distinct forms of extruded polystyrene: foam sheet, which is typically used in disposable food service packaging and packing products, and foam boardstock, which is typically used as an insulation product. The physical and chemical properties of the blowing agent affect the processability
Flexible and rigid foams.

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FIG. O-13 Consumption of CFCs in aerosols under Montreal Protocol and no-controls scenarios.

(Source: Environment Canada.)

of the foam in manufacture and the characteristics of the foam product such as density and durability. For thermal insulating applications the blowing agent contributes to the overall insulating capacity of the product. For exible and rigid foams, global consumption of CFCs as blowing agents prior to the Montreal Protocol is estimated as follows (UNEP Foam TOC 1994): Rigid polyurethane: 149,000 Flexible polyurethane: 60,400 Phenolic: 1,400

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Extruded polystyrene: 37,600 Polyolen: 19,000 Total: 267,400 (tonnes in 1986) CFC-11 was the auxiliary blowing agent used in the production of soft and lowdensity polyurethane slabstock foam, sometimes augmented by methylene chloride. Prior to the Montreal Protocol and as late as 1990, this auxiliary blowing agent was used for approximately 25 percent of the exible foam slabstock produced globally. The reduction of the use of CFC-11 in exible foam was achieved through conversion to complete water-blowing formulations for molded products, replacement by methylene chloride in slabstock and a number of other measures including the use of new polyols and related systems and by the use of liquid carbon dioxide in slabstock foams. For the other foam categories, the largest quantities are accounted for by rigid polyurethane foam, which used CFC-11 as a blowing agent, and extruded polystyrene, which used CFC-12 as a blowing agent. In developed countries, the transition out of CFCs was generally completed by 1996. Zero ODP alternatives are the substitutes of choice for certain rigid thermal insulation foams. However, in several markets and for certain applications HCFCs are necessary for rigid thermal insulating foams until zero ODP solutions are proven including high energy efciency or properties required for safety. The interim replacements for CFC-11 and CFC-12 as blowing agents have been primarily HCFC-141b and HCFC-142b, respectively. Including development and testing costs plus continuing operating cost differentials, costs are estimated to be $1.48 per kilogram for replacing CFC-12 in polystyrene and $2.01 per kilogram for replacing CFC-11 in polyurethane. In other foamed plastic applications, costs are estimated to be $2.00 per kilogram. For exible foams, cost increases in some alternatives have been offset by decreases in others. As a result, no incremental costs are estimated for this sector. For the entire foam sector, this report computes a weighted average cost per kilogram reecting the costs per kilogram described above and the quantities used in each application. Overall, this provides an estimate of $1.48 per kilogram displaced for quantities used in developed countries. For Article 5(1) countries, we have used the cost per kilogram estimate of $8.31 from the TEAP Replenishment Report (1996) for 50 percent of foam production and the developed country estimate of $1.48 per kilogram for the remaining 50 percent. Overall, this produces an estimate of $4.90 per kilogram. Global quantities per year are estimated on the basis of data shown in the 1994/1995 TEAP Foam Technical Options Report. The division of these quantities into developed country consumption and Article 5(1) consumption is on the basis of estimates by ARC (Applied Research Consultants) using baseline consumption data from the Multilateral Fund. Global costs of replacing CFCs in the foam sector are estimated to be $17.9 billion for the conversion away from CFCs. Costs for converting away from HCFCs are estimated elsewhere in this report. The global cost estimate breaks down into costs of $14.8 billion in developed countries and $3.1 billion in Article 5(1) countries. All costs are present discounted values calculated from 1989 to 2060 and expressed in 1997 dollars. The controls and no controls quantity scenarios for the use of CFCs in foams are shown in Fig. O-14.
Refrigeration and air conditioning. This section provides estimates of the costs of

implementing the Montreal Protocol in the Refrigeration and Air Conditioning

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FIG. O-14 Consumption of CFCs in foams under Montreal Protocol and no-controls scenarios.

(Source: Environment Canada.)

sector. The Refrigeration and Air Conditioning sector involves a wide variety of applications, the vast majority of which use refrigerants that have been targeted by the Montreal Protocol either in the short term (CFCs) or in the medium term (HCFCs). We estimate the costs of replacing HCFC refrigerants in a separate section of the report. The 1994 Report of the Refrigeration Air Conditioning and Heat Pumps Technical Options Committee of UNEP provides a detailed review of the various subsectors that make up the Refrigeration and Air Conditioning sector, the quantities of various refrigerants used in these subsectors, as well as the options available for replacing CFCs and HCFCs, the two major refrigerant groups targeted by the Montreal Protocol. For a number of refrigeration/air-conditioning applications the implementation

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of the protocol will be a two-stage process. The rst stage consists of replacing a CFC by an HCFC and the second stage involves replacing an HCFC by a zero-ODP refrigerant, usually an HFC. This section considers only the costs of the rst stage. HCFC costs are estimated separately. The dollar cost per kilogram of displaced ozone-depleting refrigerant is a constant cost which, when multiplied by the kilograms saved in each year, yields a stream of payments whose net present value is equal to the net present value of the total incremental costs of implementing the protocol for this sector. This cost is obtained by dividing the net present value of all incremental costs by the net present value of displaced ozone-depleting refrigerant. For the developed countries, the cost estimation framework for converting away from CFCs in Refrigeration and Air Conditioning provides an estimate of $4.62 per kilogram for the developed countries. For the Article 5(1) countries, the TEAP Replenishment Report (1996) provides an estimate of the upper bound incremental cost per kilogram of replacing CFCs in air-conditioning and refrigeration applications. Many lower cost reduction approaches such as improved service procedures are also available in Article 5(1) countries. Our overall cost estimate is based on a weighted average cost per kilogram. In this weighted average, 60 percent of refrigerant consumption is replaced at the same cost as in developed countries, 10 percent is at a cost premium of 1.5 relative to developed countries and the remaining 40 percent is at the upper bound incremental cost of $15.61 per kilogram from TEAP (1996). Using these data, the cost estimate in this report is that replacing CFCs in this sector in Article 5(1) countries costs $8.15 per kilogram. Total costs for this sector are based on the cost per kilogram estimates described above and on estimates of the gap between consumption of CFC refrigerants with and without the Montreal Protocol controls. Figure O-15 shows the consumption patterns in the controls and no-controls scenarios. Based on these data, estimated costs for replacing CFC refrigerants are $95.4 billion for the global total. This is broken down into costs of $47.7 billion in the developed countries and $47.7 billion in the Article 5(1) countries. All costs are measured as a present value over the time period 1989 to 2060 and are expressed in constant 1997 dollars using a discount rate of 5 percent. In the Article 5(1) countries, we use the cost per kilogram estimate for solvents that is provided in the TEAP Replenishment Report (1996) as a measure of upper bound incremental costs. The data shown in that report have been weighted by country type to produce an incremental upper bound cost estimate of $15.84 per kilogram in the Article 5(1) countries. Improved conservation practices suggest and the technology transfer practices of multinational rms suggest that half of the adjustments should occur at the same cost as in developed countries. A further 40 percent of adjustments are costed at 1.5 times the estimated cost in developed countries and 10 percent of adjustments are costed at the upper bound incremental cost. These calculations generate an overall cost per kilogram in Article 5(1) countries of $2.82. Total costs are based on the costs per kilogram and on estimates of the difference between consumption with and without controls for CFC-113. The two consumption scenarios are shown graphically in Fig. O-16. Using these data, this report estimates global costs for this sector of $18.7 billion. This is the present discounted value of costs at a discount rate of 5 percent measured over the time period 1989 to 2060 and expressed in 1997 dollars. These costs include $16.5 billion for the developed countries and $2.2 billion for the Article 5(1) countries. Prior to the development of the Montreal Protocol controls, CFC-12 was used extensively as a diluent with ethylene oxide (EO) to produce the sterilant gas
Sterilants.

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FIG. O-15 Consumption of CFCs in refrigerants under Montreal Protocol and no-controls

scenarios. (Source: Environment Canada.)

used by hospitals and commercial sterilizers. We estimate that 1989 global consumption of CFC-12 in this application was approximately 23,000 tonnes, with only very small quantities used in Article 5(1) countries. In this application, CFC-12 was used to reduce the ammability of the EO and accounted for 88 percent of the mixture with EO accounting for 12 percent. The resulting 12/88 mixture was released to the environment at the end of the sterilization cycle. Many options to reduce and then eliminate the consumption of CFC-12 were pursued in this sector with different costs associated with each. Conservation, for example, led to signicant consumption reductions. Sterilizers that previously had

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FIG. O-16

Consumption of CFCs in solvents under Montreal Protocol and no-controls scenarios. (Source: Environment Canada.)

been run partly full were run only when full. The major advantage of 12/88 units related to sterilization of medical devices made of polyvinylchloride or polyethylene compounds that melt or deform at the high temperatures of steam sterilization. Restricting the use of 12/88 units to only these items accounted for a further reduction in the use of CFC-12. Large commercial sterilizers were able to convert to a product that was an EO-nitrogen blend to eliminate the use of CFC-12 entirely and some hospitals were able to use small units with only EO. In addition, a dropin substitute for 12/88 was developed in which the CFC-12 was replaced with HCFC-124. The preceding paragraph suggests that many options with different control costs

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contributed to the phase-out of the use of CFC-12 in sterilant gas. In our assessment of the costs of replacing CFC-12, we have developed a weighted average cost per kilogram reecting the different costs of each option. The conservation and steam sterilization options involve cost reductions in that expensive CFCs and their replacements did not have to be purchased in the same quantities. The EO conversion of contract sterilizers and the switch to HCFC-124 involved substantial costs. In 1986, for example, the cost of CFC-12 in 12/88 units was approximately $1.50 per kilogram whereas our estimate of the cost of HCFC-124 is approximately $12.00 per kilogram. However, we estimate that HCFC-124 replaced CFC-12 in only 15 percent of sterilant applications. Overall, we estimate an average cost per kilogram of $1.43 for replacing the use of CFC-12 in sterilization. We estimate that in the absence of the Montreal Protocol, 1989 global consumption of approximately 23,000 tonnes of CFC-12 would have grown at 2 percent per year until 2060. See Fig. O-16. Calculated from the beginning of the impacts of the Montreal Protocol until 2060, we estimate control costs of $1.3 billion in discounted 1997 dollars. Since almost all of the 12/88 systems were found in developed countries, we estimate that $1.2 billion of these costs should be allocated to developed countries with $0.1 billion to Article 5(1) countries. Reference and Additional Reading
1. Soares, C. M., Environmental Technology and Economics: Sustainable Development in Industry, Butterworth-Heinemann, 1999.