xt77sq8qd40g https://exploreuk.uky.edu/dips/xt77sq8qd40g/data/mets.xml   Agricultural Experiment Station, Department of Agricultural Economics, University of Kentucky 1978 journals kaes_research_rprts_29 English University of Kentucky Contact the Special Collections Research Center for information regarding rights and use of this collection. Kentucky Agricultural Experiment Station Research Report 29 : August 1978 text Research Report 29 : August 1978 1978 2014 true xt77sq8qd40g section xt77sq8qd40g FEASIBILITY OF MARKETING ABATEMENT GYPSUM
FROM FOSSIL-FIRED POWER PLANTS L
By
james Ransom, Angeles Pagoulatos,
` David L. Debertin, and Milton Shuffett
Agricultural Economics Research Report 29
_ · August 1978

 J x
x * a
’

 CONTENTS
Page
Introduction ......................... 3 ’
The Market for Gypsum .................... 4
An Aggregate Econometric Model ................ 5
Domestic Demand and Supply .............. 6
Gypsum Imports and Stocks .............. 6
Results ....................... 7
A Disaggregated Econometric Model .............. 7
Specifications .................... 8
Results ....................... 9
Costs and Supply of Abatement Gypsum ............. 9
Marketing Potential of Abatement Gypsum ........... 13
Conclusions ......................... 18
Footnotes .......................... 20
Tables ............................ 23
References .......................... 36

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r V

 FEASIBILITY OF MARKETING ABATEMENT GYPSUM
FROM FOSSIL—FIRED POWER PLANTS
James Ransom, Angelos Pagoulatos, David L. Debertin and Milton Shuffett L
1. INTRODUCTION
The electrical utility industry in the U.S. faces difficult problems
and decisions in implementing the Clean Air Act of 1967 as amended in 1970, (
with respect to sulfur dioxide (SO2) emissions. The U.S. Department of
Interior has projected that net electrical generation by fossi1—fired power
plants will increase from 1,310 billion ki1o—watt—hours in 1971 to 1,950
billion in 1980 (Princiotta, p. 2).1 The EPA recently projected that flue
gas desulfurization (FGD) control systems will be installed on 90,000
megawatt (mw) or about 25%, of total estimated coal—fired utility
generating capacity by 1980. This would result in an annual production of
131,000,000 tons of throwaway sludge if the limestone slurry process were
used.
Disposal costs for the limestone slurry process are high, and the
process is wasteful of large quantities of sulfur, a vital economic
resource. To the extent that these emissions can be economically
recovered, society would be the net beneficiary.
ln Japan, several FGD systems that produce abatement gypsum have
been developed and are in use, but in the U.S. technology and market E
conditions have yet to be established. The gypsum is used primarily in
the wallboard and cement industries (Ando, Corriyan). The Tennessee
Valley Authority (TVA) has also developed an FGD system with a limestone
3

 A   > 4
é A ai T l ` oxidation to gypsum process. This process is not subject to tho proprietary
E ip 1 restrictions of the processes utilized in Japan.
i 4 T The purpose of this study is (l) to provide an estimate of the
Q · _ costs that will be incurred in the use of the FGD system developed by TVA,
l i ) (2) to identify fossil—fired power plants that might produce and sell abate-
A ment gypsum in competition with existing sources of crude gypsum and other
A l A A power plants, and (3) to estimate the reduction in the cost of compliance
( i with SO2 regulations that would occur as a result of producing and marketing
/ A i abatement gypsum in lieu of the conventional limestone slurry throwaway
. i A FGD system.
T Il. THE MARKET FOR GYPSUM
l lt is important to evaluate abatement gypsum FGD systems under U.S.
A p conditions. Abatement gypsum has immediate uses which are alternatives to
i ii . A throwaway systems. Gypsum can be stockpiled for future needs. In the U.S.,
i A a demonstration gypsu —producing PGD system on a coal—fired facility is
i being operated by Gulf Power and Light in cooperation with EPA. Samples
of abatement gypsum have been used successfully in wallboard and cement
manufacture. Hence, we assume that abatement gypsum can be substituted for
gypsum in the wallboard and cement industries (Ando, Bucy, Lankard).2
A While gypsum reserves are extensive both in the world and the U.S.,
I _ with the exception of one producing area in southwest Virginia, no economic
. reserves are located in the southeastern portion of the U.S. Transportation
costs are a large proportion of the value of the product (Appleyard, U.S.
Bureau of Mines, Minerals Yearbook).
Gypsum use in the U.S. is estimated at 15 to 20 million tons
pi annually, of which about one—third is imported. Seventy—three percent of

 5
’taTY all gypsu  goes into calcined materials such as wallboard manufacture,
cement used 20%, and 7% goes into agricultural uses (Reed, 1973). Despite
the close dependence on the construction industry, gypsu  demand does not
/A> have a significant seasonal pattern. In terms of value of product sold, L
°at€· the gypsum industry is highly integrated from mining through calcining
lc? and sale of manufactured products (Federal Supplement 326, Appleyard).
ce However, wallboard products are sold to independent building supply dealers
Bti¤E or building contractors. Increasingly, byproduct gypsum from fertilizer l
manufacturing operations is replacing gypsum for agricultural uses.
The industry is highly concentrated. From 1947 to 1972, the
leading four firms accounted for approximately 80% or more of value of
UISU industry shipments in every year. The eight—year ratio has consistently
to been above 90% (U.S. Bureau of Census, Bain), and the costs of entry are
ver3*l1igh.
U.S.,
Gypsum consumption has been growing at an average rate of 2% per
year through 1976 (Reed). Based on the projections of the Bureau of Mines,
iu consumption is expected to reach 20.6 million tons in 1978 of which 14.6
Q fOr million tons will be used in calcining plants, 4.1 million in cement use,
and 1.4 million in agriculture (U.S. Bureau of Mines Preprint and Ransom).
L5-, 111. AN AGGREGATE ECONOMETRIC NDDEL
‘OmiC An econometric model of the gypsum industry was postulated in this
$ati““ study. The model was designed to be used as a mechanism for estimating A
·S· the elasticities of demand for gypsum. Information with respect to demand
elasticities for gypsum is essential in order to assess the impacts of
potential new supplies of abatement gypsum on the market. If the elasticity
of

 i l i .W 3 of demand is relatively small in absolute value, new supplies of abatement
E i ` gypsum could have a substantive price-depressing effect on the gypsum
i q i market. An elasticity of demand large in absolute value would suggest
Q that new supplies would have minimal impact on the price of gypsum.
l V j The model considers the demand and supply of gypsum on both the domestic
i i ( and import side.
i Domestic Demand and Supply
, · ii The demand for domestic gypsum (Equation l, Table l) is determined
( primarily by the levels of residential, business and industrial construction.
I ( _ The wallboard industry uses 73% of the gypsum, and cement accou ts for
another 20%. The three exogenous variables in the demand equation are the
q iq price of wallboard (Wt), the amount of total new construction (NCt), and
1 the percentage of new construction that is residential.
‘ ii The supply of domestic gypsum (Equation 2) is a fu ction of the
i qéantity of gypsum provided by the industry (Qt), the level of stocks at
( the beginning of the year (3Tt), the index of mining productivity (MIPt),
which is a measure of industry costs, and an index of the energy efficiency
of industries which use gypsum (EIX). The cement and wallboard industries
are very energy intensive, and energy costs comprise more than 40% of the
‘ direct costs of production (U.S. Bureau of Mines).
in T Gypsum Imports and Stocks
` Two equations are used to determine the price and supply of imported
. gypsum (Equations 3 and 4). The price of imported gypsum (PMt) is
functionally related to the domestic demand levels (Qt), the quantity of
A p gypsum imported (Mt), and the input price lagged one year (PMt_1).

 7
>nt The demand for imported gypsum is a function of the price of imports
(9Mt), the domestic demand (0t), and prior year imports (Mt_1). Stringent
environmental regulations have been imposed on the domestic cement
producing industry since 1969, and there has been an increased reliance ,
; on imported cement since then (Brown, p. 15).
The stocks equation (Equation 5) completes the model. Stocks are
assumed to be a function of the price of gypsum (Et), the quantity of
domestic gypsum demand during the year (Qt), and imports from the prior
1ed
year (Ht_1).
ztion.
Results
the Prices and quantities in the model were simultaneously determined.
3 Time series data for the period 1955 to 1974 were used as the basis for
the estimation of the model. The model was estimated via two-stage and
three—stage least squares. The three-stage least squares method was more
t efficient, hence, three—stage least squares results are presented in
), Table 1.
ency The parameter estimate on the gypsum price coefficient reveals the
ies elasticity of demand for gypsum in the aggregate model to be near u ity
he (1.0049).3 This suggests that a new supply of abatement gypsum may not
have as heavy a price—depressing effect on the industry as had been thought.
IV. A DISAGGREGATED ECONOM TRIC MODEL
orted A second model was used to break the demand for gypsum into its A
component demands for the wallboard, cement and agricultural industries
f (Table 2).

 i V 3 ( A Specification
Q it A The demand for gypsum by the wallboard industry is a fu ction of
Q ( _i the price of gypsum for wallboard (PNt), the total value of newly built
Q , V structures (VSTt), the percentage of the total value of newly built
g it i ` structures that is residential (RESPt), and the price of wallboard (Wt).
2 _ The supply of gypsum to the wallboard industry is determined by the quantity
§ i of gypsum used in wallboard production (Dwt), the index of energy used in
l “» gypsum manufacturing (EIXt), the mining index of productivity (MIPt), and
gi the stocks of gypsum (STt).
i Q ` The demand for gypsum to the cement industry (DC) is determined
i it by the price of gypsu  to the cement industry (PCt), the price of the
substitute road oil asphalt (PROAt), the total value of construction (Nct),
ii and the price of portland cement (Ct). The price (supply) of gypsum to
j ji i · the cement industry (PCt) is a function of the quantity of gypsum for
j A cement (DCt), the mining index of productivity (MlPt), the energy index
. (EIXt), and gypsu  stocks (STt).
U The demand for gypsum to agriculture (DAt) is a function of the
price of gypsum to agriculture (PAt), the price index of vegetable crops
i i (PVCt), and thousands of irrigated acres planted in peanuts (VAt). The
. price (supply) of gypsum in agriculture (PAt) is determined by the quantity
p of gypsum for agriculture (DAt), the mining index of productivity (MlPt),
W _ the energy index (EIXt), and gypsum stocks (STt).
U Imports of gypsum (Mt) are determined by the price of imports (PMtL
A the quantity of imports in the previous time period (Mt_1), and the price
p of wallboard (PMt). The price (supply) of imported gypsum (PMt) is
= determined by the quantity of imports (Mt), the prices of imports in the

 9
previous time period (PMt_1), prices for wallboard (Pwt) and cement (PCt),
)f and the energy index (EIXt).
L Results
Prices and quantities in this model were also simultaneously L
M determined. This model was also estimated using three—stage least squares.
lntity Results are presented in Table 2.
in The price coefficient of demand for gypsum by the wallboard industry
and was nonsignificant. This is because of the integration between wallboard
producers and gypsu  production. The elasticity of demand for gypsum by
i the cement industry was fou d to be -.22. This suggests that there are
few substitutes for gypsum in cement production. The elasticity of demand
NCt)’ for gypsum in agricultural use was -1.276. This suggests that supplies of
O abatement gypsum for agricultural use would have the least price-depressing
effect on the natural gypsum industry as a whole.
X Owing to the relative inelasticity of the demand for gypsum by the
cement industry it would be expected that no appreciable quantity effect
Q would take place due to the competition of new abatement gypsu . This
P5 analysis, therefore, will proceed u der the assumption that abatement
8 gypsum produced and distributed by the utilities will be replacing natural
ntity gypsum in the specific use.
lt) I
V. COSTS AND SUPPLY OF ABATEMENT GYPSUM
(PMt)’ The study is based on the premise that all utilities currently out
Tice of compliance comply by 1978 by choosing one of the following alternatives:
(1) scrub by limestone slurry process, (2) scrub by gypsum—producing process,
zhe

 i ( 10
i j b · L (3) use low-sulfur fuel (clean fuel), or (4) use combinations of one or
Q i i two with alternative three.4
i _pl Estimates of abatement gypsu  supplies were developed from the
2 p Emission Control Development staff of TVA. The supply of abatement gypsum
A p was determined on a plant-by—plant basis for 1978.5 The analysis is based
E on projections of fuel use and other operating characteristics as reported
V E A i by the utilities themselves to the federal power commission.
l The limestone oxidation to gypsum process was used for comparing
I i gypsu  production costs with the scrub limestone throwaway process. Costs
. 1 ‘ were calculated by summing the cost of scrubbing on a boiler—by—boiler
_ S basis to the plant level. The appropriate air quality regulation for the
plant was determined and translated in to the allowable SO2 admission.
I The Clean Air Act as amended allows states and air quality regions to
[ S establish implementation regulations and standards for meeting local needs.
. Substantial variation exists between districts as to standards and how
j they are to be applied. Regulations may apply at each specific boiler, or
U they may apply at a stack or plant level. When regulations apply at the
boiler level, each boiler out of compliance must scrub. When regulations
apply at the stack of plant level, only a sufficient number of boilers
_ must scrub to bring total SO2 emissions into compliance with the point
source standard.6
S p T The next step was to determine if the plant would be in or out of
i compliance in 1978 if operated as projected. Emissions were calculated
· based on the projected quantity of fuel to be burned in each boiler and its
sulfur content. lf calculated SO2 emissions exceeded calculated allowable

 ll
T SO2 emissions by 10% or more, the plant (or boiler) was determined to be
out of compliance for purposes of this study.
Industry costs were summarized and the supply of abatement gypsum
psu  determined. The study considered all fossil—fired utilities in the U.S. .
ased According to data available from the federal power commission, a total of
rted 800 plants with 3,382 boilers having total capacity of 411,404 megawatts
were expected to be in operation in 1978.
ng A total of 187 plants were expected to be out of compliance in 1978.
Oitg These plants are shown in Figure 1. These plants would have to remove a
y total of 4,440,000 tons of sulfur to meet compliance regulations. This
the is more than twice the quantity of sulfur imported into the U.S. in 1974
and equal to 38% of domestically mined sulfur in 1974. If this amount of
sulfur were to be abated in the conventional limestone slurry FGD systems,
pcedsr a total of 25,393.0 thousand tons of calcium solids would be made and have to '
V be ponded in the first year. Total investment would be 6.89 billion dollars
_, OT if all sulfur were to be abated by the limestone slurry system (Ransom).
Vhe The $0.70 per million Btu heat input clean fuel screen was applied
ions to reduce to those plants that might realistically be considered candidates
to install some form of FGD system.7 When the screen was applied, 106
L plants in total and ten additional plants had one or more boilers that
might conceivably employ some FGD system. These plants are shown in
A Of Figure 2. These 116 plants would abate a total of 4,109,000 tons of sulfur. H
id The 331,000 remaining tons would be "abated" by use of clean fuel. At $0.70
ld 1tS per million Btu heat input, the cost would amou t to an extra 267.3 million
Vable dollars for the clean fuel. First—year limestone slurry FGD cost would
amount to 2,037.2 million dollars, making a total first—year cost of 2,350.7

 i · q 12
i A gil` l million dollars. Total investment in the throwaway FGD system under this
g $ pi assumption would be 545 million dollars. Table 3 su marized cost at
{ ~. r different levels of clean—fuel cost. The table illustrates the importance
2 il q of cost and availability of clean fuels in reducing overall costs of
{ .i meeting current emission regulations.
Q ppl At the $0.70 clean—fuel level, 116 plants were found to be candidates
E l to install some form of FGD system. These plants would produce about 27.4
/ , ( . million tons of gypsu  with an average cost of 61.3 dollars per ton and an
( incremental cost, compared with the throwaway system, of 7 dollars per ton.
j I h If clean-fuel cost were $0.50, potential gypsu  production would decline to
i l r 6 million tons. The revenue requirements for the first year operation of
the average plant would be 13.0 million dollars if the throwaway process is
i i 7 used and 14.7 million dollars if the gypsum producing process is used.
. pi i 1 Revenue requirements over the life time (30 years) of the plant are 243.9
i V million dollars for the throwaway process and 274.5 dollars for the gypsum
. producing process (Ransom).
V Cost variability occurs in only a few cases, and only a small volume
of required sulfur removal is involved (from a -13 dollars to a +20 dollars
l per ton). The base estimate indicated an incremental cost of 7 dollars
. per ton for a new 500—megawatts plant. Results of the cost model when
( applied to all plants out of compliance indicated a 7 dollar per ton
l _ incremental cost on 13% of total potential gypsum production. Two—thirds
A . p of total potential production would occur within a range of $3.50 to $10.50
` per ton incremental cost. Only 10% of total potential abatement gypsum
S production would occur at or below estimated cost of mining.

 13
is VI. MARKETING POTENTIAL OF ABATEMENT GYPSUM
To determine the market potential for abatement gypsu , consumption
mcg was projected at each demand point, and the delivered price of crude gypsum
was calculated at each demand point. T0 calculate the delivered cost of L
crude gypsum, the current rail rate for gypsu  was escalated by 15% to
iidates reflect estimated 1978 rates. Rates were Calculated to select appropriate
27.4 tariff and to calculate miles from supply point to each demand point.
1 an Rate—per—ton mile was multipled by miles to each point to obtain transpor—
gOn_ tation cost which was added to f.o.b. price of supply points. This assured
ie to that the lowest delivered cost of gypsum to each demand point was calculated
gf (Ransom).
ss is The mathematical statement of the objective fu ction to be minimized
can be stated as:
3.9 n m MAX
TIC = Z Cidi + Z TSLj — Xij NR(Xij)
PSUW 1:1 js;
Where:
volume V
11 m
·3T`$ - .. - "‘ ... _ .
NR(Xij) -.2 {Z(Ci—TlJ)Xij (IG] TLSJ)XOJ}
S ¤=1
Subject to:
m 0
2 x..-s. x. :0 x·={}
Yds _ 1j j (cj) 0] 1
J=1 t
10.50 m
E X.. S d- (i=1,2,...,N).
m jzl ij i

 i T 14
é V ii 1 Where:
E 3 TIC = total gypsum industry cost
i pi Ci = delivered cost crude gypsum to the ith demand point
2 ipli di = quantity of gypsum demanded by the ith point
E V p Xij = abatement gypsum shipped from the jth steam plant to the
l ith demand point
V E Tij = transportation cost from the jth steam plant to the ith
1 · demand point
I i TGj = total cost gypsu  process
. ii T TLSj = total cost throwaway process
pi Xoj = a zero or one variable
Sj = abatement gypsum production by the jth steam plant
i V Total cost of the gypsum—using industries (wallboard and cement)
.p l to purchase crude gypsum and total cost to the utilities industry to meet
3 T compliance by the limestone slurry FGD system are represented on the left-
, hand side of the equation. The sum of the two costs represents total cost
1 to both industries. Cost to the utilities industry to meet compliance by
i the gypsum—producing FGD process has also been established. All costs are
1 established on a point-by-point basis, and industry cost represents the sum
_ of each cost at demand points or supply points. The transportation portion
h of the model solves for the maximum potential revenue to each utility
T l (supply point) on a plant-by—plant basis. If total gypsum revenue E(Ci—Ti?
i A (xij) minus total incremental gypsum production cost (TGj—TLSj) is positive
T on a plant basis, there is a basis for production and sale of abatement
gypsum by the utility, and cost to both the utilities industry and gypsum
users is reduced. If total revenue minus total incremental cost to the

 15
utility is zero, there is still a basis for production and sale of
abatement gypsum since the utility avoids the problems associated with
ponding slurry and the cost to the gypsum users is reduced. If total
revenue minus total incremental cost is negative, there may still be a .
potential savings to the two industries. It would not be realized, however,
because the utility would have to produce gypsum at a net cost and would
not do so without outside fu ding.
In terms of the model, the mixed integer variable Xoj would take 1
on a value of one when total revenue minus total incremental cost is equal
to or greater than zero. When total revenue minus total incremental cost
is less than zero, the variable Xoj takes on a value of zero. When XOj=l,
the constraint ZXij—Sy(1)=0 holds and the supply is at its maximum. When
.t) XOj=0, the constraint EXij—Sy(0)=0 also holds and supply is zero.
meet The market analysis was limited to the industry east of the Rocky
.eft— Mountains after it was determined that only three plants were out of
cost compliance in the western states. These three plants are located in Nevada
B bY and Wyoming and, because of their location, would have limited opportunity
; are to market abatement gypsum. In the study area an assumed 15,043,301 tons
le Sum of gypsum will be used in 1978 by the wallboard and cement industries at
nrtion 187 demand points. The total cost to market that crude gypsum u der the
study assumptions will amount to 124.4 million dollars. Approximately 58%
Zi—Tij) of the total cost is for transportation. Calcining plants are located
sitive either at domestic mine sites or at deepwater ports to utilize imported
nt gypsum; therefore, the major portion of transportation costs is borne
P$Um by the cement industry.
he

 T 16
i 1 h i l Fifty-five demand points are calcining plants. These plants are
Q i ‘ assumed to use 11,855,910 tons of gypsum in 1978. Estimated consumption
i p per plant ranges from a low of 58,260 tons to a high of more than 500,000
i it tons. Average consumption per plant is estimated at 215,562 tons.
T up T Delivered cost to calcining plants is based on estimated domestic variable
{ · mining costs of 3 dollars per ton and 2 dollars per ton for imported gypsum.
l 2 ii, Imported gypsum (mainly from Canada) is transported to coastal calcining
1 . plants at rates ranging from 3 dollars to 5 dollars per ton. All interior
I i _1 calcining plants but three are located at or near mine sites. ln these
_ A 1 cases a flat 1 dollar per ton is assumed to cover costs of moving the
l it material from mine to plant. Rail rates are calculated from company—owned
i mines to calcining plants for the plants located away from mine sites.
i Projected use by size and delivered costs to wallboard plants are sum arized
. j in Table 4.
Z A i Imports are assumed at more than 5.9 million tons (in the study
Y . area) in 1978. Under the study assumptions, 66 demand points will use
R imported crude gypsum. Forty-three are cement plants which use an estimated
1.164 million tons. This gypsum is imported to the calcining plant and then
shipped to the cement plant. Rail rates are calculated in each point.
Twenty-three calcining plants will directly use 4.777 million tons of
imported gypsum.
i ‘ One hu dred and thirty-two demand points are cement plants. The
` cement industry is projected to use a total of 3.187 million tons of gypsum
. in 1978 (Mineral lndustry Surveys). This is based on each plant in the
industry operating at 85% of rated capacity and each plant using a finished
I p cement containing 5% gypsum. Use per plant ranges from a low of 2,550 tons

 17
3 to a high of 65,875 tons. Average use per plant will amount to 24,147
H tons. Delivered prices are based on a conservative average f.o.b. price
30 of 6 dollars per ton from nearest supply points. Rail transportation is
assumed in each case, and minimum delivered cost of crude gypsum is >
ble calculated to each cement demand point. Delivered costs range from a low
pSum_ of $12.43 per ton to a high of $21.18. The majority of tonnage used will
g have a delivered cost of between $15 and $18 per ton. Projected use by
ior size and delivered cost to cement plants are summarized in Table 5. A
The 30 steam plants in the final solution, their location,
production, and incremental cost per ton of gypsum are shown in Table 6.
ned The over—al1 results of the analysis are summarized in Table 6. The analysis
indicates that abatement gypsum would be used by only one existing
rized wallboard manufacturing plant. This is a result of more profitable markets
in the cement industry. For example, two plants in Florida are located near
wallboard manufacturing plants. If cement markets were not available,
these two plants could partially supply the needs of the wallboard plants
mated on a mutually profitable basis. .
_thCn The major potential for abatement gypsum marketing is to supply the
cement industry. In the analysis, 2.132 million tons were calculated to be
supplied to 92 plants in the cement industry. This tonnage represents 67%
of the projected 1978 consumption of gypsum by the cement industry in the
_€ eastern U.S. Plants calculated to produce gypsum are smaller than plants p
psum that would use the limestone slurry throwaway process. On the average, the
, annual output of sulfur is only about one—fourth as much as for limestone
.shed systems. In general, the gypsum—producing plants are newer plants; 29% of
tons them are between zero to 5 years old compared with 11% for limestone

 Z y A 18
? * diff ‘ systems. The sulfur content of fuel by type is lower. In addition, the
é Q I d percentage of Btu heat input from oil and gas is higher than in plants
i V t— predicted to install the limestone slurry throwaway system.
E E The results of the market analysis summarized in Table 7 indicate
i I i . a limited potential for abatement gypsum production and marketing to
i I significantly contribute to solving major FGD problems faced by the nation's
U . U _` utilities. Abatement gypsum was supplied by small abatement producers
U . that could supply requirements of cement plants located near the utility.
I I —i Fifteen of the thirty utilities in the final solution actually were
_ ( I calculated to have lower cost gypsum production than for the limestone
T d p slurry throwaway product. An additional seven plants had an incremental
d cost of less than l dollar per ton of gypsum. The average annual production
V at at these steam plants was 65,377 tons.
. I; When average savings per ton to the gypsum—using industry were
: 4; calculated to be only 86 cents per ton, the economics of using abatement
b . gypsum by the existing industry are questionable. However, the steam plants
U ` could pass additional savings to the gypsum-using industry to compensate
d for added costs of using abatement gypsu . For example, if these costs
S amounted to 2 dollars per ton, 27 steam plants would continue to produce.
U d At a 3-dollar-per-ton price reduction, 24 plants would continue to produce
and market abatement gypsum to the cement industry. The analysis, furthermowl
2 ° indicates that 74% of imported material used by the cement industry would
d be replaced.
` VII. CONCLUSIONS
- Gypsum is a low—value product used in substantial quantities by
d wallboard and cement manufacturing plants. The cost of SO2 removal by the

 19 I
¤€ gypsum producing process is higher than for the limestone slurry throwaway
process. The only exceptions are some small plants, in terms of SO2
removal, which have a cost advantage to produce gypsum. This works to the
ite disadvantage of the gypsum process to supply the existing wallboard industry. L
The analysis was based on conservative estimates of gypsu  mining costs,
Cion'5 but in all other respects the analysis was based on premises favorable
to abatement gypsu .
[Y- Production and marketing of abatement gypsum to the cement industry A
seems to offer an opportunity for steam plants with low annual volumes of
sulfur removal to lower cost of compliance. By the same token, there seems
al to be little opportunity to lower compliance cost by marketing abatement
Uction gypsum to the existing wallboard products industry. The gypsum-producing
alternative seems to offer only a limited potential to solve the larger
problems of sulfur conservation and disposal of calcium solids. However,
nt in terms of a total program of byproduct marketing, the gypsum-production
plants alternative may fill a specific role in that it seemingly meets the needs
.te of small plants when other byproducts may be better suited to larger plants. A
S If that proves to be the case, the gypsum process seems to be of more total
.ce. importance than the analysis indicates.
»duce
·thermow,
»uld
’Y
r the

 i ` 20
i T iii, E Footnotes
Q 2 " 1A 500-megawatt (MW) per unit, burning coal of 3.5% sulfur constant,
{ llij d will produce approximately 20,500 pou ds SO2 per hour. A more recent
Q T. l estimate (Devitt, T.W., et al.) indicates that 109 FGD systems with an
E i d T equivalent rating of 42,128 MW are either operational, under construction
E ` V or planned.
A { 4 a 2Two specific disadvantages for abatement gypsum were identified
l ljt as: The product has 20% free moisture, and it may present mechanical
A `d handling problems. Extra cost to the industry using gypsum to overcome
L i f these disadvantages could not be quantified; but to the extent that they
V jp; present real costs to the gypsum using industry, the added costs must be
d discounted from value attributed to abatement gypsum.
V ·V 3The elasticity of demand for gypsum was calculated on the basis
Z il A of the regression coefficient on gypsu  price (Equation l, Table 1).
E A 4Compliance refers to the achievement of the existing SO2 air
i i quality regulations at each plant, in affect June 30, 1976.
_ 5See Ransom and future EPA Report for the cost calculations and
. McGlanery, et. al.
p 6Any PGD system installed is assumed to remove 90 percent of SO2
A emissions.
it ` 7It is assumed that any plant out of compliance can purchase and
i use low—sulfur fuel to meet compliance at a premium cost of 70 cents per
. T million or Btu heat input.

 21
 
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