Nitrogen oxides emissions standards for domestic gas appliances

Background study
Mr Bob Joynt, Environmental Consultant and Mr Stephen Wu, Combustion Engineering Consultant
Environment Australia, February 2000

Cost to business

7.1 General

Four space heater manufacturers, three water heater manufacturers, one cooking appliance manufacturer and one components manufacturer in Australia responded to the enquiry about cost to business.

Some overseas manufacturers and industrial bodies responded also to the enquiry by providing information about low NOx emission technologies.

While the direct response from overseas on the cost to business could be better, half of the local manufacturers responded with input obtained from, or based on, their overseas parent/subsidiary companies' experience.

The cost to business can be:

The up front cost may be sub-divided according to the different stages of product development as follows:

The extent of each stage conducted by different manufacturers to develop a new product on the market varies, and hence the cost incurred can be substantially different. The resources spent at each stage depend on the company policies, source of technology, and extent of similar work done in the past.

For example, a manufacturer may not have an appropriate low NOx technology, and may like to develop its own low NOx technology. Depending upon the complexity of the technology and licensing terms, the extent and cost of such a research and development program may be substantially reduced by purchasing a proven NOx reduction technology. Naturally, some burner technology companies responded with interest in providing Australian manufacturers with NOx control technologies.

If a manufacturer is confident in the performance data of a product imported from overseas, then a small scale, and hence low cost, field test under Australian conditions would be sufficient.

7.2 Cost to business in Australia

7.2.1 Cost to water heater manufacturing industry


AquaMax is an Australian company specialising in water heaters. It designs, develops and manufactures its storage water heaters in Australia.

AquaMax provided a detailed estimate on the cost and time required to research, develop and commercialise a brand new low NOx storage water heaters if their existing models cannot meet the future NOx emissions standards in Australia. The ball park figures would be 3–5 million dollars and 4–6 years in order to satisfy itself with the quality and performance of the new low NOx model before placing it on the market. In particular, it has a policy of using extensive period of field testing for performance and life cycle evaluation.

The development stages required would be:

AquaMax also imports and markets instantaneous water heaters in a joint venture. If the joint venture partner has low NOx water heaters manufactured overseas that can meet the future NOx emissions standards in Australia, AquaMax would require a lead time of approximately 12–18 months and cost up to $A 1 million to get the joint venture partner's new low NOx models modified and field tested, certified and marketed in Australia.

If the joint venture partner does not have a suitable low NOx model, the time and cost required to launch one on the Australian market is guessed to be similar to a brand new model developed solely by Aqua Max.

Rinnai Australia

Mr. Shinji Tanaka, the Director of Planning of Rinnai Australia, informed that Rinnai Australia had been importing from Japan domestic gas appliances with minor modifications to meet the Australian conditions.

If the existing low NOx models manufactured by Rinnai Japan can meet the future NOx emissions regulations in Australia, a lower cost and shorter lead time would be required to modify such a Rinnai low NOx model and sell on the Australian market. For indicative purposes only, the lead time may be approximately 12 months, and the cost for development may be around ¥ 80 million (~ $A 1 million) and the tooling cost may be around ¥ 30 million (~ $A 400,000).

If Rinnai does not have an appropriate model that can meet the future Australian standards, it would need, in ballpark figures, a minimum of two years lead time, ¥ 300 million (~ $A 4 million) for development, and ¥ 150 million (~ $A 2 million) for tooling cost.

Rinnai Australia may be required to share the above research and development cost, or pay for an increase in wholesale price depending on the commercial agreement between Rinnai Australia and Rinnai in Japan. There would also be some cost to Rinnai Australia to train personnel in Australia, demonstrate the new product to local plumbers and gas fitters, and market the new product.

Southcorp Water Heaters Australia

Dr. Alan Law, a senior design engineer of Southcorp Water Heaters Australia, has provided some indicative cost figures based on the successful experience of American Water Heater Company in the development and manufacture of low-NOx storage water heaters for sale in Southern California (personal communication).

With the understanding of the following:

Southcorp has a technology for its American products which just meets the current Southern California limits on NOx emissions. If this technology translates directly to similar performance in products meeting Australian standards, then it would require at least three years of research and development, at a seven digit cost, to bring a reliable product to Australia after the adoption of similar requirements in Australia.

If the technology does not translate to Australian conditions or if lower limits are set, then the time will be considerably longer and the cost considerably higher.

7.2.2 Cost to air heater manufacturing industry

Bowin mfg. Pty. Ltd.

John Joyce, the Managing Director of Bowin, revealed that Bowin had spent many millions of dollars and many years on the initial research and development work to bring the first generation of their low NOx space heaters onto the local market (personal communication).

After that, the research and development cost for new models was substantially reduced. For example, Bowin has recently developed four new power flue models using their latest low NOx surface combustion technology with the spending of less than $1 million.

Mr. Joyce indicated that the cost of a Bowin low NOx burner would be 3–5% of the cost of the appliance. A conservative estimate of the cost of a Bowin burner would be $A 20–50, depending on the application and output of burner.

Lennox Australia

Mr. Bern Connell, Technical Services Manager of Lennox Australia and Mr. Bill McCullough, Senior Engineer of Lennox USA informed that Lennox Australia had been importing from the USA three domestic air heater models, and each had six different sizes. Assuming that the Lennox low NOx domestic air heaters on the US market can meet the future Australian NOx emissions standards, Lennox would require approximately five years to replace all their current air heater models marketed in Australia by low NOx models. This includes:

Currently, Lennox in the USA has spent more than three or four man-months to develop a single flame impingement device but the design and testing of the device still has not been completed. To design a new device, many design variables such as efficiency of furnace, type of burner, type of heat exchanger have to be considered.

7.2.3 Cost to cooking appliance manufacturing industry

Mr. Phill Hubbard, the Manager of Research and Development of Chef, indicated that Australia is one of the countries which have the most stringent NOx emissions standards for cooking appliances. (Mr. Hubbard is the Chairman of the Appliance Standards Committee of the Australian Gas Association, and a member of a number of consulting/reviewing committees of industrial and government bodies.) He pointed out that current measuring techniques had an accuracy of ± 50% for domestic cooking appliances only. If more stringent emissions standards for cooking appliances are to be introduced, more accurate measurement techniques would be required.

When setting emissions standards for domestic cooking appliances, Mr. Hubbard suggested that it would be better if cooking method would be considered as well. Families from different cultural/ethnic background have different cooking styles, and the demand on cooking appliances would be different. For example, Asian wok cooking requires higher temperature and port loading than the common European cooking. If a single emission standard for one type of gas cooking appliance is set with, say, the consideration of common European cooking only, it may encourage some users choosing other means to get around the emission regulation for domestic appliances.

Based on personal experience, Mr. Hubbard indicated that besides the time and money invested on the development of a suitable low NOx technology, another 2 years and $ 0.5–2 million might be required to develop, design, certify and market a new low NOx gas cooking appliance to meet lower NOx emissions standards.

Mr. Hubbard also realised that domestic gas cooking appliances had been losing their market in Australia to electric cooking appliances which are generally cheaper. In the last two years, a drop of 5–7% in sale of domestic gas appliances was observed, perhaps because of the deregulation of the utility industries. (Chef is owned by Email Appliance which owns Westinghouse Australia also. Together, Chef and Westinghouse Australia have approximately 70% of the Australian market share of domestic cooking appliances.)

If more stringent NOx emissions standards are to be introduced for domestic gas cooking appliances, the production cost of new low NOx appliances is expected to increase. This would push the price of new appliances higher and discourage end-users further from using gas appliances, unless the cheaper low NOx appliances are imported from overseas. This would seriously affect local manufacturers such as Chef and Westinghouse who have been manufacturing 100% locally for the Australian market and export approximately 10% of their production overseas.

7.2.4 Other comments on cost to business

Mr.Grahame Tiplady, the Technical Sales Manager of SIT Gas Controls responded under the request from Worgas Bruciatori SRL in Italy. SIT Gas Controls is the distributor of Worgas burners in Australia. It also supplies gas flow and combustion controls equipment to a number of brands of domestic gas appliances in Australia such as Rheem and Vulcan.

Mr. Tiplady felt that if the local gas appliances manufacturers were left alone to research and develop their low NOx products to meet any future low NOx emissions standards comparable to the overseas standards, most of the manufacturing industry would find it difficult to achieve. The reason is that each low NOx burner has to be customer-developed and designed alongside with the research and development of a particular low NOx model. Government contribution to the research and development would be very useful to maintain a competitive Australian manufacturing industry.

Mr.Tiplady indicated that the majority of the Australian manufacturers may not have the sale volume large enough to attract major overseas burner technology companies such as Worgas to invest in research and development of their low NOx technology for Australian manufacturers. It would be more cost effective if a number of Australian manufacturers can jointly contract the burner technology companies such as Worgas to develop the low NOx gas burners for their appliances.

7.3 Comments and concerns from the industry

There have been a number of comments and concerns raised by the industry in regard to low NOx emission regulations. These are:

7.4 Cost to business overseas

Besides the information provided by Rinnai Australia on the likely impact to their supplier in Japan if Australia is going to introduce new low NOx regulations (Section 7.2.1), no information on cost to business has been received from overseas.

As commented by Tokyo Gas (Koji Hase, personal communication), this is a sensitive issue and is confidential to many parties of concern.

7.5 Summary of cost to business

The cost to business is a sensitive subject. The indicative costs and lead time for modifying an existing overseas low NO model, or developing a brand new low NOx model, vary much among different types of appliances and different manufacturers. The information that has been collected from the manufacturers of domestic water heaters, air heaters and cooking appliances is summarised as follows:

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