Power Air Quality Insights No

				Power Air Quality Insights No. 56 May 17, 2012

WELCOME

The following insights can be sent to you every week. This alert contains the details on the upcoming hot topic hour, breaking news, and the headlines for the Utility E Alert for the previous week. This is one of a number of free services. You can sign up for any of these newsletters and of course request to be removed from the mailing list at any time. See registration following the newsletter.

· Decisive Classification is an Important New Tool in Air, Water and Energy

· “Status of Carbon Capture Programs and Technology” is Hot Topic Hour on May 24, 2012

· Dust Collector Filter Bag and Cartridge Market to Exceed $2.4 Billion This Year

· Encourage the selection of lowest life cycle cost products rather than those with lowest initial cost

The Decisive Classification system is being developed by the McIlvaine Company and is accessible free of charge in the Global Decisions Orchard website.

All decisions are a sequence of classifications. The more relevant the classifications, the better the decision. In the increasingly international world it is also important that classifications be precise and that this precision is conveyed in the appropriate languages of which Chinese and English are the two most important.

The system is designed to assist purchasers in finding the right products in the air, water and energy sectors. But it is also equally useful to suppliers, researchers and even investors.

The purchaser typically starts with classifying his application. McIlvaine has adopted the U.S. NAICS code system but with decisive additions.

In this case McIlvaine has chosen to separate oil shale from shale oil. The reason is that they are two completely different applications. Shale oil can be extracted with hydraulic fracturing because it is a liquid. Oil shale must be heated in-situ or mined in order to process the solid kerogens.

Classification of products is by market share rather than by theory. A decade ago dissolved oxygen monitors were based on either galvanic or polarographic methods. Then optical instruments gained popularity. This created three categories. Today optical instruments are dominant, so the first classification should now be optical or electrochemical. This classification is very valuable to the searcher because it indicates that it is more important to decide between optical and electrochemical than between specific electrochemical approaches. A new development in this field uses nanotechnology. Therefore, the classifications are likely to change again.

The classification sequence includes applications, processes, products, goals, tasks and supplier companies. A process could be water treatment. The goals could be safety or air quality. One of the big problems with identifying supplier companies is the multiple names in Chinese and English. This is overcome by a system whereby every company is identified by a number. The corporate name in Chinese and English is linked to the number as is the precise subsidiary name.

Tasks and products are identified in a parent–child system. Here is an example for catalyst maintenance for a power plant selective catalytic reduction system:

Click Here	Application Sequencing
z	211111 - Crude Petroleum and Natural Gas Extraction	Oil Shale
z	211111 - Crude Petroleum and Natural Gas Extraction	Shale Gas 页岩气
z	211111 - Crude Petroleum and Natural Gas Extraction	Shale Oil

Parent	Descriptor	Chinese Descriptor	Definition
Catalyst Maintenance	Cleaning Catalyst	催化剂除灰	A dry process that utilizes vacuum and compressed air to mechanically remove as much of the flyash accumulation as possible.
Catalyst Maintenance	Regeneration Catalyst	催化剂再生	“Catalyst cleaning” followed by a wet chemical process to remove decay compounds plus re-impregnation of the catalytic compound(s).
Catalyst Maintenance	Rejuvenation Catalyst	催化剂复原	“Catalyst cleaning” followed by a wet chemical process to remove some decay compounds with minimum removal of catalytic compound(s). There is no re-impregnation of the catalytic compound(s).

The value of this classification to Chinese power plant operators is substantial. They have just recently installed their first DeNO_x systems and do not have the maintenance experience to be familiar with the options. A system which clarifies that there are three main options is therefore very helpful.

The McIlvaine Company will continue to develop the system and is seeking input from associations, governments and corporations. A niche expert network is also being established to ensure that the classifications reflect the world’s knowledge.

For more information, click on: Global Decisions Orchard or contact the McIlvaine Company at editor@mcilvainecompany.com 847 784 0012.

The present world market for chemicals to combat air pollutants is $13.8 billion but will be growing at a healthy eight percent per year over the next five years. The larger ($24 billion) water treatment chemicals market will be growing by six percent per yr (real dollars). These are the latest findings by McIlvaine Company through extracting forecasts from a number of its market reports.

Presently, lime, limestone and ammonia are the chemicals most used for air pollution control. However, the use of other chemicals will be growing at double-digit rates. In the U.S. this segment presently generates $1 billion in revenues. It includes activated carbon, sodium products, bromine, potassium permanganate, hydrogen peroxide, sulfuric acid, amines and certain other chemicals. These chemicals are used for mercury, acid gas, volatile organic compounds, odor, CO₂ and microbial capture or destruction.

The U.S. market for activated carbon for air pollution promises to be twice as big as the market in water pollution which is presently 400 million pounds per year. Norit, Calgon Carbon, Albemarle and a joint venture involving ADA-ES are the major players. Bromine is competing with activated carbon. Chemtura, Albemarle and ICl are spearheading the U.S. effort.

FMC has formed an environmental group to supply air pollution, water pollution and remediation products. Hydrogen peroxide is being promoted for NO_x control FMC, Tata Chemicals and Church & Dwight have formed Natronix to offer various sodium products for SO₃ and SO₂ capture. Potassium permanganate is used for odor control. Amines are used for CO₂ and SO₂ capture.

Lime usage in the U.S. is 20 million tons with revenues of $2 billion. Environmental uses are seven million tons but with the average price of $150/ton generate revenues of $1 billion. Air applications now account for 80 percent of the total environmental revenues. Lhoist, Carmeuse, Graymont and Mississippi Lime are quite active in the U.S. market. The Chinese market for lime is presently 180 million tons with less than two percent used for air pollution control, but there will be double-digit annual growth over the next five years.

Dry injection for HCl control will boost lime sales in the U.S. Another potential is the use in inhibited oxidation wet SO₂ removal systems. The resultant calcium sulfite sludge can be fixed with excess lime and encapsulate toxic metals. This eliminates the need for expensive wastewater treatment. Limestone will continue to be the most utilized reagent for SO₂ capture. The largest growth will be in China in the next decade.

Ammonia is used in various forms (anhydrous and aqueous). A popular alternative is the purchase of urea and on-site conversion to ammonia. A huge NO_x control program is underway in China. A preference for the urea to ammonia approach has been indicated.

The $24 billion water and wastewater chemicals market will grow at levels well above GDP in the next five years, but its pace will be slower than air. One reason is that non-chemical technologies such as Ultra-Violet disinfection and electrodeionization are taking market share away from chemicals. In the U. S., air chemicals presently represent 78 percent of the total for water. This will increase to 85 percent over the next five years.

Analysts and executives were participants in the McIlvaine Markets webinar last week. One of the questions was in response to the display showing that all the markets are fractured. The top five companies in valves, pumps, filters, etc. have less than 10 percent of the world market. The question was: Why are they fractured?

The answer was that it is easy to roll-up a market dependent on mass production or mass marketing. Economies of scale can be achieved without too much difficulty. But the air and water roll-up synergies are based on shared knowledge. Creating an environment where disparate groups are willing to share knowledge is very difficult. Early failures have discouraged newcomers from pursuing the roll-up strategy.

· R.W. Baird projects big earnings for ADA-ES based on refined coal success and opportunities to sell systems to remove air toxics.

· Activated carbon potential is expanded by new potential to utilize it in the scrubber to separate the mercury from the gypsum.

· The FLS roaster concept would make activated carbon applicable even when flyash is to be sold. It could also open the door to a big market for metals recovery and solve the huge waste disposal problem facing power plants.

· Activated carbon can also remove selenium. This recent discovery could boost the market.

· W. L. Gore and Shaw have technologies to threaten activated carbon. The Gore technology is a trim system to be used with a wet scrubber, whereas Shaw uses bromine compounds to supplement the existing air pollution control equipment.

· Norit is looking at either IPO or sale as a result of big debt load. Goldman Sachs is the adviser. Norit is the largest A-C supplier to the U.S. power market.

· Calgon Carbon is second largest supplier of A-C for mercury, but a bigger potential is in ballast water treatment with UV and complete systems.

· Alfa Laval, Veolia, Severn Trent and Calgon Carbon are early leaders in a ballast water treatment market which will generate $70 billion in revenues in just seven years.

· Renewables are unreliable and are supplemented by big CO₂ emitters such as peaking turbines. Schneider Electric has technologies to extend renewables reliability.

· Co-location of sewage treatment, waste-to-energy and coal-fired power would be cost effective and have big environmental benefits. Siemens, Doosan, Xylem and a few others are well positioned to take advantage of these opportunities.

· Energy Recovery bought back over one million shares at a low price of around $2/share after prices plunged due to loss of a mega project desalination order.

· GE is a major player in small desalination plants, treatment chemicals, solid liquid separation and air and dust filter media. Analysts’ near-term assessments are mixed. Last month Morgan Stanley lowered their EPS estimates. Analysts at Goldman Sachs raised their price target; Nomura reiterated a “buy” rating. Barclays Capital reiterated a “top pick” rating on shares of General Electric in a research note to investors on Tuesday, April 17^th.

· Shale gas fracking could be a big market for suppliers of zero liquid discharge systems including GE, Aquatech and Veolia.

· Electrodeionization has a great future according to McIlvaine Company. Siemens is focusing on its use in desalination. Nalco is pursuing the technology for biofuels. Snowpure is a little company starting to have a big impact with EDI for Chinese power plants.

· Xylem first quarter revenue was up six percent to over $900 million. The integration of YSI is going well and underscores the potential for instrumentation and monitoring to enhance treatment. Xylem paid $310 million for YSI, which had 2010 revenues of $101 million. Janney was adviser to YSI for this transaction as well as the YSI purchase of Design Analysis Associates in 2009 which brought the hydrological monitoring. There is a big potential in hydrological monitoring for the shale and coal ash pond markets.

· Culligan has reportedly hired advisers relative to corporate restructure. Chapter 11 may be one option to deal with a $900 million loan. The private equity firm Clayton Dubilier & Rice currently owns the company and could consider selling, according to one source.

· Pentair first quarter earnings were down but, "It was a muted quarter, not indicative of the business going forward assuming the Tyco deal goes through," said John Quealy, an analyst at Canaccord Genuity. Tyco posted a second-quarter profit that beat analyst estimates, thanks to sales growth in its key segments.

· Rexnord Corporation (NYSE: RXN) closed its initial public offering last month of 27,236,842 shares of common stock at $18.00 per share. The net proceeds were approximately $459 million. BofA Merrill Lynch, Goldman, Sachs & Co.. Credit Suisse Securities (USA) LLC, Deutsche Bank Securities, Inc. and Barclays Capital, Inc. acted as joint book-running managers in connection with the offering.

· Pall is receiving $536 million for sale of blood filtration unit to Haemonetics. Larry Kingsley, CEO said, “It will enable Pall to focus on markets and opportunities where we are best positioned for growth.”

· IDEX has acquired ERC. ERC’s products include in-line membrane vacuum degassing solutions, refractive index detectors and ozone generation systems. Located in Kawaguchi, Japan, ERC has a global customer base and annual revenues of approximately ¥2.14 billion.

· Foster Wheeler has entered the air market with the purchase of Graf-Wulff and can take advantage of the fast growing fluid bed dry scrubber segment.

· Doosan has also expanded in the air market and has a number of technologies thanks to the purchase of AEE. Doosan is also a major player in desalination.

· Demand for lime will increase due to new air toxic regulations in the U.S. This will benefit Graymont, Mississippi Lime and Lafarge.

· B&W stock has ranged from $18-$31/share over the last 52 weeks and is presently in the mid twenties. The company could benefit significantly from the new U.S. air toxic regulations.

· Alstom sales should increase by more than five percent per year over the next three years while operating margin should gradually improve to around eight percent in March 2015, said Patrick Kron, Alstom’s Chairman and Chief Executive Officer.

“Status of Carbon Capture Programs and Technology” is Hot Topic Hour on May 24, 2012

On March 27, 2012, the U.S. Environmental Protection Agency (EPA) proposed the first Clean Air Act standard for carbon pollution from new fossil fuel-fired power plants. The proposed rule requires new fossil fueled power plants meet an output-based standard of 1,000 pounds of CO₂ per megawatt-hour (lb CO₂/MWh gross). The rule creates a clear path forward for new technologies to be deployed at new coal-fired electricity generating units (EGU’s) that will be built in the future. The rule does not apply to existing power plants already operating (even if they make significant modifications such as changes needed to meet other air pollution standards), power plants that will start construction over the next twelve months and power plants that do not burn fossil fuels (e.g., burn biomass only).

In the information documents EPA released announcing the proposed rule, EPA noted “New power plants can choose to burn any fossil fuel to generate electricity, including natural gas as well as coal with the help of technologies that reduce carbon emissions.” and “New power plants that are designed to use coal or petroleum coke would be able to incorporate technology to reduce carbon dioxide emissions to meet the standard, such as Carbon Capture and Storage (CCS).” Although the rule will also apply to new natural gas combined cycle (NGCC) power plants, EPA believes that NGCC plants should be able to meet the proposed standard without add-on controls.

This proposed rule makes it very clear that any new coal-fired EGU to be constructed after 2013 will need to incorporate a method to capture CO₂ and remove it from the environment (commonly referred to as Carbon Capture and Storage or CCS). Removal can be accomplished by underground sequestration, sale for enhanced oil recovery or to make other chemicals or for use in applications such as carbonation of beverages and food storage. However, EPA apparently recognized the burden that this new and relatively unproven technology will place on the utility industry and gave new power plants that use CCS the option to use a thirty year average of CO₂emissions to meet the proposed standard, rather than meeting the annual standard each year. A company could build a coal-fired power plant and add CCS later. For example, a new power plant could emit more CO₂ for the first ten years and then emit less for the next twenty years, as long as the average of those emissions met the standard. Also, power plants that install and operate CCS right away would have the flexibility to emit more CO₂ in the early years as they learn how to best optimize the controls. EPA expects that this flexibility should cause CCS to become more widely available and lead to lower costs and improved performance over time.

The following speakers will help us understand the current state of development of various CCS technologies, the economics, the potential carbon reductions achievable and the advantages or disadvantages of these various options. They may also speak about the results of current demonstration projects and technologies that have been commercialized at power plants and the strategies that are being considered and adopted by utilities to meet this proposed rule.

Dennis (Denny) McDonald P.E., Manager/Functional Technology and Steve Moorman, Manager, Business Development - Advanced Technologies at Babcock & Wilcox Power Generation Group, will discuss the status of B&W's carbon capture programs and technologies and their perspective on the factors that have greatly slowed the global momentum toward CCS.

The market drivers for electricity generating equipment are rapidly changing. Over the past two years talk of cap-and-trade and expectations of legislation limiting carbon dioxide (CO₂) emissions have faded. Poor economic conditions have limited the pool of public funding for CCS development. Horizontal drilling techniques have made natural gas abundant and inexpensive supplanting coal as the fuel of choice for electricity production. In addition, EPA has imposed particulate and mercury limits under the MATS rule that are prohibitive for new coal generation. The most recent EPA rule establishing a CO₂ emission limit of 1000 lb MWh is too low for even the most efficient coal-fired power plants to meet without carbon capture and storage (CCS).

As a result of these factors, the worldwide momentum for development of carbon capture technologies has slowed considerably. In spite of some successes in moving CCS technologies toward commercialization, several key demonstration programs have been cancelled or postponed indefinitely. The FutureGen 2.0 project is continuing though it faces many challenges. In this presentation B&W will offer their perspective on the current climate for CCS, provide an update on the FutureGen 2.0 project and the status of their post-combustion and chemical looping carbon capture development programs.

Dr. Neeraj Gupta, Senior Research Leader for Energy Systems at Battelle Memorial Institute, will present a “CO₂ Utilization and Storage Technology Update.” Commercial readiness of CCUS technologies to meet the regulatory constraints depends on our ability to expand research on geologic storage and utilization, exploration for safe and effective subsurface storage, appropriate policy and financial framework. This presentation will offer an update based on lessons learned from a number of field-testing projects, especially in the Midwestern USA, a region with strong dependence on coal. Opportunities for near-term deployment as well as challenges facing large-scale deployment will be presented.

Jeffrey (Jeff) Price, Managing Partner at Bluewave Resources, LLC, will discuss the “Outlook for Carbon Capture and Storage.” Applying Carbon Capture and Storage (CCS) to coal plants may be one route to compliance with EPA’s proposed Greenhouse Gas NSPS. Over the last decade governments and industry have devoted substantial resources to the development of CCS. CCS, however, is not yet commercially ready for power plant applications. While considerable progress has been made, more remains to be done. This presentation explains the current status and outlook for the commercial application of CCS in the power sector.

John Wheeldon, Project Manager, Coal Technology at the Electric Power Research Institute (EPRI)

On Thursday at 10 a.m. Central time, McIlvaine hosts a 90 minute web meeting on important energy and pollution control subjects. Power webinars are free for subscribers to either Power Plant Air Quality Decisions or Utility Environmental Upgrade Tracking System. The cost is $125.00 for non-subscribers. Market Intelligence webinars are free to McIlvaine market report subscribers and are $400.00 for non-subscribers.

DATE	Non-Subscribers Cost	SUBJECT	Webinar Type
May 17, 2012	$125.00	Role of Renewable Energy in U.S. and World	Power
May 18, 2012	$125.00	Electric Power Highlights	Power
May 24, 2012	$125.00	Status of Carbon Capture Programs and Technology	Power
May 31, 2012	$400.00	Air Pollution Control Markets (geographic trends, regulatory developments, competition, technology developments)	Market Intelligence
June 7, 2012	$125.00	Dry Sorbent Injection and Material Handling in Coal-fired Power Plants	Power
June 14, 2012	$125.00	Report from Power Gen Europe (update on regulations, speaker and exhibitor highlights)	Power
June 21, 2012	$400.00	Pumps and Valves (impacts of mergers, new markets, market drivers, forecasts)	Market Intelligence
June 28, 2012	$125.00	Greenhouse Gas Strategies for Coal-fired Plant Operators	Power
July 12, 2012	$125.00	CFB Technology and Clean Coal (Update on CFB Reactor Technology)	Power
July 19, 2012	$400.00	Future for Coal, Gas, Nuclear and Renewables (forecasts by region and discussion of market drivers and regulatory constraints)	Market Intelligence
July 26, 2012	$125.00	Beneficial Byproducts of Coal Combustion and Gasification	Power
August 2, 2012	$125.00	Mercury Control and Removal Status and Cost	Power
August 9, 2012	$400.00	Filter Media (forecasts and market drivers for media used in air, gas, liquid, fluid applications both mobile and stationary)	Market Intelligence
August 16, 2012	$125.00	Report from Coal-gen (highlights of speeches and exhibitions)	Power
August 23, 2012	$125.00	Report from Mega Symposium (highlights of speeches and exhibitions at this important air pollution conference)	Power
August 30, 2012	$400.00	Instrumentation for Air, Gas, Water, Liquids (forecasts , market shares, growth segments)

The Electric Power conference next week will be rich in intelligence about all the issues which are facing the industry. McIlvaine will be asking speakers and exhibitors to provide their opinions about the future. Here are the questions which we will address:

We will be gathering answers to these questions at the show and will discuss those answers with participants.

Dust Collector Filter Bag and Cartridge Market to Exceed $2.4 Billion This Year

Bags and cartridges are used to capture dust and purify stack gases. The market for these products will exceed $2.4 billion this year. The sales of filter media used in these elements will exceed $1.3 billion. This is the latest finding in the World Fabric Filter and Element Market

The value of the media used in the elements is increasing for several reasons. First the market for high temperature bags is growing faster than for low temperature bags. The media represents as much as 80 percent of the total sales price in the very high temperature range and as much as 60 percent for somewhat lower temperatures such as found in asphalt plants and dry scrubber systems used in power plants.

The second reason is the trend toward pleated bags and the elimination of internal cages. The cost of the more expensive media is offset by the greater capacity and cage saving.

A third reason is the increasing use of membranes. They are supported by non-woven substrates. The membrane film improves the efficiency and cake release qualities. Regulations are increasingly becoming more stringent. The U.S. EPA based their costs for cement plants to meet the new metal toxic regulations on the replacement of conventional bags with membrane bags.

There are new challenges. The consent decrees which are stipulating the replacement of precipitators with fabric filters on coal-fired boilers burning high sulfur coal have resulted in maintenance problems. Sulfuric acid condenses on the bags and makes the cake sticky and difficult to remove. One solution is the injection of lime ahead of the dust collector.

The growth in the high temperature sector will be more than 8 percent per year. The increase will be in the power and cement areas. The U.S. and China will both be large markets over the next few years.

There are potential media developments which could nearly double the media market. Several companies are marketing ceramic non-woven filter media and bags which can operate reliably at 850^oF. This would allow filtration to take place ahead of the selective catalytic reduction unit. An SCR operating on dust free gas can be half the size of one designed to operate in the dirty gas stream. Furthermore, the life of the catalyst increases from four years to more than ten years.

A combination dust filter and selective catalytic reduction bag is also now available. The active catalyst is attached to the surface of the ceramic fibers. This design has the opportunity to replace both the SCR and the precipitator with just one device. Furthermore, it would allow the downstream air pre-heater to operate more efficiently. There is a potential 1 percent increase in energy efficiency.

Renewable energy projects in developing countries are often funded by large international groups. The following articles are a sample of the information that may be found in McIlvaine’s Renewable Energy Projects and Update.

OPIC Board Approves $250 Million to Expand Renewable Energy and Infrastructure Lending in India

The Board of Directors of the Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution, has approved $250 million in financing to help India’s premier infrastructure lender expand its lending to renewable energy and infrastructure projects, providing much-needed long-term capital to the country’s effort to keep pace with the sectors’ massive potential.

India’s Infrastructure Development Finance Company (IDFC) will use the OPIC guaranty to expand its lending to solar photovoltaic projects, energy efficiency projects, projects that reduce energy consumption and/or demand, and wind farm projects, among others. The OPIC financing will also support IDFC’s “Go Green” initiative, which aims to mitigate the social, environmental and carbon footprint of its projects, as well as lending to infrastructure projects.

Despite significant growth over the past few years, India’s renewable energy sector remains underserved, primarily due to the inability of financial institutions to offer long-term lending. The lack of long-term funding options, especially given current financial market conditions, has made bi- and multi-lateral support much more critical.

The Inter-American Development Bank (IDB) is ramping up lending for private sector projects related to renewable energy and energy efficiency to help bridge the gap for long-term financing for green investments in Latin America and the Caribbean.

Last year alone, the IDB approved $736 million in financing for private sector environmentally-friendly projects, compared with the $663 million invested by the Bank between 2000 and 2010. For 2012, the Bank expects to approve more than $700 million in financing for private sector renewable energy projects, particularly wind, solar and hydropower plants.

The increase in the IDB lending for renewable energy and energy efficiency projects reflects both an increase in demand from its 26 borrowing members and a strategic shift for the Bank following its capital increase. One of the goals set in the IDB’s capital increase agreement calls for 25 percent of Bank’s lending portfolio to support climate change and environmentally-friendly initiatives, including renewable energy.

The Inter-American Investment Corporation (IIC) and the Nordic Development Fund (NDF) reaffirmed their ongoing commitment to supporting SMEs in Central America and to expanding the GREENPYME initiative in Latin America and the Caribbean by signing an amendment to the existing €2.2-million agreement of the IIC-NDF Trust Fund, which will now include an additional €3 million from the NDF. This new contribution will finance the IIC’s GREENPYME initiative in the Plurinational State of Bolivia and enhance GREENPYME activities currently underway in Honduras and Nicaragua, all of which are low-income countries.

GREENPYME seeks to provide SMEs with know-how, tools, as well as technical and financial support for implementing energy efficiency measures and clean technologies. In 2011, with the support of the NDF, the IIC’s GREENPYME initiative was launched in Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. The expansion of the initiative aims at tackling the main barriers to energy efficiency identified in the Plurinational State of Bolivia as well as expanding the scope of work currently under way in Honduras and Nicaragua. Over a three year period, GREENPYME will undertake activities to raise awareness and promote information on energy efficiency for SMEs, build capacity with the assistance of local partners, conduct energy audits, and promote the use of clean technologies.

Category	U.S.		World
	$ Millions	Tons Millions	$ Millions	Tons Millions
Lime Total	2,000	20	33,000	330
Lime Air	600	4	1,800	12
Lime Water	120	1	4,800	4
Limestone Total	7,000	700	70,000	7,000
Limestone Air	400	35	2,000	175
Ammonia DeNO_x	1,500		6,000
Other Chemicals in Air	1,000		4,000
Air Sub Total	3,500		13,800
Water/Wastewater Treatment Chemicals	4,500		24,000
Air to Water Ratio %	78		58