Modest Growth for Air Pollution Control Market

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The Clean Air Act amendments of 1990 created a wave of optimism in the air pollution control (APC) business. The subsequent decade, however, resulted in backwash of disappointment for APC companies as the market for stationary source equipment declined from 1-4% per year from 1993-1998. Growth returned to the APC market, however, with 1999 and 2000 characterized as 'good' years by the Institute of Clean Air Companies (ICAC, Washington, D.C.) on the strength of strong demand for NOx equipment and steady growth in VOC control systems. Jeff Smith, ICAC's executive director, acknowledged that many companies 'may have overestimated the potential' of the Clean Air Act, but that 'we are certainly in for some better times' with ICAC forecasting slow but steady growth through 2003.

EBJ estimates the stationary source market at $3.6 billion in 2000, up 3% from 1999 with strong gains in NOx counteracting continued drop-offs in flue gas desulphurization and electrostatic precipitators. Demand for fabric filters and aftermarket supplies for APC systems has remained fairly flat. VOC and oxidation systems grew fairly steadily for the third consecutive year as MACT standards continued to be put in by EPA on an industry-by-industry basis. VOCs, along with NOx, are the primary contributors to ozone and both will continue to benefit from the emphasis on urban ozone control precipitated mainly by a group of states in high-ozone areas. Recent federal regulatory developments include the upgrading of the 1-hour standard to a 8-hour ozone standard and the permitting of lower concentrations of ozone from 0.112 ppm to 0.08 ppm. Leaders in VOC markets include Durr, Megtec (see articles on both of these companies on the following pages), Smith, Huntington, Anguil and others.

NOx has taken over as the largest single subcategory of APC equipment and will continue to be in strong demand. The evolution of NOx emission trading along with the growth of the control markets has resulted in some interesting dynamics, said Smith. 'Compliance through trading has engendered lots of technology. Companies are selling a suite of compliance options,' rather than just one piece of control equipment. While SCRs, SNCRs and low-NOx burners are prevalent, the emergence of neural networks to maximize efficiency and minimize emissions during the combustion cycle has been a major trend helping both productivity and environmental performance. Leaders in NOx solutions include Alstom, Babcock Borsig, Babcock Wilcox, Hamon Research-Cottrell, Fuel Tech and others. NOx emission credits are going for about $1,300/ton in the ozone transport region (significantly higher than SO2 credits) and have fluctuated from $400-$2,000.

Continuous emission monitors (CEMs) have been another area of growth in air quality markets, said Smith. After the CEM market took off due to stack monitoring requirements being met in 1995 and 1996, demand faltered for the next few years and sales fell. Recently new requirements have taken hold but the CEM market is also driven by the need to maintain the integrity of emissions trading programs and for compliance assurance. The power sector remains the predominant market for CEMs. Smith noted the tremendous pace of technical development in the past few years and likened it to the pace of PCs. Leaders in the CEM business include Land Combustion, Horiba Instruments, STI, KVB and Fourney Corp. Presumably as emission trading programs take hold in other regions and pollutants and governments increasingly turn to market mechanisms like emissions taxes and voluntary compliance, CEMs will have more non-regulatory market drivers and potentially benefit from a more stable market.

Other growth areas could revolve around mercury emissions, particularly from coal, and the broader demand created by an expected rise in demand for clean coal technology. Energy deregulation has had a 'great effect' on the APC business, said Smith, as it injected uncertainty into the business as to 'who would own what' leading to postponement of capital expenditures. Some of these deferred expenditures have been working their way into driving recent market growth from 2000-2005, however. The energy crisis in the west and resulting demand for power can only help the APC business as well, agree executives. The more the world wants cheap power, the more the world needs the APC business.

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