United States
Environmental Protection
Agency
Office of
Air and Radiation
430-S-93-002
December 1993
v>EPA Conference Proceedings
The Clean Air Marketplace
Conference and Exhibition
Trie
Clean Air
Marketplace!] 993
New Business Opportunities Created by the Clean Air Act Amendments
September 8-9,1993 • Sheraton Washington Hotel • Washington, D.C.
Recycled/Recyclable
Printed with Soy/Canola Ink on paper that
contains at least 50% recycled fiber
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This document is a summary of presentations made at an EPA-sponsored
conference. The views expressed by individual authors are their own and do
not necessarily reflect those of the U.S. Environmental Protection Agency.
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Table of Contents
Page
September 8, 1993
Keynote Address — Carol M. Browner 1
Session 1 — Competitiveness, Jobs, and Exports 9
Session 2 — Pollution Prevention and the Clean Air Act 19
Keynote Address — Professor Michael E. Porter 31
Session 3 — Control Technologies and Services - I
Session 3A — Electric Power Technologies 49
Session 3B — Stationary Source VOCs/Air Toxics Control 57
Session 3C — Vehicular Emissions Control Technologies 71
Session 3D — Alternative Vehicle Technologies 81
Session 4 — Control Technologies and Services - II
Session 4A — Electric Power Services 93
Session 4B — Stationary Source NOX Control Approaches 107
Session 4C — Vehicular Emission Control Services 117
Session 4D — Alternative Fuels 123
September 9, 1993
Keynote Address — The Honorable Senator Max Baucus 139
Session 5 — Role of the Government in Supporting the Clean Air Marketplace
Session 5A — Federal, State, and Local Regulatory Programs 147
Session 5B — Technology Development and Diffusion 159
Session 5C — Export Promotion 177
Keynote Address — Donald A. Deieso 189
Table of Contents Page i
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Table of Contents
(continued)
Session 6 — Connections Among Clean Air Act/ISTE A/Energy Policy Act . . 197
Session 7 — The Global Clean Air Marketplace - Export Opportunities . .211
Session 8 — Looking to the Future - New Directions for
Environmental Technology ... 223
Session 9 — Public/Private Partnerships in Cleaning the Air 231
Session 10 — Financing the Clean Air Marketplace
Session IDA — Financing Companies and Projects 241
Session 10B — Financing Exports and Investments . . . . 249
Appendices
Appendix A — Conference Program A-l
Appendix B — Exhibitors B-l
Appendix C — Participants . C-l
Page ii Table of Contents
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Clean Air Marketplace 1993 Page 1
Keynote Address by
Carol M. Browner
Administrator, U.S. EPA
Introduction by Michael H. Shapiro, Acting Assistant
Administrator, Office of Air and Radiation, U.S. EPA
Septembers, 1993
Thank you very much Steve, and it is a pleasure to welcome all you to the Clean
Air Marketplace. We are delighted that so many of you chose to attend and share our
vision of clean air and a healthy economy. I would also like to acknowledge the
outstanding work that Steve Harper has done in putting together this conference.
Although he was very gracious in giving Rob Brenner and I some credit, really Steve has
put this conference together — together with a dedicated team that he led. He has done
an incredible job of overcoming the many obstacles that the Federal government puts in
the way of organizing successful conferences. I think missing the coffee was a minor
omission and will not effect your performance appraisal at all, Steve. The performance
reviews take care of that problem; we well be in good shape for next year's conference.
It is my pleasure today to be able to introduce my boss, Carol Browner, who will
be giving the welcoming remarks for this conference. Carol was sworn-in in January 1993
as the Administrator of the U.S. Environmental Protection Agency (EPA). She brings to
the Agency a career of experience in the environmental protection arena, including a blend
of experience in the State and Federal arenas, that gives her important perspectives on the
implementation of environmental programs, and in particular, implementation of the Clean
Air Act.
Prior to coming to EPA, Carol served as Secretary of the Department of
Environmental Regulation for the State of Florida from 1991-1993, where among her many
accomplishments was the early implementation of a permit fee program that would fund
programs anticipated under the Clean Air Act. That is something that many states have
still not yet completed, but which we are trying hard to get underway. Before that
position, Carol served as the Legislative Director for Senator Al Gore where, among her
other responsibilities, she assisted in drafting the provisions of the Clean Air Act
Amendments of 1990. In introducing Carol Browner, President Clinton cited her record
in building innovative partnerships to protect the environment while promoting economic
growth. I think the oft-cited example of aDowing Walt Disney World to develop in
exchange for setting aside a significant amount of wetlands for wildlife protection is just
one example of the way in which Carol brings to the environmental arena a new
perspective on how we can build partnerships among the regulated community, the
environmental community, and state, local, and Federal governments to productively work
Keynote Address — Carol M. Browner
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Page 2 Clean Air Marketplace 1993
towards important, aggressive environmental goals, while at the same time being
cognizant of the importance of economic development and prosperity. Since coming to
EPA, Carol has initiated numerous activities, including a policy to protect children from
harmful pesticide residues on food, tightened controls over hazardous waste incinerators,
and a major expansion of the important toxics release inventory. She has played a leading
role within the Federal government as an advocate for pollution prevention programs
within the Federal community. She has also initiated a major reorganization of her Office
of Enforcement, which is among the recommendations of the National Performance
Review. We are therefore delighted that Carol has been willing to take time from her very
demanding schedule to introduce this conference. Please join me in welcoming Carol
Browner.
Address by Administrator Carol M. Browner
Good morning and thank you. I want to begin by thanking all of you who have
joined with the Environmental Protection Agency to co-sponsor these two days. I think
it is going to be a very productive use of your time.
What we have in the room are the people at the forefront of air pollution control
in this country. Everyone here has something to do with air pollution control — from my
colleagues at the Environmental Protection Agency, to the people who are buying the
technologies, to the people who are inventing the technologies. It is a group of friends —
people who understand that environmental protection and economic growth go hand-in-
hand.
As I go around the country and talk to people about my job of promoting public
health by protecting our air, our water, and our land, I run into a lot of people who do not
really understand what it is we are all trying to do. And the most common, but false,
debate that I hear is that people believe we must make a choice between environmental
protection on the one hand, and economic growth on the other hand. I think too many
people still believe that the world is divided into those who make a living off of our
environment on the one hand, and those who care about it on the other hand. I hear this
when I talk about food safety by regulating pesticide use. I hear it when we talk about
improving the Superfund program to speed up the revitalization of our cities, and even
when we talk about improving water quality by strengthening the Clean Water Act and
the Safe Drinking Water Act.
But I think you all in this room are living proof that environmental protection can
protect public health, improve our environment, and at the same time create new
businesses, new profit, new export opportunities, and new jobs.
There are many who say that environmental regulations cost a lot of money: they
are not wrong. The Clean Air Act Amendments have been projected to reduce air
Keynote Address — Carol M. Browner
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Clean Air Marketplace 1993 Page 3
pollution by 56 billion pounds per year at a cost of $20-$25 billion. It is a lot of pounds
but it is also a lot of dollars. Many believe the conventional wisdom that the money is just
going down the drain and represents a net loss of economic resources. I believe they are
absolutely wrong, that the people who say this do not really understand what we are all
doing, and that if we can inform them, they would come to appreciate the investments and
the return that we get on those investments. The resources, the money, the energy that
is spent on environmental protection just do not disappear. Very often, they go to firms
like the ones represented in this room. Already, environmental protection is a $100 billion
industry. By the year 2000, a conservative estimate says that revenues in just the air
pollution control industry will rise by $50-$70 billion. These are very, very significant
amounts of money.
A recent report by the Environmental Protection Agency shows that stringent
pollution regulations have put the U.S. air pollution control industry at the very top. Our
exports of pollution control equipment outstrip all other nations, including Germany and
Japan. And our lead is growing. It is not diminishing. We are getting even further ahead.
As a direct result of the Clean Air Act, U.S. companies are at the forefront of clean diesel
engine technologies, clean fuel development, improved monitoring technologies, alternate
fuel vehicles, and cleaner paints and solvents. Our pollution control industry is ready to
help the rest of the world improve air quality.
Later this month, we will release a report on the domestic environmental protection
industry. I expect that this report will supply us with further evidence of what we already
know: that environmental technology creates jobs and substantial business growth.
Nowhere is that fact more evident than in the area of air pollution control.
Three years ago, Congress amended the Clean Air Act to reflect a new
understanding of how to reduce pollution and promote growth. I had an opportunity to
participate when the Senate was drafting amendments to the Clean Air Act, and I will tell
you that if I knew then what I know now, I might have written a few of those
amendments a little bit differently. It is quite a challenge to have been on the one side
writing and now be on the other side, helping to implement. Everyone should have this
experience of going back and forth.
In the Clean Air Act Amendments of 1990, we tried to move toward performance
standards instead of always specifying exactly what technology has to be used. We
wanted to be uncompromising about our goal of providing the protection that is important
to the public, but be flexible in how we achieved those goals. We set a strict standard of
pollution control, but we increased the flexibility allowed to states and industries. I
certainly saw that in my work at the state level in Florida. Economic incentive approaches
are woven throughout the Act, which also makes the Clean Air Act Amendments of 1990
very different from almost any other major piece of environmental legislation to have been
passed by the Congress. The Act sets up a system of trading air pollution allowances
which will provide economic rewards to companies that cut their sulfur dioxide emissions
Keynote Address — Carol M. Browner
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Page 4 Clean Air Marketplace 1993
below the legal requirement. This trading system will cut acid-rain-causing emissions by
electric utilities by one half in a way that is already saving utilities and their customers
hundreds of millions of dollars a year.
I think many of you are aware that the first public trading took place earlier this
year and it is now ongoing. I also want to announce today that I will very shortly propose
a new rule called the Opt-In Rule, which will allow other companies, in addition to the
utilities, to opt into this credit emissions trading program and join utilities in trading sulfur
dioxide emission allowances. This new phase of our acid rain program will create new
market opportunities for companies in a variety of industries, not just the utilities who
heretofore have participated in the program. I would think that for many of you here, that
is good news. It expands the number of companies looking for the technologies that so
many of you offer. We are also developing rules to encourage states to adopt the same
kind of economic incentive programs. These programs create new markets for new
technology.
President Clinton believes very, very strongly in market-based incentives. In fact,
in the National Performance Review report, there is a whole section on increasing the use
of market-based incentives not just in the Clean Air Act, but in a number of other
environmental laws. The President has also recently set up the President's Council on
Sustainable Development, of which EPA is a member. When we were discussing with the
White House the establishment of such a Council, I strongly encouraged the President to
include all of those who have an interest in the environment in this country. The President
agreed that it was important to have everyone at the table. So on this Council,
government — state, local, and Federal — industry representatives, and environmental
group representatives are all working together to look at how we can change, how we can
do a better job of protecting our environment and allowing for economic growth.
I have encouraged the Council to work with the Environmental Protection Agency
to conduct a series of demonstration projects to identify how we can achieve
environmental results as cheaply as possible. Some of you may have read about the work
that we did with Amoco in Yorktown, Virginia. Several newspapers have reported on it.
The Wall Street Journal did a lengthy piece on it. That project demonstrated the potential
to get equivalent environmental results more cheaply. We worked in a cooperative
manner with Amoco. We looked at the entire facility to see where we could get reductions
and found that in some instances, they could achieve them in places where the regulations
did not necessarily require reductions. In instances where the regulations did require
reductions, those reductions would be more costly. But the effect in terms of air quality
would be the same, one being more expensive than the other. We want to do more of
these joint projects in the future. I think ail of you will benefit from the technological
opportunities that will be created as we examine alternative ways of achieving better air
quality.
Keynote Address — Carol M. Browner
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Clean Air Marketplace 1993 Page 5
The President has also set aside $36 million for the Environmental Technology
Initiative at the Agency and will, I think, make available larger amounts of money in
future years. This project is expected to provide significant impetus to the environmental
goods and service industry by spurring the development and marketing of Innovative
technologies for pollution prevention and control. This is essentially new money to the
Agency. We have not had this level of funding before in this area and are very excited
about the work that we'll be able to do in conjunction with you all.
We are also working with the Small Business Administration. We are going to be
training people at the Small Business Administration development centers across the U.S.
to provide assistance to small businesses to help them comply with the Clean Air Act. We
are also going to help small businesses that are making, or want to make, environmental
technology, by linking them to businesses that need the technology. One of the things I
was able to do in Florida was to set up a state trust fund to provide financial assistance
to small businesses to comply with the Clean Air Act. Large numbers of small businesses
across this country will be affected by the Clean Air Act. Environmental regulations are
new for them; we want to work with them, to help them understand what the rules
require, learn what technologies are available, and avoid future enforcement actions.
I think what distinguishes this Administration from prior administrations is the
recognition that a healthy environment and a healthy economy go hand-in-hand. You
really can't have one without the other. As we come into the second year of this Congress,
there are several opportunities for us — in the reauthorizations and legislation that
Congress will be considering — to use what we've learned from the Clean Air Act to
promote economic growth along with environmental protection. I want to briefly mention
those. We will be working to propose legislation to Congress dealing with food safety
issues, Superfund, water quality, both in terms of the Clean Water Act and the Safe
Drinking Water Act, and the North American Free Trade Agreement.
I feel an obligation to explain that while lawyers may be making a lot of money in
the Superfund program, it is not taxpayers' money. It is not money that comes out of the
trust fund that we manage. Nonetheless, I think we would all agree that the Superfund
cleanups are not moving quickly enough. In November of this year, we will propose
legislation to amend the law to spur economic growth rather than stifle it. Every one of
us can probably point to a Superfund site in our home towns — a contaminated urban site
that is just lying idle — that the developers and the bankers do not want to touch. They
are afraid of becoming liable under the law. As a result, the developers go out into the
farmlands and the woodlands and destroy those areas, rather than using the areas that
already have all of the urban services like water and electricity. We want to address these
problems in the Superfund law. We want to provide incentives for people to purchase
these vacant sites, to clean them up, and return them to productive community use. The
result would be a revitalization of our urban areas, a preservation of the green areas
outside of our cities, and a bigger market for remediation technologies. We want to look
at all of the technologies that exist, we want to be creative, we want to allow more people
Keynote Address — Carol M. Browner
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Page 6 Clean Air Marketplace 1993
to use all that great technology and innovation that exists in this country to get these sites
cleaned up and put back into productive use for the citizens of those towns and cities.
This same principle of encouraging innovation is also guiding our proposed
amendments to the Clean Water Act. The Senate is currently working on revising the
Clean Water Act, one of the original environmental laws passed by the Congress. What
we'd like to do in the Clean Water Act is require communities in a given watershed region
to identify the sources of water pollution in their area and then come up with the best
solutions. Again, I believe that this will spur creativity and promote innovation and
economic growth. Rather than suggesting that one solution works for every watershed,
let us look at each individual watershed, figure out what works best, what is causing the
biggest problem, and let us put our resources into solving that problem.
Later today, I will announce the work that we will be doing on reauthorization of
the Safe Drinking Water Act, which protects the water that you drink out of your tap
every day. As the technologies have grown, and as our ability to measure what is in the
drinking water supplies has grown, so have costs of compliance grown for the cities. The
President has called for the creation of a $600 million fund in the first year, going to $1
billion in the outyears. We would give this money to the states and they would loan it to
communities so that they could put in place the technologies to make sure that their water
supply is safe. We also are asking that for the very small systems, for which the costs can
sometimes be rather prohibitive, we give greater flexibility in choosing technologies.
What is important in all of these areas is the environmental goal — we cannot
compromise the standards. We cannot set standards that do not provide levels of
protection to those people most affected in this country, whether it be people who live
around a particular Superfund site or who live in an urban area, whether it be the elderly
or the children. But at the same time, we must provide flexibility in how we reach those
goals. We have to work with the industries, work with the companies such as those
represented here who are developing the technology, work with our cities and our
communities to give them the flexibility to meet the standards that protect the health of
the people. A lot of people talk about how harsh environmental standards are and how
stringent they have become. But when I can actually have a frank and open discussion
with people, whether they be mayors or industry representatives, I always find that it is
not the standard per se that is causing the problem; it is the methods by which they have
to achieve the standards. I want to make sure that we give people the tools to find the
very, very best and the most cost-effective way of achieving those standards.
Let me say something briefly about the North American Free Trade Agreement.
1 would presume that everybody in this room is aware of what NAFTA is. It has certainly
been in the newspapers enough recently. Someone said to me that they thought most
people thought NAFTA was a place where you buy automobile parts. Not true. But let
me explain to you why NAFTA is important to you, and maybe that is something that you
have not had an opportunity on which to reflect. The most important thing about NAFTA
Keynote Address — Carol M. Browner
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Clean Air Marketplace 1993 Page 7
for the people here today is that it will expand the market for environmental technology,
perhaps on a scale we have never seen before.
NAFTA was negotiated in the last administration. When President Clinton came
into office, he said we need to look at the environmental issues associated with opening
up trade between the United States, Mexico, and Canada. We have just completed
negotiating a side agreement to NAFTA, focusing specifically on the environment. This
side agreement will make it harder to pollute in all three countries — United States,
Mexico, and Canada. It will also increase the incentive for Mexico in particular to enforce
its environmental laws, thereby creating a demand for technologies so that they can bring
down the emissions and achieve compliance with their laws.
NAFTA will create jobs all over this country, particularly in the field of
environmental technology. I would ask each and every one of you to look at NAFTA to
understand the opportunities created by the side agreement for the work you do, including
the opportunity to export technologies to Mexico and perhaps Canada.
Over the next two days, you are going to be able to participate in many interesting
debates and discussions, which is only fitting in a field that is so vital, vibrant, and
growing as this one. I would imagine that if we had had this conference 10 or 15 years
ago, we would not have had 20 co-sponsors, nor quite the number of people attending.
We have had several conferences similar to this one in other areas across the United States
and they have all been very, very well attended. Over the next couple of years we would
expect to see the numbers grow, and hopefully double. One of the opportunities in you
all coming here is not just to hear about what we are going to be doing, but also to hear
about what each other is going to be doing. It is an opportunity for those of you on the
sell side to discover markets for your products and an opportunity for companies on the
buy side to learn about the latest ways to comply with the law more cost-effectively.
In the environmental debates that lie ahead, we need your help. You all benefit in
many instances from the way the laws are written. You can also be hurt by how the laws
are written. We really need you to help us. Together, we can get the flexibility that we
believe is so important in protecting the environment and that I know you all need if your
businesses are to grow and expand. In all of these areas — air, water, Superfund — there
will be opportunity to work together. We encourage you to get involved.
When I tell audiences about the huge opportunities that exist in this industry and
the environmental technology industry, they are astounded. They have no idea about the
opportunities that exist for this country, both domestically and internationally — the jobs
that can be created, the return on investment that can be made. We need to do a better
job of telling the public that environmental technology is something in which this country
can be an international star and an international leader. It is true. It is happening. I
encourage you to talk to the people in your communities, your members of Congress, and
your colleagues in the business community.
Keynote Address — Carol M. Browner
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Page 8 Clean Air Marketplace 1993
Keynote Address — Carol M. Browner
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Clean Air Marketplace 1993
Page 9
Session 1
Competitiveness, Jobs, and Exports
September 8, 1993
9:30 a.m. - 71:30 a.m.
Moderator:
Panelists:
Jeffrey C. Smith
Robert Brenner
John Quarles
Professor Paul Templet
Dr. Richard Klimisch
Daniel Noble
Introduction
Jeffrey C. Smith, Executive Director of the Institute of Clean Air Companies,
summarized the issues of this session into three brief questions:
• What impact do the Clean Air Act Amendments (CAAA) have on business
profits?
• Are there new business opportunities, or potential opportunities, created by
the CAAA?
• How do we quantify these impacts?
Although it is difficult to measure the exact size of the air pollution control
industry, this market has the potential to be one of the fastest growing sectors of the U.S.
economy. Full implementation of the CAAA will create tens of thousands of high-tech,
highly paid jobs a year. Moreover, by forcing U.S. businesses to take the lead in
developing innovative pollution control technology, the CAAA will create important new
export opportunities as other nations implement tougher environmental regulations. As
an example, there is an increase in demand for U.S. pollution control technology in Asia.
To date, however, the U.S. air pollution industry- while generating a trade surplus- has not
experienced the growth predicted when the CAAA were enacted in 1990.
Session 1 — Competitiveness, Jobs, and Exports
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Page 10 Clean Air Marketplace 1993
Presentations
Robert Brenner, Acting Deputy Assistant Administrator, U.S. EPA Office of
Air and Radiation, reminded the audience that more regulations on business
cannot be expected to necessarily result in more business opportunities. While
keeping this in mind, it is clear that sound environmental regulation, by
maximizing the flexibility allowed to business, potentially can be very
compatible with fostering new market opportunities. There are numerous
specific examples of companies taking advantage of opportunities created by the CAAA
to increase their profits or expand their work force:
Strict U.S. regulations encouraged a producer of diesel engines to invest
heavily in the development of cleaner technology. This investment has
allowed the firm to compete very favorably in nations that are beginning
to implement tougher standards.
• Numerous substitutes, either new compounds or new uses of old
compounds, have been discovered for toxic chemicals in the production of
many goods. The aerospace industry, for example, has developed new
techniques to strip paint from planes. These techniques emit less air toxics
and save $15,000 per plane. AT&T also has greatly reduced its emissions
of toxic chemicals while reducing costs through the use of a natural
substitute. The 3M Corporation is saving $3-$7 million a year through a
program that substitutes cleaner solvents.
• The CAAA have also greatly encouraged the development of whole new
sets of innovative technologies to combat nitrogen oxide (NOX) emissions,
which will help reduce urban ozone levels. Bechtel Corporation, for
example, has developed scrubbing technologies that will reduce NOX
emissions by 90 percent, and will reduce sulfur oxide (SOX) pollution as
well. The corporation expects demand for this product to rise as a result
of the CAAA.
• The CAAA regulations on SO2 have also created significant business
opportunities for firms producing scrubber technology and cleaner burning
fuels. For instance, Custom Coals has recently developed a line of self-
scrubbing coal, in which SO2 is removed as it is burned. This coal should
be in high demand from electric utilities.
• The costs of reducing CO2 emissions have also been reduced by the fact
that some new powerplant technologies and processes have reduced
utilities' consumption of electricity as well as SO2. These processes also
often result in the production of gypsum, a marketable product.
Session 1 — Competitiveness, Jobs, and Exports
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Clean Air Marketplace 1993 Page 11
• Argonne National Labs has invested heavily in developing a potentially
profitable system to convert solid waste to fuel, while separating out metal,
glass, and plastic.
• The restrictions on using chlorofluorocarbons (CFCs) in air conditioners has
spurred investment in a number of companies as they race to develop
competitive alternatives. For instance, some firms have been developing
potentially profitable citrus-based substitutes for CFCs. Some CFC
alternatives developed also help reduce the energy consumption of air
conditioners.
• In the auto industry, regulations have created new opportunities for the
producers of new and improved catalysts and engine parts that help reduce
emissions. In the longer run, the need to switch to alternative fuels will
help create whole new markets and opportunities. Increased reliance on
alternative fuels will also draw the domestic demand for energy away from
imported oil to domestically produced forms of energy such as solar power,
electricity, and natural gas.
These examples of companies benefitting from the CAAA represent just the tip of
the iceberg; EPA is still in the early stages of implementing the Amendments, and business
opportunities will increase greatly as EPA strives to attain even tougher emissions
reduction standards in the future.
The compatibility of environmental regulation and economic growth should not be
so much of a surprise. The efforts to reduce pollution and maximize profits in a business
share many of the same basic principles, including using energy more efficiently, and
recycling or reusing resources as much as possible.
John Quarles, Esq., Partner at Morgan, Lewis and Bockius, helped develop the
Clean Air Act when he was at EPA in the 1970s.
It is obvious that there are going to be significant business opportunities
created by the CAAA. A great deal of money is being spent — clearly going
in someone's pocket — and jobs will therefore be created. This, however, is
not the issue on which we should be focusing. We should focus on whether the jobs
created by environmental regulation will be canceled out by the fact that the regulations
create impediments to U.S. firms' ability to compete in a global market. There are two
effects that regulation has on firms' competitiveness: (1) it increases U.S. firms'
Session 1 — Competitiveness, Jobs, and Exports
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Page 12 Clean Air Marketplace 1993
expenditures relative to foreign competitors; and (2) it imposes the additional burden of
a cumbersome regulatory process. Both effects represent a drag on competitiveness, but
the latter is more dangerous.
The following are a few examples of how increased costs and regulatory red tape
have hindered competitiveness:
• Environmental regulations may have been a big factor in encouraging a
number of industries to relocate overseas in the late 1980s and early 1990s.
This represents a change from the 1970s, when studies indicated firms did
not make relocation decisions on the basis of environmental laws. This
effect will increase as regulations become more cumbersome.
• A major petroleum corporation recently decided that a proposed expansion
project was not economical due to EPA's required paperwork and red tape.
The project would have increased revenue and jobs and, ironically, would
have reduced the corporation's overall emissions.
• The permitting system under Title V of the CAAA also represents a
potentially significant drag on industry and its ability to compete.
According to the permitting rules, any change or expansion that a company
undergoes, no matter how little the potential effect on air quality, will
require them to extensively revise their permit. Firms may be held back
from expanding as a result of this regulatory morass, to which foreign
competitors are immune. The permitting system is just one example of the
complex and burdensome requirements of the CAAA.
The crux of the CAAA program is that the public clearly mandates that clean air
is important, and this program will help a great deal in providing it. However, along with
these benefits comes a process that inherently hinders our ability to compete in a global
economy. Moreover, many of the controls and requirements that are the most burdensome
to industry provide very little marginal benefit. It is difficult to see much benefit from
many of the expenditures of the Superfund program.
Why, then have the CAAA and other regulations developed into such a burden on
competition? Due to the sheer size and bureaucratic nature of EPA, the agency suffers
from numerous inherent management problems:
• There are layers upon layers of supervisors, and the people who actually
make decisions are isolated from the specifics of the situations.
• The Agency is not forced to confront the real implications of the costs that
it is imposing.
Session 1 — Competitiveness, Jobs, and Exports
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Clean Air Marketplace 1993 Page 13
• The system is risk averse, which discourages experimentation and
innovative ideas.
• There are many battles over "turf".
EPA is heading in some positive directions, such as the move toward marketable
permits and other economic incentives. The effort that the Agency has made in recent
years to work better with other governmental bodies is also a positive step. This does not
change the overall problem, however, that certain aspects of EPA itself contribute to
significant burdens on U.S. industry and its competitiveness.
Professor Paul Templet of Louisiana State University, who was in charge of
environmental protection in Louisiana Governor Roemer's administration,
began his presentation by stressing that economic growth and environmental
protection should no longer be seen as inconsistent but rather as
complementary. Despite the traditional conceptions, the economy must be
seen as functioning within a larger environmental context. The economy, for
instance, is dependent on the environment as a source of materials and resources and as
a place to dispose of waste. Because of this relationship, economic development must be
consistent in the long run with the maintenance of the region's ecosystem.
Having provided this theoretical underpinning for the complementary relationship
between the economy and the environment, Professor Templet unveiled a series of graphs
demonstrating how this has been reflected in U.S. economic data:
• The first series of graphs showed how the top ten states in terms of
disposable income, per capita education spending, and growth rates also
have the highest levels of environmental protection. Although Professor
Templet admitted this does not necessarily indicate causation, and that
there are probably some other factors intruding into the data, he contended
this does help refute the perceived incompatibility of the environment and
the economy.
• A study by the Bank of America shows a similar correlation between
regions with healthy economies and strong environmental standards.
According to the study, "strong" environmental states grew an average of
2.6 percent and "weak" states an average of 2.1 percent over a 14-year
period, and an estimated 3.5 million jobs have been created by
environmental regulation. The study identified some theoretical
Session 1 — Competitiveness, Jobs, and Exports
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Page 14 Clean Air Marketplace 1993
connections between a strong economy and healthy environment, including
the fact that better management of resources and minimization of waste is
integral to both, and that long run economic growth depends on a
sustainable ecosystem.
• The next series of graphs displayed how environmental regulations, and the
funding to enforce them, multiplied greatly in Louisiana from 1988-92. As
a result of these measures, Louisiana reduced toxics more than any other
state in the country (50 percent by 1991, 75 percent by 1995). During this
period, investment increased dramatically, from $1 billion to around $3
billion, and unemployment dropped from 12 percent to 6 percent.
• According to the next graph, employment in the chemical industry began
to stagnate in Louisiana by 1988, only to surge again during the next four
years. This surge was a direct result of the aggressive environmental
regulations that were being developed, and helped contribute to the
plummeting unemployment rate in the period. For every $1 million spent
in Louisiana on pollution control in the period, 25 jobs were created, which
is close to the national ratio of 23 jobs created per $1 million spent.
• Professor Templet introduced the concept of the emissions/job ratio, that
identifies which states and industries are polluting the most per worker.
Regression analyses of the fifty states reveal that states with higher
emissions/jobs ratios uniformly have higher poverty rates and employment
rates, worse income disparity, slower growth, and lower levels of
investment. On the other hand, as the emissions/job ratio declines among
the states, the economic indicators consistently rise. Therefore, in states
where business is allowed to pollute more and industries have less regard
for natural resources, the economy is also suffering.
To conclude, Professor Templet reiterated the conclusions of an OECD study that
there is no connection between environmental standards and a loss of competitiveness.
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Clean Air Marketplace 1993 Page 15
Dr. Richard Klimisch, Vice President of the Engineering Affairs Division of the
American Automobile Manufacturers Association (AAMA), focused on the
regulations on the vehicle painting industry and how its competitiveness has
been affected. Painting is one of the most complex aspects of the automotive
industry; there are a number of different stages including primer, base coats,
clear coats, repair, and a number of different techniques, which are all
regulated separately for Volatile Organic Compound (VOC) emissions.
Japanese VOC regulations are very simple, flexible, and are generally a compromise
between business interests and the government. U.S. regulations, on the other hand, are
exceedingly complex and burdensome. The complexities of U.S. policy lead to delays,
inflexibility, and competitiveness decay. Dr. Klimisch emphasized that the complexity of
U.S. regulations has scared many operations away from areas of ozone non-compliance,
typically cities — this has contributed to urban economic decay.
Over the last decade, U.S. automobile manufacturers have made a great deal of
progress reducing VOC emissions, which are now at about half the level of Japanese firms.
Achieving further cuts will require higher and higher costs to industry; moving on to the
next level of pollution control will result in a rise in cost from $500,000 per ton to $800,000
per ton. This level of control is not cost effective, so there will be little international
demand for the technology and few jobs created.
Therefore, there are a number of direct costs, capital costs, and indirect costs, such
as a loss of time, that the vehicle painting industry suffers under as a result of regulations.
Although the laws add only about $100 to the cost of production for each car, this is added
to other regulatory differences between the U.S. and Japan. For instance, Super fund and
water pollution regulations impose significant costs on domestic manufacturers that are
not shared by foreign competitors.
The AAMA has developed a series of recommendations designed to push EPA to
acknowledge the impacts the CAAA have on international competition and develop a
strategy for dealing with them. These ideas include:
• A continued dedication to achieving the lowest costs by providing
maximum flexibility
• Enlarging bubbles
• Streamlining state procedures
• Expediting reviews
• Developing a system which does constrain industries unnecessarily by
forcing specific technologies on them.
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Page 16 Clean Air Marketplace 1993
Daniel Noble, Vice President, Director of Research, Environmental Business
International, Inc., presented an overview of the environmental industry and
some of the changes that it is currently undergoing. The movement in the U.S.
from a "linear" to a "circular" economy, among other factors, has driven the
environmental industry to a state of transition and uncertainty. A linear
economy, which has characterized our society up until the last decade, can be
described as one in which we take out resources, put them to some productive capacity,
and then throw them away. A circular economy, on the other hand, exists side by side
with the marketplace of the environmental industry and puts more emphasis on
sustainable development.
The movement towards a circular economy has been driven by a number of factors.
Rising prices for raw materials and waste disposal, for instance, have encouraged society
to manage and preserve its resources better than under a linear economy. The trend in
the environmental movement to discuss sustainable development and pollution prevention,
as opposed to remediation, has also helped drive the development of a circular economy.
This development, along with factors such as increasing globalization, will mold the future
of the environmental industry.
Mr. Noble provided an overview of the industry as it stands today and the
possibilities for the future.
• The environmental industry currently has a $134 billion market. In the
latter half of the 1980s, the industry grew at a very fast pace, and has
recently begun to slow down. The market will level off around the year
2000 at $200 billion.
• The environmental industry is divided into three areas — equipment,
services, and resources. The services area, a $61 billion market, is the
largest of the three. The equipment and resources areas are $31 billion and
$40 billion markets, respectively. The growth rate for each of these sectors
varies.
• Air pollution control comprises 17 percent of the equipment end of the
environmental market, or $5.4 billion. The growth of this market has been
relatively slow in recent years, although sales will rise as EPA further
develops rules under the CAAA.
• In the air pollution control market, the major product types in demand
include electrostatic precipitators, and baghouse and flue gas
desulfurization equipment. ABB Environmental and Research Cottrell are
two of the major suppliers of these products; 47 percent of the customers
are electric utilities.
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Clean Air Marketplace 1993 Page 17
• Another emerging part of the air pollution market has been consulting.
Charts Indicate that three companies — Radian, ENSER, and TRC — have
reaped the lions' share of the assessment design business so far.
Mr. Noble provided his view of how the air pollution control market might grow
as a result of the CAAA:
• Many analysts predict the market to reach $15 billion by the end of the
century, but the actual slope of the growth curve will depend on a number
of uncertain factors. For example, the degree to which the emphasis in
environmental policy shifts from control to prevention and the pace of the
development of alternative fuel technology will greatly impact the demand
for air pollution control equipment.
• Currently, the air pollution control industry employs about 35,000^40,000
people. An expansion to a $15 billion market would result in an additional
40,000-50,000 jobs.
• Growth markets, in addition to air pollution control, include water
reclamation, the shift from solid waste to resource recovery, and particularly
the development of alternative energy technology.
The environmental industry as a whole is facing transition and a great deal of
uncertainty, but significant opportunities will nevertheless exist in the clean air
marketplace.
Questions and Answers
How could EPA encourage moving to performance-based standards and further
innovation?
Mr. Brenner responded that EPA is trying to move one step beyond performance
based standards. The first step in environmental regulation is "command and control,"
which is based on requiring facilities to use specific technologies. Performance-based
standards, which require facilities to meet a certain level of pollution cuts using whatever
means they choose, represents the next step in the maturation of environmental policy.
EPA is trying to move to this step, which relies more on economic incentives and gives
more flexibility to facilities. Firms will not be required to achieve 60 percent reductions at
each individual plant, for example, but will be allowed to choose how they wish to achieve
60 percent reductions on average among all their plants.
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Page 18 Clean Air Marketplace 1993
Are there any studies concerning the quality of jobs, not just the numbers, that
will be gained as a result of the CAAA?
Mr. Brenner answered that EPA has been involved in surveying companies to
determine the kinds of jobs that will be gained and lost as a result of regulations. The
results so far indicate that the jobs created by the CAAA will be more highly skilled and
paid than those that are lost.
What steps has EPA taken to grant more flexibility to businesses?
Mr. Brenner responded that as EPA develops each rule, it tries to implement
economic incentives. It gets difficult, however, to grant flexibility in many
instances. To foster economic incentives, without sacrificing environmental goals, EPA is
trying to set up cooperatives with businesses and pilot programs. This effort will help the
agency gain experience and enable it to institute programs that are more sound
economically and environmentally.
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Wliat can EPA do to use its leadership position in global environmental
standards to help open up opportunities for U.S. firms abroad?
Mr. Brenner replied that EPA has been aggressively promoting U.S. pollution
control standards and techniques abroad. This is the best way to expand the market for
the services and technology that U.S. firms offer. EPA has also developed an Innovative
Technology Council to help advocate the development of new technology in every field
of environmental policy.
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Have there been any attempts to solicit the input of business at the level of
writing statutes, not just at the regulatory level?
Mr. Quarles explained that involving more parties at the level of developing the
laws would not be practical. Businesses already have influence at that level, through the
lobbying process.
Session 1 — Competitiveness, Jobs, and Exports
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Clean Air Marketplace 1993
Page 19
Session 2
Pollution Prevention and the Clean Air Act
Septembers, 1993
9:30 a.m. - 11:30 a.m.
Moderator:
Panelists:
John Seitz
Dr. Thomas Mauser
Amy Laspia
Howard Klee, Jr.
Dr. Dhiren C. Mehta
Eric Shaeffer
Introduction
John Seitz, Director of the Office of Air Quality Planning and Standards, U.S. EPA,
introduced pollution prevention as the panel's topic, commenting that the regulated
community is at a critical point, particularly in terms of the history of EPA and
implementation of the Clean Air Act. Mr. Seitz stressed that if environmental change
continues to be approached in a command-and-control sense, the costs of meeting future
goals will become increasingly higher. Focusing on pollution prevention, and not as much
on remediation, is the most cost effective solution to our environmental problems.
Presentations
Dr. Thomas Hauser, Executive Director of the American Institute of Pollution
Prevention, spoke on the historical and cultural barriers to pollution prevention
and what can be done to overcome them. Dr. Hauser described himself as an
old "command-and-control" type turned academic, who retired after 32 years
at EPA. According to Dr. Hauser, we need to break the cycle of addressing
pollution problems only after they occur, and focus instead on simply
preventing them outright. Many significant decisions have been made in past years that
have caused environmental disasters because of a lack of foresight (e.g., DDT, automobiles,
and CFCs). We have to be able to think in advance or we will find ourselves in a costly
pollution remediation situation.
Since its formation in 1970, EPA has spent over 90 percent of its resources on end-
of-pipe solutions. This is because the nation generally ignores or tolerates pollution until
there is some drastic environmental event. When there is such an emergency, correction
is often chosen in response to public concern, whether the concern is either real or
perceived. Driven by this public concern, environmental laws emphasize the use of
pollution control equipment to reduce health and environmental risks. Government
Session 2 — Pollution Prevention and the Clean Air Act
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Page 20 Clean Air Marketplace 1993
reliance on end-of-pipe solutions therefore results from the short-sightedness of the general
public and the policy making process.
Academia is also shortsighted, often driven by the necessity to bring in research
dollars for survival. Instead of solving long-term problems, academics tend to focus on
short-term, regulation-driven research projects. The evolution of the Clean Air Act from
1955-1990 with new source performance standards, mobile source performance standards,
new source review, and prevention of significant deterioration simply represents continued
reliance on remediation solutions. It is necessary to change from remedying present-day
problems to solving problems before they occur.
Pollution reduction activities should be distinguished from pollution prevention
activities.
• Pollution reduction activities. Pollution prevention has become a part of
major environmental concerns, such as ozone depletion and global
warming. Although in general these activities are good for the
environment, they are pollution reduction activities rather than pollution
prevention activities.
• Pollution prevention activities. An alternative approach is to treat
pollution prevention as an entity unto itself, rather than as an afterthought.
As environmental laws are passed, the pollution prevention concept is
added to regulations first, before end-of-pipe control is generated.
A culture seems to have developed in which everyone — from those writing
regulations, to those in industry implementing the regulations — has a command-and-
control emphasis. Perhaps the best way of changing this approach is to focus on pollution
prevention activities. Environmental problems can often be avoided through the adoption
of a "rigorous and vigorous" pollution prevention program.
Amy Laspia, President, Environmental Management Consulting, described the
results of a one-year study on the application of pollution prevention to
industry. The one-year study involved 317 companies that ranged from a
seven-employee company with one plant and one source, to a 22,000-employee
firm with 36 plants and 42 sources per plant. The businesses included food
processing, window and door manufacturing, flour milling, and hospitals.
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Clean Air Marketplace 1993 Page 21
Environmental Management Consulting, based in Minneapolis, Minnesota, was
asked by EPA to conduct a survey of businesses studying what incentives are available for
industry to engage in pollution prevention activities. It conducted one-on-one interviews
with individuals in all phases of business, and found the following pollution prevention
activities taking place:
• Housekeeping management, which relies heavily on plant maintenance, is
being conducted by all of the companies surveyed because of its cost
effectiveness. The study recommended that EPA should not discount these
activities, which are a major improvement for many plants and are low-tech
methods for running a cleaner plant with less waste. In addition, the best
pollution prevention ideas often come from maintenance personnel.
• Process modification is being achieved, but takes a much longer time to
implement than other pollution prevention activities and is very dependent
on available funds for R&D. Most companies felt that some incentive
should be given by EPA and states to increase R&D dollars for process
modification. It is very difficult for middle managers to convince upper
management of the need for R & D dollars dedicated to pollution
prevention activities.
• Material substitution is also heavily dependent on R&D dollars.
Management is not likely to spend R&D money for material substitution
when a process is operating successfully. The study recommended that
there needs to be some joint EPA, academic, and industry standards for
when material substitution might benefit the plant. These standards can
then be used by managers seeking R&D dollars to justify and implement
material substitutions.
• Employee training is being conducted by many of the firms surveyed.
However, most firms noted that they had a difficult time finding useful
training resources. Although EPA has excellent training programs and
ideas, the current distribution effort is lacking in getting them out to
businesses. This issue was mainly of concern to small- and medium-sized
companies. EPA recognizes its problem with distribution of its resources,
and will work to improve this area.
• Pretreatment is an option that is largely dependent on the industry. If a
company can modify a process to accommodate or incorporate
pretreatment, pretreatment will increase in use. However, this is one of the
least practiced pollution prevention technologies because of time, the R&D
dollars, and the aversion to unproven innovative technology, especially
when regulatory compliance is not assured.
Session 2 — Pollution Prevention and the Clean Air Act
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Environmental Management Consulting presented EPA with five key findings on
what encourages or discourages pollution prevention throughout industry. These findings
were: (1) Effective Communication; (2) Flexibility; (3) Major Impediments to Pollution
Prevention; (4) Cross-Media Solutions; and (5) Involvement Level.
Effective Communication
Uniform permit forms. Businesses would like to see a uniform form for
permits, at least for smaller businesses with simple processes. While
business realizes that this is a huge undertaking, many suggested that EPA
begin with small business, possibly in a single media (e.g., air).
• Clear and definitive regulations. EPA should communicate clear and
definitive regulations. Most permit applications are written for the
environmental professional. However, the person responsible for
implementing permits does not necessarily have an environmental/scientific
background. An understanding of clearly defined regulations allows the
environmental manager more understanding (and time) to seek out
pollution prevention options.
• Meaningful and consistent data. Data should be meaningful and be
generated consistently. Businesses would like to work with EPA to develop
hybrid measures or units commonly used in manufacturing for reporting
requirements and measurements. This would allow businesses to use data
already being generated in a plant environment, thereby cutting the time
required to convert manufacturing data for reporting, thereby allowing time
for more innovative technology development.
Flexibility
Performance standards. Industry believes that the only way to develop
pollution prevention technologies and emissions reductions rapidly is for
industry to work with EPA to develop industry-specific performance
standards. Industry considers themselves to be the best ones to do this,
because they know the processes better than anyone else.
Individual Plant measurement. Apart from reporting requirements,
manufacturers believe that they can assist EPA and state agencies in
determining an accurate method for measuring their facilities. A great deal
of trust is involved in this area, and industry is looking for a way to work
together with EPA.
Technical flexibility. Businesses of all sizes feel strongly that the EPA
should avoid prescribing technologies. Being told what type of technology
Session 2 — Pollution Prevention and the Clean Air Act
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Clean Air Marketplace 1993 Page 23
to use to achieve compliance can tie the hands of creativity and
improvement. Given parameters, a company would rather be challenged
to look for a solution within a reasonable time frame.
• Inspection and enforcement. Small- and medium-sized businesses need a
"level playing field" in inspection and enforcement. They are concerned
that inconsistencies hurt their ability to compete. Firms ignore
environmental compliance, believing that they will never be inspected. As
a result, one firm makes an investment in prevention/ control, while the
other goes free and can afford to offer lower priced goods.
Major Impediments to Pollution Prevention
• Permitting time. Permitting time is the single largest impediment to
companies trying to implement pollution prevention technologies. The
length of the permitting process forces them to be conservative about trying
new pollution prevention technologies, particularly when EPA does not
provide some condition that, for trying the technology, they will achieve
some level of compliance.
• Cost. When pollution prevention is viewed as an extra program rather than
a needed program, cost is an issue. When pollution prevention is integrated
with the regulation, cost is viewed as less of an issue, or as no issue at all.
• R&D resources. Companies are under pressure to commit R&D resources
to reliable, end-of-the-pipe technologies. They maintain that there is no
incentive to use R&D resources on an unproven pollution prevention
technology, because EPA will not provide some level of compliance if the
technology should fail.
• Regulatory uncertainty. Companies are less willing to take risks on
investments in pollution prevention technologies when they are unsure of
how the regulations may change.
• Process complexity. In some complex processes, there is no technology
available for material substitutions. Significant improvements can be made
in the process, but companies feel that they should not be penalized if those
improvements are not necessarily in the "source reduction" category.
• Business risk. For some companies, trying new technologies puts them at
a potential competitive disadvantage. If a company is in a competitive bid
process (especially for government projects), it must bid with the "proven"
technology.
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• Cost accounting. Businesses are trying to find a way to demonstrate to
their management the cost of not preventing pollution that is acceptable to
accounting and financial managers. Figures on such costs, however, are
currently unreliable, and inconsistent. Businesses would like to work with
accounting organizations to develop standards (e.g. quantifying cost of
waste and reporting).
• Fee structure. Businesses believe that the fee structure should be adjusted
or flexible if they invest in additional equipment or new technology to reach
emissions reductions below the current required level.
Cross-Media Solutions
• Cross-media permitting. Plants often deal with more than one
environmental medium. In such cases, facilities are interested in cross-
media permitting, and would welcome a joint EPA-industry pilot effort.
Involvement Level
• Motivation. Companies that motivated more employees had the most
success in preventing pollution. The pollution prevention effort should not
be limited to people responsible for source reduction and material
substitution. The entire process benefits from downstream ideas, which are
often the best catalyst to upstream changes.
Based on these conclusions about the encouragements and impediments to
pollution prevention, Environmental Management Consulting provided the following
recommendations to EPA:
• Improve EPA's distribution of information;
• Provide additional on-site technical assistance;
• Provide incentives such as matching grants and low-interest loans;
• Ensure regulatory consistency;
• Establish interagency cooperation to allow companies to use alternative
materials to meet the standards;
• Conduct consistent inspections and integrate pollution prevention. EPA
and the states need to use the inspector as an agent of change;
• Inspect regularly to provide a level playing field; and
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Clean Air Marketplace 1993 Page 25
Integrate pollution prevention options into enforcement actions using a
flexible approach.
Howard Klee, Jr., Director, Regulatory Affairs, Amoco Corporation, discussed
the Amoco/EPA project in Yorktown, Virginia, designed to study pollution
prevention opportunities, and barriers to innovation. Frustration with
inabilities to implement innovative solutions to environmental problems within
the regulatory framework led Amoco to initiate the joint pollution prevention
initiative in Yorktown.
An example of such frustration involved the rebuilding of a Texas facility to comply
with the lead phase-down rules. Amoco had an opportunity to improve the efficiency of
a certain furnace in this facility that would reduce the amount of fuel burned, reduce
emissions, and save energy. Amoco was ready to make the necessary modifications when
they discovered that changing the piece of equipment required a change in the permit.
Although EPA agreed that Amoco's plans would reduce emissions and save energy,
Amoco was told that it would be at least nine months before the Agency could look at the
permit, and even then, there was no guarantee that it would be approved. At the same
time, Amoco had a construction deadline to meet in order to comply with the lead phase-
down rule, and could not afford to wait. Hence, the old, inefficient equipment is still in
place.
In another example, Mr. Klee discussed Amoco's production of terphthalic acid,
which is used to make polyester. One of the outputs is a wastewater stream that is very
difficult to treat. Over the years, Amoco has developed a wastewater treatment technology
that consumes less energy, generates natural gas, produces less solid waste, and takes up
less land. Although the multi-media benefits of this process reportedly far outweigh the
EPA-approved process, it does not quite meet the existing water quality standards, and
cannot be constructed in this country.
These examples illustrate the types of issues that come up at facilities attempting
to use innovative technologies. In the Yorktown project, EPA and Amoco conducted an
inventory of the facility, identified sources, identified ways to reduce them, and then
ranked and identified priority alternatives according to the uniqueness of the facility. The
"rule-book" was "set aside" for the entire process.
The site chosen was a small, 35-year old refinery in Yorktown, Virginia. The
refinery is in an environmentally sensitive area on the York River, about one-half mile
from where the River empties into the Chesapeake Bay. Emissions samples were collected
Session 2 — Pollution Prevention and the Clean Air Act
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Page 26 Clean Air Marketplace 1993
over the course of one year at a cost of approximately $1 million. Almost 90 percent of
the releases were found to be going into the air. Some of the pollution prevention projects
that Amoco and EPA looked into were inexpensive and effective, such as a leak detection
and repair program. In this program, an employee uses an electronic detector to identify
hydrocarbon leaks around valves, flanges, and pumps, and then repairs them. Over 90
percent of the leaks were repaired immediately by the person who conducted the initial
check.
Interestingly, Amoco discovered that emissions from a barge loading operation (80
percent of the product is shipped out by marine barge) were the single largest source of
the emissions that were having an impact (or potential impact) on the surrounding area.
However, there are currently no controls required on those emissions, since the refinery
in question is located in an ozone attainment area.
EPA and Amoco then looked at the eight things that they thought would be
required under statutory requirements and calculated that they could capture about 7,300
tons a year of hydrocarbon emissions from multiple sources at an average cost of $2,400
per ton. They then looked at alternative technologies, such as those that are not currently
regulated, as well as other sources of releases and multimedia effects. The net effect was
a different series of projects, which, once implemented, could capture about 7,500 tons of
emissions at a cost of $500 per ton. This was a slightly different set of emissions, including
some hazardous solid waste that the plant was generating. However, by reducing solid
waste generation, the facility was able to increase their processing capacity, and reduce the
amount of waste that was sent off-site to a landfill.
Lessons Learned
• Government and industry can work together. However, current
institutional practices discourage innovative solutions to environmental
problems. The biggest concern is not the goals, but rather the means to
achieve the goals.
• Improved data can improve environmental management decisions. Too
many decisions are made without enough accurate data. Although
obtaining data is expensive now, it is cost effective in the long run.
• Risk-based decisions, while complex, offer the ability to focus resources
on significant problems and more effective solutions. Risk-based
decisions allow industry to determine the benefits of different choices in
terms of impact on human health and environmental quality.
Many opportunities exist for EPA to be flexible and to promote innovation under
current Federal statutes, including:
Session 2 — Pollution Prevention and the Clean Air Act
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Clean Air Marketplace 1993 Page 27
Reliance on performance standards instead of technological design
standards. The people who have to work with facilities should determine
the best way to meet standards.
A safety net to encourage people to try new things must be created.
Currently, if a company tries something new and comes up with 95 percent
success instead of 100 percent, they are essentially back to ground zero and
have to start over. This is an expensive proposition.
If a facility shows an overall net reduction of emissions for sources at a
particular site, EPA should consider the reduction to be valid. This is
cost-effective because it allows facilities to over-control some sources and
under-control others.
Dr. Dhiren C. Mehta, Manager, Technology Applications, Hughes
Environmental Systems, discussed pollution prevention opportunities in the
electronic sector. Hughes is an aerospace/electronics company that does a
substantial amount of work for the defense industry. The job of Dr. Mehta's
division, Environmental Systems, is to develop new technologies that are used
internally and marketed to other companies. Dr. Mehta discussed the way in
which Hughes is responding to Title I (Ambient Air Quality Standards), Title III
(Hazardous Air Pollutants), and Title VI (Ozone Depleting Chemicals) of the Clean Air Act
Amendments.
Title I — Ambient Air Quality Standards
Hughes is currently working on a project that will allow different manufacturers
to come up with the most cost effective technology for a given facility. This project will
not only reward innovation, but will also allow companies to bank their reductions so that
they can use them for other sources or sell them.
Hughes is trying to better understand the problem of air emissions from mobile
sources. It is developing technologies to better identify high polluting cars, and it is
working with the city of Los Angeles. The project will use Hughes Smog Dog, a device
that can remotely and accurately determine which vehicles are the high polluters. It
consists of an infrared source, a remote sensor, and a computer that gives percentages of
CO, HC, and CO2 emitted. At the same time, a video camera captures the license plate
of the moving vehicle. All of this is done within the fraction of a second that it takes for
Session 2 — Pollution Prevention and the Clean Air Act
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Page 28 Clean Air Marketplace 1993
a car to pass. This information would allow states to identify high emission vehicles, and
take appropriate corrective actions.
Title III — Hazardous Air Pollutants
One of the first MACTs (maximum achievable control technologies) being
developed by EPA is for the electronics industry. Hughes is working with the EPA to
assess the technological options and choose the right ones. Some market opportunities,
however, should come out of the new standards.
Title VI — Ozone Depleting Chemicals
Because Hughes uses ozone depleting chemicals very heavily, the ozone depleting
chemical (ODC) phase-out by 1995 will impact them the most of any of the regulations.
Hughes has pledged to delete all ODCs from manufacturing processes by 1994, although
it faces several problems in finding alternatives to ODCs.
Hughes has been assessing new technologies since 1988. Ideally, Hughes would
prefer to develop pollution prevention techniques because they are a long-term solution.
Hughes does not want to create hazardous waste, or transfer pollution from one medium
to another. However, solutions also have to be cost effective. In recent years Hughes has
developed different cleaning systems, some of which have been licensed to outside
companies that are now marketing them to other customers.
In summary, the CAAA have significant impacts on the electronics and aerospace
industries. Hughes is attempting to develop cost-effective solutions that they can use and
also market to other companies.
Eric Shaeffer, Director, Pollution Prevention Policy Staff, U.S. EPA, spoke of
EPA's opportunities to promote pollution prevention and source reduction.
Several of EPA's options in this area are:
Invest in research. This option, however, is constrained by EPA's limited
research budget.
Session 2 — Pollution Prevention and the Clean Air Act
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Clean Air Marketplace 1993 Page 29
• Provide people companies with information and technical assistance. To
do this EPA would have to rely heavily on states and their technical
assistance programs.
• Encourage voluntary programs such as Green Lights.
EPA's role in designing and implementing rules through permits and enforcement
actions should create a positive investment climate for prevention. In the end, EPA is a
regulatory agency with a mission to carry out environmental statutes that they are given
by Congress.
Technology-based standards and deadlines are two of the main components of the
rulemaking process that EPA faces once legislation has been mandated by Congress. EPA
attempts to identify the best performing technologies and then convert them into a
performance standard. Ideally, companies should have the option of selecting the optimal
way of complying with that standard. The pressure of deadlines also greatly impacts the
rulemaking process. If EPA misses a deadline, the courts will write the regulations.
Industry has very limited opportunities to provide input into a rule. By the time
a proposed rule gets to the Federal Register, many basic decisions have already been made.
EPA does its best to provide companies with options, but the analytical process for
pollution prevention is intense. There is a lot of information that has to be sifted through,
analyzed and understood. By the time a proposed rule reaches the Federal Register, there
is a fairly short time period between proposal and when the rule is supposed to take effect.
This makes it hard for EPA to fully respond to comments.
Source Reduction Review Project
EPA is currently working on a project that focuses on key industries and trying to
put some of the questions concerning pollution prevention to the public arena. EPA
identified 17 industrial categories that included fairly large industries such as pulp and
paper, small manufacturers like printers, and high-tech industries like pharmaceuticals.
All 17 industries face deadlines and are all generally facing multiple rules
converging on the same issues. To make this project possible, EPA only picked industries
with a regulatory proposal date far enough away that sufficient time is available to have
an impact on the industrial process. The goals of the project include:
• Designing and implementing rules in which source reduction is the optimal
method of compliance;
• Eliminating cross-media transfers of pollution by eliminating single medium
decisionmaking; and
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• Providing, through a public dialogue, as much predictability and certainty
with regard to all the compliance requirements.
Although EPA is compelled to adopt with deadlines [can we clarify?], there is some
flexibility. For example, EPA recently adjusted the timing of the air rule for the pulp and
paper industry so that it will coincide with the rule for water. This will allow the industry
to see the dual impact of the rules and plan its investment appropriately.
Technological advance often occurs so rapidly that it is impossible for every Agency
to reflect the latest technological developments in each of its rulemaking processes. It is
therefore important to build flexibility into implementation. Although EPA offers
flexibility in theory, in practice, permit writers have proven to be conservative. If a
company attempts to use a new technology, they are often discouraged by the permit
process.
For smaller manufacturers, information is critical. Because small manufacturers are
not going to read the Federal Register, it is important to convey quickly and simply the
necessary information.
No matter how much cooperation is achieved, there is always going to be a debate
over the amount of pollution prevention that is necessary. In order to accomplish some
of the above goals, EPA needs participation from industry before the rules are published
in the Federal Register. Industry also needs to be patient as EPA attempts to move from
"end-of-the-pipe" control to the complicated world of pollution prevention.
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Keynote Address by
Professor Michael E. Porter
Harvard Business School
Introduction by Michael P. Vandenbergh, Associate
Deputy Administrator, U.S. EPA
Septembers, 1993
It is always a challenge speaking immediately after lunch. I had a friend who had
gone out to a big business lunch and returned to his law firm after the big lunch and put
his head down on his desk... just for a moment. Luckily, he popped his head up just
before a partner walked into his office to give him an assignment. After a long discussion,
the partner turned around and walked out. The guy felt like relaxing when a paper clip
fell off his forehead and hit the desk. I always thought about the dangers of that. I do not
know what that means — either do not sleep after lunch or, if you do, sleep on the side
of your head.
I am very honored to introduce our keynote speaker today. As we consider the
Clean Air Act and its far-reaching impacts on the U.S. economy, we are contributing to the
critical debate that is very important to this Agency and is taking place across the country
on the relationship among environmental protection, economic growth, and environmental
technology. Few have advanced that debate more than Professor Porter. Professor Porter
is an international leader in the field of competitive strategy. His work on the interface
between the environmental regulation, business innovation, and the competitiveness of
industries provides a perfect context for discussions here today.
Professor Porter received his undergraduate degree from Princeton University, and
a Ph.D. in Business Economics from Harvard, which he received in 1973. He then went
on to become the C. Roland Christensen Professor of Business Administration at the
Harvard Business School — one of youngest tenured professors in its history.
Professor Porter's work at Harvard has been exceptional. His ideas are the basis
for one of the school's required courses and he is rumored to be — and we will find out
sometime during his lecture — one of the school's absolute best teachers. In addition, his
independent contributions are equally impressive. Professor Porter is the author of 14
books and over 45 articles. His recent works, including, Competitive Advantage: Creating
and Sustaining Superior Performance, and the well-known Competitive Advantage of Nations
form the basis for competitive strategy in both government and the private sector.
Professor Porter's April 1991 Scientific American article entitled "America's Green Strategy"
is particularly related to this conference. One of his most important conclusions in that
article — that environmental regulation, under the right circumstances, can spur
innovation and increase competitiveness — is reenforced by your presence here today.
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Professor Porter also serves as a consultant to many leading companies and has
shared his thoughts throughout the government, including with Administrator Browner
and the top management at EPA. His contributions to EPA are greatly appreciated. 1 can
think of no better expert to address this group on the issue of business competitiveness
and environmental technology. Please join me in welcoming Professor Michael Porter.
Address by Professor Michael E. Porter — Towards a New Conception of the
Environment-Competitiveness Relationship
This conference is probably the single biggest manifestation that some of the ideas
I am going to talk about today can really work, and can really make a difference. So I
could not resist the opportunity to come here this afternoon and talk to you about some
of my ideas about competitiveness in general, and about the role of environmental
regulation in impacting competitiveness.
As you know, there still remains a raging debate in our nation about environmental
policy — about how fast we should go, about how we should approach this issue. The
private sector is still deeply divided on how to think about environmental issues — new
issues that face the agenda of virtually every corporation. What I would like to do this
afternoon is to contribute to that discussion from the perspective of one who has spent
approximately 20 years deeply concerned with the problems of international competition
in industry
I would like to cover three subjects. First, I would like to talk about what it takes
to be internationally competitive. The question that many have asked is, "Is environmental
regulation diminishing the ability of U.S. industry to be internationally competitive?" In
approaching this, one must examine the prior question of what it takes to be
internationally competitive. Second, if we understand what makes an industry or firm
internationally competitive, what is the link between this and the environment? How do
we think about that relationship? How do we frame that relationship? How do we
understand whether the environment or environmental regulations contribute to
competitiveness, or erode competitiveness, or perhaps both? I would like to draw on my
joint research with Dr. Claas van der Linde to explore these questions. And finally, if we
can reach a clear understanding of the link between the environment and competitiveness,
what does that imply for the strategies of companies, the EPA, and of environmentalists
(all of whom have a keen interest and large stake in addressing this issue)?
What I would like to argue is that we have been framing the environment-
competitiveness debate using the wrong perspective. There is another way to frame the
issue that is much more constructive, both for the environment and for companies. I
would like to persuade you this afternoon that the directions in which many of you are
already moving — because you are here — are the right directions and that the notion of
the world community must find ways of speeding up this transition to a new perspective.
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What Creates International Competitiveness
Let us begin, however, with the prior question of what creates international
competitiveness in industry? There has been a long-standing interest in the question of
international competitiveness. There are some old paradigms that have shaped our
thinking about competitiveness historically, but they are rapidly fading and, indeed, are
becoming counterproductive ways of thinking about the issue.
Comparative Advantage
The most established of the old paradigms is comparative advantage. This says
that competition is fundamentally based on cost, and the company notion the companies
with the lowest cost will win. Costs are principally determined by the cost of inputs: the
cost of energy, labor, raw materials, other cost of doing business, and so on. According
to the paradigm of comparative advantage, the nation that is competitive is the one that
enjoys the most favorable endowment of what economists call "factors of production" (i.e.,
the lowest cost inputs). The nations that will win in labor-intensive industries will be
those that have low labor costs. Similarly, the companies and countries that will win in
industries that rely on raw materials will be those that enjoy favorable local supplies of
their materials.
The comparative advantage paradigm has defined much of our thinking about
competitiveness. However, it has been superseded. Why?
• Globalization. In a world of global competition, companies no longer need
to have low cost inputs at home to get access to them. They can source
raw materials cheaply on global markets, thus not needing them at home.
The global firm can locate selected activities in other countries to tap into
those low cost inputs, wherever they might be. For example, a company
could be based in Germany, but the labor intensive parts of its process can
be located in a low-wage country such as Mexico. This company can
remain vibrantly competitive despite the fact that it has high wages at
home.
• Role of Technology. Even more importantly, the old paradigm of
competitiveness has been superseded by the power of technology. In
industry after industry, we find that the companies/nations that win are not
those that have access to inexpensive, abundant inputs but those that are
able to use technology to use the inputs productively. For example, if a
company has high labor costs at home, it can simply automate away the
need to use unskilled labor. If a company has a shortage of a raw material
at home, it can find an alternative raw material or a synthetic one. If a
company faces high costs of space (e.g., as companies do in Japan) this does
not make it uncompetitive. Instead, Japanese companies have pioneered
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dozens of space-saving innovations that have allowed them to be more
productive than foreign rivals even accounting for the high cost of space.
That is what just in time production is.
Just in time production, for example, is an invention that avoids the need to
store inventory on the factory floor and consume space. Why did the
Japanese come up with just in time production? Because they were forced
to deal with the high cost of space.
In this illustration, as in hundreds of industries we have examined, the
concept of comparative advantage has been superseded. But it is more than
this. Today, if all a company has for its comparative advantage is low
input costs, it is in a very precarious position. It is likely to lose
competitiveness to rivals with even cheaper inputs or those who are more
innovative in using them.
Economies of Scale
Another paradigm of competitiveness that is becoming obsolete is the paradigm of
scale. In this paradigm, the principal source of comparative advantage is being big — big
enough to amortize R&D costs, big enough to reap scale economies in production.
Europeans, I find are particularly enamored with scale. Unfortunately, just when many
European companies are merging because they want to be bigger, the paradigm of scale
has been made obsolete by the same forces that have undermined comparative advantage.
There is growing evidence that being big does not necessarily make a company
more competitive. Why? Firms that are more innovative, and that have better technology
can make scale economies obsolete. A large company may be very efficient in making its
traditional products, or producing them in the traditional ways. But today's winner is the
company that can come up with new products or new means of producing them. The
world industrial landscape is heaped with piles of big companies that had economies of
scale but have been superseded by smaller ones.
The Paradigm of Innovation
A new paradigm is driving international competitiveness, one based on innovation.
What we have verified from looking at hundreds of industries, based in dozens of different
countries, is that, the competitive industry is not the one with the cheapest inputs or the
largest scale but the one with the capacity to continually improve and innovate.
Innovation is defined broadly, to include the product itself, how the product is serviced,
how the product is marketed, how the product is designed, and how the product is
produced.
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In industries, and segments of industries, that support high wages, relying on cheap
inputs will fail. Today, innovation can no longer be inward looking. It can no longer
merely reflect local or domestic needs. The internationally competitive companies in every
industry are those whose innovations anticipate international needs at the same time as
they serve local needs. If an American company can come up with a new product or
service that is a little bit ahead of where the world market is going, it can emerge as an
international leader. On the other hand, if a company is innovating in ways that are
peculiar to U.S. circumstances, it will ultimately lose — international competitors who are
innovating in more globally useful and relevant ways will come out ahead.
In global competition, early movers often win. Companies that can see new market
segments and discover new process technologies do not have direct opposition. They can
enter new segments of the market without any opposition.
Underpinnings of International Success
Why do that nation's companies innovate? Why is it that competitiveness emerges
in a particular nation, in particular fields? My research, first published in the Comparative
Advantage of Nations found four elements of the national (and often regional and local)
environment underpin the capacity to be internationally successful in an industry: (1)
access to specialized inputs; (2) demanding and trend setting home customers; (3) a critical
mass of local suppliers and related industries; and (4) a context of local competition.
Access to the Right Kind of Inputs
General purpose inputs, such as unskilled labor or basic infrastructure are
no longer a competitive advantage. Many nations and states have those, and firms
can readily access them. Today, competitiveness comes from having highly
specialized inputs tailored to the needs of a particular business and having these
inputs nearby. One of the reasons America is the world leader in software and
why Japan is uncompetitive, for example, is because of the shortage of software
engineers in Japan. Software engineers are scarce in Japan because Japanese
universities are so bureaucratic and centralized that it takes years to change the
curriculum. Japanese universities are good at training electrical engineers, but not
very good at training software engineers.
My favorite illustration of the role of specialized inputs in international
competition is the Dutch flower industry. The Dutch are responsible for 65 percent
of all the world exports of live and cut flowers. (I will use this example again
when I talk about the environment because it is quite an interesting example.) The
two most important inputs to the flower business are land and climate. Anyone
who has been to Holland knows that it fails on both counts. The Dutch literally
have to reclaim land from the ocean, and the weather is dreadful. Yet the Dutch
are the world's leaders in the industry. How could that be?
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The answer is that they have created unique pools of highly specialized
inputs for that particular business. They have major research centers dedicated to
flower technology: growing, shipping, handling, packaging. That is an advantage.
Having a good university, strong in basic research is great for the world's scientific
community, but does not create competitive advantage. Basic scientific knowledge
flows freely around the world. Having specific expertise in how to apply
technology to growing flowers is an advantage. The only way to gain such an
advantage is to actually be there, in Holland.
Holland also has five auction houses tailored to handling, selling, shipping,
and processing flowers. In those auction houses, one can see carts of flowers being
towed around by computer-guided vehicles, passing through a Dutch auction
room. The buying process occurs in about 3 seconds. There are buyers sitting with
buttons and the auction clock goes down (Dutch auctions start at the high price
which falls until someone pushes the button). The first person to push the button
buys the flowers. That person's code is attached to the cart, which is routed to that
buyer's shipping and handling facility. Within 20 minutes, those flowers are at
Schipol Airport in a container bound to the United States. It is an awesome,
specialized infrastructure, and it represents a competitive advantage. Simply
having highly developed airports, water ports, and roads, however, is not.
Paradoxically, having a shortage can sometimes be an advantage. One of the
reasons that the Dutch are so good in the flower business is that they do not have
good weather. If the weather was good, the Dutch would plant flowers outside
and pray for good weather. Not having good weather forced the Dutch to come
up with a different way to grow flowers. Their solution was to cultivate flowers
in greenhouses all year round. Adopting such a strategy would pose a tough
tradeoff for a nation with a good climate (i.e., why build a greenhouse that you are
only going to use three months a year?). For the Dutch, it was easy. Once the
Dutch committed to greenhouses, however, they could control every single thing
about the environment of the flowers. Going into a Dutch flower greenhouse is
kind of like being in a spaceship — high technology, sensors, automatic shutters
to control the sunlight, and the sprinklers to regulate humidity. Competitiveness
comes from the ability to create unique, specialized technology and keep advancing
that technology over time.
When a nation has an abundance of labor, an abundance of land, and an
abundance of natural resources, conversely, it does not normally create unique,
specialized technology. Abundance leads firms to use the input inefficiently and
unproductively. Competing on cheap inputs alone used to work when we had an
insular, closed economy. Now, when the U.S. competes with many other countries
with even cheaper labor and even cheaper raw materials, this strategy fails. The
only way to succeed is through innovation. And to innovate, one needs specialized
inputs.
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Demanding and Trend Setting Home Customers
If home customers will accept whatever you already provide, and if they
do not push you, your firm will never be internationally successful. To be
internationally successful, companies need home customers that are very
demanding. You need home customers who have problems early — before
customers elsewhere in the world. This way, firms can understand those problems
better and you can keep adapting your products and services to address them.
A Critical Mass of Local Suppliers and Related Industries
Internationally competitiveness depends on a critical mass of local suppliers
with which to work. While machines, components and services can be bought
from around the world, a company needs a critical mass of suppliers that are based
nearby to work with interactively, on a continuous basis, and in the same language.
Otherwise firms will have a hard time being innovative enough to be truly
competitive. Firms hold on in the price-sensitive segments, and in the less
sophisticated parts of the market, but without local suppliers firms will have a hard
time being truly competitive.
A Context of Vigorous Local Competition
Finally, competitiveness is crucially affected by local competition. We found
very few internationally successful industries where there is only one company
based in a particularly successful country. Much more typical is an example such
as the German auto industry, in which we find companies such as Mercedes, BMW,
Audi, and Porsche, all located within a relatively small geographic area.
Why is local rivalry necessary? In a static view of "low cost", having a
number of rivals divides up the home market and causes duplication — a word
heard often in Washington these days. But in a world where innovation puts
pressure on local rivals, there is much more rapid improvement. The best analogy
I have been able to come up with was given to me by a German CEO:
// you are trying to become a really good runner, one way to improve is to run
against a dock. Your coach is there with a stop watch. Ready, set, go. Run
around the track. Click... look at your time. Tell yourself you can do better. But,
if you really want to be a world class runner, you need somebody breathing in the
next lane. You need someone there who is sort of like you, that is in similar
circumstances, that is showing you that it can be done and is forcing you to
improve.
Particularly in sports, science, and the arts, the power of local rivalry is
pervasive all forms of human endeavor. Good sprinters, for example, occur in
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clumps. There are three or four of them at the same time at UCLA, or some other
location, they all become Olympic medalists — because they push each other,
because they challenge each other. We find the same thing to be true in business
competition.
Competitiveness and the Environment
Now what does all this mean for the environment? This perspective about
competitiveness has a profound implications for how we must think about the
environment. It also suggests that we have been framing the environment-competitiveness
issue in a way that is not advancing either company or environmental goals as rapidly as
they could be.
The tendency in thinking about the environment has been to view it as a tradeoff.
On one side of the tradeoff are some social benefits through strict environmental
standards. There is a debate about how big the social benefits are: about how much
improvement in life expectancy results, and how big the health risks are, etc. I will put
this issue aside. Let us assume we know what the social benefits are. Sustainable
development concepts are giving us a broader perspective on the social benefits of a clean
environment might be. On the other side of the tradeoff is industry competitiveness. The
idea here is that obtaining environmental benefits will involve private costs. Industries
must bear costs in order to improve environmental outcomes. The prevailing view is that
there is an inherent tradeoff. To get the social benefits, a nation or state inherently and
inevitably must bear private costs.
There are numerous problem with framing the issue this way. First, it means that
the process of environmental improvement becomes a power struggle. Using this
perspective, there are two sides with diametrically opposed objectives. Progress on the
environment becomes a kind of an arm wrestling match. The struggle goes a little bit one
way when Republicans are in power, and the other way when the Democrats are in power.
The problem is that the wrestling match itself consumes enormous amounts of energy and
resources. If we had the data, I would submit that it would show that a substantial
fraction of the revenues from environmental products and services industry is consumed
in the struggle, not in cleaning up the environment.
Struggle Metaphor
The struggle metaphor (i.e., "we must push harder to get tougher standards", "we
must beat standards back", also creates a lot of uncertainty in the minds of industry. This
is the true enemy of progress. If companies are uncertain about what environmental
regulations are going to be, and think they can be delayed or modified, they will hold back
investment. They will not push forward on programs to really deal with environmental
issues. The arm wrestling match guarantees that progress will be quite slow. Both sides
will battle over one inch of territory, not unlike World War I.
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Now as you have probably already guessed, I do not believe that the struggle
perspective is the right way to frame the issue. The focus should not assume a fixed
inherent tradeoff, but on how we can relax that tradeoff as much as possible, and perhaps
even eliminate it. This framing of the problem provides an opportunity for what
economists call a "positive-sum game" Making the environment-competitiveness nexus
into a positive-sum game, however, will require some profound changes in just about
every aspect of the way in which we think about environmental issues, craft regulations
as well as in the way companies, EPA and environmentalists behave.
The Static View of Environmental Regulations
The struggle metaphor grows out of what I would call a static view of
environmental regulation. A static view is one in which everything is held
constant, but environmental regulations are imposed. Technology, products, and
customer needs are held constant. In this static world, environmental regulation
raises costs and, with a downward sloping demand curve, reduces profits in the
private sector. In a static world, environmental regulation inevitably reduces
competitiveness. Assuming that the U.S. is more regulated, and more strictly
regulated than a variety of other countries, compliance in a static world will
inevitably inflict higher costs on U.S. industry that will lower domestic profitability,
and/or lost sales if competition is international.
Regulation will create some demand for environmental products and
services; so although regulation will inflict costs on the affected industries,
environmental products and services suppliers will benefit. That will provide a
partial private offset against the cost, assuming that there are capable domestic
suppliers of pollution control services and equipment. But the two will not
balance, and the economy will be worse off. The nation may gain a cleaner
environment, but at the expense of private costs that can be substantial.
The Dynamic View
My previous discussion should suggest to you that we are not in a static
world. And indeed, the static mentality represents the old view of competition
which we must shed. What we are in, instead, is a dynamic world. We are in a
world where everything does not stay constant. Just because we impose
environmental regulation does not mean we have to hold everything else the same.
In a dynamic world, of course, things can look very, very different. In a dynamic
world, firms can respond to environmental regulation or even anticipate it with
innovation. This innovation can take one of two broad forms. One form consists
of new technologies and approaches that minimize the costs of compliance. Here,
we get smarter and smarter on how to deal with toxic materials, or process
emissions. But there is another form of innovation that is even more interesting
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and more exciting. These are innovations that address environmental regulation
which simultaneously leads to improved products and processes.
Think of it as a bonus, In innovating a deal with an environmental regulation, a
firm may also benefit the core product or process itself. This produces what we call an
innovation offset, which can partially offset the net cost of compliance. In some situations,
the innovation offset may be greater than the cost of compliance. We have documented
quite a number of cases where the compliance with the environmental regulations had a
net profitable impact on the company. Not only was there zero cost, but there actually
was a negative cost in dealing with environmental regulation.
If environmental problems can be addressed through innovation, we also get
another bonus. Innovative solutions will not only help the affected industries be more
competitive, but also help U.S. suppliers of environmental products and services industry
be more competitive. To the extent that firms are innovating to deal with environmental
problems, local suppliers will gain a competitive advantage in selling those environmental
products and services in foreign markets where the demand for innovative technologies
is exploding.
Answering the Critics
I originally put forward the argument that strict regulation was not inconsistent
with competitiveness in a short Scientific American essay. This essay has received a good
deal of scrutiny, far beyond what I could have predicted. It has been warmly received by
many, especially in the business community. But I have also had my share of critics,
especially among economists.
One criticism of my argument is easily dealt with. Some have read my Scientific
American essay to say that I believe that I believe that strict environmental regulation
inevitably leads to innovation and competitiveness. This is not what my argument is, nor
what the essay actually says. My argument is that innovation to minimize and even offset
the cost of compliance is possible in many circumstances, provided that regulations were
properly crafted. We must focus, then, on relaxing the trade-off between the environment
and competitiveness rather than accepting its as given. Any innovation offset is a plus for
both the environment and industry.
Yet there are more legitimate criticisms that must be dealt with. One is that the
opportunity for innovation offsets is exceedingly rare, even though theoretically possible.
Here, our argument is that the most important reason we would expect innovation offsets
in many circumstances is the nature of pollution itself. Pollution is the emission or
discharge of a harmful substance into the environment. If you think about it, pollution if
fundamentally a manifestation of economic waste. It involves incompletely using a
resource, throwing a resource away, or burning something. The opportunity to lower cost
by eliminating pollution, then, seems anything but rare.
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Think of the analogy of quality. Companies used to think about quality in terms
of reducing the number of defects. To do so, the prevailing practice was to have many
inspections. Then the idea was to have a really good service organization in order to
correct the product quality problems that turned up in the field. As we have rethought
the quality issue, however, this approach has proven to be the wrong one. The best way
to think about quality is to figure out how to build in quality at the source, which is
usually in the design, the purchased components, the process technology, the shipping and
handling techniques, and so forth. Inspections and the need for a large service
organization can be dramatically reduced. This leads to the off-quoted phrase, "quality
is free." Given the nature of pollution, I think the analogy with quality is a good one.
There is every reason to believe that we could have substantial innovation offsets in many
circumstances.
Another observation is that estimates of regulatory compliance costs are
systematically biased upward. Estimates prior to regulation are usually higher than the
actual costs, because early estimates assume no innovation. In coatings, for example, early
estimates involved holding everything else constant and added a hood to capture the
fumes from the paint line. Yet, it has proved possible to remove the volatile compounds
from the paint, and eliminate the need for the hood altogether. Moreover, the new solvent
could be water rather than an expensive chemical. The compliance cost estimates used by
most studies are those self reported by industry, and no one every goes back and
compares them with actual practice.
Net compliance costs are biased upward in every single study that shows that
environmental regulations raise costs and harm competitiveness. All such studies measure
is cost. The models literally assume away any innovation benefits. How, then, could
econometric studies reach any other conclusion than they do? Moreover, traditional
approaches to regulation have not fostered innovation and thus imposed unnecessarily
high costs of compliance on industry.
My joint research with Dr. Claas van der Linde of St. Gallen University, work by
the Management Institute for Environment and Business, and other research has started
to assemble a body of case shady evidence that provides quite striking examples of
innovation to respond to environmental regulation. These innovations sometimes created
offsets that exceed the cost of compliance. Let me return to the Dutch flower industry.
The industry has a serious environmental problem. Cultivating flowers intensely in small
areas creates pesticide and fertilizer contamination of the soil and groundwater. The
Dutch have understood that they only way to really address this problem is to innovate
by moving to a closed-loop system. In advanced Dutch greenhouses, flowers grow in
water and are not in contact with the soil. The water circulates and contains the fertilizers
and pesticides. Water is reused, and the need for fertilizers and pesticides is reduced,
because of the absence of soil and a lower risk of infestation. By designing the cultivation
platforms correctly, it is also possible to reduce handling cost. In eliminating the
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environmental problem, then, the Dutch have simultaneously lowered cost and even
improved product quality.
Stringent regulation can actually enhance competitiveness because it pressures
greater innovation offsets. Relatively lax regulation can be dealt with easily without
innovation, and often with "end-of-pipe" solutions. More stringent regulation, however,
requires more innovation. While the cost of compliance may rise, so also does the offset
to these costs because of the innovation. Thus, the net cost of compliance often seems to
fall with stringency and may turn negative! This is before adding in the innovation
benefits for supplier industries.
There are many such examples, and the numbers will proliferate as companies (and
regulators) become more sophisticated and shed old mindsets. And I am taking into
account any benefits from so-called "green demand" (consumers wanting more
environmentally friendly products). Instead, the static mindset has created a self-fulfilling
prophecy of ever more costly environmental regulation. It has also spawned an entire
industry of litigators and consultants fighting over regulation, driving up costs, and
draining resources from real solutions.
The Need for Regulation
One of the most common criticisms of my argument is that if there is money to be
made innovating to deal with environmental regulation (i.e., if you can actually offset the
cost of compliance), why is regulation necessary? If such profitable opportunities existed,
companies would already be pursuing them. The first answer to this criticism is that some
companies do, especially in European companies such as Germany and Scandinavia where
both companies and consumers are very sensitive to environmental issues. While this may
be more true in the United States in future decades, we are now in a phase of our
industrial history where companies are inexperienced in dealing creatively with
environmental issues. The environment has not been a principal area of technological
emphasis.
Regulation is needed for five major reasons:
Regulation signals and provides information to companies about potential
payoffs. A typical company has numerous avenues for technological
improvement and limited attention and resources. Companies are
inexperienced in measuring environmental impacts, understanding the full
costs of toxicity and discharges, and conceiving of new approaches that
reduce discharges or eliminate hazardous substances. Regulation rivets
attention to this area of potential innovation, just as total quality programs
have in the 1980s and early 1990s.
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• Regulation reduces uncertainty about the demand for solutions to
environmental impacts. Regulation reduces uncertainty that investments
to address the environment will be valuable.
• Pressure from regulations acts as a motivator. My work on
competitiveness highlights an important role of pressure in the innovation
process, to overcome inertia and foster creative thinking. Strict regulation,
if it structured to allow innovative solutions, fosters progress.
• Regulation addresses the case of incomplete offset. It is not always
possible to completely offset the cost of compliance through innovation.
There will still be a net cost of compliance, but nearly as large a cost as
dealing with environmental problems without innovating (e.g., by adding
a hood to capture the fumes versus changing the paint).
• Leveling the transitional playing field. During the transition period to
innovation-based solutions, regulation ensures that one company cannot
opportunistically gain position by avoiding environmental investments. It
provides a buffer until new technologies become acceptable.
Barriers to Innovation
My central message is that there is great potential to limit or relax the tradeoff
between environmental regulation and competitiveness via innovation. To the extent that
we can relax the tradeoff or even eliminate it, the nation will enhance the competitiveness
of its companies and suppliers at the same time as it makes progress on environmental
quality.
Yet considerable barriers are present in our current system. Perhaps the most
important single barrier is mindset. As long as the constituencies see environmental
regulation as a fundamentally adversarial, win-or-lose process, innovative solutions will
often not even be considered. Other barriers to innovation can be divided into two
categories:
The Content of Regulatory Standards
One of our problems in the United States is that we have gone about regulation in
a way that actually makes it difficult, if not impossible, to introduce innovative solutions
versus "put-the-hood-over-the-paint-line" solutions. What we should be doing is
regulating outcomes, not technologies. Instead, the phrase "best available technology" is
deeply rooted in American thinking, which almost guarantees that innovation will not
happen. It raises the perceived risk and thereby creates major disincentives for any
company that attempts to deal with an environmental problem in an innovative manner.
Our regulations must encourage product and process changes rather than treating discharges.
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We must make sure that our environmental regulations are in synch (but slightly
ahead) with the rest of the world. We must avoid adopting philosophy A when every
other country in the world is pursuing philosophy B, or the competitiveness of U.S.
companies and U.S. suppliers of environmental products and services will be undermined.
We need significant phase-in periods for regulations. We need to give companies
as much flexibility as possible to address environmental problems in fundamental ways.
WE need to understand how unrelated regulations regard innovation. To eliminate CFCs
and HCFCs from refrigerators, for example, one solution involves a mix of small amounts
of propane and butane. But safety regulations in the United States seem to have impeded
a shift to the new technology, while European companies are already marketing new
products. We need to do more of what the Clean Air Act has finally started to do, which
is to build market incentives for innovation into regulations.
Finally, we need to rethink some of the liability issues. Liability exposure in the
United States works against new innovative approaches, and leads companies to take safe,
"best available technology," "what everybody else does" approaches. We must provide
adequate safeguards against companies recklessly harming citizens, but recognize the
health and safety benefits of innovation.
The Regulatory Process
I suspect that even more important than the content of regulatory standards as a
barrier to innovation is the process in place in the United States for setting, implementing,
and enforcing the standards. It is hard to imagine a regulatory process that is more anti-
innovation than the one we have in this country.
What kind of a regulatory process do we need? We want to process where
industry accepts standards as a given and starts doing something to meet them, rather
than spending years dodging and feinting trying to water down standards and learning
what they will actually be. In our current system, once standards are finally settled, it is
often too late to address them fundamentally. We need more certainty and predictability,
so that it pays to innovate rather than adopt a short-term expedient. We need to evolve
toward a regulatory regime in which the EPA makes commitments that standards will be
in place for, say, five years, so that industry can lock in and innovate around them instead
of hedge against the next twist or turn in direction.
We need substantial industry participation in setting standards right from the
beginning — not industry participation in the arm-wrestling mode. The industry must
develop the trust to provide genuine information reactions, and regulators must develop
the trust to take it seriously.
We need a much more efficient process that minimizes the resources expended on
the process versus cleaning up the environment. A crucial priority is new forums which
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minimize litigations. In Massachusetts, there is actually a money (filing fee) back
guarantee if a company does not get an answer on the permitting process within 60 days.
While this may seem trivial, the Department of Environmental Protection has not missed
it once. These sorts of approaches must proliferate.
We need the different parts of government to organize themselves so that
companies can understand again what the requirements really are. We need strong
technical capabilities among regulators so that regulation and enforcement can understand
and accept novel solutions. Finally, we need to build innovation incentives into not only
standards but the regulatory process. In Massachusetts, for example, the Commissioner
is able to waive permits in some circumstances or promise an immediate permit if it will
take a zero-discharge approach, versus a "careful review" if the company wants to
continue discharges. This creates strong incentives for innovation rather than end-of-pipe
solutions.
Imperatives for Companies
If we adopt this new perspective, what are the implications for the constituencies
now engaged in the environmental area? Companies, first and foremost, must start to
recognize environmental regulation and environmental issues as a strategic opportunity
— not as an annoying cost, not as a threat. The early movers, the companies that can seize
the opportunity first, that embrace innovation-based solutions, will reap major competitive
benefits. We are already seeing the competitive advantage of environmental innovation
in a widening array or cases.
Companies must start by deeply understanding and measuring what it is that they
are doing that impacts the environment. One of the reasons that companies are not very
innovative about the environment is ignorance. Companies have not analyzed the true
cost of toxicity, waste, and discharges. Relatively few companies look not only at the out-
of-pocket costs of these things but also the opportunity cost. How much money is going
up the smoke stack? What portion of inputs are being wasted? What are the second-order
impacts of waste and discharges on other activities?
Once environmental impacts are understood, companies must make innovation-
based solutions the expectation. In order to find such solutions, environmental strategies
must be embedded in overall competitive strategies. They must be a general management
issue if the sorts of process and product redesign needed for innovation is to occur. The
more environmental issues are delegated to individuals without profit responsibility, the
more a company will tend to get incremental solutions.
Finally, companies are clearly going to have to start investing in new kinds of
innovation and 'new technologies that have not been seen as relevant to their businesses.
These sorts of capabilities are necessary to really address environmental issues.
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Imperatives for EPA
Given this perspective, what is an appropriate mission statement for the EPA? I
want to emphasize that what follows is not officially sanctioned, but I offer it as
illustrative. A central goal of the EPA should be to promote innovation to enhance
environmental quality, including innovation in compliance technologies and innovation
in ways to offset compliance costs via more efficient processes or better products. EPA's
central mission would be to foster innovation because it lessens the tradeoff between
environmental benefits and private costs and will lead to the fastest rate of true progress
in environmental quality.
The EPA's regulatory standards would be to set to maximize innovation potential.
Every single standard that was issued would be scrutinized deeply from this perspective,
to encourage innovation-based as opposed to status quo solutions. Some important
principles for standard setting have been outlined earlier.
Similarly, the regulatory process would be fundamentally reexamined to minimize
cost and to foster innovation. Legislative changes may well be required. There is also a
need to change the way the EPA deals with the states. Right now, the EPA measures state
performance in terms of how many inspections are conducted, not how much
improvement in environmental quality they achieve or cost/benefit rations of
improvements in various areas.
The EPA must move beyond the medium (air, water, etc.) as the principal way of
thinking about the environment. It would reorganize around affected industries to better
understand industry processes and technology and its total set of problems. This will
foster innovative rather than piecemeal solutions. We also need to eliminate the practice
of hiring multiple inspectors of the same plant who do not talk to one another, and
consume time and resources unnecessarily.
To play its modified role, the EPA would not only worry about affected industries
but also about the nation's environmental products and services suppliers. The health of
this sector is crucial to the pace of innovation. There would be an explicit strategy for
upgrading this sector, not only because it will be crucial in addressing America's
environmental problems but because it is a major potential area of competitiveness in our
economy.
The EPA would employ a lot of demonstration projects to stimulate and seed new
technologies. I would caution against heavy reliance on government laboratories for these
projects because this will slow diffusion. Instead, the EPA should be encouraging private
sector entities such as universities and industry associations to pursue such efforts.
A major point of leverage for the EPA is to harness the role of government as a
buyer. The EPA would coordinate procurement of environmental products and services
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throughout government. The aim would be that government act as a sophisticated and
demanding buyer that demands innovative solutions to environmental problems. There
is going to be a lot of money spent by the Federal government on environmental issues
in the next decade. This spending should be pro-innovation, where the government
provides a market for innovative solutions rather than old solutions. Finally, EPA would
play a major role in creating information on the economics of compliance, innovation, best
practice, trade in environmental equipment and services, and other topics which will speed
innovation and sharpen our understanding of these issues.
The Role of Environmentalists
This way of thinking also casts new light on the appropriate role of
environmentalists. While the "progress at any cost" stage was probably necessary, it is
time to move beyond it. It would submit that the best way to further the goal of
environmental quality today is to foster an innovation mentality. Environmentalist groups
should be speaking out for regulatory standards that are pro-innovation. They should
devote substantial resources to educate the public to create a demand for environmental
solutions, which will motivate companies to supply them, rather than only addressing the
supply side. They should also be thinking differently about their role in the regulatory
process. Rather than prolonging uncertainty, environmental groups must work to reduce
the uncertainty about acceptable and appropriate standards. Rather than consuming
resources in filings and litigation, the focus should be on maximizing the proportion of
resources devoted to actual solutions.
Environmental organizations need to develop deeper interaction with industry.
Our environmental organizations could become sources of information and best practice
about how to innovate your way around environmental problems. Some of the resources
of environmental organizations could also be used to fund research on minimizing the cost
of addressing environmental problems, especially as it applies to fragmented industries
composed of many small companies.
Closing Remarks
In summary, we need a whole new way of thinking about the environment-
competitiveness nexus — a way that is closer to the reality of modern competition. We
need to focus on relaxing the tradeoff rather than heightening it. We need an approach
that minimizes, and ideally eliminates, the energy, time, and resources spent not on
improving the environment but on the struggle over regulation. It is not at all surprising
that the environment-competitiveness debate has emerged the way it has. But now is the
time for a paradigm shift to carry us for the next several decades. The real winners among
environmentalists, regulatory agencies, companies, and suppliers will be those that can
adopt innovation-based solutions rather than accepting current technologies or established
approaches to compliance.
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Page 49
Session 3 — Panel A
Electric Power Technologies
Septembers, 1993
2:00 p.m. - 4:00 p.m.
Moderator:
Panelists:
Paul Stolpman
Eugene Crossland
William Elliott
Steven Feeney
John Huffman
Presentations
Eugene Crossland, Pure Air, introduced his remarks by explaining the role of
Pure Air.
Pure Air is a partnership between two Fortune 200 companies — Mitsubishi
Heavy Industries America (MHIA), an SO2 scrubber technology company, and
Air Products and Chemicals, a company which provides long-term clean air
services. Pure Air is involved with a Department of Energy (DOE)-sponsored Clean Coal
Demonstration project at the Bailly Station. This powerplant is owned and operated by
Northern Indiana Public Services Company (NIPSCO). Pure Air has constructed an SO2
scrubber at the Bailly Station and through a project company owns and operates the
scrubber under a 20 year contract with NIPSCO.
The Clean Air Act Amendments create a large market for SO2 removal. As a result
of this legislation, there was a shift from "command and control" to "least-cost
compliance" where each utility must select the compliance option that provides the least
cost option for the utility. The Bailly Station project couples advanced technology and the
unique Own-and-Operate commercial arrangement to provide a least-cost compliance
package.
DOE has been awarding money for jointly-funded demonstration projects under
the Clean Coal Program. The Bailly Station was awarded funding under the Clean Coal
Round II program. DOE provides up to 50 percent funding for design, construction, and
operation of projects to demonstrate new clean air technologies. The goal of the Bailly
project is to include all viable, advanced technology developments and commercial features
to provide a low-cost air pollution control system. The Bailly Station project between Pure
Air and Northern Indiana Public Service Company (NIPSCO) was given $63 million by
DOE and came on-line in June 1992. Under this project, a large single-module scrubber
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Clean Air Marketplace 1993
system was built to service two boilers at the facility, a concept which is unique in the field
of clean air technology.
The following table illustrates some features of the NIPSCO/Pure Air project:
High SO2 Removal
Single 600 MW Module
Multiple Boilers
Maximum Fuel Flexibility
High Efficiency Oxidation System
Commercial-Grade Gypsum
Dry Injection of Powdered Limestone
SO2 Allowances
Over 95 percent
99.9 percent availability
99.9 percent availability
2 percent to 4.5 percent sulfur testing
Complete FGD system requires less than 1.5
of total station capacity
100 percent sold to the a wallboard facility in
percent
the area
Reduced capital cost
Pure Air and NIPSCO shared credits
The Bailly Station project is a co-current wet limestone flue gas desulfurization
(FGD) system. In this system, the SO2 is converted to calcium sulfite, then is oxidized to
form calcium sulfate (gypsum). A centrifuge is used to dewater the Gypsum. Gypsum,
a commercial by-product as opposed to waste, is made into wallboard. The chemistry is
simple; but what is unique is the order of magnitude of the system and its efficiency.
Efficiency is a key to this system; this is accomplished by a large single module which is
unique in the industry.
What is also unique about the Bailly Station is the partnership which was formed
between Pure Air and NIPSCO. Pure Air owns and operates this scrubber and is under
a 20-year contract with NIPSCO. Once the three-year demonstration project is over, Pure
Air will continue to operate at the facility for 17 additional years. Therefore, Pure Air
provides a scrubber service to NIPSCO.
William Elliott, Vice President and General Manager, Electric Supply,
Northern Indiana Public Service Company (NIPSCO), gave explanatory
remarks about NIPSCO.
NIPSCO Industries, Inc. is an energy-based holding company. Its largest
subsidiary, Northern Indiana Public Service Company, is a regulated natural
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Clean Air Marketplace 1993 Page 51
gas and electric public utility company serving a 12,000 square-mile area with a population
of 2.2 million people.
The Bailly Station project, a partnership between NIPSCO and Pure Air, is a
demonstration project for the DOE Innovative Clean Coal Technology Program. The
program and the partnership provided Bailly Station with superior technology, experience
in chemical processes and, due to DOE's program, a 20-year contract. The partial funding
from DOE provided a benefit to NIPSCO's customers by reducing the cost of
environmental controls needed to comply with Clean Air Guidelines, and allowed NIPSCO
to continue to burn high-sulfur coals found in their State. This, over time, benefits the
Indiana Coal Industry and provides NIPSCO customers with low-cost fuel flexibility. As
the project advanced, the Indiana Utility Regulatory Commission, United States Gypsum,
and numerous suppliers and trade unions joined the partnership.
Start-up at Bailly Station occurred on June 2, 1992, and commercial operations
commenced on June 15, 1992. Between start-up and June 1995, six one-month
demonstration tests will be performed to assess scrubber operations with a variety of coals.
All will be bituminous coals with sulfur contents ranging from 2.0 percent to 4.5 percent.
The partnership presented a new concept for NIPSCO. In the past, we have
entered into many partnerships, especially in generating stations; however, these
partnerships have been "maintenance" related. Leasing space to an outside company to
build, own, operate, and maintain a plant attached to NIPSCO equipment presented an
uncertain and an unsettling concept. However, further analysis of the concept indicated
that the ultimate benefit of this partnership would rest with NIPSCO and our customers,
resulting from Pure Air's years of design, engineering, and chemical operating expertise.
The result would be a plant with minimized operating costs and guaranteed maximum
efficiency over the contract period.
The operating characteristics of Pure Air have been outstanding. During the past
twelve months, the Pure Air facility:
Scrubbed 3,123,314 MWH;
• Had a facility availability of 99.93 percent (in hours) and 99.97 percent (in
MWH);
• Removed 79,248 tons of SO2; and
• Shipped 216,344 tons of by-product gypsum to U.S. Gypsum.
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Our teamwork allows us the opportunity to think about what NIPSCO does best
— generate electricity. Therefore, there has been an improved station operating
performance perspective since the Pure Air facility came on line. The statistics for the year
to date demonstrate significant improvement in forced outage rate and availability:
• Forced Outage Rate:
> 0.74 percent Actual
•> 7.62 percent Goal (or 6.68 percent under plan)
• Availability:
> 90.12 percent Actual
•• 82.96 percent Goal (or 7.16 percent over plan)
Heat Rate:
> 10,174 BTU/kWh Actual
- 10,059 BTU/kWh Goal (or 1.1 percent over plan)
In closing, NIPSCO has made a long term commitment to the Northwest Indiana
Region's clean air standards with the emphasis on keeping costs competitive. There will
continue to be a commitment to our partnerships with Pure Air, U.S. Gypsum, the State
of Indiana, the Department of Energy, and many others. The last twelve months of
operations prove that this blending of people and machine technology are worth using
elsewhere to meet clean air standards.
John Huffman, Project Development Manager, Kenetech/U.S. Wind Power Inc.
On the surface, the resource planning challenge seems straightforward. Most
utilities enjoy a favorable position with low energy costs, new base load
capacity needs after 2000, and combustion turbines in the near term for
peaking power. However, recent events have created uncertainties. The Clean
Air Act Amendments of 1990 (CAAA) created uncertainty surrounding SO2 allowance
prices, ultimate NOX compliance requirements (Title I), and possible air toxic emissions
caps (Title IE). In addition, there are potential for energy taxes, CO2 reductions, and an
uncertainty about future prices and availabilities of fuels. All of these uncertainties must
be reconciled with increasing pressures to keep costs low.
In the past, utilities did not consider wind power because early turbines had
unproven technical reliability and poor economics. However, ENETECH/U.S. Wind
Power Inc.'s (the world's largest wind power company with over 750 employees) recent
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Clean Air Marketplace 1993 Page 53
introduction of the 33M-VS Wind Turbine dramatically changes wind power's potential.
Wind power can now help utilities deal with resource planning uncertainties and wind
may be the least cost CAAA compliance option while hedging against fuel price risks and
additional environmental regulations.
Wind power evolved in the 1980's into a mature generating technology with a
proven 1,600 MW installed in California, with current availability rates exceeding 95
percent. Wind has also proven to be a predictable source of power with seasonal and
time-of-day patterns. But despite rapid gains, the economics of wind power were not
competitive with conventional power plants until U.S. Wind Power developed the 33M-VS
Utility-Grade Advanced Wind Turbine with key utility partners: Pacific Gas & Electric,
Niagara Mohawk Power Corporation, and Electric Power Research Institute. Development
was completed one and one-half years ago and the technology breakthrough of the
product is its variable speed operation. The 33M-VS wind turbine delivers power at 5
cents/kWh power, making it competitive with conventional plants. In addition, wind
power provides a wide range of environmental benefits compared to conventional power
plants because it has zero emissions.
The Energy Policy Act of 1992 included a production tax credit for wind, thus
making wind power more advantageous than conventional power plants. The Energy
Policy Act provided wind power with a 1.5 cents/kWh tax credit which escalates with
inflation for projects placed in service between 1994 and 1999. Thus, on a real levelized
basis, and with lower-cost utility financing, the cost of wind is approximately 3.6
cents/kWh.
U.S. utilities have committed to over 430 MW so far with 165 MW windplant
purchases, 20 MW power plant purchases and 250 MW in joint development agreements.
Utilities using the 33M-VS Wind Turbine include: New England Power, Iowa-Illinois Gas
& Electric, PacifiCorp and Bonneville Power, Portland General, SMUD, and Puget Sound.
Some near-term, publicly-known opportunities for the wind industry include 100 MW of
wind power to Northern States Power, 50 MW (AVG) of renewables to Portland General,
and 700 MW of renewables to California utilities.
Wind Power can add near-term economic value as a least-cost CAA compliance
option by displacing marginal (SO2 emitting) energy. Wind's source of value comes from:
capacity value, energy savings, SO2 savings, and production tax credits. The value created
offsets wind's capital cost, creating a negative cost of compliance (a savings). Wind can
create savings for every ton of SO2 removed making it the least-cost compliance option,
regardless of where the market price for SO2 allowances settles. The sources of value
described in detail are:
• Capacity Value: Wind's capacity value is the highest when there is a high
correlation between the wind resource and utility peak load.
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Energy Savings: Wind has zero fuel costs and stable O&M costs, making
it valuable as a fuel displacer, even when coal is on the margin. Also, wind
acts as a hedge against uncertain future fuel prices.
• SO2 Savings: By displacing marginal energy, wind frees up SO2 allowances
which can then be used or sold for profit.
• Production Tax Credits: 1.5 cents/kWh escalating.
Wind creates value as a CO2 mitigation option making wind preferable to tree
planting as a compliance option while providing an excellent hedge against carbon taxes.
In conclusion, wind power is a proven technology and is feasible in today's
economy. It is an excellent hedge against future energy taxes, additional regulations on
emissions of CO2, NOX/ and toxic air pollutants, and future prices and availability of other
fuels. It also offers other advantages such as short development and construction lead-
times.
Steven Feeney, Manager of Upgrade Projects and Services, Environmental
Equipment Division, Babcock & Wilcox, Inc. Babcock and Wilcox is part of
McDermott International, a company with $3.1 billion per year in revenues,
traded on the New York Stock Exchange.
The following are engineered products of the Environmental Equipment
Division of Babcock & Wilcox.
• Wet Flue Gas Desulfurization (Wet FGD) is a staple of the environmental
equipment division. As a result of Phase I of Title IV of the Clean Air Act
Amendments of 1990, Babcock & Wilcox led the market with five contracts
for Wet FGD's. Of these five, two have been delayed and three are
currently under construction. There were a total of 18,425 MW contracted
for in the U.S. as a result of Phase I. Of this, 4,350 MW have been delayed
and 14,075 have been confirmed. The three leaders supplying equipment
are Babcock & Wilcox, ABB, and General Electric. Some of the companies
which have delayed construction in Phase I are Commonwealth Edison,
CEI, Illinois Power, Niagara Mohawk, and Tampa Electric.
• Selective Catalytic Reduction (SCR) is a technology utilizing a catalyst
located downstream of the economizer on a utility boiler and upstream of
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Clean Air Marketplace 1993 Page 55
the air heater. In the process ammonia is injected in front of the catalyst
and NOX is reduced to nitrogen and water. Throughout the world, 100,000
MW have been installed, 23 percent of these by Babcock & Wilcox or its
licensor, Babcock-Hitachi.
• Electrostatic precipitators are a participate removal device. Babcock &
Wilcox has 30,000 MW of electrostatic precipitations installed worldwide
with our German Licensee, Rothemuhle.
• Dry Flue Gas Desulfurization (Dry FGD), of which approximately 6,000 MW
of utility systems are in operation in the U.S., generally with low-sulfur
Western coals. Typically, Dry FGD is considered appropriate for low-sulfur
Western coals. However, this perception is changing. Dry FGD has not
been a popular compliance option as a result of Phase I; no projects have
been sold.
• Clean Coal Technologies involve advanced technologies for the reduction
in emissions of SO2, NOX, and particulates.
• Condenser Heat Exchange (CHx) is a heat recovery system. CHx is a
technology which hopefully will reduce air toxics in the future. The
technology involves teflon coated tubing which can operate below the acid
dew-point without affecting the tubes. It has found widespread use in heat
recovery, but it will prove to be an air toxics control device.
There is also an international focus to Babcock & Wilcox. Currently Babcock &
Wilcox has joint ventures in Mexico, Turkey, China, India, and Indonesia.
Market trends for the future include:
• Fuel switching — 60,000-65,000 MW of fuel switching resulted from Phase
I. Many times, fuel switching requires boiler and accessories modifications.
• NOX — called the awakening giant — represents a very large market in the
future. Non-attainment requirements may make NOX a bigger capital
investment than SO2 in the future;
• Phase II of CAA Amendments of 1990, starts in the year 2000 — Delayed
by a few years, the decision of customers and as a result, there is little
activity;
• Allowance market — This could be big in the future. There is a way for
existing FGD systems to inexpensively upgrade their units and remove
more SO2. If a company could upgrade its units for greater SO2 removal
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and receive credit in Phase I through a "substitution plan," in many cases
it would be an extremely low-cost option. Recently, however, EPA sent a
proposal to OMB to change the substitution rules and EPA is not taking any
more permits or plans for substitution. This could be a fatal blow for a low
cost option. EPA should revisit the policy of substitution for those units
which actually reduce their SO2 emissions below where they otherwise
would have been without the planned substitution.
Questions and Answers
Wliat is the difference between the utility building a scrubber and Pure Air
building the scrubber?
Since utility companies are a regulated community, they can not push the edge
of technology. The scrubber system that the utility would choose may be different than
the one Pure Air chose to build since Pure Air is a non-regulated company. For example,
it is unheard of for a utility to tie together two boilers to one scrubber. Also, the operating
philosophy is different because Pure Air sees a scrubber as a chemical plant, and not a
power plant. Even if they built the same product, the operating mind-set would probably
be different and this would make a difference in how the scrubber is run.
If wind power technology is so great, why isn't everyone doing it?
L
*>
• I The variable speed technology that makes wind power competitive with
"^"^•" conventional power plants has just arrived and a lot of education is Involved.
The economics are extremely compelling, and you will see many more utilities (in addition
to the ones mentioned) sign up for wind power.
How much power does wind power produce and what is the minimum wind
needed?
Mr. Huffman answered that the windmill needs 15-16 miles per hour average
annual wind speed to make the economics win. The 33M-VS is a 400 kW machine and
provides power at an installation cost of $750-$800/kW.
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Page 57
Session 3 — Panel B
Stationary Source VOCs/Air Toxics Control
Septembers, 1993
2:00 p.m. - 4:00 p.m.
Moderator:
Panelists:
Bruce C. Jordan, Jr.
C. Shepard Burton
Dr. Orman A. Simpson
David A. Doles
Paul D. White
Introduction
Bruce C. Jordan, Jr., Director of the Emission Standards Division, Office of Air
Quality Planning and Standards, U.S. EPA, is responsible for implementing major portions
of the Clean Air Act Amendments, including the Air Toxics Program. The discussion
focused on stationary source controls and VOCs, and specifically concentrated on how
market forces might affect the Air Toxics Program and the way regulations are structured.
EPA has traditionally used a "command-and-control" approach to regulate. This
approach is a hard barrier to overcome, not only for the regulators, but also for the
industries responsible for adhering to the regulation. Regulations become constrained
because of the way they are structured and this hampers the development or use of market
forces in regulatory programs. This hindrance occurs in two ways:
• The way that regulations are actually written forces the use of preexisting
technology, and inhibits innovative technology. Oftentimes, the regulation
focuses on proven technology, either in setting the performance standards
or in identifying the type of control technology that would satisfy the
requirement. This actually may prohibit the development of innovative
approaches that achieve reductions in a more economical and efficient way.
• The emphasis that regulators have put on creating enforceable programs
has also hindered the development of market forces and flexibility. The
interests of simplicity and enforceability have led regulators to focus on
controlling pollution from individual emissions points. It would be much
more flexible, however to allow each facility to decide for itself which
individual points to control and which means to use.
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Presentations
C. Shepard Burton, Senior Vice President at ICF Kaiser Engineers Environment
Group, is responsible for the air consulting and air compliance business unit.
Mr. Burton focused his talk on fugitive emissions, particularly in the refinery
and chemical manufacturing industries. According to Mr. Burton, the rules
governing fugitive emissions are complex; there is a sizable opportunity for
companies like ICF Kaiser, and there is a sizeable expense involved for
companies that have to comply.
• Complexity. There are numerous Federal, state and local rules governing
VOCs and volatile hazardous air pollutants (VHAPs) that facilities must
deal with. For VOCs, the requirements mostly stem from Title I of the
Clean Air Act. Some states, however, have their own rules and/or local
rules with which to comply as well. Volatile hazardous air pollutants are
dealt with under the NESHAPs, RCRA, and HON (Hazardous Organic
NESHAPs) rules. A facility located in the Bay Area, for instance, may have
to comply with NSPC, NESHAPS, RCRA, HON, CAA RACT rules, and
rules specific to the Bay Area Air Quality Management District. Each of the
rules differ according to leak definition, monitoring frequency, repair
requirements and reporting/recordkeeping requirements.
• Costs. $70-$140 million is spent each year by the chemical manufacturing
and refining industry to comply with the VOC regulations and fugitive
emission rules. After the MACT implementation, this number will increase
to approximately $400-$800 million. The increase in cost figures is due to
the increasing number of facilities that will be regulated, the additional
components that must be monitored, the increased monitoring frequency,
and lower leak definition. All major chemical plants and petrochemical
facilities will be affected, not just those located in non-attainment areas.
• Business Opportunities. The dynamics of the situation present some
interesting business decisions, as well as compliance questions. When all
of the rules for equipment leaks take effect, there will be a rapid rise in
monitoring, system installation, and the number of system components to
monitor. The estimated cost to comply, $400-$800 million, is substantially
higher than what EPA estimated because it takes into account both chemical
manufacturing and petroleum refining, and more realistically reflects the
increase in monitoring. Currently, the bulk of this work is performed
within the plant by plant personnel. The rest is handled by about 5-10
competitors, including ICF Kaiser.
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There are six elements needed for compliance, and these are included in ICF
Kaiser's approach to addressing the challenges facing industry brought on by the fugitive
emissions rules.
• Sources. Accurately identify all of the leaking components, starting
with pipe and instrument drawings for the plant.
• Data. Automation is necessary to manage the huge volume of data
involved. Most states require quarterly monitoring, and some require
monthly monitoring.
• Training. Being able to reliably identify and repair leaking components
quickly and safely requires specialized training for personnel.
• Credibility. One of the problems with leak detection and repair programs
is that they have not been credible in the past — it is difficult to find out
what someone did, when they did it, and what they have found.
• Self-audits. To ensure compliance, it is important to conduct internal
review of monitoring activities. New software can help do this effectively.
• Continuous improvement. Change is continuous in the chemical and
petroleum refining business; as fugitive emissions monitoring systems must
interface smoothly with that change.
ICF Kaiser has developed a plan to manage all of these elements for facilities. ICF
Kaiser has concentrated on making the system as rugged and cost effective as possible, so
that it will last. The system is called the Fugitive Emissions Management System
(FUGEMS) and it consists of:
• Training for field operators, in the form of a users guide, with a big focus
on safety, productivity and quality.
• Improved hardware for measuring and checking for leaks. ICF Kaiser uses
a punch-hole card system. The system has a tag reader, a data logger and
a signal conditioner that interfaces with the sniffer. The system works in
the following way:
*• The field operator has a list of all the components that must be
monitored that day and their locations.
>• At the specified location, the tag is inserted into the tag reader and
the system asks if the reading is on the list of measurements
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required that day. The operator proceeds if it is and may move on
if not.
> A leak check is conducted, using the time clock in the data logger
that makes sure the operator follows the regulatory method. If the
equipment fails a leak check, the system prompts the operator to
repair the problem. If the operator chooses not to repair it at that
time, the system sends a message to maintenance the following day.
Operators can conduct hundreds of these checks in a day to meet
the requirements. Daily productivity is governed by the leak
detection method and the time to find the components.
• Improved software that standardizes the operating procedure, and
schedules and prioritizes the work. It also develops a synthetic regulation
that integrates all of the applicable rules for that facility in order to better
identify what the facility needs to do in order to comply.
• A guarantee that the system will help a facility reach compliance. ICF
Kaiser pledges to pay any fines incurred if a violation occurs.
According to Mr. Burton, the system has been a success. It has been installed at
six facilities and has had no violations. The system has resulted in a 90 percent reduction
in emissions, and a 50 percent reduction in the inplant labor required for the tasks. The
time of supervisory and clerical personnel required for compliance tasks has been reduced
by 50 percent.
There is an issue concerning the slowness in the uptake of these new systems. ICF
Kaiser expected to install more than six systems. Clearly, economic uncertainty in these
times is driving industry to be cautious. According to the Wall Street journal, refinery
margins and chemical margins are really down; firms are not making money from
operations, but rather through restructuring and downsizing.
Regulatory complexity and gridlock between Federal, state, and local agencies is
in part responsible for the slow growth in demand for the fugitive emissions control
system. Rule development and promulgation is slow, and the variation in EPA's monetary
commitment to enforcement also contributes to enforcement delays. There are some good
cost incentives within the regulations, however, specifically in the HON rule; if you have
a good program, costs will dramatically decrease. A key factor driving cost incentives to
work and fugitive emissions to drop is enforcement — reasonable, reliable, and sufficiently
frequent.
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Dr. Orman A. Simpson, Director of Remote Sensing Technology, MDA
Scientific Inc., produces optical remote sensing equipment. His presentation
examined optical remote sensing technology, how it contributes to
manufacturing in the U.S., and the advantages and disadvantages of applying
this technology to stationary source monitoring.
When the HON and the NESHAPS rules are implemented, everyone needs to
understand the costs and the total impact. Every average or medium-sized plant has
thousands of valves, pump seals, and flanges that they must monitor on a monthly basis
under the national standards for equipment leaks. The average cost is $1.50 per
measurement, so facilities are spending hundreds of thousands of dollars every month to
be in compliance. Thus, chemical plant managers and environmental engineers are always
looking for innovations. One such innovation is optical sensing technology.
An optical sensor generally includes some sort of an optical source, an instrument
that projects a beam of light out — ultra violet or infrared. This beam hits an optical
target that returns it to the transmitter. This provides an analytical technique for
measuring and identifying compounds in gas clouds emitted by sources.
One example of this technology is Open Path FTIR (Fourier Transform Infrared),
built by MDA Scientific, Inc. It can take continuous measurements for multiple
compounds at a site where measurements are required. This technology was introduced
in 1988, under the Superfund Region 2 field screening program. It has matured since then,
with funding support from several EPA programs. Emission rates for upwind remediation
activity can be obtained by the system. The system is also effective in fenceline
monitoring. For example, Dupont is now using this technology to monitor 24 different
compounds every 2 minutes across 1060 meters of their fenceline. SAFER, a subsidiary of
Dupont, is inputing the data into emergency response models to get emissions rates.
Optical sensors are systems technologies — they are not core component
technologies. They are made up of many advanced component technologies. As such,
when you obtain an advanced optical system, you impact many component manufacturers
in this county. When you introduce innovation of this kind in industry, rather than being
a burden on industry, you are actually loosening the ties of the industry, and favorably
impacting other manufacturers. To illustrate this point three technologies that are making
headway in this market are described below.
• Ultra Violet DOAS (Differential Optical Absorption Spectrometer) —
Manufactured by Optsis of Sweden, this system combines an infrared open
path FTIR system and monitors most of the air toxics with an ultraviolet
system that detects SO2, NO2, ozone, and benzene better than the infrared.
It uses an ultraviolet lamp source, specifically mercury arc lamps. Arotech
and Datal produces precision motorized scanners that are computer
controlled. Other manufacturers produce detectors, photomultiplier tubes,
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transmitter and/or receiver optical systems (i.e. mirrors and windowed
materials), and products that have to be coated for the ultraviolet.
• LIDAR (Light Detection and Ranging) — This laser-based system uses
various types of pulse lasers (carbon dioxide lasers, optically pumped lasers,
etc.), each from a different manufacturer. Other technologies used in this
system include: motorized precision scanners, optical transmitting receiver
systems that have optic and window materials dependant on the spectral
region in which the system operates, and advanced signal processing
electronics. These contain various LIDAR technologies that can look at
gases for gas concentration and actually create television images from gas
specific clouds or particulate. The diode laser based in-situ stack monitor,
developed by SAAB Industrial Systems of Sweden, will be introduced into
the US market this year to monitor SO2 and NO2-
• FTIR (Fourier Transform Infrared) — This system uses the Michealson
Interferedometor that can be found in an analytical chemistry unit, or a
process analysis type of instrument; this system simply opens a box and
transmits a beam into space. This technology has produced a $110 million
market, and requires parts from other manufacturers, such as motorized
precision scanners, cool market liquid detectors, transmitter and receiver
optics, beam return optics, and infrared sources.
Performance specifications (listed in the appendices of 40 CFR Parts 50, 51, 53, 60,
and 61) can be adapted to remote monitors, codified reference methods, test methods, and
measurement principles. However, the calibration test procedures require major revisions.
Although the initial capital costs are higher for remote instruments than for point
samplers, the operational costs are less because of mobility. The current estimate is that
for some remote monitoring applications the operational costs are decreased by a factor
of ten. One disadvantage to using monitors is that there has not been an adaptation of
existing performance specifications of continuous monitors to remote monitoring
application, or an initiation to formulate additional test procedures required in the
application of remote monitors.
Remote monitoring can play a major role in EPA's enforcement and R&D activities.
There are innovative technologies that produce better results and are more cost effective
if regulations can be structured to incorporate innovation.
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David A. Doles, Sales Engineer of Stationary Source Catalysts with Engelhard
Corporation, which supplies pollution control equipment, focused primarily on
catalytic and thermal oxidation systems. His presentation highlighted the
issues and complications affecting industry due to the Clean Air Act Title I and
Title III. He discussed aftertreatment technologies available today, as well as
past successes and future challenges with these technologies.
Mr. Doles began his presentation by sketching out some differences between Title
I and Title ID of the Clean Air Act Amendments. Title I, according to Mr. Doles, focuses
on state regulation. It allows states, with Federal approval to draw up and enforce
regulations. Title III, on the other hand, is essentially Federal regulation. In terms of
pollutants addressed, Title I covers all VOCs and does not distinguish between hazardous
and non-hazardous emissions. Title III covers only hazardous VOCs. Since there is
overlap, some facilities may be regulated by both. Control requirements in Title I depend
on whether the area of the facility is in attainment. Such area distinctions do not apply
in Title III; all sources have the same control requirements. Timing is also a big difference
between these two titles. Facilities may have to meet standards under both acts which
come into play over different time periods. This complicates firms' decisions about what
technologies to use.
Various control options that are available today are:
• Process modifications — This includes raw material changes, processing
conditions, etc. The end user is often able to both reduce emissions, and
realize other economic benefits such as producing a better product or
reducing its cost of production. These opportunities, however, are not as
common as we would like; such changes are expensive and oftentimes not
technologically feasible.
• Recovery/Recycling — If VOC streams are concentrated enough, and if they
cannot be avoided through process modifications, it is often economically
attractive to recapture the VOCs through a number of different
technologies. The VOCs can then be reused in the process or sold on a
secondary market.
• Aftertreatment technologies — If it is not feasible to prevent or recover the
pollution, there are a number of aftertreatment technologies that are
applicable and currently being used.
* Catalytic oxidation — A catalyst, typically a precious metal
catalyst, is used to oxidize VOCs. This can be carried out at much
reduced temperatures, and the resonance time can be much shorter.
There is heat recovery with this system as well.
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> Thermal oxidation — This process takes the VOC stream and heats
it to an elevated temperature, 1500°F-2000°F. The two main
technologies involved are regenerative and recuperative. For both
of these technologies, the goal is to recover the heat that you put
into the system in order to oxidize the VOCs.
° Recuperative systems take the exhaust stream from the
combustion process and use it to preheat the incoming
stream, with heat recoveries commonly at about 60 percent.
0 Regenerative systems consists of multiple regenerative
chambers and an oxidation chamber. The contaminated air
enters one chamber of the RTO and the air passes upward
through the heat sink material, which serves as a preheat for
the gas because this chamber is hot from being the exit
chamber in the previous cycle. The gas then enters the
oxidation chamber, which is operating at elevated
temperature, to complete the oxidation of the VOC
compounds.
• Incineration — Depending on the nature of the VOC stream, it is possible
to use incineration as a fuel for existing combustion sources and thereby
produce some economic benefits. However, this system is not specifically
engineered for high VOC destruction, so for areas with very strict emission
standards, incineration may not be appropriate.
• Adsorption — This is a recovery system in which VOCs are adsorbed into
a carbon bed or perhaps zeolite. There are two drawbacks: the bed
eventually has to be discarded, disposed of or destroyed.
• High Tech Technologies — These include cryogens, UV,
ozonation, and biofiltration. By and large, these are new
technologies that have not been widely commercially
applied.
Mr. Doles focused specifically on two of the above technologies, catalytic oxidation and
regenerative thermal oxidation to illustrate past successes in innovation.
• Catalytic oxidation — There have been a number of advances in the use of
catalysts for oxidation. This is one of the primary advantages of a catalytic
system — it can be operated at low temperatures and achieve high
efficiency. This advantage has been enhanced over the years with new
catalyst and system designs. The major drawback to catalytic systems is
that because they use precious metal catalysts, they can be susceptible to
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Clean Air Marketplace 1993 Page 65
poisons. Many catalyst compositions can be poisoned by things like sulfur,
heavy metals, chlorinated compounds, etc. To address this, poison resistant
catalysts have been developed. Mechanical design and equipment can often
be the overall factor that determines the destruction efficiency of the system.
With special attention to ensuring the equipment is air tight, destruction
efficiencies of 99% can be guaranteed. This technology also reduces capital
and operating costs. As the market has grown and more players have
entered, there have been innovations to reduce the up front and ongoing
costs to operate these systems. This has made the systems readily available
and more practical in many applications.
• Regenerative thermal oxidation — Technologies in other industries use the
concept of a reciprocating flow stream with the ceramic bed, but only
recently has it been applied to VOC oxidation. Thermal efficiency through
this method has reached 95 percent. Regenerative thermal oxidation
systems are particularly attractive for larger flow rate streams, because they
recover a significant portion of the heat from the gas. One of the problems
had been that as the stream cycles back and forth, there was a residual
unoxidized component emitted. New developments in valve design and
purge systems, however, eliminate this problem.
The future for technological innovation may see the following:
• The efficiency and cost of existing technologies will continue to improve.
• New technologies will continue to come on the market. Here are a few
examples:
> Catalytic filtration — A ceramic honeycomb filtration device
applied to a catalytic media creates both a catalytic oxidation
reaction and particle filtration in the same unit. Two activities can
be carried out in one system.
> Regenerative catalytic oxidation — Adding a catalyst to the
regenerative thermal oxidation system can reduce operating
temperature. Operating and total system costs will decrease.
• The future for technological innovation is in a dilemma. End users require
technologies that are proven so that the after treatment unit does not
adversely affect their process and the regulators must accept the technology
as meeting their requirements. In writing regulations, regulators must base
the rules on results that are achievable with commercially proven
technologies. The missing element in this scenario is a mechanism for
proving and accepting new technology, which may have the benefit of
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better destruction efficiencies and more cost effective operations. If there
is a perception that it will take too long for equipment to be accepted, or it
looks like it might not be accepted, equipment suppliers' already limited
R&D funds will dry up very quickly.
New regulations have created a large dynamic market for aftertreatment
technology, resulting in jobs and export opportunities.
To continue this market innovation and growth, the regulators need to promote the
development and acceptance of new technology.
Paul D. White, Business Director of the Environmental Projects Division at
Johnson Matthey Corporation, supplies stationary source environmental
controls. His presentation described state of the art catalytic oxidation and
some developments in meeting the requirements of the Clean Air Act.
The main motivation to control VOCs are the requirements in Title I.
Facilities not meeting attainment VOC and NOX standards create smog and contribute to
the ozone non-attainment areas. The upcoming rules and regulations are impacted by Title
III, which regulates carcinogens and mutagens. Many are standard VOCs, but some
present some interesting challenges, particularly the halogenated materials. In addition,
nuisance conditions of odor and smoke will be addressed.
There are a variety of VOC control technologies:
• Carbon absorption
• Solvent recovery
• Incineration
*• Recuperative
•• Regenerative
> Catalytic
Catalytic oxidation is currently the preferred technology — it is merely an
enhanced thermal oxidation process. The catalyst allows the reaction to take place at a
lower temperature, the main advantage of catalytic over thermal oxidation. Much less fuel
is needed to heat the incinerator and a catalyst allows the reaction to take place in a in a
much shorter period of time. The resonance time is important because it allows the device
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Clean Air Marketplace 1993 Page 67
to be smaller. Unsaturated materials are more difficult to destroy than saturated.
Benzene, acetone, and methanol are relatively easy VOCs to destroy at relatively low
temperatures. Methane and short-chained saturated compounds tend to be more difficult
to oxidize. Most of the VOCs and air toxics fall into the range of 450°F-850°F.
Typical catalytic applications include:
• Can coating
• Painting of any kind
• Converting (printing on anything other than paper)
Title ID presents some interesting challenges. In the past, catalysts were thought
to be inefficient in streams that contained halogens. Much research has gone into
developing catalysts that can effectively destroy halogenated hydrocarbons. This is an
example of the kind of innovation that needs to be done to meet Title ID.
There is no advantage to destroying one compound and creating one that is even
more hazardous; if there is no moisture in the stream, phosgene is created as the
compound is destroyed. The destruction of halogenated VOCs then becomes more than
simply designing a catalyst — it focuses on system design to make sure that the water
levels are proper. Along with the necessity of injecting water is the heat requirement. Not
only must the heat be sufficient to destroy the compound, it must also be sufficient to not
create another compound.
One solution to this problem is to use PGM catalysts that are less volatile than base
metal catalysts, and operate at higher temperatures. Basically, because they operate at
higher temperatures, unwanted byproducts do not form. However, laboratory trials still
should be backed up by field trials.
PGM catalysts are effective for the complete destruction of halogenated VOCs. To
deal with regulations, one cannot simply develop a catalyst. A complete system should
be developed to account for all the different parameters involved.
Questions and Answers
How can regulators convince industry that there is technology that may even be
more economically feasible than the techniques we use now?
Mr. White responded that the producers, users, and government officials must
be understanding so that we know the limits of all the different VOC technology and
where it can be applied.- There are a host of different VOC technologies available. People
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must take the time to evaluate the different technologies. Government officials must
understand the limits of what the different technologies can and cannot do. Most
importantly, vendors have to make sure that people do not misapply the technologies.
A member of the audience added that one of the things catalyst manufacturers should
consider is the liability question. Warranties and guarantees are quite limited. As part of
the innovative process, manufacturers should stand behind the product and offer longer
warranties.
To what extent is pollution prevention control technology being developed?
Mr. Dole responded that Englehard only has abatement and aftertreatment
technology as of now. The pollution prevention technologies available today are
very industry- and pollution-specific. Some new pollution prevention technologies could
include a coating type application, and a progression from solvent to water-based systems.
Perhaps there are no capitol costs for this modification, just a change in the product. There
is improved equipment available that can prevent leakage.
Winch industries arc being proactive in terms of market size and growth?
O
• I Mr. White replied that, regarding market size and growth of this technology,
^™^^" VOC control is about a $200 million market. The major industry that is now
undergoing VOC control is the chemical process industry, particularly the synthetic
chemical manufacturers. Many of these industries have had nuisance problems long before
now. For example, the printing and converting industry is a known user of solvents, and
they really do not have any substitutes — they are stuck with post-treatment.
Mr. Jordan added that we are actually developing MACT standards for 174 major
industries under Title III. Practically all will be affected by VOC regulation. They cover
everything from wood furniture manufacturing to coating operations.
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Each panel member was asked to make a one sentence suggestion to regulators.
Mr. Burton.commented that business and government must trust each other.
There is a lot of room for improvement.
Mr. Simpson added that flexibility should be built into the regulations.
Mr. Doles suggested that regulators incorporate flexibility into their regulations and
enforcement. Many innovations have a lot of promise, but there is risk involved. EPA can
go a long way to help alleviate the risk that the end user perceives.
Mr. White recommended that Federal agencies give the states guidance. They need to
decide where the most VOCs are coming from and what is the most appropriate
technology.
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Page 71
Session 3 — Panel C
Vehicular Emissions Control Technologies
Septembers, 1993
2:00 p.m. - 4:00 p.m.
Moderator: Bruce Bertelson
Panelists: John S. Howitt
John Mooney
Reginald Modlin
Dr. George M. Sverdrup
Introduction
Bruce Bertelsen, Executive Director of the Manufacturers of Emission Controls
Association, was the moderator for this session. He began his remarks by stating that the
motor vehicle emission control program began approximately 25 years ago with the Clean
Air Act Amendments of 1970. The program is an example of an environmental success
story for this country and the world. During the 1960s the air quality in a number of cities
in the U.S. was as bad as Mexico City's air quality is today. The motor vehicle emission
control program has helped turn this around and has spurred the development of a multi-
billion dollar industry.
Although the program has experienced success in the past, there are still air quality
challenges to be addressed today. Specifically, there are two goals: (1) to look back at the
program's successes and failures and learn from them, and (2) to look forward to the
future of the program. The discussion will focus on new emission control technology, the
impacts of that technology, changes in the program, and the impacts of fuel selection.
Presentations
John S. Howitt, Manager of New Technical Ventures at Allied Signal
Corporation, has 23 years experience in auto emissions control, and his current
responsibilities include developing new business opportunities in the catalyst
area. His remarks focused on advancements in catalyst technology.
In the next few years, the market for catalytic converters will see some growth.
In North America the need for catalytic converters will increase modestly, while Japan's
market will remain constant. However, there will be tremendous growth in Western
Europe, and potential for growth in Eastern Europe, South America, and Asia.
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The driving force behind technological advancements has been California's
forthcoming regulation on LEV standards, to be employed in various phases in the 90's.
Preliminary figures from these regulations show that the hydrocarbon limit will fall from
today's .41 to a midlevel of .125 and finally to an even lower level. The planned ULEV
standard will be .04.
The focus of catalyst technology is the control of hydrocarbons. The following list
summarizes some of the most remarkable advances in catalyst technology today:
• electrically heated catalysts;
• palladium catalysts;
• lean NOX catalysts;
• hydrocarbon traps;
• substrates;
• compressed natural gas catalysts;
• utility engines, mainly for lawn and garden controls;
• diesel catalysts; and
• motorcycle catalysts.
Electrically Heated Catalysts
A catalyst usually does not become active until it has reached several hundred
degrees, and it is therefore fully effective only on a hot car. Eighty percent of an
automobile's total emissions occurs within the first 2 minutes of the start. Electrically
heated catalysts decrease the heating time, and thereby reduce the amount of hydrocarbons
that escape during the cold start period. They are heated by electric energy conducted
through metal substrates.
A manifold mounted converter, using a more conventional type of catalyst, can also
help to reduce the cold start problem. It absorbs the sensible heat in the exhaust quickly
and because the catalytic action is exothermic (heat-generating), it provides a hotter
exhaust faster to the main underbody converter.
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Palladium Catalysts
Catalysts have traditionally been made of platinum, platinum rhodium, or platinum
palladium rhodium. Last year a catalyst made solely of palladium was developed that
decreased the time it takes for the converter to reach efficiency. These catalysts have been
effective in meeting the LEV and ULEV standards in tests.
Compressed Natural Gas Catalyst
A compressed natural gas catalyst was tested by EPA on a Dodge Dakota pickup
truck and several other car models and it was found to have an acceptable conversion
efficiency. The catalyst allowed the vehicles to comply with the ULEV standards and was
considered successful.
Hydrocarbon Traps
Substrate manufacturers have recently found a way to impregnate the ceramic
substrate with activated carbon to absorb 77 percent of the non-methane hydrocarbons
emitted in the first 60 seconds.
Utility Engines
In the state of California, beginning January 1,1995, utility engines (e.g., lawn and
garden equipment) are going to be subject to emission control standards. It has been
found that 4 percent of the total hydrocarbons emitted in California comes from utility
engines. The standards will continue to tighten significantly through 1999.
Engine manufacturers have developed several different strategies to conform with
upcoming emission regulations. Some of those strategies include:
• tuning engines and carburetors to make engines run more smoothly (1995);
• converting to overhead valve engines, which run much cleaner;
• catalytic aftertreatment, particularly if the first two options fail;
• converting to overhead valve + catalyst engines (1999); and
• converting to 4-stroke + catalyst engines (utility engines).
This industry faced the following problems in catalyst design for utility engines:
• Effectiveness and efficiency (i.e., being able to design a catalyst to meet the
standards)
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• Durability
• Temperature of exhaust and shell of structure where the catalyst is
mounted (in many cases, the muffler)
• Safety (e.g., mechanical malfunction, fire)
• Mechanical durability
Cost
Motorcycle Catalysts
Catalysts on motorcycles and motorbikes are very effective in reducing the
emissions of hydrocarbons, CO, and NOX. In virtually every case, the use of these
catalysts is the result of regulatory action. For example, catalysts are being installed on
motorbikes and motorcycles in Taiwan at the rate of 1 million units a year, and the
potential market in that area could expand in the next 5 or 6 years to nearly 6 million units
a year. (In some areas of Southeast Asia, the motorcycle is the major form of
transportation.) Taiwan already has three-phase standards in place and catalysts are
already in production. In Japan they begin in 1996. There are standards in South Korea
but few motor vehicles to which they are applicable. In India, Singapore, and Malaysia,
standards are currently being considered.
John Mooney, Manager of Technology and New Applications at Engelhard
Corporation, focused his discussion mainly on diesel catalytic aftertreatment
devices. Diesel exhaust is perceived by the public as dirty because of (1)
particulates visible to the human eye; (2) a characteristic odor; and (3) gaseous
emissions that contribute to smog. Diesel exhaust consists of solid organics,
carbon, aerosol organics derived from the fuel or lube oil, HC, CO, SO2 gases,
and free organic liquids.
Preregulation emissions controls have usually focused on particulate matter, and
not as much on hydrocarbons or carbon monoxide. In 1998 there will be a fairly strict
standard for NOX. The three catalytic devices that are being applied for the future are (1)
diesel oxidation catalysts (DOC); (2) catalytic soot filters (CSF); and (3) lean NOX catalysts.
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Diesel Oxidation Catalysts
The first DOC was developed in 1968 and there has been quite an improvement in
their formulation in the last couple of years. The DOC is similar to those catalysts used
on spark ignited engines. However, the liquids collect on the surface of the catalyst, are
oxidized to gaseous components, and then are consumed by the catalyst. The following
characteristics all pertain to DOCs:
• DOCs collect and oxidize aerosol HC. This is sometimes termed the soluble
organic fraction (SOF). The sources are from fuel and lube oil consumed or
not burned by the engine;
• In DOCs gaseous emissions are oxidized just as they are in an oxidation
catalyst;
• DOCs reduce odor and irritants;
• DOCs have low deterioration — some DOCs last for ten years with little
deterioration;
• DOCs are a lower cost technology compared to other types of aftertreatment
devices;
• DOCs are the most effective technology in terms of reducing particulate
matter; and
• DOCs need low sulfur fuel.
Ninety-eight percent of fuel sulfur combusts in the combustion chamber into SO2,
and about 2 percent combusts into SO3. The engine companies dropped the specifications
for sulfur from 0.3 to 0.05 percent. A catalyst is very effective in oxidizing SO2 to SO3.
SO3, once formed, hydrolizes with water to form sulfuric acid, which is collected in the
filter used to collect particulates. The catalyst companies have been successful in striving
to produce a catalyst that would be selective, that is, oxidize the soluble organic
hydrocarbons but not oxidize SO2 to SO3 and form particulate.
Catalytic Soot Filter
A CSF is made from an extruded monolith that collects particulates. This type of
trap has a collection efficiency of 60-90 percent with only a 2-4 percent fuel penalty. The
regeneration system is either onboard using a fuel burner or electric heater or the whole
unit can be taken off and regenerated with a heater. The surface that collects soot is
coated with a catalyst. There are several additional features of a CSF:
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CSFs can be used for 4-stroke engines without a regeneration system;
CSFs oxidize the HC and CO and remove odors and irritants;
• CSFs decrease the regeneration emissions;
CSFs increase the collection period, i.e., the time it takes to fill the trap;
• CSFs provide complete regeneration to the baseline condition;
CSFs decrease the temperature at which the collected soot is combusted by
50-200°C; and
CSFs provide low deterioration (up to 75,000 miles).
A significant stride toward cleaning up the diesel engine would be the use of low
sulfur fuel.
Lean NOX Catalysts
Lean NOX catalysts reduce NOX in oxidizing atmospheres with zeolites (molecular
cages that pick up and reduce HC and NOX emissions).
Southwest Research has a program funded by CARB to study lean NOX catalysts
and further their development. Many catalyst companies have lean NOX development
programs and the progress is continuous. Further developments are expected in 1994.
Reginald Modlin, Manager of Vehicle Emissions Regulatory Programs at
Chrysler Corporation, gave his talk from the perspective of the automobile
manufacturer. He felt that the theme of the conference (New Business
Opportunities Created by the Clean Air Act Amendments) can be a bit
misleading, because the Clean Air Act is about clean air. The link between
clean air and a healthy economy is not direct. The maintenance of a clean
environment may complement a healthy economy, but one does not necessarily follow the
other. Cleanup of the environment will be costly. New technology and new jobs will
result, but the costs should not and cannot be hidden. The discussion focused on attitudes
and goals for the future and the importance of government and industry cooperation.
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Clean Air Marketplace 1993 Page 77
The state of California provides the largest clean air challenge of any state. The Air
Resources Board is still struggling to show compliance with National Air Quality
Standards. Non-attainment areas like California are required to conduct advanced
inspection programs. The State's check system has come under review recently, and
information gathered shows that the system is riddled with the potential for error and the
inappropriate passing of otherwise failing vehicles. Non-attainment areas like California
are required by the CAA to implement enhanced IM programs. (EPA is currently finishing
guidelines for these programs.)
The problem in California is the perception that all the jobs previously associated
with testing will be lost because of the new IM programs. There is less of a focus on air
quality and more of a focus on jobs. In addition, there has been little discussion of the jobs
created by the need to fix the increased volume of failing cars. When people point to
perceived potential for loss of jobs without acknowledging the potential business
opportunities, the discussion no longer focuses on clean air. If we do not keep our focus
on improving air quality, we run the risk of adopting policies that may be more politically
acceptable, but result in little sustainable environmental benefit. Solutions to the complex
environmental problems that we all face require complex solutions, and automobile
manufacturers, regulators, and government officials should resolve the problems by using
cost effective measures and properly educating the public as to what they are paying for.
From the technology side, an integrated strategy could be built. For instance,
regulatory policy could both tighten vehicle emission control and consider ways to reduce
customer inconvenience. The tools used in this example are an IM test station, vehicle on-
board diagnostic systems, traffic monitoring control systems, roadside vehicle emissions
monitoring, and scrappage. Finding and fixing the most polluting cars and trucks is the
single most cost effective control strategy for emissions control of motor vehicles.
Increasing the frequency of inspection can be achieved simultaneously to reducing the
inconvenience of inspections to the consumer, with an on-board diagnostic system. With
the addition of a transponder, the data stored in the system's computer could be broadcast
to a roadside monitor. Knowing the real-time emissions performance of the vehicle, a
central processor could notify the owner of the need to have his vehicle checked and
possibly repaired if it is out of compliance.
The central processor could also routinely search the files for vehicles that have
somehow missed the roadside monitor and generate notice to the owner that a periodic
inspection is needed. Testing would not be required at the IM station for those who have
encountered a station and have reported passing conditions, thus reducing customer
inconvenience.
Direct linkage with vehicle registration and licensing systems would assure that the
owners would acknowledge notifications for service. Direct integration of a gross polluter
scrappage program into this einissions monitoring system based on actual measured
emissions of the vehicles pulled from the road could help in establishing emissions trading
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banks to help small businesses adjust emissions abatement requirements to their ability to
purchase hardware. This time phasing of emission abatement equipment could extend to
major industrial facilities as well.
The vehicle's transponder could also aid in reducing traffic congestion, the data
reflecting exactly where the vehicle is located. Another option for the consumer would be
an onboard location display that would provide traffic information accumulation by the
traffic control system. Development of these systems would take a coordinated effort from
several disciplines to minimize the complexities of each. People need to put aside their
own personal biases and work together to provide a coordinated solution.
Lastly, the effect of fuels on vehicle emissions should be discussed. An increase in
the cost of gasoline is not palatable to government officials. Whether or not regulating fuel
formulation is a rational policy option depends on the extent to which fuels impact on
tailpipe emissions. According to soon to be released data obtained from tests aimed at
determining the emissions difference imposed by fuels alone, the imposed difference can
range from 14-48 percent. Properly addressed, fuel formulation is a cost effective motor
vehicle emission control strategy.
Dr. George M. Sverdrup, Program Manager at Battelle Memorial Institute, is
involved in two programs: (1) a comprehensive assessment of toxic emissions
from coal fired power plants, including two with clean coal demonstration
projects; and (2) the CleanPleet program, a demonstration of five alternative
fuels and a control gasoline in 111 Federal Express delivery vans in Southern
California. Dr. Sverdrup limited his remarks to the CleanFleet program.
The goal of CleanFleet is to demonstrate and document the operations (vehicle
performance, maintenance, reliability, durability, safety), emissions, and economic status
of five alternative fuels. All the liquid and gaseous fueled vans used were model year
1992 vans built by Ford, Chrysler, and Chevrolet.
The following chart gives some details on the fuel type being tested, the location
of each fleet, the number of vans being used, and the number of control vans in operation.
Control vans operate on regular, unleaded gasoline to provide a base for comparison.
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Page 79
TYPE OF FUEL
Propane
Reformulated gasoline
Electricity (lead acid batteries)
Methanol
Compressed natural gas
LOCATION
Rialto
South Central Los Angeles
Culver City
Santa Ana
Irvine
NUMBER OF
VANS
20
21
2
20
21
NUMBER OF
CONTROLS
6
9
—
3
9
The vans were phased into operation beginning in April 1992 through September 1992 and
will complete the 24-month test in the fall of 1994. Federal Express has used all five fuels
successfully in its daily operations.
Some highlights of the five sites, illustrating problems encountered and solutions
developed are as follows:
Rialto (propane)
A number of issues were addressed to provide a successful demonstration of
propane gas. Initially, the Federal Express drivers were concerned about the accuracy of
the fuel gauges and how the fuel gauges read during driving. Problems were encountered
with the diaphragms in the regulators, which were replaced with a new material. There
have also been problems in the last several months with the electronics added to the vans
from one manufacturer to convert from gasoline to propane. The propane fuel tanks are
sensitive to grade — if there is a grade, the fuel tank may not completely fill and the van
may subsequently run out of gas. Changes also had to be made to the fuel nozzle to allow
it to fit into the vehicle fuel tank and adjustments were also made to guard against hand
fatigue while fueling vehicles. Since Federal Express usually drives its vans into a
warehouse to pack them, duct work and air handling equipment were added to the facility
to increase ventilation. Flammable gas detectors were also installed near the floor.
South Central Los Angeles (Phase 2 reformulated gasoline)
Underground tanks provide storage for the California Phase 2 reformulated
gasoline. There is a special fuel dispensing management system in use (TIR1S) to test an
automated system for fleet operators reporting fuel use to the government, on a vehicle-by-
vehicle basis.
Santa Ana (methanol)
An above-ground vaulted tank was installed to provide the fuel. Although the fuel
storage tank and M-85 dispensing system were specified to be compatible with M-85 and
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were warranted as such, some components were not compatible with methanol. These
components had to be changed to provide long-term trouble-free operation. Suppliers are
only now manufacturing hardware that is compatible with high methanol content motor
fuel. Some problems were experienced with the fuel pickup line in the fuel tank. This
was remedied by the vehicle manufacturer. There were significant permitting procedures
to be met in the installation of this tank. The fuel being used is M-85 — 85 percent
methanol and 15 percent Phase 2 reformulated gasoline.
Culver City (electric vehicle)
Two electric G-Vans are being demonstrated. Initially, they had lead-acid batteries.
Under Federal Express driving conditions, there were found to have a range of about 25
miles. One G-Van is now being outfitted with nickel-cadmium batteries. A Ford Ecostar
will be added to the project in 1994.
Irvine (compressed natural gas)
21 vans are operating on compressed natural gas (CNG) which is supplied onsite
by a natural gas compressor, cascade tank storage system, and a dispenser. As for the
propane site, enhanced air handling equipment was installed in the building into which
the vehicles are bought. A system of 24 flammable gas detectors near the ceiling control
operation of the new ventilation system. Range of the vehicles from the three
manufacturers varies from about 120 to 150 miles. An extra fuel tank was added to each
of the seven Dodge CNG vans to increase the range to 120 miles. During the past few
months, problems have been encountered with the electronics used to control fuel in
Chevrolet vans modified to run on CNG. The problems have largely been resolved as they
were for those propane vans that use the same electronic system.
Questions and Answers
What is the effect of diesel filters on diesel engines?
John Mooney answered that there is a 2-A percent negative fuel economy because
of the additional back pressure. However, passive regeneration systems avoid
the problem.
L
** \
• I
^^^™
What are some different problems concerning retrofit engines versus new engines?
John Howitt replied that the most important difference relating to retrofit engines
is temperature.
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Clean Air Marketplace 1993
Page 81
Session 3 — Panel D
Alternative Vehicle Technologies
September 8, 1993
2:00 p.m. - 4:00 p.m.
Moderator:
Panelists:
Phil Barnett
Martin J. Bernard, III
Gorik Hossepian
Dr. Roberta Nichols
Paul Gifford
Introduction
Phil Barnett, U.S. House of Representatives, Subcommittee on Health and the
Environment, introduced the session by stating that high emission inventories are a prime
problem addressed by the Clean Air Act Amendments (CAAA). Under the CAAA, many
urban areas must reduce their emission inventories by 50-60 percent and in some areas,
such as the southern coast of California, by as much as 70-80 percent.
Mobile sources are the primary cause of emissions in major cities. The
development of cleaner fuel technologies is therefore crucial to the successful
implementation of the CAAA's emission reduction provisions. At the same time,
continued economic growth must be fostered.
Presentations
Martin J. Bernard III, Executive Director of the National Station Car
Association (NSCA) discussed his association's efforts to develop a nation-wide
station car program to fill electric vehicle market niches in urban and suburban
markets.
There are three early market niches for electric vehicles: service vehicles,
shuttle buses, and, most importantly, station cars. These are early niches because the
vehicles operating in each require relatively simple technology, have simple driving
patterns and return daily to a central location for servicing. Station cars are battery-
powered electric vehicles driven by transit passengers to and from a station. Station cars
will probably be small, but not 'mini', and fully safety-certified if the mass transit criteria
favored by the NSCA are adopted. Some vehicles which would operate only on local
streets might not be safety certified, but the NSCA is not interested in supporting those
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types of vehicles. Station cars would be designed to have a 45-mile range and capable of
being used on freeways, but only in a limited capacity because the station cars are meant
to be primarily urban vehicles.
Two advantages to using electric cars rather than conventional cars on short,
commuter trips are:
• More than half of the emissions released during a 20-mile trip are released
within the first five miles and are caused primarily by the "cold start" of
the engine. Because most trips to a commuter station are less than five
miles long, using station cars would greatly reduce emissions.
• Traffic congestion involving conventional cars has a high emission impact.
By encouraging public transportation ridership, some of this congestion
could be avoided.
The startup funding for NSCA came primarily from the Electric Power Research
Institute (EPRI). The Transit Development Corporation, a non-profit corporation set up
in the mid-1970s by the transit industry to perform research and development, is also
providing support to station car demonstrations.
Stage 1: Local Demonstrations (1993-1998)
The following presents a two-stage process for the introduction of station cars. The
first period, running from 1993-1998, will involve local demonstrations of the vehicles.
Many of these local demonstrations will be supported by local utilities, transit authorities,
and other state and local agencies. The American Public Transit Association has set up an
electric station car task force to motivate the transit industry to encourage these efforts.
Each demonstration would involve a fleet of 25-30 cars and would be centered around one
or more commuter train or light rail or rapid transit stations. Initially, the vehicle would
be assigned to one person, possibly an employee of the utility or transit agency, who
would be given priority parking at the station. The vehicle would be recharged at the
station or at the assigned individual's home at night. The station car would therefore be
used primarily as a forward commuting vehicle.
Nine major cities, including Atlanta, Boston, Los Angeles, San Francisco, and
Washington, D.C., have committed to this program. These transit operators have made
a commitment to station car development. The vehicles provide clean air access to mass
transit and could eliminate the need for second or third household cars since it could be
used for other local trips. As the demonstrations go, they will presumably attract new
riders to the public transportation system by making transit a door-to-door service.
Demonstration funding for the first stage will come from state and local air quality
agencies, state departments of transportation, local electric utilities, and ARPA (which will
put $500 million into the development of electric vehicles, though not exclusively station
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Clean Air Marketplace 1993 Page 83
cars, in the next few years). NSCA also hopes to interest the Federal Transit Authority in
station car development.
There are several demonstration programs already underway. In San Franscisco
in 1994, for example, 45 station cars will be located at five stations, and have been paid for
with local and ARPA funds. In Orange County, the station cars will be used by "reverse
commuters" to go to jobs in local industry, hi Miami, officials have found that the
program would encourage commuters to use the city's mass transit system, because it
allows the riders to conveniently run business and personal errands in the city during the
day.
Stage 2: Full-Scale Programs
The second stage of the station car introduction will begin in 1998 and will involve
a number of concurrent programs, including maintenance and charge-ups for cars at the
station, on-board diagnostic systems, and monthly billing capabilities. The uses of the
vehicles would also be expanded. Dr. Bernard envisions the car as a multiple-use vehicle,
that could be used for all kinds of trips in suburban and downtown areas. The cars, in the
second stage of the program, would therefore no longer be used exclusively for forward
commutes, but also for reverse commutes, shopping trips, and local business trips.
During the second stage, the vehicles could be owned by a variety of groups,
including transit authorities and local employers, but the station cars will probably be
owned by third party leasing firms, or perhaps by parking garage operators. In California,
for example, the American Automobile Association has expressed interest in operating
station cars.
At first, most of the station cars will be conversion cars but, starting in 1995, station
cars could be built as electric cars from the "ground up" and will be ultra-lightweight,
graphite, fiber-based vehicles. While the NSCA would prefer to have one manufacturer
make all the cars, to cut the per-vehicle cost, the participants in the program want their
cars to be produced locally. Cottage industries are therefore the key to program
expansion. However, efforts will be made to link the smaller manufacturers into a
coherent program. The NSCA will perform reliability testing, and EPRI will develop
testing protocols so the manufacturers will be operating from the same set of data.
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Gorik Hossepian, Manager, Fuel Cell Program, Allied Signal Aerospace Co.,
discussed his company's efforts to produce a viable fuel-cell for vehicular
power systems. Fuel cells are a particularly attractive option, according to Mr.
Hossepian, because they are a technical discontinuity; that is, they represent
a revolutionary innovation, not an evolutionary one. The development of a
viable fuel cell could reduce the U.S. trade deficit dramatically — by over $21
billion annually — through a reduction in oil imports and increase in technology exports.
Fuel cells could be a major global opportunity, not just for Allied-Signal, but for the U.S.
Fuel cells are much more efficient power sources than conventional electric
generators because the cells transform chemical energy directly into electrical energy
without heat and mechanical energy steps. In addition, emissions are almost non-existent
when compared with combustion engines, because there is almost no physical contact
between the nitrogen and the oxygen at high temperatures, as is the case with the
combustion process. Eventually, fuel cells (assuming they are twice as efficient as the cells
being produced today) will be able to save three million barrels of oil per day.
There are two fuel cell programs sponsored by Allied Signal: the Monolithic Solid
Oxide Fuel Cells (MSOFC) program and the Proton Exchange Membrane (PEM) program.
The MSOFC is the highest power density fuel cell being developed today, making it
attractive for high power needs such as vehicles and industrial sites. The MSOFC is a
multi-fuel device — it has operated on anything from packed charcoal to natural gas.
Unlike other fuel cells, the energy is produced through the transport of oxygen ions and
not hydrogen ions. The MSOFC also has the potential to be economical, perhaps costing
under $1,000 per kW installed. The PEM cell is preferred for non-fossil fuel applications,
and will be used for transportation applications.
Allied Signal has great interest in fuel cell technology. Fuel cells fit in well with
Allied Signal's hardware product lines. In addition, the company's expertise in key
material technologies and in the aerospace and transportation industries provides Allied
Signal with a competitive advantage, which is the key to making fuel cells economically
viable. Fuel cells will be the next replacing technology in the auxiliary power unit market,
of which Allied Signal currently controls about 90 percent.
There are three potential markets for fuel cells:
• Power utilities, which have already started using the technology;
• Transportation, which should be the next major fuel cell user, because of
regulatory mandates to create emission-free cars; and
• Aerospace, which is a sector lagging in fuel cell applications. This can be
attributed to the fact that fuel cells have a bad reputation, and aircraft
companies prefer to deal in proven technologies.
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The presentation concluded with a projection of the future of fuel cells. By 2010,
fuel cells will represent a $35 billion market worldwide, with much of the growth
occurring after 2000. By 2003, 500,000 zero-emission vehicles will be produced, largely
because of the California vehicle law, generating a transportation market for fuel cells.
Environmental regulations relating to vehicle emissions have created a market pool,
not a market itself. The search for potential commercial uses for the PEM fuel cell has
been motivated by current legislative mandates, but a viable product has not yet been
developed. Before any growth can occur, the technology and performance of the cells
must improve significantly. Allied Signal has attempted to do this through advancements
in materials and systems.
Dr. Roberta Nichols, Electric Vehicles External Strategy Manager, Ford Motor
Co., presented an overview of Ford's efforts to produce electric-powered cars.
Dr. Nichols began with a brief discussion of the history of electric vehicles,
noting that such vehicles do not represent a new technology. In the early part
of the century, in fact, there were more electric cars than gasoline-powered
cars. Once hand-crank starters were replaced by electric starters, however, the
internal combustion-powered cars became more prevalent. Since that time, the lack of a
battery that could power a car with satisfactory range and sufficient lifetime has been the
primary obstacle to marketing electric cars.
There are several advantages to electric vehicles:
• Electric vehicles have zero emissions. The improvement in air quality
provided by these cars is especially pronounced in those countries, such as
France, where most electricity is provided by nuclear or hydro-electric
power plants;
• The ability to recharge electric vehicles at home precludes the need to stop
at filling stations;
• Preliminary indications are that electric vehicles will be more reliable and
require less maintenance than internal combustion vehicles because the
engine will be simpler to maintain. Oil and spark plugs, for example, do
not need to be changed in an electric car; and
• Electric vehicles are quiet and can therefore be used in situations, such as
a park setting, where conventional vehicles would be too loud. Dr. Nichols
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did note that the quiet operation of the motor could pose a safety problem
because pedestrians cannot hear the car coming.
Conversely, there are also some disadvantages to the use of electric vehicles:
• The reduced driving range of electric-powered cars means that electric
vehicles will never provide an equal replacement for the traditional family
car;
• The high cost and short lifetime of electric vehicle batteries make electric
vehicles more expensive to operate than conventional gasoline vehicles.
Considering electricity alone, electric vehicles are very inexpensive. But
when the cost of replacing batteries is factored in, the cost per mile of
operating an electric vehicle is higher than the cost per mile of operating a
gasoline engine. The cost of running an electric car in the U.S. would be
equivalent to the cost of running a 30 mpg car on $3.75 per gallon gasoline.
This gap is especially pronounced in the U.S., where gasoline prices are
lower than in European countries: In the U.S., electric cars cost 14 cents a
mile to run, compared with four cents a mile for conventional vehicles,
while in France, the cost is about 15 cents a mile for both.
• Though electric vehicles themselves do not produce emissions, the power
plants which supply the electricity to the vehicles do, at least in the U.S.
These secondary emissions must be considered, but there does appear to be
a net benefit.
Ford is examining a number of consumer issues. The initial cost of electric vehicles
will be very high, though the price will eventually decrease as the technology is refined
and volumes increase. This high initial cost, coupled with the high battery cost and
limited range of the vehicles will make electric cars a hard item for Ford to sell. The
consumer, in effect, is being asked to pay more for less.
The primary obstacle that must be overcome in electric vehicle development is the
development of better battery technology. There is no clear indication as to what the
battery of the future will be. Ford is currently using sodium sulfur batteries in its electric
vehicle program. Though these batteries have four times the energy of a conventional
lead/acid battery, a battery source with twice the energy as the sodium sulfur battery may
be needed. To this end, the U.S. Advanced Battery Consortium (USABC) was formed in
January 1991. USABC is a business partnership among Ford, General Motors, and
Chrysler with participation by EPR1 and battery development companies throughout the
world. The U.S. Department of Energy has matched (dollar for dollar) industry funds
given to USABC. By the end of 1995, over $260 million will be spent by USABC on
advanced battery technologies.
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Ford currently is operating an electric vehicle demonstration program. Eighty-two
ECOSTAR vans, a modified version of Ford's European Escort van, are being delivered to
customers on a 30-month lease, after which time they will be returned to Ford for
evaluation. The purpose of the demonstration is to confirm the technology, develop
vehicle expertise, and gain information on customer satisfaction.
The ECOSTAR has exceeded Ford's targets in several performance areas. The
ECOSTAR has a range of more than 100 miles per day, surpassing the initial 100 mile
target; is able to accelerate from 0-50 in 12 seconds, bettering the target time by 2 seconds;
and is able to carry a 900 pound payload, compared to the 700 pound target. The recharge
time of seven hours, however, is longer than the five to six hour target.
The van has a single speed integrated transmission and a top speed of 70 mph.
The ECOSTAR acceleration is also roughly similar to that of the gasoline powered Escort;
the performance of the electric van is slightly better in the 0-50 mph range, but slightly
worse in the 50-70 miles-per-hour range. Air conditioning and heating systems are
available, though both cut down severely on the range of the vehicle in extreme weather
conditions; using the air conditioning in a temperature of 105 degrees cuts the range by
a third, while using the heater at zero degrees reduces the range by 40 percent.
The development of a market for electric-powered cars will hinge on the
development of greater advantages for the cars to outweigh the several disadvantages. In
the end, consumer satisfaction must be the primary goal because all the legislation in the
world will not support an electric vehicle program unless the customer is satisfied
Paul Gifford, Ph.D., Director of Product Development, Energy Conversion
Devices, Ovonic Battery Company, Inc., described his company's efforts to
develop a high powered battery based on a nickel metal hydride power source.
Dr. Gifford began by listing seven areas that must be maximized in the design
of batteries used to power electric vehicles:
• specific energy content and electrical energy density, which relate to how
far a vehicle can travel;
• power, which determines how fast a car will be able to accelerate;
• low temperature performance, so a car may perform well in inclimate
weather;
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• cycle life, which determines how long a battery will last before it must be
replaced;
• abuse resistance, which is important because vehicle drive trains are
pushing at high ranges — up to 320 volt systems;
• rapid recharge capability; and
• environmental compatibility. Batteries should not contain heavy metals,
such as cadmium and lead, which could ultimately result in downstream
pollution.
The recognized need to develop improved batteries led to the creation of USABC.
In May 1992, USABC granted Energy Conversion Devices, Inc. the first contract to develop
a nickel metal hydride battery, to be produced by its Ovonic Battery Company subsidiary.
Ovonic's development is proceeding well, and the company has remained ahead of
schedule in its deliverables.
Some of the technical specifications of the nickel metal hydride battery are:
• high energy density (80 watt hours per kg, 240 watt hours per Ib versus
34-36 watt hours per kg for conventional lead/acid batteries);
• high power (greater than 200 watts per kg, even at high depths of
discharge);
• long life (1000 cycles at 100 percent depth of discharge);
• wide operating temperature (-20°C to +60°C);
• quick charge capability (60 percent in 15 minutes);
• totally sealed/maintenance free unlike some other batteries which, for
example, may require watering systems;
• tolerance to overcharge and over-discharge; and
• environmental acceptability. The nickel metal hydride batteries do not
contain any heavy metals and have been independently certified as passing
EPA's pollution standards.
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Page 89
The following table compares the performance of a vehicle running on a
conventional battery versus the Ovonic battery:
Range
Top speed
Acceleration
Lifetime
Recharge time
ADVANCED LEAD/ACID BATTERY
120 miles
100 mph
0-60 mph, 8 seconds
20,000 miles
2 hours
OVONIC BATTERY
greater than 250 miles
100 mph
0-60 mph, less than 8 seconds
100,000+ miles
60 percent in 15 minutes
100 percent in 1 hour
The nickel metal hydride battery does not need to be replaced — the battery would last
the lifetime of the car.
Ovonic is located in Troy, Michigan and employs 80 people in three facilities. It is
a fully integrated battery company, manufacturing its own electrodes, cells, and hydride
materials (metal alloys which store hydrogen as a solid and represent the heart of the
battery technology). Ovonic has produced batteries in a wide range of shapes and sizes
— from a 30 amp per hour cell to a 250 amp per hour cell. These cells have been
configured into battery modules and full electric vehicle battery packs.
Questions and Answers
L We have heard different views on the progress of battery technology. Dr.
f^ I Nichols seems more pessimistic than Dr. Gifford. How do you account for the
• I difference in your assessments?
Dr. Gifford stated that while work was left to be done in battery development, significant
progress has been made. Dr. Gifford stated that the results presented are actual
experimental results demonstrated with existing cell and battery hardware. He also
pointed out that the nickel metal hydride battery was currently being successfully tested
in a mini van in Troy, Michigan.
Dr. Nichols characterized the differences between her and Dr. Gifford as "where we are
today versus where we want to go." She stated that Dr. Gifford was discussing potential
battery development, and that the batteries currently being tested do not quite match up
to the projected technical specifications. She also said that it was too soon to comment
whether Dr. Gifford was being overly optimistic.
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Does Ford make station vehicles?
*>
• I Dr. Nichols responded that it is too soon to tell whether Ford will enter into the
T"^^J station car market. While Ford has not traditionally been in that business, the
status of electric vehicle technology makes the nature of the market uncertain.
Can the sodium sulfate battery be disposed of safely?
Dr. Nichols said that the USABC contract with the battery developers requires
them to develop a means to recycle any battery that is produced.
What is the cost of the PEM for transit operators?
*
• I Mr. Hossepian responded that the current cost is greater than $2,000 per kW, and
^•^J may be as high as $8,000 per kW. To make the technology economically viable,
however, the cost must be in the $20-$30 per kW range.
What are the logistics of station cars?
Dr. Bernard responded that ownership will rest in a third party — not the person
who uses the car, and not the transit agency. The car would be rented to a
customer who would keep it until it was needed for the next transit trip, perhaps using
it during the day at work. While the station cars might not ever be financially viable, they
will be economically viable, because the environmental benefits will outweigh the costs of
the program. The station car might replace the third car in a three car household, thus
providing benefits. The station cars currently use lead/acid batteries, and NSCA expects
to use such batteries until at least 2000, because they are the only affordable battery
systems available.
Have you considered using solar power for electric vehicles?
Dr. Bernard responded that not enough energy can be collected to power cars
using only solar power. Mr. Hossepian agreed, and stated that sufficient power
density simply does not exist with a solar energy source. Mr. Gifford pointed out that
solar power cannot stand on its own as an energy source, but with the right technology,
solar power could be used for vehicle range extension.
Dr. Nichols explained that The ECOSTAR van uses a solar powered fan to blow out hot
air while the van is idle, to prevent drain on the air conditioning when the van is started.
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Clean Air Marketplace 1993 Page 91
a
The comparison in gas prices between the U.S. and other countries that Dr.
Nichols presented is misleading because the gas taxes between those countries
vary so much. If more electric cars are used, will not tax revenue be lost?
Dr. Nichols agreed with the questioner's point, but speculated that if many electric cars
were in use and there was a resulting reduction in fuel tax collected, then some sort of tax
would probably be imposed on batteries or alternative fuels to make up the difference.
a
Are venture capital markets active in the development of alternative vehicle
technologies?
Mr. Gifford indicated that venture capitalists are probably waiting to see what
the market for batteries will be. We do not expect significant involvement on their part
until the technologies are developed further.
Dr. Nichols responded that because of this trend, government agencies would probably
remain the prime source of funding for alternative vehicle technologies. Because the
legislative mandates of the U.S. government are driving electric vehicles into the
marketplace at a faster rate than they would otherwise be introduced, the government
recognizes that they have a responsibility to help manufacturers develop such vehicles.
Mr. Hossepian added that venture capital companies are very active in the development
of fuel cells.
What has been the effect of the President's clean air initiative on the industry?
Dr. Nichols responded that the initiative is not close to being in final form and
no one in industry knows what the final initiative will contain,
// we put "ambassador vehicle" cars on the road that have not been safety
f} I certified, as Mr. Bernard implied we might, are not we just hurting ourselves?
a
Dr. Bernard stated that the NSCA does not support the production of non-safety
certified vehicles, but such vehicles may be produced in any case. Mr. Bernard added that
his association depends on cottage industries because Original Equipment Manufacturers
(OEM) are not willing to work in a small market niche, such as in station vehicles.
How does the intensity of U.S. efforts to produce electric vehicles compare to
C}~ I efforts in the rest of the world?
a
Dr. Nichols responded that U.S. technology is as good as technology anywhere
and the U.S. could be at the forefront of the electric vehicle market if it could bring that
technology into the marketplace at an affordable price.
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Mr. Gifford explained that there is a high visibility of effort in developing battery
technology in the U.S., largely due to the efforts of USABC. At the same time, while the
U.S. may be a leader today in the development of advanced battery technology,
competition abroad will be a problem in the future. The level of activity in Europe and
Japan is very intense. In Europe, the size of the electric vehicle market is potentially larger
than it is in the U.S., and the Japanese and Korean auto companies are pursuing the
development of technology with great vigor, though they do so with a lower public profile
than the U.S.
Mr. Hossepian stated that the U.S. is out spent by two and one-half to one by the
European community, and by five to one by the Japanese in fuel cell technologies. Most
of the money in Europe and Japan goes toward demonstration programs for relatively
poor technology, while some U.S. money is being spent on solving technical problems,
which makes the technology viable. In sum, the U.S. is ahead of Europe and Japan from
a technical standpoint, but it is being out spent at an alarming rate.
Is Ford using fuel cells?
Dr. Nichols responded that the development of fuel cells is still in the research
stage, and is handled through a different department.
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Page 93
Session 4 — Panel A
Electric Power Services (including DSM)
September 8, 1993
4:15 p.m. -6:15 p.m.
Moderator:
Panelists:
Renee Rico
Jeffrey VanSanf
William Hederman
Carlton Bartels
John Henry
Introduction
Renee Rico, Chief, Market Innovations Branch, Acid Rain Division, U.S. EPA,
discussed how the electric power industry is at a crossroads, faced with mandates to
consider the environment while providing least cost service. The opportunities in the
Clean Air Act (CAA) go well beyond the traditional command-and-control technologies.
Opportunities for compliance with a variety of 1990 Clean Air Act Amendments (CAAA)
requirements, include fuel choice, energy efficiency and demand side management (DSM).
While the acid rain program contains probably the best known requirement facing utilities,
they also have to comply with Title I ambient air quality standards requirements, including
those for ozone. The Energy Policy Act builds on the issues the CAAA began to address,
such as how utilities consider their planning and delivery of services, Interstate issues, least
cost planning for meeting energy needs, as well as accounting for lost revenue due to DSM
and conservation. Greenhouse gases is another issue that will be discussed.
Presentations
Jeffrey VanSant, Vice President and Director of Fuel Supply, New England
Power Company, New England Electric System (NEES), discussed his
company's efforts to reduce emissions based on least cost strategies and
increased energy conservation. NEES has one of the nation's largest DSM
programs. A critical part of NEES' commitment to reduce the environmental
impacts of electric service by 50 percent by the year 2000 is its DSM program,
one of the largest in the nation.
NEES's retail electric companies serve about half of Massachusetts, most of Rhode
Island, and part of New Hampshire. It also owns New England Power Company, a
wholesale power company.
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History of DSM at NEES
NEBS' commitment to conservation and load management was first articulated in
1979 its long range plan, the first in a series of company planning initiatives. The
commitment was stepped up in 1985 with a second plan in which NEES committed itself
to a balanced, least cost planning process. In 1989, in cooperation with the utility
commissions in Rhode Island, Massachusetts, and New Hampshire, and also with the
Conservation Law Foundation, the NEES retail companies pioneered the development of
regulatory mechanisms that provide utilities with the opportunity to earn a return on their
conservation and load management investments. The objectives of the mechanisms were:
• To guarantee value to the customer
• To share the savings fairly
• To ensure the company is paid only for performance
In the third NEES plan, announced in 1991, NEES reaffirmed its commitment to
conservation as part of an overall strategy with the following objectives:
• To reduce the impact of emissions by 45 percent in the next decade
• To cause no real increase in electricity rates in the next decade
• To combine supply and demand side strategies to meet these goals
DSM is expected to contribute about 10 percent of the total emissions reductions.
Savings, Spending, and Shareholder Value
Since 1979 NEES has spent $341 million on DSM. DSM spending currently
amounts to five percent of revenue, making NEES's DSM program one of the largest in the
country as a percentage of revenue. The incentive measures have been a success. In 1990,
before tax incentives earned by the company were $4.3 million; in 1991, they were $7.3
million, and in 1992, $10.5 million. NEES expects to save 600,000 megawatt-hours over the
period 1990 to the end of 1993 as a result of the DSM programs installed.
The key here is not just the real savings achieved, but the development with the
Conservation Law Foundation of highly advanced evaluation techniques for measuring
energy saved and continuous monitoring. Since 1987, 3,000 tons of NOX emissions, 7,000
tons of SO2 emissions, and two million tons of CO2 emissions have been reduced as a
result of DSM programs. The reductions are not huge, but they are real and quantifiable.
DSM is an ideal pump primer for emissions trading, and emissions trading can provide
an additional incentive to undertake DSM.
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Other Emissions Reduction Initiatives
NEES is involved in several innovative projects, the objectives of which are to:
• Push the edge on technology, both in pollution control and the efficient
creation and use of energy
• Gain knowledge about technology to help tackle environmental strategies
in the future
• Participate in the regulatory process
• Establish the value of offsets
• Ensure low cost access to offsets
Selective non-catalytic reduction
Selective non-catalytic reduction is a chemical process for reducing NOX emissions.
Urea is injected into a boiler where it combines with NOX to yield elemental nitrogen and
water. The project at Salem Harbor, a cooperative arrangement with the Massachusetts
Department of Environmental Protection, is a good example of pushing the technological
edge. This is the first successful commercial application of selective non-catalytic reduction
in a coal-fired boiler, and it has cut NOX reductions by almost 50 percent.
Renewable Power
In 1991 NEES issued a "green" request for proposal — a solicitation for proposals
for renewable resources. As a result, NEES recently announced that it will purchase 36
megawatts of electricity from seven renewable plants, including New England's first wind
power project. The cost of power for most of these projects is less than the cost of power
produced by modern fossil fuel plants. The technologies and processes employed by these
plants include state-of-the-art wind turbines, combustion of methane produced at landfills,
and municipal solid waste combustion. This competitive solicitation was the first of its
kind in the United States.
Coalbed Methane
NEES has also participated in a pilot program to demonstrate the feasibility and
cost of capturing coalbed methane at two sites in West Virginia and Pennsylvania. The
goals were to collect scientific data demonstrating the potential cost of coalbed methane
offsets, to help establish the value and verifiability of coalbed methane offsets, and to
secure access to sources of offsets. In the process NEES has developed a valuable data
base. The results of the program are an $11 per ton CO2 equivalent cost, factoring in
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expected methane flow rates, the price at which it would be sold into a pipeline, and
associated development costs. NEES expects to continue its pilot projects.
International Greenhouse Gas Reduction
NEES has also participated in a reduced impact logging project in Malaysia. This
pilot project tests new methods of harvesting that reduce the impact on the forest. It
involves better planning and minimizing destruction of trees not targeted for harvesting.
An environmental audit committee, consisting of an expert from the University of Florida
and the Rainforest Alliance, has been established to measure the results. The first
harvesting is underway using the reduced impact logging techniques. Initial results
appear to confirm that CO2 will be offset at a cost of $l-$2 per ton.
NOX Trading
NEES is pursuing NOX trading on two fronts. First, it is working closely with
NESCAUM (North East States for Coordinated Air Use Management) to develop protocols
for quantifying NOX reductions, in order to create and document a NOX reduction credit.
The next step will be to address the banking and trading of credits. Second, NEES is
actively pursuing trading partners in Massachusetts and Rhode Island to help prime the
trading system.
The CAAA, with their expansion of market-based emission credit trading to more
localities and more affected sources, were a turning point in emissions regulation,
providing market-based options to meet emissions reduction goals. Market-based
approaches have many advantages over traditional command and control approaches, and
should be adopted for other emissions. Market-based approaches result in least cost
compliance, and encourage expenditures beyond what would be done under a command
and control environment. Market-based systems encourage industry through competition
and incentives to stimulate technology development. They can create economic
development opportunities by:
• Fostering technology development
• Providing incentives to use energy more efficiently
• Reducing the costs for everyone
• Making offsets available to new industry
NEES plans to offer offsets as an inducement to industries that choose to locate in
its service territory. A good example of the economic development opportunities are the
thousands of jobs created by NEES' DSM program. In conclusion, with a market based
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system, adverse environmental impacts can be reduced in a cost effective manner,
development opportunities can be created, and shareholder value will increase.
William Hederman, Managing Director, RJ. Rudden Associates, Inc., discussed
integrating natural gas and electric utility resource planning. He chose to
discuss this topic because of the uninformed opposition of utilities to fuel
substitution he has encountered in litigation at the state commission level. In
many cases integrating natural gas and utility DSM programs will result in
major efficiency gains that benefit all. DSM is important to gas and electric
utilities for very different reasons.
It is important to keep in mind the differences between gas and electric utilities.
• Vertical integration: Gas utilities are much less vertically integrated than
electric utilities.
• Planning horizons: Electric utilities are comfortable planning 20 or 30 years
ahead or considering the life of a power plant. A gas company often plans
only 20 or 30 months into the future. It does not take more than a year or
a year and a half to put new gas capacity in place, with the exception of
long haul pipelines. Local gas systems therefore have a different mentality
than electric utilities.
• Outages: A big part of load management on the gas side is planning for
interruptions of major industrial customers. Electric utilities have more
information about their load and market than gas suppliers do. When the
gas and electric combination utilities start dealing with DSM on the gas
side, they typically bring some of their electric market and gas market
people together to talk. The electric side has information on penetration
rates and age of appliances. The gas side does not and may not collect this
type of information. Because of the mistaken belief that the U.S. was
running out of gas supplies, regulators have often prohibited gas utilities
from making expenditures for market research or marketing. Where
marketing and market research are allowed, the exclusion of costs from
revenue requirements consitutes a major negative factor.
• Implications of DSM: On the electric side DSM tends to mean less
electricity. On the gas side it tends to mean more gas. That appears to
have created serious resentment on the part of the electric utility.
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Despite the differences there are opportunities to improve air quality with natural
gas.
• Cooling: One major opportunity is gas cooling. One of the advantages of
using gas as part of electric DSM is its persistence (i.e., ability to stay in
place). Gas equipment, unlike a high efficiency bulb, will continue to
produce electricity savings far into the future. There is little potential for
electricity use at the site to increase over time once gas cooling equipment
is in place.
• Water heating: Another possibility is hot water supply, but it is more
controversial. Going to a high efficiency electric water heater may lock out
an option that is even more efficient, such as gas. Officials at EPA have
talked informally about supporting gas over electrical hot water at the state
level, but have not done so yet.
What utilities need are not directives from EPA, but objective, expert information
about externalities and how to take them into account when considering gas and electric
power. An individual utility does not have the expertise, the data, or the economic
resources to develop definitive externality values. The more perceptive state regulators
are looking to come up with some way to increase efficiency in their regions. They are
therefore interested in more efficient use of the gas and electric utilities' infrastructure.
Between one-fourth and one-third of states have or are considering gas-electricity fuel
substitution requirements.
Looking at gas and electricity demand over a given year shows that even in very
different climates, excess seasonal capacity in gas and electricity are complementary. The
highest demand for gas is during the winter when gas is used to heat homes. The highest
demand for electricity is in the summer when it is used to power air conditioners. Gas
suppliers and utilities are forced to build capacity for these peak periods that then goes
unused much of the rest of the year. Gas cooling systems can increase use in a low-use
season. Using the seasonal spare capacity in both systems will delay the need to build
more power plants. There is considerable potential for synergy. That economic gain need
not end up solely in the hands of the gas company or the electric company. The
breakthrough of DSM is that incentives can be offered in such a way that all parties
benefit.
The challenge is to get over the almost emotional rejection of the idea, just because
gas and electricity are competitors. Competition should be maintained. To quote a friend
from the Hill — the idea of putting two monopolies in a room and asking them to
cooperate does not give people "warm fuzzies." Fuel substitution needs to take place in
such a way that competition is preserved, but the economic advantages of offering cheaper
service as a result of greater efficiency should not be overlooked. Because fuel substitution
is a more efficient use of resources, it should give those regions that implement it a
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Clean Air Marketplace 1993 Page 99
competitive advantage in power costs at the national level. This is beginning to occur in
a few regions where there are gas and electric combination utilities, such as Consolidated
Edison in New York and Baltimore Gas and Electric.
The best way to overcome competitor and regulator distrust is a strategy first used
with DSM. A technical working group including the electric utilities, gas suppliers, and
regulators should be set up to start finding common ground and building trust. They can
begin with many technical issues such as how to establish avoided costs, externality
values, discount rates, and incremental costs. The group needs to decide which building
simulation models are acceptable and how to run base and post-DSM cases. Then the
debate can focus on meaningful issues. Many DSM consultants and technicians are
missing a strategic opportunity here. They seem to think that the top executives want to
think narrowly on gas-electricity fuel substitution. There is a revolution in efficiency going
on. Time has shown that those who choose to stick their head in the sand tend to face
premature retirement.
Carlton Battels, Director, Environmental Brokerage Services, Cantor Fitzgerald,
discussed the SO2 allowance trading system created by Title IV of the 1990
CAAA and Regional Clean Air Incentives Market (RECLAIM) in the South
Coast Air Quality Management District (SCAQMD) in Los Angeles, California.
The SO2 allowance trading system is one of the most innovative parts of the
1990 CAAA. The Act sets a maximum level of emissions, and the market
decides the least cost method of reaching this level. This will result in great efficiencies
and lower costs in reducing SO2 and acid rain. The market acts to drive innovation in the
emission reduction system. Allowing trading in allowances has reduced the price of
eliminating SO2 from $1,200 to $200 per ton.
Cantor Fitzgerald is trying to formalize the market by establishing a centralized
marketplace which brings buyers, sellers and traders together. By establishing that
recognize that all allowances are the same, greater efficiency in trading can be achieved.
Currently, emissions allowances are sold through detailed and complex one-to-one
contracts. This should not be necessary. By creating trading rules, a more efficient, liquid,
and low cost commodity market can be created. Cantor Fitzgerald is in the process of
establishing a screen based trading system, similar to the one used for U.S. government
bonds, to create a centralized marketplace from decentralized information. It will provide
a place to turn when one needs or has allowances, a place where the price is set by the
entire market.
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Cantor Fitzgerald needs to tailor the market to fit the needs of the industry. In
particular, Cantor Fitzgerald has created a transaction, the forward-looking contract, that
is based on the way utilities buy and sell power and fuel. The forward-looking contract
is a purchase of several years supply at a time with a set delivery schedule and payment.
This with the needs of today's industry.
Cantor Fitzgerald will be running a screen-based trading system in the California
Regional Clean Air Incentives Market (RECLAIM) starting in January and, is trying to set
up such a program in the acid rain allowances market.
The advantages of a centralized marketplace are:
• Price discovery, resulting from many transactions occurring at one time in
one place. A risk adverse group, such as the electric utility, is especially
reluctant to make price commitments when there is price uncertainty.
Cantor's system posts sales and price, but keeps names secret.
• Better deals, resulting from the availability of many buyers and sellers. A
centralized market makes it easy to combine the offers of several buyers or
sellers to match the exact quantity that you wish to buy or sell. In a
decentralized market, the cost of finding the best deal is much more
expensive.
• Standardized agreements, resulting in quicker, simpler and cheaper
transactions. Everything is done with standardized agreements, signed
beforehand. Specialized contracts are rarely necessary. The broker arranges
and supervises the exchange of money and emission credits. The contract
is set up in such a way that today's ratepayers do not pay for allowances
for tomorrow's ratepayers. There are also tax advantages to spreading the
sale over several years. In sum, the contract fits into cost regulation today,
and it is consistent with the way rates are set.
The allowance market by law is open to everyone, and there is a role for financial
intermediaries because of the rigid way utilities look at pricing. Intermediaries can smooth
out cost flows.
Cantor Fitzgerald will be running a market-clearing, computer-assisted auction in
California, with the aim of bringing order into an ill defined market with minimum risk
to the participants. RECLAIM, a trading system for SO2 and NOX in SCAQMD, will come
into existence in December. Emitters, including utilities, will then be able to trade
emissions allowances within the district. At a given moment every person faces the same
prices. Everyone either gets a price they are happy with or they do not make a trade. The
computer calculates the price over time, making it possible to weigh the costs of installing
new emissions control equipment with the value of the product, emissions credits.
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John B. Henry II, President, Clean Air Capital Markets (CACM), discussed the
SO2 allowance market from another perspective. CACM, an environmental
investment bank, has structured the majority of private placement (one-to-one)
SO2 transactions, totalling more than 200,000 allowances. It currently has eight
full-time professional employees and continues to grow. Many of the deals are
not made public because of concerns about negative publicity and competitive
pressures, contributing to the lack of information mentioned by Mr. Bartels. Deals that
CACM have been involved with are:
• A deal between Wisconsin Power and Light and the Tennessee Valley
Authority (TVA). The public reaction to the first allowance transaction
showed how important politics and public perception are in this market.
• ALCOA, the world's largest aluminum manufacturer, has undergone some
significant fuel switching at a plant in Indiana. The emissions allowances
were sold to Ohio Edison.
• NEES is compensating generation for reduced utilization deal with Ohio
Edison now awaiting EPA approval.
• Illinois Power avoided the major expense of installing scrubbers by
purchasing a bundle of allowance streams from several sources that CACM
had put together.
Increasingly, deals are not announced, making it difficult to obtain price information. The
information that is available is often unreliable. In addition, utilities have only limited
staff working on allowances, and allowances have not been a major priority. Full time
specialists are needed to close deals.
CACM acts as a confidential advisor/ advocate and does not take capital positions
in its trades. CACM is paid only if an allowance deal is concluded. Its job is to structure
deals for its clients. The allowance trading market is driven by prudence rather than
greed, and the public relations aspects are highly important. Rate-making is a large part
of any deal as well, because utilities are so highly regulated. Who pays and who benefits,
the rate payers or the shareholders, must be determined in each case. There are also
political limitations on the deals that can be done, particularly ones between distant areas.
Utilities are the major players in the allowance market in which CACM operates.
The utility industry represents the largest accumulation of capital in the economy, as well
as the most regulated industry in the economy. Utilities are required to exercise
compliance planning, which is what shapes the market. Compliance plans traditionally
have consisted of one or a combination of two options:
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(1) The scrubber, which is a huge capital investment, paid for over 25 to 30
years, and
(2) Fuel switching to low sulfur coal or gas, which involves a long term
contract of 10 to 15 years.
Both of these compliance options can be viewed as the utility purchasing emissions
allowances from its own system. These purchases are called "on-system" purchases while
allowances bought from other utilities or sources in the emissions allowances market are
"off-system" purchases. Utilities make commitments to clean up years in advance, and the
methods they traditionally choose involve long-term streams of reductions, rather than
annual reductions. This shapes the allowance market. Every utility is set up to reduce
emissions through "on-system" measures. Every deal so far has been a major policy
decision, requiring the participation of the CEO and the chairman of the board. No utility
is yet willing to look at "off-system" compliance in a fundamentally different way than
"on-system" compliance, meaning that utilities are not interested in short term or small
allowance trades.
A utility that is buying "off-system" allowances is looking for a secure supply at
reasonable prices. CACM believes the solution is to lock in long term streams through
private placement.
How do you overcome customer resistance to "off-system" transactions? CACM's
experience is that requests for proposals, bulletin boards and auctions do not meet market
needs. A centralized market will not solve the needs of utilities. CACM has found that
the main obstacle to off-system compliance is that utilities are struggling with least-cost
versus least-risk. The regulatory structure of who pays, who benefits, and who takes on
risk makes the market very complicated. Public utility commissions need to learn more
about the allowance market, but cannot be expected to give utilities a blank check and
rubber stamp every allowance deal. Those advocating allowance transactions need to
recognize that they are competing with suppliers of on-system emissions reductions, such
as low sulfur coal suppliers and scrubber manufacturers. The price of allowances must
be competitive with the scrubbers and fuel switching, which are sold in customized
contracts in a decentralized marketplace.
The CAAA SO2 emissions reduction plan has two phases. Phase I, which ends in
1999, requires a 3.5 million ton annual reduction in SO2 emissions, a fairly easy standard.
Most of this has been met with fuel switching, in many cases at negative or close to zero
cost. Scrubbers supply much of the remaining reductions. Thus, in Phase I, the price of
allowances has been very low. Phase II, starting in 2000, requires an annual reduction of
more than 8 million tons. At least half of this will be met through fuel switching, with the
rest coming from scrubbers and allowance purchases. According to Mr. Henry,
shareholders will not willingly pay for scrubbers, and utility management are preparing
to go before their regulatory boards to get permission to have rate payers pick up the cost.
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There will be a two-tiered market for allowances — a forward market, which
CACM is involved with today, will be joined in the future by a short term allowance
market. The window for forward high-value Phase II allowance deals is 1994-1996. As
seen in the EPA auction, the short term price of an allowance is considerably lower and
after 2010 will fall as the uncertainty associated with the transition to lower emissions is
eliminated.
Questions and Answers
Is the centralized marketplace described by Mr. Bartels a complement or a
substitute for the one-to-one private placement transactions that Mr, Henry has
been working on?
Mr. Bartels explained that there is significant overlap, with both systems offering streams
of allowances, but standardized trading cannot take over everything. Private placement
trades offer a lot more hand holding. As the market develops, there will be a transition.
Originally, power exchange involved as much effort as emissions trading today, but now
power exchange is commonplace and top management is not involved. Cantor also sees
a two tier market. There is definitely a rivalry between the centralized marketplace and
private placement firms.
Mr. Henry commented that utilities lack confidence in how their regulatory commissions
will treat their allowance decisions. In theory, allowances could be traded as a
standardized commodity, but that is not what is going on. Given the window of
opportunity for Phase II, which will close in just a few years due to long-term planning,
large deals need to be made if they are to be made at all. CACM is not focused on EPA
developing an annual, short-term market. From the seller's point of view, EPA's annual
forced sale of 2.8 percent of a utility's paper one-year at a time with 100 percent cash up
front is a disaster. Utilities do not want this product because it doesn't meet their need
for scarcity of supply. However, the auction is in the law, and will continue to be held.
Ms. Rico added that the irony is that Congress did not think the auction through because
there is no floor price set. There will always be a market for an allowance at close to zero
cost.
What are examples of rate payers taking the risk and of shareholders taking the
risk?
Mr. Henry answered that in the Wisconsin Power and Light deal, the rate payers
paid for the clean up and got the proceeds from the sale. The shareholders of Ohio Edison
paid for the ALCOA allowances^ At Pacific Corp., the rate payer paid for the clean up,
and the proceeds will go back to the rate payer.
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Mr. Henry added that there is no evidence that CEOs are going to put shareholder money
at risk to create additional allowances for the sale. Mr. Bartels commented that utilities
have not awakened to the fact they are all in the market, whether they have made a trade
or not. They are also all at risk, rate payers and shareholders alike, whether they have
made a trade or not. There is no way to get a least cost compliance plan without at least
considering trading. Utilities are going to be asked about their allowance management
plan. Before a utility can say that the technology solution is the most cost effective one,
it must examine allowance trading options. If they do not do it now, they may be held
accountable for that oversight later.
Mr. Henry added that there is sometimes a difference between regulatory theory and
regulatory reality, which can lead to higher cost, rate based option being preferred to a
lower cost option that puts the shareholders at risk.
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A Maryland emitter was interested in buying NOX allowances and selling CO2
reductions, and wanted advice on doing so.
Mr. VanSant remarked that NEES has NOX allowances to sell. However, the
political obstacles to trading allowances over such a distance would be difficult to
overcome. NESCAUM is currently running a model trade program, which NEES is
participating in. At the moment they are just going through the protocols of creating and
certifying NOX emission reductions. However, Maryland is part of the Mid-Atlantic
Region Air Management Association (MARAMA), rather than NESCAUM. In terms of
selling CO2, NEES is a competitor.
Is it true that there is no official system for CO2 now?
Mr. VanSant stated that at the moment, greenhouse gases such as CO2 are not
part of a trading system. Several European utilities have expressed interest in
buying greenhouse gas emission allowances. First, market structures for creating and
certifying credits need to be developed.
How can we get regulators to look at economic alternatives such as trading
allowances fully?
Mr. Hederman suggested that educating the regulators is the answer. Working
with the appropriate committees can lead to progress. A lot of effort is going into putting
together guidebooks with model regulations. Lawrence Berkeley Labs has put one
together on gas. Mr. VanSant pointed out that since 1985, NEES has been pursuing gas-
electric deals by which NEES would use gas in the summer, the off-peak for gas use.
NEES has made a commitment to gas, and its gas needs are growing, but it could never
get a gas company to play ball. As a result NEES has built its own excess capacity. Order
636, which makes gas companies accountable for the capacity they pay for, will make fuel
switching deals possible. When the gas companies are paying for pipeline that they are
Session 4A — Electric Power Services
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Clean Air Marketplace 1993 Page 105
not using, and the state commissions hold them accountable, they will be forced to lay it
off to the highest valued market. Examples of this include New England Electric Utility,
Ocean State, and a gas company in Tennessee.
The questioner noted that allowances that are traded from one utility to another are
quickly taken off the market, and only those that are traded to third parties act as financial
instruments. Mr. Bartels responded that the market is dominated by users, who view
allowances as operational assets rather than as trading vehicles. However, third parties
can reduce the risk and cost incurred by the end user in the market. Although the market
is being designed for the utility market, the participation of the investment community will
be needed to defray risk and increase liquidity. The questioner clarified that the effect of
this type of trading would be two classes of allowances: one set that was traded and one
set that was kept by utilities. Mr. Bartels contended that utilities do not have a different
"class" of allowance, rather they are consuming the allowances that they keep. An
allowance is a commodity and also a future.
a
What is the effect of advocacy groups further reducing the emissions allowances
available by buying and retiring them?
Mr. Bartels stated that there have been a few cases and several groups that are
interested. However, the market has $1.8 billion in capital. Even at today's low prices,
it would take all the money of all the environmental groups in the country to make a
noticeable dent in emissions.
What are the chances of a CO2 market being included in a CAA amendment?
Mr. Bartels answered that the Montreal Protocol includes a greenhouse gas
market as an option. A bill to create such a market will be introduced in the
near future. Ms. Rico pointed out that there is discussion of'how the U.S. will meet its
obligation to stabilize greenhouse gas emissions at 1990 levels. The administration would
prefer to use voluntary reduction programs. A market implies that reductions are
mandatory. In light of uncertainty in many countries about reduction goals and the way
they will be reached, there is a reluctance to discuss trading in the absence of knowing
what the goal is. There are concerns about how to measure reductions and monitor
international trades. A greenhouse gas market is not impossible, but there are some
practical steps to getting a program up and running in terms of the infrastructure required.
Session 4A — Electric Power Services
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Session 4A — Electric Power Services
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Page 107
Session 4 — Panel B
Stationary Source NOX Control Approaches
(Including Fuel Switching)
September 8, 1993
4:15 p.m. - 6:15 p.m.
Moderator:
Panelists:
Joseph A. Belanger
Vincent M. Albanese
Joel Bluestein
Mitchell B. Cohen
Dr. Michael J. Wax
Introduction
Joseph A. Belanger, Director of Planning and Standards, Bureau of Air
Management, Connecticut Department of Environmental Protection, noted that NOX
control approaches are an important subject because air quality conditions are so bad that
NOX control beyond RACT (reasonably attainable control technologies) will be needed.
Flexibility will be the key to a rational NOX control policy.
Presentations
Vincent M. Albanese is Vice President for External Affairs at NALCO Fuel
Tech, which has intellectual property rights to NOX control patents. NALCO
Fuel Tech's marketing structure is an international one, with offices in England
and Germany; they have recently expanded to Taiwan and Korea. NALCO's
strategy is to manage the technology of its licensees by establishing marketing
partnerships or strategic alliance setups.
Mr. Albanese focused on the specific control technique of selective non-catalytic
reduction (SNCR). SNCR involves spraying urea into a specific temperature zone of the
flue gas in a boiler or other equipment. The NOX components of flue gas are converted
to nitrogen and water in the resulting reaction.
NOX reduction in a power generation boiler is a low capital pollution control
device; operation and management of the system comprise most of the expense. This
technology can produce a 40-70 percent reduction of NOX, although the particular
reduction is dependent on site-specific factors. The type of process, for instance, renders
the pollution reduction more or less effective; a range of 20-95 percent has been observed
over processes ranging from gas burners to solid waste incinerators.
Session 4B — Stationary Source NO Control Approaches
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Page 108 Clean Air Marketplace 1993
Capital costs for SNCR range from $5-$20 per kilowatt. The Annualized Busbar
Cost is 0.5-2.5 mils per kilowatt-hour (one mil is 1/1000 of a dollar) or $0.05-$0.25 per
MMBtu. This cost range includes many kinds of processes, including new processes as
well as retrofits.
At a demonstration of SNCR at Wisconsin Electric Power Company (WEPCO), site
specific factors resulted in effective use of reagents. At a cyclone unit, the cost of
containment was $1,000 per ton. For WEPCO and the cyclone unit, the capital cost was
$7-$10 per kW. Mr. Albanese is excited about these benefits, and their implications for
how major sources of NOX may comply with the regulations.
Longer term use of SNCR was demonstrated at LILCO (Long Island Lighting
Company). The unit ran for 8 months, resulting in total use cost of $950 per ton. This unit
was run under dispatch conditions, as opposed to a constant load. At a commercial
installation at NEPCO (New England Power Company), three units currently have SNCR
as the stand-alone technology for NOX reduction.
Experience in delivering SNCR technology in cost-effective ways is growing at a
frantic pace. The rapid rate of technology growth often outpaces the ability of consultants
and regulators to publish information guides. Therefore, it is difficult for someone not
directly involved with NOX pollution control to keep up with the costs and technologies.
When a NOX source is faced with compliance measures, it must determine what
combination of available technology is best to use. For RACT, for instance, SNCR can
stand-alone. However, combustion management used with SNCR may be a more cost-
effective option. The NOX reduction attainable by these technologies tends to be additive
when technologies are used in combination.
Several possible measures may be used to attain NOX reductions as required by
regulations, including gas reburn (GR), selective catalytic reduction (SCR), low NOX
burners (LNBs), and SNCR. With SNCR the cost is "expense intensive" but not necessarily
expensive in terms of dollars per ton of NOX reduced. Nearly 90% of the cost is
concentrated in operation. This combination is attractive in the ozone season, which lasts
from 6-7 months (roughly April through October) out of each year. The system can be
operated to reduce NOX, and it can be turned off in seasons when ozone is less of a
consideration. This flexibility is an example of what we must strive for in making rational
NOX control policy.
Session 4B — Stationary Source NO Control Approaches
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Clean Air Marketplace 1993 Page 109
Joel Bluestein, Director, Gas-Based NOX Control Center, has been involved in
researching fuel-type strategies. He began his presentation by polling the
audience to determine their affiliations. There were three to five regulators,
four to six equipment manufacturers, and about 15 consultants or lawyers, as
well as many other professionals. Mr. Bluestein addressed NOX control
requirements under Title I, rather than acid rain provisions. Low NOX burners
may not be sufficient to meet Title I requirements that may go beyond the reductions
required by Title IV regulations.
There are several approaches to using gas in existing coal and oil burners. Co-
firing is the simultaneous firing of a small portion of natural gas with coal. It has the
benefit of reducing emissions, and addresses both operating and environmental problems.
Seasonal gas-based NOX control is a cost-effective approach. Conversion to gas matches
the period of best gas availability and low gas prices to the peak ozone season — when
NOX reduction is most needed. Emissions of SO2, CO2, particulates, and air toxics are also
reduced. On the low end, there is zero capital, but the incremental cost of natural gas is
a consideration. The high end cost is $10-$20 per kilowatt for gas conversion.
Gas reburn uses natural gas to chemically reduce NOX emissions by injecting the
gas into the boiler above the primary combustion zone. The gas doesn't actually burn, as
there is not sufficient oxygen. Instead, natural gas chemically reduces the oxides of
nitrogen and gas, and the remaining combustion gases are burned out by excess air.
Reburn of 15-20 percent natural gas has reduced NOX by 50-70 percent in recent long term
testing of coal- or oil-fired burners. This reduces the primary fuel input; for example, coal
input can be reduced by 18 percent by injecting natural gas above the combustion zone.
Consequently, emissions caused by coal burning are also reduced. When overtired air is
applied in conjunction with low NOX burners, an additional reduction is achieved. Gas
reburn can reduce NOX in cases where simple conversion may not be effective.
Additionally, it is less economically sensitive to gas prices since it uses less gas.
There are several gas reburn projects currently supported by the Gas Research
Institute, DOE, and EPA. These projects encompass the major boiler configurations
(cyclone, wall, and tangential), as well as gas technology combinations. The costs of
projects at Ohio Edison, Illinois Power, PS Colorado, Midwest Utilities, and Kansas Power
and Light have ranged from $30-$35 per kilowatt. NOX control has ranged from 50-75
percent. At Illinois Power's Hennepin facility, long-term gas reburn data showed an
overall 67.3 percent reduction — lower than that required by EPA and NESCAUM
regulations. This reduction was produced with tangential firing. Full scale data was
presented on NOX produced by coal designed utility boilers that had switched fuel or were
using gas firing to reduce NOX. The numbers were very low, ranging from 0.05 pounds
of NOX per million Btu to 0.46 pounds per million Btu.
Reburn is specifically applicable to coal, oil, and gas-fired units that cannot meet
RACT limits with combustion modifications alone. It is suitable for meeting more
Session 4B — Stationary Source NO Control Approaches
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Page 110 Clean Air Marketplace 1993
restrictive requirements for existing sources. Reburn is an option for the lowest achievable
emission rate (LAER), a very strict level that applies to new sources in ozone non-
attainrnent zones.
Finally, Mr. Bluestein presented a graph discussing the cost and effect of NOX
control technologies. While not trying to identify the best technology, he believes that
there will be a large range of technologies used for NOX control. The graph showed the
cost of control in dollars per ton versus the percentage of NOX reduced. All technologies
fell under the $2,500 per ton mark. In the 30-50 percent NOX reduction range, low NOX
burners are inexpensive. SNCR's are in the 50-70 percent range, and require more control.
The highest range of NOX reduction can be created by SCR, seasonal gas conversion,
advanced gas reburn, SNCR plus gas reburn, and low NOX burners plus gas reburn.
The moderator noted that as a regulator, he likes to see technologies with high NOX
reduction which are in the under $1,000 per ton range.
Mitchell B. Cohen, a Senior Consulting Engineer with Asea Brown Boveri-
Combustion Engineering Systems (ABB), gave a slide presentation overview
of integrated NOX reduction techniques. ABB's innovative techniques are
achieving NOX emissions that are below Japanese, German, and U.S. NOX
emission regulations for new coal fired utility units. Japan's national
regulations require NOX emissions of around 250 ppmvd at 3 percent oxygen,
while German levels are about 120 ppmvd and U.S. levels in some local areas just under
100 ppmvd.
NOX reduction in boilers can be achieved with combustion improvements, flue gas
treatment at high gas temperatures with ammonia or urea (SNCR), and tail-end flue gas
treatment (SCR) at lower gas temperatures with ammonia and catalyst. In designing a unit
for NOX control, the engineer must analyze the fuel and the operating process (e.g., base
load or cycling load). High reliability and optimization of post-combustion techniques is
the objective of each design. Every unit design is site specific.
SNCR and SCR can reduce combustion NOX for pulverized coal. ABB has analyzed
in-furnace and post-combustion NOX reduction methods. Tangential firing produces lower
NOX levels than wall firing, and the emission levels of both have decreased steadily over
the past 30 years. The lowest in-furnace NOX system integrates the furnace design with
the tangential firing sys'tem and pulverizer equipment to guarantee less than or equal to
0.1 pounds of NOX per million Btu, or the equivalent of a volume of NOX of about 73 ppm.
The most cost effective way to reduce NOX is by maximizing in-furnace control.
Session 4B — Stationary Source NO Control Approaches
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Clean Air Marketplace 1993 Page 111
Mr. Cohen discussed optimized selective catalytic reduction systems. As Federal,
state and local regulations require increasingly lower NOX emissions, low NOX firing
systems can minimize reductions necessary from SCR systems. An optimized SCR system
has many benefits, including lower initial capital costs, minimized catalyst replacement and
disposal costs, lower system pressure drop, lower auxiliary power, and lower ammonia
consumption. ABB uses the Tangential Firing System 2000 (TFS2000) in combination with
its Environment 2000 (E2000) unit. E2000 is an integrated NOX control system with an
optimized steam generator design for highest efficiency. The unit has two levels of
overtired air and a vertical downflow SCR chamber, controlling NOX emissions levels to
under 100 ppm. In-furnace NOX control involves local and global air staging. In the
TFS2000 furnace, which is used in the E2000 unit, oxygen is managed throughout the
combustion process to minirnize emissions of CO, and VOCs. This new tangential firing
system effectively uses vertical and horizontal staging to lower NOX emissions. It
produces complete mixing, has high combustion efficiency, and protects furnace walls from
corrosion.
The main difference between SNCR and SCR is in operating temperature. SNCRs
run at higher temperatures, 1600°F-2000°F, while SCRs operate between 575°F-750°F. SCR
systems are reliable for several reasons: their operation is simple and they have no
moving components, minimal maintenance, and a long catalyst life. SCRs utilize either a
ceramic-based or plate type catalyst on which the reaction with ammonia takes place.
SCR costs have been declining.
• In 1985, the capital cost for a new coal fired utility unit was $100 per
kilowatt.
• By 1993, this cost has been reduced to about $30 per kilowatt.
• Capital costs for firing systems have held relatively steady at less than $20
per kilowatt, and by 1993 have fallen as low as $10 per kilowatt.
NOX control technology will become more viable as experience is gained in retrofitting and
operating these systerfis. Some cost ranges for LNCFSs (low NOX concentric firing
systems) are $10-$15 per kilowatt for an in-furnace combustion system, and $30 per
kilowatt for a combined system (TFS2000 + SCR).
ABB helps promote the effectiveness of NOX control techniques by providing local
and state regulatory and environmental groups with information on air pollution control.
Session 4B — Stationary Source NO Control Approaches
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Page 112 Clean Air Marketplace 1993
Dr. Michael J. Wax, Deputy Director, Institute of Clean Air Companies
(ICAC), made several "macro remarks," in light of all the technical information
that had been presented by the other speakers. ICAC members sell all types
of control technologies. ICAC takes the position of favoring performance-
based rules over command and control rules. Regulators should set rules that
specify emission limits, but are technology neutral. Competition should be
allowed to minimize the costs of compliance with maximum control over technologies.
Each NOX producing source is different; it would be impossible to specify one type of
control. In other words the marketplace should decide what NOX control technology to
use.
ICAC research has come across a problem that is not limited to NOX control. The
problem is that important information is missing from the marketplace. At least two NOX
control technologies, SCR and SNCR, are misunderstood. Their capabilities are still viewed
as more experimental than they actually are. The extensive use of these technologies
overseas and in the U.S. has not been acknowledged; SNCR and SCR are still seen as risky.
The costs of SCR and SNCR are also misunderstood. It is assumed that costs are higher
than they actually are, but air pollution control equipment costs actually drop over time.
The numbers typically associated with SCR, such as $150 per kilowatt, are too high. ICAC
estimates lower SCR costs:
Coal-fired units: $30-$70 per kilowatt
• Oil- and gas-fired units: $15-$30 per kilowatt
• SNCR costs for utility boilers similiarly are lower than commonly believed,
and are $8-20 per kilowatt.
These latter numbers are the ones that should be used in setting regulations and setting
facility compliance. In the initial evaluation, costs for new NOX control technologies are
higher than they will be after implementation. Several factors have decreased costs for
NOX control technologies: increased experience, technical advances, and more competition.
Another beneficial aspect of competition is that it makes people smarter. If several
suppliers are bidding on a NOX control job, prices will be forced down. Competitors will
see each others' innovat]ive designs and work harder to produce equipment that satisfies
the buyers' needs and requirements.
In closing, ICAC would like to see as much accurate information as possible in the
marketplace. More information helps both the public and utility groups.
Session 4B — Stationary Source NOX Control Approaches
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Clean Air Marketplace 1993 Page 113
Vince Albanese noted that a lot of comments were made regarding capital
costs. This is an incomplete picture, because the issue of cost is a complex one.
He presented a graph showing the costs, in dollars per ton NOX reduced for
various technologies, that was produced by a NESCAUM contractor working
on an EPA report. The graph shows that the costs for six technologies overlap
at RACT-type costs, including low NOX burners plus overtired air, SNCR
uncontrolled, SNCR controlled, reburn on cyclic and wet bottom boilers, overfired air, and
low NOX burners.
Dollars/ ton NOX reduction costs tend to overlap when one considers the broad
data available. The ACT document has shown the sensitivity of site-specific variables as
they affect costs. Ninety percent of the costs are wrapped up in capital; this has been
realized because retrofit units must be set up. The costs ranges are wide, and sensitivities
are being probed. There are very rough guides available to make economic conclusions.
Therefore, flexibility and market incentives must be encouraged.
Questions and Answers
Can you clarify what is meant by "level playing field" standard based on
output?
Mr. Belanger suggest that in the long term, we should be talking about a
standard based on emissions per utility output. In other words, the standard should be
based on the change in NOX emissions per kilowatt-hour. This would treat NOX as a paid-
for resource; companies would, in effect, be buying each unit. The Connecticut EPA is
researching the possibility of developing this concept.
What are the 'regulatory barriers to implementing NOX control technologies?
*>
• I Mr. Albanese explained that there are regulatory barriers to implementing the
"•"•J NOX reductions, but these barriers are diminishing. At the time literature
research was initiated by EPA and others to investigate RACT and other measures,
technologies other than burners and combustion modifications had not yet been
commercially used. Recently, field demonstrations and commercial use of other
technologies have been rapidly accepted, so the issue of RACT technology is not so clear
cut anymore.
Mr. Albanese added that there is a perception that technologies beyond combustion
modification have high cost. Because RACT is a retrofit requirement, many site specific
factors govern cost, and cost therefore ranges widely. Regulators are now allowing that
other technologies can be utilized to comply with RACT.
Session 4B — Stationary Source NO Control Approaches
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Page 114 Clean Air Marketplace 1993
Mr. Belanger commented that the question of seasonal regulation needs to be examined.
Mr. Bluestein added that ozone is a seasonal problem. Looking at production of ozone
and requiring control and reductions seasonally is a major change in philosophy for
regulators.
Mr. Bluestein indicated that fuel switching has not been looked at as a control technology.
A level playing field refers to whether emission levels are based on fuel. The field is level
when limits are set in a fuel neutral way. What works best, and is most cost effective, is
site specific. In the context of ozone rules starting at'a baseline, total emissions must be
reduced. There is the question of fuel switching being satisfactory if it is the cheaper
solution. Fuel based1 rules provide a dis-incentive to NOX control. Using cleaner fuel
should be encouraged by the regulating community. In the serious and severe ozone non-
attainment zones, substantial NOX emissions reductions will be required. Companies will
need flexibility to reduce NOX emissions, including fuel approaches. In the spirit of
flexibility, cost effective solutions should be promoted.
To what extent would a fuel-neutral policy push companies away from more
expensive technologies?
Dr. Wax responded that a fuel-neutral policy would not necessarily push
companies away from'what are seen as more expensive technologies. The company's
selection of a technology would depend on the regulation, price of the control technologies,
and might be a mixture of controls and clean fuels.
Mr. Cohen explained that it makes sense to put in SCR in some cases, because some units
do not have adequate furnace space to accommodate low NOX burner technology. A
generalization cannot be made on this issue. Mr. Bluestein added that a fuel-neutral policy
might encourage gas burning, but only marginally.
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With respect to anticipation of change, is each process optimized to anticipate
a change in NOX regulatory levels?
Mr. Cohen acknowledged that uncertainty in regulations has been a problem.
SCR technology can accommodate additional reductions. Low NOX burners can be fine-
tuned to a certain point.
Mr. AJbanese explained that with regard to regulatory uncertainty, the source must be
aware of the margin of reductions required. When the reagent-based technology is not
pushed to the maximum reduction level, or when a combination of technologies is used,
there is the potential to generate air emission credits.
Session 46 — Stationary Source NO Control Approaches
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Clean Air Marketplace 1993 Page 115
a
If gas burning provides additional pollution control and has seasonal benefits,
why should a regulator be willing to undertake the seasonal approach?
Mr. Bluestein responded that NOX reduction primarily for ozone non-attainment
is very expensive. In'order to make air healthy, it is worth the extra money in the summer
time when air quality is poor. In winter, when the emissions are not hurting us, why
should companies spend the money? Additionally, if other pollutants can be reduced, that
should be taken into account.
At $500-$2,000 per ton, is NOX control perceived as expensive?
A panelist responded that if the costs for NOX controls seem high, they are
reasonable in respect to cost-effectiveness. A National Academy of Sciences
study found that NOX controls work 3-10 times as well as VOC controls, which range from
$10,000-$20,000 per ton. Costs for NOX control are lower, and control is much more cost
effective, by a 30:1 ratio. Car emissions reductions have increased from 96-98 percent.
Previously, power plants were reducing 0 percent of their emissions; now they can reduce
75 percent of these emissions.
To what extent will snfall businesses be adversely affected if EPA does not
accept fuel switching as an alternative NOX control?
Mr. Belanger explained that fuel switching must be viewed with respect to its
limitations. As opposed to switching from coal to gas, the reductions attained by
switching from oil to gas might not meet necessary standards.
Mr. Bluestein added that NOX RACT guidance requires the total savings during a period
to be equivalent to the year round savings. For smaller boilers, it may be possible to get
EPA to sign off on credits. EPA will accept documentation of savings.
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Will small boilers would be expected to match the savings and reductions
achieved by large boilers?
Dr. Wax indicated that unit control costs will become higher for small boilers,
and the rules will acknowledge this limitation. However, costs are not so prohibitive as
to disallow fuel switching.
L The technologies discussed today address many programs. Are there any
^} I technologies that address the solid waste issue (e.g., the ash produced by coal
* I fif^d boilers)?
Mr. Belanger responded that these NOX reduction technologies should not change the
marketability of soda ash.
Session 4B — Stationary Source NOX Control Approaches
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Page 116 Clean Air Marketplace 1993
Mr. Cohen pointed out that there are disadvantages to some NOX controls, namely that
ammonia emissions are higher and there is potentially higher levels of carbon in the fly
ash. These considerations go hand-in-hand in examining a specific site. For example,
greater fineness may be required. Each situation must be evaluated.
Dr. Wax commented that increased solid waste problems have not been a problem in
Germany. None of the fly ash created by NOX controlled units is landfilled there, and
ammonia slip has been kept low, at levels of 2 ppm and less.
Session 4B — Stationary Source NO Control Approaches
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Clean Air Marketplace 1993
Page 117
Session 4 — Panel C
Vehicular Emissions Control Services
September 8, 1993
4:15 p.m. - 6:15 p.m.
Moderator:
Panelists:
Ken Thomas
William Dell
Gary Muggins
Jay Gordon
Dan Grubbe
Introduction
Ken Thomas, Horiba Instruments, is a leading manufacturer of equipment for the
Federal Test Procedure, and one of the designers of the IM240 test. Despite perceptions
to the contrary, the IM240 is a simple, quick, viable test of whether a car meets Federal
Test Procedure regulations. It is different from other inspection and maintenance tests in
that vehicles are driven on a dynamometer, which simulates real driving patterns. The test
measures hydrocarbons, CO, and NOX as a vehicle is operated at many different speeds.
This is important because vehicle acceleration and deceleration can be significant sources
of pollution in malfunctioning vehicles. The IM240 captures the total exhaust stream,
which also distinguishes it from other tests.
The purge test, which is part of the IM240 test, is conducted while the vehicle is on
the dynamometer. This test investigates whether the charcoal canister, which is designed
to prevent evaporative emissions from the gas tank, is functioning properly and
recirculating the fuel vapors. The pressure test, also a part of the IM240 test, ensures that
a fuel system is working correctly and recirculating vapors in the system.
Presentations
William Dell, Director of Marketing for Systems Control Corporation, focused
his presentation on two basic issues: the responsibilities of inspection and
maintenance (I/M) firms, and how I/M firms cooperate with the government
to create better vehicle inspection programs.
State agencies typically contract an I/M firm to be the single point of
responsibility for the design, development, and operation of a vehicle inspection program
Session 4C — Vehicular Emissions Control Services
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Page 118 Clean Air Marketplace 1993
to meet the requirements of the CAAA. I/M contracts are usually very complex, often
including items such as:
• Financing for the inspection program
• Siting and acquisition of land and buildings for use in the program
• Sacility design
• Testing equipment and procedures
• Staffing of facilities
• Public relations and advertising
• Technician training
• Initial operation of the program
• Quality assurance
Mr. Dell presented slides of facilities currently performing under I/M contracts.
For example, there is a multiple lane, high impact program in Texas, which has developed
a fully automated assembly line testing procedure.
How an I/M firm goes about Implementing these contracts throughout a state is
an important issue. The primary importance of cooperation between state governments
and the industry in getting these programs operational cannot be too lightly stressed. In
the legislative phase, I/M contractors generally help governments design programs
through a number of different methods, the most visible of which is direct lobbying. Firms
also work with various agencies, helping to develop definitions and program designs. This
education process is accomplished through testimony at hearings, working with legislative
staffs, as well as advising individual legislators.
In the regulatory phase, I/M contractors lend their technical expertise to help state
agencies gather information and design specific portions of the tests. Firms also work with
the press, helping the public understand the program.
If handled properly, cooperation between the state and contractors helps
tremendously in designing an effective program, and does not give the firms involved
unfair advantage. However, there is a fine line between positive cooperation and conflict
of interest.
Session 4C — Vehicular Emissions Control Services
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Clean Air Marketplace 1993 Page 119
Cooperation between governments and the I/M industry is also crucial in the
Request For Proposal (RFP) development phase. The states with the best RFPs are those
that worked with contractors to incorporate their technical expertise and other advice.
Firms, for instance, can lend information and field research capabilities in order to solve
potential problems before a RFP is even released.
Consensus building is critical to developing a sound inspection program. The state
of Virginia, for example, has developed ad-hoc committees of individuals and groups
affected by I/M requirements to deal with the development of rules and RFPs. The
Coalition for Safer, Cleaner Vehicles has also been reaching out to different parties in order
to build consensus.
Gary Hugging is the Executive Vice President of the Coalition for Safer,
Cleaner Vehicles (CSCV), a national non-profit consumer environmental and
industry organization committed to assisting states in adopting effective
vehicle emissions and safety inspection programs. The coalition also provides
public education on the benefits of vehicle inspection programs.
Mr. Huggins began by focusing on the Maintenance or the "M" side of I&M
programs. New enhanced vehicle inspections, required by the 1990 Clean Air Act
Amendments, will be much more effective than past requirements and are expected to fail
between 15-25 million vehicles in the first testing cycle (two years). It is vital that we now
focus on effective automobile technician training programs to assure that vehicles that fail
enhanced inspections can be effectively repaired. Not one ounce of pollution is removed
by inspection alone. The key to the success of I&M programs will be effective vehicle
repairs.
This need led CSCV to create the Education/Training Advisory Board (ETAB) for
the purpose of developing guidelines for effective technician training programs and to
assist states in addressing important issues related to improved vehicle maintenance.
Additionally, CSCV created the National Education Resource Center (NERC) to draw on
the expertise of companies involved with technician training and automotive repair to help
states and industry develop solutions to problems involved with the implementation of
effective I&M programs. To address the need to focus more organizations and states on
the "M" side of I&M, EPA along with CSCV and other interested organizations also began
the Vehicle Maintenance Initiative.
To begin building a regional infrastructure of qualified trainers, CSCV, in
cooperation with EPA and the Coordinating Committee for Automotive Repair (CCAR),
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is initiating a National Train-The-Trainer Program. The goal of the program is to prepare
sufficient numbers of people in I&M areas to train automotive technicians for the
implementation of enhanced I&M and to begin grassroots efforts to build support for the
program.
CSCV also serves on several state I&M advisory committees and is encouraging
states that have not formed them to do so. The Coalition believes these local efforts will
be vital in the implementation of effective programs and in building public support.
Dan Grubbe is Manager of Arizona's Vehicle Inspection Program, one of the
most extensive vehicle inspection programs in the U.S. He provided a brief
overview of his program and its testing procedures. Loaded tests are
performed on 1981 and post-1981 vehicles as well as all diesel vehicles, and
idle tests are performed on older vehicles. The program includes tests on
operational air injection, the catalytic converter, the fuel inlet restrictor, and the
presence of a gas cap.
Handling 1.7 million vehicles annually, the Arizona program is considered mid-
sized, and has a single I/M contractor. The program has a 14 percent failure rate.
The Arizona plan has reaped considerable rewards: attainment has been reached
in the Tucson area and the frequency of nonattainment in Phoenix has declined. To
maintain these types of results, especially with a state Vehicle Miles Traveled (VMT)
growth of over 3 percent, the state is considering enhancing the program.
The high degree of public approval and confidence in inspection programs must
be maintained. Therefore, when selecting an I/M contractor, it is crucial to consider the
need to maximize the convenience to the customer and to minimize the costs. For
example, sites must have adequate facilities and efforts must be made to reduce waiting
times at emissions testing sites. More importantly, programs must improve their ability
to accurately diagnose and repair vehicles the first time. The inability to do this could
prove to be a major factor in the erosion of public confidence in inspection programs. The
ability to diagnose and correct malfunctions can be improved through better education and
training of mechanics, and by providing them with diagnostic trouble-shooting guides.
Diagnostic aids and better vocational/technical schools can provide information on
common problems and how to remedy them.
Before turning to the questions and answers section of the panel, Gary Huggins
stressed that vehicle emissions control efforts will continue to be one of the most important
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components in the effort to improve air quality. Vehicle emissions control efforts are much
more cost effective than other options, and, according to a survey, 70 percent of the public
supports inspection efforts as opposed to other methods. The panelists assembled at the
conference represent both ends of the vehicle inspection effort: those developing the tests
and inspection programs, and those actually implementing the tests and inspection
programs and ensuring that the mechanics are able to repair the cars effectively.
Questions and Answers
How long does the IM240 inspection test take to complete?
Mr. Thomas responded that the test is called IM240 because it takes 240 seconds
to complete. It uses simulated road conditions, including inclines and declines.
EPA is considering a "fast pass" system in which a car could be designated as "super
clean" within the first 45 seconds or so of the test.
What percentage of the 14 percent that fail in the Arizona program get waivers?
Mr. Grubbe responded that the current waiver rate is 1.09 percent of the total
population. There are three waiver limits: vehicles of model year 1974 or earlier
have a $50 limit, vehicles of model years 1975-1980 have a $200 limit, and vehicles of
model year 1981 or later have a $300 limit.
What is the difference between the pressure test and the purge test?
Mr. Dell responded that the pressure test associated with the IM240 makes sure
that the system is not leaking, and the purge test makes sure that the stored
vapors get burned in the engine.
How do IIM contractors finance these programs?
Mr. Dell explained that a lease-back arrangement for land and buildings is a
common financing tool; the equipment assets are usually funded by the
companies. There are also less obvious financing methods, such as the involvement of
bonding agencies.
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What opportunities does the IIM industry see in leveraging new areas of work
into IIM contracts?
Mr. Dell responded that as an industry, I/M contractors are trying to incorporate
as much as they can into the contracts, as this would maximize the convenience to
customers. However, it is difficult to expand the scope of the contracts in a number of
areas. For instance, safety inspections are a stronghold of the automotive repair industry
and many lawmakers and regulators are reluctant to become involved. There are also
opportunities to include other aspects of the process, including vehicle registrations and
recalls.
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Session 4 — Panel D
Alternative Fuels
Septembers, 1993
4:15 p.m. - 6:15 p.m.
Moderator:
Panelists:
Charles L. Gray, Jr.
William Holmberg
Jerrold L. Levine
Raymond Lewis
Carl Moyer
Dr. Jeffery Seisler
Introduction
Charles L. Gray, Jr., Director of Regulatory Programs and Technology for the Office
of Mobile Sources, U.S. EPA, introduced the topic of alternative fuels by suggesting that
the automotive fuels industry is experiencing the greatest rate of change since its original
creation and growth. This change has been caused by a shift in the focus of the Clean Air
Act, from exclusively trying to change vehicle technology to reduce emissions, to a
combined strategy of dealing with both the vehicle and the fuel. The change has also been
driven by the weak U.S. economy and U.S. dependence on foreign oil. There are high
expectations for dealing with economic problems in the U.S. and unless the imported oil
problem is addressed, there is little hope of the economy improving. Clean fuels are
alternatives to imported petroleum, not to each other.
There are a variety of alternative fuels programs already in place or being
established, including 41 established oxygenated fuels programs in carbon monoxide (CO)
nonattainment areas; the introduction of reformulated gasoline in many of the U.S.'s ozone
nonattainment areas in 1995; expanded fleet programs focusing on alternative fuels; and
the Presidential Task Force to set goals for converting the Federal fleet. The Federal fleet
is expected to be a model for state and local government fleet programs. It will combine
the provisions of the Energy Policy Act with the fleet provisions of the Clean Air Act to
clean the air and stimulate the market for alternative fuels. The alternative fuels industry
has a bold, exciting future beyond what has already been achieved.
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Presentations
William Holmberg, Regulatory and Policy Advisor for the National SoyDiesel
Development Board (NSDB), discussed the potential of Biodiesel fuel to be a
part of the transition to a sustainable society, and particularly the role of
farmers in the NSDB in bringing about that change.
There are pros and cons to Biodiesel. The advantage of Biodiesel include the
fact that it is:
• Renewable, with a very positive energy balance; effective in stabilizing
greenhouse gas emissions;
• Chemically similar to diesel but biodegradable and nontoxic;
• Essentially free of sulfur and aromatics;
• Helpful) in reducing CO, hydrocarbons, particulate matter, visible smoke
and, with some fine-tuning, nitrogen oxides (NOX) emissions;
• A team player with petro-diesel and requires no significant engine
modifications or infrastructure changes.
The chief disadvantage of biodiesel is its cost. Other disadvantages include
biodiesel's tendency in some situations to damage elastomers and concrete, although much
of this damage can be avoided by using proper materials.
The main distinction between a renewable fuel and a fossil fuel is that naturally
occurring fossil fuels can be produced at minimal cost to the producer, while Biodiesel
requires that farmers be paid for the feedstocks they grow. However, when environmental
benefits and societal benefits, including nation-building, are taken into account, the cost
of Biodiesel balances out and provides the opportunity to move towards a sustainable
society. To achieve this balance, Biodiesel must receive the same financial incentives as
other alternative fuels.
Biodiesel also differs from fossil fuels in that the board of directors of the NSDB is
comprised of farmers, not corporate executives. The work and goals of the board reflect
the members' background and strong commitment to sustainable agriculture. The
priorities of the NSDB, as described by NSDB President Gary Ellington, reflect that
dedication. These priorities:
• Look ahead to an increase in farm profitability by generating new markets
for surplus agricultural products;
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• Look to the left to ensure that all aspects of the Biodiesel industry meet the
needs of the environmental and public interest communities; and
• Look to the right to make sure that they are a part of the nation-building
process of energy security and job creation.
The discussion moved on to compare the modern evolution of fuel ethanol and
Biodiesel and exploring the potential of biofuels, Biodiesel in particular. The purpose of
initiating the renewable fuels industry was to find new markets for agricultural products,
which are in great surplus. The following chart delineates several key points in the
comparison.
EVENT
Start up
Requirements to reduce
emissions
Octane rating/cetane index
Oxygen content
Energy security
Basic industry and job
creation
Greenhouse gas
stabilization
Increased emissions
Exploration of alternative
uses of the fuel
Cooperative relationship
with government and
environmentalists
Integrated approach from
soil biology to tailpipe
FUEL ETHANOL INDUSTRY
1975
CO and unburned hydrocarbons
High Octane
113(R+M)/2
35 percent weight
Fair to high with cellulosics as
feedstocks
Already significant with great
potential
Fair, with energy balance of 1:1.3
Evaporative emissions and NOX
Focus on 1 0 percent ethanol
blends
Limited efforts to develop
cooperative relationships
Limited interest
BIODIESEL INDUSTRY
1992
CO, unburned hydrocarbons,
particulate matter
High Cetane
49 and higher for saturated oils/fats
as feedstocks
Neat form, about 1 1 percent weight
Low with conventional feedstocks,
but fair to high with microalgae as
feedstocks
Just starting, with great potential
Outstanding, with energy balance of
1:4
NOX can be controlled with timing
retardation, additives, engine
modification
Extensive efforts to determine best
blends, best engine/fuel
relationships, best relationships with
other fuels
Extensive efforts to build
cooperative relationships
Extensive interest in cooperative
exploration
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The accomplishments of the NSDB reflect the growth of the Biodiesel industry:
• Over $5 million in investment by farmers in the past 13 months.
• Registration of Biodiesel variations with EPA, and attempts to determine
"substantially similar" diesel blends not exceeding 2.7 weight percent
oxygen.
• Working in cooperation with engine manufacturers to gain support for
Biodiesel blends.
Joint effort with ASTM and NCWM to establish standards.
• Supervision of contracts with the Southwest Research Institute, the National
Institute for Petroleum and Energy Research, and ORTECH of Canada to
conduct engine emissions research and testing, as required by EPA.
• Wide range of demonstrations involving blends of Biodiesel with different
fuels (petro-diesel, natural gas, compressed natural gas (CNG)/liquid
natural gas (LNG), methanol and ethanol) and applications in marine,
underground, and railroad industries, fleet operations, and individual
vehicle and equipment tests.
• Working in cooperation with the National Renewable Energy Laboratory to
assemble and catalogue all demonstration and test data.
• Working in cooperation with the Departments of Agriculture, Energy
(DOE), Transportation, and Defense in developing additional data needed
to meet EPA requirements, DOE requirements for alternative fuel
classification, and engine manufacturer and end-user requirements.
One of the goals of the NSDB is inclusiveness — working together cooperatively
with all interested parties. Therefore, in addition to promoting the interests of Biodiesel,
the Biodiesel industry would like to team up with the CNG/LNG, ethanol and methanol
industries, so that the fuels meet the DOE classification of an alternative fuel when used
together. By the end of October 1993, Biodiesel will be used in more heavy-duty engines
than all other alternative fuels combined.
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Jerrold L. Levine, Director for Corporate Studies at Amoco Oil Corporation,
discussed the alternative transportation fuels industry, CNG in particular, and
Amoco's role in the CNG industry. While legislation will mandate the supply
of an increasing level of alternative fuels, no particular fuel is identified in
either the Clean Air Act or the Energy Policy Act. While market dynamics are
expected to determine the alternative fuel of choice, under the Energy Policy
Act, CNG is likely to prevail as the clean fuel of choice. By entering the CNG industry,
Amoco has the opportunity to position itself as a leader in the clean transportation fuels
industry.
Alternative fuels represent a new retail market opportunity. The combination of
all fleet requirements covered by the Clean Air Act, the Energy Policy Act, and the
President's order for a 50 percent Federal fleet expansion, are expected to drive the
alternative fuels market. By 2010, alternative fuels could replace somewhere between
550,000 and 1.1 million barrels per day of equivalent demand for gasoline, or 8-15 percent
of the demand for gasoline. The lower estimate assumes that alternative fuels will satisfy
the basic requirements of existing Federal and state legislation. The high estimate assumes
significant participation by other states and the conversion of existing vehicles.
In comparison to methanol, ethanol, and propane, natural gas generally has lower
CO, volatile organic compounds (VOCs), and NOX emission levels than do reformulated
gasolines. The operating characteristics of natural gas (e.g., cold weather starts,
convenience of refueling, and "driveability") generally are superior to those of other
alternative fuels, except for convenience of refueling. In terms of maintenance, natural gas
and propane vehicles require fewer oil changes and engine tune-ups and have longer
engine life. Converted light-duty vehicles tend to suffer from poor acceleration and
limited range, problems generally not encountered in larger vehicles such as pickups and
vans. Dedicated CNG vehicles will be redesigned with engine control systems,
compression ratios, and port fuel injection in order to overcome these problems.
LNG has the same operating characteristics as CNG, but vehicles can carry much
more fuel and have an extended driving range. The disadvantage of LNG is that it has
a very low temperature and requires special handling. As a result, it is not being seriously
considered for cars and light trucks, but is being reviewed for use in larger medium- and
heavy-duty trucks, tractors, and railroads.
There are several reasons why CNG is likely to be the clean fuel of choice:
• CNG has a distribution system in place. Development of a dedicated
infrastructure for methanol, the next most likely alternative fuel, is not
likely, especially under the accelerated timetables for use of alternative fuels
prescribed by the Energy Policy Act.
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• CNG is clean burning. Emissions are 85 percent lower than gasoline, and
generally lower than other alternative fuels.
• CNG is safe. It is neither toxic nor corrosive.
• Natural gas is domestically abundant. A 50-year conventional supply is
available, with hundreds of years of unconventional supply available.
• CNG is inexpensive. It is typically priced 2CMO percent below gasoline.
All other alternatives are more expensive than gasoline.
• CNG reduces engine maintenance expense.
• CNG performs. It has an octane reading of over 130 and yields essentially
the same fuel efficiency (mpg) as gasoline.
• CNG can be sold via public or private fueling.
The challenge facing industry is to respond to the need for fueling facilities while
having enough CNG vehicles to justify the investment. There are several reasons why the
market for public CNG fueling stations is expected to grow:
• High initial investment necessary for gasoline fueling facilities (typically
$200,000 to $300,000 for existing sites) and a strong desire to get away from
underground storage tanks may lead many fleet managers to remove their
on-site fueling stations and utilize public fueling.
• Many fleet managers indicate that they want to initiate a pilot program for
their vehicles to get comfortable with CNG before committing to a full-scale
program. A public fueling site could be used for this purpose.
• Public fueling development will encourage manufacturers to produce more
dedicated CNG vehicles.
• The size and availability of a public fueling program will help establish
CNG as the alternative fuel of choice.
The keys to success of CNG public fueling systems can be likened to the three legs
of a stool, all of which must be in place and work effectively for the system to succeed:
A proactive local distribution company (LDC). Generally this would be
the local utility. A proactive LDC has an aggressive fleet marketing
program consisting of fleet customer prospect lists, solicitation of fleet
customers, and incentives or rebates against the cost of vehicle conversion.
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• A retail fuels marketer. Successful retail fuels marketers are willing to
form alliances and commit resources. They bring to the table existing
service station sites and a knowledge of transportation fuels marketing.
• Local conversion and technology centers. This allows fleet owners to
convert vehicles locally and have confidence that there is local technical
support to maintain the vehicle. This is necessary until auto manufacturers
begin manufacturing sufficient numbers of dedicated CNG vehicles.
Fueling stations should be convenient for customers:
• User-friendliness. A CNG dispenser should be similar to a liquid fuels
dispenser, both in appearance and in operation.
• Fast-fill dispensing. Dispensing of CNG into the vehicle's storage cylinder
should take about the same amount of time as liquid fuels dispensing at the
station.
• Priced and dispensed in familiar terms. CNG should be priced in cents
per equivalent gallon and dispensed in equivalent gallons, allowing the
purchaser to easily compare fuel cost savings to gasoline.
• Easy payment. The station cashier should be able to take various forms of
payment — cash, major credit cards, and government fleet cards — with no
need to pre-arrange vehicle fuel purchases.
Amoco began marketing CNG two years ago, with three CNG fueling stations in
operation by the end of 1991: public stations in Denver and Boulder, CO, and a
demonstration station in Washington, D.C. The Colorado stations were the first public
CNG fueling stations in the U.S. opened by a major oil company. In the past two years,
Amoco has equipped a total of 17 stations with CNG, more than any other major retailer.
Although volume for these stations continues to be low and the stations tend not to be
economically profitable, Amoco expects to add about 15 more stations this year in markets
where local distribution companies and governments are receptive.
Amoco would enter the CNG fuels market for three reasons:
• Amoco has been a leader for many years in producing quality fuels for the
transportation industry. CNG public fueling initiatives are viewed as
providing an additional product to the existing transportation fuels product
slate.
• Marketing CNG strengthens Amoco's strong corporate commitment to
environmental leadership. Amoco believes that it has the opportunity to
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position itself as a leader in the growing market of alternatives to
petroleum-based fuels.
• As a customer-focused company, Amoco is dedicated to meeting its fleet
customers' needs as they comply with mandates of the Clean Air Act and
the Energy Policy Act.
Raymond Lewis, President of the American Methanol Institute, believes that
people must realize that alternative fuels are real, current, and economic. In
examining what alternative fuels and clean air can do for jobs and the
economy, he explored how alternative fuels can form a healthy competition
that generates clean fuel technology and economic development.
Methanol, by current definitions of clean fuels including reformulated gasoline,
represents the largest alternative fuel. Methyl tertiary butyl ether (MTBE), a methanol
derivative, is the fastest growing chemical in the world and uses around 40 percent of the
methanol in the U.S. It is used as an oxygenate in oxygenated and reformulated gasoline.
Mayor Pena started an oxygenated fuels program in Denver that spread to other cities.
The program was so successful that it was incorporated into the Clean Air Act. Currently
in place in 41 cities, the oxygenated fuels program is considered one of EPA's most
successful programs, with high implementation and acceptance rates, as well as tangible
CO reductions.
Reformulated gasoline programs were introduced later and have the potential to
double the current demand for MTBE. Reformulated gasoline was developed in California
where specific environmental concerns led to a search for cleaner burning fuels. The
refinery industry recognized the potential of methanol to be a tremendous competitor in
the marketplace and set its fuel standards to be as clean as methanol fuel. ARCO initially
developed a reformulated gasoline with a goal to be as clean as M85 (85 percent methanol
fuel). As a result, Unocal and Chevron lost market share and responded by cleaning their
products. Under the Clean Air Act, the oil industry was forced to acknowledge the
potential for reformulated gasoline because three companies had voluntarily developed it
through competition in the marketplace. The presence of methanol in the fuels industry
as a product and the competitive driving force of M85, forced the development and
marketing of a cleaner gasoline product.
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There are three benefits to using neat fuels (e.g., M85 and M100) in flexible fuel
vehicles.
• Neat Methanol fuels are the most similar to liquid fuels currently in use.
Although vehicles are being built with different materials, competition has
reduced price, allowing the consumer to adopt an alternative fuel while
avoiding excessive cost.
• Because flexible fuel vehicles can run on either methanol, gasoline (or some
combination thereof)/ consumers are not constrained by the availability of
alternative fuels.
• M85 is a transition fuel that can be used during the development of an
infrastructure for dedicated vehicles that will be even cleaner and more fuel
efficient.
It is important to consider methanol supply and availability in the U.S. and the
capital cost of methanol conversions. Viewing the overall capital requirement for the
development of an alternative fuel infrastructure, the cost of methanol is lower than that
of CNG. Methanol can be derived from natural gas — it is the largest use of natural gas
as an alternative fuel which is growing in domestic supply. Methanol also can be derived
from oil, coal, biomass, sewage sludge, new steel coke oven processes that turn emissions
into methanol, and conversions of closed ammonia plants. There is also a rapidly growing
distribution infrastructure for methanol that requires approximately one tenth the capital
cost of a CNG station. Methanol can be transported in liquid pipelines like gasoline and
dispersed through liquid fuel pumps with only minor modifications. Large oil pipeline
companies have made a commitment to transporting methanol through their commercial
pipelines once there is sufficient volume. Methanol has the capacity to displace crude oil,
and industry has acknowledged and should welcome the competition it provides.
The use of methanol as an ether, the development of Biodiesel fuel which is
partially made from methanol, and the role of methanol in reformulated gasoline are
examples of competition within the alternative fuels industry. The ultimate goal is to
create sufficient competition within the alternative fuels industry so that consumers can
choose which alternative fuel they want to use. The best way to achieve this goal is to
level subsidies of alternative fuels to allow the market to determine competition.
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Carl Moyer, Chief Scientist for Acurex Environmental Corporation, presented
an overview of the business aspects of alternative fuels. He has considerable
experience demonstrating alternative fuels, supporting fleet programs in
California, and helping state and local agencies develop incentive programs for
successful energy programs. The future of the alternative fuel industry, its
pace, and elements of alternative fuel program success can be outlined in six
themes.
(1) Driving Forces for Alternative Fuels
Driving forces for alternative fuels are weak and not well aligned. This is a time
of great fuel change, but most of the changes are going to happen in gasoline and diesel.
Emission standards alone will not drive alternative fuels.
• There is a strong response of gasoline to meet the alternative fuels threat.
In California, gasoline is capable of meeting emissions standards for light-
and medium-duty vehicles through low emission vehicles (LEVs), while the
standards for zero emission vehicles will require entirely different
technologies. There is no room for alternative fuels in the light- and
medium-duty sectors solely to meet emission standards. But there is a
possible exception: if the gasoline LEVs are late for some reason, a demand
for flexible-fueled transitional LEVs may be triggered.
• Heavy-duty diesel standards can be met by clean diesel until the 2000s.
Emission standards cannot be used to force out clean diesel and switch to
alternative fuels. Local decisions to overtly favor clean fuels over diesel for
buses and some other fleets (Seattle, Sacramento, Texas) are an exception to
this. '
• Emission reduction credits can be critical to making alternative fuels
competitive, particularly natural gas and methanol in the heavy duty (HDV)
sector. When markets are thin, it is hard to equate a real dollar value with
NOX credits, and transaction costs are high.
The relatively minimal Energy Policy Act requirements (100,000-300,000 vehicles
per year) are divided between methanol, natural gas, and propane, and between original
equipment manufacturers (OEM) and vehicle conversions. This division results in a fairly
small niche for each technology. Also, available financial incentives reward fuels in
competing ways. For instance:
• The Energy Policy Act and rate basing reward capital-intensive
technologies, such as natural gas and propane, but they do not support
methanol.
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• The energy tax punishes all alternatives and local taxes tend to be
confusing.
• Site specific evaluations of fleet options are needed by all fleet operators;
however, it is difficult for fleet operators to understand all of their options
and respond appropriately.
(2) Niche Strategies
Niches can work for low, medium, and heavy duty vehicles. Fleet economics favor
niche strategies, where marketing costs decrease with large volume sales and high mileage
vehicles favor natural gas and propane. While there is a shortage of certified natural gas,
engines and rate basing benefits are temporary. Methanol can adapt to niches by careful
matching of fuel supply to vehicles. Fuel suppliers must take risks and work to link fleet-
fueling retailers to fleet users. Fleet fuel retailers are eager to meet this demand because
fleet vehicles are required to convert and the Energy Policy Act opportunity is very near-
term. The methanol industry needs dedicated suppliers who are willing to work to make
methanol succeed. The question facing the industry is how long OEMs will stay with
methanol cars, if they do not need them for emission requirements or CAFE credits.
(3) Cost-Consciousness
Government and business fleets are extremely cost-conscious in a time of recession
and require a delivered value in their alternative fuel vehicles. Trials and experiments
with alternative fuels are ending and retail fleet purchases are impending. Suppliers of
vehicles and fuel must provide service, reliability, and competitive costs to retailers who
want value and quality. Suppliers must be willing to provide the labor intensive on-site
presence necessary to help and support their customers as they make the transition to
alternative fueled vehicles.
(4) Market Value
Emission standards alone will not drive alternative fuels; therefore, success for
methanol is more likely where NOX reductions offered by alternative fuels have real
market value (i.e., in air quality-impacted areas). Emission credits can be worth up to
$30,000 per heavy duty vehicle in their net present value or 20tf per gallon of methanol.
Unfortunately, it is difficult to take advantage of emission credits for several reasons.
Markets are thin, it is difficult to locate buyers, verification of credits requires costly testing
and auditing, and skimming and factoring for breather-benefits adds cost.
(5) Inherent Advantages
Although natural gas and LPG are better positioned, methanol can compete in the
alternative fuel fleet market. The lower cost of fuel offers inherent advantages for natural
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gas, but vehicle technology still needs improvement. Fleets are not affected by economies
of scale, which is also a benefit for natural gas. However, methanol can take advantage
of fleet operations by working niches.
(6) Cost-Prohibitive Alternatives
Ethanol production and electric vehicles (EVs) probably will not be viable options.
Their costs are too high. In particular, EVs need a better platform with less weight and
fewer losses. He suggests that EVs may become viable for fleets where air credits can be
obtained during urban design.
The 1990s have provided real, albeit limited, opportunities for alternative fueled
vehicles. Success will require suppliers of fuels and equipment to work closely with
buyers. This has nof been the case so far. Natural gas suppliers tend to be more service
oriented and may fit into this role more easily. Broader alternative fuel vehicle markets
will require different policies than those implemented in 1974-1992. Although individually
the different policy acts have useful features, when added up, they provide no decisive
guidance except for emissions. A question to consider is why there is not greater emphasis
on the balance of payments and domestic jobs in the promotion of alternative fuels.
Dr. Jeffeiy Seisler, Executive Director of the Natural Gas Vehicle Coalition
(NGVC), discussed natural gas technology (vehicles, hardware, and the fueling
process) that is available on the market today and efforts by the natural gas
industry and fuel retailers to bring the fuel to the marketplace.
There are challenges facing the NGVC, especially in that convincing the natural
gas industry that there is a viable transportation market. The NGVC has been particularly
striving to:
• Achieve a balanced approach to developing a regulatory/legislative market
for natural gas vehicles and strengthen the gas industry's support of that
market.
Facilitate and commercialize natural gas vehicle development. Natural gas
is worldwide and requires international tie-ins. It is necessary to provide
the opportunity for U.S. companies to export their technology abroad.
There are many advances in natural gas vehicle technology. To date, most
technology has been mechanically-based retrofit, taking a standard gasoline vehicle and
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adding on natural gas cylinders, a regulator, and fuel mixer. Retrofitted vehicles work
with either gasoline or natural gas, though the fuels are not mixed. These retrofits have
had minimal effect on the outside appearance of the vehicles. Examples of new
technologies include:
• IMPCO is at the forefront of developing computer technology for closed
loop systems that work with tailpipe sensors.
• Diesel engines are using fuel injectors to inject natural gas and spark plugs
to ignite the fuel; the heat of compression engines cannot generate sufficient
heat to meet the ignition temperature of CNG. Hercules has a "new look"
diesel engine that uses spark plugs.
• The defense industry is becoming involved in developing cylinder
technology out of lightweight composites.
• Browning Ferris and Southwest Research Institute produced a dedicated
natural gas Mack garbage truck that was driven from Texas to Boston.
• Brooklyn Union is experimenting with closed loop garbage trucks that run
on natural gas that is collected from landfills and compressed.
• Bluebird and Hercules are producing natural gas school buses.
• The Big Three auto manufacturers are all in various stages of developing
natural gas vehicles. Ford has introduced the dedicated CNG Crown
Victoria; General Motors Corporation is taking an after market conversion
approach through a contract with IMPCO to convert new trucks; and
Chrysler has the "cleanest burning internal combustion engine on the road,"
which has been certified as surpassing California LEV standards.
• Natural gas is being used in on- and off-road vehicles, water vehicles, and
trains. For instance, one can find natural gas in Zambonis, Disneyland
water rides, police cars, Giant food delivery vans, Entenmann's delivery
trucks, airport shuttle buses, Burlington Northern LNG trains, off-road
forklifts, and mass transit buses.
There are different ways in which natural gas vehicles can be fueled, but it is
difficult to predict which method will be predominant. Instead, utilities will use different
market development styles to develop their natural gas fueling markets. Fueling methods
include:
• Fueling at the utility, which is oriented towards fleet operators.
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• Selling through the fence, where a utility puts the CNG dispenser outside
of the utility yard so that the customer does not have to enter the utility
property.
• Dedicating a natural gas station for fleet operators.
• Installing pumps at independent retailers (e.g., a utility-owned pump at a
privately-owned gas station).
• Gas companies establishing their own, non-regulated, non-rate-based
businesses (e.g., Natural Fuels in Denver, CO).
• Taking over-the-road cylinders to places not served by natural gas
pipelines.
• Slow-fill and home refueling.
Dr. Seisler concluded by highlighting some of the changes necessary to make
alternative fuels, and CNG in particular, acceptable in the marketplace. Organizations
representing alternative fuels must look to establish a balanced approach to
legislation/regulation that will build in standards and legitimize alternative fuels in the
marketplace. Public relations and communications must be used to get the message out
that alternative fuels are available and consumers must choose which fuel they want to
use. In addition to having sufficient time and economic resources, alternative fuel
suppliers need to be visionaries to succeed.
Questions and Answers
There is an issue concerning inherently low emission vehicle (ILEV) standards,
which recognize that there are two sources of hydrocarbon!organic emissions
from motor vehicles, exhaust and evaporative. Why would ILEV standards not
provide a strong market incentive for alternative fuels?
Mr. Moyer explained that the ILEV concept fundamentally requires dedicated vehicles.
Lessons from the 1980s show that it is extremely challenging to match vehicles with user
application if the vehicle does not have some option for another fuel. Flexible fuel or dual
fuel vehicles take away many of the advantages sought through ILEV. Work in California
has tried to recognize high in use emissions and include whole life cycle emissions, from
the refinery to the tailpipe. ILEV standards favor alternative fuels, but regulators cannot
impose standards requiring dedicated vehicles without experiencing extreme backlash from
the vehicle users. Retrofit technologies in the heavy duty area could also help address this
problem.
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Clean Air Marketplace 1993 Page 137
Mr. Gray added that dedicated alternative fuel vehicles will be very attractive, despite their
drawbacks, relative to the draconian measures that will need to be implemented to meet
increasingly strict air standards. Mr. Moyer asserted that legislation that supports
alternative fuels with some tailoring to community acceptance, and more aggressiveness
from the agencies for lower NOX standards for new engines, should be encouraged. Mr.
Levine pointed out that a standard for heavy duty vehicles was established, but only the
Detroit Diesel Corporation (DDC) was prepared to meet it. Rather than letting DDC
benefit in the marketplace, the standards were changed and DDC was told not to take the
initiative standards seriously.
Will the car companies take proposed standards seriously if they have been
ignored in the past?
Mr. Gray answered that such a statement presumes that the CAA will not be
implemented. Unless that situation changes, it is difficult to propose alternatives that are
less negative than a technology solution.
Why does the methanol industry find the ILEV concept objectionable?
Mr. Lewis pointed out that the methanol industry does not object to the concept,
but rather the implementation. ILEV assumes that only one thing, the volatile
emissions equipment, fails and ignores all of the other components on the system of a car.
It prevents a market for transition fuels such as M85 because they fail emission standards.
Industry has fuel that would lead to Ml00, but regulators have set a standard that only
M100, which is not market-ready, can meet. Presently, M85 should be banned from the
major programs, like state fleets, and implementation deadlines are so short that it is
impossible for car companies to address the problem. ILEV is not a fuel neutral standard.
Mr. Gray added that ILEV is a performance standard based on air quality.
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Is there a nationwide effort that makes Congresspeople aware of the potential
to cause a significant reduction in the balance of trade or to process unused
grain or garbage?
Dr. Seisler explained that the NGVC is looking at the government to use and balance all
of the opportunities it has to support alternative fuels: mandates, incentives, credits, basic
communications, and development of standards to force the adoption of alternative fuels.
Mr. Lewis commented that it is a problem for an alternative fuel to get established in an
existing infrastructure where the current costs are very low. It does not make sense for
methanol to have to compete in an arena where all fuels are not created equal.
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Why is the alternative fuel industry not focusing on the issue of replacing foreign
oil instead of focusing on how one fuel is disadvantaged in terms of other
alternative fuels?
Mr. Lewis answered that when one industry goes out to promote this idea, it is viewed
as feathering its own nest. Promotion of alternative fuels has to be perceived as good for
the whole country and not for one private industry.
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When you talk about reducing dependence on foreign oil, you assume that all of
the alternatives are domestically produced, but many foreign oil producers are
gearing up to produce methanol for the 1995 oxygenates seasons. Also, even if
methanol is domestically produced, is it not still a finite resource?
Mr. Lewis explained that the source of methanol is natural gas, so if there is a source for
one alternative fuel then there is a source for both. Also, methanol can be produced from
renewable resources. Mr. Gray responded that a domestic policy initiative needs to say
that some amount of our fuel will be derived from domestic resources and some from
renewable resources, while promoting technological development and preserving jobs. Mr.
Levine went on to say that in order to produce methanol, there needs to be a lot of natural
gas in one place. There is a lot of natural gas in the U.S., but it is spread out. There is
much more concentrated natural gas in the Middle East and former Soviet Union, but the
economy will not import expensive methanol if petroleum fuel is inexpensive.
Have there been any attempts to quantify methane releases from methane uses?
Dr. Seisler responded yes, however the focus needs to be on developing
greenhouse gas standards, which include methane and carbon dioxide.
Session 4D — Alternative Fuels
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Clean Air Marketplace 1993 Page 139
Keynote Address by
Senator Max Baucus
"An Environmental Renaissance'
September 9, 1993
Two days ago the Fall session of Congress began, and the Environment and Public
Works Committee has a lot to do. Next Tuesday we will hold our first major hearing on
the implementation of the Clean Air Act Amendments of 1990. At the hearing I hope to
hear a lot more about the subject being discussed at this conference: new environmental
technologies.
I believe that on environmental issues, this year will be among the most productive
in more than two decades. That is because there is a basic change in government
philosophy and in public attitudes toward environmental protection. We are leaving an
era of reaction, backlash, and fear, and entering one of hope and progress.
We seem to be resolving a bitter and destructive argument that has hindered
environmental progress for decades: the contention by some that environmental protection
will destroy jobs and end economic growth; and the argument by others that a vigorous
economy and technological advances will destroy the environment.
From Conservationism To Common Ground
Before we discuss the future, it may be helpful to talk a little bit about the past, and
about the historic processes that brought us all here today.
As a mass movement, modern environmentalism dates from the first Earth Day
celebration in 1970. In those days, now familiar environmental issues were very new to
government and industry. People were sick and tired of burning rivers, dirty air, and
toxic dumps. They asked Congress to respond, and Congress did respond. The Clean
Water Act, the Clean Air Act, and the Safe Drinking Water Act all date from that era.
In those and following years, however, too many environmentalists viewed
industry not as a partner to work with, but as an enemy to conquer. Too many members
of the business community took the same view of environmentalists. Bitter divisions
between the Executive Branch and Congress, and between industry and environmental
groups, made advances impossible. Legal and political battles, not scientific analysis and
cooperation, dominated the environmental landscape. The result, of course, was that for
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a full decade, from the early 1980s to the early 1990s, environmental progress halted, and
at times was reversed.
This year we can clear the air, so to speak. That means, as I like to say, that we are
on the verge of a Renaissance — a rebirth of environmental progress. At the core of this
Renaissance, as at the core of the Renaissance in Europe hundreds of years ago, is better
understanding. It is the understanding that we must preserve our natural resources to
sustain ourselves both economically and physically.
Industrial and environmental groups have found common ground in the goal of
sustainable development — a growing economy, secure jobs, a healthy and clean
environment. The challenge is no longer whether, but how to reach the goal.
Taking Stock
Last winter, when I became Chairman of the Committee, I looked over the agenda
for the 103rd Congress and I saw a lot to do: the Clean Water Act, implementation of the
Clean Air Act Amendments of 1990, the Endangered Species Act, and the Environmental
Justice Act.
But I decided that rather than try to rush through it all, the Committee should step
back and look at the big canvas. So we held a long series of what I called "Taking Stock"
hearings. I brought in scientific experts, environmental groups, legal scholars, economists,
and ordinary citizens to discuss where our country and our world stand on environmental
issues. I listened to testimony on many different environmental topics and considered
many different approaches to our environmental goals.
I emerged from those hearings more confident than ever that we have the makings
of a consensus on the right way to approach environmental protection, a way to keep our
country environmentally clean and economically healthy, a way to achieve sustainable
development.
I am optimistic about the future because, as Russell Train reminded me, my
generation is more environmentally conscious than his. And our children, he noted, are
even more driven to achieve environmental preservation than we are.
Corporations Are Changing Their Ways
1 am also optimistic because American businesses are catching on. Companies now
listen to advice from inside and from outside. They are changing their ways and adopting
environmentally safer practices — not just for public relations, but because it make good
business sense.
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Clean Air Marketplace 1993 Page 141
• Dow Chemical used ideas submitted by its own employees to reduce waste
in five of its plants, saving the company $10.5 million through recycling and
increased efficiency.
• Xerox changed its packaging, eliminating 10,000 tons of waste and saving
up to $15 million per year.
• AT&T saves at least $25 million a year in supply costs by eliminating
ozone-depleting substances.
Government Must do the Same
Government can learn some lessons from companies like these. We who write laws
must be just as thoughtful and innovative as they are. We must take some new directions.
In the spirit of re-inventing government, we must look for ways to re-invent environmental
laws. The traditional "command and control" approach to environmental law is no longer
as effective as it once was in solving our environmental problems.
This does not mean lowering environmental standards. Nor does it mean
sacrificing our economy for the sake of preservation. The "Taking Stock" hearings brought
home to me the importance of three things: (1) developing new, cutting edge
environmental technology; (2) creating market-based incentives in our environmental laws
and programs; and (3) finding multi-media solutions tailored to particular facilities.
Developing New Technology
Green technology can make environmental controls more efficient and more
effective — and it is critical to our economy. A recent study found that the air pollution
control industry can create 40,000 U.S. jobs per year by the year 2000. This job growth is
fueled by a 44 percent increase in worldwide demand for environmental goods and
services.
Green technology, however, will not develop automatically. We must avoid a naive
faith that demand for these products will arise on its own. Instead, we must create it by
using tough regulatory standards. The California Air Resources Board, for example,
requires that by 1998, 2 percent of the cars produced for sale in California must have zero
emissions. That makes some people mad. But it gets results. Major auto companies and
small firms are now developing electric cars for the California market. And over 100,000
miles, an electric car is 200 times cleaner than the least-polluting conventional vehicle.
I want to see that kind of advance nationwide, in all industries. The Environment
Committee has given us a start by reporting an "enviro-tech" bill I introduced earlier this
year. I believe this legislation will get us started, by setting an overall strategy for Federal
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environmental technology research and development, and fostering private development
of technology.
Other countries are well ahead of us in understanding the importance of green
technology, both for environmental and economic reasons. For example, I recently visited
Japan and spoke with Mr. Okamatsu, the Vice Minister for International Affairs at Japan's
Ministry of International Trade and Industry. I expected a tough discussion of U.S.-Japan
trade conflicts, the bilateral deficit, the Clinton Administration's trade negotiating
framework, and so on. But in fact what interested Mr. Okamatsu most was not trade. It
was my enviro-tech bill. He knew more about that bill than virtually anyone I have met
in the U.S., and he told me that it is precisely the sort of thing the U.S. needs to do not
only to protect the environment, but to improve our international economic position as
well.
Using The Market
The second step is to use market forces to promote environmental protection. At
times, this will happen automatically. At times, we can create markets, as California has
done for the electric car. And at other times, we will have to eliminate market incentives
that push companies to pollute.
• First, we have to insist that a product's price reflect its full social cost. We
cannot let companies use "pollution subsidies" to cut costs and underprice
environmentally responsible competitors.
• Second^ we have to look for ways to create markets to reduce emissions.
We have already begun to do so with the 1990 Clean Air Act Amendments,
which created the allowance trading program for sulfur dioxide. I am
looking forward to hearing more in the days ahead about California's
RECLAIM program.
On the whole, this new market for acid rain allowances is working well. There
were some problems in the way initial allowances were achieved, but those are growing
pains. They should not overshadow the overall success of the first auction last March. We
must learn from these mistakes to ensure the future success of other markets.
Finding Multi-Media Solutions
The third new step is to use what some call "multi-media solutions." This means
considering the total emissions of all pollutants into all media rather than focusing only
on single sources of emissions into one medium. This way, we can find the cheapest way
for a facility to reduce its pollution overall.
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Clean Air Marketplace 1993 Page 143
This approach makes economic and environmental sense. Strict divisions by
medium are unnatural. They ignore the inter-relationship between the elements that
comprise the environment. When we write laws, we must understand their effects on one
another. As Bill Ruckelshaus told the Environment and Public Works Committee this
summer:
"... the Administrator of EPA must follow rules of nine major statutes, none
of which were designed to work with one another. There is no integrating
principle built at all into this statutory armory. Each is written to stand
alone, as if the world were made entirely of air or water or some other
target of concern. No word in all this law directs EPA to simply find the
combination of policies across all programs that will garner the maximum
benefit to the environment for every dollar of cost expended."
I read with great interest a recent account in the Wall Street Journal of a joint study
by EPA and Amoco regarding its Yorktown refinery in Virginia. EPA regulations required
the refinery to install a pollution-prevention system at a cost of $41 million. The study,
however, showed that the refinery could achieve greater overall pollution reductions for
$11 million, without u$ing the required prevention system. How did they discover this?
I know the more interesting question may be "Who told the boss?" But we can learn more
from the answer to the first question.
Most of the pollution being regulated at the facility was toxic benzene vapor.
EPA's Air Pollution Office, therefore, had an important part to play if an innovative
solution was to be found. Amoco and EPA jointly studied the plant's overall emissions
of gases, fluids, and solid waste. They found that emissions of vapors from dirty water
were 20 times less than predicted. On the other hand, releases at the loading docks where
fuel is pumped into barges were extremely high. But benzene vapors coming from inside
the refinery were regulated under the Clean Air Act and benzene vapors escaping at the
loading docks were not. Amoco had to build a $41 million dollar water-treatment facility
to clean up the dirty water. After a bill like that, they decided not to make any changes
in the loading docks. The benzene vapors there, a much worse problem than the vapors
at the water emission point, went untouched.
Obviously, this is not a story of successful pollution control. It is an example of a
rigid law that forces companies and environmental control officials to concentrate on a
minor problem and ignore the top priority. We have to change the law. And we have to
find the other laws that have similarly perverse results, and change them. With this
example in mind, the Senate Environment Committee will study the use of multi-media
approaches in the near future.
Most cases will not be as simple as this. Just as in the Acid Rain Allowances
Trading Program, there will be a learning curve as we find the best ways to reduce total
pollution. We may find it best reorganize EPA to deal with particular sectors of the
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industrial base, or into geographical teams that help particular plants lower overall
emissions. But it is clear that we have to make changes if we do not want to repeat the
Yorktown experience all over the country.
Common Ground
The Yorktown refinery project is not a happy story. And it did not have a happy
ending, whether you are an ordinary North Carolina citizen who wants pollution reduced,
or the guy who ended up short $30 million, or the worker at the loading dock who is still
breathing in benzene vapors. But it is a story with a moral. It shows that if the laws are
well designed, industry and government can cooperate. Despite the distrust that originally
existed between Amoco' and the EPA, the two sides collaborated and came up with the
right answers. Only the law stood in their way.
A related problem is that environmental teams, as well as laws, are too specialized.
Like the wise men in the Indian folk tale, they often look only at the truck, or the side, or
the foot, or the tusk — and they miss the whole elephant. Multi-media examination of a
facility goes against today's emphasis on hyper-specialized training. But in the end, as
happened in the Yorktown project, we may find a multi-media approach more efficient
and much more effective.
Add to multi-media approaches better technology and market based incentives to
prevent pollution, while continuing to keep the regulatory requirements high, and I think
we are out of the Dark Ages and on our way to a Renaissance in environmental law.
Conclusion
As always, 1 am inspired by my western roots. One of my favorite authors is a
Montana native named Norman MacLean, who wrote the now-famous novel A River Runs
Through It.
Toward the end of his life, MacLean wrote an account of the Mann Gulch Fire of
1949 on the Upper Missouri. The book, Young Men and Fire, tells the story of the 13 young
firefighters — called "Smokejumpers" because they used planes and parachutes to reach
the fires as fast as possible — who jumped into the gulch and died when the fire caught
them on a steep hillside. The book recounts a tragic episode in Montana history. But it
also tells an inspiring story of your people who worked together for the common good,
of the lessons we can learn from terrible experiences, and of how important it is always
to try and find new and better ways to solve our problems. Toward the end of the book,
MacLean writes about how the "Smokejumpers" reacted to the fire:
"The Mann Gulch tragedy immediately became a flaming symbol to the
Smokejumpers and to firefighters generally, especially those in the
Northwest... It was some of these who said to me not long after the fire,
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Clean Air Marketplace 1993 Page 145
'God damn it, no man of mine is ever going to die that way.' Small cracks
were soon filled in, especially with technical improvements... the training
of the crews was also improved in many particulars... [and] in the early 40
years since the Mann Gulch tragedy, no Smokejumper has died on a fire
line."
That is a lesson for people in all walks of life, but is particularly important for those
of us in the environmental field. We have had a lot of disasters, a lot of failures, and some
tragic individual incidents. But we can learn from them all just as we learned from the
Yorktown refinery. We can use new technologies, new economic tools, and new overall
approaches to our problems. And by doing so we will prevent future failures.
Which brings me back to the subject of this meeting. Innovative new technologies
for cleaning our polluted air are on display here at this Conference. Take a look at them.
In technical brilliance and in the new approaches their inventors bring to environmental
protection, they are an inspiration. They tell me very clearly that we can make an
environmental Renaissance a reality.
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Session 5 — Panel A
Federal, State, and Local Regulatory Programs
September 9, 1993
9:15 am. - J1:15 a.m.
Moderator:
Panelists:
S. William Becker
Michael Bradley
Bruce S. Carhart
David Jordan
Robert Brenner
Introduction
S. William Becker, Executive Director, State and Territorial Air Pollution Program
Administrators, described the panel as a collection of officials at different levels of
government in charge of implementing market-based regulatory strategies. This panel,
according to Mr. Becker, provides the opportunity to explore examples of how market-
based initiatives can work and to discuss what we can do to improve them.
Presentations
Michael Bradley, Executive Director for Northeast States for Coordinated Air
Use Management (NESCAUM), began his remarks by stating that NESCAUM
is moving forward with a number of issues. The mission of NESCAUM is to
pursue clean air goals, but do it at the lowest cost and in a way that will
promote economic expansion and new jobs. This was a key overriding
criterion in the way NESCAUM pursued its strategies, particularly as the
Northeast was still in the midst of a regional recession when the Clean Air Act
Amendments (CAAA) were passed.
This past summer, with the widespread number of ozone non-attainment days,
illustrates our regional ozone problem. The realization that NOX is a part of our ozone
problem is one of the major changes from the earlier approaches in the 1980s. Thus,
NESCAUM foresees NOX emission reductions to be approximately 60-70 percent during
this decade.
NESCAUM is actively pursuing a regulatory framework which promotes control
programs that encourage technological advances, hopefully at a low cost and utilizes
economic incentives which will result in an effective approach.
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NOX Reduction for Utilities and Industrial Boilers
A significant amount of NOX emissions come from industrial boilers and electric
power generation facilities. After holding meetings and information gathering sessions,
NESCAUM developed emissions performance standards that included innovative concepts
(e.g., allowing a utility to over-control one or more boilers, while under- or not controlling
another boiler in the same state, in order to focus on those facilities that will be in
operation for the longer term). The states are moving forward with their own NOX
reduction strategies that are consistent with this policy. Although NESCAUM's policy was
initially received with much opposition by the utility industry, the industry is now
concentrating on devising the most cost effective strategies to comply with the standards.
The NESCAUM states are also attempting to allow utilities to choose the best
control strategy to attain the performance standard. The utilities may choose any strategy
(e.g., fuels changes, seasonal strategies, combustion modifications) that is most cost
effective. In particular, selective non-catalytic reduction is the one technology with
measurable, cost effective results that has been used recently by utilities in the Northeast.
More advanced technological solutions (e.g, selective catalytic controls) are also being
considered. There is a healthy level of competition between control technologies that
reduce emissions from all types of fuels, as well as competition with cleaner fuels like
natural gas. The stage is being set for a second round of NOX reductions two different
policy approaches are being considered:
• A performance standard, and
• An allowance cap approach, which sets a baseline level of emissions for
each major source (e.g., boiler), effectively allowing the major source to
decide what control options to pursue, including purchasing credits.
The regulations will be based on energy output, not on the amount of energy
content of fuel going into the facility. Focusing on energy output provides incentives for
overall efficiency, demand-side management techniques, and conservation, and places a
higher value on renewable resources. NESCAUM is currently undertaking a feasibility
analysis on this alternative.
Motor Vehicle Control Strategies
NESCAUM is also focusing on California's low emission vehicle (LEV) program.
The estimated emissions control cost per vehicle that California has set has dropped by a
large magnitude in less than 2 years. This is crucial to those who see motor vehicles as
a key component in an overall reduction program.
The California standards mandate production of zero-emission vehicles by model
year 1998. This has led to an unprecedented shift in research and development activities
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Clean Air Marketplace 1993 Page 149
to sectors within the automobile manufacturing industry, battery manufacturing area, and
electronic component area, to attempt to produce an electric and hybrid electric vehicle,
which is affordable and performs well. There also has been a tremendous effort on state,
local, and Federal government levels to form partnerships with the private sector to
facilitate the development of these technologies and implement demonstration programs,
as well as to look at broader infrastructure issues.
Economic Incentives for the Emissions Trading Program
Emission trading and economic incentives have to play a role, because without
these incentives, states may not be able to achieve their goals. NESCAUM met with 12-15
private sector representatives and promoted a summer demonstration program. The goal
was to promote innovative, traditional, non-traditional, and seasonal control strategies.
Actual control strategies implemented included trip reduction, demand-side management,
application of selective non-catalytic reduction, seasonal fuel switching, use of alternative
fuels for both light and heavy duty vehicles, vehicle scrappage, and aggressive fugitive
emission controls. Massachusetts is about to adopt regulations that are the most
innovative emission trading regulations on the books today. These regulations will get
attention from other states in the Northeast.
NESCAUM is interested in putting regulatory initiatives into place by promoting
a high degree of market competition; the utility NOx/industrial NOX competition has
illustrated the benefit of doing this. The market is certainly responding, and there is more
to come. NESCAUM is looking to continue to encourage mechanisms that will advance
technologies, as well as innovative strategies and market competition.
Bruce S. Carhart, Executive Director, Ozone Transport Commission (OTC),
explained that the OTC was created in the Clean Air Act Amendments of 1990
to coordinate the control of ground-level ozone in the Northeast and mid-
Atlantic states. Air quality activities have generally been on a state-by-state
basis. There is now statutory recognition that regional problems require
regional solutions, and should not be addressed solely on a state-by-state basis.
Toward that end, the OTC coordinates air quality management strategies in the ozone
transport area. The goal is to provide attainment and maintenance of ambient ozone
standards by statutory attainment dates. The commission must be creative and
imaginative in the way it brings about attainment and maintenance. Clearly, economic
incentives are going to play a part. One area to focus on is emission offsets, specifically
trading programs.
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Clean Air Marketplace 1993
Mr. Carhart introduced a slide show that discussed the following topics:
• Background information on the OTC. In the Northeast, there are substantial
urban areas that contribute to the ozone problem. A non-attainment map
shows established areas of non-attainment throughout the region.
Modelling studies have been performed to further identify the nature and
severity of the problem.
Background information on the air quality challenge.
• Offset requirements of the CAAA.
• The extent to which emission offset programs have been/are being
developed in the Northeast and mid-Atlantic states. The OTC is developing
trading programs because: 1) it is sound policy to encourage progress
toward economic growth, while also moving toward ozone reduction
requirements; 2) there is the potential for reducing costs of compliance; and
3) there is the potential for reducing emissions that would not otherwise
occur.
The May 18,1993, Memorandum of Understanding (MOU) that OTC signed
relating to NOX emission offset programs. The preamble discusses trying
to achieve greater air quality benefits as well as economic benefits than
would otherwise occur in the absence of such a program.
• Future activities for the OTC, including interstate offset trading systems.
The OTC has initiated correspondence with EPA and wants to evaluate past
offset experience to demonstrate the potential to create emission reduction
credits.
David Jordan, Former Administrator, Indianapolis Air Pollution Control
Division, Semor Project Manager, ERM Midwest, explained that he has the
perspective or a local air pollution agency official, as well as someone who has
industrial clients. Mr. Jordan outlined major issues that state and local
agencies have to deal with, and also described some private sector concerns.
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Clean Air Marketplace 1993 Page 1ST
Some concerns of regulators include:
• Meeting obligations of the CAAA, including non-attainment obligations,
deadlines, and plans to submit. Regulators want flexibility from EPA, and
particularly want to be able to determine if their source is in compliance
with regulations.
• Being a partner with industry, which includes being kept abreast of future
changes in industry.
• Economic growth, primarily the expansion of the industrial base.
• Fiscal stability, which would allow a program to grow in the future.
Some examples of industry's concerns are:
• Consistency across counties, states, and regional boundaries in the
enforcement of laws. Industry wants to see laws uniformly enforced. A
facility is put at a competitive disadvantage if it is forced to comply when
competitors are not.
• Certainty about what the ground rules are. Industry wants to know what
the regulations are, what the standards are, when they have to be met, and
how to demonstrate compliance.
• Flexibility in how industry manages operations. Day-to-day operations
change, and industry wants this reflected in regulations.
• Industry wants regulators to have quality staff in order to better understand
how indu-stry does business.
Joint opportunities for how these concerns can possibly be addressed include
changing the way business has been conducted in order to make market-based solutions
more attractive. There are environmental interests, business' interests, and regulatory
interests that have to come together to address these issues. Some possible options for
addressing various concerns include:
• Better communication and consensus-building among all interests in the
rulemaking process. Everyone has an obligation to get involved in the
process to 'avoid the typical regulatory-negotiation approach. There is a
need to involve EPA in this process, and there is a need for more outreach
and training on obligations. Small business assistance programs are a very
important aspect in making a rulemaking successful. Involving the public
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will help in heading off negative reactions from environmental groups to
certain regulatory stances.
• More flexible regulations can be written using different types of
technologies. We have a strong track record of attaining regulatory goals
(e.g., Acid Rain). What we have to understand is the relationship of these
programs to our ability to meet our environmental obligations.
• Maximizing flexibility. We want the environmental benefit that we desire
at the least cost. The CAAA provide opportunities for this; more flexibility
is given to state and local agencies to develop rules and regulations to meet
the standards (e.g., ozone control obligations). There is also an opportunity
to involve the public and decision makers in development.
• EPA's role in an audit program. EPA must make sure there is consistency
across the country in the effort to meet environmental goals. EPA also has
a role in providing technology to regulators, in order to provide information
to be used in the rulemaking process. EPA also needs to set up a good
technology exchange program.
• Efforts to rejuvenate local and state governments. There has recently been
considerable attention surrounding Mr. Gore's "Reinventing Government"
approach. This approach has been going on for some time at the local level,
and we want it to continue to be encouraged.
• Efforts to do business in sensible ways, such as the efficient spending of
resources. There will be efforts to change the way we do business,
including multi-media approaches, efforts to coordinate different
governmental interests, TQM approaches, and team building to assess cross-
media impacts and our business practices.
In closing, there are a great deal of opportunities for the future to try to make
market-based approaches succeed.
Robert Brenner, Acting Deputy Assistant Administrator, Office of Air and
Radiation, U.S. EPA, began by tying together the presentations so far. We
have heard the need for regulatory approaches that really challenge industry
and reward companies that are clever in their approach. If we do our job right
in developing the regulations, we will further build a constituency that
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supports the CAAA (e.g., industries that can gain a competitive advantage by being smart
in how they comply with the CAAA). The economic incentive programs that work best
are those that are designed by regulators, industry, environmental groups, and all relevant
parties together. These types of programs will not just provide equivalent environmental
results to traditional regulatory approaches. Almost always, part of the savings that you
achieve by using this approach are used for better protection of the environment.
Regulators are also becoming more supportive of incentive programs because these
programs are the best way to promote new technologies and prevent pollution. For
instance, systems that encourage firms to move beyond compliance requirements have
been very successful. Under such programs people understand that there is a real market
for cheaper technologies that can meet stricter standards. Incentive programs such as
marketable permits provide powerful stimulus for pollution prevention because sources
with zero emissions can sell permits they no longer need. As new technologies are
developed, other areas will find it easier to meet air quality goals. Other advantages of
incentive programs include better monitoring and better recordkeeping. The ability to
accurately quantify the results of the programs is important.
It is important to continue the concept of regulatory negotiation, round tables, and
other consensus-building approaches for feedback on regulations (especially before the
public comment period). It is also very important that we provide timeliness and
predictability in our regulations. The problems we have had in the past have made it
difficult for state and local agencies to have the lead time they need to develop new
approaches for more effective compliance. As we work with other parts of the
administration (e.g., DOC, DOE, DOT, OMB), we intend to constructively develop
innovative approaches and get these rulemakings out on time. It is very important that
we find ways to cooperate and provide flexibility to regulators across the country to enable
them to meet their area's transportation needs, energy concerns, increase export
opportunities, and produce state air quality plans.
Questions and Answers
To what extent are other types of trading programs, such as for Volatile Organic
Compounds (VOCs), being examined?
Mr. Carhart explained that priorities had to be established for initial efforts. We
decided on NOX because it was a new requirement. Also NOX trading has an advantage
over VOC trading which involves both reactivity and toxicity. However, we have
consciously put together the May 18, 1993 MOU so that it could be added onto in the
future. If it appears that there is a need to expand into VOCs, there is always that
possibility. In the short run, NOX became the priority.
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How can the OTC meet its emission reduction requirements without an LEV
program?
Mr. Carhart responded that the OTC has been looking at a broad range of
options for meeting the emission reduction requirements. We find that just relying on
specifically indicated strategies in the CAAA is not going to do the job in the Northeast.
The OTC believes that we need a balanced approach between VOC and NOX, and between
stationary and mobile sources. To date, the OTC has not found a way to attainment
without LEV.
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What is the relationship between regional air pollution authorities and state air
agencies (i.e., What is the mission of NESCAUM and the OTC?)?
Mr. Bradley answered that due to the regional nature of the markets, it makes
a lot of sense to pursue consistent regulatory programs. To achieve this, NESCAUM
supports the exchange of information. Out of that consensus-building process, a consistent
approach is borne. There are many benefits to pursuing a consistent — not a uniform —
approach in terms of environmental equity. The regional process saves a lot of resources
by having a regional rather than a state-by-state process. Mr. Carhart added that the
course is replicated for the OTC, in that there is a shared commitment on ozone control
in the region.
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What are the advantages and ramifications of taking the approach of pounds per
kilowatt hour?
Mr. Bradley responded that the current regulations to control NOX and SO2
emissions in the Northeast are based on the energy input in a boiler, which is in pounds
per million BTU units. This creates the incentive to become as efficient as possible, in a
way that produces fewer emissions.
They have done this in California. Would you go about it the same way?
Mr. Bradley responded that NESCAUM is looking at a California program, the
South Coast utility averaging program, restricted just to utilities. We are looking
at expanding the population of sources to include all of the major NOX emission sources.
L To what extent are you planning on incorporating public participation in the
f} I development of the energy output approach?
JJ
^"™" Mr. Bradley responded that the process is really only a feasibility analysis right
now. It is made up of a committee of all of the state and EPA offices, as well as an
advisory committee made up of private sector and environmental advocates. There will
be a public process, and there will be a broader comment process as we develop the
program. However, there are a lot of sticky issues to be resolved, and things are not final
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yet. For example, we have to come up with a feasible way to measure and deal with
baseline emissions.
U How do we use market-based incentives to effect individual behavior, or to
f% I influence companies' actions to provide incentives for changing their employees'
• I behavior, particularly in light of the mobile source problem ofNOx emissions?
T""^"" Do you have comments on the extent to which state or local regulatory
processes, market incentives, or state emissions fees can be used as incentives to change
individual behavior?
Mr. Brenner responded that, as was pointed out earlier in the conference, the price of a
product should reflect its full environmental implication. States are trying to do this on
their own, and trying to deal with relatively diverse sources. It may be more efficient to
handle on a Federal level.
Mr. Brenner added that the employee commute (also known as the employee trip
reduction program), if implemented correctly, will strpngly encourage employees to
commute in more environmentally friendly ways. For example, groups of companies are
getting together to work jointly to set up incentives. It is difficult, and for years we have
been trying to inject into the transportation sector the right kind of market signals. The
current transportation sector is like the utility sector 15 years ago: utility pricing was not
very rational given environmental economic impacts. Over time, utility pricing has
become more rational. The challenge now is to see whether we can do something similar
in the transportation sector so that we can send pricing signals so people make the right
kind of investments.
L EPA Regions are increasing the number of requests from states for fairly
f% I innovative public/private partnership proposals. We are seeing that EPA is
• I reducing its funding for market-based incentives, and that the Inspector General
•"^•" (IG) is about to "land on" anyone who touches a public/private partnership. Mr.
Gore's recent report cited two overzealous IGs illustrating a restriction of creativity
instead of an encouragement to educate people and get them on the right track.
Mr. Brenner pointed out that it is difficult to implement or find funding for these
programs. However, there is a lot of momentum behind developing these kinds of
programs, even without additional funding from EPA. We are finding that state and local
governments are funding their own programs. We are continuing to do the best we can,
but hope that, as people see the merits of the programs, they will grow.
As far as the comment on IGs, there is a whole body of statutes and regulations that make
the new types of approaches difficult to implement. One of the messages of the
"Reinventing Government" report is that it is time to look at procurement regulations and
determine whether they have become too detailed and burdensome to pursue some of the
innovative types of approaches. In defense of IGs, they are simply making sure that we
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adhere to the requirements that are in place. "Over-zealousness" occurs in any regulatory
agency. Unfortunately, we cannot simply ask the IGs to ignore the regulations. Instead,
we should start reforming the regulations.
Mr. Carhart responded that we face a difficult task in states — trying to make ends meet
in order to augment decreases in grants and state and local appropriations. If a state and
local regulator are asked to choose between spending a certain amount on cleaning up the
air toxics problem versus a market-based incentive scheme with an unsure payoff, the air
regulator does not have much choice. EPA has been saying to us that they are going to
earmark money for market-based approaches, but this reduces the funding on other,
perhaps more important, issues that have greater impact on public health.
One of the ways to overcome this problem is for industry to sell to the government. There
should be an understanding that one cannot expect a government regulator to accept
something that only makes industry's job easier, without helping the environment, and
without pursuing additional recordkeeping and monitoring to ensure the desired results.
A more successful approach is to convey a system in which one sees more reductions,
better recordkeeping, and better monitoring.
What is the status of the need for California reformulated fuel within the LEV
program? What kind of emission credits would EPA give for an LEV program
with Federally reformulated gasoline?
Mr. Carhart stated that the position of the OTC has been very clear. The intent has always
been to use Federally reformulated fuel in the LEV program. As far as court cases are
concerned, the position of the states will be upheld. OTC has looked at the LEV program
with Federally reformulated fuel and found that we should be getting most of the emission
reductions even without California reformulated fuel. All of the indications show that
Federally reformulated fuel is the technically feasible thing to do.
Mr. Brenner explained that it would be difficult to determine what the credits would be.
In determining the credits, we look at not only the vehicle and the fuels, but maintenance
requirements as well. What sort of maintenance requirement would have to go along with
the program in order to get the desired program results?
r
What type of consideration is being made to allow for site specific
considerations in implementing technology transfers? In some cases, they may
actually increase CO and air toxics.
Mr. Brenner responded that site specific considerations will enter the discussion. If we
offer flexibility in programs, such as technologies that increase VOCs while reducing NOX,
the problem can be compensated for in other ways. If the technologies are no longer
economic, it might not be appropriate for that area. The point is to give people several
options as to where they get reductions. The flexible approaches are also important
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because it may be possible to achieve more reduction and remain economically viable for
the industry.
Do you think there is enough time to implement that type of flexibility into the
NOX reduction provisions we have been discussing? Is the process too far along?
Mr. Brenner responded that we have an economic incentives rulemaking that
deals with trading. We are trying to set up ways so that we can achieve better — not just
equivalent — environmental results.
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The approaches discussed so far seem pretty slow in coming about (e.g.,
performance standards). Why is it taking so long, and what types of things
could be done to speed things up to make this a more common practice?
Mr. Bradley indicated that we are asking for a new mind set, a new approach. There are
technical, institutional, and political obstacles that are difficult to overcome. The
momentum is beginning to build through successful application of flexible, innovative
approaches.
Mr. Becker added that the goal is to have equal or greater emissions reduction, the
assurance that those reductions will occur, and increased monitoring and recordkeeping.
There has to be mutual trust.
Mr. Brenner pointed out that we have to overcome some baggage (e.g., the Bubble
Program implemented in the 1980s) from the past where the emphasis was more on
regulatory relief than regulatory reform. These programs were seen by many as lowering
environmental goals rather than achieving the same or better environmental goals at lower
cost. Thus, there is suspicion. Also monitoring is difficult to facilitate in these types of
programs.
Mr. Carhart added that developing interstate NOX offset trading programs is new. It is
a problem of trying to coordinate trading and nonattainment planning efforts
simultaneously, and we are finding that it simply takes time. On the positive side, the
time spent now is likely to be well spent, as it is designed to produce both an attainment
and maintenance plan and an economic incentive program, in tandem. This should be
viewed as a benefit to everyone, instead of trying to create an attainment and maintenance
program first, and then trying to retrofit economic incentives after the Title I program has
already been created.
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Could you comment on the possibility that emission reduction credits, once
certified, may be assigned a lower (or zero) value in the future if a state changes
its reduction standards? Some have argued that this is necessary, but others
argue that it will retard investment in early reductions. Is such a system really
market-based if the creator of the credits is asked to take on that much risk?
Mr. Carhart responded that, based on the modelling that has been done, NOX control is
a very effective way of reducing regional ozone. We are quite likely to see a second stage
of NOy control in order to provide for attainment within the region. For that reason, the
OTC has taken an aggressive posture toward evaluating additional NOX emission control
strategies aimed at that second phase. In fact, just this week, both the OTC Stationary
Source Committee and Mobile Source Committee met (separately), to discuss additional
NOX emission control strategies that are available. For any system of this sort to work,
there must be predictability, and establishing the new SIP limits expeditiously will help.
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Page 159
Session 5 — Panel B
Technology Development and Diffusion
September 9, 1993
9:30 a.m. - 11:30 a.m.
Moderator:
Panelists:
Steve Harper
Nick Nikkila
Tim Mohin
Robb Lenhart
Dr. Joseph Ben-Dak
Introduction
Steve Harper, Senior Policy Analyst, Office of Air and Radiation, U.S. EPA,
introduced the panelists for this session. A diverse set of perspectives has been presented
at this conference. In simpler days environmentalists could point to technology as a
monolith that created environmental degradation. The discourse today is much more
sophisticated. There is an increased realization that only technological transformation will
allow us both to continue to grow economically and to solve our environmental problems.
Gus Speth, former Head of the World Resources Institute and current Director of
the United Nations Development Programme, has written very eloquently on this topic,
identifying the need for a "wholesale technological transformation." The need for a
technological transformation manifests itself domestically in many ways. Technology
transfer provides the only means for economically solving some of the current
environmental problems of which Senator Baucus spoke and those that the Senate will
confront in various re-authorization bills in Congress. In the air quality arena, the ground
level ozone pollution in cities like Los Angeles, Houston, and New York is a problem
which many people believe cannot be solved using current technology without shutting
down the economy — an effect which no one wants. As we tackle progressively tougher
environmental problems, the cost of cleaning will climb substantially. We need to find
cleaner and cheaper solutions. As our economy grows, innovative technology will permit
us to improve both our environmental and our economic well-being. Internationally, some
feel innovative technology is the only hope for sustainable development. Indeed,
discussions of sustainable development increasingly turn to topics such as de-
materialization and technologies that effectively reduce the connection between the
economy and nature.
It is important to note that although the primary focus of the panel today — and
of the conference — is on environmental technology, or what some call "dark green"
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technology, much of what is needed throughout industry is what is termed "light green"
technology. Light green technology is technology that will have significant impacts,
although not having environmental improvement as its primary focus. Examples of light
green technologies include energy efficiency breakthroughs such as the use of light-weight,
fuel-efficiency boosting and composite materials in automobile manufacturing.
The Clinton Administration has significantly increased the Federal government's
focus on technology development and diffusion. For example, EPA has convened the
Innovative Technology Council to make decisions on how environmental technology
monies will be spent and, more importantly, to get the various parts of the Federal
government to act together. The Environmental Technology Initiative will provide $36
million in its first year and is projected to grow to a cumulative $1.9 billion over an 8-9
year period. More recently, President Clinton has convened the President's Council on
Sustainable Development. It is safe to assume that many public and private sector leaders
will want to focus on technology innovation and diffusion as the cornerstone to
sustainability. It is in innovative technology that our economic and environmental
objectives can meet cooperatively.
An important question the panel may want to address is how much effort and
funding to apply toward innovative technology development, versus toward the actual
diffusion of current technologies which are innovative but which, for a variety of reasons,
have not found a market niche. The fundamental question for the panel is, "What is the
proper role of government in both technology development and diffusion?" The
environmental goods and services market is unique in that it is created and shaped by
regulations that EPA and other agencies are charged with implementing. EPA and DOE
have traditionally played a role in supporting both basic and high-risk research activities.
Typically, this has been in partnership with the private sector and increasingly through
mechanisms such as Cooperative Research and Development Agreements (CRADAs).
Some say EPA plays an important role in discouraging the market acceptance of
innovative technologies since the "best available technology" syndrome is woven into
many statutes. This syndrome leads to risk aversion on the part of permit writers and
companies that could potentially face severe penalties if they try something innovative that
does not work. Besides cleaning up its regulatory act, the government can have many
other important roles, such as providing and sharing state of the art information, thereby
facilitating uniform technology protocols against which new technologies can be judged.
The government is important as a sophisticated consumer. Although the Federal
government has received criticism in the past, President Clinton is making great strides
with procurement policy changes to encourage and increase the extent of the government's
purchasing role (e.g., the Federal government encouraging the use of recycled paper).
The incentives and flexibility that are built into the Clean Air Act are key to the
marriage of stringency and flexibility in fostering technology innovation. At EPA we have
developed a database, called the Clean Air Marketplace (CLAM) Database, to track new
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technology and business activities directly related to the Clean Air Act. Currently, we
have over 600 projects in the database. Not all of them are new technologies, but there
is a tremendous, amount of technological ferment in the market. The pace and
predictability of future EPA regulations will have a large impact on the marketplace.
Presentations
Nick Nikkila, Director, Economic Development and Business Retention, South
Coast Air Quality Management District (SCAQMD), described the efforts of the
regional air pollution control agency in assisting in the development and
commercialization of new, less polluting technologies.
The SCAQMD — comprised of Los Angeles, Orange, and Riverside counties
and the non-desert portion of San Bernadino County — was given the legislative authority
to regulate air pollution in the Los Angeles area. In all, the SCAQMD covers 13,350 square
miles and a population of over 13 million people. It also covers in excess of 9 million
resident vehicles which, coupled with tourist traffic, drive approximately 270 million miles
each day.
The combination of topography, meteorology, and population has produced a level
of air pollution that is beyond any conditions experienced elsewhere in the United States.
The problem is growing and the population of the area is projected to increase by more
that 30 percent by the year 2010. If we are to have healthy air quality in the Southern
California Basin, it will only come about as a result of new, lower-emitting technologies
such as fuel cells for mobile and stationary applications, commercially acceptable zero-
emission vehicles, non-VOC coatings and inks that are usable in all printing and coating
applications, and ultra-low NOX burners. As a result, the SCAQMD, more than any other
air pollution control agency in the country, depends upon the development and
commercialization of new technologies. While stringent regulatory requirements can
provide incentives for technology development, it is our belief that this alone is not
sufficient to meet the needs of our area. The SCAQMD must play a larger role in the
solution.
Since SCAQMD created of the Office of Technology Advancement in 1988, the
office has invested in excess of $34 million toward the research and development of low-
emitting technologies. Because this money is used to leverage additional research and
development funding, the result has been in excess of $100 million dedicated to the
development of low-emitting technologies. In a risk-averse corporate culture, our
participation has had value far beyond the dollar amount contributed. We often are able
to give technical innovators in corporate America the credibility they need within their
own companies to advance research and demonstration projects, even when our share is
only 10 percent of a project or less. The SCAQMD has provided co-funding for over 100
research and development projects.
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Initially, the vision was something like that in the movie, Field of Dreams — "Build
it and they will come." In reality, demonstrating the efficacy and feasibility of a
technology does not guarantee investment in its commercialization and use. Since gaining
that perspective, we have initiated two separate actions:
• The Best Available Control Technology (BACT) designation program; and
• The development of a new Technology Commercialization Loan Program.
The Best Available Control Technology (BACT) Designation Program
In the state of California, all new sources of pollution are required to be equipped
with BACT level controls or processes. As a result, a BACT designation can make a new
technology a much more viable commercial product. Within our agency, we are now
building a discrete group, which will be dedicated to BACT designations and will have a
close tie to our technology advancement program. In that way, we can maximize the
opportunities for private investment in the commercialization of new technologies.
As a technology becomes available for commercial investment, we perform a BACT
analysis. A subsequent BACT designation should then serve to attract investors to that
technblogy. One of the things we have heard from investment bankers today is that,
"What is BACT today may not be BACT tomorrow." This creates uncertainty in regard
to the time-frame for marketability of the technology in which they might be considering
investment. In response, the SCAQMD is now considering establishing a fixed, or
guaranteed life of three years for BACT designations. The designation would be valid for
three years whether a new technology with improved effectiveness comes out next week
or next year. Once a technology is termed BACT, it would hold that designation for three
years. This means that there will be an overlap of technologies that are BACT. This
strategy would assure investors a reasonable market period for the new technology being
considered. All signs suggest that this will improve the opportunities for timely, private
investment in the commercialization of newly emerging technologies.
Commercialization Capital
Private investment is not always attractive to the technology entrepreneur. Often,
an entrepreneur goes to the bank with only an intellectual property — often regarded as
poor collateral for a loan. On the other hand, if that same entrepreneur seeks funding
from a venture capitalist, the entrepreneur would be forced to pay a very high price, most
often in the form of equity in their company. After working for years to develop a
technology, it is difficult for individuals to give up a large part of their company to people
who have invested comparatively very little themselves. In response, the SCAQMD has
begun an effort which we hope will result in the creation of a revolving loan fund
dedicated to the commercialization of new technology. Initially, the source of funding
would be a part of the current vehicle registration fee. For that reason, projects that could
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be funded would be limited to those that are related to mobile sources. If this proves
successful, we will look for opportunities to expand this program to cover stationary
source-related technologies as well. Currently, a contractor has been hired to develop
recommendations for the structure and administration of such a loan program. Any
suggestions from those familiar with existing loan programs are welcome.
The SCAQMD recognizes that efforts to develop and commercialize a new
technology can be useless if the customer is not able to buy the product. That is why the
low interest loan program is available for customers who want to purchase the new
technology.
The SCAQMD is taking other bold steps toward an improved regulatory climate
for innovations, including the new market-based approach which the SCAQMD terms
RECLAIM (Regional Clean Air Incentives Market). Hearings are scheduled to begin on
September 9, 1993, and are expected to last until October 15, 1993, when RECLAIM will,
hopefully, be approved. If adopted, RECLAIM could change the regulatory mode both
nationally and internationally. Inspection of non-RECLAIM sources has revealed that in
just one instance, the SCAQMD has saved more than 19,000 businesses in Southern
California over $1.7 billion, while opening the way for more rapid economic recovery and
air quality improvement.
Through the SCAQMD's knowledge of new emerging technologies and their
partnerships with businesses in their district, SCAQMD has been able to retain 4,000 jobs
which otherwise would have left the basin. Given California's poor economic situation,
economic enhancement must go hand-in-hand with environmental improvement. The
approach of the SCAQMD is proactive because it combines development,
commercialization, and the use of new technologies to create greater opportunities for
innovation and improving the economy.
Tim Mohin, Senior Fellow, U.S. Senate Environment and Public Works
Committee, spoke about the National Environmental Technology Act of 1993.
The bill was introduced by Senator Baucus on May 18,1993; co-authors of the
bill include Senator Lieberman and Senator Mikulski.
Goals of the Legislation
The National Environmental Technology Act is the embodiment of the marriage
between the environment and the economy. The goal of the legislation is to foster a strong
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U.S. environmental technology industry, leading to increased job creation, economic
development, and a healthy environment. A strong environmental technology industry
is a win-win situation for America. In determining the goals of this legislation, the
Committee of Environment and Public Works asked, "What can we do within our
jurisdiction that will foster this industry?," resulting in four primary objectives of the bill:
• Coordinate the efforts of the Federal government related to environmental
technology;
• Provide the necessary seed money for the capitalization of innovative
technologies development in the private sector;
• Reduce market barriers that exist for the environmental technology market;
and
• Disseminate information by Linking users and developers.
Coordination
The National Environmental Technology Panel was organized to meet the first
objective, coordinating government efforts. According to a Congressional research service
report, there are over ten different agencies within the Federal government that have a
combined total annual spending of over $4 billion for environmental technology. The
report illustrated that it was difficult to specifically determine how this money is being
spent. The Federal Coordinating Council for Science Engineering and Technology
(FCCSET) has developed a panel within its existing structure to coordinate environmental
technology efforts throughout the government. The Clinton administration has already
designated this panel, which would act as the National Environmental Technology Panel.
The panel aims to find out what is already being done by Federal agencies and to create
a budget crosscut of all the dollars that are being spent on environmental technology
today. From this information, FCCSET will develop a national strategy for addressing our
critical environmental technology needs, indicating where we need to start investing our
dollars. This strategy will form the basis for a research agenda for the future. Each year
the panel will review the budgets of those separate agencies requesting environmental
technology funds as one single budget request. Joint reporting will maximize coordination
efforts, reduce duplication, and enhance the goal of a national strategy for environmental
technology.
Funding
Environmental technology development is consistently suffering from a lack of
venture capital. Venture capitalists tend to be conservative; therefore, the high risk, high
pay-off ventures often do not get funded.
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Bureau of Environmental Technology
The National Environmental Technology Act addresses the funding issue through
provisions for the Bureau of Environmental Technology and the Environment Innovations
Research Program. The Bureau of Environmental Technology, located at EPA, would be
a focal point for the development of environmental technology. It would be modelled after
successful government programs such as the Advanced Technology Program (ATP) at the
Department of Commerce and the Advanced Research Projects Agency (ARPA) at DOE.
These tend to be non-bureaucratic agencies which are nimble and can fund the
development of innovative technology projects focusing on pre-commercial, product-
oriented research and development. The proposed appropriation levels for this project are
$36 million for the first year (FY 94), and $120 million in the third year.
To encourage public and private partnerships the bill requires that 95 percent of
the money appropriated to this bureau be spent outside the Federal government in private
and public partnerships. Developing a public and private partnership requires a 50
percent match from businesses (25 percent for smaller businesses). In addition, more
projects will be conducted in coordination with other Federal agencies. The bill contains
a first-year waiver, allowing 10 percent of these dollars to be spent within the Federal
government for start-up costs during the first year. There have been complaints that EPA
is a regulatory agency and not a technology development agency. EPA's first priority is
regulation; however, the agency spends over $100 million per year on environmental
technology. The agency has experience and is well positioned to anticipate the future
regulatory agenda and, therefore, the environmental technology needs of the country in
the future. The bureau director must work with the heads of other agencies such as ATP
and ARPA.
Environmental Innovation Research Program
The purpose of this program is to advance both clean-up and pollution prevention
technologies. The program is specifically geared toward commercially viable technologies.
This program uses the Small Business Innovative Research (SBIR) programs model, which
is proven in developing successful ventures and technologies. It uses a carefully
structured, three-phase approach to set aside dollars for programs. The Environmental
Innovation Research Program is funded through money that would have been used to
clean up sites within the federal government. The costs of federal cleanup have been
estimated in the billions and as high as $1 trillion over the next thirty years. This program
will tap 1.25 percent of the funds that would be appropriated for cleanup and these funds
would be spent in the private sector, to develop technology for the cleanup of these sites.
This is necessary to reduce future costs and to provide solutions for those sites which we
currently do not have the knowledge or technology available to clean up. The scope of
the Technology Research Program is not limited to cleanup technologies, it also includes
pollution prevention technologies. The development of new technology for pollution
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prevention is also in the interest of the cleanup endeavor, since prevention technologies
will result in less pollution to clean up in the future.
Reduce Market Barriers
Technology Verifications Program (EPA)
The goal of the Verification Program is to break down the barriers of performance
and equipment standards by setting up a program within EPA that would verify new
technology developments. It is difficult for developers to get into the market when their
technology is not trusted. There exists a need for a credible third party to verify the cost
and performance characteristics of new technologies under tested conditions. This is
needed to combat the inertia to employ the technologies used to develop the performance
standard. In practice, the permit writers look at the background document to find the
backbone process upon which improved performance is based and then utilize this
technology.
EPA's development of verification will provide the regulated community an
introduction to new technologies and simultaneously give credibility to the new
technology. Therefore, the regulated community will have greater flexibility in choosing
technologies to be implemented. The program would rate a new technology versus the
technology upon which the performance is based. EPA would look at the technology and
verify cost and performance. The result will not be a "Pass/Fail" endorsement, but a
description of how well a technology compares to the regulatory line. A verified
technology will not guarantee compliance with the standard for users of the new
technology; it will provide a verification of how that new technology performs. During
the review of technologies, those that are pollution prevention approaches are favored.
Innovative Technology Testing Program (EPA)
Another barrier to the development and marketing of new technologies is the lack
of adequate testing facilities. The issue of liability stands as a huge barrier when a new
technology is in need of demonstration or testing. Risk averse companies do not want to
take on this liability and, therefore, do not promote testing at their facilities. The
Innovative Technology Testing Program builds on the existing EPA Superfund Innovative
Technology (SITE) program, which focuses on cleanup. The SITE program allows
developers of new technologies to come on-site and demonstrate how their new
technology works. The Federal government should expand this program to include
Superfund sites and other federal facilities. The testing provision intends that the federal
government assumes the risl^ for the development of innovative technologies.
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Disseminate Information
Coordination between EPA and NIST
The National Institute for Standards and Technology (NIST), Department of
Commerce, has a network of manufacturing technology development centers. There are
currently seven existing centers, expected to increase to 100 in the next budget year. This
increase offers an incredible opportunity to spread the news about environmental
technology. We feel that this is one of the most effective ways in which to distribute this
information about environmental technology. The current focus of NIST facilities is to help
small businesses improve their manufacturing processes. This program proposes that these
facilities could simultaneously help businesses with their environmental strategy. EPA
should be connected with this network. The bill also has provisions to connect EPA with
the Agricultural Extension Centers.
Clearinghouse
All of the information developed under this act will be collected and distributed
by a clearinghouse. It is our hope that this will get the information out to small
businesses. The program will possibly promote exports to other countries and provide
information to technology developers on the sources of technical and financial assistance
that they can access to help export their products.
National Environmental Technology Advisory Council
This council will be part of the existing NACEPT council that EPA already operates.
The concept behind the program is to bring private sector and non-government expertise
involvement into these technology programs. The program seeks to combat the criticisms
that bureaucrats are picking winners and losers while they have no idea about real market
forces. This is a fair criticism and that is why it is important to bring into this council
people from business and academia who really understand the market forces that are
driving decisions.
Remaining Challenges
This bill is only the first step on a long road of environmental technology in this
country. Japan's Ministry of International Trade and Industry (MITI) has taken an interest
in this bill. This is encouraging because it indicates that we must be doing something right
to draw such esteemed international interest. The largest remaining challenge is to break
down some of the barriers between business and government. We need to stop wasting
money and energy fighting each other and focus on our shared goals of a cleaner
environment and a healthier bottom line. Environmental technology is a means for both
government and industry to achieve our goals. We need solid ground rules to direct our
efforts. A regulation should be tough, but it should also be reasonable and flexible. The
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importance of focusing on incentive systems so that we can go beyond the regulations
cannot be stressed enough. The Amoco situation, where there is no incentive for Amoco
to stick its neck out and take action because they run the risk of not doing enough by the
standard of some future regulation, is a shame. We need to find ways to build in both
incentives and flexibility.
All the economic indicators point to a strong environmental technology industry
— on which we need to capitalize. We need to become a world leader, and to do that,
EPA, industry, environmental groups, and Congress need to work together. The National
Environmental Technology Act provides a good start for such cooperation.
Robb Lenhart, Director of Business Services, National Environmental
Technologies Applications Corporation (NETAC), began by endorsing the
leveraging of which Mr. Harper spoke. Many of the issues discussed at the
conference are being dealt with in this legislation. Mr. Lenhart expanded on
NETAC's role in helping small businesses get new, innovative technology into
the market.
History of NETAC
NETAC was founded as a partnership of industry, government, and the academic
community; it recognized that many of the solutions for the environmental industry must
come from different segments, not just from industry alone. Created in October of 1988,
NETAC is a subsidiary of the University of Pittsburgh Trust. At that time EPA
Administrator Lee Thomas came to Pittsburgh and spoke with the University about
establishing this type of program. It was recognized that the SITE program was beginning
to provide a forum for providing the operating and cost data for new environmental
technologies. What was missing at that point was the commercialization assistance that
many individual entrepreneurs and small- to medium-sized companies needed to take
their technologies successfully to the market. NETAC was established to focus on
providing this commercialization assistance.
NETAC is a non-profit organization that accelerates commercialization of priority
environmental technologies. NETAC operates on an annual budget of approximately $1
million, as part of the start up fund from EPA. Fulfilling this mission means identifying
the technologies which are available, and then providing the services needed to move
those technologies successfully into the marketplace. An important lesson learned in the
past five years of operation is that NETAC must do more than just help the companies
who are developing new technologies; it must also assist the end users who are seeking
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innovative ways to solve their problems. NETAC now offers product and information
services on emerging innovative technologies to help users get access to the available
technologies.
Air Pollution Controls in the Market
Earlier in the conference we heard about the overwhelming need for innovation.
The need for new technologies drives market opportunities. A market survey was
conducted by the Environmental Business Journal, showing that air pollution control
represents a market of $5-$6 billion per year over the last four years. (Numbers that you
may hear from EPA of $20-$30 billion differ due to construction costs not included in the
costing by the Environmental Business Journal.) The overall annual cost for environmental
goods and services in the U.S. is approximately $135 billion, with air pollution control
representing a large part of the total. Air pollution control costs are even more significant
when one looks at the projected growth: in the 1980s, averages of 12-15 percent growth
for environmental costs were normal; projections show 5-7 percent averages for the 1990s.
Air pollution control costs show the highest projected growth.
Need for Innovative Technologies
One needs only to look at the remediation side of the current marketplace to see
how things stand. Over 40 percent of the technologies currently being identified for site
reclamation work are innovative, emerging technologies. This number has increased by
about 10 percent over the past three years. The same trend is true for the air pollution
control business. Looking at the sites on the National Priority List (NPL), one sees that the
reason that approximately one-quarter of the sites appear on the NPL is because of their
air impacts. The potential exists for many chemicals or compounds to become airborne.
This is a serious problem demanding technologies that can address this issue. What does
this mean in terms of new business for companies in the air pollution control field? A
study by the BT1 consulting group identified new service offerings for environmental firms
in 1993; approximately one-fifth of all new proposals for this year from the environmental
field deal with the air segment.
Venture capitalists are also good indicators of the business in environmental
technology. A survey by the Environmental Business Journal looking at the level of interest
of investors showed that — compared to eleven other areas in the environmental segment
— interest in air pollution control ranked third. Interest in air pollution control has
increased while resource recovery has decreased, the latter resulting from recycling and
reclamation programs that have not been as economically successful as expected.
What Does This Mean for an Industrial Company Financially?
It is important for industrial companies to recognize that environmental technology
development and commercialization can be a successful process. NETAC compared four
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separate companies in the air pollution control field, looking at financial performance
figures, annual sales, compounded annual growth rates over a three-year period, operating
profit margins, operating profit/sales, the return on equity, the net income based on
average shareholder equity, and the price-to-eamings ratio. As a general rule, if a
company achieves operating profit margins greater than 8-10 percent, or if the company's
return on equity is in excess of 20 percent, the company is doing fairly well. Some
companies in the past, however, continued to achieve these levels year after year.
Comparing the air pollution control industry to other environmental control segments with
regard to employment level, employment figures for air pollution firms have increased
while other environmental organizations are in decline.
NET AC recently compared different environmental segment niches and illustrated
a qualitative ranking for sales growth rate, operating profit margins, and financial stability.
In general, air pollution control ranked in the top two or three segments in the
environmental field. Other segments that ranked near air pollution control were
remediation and water/ wastewater treatment, all representing good returns for companies
who are involved.
What Does NETAC Do?
NETAC's efforts in commercialization
Initially, NETAC was set up to encourage commercialization. This endeavor began
by breaking down the continuum of technology development into a number of stages.
NETAC uses a six-stage model based on participants, commercialization factors, success
criteria, and an "activity balance" between technology and business factors. NETAC
maintains a micro approach to solving some of these technology commercialization
problems. NETAC analyzes the players involved: technology professionals, business
professionals, users, suppliers, financial investors, and regulatory personnel. NETAC also
looks into how each tends to get more or less involved as development progresses from
the initial idea or proof of concept stages through prototype and pilot development,
demonstration, and commercialization activities. NETAC has developed success criteria
for each stage that must be fulfilled in order to move forward successfully to the next
stage. Different commercialization factors utilized in the process are technology, market
factors, competition both within the U.S. and abroad, and business and management
issues.
NETAC's research shows that more companies fail due to a lack of attention to
business issues than to technical considerations. Generally, small companies or
entrepreneurs do not focus enough on business. Sometimes they have spent millions in
development and then find themselves asking, "Who needs this?" or "Where is my
market?" Many technical successes are business failures. How can the business issues be
properly addressed? The point is that there are some key levels of accomplishment that
need to be addressed as one moves through the development process. Both technical and
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business factors need to be dealt with at every stage of the process. In the beginning,
companies too frequently neglect business factors — there is a trade-off.
NET AC, as a new group dealing with technology commercialization, has been able
to look at some of these issues from the business side. With this perspective NETAC has
been able to help companies deal with commercialization. NETAC identifies the barriers
to commercialization and develops strategies to get around them. NETAC hosts seminars
and conferences to offer strategies for avoiding barriers. "The Valley of Death", a
schematic illustrating different types of financing applicable to the technology development
process, was introduced from a DOE publication. The valley illustrates the difficulty of
accessing the proper funding at the appropriate time during the development process.
Clearly, as you move from stage to stage in development, the need for funding changes.
NETAC has identified many sources of funding for entrepreneurs by developing lists of
venture capitalists who work in the environmental field, and by creating relationships with
corporations where, through corporate partnering, we help entrepreneurs get their
technologies demonstrated and developed. There are many different avenues that can be
pursued in obtaining funding; NETAC tries to offer these financing options in a clear
manner to businesses. NETAC does not have actual funding from the EPA to support the
development process. In most instances, NETAC has been involved in technology
development and demonstration activities supported directly by the client organization.
When investors are looking at an organization, they are primarily concerned with: (1) the
business operation; (2) the potential for turn-around of profit; and (3) technology. Good
profit margins and a proven track record for the organization are important.
Technology Information
Another large aspect of NETAC's capability is technology information services, as
it is important to disseminate technology into the marketplace. NETAC has a database
called ETAP which has nearly 2,000 emerging innovative technologies. The Vender
Information System for Innovative Treatment Technology (VISIT) database of EPA has
about 300, but is more focused, whereas the NETAC database is more comprehensive in
selecting new solutions. NETAC provides another technology information service called
"Product Profile", which consists of a two-page description of technologies that have been
developed from vendor information. Approximately 250 technologies have been
developed in the past 2-3 years for this service. The Product Profiles include process
descriptions, technology applications, operating parameters of the process, and vendor
information. NETAC has no investment or equity interest in any of the technologies —
this is purely a service to offer technology information to businesses looking for
environmental technologies. NETAC does independent confirmation tests to screen out
"fly-by-night" technologies from this Product Profile service.
NETAC also offers technology evaluations, independent assessments, and
demonstrations that illustrate that a technology can work. NETAC has developed test
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protocols for products that have been applied to oil spill clean-ups, and also offers business
evaluations, market assessments, arid industry analyses.
In summary, there is a connection between what we have been trying to accomplish
here — the seed that was planted five years ago by EPA — and some of the initiatives
described at this conference. We believe that this illustrates how we can work together to
solve some of the most pressing U.S. environmental problems.
Dr. Joseph Ben-Dak, Chief, Global Technology Group, United Nations
Development Programme (UNDP), deals with technology transfer, adaptation,
and conversion of military technologies to civilian markets. His remarks
focused on the international view of sustainable development.
Most of the developing countries do not have an organization like NET AC, nor
a technology assessment or dissemination program, nor even a Clean Air Act. Nor is there
any chance of such a regulation in the near future. These countries, therefore, have very
little of the regulatory function that is taken for granted both nationally and regionally.
Markets are applicable, under some conditions. U.S. companies (correctly) believe that
third world countries do not have the money to pay for their technology. This will not
change drastically, but you really can determine some sub-populations of interest from the
general group.
Part of the reason we are going to be dealing more with clean air is because the
administrator of UNDP, Gus Speth, is speaking in a tone the rest of us like very much.
The idea that one can make a living in a less developed country and at the same time be
very much in tune with environmentally sound technologies is beginning to be something
very much in fashion.
There are essentially seven different groups in which clean air technologies are
relevant, five of which are described below. The UNDP is dealing with all these groups.
Group 1: Commonwealth of Independent States and Eastern Europe
The Commonwealth of Independent States and many parts of Eastern Europe have
experienced extensive environmental damage to their air and water supplies. These areas
require immediate action. The people of each strata of the population in these countries
are beginning to become aware of the damage and there is a growing interest in obtaining
funds for the environment from the European Community. These are not good years for
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the European Economic Community, but, there is a great deal being attempted by
European corporations.
Now is the time to pull in U.S. technology. We must use a great deal of Japanese,
U.S., and European companies and pull together the best technology solutions and services
from each. There are currently over 170 requests to the UNDP from countries in Eastern
Europe. This represents a large sum of money that could be applied in the next five years
to environmental technology.
Group 2: China
China represents a large percentage of humanity. To put their population into
perspective, there are factories in China with 80,000 workers that are considered "small".
There is a growing awareness in China of the issue of air and water pollution, particularly
in cities with both open and closed industrial parks. If one wants to do business in China,
the most important thing is not to go about it as a market, but to try to develop the
technology with the country, catering to its needs and its situation. Packages are made of
complementary technologies by looking at what already exists locally and pulling this
together with foreign technologies. Approximately 20 percent of the military industry,
which currently produces strictly military products, will be totally converted to
environmentally oriented goods in the next ten years. There is an enormous amount of
research and development in this area. Unfortunately, these industries are not being given
a fair chance by U.S. and other foreign countries to pull together local resources with
foreign efforts.
Group 3: Small Island States
Small island states, which politically represent about one-third of the members of
the U.N. community, include Papua New Guinea, Indonesia, and others. These countries
consist of gentle, precarious ecosystems, and have a great need for technology. There are
62 states defined as island states which are calling for technology. If one creates a wise,
careful coalition of technology, more can be done for these precious ecosystems and
humanity because a large portion of the population lives on island states or in seashore
areas.
Group 4: Newly Industrialized Countries
The large, newly industrial countries of Indonesia, Malaysia, and some larger
countries of Africa such as Nigeria, are an untapped resource for products and
collaboration opportunities in environmentally sound technologies. Africa, Latin America,
and other less developed countries represent one of the biggest challenges because they
are able to fund little development. One of the biggest challenges that one faces in
entering those markets is the so-called "appropriate technologies" and ways to reduce the
overall cost.
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As "citizens of the world," we ought to look at these issues in addition to our local
concents. This is a high priority for the next level of development. The U.S. needs to help
the UNDP develop standards internationally. The relationship between what happens in
this country and what will happen in less developed countries is obvious.
The issue of sustainable development indicates that we must focus on developing
environmentally sound technologies that are relevant in producing a living, as well as a
sustainable standard of resources both internationally and nationally that makes sense in
the long run. That is, we must apply a lot of loving care to the questions of how the
environment and natural resources are being treated. Many more countries today are
talking about these issues. Ten years ago, no lesser developed countries talked about
sustainable development. Even today, leaders of these countries still do not consider the
environment a priority, but at least they recognize that the environment is a concern.
There is an element of support from other international organizations such as the Global
Environment Facility, the World Bank, the Commission on Sustainable Development
within the secretariat of the U.N., the UNKTAD, and the UNEP. The combined budget
for these organizations is $1 billion every five years. This budget must be applied
specifically to environmental issues especially dealing with sustainable development. This
is particularly relevant for the lesser developed countries of the world.
Group 5: Cities and Super-Cities
Cities and super-cities — composed of large critical masses of over 700,000 people
typically operate under a built-in economy of scale to apply technology. The people in
these cities are aware of the importance of the environment, because they have seen it
destroyed. The large population makes it necessary to buy services for the people in these
cities, and in doing this create a private/public combination that makes sense for the
situations in these cities. There are no less than 20 large cities which have asked the
UNDP for assistance. They are seeking mid-course correction of their current situation.
These cities are open to technologies, open to utilizing debt, and intend to take these
actions in the near future.
Often the military is the most logical partner because military personnel are already
technically oriented. The military leaders understand technology from being involved in
weapons and military equipment. Many military leaders understand that their role in the
world may change. Some critics say that the UNDP is doing too much with the military,
that it is not fashionable at this time. They do not understand that, as in Daniel Webster's
story, "You must work with the devil to kill it." There are approximately 42 different
military groups looking to redirect their energy and manpower. The more you tie
technology and innovations to these communities the more success you will enjoy. Many
assume that the private sector is ineffective in less developed countries. In many of these
countries they are so interested in the technology they ignore the infrastructure and quality
control. Source reduction technologies are far better than control technologies. Pollution
prevention is a key concern for the regions. All should remember that we are first citizens
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of the world and that we should work together to improve the economic and
environmental situation across the world through technology application.
Questions and Answers
a
It seems that throughout the conference people have been speaking about control
technologies as either a light green or dark green technology. Can you explain
the difference?
People use both of these terms broadly to describe technologies which reduce pollution,
including source reduction, control technologies, and pollution prevention. As Mr. Harper
described earlier, dark green technologies are those created with the intent of improving
the environment, light green technologies are those which reduce the threat to the
environment as an incidental bonus.
In Georgia, entrepreneurs speak about incubation centers that generate sustaining
revenue and lock in technical support. To what extent have your organizations
thought about this approach?
Mr. Mohin stated that although he has thought about this approach, it is not included in
the legislation. He looked at a similar program at Iowa State University. Mr. Lenhart
indicated that it was a process which could be factored in, but that NET AC does not run
any special programs as of yet to deal with this issue. Many programs focusing on
business deserve greater attention.
How does government coupling with innovative technology effect investments
in research and development?
Mr. Nikkila pointed out that 87 percent of over $100 million spent in California
has been on California companies. Mr. Mohin added that we are making progress in
change, but we still have a long way to go. We need a better way to combine the bottom
line. Corporations are not in the environment business, they are in the money-making
business. From Congress' standpoint we need to make it part of the bottom line by
promoting tax incentives, tax credits, and taxes on hazardous waste generators. Mr.
Harper indicated that the political environment is changing across the world. Similarly,
there is change in corporate culture.
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A statement was made earlier in regard to industry not wanting to be
innovative. Who is coming to the SCAQMD? Are they vendors for off-the-shelf
technology?
Mr. Nikkila explained that under the RECLAIM program, innovators are given a goal, such
as a law, around which to focus their innovative efforts. The RECLAIM program also
encourages innovators to sell and, thereby share, what they have developed.
When speaking about breaking the barriers to technology innovation, you
mentioned that technology verification would not guarantee compliance. Does
this mean that verifiers would have a separate set of standards?
Mr. Mohin responded that there is a need to compare existing technology with regulations.
Moving away from specific regulations, verification is more of a credibility check. EPA
would provide information to prospective consumers that the technology has some
legitimacy. In other words, using an EPA "verified technology" does not mean that EPA
is guaranteeing its use will automatically ensure compliance. EPA has the responsibility
to help drive technology.
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Page 177
Session 5 — Panel C
Export Promotion
September 9, 1993
9:30 a.m. - 11:30 a.m.
Moderator:
Panelists:
Richard A. Wegman
Rodney Sobin
Lewis P. Reade
F. Bradford Smith
Introduction
Richard A. Wegman, Partner, Garvey, Schubert, and Barer, noted that the U.S. is
almost twenty-five years into the "modern environmental age," exemplified by the fact that
much of its environmental technology is now second generation. As a result, American
companies are well situated to take advantage of a burgeoning international market for
these technologies and services. The market, currently estimated at $30 billion for air
pollution control technologies alone, is projected to grow substantially by the year 2000 to
as much as $80 billion.
In light of these statistics, the panelists were asked to address several topics during
the course of their presentations:
• What more can government, at all levels (but particularly the Federal
government), do to promote exports and American companies that wish to
serve this market?
• Are the efforts of the different Federal government agencies involved in this
area well coordinated? If not, how can coordination be improved between
and among the agencies?
• [For the public sector panelists] What is President Clinton's Inter-Agency
Strategic Plan going to look like and what sort of results can be expected?
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Presentations
Rodney Sobin, Analyst, U.S. Congress, Office of Technology Assessment
(OTA), began his remarks by highlighting a current OTA project, provisionally
titled "American Industry and the Environment," which is examining trade,
the environment, and competitiveness. Several reports have been or currently
are being prepared for this study:
• Trade and Environment: Conflicts and Opportunities (released May 1992), is
a background paper that examines the relationships between trade practices
and laws, and environmental concerns and regulations.
• Development Assistance, Export Promotion, and Environmental Technology
(released September 1993), discusses the use of environmental aid, and
includes the use of environmental aid to promote exports of environmental
technologies.
• The third report, a final assessment scheduled for release in November
1993, will address competitiveness of the environmental business services
sector, and analyze the effects of environmental regulations on the
competitiveness of U.S. manufacturing.
Mr. Sobin provided a brief overview of the organization of export promotion in the
U.S. The Federal export promotion and financing apparatus is complex, with
responsibilities divided among numerous agencies. Some of the programs and initiatives
of the Federal agencies that have primary responsibility for promoting U.S. exports and
related investment abroad are as follows.
• The International Trade Administration (ITA) of the Department of
Commerce operates the U.S. Foreign and Commercial Service, a network of
U.S. regional offices and commercial officers overseas, and a Trade
Information Center. ITA also distributes information via trade data banks,
electronic bulletin boards, and publications. Its responsibilities include
gathering and disseminating market data and trade leads, providing export
education, facilitating trade missions, shows, and connections between U.S.
companies and potential customers abroad.
• The Export-Import Bank (Eximbank) promotes exports by accepting credit
risks that are unlikely to be accepted by private lenders. It provides credit
insurance, loan guarantees, and some direct loans to finance U.S. exports.
The Overseas Private Investment Corporation (OPIC) provides loans, loan
guarantees, political risk insurance, and other services to private sector
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investors for financing investments in developing and middle-income
countries. OPIC hopes to establish an International Environmental
Investment Fund.
• The Trade and Development Agency (TDA) funds pre-feasibility and
feasibility studies conducted by U.S. firms for projects in developing and
middle-income countries. TDA also supports technical assistance, training,
and trade events.
Support for activities like TDA's is important because U.S. involvement at planning
stages increases the likelihood of winning design, construction, and project management
contracts, as well as providing opportunities for the export of manufactured products.
In addition, other agencies support environmental export activities even when it
is not their primary mission:
• The U.S. Agency for International Development (U.S. AID) supports and
administers many programs including the U.S.-Asia Environmental
Partnership, the Environmental Credit Program, the Private Investment and
Trade Opportunities program, and the Bureau for Private Enterprise, in
addition to supporting other activities such as feasibility studies, trade
events, and environmental training.
• The Department of Energy (DOE), active in promoting cleaner energy
technology trade and transfer, administers an Export Initiative Program,
leads the interagency Committee on Renewable Energy Commerce and
Trade (CORECT), and provides technical assistance capability.
The Energy Policy Act of 1992 authorizes U.S. AID and DOE to lead export
and technology transfer initiatives for renewable energy, energy efficiency,
and clean coal technologies to developing countries and Eastern Europe.
• The Environmental Protection Agency (EPA) plays a role as a provider of
technical expertise. EPA also helped create the U.S. Environmental Training
Institute, whose courses are designed to allow U.S. companies to showcase
their environmental products and services to foreign private and public
sector officials of developing countries while providing training and
technical assistance. EPA also recently developed a Green Pages directory
of environmental firms.
A number of states have developed significant export promotion programs that in
some cases target environmental products and services. They have taken a growing
responsibility for export promotion by posting representatives overseas, planning trade
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events, promoting export awareness and education, providing advice on financing, and
passing on trade leads. States can also help businesses gain access to Federal services.
Many private sector organizations such as industry associations also work toward
increasing environmental exports by helping coordinate public and private efforts.
Other efforts such as objective, independent performance evaluations of U.S.
environmental technologies could be used to help speed the diffusion of innovative
technology domestically and promote exports of U.S. products. Programs like the
Superfund Innovative Technology Evaluation program for remedial treatment technologies
could be used as a model for expanding into pollution prevention and control technologies
of interest to industry and utilities.
Responsibility for the problems of export promotion lie with both the public and
the private sectors. Industry needs to recognize that reaping the rewards of exports takes
significant effort, time, and expense, in addition to developing an export culture within the
company products and services often need to be adapted to the needs of foreign markets
and practices. However, an environment with multiple agencies and programs has led to
poor coordination, program duplication, and a lack of overall strategy. The low level of
awareness in the private sector (and sometimes, the public sector) of what services are
available and how to access them is also a problem. Several initiatives are underway to
attempt to address these issues, although many face the same problems as the programs
and agencies they represent:
• An interagency Trade Program Coordinating Committee (TPCC): to
develop an overall export strategy; along with an environmental subgroup
to develop an environmental export strategy.
• An Interagency Working Group on Environmental Technology: to
develop strategies to further environmental exports, technology
development, and technology diffusion;
• The Trade Information Center (Commerce): to direct inquiries to
appropriate agencies;
• Trade and Investment Services Center (U.S. AID) and Export Promotion
Initiative (DOE): to provide coordinated services to U.S. exporters;
• CORECT (DOE): to provide coordination for renewable energy exporters;
and
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• The U.S.-Asia Environmental Partnership: to coordinate environmental
exports, technology cooperation, and investment in the Asia-Pacific region.
These initiatives should assist in improving agency coordination.
Lewis P. Reade, Director General, United States-Asia Environmental
Partnership (US-AEP), United States Agency for International Development
(USAID), began his presentation by noting that USAID recognized early the
relationship between economic development and the environment. The
environment is a major issue in developing and newly industrialized countries
for a number of reasons. For example, the environment is a major component
of sustainable development. The poor, who are the focus of economic development efforts,
usually suffer the most from environmental degradation. From an economic development
standpoint, a strong economy supports a good environment, and a good environment
supports strong economic growth.
The two principal goals of the U.S.-Asia Environmental Partnership are to:
• Work with U.S. and Asian governments, non-governmental organizations,
and the private sector to identify and address environmental problems that
prevent sustainable development and sustainable economic growth.
• Provide technology transfer opportunities for U.S. producers of
environmental technologies and services.
USAID does not underwrite specific projects, but rather provides the "software"
that needs to be in place so that American companies can take advantage of the Asian
market. To that end, US-AEP provides information (in the form of relationships, and
technical information and training), networking opportunities, and access to financing
related to these technologies.
Asia, a vast region supporting over half the world's population and many of its
resources, is experiencing rapid population and industrial/economic growth, and
consequently some serious environmental crises. Studies show Asia is already having a
major impact on global air quality, and the situation is expected to worsen. USAID hopes
to help improve conditions in the thirty-four developing and newly industrialized Asian
countries which are part of this partnership. Therefore, there is a role for U.S. businesses
to play in helping Asia address and remediate the negative environmental trends.
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US-AEP's role is one of coordination. It supports the environmental and
commercial efforts of other agencies with core funding, currently $100 million over five
years. The partnership expects these core funds to leverage significant contributions from
the U.S. and foreign governments, private sector companies, non-governmental
organizations, and multilateral development institutions. Through US-AEP, substantial
business opportunities are created for U.S. technology, goods, and services.
US-AEP expended about $4 million, originally for organization and now for project
start-up. All of the current projects are less than a year old; some are only a few weeks
old. They estimate that their work thus far has generated in excess of $50 million for U.S.
companies.
US-AEP's theory is that a system is necessary in order to help companies; this
system focuses on four major components, and some supporting activities.
• Creating links between American companies and potential foreign
customers that lead to business opportunities in the long run.
• Underwriting companies that go out to demonstrate their technologies.
Examples include efforts currently underway in cooperation with the
Department of Commerce, and similar activities with the National
Association of State Development Agencies to open nine Offices of
Technology Cooperation.
• Helping companies that have opportunities in Asia to seek trade financing.
An arrangement with the Bankers Association for Foreign Trade and the
Commerce Department will help towards this end. US-AEP has established
an 800 number for those in the industry to call to find out which banks are
prepared to meet their export financing needs for environmental goods and
services.
• Developing a "one-stop" phone network called the Environmental
Technology Network for Asia. Such a network would contain trade leads
generated by the technical overseas representatives, plus all the
environmental laws, regulations and current practices of the Asian
countries.
US-AEP also hopes to generate interest among larger commercial banks to coordinate with
OPIC and the Environmental Development Fund to provide equity financing for American
companies. Three banks have already signed on, and arrangements are being made with
several others.
Biodiversity conservation is another area in which US-AEP has become involved,
by producing education in the practice of sustainable harvesting of non-timber forest
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products and coral reef products. A consortium composed of the World Wildlife Fund,
the Nature Conservancy, and World Resources, Inc., and others, are involved in this effort.
America needs to rethink its attitudes and business practices to become more
oriented towards international trade. Marketing environmental goods and services is a
highly technical and engineer-oriented process; they are not like standard commodities that
we are used to trading. Five years ago, only 8 percent of the U.S. GNP came from trade;
today it is 12 percent. Currently, only 1 in 11 American business persons have passports,
compared with 1 in 2 British, and practicaDy every Dutch business person.
US-AEP is involved in sponsoring a variety of projects specifically in the clean air
marketplace, such as a conference on reducing pollution in mega-cities on the Pacific Rim,
a joint project with EPA and IBM to help the Koreans address the problem of CFCs, urban
pollution monitoring in Hong Kong, and dealing with bus emissions and electrifying
vehicles in Nepal and Thailand. They believe that the U.S. has significant technology to
help in activities like these, technology that came about and is improving as a result of the
Clean Air Act Amendments.
F. Bradford Smith, President and CEO, Environmental Elements Corporation
(EEC), noted that his remarks would respond to some of the data presented
by the other panelists to provide a context for discussing how the government
can promote environmental exports. He provided some background
information on the history and nature of EEC's business.
Mr. Smith disagrees with the OECD's estimate of a $30 billion market for American
environmental products. For example, in their 1992 annual report, ABB, one of the largest
suppliers (as measured by revenues) of air pollution control equipment in the world,
disclosed world-wide revenues of only $540 million for these types of products. This is
less than 2 percent of the world market as defined by OECD. Some of the statistics
deserve further scrutiny. Other issues that affect American entry into world markets
include:
• The world market for environmental goods and services is highly
fragmented. Most industrialized nations have companies in this field with
significant, proprietary technology. As a result, this is an internationally
well-populated, highly qualified, and competitive marketplace.
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• "Need" and "market" are not synonymous. Most of the statistics (like
OECD's) are based on need, which in some cases, i.e., Eastern Europe, is
very obvious. However, the need for goods and services does not
necessarily create a market. First, there must be the ability to get through
a process, outlined as:
dream —> vision -> policy —» plan -» program —>
prospect -> project -» bids —> contracts -> work
This requires technical skill, administrative management, skillful policy
making, and substantial funds. Currently, there is a great deal of need, but
very few markets.
• The money must be indigenous to the geography in which the need arises.
These factors greatly complicate what is required of American government and industries.
Assuming a supporting industry technology and interest to enter the world
marketplace exists, along with governmental policy, American companies also have specific
needs:
• Profits — however, the investment cycle for international "prospecting" is
several years, at best.
• Established business relationships — Mr. Smith concurred with Mr. Reade
that international business is far more dependent on and influenced by
personal relationships than it is in the U.S. American companies are in
danger of being viewed and treated as opportunists when it comes to
bidding on project-specific opportunities.
• Export culture — Mr. Smith also agreed with Mr. Sobin's comments that
there needs to be private sector responsibility for increasing this culture
within their companies.
• A relatively stable or thriving domestic marketplace for a company's
products and services — Because of the investments required, an industry's
ability to export is dependent on strong demand at home.
This last point leads to a key issue that had not yet been addressed. The U.S.
domestic air pollution control marketplace, to the extent that it is being influenced by Title
IV of the Clean Air Act, is a great disappointment, in part because of reasons subject to
Federal policy and regulatory process influence. This has to be examined as a component
of export promotion policy.
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American government and industries must face the reality of the role of
government financing and how this helps our international competitors. Currently,
American industry is not equipped to compete in the international marketplace with
foreign companies whose governments are using financing capability as a domestic
economic development tool. Financing can be a key component that may distinguish one
country's efforts from another, despite equal technological expertise. This is a policy-level
issue that the government must address.
In addition, Federal policy needs to be much more specific and recognize that we
are dealing with a crowded world marketplace. In order to deal with the market
effectively, the U.S. needs a much stronger and more buoyant domestic market. Countries
export the technologies, products, and services in which they excel. This can only come
about as a result of a strong domestic market that has provided both the demand and the
competition to hone these components to a world-class level.
Barriers to the domestic market are few but they can and should be addressed as
a national priority by both policy and regulatory people at the state and Federal levels.
Questions and Answers
L
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• |
Can you provide some theories as to why the domestic market for environmental
goods and services is so soft, and what might the government do to strengthen
it?
Mr. Smith explained that industry has not been purchasing many of these goods and
services mainly because the government has not enforced the Clean Air Act Amendments
of 1990 in a complete or timely manner. This resulting atmosphere of uncertainty among
industry, despite the self-enforcing deadlines laid out by Title IV, has led to the attitude
that the deadlines do not mean anything. Some industries are not complying, and are
prepared to wait and see what happens. In addition, there is the continuing recession that
American industries have yet to recover from, despite what economic indicators may
show. Lastly, there has been a serious lack of coordination among Federal and state
regulators. Their differing concerns, air quality (Federal) and rate setting (state), have not
been resolved as they pertain to environmental compliance costs, a major issue for
industry. Being able to recover their costs is significant for industry, who want reasonable
assurance that this will happen before making extensive capital investment.
What do you think can be done — by both the private sector and the government
— to stimulate greater awareness and interest in overseas markets among U.S.
companies?
Mr. Smith stated that the government's efforts to help American companies are extensive,
but are too unfocused. There is no qualitative screening of data and information, and
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companies get overwhelmed and discouraged. Project development money is another
lacking item that would greatly help companies. Such funding would go towards
feasibility studies very early on, typically long before proposals or specifications are issued.
This type of "soft" money is something most companies cannot afford; however, some
foreign governments support their companies in this manner. American companies often
work on projects where the feasibility studies have been done by another country, and are
subsequently forced to play "catch-up." Therefore, getting into a project early on can be
key.
Mr. Reade concurred with Mr. Smith on several of his points. However, he strongly
disagreed with Mr. Smith's argument that a domestic base is necessary for export culture.
Many newly industrializing countries market products in the U.S. that they do not sell in
their own countries. Strong companies that can afford to engage in long-term prospects
by maintaining a continuing presence in a country and establishing relationships to create
a market for their goods are the ones that will succeed. Technology products designed for
use in the U.S. cannot always be applied [in the same form] in another country (e.g., using
an expensive computer to perform tasks for which another country might rely on
inexpensive labor.)
Mr. Smith responded to this by distinguishing between a company trying to sell leftover
products, versus having a base market on which to build. The environmental business
within the U.S. has not measured up to expectations, and companies are feeling the effects.
He is not aware of a major technical breakthrough generated by the U.S. in the last ten
years. To illustrate this, he noted that 50 percent of the scrubbers installed as a result of
the Clean Air Act were of European design. Exports will not make up for a lack of a
domestic market, because without this market, the products and technology will not be at
a world-class level, and consequently, internationally competitive.
Mr. Sobin commented on several different issues raised by the other panelists. First, U.S.
foreign assistance is often relatively less capital intensive than for other European countries
and Japan. The U.S. typically provides money for rural training and agriculture, which
are not as export intensive as projects like power plants or sewer systems, which other
countries are likely to assist. Therefore, the issue of development assistance may be one
worth examining. In addition, the appropriateness of a technology in a given marketplace
is important. American products often have a reputation for being too complex,
sophisticated, and expensive, and after-assistance is often poor. Lastly, most
businesspeople are unaware of where to go to get information. There is a whole export
promotion structure set up, but it in him has not been very well marketed.
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Clean Air Marketplace 1993 Page 187
a
Stronger environmental regulations have been promulgated in Europe. How is
this related to the fact that 50 percent of scrubber technologies are developed in
Europe?
Mr. Smith responded that the initial blossoming American market for particulate control
and scrubber technology was a result of the Clean Air Act of 1970 and the amendments
in 1977. That market became dormant in 1981, and has not made a comeback since 1990.
In the meantime, strong acid rain regulations were being passed in Scandinavia, Germany,
and Japan. As a result, the second generation of scrubbing technology moved overseas,
primarily to Germany. This is the technology that has moved back to the U.S. in response
to the Clean Air Act of 1990. This anecdote strongly illustrates why it is important to have
a strong domestic base.
f% I
• I
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guy?"
Many small environmental technology companies face problems that bigger
companies do not; how is the government qualifying the information and leads
they make available to companies; is the government and its programs (i.e., the
nine overseas export offices discussed by Mr. Reade) capable of helping "the little
Mr. Reade answered that small- and medium-sized firms usually do not have the
discretionary funds that are necessary for market, sales, and product development. The
job of the technical representative, in addition to making contacts with buyers, distributors,
intermediaries, etc. and gathering information, is to be responsible for qualifying the
people and companies that they believe would be of interest to American firms. These
representatives, both Americans and foreign nationals, have been hired for their
backgrounds, which typically include engineering and sales. Representatives may also
eventually identify lead agents in the host countries who would be responsible for
qualifying the contacts/
Mr. Sobin explained that while these representatives will help the situation with small- and
medium-size firms, they still cannot replace face-to-face contact. Intermediaries cannot set
up arrangements with distributors or joint ventures — both for cultural and legal reasons.
They can smooth the way and reduce costs somewhat, but it is still a costly and uncertain
risk. However, they can cut down on the time investment that would be involved
otherwise.
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Would the weaker U.S. dollar provide any advantages for export opportunities,
and is this of consequence in the immediate term?
Mr. Smith felt that it does not seem to hurt or help; most hardware is being
produced locally and the role that U.S. firms are playing at the moment (start-up, process
and detail engineering) does not translate into a huge portion of the money that is being
generated. In addition, the manufacture of engineered products (as an example) is
becoming increasingly international as companies move parts of their operations around
to different locations world-wide where they can be done at the lowest cost. Lastly, many
of today's contracts are being denominated in dollars, particularly in the Middle East.
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Keynote Address by
Donald A. Deieso
President and CEO, Research-Cottrell
Companies
Introduction by Robert Brenner, Acting Deputy Assistant
Administrator, Office of Air and Radiation, U.S. EPA
September 9, 7993
Of course as all of you are aware, it is one thing to have these good ideas and
another thing to have people like Steve Harper who can really make them happen. And
it is a lot harder to make them happen than it is to have a good idea. So as Carol Browner
said yesterday, we are very grateful to you for putting this together and doing such an
excellent job. One of the very nice parts of my job at EPA is the opportunity to work with
some very creative, innovative, and dynamic people who are involved in this effort to
implement the Clean Air Act. You have heard from a number of them over the last couple
days and you are about to hear from another, Don Deieso. Don is the President and CEO
of the seven Research-Cottrell Companies. They are one of the oldest and largest air
pollution control firms in the United States. He is also now Executive Vice President of
their parent firm, Air and Water Technologies Corporation.
We asked Don to speak not only because of his central role in the Clean Air
Marketplace, but because he has a fairly unique prospective: he has personally
participated in just about every side of this marketplace. He has been Assistant
Commissioner for Environmental Management and Control at the New Jersey Department
of Environmental Protection. He has been the Chief Chemical Engineer for ConEd in New
York, where he was responsible for corporate environmental science and engineering
activities. Prior to that, he actually developed waste treatment systems at ConEd. Notice
that he really has some technical skills as opposed to a lot of us "policy wonks" who are
involved in this area. He also worked for EPA. He directed hazard remediation in our
Region II Office. He has also done a stint in academia where he has done some teaching
on environmental science at Rutgers University.
Over the past few years, Don has been a member of our Clean Air Act Advisory
Committee and that is where we at EPA have learned that not only have his experiences
made him unusually knowledgeable and insightful on air pollution issues, but he also has
not hesitated to speak very directly to us about the right way to implement the Act. To
my way of thinking, what could be a better combination for a conference speaker — he
knows what he is talking about, given his experiences he really can relate to all of you,
and I can confidently say he will tell it to you straight.
Keynote Address — Donald A. Deieso
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Address by Donald A. Deieso
Rob, thank you very much. Steve, let me first commend EPA once again for an
outstanding conference. This started out as a very small group but, as I understand now,
it is a record attendance of over 300 and that is to your credit, finding a niche and filling
it and letting this activity grow. As a former EPA-er, I am extremely proud of the
accomplishment.
As a high school student back in New Jersey during the late 1960s, I remember a
number of public hearings on the proposed sulfur-in-fuel air regulations that were very
controversial at that time, and I remember distinctly the loud opposition raised by
industry. Adopt these, they argued, and we will be out of business. The regulations of
course were adopted, business continued, and life went on.
During the implementation of the 1977 Clean Air Act Amendments, I served in a
advisory role to EPA on the development of specific new source performance standards.
The public hearings were no less contentious, and the theme of the 1960s echoed again in
the position of the regulated community who said "economy versus environment." They
created an illusion that the American people cannot have both. During my tenure in New
Jersey under Governor Tom Kean in the mid- and late-1980s, there was not a week that
went by that we were not visited by one of the Fortune 50 companies resident in our state,
and always the arguments were the same: If you impose this regulation, if you levy this
enforcement action against us, if you force this site cleanup, we will have no choice but
to leave the state. In fact, so consistent was the pattern that it became known to the
Governor as the "caster appeal" (casters being those devices on the bottom of a chair that
make it roll easily), so-named because one would believe that the major manufacturing
facilities in the state were on casters, and we would find them up and down the New
Jersey Turnpike going to Pennsylvania or going to Delaware or moving to wherever the
regulations were the least burdensome.
For those of us who participated in the process leading to the 1990 Clean Air Act
Amendments, the subcommittee chambers resounded with overstated, poorly documented,
and ill-supported statements by both sides of the debate. Potential cost impacts of the
Amendments on the regulated community were consistently cast in billions of dollars a
year — reminiscent of Carl Sagan's comments about the extent of the universe — and yes,
the "economy versus environment" debate was raised again and again and again. I would
like to report to you that, nearly three years after the passage of the 1990 Clean Air Act
Amendments, the overall domestic air pollution control market is smaller now than what
it was in 1989. So we gather for this conference this week, a conference entitled "Clean
Air Marketplace 1993," and we will discuss wonderfully complex and elegant topics such
as finance, public-private partnerships, and globalization of technology — and this is very,
very good. And yet, I hear the ghosts of thirty years ago in the "economy versus
environment" debate even today, and it causes me to wonder just how far we have really
progressed culturally toward the goal of improving our environment.
Keynote Address — Donald A. Deieso
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Clean Air Marketplace 1993 Page 191
Our firm, along with others, participated in a study prepared by EPA last year on
the benefits to the economy of the Clean Air Act Amendments. At the core of the findings
was the principle that the air pollution control act and business would create jobs —
special types of jobs, high-tech jobs. This report was prepared presumably to blunt many
of the arguments made by the regulated community that it would cause tremendous
hardship on the economy: plant closures, displacement of workers, layoffs, and
unemployment. I suppose we can agree that this logic would add up the jobs gained,
subtract the jobs lost, and declare this a victory for society. We could do that, but I search
desperately in that equation for the parameters of public health and welfare the basis of
all of our actions. More intriguing to me was the notion that environmental control
programs had to "pay their way" and had to be measured in a traditional return-on-
investment approach, the way you would introduce a new product to a consumer
marketplace. And yes, that might be the beginning stages of free enterprise as applied to
environmental programs. But we must clearly understand that we have a debt to society
programs, we have quite a bit of affirmative action of 40 and 50 years of industrialization
to make up, and I am not quite sure that analysis is proper in time.
It has been clear to me that economic prosperity is a prerequisite for robust
environmental industry and business. In fact, the past two years have demonstrated
convincingly that environmental firms are not recession-proof, nor are we recession-
resistant. The capital structures of this country's major environmental firms have been
severely damaged by the poor economic climate of the past two years. Stocks are at 50-60
percent of the value they enjoyed less than two years ago. These are the same firms that
this nation expects to invest in advanced technology demonstration projects and research
and development. Well, be assured the money simply is not there. But as with Charles
Dickens — it was the best of times, it was the worst of times — as depressed as the
domestic market has been, as interesting and exciting have the offshore opportunities for
these U.S.-based environmental firms been for us in the past two years.
Last February, in testimony before the Senate Environment and Public Works
Committee, I presented the five components which create a robust environmental
marketplace:
• Strong laws and regulations;
• A general will on the part of the regulated community to comply with the
spirit as well as the letter of the law;
• A strong enforcement program;
• A healthy national economy; and
• Cost-effective control techniques.
Keynote Address — Donald A. Deieso
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All five, incidentally, apply as effectively domestically as they do internationally. Let us
examine each of these separately.
Strong laws and regulations
We have environmental laws and regulations in the United States. We have
environmental laws and regulations throughout Europe and in many of the developing
countries of the Pacific Rim. In fact, one could argue these laws, when studied, are very
strong. The European Economic Community requirements promise to be as stringent and
in some cases more stringent than U.S. emission standards. Certain standards in Japan
have out-paced us here. The requirements for waste-to-energy plants, for instance, in
Japan are considerably tighter than those in this country. International treaties have been
developed for greenhouse gases, biodiversity; all of those hint that we are globalizing, we
are making more consistent, the environmental requirements country-to-country. More
impressive to us, there is not a client that we deal with based in the U.S. that retains our
products or services for work in developing countries that does not immediately say: I
would like this facility, I would like that piece of equipment, to comply with U.S.-based
standards. Notwithstanding that perhaps Thailand or Malaysia may not have the same
stringent requirements today, they understand that the investment is a sound investment
for the future.
A general will to comply with the spirit as well as the letter of the law
There is a general will on the part of the regulated community to operate in
compliance with environmental standards. It has been in some cases less than consistent,
and I continue to be struck by the wide diversity of commitment. Fortune magazine on
July 26 (a few weeks ago) had a wonderful article in which they assessed the nation's top
companies and rated them on the 10 worst, 10 best, and 10 most improved. Without
names it was fascinating to see that among the 10 worst were multi-national, multi-billion
dollar companies that for the last 10 years, by Fortune's review and discussions with those
corporate officers, would indicate status quo.
A strong enforcement program
Most of us think of enforcement in the traditional sense of an EPA or state DEP cop
on every corner. And somewhere that notion is becoming obsolete. Enforcement today
is now actually taking two facets — the first is of course traditional environmental
reporting obligations in which the regulated community must come forward with their
moments of non-compliance. But there is another very subtle and very powerful force
building in enforcement on the financial side. The Securities and Exchange Commission
in its regulation of publicly traded companies is now asking for disclosures of
environmental liabilities. No longer in an annual report can a company hide the fact that
there is a $150 million site cleanup that it faces. The accounting community, the auditors,
the Price Waterhouses of the country (i.e., the "Big Eight"), are also under pressure to
Keynote Address — Donald A. Deieso
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Clean Air Marketplace 1993 Page 193
disclose, to ask the company to disclose, to find material in discussion with corporate
management those items that would suggest that there is an environmental exposure that
the company faces. This of course was highlighted a year and a half ago when one of the
Big Eight was sued by shareholders. They were sued because they had knowledge that
the company was facing a $150 million exposure. The net worth of the company was $100
million. The environmental exposure was clearly material, something the shareholders
needed to know, deserved to know, and by law had a right to know. And those elements
of enforcement in fact last year grew. Very quietly and subtly the SEC and EPA connected
databases so that now when EPA has an enforcement action against Company A that will
become immediately pa,rt of the SEC record on Company A and so the SEC will police those
disclosures to see that shareholders are well informed of any exposures that the company
may have. That enforcement promises to be as powerful, if not more so, than the
Environmental Enforcement Officer at your door.
A healthy national economy
We would benefit from a healthy, international economy. Here perhaps is the true
Achilles heel to growing the environmental business. The U.S. is not the only nation
struggling with a sluggish economy; many of our fellow European allies and competitors
are locked in their own conflicts with deficits, unemployment, trade imbalances of many
sorts. In some cases and in some countries — for example Eastern Europe, parts of the
Pacific, and Latin and South America — it is literally true to say that they cannot afford
to protect the environment and to heal and rehabilitate the environment. It simply cannot
be done. We have operations in Eastern Europe, and the devastation that we see is
something that I can only imagine in the pages of our Donora, Pennsylvania, incident of
1948. Some areas of complete deforestation, health records of local hospitals with
respiratory ailments that would dwarf anything that London in the 1960s would have
offered. And yet, these are the countries that today simply cannot afford a scrubber,
cannot afford an electrostatic precipitator, or water and wastewater treatment.
Cost-effective control techniques
In the same discussion in February, I said I found it increasingly difficult to define
what a U.S. environmental firm is. Most of us sit here today with a notion that there is
a U.S. environmental business. My own company, for instance, and almost every one of
our major competitors in this country, owns or is partially owned by an offshore company.
We compete in this country and abroad with environmental business firms that design and
manufacture the same basic categories of equipment; in fact, indistinguishable in the U.S.
is, a U.S.-based company. So, in short, much of the globalization that we speak of has
already occurred. There is not a firm without a major and/or significant ownership by a
firm from offshore. Similarly, there is not a technology in the U.S. that is not in some way
a hybrid of ideas that have been spawned in either Germany or Japan and that are in play
in our field today. So in short, there really is not a U.S. company and there is not a U.S.
market; it is truly is a global market. Nearly 20-30 percent of our revenue is based in
Keynote Address — Donald A. Deieso
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international business. Of that, more than half is sold and negotiated in the U.S. for multi-
nationals here to be installed and/or designed in other countries. So more and more we
are seeing one massive incestuous group of competitors and technologies all in play, all
improving and all benefiting, one idea for the other.
Does this mean that our environmental business is condemned to chase country-by-
country and without any sense of U.S. identity? We think the answer is no. We continue
to lead the world here in much of the technology developed. There was a notion during
the last Presidential campaign that Japan and Germany had better ideas, that they were
well advanced of anything that we have in this country, and we would benefit. Let me
be very clear. The environmental program, the environmental technologies were born in
the United States. We were treating wastewater before any other nation. We were
chlorinating wastewater in 1909. We had the first electrostatic precipitator. We had the
first scrubbers. These ideas were spawned and developed here in the U.S., and that
leadership and technology continues.
Solutions to industry-wide problems
We find ourselves, however, faced with a few major shortcomings. Let me offer
some very practical solutions to the problems that our industry faces.
• First, the U.S. government must subsidize the expansion of environmental
businesses in undeveloped and developing nations by providing loan
guarantees and access to capital at below-market rates for very specific
projects.
>• We and a German partner were recently defeated in a large
scrubber project in Thailand by a Japanese firm. We were defeated
not because we did not have the best technology — in fact, we had
the number-one rated technology). When, in the final moments
when that government came forward in Thailand and said, "but we
have no money for this project... you must finance it", we packaged
our best financing through commercial banks, but the Japanese
came in with financing backed by their government with complete
loan guarantees and, of course, it was something that we could not
match.
•• Similarly, in Mexico a year and a half ago, the Japanese government
advanced the Mexican government $250 million for air pollution
and environmental control. There was a hitch: the work had to be
done by Japanese firms.
Keynote Address — Donald A. Deieso
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Clean Air Marketplace 1993 Page 195
These are marketplaces that U.S.-based companies have developed, have
spent quite a bit of time and energy, and have wonderful technology to
play. But U.S. companies do not have a level playing field by any measure.
Second, investment tax credits need to be offered in this country for all
of its environmental technology purchases — a well-trodden issue.
Third, tax credit for R&D on environmental expenditures and
environmental initiatives. We have wonderful technologies today that
your public companies must expense. For those of you who are unfamiliar
with P&L and public finance reporting, it means that every dollar of R&D
must be discounted against a profit. Well, those of you that are in the
financial community study the profit and loss statements and operating
statements of the public companies in the environment today, and you will
find many of them in major distress. That is not the condition under which
one invests in R&D, and it is simply not going to be made easy.
Lastly, there are accounting rules that could easily favor environmental
research and development as an item that could be capitalized and enjoyed
over the next 20 and 25 years. Those two would be of tremendous help in
freeing these companies to do what they must do.
Conclusion
In closing, let me suggest a few thoughts. First and clearly, this technology of the
U.S.-based companies is more than competitive — in many instances it is superior.
Second, the quality of the engineers and scientists in the companies, universities, and EPA
rank among the top in the world. There is no doubt in that regard. Third, we are at a
considerable disadvantage in the world marketplace because of competitors' government
backing and subsidies and — perhaps no different than the Airbus in a non-related
industry — it is coming home to roost here, and the prospects for the future are even
dimmer if we cannot muster government support. If there are any questions that you
have, I would be delighted to entertain them.
Keynote Address — Donald A. Deieso
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Keynote Address — Donald A. Deieso
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Clean Air Marketplace 1993
Page 197
Session 6
Connections Among Clean AirAct/ISTEA/Energy
Policy Act
September 9, 1993
2:00 p.m. - 4:00 p.m.
Moderator: Susan F. Tierney
Panelists: G.B. Arrington
Joseph Goffman
Michael Stanton
Mary Margaret Whipple
Ben G. Henneke
Introduction
Susan F. Tierney, Assistant Secretary, Office of Policy Planning and Program
Evaluation, U.S. Department of Energy (DOE), noted that there has been an upward trend
in ozone precursor and greenhouse gas emissions, oil imports, and vehicle miles travelled
(VMT) in the last few decades. Each of these upward trends is part of a common problem.
To paraphrase Secretary O'Leary, "It is the car, Stupid." The Clean Air Act Amendments
(CAAA), the Intermodal Surface Transportation Efficiency Act (ISTEA), and the Energy
Policy Act of 1992, provide an integrated response to the problems created by motor
vehicle emissions. These statutes begin to focus on issues that are critical to reducing
motor vehicle emissions — improving fuel options, reforming motor vehicle operation, and
reducing VMT. The three acts also provide an opportunity to fight vehicular emissions
in a comprehensive way while considering national security, the environment, jobs, and
economic development. Together, the statutes encourage innovation and business
opportunities, as well as promise to combat negative air quality trends.
Presentations
G.B. Arrington, Director of Strategic and Long-Range Planning, Tri-County
Metropolitan Transportation District (Tri-Met) of Portland, Oregon, discussed
how integrated land use and transit planning in Portland over the last twenty
years have resulted in a more vibrant economy, as well as cleaner air and less
traffic. Portland's efforts can serve as a model for many other communities
facing similar problems, according to Mr. Arrington. The success of Portland's
innovative public policy can be seen in its thriving downtown, smooth functioning transit
mall, and soon to be expanded urban light rail system. MAX, the light rail system, is in
fact part of an integrated plan to shape urban growth, move people around the area, defer
highway investment, and enhance the quality of life. Development dollars invested in
projects adjacent to the light rail line have exceeded the cost of the line by four-fold.
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In the 1970s Portland's central city was dying. Expanding the public transit system
was chosen over highway development as a key part of a comprehensive strategy to
promote downtown growth. Before MAX started operations, Tri-Met buses accounted for
half of the rush hour trips into the city and one-third of all trips downtown. Since MAX
began its operations, Tri-Met's market share of travellers has doubled. Today, one in three
people in Portland ride public transit at least once a month. Sixty percent of riders are
choice riders (i.e., individuals who have a car available).
The success of this system has hinged on the cooperation between government land
use planners and the transit authority. This cooperation comes out of the belief that new
rail systems should not be seen solely as transit investments, but must also take into
account the community's vision of its own growth. The transit authority, for instance, asks
local governments along the rail corridor to help make development more dependent on
transit by limiting parking, widening sidewalks, improving pedestrian access, and allowing
mixed use development. For its part, Tri-Met provides investment funds and assists local
jurisdictions in planning to stimulate economic development around transit stations.
Public transit has been key to the downtown investment strategy in Portland for
years. Transit corridors have been spines for growth, the most intense development, and
the lowest parking ratios. The plan is to build downtown around public transit, and to
use it to shuttle people around Center City once they are there. Since 1972, strict limits
have been set on parking in an effort to create automatic demand for mass transit. New
office buildings, for instance, have strict maximum but no minimum limits on parking
space.
Rather than wither away as critics predicted, the downtown has thrived. Portland
has grown from having 56,000 jobs in 1975 to 86,000 today, an increase of over 50 percent,
while the number of cars entering downtown has not changed. Portland would have to
add six new parking garages, each as tall as its highest building, if the city were to reduce
its dependence on public transit. In addition to saving resources, Portland's reliance on
public transit has halted the growth in traffic congestion and has helped markedly improve
air quality. Portland has gone from being out of compliance with national ambient air
quality standards two out of every three days in 1973 to having 100 percent compliance
in 1992. Portland has not had an air quality violation since 1987.
Portland has been pursuing a balanced transportation plan. Rather than widening
highways to accommodate growth, the area chose to invest in public transit. Portland has
not built a radial freeway or widened any arterial highways in 20 years, and the city is in
the process of expanding MAX. In 1991 the State Land Use and Conservation Commission
passed a new transportation rule which is designed to reduce dependence on single
occupant vehicles. It calls for a ten percent reduction in the number of parking spaces and
a ten percent reduction in VMT in the next twenty years. The rule requires local
governments to adopt land use and subdivision strategies within the next two years that
allow transit-oriented development as a matter of right. The Portland metropolitan area
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Clean Air Marketplace 1993 Page 199
is required to consider changes in land use plans in lieu of making transportation
investments. The state transportation plan reduced the need for state highway building
from $37 billion to $24 billion by assuming investments in public transit.
The common thread in Portland's land use and transportation plans is the desire
to contain growth: Portland wishes to "grow up", as opposed to "growing out", to
substantially increase density in transit corridors, and to help ensure that new
development is served by public transit.
Portland shows the dramatic impact that integrated land-use, transit planning can
have. Some examples are:
• The Transit Mall. This four block, $180 million mall is a prime place to
shop in Portland. Light rail provides a larger retail market, which has
attracted stores.
• Lloyd's Center. A mall with 1.3 million square feet across the river from
the transit mall has been renovated to take advantage of light rail
customers.
• The Oregon Convention Center. An $85 million, 400,000 square-foot
convention center was designed with mass transit in mind. It has only 400
parking spaces.
• The Arena. A $205 million, 20,000 seat arena has been built adjacent to a
MAX station. It has only 3,000 parking spaces.
In sum, 7 million square feet of development, valued at over $1 billion, have been
completed immediately adjacent to MAX stations since MAX was built. Another $440
million in new development has been announced.
The lesson to learn from Portland is the value of regional, integrated land-use,
transit planning with the force of law.
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Joseph Goffman, Senior Attorney, Environmental Defense Fund, discussed the
use of market-based approaches to achieve policy goals, which he contended
can greatly complement the traditional comrnand-and-control approach. The
CAAA, ISTEA, and the Energy Policy Act provide examples of laws that
integrate a variety of policy tools, including market incentives, for achieving
their goals.
The CAAA institutionalized the conclusion that the market can be used as a tool for
stimulating innovation. The Act empowers state and local authorities to force new
stationary source technologies, new fuels, and new approaches to mobile sources. Title IV
of the CAAA, the acid rain program, created the market for SO2 emissions. Mandatory
reductions on individual plants are made flexible with a market that allows plants who
reduce emissions by more than their standard to sell credits to those who do not meet
their reduction standards. Under a market system all utilities, vendors, and consultants
constantly have an incentive to find new, better and cheaper ways of getting the job done.
Another example of the use of market-based incentives in environmental policy is
the Energy Policy Act of 1992. The Energy Policy Act addresses a wide range of issues,
including utility regulation and the diversification of motor fuels. One provision of the
Energy Policy Act creates a voluntary registry of firms that reduce greenhouse gas
emissions. Although greenhouse gas emissions are not yet regulated, the Energy Policy
Act creates several incentives to reduce emissions:
• Those who expect that greenhouse gas reductions will eventually be
mandatory stand to benefit by having their baseline emissions and
reductions recorded now in the hopes of getting credit later on.
• The registry, by publicizing a firm's emissions reductions, could be used to
a firm's advantage in public relations.
Many of the actions taken to reduce pollutants in response to the CAAA will also
reduce greenhouse gasses. The registry gives firms the option of telling the public about
the positive greenhouse gas reduction side effects that result from complying with the
CAAA. Those innovators who can reduce both CAAA pollutants and greenhouse gasses
will be rewarded by the marketplace.
Together, the CAAA, the Energy Policy Act, and ISTEA provide a much more
diverse policy framework to encourage innovation than traditional command-and-control
techniques. They provide a powerful inducement to firms to think about both greenhouse
gas and traditional pollutant management.
The idea of using markets for pollutant reduction commodities is critical to the
success of clean air efforts. The CAAA offer a critical opportunity to expand the pollution
reduction market. States putting together their State Implementation Plans (SIPs) for
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Clean Air Marketplace 1993 Page 201
ground level ozone have the option of creating a market for ozone precursor emissions
reduction. As governments and polluters are developing pollution reduction plans, the
focus should not be limited to technology mandates, but rather should include market
frameworks among the tools for reaching compliance.
Michael Stanton, Director, Federal Liaison Department, American Automobile
Manufacturers Association (AAMA), spoke of the challenges the auto industry
faces in trying to meet the demands of the CAAA, the Energy Policy Act, and
ISTEA.
One of the major causes of difficulty is the differences among the three acts.
The CAAA have been debated and discussed in Congress for eleven years, while ISTEA
and the Energy Policy Act appeared on the scene much more recently. The Energy Policy
Act and the CAAA also have different objectives; the Energy Policy Act's goal is to reduce
consumption of oil, while the CAAA attack pollution. The two acts differ on many
smaller, yet very significant points as well, such as the definition of a fleet or classification
of certain fuels.
The AAMA, in order to encourage alternate fuel vehicle (AFV) demand, wanted
an AFV exemption from transportation control measures (TCMs), such as high occupancy
vehicle (HOV) lanes, put into the Federal law. However, if this exemption were included
at the Federal level, states would not be allowed to count the air pollution credits in their
SIPs.
In considering the CAAA and the Energy Policy Act, the AAMA wants what is best
for its customers — the closer the programs in the two acts are, the better. Unfortunately,
sometimes compliance with one act is not compatible with compliance with the other. For
instance, the auto industry had originally hoped to meet the CAAA fleet mandates through
the use of reformulated gasoline, even though the likelihood of success of such an
approach is unknown. The Energy Policy Act, however, requires that many fleets
purchase AFVs; reformulated gasoline is not considered to be an alternative fuel.
The auto industry currently faces several sets of requirements in addition to the
fleet programs in the Energy Policy Act and CAAA. ISTEA includes safety requirements.
The CAAA contains hundreds of requirements, many technology forcing, and many of
which the auto makers do not yet know how they will meet. In addition, the CAAA and
Montreal Protocols require that the auto makers eliminate the use of CFCs, which affects
their production processes. The AAMA estimates that meeting Federal safety requirements
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adds $1,000 to the price of a car, with emissions controls costing an additional $1,600.
Controlling CFC emissions adds $125 to $150.
Given all these requirements, the big challenge to auto manufacturers is to try to
promote APVs, and make them compatible with CAAA requirements. The auto
manufacturers are working with DOE, the General Services Administration (GSA) and the
Federal Fleet Conversion Task Force to try to jump start the use of AFVs. The difficulties
are not just in production. The greatest obstacle to overcome is the lack of demand, which
threatens the sustainability of an AFV program. Congress intended government to lead
the way through Federal purchase requirements.
How Will Auto Manufacturers Supply the Vehicles and How Will GSA Purchase Them?
Auto manufacturers have been supportive of fuel-neutrality in the Energy Policy
Act throughout its development because they do not know which fuel will be the winner,
if in fact any single fuel is. They would prefer to let the market decide.
Each fuel presents certain advantages and disadvantages. For example, compressed
natural gas (CNG) is a very clean burning but space consuming fuel. As the Big 3 look
actively into all fuels, they are finding that the biggest challenge is solving market needs,
fuel needs, and vehicle needs simultaneously. Auto manufacturers are currently
developing and selling flexible fuel vehicles (FFVs) that run on M85 or E85 (methanol and
ethanol blends) and dedicated vehicles that run on CNG or electricity. Auto
manufacturers expect to sell FFVs that can run on ethanol, methanol or gasoline during
the transition period to alternative fuels. Such vehicles can be made to run without
extensive and expensive reconfiguration, but these fuels are not clean enough to meet the
strict final emission standards mandated by the CAAA. Electricity is a fuel option that is
clean enough to satisfy the regulations, but is very expensive. Two percent of all vehicles
sold in California in 1998, and ten percent by 2003, must be electric powered.
The manufacturers are approaching the AFV requirements differently.
• Ford has put a lot of effort into FFVs, focusing on the Taurus, a mid-sized
vehicle. In addition, it is working on using liquid propane gas as a fuel on
its light duty trucks. Ford is the only one of the domestic auto makers
working on a CNG powered passenger car, using the Crown Victoria. By
putting four CNG cylinders in the trunk and behind the back seat, Ford has
achieved a driving range of several hundred miles. In the area of electric
powered vehicles, it is developing what Mr. Stanton calls a mini-mini-van.
Ford has done everything possible to make the van feel like a gasoline
powered vehicle, including using a key rather than a button to start the
vehicle and having the vehicle inch forward when the brake is released
from a standstill. These improvements have centered around Ford's main
concern in developing consumer acceptance of AFVs.
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Clean Air Marketplace 1993 Page 203
• General Motors Corporation had a Lumina FFV, but it is backing off
production as sales have been poor. For CNG, General Motors is using the
Sierra pickup truck because it has room for the fuel canisters that will allow
a driving range that matches gasoline. General Motors is also working on
bi-fuel vehicles, and an electric powered passenger car.
• Chrysler has been working on a compact FFV for 1993-94, the Dodge Spirit.
Like General Motors, it has chosen a larger vehicle for CNG. Chrysler has
the electric T-Van on the market, which sells for between $100,000 and
$125,000.
What Are Auto Manufacturers Looking for from Government and Fleet Customers?
Auto manufacturers are looking for purchase commitments. It is expensive in
terms of capital and time to start up a production line, and it is not economical to do so
without purchase commitments. The auto industry is also looking to narrow the scope of
vehicles that they will market as AFVs. There are about 600 gasoline powered models
currently in the market, and only a limited number will be able to make the transition to
alternative fuels. Automobile manufacturers also want to focus on certain areas of the U.S.
for the development of infrastructure. Commitments to deliver fuel must be made in order
for vehicles to be matched with fuels. An example of a program attempting to do this is
DOE's Clean Cities program.
Surveys say that people are not willing to pay more for less. Auto manufacturers
have a responsibility to provide AFVs that will have the driving range, operating
characteristics, and cost of a gasoline powered vehicle if these vehicles will be successful.
What Has Government Been Doing?
In 1992 the Federal government purchased 6 models of AFVs. Of the 3,100 vehicles
purchased, 2,600 were M85 compact sedans. GSA has also purchased predominately
compact gasoline powered sedans —17,000 of the 18,200 vehicles purchased were compact
sedans. Compact cars, however, do not lend themselves to CNG because they do not have
the capacity to store sufficient fuel to match the range of a gasoline powered vehicle.
Therefore the question is whether companies should focus on compact vehicles or try to
broaden the market. Chrysler has focused on the compact vehicle because of the Federal
government business. Ford has opted for mid-sized vehicles because that is what non-
government fleets purchase. Companies are also taking into account the fact that certain
fuels are better suited to some areas of the U.S. than others, in their model development
calculations.
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What Needs to Be Done?
• Funding incremental cost: The incremental cost of FFVs and AFVs over
gasoline powered vehicles ranges from close to zero in the case of FFVs, to
$4,000-$6,000 for CNGs, to $100,000 for current electric vehicle prototypes.
Government support in lowering incremental costs will increase the size of
the AFV market.
• Availability of alternative fuels: Right now there are about 600 CNG
fueling stations nationwide, and not all of them are open to the public. We
need to make sure that they all operate the same way, the connections are
the same, the pressure is the same, and the quality is the same.
• Driving range: Auto manufacturers need to solve the storage problems of
CNG and methanol, which gallon for gallon only get you half as far as
gasoline.
• Consumer education: This is a huge challenge that many groups will need
to work together to meet.
• Fuel and fuel facility standardization: Government, fuel providers, and
auto makers need to work together to set standards. For example, the units
in which different fuels are sold need to be standardized.
All of these problems must be overcome if the volume of vehicles and fuel sold is
to be adequate. Finally, there are many market and technology unknowns, such as fuel
prices, to be addressed.
Mary Margaret Whipple, Vice Chairman, Arlington County Board, and
Member, Washington Metropolitan Area Transit Authority Board, presented
one example of how local and regional authorities are responding to ISTEA,
CAAA, and the Energy Policy Act.
The problems of air pollution and traffic are caused and experienced at a local
level, and must be responded to at that level. Local governments and citizens generally
feel they know their own communities best and want to be involved in formulating
responses to pollution problems. National policy must be particularly flexible to deal with
the different needs of rural and urban communities. For example, the most important
transportation priority for a rural county in Virginia may be paving roads or erecting a
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Clean Air Marketplace 1993 Page 205
guard rail, while improving mass transit may be more important to the urban counties.
ISTEA recognizes the importance of local response, and allows for strong local involvement
in implementation. ISTEA also recognizes the interconnections with the CAAA, and
provides congestion management and air quality funds for non-attainment areas. ISTEA
congestion funds can be used for HOV lanes, traditional highways, public transit, bike
paths, or other modes of transportation.
The Metropolitan Planning Offices (MPOs) have a leading role in deciding how to
allocate funds. The Washington MPO includes Maryland, Virginia, and Washington, DC.
In the first year that ISTEA funding was available, Maryland made its funding decisions
at the state level while in Virginia a committee of local officials came up with a plan. DC
could not spend ISTEA funds because it was at its obligation authority limit. The Virginia
committee muddled through, trying to balance the need to give something to every area
with the need to use the funds where they would do the most good. In the first year, this
was done with little scientific data about likely air quality effects of different programs.
This year more scientific data and agreements led to a smoother outcome, which involved
purchasing new buses for the metro system. This experience has shown that the flexibility
of ISTEA at the local level is a significant benefit but takes additional effort.
Washington is a serious ozone non-attainment area, and is required to reach
attainment by 1999. The Metropolitan Washington Air Quality Committee (MWAQC) is
responsible for developing the air quality attainment plan (SIP) to reduce emissions by 15
percent. It consists of elected officials from the Washington area and regulatory officials
from Maryland, Virginia, and Washington. MWAQC has been meeting for more than a
year, quantifying sources of pollution and making long, unconstrained lists of possible
reductions, often without reference to cost per ton or feasibility. Choosing which sources
to reduce, how, and by how much was complicated by regular revisions of emissions
targets. In the last few months the committee focused on a shorter, more reasonable list
of possible reductions, and has now published a plan.
The plan that was finally agreed upon relies heavily on required programs, such
as enhanced I/M and Stage E Vapor Recovery systems, and reformulated gasoline. Once
the preferred technical solutions were exhausted, the remainder of emissions had to be
eliminated through paint and coatings and pesticide formulation regulations, TCMs, bans
on open burning, and episodic measures such as a prohibition on lawn mowing on poor
air quality days.
Measures that require people to change their behavior must pass the common sense
test. Previous positive experiences with snow emergency routes and lawn watering limits
during water shortages demonstrate that episodic measures tan work. Further emissions
cuts will require more serious and expensive measures, such as additional TCMs.
Ultimately this region will pay more attention to land use and transit issues.
Members of the Council of Governments have spent much of the last few years developing
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a plan for regional excellence, which emphasizes coordinated land use and transit
planning. At the moment local officials are much more informed about air quality and
health issues than the general population. It has been difficult to generate public interest,
and education will therefore be a key to the long term success of any program.
Ben G. Henneke, President, Clean Air Action Corporation, discussed common
assumptions about vehicle use that have been built into 1STEA, CAAA, and
the Energy Policy Act, and why he believes some of them are incorrect. He
then discussed some innovative local solutions to improving air quality.
Most assumptions built into the three acts originated in the 1988 Alternative
Fuels Act, and some of them are faulty. The first incorrect assumption is that VMT will
continue to grow at its historic rate. VMT has grown in recent years because the car has
improved. When a product improves or falls in price, people demand more of it. The cost
per mile of operating a car has declined over the years, and cars have unproved
significantly. Poor land use planning has exacerbated VMT growth, but the main reason
that VMT has increased is the steady improvement of automobile quality and price. Cars
in their present form, however, cannot get much better. A commuter, for instance, will not
spend another two hours a day in his/her car because of its comfort. Therefore, the
growth in VMT should slow. Further, alternatives to vehicle use are growing, helped by
ISTEA. Highway funds are now going to different modes of transit.
The second incorrect assumption concerns the viability of alternative fuels. Fuel
neutrality is not a realistic option because of the chicken and egg problem of lack of supply
and demand infrastructure. But even if one fuel were chosen, the numbers simply do hot
work. None of the alternative fuels available is as cheap and plentiful as gasoline.
Gasoline is still the cheapest option, even when taking into account the additional cost of
cleaning up the air that it creates. Even if CNG were a zero emission fuel, it would still
not be economical. Petrochemicals and home heating are more effective uses of natural
gas. This is bad news for the underlying assumptions of the acts. The only chance for
alternative fuel to decrease our oil import dependence is if research drives down the price
of alternative fuel.
Mr. Henneke discussed the example of a MPO that succeeded in improving air
quality in spite of a lack of resources. Its strategy had annual, seasonal, and episodic
elements. This city had been classified as in attainment because a recession brought down
emissions. When the economy began to pick up the city found that it was not eligible for
funds set aside by the CAAA and ISTEA for cities with air quality and traffic problems.
The MPO concluded that encouraging cleaner gasoline was the solution for which it was
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Clean Air Marketplace 1993 Page 207
easiest to build political support. The MPO asked the five gasoline suppliers in the area
to sell less polluting gasoline during the time of year that air quality was poorest. Four
suppliers refused the first year, but Sun Companies provided leadership and this past year
all five agreed.
Inspection and maintenance (I/M) is politically unpopular, and the state in which
this city is located was reluctant to impose tougher I/M standards. The city managed to
get ISTEA congestion funds that, combined with corporate funding of 20 percent, was used
to buy mobile inspection stations. These stations will be parked at the offices of the
corporate sponsors, allowing employees to have their vehicles inspected while they are at
work.
Episodic measures on high ozone days included free public transit and requesting
that people drive their cleanest car and do not fill up the tank. Free mass transit has
resulted in a 50 to 70 percent increase in ridership.
Another method of reducing mobile source emissions now being developed is the
elimination of toll bootH lines. The lines created by toll booths are in effect large stationary
sources made up of mobile sources. In addition to idling, many drivers slam on the
accelerator after paying, releasing large amounts of extra pollution.
Questions and Answers
What sort of AFV programs is General Motors focusing on?
?
• I Mr. Stanton responded that General Motors is focusing on CNG. General Motors
^^™ is the industry leader in conversions, although the legal questions about
warranty requirements with conversions are an obstacle.
U
1*% I
* I
Why did not the AAMA comment on DOE regulations based on the Energy
Policy Act of 1992, sections 407 and 503, which refer to AFV data acquisition
programs?
Mr. Stanton responded that the regulations were brought to the attention of the AAMA
several months ago.
L
f} I
• I
What are examples of government policy working to increase innovation or
create a need that innovators can fill, and how do these relate to the creation of
a market for pollution allowances?
Mr. Stanton responded that auto safety regulations are an example. Auto makers were
required to include passive restraints on all vehicles unless two-thirds of the states
required that passengers wear seat belts. Forty-two states now require that passengers
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Page 208 Clean Air Marketplace 1993
wear seat belts, but most of the laws do not meet the specific requirements set by the
Federal government. In the meantime, most cars are now manufactured with anti-lock
brakes and air bags because of increased consumer safety awareness, a result of Federal
regulations.
Mr. Henneke added that in terms of creating demand for pollution credits, it should be
recognized that people respond to price signals, but they also choose to ignore them. For
example, many people choose not to buy generic cereal: But the price of generic cereal
versus name brand or pollution credits versus on-system pollution reduction at least keeps
prices honest. If people know the cost of a ton of reduction then they can choose the
cheaper one.
Mr. Goffman responded that many baffles hide and distort true costs. Another example
is the employee trip reduction rule, which is unpopular and of unknown cost, but is
required. Pollution credits are an easy solution, but sometimes the market does not work,
and buyers and sellers cannot discover price signals.
Mr. Arrington pointed out that technical solutions attack the symptoms, not the problems.
People want options not to drive and to have livable, vibrant cities. The market has not
recognized this need. California has given up on land use and transit planning. It is
doing everything with technical solutions. Cleaner cars are not a good solution.
Ms. Whipple responded that people do not drive their cars more because they are more
comfortable. They drive more because housing policy is creating a situation where people
live far from where they work.
7
What did the oil companies do to clean up the fuel in the city Mr. Henneke
described?
Mr. Henneke responded that they reduced Reid vapor pressure.
Why does Portland have a pollution problem and what can other cities learn
from Portland?
Mr. Arrington explained that Portland's weather and geography are much like
Los Angeles' — pollution is trapped in the basin. Cleaner fuel, inspections and
maintenance, a parking plan, and no new roads are the programs that have worked for
Portland.
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Can tour buses that travel between cities or across regions receive mobile source
credits? Can a tour bus operator receive credits for buying cleaner engines, or
only for running on alternative fuels?
Robert Brenner, in the audience, explained that EPA provides guidance, which localities
can adopt. Credits are only available within those localities. Within those localities,
credits could then be sold.
Are the suburbs around Portland the same as those around other cities with
large housing developments and strip zoning?
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Mr. Arrington responded that the urban growth area is legally limited. Transit
service is offered to those areas with high density, mixed use only. Portland has strong
regional plans and state support. The state air agency sets parking ratios regionally,
including the suburbs, as part of the SIP, to guarantee a level playing field throughout the
region. The mega-store national chains that are marked by large parking lots are
complaining, and negotiations are underway.
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Session 7
The Global Marketplace — Export Opportunities
September 9, 1993
2:00 p.m. - 4:00 p.m.
Moderator: Donald C. Conners, Esq.
Panelists: Russell Sturm
Alvin Aim
John Schofield
Alan Scarsella
Roger Strelow
Introduction
Donald C. Conners, Esq., President of the Environmental Business Council of the
U.S., Inc., introduced the focus of this session: to raise the collective consciousness about
the opportunities for export of environmental goods and services that grow out of Clean
Air Act regulations and policies. Mr. Conners noted that the session would focus on
specific export opportunities and, in particular, how companies with competitive clean air
technological products and services could promote the sale of these goods and services
overseas.
There are major initiatives at the Federal level, both at the White House and in
Congress, as well as among the states, to promote jobs and the environment. The White
House perception is that the U.S. environmental industry has a competitive advantage in
the global marketplace — there is an opportunity to create jobs in the U.S. by helping
industry connect to overseas markets and assisting in the development of worldwide
markets for environmental goods and services.
Some of the Federal initiatives were set forth in President Clinton's April 22,1993,
Earth Day speech:
• The Federal government must engage in the purchase of environmental
goods and services — these are referred to as "green" goods and services.
• The government must develop a coordinated Federal strategy on how
Federal' agencies might work in cooperation with the environmental
industry to connect industry to markets.
The White House has set up a committee, led by Commerce Secretary Ron Brown,
to deal with issue of promoting the environmental market and particularly export
opportunities. The committee, in a series of meetings nationwide, recently invited industry
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to come forth and suggest ways the Federal government could ensure a healthy domestic
industry, which is an important precursor to a healthy export industry. The committee
will dissolve when it issues its report. The long-term sustained effort toward the promotion
of environmental goods and services then will rest in the Trade Promotion Coordinating
Council, formally created by the Export Enhancement Act of 1992.
Congress is currently engaged in a similar initiative to promote the export of
environmental goods and services in the global marketplace. There are currently four
major pieces of legislation pending:
The National Trade Development Act of 1993
• The National Environmental Technology Act of 1993
• The Environmental Technologies Export Financing Act of 1993
• The Green Tech Jobs Initiative of 1993
The Office of Technology Assessment recently issued a report that pertains to
development assistance and linkage between the programs outlined in the legislation and
the promotion of environmental technologies. Hopefully, everyone will leave this
conference with an understanding of the need to assist industry in creating an effective
partnership so that companies will be better able to find and exploit market opportunities
worldwide.
Presentations
Russell Sturm, Program Director of Private Sector Activities and the
International Institute for Energy Conservation (IIEC), spoke about the energy
efficiency component of the industry and discussed the global market
opportunities his work has identified. A publication put out by IIEC, entitled
Seizing the Moment, characterizes the industries, identifies export opportunities,
and describes U.S. government activities already in place to assist the energy
efficiency industry.
Exporting is a definite opportunity in which U.S. manufacturers have a competitive
advantage. An example of this is the significant potential for exporting refrigerator
technology to India as,it continues to develop. India currently has 15 percent annual
growth in the demand for refrigerators, and the potential for continued growth is
considerable. In ten years, for instance, the Indian market will equal the U.S. market, and
in 22 years it will be four times that of the United States. In addition to this growth, the
Indian demand for high efficiency U.S. refrigerator technology will also expand since most
of the refrigerators currently in the Indian market are relatively inefficient; improved
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energy efficiency will be necessary for India to prevent current problems created by power
shortages that constrain industrial growth. U.S. refrigerator firms therefore have a
significant opportunity in India, which is especially important since the U.S. refrigerator
market already has 99.9 percent penetration.
Second, The World Bank projects that during this decade, $1 trillion in capital will
be required to meet the electricity infrastructure demands of the developing world. At the
same time, there are $230 billion available from traditional sources of capital to meet that
demand. Therefore, there is going to be a 75 percent shortfall in capital required to meet
the demand or else more cost effective means must be used to provide expanded energy
services.
Another dynamic affecting this market is environmental constraints — especially
CO2 reductions. With global treaties limiting CO2 emissions, the only way economic
growth can occur is through the use of new technologies that will allow us to reduce the
generation of electricity at the same time as we expand energy services.
The energy efficiency industry is difficult to characterize because it is fractured into
different pieces without a unified identity. It does, however, include the following:
• Energy.services companies
• Building environmental control industries
HVAC
• Building products
• Industrial and process controls
• Motor adjustable speed drives
• Automobile sub-sectors
• Agricultural sub-sectors
• Lighting manufacturers
• Window manufacturers
• Household appliances
Each sub-sector of this industry is represented through a trade association. Even
within these sub-sectors there are "sub sub-sectors". For example, wood window
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manufacturers, aluminum window manufacturers, and vinyl manufacturers are
represented. Though the energy efficiency industry has many specialized trade
associations, there does not yet exist a unifying umbrella organization that speaks on
behalf of all efficiency companies.
What is the size of this energy efficiency industry? It is difficult to tell just how big
it is because oftentimes, the industry is not recognized as an industry unto itself. There
is an approximately $18 billion dollar per year U.S. market for energy efficient products
and services. There is currently an $84 billion dollar global market. If, however, energy
efficiency products represent an alternative energy resource, there is a trillion dollar per
year global marketplace because they are substitutes for traditional resources.
What domestic forces have caused this tremendous growth in the energy efficiency
market? U.S. utilities have recognized that energy efficiency products and services
represent an alternative means of delivering energy services, in part because regulatory
reforms have allowed them to profit by investing in the delivery of energy services in the
least cost manner. With a long-term investment perspective, a utility makes decisions on
purchasing power plants with paybacks of 15-20 years. The utility can provide added
energy services at a rate of two and a half cents per kilowatt hour by investing in the more
efficient refrigerator, for example.
An example of U.S. government involvement is the Golden Carrot Program where
EPA brought utilities together to come up with $30 million — as a reward to
manufacturers of refrigerators — to bring a more efficient refrigerator technology into the
US economy beyond DOE standards.
The energy policies of the U.S., such as regulatory reform for the utility industry,
and the encouragement of efficient energy are spreading globally. This is because
environmental and economic constraints dictate the use of energy efficiency in expanding
the delivery of energy services necessary to fuel economic growth.
In Thailand, for instance, there is 10 percent growth in electricity demand growth
each year. There is simply not enough time or capital to build power plants at that rate.
To avoid economic growth constraints, Thailand needs to find ways of expanding its
energy services that can be rapidly implemented. It has adopted Demand Side
Management (DSM) as a response, and has made a $189 million commitment to DSM in
the next 5 years. Thailand has also created an $80 million per year annual fund to finance
energy efficiency investments. The fund focuses on lighting, refrigeration, building design,
and industrial motors. These are all technological innovations dominated by U.S.
industries.
Another example of an export opportunity that involves technology in which the
U.S. has advantages is in Mexico. Mexico is currently developing the largest demand side
management demonstration in the residential sector. This January, the Mexican national
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utility is procuring one and one half million compact florescent lightbulbs. This is the
largest procurement in the history of the lighting industry. This initiative is based on the
superior energy performance of compact florescent light bulbs. The Mexican national
utility's investment will be $20 million, in the first stage of the project. The government
of Norway is investing an additional $4 million because they are interested in the potential
carbon offset benefits of this program down the line. The relevance to the private sector
is clear. It is the largest procurement 'in the history of the industry for a technology in
which the U.S. excels.
Some of the main barriers between these export opportunities and the energy
efficiency industry are:
• Lack of recognition of opportunity
• Lack of government perception of opportunity
• Lack of government organization and finance mechanisms to assist the
industry
The Committee on Energy Efficiency Commerce & Trade (COEECT), mandated by
Congress last winter in the Energy Policy Act of 1992, coordinates the various activities of
the Federal government to promote energy efficiency. In effect, DOE is looking for
guidance from the industry.
The International Institute for Energy Conservation (UEC), Alliance to Save Energy,
and the American Council for an Energy Efficient Economy have had preliminary meetings
with industry representatives to establish a "Business and Energy Efficiency Advocates'
Consortium." to provide a unified, guiding voice.
In 1971, the U.S. had a new technology in hand known as VCRs. We invented and
initially produced the technology. Twenty years later, the U.S. exported $65 million worth
of high-end VCR equipment. At the same time, it was importing $1.5 billion worth of this
technology from Japan. We are on the edge of opportunity with the efficiency industry;
the global market is on the verge of explosion. Environmental impacts and capital
restraints on infrastructure investment limit growth in the energy sector. We have a very
strong domestic energy efficiency industry. The opportunity is out there.
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Alvin Aim, Senior Vice President for SAIC Corporation, focused on three
aspects of the Clean Air Marketplace in relation to exports: (1) the Clean Air
industry itself; (2) participating in the industry; and (3) how the government
could assist the industry in the area of exports.
In the mid-1970s, two very important technological developments occurred
that were influential at the start of the domestic air pollution control market: (1) EPA's
regulatory posture resulting ultimately in industry adopting the stack-scrubber as a
technology to deal with sulfur oxides, and (2) the 1970 Clean Air Act requirements
resulting in adoption of the catalytic converter as the main VOC control technology.
The prospects for the air pollution industry are great (even with increased U.S.
emphasis on hazardous waste and other issues that are less pressing to large parts of the
world) in part due to the devastating air pollution problems in Central/Eastern Europe,
Mexico City, as well as U.S. cities. The market is great — especially in developing
countries, and the U.S. has a strong technological position.
However, entering the environmental export business is difficult and time
consuming. Things are often done very differently elsewhere; personal relationships are
often much more important. Oftentimes that means placing someone in another country,
which is an expensive undertaking. Therefore, the early years are a very expensive
education.
What can government do to help the environmental industry?
• The government needs to spend more money to find out what our
competitors are doing. This could be helpful in the formulation of
government policy.
• The government also needs to create more mechanisms to help establish
personal relationships between U.S. business and foreign business (e.g., via
trade missions). Commercial attaches at the embassies could be helpful as
well.
• The government should establish exchange programs to bring more foreign
visitors to the U.S. to investigate U.S. products.
• The government should target more expenditures up front. It should
provide help to countries around the world to develop their indigenous
environmental capabilities.
• Feasibility studies are particularly effective. These would provide an
opportunity for U.S. firms to develop specifications on which to bid. If the
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feasibility studies are done by competitors, we will have very little
opportunity to bid on the subsequent work.
Intelligence is key. We need much better intelligence in foreign markets.
The government needs to develop some policy for promoting U.S. firms at
embassies.
As far as financing is concerned, the government can provide money and
information to help firms get started but, ultimately, the success is really up
to individual companies. The industry needs to work together, be
aggressive, and share information on what works and what does not work.
John Schofield, President and CEO of Thermatrix, Inc., presented his
observations as a technology developer for a new company. His company has
developed a flameless thermal oxidation technology which he claimed will
have a major impact in the marketplace as a replacement for incineration. This
technology was introduced for the first time in September 1992. Thermatrix
had immediate success in getting orders for equipment using this technology
in the U.S. market.
Initially Thermatrix had only $250,000 for this development. Thermatrix appeared
at one conference per month for marketing purposes, and began receiving domestic orders.
They immediately started manufacturing equipment. In early December, they began to
receive foreign inquiries, but were unable to service them due to lack of funds. It is very
expensive to open an export market, especially when funds are limited. In checking with
all of the organizations that assist in exporting, nobody could provide any assistance with
the up front market development. A business can only get a loan if their company is
profitable. Unfortunately, Thermatrix was not profitable because it was still growing and
profits were funnelled back into the company. Basically, there was no way to get any
money from any export agencies to assist in these exports.
The inability to get funding to develop a company means that piece by piece you
begin to sell the company overseas. What the U.S. is doing, instead of exporting goods
and services manufactured here, is exporting technologies and companies.
Thus, Thermatrix received several foreign inquiries about its newly developed
technology, and several countries wanted to purchase units to be shipped overseas and
installed. Because Thermatrix did not have the funding nor the infrastructure to do this,
the first step was to sell some of the company equity to a venture capital firm representing
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the government of Singapore. Then, Thermatrix entered into a licensing agreement
whereby they would receive the funding from forward royalties in exchange for allowing
manufacture of units with Thermatrix's technology for installation in Sweden and
Germany. The same thing occurred with Samsung of South Korea. Once again, however,
Thermatrix did not have the funding to service inquiries. Thus, Samsung set up an agency
to import the units; they sent an agent to the U.S. at their expense be trained on
Thermatrix technology equipment; Samsung is also paying 50 percent of costs at an
upcoming exhibit in South Korea. Still, however, Thermatrix could not get any financial
assistance from U.S. organizations to assist in exporting.
The Belgium government approached Thermatrix and offered $2 million to establish
a manufacturing and engineering facility in Belgium to help service the European market.
Again, however, Thermatrix cannot get any assistance from the U.S. exporting agencies to
undertake such an activity.
Furthermore, EPA does not certify technology. Some sort of high level certification
would assist firms in the exportation market. With the current push on environmental
technology, unless the system changes, the U.S. will continue to export technology and
companies, but not exports.
Alan Scarsella, Director of International Business Development for Wahlco
Environmental Systems, Inc., spoke of work at Wahlco in developing funding
sources through U.S. and foreign government agencies, and private institutions
to broaden the company's export opportunities. Wahlco has worked to try to
find capital, put together deals, and finance the opportunities that they see
developing in Eastern Europe, Asia, and elsewhere.
In Poland, Wahlco worked through a joint venture partner who acted as its
manufacturer's representative. Wahlco had worked with this company for 20 years prior
to this particular venture and was able to make good connections.
Also, there is a Clean Air Foundation in Poland that was helpful in getting Walcho
into one of the plants in Warsaw. As a result, Wahlco was able to put one of its units in
the plant as a demonstration unit at a very low cost both for Walcho and the customer.
The cost was paid for in coal, a barter arrangement. Mr. Scarsella reiterated how
advantageous it was to have a partner in Europe that was very familiar with the Polish
economy as well as with the barter system. The demonstration unit was very successful.
Wahlco signed an agreement with the plant manager to install several more units — this
time for deiitchmarks and U.S. dollars.
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In India, Wahlco's experience was not as positive. Wahlco became involved with
a plant owned by one of the state electricity boards. As in Poland, Wahlco made the plant
connection through a joint venture. In 1991, Wahlco received an initial offer to bid, made
an offer, and quoted a price. Two years later, Wahlco was still waiting for feedback.
Finally, they were asked to resubmit the bid because the coal had been changed and the
particulate amount had increased by a magnitude of five. Wahlco had to double the
capacity of the unit they had designed. Wahlco did this but kept the price the same. By
that time, however, people that had been making decisions had been replaced, and the
new staff were not very familiar with the technology and felt there had been some
wrongdoing on Wahlco's part in reference to the quoted price (which, in actuality, was the
same as the original quote from two years earlier). Wahlco was offered unacceptable
conditions: they might be allowed to install a demonstration unit, but only if it was
entirely at Wahlco's expense; if the first year's demonstration is successful, the electricity
board may consider whether it wants to purchase the equipment.
There is a U.S. AID program called TEST, handled by a joint advisory panel of U.S.
and Indian representatives. They have offered to help Wahlco in any way they can to
clear up this kind of issue. Sanders International is the primary contractor for TEST and
have been very helpful; they perform the same type of role that the consultants to
government agencies should play.
Although Wahlco representatives spent two weeks educating plant representatives
on their technology and Wahlco has their own people posted in India, there is no
guarantee of ultimate project success. One cannot necessarily do business in one country
the way one does it somewhere else. Wahlco is currently working with its Indian joint
venture to resolve the situation and salvage the job. If a reasonable demonstration
agreement is reached, Wahlco hopes to have the assistance of one of the national
laboratories as a third party to certify demonstration results.
Like other U.S. manufacturers, some of our best prospective customers lack the
ability to pay for the product. Many U.S. investors would respond to the right incentive
to provide their capital, especially if the investment would help improve conditions in their
native country. The Earth Day slogan was "Think globally, act locally." Any improvement
in the environment has its incremental effect on the whole. The U.S. should encourage
people to invest in cleaning up the environment, whether it is in this country or elsewhere.
We can do that with the right incentives. We gained experience with alternative energy
incentives. Hopefully we can use those lessons to design incentives that encourage
individuals to invest in purchasing U.S. environmental products regardless where they are
used. It would help us both economically and environmentally. I believe it would also
help us politically.
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Roger Strelow, Vice President of Environmental Affairs for Bechtel
Corporation, endorsed the notion of finding a suitable mechanism for high-
level certification of environmental technologies. This could be particularly
helpful when promoting technologies abroad. One of the Congressional bills
being considered has a provision that would create a high-level entity separate
from EPA to give U.S. firms a mechanism for promoting technology abroad.
Bechtel is the largest environmental engineering and construction company in the
United States. It is an $8 billion company that is heavily involved abroad. The key
industry sectors Bechtel serves are fossil power, petroleum and chemicals, and mining and
metals. Betchel designs and builds industrial facilities, highways, airports, and power
plants. Bechtel often does its air quality work as an integral part of a broader project, for
example, in designing and building an entire power plant. Some 30^40 percent of Bechtel's
total business is overseas.
The Environmental Technology Export Council strengthens some of the linkages
between larger and smaller firms in common export ventures. Bechtel's business
philosophy has been generally to avoid proprietary technologies. Bechtel usually helps
customers look over the entire range of available domestic and foreign technologies. It
rarely develops a technology that is its own. One area that has been a notable exception
is with flue gas desulfurization (FGD).
For the Coal Strip Power Plant in Montana, Bechtel designed a system for a
particular application. It developed a Dolomite Lime FGD process. Bechtel also has a sea
water scrubbing technology that is now being licensed overseas along with the Coal Strip
derived process. Another technology is the confined zone dispersion — to remove sulfur
without having to have a scrubbing unit. Cheaper than a scrubbing unit, this may be
particularly attractive to regions like Eastern Europe. However, it only removes about 50
percent compared to the 90 percent success rate of scrubbing units.
Bechtel has performed a number of overseas studies and feasibility assessments —
from the UK to Saudi Arabia, and from New Zealand to Japan — in the area of FGD.
Bechtel sees a substantial global FGD market developing over the next 15 years of some
$45 billion, about half retrofit/ half new facilities. The U.S. portion of this market should
be about $9 billion. However, there is a substantial portion not open to U.S. firms. The
open market for US FGD abroad, where US firms can be competitive, is approximately $25
billion. Western Europe and the Asia Pacific area are the focal points for the development
of this market.
One alternative, especially for smaller companies is to find appropriate linkages
with firms like Bechtel. This enables the smaller company to gain some leverage. One
example, in the hazardous waste treatment field rather than the air pollution field, helps
to illustrate the potential. A thermal distillation technology that actually qualifies for
RCRA recycling can be used to treat a wide variety of hydrocarbon wastes and was
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developed by an independent entrepreneur. Bechtel discovered it early in its development.
Recently, the technology company has contracted with an affiliate of Bechtel, Zytel-Bechtel
(a joint Japanese-U.S. firm that specializes in the engineering and production of process
technology units), to be the exclusive designer and fabricator of its equipment. Bechtel
gives an operational guarantee for the equipment Bechtel designs and builds. This
operational guarantee by Zytel-Bechtel is an enormous asset to a small technology
company that is not heavily capitalized.
There are plenty of opportunities for the private sector, even without additional
government intervention, to do a better and smarter job of competing with foreign
enterprises in the export market for air pollution control and other environmental types
of work. However, we cannot stake the future of our companies on government becoming
organized and getting out on the front line to work with us.
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Session 8
Looking to the Future — New Directions for
Environmental Technology
September 9, 1993
2:00 p.m. - 4:00 p.m.
Moderator:
Panelists:
Richard Ayres, Esq.
Braden R. Allenby
Howard Geller
Dr. Richard Klimisch
Bruce Smart
Introduction
Richard Ayres, Esq., Partner at O'Melveny & Myers, opened the discussion by
reflecting on the future of environmental technology over the next 30 years. The
environmental technology marketplace is rapidly changing because, according to the
House Committee on Merchant Marines and Fisheries, most of the 58,000 small
environmental companies in the U.S. do not export their technology. Ten to fifteen years
from now, global environmental trade may expand. Over the next three decades, this
marketplace will go "offshore and upstream." During this time frame the developing
world will acquire the technology that the developed world has today, and environmental
pollution abatement will undoubtedly follow. Furthermore, environmental technology will
provide innovations in pollution prevention and life-cycle controls. Examples of these
possible innovations include energy efficiency technology, alternative energy generation
technology, and life-cycle analysis.
Presentations
Braden R. Allenby, Research Director, Technology and Environment, AT&T,
focused on defining environmental technology.
Americans lack a certain perspective on technical issues; they tend to trivialize
tasks and turn them into products. This is not environmental technology. A
better definition of environmental technology can be formulated using the
environmental impact equation:
Environmental Impact = Population x
Wealth /Unit Population x
Environmental Impact / Unit Wealth
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Several terms in this equation need to be refined. The environmental impact term,
for instance, is unacceptable today because of such problems as species depletion, global
climate change, and the loss of soil and water resources. The population is increasing and
can be considered exogenous. The wealth / unit population term is also increasing
because the developing world will not give up its right to develop, and the developed
world will not give up its right to increase wealth.
As a result, environmental impact / unit wealth must compensate not only for the
first two terms, but for environmental impact as well. Moreover, environmental impact
/ unit wealth is a technological term because quality of life and economic development are
created through the applications of technologies. It is not, however, limited just to
technological products (e.g., scrubbers). This definition of environmental technology is,
therefore, much broader in scope than the term "environmental technology" usually
implies and involves, for example, a technology's diffusion into society.
Today there is no such thing as environmental technology because we have not yet
developed a sustainable technological base. A useful example is the manufacture of cars.
Industry must focus on other things besides manufacturing processes and tailpipes
to assess environmental pollution. For instance, industry should look at how cars are used
in society. The Japanese, for example, use cars for many different reasons than Americans
do, and this will affect pollution. Because of this cultural difference, green technology in
America is viewed differently than elsewhere. The above differences will affect
competition between U.S. and foreign markets because other countries are trying to
develop towards a more sustainable position.
The environmental industry is, by nature, transitory. Today, environmentalists
push for companies to develop technologies that eliminate pollution stemming from the
starting point of industrial processes. This was not the case several years ago. A Virginia
electronics manufacturing plant, for example, went from emitting CFCs and chlorinated
solvents to near zero pollution level reportable under the Superfund Amendments and
Reauthorization Act in 2-3 years, by re-engineering components and processes from the
ground up. The implication of this approach is not to focus on controlling emissions, but
to re-engineer industry away from any practice that produces emissions at the start of the
industrial process. The most important green technology issues are as follows:
• Policy should not be directed towards subsidizing or improving existing
technology, but should establish boundary conditions that will encourage
industry to take environmentally appropriate actions.
• Policy should focus on systems. By taking a life-cycle approach to
productivity, technology, and service within the same context in which they
are used in our culture and economy, we can minimize negative impacts
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and, therefore, begin to develop new insights into environmental
technology.
Howard Geller, Executive Director of the American Council for an Energy
Efficient Economy, is dedicated to advancing energy conservation technologies.
Mr. Geller discussed a study that illustrated the potential economic savings
and pollution reduction in the utility industry and reviewed some emerging
technologies in energy conservation.
According to Mr. Geller, if industry uses less energy in making a product or
providing a service, then less pollution will result. Improving the efficiency of energy use
is cost effective because the energy savings generated are worth more than the cost of the
energy efficient technology. The following study illustrates this point.
Acid Rain and Electricity Conservation, a study concluded in 1987, focused on the role
of more efficient electricity use in cutting emissions of SOX in the Upper Midwest. The
study presented potential energy savings that could result over a 20-year period if utilities
promoted these new technologies. A base-case load growth of 1.7 percent per year
between 1985 and 2005 was predicted, assuming normal electricity use with no new
efficient technology. More efficient energy use could result in a growth rate of only 0.9
percent per year for the same time period.
The same study can be used to simulate fuel use and emissions scenarios. These
scenarios tested the effectiveness of conservation and further emissions control technology.
In addition, the study assumed there would be legislation reducing SO2 emissions by 5
million tons in 1995 and by 10 million tons in 2000. The results were as follows:
• Before the new legislation, emissions slowly rose; after the legislation, the
more efficient technology reduced emissions by 7-11 percent.
• For the period 1985-2000, electricity costs to the consumer totalled $355
billion. Employing conventional emissions control technology added
$3.6-$8j4 billion in electricity costs to the consumer. However, if more
efficient electricity and pollution measures are employed, there is a net
economic savings of $3.7 to 10 billion.
The savings more than offsets the cost of the pollution control technology and
therefore, makes this scenario profitable.
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The following examples illustrate the emerging technologies focusing on energy
conservation.
• Energy efficiency in refrigerators has dramatically improved over the past
20 years. Until about 1970, electricity use in these appliances rose because
of added features. By the early 1970s, electricity use in refrigerators began
declining while average unit size increased roughly 10 percent. Public
pressure and higher oil prices during this time period drove the
development of more efficient refrigerators.
• More recently, EPA sponsored a contest to see which refrigerator
manufacturer could build the most efficient, pollution-free machine. As a
result, products now use only 350-500 KWHr of electricity compared to the
1500-2000 KWHr common 15 to 20 years ago.
• Other appliances that have increased energy efficiency are clothes washers
and clothes dryers. Heat pump and microwave clothes dryers should be
available to consumers in the next five years.
• Lighting, particularly compact fluorescent lamps, now use less energy and
are gaining popularity in the marketplace. Improved incandescent lamps
are also readily available to consumers.
There are many benefits stemming from more efficient energy use. By using less
energy, industries can pass on their savings to consumers. Lower energy costs to industry
also will help create new jobs, limit our dependence on foreign oil, and, ultimately,
produce environmental benefits such as reduced pollution.
Dr. Richard Klimisch, Vice President of the Engineering Affairs Division at the
American Automobile Manufacturers Association, introduced the United States
Council for Automotive Research (USCAR). This organization comprises
consortia that are involved in the research and development of new vehicles.
USCAR considers both the environment and the needs of society when
designing new technologies. There are five consortia forming the
environmental side of USCAR:
The Auto/Oil Air Quality Improvement Research Program, a partnership
between the auto and oil industries to improve air quality.
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Clean Air Marketplace 1993 Page 227
• The Low Emission Technology Program, which is involved in measuring
pollution using remote sensing technology.
• The Low Emission Paint Partnership, focusing on the goal of reducing and
eventually eliminating solvents in paint.
• The U.S. Advanced Battery Consortium, which helps develop better
batteries so that electric vehicles have a better range with less cost.
• The Vehicle Recycling Partnership, which works on the reuse, recycle, and
disposal of vehicles. Currently it is developing methods to recycle plastics
found in vehicles.
Lastly, the discussion focused on America's dependence on cheap gasoline. Fuel
consumption is controlled by fuel prices. Therefore, to decrease fuel consumption, fuel
prices must rise. This will inevitably spur the production of more efficient vehicles.
However, efficient vehicles will only be produced in mass quantity when markets open
and the public demands new technology.
Bruce Smart, Senior Fellow at World Resources Institute and author of Beyond
Compliance: A New Industry View of the Environment, discussed his views on
how America can solve its environmental problems correctly and efficiently.
We cannot really tackle these problems, according to Mr. Smart, until both the
environmental and business communities agree on goals and policies for
change. Technology is the key to solving our problems. However, this
technology must be developed through industry — government and environmental groups
cannot play the central role.
Environmental problems involve too much emotion. This emotion causes groups
to take sides, allowing issues to become stagnant in Washington. Therefore, technology
must replace emotion with fact; we must set priorities and better define our problems.
Only when the problems are better denned can we decide how to tackle them efficiently.
The environmental and business communities must agree to move towards solving
our environmental problems by developing a consensus on the following issues:
• Correct indicators of the environment;
• A hierarchy of relative risk; and
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• Proper dissemination of information to the public.
When the problems are better defined, we can apply specific technologies to
properly solve them. The development of these specific technologies will undoubtedly
help America become more competitive in world markets.
Questions and Answers:
How we can provide incentives to promote new technologies?
Mr. Smart answered by stating that business can respond accordingly if we can
institute a fee system for pollutants or give credit for a lack of pollution. These
incentives will help our tax and fiscal system reflect the social costs of environmental
degradation.
Mr. Allenby added that it may be difficult for governments to adopt incentives such as
fees and rebates. Community right-to-know programs to spread the word regarding
environmental degradation may also be useful.
Mr. Geller responded that utility incentives (i.e., rebates) and the gas guzzler tax already
provide incentives. Perhaps the gas guzzler tax could be expanded to tax owners or issue
rebates according to the amount of emissions vehicles produce.
Why didn't anyone mention renewable technology?
Dr. Klimisch responded that a talk on soydiesel was given the day before. More
needs to be done with renewable energy to limit CO2.
Mr. Geller added that wind technology and solar-thermal technology are gaining
popularity and will expand in use. More bio-fuels are also on the horizon.
Many companies have developed environmental technologies but have not
marketed them. How can we force companies to release their products?
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Mr. Smart explained that more rapid depreciation schedules, investment tax
credits, and incentives for new technology by raising the costs of using old technology are
some answers.
How was USCAR formed when many other similar environmental problem-
solving consortia failed to form?
Dr. Klimisch responded that the time was right. Other consortia failed because
of economic distress in the member companies.
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How will the development of electric cars affect energy efficiency?
Mr. Geller responded that one must look carefully at the total resource
requirements of a technology. Economies in the marketplace will help determine
which energy sources will be better used.
Can we really attain long-term sustainable development?
Mr. Allenby answered that one must assume sustainable development is possible,
but it is questionable whether there are data to support this stance.
How will pollution prevention spur development in companies?
Mr. Allenby explained that pollution prevention will not yield as much as is
hoped because compared to emissions reporting, pollution prevention reporting
is complex and more difficult for non-technical people to understand. Pollution prevention
is a good idea for managers of facilities to know, but it will not be an effective driver for
practical developments. In addition, the environmental benefit that will result is just a
good next step in the right direction.
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Page 231
Session 9
Public/Private Partnerships in Cleaning the Air
September 9, 1993
4: J5 p.m. - 6:15 p.m.
Moderator:
Panelists:
Steven Howards
Daniel Greenbaum
Isaac Manning
Steven Coffin
Ben G. Henneke
Introduction
Steven Howards, President of Environmental Strategies, prefaced his remarks by
posing the following questions: Why would air quality regulators want to work with the
private sector? Why would the private sector want to work with air quality regulators?
Models and examples of public/private sector partnerships, particularly partnerships that
use the private sector to facilitate the implementation of public programs, show that such
partnerships can form, work, and be successful in creating stronger pollution control
programs and in fostering greater competition in the clean air market.
The private sector, especially those industries that might gain broader markets from
the implementation of stronger control programs, can play a key role in helping air quality
regulators develop and implement their programs. The private sector wants to participate
in program implementation in order to be a part of the program development process,
understand how decisions are made, and shape programs to create additional market
opportunities for environmentally, economically, and socially responsible products. The
public sector needs information and support from the private sector in getting programs
implemented. To the extent possible, the public sector needs private sector help in
developing programs that nurture competition in the marketplace and create an incentive
for the development and marketing of cleaner products. Although the motivations of the
involved parties might be quite distinct, the potential for powerful public/private
partnerships exists if both the public and private sectors take time at the outset of program
development to see how their interests coincide and to subsequently develop programs
that harness their joint energies.
There are successful programs in which the public and private sectors created
unusual collaborative processes using their joint technical resources to create consensus-
based programs that encourage the private sector to aggressively pursue market
opportunities. Programs based on pub lie/private sector partnerships can be economically
sounder, and can better anticipate and address points of controversy, allowing the private
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sector to actively contribute to the implementation of programs, rather than serve only as
passive observers.
Presentations
Daniel Greenbaum, Commissioner of the Massachusetts Department of
Environmental Protection, discussed efforts by the State of Massachusetts to
forge public/private sector partnerships and develop ideas for the direction of
future partnerships. Because the public sector cannot alone protect the
environment, the relationship between the public and private sectors becomes
crucial to the entire issue of environmental protection. The public sector can
pass rules, enforce rules, and give incentives, but the private sector makes decisions,
investments, and propagates expertise and ideas.
Mr. Greenbaum began by discussing the role that the public sector should play in
clean air. In describing this role, one sees seemingly contrasting approaches: a "command
and control", "tough-on-the-environment" stance, versus a cooperative relationship with
the private sector. The command and control approach has achieved a certain level of
success in clean air. However, a command and control approach limits the input of ideas
and expertise, which is necessary for comprehensive and sustainable clean air programs.
An approach incorporating both stances (command and control, and cooperation) would
be more successful — the Clean Air Act Amendments serve as an example. It sets very
straightforward clean air goals (e.g., the acid rain program and ozone attainment
requirements), but does not specifically mandate how to reach these goals. The Clean Air
Act Amendments allow the market to determine how to reach clean air goals in the
cheapest and most effective way possible.
Implementing the Clean Air Act Amendments is a classic zero-sum game. The
reality of the Clean Air Act is not whether pollution reductions are made, but how they are
made. If one industry (e.g., auto manufacturing) does not make sufficient reductions,
reductions have to be made by another industry (e.g., utilities). People are a necessary
part of making choices to achieve pollution reductions. If partnerships that involve people
making decisions are not fostered in the development of clean air programs, different
economic sectors will not understand their integral role in meeting clean air standards and
will be less willing to comply with any programs that impact their industries.
Two examples of successful public/private sector partnerships that broadly
encourage people to go beyond basic requirements in order to benefit from economic
incentives include:
• Transportation control measures. Massachusetts addressed the issue of
creating business, development, and incentive opportunities — that are not
in opposition to clean air goals — by chartering a transportation task force.
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The task force, comprised of the public, private, and public interest sectors,
developed a set of proposals to meet the air pollution reduction goals. As
a part of the negotiation process, the business community identified the
public sector as responsible for maintaining transportation systems and built
into the State Implementation Plan (SIP) — a set of enforceable performance
standards for public sector maintenance and operation of transit systems.
The Boston Chamber of Commerce also proposed an entirely market-based
emission incentive program in which a fee would be imposed on those who
drive more than a certain number of miles per year in more highly
polluting vehicles, while granting credits to those who drive less than the
amount and/or in less polluting vehicles. Even though the program would
not generate profits for the government, it would allow economic and
market incentives to influence the current automobile pricing system.
Although there was not agreement on all points, a market-based proposal
was developed that outlines collective goals, activities for individuals to
participate in, and an overall time line for events. The proposal does not
control how the goals are going to be met, but rather, tries to offer people
options to reduce the growth in trips. Under the proposal, the market
encourages many of the reductions, as well as promoting cooperation.
• Emissions trading. In a project involving almost no public money,
Northeast States for Coordinated Air Use Management (NESCAUM)
developed a voluntary program with twelve companies, two state agencies,
and the city of Philadelphia to work with companies to measure air
emissions and use emission credits effectively. This program will develop
the market for credits, thereby encouraging companies to invest in greater
emission reductions than required by the Clean Air Act Amendments.
Enforcement cases are an additional forum from which public/private sector
partnerships can develop. Enforcement actions provide the government with many
opportunities either to be very tough or to look at opportunities for partnerships to
advance clean air. For example, enforcement actions were brought against the New
England Power Company. The company agreed to come into compliance, and additionally
agreed to be one of the first commercial installations in the country to use selective
noncatalytic reduction to reduce NOX emissions. This voluntary reduction with new,
untested technology brought about very substantial reductions and improved public
relations with neighbors around the plant. The company is looking into applying the
technology at other plants that do not have enforcement issues to earn marketable
emission credits. This sort of unlikely partnership not only produces cleaner air and lower
costs, but it also tests out new technologies and gets them moving at a faster pace.
There is also the potential for public/private sector partnerships resulting from
implementing private sector licensing processes and certification programs for traditional
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government roles. Private sector companies fulfilling traditionally public sector roles
provide several economic and service-related benefits. These programs build a greater
private sector pool of expertise, provide better service to people, make available more
service to people, force better quality control, and encourage a very active and competitive
private market providing the services. Several such programs are being implemented in
Massachusetts.
• Starting in October, much of the Superfund cleanup process will be turned
over to licensed site professionals. The licensed professionals will render
opinions on cleanups and be subject to audits in the same way that
accountants are subject to audits by the IRS. The program will allow a
large number of relatively uncontaminated sites to move forward more
quickly and allow private expertise to operate.
• Massachusetts is certifying private toxic use reduction planners, rather than
solely relying on the limited resources of public sector specialists. These
private sector individuals will have responsibility for developing toxics use
reduction plans with industries.
• Massachusetts has developed a rulemaking for stationary source emitters
that includes some privatization of the permitting process. The State will
not review plans from every company, but will have private sector
specialists, who in addition to reviewing completed applications, will help
companies submit their permit applications accurately.
Two fundamental elements form the basis of successful public/private sector
partnerships:
• Both sides of the partnership must have some incentive to be involved.
Unfortunately, many in both the public and private sectors do not
understand what incentives to partnerships are. Understanding the
economic and environmental incentives of public/private sector
partnerships will encourage involvement from both sides and begin to build
the trust necessary to sustain both the partnerships and clean air.
• People in different sectors are beginning to understand that there are
common environmental problems that everyone — not just
environmentalists — is trying to solve. Implementation of the Clean Air
Act Amendments may be the stepping stone for building trust between the
public and private sectors. People will see that with trusting, more gets
done with less bureaucratic wrangling. There is a surprising amount of
common ground on which to move forward, a large and diverse group of
people who recognize and support their interest in implementation, both of
which should result in successful implementation of clean air programs.
Session 9 — Public/Private Partnerships in Cleaning the Air
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Isaac Manning, an architect and real estate developer who works with the
North Texas Clean Air Coalition (NTCAC), discussed the role of clean air in
sustaining a strong economy and the role of public/private sector partnerships
in achieving environmental and economic goals in the Dallas-Fort Worth
metropolitan area. When the business community and Chambers of
Commerce began losing opportunities for economic and industrial
development because of poor air quality, it became clear that there was little distinction
between clean air and economic development.
The five myths of nonattainment are:
• It is not my fault. Ninety-two percent of VOCs emitted in the Dallas-Fort
Worth area are from mobile and area sources.
• It is not my county, plant, or town that is causing all of these problems.
Currently four counties in the Dallas-Fort Worth area are not in attainment,
11 counties could be in non-attainment by 1996.
• There are too many or not enough air monitors. Air monitors are necessary
to determine compliance. They are crucial for reaching attainment, as they
prove the programs are working.
• It is impossible to comply. With that attitude, everything is impossible.
Texans, Mr. Manning pointed out, like a challenge; attainment is difficult,
but not impossible.
• YOM can change the Clean Air Act Amendments. Too much time is wasted
fighting the law and not working for solutions.
The Dallas-Fort Worth area can be used as a case study for refuting the myths of
nonattainment, illustrating the potential of public private partnerships. Only eight percent
of the emissions in the area are from stationary sources. As a result, the area lacks surplus
emissions from industrial development that could provide emission offsets to reach
attainment. The only way for the area to meet the air quality standards required by the
Clean Air Act Amendments, which allow continued economic growth, is by reducing air
emissions from mobile and area sources. The singular goal of NTCAC — comprised of
the Dallas Chamber of Commerce, the Fort Worth Chamber of Commerce, the North Texas
Commission, and the North Central Texas Council of Governments — is to bring the
Dallas-Fort Worth metropolitan area into attainment.
NTCAC, a partnership between the public and private sectors, worked with EPA
Region VI and the Texas Air Control Board to develop a program to bring Dallas-Fort
Worth into attainment before 1996 and maintain air quality as required by the Clean Air
Act Amendments. The private sector supported clean air programs as a long term
Session 9 — Public/Private Partnerships in Cleaning the Air
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business decision, and in this way generated political support for implementation of clean
air rules and programs.
The joint efforts of NTCAC and the private sector resulted in the creation of a SIP
and a privately run "shadow SIP." The shadow SIP is based on the Tulsa-Oklahoma
Ozone Alert Program. On days that are likely to have ozone exceedances, certain activities
are either encouraged or discouraged (e.g., using public transportation and not cutting
grass, respectively). The public sector was invited to join the program through the
transportation authorities. The Tulsa program showed that if free rides were offered on
ozone-alert days, overall ridership on public transportation would increase. The Fort
Worth transportation authority has experienced a 30-40 percent increase in ridership since
the inception of the Ozone Alert Program. The Dallas Area Rapid Transit joined the
program in August 1993.
Another element of the shadow SIP program involves corporations ranking their
employees' performance on ozone-alert days and linking that performance directly to their
bonus compensation. Under the program, employees get the impression that if they do
not comply with ozone-alert requirements, they will be impacted financially. A final
element of the program involves educating school children. Children are taught simple
ways to reduce air pollution. In addition, children directly feel the affects of ozone-alert
days because their schoolday starts later. Children can directly pressure their peers and
parents into compliance.
Clean air truly is a public and private partnership. Because the economic and
environmental future rests on partnerships, industry, business, government, and public
interest groups must work together in creative ways, discarding stereotypes about
individual groups.
Steven Coffin, Vice President of the Colorado Interstate Gas Company (CIGC)
and Vice Chairman of the Colorado Air Quality Control Commission,
discussed two examples of business opportunities that have been developed
for the natural gas industry through efforts to address the air quality issues
facing Colorado.
The natural gas industry is in a good position to seize opportunities created by the
Clean Air Act and do something about air quality problems in Colorado because the
problems are related to carbon monoxide and particulate matter — not ozone. In addition,
visibility is an important air quality concern. The majority of these pollutants are caused,
directly or indirectly, by mobile sources in Colorado.
Session 9 — Public/Private Partnerships in Cleaning the Air
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Clean Air Marketplace 1993 Page 237
There is a strong impetus fair environmental protection in Colorado.
• People come to the State for outdoor activities, the quality of life, and the
mountains.
• Denver (like Dallas) went through a major economic downturn that was
directly linked to air quality. Despite improvements in air quality resulting
from "easy" control measures, economic growth has generated more vehicle
miles travelled and more cars on the road, challenging air quality
improvements.
Colorado is in the position of having to implement additional, more difficult control
measures to meet air quality standards. Natural gas utilities, distributors, and pipelines
are beginning to recognize their potential, to contribute to the pollution, and to become
players in developing State and private programs to use natural gas to reduce emissions.
Business Opportunity #1: CNG Vehicle Industry
In the early 1980s, CIGC and the Public Service Company started promoting the
use of natural gas to operate vehicles on a pilot-project basis. Although the project was
not intended to become a major venture, over time it became an established business.
Several elements contributed to the success of the pilot CNG vehicle programs, including:
• Poor air quality is a hindrance to economic development;
• Nationwide energy security problems have been recognized;
• Natural gas is more economically efficient ($0.60 per gallon equivalent of
gasoline) than gasoline; and
• The natural gas industry is indigenous to Colorado and an important part
of the Colorado economy.
Additionally, several pieces of legislation encouraged the development of CNG
vehicle programs in the state.
• At the Federal level, the Colorado delegation influenced Congress to
modify the alternative fuel fleet requirements of the Clean Air Act
Amendments of 1990 to include carbon monoxide nonattainment areas.
• At the State level, tax credit and other financial incentives promoted the
use of alternative fuels.
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The natural gas industry began to see that market demand was greater than could
be serviced through a pilot project approach. In 1990, Natural Fuels Corp. was created to
put all of the operations for a CNG vehicle infrastructure together: vehicle conversion,
refueling station development, fuel sales, and vehicle servicing. This venture has
improved public relations and the economic position of both public utilities and private
fleet operators: utilities sell more natural gas and fleet operators can convert their vehicles
for economic purposes while cleaning the air. Currently, there are approximately 3,000
CNG vehicles on the road in Colorado with 18 service and refueling stations.
There are both negative and positive aspects of the CNG vehicle market. On the
negative side:
• The market is more difficult than anticipated;
• The cost of conversion is still high and a barrier to market growth;
• Customer convenience is poor; and
• Customer acceptance — attitude, behavior, thinking about CNG or
converting cars — is low.
The industry is working with the government to address these negative aspects.
On the positive side, the CNG vehicle market has:
• Generated business opportunities — additional gas has been sold;
• Generated a significant amount of goodwill — CNG vehicles have become
a part of the clean air solution; and
• Paved the way for other companies to get into the CNG business (e.g.,
Total, Amoco).
Business Opportunity #2: Conversion of Woodburning Fireplaces
The second business opportunity involves the conversion of woodburning fireplaces
to natural gas. Fireplaces are a significant contributor to the air pollution problem in
Denver. However, as a result of a strong educational program and close work with local
and state governments, some woodburning fireplace bans are being put into effect. For
example, "The Great Stove and Fireplace Changeout" was an illustration of the public and
private sectors joining together to implement a voluntary mechanism for cleaning the air.
Participants in the program included public utilities, the woodburning industry (i.e.,
manufacturers and sellers of fireplaces), and a major financial institution. The program
was a two-month cooperative effort that incorporated an aggressive advertising campaign,
educational outreach, low interest loans for fireplace conversions, municipal waivers of
Session 9 — Public/Private Partnerships in Cleaning the Air
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Clean Air Marketplace 1993 Page 239
sales tax and building permit fees, discounts, and rebates to encourage voluntary
conversions from wood burning to natural gas fireplaces and stoves. The program
resulted in a 25 percent increase in sales of clean burning appliances, an improvement in
air quality, and the establishment of an ongoing coalition to increase public awareness of
the polluting aspects of woodburning fireplaces.
A number of Federal and state programs, including the Clean Air Act Amendments
and the Energy Policy Act of 1992 fleet requirements, and state and Federal financial
incentives, will have a determining impact on the industry. The key to the success of
natural gas, and all clean fuel industries, is legislative support to ensure the development
of a strong market for the fuels. If companies look creatively at the air quality problem,
it becomes clear that there are more potential products and ways to make money than ever
thought possible.
Ben G. Henneke, President of the Clean Air Action Corporation, used the
Tulsa Ozone Alert Program to discuss the importance of building on successful
program ideas and of including industry, regulators, and environmentalists in
public/private sector partnerships. Through the input of many different
perspectives, each time a clean air idea works, it has wide-ranging
implications. As it is adopted elsewhere, it is consistently improved. Mr.
Henneke discussed how the Tulsa program has grown from a privately funded effort to
one involving Federal funding and broad educational programs.
Despite the success of the Tulsa program in generating emission reductions and
government support through simple control measures, people will only do "inconvenient"
things occasionally. Public and private sectors, and environmentalists, must work together
to reduce pollution. By involving three perspectives in the discussion, typically opposing
factions can be brought together in a cooperative manner. Tulsa's public/private
partnership is comprised of approximately 50 percent environmental public interest
groups, 25 percent public sector, and 25 percent private industry. Environmental groups
and industry will join forces in the development of clean air programs, while regulators
are overwhelmed just to implement required laws and regulations. The government's role
is to provide information, so that creative, voluntary programs may develop. The joint
efforts of environmental groups and industry have created an atmosphere of cooperation
and a certain level of compromise. In the spirit of cooperation, environmental groups and
regulators establish goals and a time frame, while the industrial sector determines how it
will meet those requirements in the goals.
Session 9 — Public/Private Partnerships in Cleaning the Air
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The potential for public and private sector partnerships, particularly involving
environmentalists, is much greater than most realize. The willingness of industry to
participate in clean air programs is significantly underestimated when industry is given
the freedom to determine how it will reach clean air goals. The potential for public and
private sector partnerships can only increase as people build, through shared ideas,
examples of clean air programs that have been successfully implemented.
Questions and Answers
What is being used to clean up gasoline and diesel in Tulsa?
Mr. Henneke answered that nothing is being done to clean up diesel. To clean
gasoline, the Reid vapor pressure (RVP) was reduced and voluntary reformulated
gasoline was put in place. Companies were not required to use Federal or California
reformulated fuel, but they were required to clean the fuel in whatever way was most
economical. Mr. Howards pointed out that the problem with diesel is sulfur and
aromatics. In Denver, refineries developed ways to reduce the sulfur content of diesel
cheaply, which resulted in the marketing of diesel based on its clean air qualities. This
marketing strategy started building voluntary consumer demand for cleaner products.
New York State has been very slow in pushing its clean air regulations. Do
states talk to each other?
Mr. Greenbaum explained that NESCAUM, which includes the air directors from
New York, New Jersey, and the other Northeast states, meets regularly to come up with
joint strategies. By 1989 all eight member states had adopted seasonal lower RVP gasoline.
The members of NESCAUM are now part of the larger Ozone Transport Commission,
established in the Clean Air Act Amendments of 1990, which is working to develop
everything from cleaner gasoline and cars to a regional emission credit trading system.
New York has played an active part of this group.
Have you looked at soydiesel?
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• I Mr. Henneke responded that there are several ways to clean up diesel emissions
^™™ if there is no Federal standard: (1) inexpensive catalysts can be retrofitted on
most diesel engines; (2) engines can be overfeed with natural gas and alcohols, as is being
done with methanol and ethanol; or (3) inherently less polluting fuels, such as soydiesel,
can be used.
Session 9 — Public/Private Partnerships in Cleaning the Air
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Page 241
Session 10 — Panel A
Financing Companies and Projects
September 9, 1993
4:15 p.m. - 6:15 p.m.
Moderator.
Panelists:
Robert Brenner
Jerry Esmay
Robert Grady
Jake Tarr
Frank Pope
James H. McCall
Introduction
Robert Brenner, Acting Deputy Assistant Administrator, Office of Air and
Radiation, U.S. EPA, introduced the session by reiterating Donald Deieso's statement in
the afternoon's keynote address: Unless the financing works, the project is not likely to
happen. This session offers us the opportunity to hear from several people who are
involved in financing CAAA-related projects, which, according to Mr. Brenner, is an
excellent way to explore the critical role of financing in the Clean Air Marketplace. These
representatives can offer valuable help to both government and industry in identifying the
hurdles to financing clean air projects and approaches we can take to facilitate financing.
Presentations
Jerry Esntay, Environmental Project Specialist, International Finance
Corporation (IFC), began by explaining that the IFC is the private sector arm
of the World Bank, financing only private companies without government
project guarantees. The U.S. is the largest single shareholder of the World
Bank, owning approximately 25 percent of the shares outstanding compared
to most other countries, which generally hold about 6 percent or less.
Conversely, the U.S. represents only about five percent of industry that is sponsoring
environmental projects through EFC.
The EFC is the project financier of businesses that set up in Group 2 countries and
help mobilize resources for projects within these countries. Despite some popular
perceptions, adequate financing is generally available. What are lacking are viable projects
that qualified U.S. firms are willing to support. The following are a few examples of the
various types of international projects for which U.S.-based firms can acquire financing
through the IFC:
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• Manufacturing operations where research and development is accomplished
primarily in the U.S.; and manufacturing, management efficiency, and
quality control services in Group 2 countries. These projects allow for the
development of new technologies within the U.S., as well as provide Group
2 countries with goods, services, and much needed industrial training.
• Build own Transfer (BOT) projects. An example of a BOT project is the
arrangement that a European environmental firm has made with a facility
that cannot afford to invest in pollution control equipment but will be
required to meet European Community (EC) emissions standards. The firm
sells equipment and services to the facility on a per cubic meter of air
cleaner basis; by installing equipment on-site and charging the facility for
cleaning their emissions over a period of fifteen years. By the end of the
fifteen years, the equipment is paid for and can then be turned over to the
facility. This type of venture may become more common as Central
European firms try to break into the EC, and could be a great opportunity
for environmental businesses to get their foot in the door of the
international market.
• Model Industries, which set examples for other industries to follow. A
heavy polluting auto manufacturer located in South America, for example,
and the U.S. will join forces with an environmental consulting firm to
provide waste minimization, pollution control, and clean-up of
contaminated soils. In doing so, the auto manufacturer will improve its
regional and global reputation, and the environmental consultants will
establish an international business base with minimum risk and capital.
The IFC is the largest single development bank for the private sector in the world.
It has financed over 1,000 business ventures all over the world, in more than 90 countries,
with total project costs exceeding $60 billion. The IFC offers financial structuring and acts
as a catalyst for other financing options. When considering projects to finance, the IFC
looks for strong management, a strong market, and solid financial resources. The IFC
looks for value added ventures, where the community will also benefit as a result of the
project.
Mr. Esmay concluded that the private sector will be the driving force behind
meeting future environmental regulations, as the public sector will not have the necessary
capital requirements.
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Clean Air Marketplace 1993 Page 243
Robert Grady, Vice President, Robertson Stephens & Co., began by stating that
the current financial market has not been kind to environmental stocks. He
provided a performance comparison of environmental services stocks in the
first two quarters of 1993 by comparing a Roberts & Stephens Co. index of 132
environmental services firms to the S&P 400 and the NASDAQ indexes.
Environmental services stocks were down about eighteen percent in value in
the first two quarters of 1993 while the S&P 400 and NASDAQ indexes were up by about
three and one half percent, and four percent respectively.
Mr. Grady sought to debunk three pieces of conventional wisdom related to
investing in environmental stocks: (1) Environmental markets are dead; (2) Business does
not like regulation; and (3) Investors are willing to invest in socially responsible companies
just to be socially responsible.
Misperception 1 — Environmental markets are dead
The misperception that environmental markets are dead is due in part to misplaced
premium valuations of environmental stocks that resulted from the passage of the Clean
Air Act Amendments, and the election of Clinton and Gore. As a result of disappointing
growth that followed premiums, investors became disenchanted with environmental
stocks. They did not understand that clean air regulations were not scheduled to take
effect immediately. This pessimism remains and affects all environmental stocks.
The primary reason for the misperception that the environmental market is dead
is the recent rapid shift in the definition of an "environmental firm." The environmental
industry has been changing its focus from remediation to pollution prevention. Companies
in their strategic decisions, as well as public statutes, regulations, and implementations
schemes, have been stressing prevention over end-of-pipe controls. The Global
Environment Fund's Market Survey for 1993 estimates that industries will spend four
times as much on industrial process changes as on actual pollution control equipment to
meet the mandates of the CAAA of 1990. Production process changes, factory automation
changes, substitution of various types of raw materials, and energy efficiency
improvements are examples of ways industries are responding to the changing demands
of the clean air marketplace.
Along the same line, the Global Environment Fund's Survey states that the under-
performance of the remediation side of the environmental industry is not purely a cyclical
phenomenon related to the overall economy; in fact, it is related to the overall importance
of pollution prevention. Remediation companies that specialize solely in removal and
hauling of hazardous substances are only part of the environmental industry and will
continue their relative decline. Stocks which will perform well are process technology
improvements that help the environment, instrumentation and monitoring companies, and
companies performing cleanup for the Department of Defense and the Department of
Energy.
Session IDA — Financing Companies and Projects
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Page 244 Clean Air Marketplace 1993
Misperception 2 — Business does not like regulation
The second piece of faulty conventional wisdom is the myth that businesses do not
like regulation. In fact, many environmental companies, as well as investors, rely on
regulatory timeliness and regulatory certainty in order to maintain a consistent and reliable
marketplace. Companies rely on regulations to provide them with the rules of the road.
The key from a financing perspective is that regulations come out on time and are
enforced. A recent example of the importance of promulgating regulations consistently
and in a timely manner was demonstrated by EPA's decision to delay the issuance of
Subtitle D of the Resource Conservation and Recovery Act (RCRA). This delay hurt those
companies that were taking steps in order to comply with the regulations by investing in
and implementing new technologies.
Misperception 3 — Investors are willing to invest in socially responsible companies just
to be socially responsible
The third misperception is that investors are willing to pay a premium to invest in
socially responsible markets. This might have been that case for a short period in 1990,
and may to a certain extent be true, but companies have to make money in order to be
attractive to investors.
The changing nature of the environmental industry is the result of the need for
companies to adapt to the requirements of a true marketplace (e.g., having the attributes
that are required to be a successful company — serving a growing market, having strong
margins, having a strong management team, and developing a strong business plan).
These attributes are essential in order to make environmental companies attractive to
investors and ensure future interest in investing in the environment. Mr. Grady indicated
that investors will be very selective and will be looking for a well planned business
strategy, triple play companies (companies whose products promote environmental
improvement, energy efficiency, and economic efficiency simultaneously), regulatory
progress in the sector, and margins that can sustain growth and profitability in the
business.
Conclusion:
Changing demands in the marketplace will result in growth in new sectors of the
environmental industry. Consistency and timeliness of regulations and the proper
enforcement of these regulations will be essential to the continued growth of the industry.
Investors will be selective, which will impact the type of financing available to firms. But
significant new funds continue to pour into mutual funds and other sources of equity
financing, which is good news for environmental firms wishing to access the equity
markets.
Session 1QA — Financing Companies and Projects
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Clean Air Marketplace 1993 Page 245
Just as the early enthusiasm in 1990 was misplaced, Mr. Grady concluded, the
current pessimism or "doom and gloom" attitude is also misplaced.
Jake Tarr, Vice President, Arete Ventures, summarized the key investment
criteria that venture capital firms such as Arete Ventures look for in possible
clean air related investments. The most important criteria is a clearly defined
near-term market need, which in most cases is created by regulation. Other
qualities important to a venture capital firm include: a management team that
presents a compelling story of success, modest capital requirements, and a
strategy to maintain a sustainable market advantage.
In most cases, venture capital firms are not looking to invest in projects such as
electric vehicle companies or SO2 remediation companies because of the enormously high
capital requirements and the fact that these firms will be at a huge disadvantage against
larger competitors. Instead, Arete" is looking for companies that specialize in areas such
as development of instrumentation, dispersed power generation, and vehicle-related
component technologies (i.e., storage tank technologies, gas lines, and batteries). Such
companies will contribute greatly to the future of the environmental industry.
Arete Ventures has recently backed the following projects:
• Environmental Monitoring (Continuous Emissions Monitoring)
• Solid Polymer Fuel Cell Power Systems
• Landfill Gas Treatment Systems (Advanced Gas Processing)
• Gas Adsorption Heat Pump
• Polycrystalline Silicon Photovoltaic Cells & Modules
• High Temperature Super Conductors For Power Transmission
• Fungal Bioremediation
Session 10A — Financing Companies and Projects
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Frank Pope, General Partner with Technology Funding, Inc., stated that
environmental technology firms are facing a capital shortage at the
commercialization stage because of unique barriers to the market. These
barriers are the result of unknown factors that make it very difficult to project
if and when a new technology will be successful and profitable. Venture
capital is a very conservative business and most of these firms will not invest
in the environmental industry because there is not a proven series of success. Out of 650
professional venture capital firms in the country, less than 20 of these firms will consider
environmental technology investments.
Venture capital investors are hesitant to commit funds to environmental firms for
a variety of reasons:
• Most firms are not making money
• Many companies have not lined up customers
• The industry is young and the management is inexperienced
• Many firms experience permitting delays
We are at the crossroads in developing an enormous private industry market in the
environmental sector. Much of the future success will be the result of strong government
backing and efforts by advisory groups such as the California Environmental Technology
Partnership, which assists in resolving problems between industry and the government.
With the assistance of such advisory groups, the government has made changes in
procurement and testing regulations which have in turn minimized barriers to the
environmental market and environmental firms more attractive to investors.
Other options for environmental firms to turn to for funding are private investors,
private companies, joint ventures, general grants, and the government. Various tax breaks
(i.e., for the use of recycling equipment) also provide financial assistance.
Environmental firms that seek financial assistance should be persistent. We are in
the early stages of what could potentially be a huge marketplace.
Session 10A — Financing Companies and Projects
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Clean Air Marketplace 1993 Page 247
James H. McCall, President, Environmental Capital Corporation, reiterated
some of the financing difficulties that many small businesses experience when
trying use services and technologies in the environmental marketplace. The
Air Quality Assistance Fund/1146.1 Demonstration Program was developed
with the South Coast Air Quality Management District (SCAQMD) to assist
small businesses in complying with environmental regulations. This is a
demonstration of help to mitigate the impact of the compliance requirements of SCAQMD
Rule 1146.1, which requires owners of boilers, process heaters, and steam generators to
reduce their NOX emissions.
The Air Quality Assistance Fund is now a $4 million and was created with fines
and penalties. The majority of these funds are set aside to provide loan guarantees for
small businesses.
The program is structured to provide incentives for banks to make loans to small
businesses and to create a secondary market for these loans. In addition, the Federal
Reserve Bank of San Francisco has advised all banks that participation in this program will
enhance their compliance with the Community Investment Act.
Listed below are some examples of how the community will benefit from the
program.
• Small businesses will benefit by receiving assistance through multiple
credible channels. The high level of professional technical assistance and
compliance support, and lower cost debt capital with fixed rates and long-
term repayment terms will also be significant benefits of the SCAQMD
program. The program will also facilitate compliance and help owners
small businesses avoid diversion from operating the business by assisting
in the permitting process, and focuses on lenders that are familiar with
businesses and thereby avoiding time-consuming efforts to establish new
relationships.
• The program will also provide assistance to SCAQMD by helping to
mitigate regulatory impact on small businesses, facilitating compliance,
improving community relations, enhancing staff utilization, and meeting
CAAA mandates.
• The program will assist the banks by mitigating credit risk with credit
enhancement of small businesses, providing liquidity for loans, reducing
interest rate risk, and enhancing compliance with the Federal Community
Reinvestment Act. The program will also assist in improving relationships
with small business customers, improving community relations, and
providing a new financial service product to the market.
Session WA — Financing Companies and Profocts
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Page 248 Clean Air Marketplace 1993
• Utility Companies will benefit from the program through improved
relationships, customer retention, and enhanced community relations.
• Consultants and vendors will benefit from new marketing tools.
The benefits of this program to the community are pragmatic and specific — this
program can be a model that will be replicated in other communities in the future.
Session 10A — Financing Companies and Projects
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Clean Air Marketplace 1993
Page 249
Session 10 — Panel B
Financing Exports and Investments
September 9, 1993
4:15 p.m. - 6:15 p.m.
Moderator:
Panelists:
William A. Delphos
John Wisniewski
Edward Sanders
Harvey Him berg
Introduction
William A. Delphos, President of Delphos International, a company which
specializes in helping U.S. companies obtain government financing for international
business. Mr. Delphos is also the Chairman of the U.S. Environmental Training Institute,
a public/private partnership that promotes the transfer of environmentally sound
technology and management principles by providing training courses to public and private
sector officials from developing countries around the world.
Presentations
John Wisniewski, Vice President of Engineering at the Export-Import Bank of
the United States (Eximbank), and responsible for the evaluation of the
environmental aspects of bank transactions, began by describing his
organization. Eximbank facilitates the export of U.S. goods and services by
providing loans or loan guarantees to foreign buyers of U.S. goods and
services in order to offset the effects of export subsidy credits from other
governments. The Bank has helped finance more than $280 billion of exports from the U.S.
to more than 150 countries, mostly developing countries. Financing programs include:
• Direct loans to foreign buyers of U.S. goods and services.
• Guarantees to U.S. and foreign commercial lenders for repayment protection
for their loans to foreign buyers.
• Export credit insurance to protect U.S. exporters against foreign buyers'
inability to meet payment obligations.
Session 10B — Financing Exports and Investments
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Page 250 Clean Air Marketplace 1993
• Working capital guarantees to encourage commercial lenders to make loans
to small- and medium-sized U.S. businesses that have exporting potential.
Eximbank does not give preferential treatment to any U.S. product, company, or
industry, nor does it allocate specific sums of money to countries or geographic regions.
instead, it responds to specific requests for financing from foreign buyers and American
exporters.
Environmental exports are not new to Eximbank. Recently, however, the Bank has
placed additional emphasis on enhancing environmental exports. Some recent examples
of loan and loan guarantee programs the Bank has supported include:
i
• A feasibility study for water and sewage treatment in Istanbul, Turkey;
• Over $100 million in U.S. equipment and project management services to
improve water resources and infrastructure in rural areas in Venezuela; and
• A wide array of other U.S. pollution control equipment exports.
Eximbank is participating in a number of inter-governmental working groups
involved in the development of a U.S. export strategy for U.S. environmental goods and
services (e.g., Interage-ncy Working Group on Technology and Exports, whose findings
were released in a November 1993 report). The report includes results from public
stakeholder meetings held in Los Angeles, Dallas, and Boston.
Edward Sanders, President of Sanders International, explained that his
company provides business facilitation services, specializing in environmental
technology transfer and venture promotion, working primarily in Central and
Eastern Europe. Sanders International has been the recent recipient of U.S.
Agency for International Development (USAID) contracts in Eastern Europe
and India to help facilitate environmental investments and exports in those
regions.
The Clean Air Marketplace Conference 1993 highlighted the availability of a variety
of sources of assistance for financing environmental exports. Financial assistance for
specific projects, however, may nonetheless seem difficult to obtain. The conditions
attached to the financing make it difficult to match projects with the financing
requirements. Among companies with which Sanders International works, there is
generally an assumption that financing will be available without a careful analysis of
Session WB — Financing Exports and Investments
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Clean Air Marketplace 1993
Page 251
whether a particular project fits with financing sources that are likely to be available. Two
screening devices can facilitate the identification of sources of financing:
• Determine whether the transaction is public or private. Who is the buyer
of the product (or the partner in the investment)? If private, do financing
sources really have access to appropriate funds? Potential sources of
financing differ for public versus private transactions. Consequently, the
conditions attached to funding will be also different.
• Determine whether the transaction is an export or an investment. If the
transaction involves exports, financier concerns will likely be focused on the
security for the loan; in "tougher markets" the general lack of security can
be a tremendous roadblock to project progress. An example shows the
importance of the issue: a recent project in Central Europe was expected
to be successfully carried out, but fell through because local bank
guarantees were simply not available on reasonable terms. If the
transaction is an investment, financiers will want the project principals to
have equity in the project.
Harvey Himberg, of the Overseas Private Investment Corporation (OPIC),
explained that OPIC has provided financing, insurance and supported
feasibility studies for environmental projects overseas. Mr. Himberg focused
his remarks on investments as an alternative and complement to direct export
finance. Direct financing may have advantages for environmental goods and
services, in terms of entering and competing. However, from a broader
perspective, it may not always be in the best interests of the parties. Another way to
export and obtain access to export financing is through a project structured as a direct
investment. The relationship between investments and exports has been growing. Indeed,
U.S. exports of manufactured goods and services go overwhelmingly to locations that
already have substantial direct U.S. investment. In more competitive markets, companies
may require more proximity to their markets than a purely export relationship can
provide, and local companies will maintain a competitive advantage.
Financing and insuring overseas investment is a specialty of OPIC. OPIC is an
agency of the U.S. government organized for the sole purpose of providing financing,
insurance, and pre-investment services to companies seeking to enter markets through
direct investment. An investment can take various forms including direct equity loans for
enterprises, leases, licensing agreements, and management contracts. OPIC offers services
in nearly 140 countries, including those in Latin America, Asia, Africa, Eastern Europe, and
Session 10B — Financing Exports and Investments
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Page 252 Clean Air Marketplace 1993
the newly independent states (MS) of the former Soviet Union. OPIC (with funding from
USAID and US-Asia Environmental Partnership (US-AEP)) provides funding for feasibility
studies for prospective investment projects in Eastern Europe, NIS countries, the Asia-
Pacific countries, and Africa.
OPIC loan guarantees range from $1 million to $200 million per project. Loans are
made on a non-recourfee and Limited basis (i.e., the income of the foreign enterprise must
be sufficient to repay the loan and the assets must be sufficient to provide security for the
loan or loan guarantee), at U.S. commercial rates of interest, with terms ranging from five
to twelve years. These rates and terms are not always available from commercial banks
in the countries in which OPIC operates. OPIC insurance provides U.S. companies with
protection against "political risks" including expropriation of assets by the host
government, inconvertibility of local currency, and politically motivated damage to
physical assets and facilities.
Two examples (one large and one small) of environmental projects that OPIC has
assisted include:
• Ford Motor Company. This project involves a facility located in Brazil that
manufactures emission control equipment for sale to Brazilian auto
manufacturers. Without the project, Ford would not have been able to
compete with domestic manufacturers. Furthermore, the supply of U.S.
components to the project (e.g., test equipment) will amount to about $10
million of exports to Brazil.
• Environmental Systems Corporation. The project involves a firm located
in the Slovak Republic that provides environmental engineering services to
industries located throughout Eastern Europe. While small ($3 million in
U.S. exports), it is assisting in the continued development of substantially
larger markets.
Other OPIC initiatives, both independent, and in coordination with other U.S.
government agencies), include:
• The OPIC/USAID environmental investment mission to Argentina, Chile,
and Brazil (November 1993).
• Development of an environmental investment fund, which will provide
equity financing to U.S. companies interested in investing in environmental
projects but lacking sufficient equity.
A project development program that will include feasibility studies and
other pre-investment support for environmental investments in the Asia-
Pacific region, in coordination with USAID and the US-AEP.
Session 10B — Financing Exports and Investments
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Clean Air Marketplace 1993 Page 253
Questions and Answers
To what extent do groups like Eximbank, Sanders International, and OPIC assist
small businesses (i.e., 10 employees and under)?
Mr. Wisniewski explained that Eximbank has a Congressional mandate to focus
on small business, and that at least 10 percent of all Eximbank authorizations are to be for
small businesses. The current Administration supports small businesses in exporting
environmental services. As a government agency with a Congressional mandate,
Eximbank is compelled to find reasonable assurance of repayment in transactions of
support.
Mr. Delphos expanded on the response by saying that in general, if certain base
requirements for a project are met (e.g., minimum length of operation, specific equity
status, ability to produce and sell product, and the existence of a foreign order or prospect
for a foreign order), then legitimate programs are available to assist in funding. Naturally,
if the project is a pure start-up that is still in development, financing will likely be difficult
to obtain.
Mr. Sanders added that many programs are available to help finance programs other than
just straight exports. For example, in Central Europe, the Enterprise Funds concentrate
largely on environmental projects. Intermediaries often can more cost effectively service
small loans. The projects between $1-$10 million are the biggest gap in the overall
financing scheme.
Mr. Himberg pointed out that the problems and challenges of helping small businesses in
financing exports are magnified in investment projects because investment projects take
both more up-front and long-term financing to sustain. Thus, small businesses will require
a certain amount of capital base in order to initiate and maintain projects.
What would Eximbank and OPIC do in terms of credit markets in response to
CO2 reduction projects?
Mr. Himberg responded that it is difficult to finance stand-alone projects such as
these (i.e., projects that do not generate a stream of income by themselves). If the project
were linked to some sort of market that would produce a stream of income, the project
could possibly be the type of investment that OPIC could assist. There exists the
possibility of user-fee systems. Under an OECD agreement, there are provisions related
to "tied aid," in the sense of a mixture of commercial financing with grants. If one can
show that a project would not be financially or commercially viable otherwise, then it can
be eligible for tied aid. Thus, if a company can categorize a project as being environmental
(e.g., fluidized bed clean coal technology), obtaining funding will be easier.
Session 10B — Financing Exports and Investments
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Page 254 Clean Air Marketplace 1993
To what extent have the panelists dealt with financing CO2 prevention projects,
and how can one compare this to CO2 control? Also, how can one
quantitatively compare the pay-backs/spin-offs from the initial venture?
Mr. Wisniewski responded that Eximbank finances all of the above types of projects. All
renewable energy is treated by Eximbank as environmentally beneficial. Eximbank
supports projects that have these beneficial environmental effects, including those with and
without income streams.
How can one develop methods to assess the above types of projects?
• • Mr. Himberg explained that OPIC is not involved with demonstration projects;
instead, OPIC is involved with fully commercial projects. To the extent that
other agencies draw conclusions that might be useful, OPIC utilizes the information in
looking at technologies for the first time. Mr. Wisniewski added that Eximbank also uses
certain commercial data to assess projects.
What is meant by a "feasibility study", and what role does OPIC play in them?
Mr. Himberg responded that the company involved in the long-term
implementation of the project should be intimately involved in performing the
feasibility shady. OPIC does not fund third-party feasibility studies. Current feasibility
programs include project development in Eastern Europe and NIS countries, Asia and
Africa. Eximbank has an "engineering multiplier" program that finances feasibility studies.
Mr. Delphos pointed out that there is not a single "feasibility study" program to facilitate
U.S. companies going overseas or starting to conduct market research in order to locate
distributors.
Can you clarify the meaning of a feasibility study?
*1
• I Mr. Himberg explained that he is referring to a feasibility shady as a shady of the
^^™"" financial and commercial feasibility of a planned project. The product of a
feasibility shady is a business plan for an investment that would be eligible to apply for
OPIC funding or insurance. It should not be confused with a purely technical feasibility
shady.
Are these feasibility studies 100-percent funded?
Mr. Himberg responded that OPIC feasibility studies are "cost-shared", with
between 50-75 percent of the feasibility shady funded, depending on whether the
U.S. investor is a large, small, or medium sized business. It becomes a reimbursable grant
if the project goes ahead within two years (i.e., the company pays OPIC back). Mr.
Wisniewski commented that Eximbank finances feasibility studies as loans and guarantees
Session WB — Financing Exports and Investments
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Clean Air Marketplace 1993 Page 255
to foreign borrowers, which have to be repaid in any case, regardless of whether the
project goes forward.
L To what extent are government efforts to stimulate exports and joint ventures
f} I in environmental technologies reducing or diminishing similar efforts
• I domestically?
Mr. Himberg responded that government efforts abroad could structure the incentive
schemes so as to have the desired outcome. Mr. Wisniewski added that Exirribank treats
services just like capital goods, and last year Eximbank supported over $1 billion in service
exports. But in any transaction, one can expect that about 15 percent of the transaction is
for services (e.g., management services, engineering services).
Mr. Himberg pointed out that the difficulty of financing services directly, with non-
recourse financing, is that assets are not always apparent. OPIC participates in some direct
financing. Many projects initially involve equipment but later involve services in order to
maintain the equipment.
Session 10B — Financing Exports and Investments
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APPENDICES
-------
APPENDIX A
Conference Program
-------
The
Clean Air
Marketplace 1993
New Business Opportunities Created by the Clean Air Act Amendments
September 8-9, 1993 • Sheraton Washington Hotel • Washington, D.C.
Co-sponsors:
American Automobile Manufacturers Association
American Gas Association
American Institute for Pollution Prevention
American Institute of Chemical Engineers
American Petroleum Institute
Chemical Manufacturers Association
Coalition for Safer, Cleaner Vehicles
Edison Electric Institute
The Environmental Business Association
The Environmental Business Council of the U.S., Inc.
Environmental Law Institute
Institute of Clean Air Companies
Manufacturers of Emission Controls Association
National Association for Environmental Management
National Association of Manufacturers
NESCAUM
South Coast AQMD
STAPPA/ALAPCO
U.S.-Asla Environmental Partnership
U.S. Environmental Technology Export Council (U.S. ETEC)
Appendix A — Conference Program
Page A- 1
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Conference Agenda
September 8
7:30 - 8:30 a.m. Registration
8:30 - 9:15 a.m. Welcoming Remarks
NORTH COTILLION BALLROOM
Ihtroducfton fey WJcJftael HL Skajiiro, Aettog Assistant Adralaistrator, Office of Air and
Radiation:,. CAS-EPA
Speaker: The Honorable Carol M* Browner, Administrator, 1LS. EPA
9:30 -11:30 a.m.
SESSION 1: CLEAN AIR ACT- JOBS, COMPETITIVENESS,
EXPORTS
NORTH COTILLION BALLROOM
This panel presents a variety of perspectives on the impact of the Clean Air Act Amendments of 1990 on U.S. industry,
specifically its effects on employment, export opportunities, and overall competitiveness. How compatible are clean air
and economic growth?
Moderator: Jeffrey C. Smith - Executive Director, Institute of Clean Air Companies
Panelists: Robert Brenner - Acting Deputy Assistant Administrator, Office of Air and
Radiation, U.S. EPA
Dr. Richard Klimisch - Vice President, Engineering Affairs Division, American
Automobile Manufacturers Association
Daniel W. Noble - Vice President, Director of Research, Environmental Business
International, Inc.
John Quarles, Esq. - Partner, Morgan, Lewis & Bockius
Paul Templet - Professor, Louisiana State University
SESSION 2: POLLUTION PREVENTION AND THE CLEAN AIR ACT
MARSHALL ROOM
What is the connection between the Clean Air Act Amendments and pollution prevention? Our panelists view this
question from both Federal government and private sector vantage points.
Moderator: John S. Seitz - Director, Office of Air Quality Planning and Standards, U.S. EPA
Panelists: Dr. Thomas Hauser - Executive Director, American Institute of Pollution
Prevention
Howard Klee, Jr. - Director, Regulatory Affairs, Amoco Corporation
Amy Laspia - President, Environmental Management Consulting
Dr. Dhiren C. Mehta - Manager, Technology Applications, Hughes Environmental
Systems
Eric Schaeffer - Director, Pollution Prevention Policy Staff, U.S. EPA
The Clean Air Marketplace Conference and Exhibition
Page A-2
Appendix A — Conference Program
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September 8 (continued)
11:30 a.m. - 12:45 p.m. Lunch Break (Free Time)
1:00-1:45 p.m. Keynote Address NORTH COTILLION BALLROOM
, Vasn&nfcergfc, Associate DeputyA<3mirustra^r,
The Clean Air Marketplace Conference and Exhibition
Appendix A — Conference Program Page A-3
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Septembers (continued)
2:00 - 4:00 p.m.
SESSION 3: CONTROL TECHNOLOGIES AND SERVICES -1
These four panels begin the conference's focus on market developments in specific technology and service sectors.
Panels A and B both delve into stationary source control technologies. Panel C addresses control technologies for
traditional vehicular sources. Panel D looks to the future of alternative vehicular technologies, including electric cars
and fuel cells.
Panel A: Electric power technologies MARSHALL ROOM
Moderator: Paul M. Stolpman - Acting Director, Office of Atmospheric Programs, U.S. EPA
Panelists: Eugene C. Grassland - Manager of Business Development, Pure Air Corp.
William R. Elliott - Vice President and General Manager, Electric Supply, Northern
Indiana Public Service Co.
Steven Feeney - Manager of Upgrade Projects and Services, Babcock & Wilcox, Inc.
John U. Huffman -Project Development Manager, Kenetech/U.S. Wind Power Inc.
Panel B: Stationary source VOCs/air toxics control HOLMES ROOM
Moderator: Bruce C. Jordan, Jr. - Director, Emission Standards Division, Office of Air Quality
Planning and Standards, U.S. EPA
Panelists: C. Shepherd Burton - Senior Vice President, ICF Kaiser Engineers,
Environment Group
David A. Doles - Sales Engineer, Stationary Source Catalysts, Engelhard Corp.
Dr. Orman A. Simpson - Director, Remote Sensing Technology, MDA Scientific Inc.
Paul D. White - Business Director, Environmental Projects, Johnson Matthey Corp.
Panel C: Vehicular emissions control technologies CALVERT ROOM
Moderator: Bruce Bertelsen - Executive Director, Manufacturers of Emission
Controls Association
Panelists: John S. Hovvitt - Manager, New Technical Ventures, Allied Signal Corp.
Reginald Modlin - Manager of Vehicle Emissions Regulatory Programs,
Chrysler Corporation
John Mooney - Manager, Technology and New Applications, Engelhard Corp.
Dr. George M. Sverdrup - Program Manager, Battelle Memorial Institute
Panel D: Alternative vehicle technologies WARREN ROOM
Moderator: Phil Barnett - U.S. House of Representatives, Subcommittee on
Health and Environment
Panelists: Martin J. Bernard HI - Manager, National Station Car Association
Gorik Hossepian - Director, Fuel Cell Program, Allied-Signal Aerospace Co.
Dr. Roberta J. Nichols - Electric Vehicle External Strategy Manager,
Ford Motor Company
Paul Gifford - Director, Product Development, Energy Conversion Devices, Inc.
The Clean Air Marketplace Conference and Exhibition
Page A-4 Appendix A — Conference Program
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September 8 (continued)
4:15 - 6:15 p.m.
SESSION 4: CONTROL TECHNOLOGIES AND SERVICES - II
These four panels continue our examination of specific technologies and services. Panel A examines service opportunities
in the electric power market, notably including allowance trading and demand-side management. Panel B focuses on
the increasingly important subject ofNOf control approaches, including fuel switching. Panel C examines the growth
market in services related to vehicular emissions control. Panel D features a discussion about the leading candidate
alternative fuels, including reformulated gasoline.
Panel A : Electric power services (including DSM) MARSHALL ROOM
Moderator: Renge Rico - Chief, Market Innovations Branch, Acid Rain Division, U.S. EPA
Panelists: Carlton Bartels - Director, Environmental Brokerage Services, Cantor Fitzgerald
William F. Hederman - Managing Director, R.J. Rudden Associates, Inc.
John B. Henry, n - President, Clean Air Capital Markets
Jeffrey W. VanSant - Vice President and Director of Fuel Supply, New England
Power Company
Panel B: Stationary source NOx control approaches (including fuel switching) HOLMES ROOM
Moderator: Joseph A. Belanger - Director of Planning and Standards, Bureau of Air
Management, Connecticut Department of Environmental Protection
Panelists: Vincent M. Albanese - Vice President, External Affairs, Nalco Fuel Tech
Joel Bluestein - Director, Gas-Based NOx Control Center
Mitchell B. Cohen - Senior Consulting Engineer, Asea Brown Boveri,
Combustion Engineering Systems
Dr. Michael J. Wax - Deputy Director, Institute of Clean Air Companies
Panel C: Vehicular emissions control services CALVERT ROOM
Moderator: Kenneth Thomas - Marketing Manager, IM Systems, Horiba Systems, Inc.
Panelists: William Dell - Director of Marketing, Systems Control Corp.
Jay Gordon - President, Gordon Darby Corp.
Daniel Grubbe - Manager, Vehicle Emissions Inspection Program, Arizona
Department of Environmental Quality
Gary Huggins - Executive Vice President, Coalition for Safer, Cleaner Vehicles
Panel D: Alternative fuels WARREN ROOM
Moderator: Charles L. Gray, Jr. - Director, Regulatory Programs and Technology, Office of
Mobile Sources, U.S. EPA
Panelists: William Holmberg - Regulatory Advisor, National SoyDiesel Development Board
Jerrold L. Levine - Director for Corporate Studies, Amoco Oil Corporation
Raymond Lewis - President, American Methanol Institute
Carl Moyer - Chief Scientist, Acurex Environmental Corporation
Jeffrey Seisler - Executive Director, Natural Gas Vehicle Coalition
I
The Clean Air Marketplace Conference and Exhibition
Appendix A — Conference Program Page A-5
-------
Septembers (continued)
6:30 - 8:00 p.m. SOUTH COTILLION BALLROOM AND MEZZANINE
Reception (cash bar)
Reception will be held in exhibits area. Conference participants are encouraged to tour the exhibits.
The Clean Air Marketplace Conference and Exhibition
Page A-6 Appendix A — Conference Program
-------
September 9
8:30 - 9; 15 a.m. Keynote Address NORTH COTILLION BALLROOM
p^kfir; HlfeH0itor&l>le Sfenatp Max B9treu$» Ch^irtn^n of th« Senate Enviroameflt sftd
9:30 -11:30 a.m.
SESSIONS: ROLE OF THE GOVERNMENT IN SUPPORTING THE CLEAN AIR MARKETPLACE
Session 5 panels examine the role of all levels of government in facilitating and supporting the clean air marketplace.
Panel A focuses on how Federal, state, and local government regulations can help shape the market for new clean air
technologies. Panel B addresses government's role in directly supporting the development and diffusion of innovative
technologies. Panel C is the first of several conference discussions about exports of clean air technologies, in this case
how the Federal government can promote such exports.
Panel A: Federal, state, and local regulatory programs MARSHALL ROOM
Moderator: S. William Becker - Executive Director, State and Territorial Air Pollution Program
Administrators
Panelists: Michael Bradley - Executive Director, Northeast States for Coordinated Air Use
Management
Robert Brenner - Acting Deputy Assistant Administrator, OAR, U.S. EPA
Bruce S. Carhart - Executive Director, Ozone Transport Commission
David Jordan - Former Administrator, Indianapolis Air Pollution Control Division;
Senior Project Manager, ERM Midwest
Panel B: Technology development and diffusion HOLMES ROOM
Moderator: Steve Harper - Senior Policy Analyst, Office of Air and Radiation, U.S. EPA
Panelists: Dr. Joseph D. Ben-Dak - Chief, Global Technology Group, United Nations
Development Programme
Robb Lenhart - Director of Business Services, National Environmental Technology
Applications Center
Timothy Mohin - Senior Fellow, U.S. Senate Environment and
Public Works Committee
Nick Nikkila - Director, Economic Development and Business Retention,
South Coast Air Quality Management District
Panel C: Export promotion WARREN ROOM
Moderator: Richard A. Wegman - Partner, Garvey, Schubert, and Barer
Panelists: Lewis P. Reade - Director General, U.S .-Asia Environmental Partnership, U.S. AID
F. Bradford Smith - President and CEO, Environmental Elements Corporation
Rodney Sobin - Analyst, U.S. Congress, Office of Technology Assessment
The Clean Air Marketplace Conference and Exhibition
Appendix A — Conference Program Page A-7
-------
September 9 (continued)
11:30 a.m. -12:45 p.m. Lunch Break (Free Time)
1:00 - 1:45 p.m. Keynote Address NORTH COTILLION BALLROOM
r, Apling Deprty Assistant A&ainisftatqr.
Speaker; Donald A. JPeieso* President and CEO of Research»CottreH Compaoies
The Clean Air Marketplace Conference and Exhibition
Page A-8 Appendix A — Conference Program
-------
September 9 (continued)
2:00-4:00 p.m.
SESSION 6: CONNECTIONS AMONG CLEAN AIR ACT/ISTEA/ MARSHALL ROOM
ENERGY POLICY ACT
This panel brings senior Federal and local policymakers together -with leaders from the NGO and corporate sectors to
examine the many interfaces among the Clean Air Act Amendments, the Intermodal Surf ace Transportation Efficiency Act,
and the Energy Policy Act of 1992,
Moderator: Susan F. Tierney - Assistant Secretary, Office of Policy Planning and Program
Evaluation, U.S. Department of Energy
Panelists: G.B. Arrington, Jr. - Director of Strategic and Long-Range Planning, Tri-Met
Joseph Goffman - Senior Attorney, Environmental Defense Fund
Ben G. Henneke - President, Clean Air Action Corporation
Michael J. Stanton - Director, Federal Liaison Department, American Automobile
Manufacturers Association
Mary Margaret Whipple - Vice Chairman, Arlington County Board, and Member,
Washington Metropolitan Area Transit Authority Board
SESSION 7: THE GLOBAL CLEAN AIR MARKETPLACE - HOLMES ROOM
EXPORT OPPORTUNITIES
This panel continues the conference's examination of export issues. The focus this time is on specific export opportunities
that companies with competitive clean air technologies and services can capitalize on. Executives of companies which
have been successful in the export market share their experiences.
Moderator: Donald L. Connors, Esq. - President, Environmental Business Council of the U.S., Inc.
Panelists: Alvin L. Aim - Senior Vice President, Science Applications International Corp.
Alan N. Scarsella - Director, International Business Development, Wahlco
Environmental Systems, Inc.
John T. Schofield - President & CEO, Thermatrix, Inc.
Roger Strelow - Vice President, Environmental Affairs, Bechtel Corporation
Russell Sturm - Program Director, Private Sector Activities, International
Institute for Energy Conservation
SESSION 8: LOOKING TO THE FUTURE - NEW DIRECTIONS FOR WARREN ROOM
ENVIRONMENTAL TECHNOLOGY
Where is the next generation of clean air, pollution prevention, and energy efficiency technology headed? These experts
provide their diverse perspectives on this important topic.
Moderator: Richard E. Ayres, Esq. - Partner, O'Melveny & Myers
Panelists: Braden R. Allenby - Research Director, Technology and Environment, AT&T
Howard Geller -Executive Director, American Council for an Energy
Efficient Economy
Dr. Richard Klimisch - Vice President, Engineering Affairs Division, American
Automobile Manufacturers Association
Bruce Smart - Senior Fellow, World Resources Institute
The Clean Air Marketplace Conference and Exhibition
Appendix A — Conference Program Page A-9
-------
September 9 (continued)
4:15-6:15 p.m.
SESSION 9: PUBLIC/PRIVATE PARTNERSHIPS IN CLEANING THE AIR MARSHALL ROOM
Cleaning the air requires more than state-of-the-art technology. At the state and local level it requires building coalitions
of diverse interests. This panel features public and private sector leaders from several different states who have helped
build effective public/private partnerships.
Moderator: Steven Howards - President, Environmental Strategies
Panelists: Steven Coffin - Vice President, Colorado Interstate Gas Company; Vice Chairman,
Colorado Air Quality Control Commission
Daniel Greenbaum - Commissioner, Massachusetts Department of Environmental
Protection
Bfln G. Henneke - President, Clean Air Action Corporation
Isaac Manning - North Texas Air Coalition
SESSION 10: FINANCING THE CLEAN AIR MARKETPLACE
Financing the clean air marketplace presents many challenges and opportunities. Panel A focuses onfmancing specific
companies and projects. Panel B addresses the financing of exports and foreign investments.
Panel A: Financing companies and projects HOLMES ROOM
Moderator: Robert Brenner - Acting Deputy Assistant Administrator, Office of Air and
Radiation, U.S. EPA
Panelists: Jerry Esmay - Environmental Project Specialist, International Finance Corporation
Robert Grady - Vice President, Robertson Stevens & Co.
James H. McCall - President, Environmental Capital Corporation
Frank Pope - General Partner, Technology Funding, Inc.
Jake Tarr - Vice President, Arete Ventures
Panel B: Financing exports and investments WARREN ROOM
Moderator: William A. Delphos - President, Delphos International
Panelists: Harvey Himberg - Director, Development Policy and Environmental Affairs,
Overseas Private Investment Corp.
Edward Sanders - President, Sanders International
John Wisniewski - Vice President, Export-Import Bank of the United States
The Clean Air Marketplace Conference and Exhibition
Page A-10 Appendix A — Conference Program
-------
Clean Air Marketplace
Steering Group
Richard E.A;pm, Esq.
Pdrmr
O'Melveagwitf Myers
Urtice Bertelsen
Michael Bradley
Dale Brooks
Conmtiwt
ftrrnksmd Associates
OonaldJU.
Cheryl M. Fates-, JEsq,
r. Thomas Haiuser
. Muggins
Vic* President
CoaM&rt for Safer, CU&mr VMtks
William I, King
ufatpry Manager,
•Ford Motor Campatty
ErifeJ.Mcyas -
Gettertit Cffw&el
Environmental Law Institute
NickNikkito
, Kcottowc Dewfopment Program
Robert Px OuelfeEfe, Sr.
Deborah Sheiman
Resource Spzdtitist
Natural Resources Offense Comtil
Jeffrey C Smith
Sx&cutive director
Paul Wilkinson
Director, Pettey and Environmental Anatysiy
American Gas Association
Appendix A — Conference Program
PageA-U
-------
APPENDIX B
Exhibitors
-------
Exhibitors
Air Daily
4418 Mac Arthur Boulevard
Washington, DC 20007
(202) 298-8201
Fax (202) 298-8210
The American Institute of Chemical Engineers
345 East 47 Street
New York, NY 10017
(212) 705-8124
Fax (212) 752-3294
Berty Reaction Engineers Ltd.
1806 Bent Pine Hill
Fogelsville, PA 18051-1501
(215) 391-1676
Fax (215) 391-9434
Black & Veatch
B & V Waste Science and Technology
100 CambridgePark Drive
Cambridge, MA 02140
(617) 547-2553
Fax (617) 547-1416
Brown & Root Environmental
910 Clopper Road
Gaithersburg, MD 20878-1399
(301) 258-8705
Fax (301) 258-2568
Columbia Scientific Industries
Continous Emissions Monitoring Systems
11950JollyvilleRoad
Austin, TX 78759
(609) 783-6313
Fax (609) 784-3759
EPA and DOE
Climate-Wise
401 M Street, SW
Washington, DC 20460
(202) 260-4407
Fax (202) 260-0512
Design for the Environment
401 M Street, SW
Washington, DC 20460
(202) 260-0880
Fax (202) 260-0981
Engineering-Science, Inc.
10521 Rosehaven Street
Fairfax, VA 22030-2899
(703) 934-2319
Fax (703) 591-1305
Entropy, Inc.
P.O. Box 12291 ,
Research Triangle Park, NC
27709-2291
(919) 781-3550
Fax (919) 787-8442
Environmental Business Council of the U.S., Inc.
1601 Trapelo Road
Waltham, MA 02154
(617) 890-4242
Fax (617) 890-2881
Environmental Law Institute
1616 P Street, NW, Suite 200
Washington, DC 20036
(202) 939-3833
Fax (202) 328-5002
U.S. Environmental Technology Export Council
2000 K Street, NW, Suite 750
Washington, DC 20006
(202) 466-6933
Fax (202) 466-8009
Environmental Resources Management, Inc.
855 Springdale Drive
Exton, PA 19341
(215) 524-3500
Fax (215) 524-7335
EPA Green Lights Program,
Energy Star Programs
401 M Street, SW
Washington, DC 20460
(202) 233-9099
Fax (202) 233-9569
Ford Motor Company
1350 I Street, NW
Washington, DC 20005
(202) 962-5379
Fax (202) 962-5457
Appendix B — Exhibitors
Page B-l
-------
Exhibitors
(continued)
Information Resources, Inc.
Oxy-Fuel News
Octane Week
499 South Capitol Street, SW, Suite 406
Washington, DC 20003
(202) 554-0614
Fax (202) 554-0613
Lancaster Laboratories, Inc.
2425 New Holland Pike
Lancaster, PA 17601-5994
(717) 656-2301
Fax (717) 656-2681
The Mcllvaine Company
2970 Maria Avenue
Northbrook, IL 60062
(708) 272-0010
Fax (708) 272-9673
MG Refining & Marketing Inc.
1000 Louisiana
Houston, TX 77002
(713) 759-0510
Fax (713) 759-9426
Nalco Fuel Tech
101 Frontenac Road
Naperville, IL 60563-1746
(708) 983-3242
Fax (708) 983-3240
National Association for Environmental
Management
1455 Pennsylvania Avenue, NW, Suite 1000
Washington, DC 20004
(202) 737-3415
Fax (703) 391-2178
National Geothermal Association
Geothermal Resources Association
803 Prince Street
Alexandria, VA 22314
(703) 922-5473
Fax (703) 922-5473
Omstar Clean Air Corporation
126 Marine Avenue
Wilmington, CA 90744
(310) 835-6909
Fax (310) 835-0723
Scott Environmental Technology
6205 Route 611
Plumsteadville, PA 18949
(215) 766-7230
Fax (215) 766-2051
Scott Specialty Gases, Inc.
6141 Easton Road
P.O. Box 310
Plumsteadville, PA 18949
(215) 766-8861
Fax (215) 766-2070
Thermacon Enviro Systems
111 West 40th Street
New York, NY 10018
(212) 704-2111
Fax (212) 704-2089
U.S.-Asia Environmental Partnership
1133 20th Street, NW, Suite 300
Washington, DC 20036
(202) 835-0333
Fax (202) 835-0366
Vara International
Calgon Carbon Corporation
1201 19th Place
Vero Beach, FL 32960
(407) 567-1320
Fax (407) 567-4108
ViGYAN, Inc.
5203 Leesburg Pike, Suite 900
Falls Church, VA 22041-2406
(703) 931-1100
Fax (703) 820-4322
W. L. Gore & Assoc., Inc.
P.O. Box 1100
Elkton, MD 21922-1100
(410) 392-3300
Fax (410) 392-6624
Welsh Technologies
P.O. Box 4214
River Edge, N] 07661
(201) 489-3465
Fax (201) 489-3110
Page B-2
Appendix B — Exhibitors
-------
APPENDIX C
Participants
-------
Participants
Dan Abbasi
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-4332
Richard F. Abrams
CeraMem Separations
20 Clematis Avenue
Waltham, MA 02154
(617) 899-0467
Eman Ahmed
Saudi Education Mission
600 New Hampshire Avenue, NW
Washington, DC 20037
(202) 298-8833
Vincent Albanese
NALCO Fuel Tech
1001 Frontenak Road
Naperville, IL 60563
(708) 983-3254
Braden R. Allenby
AT&T
131 Morristown Road
Basking Ridge, NJ 07920
(609) 639-2244
Alvin Aim
Science Applications International Corporation
1710 Goodrich Drive
McLean, VA 22102
(703) 821-4530
Arlene Anderson
U.S. Department of Energy
1000 Independence Avenue, SW
Washington, DC 20585
(202) 586-3818
Linda Anderson-Carnahan
EPA Region 4
345 Courtland Street, NE
Atlanta, GA 30365
(404) 347-2864
Phillip Andres
STAR Compliance Services
4333 Stern Avenue, Suite 106
Sherman Oaks, CA 91423
(818) 784-3304
Mike Andrews
Int'l Brotherhood of Painters & Allied Trades
1750 New York Avenue, NW
Washington, DC 20006
(202) 637-0744
Vernon Anthony
Delmar Publishers, Inc.
5105 Cemetary Road
Milliard, OH 43026
(614) 771-7028
Edward J. Apple
SC Johnson Wax
1525 Howe Street
Racine, WI 53403
(414) 631-2761
Doug Ardell
The Mcflvaine Co.
2970 Maria Avenue
Northbrook, IL 60062
(708) 272-0010
Ross Ardell
The McDvaine Co.
2970 Maria Avenue
Northbrook, IL 60062
(708) 272-0010
G.B. Arrington
Tri-Met
4012 Southeast 17th Avenue
Portland, OR 97202
(503) 238-4977
Dwight Atkinson
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-6921
Rob Atkinson
U.S Congress Office of Technology Assessment
Washington, DC 20510
James Austin
NY Senate Environ. Conservation Committee
New York State Senate,
Room 310, L.O.B.
Albany, NY 12247
(518) 455-3411
Bob Axlerad
U.S. EPA
Appendix C — Participants
PageC-1
-------
Participants
(continued)
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 233-9315
Eric Aynsley
Scott Environmental Technology
6205 Route 611 P.O. Box 369
Plumsteadville, PA 18949
(215) 766-7230
Richard E. Ayres
O'Melveny & Myers
555 13th Street, N.W., Suite 500 West
Washington, DC 20004
(202)383-5211
Alan Bahl
Red Star Yeast
2100 Van Deman Street
Baltimore, MD 21224
(410) 633-8575
Michael Baker
Committee for Economic Development
2000 L Street, NW, Suite 700
Washington, DC 20036
(202) 2%-5860
Paul Balasic
Environmental Elements Corp.
P.O. Box 1318
Baltimore, MD21203
(410) 368-7143
Jennifer Barber
White Lung Association
P.O. Box 1483
Baltimore, MD21203
(410) 243-5864
Mark Bareta
Black and Veatch
11401 Lamar Ave.
Overland Park, KS 66062
(913) 339-2000
Christina Barnes
Stevens Publishing
1170 National Press Building
Washington, DC 20045
(202) 942-1422
Phil Barnett
U.S. House of Representatives
2415 Rayburn House Office Building
Washington, DC 20515
(202) 225-4952
Jerry Barnhill
AquAeTer, Inc.
P.O. Box 1187
Brentwood, TN 37024
(615) 373-8532
Randy Barrett
Washington Technology
1953 Gallows Road
Vienna, VA 22182
(703) 848-2800
Carlton Bartels
Cantor Fitzgerald
One World Trade Center
New York, NY 10048
(212) 938-5000
Jim Barton
Columbia Scientific Industries Corporation
11950Jollyville Road
Austin, TX 78759
(512) 258-5191
Philip Barton
Fidelity Management and Research Co.
82 Devonshire Street
Boston, MA 02109
(617) 570-7911
Robert M. Bates
Southwest Marine, Inc.
1300 Crystal Drive, Suite 1709S
Arlington, VA 22202
(703) 979-2270
Max Baucus
U.S. Senate
SH-511 Hart Sehate Office Building
Washington, DC 20510-2602
(202) 224-2651
Earl Beaver
American Institute of Chemical Engineers
345 East 47 Street
New York, NY 10017
(212) 705-7407
S. William Becker
Page C-2
Appendix C — Participants
-------
Participants
(continued)
State & Territorial Air Pollution Program Admin.
444 North Capitol Street, NW, Suite 307
Washington, DC 20001
(202) 624-7864
William Beeman
Committee for Economic Development
2000 L Street, NW, Suite 700
Washington, DC 20036
(202) 296-5860
Joseph A. Belanger
Connecticut Department of Environmental
Protection
DEP-79 Elm Street, P.O. Box 5066
Hartford, CT 06102
(203) 566-2506
Roy Belden
Chadbourne & Parke
1101 Vermont Avenue, NW
Washington, DC 20005
(202) 962-4526
Alan Belkin
ECRA Laboratories
273 Franklin Road
Randolph, NJ 07869
(201) 361-4252
DeWain Belote
Doed Motor Co.
Joseph Ben-Dak
United Nations Development Programme
One United Nations Plaza
New York, NY 10017
(212) 905-5027
Jeffrey A. Berg
Raymond James & Associates
880 Carillon Parkway
St. Petersburg, FL 33716
(813) 573-3800
Joan Berkowitz
Farkas Berkowitz & Co.
1220 19th Street, NW
Washington, DC 20031
(202) 833-7530
Timothy Bernadowski
Virginia Power
P.O. Box 26666
Richmond, VA 23261
(804) 771-3246
Martin J. Bernard
National Station Car Association
501 14th Street, Suite 210
Oakland, CA 94612
(510) 444-8707
Jeffrey Bernardo
Kidder Peabody & Co., Inc.
10 Hanover Square, 15th Floor
New York, NY 10005
(212) 510-3792
Bruce Bertelsen
Manufacturers of Emission Controls Association
1707 L Street, NW
Washington, DC 20036
(202) 296-4797
Jozsef Berty
Berty Reaction Engineers, Ltd.
1806 Bent Pine Hill
Fogelsville, PA 18051-1501
(215) 391-1676
Clifton Bittle
Environmental Science & Engineering, Inc.
P.O. Box 1703
Gainesville, FL 32607
(904)333-6601,
Thomas Black
U.S. General Accounting Office
441 G Street, NW
Washington, DC 20548
(202) 512-2867
Donald Bliss
O'Melveny & Meyers
555 13th Street, NW, Suite 500 West
Washington, DC 20004
Bernard Bloom
Grumman
1760 Business Center Drive
Reston, VA 22096
(703) 438-5479
Appendix C — Participants
Page C-3
-------
Participants
(continued)
Joel Bluestein
Gas-Based NOX Control Center
1655 N. Fort Myer Drive, Suite 600
Arlington, VA 22209
(703) 243-4947
Debbie Boger
Design for the Environment, U.S. EPA
401 M Street, NW
Washington, DC 20460
(202) 260-0880
Ben Bonifant
Management Institute for Environ, and Business
1220 16th Street, NW
Washington, DC 20036
(202) 833-6556
Stuart Bone
Environmental Business Journal
Wood Bouldin
Columbia Scientific Industries Corporation
11950 Jollyville Road
Austin, TX 78759
(512) 258-5191
Ella S. Bowman
WNC Regional Air Pollution Control Agency
Buncombe County Courthouse
Asheville, NC 28801-3569
(704) 255-2655
Herbert Braden
Noell, Inc.
2411 Dulles Corner Park, Suite 410
Herndon, VA 22071
(703) 793-6500
Hazel Bradford
McGraw-Hill/ENR
1200 G Street NW - Main Office
Washington, DC 20005
(301) 229-1001
Michael Bradley
Northeast States for Coordinated Air Use Mgmt.
85 Merrimac Street
Boston, MA 02114
(617) 367-8540
Michael Brandon
S+ME, Inc.
3100 Spring Forest Road
Raleigh, NC 27604
(919) 872-2660
Ronald Braun
IT Corp.
11499 Chester Road
Cincinnati, OH 45246
(513) 782-4600
Rhea Brekke
New Jersey Department Environmental
Protection & Energy
401 East State Street, CN 402
Trenton, NJ 08625-0402
(609) 984-1484
Robert Brenner
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-7400
Jeanne Briskin
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-5520
Kevin Bromberg
Law Offices of Kevin L. Bromberg
1725 K Street, NW
Washington, DC 20006
(202) 775-8146
Dale Brooks
American Institutue of Chemical Engineers
1300 Eye Street, NW
Suite 1090 - East Tower
Washington, DC 20005
(202) 962-8690
Gregory A. Brown
Stone & Webster Engineering Corporation
1201 Connecticut Avenue, NW
Washington, DC 20036
(202) 466-7415
Page C-4
Appendix C — Participants
-------
Participants
(continued)
Carol M. Browner
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-4700
Susie Bruninga
BNA
1231 25th Street, NW
Washington, DC 20037
(202) 452-5358
Kevin R. Bryson
Stone & Webster Engineering Corporation
#3 Executive Campus
Cherry Hill, NJ 08034
(609) 482-3677
Tom Burgum
Burgum and Grimm, Ltd.
106 North Carolina Avenue, SE
Washington, DC 20003
(202) 546-3414
Richard M. Burke
Lancaster Laboratories
2425 New Holland Pike
Lancaster, PA 17601-5994
(717) 656-2301
C. Shepherd Burton
ICF Kaiser Engineers
Environment Group
101 Lucas Valley Road
San Raphael, CA 94903
(415) 507-7101
Barbara Bush
American Petroleum Institute
1220 L Street, NW
Washington, DC 20005
(202) 682-8450
Bill Byers
CH2M Hill Co.
2300 NW Walnut Boulevard
Corvallis, OR 97330-3538
(503) 752-4271
Jeff Campbell
Board of Trade of the City of Chicago
141 West Jackson Boulevard
Chicago, IL 60604
(312) 341-7264
Melissa Carey
Electronic Industries Association
2001 Pennsylvania Avenue
Washington, DC 20006-1813
(202) 457-8733
Bruce Carhart
Ozone Transport Commission
444 N. Capitol Street, Suite 604
Washington, DC 20001
(202) 508-3840
David Carlton
Mitchell International
9889 Willow Creek Road
San Diego, CA 92131
(619) 530-8955
Mark V. Carney
U.S. Generating Company
7475 Wisconsin Avenue
Bethesda, MD 20814
(301) 718-6800
Gale J. Carr
Ogden Martin Systems Inc.
2200 Wilson Boulevard, #600
Arlington, VA 22201
(703) 875-8900
David Carstater
LICA Systems, Inc.
10400 Eaton Place, Suite 302
Fairfax, VA 22030
(703) 359-0996
Donald Carter
S+ME, Inc.
3100 Spring Forest Road
Raleigh, NC 27604
(919) 872-2660
Bhaskar Chandan
Carnot
15991 Red Hill Ave
Tustin, CA 92626
(714) 259-9520
Appendix C — Participants
Page C-5
-------
Participants
(continued)
Peter Charrington
ERM Inc.
855 Springdale Drive
Exton, PA 1^341
(215) 524-3500
Rahul Chettri
ViGYAN Inc.
5203 Leesburg Pike, Suite 900
Falls Church, VA 22041
(703) 931-1100
Steve Cochran
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-7428
Steven Coffin
Colorado Interstate Gas Company
P.O. Box 1087
Colorado Springs, CO 80944
(303) 573-4425
Mitchell B. Cohen
Asea Brown Boveri
Combustion Engineering Systems
1000 Prospect Hill Road
Windsor, CT 06095
(203) 285-2482
Kenneth Cole
American Nuclear Services
P.O. Box 87
Etna, OH 43018-0087
(614) 964-0130
Libby Conde
Entropy, Inc.
P.O. Box 12291
Research Triangle Park, NC 27709-2291
(919) 781-3550
Raymond Connor
Manufacturers of Emission Controls Association
1707 L Street, NW, Suite 570
Washington, DC 20036
(202) 296-4797
Donald' L. Connors
Environmental Business Council of the U.S., Inc.
Choate, Hall & Stewart
53 State Street
Boston, MA 02109
(617) 482-1390
Glenn Conover
Sutron Corporation
21300 Ridgetop Circle
Sterling, VA 20166
(703) 406-2800
Nancy Cookson
Chemical Manufacturers Association
2501 M Street, NW
Washington, DC 20037
(202) 887-1241
Clare Corcoran
Bruce Environmental
1850 K Street, NW, Suite 290
Washington, DC 20006
(202) 775-6655
Julie Crippen
The Crippen Companies
10132 G&H Colvin Run Road
Great Falls, VA 22066
(703) 759-5900
Linda Critchfeld
U.S. EPA
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 233-9087
Ted Cromwell
Chemical Manufacturers Association
2501 M Street, N.W.
Washington, DC 20037
(202) 887-1383
Eugene Grassland
Pure Air Corporation
7540 Windsor Drive
Allen town, PA 18195
(215) 481-5589
Page C-6
Appendix C — Participants
-------
Participants
(continued)
John K. Crum
American Chemical Society
1155 16th Street, NW
Washington, DC 20036
(202) 872-4534
Thomas V. Crumley
Energy and Environmental Sales Corporation
650 Poydras, Suite 2045
New Orleans, LA 70130
(504) 523-1509
Richard Cudahy
SYCOM Enterprises
7475 Wisconsin Avenue
Bethesda, MD 20814
(301) 718-6600
Kate Cudlipp
Environmental Business Journal
2415 20th Street, NW
Washington, DC 20009
Kevin Curtis
Virginia Power
P.O. Box 26666 OJRP/9
Richmond, VA 23261
(804) 771-6358
Gene D'Andrea
CSCV National Education Resource Center
U.S. Highway 1
Morrisville, PA 19067
(215) 295-0722
Robert Daly
Balston, Inc.
260 Neck Road
Haverhill, MA 01835
(508) 374-7400
Kathleen Daniel
R. Gene Darnell
EPA - CERT/Univ. of Michigan
2565 Plymouth Road
Ann Arbor, MI 48105
(313) 741-7851
John Darrow
W.L. Gore & Associates, Inc.
101 Lewisville Road
Elkton, MD 21921
(410) 392-3300
Carolyn Dawson
Coal & Synfuels Technology
1616 North Fort Meyer, Suite 1000
Arlington, VA 22209
(703) 528-1244
David De Bruyn
EPA Region 10
1200 6th Avenue/8T-082
Seattle, WA 98101
(206) 553-4973
Rich Deblasi
Environmental Maintenance Solutions, Inc.
P.O. Box 37
Thornwood, NY 10594
(914) 747-1583
Mike Deegan
Teledyne Environmental Systems
2111 Wilson Boulevard, Suite 1100
Arlington, VA 22201
Donald A. Deieso
Research-Cottrell Companies
P.O. Box 1500
Somerville, NJ 08876
(908) 685-4255
William Dell
Systems Control Corporation
755 North Mary Avenue
Sunnyvale, CA 94086
(410) 280-0088
William A. Delphos
Delphos International
3000 K Street, NW, Suite 690
Washington, DC 20007
(202) 237-6300
Faustin Denis
Industrial Environmental Technologies
234-18 133rd Avenue
Rosedale, NY 11422
(718) 276-2300
Carolyn DeVinny
The DeVinny Group
13101 Washington Boulevard
Los Angeles, CA 90066
(310) 306-8584
Appendix C — Participants
Page C-7
-------
Participants
(continued)
Deborah DeYoung
Committee on Environmental and Public Works
U.S. Senate
Washington, DC
(202) 224-6176
Scott R. Dismukes
Doepken Keevican Weiss & Medved
37th Floor, USX Tower, 600 Grant Street
Pittsburgh, PA 15219
(412) 355-2641
Karen Doerschug
ICF Incorporated
9300 Lee Highway
Fairfax, VA 22031-1207
(703) 218-2509
David A. Doles
Engelhard Corporation
101 Wood Avenue
Iselin, N] 08830
(908) 205-5237
Cathy Dombrowski
Airtech News
14120 Huckleberry Lane
Silver Spring, MD 20906
(301)871-3299
Lise Dondy
Connecticut Innovations, Inc.
845 Brook Street
Rocky Hill, CT 06067
(203) 258-4305
Perle Don-
National Geothermal Association
803 Prince Street
Alexandria, VA 22314
(703) 836-3654
Donna Downing
U.S. Congress Office of Technology Assessment
Washington, DC 20510
Brenda Doyle
U.S. EPA
401 M Street, SW
Washington, DC 20460
David Driesen
Natural Resources Defense Council
1350 New York Avenue, NW, Suite 300
Washington, DC 20005
Elizabeth Drye
U.S. Senate
316 Senate Hart Building
Washington, DC 20510
(202) 224-4042
Dennis Dubberley
Brown & Root Environmental
910 Clopper Road
Gaithersburg, MD 20878-1399
(301) 258-8621
Dana Dudley
Texas Instruments Inc.
P.O. Box 650311, M/S 3933
Dallas, TX 75265
(214) 917-6212
Damian Durrant
Greenpeace
1436 U Street, NW
Washington, DC 20009
(302) 319-2518
Shari Effman
Thermacon Enviro Systems
345 New Albany Road
Moorestown, N] 08057
(609) 235-9471
Scott Ellensworth
Chemical Manufacturers Association
2501 M Street, NW
Washington, DC 20037
(202) 887-1286
William Elliott
Northern Indiana Public Service Company
801 E. 86th Avenue
Merrillville, IN 46410
(219) 647-6024
Kathy Ellis
NAVFAC Chesapeake Division
Barbara Ennis
National Association for Environ. Management
131 Morristown Road
Basking Ridge, NJ 07920
Page C-8
Appendix C — Participants
-------
Participants
(continued)
Richard C. Entz
Lancaster Laboratories
2425 New Holland Pike
Lancaster, PA 17601-5594
(717) 656-2301
Michael Epstein
National Inst. of Standards and Technology
A303/222
Chemical Science & Technology Laboratory
Gaithersburg, MD 20899
(301) 975-3385
Jerry Esmay
International Finance Corporation
1850 I Street, NW
Washington, DC 20433
(202) 473-0661
Caren Ewing
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-2556
Heidi Farber
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-2632
Alan Farkas
Farkas Berkowitz & Co.
1220 19th Street, NW
Washington, DC 20031
(202) 833-7530
Ralph Fasano
White Cap, Inc.
1819 N. Major Avenue
Chicago, IL 60639
(312) 637-2000
Denis Faustin
Industrial Environmental Technologies
234-18 133rd Avenue
Rosedale, NY 11422
(718) 276-2300
Steven Feeney
Babcock & Wilcox, Inc.
20 South Van Buren Avenue, P.O. Box 351
Barberton, OH 44203-0351
(216) 860-2783
Sarah S. Fehrer
Science and Policy Associates, Inc.
West Tower, Suite 400,1333 H Street, NW
Washington, DC 20005
(202) 789-1201
Stephen Felix
Lenzing USA Corp.
Danielle Fern
Manufacturers of Emission Controls Association
1707 L Street, NW
Washington, DC 20036
(202) 296-4797
Larry Ferrell
B&W Nuclear Technologies
3315 Old Forest Road
Lynchburg, VA 24501
(804) 385-3560
Louis Fiorucci
EMS Environmental, Inc.
801 East Street
Frederick, MD 21701
(301) 695-5828
T. Gary Flynn
Santa Fe Technologies
2642 Wild Cherry Place
Reston, VA 22091
(703) 715-2556
Marcie Francis
TAS, Inc.
1000 Potomac Street, NW
Washington, DC 20007
(202) 337-1744
Patricia Franco
Electronic Industries Association
2001 Pennsylvania Avenue, NW, Suite 1100
Washington, DC 20006
(202) 457-8703
Appendix C — Participants
Page C-9
-------
Participants
(continued)
Julie Frieder
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-2741
James Frock
Scott Environmental Technology
6205 Route 611, P.O. Box 369
Plumsteadville, PA 18949
(215) 766-7230
Charles L. Fryxell
Mojave Desert Air Quality Management District
15428 Civic Drive, Suite 300
Victorville, CA 92392
(619) 245-1661
Celeste Furr
Information Resources, Inc.
499 S. Capitol Street, SW
Washington, DC 20003
(202) 554-0614
Lee D. Garrigan
American Consulting Engineers Council
1015 15th Street, NW, Suite 802
Washington, DC 20005
(202) 347-7474
Walter Gehlmann
ViGYAN Inc.
5203 Leesburg Pike, Sbite 900
Falls Church, VA 22041
(703) 931-1100
Howard Geller
American Council for an Energy Efficient
Economy
1001 Connecticut Avenue, NW, Suite 801
Washington, DC 20036
(202) 429-8873
Mary Beth Gentleman
Foley, Hoag & Eliot
One Post Office Square
Boston, MA 02109
(617) 482-1390
Rodney A. Gibson
Geraghty and Miller, Inc.
2840 Plaza Place, Suite 350
Raleigh, NC 27612
(919) 571-1662
Paul Gifford
Energy Conversion Devices, Inc.
1707 Northwood Drive
Troy, MI 48084
(313) 362-1750
Carl A. Gilbert
Dravo Lime Company
3600 One Oliver Plaza
Pittsbugh, PA 15222
(412) 566-5501
Eric Gilchrist
9130 Weant Drive
Great Falls, VA 22066
(703) 820-4524
Debra Giles
Ferrofluidics
40 Simon Street
Nashua, NH 03061
(603) 883-9800
Jennifer Giles
Enviro-Management and Research, Inc.
1015 18th Street, NW
Washington, DC 20036
(202) 293-5300
Jajiet Gille
Alliance for Acid Rain Control
444 N. Capitol Street, Suite 602
Washington, DC 20001
(202) 624-8199
Jerry Gillespie
Callidus Technologies, Inc.
7130 South Lewis, Suite 635
Tulsa, OK 74136
(918) 496-7599
William Gillespie
District of Columbia
2100 Martin Luther King Jr. Boulevard, SE
Washington, DC 20020
(202) 404-1180
Joseph Goffman
Environmental Defense Fund
1875 Connecticut Avenue, Suite 1016
Washington, DC 20006
(202) 387-3500
Page C-10
Appendix C — Participants
-------
Participants
(continued)
Thomas Goldsmith
National Association for Environmental Mgmt.
1455 Pennsylvania Avenue, NW, Suite 1000
Washington, DC 20004
(202) 737-3415
Jay Gordon
Gordon Darby Corporation
2410 Ampere Drive
Louisville, KY 40299
(502) 266-5798
L. Barry Goss
Science Applications International Corporation
P.O. Box 2502
Oak Ridge, TN 37831
(615) 481-4609
Robert Grady
Robertson Stevens & Company
555 California Street
San Francisco, CA 94123
(415) 781-9700
Geneva Graham
The Port Authority of New York & New Jersey
One World Trade Center, Room 64E
New York, NY 16048
(212) 435-4065
Anne Grambsch
U.S. EPA
401 M Street, SW PM 221
Room 3009
Washington, DC 20460
(202) 260-5728
Charles L. Gray
U.S. EPA
2565 Plymouth Road
Ann Arbor, MI 48105
(313) 668-4404
Neil Gray
Highway Users Federation
1776 Massachusetts Avenue, NW
Washington, DC 20036
(202) 857-1217
Daniel Greenbaum
Massachusetts Dept. of Environmental Protection
One Winter Street
Boston, MA 02108
(617) 292-5856
Lestelle Greenwalt
MEMA
1325 Pennsylvania Avenue, NW, Suite 600
Washington, DC 20004
(202) 393-6362
Daniel Grubbe
Arizona Department of Environmental Quality
600 North 40th Street
Phoenix, AZ 85008
(602) 207-7017
Tom Guay
Environmental Compliance Alert
12413 Ellen Court
Silver Spring, MD 20904
(301) 622-9078
Shannon Guernsey
American Lung Association of Northern Virginia
9735 Main Street
Fairfax, VA 22031
(703) 591-4131
Leah Gurowitz
Podesta Associates, Inc.
1001 G Street, NW
Washington, DC 20001
(202) 393-1010
Burl Haigwood
Fuel Reformation
499 S. Capitol Street, SW, #406
Washington, DC 20003
(202) 554-0614
John Hakel
AGC of California
1255 Corporate Center Drive
Monterey Park, CA 91754
(213) 263-1500
Stephen Hall
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-5016
Ed Haltom
United Elchem Industries, Inc.
11535 Reeder Road
Dallas, TX 75229
(214) 241-6601
Appendix C — Participants
Page C-11
-------
Participants
(continued)
George Hansen
Arthur Andersen, & Co.
711 Louisiana
Houston, TX 77401
(713) 237-5011
LuAnne Hansen
Automotive Chemical Manufacturers Council
1325 Pennsylvania Avenue, NW
Washington, DC 20004
(202) 393-6362
Penny Hansen
U.S. EPA
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 253-9150
Steve Harper
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-5580
Matthew Harrington
Clean Air News
501 Slaters Lane, #320
Alexandria, VA 22314
(703) 549-3823
Thomas Hauser
American Institute of Pollution Prevention
c/o University of Cincinnati
Mail Location 71
Cincinnati, OH 45221
(513) 556-2517
David Hawkins
Natural Resources Defense Council
1350 New York Avenue, NW, Suite 300
Washington, DC 20005
(202) 783-7800
Richard Head
SRS Technologies
1500 Wilson Boulevard
Arlington, VA 22209
(703) 522-5588
William F. Hederman
R.J. Rudden Associates, Inc.
1110 N. Glebe Road, Suite 725
Arlington, VA 22201
(703) 812-8500
Holly Hegner
O'Melveny & Meyers
555 13th Street, NW, Suite 500 West
Washington, DC 20004
(202) 383-5300
John Heiderscheit
Chadbourne & Parke
1101 Vermont Avenue, NW, Suite 900
Washington, DC 20005
(202) 289-3000
Jeffrey Heim'erman
U.S. EPA
Crystal Station One
2805 Jefferson Davis Highway
Arlington, VA 22202
(703) 308-8806
J Fred Heitman
JAYCOR Environmental
1608 Spring Hill Road
Vienna, VA 22182
(703) 847-4000
Gary Helms
CH2M Hill
P.O. Box 4400
Reston, VA 22090-1483
(703) 471-1441
Ben Henneke
Clean Air Action Corporation
320 S. Boston, Suite 1501
Tulsa, OK 74103
(918) 592-0300
John B. Henry
Clean Air Capital Markets
1250 24th Street, NW, Suite 300
Washington, DC 20037
(202) 466-0520
Pam Herman
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-8705
Page C-12
Appendix C — Participants
-------
Participants
(continued)
Thomas M. Heron
UEC Environmental Systems
600 Grant Street, Suite 770
Pittsburgh, PA 15219-4776
(412) 433-6572
f
Robert Herzstein
Southern California Edison
2244 Walnut Grove Avenue, Room 399
Rosemead, CA 91770
(818) 302-7479
Jon Hiler
American Society of Agricultural Engineers
2950 Niler Road
St. Joseph, MI 49085
(616) 429-0300
A. Judson Hill
Florida First Processing
One Church Street, Suite 801
Rockville, MD 20850
(301) 762-6115
William R. Hill
Entech, Inc.
560 Oak Ridge Turnpike
Oak Ridge, TN 32830
(615) 481-3231
Harvey Himberg
Overseas Private Investment Corporation
1100 New York Avenue, NW
Washington, DC 20527
(202) 336-8400
Russell A. Hinz
American Lung Association of Northern Virginia
9735 Main Street
Fairfax, VA 22031
(703) 591-4131
Barbara Hirsch
APPA
1446 Duke Street
Alexandria, VA 22314
(703) 684-1446
Robert Hirsch
Parsons Environmental Services, Inc.
321 Norristown Road, Suite One
Ambler, PA 19002
(215) 540-4211
James Holian
Brown & Root Environmental
910 Clopper Road
Gaithersburg, MD 20878-1399
(301) 258-8705
Elise Holland
U.S. Congress Office of Technology Assessment
Washington, DC 20510
(202) 228-6858
William Holmberg
National SoyDiesel Development Board
499 S. Capitol Street, SW
Washington, DC 20003
(202) 554-1025
John Hoppe
Burns and Roe
812 Old Lee Highway
Fairfax, VA 22031
(703) 207-0800
Dirk Horn
Noell, Inc.
2411 Dulles Corner Park, Suite 410
Hemdon, VA 22071
(703) 793-6500
Betsy Horsman
U.S. ETEC
Gorik Hossepian
Allied Signal Aerospace Company
2525 West 190th Street, P.O. Box 2960
Torrance, CA 90509
(310) 512-1932
Mark Howard
National Association of Regional Councils
1700 K Street, NW, Suite 1300
Washington, DC 20006
(202) 457-0710
Steven Howards
Environmental Strategies
1600 Wynkoop Street, Suite 200
Denver, CO 80202
(303) 436-1860
Appendix C — Participants
Page C-13
-------
Participants
(continued)
John Howitt
Allied Signal Corporation
P.O. Box 580970
Tulsa, OK 74158
(918) 266-1406
John Huffman j
Kenetech/U.S. Wind Power, Inc.
1730 M Street, NW, Suite 1050
Washington, DC 20036
(202) 833-8954
Gary Huggins
Coalition for Safer, Cleaner Vehicles
321 D Street, NE
Washingotn, DC 20002
(202) 543-4499
Carrie Hunter
ECO Magazine
1212 New York Avenue, Suite 345
Washington, DC 20005
(202) 842-8416
Joe Ingram
Island Press
1718 Connecticut Avenue, NW, Suite 300
Washington, DC 20009
(202) 232-7933
Susan Ishmael
Associated Builders & Contractors
1300 North 17th Street
Rosslyn, VA 22209
(703) 812-2039
Andy Jabali
Environmental Maintenance Solutions, Inc.
P.O. Box 37
Thorn wood, NY 10594
(914) 747-1583
Wendy B. Jacobs
Foley, Hoag & Eliot
One Post Office Square
Boston, MA 02109
(617) 482-1390
John Jeffery
ViGYAN, Inc.
5203 Leesburg Pike, Suite 900
Falls Church, VA 22041
(703) 931-1100
Robert Johnson
Liquid Carbonic Industries
810 Jorie Boulevard
Oak Brook, IL 60521
(708) 572-7231
Russ Jones
American Petroleum Institute
1220 L Street, NW, Suite 1200
Washington, DC 20005
(202) 682-8450
Tom Jones
Texas Instruments Inc.
P.O. Box 650311, M/S 3933
Dallas, TX 75265
(214) 917-6217
Bruce C.Jordan
U.S. EPA
Research Triangle Park, NC 27711
(919) 541-5572
David Jordan
ERM Midwest
8465 Keystone Crossing, Suite 190
Indianapolis, IN 46240
(317) 251-0708
Mark Joyce
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-4717
Mary Ellen Joyce
American Petroleum Institute
1220 L Street, NW, Suite 1200
Washington, DC 20005
(202) 682-8450
Robert Jubach
Team Environmental Services, Inc.
5320 Spectrum Drive
Frederick, MD 21701
(301) 694-5202
Jacqueline Kaldon
Emissions Exchange Corp.
1001 G Street, NW, Suite 400
Washington, DC 20001
(202) 638-1918
Page C-14
Appendix C — Participants
-------
Participants
(continued)
Gerald Karey
Oilgram News
1200 G Street, NW
Washington, DC 20005
(202) 383-2250
Marie-Ange Katzeff
Embassy of Belgium
3330 Garfield Street, NW
Washington, DC 20008
(202) 333-6900
Morris Kaufman
Stackhouse Garber
2 Todmorden Lane
Wallingford, PA 19086
(215) 565-0852
Andy Kaupert
General Motors
1660 L Street, NW
Washington, DC 20036
(202) 775-5073
Heather Anne Keith
Chemical Manufacturers Association
2501 M Street, NW
Washington, DC 20037
(202) 887-1320
John Keller
P.O. Box 768
Olney, MD 20830-0768
(301) 774-5086
Merilynn Kessi
AMK Associates
P.O. Box 1440
Columbia, MD 21044
(410) 964-9373
James Kiefer
MidCon Development Corp.
701 E. 22nd Street
Lombard, IL 60148
(708) 691-3514
William King
Ford Motor Co.
1350 I Street, NW
Washington, DC 20005
(202) 962-5379
John Kinsman
Edison Electric Institute
701 Pennsylvania Avenue
Washington, DC 20004
(202) 508-5711 '
Brian Klatt
Rust Environment and Infrastructure
4738 N. 40th Street
Sheboygan, WI 53083
(414) 458-8711
Howard Klee
Amoco Corporation
Mail Code 4808, 200 East Randolph Drive
Chicago, IL 60601
(312) 856-2320
Andrea Klein
Intertrade Development Corporation
4825 Reservoir Road, NW
Washington, DC 20007
(202) 333-9112
Richard Klimisch
American Automobile Manufacturers Association
7430 Second Avenue, Suite 300
Detroit, MI 48202
(313) 871-2300
Adam Klinger
U.S. EPA
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 233-9122
Charles Knebl
The Pollution Prevention Letter
P.O. Box 13315
Silver Spring, MD 20911-3315
(301) 495-7747
Terresa Knierieman
National Association of Manufacturers
1331 Pennsylvania Avenue, NW, Suite 1500 N.
Washington, DC 20004
(202) 637-3175
Chris Knopes
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-6921
Appendix C — Participants
PageC-15
-------
Participants
(continued)
Warren Koenig
Scott Environmental Technology
6205 Route 611
Plumsteadville, PA 18949
(215) 766-7230
Steven A. Kohl
Raymond James & Associates
880 Carillon Parkway
St. Petersburg, FL 33716
(813) 573-3800
Zofia Kosim
U.S. EPA
Crystal Station One
2805 Jefferson Davis Highway
Arlington, VA 22202
(703) 308-8733
Andrew Kralkov
U.S. News and World Report
2400 N Street, NW
Washington, DC 20037
(202) 955-2673
Colyn Kreger
Cheryl Minor Consultants, Inc.
P.O. Box 944
Rural Hall, NC 27045
(919) 969-5755
Sue Krieg
Mojave Desert Air Quality Management District
22321 Shawnee Road
Apple Valley, CA 92307
(619) 247-4876
Joe Krumenacker
Scott Specialty Gases, Inc.
6141 Easton Road, P.O. Box 310
Plumsteadville, PA 18949
(215) 766-8861
Lisa Ann Kurbiel
United Nations Development Programme
John Paul Kusz
Safety Kleen Corporation
1000 N. Randall Road
Celyin, IL 60123
(708) 697-8460
Vincent Lajiness
Coastal Corporation
One Woodward Avenue
Detroit, MI 48226
(313) 496-2447
Joe Lang
Oregon Sandblasting and Coating
P.O. Box 1171
Tualatin, OR 97062
(503) 692-3575
Robert M. Large
Lancaster Laboratories
2425 New Holland Pike
Lancaster, PA 17601-5994
(717) 656-2301
Amy Laspia
Environmental Management Consulting
701 Fourth Avenue, S., Suite 500
Minneapolis, MN 55145
(612) 337-9537
John Laumer
Elf Atochem North America
900 First Avenue
King of Prussia, PA 19406
(215) 337-6813
Joseph Laznow
SRS Technologies
1500 Wilson Boulevard
Arlington, VA 22209
(703) 522-5588
Dennis Leaf
U.S. EPA
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 233-9129
Robb Lenhart
National Environmental Technology Applications
Center
615 William Pitt Way
Pittsburgh, PA 15238
(412) 826-5511
Page C-16
Appendix C — Participants
-------
Participants
(continued)
Jerrold L. Levine
Amoco Corporation
200 E. Randolph Drive
Chicago, IL 60611
(312) 856-2605
Raymond Lewis
American Methanol Institute
815 Connecticut Avenue, NW, Suite 800
Washington, DC 20006
(202) 467-5050
Sherri Lilienfeld
Air Products and Chemicals, Inc.
7201 Hamilton Boulevard
Allentown, PA 18195
(215) 481-7501
Rosanne M. Lindsay
EPA Region 5
77 W. Jackson (AR-185)
Chicago, IL 60604
(312) 353-1151
David P. Lingo
Mid-Continent Area Power Pool
430 Century Plaza
1111 Third Avenue South
Minneapolis, MN 55404
(612) 341-4618
Jan Linsenmeyer
U.S. Congress Office of Technology Assessment
Washington, DC 20510
Steve Linsenmeyer
Liquid Carbonic Industries
8124 Norris Lane
Baltimore, MD 21222
(202) 228-6863
George Linzer
The Bruce Company
501 3rd Street, NW, Suite 260
Washington, DC 20001
(202) 434-9364
Stephen Lipmann
Environmental Research and Analysis
140 North Broadway
Irvington, NY 10533-1215
(914) 591-7414
Laura Litvan
Nation's Business
1615 H Street, NW, Suite 300
Washington, DC 20062
(202) 463-5497
Olga Loera
ViGYAN Inc.
5203 Leesburg Pike, Suite 900
Falls Church, VA 22041
(703) 931-1100
Lon Loken
PACE, Inc.
9893 Brewers Court
Laurel, MD 20723
(301) 490-9860
Frederick Long
MEB
1220 16th Street, NW
Washington, DC 20036
(202) 833-6556
Francois Louis
Renault, USA
15 Volvo Drive, Building D
Rockleigh, NJ 07647
(201) 784-4627
Barbara Loux
Mojave Desert Air Quality Management District
22521 Shawnee Road
Apple Valley, CA 92307
(619) 247-4876
Louis Luedtke
Research-Cottrell
P.O. Box 1500
Somerville, NJ 08876
(908) 685-4255
Ilmar Lusis
Lockheed Environmental Systems &
Technologies Co.
1901 N. Fort Myer Drive, Suite 305
Arlington, VA 22209
(703) 516-9091
W. Howard Macfadden
15112 SE 2nd Street
Bellevue, WA 98007
(206) 641-0622
Appendix C — Participants
Page C-17
-------
Participants
(continued)
Carole Macko
BNA
1231 25th Street, NW
Washington, DC 20037
(202) 452-4030
Bruce Maillet
Wehran Envirotect
6 Riverside Drive
Andover, MA 01810-1121
(508) 682-1980
John Malanchuk
International Technology, Inc.
1133 21st Street, NW
Washington, DC 20036
(202) 331-8510
Karen Malkin
National Park Service
18th and C Street, NW
Washington, DC 20240
(202) 208-4911
Isaac Manning
North Texas Air Coalition
2421 Westport Parkway
Fort Worth, TX 76177
(817) 224-6010
Bella Maranion
U.S. EPA'
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 233-9138
Stanley March
Tenneco Gas-Environmental
P.O. Box 2511
Houston, TX 77252-2511
(713) 757-8387
Jayne Mardock
Clean Air Network/NRDC
1350 New York Avenue, NW, Suite 300
Washington, DC
Larry Marigold .
MG Refining & Marketing, Inc.
1000 Louisiana, Suite 6500
Houston, TX 77002
(713) 759-0510
Mary Markeete
American Institute of Chemical Engineers
345 East 47 Street
New York, NY 10017
(212) 705-7329
Chuck Marshall
JACA Corporation
550 Pinetown Road
Ft. Washington, PA 19034
(215) 643-5466
Mary Ann Massey
Research-Cottrell
P.O. Box 1500
Branchburg, NJ 08876
(908) 685-4185
Suzanne Mattei
NYC Comptroller
Municipal Building, Room 517
New York, NY 10007
(212) 669-7396
Damon Matteo
Lawrence Livermore National Laboratory
P.O. Box 808, L-795
Livermore, CA 94550
(510) 423-0366
Eric Maurer
EPA Region 4
345 Courland Street
Atlanta, GA 30365
(404) 347-2864
Carol May
American Gas Association
Susan Mayer
Congressional Research Service
Larry McAfee
Air-Cure Environmental, Inc,
275 West Street, Suite 204
Annapolis, MD 21401
(410) 268-2450
James H. McCall
Environmental Capital Corporation
P.O. Box 1373
Solanal Beach, CA 92075
(619) 755-3535
Page C-18
Appendix C — Participants
-------
Participants
(continued)
Maria McCann
NYNEX Government Affairs
1300 I Street NW, Suite 400 West
Washington, DC 20005
(202) 336-7882
Diana McCauley
American Institute of Chemical Engineers
345 East 47 Street
New York, NY 10017
(212) 705-7329
Dave McDonald
Wessels, Arnold & Henderson
901 Marquette Avenue, Suite 2700
Minneapolis, MN 55402
(612) 373-6235
Peter McKenzie
Brooklyn Union Gas
One MetroTech Center
Brooklyn, NY 11201
(718) 403-3009
Terrence McLaughlin
DOE, Energy, Research, ER-8.2
1000 Independence Avenue
Washington, DC 20585
(301) 903-6432
Gary McNeil
U.S. EPA
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 233-9173
Paul McNeill
Coalition for Safer, Cleaner Vehicles
321 D Street, NW
Washington, DC 20002
(202) 543-4499
Peter Meeh
Enseco Air-Toxics Laboratory
5033 Stoneybrook Boulevard
Milliard, OH 43026
(614) 876-6834
Dhiren Mehta
Hughes Environmental Systems
Mail Stop MB/A20/SN206
P.O. Box 10011
Manhattan Beach, CA 90266
(310) 536-5487
Richard Mendez
Defense Fuel Supply Center
Cameron Station
Alexandria, VA 22304
(703) 274-2840
Donna Mercado
American Gas Association
James Merkel
Monex Resources, Inc.
45 NE Loop 410, Suite 700
San Antonio, TX 78216
(210) 349-4069
Dean Merkle
2500 Q Street, NW, Apartment 544
Washington, DC 20007
Susan Merther
Science and Policy Associates, Inc.
West Tower, Suite 400,1333 H Street, NW
Washington, DC 20005
(202) 789-1201
Erik J. Meyers
Environmental Law Institute
1616 P Street, NW, 2nd Floor
Washington, DC 20036
(202) 328-5150
Jeffrey A. Meyers
Columbia Gas Distribution Companies
200 Civic Center Drive
Columbus, OH 43216-0117
(614) 460-5956
Matt Middaugh
Can Manufacturers Institute
1625 Massachusetts Avenue, NW
Washington, DC 20036
(202) 232-4677
Appendix C — Participants
Page C-19
-------
Participants
(continued)
Ken Miller
Gannet News Service
1000 Wilson Boulevard
Arlington, VA 22229-0001
(703) 276-5806
Rich Miller
Scott Specialty Gases
614 Easton Road, P.O. Box 310
Plumsteadville, PA 18949
Cheryl Minor
Cheryl Minor Consultants, Inc.
P.O. Box 944
Rural Hall, NC 27045
(919) 969-5755
Diane Miskowski
BCM Engineers
3 Perry Lane
Burlington, NJ 08016
(609) 235-6523
John Mizroch
U.S. ETEC
2000 K Street, NW, Suite 750
Washington, DC 20006
(202) 466-6933
Reginald Modlin
Chrysler Corporation
800 Chrysler Drive East
Auburn Hills, MI 48326-2757
(313) 576-8077
Timothy Mohin
U.S. Senate Environ. & Public Works Committee
Washington, DC 20037
(202) 224-5031
John Mooney
Engelhard Corporation
101 Wood Avenue
Iselin, NJ 08830
Bruce Moore
Central & South West Services, Inc.
P.O. Box 660164
Dallas, TX 75266-0164
(214) 777-1288
Eileen Moran
Public Service Resources Corporation
One Riverfront Plaza, 9th Floor
Newark, NJ 07102
(201) 596-6710
Michael Morley
Vara International
Calgon Carbon Corporation
1201 19th Place
Vero Beach, FL 32960
(407) 567-1320
Patrick Morrissey
General Motors
1660 L Street, NW
Washington, DC 20036
(202) 775-5015
John Moses
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-6380
Ronald M. Moskal
Calgon Carbon Corporation
P.O. Box 717
Pittsburgh, PA 15230-0717
(412) 787-6314
Leslie Moy
2613 Arvin Street
Wheaton, MD 20902
(301) 942-1637
Carl Moyer
Acurex Environmental Corporation
P.O. Box 7044
Mountain View, CA 94039
(415) 961-5700x3900
Andrew J. Murphy
Acurex Environmental Corporation
PO Box 13109
Research Triangle Park, NC 27709
(919) 544-4535
Paul Murray
Herman Miller, Inc.
855 East Main Avenue
Zeeland, MI 49464
(616) 654-5035
Page C-20
Appendix C — Participants
-------
Participants
(continued)
Dean Murville
Murvex International
3710 Garfield Street, NW
Washington, DC 20007
(202) 338-5214
Jon Naimon
IRRC
1755 Massachusetts Avenue, NW
Washington, DC 20036
(202) 234-7500
Matt Naud
ICF Incorporated
9300 Lee Highway
Fairfax, VA 22031-1207
(703) 934-3933
John Nelson
The Pearlman Group
2000 L Street, NW, #702
Washington, DC 20036
(202) 296-2739
I.L Newlin
Rhone-Poulenc Inc.
CN 5266
Princeton, NJ 08543-5266
(908) 297-0100
Robert Newman
EA Engineering, Science & Technology
11019 McCormick Road
Hunt Valley, MD 21031
(410) 584-7000
John Nichols
Dovco Industrial Fabricators, Inc.
1700 Ridgely Street
Baltimore, MD 21230
(410) 625-6000
Mary D. Nichols
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-2090
Roberta Nichols
Ford Motor Company
Village Plaza, Suite 1200
23400 Michigan Avenue
Dearborn, MJ 48124
(313) 248-2369
Joseph Niemiec
Brooklyn Union Gas
One Metro-Tech Center, 19th Floor
Brooklyn, NY 11201-3850
(718) 403-3247
Nick Nikkila
South Coast Air Quality Management District
21865 Copley Drive
Diamond Bar, CA 91765
(909) 396-2660
Jane Nishida
Chesapeake Bay Foundation
164 Conduit Street
Annapolis, MD 21401
(410) 268-8833
Daniel Noble
Environmental Business Research
4452 Park Boulevard, Suite 306
San Diego, CA 92116
(619) 295-7685
Ola Nordquist
Swedish Attache of Technology
10880 Wilshire Boulevard, #914
Los Angeles, CA 90024
(310) 475-0589
Claudia O'Brian
Design for the Environment
401 M Street, SW
Washington, DC 20460
(202) 260-0880
Eileen O'Hara
Lafarge Corp.
P.O. Box 4600
Reston, VA 22090-1415
(703) 264-3668
Jesse O'Neal
Coerr Environmerital Corp.
6320 Quadrangle Drive, #320
Chapel Hill, NC 27514
(919) 419-0567
Carlos O'Neill
U.S. EPA
1413 Fernandez Juncos Avenue
Santurce, PR 00909
(809) 729-6952
Appendix C — Participants
Page C-21
-------
Participants
(continued)
James T. O'Neill
ViGYAN Inc.
5203 Leesburg Pike, Suite 900
Falls Church, VA 22041
(703) 931-1100
Nancy Olsen
Island Press
1718 Connecticut Avenue, NW, Suite 300
Washington, DC 20009
(202) 232-7933
Greg Ondich
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-5748
Robert Ouellette
BCM Engineers
3 Perry Lane
Burlington, NJ 08016
Joanne Oxley
Enviro-Management and Research, Inc.
1015 18th Street, NW, Suite 310
Washington, DC 20036
(202) 293-5300
Louis Paley
U.S. EPA
Crystal Station One
2805 Jefferson Davis Highway
Arlington, VA 22202
(703) 308-8806
Keith Pandorf
Pandorf's Haz Mat Training & Consulting
759 Columbus Avenue
Lebanon, OH 45036
(513) 932-7669
Richard W. Parker
Ria Patterson
Elf Atochem North America
900 First Avenue
King of Prussia, PA 19406
(215)337-6869
Carl Pavetto
Systematic Management Services, Inc.
20201 Century Boulevard
Germantown, MD 20874
(301) 353-0072
Bruce Perry
Environmental Manager's Advisor
EHM1, 10 Newmark Road
Durham, NH 03824
(603) 868-1496
David Peterson
PSA Peugeot Citroen/USTR
2000 Town Center #1700
Southfield, MI 48075
(313) 948-9600
Anne Phelan
Environmental Law Institute
1616 T Street, NW, Suite 200
Washington, PC 20036
(202) 939-3853
Jennifer Phillips
ViGYAN Inc.
5203 Leesburg Pike, Suite 900
Falls Church, VA 22041
(703) 931-1100
Richie D. Pickens
Nalco Fuel Tech
1001 Frontenac Road
Naperville, IL 60563-1746
(708)983-3511
Jane Piepho
Babcock and Wilcox
20 S. Van Buren Avenue, P.O. Box 351
Barberton, OH 44203
(216) 860-6246
Mark Pine
Arthur D. Little, Inc.
Bill Piske
IEA Field Services
120 South Center Suite 200
Morrisville, NC 27560
(919) 460-0852
Page C-22
Appendix C — Participants
-------
Participants
(continued)
Mahesh Podar
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-5387
Terry Poles
Engelhard Corporation
101 Wood Avenue
Iselin, NJ 08830
(908) 205-6633
Robert Polito
Environmental Resources Management, Inc.
855 Springdale Drive
Exton, PA 19341
(215) 524-3500
Frank Pope
Technology Funding, Inc.
2000 Alemeda De Las Pulgas, Suite 250
San Mateo, CA 94403
(415) 345-2200
Michael E. Porter
Harvard University Business School
Aldrich Hall #200, Soldier Field Road
Boston, MA 02163
(617) 495-6309
Lawrence Pratt
Environmental Law Institute
1616 P Steet, NW
Washington, DC 20036
(202) 939-3800
Mary Prendergast
ASME
1828 L Street, NW, #906
Washington, DC 20036
(202) 785-3756
Doris Price
U.S. EPA
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 233-9067
Nancy Prolman
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-2744
John Quarles
Morgan, Lewis & Bockius
1800 M Street, NW
Washington, DC 20036
(202) 467-7000
Gloria Quinn
Edison Electric Insititute
101 Wood Avenue
Iselin, NJ 08830
Theresa Quinn
B&V Waste, Science and Technology Corporation
100 Cambridge Park Drive
Cambridge, MA 02140
(617) 547-2553
Walter D. Ramsay
4501 Arlington Boulevard, #324
Arlington, VA 22203
(703) 525-1780
Todd Ramsoter
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-6921
Dawn Randall
Coalition for Safer, Cleaner Vehicles
321 D Street, NW
Washington, DC 20002
(202) 543-4499
Fred Rappold
ERM, Inc.
855 Springdale Drive
Exton, PA 19341
(215) 524-3500
Jay Ratafia-Brown
Science Applications International Corporation
1710 Coodridge Drive, P.O. Box 1303, 2-2-5
McLean, VA 22102
(703) 448-6343
Mick Rayder
ECG, Inc.
8150 Leesburg Pike, Suite 401
Vienna, VA 22182
(703) 448-8900
Appendix C — Participants
Page C-23
-------
Participants
(continued)
Maurice Raymond
Rhone-Poulenc Specialty Chemicals
CN 7500 Prospect Plains Road
Cranbury, NJ 08512-7500
(609) 860-4506
Lewis Reade
U.S. AID
320 21st Street, NW, Suite 3319
Washington, DC 20523-0064
(202) 647-9969
Lisa A. Reale
Delmar Publishers Inc.
3 Columbia Circle
Albany, NY 12212
(518) 464-3500
Isabel Reiff
ICF Incorporated
9300 Lee Highway
Fairfax, VA 22031-1207
(703) 934-3006
Ruth Reiman
Texas Air Control Board
12124 Park 35 Circle
Austin, TX 78741
(512) 908-1219
W. Rerman
AAA News Service
1448 New York Avenue, NW
Washington, DC 20005
(202) 942-2050
Byron Rettig
Petrolite Polymers Division
1709 Industrial Boulevard
Kilgore, TX 75662
(903) 984-5077
Richard Rhoden
American Patroleum Institute
1220 L Street, NW
Washington, DC 20005
(202) 682-8480
Michelle Rice
MD Dept. of the Environment
2500 Broening Highway
Baltimore, MD 21222
(410) 631-3240
Renee Rico
U.S. EPA
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 233-9153
Marilyn Ripin
JAYCOR
1608 Spring Hill RD
Vienna, VA 22182
(703) 847-4106
Leslie S. Ritts
Chadbourne & Parke
1101 Vermont Avenue, NW, Suite 900
Washington, DC 20005
(202) 289-3000
Eve Robinson
Thompson Publishing Corp. ,
1725 K Street, NW, Suite 200
Washington, DC 20006
(202) 872-4000
J. Thomas Robinson
Nyacol Products, Inc.
P.O. Box 349
Ashland, MA 01721
(508) 881-2220
Phyllis Robinson
Business Publishers, Inc.
951 Pershing Drive
Silver Spring, MD 20910-4464
(301) 587-6300
John Rolfe
Pegasus Consultants
345 Third Street, Suite 640
Niagara Falls, NY 14303
(716) 285-3856
Paul Rosasco
Harding Lawson Associates
707 17th Street, ARCO Tower 2400
Denver, CO 80202
(303) 292-5365
Page C-24
Appendix C — Participants
-------
Participants
(continued)
Bob Rose
U.S. EPA
Crystal Mall II
1921 Jefferson Davis Highway
Arlington, VA 22202
(703) 305-5511
Robert Rose
Leon G. Billings Inc.
901 15th Street, NW #570
Washington, DC 20005
(202) 371-0764
Julie Rosenberg
U.S. EPA
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 233-9154
Peter Rosenberg
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-8869
Carl S. Russell
Sun Co.
1801 Market Street
Philadelphia, PA 19126
(215) 977-6927
Rafael Sanchez
U.S. EPA
Crystal Station One
2805 Jefferson Davis Highway
Arlington, VA 22202
(703) 308-8730
Ernest Sandelli
K&M Engineering & Consulting Corporation
2001 L Street, NW, Suite 500
Washington, DC 20036
(202) 728-0390
Edward Sanders
Sanders International
1616 P Street, NW, Suite 410
Washington, DC 20036
(202) 939-3480
Gary Saunders
Engineering-Science Inc.
401 Harrison Oaks Boulevard, Suite 201
Gary, NC 24513
(919) 677-0080
Alan Scarsella
Wahlco Environmental Systems, Inc.
3600 West Segerstrom Avenue
Santa Ana, CA 92702-6495
(714) 979-7300
Eric Schaeffer
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-8636
Reeva Schiffman
First Environment, Inc.
90 Riverdale Road
Riverdale, NJ 07457
(201) 616-9700
John Schofield
Thermatrix, Inc.
3590 North First Street, Suite 310
San Jose, CA 95134
(408) 944-0220
Barry Schroer
U.S. EPA
Douglas Schuessler
Ecology and Environment, Inc.
1700 N. Moore Street
Arlington, VA 22209
(703) 522-6065
Peter Scott
Global Environmental Fund
1250 24th Street, NW, Suite 300
Washington, DC 20037
(202) 466-0529
Tony Scott
Sutron Corporation
21300 Ridgetop Circle
Sterling, VA 20166
(703) 406-2800
Appendix C — Participants
Page C-25
-------
Participants
(continued)
James Seal
OMSTAR Clean Air Corporation
4180 La Jolla Village Drive, Suite 415
La Jolla, CA 92037
(310) 835-5377
Jeffrey Seisler
Natural Gas Vehicle Coalition
1515 Wilson Boulevard, Suite 1030
Arlington, VA 22209
(703) 527-3022
John S. Seitz
U.S. EPA
Research Triangle Park, NC 27711
(919) 541-5616
Jennifer Selber
U.S. EPA
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 233-9177
David Selden
American Management Systems, Inc.
1777 N. Kent Street
Arlington, VA 22209
(703) 908-5087
U. SenGupta
Vara International
1201 19th Place
Vero Beach, FL 32960
(407) 567-1320
Andrea Shal al Fsa
Reuters
1333 H Street, NW
Washington, DC 20005
(202) 898-8465
Greg Shamitko
USAir, Inc.
Pittsburgh International Airport, P1T/K125
Pittsburgh, PA 15231
(412) 747-3070
Mark R. Shanahan
Ohio Air Quality Development Authority
1901 Le Veque Tower
50 West Broad Street
Columbus, OH 43215-5985
(614) 224-3383
Rich Shank
Science Applications International Corporation
655 Metro Place S., Suite 745
Dublin, OH 43017
(614) 793-7600
Michael H. Shapiro
U.S. EPA
401 M Street, SW
Washington, DC 20460
Deborah Sheiman
Natural Resources Defense Council
1350 New York Avenue, NW Suite 300
Washington, DC 20005
(202) 783-7800
Robert Sheriff
Atlantic Environmental Inc.
2E-Blackwell Street
Dover, NJ 07801
(201) 366-4660
Claire Sherry
U.S. EPA
David Sherve
MTI
41762 Christy Street
Fremont, CA 94538
(510) 490-0900
John Shoaff
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-1831
Jerry Shoemaker
Engineering-Science
10521 Rosehaven Street
Fairfax, VA 22030-2899
(703) 591-7575
Albert Short
United States-Asia Environmental Partnership
1133 20th Street, NW, Suite 300
Washington, DC 20036
(202) 835-0333
Glyn Short
Page C-26
Appendix C — Participants
-------
Participants
(continued)
Richard Siegel
B&V Waste Science and Technology Corporation
100 CambridgePark Drive
Cambridge, MA 02140
(617) 547-2553
Daniel Silver
U.S. - Asia Environmental Partnership
1133 20th Street NW, Suite 300
Washington DC, 20036
(202) 835-0333
Karl Simon
U.S. EPA
401 M Street, SW (6405J)
Washington, DC 20460
(202) 233-9299
John Simpson
Public Utilities Reports
2111 Wilson Boulevard, Suite 200
Arlington, VA 22201
(703) 243-7000
Orman Simpson
MDA Scientific, Inc.
3000 Northwoods Parkway, Suite 185
Norcross, GA 30071
(404) 242-0977
Kara Sissel
Clean Air Report
1225 Jefferson Davis Highway
Alexandria, VA 22202
(703) 892-8516
Richard Skaggs
CalTest Instruments, Inc.
Omstar Environmental Products
126 Marine Avenue
Wilmington, CA 90744
(310) 835-5377
David Slaughter
Thompson Publishing Group
1725 K Street, NW, Suite 200
Washington, DC 20006
(202) 872-4000
Anthony R. Sloan
Anthony Sloan and Associates
23 Chestnut Lane
Wayne, PA 19087
(215) 964-0620
Bruce Smart
World Resources Institute
1709 New York Avenue, NW, Suite 700
Washington, DC 20006
(202) 638-6300
Alan Smith
Environment Plus/Brooklyn Union Gas
One Metrotech Center
Brooklyn, NY 11201
(718) 403-3373
F. Bradford Smith
Environmental Elements Corporation
3700 Koppers Street
Baltimore, MD 21227
(410) 368-7090
Jeffrey Smith
Institute of Clean Air Companies
1707 L Street, NW
Washington, DC
(202) 457-0911
Kenon Smith
U.S. EPA
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 233-9164
Michael Smith
Graseby Andersen Inc.
4801 Fulton Industrial Boulevard
Atlanta, GA 30336
(404) 691-1910
Rodney Sobin
U.S. Congress Office of Technology Assessment
Washington, DC 20510-7025
(202) 228-6369
Daryl K. Solomonson
TRW
One Federal Systems Park Drive
Fairfax, VA 22033
(703) 803-4990
George Spencer
Air Daily, Ltd.
4418 Mac Arthur Boulevard
Washington, DC 20007
(202) 298-8202
Appendix C — Participants
Page C-27
-------
Participants
(continued)
Sam Spencer
Air Daily, Ltd.
4418 Mac Arthur Boulevard
Washington, DC 20007
(202) 298-8202
Bryan C. Spielman
Thermacon Industries
111 West 40th Street
New York, NY 10018
(212) 704-2111
Curtis Spraitzar
2925-1 19th Street South
Birmingham, AL 35209
(205) 879-5561
Beverly Stanton
Manfacturers of Emission Controls Association
1707 L Street, NW, Suite 570
Washington, DC 20036
(202) 296-4797
Michael Stanton
American Automobile Manufacturers Association
1620 Eye Street, NW, Suite 1000
Washington, DC 20006
(202) 775-2729
Lynne Steingass
The Environmental Policy Center
2000 L Street, NW, Suite 710
Washington, DC 20010
(202) 296-7444
Stan Stephenson
Coalition for Safer, Cleaner Vehicles
The After Market Research Inst, Inc. Box 648
Southeastern, PA 19399
(215) 964-9820
Mary Stevens
Weinberg, Bergeson, & Neuman
1300 1 Street NW, Suite 1000 W
Washington, DC 20005
(202) 962-8528
Kevin Stickney
Wheelabrator Technologies, Inc.
Liberty Lane
Hampton, NH 03842
(603) 929-3354
Jerry Stilkind
USIA News
301 4th Street, NW
Washington, DC 20008
(202) 619-4157
Lori Lee Stall
Radian Corp.
2455 Horsepen Road
Herndon, VA 22071
(703) 713-1500
Paul M. Stolpman
U.S. EPA
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 233-9140
Mary Stone
National League of Cities
1301 Pennsylvania Avenue, NW
Washington, DC 20004
(202) 626-3030
Donald H. Stowe
Dravo Lime Company
3600 One Oliver Plaza
Pittsburgh, PA 15222
(412) 566-5574
Thomas Strang
Motor and Equipment Manufacturers Assn.
P.O. Box 13966
Research Triangle Park, NC 27709-3966
Roger Strelow
Bechtel Corporation
50 Beale Street
San Francisco, CA 94105
(415) 768-2759
Donna Strumbel
East Ohio Gas Company
1717 E. Ninth Street, Room 826
Cleveland, OH 44114
(216) 736-5359
Russell Sturm
International Institute for Energy Conservation
750 1st Street, NE, Suite 540
Washington, DC 20002
(202) 842-3388
Page C-28
Appendix C — Participants
-------
Participants
(continued)
George Sugiyama
Pilsbury, Madison & Sutro
1667 K Street, NW, Suite 1100
Washington, DC 20006
(202) 463-2382
Margaret Sullivan
U.S. - Asia Environmental Partnership
1133 20th Street, NW, Suite 300
Washington, DC 20036
(202) 835-0333
Robert Sullivan
JAYCOR
1608 Spring Hill Road
Vienna, VA 22182
(703) 847-4008
Eric Summers
Science and Policy Associates, Inc.
West Tower, Suite 400, 1333 H Street, N.W.
Washington, DC 20005
(202) 789-1201
Rupert Surcouf
Energy and Environmental Sales Corporation
650 Poydras, Suite 2045
New Orleans, LA 70130
(504) 523-1509
Nancy Sutley
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-4123
George Sverdrup
Battelle Memorial Institute
505 King Avenue
Columbus, OH 43201-2693
(614) 424-5014
Kevin T. Swift
Chemical Manufacturers Association
2501 M Street, NW
Washington, DC 20037
(202) 887-1286
John Tallmadge
Clean Air Network
Yuji Tanaka
Cosmo Oil of U.S.A., Inc.
280 Park Avenue, 22nd Floor, East Building
New York, NY 10017
(212) 949-9710
Jake Tarr
Arete Ventures
6110 Executive Boulevard
Rockville, MD 20852
(301) 881-2555
Grant Taunton
Human Resources Consulting Services
314 S. Smedley Street
Philadelphia, PA 19103
(215) 893-9383
Lawrence Taylor
Envirotest Systems, Inc.
2002 Forbes Boulevard
Tucson, AZ 85745
(602) 620-1500x427
Valerie Taylor
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-0880
Paul Templet
Louisiana State University
11831 Pride Point, Hudson Road
Zachary, LA 70791
(504) 388-6428
Kenneth Thomas
Horiba Instruments, Inc.
3901 Varsity Drive
Ann Arbor, MI 48108
(313) 973-2171
Louis Thomas
Columbia Gas
200 Civic Center Drive
Columbus, OH 43216
(614) 460-6801
Gary Threatt
A.O. Smith Water Products Co.
Highway 1 North, P.O. Box 600
McBee, SC 29101
(803) 335-8281
Appendix C — Participants
Page C-29
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Participants
(continued)
Susan Tierney
U.S. Department of Energy
Forrestal Bldg., 1000 Independence Avenue, SW
Washington, DC 20585
(202) 586-5800
Maria Tikoff
U.S. EPA
401 M Street, SW
Washington, DC 20460
(703) 233-9178
Rex Tingle
AFL-CIO
815 16th St., NW, Room 704
Washington, DC 20006
(202) 637-5203
Yves Tondeur
Triangle Labs
6320 Quadrangle Drive # 240
Chapel Hill, NC 27510
493-0877
Jeffrey Tranen
New England Electric Systems
25 Research Drive
Westborough, MA 01582
(508) 366-9011
David Trossman
Alex, Brown & Sons, Inc.
135 East Baltimore Street
Baltimore, MD 21202
(410) 783-5330
Whitney Truelove-Cranor
U.S. EPA
Judiciary Square
2805 Jefferson Davis Highway
Arlington, VA 22202
(703) 233-9036
Jose A. Trujillo
K&M Engineering & Consulting Corporation
2001 L Street, NW, Suite 500
Washington, DC 20036
(202) 728-0390
Hank Trzcinski
Advantage Plus Analysis Corporation
8503 Marquette Street
Vienna, VA 22180
(703) 573-2441
Norman Umberger
ViGYAN Inc.
5203 Leesburg Pike, Suite 900
Falls Church, VA 22041
(703) 931-1100
Hiroyuki Umetani
Teijin America, Inc.
10 East 50th Street
New York, NY 10022
(212) 308-8744
Kenneth Underwood
AeroVironment, Inc.
222 E. Huntington Drive
Monrovia, CA 91016
(818) 357-9980
Richard Vaccaro
Killam Associates
27 Bleeker Street
Millburn, NJ 07041
(201) 912-2455
Rene Van Breusegen
Schriebner, Grana, & Yonley Inc.
271 Wolfner Drive
Saint Louis, MO 63026
(314) 349-8399
Amy Van Kolken
Michigan Department of Natural Resources
P.O. Box 30028
Lansing, MI 48909
(517) 373-7040
Jeffrey W. VanSant
New England Power Company
Michael P. Vanderbergh
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-7960
Lynn Vendinello
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-8612
Page C-30
Appendix C — Participants
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Participants
(continued)
Laura Viani
American Metal Market
601 13th Street, NW, Suite 520 South
Washington, DC 20005
(202) 639-6931
Karen von Clef
Veriflo Corp.
250 Canal Boulevard
Richmond, VA 94804
(215) 340-0756
Carol Vukmanic
USAir, Inc.
Pittsburgh International Airport, PIT/K125
Pittsburgh, PA 15231
(412) 747-3084
James S. Wallis
Scott Specialty Gases, Inc.
6141 Easton Road, P.O. Box 310
Plumsteadville, PA 18949
(215) 766-8861
William Walsh
Greenpeace
1436 U Street, NW
Washington, DC 20009
(202) 319-2491
Anthony Walters
Environmental Systems & Solutions, Inc.
3100 33rd Place, NW
Washington, DC 20008
(202) 966-6698
Bruce Warden
IT Analytical Services
11499 Chester Road
Cincinnati, OH 45246
(513) 782-4600
Ann Watkins
U.S. EPA
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 233-9113
Denise Watts
City of Irvine
1 Civic Center Plaza
Irvine, CA 92713
(714) 724-7322
Michael J. Wax
Institute of Clean Air Companies
1707 L Street, NW
Washington, DC 20036
(202) 457-0911
Wendy Webb
GE Plastics
One Plastics Drive
BurkviUe, AL 36752
(205) 832-5611
Henry Weber
H & W Management Science Consultants
415 East 52nd Street, Suite 1D/C
New York, NY 10022
(212) 355-1448
Richard A. Wegman
Garvey, Schubert, & Barer
1000 Potomac Street, NW, Suite 500
Washington, DC 20007
(202) 965-7880
Abbie Weiner
Lean Power Corporation
8700 Georgia Avenue
Silver Spring, MD 20910
(301) 588-2200
Stephanie Weisband
Advanced Sciences, Inc.
2000 N. 15th Street, Suite 407
Arlington, VA 22201
(703) 243-4900
Roy Weiskircher
USX Corp.
Room 2206 USX Tower, 600 Grant Street
Pittsburgh, PA 15219
(412) 433-5914
Ellyn Weiss
Foley, Hoag, & Eliot
1615 L Street, NW, Suite 850
Washington, DC 20036
(202) 775-0600
Jeff Wells
EPA
401 M Street, SW
Washington, DC 20460
(202) 260-6787
Appendix C — Participants
Page C-31
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Participants
(continued)
John Wells
The Bruce Company
501 3rd Street NW, # 260
Washington, DC 20001
(202) 434-9358
Jonathan Welsh
Welsh Technologies
P.O. Box 4214
River Edge, NJ 07661
(201) 489-3465
Jeffrey Wendle
CET Engineering Services
1240 North Mountain Road
Harrisburg, PA 17112
(717)541-0622
Vaughn Whatley
EPA Region 8
999 18th Street, Suite 500, 8-OEA
Denver, CO 80521
(303)294-1111
J.E. Wheeler
Eclipse Inc.
1665 Elmwood Road
Rockford, IL 61103
(815) 877-3031
Mary Margaret Whipple
Washington Metro Area Transit Authority Board
2100 Clarendon Boulevard, Suite 300
Arlington, VA 22201
(703) 358-3130
Paul White
Johnson Matthey Corporation
460 East Swedesford Road
Wayne, PA 19087-1880
(215) 971-3118
John P. Whitescarver
Carter & Burgess
P.O. Box 16525
Washington, DC 20047
(703) 471-9196
Mary Lynn Wilhere
DR1/ McGraw-Hill
1200 G Street, NW, 10th Floor
Washington, DC 20005
(202) 383-3544
Paul Wilkinson
American Gas Association
Richard D. Wilson
U.S. EPA
401 M Street, SW
Washington, DC 20460
(202) 260-7645
Sherie Winston
Engineering News Record
1200 G Street, Suite 1100
Washington, DC
(202) 383-2255
John Wisniewski
Export-Import Bank of the United States
811 Vermont Avenue, NW
Washington, DC 20571
(202) 566-8802
Rosemary Wolfe
U.S. EPA
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 233-9176
Carol Woodyard
The Clean Air Review
10400 Whitestone Road
Raleigh, NC 27615
(919) 870-1845
Mitch Wool
Geraghty & Miller
555 Clyde Avenue
Mt. View, CA 94043
(408) 961-5700
Bob Wright
MG Refining & Marketing, Inc.
1000 Louisiana, Suite 1000
Houston, TX 77002
(713) 759-0510
Lloyd Wright
U.S. EPA
Judiciary Square
501 3rd Street
Washington, DC 20005
(202) 233-9191
Page C-32
Appendix C — Participants
-------
Participants
(continued)
Sergey Yakubov
Russian Embassy
1125 16th Street, NW
Washington, DC 20036
(202) 347-5031
Helen Yoest
Entropy, Inc.
P.O. Box 12291
Research Triangle Park, NC 27709-2291
(919) 781-3550
Marcia Zalbowitz
EV Inside
1915 Kalorama Road, NW #102
Washington, DC 20009
(202) 387-6185
Joseph Zeigler
Joy Environmental Technologies Inc.
10700 N. Freeway, Towerpark North
Houston, TX 77037
(713) 878-1037
Stanley Zwicker
Dames & Moore
911 Wilshire Boulevard
Los Angeles, CA 90017
(213) 683-1560
Appendix C — Participants Page C-33
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