&EPA
United States Industrial Environmental Research EPA 600 7 78 092
Environmental Protection Laboratory Junf 1978
Agency Research Triangle Park NlC 2771 1
Research
and Development
and Cost
Projections for Air
Pollution Control
Equipment
nteragency
Energy/Environment
R&D Program Report
-------
RESEARCH REPORTING SERIES
Research reports of the Office of Research and Development. U.S. Environmental
Protection Agency, have been grouped into nine series. These nine broad cate-
gories were established to facilitate further development and application of en-
vironmental technology. Elimination of traditional grouping was consciously
planned to foster technology transfer and a maximum interface io related fields.
The nine series are.
1. Environmental Health Effects Research
2. Environmental Protection Technology
3. Ecological Research
4. Environmental Monitoring
5. Socioeconomic Environmental Studies
6. Scientific and Technical Assessment Reports (STAR)
7. Interagency Energy-Environment Research and Development
8. "Special" Reports
9. Miscellaneous Reports
This report has been assigned to the INTERAGENCY ENERGY-ENVIRONMENT
RESEARCH AND DEVELOPMENT series. Reports in this series result from the
effort funded under the 17-agency Federal Energy/Environment Research and
Development Program. These studies relate to EPA's mission to protect the public
health and welfare from adverse effects of pollutants associated with energy sys-
tems. The goal of the Program is to assure the rapid development of domestic
energy supplies in an environmentally-compatible manner by providing the nec-
essary environmental data and control technology. Investigations include analy-
ses of the transport of energy-related pollutants and their health and ecological
effects, assessments of. and development of. control technologies for energy
systems, and integrated assessments of a wide range of energy-related environ-
mental issues.
EPA REVIEW NOTICE
This report has been reviewed by the participating Federal Agencies, and approved
for publication. Approval does not signify that the contents necessarily reflect
the views and policies of the Government, nor does mention of trade names or
commercial products constitute endorsement or recommendation for use.
This document is available to the public through the National Technical Informa-
tion Service. Springfield. Virginia 22161.
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EPA-600/7-78-092
June 1978
Research and Development
and Cost Projections for
Air Pollution Control Equipment
by
R.W. Mcllvaine and Marilyn Ardell
The Mcllvaine Company
2970 Maria Avenue
Northbrook, Illinois 60062
EPA Purchase Order No. DA-7-6086A
Program Element No. EHE624A
EPA Project Officer: Dale L Harmon
Industrial Environmental Research Laboratory
Office of Energy, Minerals, and Industry
Research Triangle Park. NC 27711
Prepared for
U.S. ENVIRONMENTAL PROTECTION AGENCY
Office of Research and Development
Washington, DC 20460
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ABSTRACT
Utilizing a large and unique data base, the researcher has developed a
methodology for projecting the installed cost of air pollution control
equipment annually through the year 1982. Projections are made for the
installed cost of fabric filters and electrostatic precipitators for the
removal of particulate matter and for the installed cost of scrubbers for
the removal of particulate and oxides of sulfur.
Similar projections are made for annual research and development expend-
itures by manufacturers of scrubbers, electrostatic precipitators, and
fabric filtration systems.
Differences in the reported projections and those made routinely by
other organizations are explained in light of the size of the researcher's
data base, which is reported to be considerably larger than other similar
data bases.
n
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CONTENTS
Abstract ii
Tables jv
1. Introduction 1
Objective and Scope 1
General Clarifications 1
2. Conclusions 4
3. Recommendations 5
4. Installed Cost Projections - 1976 through 1982 6
Industrial Air Pollution Control Equipment Costs .... 6
Industrial Expenditures 7
Utility Particulate Control Equipment 8
Fabric Filter Sales by Company Size 11
Utility S0x Control 11
Industrial Boiler SO Control 13
/\
Total Installed Costs for Air Pollution
Control Equipment 13
A Discussion of Discrepancies with Other Published Data 15
5. Research and Development Expenditures - 1976 through 1982 . . 16
Survey Procedures 16
Survey Response 17
R & D Expenditures by Manufacturing Group 17
Annual Expenditures for Research and Development .... 19
Possible Survey Discrepancies 21
References 23
Appendix A - Research and Development Questionnaire 24
ill
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TABLES
Number Page
1 Industrial Air Pollution Control Equipment Costs 7
2 Industrial Expenditures 8
3 Utility Particulate Control Costs 10
4 Fabric Filter Expenditures 11
Utility SO Expenditures
6 Industrial Boiler SO Control Expenditures 13
7 Installed Costs of Air Pollution Control Equipment 14
8 Percent of Flange-to-Flange Cost Spent on R & D by
Each Reporting Company 18
9 R & D Expenditures by Scrubber Manufacturers 18
10 R & D Expenditures by Precipitator Manufacturers 19
11 R & D Expenditures by Fabric Filter Manufacturers 19
12 Yearly R & D Expenditures by Scrubber Manufacturers 20
13 Yearly R & D Expenditures by Precipitator Manufacturers .... 20
14 Yearly R & D Expenditures by Fabric Filter Manufacturers ... 21
15 Adjustments to R & D Expenditures Due to Survey Discrepancies . 22
iv
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SECTION I
INTRODUCTION
OBJECTIVE AND SCOPE
Most air pollution control equipment market forecasts are based upon
projections derived from generally available data. Exceptions to this are
the projections made by the Industrial Gas Cleaning Institute (IGCI) and the
Department of Commerce (DoC) which are based upon data obtained from individ-
ual companies. However, both IGCI and DoC statistics are derived from a
fairly limited sampling of manufacturers.
The Mcllvaine Company, in pursuit of its publishing activities, has
developed a large and unique data base that has been successfully employed
to calculate installed costs and to project research and development expendi-
tures in the air pollution control field. Data are obtained on a continuing
basis from nearly every manufacturer of air pollution control equipment.
Projections are thereby based upon a statistical population that approaches
the real population. Thus differences between Mcllvaine projections and
those of other organizations should be weighed primarily in light of the
size of the respective data bases.
GENERAL CLARIFICATIONS
There follows a discussion of the basic assumptions and certain spe-
cific clarifications that are necessary to understanding the material pre-
sented.
Prices
All prices given for 1977 and future years are reported in 1977 dol-
lars. To obtain actual dollar values, an inflation factor should be added.
Chronology
Data are furnished relative to the year in which orders were placed, or
in other words "bookings" as opposed to shipment year or year of operation.
-------
Generally, the cash flow from purchaser to manufacturer begins within six
weeks following the formal order placement and continues for months after
installation of equipment. Purchasers often withhold as much as 10
percent of the total contract until the equipment is adequately demonstrated
which would typically be six months after startup. Initial payments are
made for engineering work on larger orders. Cash flow generally peaks
around the time of shipment of the major components. Thus, actual cash flow
figures are 6-18 months subsequent to booking figures. Booking figures have
been used because they have a specific identifiable date, whereas shipment
and startup dates are not readily identifiable.
Industrial Oxides of Sulfur
Figures for Industrial SO removal include only industrial boilers.
Many other industrial sources will incorporate SO removal equipment. They
J\
include smelters, sulfuric acid plants and a wide variety of dryers, cal-
ciners and furnaces that use fuel with some sulfur. However, much of the
pollution control equipment being operated is primarily removing particu-
lates and other gases so that the removal of SO is accomplished along with
the removal of other contaminants. Due to the diversity and lack of clarity
estimates have not been segregated for non-boiler industrial SO but have
J\
been included with other pollutants.
Particulate
Particulate figures have been provided for the utility industry but
industrial boiler particulate has been combined with other contaminants
under "Industrial Air Pollution Control."
Flange to Flange Equipment Costs
This includes equipment (scrubber, fabric filter or precipitator)
without auxiliaries or in other words, the purchase price of the device from
the inlet to outlet flange. For example, the cost would not include the
main air moving fan but would include fans used with fabric filters for
reverse air cleaning of the bags.
Installed Costs
This includes equipment both primary and auxiliary, ductwork, founda-
tions, engineering, startup service and electrical controls and liquid
-------
clarification in the case of scrubbers. It does not include some other
total investment costs such as interest on the investment during construc-
tion and preparation of the site.
Oxides of Nitrogen
A portion of this project involved projection of installed costs of NO
flue gas treatment equipment as applied both to utility and industrial
boilers. However, no individual figures have been furnished because it is
the belief of the authors that no significant number of NO scrubbers will
be purchased for this prior to 1983. A demonstration project is scheduled
to be funded by the Environmental Protection Agency and will therefore
result in the purchase and installation of some equipment. But, unless
performance standards are instituted which would alter the present outlook,
no substantial purchases are likely. Japan has placed considerably more
emphasis on NO flue gas treatment and by contrast substantial equipment
expenditures can be expected in that country during the period under exami-
nation.
Oxides of Sulfur
Figures are supplied for SO removal with scrubbers. Any SO removal
f\ ^
with fabric filters or precipitators would therefore be in place of that
projected for scrubbers. Presently, the only likely method of S02 removal
with fabric filters is with the use of nahcolite. Other additives are
considered to be either too expensive or not feasible with present technol-
ogy. No nahcolite is presently available and no utilities are firmly com-
mitted to using nahcolite. After firm commitments are made, it will be
three to four years before mines will be opened and material will become
available.
The recent clean air amendments mandate best available technology. If
it eventually is decided to exclude nahcolite injection, which at best only
achieves 60-70 percent efficiency, then the amendments will have effectively
eliminated this alternative. If, on the other hand, it is determined that
nahcolite injection and fabric filters are an acceptable control technology,
eventual sales will be increased since the amendments legislate desulfuriza-
tion even on low sulfur coal installations.
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SECTION II
CONCLUSIONS
1. A methodology has been developed to produce projections of future
expenditures for research and development In the field of air pollution
control equipment. A similar methodology has been developed to project
estimates of installed costs of air pollution control equipment.
2. These methodologies have been employed to provide estimates of research
and development expenditures in the fabric filter, scrubber, and precipi-
tator industries for the years 1976 through 1982. Also, installed cost
estimates for the years 1976 through 1982 are provided for the following
specific applications:
Electrical Utilities Other Industries
SO NO Part SO N0v Part
X X • - • X X •
Fabric Filter X XX X
Scrubber X X X X X
Precipitator X X
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SECTION III
RECOMMENDATIONS
The Mcllvaine Co. recommends the EPA project officer use the research
and development expenditures and installed cost forecasts presented in this
report before referring to other published air pollution market projections
and forecasts. It is believed that the projections presented here are more
accurate because they are derived from a much larger data base than are
those made by other market forecasters.
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SECTION IV
INSTALLED COST PROJECTIONS - 1976 THROUGH 1982
INDUSTRIAL AIR POLLUTION CONTROL EQUIPMENT COSTS (Excluding Boiler SOx)
In order to determine installed costs for 1976 it was first necessary
to determine flange-to-flange equipment costs. This was accomplished by
obtaining actual figures in some cases, but more frequently from obtaining
the CFM reported by manufacturers in publicity releases and other published
data. This was supplemented by other data including sales estimates submit-
ted by manufacturers. Costs for equipment were then derived based on a cost
per CFM basis. This technique eliminated the need to use published installed
costs which in reality are often total investment costs and therefore mislead-
ing.
It was determined that there were two distinct trends. One involved
industrial boiler particulate control and the other involved other sources.
With a new emphasis on coal use, it is projected that by 1985 over 33 percent
of industrial energy will be supplied by coal-fired boilers as opposed to
only 18 percent now being supplied. It was further assumed that precipita-
tors would be furnished for 25 percent of the requirement for industrial
boiler particulate control and that scrubbers would be used for 35 percent
of the requirement and that fabric filters would be used for 40 percent of
the required capacity. These estimates reflect the recent trend away from
precipitators which have been historically used on this application.
It is projected that the nonboiler industrial segment will grow at a
considerably slower rate. Fabric filters are projected to increase at an 11
percent rate, precipitators at a 10 percent rate and scrubbers at a 12
percent rate. Total yearly figures, therefore, reflect the combined increase
of boiler and nonboiler expenditures. These figures are at odds with A. D.
Little's 1975 projection of an 11 percent increase in particulate control
equipment on a yearly basis from 1976 to 1985 and with Kidder Peabody's more
conservative estimate of only 7 percent. However, the figures in table 1
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TABLE 1. INDUSTRIAL AIR POLLUTION CONTROL EQUIPMENT COSTS
(Excluding Boiler SO )
1976 1977
1978 1979 1980
(Millions $)
1981 1982
FABRIC FILTER
Nonboiler
Expenditures
Industrial Boilers
TOTAL
SCRUBBER
Nonboiler
Expenditures
Industrial Boilers
TOTAL
PRECIPITATOR
Nonboiler
Expenditures
Industrial Boilers
TOTAL
$ 127.
2.
129.
44.
1.
45.
77.
5.
82.
0
0
0
0
0
0
0
0
0
141.
5.
146.
49.
2.
51.
84.
7.
91.
0
0
0
2
0
2
7
0
7
156.5
8.0
164.5
55.1
3.0
58.1
93.2
9.0
102.2
173.
12.
185.
61.
5.
66.
102.
10.
112.
7
0
7
7
0
7
5
0
5
192.8
20.0
212.8
69.1
6.0
75.1
112.8
11.0
123.8
214.
30.
244.
77.
8.
85.
124.
12.
136.
0
0
0
4
0
4
1
0
1
238.5
42.0
280.5
86.7
12.0
98.7
136.5
13.0
149.5
reflect some of the impact of energy conversion mandated by the clean air
amendments that was possibly not taken into account in the earlier studies.
Industrial boiler SO expenditures are given in table 6.
^
INDUSTRIAL EXPENDITURES
Flange-to-flange equipment costs from table 1 have been used to calcu-
late installed costs based on the following multipliers: Fabric Filters
2.22^ Scrubbers 4.5, and Precipitators 2.9. It is believed that these
multipliers are accurate on an average basis even though there is a wide
range for individual installations. Though flange-to-flange costs are the
same, installation costs are often much higher for retrofit installations
than for so-called green field installations. Size, materials of construc-
tion, and other factors also vary ratios between equipment and installed
costs for individual installations.
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TABLE 2. INDUSTRIAL EXPENDITURES
ORDER YEAR
FABRIC FILTER
1976
1977
1978
1979
1980
1981
1982
SCRUBBER
1976
1977
1978
1979
1980
1981
1982
PRECIPITATOR
1976
1977
1978
1979
1980
1981
1982
FLANGE TO FLANGE
(Millions $)
129.0
146.0
164.5
185.7
212.8
244.0
280.5
45.0
51.2
58.1
66.7
75.1
85.4
98.7
82.0
91.7
102.2
112.5
123.8
136.1
149.5
INSTALLED COSTS
(Millions $)
286.4
324.1
365.2
412.3
472.4
541.7
622.7
202.5
230.4
261.4
300.2
338.0
384.0
444.0
237.8
265.9
296.4
326.2
359.0
394.7
433.6
UTILITY PARTICULATE CONTROL EQUIPMENT
Separate calculations have been made for new and retrofit installa-
tions. For participate control on new boilers it has been assumed that
8
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66,000 megawatts of high sulfur coal burning boilers will be ordered by 1982
for installation by 1985. It has further been assumed that 67,000 megawatts
of low sulfur coal burning boilers will also be ordered by 1982. These
figures are in agreement with those contained in the Temple, Barker &
Sloane study.1
Fabric filters are more likely to be used with low sulfur coal because
of the higher resistivity which makes precipitation difficult. Also, when
flue gas desulfurization is required, the precipitator-absorber or scrubber-
absorber combination is more likely than a fabric filter-absorber combina-
tion. Therefore we project that the fabric filter will capture 45 percent
of the low sulfur installations but 0 percent of the high sulfur installa-
tions. Precipitators will be used for 45 percent of the low sulfur instal-
lations and 85 percent of the high sulfur installations. Particulate scrub-
bers will be used for 10 percent of the low sulfur installations and 15
percent of the high sulfur installations.
In addition to new units, particulate control on 8,000 megawatts yearly
of existing capacity has been estimated to bring units into compliance with
local regulations and for normal replacement. Both high and low sulfur coal
will be burned. In many cases, the additional particulate control will be
required because of the switch from high to low sulfur coal. Consequently,
we project 20 percent of these retrofit installations will include fabric
filters, 10 percent scrubbers and 70 percent precipitators.
Although no scrubbers were purchased specifically for particulate
control for utilities in 1976, Northern States Power has announced that it
will install scrubbers rather than precipitators on an additional 1,500
megawatts. We believe this a beginning of a trend back to scrubbers for
particulate control because of the much lower cost when particulate control
and flue gas desulfurization can be combined.
Also of great significance is the trend toward using lower efficiency
precipitators in systems where the precipitator precedes the flue gas desul-
furization unit. In the system slated for Bruce Mansfield No. 3, there is a
95 percent efficient precipitator to be followed by an absorber that will
remove S02 as well as capture 4-plus percent of the dust. This reduces the
precipitator size and cost by a very substantial amount.
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TABLE 3. UTILITY PARTICULATE CONTROL COSTS
TOTAL MW
YEAR 1,000
PRECIPITATOR
1976
1977
1978
1979
1980
1981
1982
SCRUBBER
1976
1977
1978
1979
1980
1981
1982
FABRIC FILTER
1976
1977
1978
1979
1980
1981
1982
10.8
12.55
19.0
23.35
26.4
29.9
1.8
2.2
3.3
4.2
4.8
5.5
1.2
3.4
4.3
5.65
7.45
8.8
10.6
CFM IN
MILLIONS
50.76
58.98
89.3
109.74
124.08
140.53
5.4
6.6
9.9
12.6
14.4
16.5
5.6
16.0
20.2
26.6
35.0
41.4
49.8
EQUIPMENT COST
MILLIONS $
110.0
139.6
162.2
245.6
301.8
341.2
386.5
9.5
11.5
17.3
22.0
25.2
28.9
18.3
51.9
65.7
86.3
113.8
134.4
161.9
INSTALLED COST
MILLIONS $
275.0
348.7
405.2
613.5
753.9
852.4
965.4
0
37.8
46.2
69.3
88.2
100.8
115.5
37.2
105.5
133.4
175.3
231.1
273.0
328.8
10
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FABRIC FILTER SALES BY COMPANY SIZE
In 1976 the Industrial Gas Cleaning Institute reported only $95 million
in fabric filter orders whereas this study shows $140 million--46 percent
more. This $140 million was derived from individual estimates of 100 com-
panies. The top ten companies sold 62 percent of the total whereas the
smallest fifty companies only sold 5 percent. But there were substantial
quantities sold by the second and third tier companies. IGCI members in-
cluded nine of the largest ten companies but only six of the second tier of
ten companies and only four of the third tier and none of the fourth tier.
It is believed that the figures in table 4 are consistent with IGCI data;
but because IGCI reports only on activities of 20 percent of the companies,
its figures are considerably lower than the actual industry totals.
UTILITY SO CONTROL
^
Orders for FGD equipment in 1976 were well over 1/2 billion dollars.
The flange-to-flange scrubber sales were in excess of $100 million. These
figures are much greater than those reported by IGCI. Our figures were
taken from reports in The Wet Scrubber Newsletters issued in 1976 and from
TABLE 4. FABRIC FILTER EXPENDITURES
COMPANY SIZE
Top 10
2nd 10
3rd 10
4th 10
5th 10
51-100
TOTAL
100
TOTAL CFM
(1,000's)
43,428
12,936
5,502
3,304
1,538
3,750
CFM x 1000
AVERAGE
4,343
1,294
550
330
154
75
EQUIPMENT COST
(1,000's $)
86,856
25,872
11,004
6,608
3,076
7,500
140,916
INSTALLED COST
(1,000's $)
192,820
57,435
24,428
14,670
6,828
16,650
312,831
% OF
TOTAL
62
18
8
5
2
5
11
-------
data compiled by PEDCo in their bi-monthly report to EPA. Totals of individ-
ual reports from the newsletter agree with the general figures supplied by
PEDCo and are therefore believed to be accurate.
IGCI figures are lower than actual sales because, (1) a number of large
flue gas desulfurization equipment manufacturers do not belong to IGCI, (2)
IGCI has recently formed an FGD division; and there may be some problem in
reporting because of the two categories (wet scrubbers and flue gas desul-
furization) under which an order could be classified.
Projected orders for new equipment are based on the assumption that
156,000 MW of FGD systems will be required by 1985 but that only 70 percent
of the required systems will be ordered by 1982. This is based on the
assumption that all new low sulfur coal-fired boilers will also require FGD
systems since the passage of the new Clean Air Amendments.
The forecast assumes that orders for FGD systems will peak in 1982.
Orders placed in that year will result in installations operating in 1985.
Since noncompliance penalties are to be imposed, it is assumed that the bulk
of the orders will be let in time to avoid such penalties.
TABLE 5. UTILITY SO CONTROL EXPENDITURES
Order
Year
1976
1977
1978
1979
1980
1981
1982
Compliance
Year
1979
1980
1981
1982
1983
1984
1985
MW x 1,000
11
8
12
18
20
24
27
Saturated
CFM x 1,000
33,000
24,000
36,000
54,000
60,000
72,000
81,000
Flange-to-Flange Installed Cost
Scrubber Cost S02 System
(Millions $) (Millions $)
101
72
108
162
180
216
243
674
480
720
1,080
1,200
1,440
1,620
12
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INDUSTRIAL BOILER SO CONTROL
/\
This market segment is very difficult to forecast because most indus-
trial companies are uncertain as to their plans. The biggest unknown is
whether they will use low sulfur coal. Although the shift to coal in gen-
eral is viewed as inevitable, the timing may be subsequent to the forecast-
ing period for some. It is assumed that new high sulfur coal installations
will utilize FGD equipment and that some older systems and some new lower
sulfur coal installations will also have FGD systems although the latter
number will be quite small.
As with the utility segment, it is forecast that the orders for these
systems will peak in 1982, based on compliance dates of 1984-85.
TABLE 6. INDUSTRIAL BOILER S0x CONTROL EXPENDITURES
Year
1976
1977
1978
1979
1980
1981
1982
MW
200
400
1,000
2,000
3,000
5,000
7,500
CFM x 1000
600
1,200
3,000
6,000
9,000
15,000
22,500
Equipment Cost
(1,000's $)
1,800
3,600
9,000
18,000
27,000
45,000
67,500
Installed Cost
(1,000's $)
19,800
39,600
99,000
198,000
297,000
495,000
742,500
TOTAL INSTALLED COSTS FOR AIR POLLUTION CONTROL EQUIPMENT
Because of the large investment in flue gas desulfurizaton equipment,
scrubbers represented over 50 percent of all expenditures in 1976. This
figure is projected to be slightly less than 50 percent in 1977, but to
increase to 55 percent by 1982. Precipitators will continue to lead fabric
filters but not by the historically wide margins of the past. In 1982,
expenditures by utilities will comprise 60 percent of the total expendi-
tures.
13
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TABLE 7. INSTALLED COSTS OF AIR POLLUTION CONTROL EQUIPMENT
(1,000's $)
FABRIC FILTERS
Utility Part.
Ind. Part.
Total
SCRUBBERS
Utility Part.
Ind. Part.
Utility SOX
Ind. SOX
Total
PRECIPITATORS
Utility Part.
Ind. Part.
Total
Total Equip.
1976
37,224
286,400
323,624
0
202,500
674,000
19,800
896,300
275,000
237,800
512,800
1,732,724
1977
105,468
324,100
429,568
37,800
230,400
480,000
39,600
787,800
348,700
265,900
614,600
1,831,968
1978
133,386
365,200
498,586
46,200
261,400
720,000
99,000
1,126,600
405,200
296,400
701,600
2,326,786
1979
175,263
412,300
587,563
69,300
300,200
1,080,000
198,000
1,647,500
613,500
326,200
939,700
3,174,763
1980
231,099
472,400
703,499
88,200
338,000
1,200,000
297,000
1,923,200
753,900
359,000
1,112,900
3,739,599
1981
272,976
541,700
814,676
100,800
384,000
1,440,000
495,000
2,419,800
852,400
394,700
1,247,100
4,481,576
1982
328,812
622,700
951,512
115,500
444,000
1,620,000
742,500
2,922,000
965,400
433,600
1,399,000
5,272,512
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A DISCUSSION OF DISCREPANCIES WITH OTHER PUBLISHED DATA
The Bureau of the Census issued its figures for 1976 in August 1977.2
There is a substantial difference between their estimates of orders received,
those presented in this report, and those of IGCI. The difference between
IGCI and Census figures can be only partly explained by differences in the
numbers of companies reporting. Only two very large precipitator manufac-
turers do not belong to IGCI, yet 1976 orders reported by IGCI are less than
50 percent of the $280 million reported by the Bureau of the Census.
The Bureau of the Census figures are based on flange-to-flange equip-
ment as are the IGCI figures. However, according to a Census spokesman, the
forms they send out are mailed to accountants who tend to submit total
contract prices rather than flange-to-flange prices. In fact, Census encour-
ages the reporting of available figures like contract prices rather than
imputed figures such as flange-to-flange prices that require difficult
calculations. Therefore, despite the fact that our estimates of 1976 precipi-
tator orders are considerably less than those of Census, it is believed that
the estimates presented are more representative.
Coincidentally, our figures and those of Census for fabric filters are
very close even though theirs are for 36 companies and ours are for 100.
Again, it is felt that this is because installation figures are included in
some of the Census numbers.
Our figures on scrubbers are higher. Again it is felt this is because
Census did not include scrubber orders of multiproduct companies such as
Combustion Engineering that are now quite active in flue gas desulfurization
systems. Our figures are for 150 companies, and Census included only 36
scrubber companies.
15
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SECTION V
RESEARCH AND DEVELOPMENT EXPENDITURES - 1976 THROUGH 1982
SURVEY PROCEDURES
Manufacturers of air pollution control equipment provide only a portion
of the research and development activity on their devices. Purchasers of
equipment either independently or through their associations do a substantial
amount of research and development of control equipment. This frequently
takes the form of grants or funding of demonstration projects by manufac-
turers. University research in these fields is also funded by purchasers.
Governmental bodies, and specifically the Environmental Protection
Agency, fund a great deal of research and development. Some of this work is
done by EPA personnel, but a larger quantity is performed by contractors.
These contractors include manufacturers, engineering firms, private research-
ers, universities and nonprofit institutes.
This study includes only those expenditures by equipment manufacturers;
however, the expenditures by the other above mentioned organizations are
more than equal to manufacturers' expenditures. For instance, the Electric
Power Research Institute has budgeted $55 million in research and develop-
ment expense for air quality control for the next five years. This is equiva-
lent to 40 percent of the entire amount to be spent by the manufacturers;
but since much of the EPRI work will be subcontracted to those same control
equipment manufacturers, the manufacturer's role is substantially greater
than that reflected in their research and development expenses. These con-
tract expenditures are treated as normal cost of sales associated with
revenue producing contracts.
Another type of research and development is extremely common but not
easily identifed. Manufacturers incorporate new ideas into actual full
scale installations. In effect, the customer pays for the research and
development. The jump from the idea to the full scale trial often results
16
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in expenses to the manufacturer in terms of field service labor and material
changes which are again treated as normal cost of sales.
To determine the actual research and development expenses by manufac-
turers, a survey was conducted. Approximately 150 companies were sent a
questionnaire which is included as appendix A. Manufacturers were asked to
supply figures on R & D expenses for two years 1977 and 1982. These
figures were expressed as a percentage of flange-to-flange equipment sales.
The tabulation of the results of this study are shown in tables 8 through 13.
SURVEY RESPONSE
A high percentage of the precipitator manufacturers responded to the
survey, but a relatively small percentage of fabric filter and scrubber
manufacturers responded. Individual responses are shown in table 8. This
is possibly because IGCI has recently conducted a survey of precipitator
manufacturers and they had the information more readily available.
Several very high percentages reported by a few manufacturers of
scrubbers and fabric filters could distort the totals. However, it is
believed that this does represent a true picture in that a few companies
tend to be the innovators. These few do a disproportionate amount of the
research and development. The philosophy of the other companies is that it
is better to let their competitors (frequently smaller companies) do the
innovating and that it is safer and more profitable to follow rather than
lead.
Table 8 also indicates that scrubber and fabric filter expenditures
are considerably higher than precipitator expenditures. It is not expected
that the precipitator industry will continue to expand. As a result, pre-
cipitators will gradually give way to other control methods. It is the
anticipation of this trend that has caused and will continue to cause com-
panies to reduce expenditures for precipitator research.
United States precipitator manufacturers are doing less research and
development than their foreign competitors. This may in part explain the
substantial inroads made by foreign companies in the U.S. market.
R & D EXPENDITURES BY MANUFACTURING GROUP
Tables 9, 10, and 11 list expenditures by groups. More than half the
companies are spending less than 2 percent of equipment sales on research
17
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TABLE 8. PERCENT OF FLANGE-TO-FLANGE COST SPENT ON
R & 0 BY EACH REPORTING COMPANY
SCRUBBER
1977
1
1
1.82
2
2
2.1
4
4
5
5
11
25
25
6.84
1982
-
2
2
2
2
2
1.5
6
2.5
3
2
10
20
4.6 Average
FABRIC
1977
1
2
2
3
3
22
5.5
FILTER
1982
2
2
2.5
1.5
3.5
6
2.9 Average
PRECIPITATOR
1977 1982
0
0
.4
.9
1.9 1
2
2
2
2
2
6.3
1.8 1
0
.5
.5
3
.5
35
1
2
2
3
3
.5 Average
TABLE 9. R & D EXPENDITURES BY SCRUBBER MANUFACTURERS
1977
Percent
From Table 8
0 - IX
1 - 2%
2-5%
5 + %
Companies
2
3
5
3
Percent
of Total
15
23
38
23
1982
Companies
0
7
2
3
Percent
of Total
0
58
17
25
18
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TABLE 10. R & D EXPENDITURES BY PRECIPITATOR MANUFACTURERS
1977
Percent From
Table 8
0 -
1 -
2 -
5 +
1%
2%
5%
%
Companies
4
6
0
1
Percent
Of Total
36
55
0
9
1982
Companies
4
4
3
0
Percent
Of Total
36
36
27
0
TABLE 11. R & D EXPENDITURES BY FABRIC FILTER MANUFACTURERS
Percent
From Table 8
0-1%
1 - 2%
2-5%
5 + %
1977
Companies
1
2
2
1
Percent
Of Total
17
33
33
17
1982
Companies
0
3
2
1
Percent
Of Total
0
50
33
17
and development. Since the average contract is several times the control
equipment sales price, research and development expenses expressed as a
percent of total sales are less than half the percentages shown in the charts.
ANNUAL EXPENDITURES FOR RESEARCH AND DEVELOPMENT
• Tables 12, 13, and 14 show the actual dollar expenditures for research
and development year by year for each of the three types of control equipment.
1977 expenditures for the three types are $23 million expanding to $41 mil-
lion in 1982. Note, however, that the expenditures as a percent of sales
are anticipated to decline. This is probably because of the belief by
the manufacturers that the market will not keep accelerating in the late
1980s.
19
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The approach used for tables 12 through 14 in the research end develop-
ment analysis has been made on a strictly statistical basis. The replies
received from manufacturers were assumed to be representative of both the
mean and average expenditure.
TABLE 12. YEARLY R & D EXPENDITURES BY SCRUBBER MANUFACTURERS
Year
1977
1978
1979
1980
1981
1982
TABLE 13.
Year
1977
1978
1979
1980
1981
1982
Equipment
Sales
(Millions $)
136.3
186.6
264.0
304.1
371.6
438.1
YEARLY R & D
Equipment
Sales
(Millions $)
231.3
264.4
358.1
425.6
477.3
536.0
Percent
R & D
6.84
6.39
5.94
5.49
5.04
4.60
EXPENDITURES BY PRECIPITATOR
Percent
R & D
1.80
1.74
1.68
1.62
1.56
1.50
R & D
Expenditures
(Millions $)
9.3
11.9
15.7
16.7
18.7
20.2
MANUFACTURERS
R & D
Expenditures
(Millions $)
4.2
4.6
6.0
6.9
7.4
8.0
20
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TABLE 14. YEARLY R & D EXPENDITURES BY FABRIC FILTER MANUFACTURERS
Year
1977
1978
1979
1980
1981
1982
Equipment
Sales
(Millions $)
197.9
230.2
272.0
326.6
378.4
442.4
Percent
R & 0
5.5
5.0
4.5
4.0
3.5
2.9
R & D
Expenditures
(Millions $)
9.9
11.5
12.2
13.1
13.2
12.8
POSSIBLE SURVEY DISCREPANCIES
It is quite possible that the survey reflects mean expenditures accu-
rately while not reflecting average expenditures. This is because the size
of each company reporting was not identified. Small companies entering the
field have high research and development expenses relative to sales. How-
ever, the total gross expenditure is small compared with that of the larger
manufacturers.
To pursue this approach additional calculations were made as shown in
table 15. Percentage averages were recalculated by eliminating the highest
reported expenditures. In the case of scrubbers two figures were excluded.
One each was dropped from the fabric filter and precipitator groups. This
approach substantially reduces projected 1977 expenses and also has an
important but lesser effect on 1982 expenditures.
To further study the validity of this hypothesis a supplemental study
would be required in which sizes of reporting companies are identified.
This could be somewhat difficult because of the reluctance of companies to
reveal dollar numbers as opposed to percentage figures.
21
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TABLE 15. ADJUSTMENTS TO R & D EXPENDITURES DUE TO
SURVEY DISCREPANCIES
1977 1982
Percent $ millions Percent $ millions
Scrubbers 3.5 4.8 2.5 10.9
Fabric Filters 2.2 4.4 2.3 10.2
Precipitators 1.3 3.0 1.4 7.5
22
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REFERENCES
1. Temple, Barker & Sloane, Inc. Economic and Financial Impacts of Fed-
eral Air and Water Pollution Controls on the Electric Utility Industry.
Wellesley Hills, Massachusetts. May 1976. PB 254 308.
2. Bureau of the Census. Selected Industrial Air Pollution Control Equip-
ment. 1976. MA-35J.
3. Various statistics reported by the Industrial Gas Cleaning Institute.
4. U.S. Department of Commerce. U.S. Industrial Outlook. January 1977.
5. The Mcllvaine Company. Wet Scrubber Newsletters, Fabric Filter Newslet-
ters and Precip Newsletters.
6. J. A. Klein and Kenneth Ch'uan-k'ai Leung. The Environmental Control
Industry, Kidder, Peabody & Co., Inc., December 1975.
7. Air pollution control manufacturers' net worth and sales figures were
obtained from The Mcllvaine Scrubber Manual, The Fabric Filter Manual,
The Electrostatic Precipitator Manual. The Mcllvaine Company.
8. Survey of Air Pollution Control Manufacturers, Research and Development
Expenses. The Mcllvaine Company.
9. Pedco Environmental, Inc. Summary Report - Flue Gas Desulfurization
Systems. Cincinnati, Ohio.
23
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APPENDIX A
RESEARCH AND DEVELOPMENT EXPENDITURE QUESTIONNAIRE
ELECTROSTATIC PRECIPITATOR
Research and Development Expense Estimate
TO: Mcllvaine Company
Definition of Research and Development: Projects not associated specifi-
cally with sales where anticipated revenue is a significant portion of the
total (in other words exclusion of R & D with customers' money) where the
primary goal is the improvement of the precipitator or the improvement of the
air pollution control process in which the precipitator is an integral part.
In other words pilot testing to determine applicability of a device to a proc-
ess would be considered R & D but only if the purpose were general and not
part of a specific proposal for the pollution source being piloted.
Definition of Cost of Research and Development: Yearly R & D expense
divided by yearly sales of precipitators on a flange to flange basis ex-
pressed as a percent. In other words if precipitators R and D for 77 is
$50,000 and flange-to-flange precipitator sales are $2,000,000 then R & D
cost percent would be 2 and 1/2 percent.
Estimates: Estimated 1977 Research and Development cost for precipitators
by my company expressed as a percent of flange to flange sales
percent.
Estimated 1982 Research and Development cost for precipitators by my company
expressed as a percent of flange-to-flange sales percent.
Tear off and send bottom half separately if complete anonymity is desired.
I have replied to the R & D questionnaire. Please see that I receive the
general published results.
Name
Company
Address
24
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TECHNICAL REPORT DATA
(Please read Inunctions on the ret crsc before completing)
REPORT NO.
EPA-600/7-78-092
2.
3. RECIPIENT'S ACCESSION NO.
4. TITLE AND SUBTITLE
Research and Development and Cost Projections for
Air Pollution Control Equipment
5. REPORT DATE
June 1978
6. PERFORMING ORGANIZATION CODE
7. AUTHORIS)
8. PERFORMING ORGANIZATION REPORT NO.
R.W. McDvaine and Marilyn Ardell
9. PERFORMING ORGANIZATION NAME AND ADDRESS
The McHvaine Company
2970 Maria Avenue
Northbrook, Illinois 60062
10. PROGRAM ELEMENT NO.
E HE 62 4 A
11 CONTRACT/GRANT NO.
EPA Purchase Order
DA-7-6086A
i:. SPONSORING AGENCY NAME AND ADDRESS
EPA, Office of Research and Development
Industrial Environmental Research Laboratory
Research Triangle Park, NC 27711
13. TYPE OF REPORT AND PERIOD COVERED
Final; 8/77-1/78
14. SPONSORING AGENCY CODE
EPA/600/13
15. SUPPLEMENTARY NOTES jjERL-RTP project officer is Dale L.
541-2925.
Harmon, Mail Drop 61, 919/
16. ABSTRACT
The report gives projections for the installed cost of fabric filters and
electrostatic precipitators (ESPs) for the removal of particulate matter and for the
installed cost of scrubbers for the removal of both particulates and sulfur oxides.
The projections, utilizing a large and unique data base, project the installed cost
of the equipment annually through the year 1982. Similar projections are made for
annual research and development expenditures by manufacturers of scrubbers,
ESPs, and fabric filtration systems. Differences between the reported projections
and those made routinely by other organizations are explained in the light of the
size of the McHvaine data base, reported to be considerably larger than other
similar data bases.
17.
KEY WORDS AND DOCUMENT ANALYSIS
DESCRIPTORS
b.IDENTIFIERS/OPEN ENDED TERMS
c. COSATi Held, Group
Air Pollution
Air Pollution Control
Equipment
Cost Estimates
Research
Development
Gas Filters
Gas Scrubbing
Fabrics
Electrostatic
Precipitators
Dust
Sulfur Oxides
Air Pollution Control
Stationary Sources
Research and Devel-
opment
Fabric Filters
Particulate
13 B 13K
07A,13H
11E
05A
11G
07B
3. DISTRIBUTION STATEMENT
Unlimited
19. SECURITY CLASS (This Rff>i"l>
Unclassified
21. NO. OF PAGES
29
20. SECURITY CLASS {'fliis page)
Unclassified
22. PRICE
EPA Form 2220-1 (9-73)
25
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