February 1, 2007

China FGD/SCR Program will have Big Impact on the World

Market

The Chinese effort to reduce power plant air pollution is bigger than that expended by any country ever. This is not to say that the emissions will be lower than in any country, but with the huge expansion of coal-fired boiler capacity and with the goal of decreasing rather than increasing pollution, the pollution control program is huge.

In the Thursday Hot Topic Hour Shiaw Tseng of Graymont summarized the FGD and DeNOx status and plans. He pointed out that there are now financial incentives as well as enforcement muscle to speed up compliance. His presentation plus interesting data on all the CFB scrubbers at the Yushe power plant are displayed on the website in the FGD Decision Tree at

Shiaw also summarized the activities and recommendations made at the Sino-American Conference. Shiaw led the U.S. delegation. The conferees made recommendations to the National Development and Reform Commission (NDRC) to achieve the environmental goals through more extensive use of CEMS data and both the tax incentives and electricity price increase allowance for plants which scrub.

Participants viewed a listing of 300 FGD units which are to be retrofitted to 180 plants between now and 2010. These units are all displayed in the Utility Environmental Upgrade Tracking System.

Lutz Bergmann of Filter Media Consultants told the participants that the Chinese market for dust collector bags is bigger than the entire European market. He indicated that the offshore media companies have a strong presence in China. BWF, Ahlstrom (Lantor) and others have facilities in China and are major players in the domestic Chinese market. Lutz has just completed a new report on media for dust collection and other separation uses. Details are found under air on our website at www.mcilvainecompany.com

The NO_x Control Market in China is in its infancy but will be big. Shiaw quoted government officials who want to move cautiously and avoid the mistakes which were made in the first wave of FGD systems. McIlvaine is presently projecting 150,000 MW of SCR by 2020.

Excerpts from the McIlvaine NO_x Control World Markets were then displayed to show that Chinese power plants will be emitting close to 50 percent of the world’s coal-fired NO_x in 2020.

World NO_x Control and Emissions in 2020

Participants discussed the impact of China on the world based on a series of questions.

How much impact will Chinese purchases have on U.S. availability of materials and equipment?  The impact is big now, and it will continue as China continues to invest in APC.

Will China be a laboratory for development of new technologies? The Yushe plant described by Shiaw Tseng is installing two of the largest CFB scrubbers ever built. There are many examples where China is the first to use new technology.

How low are the prices for FGD and other APC equipment in China? Is the push for more local content in APC products a wise move? Shiaw explained that the prices have dropped to 200 RMB or $25/kW for the scrubber island down from 500 RMB a few years ago.

Rich Staehle of Marsulex has lots of hands-on experience in the Chinese market. He is as perplexed as anyone at the low price levels. At this level the FGD suppliers with foreign licenses are not able to compete. The reliability of domestic systems with domestic components is questionable. Rich points out that many U.S. manufacturers of components have already set up shop in China and are supplying these components not only for the domestic market but for offshore markets as well. So it is likely that there is some Chinese content already in most of the FGD systems being installed in the U.S.

How profitable will the Chinese market be for domestic as well as offshore companies? How will this differ from the big surge in the 80s in Europe when lots of new companies entered the market and everyone lost money? If prices do not increase soon, there will be a reckoning. But Rich agreed with Bob McIlvaine’s premise that there will be lots of business in revamping and replacing the first generation of domestic designed systems.

How reliable and trustworthy will Chinese partners and licensees be? A number of participants weighed in on their positive dealings with Chinese companies and individuals. They are hardworking, intelligent and they execute their projects swiftly. Rich says that they can provide the manpower to move projects along at a rapid pace. They also, for better or worse, ignore some of the requirements for review which slow down projects elsewhere.

Will Chinese companies enter the world market? CCMP has purchased Wuhan Kaidi. So you have an offshoot of a major U.S. investment bank owning a large Chinese FGD company. The trend for developing countries to move on to the world stage is demonstrated by Doosan of South Korea. They purchased Babcock from Mitsui. This gives them boiler manufacturing capability in Scotland as well as offices and personnel in the U.S. and many other countries.

Will the availability of comprehensive information about companies and technology make the world flatter and eliminate some of the prejudice for buying local? McIlvaine thinks so and is moving forward to provide the Chinese with the information on the world’s technology.

McIlvaine takes issue with the government official who spoke at the DeSOx/DeNOx Conference and stated that the way to obtain more cost effective reduction of air pollutants was by increasing the local content of the systems. McIlvaine submits that the most cost effective choices will be provided by world suppliers. Some of these suppliers may be Chinese based and some may be offshore based with Chinese manufacturing capability. Some may be able to best compete with manufacturing in Europe or India.

This Hot Topic Hour has been recorded and is available to subscribers as follows:

http://www.mcilvainecompany.com/brochures/FGDnetoppbroch/hot_topic_hour.htm