NEWS RELEASE                                   JULY 2010

$14 Billion Market for FGD Equipment and Consumables

Revenues for equipment, repair parts and consumables to remove SO₂ from power plant stacks around the world will increase to over $14 billion in 2011 up from $13.2 billion in 2010.  This is the forecast in the McIlvaine online report FGD Markets and Strategies.  www.mcilvainecompany.com

Fifty percent of the expenditures will be for reagents and repairs.  The reagents include lime, limestone, dibasic acid, sodium hydroxide and polymers.  Repair parts include pump impellers, nozzles, valves, mist eliminators, agitators, filter belts, piping, instrumentation and linings. Many FGD systems installed in the 1970s and 1980s are undergoing major repairs and upgrades.

The activity in installation of new FGD systems is split between retrofitting of existing power plants and new coal-fired power plants. The new plants are primarily in Asia while the retrofits are primarily in the U.S. and eastern Europe.  Most of the new installations will be wet systems using a calcium reagent.  About 15 percent of the systems will be semi dry or dry and will use lime.  A small number of systems will use ammonia or other reagents.

                               World FGD System Revenues ($ Millions)

Subject                       2010                2011

Dry Lime                        781                  830

Other                              226                  239

Wet Calcium               5,690               6,066

Total                           6,697               7,135

The market is growing fastest in India but from a small base.  China continues to lead the world in both new installations and in the total installed base of systems.  Its installed base passed by the previous leader (the U.S.) in 2009.  China also has the largest repairs and consumables market due not only to the large installed base but to the inadequacy of some of the original parts choices.  China is moving along the same path traveled by the U.S. which found it necessary to renovate many of the early systems.

There are substantial opportunities for innovative technology.  The SO₂ can be converted by ammonia scrubbing into ammonium sulfate.  This fertilizer is in high demand in some areas.  The ability of some scrubbing systems to remove toxic pollutants along with SO₂ presents opportunities for multi-pollutant removal.  Where high chlorine coals are available, salable 30 percent hydrochloric acid can be produced along with gypsum.  SO₂ scrubbing requires considerable parasitic energy, so innovations which can reduce this energy consumption will be of interest.

The U.S., despite climate change pressures, will be spending another $20 billion for new FGD systems over the next eight years.  There are several drivers including:

·         A new air toxic rule which will limit HCl and cause the installation of scrubbers to remove both acid gases

·         Pressure by individual states to meet fine particulate ambient air limits 

(SO₂ reacts with other air contaminants to form these fine particles)

·         Requirements to remove mercury (SO₂ scrubbing also removes mercury)

·         New Clean Air Act amendments which will address SO₂ along with other emissions

·         The need to remove SO₂ prior to carbon capture.

This $20 billion is only the expenditure to retrofit existing power plants without scrubbers and does not take into account the expenditures on FGD for new coal-fired plants.  It is unlikely that many new coal-fired generation power plants will be built in the U.S.