Testimony of Frank Alix before the Senate Committee on Environment and Public Works Subcommittee on Clean Air, Wetlands, and Climate Change, January 29, 2002

 

Chairman Lieberman and distinguished members of the Senate Subcommittee on Clean Air, Wetlands, and Climate Change, thank you for the opportunity to share Powerspan’s perspective on compliance options for electric power generators to meet new limits on carbon and mercury emissions contained in S. 556.

 

My name is Frank Alix and I am the Chairman and Chief Executive Officer of Powerspan Corp.

 

Powerspan is a clean energy technology company headquartered in New Hampshire.  Our company was founded in 1994 and has grown to employ 50 scientists, engineers and other high-tech workers.  In order to fund technology development, the company has raised over $29 million to date from private, institutional, and corporate investors. 

 

Over the past four years, we have focused our resources on developing and commercializing a patented multi-pollutant control technology for coal-fired electric generating plants called Electro-Catalytic Oxidation, or ECO^TM.  Our ECO technology is designed to cost-effectively reduce emissions of sulfur dioxide (SO₂), nitrogen oxides (NO_x), mercury (Hg), and fine particles (PM_2.5) in a single, compact system.  Several leading power generators are investors in the company or partners in ECO development.  These include FirstEnergy, American Electric Power, Cinergy, Ameren, and Allegheny Energy.  In addition, the Department of Energy recently issued Powerspan a $2.25 million Cooperative Agreement to demonstrate the mercury removal capabilities of ECO under various conditions. 

 

We have successfully tested our ECO technology in a 2-megawatt slipstream of a coal-fired plant owned by FirstEnergy.  During this testing, ECO reduced emissions of mercury to below minimum detectable limits, representing an 81% reduction from incoming mercury levels.  In addition, recent testing indicates that our ECO technology is capable of reducing sulfur dioxide by 99 percent and nitrogen oxides by 90 percent, thereby providing Best Available Control Technology—or BACT— removal levels in a single, multi-pollutant control system.  Furthermore, ECO produces a commercially valuable fertilizer byproduct, avoiding the need for large, new landfill disposal sites to accept flue gas desulfurization (FGD) waste.  Finally, our commercial cost estimates indicate that ECO capital and operating costs will be about half of the combined costs of FGD and selective catalytic reduction (SCR) systems, which are the closest alternative technologies for reducing SO₂ and NO_x emissions.

 

Powerspan has begun installation of our first commercial ECO demonstration in a 50-megawatt slipstream at FirstEnergy’s Burger Plant near Shadyside, Ohio.  The project is being co-funded by a $3.5 million grant from the Ohio Coal Development Office within the Ohio Department of Development.  Successful completion of this demonstration in early 2003 will lead to the availability of full-scale commercial ECO systems beginning in 2005. 

 

As you consider compliance options for power generators to meet new limits on emissions of carbon and mercury, I would like to make the following points on the potential impact of new technology and the important role that regulations can play in promoting new technology:

 

1. Environmental technology development is driven by environmental regulations.  Regulatory certainty and time are important factors that impact the degree to which environmental technology is deployed.
2. The cost of achieving environmental compliance is usually significantly less than estimated at the time regulations are developed.
3. Environmental regulations are not all created equal.  Some are more likely to spur innovation than others.

 

Let me briefly address each of these points.

 

• Both the electric generating industry and the environmental technology community need long-term certainty in environmental regulation.  For the capital-intensive electric generating industry, long-term regulatory certainty allows for the orderly improvement of generating assets without undue financial risk or threat to the availability of electricity supplies.  For the technology community, regulatory certainty provides the incentive and time to deploy resources to develop and commercialize new technology that will meet the regulatory goals in the most cost-effective manner possible.

 

• In the process of crafting environmental legislation, the cost associated with the law’s implementation is normally evaluated.  These cost assessments are inevitably based upon what is known or commercially proven at the time.  The objective of technology developers, however, is to make what is known and commercially proven obsolete.  This they do on a regular and dependable basis.  Therefore, it is important to remember that, given time, technology developers will ensure that environmental compliance costs are far less than predicted today.

 

• Our ECO technology could provide the environmental benefits of reductions in a number of air emissions, including mercury, years ahead of a typical regulatory schedule, and at a much lower cost than conventional pollution control technologies.  However, the existing regulatory requirements significantly limit the generating industry’s compliance flexibility, thereby making the use of lower cost, multi-pollutant approaches less viable.

 

Air regulations traditionally limit the emissions of a single pollutant independent of other regulated pollutants.  Thus, a plant owner may need to install NOx controls today, Hg controls in five years, and SO₂ controls in ten.  This approach does not serve the plant owner well, as it could require three separate outages to install control equipment; and it does not promote the use of more affordable multi-pollutant control technologies.  Therefore, it is important that new regulations require that all regulated emissions be reduced during a similar, overlapping timeframe.

 

• Another potential problem with air regulations is that some reductions are made early, when credit is given for early compliance, and the remainder are made at the last possible moment to achieve compliance deadlines.  While this makes good business sense for power generators, it puts the air pollution control industry in a feast or famine mode, and limits the available window to deploy new technologies.  Therefore, I recommend a staged reduction approach for all new emission limits.

 

·       Lastly, while there are many uncertainties related to mercury and carbon control technologies, one thing is certain.  Until you require emission reductions, there will never be a commercially available control technology. 

 

The extent to which mercury and carbon reductions can be made without threatening the availability of electricity supplies is also uncertain.  However, the innovative use of ratchets, circuit breakers, and tolls may provide a reasonable approach to achieve the best possible outcome.  With a ratchet, emission limits are continually reduced as long as the cost of reduction does not exceed a preset limit.  With a circuit breaker, a stringent emission limit is set, but the EPA could provide relief if the compliance cost exceeds a certain threshold.  And the toll, which might be best applied to carbon emissions, assigns a cost per unit emitted and thereby results in predictable compliance costs while, at the same time, providing a financial incentive to reduce emissions.  One or more of these features, when combined with a cap and trade framework, could achieve the clean air goals desired at the lowest cost and with the least risk.

 

In summary, I believe that increasing our energy supply, and at the same time, improving our environment is not only possible, but also imperative for the future well-being of our society.   Fortunately, our nation is blessed with an innovative and entrepreneurial spirit that will rise to such challenges.  I believe that political leaders must exercise a degree of faith in order to establish the environmental laws that look out over a decade or more to protect public health.  Given time and the right regulatory framework, the technology community will find an economical way to achieve the desired environmental benefits.  History has demonstrated this time and again.  And there are many companies like Powerspan full of talented individuals who are dedicated to this goal.