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Strategies for a Shrinking Air Pollution Controls Market

mcilDivestment, acquisition, international expansion and offering “total solutions” are four strategies that air pollution control companies can use to adapt to a shrinking market, says market research organization the McIlvaine Company.

Suppliers of air pollution control systems in the US have relied on huge purchases by owners of coal-fired boilers as the leading source of business since the 1920s.  More than 50 percent of US air pollution control purchases have been by the power companies.  However, there are not likely to be any new coal-fired boilers in the next decade. This creates a significant challenge but one that can be met, says McIlvaine.

The company has compiled a list of four strategies to attack the problem:

Divestment: One option for larger companies that operate in many different businesses is to sell their air pollution control division. Siemens did this with the sale of Wheelabrator to Foster Wheeler.

Aquisition: Another option is to diversify into non-power related industries. This was the route taken by Babcock & Wilcox when it purchased MEGTEC earlier this month. MEGTEC is a major air pollution control system supplier to the chemical industry and to many plants that utilize solvents.

International Expansion: The market for air pollution control systems in China is more than twice as large as the US market was at its peak. India is a generation or two behind China but has extensive needs.

Total Solutions: The world’s knowledge is “expanding geometrically, whereas individual ability remains relatively static,”says McIlvaine. The increasing knowledge gap can be eliminated through outsourcing. Suppliers of air pollution control systems can become the virtual operators of those systems. Remote monitoring of operations along with smart valves, pumps, neural networks, optimization software and many other digital innovations allow the offsite experts to perform at a level which was, heretofore, impossible.

Over 250,000 MW of coal-fired boilers will remain in operation in the US for the next forty years, McIlvaine and the Energy Department forecast. What McIlvaine calls “the absurdity” of retrofitting and upgrading ancient boilers is a political reality. It is also a very big opportunity. Building new boilers for the forty year run would be much less expensive. Instead, the large outlays for keeping the old fleet running can be converted to profits by the air pollution control companies.

In April, the US Supreme Court upheld an air pollution rule intended to reduce the amount of coal plant emissions that cross state lines.

In a 6-2 decision, the court backed the Cross-State Air Pollution Rule, adopted by the EPA in 2011, which set limits on sulfur dioxide and nitrogen oxide emissions from power plants in 28 Eastern states and Texas.

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