The Sonti Report

Contact Information
“The Sonti Report” Issued by: Pat V. Sonti, Advisor P.O. Box 423 Short Hills, NJ 07078 USA Telephone: +1-973-467-2923 FAX: +1-973-665-2361 E-mail: pvsonti@comcast.net LinkedIn: www.linkedin.com/in/patvsonti Facebook: www.facebook.com/pat-v-sonti Twitter: twitter.com/patsonti You Tube: www.youtube.com/patvsonti

SM

A monthly newsletter covering global economy, energy, investments, life sciences, healthcare, food & water
Volume 1, Issue 2 December 2009

In This Issue
Page 2: Clean Energy Project Development in Current Economic Conditions. Page 7: Pharmaceutical Companies Ramp-Up on Contract Manufacturing. Page 9: Domestic U.S. Natural Gas; Transition Fuel for Cleaner, Smarter, & Secure Energy Future. Page 14: Addressing Fly Ash; A Sensible & Viable Approach.

Curtain Raiser
As the global economy is trying to recover from the Great Recession, there are major concerns on the resulting impact of quantitative easing by central banks in developed countries which have injected massive amounts of low interest capital into the financial markets in order to preclude deflation which occurred during the Great Depression. Currently, there is a major “carry trade” occurring wherein massive infusion of low interest funding is chasing various asset classes in emerging markets such as Brazil, China and India on the hope and potential that adequate returns from these countries can fund, finance and continue stock market rallies. It should be noted that this “massive speculation” is inflating asset bubbles in stocks, commodities, real estate, currencies, thus creating unavoidable risks for the recovery of the global economy including emerging markets. In such a case, it is vital to avoid a “depression-inflation” scenario based on the above “asset bubble” which may burst without much advance notice to investors. Simply, inflation occurs when too much money is chasing too few goods and services. A key underpinning factor to any tangible global economic recovery is the ability for countries to maintain economic dynamism based on their own innate capacity, urge and ability to invent / innovate / improvise solid job creation for products and services. In the case of the U.S., the current “carry trade” has never been fully tested before and is being undertaken by the Federal Reserve against the backdrop of unemployment rates as high as 17.5%, rising federal deficits and burgeoning national debt while domestic consumer demand, constitutes 70% of U.S. GDP, is not rebounding even with major stimulus funding. The energy sector is also undergoing a major transformation as traditional business and market fundamentals are on the verge of potential shift through proposed legislative means on climate change rather than through market mechanisms of developing and deploying advanced innovative technologies into projects and assets as in the case of India and China. Along these lines, it is imperative to clearly articulate, understand and appreciate clean energy project development and finance in the current economic conditions. Main goal must be to achieve sustainability of the sector. There is much emphasis on reducing the cost of prescription drugs, increase role of generics, and enhanced role of biotech. In addition, there is much attention on introducing new life saving molecules in key therapeutic areas through cost effective and efficient contract drug discovery, contract research, clinical trials and contract manufacturing. Thus, pharmaceutical companies are targeting their efforts on ramping up on contract manufacturing. Domestic natural gas is gaining much bipartisan support in U.S. Congress as a “bridge fuel” to a clean energy economy. There is full alignment between policymakers, regulators and industry on harnessing local natural gas supplies, conventional and non-conventional, in order reduce crude oil imports, achieve energy independence, and transition to increasing role of alternate / renewable energy. Based on advanced technological innovation of horizontal drilling and hydraulic fracturing, commercially proven methods exist today to enable the U.S. to meaningfully increase domestic natural gas supplies to meet increasing wholesale and retail demand from consumers across-the-board. Fly ash is a residue from coal fired power plants and its leakage from onsite storage ponds poses a serious environmental threat. Currently there are proven advanced innovative technologies to process fly ash and convert to beneficial byproducts which serve as a feedstock to cement industry, road construction materials and other viable uses. The U.S. Environmental Protection Agency is currently contemplating legislation to classify fly ash as a hazardous waste whereby beneficial methods for conversion may no longer be viable.

In Next Issue
     Smart Grid; Its Role in a Clean Energy Economy. Industrial Waste Energy Recovery; Makes Common Sense. Addressing Critical Issues Related to Clean Water. Electronic Health Records; Making Healthcare Reforms Effective. Marcellus Shale; Major Natural Gas Supply for Northeast U.S.

This newsletter has been prepared by; Pat V. Sonti, Advisor; co-author(s); or other contributing author(s), as so indicated in each article contained herein, and issued for private circulation at no cost and a on complimentary basis via e-mail. This newsletter covers insights, perspective, opinion, commentary, critique, analysis as well as research and other content. This newsletter utilizes certain information and / or data in the public domain and is referenced accordingly. This newsletter may contain confidential or proprietary information and / or data. No part of this document may be reproduced, copied or otherwise reproduced without prior written approval. Copyright 2009; All rights reserved worldwide by Pat V. Sonti, Advisor.

The Sonti Report
Volume 1, Issue 2

SM

December 2009

___________________________________________________________________________________________

Clean Energy Project Development in Current Economic Conditions
Pat V. Sonti, Advisor, Short Hills, New Jersey, USA and critical phases which if altered leads to unsustainable technologies and projects. Today, clean energy Based on recent trends, there is much enthusiasm on technologies which are being promoted are, including but promoting clean energy in the form of technologies and not limited to; solar, wind, biomass, biofuels, smart grid, projects. Politicians, bureaucrats, legislators and regulators and green buildings. as well as industry stakeholders have also embarked on promoting clean energy against the backdrop of tackling global climate change, reducing greenhouse gas (GHG) emissions and creating jobs as part of a new clean energy economy. Various international, regional and national level climate change legislation is being proposed and in some cases being seriously considered for enactment. Introduction

Source: World Energy Outlook, Intl. Energy Agency

There is no doubt in anyone’s mind that there is an ongoing “global recession” and the path to recovery is quite uncertain considering the recent financial meltdown which occurred is the worst in the post-World War II period. Significant debt burden and ongoing weak balance sheets across-the-board coupled with deleveraging continue to plague businesses and individuals while substantial liquidity has already been injected into financial markets by central banks as part of quantitative easing efforts. Meanwhile, any foreseen recovery is subject to other important economic and financial factors, including but not limited to, increasing federal / state budget deficits, double-digit unemployment, reduced consumer demand, increasing rate of bankruptcies, continued mass financial destructive effects of over-the-counter derivatives, collateralized debt obligations and credit default swaps. Key Fundamentals of Energy Projects

Source: i2bf.com

The above includes; combined heat & power (CHP), natural gas, commercial nuclear as well as clean coal and enhanced hydrocarbon recovery through carbon capture conversion and sequestration (CCCS). Successful energy project asset development follows three (3) critical phases:  Project Development (feasibility, permits & clearances, contracts, and financing).  Project Execution (engineering, procurement, construction, startup and commissioning).  Project Operations (facility operations, management, and operations).

The energy industry (conventional / alternate / renewable sources) is extremely complex, sensitively balanced and a highly integrated sector along its entire value chain and life cycle from raw materials to exploration, production, generation, transmission, and distribution to wholesale and retail consumers of fuels, feedstock, and electricity. In this context, the business and market fundamentals of energy Source: Pat V. Sonti, Advisor projects have always followed some very key fundamental ___________________________________________________________________________________________ Page 2

The Sonti Report
Volume 1, Issue 2

SM

December 2009

___________________________________________________________________________________________ Many well-minded enthusiasts such as project developers, investors to engage highly qualified consultants and promoters and investors as well as up and coming “clean & advisors with proven track record in project development. green” entrepreneurs are aiming to take advantage of the potential opportunities from the clean energy sector. In Sub-Phase 2; Permits & Clearances order to achieve true sustainability of projects, it is vital to address the critical phases of clean energy projects in light Covers; (i) federal, state and local permits; (ii) green-tag permits; and (iii) emissions and tax credits. During this of the current economic conditions. phase, regardless of the clean energy technology, some projects may face substantial public opposition such as “Not-In-My-Backyard-NIMBY” issues which must be foreseen and factored by project developers, promoters and equity investors. Sub-Phase 3; Transactional Contracts Covers; (i) Engineering-Procurement-Construction (EPC); (ii) Operations & Maintenance (O&M); (iii) fuel / feedstock supply agreements; (iv) product / commodity / offtaker agreements; and (v) other applicable agreements required for securing debt. The main focus and attention must be on maintaining and achieving back-to-back arrangements or “sacro-sanctity” between various project agreements and contracts. It is vital to demonstrate “bankability.” Contracts with creditworthy wholesale and retail customers and long-term offtakers will enhance chances of non-recourse debt financing from lenders. Such contracts include Power Purchase Agreements (PPA’s) and Energy Sales Agreements (ESA’s).

Source: www.matternetwork.com

Project Development This is the most critical phase of a project wherein technoeconomic feasibility and viability must be clearly demonstrated as well as obtaining the required federal / state / local permits and clearances. In addition, mandatory transactional agreements and contracts must be executed in order to ensure syndicating and securing of debt for achieving financial closure.

The cost of the project development phase depends on the type of clean energy technology, its complexity as well as its site location among the key factors. This major phase typically can range from $1 million to $5 million (estimated) from initial start to financial closure which must be funded by project developers, promoters and equity investors Very few projects can attract federal /state grants at the initial phases of a project. There are four (4) Source: www.ocrwm.doe.gov succinct sub-phases which make-up project development. Sub-Phase 1; Feasibility Covers; (i) conceptual, basic, preliminary and detailed engineering; (ii) Project Feasibility Report (PFR); (iii) Detailed Feasibility Report (DFR); (iv) Front-EndEngineering-Design (FEED); (v) Environmental Impact Studies (EIS) and; (vi) Commercial market studies, Risk assessment and mitigation analysis. During this phase, it is prudent for project developers, promoters and equity Sub-Phase 4; Project Financing Covers; (i) financial analysis and modeling; (ii) structuring of equity, grants and debt; (iii) critical inputs regarding equity and debt agreements through financial closing; (iv) comprehensive risk assessment mitigation & management report; (v) due diligence, syndicating and securing senior / subordinated debt, working capital, and financial closing costs. If non-recourse debt financing cannot be obtained, lender’s may opt for limited recourse financing by way

___________________________________________________________________________________________ Page 3

The Sonti Report
Volume 1, Issue 2

SM

December 2009

___________________________________________________________________________________________ collateralization and securitization of project assets and / or As a note of caution, any clean energy technology which is balance sheet(s) of project developers, promoters and utilized in a project must be commercially proven and the equity investors. It is important to understand and promoters, project developers, equity investors and lenders appreciate the wise saying; “if you cannot finance it, forget must avoid becoming “guinea pigs” for early stage, pilot or proof-of-concept technologies. Non-commercialized it.” This is especially true to clean energy projects. technologies will add to project risk and may impact not Project Execution only financing but also sustainability of the project itself. Project execution is also known as the design & build phase. During this critical phase, project promoters, equity Project Operations investors and lenders require supervision and management This phase covers facilities operation, management and of the EPC contractor throughout the entire process of maintenance, renovation & modernization, re-vamps and design-build-construction-startup-commercial operations upgrades. Various owner’s and lender’s engineer reports leading to plant commissioning. This is typically achieved are required during the execution and operations phases. It through engagement of an owner’s and / or lender’s should be noted that the operations and maintenance costs engineer. (OPEX) must be supported by a very detailed project financial model in MS-Excel to be mutually developed and agreed upon by the various equity and debt stakeholders.

Source: www.uvm.edu

Source: www.tinycomb.com

Continual monitoring of project critical path and milestone schedules is required upto commercial operation of the facility. In principle, any target total project cost structure for a single project follows the below items of hard costs and soft costs in addition to working capital and interest during construction. It should be noted that the total project cost (CAPEX) must be supported by a very detailed project financial model in MS-Excel to be mutually developed and agreed upon by the various equity and debt stakeholders.

Funding & Financing In Today’s Current Economic Conditions via Private-Public-Partnerships

As indicated earlier, the project development phase must be funded by the promoters, project developers and equity investors. In otherwords, balance sheet strength is essential for undertaking any clean energy projects. In today’s economic conditions, it is very difficult to fund the project development costs with debt in the form of either senior or subordinated debt including working capital lines of credit. Hard Costs In some cases, depending on the individual merits of the (i) Civil and structural and related costs; (ii) mechanical clean energy project, some projects may attract either equipment, process systems; (iii) electrical equipment and federal and / or state government matching grants. systems; and (iv) auxiliaries and ancillary equipment and Private-Public-Partnerships (P-P-P) process systems. Sources Funding & Financing Soft Costs
Equity Project developers, equity & tax investors/funds, and promoters Commercial banks, financial institutions, federal and state govt. agencies Federal and state govt. agencies, non-profits and foundations.

Debt (i) Pre-operative expenses (from initial project to commercial operations); (ii) preliminary expenses (legal, Working Capital accounting, statutory, corporate, insurance); (iii) turnkey Grants project engineering and management services; and (iv) technology(s) license fee (as applicable). The project Source: Various government and industry sources developments costs incurred are included in this category.

___________________________________________________________________________________________ Page 4

The Sonti Report
Volume 1, Issue 2

SM

December 2009

___________________________________________________________________________________________ The project execution phase, via CAPEX, must be funded via a debt-equity ratio of minimum 50:50 to 80:20 Project Structure maximum depending on the risk profile assessment and debt service coverage ratio (DSCR) as determined by the Design and implementation of a viable project structure is lenders. Syndication of the debt usually comprises of both vital to the success of any clean energy project. Below is a commercial banks and financial institutions; both public proven business model and structure for effective project sector and private sector. Depending on the balance sheet development along with funding and financing sources. strength and commercial market fundamentals, collateralization and securitization of the debt is done either via balance sheet strength, limited recourse (project assets hypothecated to lenders), or non-recourse (strength of revenue / offtaker agreements). In today’s economic conditions, federal / state loans and loan guarantees may be available on a project-by-project basis. The loan guarantees are critical to securing any debt from commercial banks and financial institutions.

Source: K&L Gates, Pat V. Sonti

In all cases, it is very important to be weary of speculators who may be keen to have various early stage exits in the project development and execution phases by “flipping” the assets which may have a major impact of the clean energy project’s sustainability. It would be very prudent to ensure that majority, if not all, of the various stakeholders continue in the clean energy project until such time full commercial operations and positive waterfall cashflows are achieved. This approach may be required at least to the extent that a major portion of the debt is serviced, normally occurring during the first 1-5 years of commercial operations.
Source: www.vnf.com

Forward Steps The energy industry has undergone major ups and downs since the first crude oil embargo of 1973. Many across the policy and public spectrum have attempted to define an optimal energy mix coupled with comprehensive energy policy. In the last two-to-three decades, there has been a major thrust of deregulation of the entire energy value chain of production / generation-transmission-distribution. The main emphasis has been; customer choice; open access; independent regulatory authority; and market indexed energy prices for wholesale and retail consumers. Meanwhile, many project developers, promoters, equity investors and lenders have been undertaking energy project development based on non-recourse or limited-recourse financing with very few balance sheet based projects. As a result, with the onset of risks associated with business and market fundamentals coupled with policy uncertainty,

As a part of the detailed project financial model, it is important to incorporate both fiscal and financial incentives in the form of production tax credits, income tax credits, tax holidays and accelerated depreciation. Also, carbon credits, renewable energy credits, and any other such incentives must be modeled accordingly. These will help the overall project profitability indicators such as Internal Rate of Return (IRR), payback period, DSCR etc. In some cases, project developers, promoters and equity investors with very strong balance sheets opt to fund the entire project development, CAPEX and OPEX well into project commercial operations. Such project developers, promoters and equity investors may seek to re-finance the project based on viable revenue / offtaker agreements which generate high current income, high net profits and positive cashflow.

___________________________________________________________________________________________ Page 5

The Sonti Report
Volume 1, Issue 2

SM

December 2009

___________________________________________________________________________________________ energy projects today must adhere to conservative balance These factors include: sheet basics and focus on proven business models. 1. Comprehensive and sustainable energy policy with Looking ahead, under the current economic scenario, one of the most important factors is the restoration of equity investor’s confidence which will allow them to emerge back from the sidelines and participate with project developers and promoters in order to undertake development of clean energy projects. Risks & Mitigation An effective comprehensive risk analysis must be undertaken by stakeholders to assess, quantify, allocate and distribute associated risks thereby resulting in a proper mitigation plan. A viable methodology and approach can include; an optimal energy mix covering conventional / alternate / renewable energy or “all of the above solutions” must be enacted at the federal / state levels. All encompassing legislative and regulatory framework for the energy sector must be enacted at the federal / state levels. All regulators must be free of political and bureaucratic interference and must encourage open access, market competition, sustainable energy pricing and customer choice. Sound, predictable, sustainable and effective tax policy at the federal / state levels in order to allow tax investors to participate in the “jump-starting” of clean energy project development, especially with funding the pre-operative and preliminary expenses associated with the sub-phases; feasibility, permits & clearances and transactional contracts. Entire project development phase must be funded by equity sources and matched, when proven viable, by grants. This will allow “bankable” projects to attract debt financing via loan guarantees and loans. All project stakeholders must ensure that critical path milestones are met, namely; financial closure and commercial operations date.

2.

3.

4.

 Identify the risk, understand its origin, nature, and categorize / classify the risk.  Determine the effective course of corrective action(s), commercial / financial / schedule impact(s) for each corrective action, and establish a 5. tabulated categorized risk / reward ratio.  Assess the execution plans for each corrective action, roles & responsibilities, transactional contracts and agreements, and applicable insurance. 6.  Implement the corrective action based on a critical path milestones schedule and monitor and manage the performance of all responsible parties. Summary The potential risks can include, but not limited to, the There are great business opportunities available in the following: clean energy sector worldwide. In order to achieve true  Technical; proven technology, design, engineering, sustainability and “bankability”, beyond hype, hysteria and procurement, construction, commissioning, start-up speculation, it is essential that project developers, operations, maintenance, retrofits, revamps and promoters, equity investors or lenders adhere to both business and market fundamentals. In today’s uncertain spare parts.  Commercial; supply-demand, price, competition, economic conditions, it is also critical to understand and transactional contracts and agreements, escalation, appreciate that balance sheet strength is vital for indexation, foreign exchange variation, force undertaking successful project development, achieving financial closure and commercial operations. majeure, and default provisions.  Financial; debt-equity ratio, subscribing equity, References syndicating debt, working capital, grants, balance 1. Five Emerging U.S. Public Finance Models: sheet exposure, interest during construction, Powering Clean-Tech Economic Growth and Jobs collateral / security, and hypothecation of assets, Creation, October 2009, Clean Edge Inc., San liquidation and default. Francisco, CA, USA.  Policy; federal / state energy policy, regulatory 2. Financing Incentives in the Stimulus Package framework, permits & clearances, taxes / duties / Project Finance Basics Power Purchase Agreements, levies, tax credits, accelerated depreciation, and Presented to the Florida Renewable Energy carbon credits. Producers Association, September 2009, K&L Gates, Palo Alto, CA, USA. Essential Next Steps 3. World Energy Outlook, 2009, International Energy Agency, Paris, France. There are essential next steps which must be undertaken by 4. Annual Energy Outlook, 2009, U.S. Energy various stakeholders in order for any clean energy project Information Agency, Washington D.C., USA. to be implemented successfully and achieve sustainability.

___________________________________________________________________________________________ Page 6

The Sonti Report
Volume 1, Issue 2

SM

December 2009

___________________________________________________________________________________________

Pharmaceutical Companies Ramp-Up on Contract Manufacturing
Pat V. Sonti, Advisor, Short Hills, New Jersey, USA Introduction The global economic outlook appears uncertain as the most severe recession in the U.S. since World War II continues to linger, but prospects for the pharmaceutical industry may remain brighter. The prevalence of various diseases in key therapeutic areas such as; oncology, immunology, infectious diseases, cardiology, etc., growing healthcare needs and an ageing population are factors that ensure a steady growth for the industry. So, even in a lean and unpredictable economy, with major mergers & acquisitions (M&A), the global pharmaceutical business is expected to stay resilient as these companies tighten their business and operating costs. Pharmaceutical companies strive to maximize their return on invested capital. Today’s costs for the entire value chain for a new drug molecule (research, development, clinical trials, and commercialization) ranges from $800 million to $1 billion. Thus, their most effective approach is to determine whether the margins on any drug justify the use of the company’s manufacturing facilities. U.S. Contract Manufacturing U.S. pharmaceutical companies have been increasingly turning to contract manufacturing organizations (CMO’s) solely to achieve efficiencies in cost, capacity and time-tomarket, or to obtain a specific expertise not available inhouse. Today, these factors still play a role, but now the most dynamic driver behind the use of CMO’s in the pharmaceutical industry rapidly is becoming the unique, innovative, and state-of-the-art process and production technology they offer. More and more pharmaceutical companies are leaning towards sub-contracting or outsourcing to CMO’s in order to concentrate on marketing their products, without spending time in new drug discovery and process of manufacturing. This also applies to some “virtual” companies that exist by the simple fact they can rely on CMO’s and researchers. Today’s basic Source: www.fillers.com question for many pharmaceutical companies remains is; “If the resources used to manufacture low margin products Global Market Outlook could be applied to higher margin activities, why not subAccording to BCC Research, a leading information contract?” resource company for the pharmaceutical and high tech industries, overall sales in the pharmaceutical contract Pharmaceutical, biotech and generic drug companies have manufacturing and contract research market were worth concluded that by sub-contracting some and / or all parts of nearly $143 million in 2007, which increased to an their manufacturing process or services, the resultant estimated $177 million in 2009. By 2014, sales are savings could be invested in the development of new projected to increase to nearly $299 million, for a 5-year products that should provide higher margins and a potential competitive edge. CAGR of 11.1%. The largest segment in the market, contract manufacture of Over the past 75 years, pharmaceutical companies have over-the-counter (OTC) and nutraceuticals, was valued at been one of the main sectors recognizing the financial ___________________________________________________________________________________________ Page 7 $82 million in 2007. This increased to an estimated $103 million in 2009, and is projected to reach $177 million in 2014, for a 5-year CAGR of 11.4%. Sales in the contract manufacture of bulk- and dosage-form drugs segment were worth $36 million in 2007, and were to increase to nearly $44 million in 2009. By 2014, they are projected to increase to $73 million, for a 5-year CAGR of 10.8%.

The Sonti Report
Volume 1, Issue 2

SM

December 2009

___________________________________________________________________________________________ benefits of CMOs. In addition, the U.S. Government has Some of these CMO’s have technologies and been increasingly turning to CMO’s for production of manufacturing facilities which are still in early stages, controlled substances, such as methadone in order to some in proof-of-concept stages, some in pilot plant stages maintain cost effectiveness and control. With respect to the and some entering scale-up / commercialization, current Administration, as part of its overall healthcare respectively. Most of the private sector parties involved in reforms for Medicare, there is much greater emphasis on CMO technologies and manufacturing are small businesses reducing the cost of prescription drugs via generics which and are presently starved for capital, with weak balance can be achieved through sub-contracting to CMO’s in the sheets, minimum collateral and / or security for securing U.S. versus offshoring to highly competitive CMO’s debt, but have highly competent technical and management overseas. skillset with intellectual property. With the currently fragile investment scenario for equity, working capital and India’s CMO’s debt, it is vital to leverage a “Private-Public-Partnership” The Indian CMO market was worth $874 million in 2007. model wherein the U.S. government will provide grants, Although this market presently occupies a fraction of the loans, and loan guarantees via agencies such as the Small total global opportunity, the future potential of the market Business Administration (SBA), the Food & Drug seems immense. The Indian CMO market, with its low cost Administration (FDA), and / or the Department of Health advantage, strong chemistry and reverse engineering & Human Services (HHS). This can be matched with capabilities, improving infrastructure and strong incentives equity from CMO promoters and owners, private equity from the Indian government, is expected to grow strongly groups and venture capitalists. In addition, the U.S. federal in the next five years. By 2012, the Indian industry is and state government(s) must also seriously consider expected to grab nearly 8% of the total global market. The providing income tax credits, production tax credits and Indian CMO market is expected to grow in excess of other job creation incentives in order to spur active private cumulative annual growth rate (CAGR) 37% between 2007 sector involvement. The U.S. can become a net exporter of and 2012. Most companies presently outsource Active CMO products and services thereby increasing U.S. Pharmaceutical Ingredients (API’s) and intermediates from exports and improving the current economic scenario. The India. Moreover, India is also becoming a major hub for U.S. small business sector continues to remain as the major outsourcing formulations. Most Indian CMO’s have engine for economic growth and can truly accelerate jobs upgraded their manufacturing plants, which has enabled growth in order to meet the current Obama India to have a number of plants certified by the USFDA, Administration’s objective to save or create nearly 2.5 EDQM and various other regulatory agencies. The cost of million jobs. However, unless and until business and secondary manufacturing in India is around 13%-15% of market oriented policy and investment work hand-in-hand, the cost in the U.S., the U.K. and Germany, with the commitment to increasing CMO’s market share as companies making substantial savings on costs of plant set articulated above, will just remain as one more “concept” up, labor and operations. India has more than four times and “business-as-usual” only as in the previous decades. the total drug manufacturing staff than the U.S. and more than 12 times that in the U.K. Growth of the CMO market Summary is expected to provide a major boost to the pharmaceutical The pharmaceutical industry is undergoing significant machinery market in India, which is expected to register M&A activity. By leveraging the utilization of CMO’s, the revenues up to $822 million by 2010-11. Strong industry can supply cost effective generic drugs for the appreciation of the Indian Rupee against the U.S. Dollar is global market. In addition, pharmaceutical companies can having a detrimental effect on the profits being generated take advantage of innovative technologies developed by CMO’s and enhance job creation during the current global by many of the Indian CMO’s. recession. Positive Steps Going Forward As with any effective policy, unless and until the U.S. References 1. Contract Pharmaceutical Manufacturing, Research Congress enacts comprehensive, bipartisan, fair, balanced, and Packaging, Report Code: PHM043C, October transparent, and equitable healthcare legislation and 2009, BCC Research, Wellesley, MA, USA. regulatory framework, the task of dealing with reducing 2. Indian Contract Manufacturing-A Hot Opportunity, the costs of prescription and generic drugs will be left Report No. ASDR-2266, March 2008, RNCOS solely to the private sector and competing market forces of Industry Research Solutions. globalization as in the past. The U.S. currently is a global leader in CMO’s which have been developed solely with private sector partnership.

___________________________________________________________________________________________ Page 8

The Sonti Report
Volume 1, Issue 2

SM

December 2009

___________________________________________________________________________________________

Domestic U.S. Natural Gas; Transition Fuel for Cleaner, Smarter, & Secure Energy Future
Pat V. Sonti, Advisor, Short Hills, New Jersey, USA Scott M. Shemwell, D.B.A., Houston, Texas, USA Introduction There is no doubt that natural gas, the lowest carbon fuel, remains the cleanest fossil fuel when compared to existing conventional hydrocarbon sources such as crude oil and coal. Significant private sector efforts have been made in the U.S. over the last 20 years to increase natural gas usage for power generation thereby displacing crude oil and coal. Today, with major advances in state-of-the-art technology, there is much focus on harnessing non-conventional sources of natural gas via shale gas in the lower-48 states for which the U.S. has vast and abundant domestic resources to enhance its energy independence and national security from crude oil imports and coal usage. As major bipartisan support continues to grow in the U.S. Congress, there is major legislation proposed pending enactment to ensure that natural gas takes center-stage as the “bridge fuel of choice” for a clean energy economy coupled with energy conservation, energy efficiency, reducing carbon footprint, and integration of renewable energy sources such as wind, solar and biofuels. Using clean domestic natural gas will also enhance the U.S. economy. Since it is produced in the U.S., higher gas demand will create more jobs, and using domestic gas in lieu of imported crude oil would reduce current trade imbalances, keeping energy dollars in the U.S. instead of exporting crude oil dollars overseas. Current U.S. Pipeline Network Based on the U.S. Energy Information Administration (EIA), the current natural gas pipeline transmission infrastructure is a highly integrated transmission and Source: www.vorysenergy.com distribution grid that can transport natural gas to and from Positive Regulatory Support nearly any location in the lower-48 states. Under the current Administration, the Secretary of the U.S. Department of Interior is recommending that natural gas be considered as an important part of the U.S. energy policy because using it produces less greenhouse gases (GHG) than any other fossil fuel. To date, the U.S. Department of Energy’s (USDOE), National Energy Technology Laboratory (NETL) has funded nearly nine natural gasfrom-shale projects. Most of them are intended to improve the management of hydrofracing water at shale drilling sites or waste water treatment sites. NETL projects’ goals are to improve management of water resources, usage, and disposal; and to support the science which will help the shale gas development regulatory and permitting process. The USDOE share will be about $7million to $10 million. The U.S. natural gas pipeline grid comprises of; 1) more than 210 natural gas pipeline systems; 2) 305,000 miles of interstate and intrastate transmission pipelines; 3) more than 1,400 compressor stations that maintain pressure on the natural gas pipeline network and assure continuous forward movement of supplies; 4) more than 11,000 delivery points, 5,000 receipt points, 1,400 interconnection points that provide for the transfer of natural gas throughout the U.S.; 5) 24 hubs or market centers that provide additional interconnections; 6) 400 underground natural gas storage facilities; 7) 49 locations where natural gas can be imported / exported via pipelines; and 8) 8 LNG (liquefied natural gas) import facilities; and 9) 100 LNG peaking facilities (1).

___________________________________________________________________________________________ Page 9

The Sonti Report
Volume 1, Issue 2

SM

December 2009

___________________________________________________________________________________________ The proposed legislation, H.R. 1835, The New Alternative winners when it comes to new pipeline construction and Transportation to Give Americans Solutions Act (or “Nat recovering from releases or accidents. Gas” Act), to the 111th Congress on April 1, 2009, yet to be passed by the U.S. Congress contains robust support for natural gas transportation initiatives including massdeployment of natural gas vehicles (NGVs). Under the proposed legislation, there will be expansion of the market for natural gas as a heavy-duty transportation fuel by increasing incentives for gas-powered buses and heavy trucks. In addition, creation of incentives for communities to develop bus rapid transit systems that employ buses fueled by natural gas. Recent Growth The past 10 years have seen an increase of about 20,000 miles of natural gas transmission pipelines. From a demand perspective, this new capacity was added primarily to serve new natural gas-fired electrical generation plants. New unconventional gas is primarily coal seam or coal-bed methane and shale gas. Given the large amount of recent construction and the current relatively low energy price environment, construction activity is likely to decline from this peak for the next several years. It should also be noted that Alaska continues to be a major potential supply of natural gas with reserves in excess of 42 trillion cubic feet (TCF) (estimated) with technically recoverable reserves of nearly 28 TCF (estimated). In addition, the deepwater region of the Gulf of Mexico also promises to be a major source of natural gas along with the outer continental shelf (OCS). Infrastructure Limitations The largest economic threat to natural gas transmission line profitability, although highly unlikely given the relative environmental attractiveness of natural gas as a fuel, is a reduction in natural gas use to fire electric power generation facilities. Environmental regulations have thus far favored and will continue to favor natural gas as a fuel of choice. These regulations will continue to drive power plant demand of natural gas, even though on a strictly energy equivalent economic basis this use is questionable. Pipeline integrity expenditures will continue at significant levels but will not seriously threaten industry profitability, as regulators and the pipeline industry have been Both wholesale and retail natural gas prices are expected developing these programs for at least the past decade. to, subject to adverse weather, continue their stable pricing levels. From a supply-demand scenario, ample storage is Accidents and the attendant litigation, however, could expected to meet any peaking demand scenarios while threaten individual company profitability. Consequently, maintaining price elasticity to meet the norms of both prior to investing in natural gas transmission companies, wholesale and retail consumers. investors should understand the company’s integrity programs and the risks those companies face. Permitting Capturing the New Natural Gas Opportunity (2) and land use are impacted by a patchwork of federal, state, and local regulations. Those pipeline companies that can The recent development of advanced technology, as above, best manage the public relations process will be the that enables the affordable development of significant ___________________________________________________________________________________________ Page 10

Source: www.engineervill.com

Natural Gas Prices Natural gas prices in the U.S. are indexed based on spot prices of Henry Hub / New York Mercantile Exchange (NYMEX) both being commercial market driven indices. There have been some major price spikes in the last 4-5 years and prices have now been stabilized and today range from $4-7 per MMBTU. Improved commodities regulatory oversight will ensure that speculation is kept under check thereby minimizing volatility of natural gas prices.

The Sonti Report
Volume 1, Issue 2

SM

December 2009

___________________________________________________________________________________________ shale gas reserves in the lower-48 states could fundamentally alter the U.S. energy system and play a larger role in helping to more rapidly and cost-effectively speed the transition to a low-carbon economy and reduce global warming pollution. The EIA estimates that the U.S. has approximately 1,770 TCF of technically recoverable gas, including 238 TCF of proven reserves. It is estimated that total U.S. gas resources is 2,074 TCF. It is also estimated that “technically recoverable unconventional gas” including shale gas accounts for nearly two-thirds of U.S. onshore gas resources. At the current production rates, “the current recoverable resource estimate provides enough natural gas to supply the U.S. for the next 90 years.” These gas findings in Arkansas, Louisiana, Michigan, New York, North Dakota, Ohio, Pennsylvania, Texas, and elsewhere have increased proven reserves of U.S. natural gas by 13%, and driven potential reserves even higher.

Source: Energy Information Administration, based on data from the Office of Fossil Energy, U.S. Department of Energy (6)

These statistics suggests that while crude oil imports have been difficult to tame, natural gas based “energy independence” is within range. First let’s define what we mean by “energy independence” as it relates to natural gas. Many define energy independence as simply zero import of petroleum. This definition discounts a strong dynamic, which we classify as the “3E’s of Natural Gas”. We have all experienced the wobbly 4-leg stool, either on a rough surface or as the result of wear and tear. Two legs will not stand alone, but the tripod or “3-legged stool” is a very stable platform as below.

Natural Gas 3 (E’s) Legged Stool (E’

Energy Independence

Environment

Economy (Jobs)
Source: S. Shemwell, D.B.A

National Security & Energy Independence

Since the 1973 oil embargo, all subsequent U.S. Administrations have called for “energy security” by reducing the import of foreign crude oil. During that timeframe the importation of crude oil has increased from 1,183,996,000 barrels in 1973 to 3,580,694,000 barrels in 2008 (3). This represents a growth from approximately 30% of the total U.S. consumption in 1973 (4) to 58% in 2007 Second; the beneficial environmental impact, is partly (last year reported) (5). understood in that burning natural gas emits a small amount of GHG; however, what is often overlooked is the Given the continued reluctance to drill for crude oil outside small environmental footprint from ongoing natural gas of the current producing areas of the U.S., it is unlikely that production. Compared, for example, to wind and solar meaningful reductions in the import of crude oil will be power, natural gas is more environmental friendly since the attained anytime soon. Conversely, the level of natural gas industry has long remediated the landscape and is “good imports has remained relatively steady, despite significant neighbors.” Natural gas can serve as a “bridge fuel” to a increases in consumption. low-carbon, sustainable energy future. In particular, natural gas can provide the critical low-carbon “firming” or back___________________________________________________________________________________________ Page 11

First; with the advent of shale gas reserves as described herein, natural gas becomes the primary fuel of energy independence. Natural gas is not only the feedstock for clean electricity, but the basis of many carbon based products such as plastics, fertilizer, and fabric.(7) Industrial utilization, as well as gas liquefaction,(8) round out the value from a robust economic hydrocarbon molecule.

The Sonti Report
Volume 1, Issue 2

SM

December 2009

___________________________________________________________________________________________ up fuel that can enable deep market penetration of both dramatically. While much remains to be done, particularly wind power and concentrated solar thermal power. The with infrastructure development and water management, marriage of natural gas and renewable energy in the form shale gas could represent approximately 42% of the total of hybrid wind-gas and solar-gas plants addresses the issue gas produced by 2035.(9) Some critics will suggest that of renewable intermittency, greatly enabling low-cost / low shale gas drilling and production will damage the local water supply which is not the case. The industry takes the emissions power generation. remediation and reuse of produced water seriously and uses processes that return the water to the environment for appropriate human and animal / agricultural uses.(10) Today, much of the conventional gas is supplied from a few geographical areas such as Louisiana and Texas that can be subject to unpredictable bottlenecks such as the hurricanes that raked the area in 2005, dramatically restricting availability for a period of time. The extensive proximity of shale gas to industrial areas in the Midwest and Northeast vividly changes this equation. States and local communities with shale gas reserves can build strong, resilient economies on the 3-legged stool of natural gas. With clean energy availability assured, local areas will have flexibility to address community economic and environmental issues and take control of their destiny. The following table provides readers with a brief overview of some Key Economic Indicators on a state-by-state basis. Source: NY State Dept. of Conservation, U.S. Energy Information
Agency

Due to ample supply along with price stability, natural gas is the basis for promoting the development of clean energy technologies such as wind-gas hybrid electricity plants, carbon capture and storage, and natural gas transportation fuels. Such low-carbon technologies would find a market overseas. The U.S. and the world’s needs for new jobs and new energy sources coincide with the emergence of a powerful wave of clean energy investment. More than $155 billion was invested in clean energy technologies in 2008 alone and investments are expected to triple in the next three to four years. Third; benefits to the economy. The natural gas industry generates long-term, sustainable, well paying jobs. The industry requires engineers, managers, finance, information technology professionals as well as a significant number of skilled laborers such as welders, fabricator, instrument technicians as well as truck drivers and hospitality personnel. When coupled with the fact that natural gas is substantially less expensive than a barrel of crude oil, the economics of this industry are compelling. Moreover, as good neighbors, the industry works closely with local communities to better local lifestyles. Finally, for local, state, and federal governments, the industry is a source of a stable tax base. Role of Shale Gas The commercial development of U.S. shale gas is little more than a decade old. During this period, the industry has evolved rapidly and the arrival of this unconventional product is changing the natural gas landscape rather

Key Indicators of Economic Activity from Natural Gas Production (2007 Last Year Reported)
N um be ro fP ro du Ec ci on ng om G et as ric W Es To el ls tim ta lN at e at of ur al G as G as W Se D el ve ire lD ra ct ril nc le O e d* pe an ra d to Pr rE od m uc pl oy tio n ee Ta s xe s Pa id
6,591 239 7 4,773 1,540 22,949 2,552 316 2,350 19,713 16,563 18,145 7 9,712 2,315 6,925 186 4 42,644 6,680 200 34,416 38,364 18 52,700 71 305 76,436 5,197 5,735 48,215 26,900 452,768 529 15 765 163 3,385 94 37 1,546 937 1,260 432 200 494 132 1,265 211 12 547 2,570 3,110 2 59 9,533 646 705 1,808 2,876 33,334 6,203 1,253 250 6,535 3,131 23,970 1,852 6,218 3,749 6,830 3,326 52,588 678 7,551 5,283 3,305 2,467 2,432 23 13,483 5,799 242 8,243 36,713 11,091 226 3,335 167,761 5,729 4,759 7,020 22,268 424,312 $139,380 $2,208,400 $6,761 $14,928 $471,185 $126,244 $9,288 $1,350 $131,217 $38,538 $981,229 $3 $67,796 $8,364 $242,776 $2,894 $40 $987,921 $185,970 $2,452 $1,001,328 $117 $3,153 $1,838 $2,729,862 $70,178 $80,294 $595,031 $10,108,537 Sources: http://www.ipaa.org/reports/docs/2008-2009IPAAOPI.pdf http://tonto.eia.doe.gov/dnav/ng/ng_prod_wells_s1_a.htm
Note: Econometric Estimate of Gas Well Drilled is estimated including percentage of dry wells attributed to gas vs. oil wells

State
Alabama Alaska Arizona Arkansas California Colorado Florida Gulf of Mexico (Federal) Illinois Indiana Kansas Kentucky Louisiana Maryland Michigan Mississippi Missouri Montana Nebraska Nevada New Mexico New York North Dakota Ohio Oklahoma Oregon Pennsylvania South Dakota Tennessee Texas Utah Virginia West Virginia Wyoming Total

___________________________________________________________________________________________ Page 12

The Sonti Report
Volume 1, Issue 2

SM

December 2009

___________________________________________________________________________________________ According to the EIA, in 2007 (the last full reporting required directly by the industry, there are “pull through” period available) (11), there are over 450,000 producing gas required by this inexpensive, readily available, and wells, employing over 400,000 direct employees. This does sustainable energy source. As shale gas infrastructure is not include the supporting personnel as described above, developed, logic suggests that with favorable tax and i.e., service company labor as well as local support regulatory environments, energy intensive industry can infrastructure such as retail. compete from a common base within the U.S. Moreover, in 2007 over $10 million in severance and production taxes were paid to the states. Other tax revenue, such as sales tax, would apply to the purchase of oil & gas field equipment as well as purchases made by direct and indirect employees. It is clear that the tripod model of value demonstrably provides; 1) energy independence not just from foreign sources but risk mitigation from Gulf of Mexico natural disasters; 2) economy and jobs at state and local levels; 3) lowest environmental impact and footprint compared to crude oil, coal and other green alternatives; and 4) less capital investment in infrastructure compared to other alternatives. Moving Forward
3.

Summary It is both vital and important for U.S. Congress to enact pending legislation to ensure that natural gas takes centerstage in the U.S. clean energy economy and as a “bridge fuel” transitioning to an integrated energy mix conventional / alternate / renewable sources of energy. References
1. 2. U.S. Energy Information Administration (EIA), www.eia.gov “Natural Gas, A Bridge Fuel for the 21st Century” John D. Podesta and Timothy E. Wirth, Center for American Progress, Washington D.C., August 10, 2009. Energy Information Administration. http://tonto.eia.doe.gov/dnav/pet/hist/LeafHandler.ashx?n =pet&s=mcrimus1&f=a Energy Information Administration. http://www.eia.doe.gov/emeu/25opec/sld002.htm Energy Information Administration. http://tonto.eia.doe.gov/energy_in_brief/foreign_oil_depe ndence.cfm http://www.eia.doe.gov/pub/oil_gas/natural_gas/feature_a rticles/2009/ngyir2008/ngyir2008.html#consumption http://www.naturalgas.org/overview/uses_industry.asp http://www.naturalgas.org/overview/uses_transportation.a sp Water Treatment Technology For Oil & Gas Produced Water;http://www.unm.edu/~cstp/Reports/H2O_Session_ 4/4-5_Sullivan.pdf Snow, Nick. (2009, November 9). CSIS: unconventional resources altering global gas outlook. Oil & Gas Journal. pp. 19-20. The EIA published data is available through 2007. The authors understand that due to the 2008-09 Recession that these figures maybe higher than the current level. The point herein is to suggest the order of magnitude of economic value to State and local citizens and governments. Snow, Nick. (2009, November 2). Tax policy leaders urged to back high=paying energy jobs. Oil & Gas Journal. pp. 26-27. A Practical Guide to US Natural Gas Transmission Pipeline Economics, An Oil & Gas Journal Research Center™ Report, 2009, Oil & Gas Journal, Penn Energy.

Natural gas infrastructure is critical and vital to economic growth. The current Administration must realize that no country can have economic success without promoting natural gas as part of its energy and environment policy wherein exploration companies are the producers, the pipeline industry are the transporters, and gas utilities are the local distributors. Understanding the natural gas industry and the electric power industry and how these industries impact their customers is the price of entry into the natural gas production, transmission and distribution arena. Those natural gas companies who succeed in the long-term must understand the myriad stakeholders. Appreciating stakeholder positions and working to balance the competing stakeholder demands that include safety, environmental responsibility, reliability, efficiency, profitability, quality of life, and many others is the key to long-term success in this industry. Today, policymakers in Washington D.C. are desperately trying to “create jobs, jobs, jobs”. The oil & gas industry employs nine million people in the U.S. alone. These high paying jobs not only include those employed by gas companies, but those providing a wide variety of support as discussed herein.(12) Moreover, energy industry that depends on a viable and clean hydrocarbon source will locate where that energy source is readily available. One school of thought is that the advent of the development of shale gas in the Midwest and northeast U.S. can be a catalyst for sustainable jobs in the current economic environment. In addition to the jobs

4. 5.

6. 7. 8. 9.

10.

11.

12.

13.

___________________________________________________________________________________________ Page 13

The Sonti Report
Volume 1, Issue 2

SM

December 2009

___________________________________________________________________________________________

Addressing Fly Ash; A Sensible & Viable Approach
Pat V. Sonti, Advisor, Short Hills, New Jersey, USA Alec Ganopolsky, President, MCC Technologies Inc., New York, New York USA of a clean energy economy and creating jobs. The opponents would like to declare fly ash as a hazardous Fly ash is one of the residues generated in the combustion waste through legislation and thereby preclude any of coal in power plants. Fly ash is generally captured from leveraging of clean technologies and mitigating inaction. the chimneys of coal-fired power plants, and is one of two types of ash that jointly are known as coal ash; the other, U.S. Dealing With Fly Ash bottom ash, is removed from the bottom of coal furnaces. Depending upon the source and makeup of the coal being In the past, fly ash was generally released into the burned, the components of fly ash vary considerably, but atmosphere but pollution control equipment mandated in all fly ash includes substantial amounts of silicon dioxide recent decades required that it be captured prior to any (SiO2) (both amorphous and crystalline) and calcium oxide release. In the U.S., fly ash is generally stored at coal (CaO). Toxic constituents include arsenic, beryllium, power plants or placed in landfills. About 43% is recycled, boron, cadmium, chromium, chromium VI, cobalt, lead, often used to supplement Portland cement in concrete manganese, mercury, molybdenum, selenium, strontium, production. It is increasingly finding use in the synthesis of thallium, and vanadium, along with dioxins and polycyclic geopolymers and zeolites. aromatic hydrocarbons (PAH) compounds. Introduction

Source: www.caer.uky.edu

Fly ash has become a very important issue which has received much attention from policymakers such as the U.S. Environmental Protection Agency (USEPA). Millions of tons of toxic fly ash is piling up in power plant ponds in 32 states in the U.S. and the federal government has long recognized fly ash as a risk to human health and environment but has left it unregulated. The reuse of fly ash, via processing technologies, in the U.S. as an engineering material primarily stems from its pozzolanic Currently, the three major coal consuming countries, U.S., nature, spherical shape, and relative uniformity. Fly ash China and India are focusing on dealing with fly ash. recycling, in descending frequency, includes usage in: Emphasis thus far is on developing advanced innovative 1. Portland cement and grout. technologies which can be deployed into state-of-the-art 2. Embankments and structural fill. projects which can utilize fly ash as a feedstock to support 3. Waste stabilization and solidification. downstream industries thereby becoming an integral part ___________________________________________________________________________________________ Page 14

Other important components are aluminum trioxide (Al2O3) with concentration of up to 60%, cenospheres (1-2%) and unburned carbon (Loss on Ignition-LOI). Some ashes contain high concentration of rare elements such as germanium (up to 1000 ppm) and gallium. Utilization of fly ash as cement substitute depends on LOI level and in case of high LOI (above 3%) would require processing. Germanium extracted from fly ash can be used in solar cells production, fiber optics and other high tech applications.

Source: fhwa.dot.gov

The Sonti Report
Volume 1, Issue 2

SM

December 2009

___________________________________________________________________________________________ 4. Raw feed for cement clinkers. Currently, man-made lagoons hold a mixture of the non5. Mine reclamation. combustible ingredients of coal and the fly ash trapped by 6. Stabilization of soft soils. equipment designed to reduce air pollution from power 7. Road subbase and aggregate. plants. Over the years, volume of waste has grown as 8. Flowable fill. demand for electricity increased and U.S. government, at 9. Mineral filler in asphaltic concrete. federal level, has clamped down on emissions from power 10. Other applications; includes cellular concrete, plants. The USEPA has set out to make national standard geopolymers, roofing tiles, paints, metal castings, for ponds or landfills use to dispose of wastes produced and filler in wood and plastic products. from burning coal. Under the current Administration, the One new U.S. technology company estimates that 1.2 million tons (per annum) of Class F fly ash is processed by either carbon burnout (CBO) or electrostatic separation technologies in the U.S. The two primary carbon reduction companies are Progress Materials (owned by Progress Energy) and Separation Technologies (owned by Titan America). Both approaches, while effective, are capitally and operationally expensive for many utilities to consider as a substitute for land disposal, mine backfilling and other less expensive material reuse options. CBO, the market leading technology, is more effective on higher carbon content (greater than 8%) ashes, which not all plants produce, and, from an environmental perspective, is harder to permit because of its atmospheric emissions. Other prospective technologies; chemical treatment, microwave, ozonation have yet to offer significant competition for a variety of reasons. New fly ash processing technology companies propose an environmentally benign, closed loop, low capital and operational cost alternative – based on multi-sectional column flotation technology – for processing coal ashes to exceed ASTM C618 carbon content criteria. The proposed plant can be designed to process up to 500,000 tons of material per year. U.S. Government now USEPA Administrator, testified at her U.S. Senate confirmation hearings in early 2009 that targeting fly ash is one of the top three areas of her focus if confirmed as the new head of the USEPA. The USEPA estimates about 300 ponds exist for fly ash existing nationwide. The U.S. power industry estimates that ponds contain tens of thousands of pounds of toxic heavy metals. Storing fly ash is getting more expensive and power utilities will be pushed to find more ways to recycle or process it safely via fly ash processing plants. As stated above, some beneficial uses of fly ash are to process it and utilize substituting fly ash for cement in concrete, which binds heavy metals and prevents them from leaching, or as a base for roads, where the ash is covered by an impermeable material. But using the fly ash as backfill or to level abandoned mines requires intensive study and monitoring. As with any effective policy, unless and until the U.S. Congress enacts comprehensive, fair, balanced, transparent, “common good” and “common sense” legislation and regulatory framework, the task of dealing with fly ash will be left solely to each state and private sector as in the past. Currently, there appears to be politicization of the issues dealing with fly ash and constructive measures seem difficult under the present legislative climate in Washington D.C. as partisan forces are not willing to compromise their respective positions. Today, the USEPA is seriously considering whether to classify fly ash as a hazardous waste which in turn may have significant impact on commercial utilization of effective means of fly ash processing technologies.

The U.S. has laid great emphasis in tackling safe handling and processing of fly ash as part of its clean energy agenda under the current Administration. The U.S. Department of Energy (USDOE) data found that 156 coal-fired power plants store fly ash in surface ponds similar to one that recently collapsed the Tennessee Valley Authority (TVA) India and China power plant in Tennessee in December 2008 which has been declared a disaster much worse than the Exxon Today, India and China lead the emerging markets and are well poised to be in the top three world economies in Valdez oil spill in Alaska over two decades ago. coming years. Impressive growth rates of 5-10% annual GDP, latent domestic demand, conservative fiscal and financial regimen, along with an optimal energy mix of conventional / alternate / renewable sources are fueling both these countries. Coal constitutes over 50% of the energy fuel mix and is likely to continue at these levels.

Source: www.nytimes.com

Although there is persistent pressure through proposed legislation from developed countries to curtail coal utilization, both India and China continue to focus on their own economic growth leveraged by advanced innovative technologies and on-the-ground clean energy projects. Both India and China are advocating sound policy to

___________________________________________________________________________________________ Page 15

The Sonti Report
Volume 1, Issue 2

SM

December 2009

___________________________________________________________________________________________ harness, process and recycle fly ash as a feedstock thereby It will be interesting to observe the outcome of the upcoming Copenhagen climate change summit as well as supporting downstream industries. India and China’s continued proposals for multilateral and bilateral cooperation.

Source: www.hyderabadolx.in

Both India and China have shown willingness to discuss multilateral framework for broad cooperation on climate Source: www.adityabirlachemicalsindia.com change but discuss bilateral joint ventures for advanced Summary technology development and projects.
Category Policy (federal / state) Technology Industries Companies Details Supporting upto 100% fly ash utilization based mandatory policy notifications. Research, design, development (RD&D), early-stage, pilot plants. Cement, bricks, road construction, other building materials. Small and medium enterprises, joint-venture companies, technology collaborations. Tie-ups with large cement companies, building construction contractors, roads & highway contractors. Private-Public-Partnerships. • Equity; private / public sector. • Debt; commercial banks / financial institutions. • Grants; federal / state agencies, non-profits, foundations.

Fly ash processing must be addressed by all stakeholders at the political, bureaucratic, regulatory and industry levels. Currently, there are proven advanced innovative technologies which can effectively support fly ash processing into be useful products. Any proposed legislation must seriously consider a sensible and economically viable approach to address the various issues with fly ash. References 1. Wastes-Resource Conservation-Reduce, Recycle, Reuse-Industrial Metals Recycling, www.epa.gov, 2009, U.S. Environmental Protection Agency, Washington D.C., USA. Various data and information, 2008-09, MCC Technologies Inc., New York, New York, USA. Notifications, Government of India, New Delhi, India, Ministry of Power and Ministry of Environment & Forests.

Execution Financing

2. 3.

Source: Various research and industry publications

___________________________________________________________________________________________ Page 16

Sign up to vote on this title
UsefulNot useful