Advanced Emissions Solutions, Inc. engages in the sale of consumable air and water treatment options, including activated carbon (AC) and chemical technologies. The company's proprietary technologies in the advanced purification technologies (APT) market enable customers to reduce air and water contaminants, including mercury and other pollutants, to maximize utilization levels and to improve operating efficiencies to meet the challenges of existing and pending emission control regulations. Thro...
Advanced Emissions Solutions, Inc. engages in the sale of consumable air and water treatment options, including activated carbon (AC) and chemical technologies. The company's proprietary technologies in the advanced purification technologies (APT) market enable customers to reduce air and water contaminants, including mercury and other pollutants, to maximize utilization levels and to improve operating efficiencies to meet the challenges of existing and pending emission control regulations. Through its wholly-owned subsidiary, ADA Carbon Solutions, LLC (Carbon Solutions), the company manufactures and sells AC used to capture and remove contaminants for coal-fired power plants, industrial and water treatment markets. Carbon Solutions also owns an associated lignite mine (Five Forks Mine) that supplies the primary raw material for manufacturing AC.
The company sells consumable products that utilize AC and chemical-based technologies to a broad range of customers, including coal-fired utilities, industrials, water treatment plants and other diverse markets. The company’s proprietary technologies and associated product offerings provide purification solutions to enable its customers to reduce certain contaminants and pollutants to meet the challenges of existing and potential future regulations.
As of December 31, 2021, the company held equity interests of 42.5% in Tinuum Group, LLC (Tinuum Group) and Tinuum Services, LLC (Tinuum Services).
Markets
AC is a specialized sorbent material that is used widely in a host of industrial and consumer applications to remove impurities, contaminants and pollutants from gas, water and other product or waste streams. AC is produced by activating carbonaceous raw materials, including wood, coal, nut shells, resins and petroleum pitch. Properties, such as surface area, pore volume, surface chemical functionalities and particle size can be specifically engineered to selectively target various contaminants to meet end-use application requirements. AC can come in several different forms that are important for the end-use application, including powdered activated carbon (PAC), granular activated carbon (GAC), pellets, honeycombs, blocks or cloths.
Key markets include removal of pollutants from coal-fired electrical generation and other industrial processes, treatment of drinking and waste waters, industrial acid gas and odor removal, automotive gasoline emission control, soil and ground water remediation and food and beverage process and product purification. Demand for AC products has been, and is expected to continue to be, driven by increasing environmental regulations pertaining to water and air purification, especially in the developed and more industrialized areas of the world.
The company sees opportunities and is continuing to pursue diverse markets for its purification products outside of coal-fired power generation, including industrial applications, water treatment plants and other end markets. In addition, the company sees significant opportunities emerging in the soil, sediment and groundwater treatment markets.
Segments
Through December 31, 2021, the company operated two segments: Refined Coal and Advanced Purification Technologies.
Refined Coal (RC)
Through December 31, 2021, Tinuum Group provided reduction of mercury and nitrogen oxide (NOX) emissions at select coal-fired power generators through the production and sale of RC that qualified for Section 45 tax credits. The company benefited from Tinuum Group's production and sale of RC from its share of earnings from Tinuum Group's sales or leases of RC facilities to tax equity investors. The Section 45 tax credit period expired on December 31, 2021 and both Tinuum Group and Tinuum Services substantially ceased operations as of that date. Tinuum Group is performing reclamation at its RC facilities and, along with Tinuum Services.
Products
The company’s patented M-45 and M-45-PC technologies (collectively, the M-45 Technology) are proprietary pre-combustion coal treatment technologies used to control emissions of nitrogen oxides (NOX) and mercury from coals burned in circulating fluidizer bed boilers and pulverized coal boilers, respectively.
The company’s patented CyClean technology, a pre-combustion coal treatment process provides electric power generators the ability to enhance combustion and reduce emissions of NOX and mercury from coals burned in cyclone boilers.
The company’s patents related to the RC segment are not expected to have significant commercial application beyond December 31, 2021, primarily due to the wind down of Tinuum Group and Tinuum Services as a result of the expiration of the Section 45 tax credit period.
Sales and Customers
Through December 31, 2021, the company earned royalties (M-45 Royalties) under a licensing arrangement with Tinuum Group for those RC facilities that utilized the M-45 Technology to treat coal for the reduction of emissions of both NOX and mercury.
For 2021 and 2020, the company also derived substantial earnings in the RC segment from its equity method investments in Tinuum Group and Tinuum Services.
Through the company’s direct ownership in retained RC facilities or indirect ownership through Tinuum Group, it earned Section 45 tax credits at retained RC facilities for the RC that was produced and sold to utilities. Through December 31, 2021, Tinuum Services operated and maintained RC facilities under operating and maintenance agreements with owners or lessees of these RC facilities.
Advanced Purification Technologies
In the company’s Advanced Purification Technologies (APT) segment, its AC and chemical products are used to purify contaminated liquid and gas streams from a variety of industrial sources, including coal-fired power plants and waste-water treatment plants, among others. Most of the North American coal-fired power generators installed equipment to control air pollutants, such as mercury, prior to or since the inception of the Mercury and Air Toxics Standards (MATS). However, many power generators need consumable products to complement the operation of installed equipment on a recurring basis to chemically and physically capture mercury and other contaminants. AC has been adopted as the most widely-used technology to capture mercury due to product efficiency and effectiveness and accounts for the majority of the mercury control consumables in the North American market. The company offers AC and other chemical products and work with customers as they develop and implement a compliance control strategy that utilizes the consumables solutions that fit with their unique operating and pollution control configuration.
For the purification of water, AC has been used in the treatment of drinking water, wastewater, contaminated soil and groundwater to adsorb compounds causing unpleasant taste and odor and other contaminants. Both industrial and municipal wastewater treatment plants have deployed the use of AC in their treatment processes. Groundwater contamination has become a matter of increasing concern to federal and state governments, as well as to the public, especially over recent years.
In 2021, the company developed a new Colloidal Carbon Product (CCP) platform, FluxSorb IS that is in the process of or planning stages of in-field testing at multiple contaminated soil and groundwater remediation treatment sites.
Coal-fired power plants continue to be a significant, though declining, source of electricity in the United States. Demand for the company’s AC products related to coal-fired electricity generation is dependent on the availability and cost of alternative energy sources, such as natural gas, solar and wind energy. The company sees opportunities to continue pursuing diverse markets for its purification products outside of coal-fired power generation, including industrial applications, water treatment plants and other markets.
Sales and Customers
Sales of consumables are primarily made by the company’s employees to a range of end customers, including coal-fired utilities, industrial companies, water treatment plants and other customers. The company’s AC sales are generally made under requirements-based contracts ranging from one to five years. The company’s chemical product sales are generally made on a purchase order by purchase order basis.
Cabot Supply Agreement and Related Agreements
On September 30, 2020, the company and Cabot Norit Americas, Inc. (Cabot) entered into a supply agreement (the Supply Agreement) pursuant to which it agreed to sell and deliver to Cabot, and Cabot agreed to purchase and accept from it, certain lignite-based activated carbon products (Furnace Products).
On February 1, 2021, the company and a subsidiary of Cabot Corporation, Cabot Norit Nederland B.V. (Cabot Corporation) entered into a five-year supply agreement (EMEA Supply Agreement) to supply Cabot Corporation with lignite activated carbon products and other proprietary products used for mercury removal in utility and industrial coal-fired power plants in the EMEA market (as defined below). Cabot Corporation will be the exclusive and sole reseller of these products within Europe, Turkey, the Middle East and Africa (EMEA), and the company will have a first right to provide the products to Cabot for sale in the EMEA market.
Competition
The company’s primary competitors for consumable sorbent products include Cabot (CBT), Calgon Carbon, a subsidiary of Tokyo Stock Exchange listed Kuraray Co., Ltd., Donau Carbon Company, Midwest Energy Emissions Corp. (MEEC), and Nalco Holding Company, a subsidiary of Ecolab Inc. (ECL).
Raw Materials
The company supplies 100% of the lignite coal through its ownership of the Five Forks Mine (Five Forks) to fulfill customer orders. Five Forks is operated for the company by Demery Resources Company, LLC (Demery), a subsidiary of the North American Coal Company.
Operations
The company owns and operates the Red River plant which is located in Louisiana. The company also leases land in which operate a manufacturing and distribution facility located in Louisiana. Additionally, the company has sales, product development and administrative operations located in Colorado.
Research and Development Activities
During the year ended December 31, 2021, the company incurred expenses of $0.4 million.
Patents
As of December 31, 2021, the company held 83 U.S. patents and 12 international patents that were issued or allowed, 15 additional U.S. provisional patents or applications that were pending, and two international patent applications that were either pending or filed relating to different aspects of its technology. The company’s existing patents generally have terms of 20 years from the effective date of filing, with its next patents expiring beginning in 2022.
Seasonality of Activities
The sale of the company’s consumable products depends on the operations of the power generation units and industrial facilities in which the applicable consumables are provided. Power generation is weather dependent, with electricity and steam production varying in response to heating and cooling needs. Additionally, power generating units routinely schedule maintenance outages in the spring and/or fall depending on the operation of the boilers. The sale of the company’s AC products for water purification depends on demand from municipal water treatment facilities where these products are utilized.
Safety, Health and Environment
The company’s operations are subject to numerous federal, state, and local laws, regulations, rules and ordinances relating to safety, health, and environmental matters (SH&E Regulations). These SH&E Regulations include requirements to maintain and comply with various environmental permits related to the operation of many of the company’s facilities, including mine health and safety laws required for continued operation of the Five Forks Mine.
History
Advanced Emissions Solutions, Inc. was founded in 1996. The company was incorporated in Colorado in 2011.
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