ICF Consulting Predicts Surging U.S. Market for Pollution Control Vendors and Some Coal Producers

WASHINGTON, DC, September 30, 2003 - ICF Consulting's recently published SO₂ Emissions and Mercury Market Outlook 2003 predicts that, contrary to many accounts, multipollutant air emissions regulations in the United States will increase output levels and improve profitability for many coal producers.

"The conventional view has been that air emissions regulations will increase the cost of electric generation from coal-fired plants, thereby placing these units at a competitive disadvantage to cleaner and therefore less costly, natural gas, nuclear, and renewable power plants. However, air emissions regulations will actually give a boost to some coal producers, and air pollution control manufacturers will see an explosion in their business opportunities," says John Blaney, a Senior Vice President in ICF Consulting's Energy Markets practice.

New air emissions regulations are increasingly likely because President Bush has begun a major push to get his Clear Skies Act (CSA) enacted this year. The President's legislative proposal calls for major reductions in SO₂, NO_x, and mercury emission reductions. Absent new legislation, the U.S. Environmental Protection Agency (EPA) is under court order to pass new mercury regulations and has announced plans to proceed with a fine particulates rulemaking that will likely lead to cuts in SO₂ and NO_x similar to those included in the President's proposal. "New, more stringent air pollution regulations are inevitable," says Blaney.

CSA and several other competing bills in Congress call for a two-phase implementation of emission reductions. If CSA is passed, the first phase of reductions is targeted for 2008-2010, with the second phase occurring in 2018.

New air regulations such as CSA will lead to capital expenditures for pollution control equipment in excess of $30 billion by 2020. These investments will enable the owners of coal-fired power plants to continue to burn coal, and in some instances even increase generation levels. The study results show that the immediate aftermath of the announcement of new air emissions regulations will include a production increase for low sulfur coal producers in 2005-2009. This is because coal plant owners will initially switch to lower SO₂ emitting coals to build a bank of emission allowances and allow a longer transition to lower emission levels in the years prior to the implementation of the first phase of reductions. "Powder River Basin coal production in Wyoming and Montana will see an initial increase in production of over 50 million tons, or about 13 percent" says Blaney.

As the second, more stringent, phase of air emission reductions is implemented, the coal producing regions that are likely to experience the biggest boost are the currently depressed Midwest regions that produce high sulfur coal. Lastly, if a market-based approach to mercury emissions regulation is adopted—as envisioned in CSA—coals with low mercury levels also will see an increase in value.

ICF International (Nasdaq: ICFI) partners with government and commercial clients to deliver consulting services and technology solutions in the energy, environment, transportation, social programs, defense, and homeland security markets. The firm combines passion for its work with industry expertise and innovative analytics to produce compelling results throughout the entire program life cycle, from analysis and design through implementation and improvement. Since 1969, ICF has been serving government at all levels, major corporations, and multilateral institutions. More than 1,800 employees serve these clients worldwide. ICF’s Web site is http://www.icfi.com.

For Immediate Release Contact: Douglas Beck 1.703.934.3820