PRCC Aims for Clean Skies in the PRC

By JONATHAN S. LANDRETH

(Virtual China News -- Mar. 13) Did the man widely credited for inventing the word "smog" in 1958 ever imagine that 40 years later his small but sturdy Glendale, Calif., company, Pollution Research and Control Corporation (NASDAQ: PRCC), would be doing the bulk of its work in the People's Republic of China?

"No way in hell," said Al Gosselin with a laugh. But the 67-year-old power plant engineer, a veteran of Southern California Edison and a California native, is on the verge of helping Earth's most populous nation breathe cleaner air -- no small feat in a country that's home to the most polluted cities in the world.

After a five year struggle, the pollution monitoring devices sold by Dasibi, a PRCC subsidiary, were installed last year in 11 cities, from Tianjin to Xi'an and Jilin to Wuhan--the company's Phase I cities--at a cost of US$5.2 million. The monitors, which allow for sophisticated measurement of air pollutants, will soon be installed in 25 more "Phase II" cities in sales totaling about $15 million in contracts, according to Gosselin.

Dasibi's goal is to help China help itself tackle its air pollution. By placing pollution monitors throughout Phase I cities, municipal and central government officials can determine who the greatest polluters in a city are, and assess fines and implement controls accordingly. While the program will be expanded to the Phase II cities, some large urban areas--including Beijing, Guangzhou, and industrial Shenyang--are absent from the list.

Small is good

Gosselin's track record in pollution control dates back to the days when the air in "Los Angeles looked like Mexico City does today," he said. But how does this company, capitalized at a mere $12 million, expect to conduct successful studies of pollution that often fills the air with 1,500 micrograms of particulates per cubic meter? "The worst it ever got in L.A. in the 1950s and 60s was 150 micrograms," Gosselin laughs again, as if to say, undeterred, "Hey, it's dirty work, but somebody's got to do it."

"What's in our favor is that we're the small player," Gosselin said, noting that his competitors in France, Japan and the U.S. are all multi-billion dollar companies. Thermal Electric of Massachusetts, a competitor, tried a hostile takeover of PRCC on more than one occasion, Gosselin said. It's his longstanding relationship with the Chinese that has put his company in a prime position to help, Gosselin said.

In 1981, PRCC sponsored a visit to L.A. by a delegation from the Beijing Analytical Instruments Factory. The team of 11 all arrived in communist uniform to inspect a carbon monoxide control device that Gosselin had developed.

"We became good friends but I lost track of them over the years," Gosselin said. In 1994, when PRCC reconnected with China with a $300,000 contract, seven of the group of 11 Gosselin met with were his old friends from the State Environmental Protection Agency (SEPA). "Of course, now they're capitalists, or semi-capitalists," Gosselin said, and they proposed a $10 million job if I could get them a loan with less than four percent interest." Gosselin got the necessary Letter of Intent within days, then quickly engaged the Export and Import Bank of China and the Bank of America to help back the project.

It took until 1998 to sign the contract, with the financing closing in 1999 -- a long time, even by Chinese standards, but Gosselin said that his company's patience is about to pay off.

Though his original contacts at SEPA have dwindled to one or two, and the team led by SEPA Vice Minister Wan Xinfang is "nearly brand new," Gosselin thinks that he can lock-up China's pollution monitoring market without too much trouble.

"Now we're hoping to clean up all of China's 680 cities," Gosselin said of something he admits he could never do in the West for fear of anti-trust laws. Dasibi's success in China's pollution monitoring market hinges on the next few weeks of negotiations with the SEPA, whose delegation will be in Los Angeles Monday and Tuesday to meet with PRCC, the mayors of Glendale and Los Angeles, and representatives of the U.S. Department of Commerce (DOC).

"We're in touch with the DOC every day," said Gosselin, whose Dasibi may yet become a poster child for successful U.S.-China trade. The benefits that small to midsize American businesses would reap if the two nations were to engage in full trade relations were highlighted in the lead up to the signing of November's historic bilateral trade agreement. The ceremony surrounding the signing of the Letter of Intent for Phase II was signed in the Great Hall of the People in Beijing and hosted by none other than U.S. Secretary of Commerce Willam Daley.

Coal is king

What the company hopes to do from its recently opened offices near the Beijing train station is set up central and satellite monitoring stations in urban centers all across China. Dasibi's home grown software will allow Chinese municipalities to track the levels of pollution in different climates and identify an area's worst polluters.

"They can begin to experiment," said Gosselin of the solutions that China must consider when cleaning up the air in its capital, Beijing, for instance. Taking Mao Zedong's pride and joy -- the Beijing Number One Steel Plant -- for instance, Gosselin said there are three solutions.

"It could move, costing 'x' dollars; it could control its pollution emission, costing 'y' dollars; or it could use substitute fuel, costing z dollars," Gosselin said. Though his work is simply to enable the government to begin to recognize the scope of its pollution problem, Gosselin believes that Beijing sees that substitute fuel is the solution of the future.

"The first step is to know your starting point," said Gosselin. "The only way you know you have an impact is to establish the size of the problem." Indeed, in spite of announcing that US$12 billion was being sought to build a natural gas pipeline from China's wild West to Shanghai, the government recently announced that coal would remain the major source of power well into the 21st century.

Once Beijing can identify the worst coal polluters, "it can set up a permitting system to collect fees," Gosselin said without the slightest hint of irony or recognition that one of Beijing's most significant sources of revenue is its tax on a pollutant of another magnitude: cigarettes.

Along with adding 25 more cities to China's pollution monitoring network, Phase II will bulk up some of the initial 11 Phase I cities because, according to Gosselin, the local governments have recognized the potential to make money while controlling pollution.

Blue skies

"They're about six months from getting revenue," said Gosselin, adding that his Los Angeles team back in the 1950s saved SoCal Edison "about $100 million a year in fuel bills, even though they spent $20-30 million in R & D."

To improve the air quality of its big cities, China will eventually have to reach the street vendors who still cook in woks over barrels laden with high-sulfur coal. "They'll go for the big guys first," Gosselin said. Low-sulfur coal may be as much as 75 percent more expensive, said Gosselin.

Beijing residents got a whiff of clean air during the 50th anniversary of the PRC last October. To ensure that news reports of the event would have clear, blue skies as a backdrop, the government closed the capital's factories for several days before and after the October 1 celebration. While those skies remain the most picturesque in memory, long-term commitment to that level of air quality is not yet forthcoming.

"The Chinese have always gone for the easiest way of doing things," laughed Gosselin. But China's Shanxi province, due west of the capital, has the second largest low-sulfur coal deposits in the world after Russia. And, according to Gosselin, at least one West Virginia consortium is preparing to help China begin more sophisticated mining of coal found deeper in the earth, containing less sulfur, with less of an impact on air quality.

"It's a business I love and it's for the good of mankind," Gosselin said. "But we're selling something nobody wants to buy. It's all brought by legislative pressure."

To reach Jonathan S. Landreth: jslandreth@virtualchina.net