Massachusetts Executive Office of Environmental Affairs


MASSACHUSETTS ENVIRONMENTAL VENTURES

Quarterly Newsletter of the Massachusetts Strategic Envirotechnology Partnership

Spring 1997

In this Issue:

Viewpoint
Company Spotlight
Letters to the Editor
Marketbeat
Massachusetts Developments
Company Update

VIEWPOINT

What Can We Expect from Utility Restructuring?

by Lawrence Ambs and James Manwell
Energy Analysis and Diagnostic Center, UMass-Amherst

Whether we like it or not, the deregulation and restructuring of the energy infrastructure, and specifically the electric utility industry, have arrived. As the influence of federal and state regulations declines, market forces will assume the primary role in shaping utility operations. The relatively low costs of newer generation technologies, such as aerodynamic gas turbines, combined-cycle plants, and cogeneration, are also increasing competition in the energy sector.

In Massachusetts, the many concerns that arise from utility deregulation and restructuring are now being negotiated by all stakeholders, including state executive and regulatory agencies, utilities, consumers, and nonprofit organizations. Although this industry shake-up presents difficult challenges, it will also be a driving force for innovation, providing new opportunities for energy and environmental firms.

As restructuring proceeds, both established utilities and start-up companies will compete aggressively for customers in a business environment similar to that of the telecommunications industry following the breakup of AT&T. In the past, utilities had exclusive control of power generation, transmission, and distribution in their operating areas. This monopoly structure, which has been eroded by regulatory changes during the past 20 years, will be completely dismantled by deregulation. In the process, separate markets will be created for power generation, transmission, and distribution.

In this new energy marketplace, volume purchasers will be able to "shop around" and negotiate the best prices for energy services. Aggregators-companies formed to purchase energy services on behalf of many industrial and commercial firms-will play a growing role by negotiating volume purchases from independent power generators. Similarly, new energy cooperatives or buying clubs will allow small businesses and residential users to pool their energy purchases and thereby benefit from volume buying.

Climate for Innovation

Utilities and other energy-related businesses will have to adopt new strategies to succeed in this changing marketplace, such as specializing in a particular service or packaging a group of energy services for prospective customers. New companies called energy service providers (ESPs) will offer their clients the opportunity to purchase electricity, oil, and natural gas-along with other utility services-in a single package. These ESPs will compete directly with traditional utilities by entering into contracts with energy generators, transmission systems, and local utilities to provide energy and services to the client. Under this scenario, utilities and ESPs will compete both on price and on the package of services offered.

In the new energy marketplace, the main focus of government action will shift from regulating the utility industry to offering incentives to achieve the desired policy goals. For example, the U.S. Department of Energy's voluntary Climate Wise Program encourages companies to adopt innovative approaches to improve energy efficiency and reduce greenhouse gases, while improving their economic performance and gaining public relations benefits.

While government policy will probably continue to encourage energy efficiency, there are likely to be significant changes in both government and utility efficiency programs. Firms that develop innovative energy-efficiency technologies may need to rethink their business strategies in order to properly position their products and services.

Demand Side Management (DSM) programs, which some utilities have embraced during the past decade, may have to be revamped or abandoned as a result of deregulation. These programs are based on the rationale that it is sometimes more economical for utilities to pay their customers for conserving energy or shifting their pattern of energy use than to build costly new power plants. Deregulation will remove much of the economic incentive for utilities to offer DSM programs, since they will have a new option for meeting energy demand: purchasing electricity from competing outside suppliers at the lowest price.

In contrast, "market transformation" policies will probably be used more widely to promote energy efficiency. In this strategy, the government offers various incentives, such as tax breaks, rebates, or guaranteed purchase contracts for products such as compact fluorescent lights or high-efficiency motors and appliances. Other examples of market transformation policies include energy-efficient building codes and residential, commercial, and institutional energy conservation programs. Broader application of these approaches could be a boon for energy firms by encouraging the development of efficient technologies.

Helping Renewable Energy

The environmental benefits of renewable energy facilities are widely acknowledged, but their relatively high capital costs (on a per-kilowatt basis) often make it difficult for them to compete with conventional power plants. However, policy-makers have developed several strategies to help renewable energy technologies survive the restructuring of the utility industry.

Under a "green pricing" policy, customers have the option to obtain some or all of their electricity from renewable sources. While green rates are typically higher than normal electricity rates, they may be attractive to environmentally conscious consumers, including businesses participating in programs such as Climate Wise.

A second approach would require power providers to derive a certain percentage of their electricity production from renewable energy sources. Implementation of this "renewable portfolio standard" would likely stimulate the development of renewable energy technologies.

We are in the midst of an unprecedented transformation of the electric utility industry. While negotiating these changes will be challenging, there is reason to hope that a "free-market" utility industry will ultimately reduce the costs and improve the efficiency of power generation, transmission, and distribution. By developing new technologies to meet this changing marketplace, Massachusetts energy and environmental firms can profit from deregulation while helping utilities protect the environment and make a smooth transition to a sustainable energy future.

COMPANY SPOTLIGHT

Thermo Fibergen: Recycling for the Recyclers

The pulp and paper industry is making rapid gains in establishing the infrastructure to process wastepaper into recycled paper products. Indeed, the production of new paper from recycled fiber is growing at a much faster rate than paper production from virgin pulp. Along the road to recycling, however, comes a new environmental problem-disposing of increased volumes of sludge, or pulp residue, generated during the process of de-inking, filtering, and cleaning the wastepaper.

About 25 percent of the fiber entering recycling mills is lost in the recycling process, resulting in the generation of approximately eight times the waste that virgin paper mills yield. Pulp and paper mills spent an estimated $900 million in 1993 to dispose of their pulp residue, and the current worldwide market for treating and disposing of the residue may approach $2.5 billion.

Enter Thermo Fibergen, a member of the Waltham-based Thermo Electron family of firms making environmental monitoring and analysis instruments, biomedical equipment, and paper-making and paper-recycling equipment-a group that has been a paragon of innovation and economic success in Massachusetts. Bedford-based Thermo Fibergen, the 68-percent-owned subsidiary of paper-equipment maker Thermo Fibertek, is developing a proprietary process to recover and clean long cellulose fibers from the sludge generated by the paper recycling process, return those fibers to paper mills for the production of new paper, and recover other valuable products from the pulp residue.

Thermo Fibergen's objective is to site its fiber-recovery facilities at or near the paper mill, which will pump its pulp residue directly to the Thermo Fibergen plant. The Thermo Fibergen process will use a proprietary "scalping" technique developed by Thermo Fibertek, which is already using scalping equipment inside the paper mill to recover fibers.

According to Yiannis Monovoukas, Thermo Fibergen's chief executive officer, 228 pulp and paper mills in North America generate about 9 million tons of sludge per year, while 154 mills in Europe generate about 8 millions tons. Mills in Asia, Australia, and the rest of the world generate another 8 million tons. Figure a processing cost of $100 per ton, and you have an annual worldwide market for processing pulp residue of $2.5 billion, Monovoukas says.

The $2.5-billion market for treating and disposing of pulp residues is only one of the three revenue streams anticipated from the operation of the Thermo Fibergen facilities, according to Monovoukas. In addition to enjoying the revenues from the tipping fees for disposing of the residues, Thermo Fibergen will sell the recovered long cellulose fibers and clean water back to the mill.

The third revenue stream will come from the sale of various products, other than the cellulose Thermo Fibergen fibers, that are recovered from the pulp residues. These products include minerals and commodity chemicals, as well as a series of granulated products, such as agricultural carriers, oil absorbents, and catbox fillers.

The technology for granulating the sludge left over from fiber recovery is a major element of the Thermo Fibergen system and-until last summer-was a missing piece of the puzzle. In July, Thermo Fibergen acquired GranTek, now a wholly owned subsidiary that makes organic, dust-free granules at its 200-ton-per-day plant in Green Bay, Wisconsin. "With GranTek, we've closed the loop" on extracting the maximum value from paper-making sludge, Monovoukas says. He estimates the U.S. market for granulated products alone to be at least $235 billion annually.

Monovoukas's goal is to have two fiber-recovery plants and two integrated fiber-recovery and granulation plants operating by the end of 1998 in the United States and Europe. That includes GranTek's Green Bay plant, which is located in a major center of the U.S. paper-making industry. Thermo Fibergen has tested a mobile pilot system using its fiber-recovery process at several U.S. pulp and paper mills, Monovoukas says, and it completed sludge-processing tests at three European facilities in January.

Thermo Fibergen has satisfied the investment community that its concept is sound and that the technology has promise. Last September, Thermo Fibergen raised $56 million through an initial public offering. The investment firm Oppenheimer & Co. in New York City estimates that, once Fibergen turns profitable in 1998, its annual growth should exceed 50 percent for several years. Oppenheimer rates Thermo Fibergen a "buy."

The next critical hurdle on the track to success will be the start-up of a commercially viable facility. "What we need to do right now is announce the first contract, proving to the paper industry that our technology works and provides the pulp and paper mills with a long-term, environmentally sound, and financially attractive solution for years to come," Monovoukas says. "This is where I'm focusing our attention right now." The other major hurdle, he says, "is to find new markets for the products we make,"There's not one company in the world we know of that combines the services we offer to the paper mill," Monovoukas declares. Thermo Fibergen's principal competitors initially will be landfills in the United States and incinerators in Europe. The company is confident that its tipping fees will be competitive with the current disposal costs faced by pulp and paper mills.

How can Massachusetts and other states facilitate the commercialization of technologies like Thermo Fibergen's? "They can really jumpstart a company by processing permits quickly," says Monovoukas.

Currently, Thermo Fibertek is working with a major newsprint maker to design and build a paper-making facility on an old brownfields site in Lowell. The plant will use Thermo Fibertek's equipment to produce new newsprint from recycled paper, and Thermo Fibergen's technology to recover long cellulose fibers from the pulp residue. The Weld Administration has pledged to fund a major portion of the facility through the issuance of a tax-free bond.

LETTERS TO THE EDITOR

Dear Editor:

In your recent article on technology trends (Massachusetts Environmental Ventures, Fall 1996, page 1), Environmental Capital's Hugh Holman said that recycling and reprocessing technologies have the potential to meet Americans' "appetite for a more sophisticated service offering" from the waste management sector.

I agree completely. My experience has shown that American businesses are willing to recycle-even when the market is down-provided that recycling is less expensive than sending their wastes to a landfill or incinerator.



With technological know-how and hard work, it is possible to recycle wastes economically, regardless of the market conditions.


Since opening in 1990, Conigliaro Industries has competed successfully with disposal firms for waste business. During this time, the company has expanded from one to 25 employees. We now own and operate an 88,000-square-foot recycling facility in Framingham. The plant accepts and processes 150 different materials, including 80 types of plastic and items ranging from mattresses to demolition materials.

With technological know-how and hard work, it is possible to recycle wastes economically, regardless of the market conditions. When environmental goals are supported by sound economics, the opportunities are endless.

Gregory Conigliaro
President
Conigliaro Industries, Inc.

MARKETBEAT

Can Massachusetts Companies Do Well by Doing Good?

by Barbara Thorpe
Vice President
Winslow Management

Some investment professionals still believe that investors must choose between making money and "making a difference" environmentally-that is, between maximizing the return on their investment or screening a potential investment according to the target company's environmental practices. Winslow Management, a Boston-based investment firm, disagrees: Prudent corporate environmental management can contribute to improved financial performance and thereby enhance shareholder return.

Increasing numbers of investment professionals and corporate executives agree that responsible environmental management provides a strategic advantage. Moreover, a growing list of studies validate the performance benefits of responsible investing and demonstrate that sustainable management practices help to reduce costs, increase operating efficiency, and minimize liability, yielding competitive advantage and improved profitability.

Winslow has added to this body of literature with its own comparison of the yearly financial performance of "clean" versus "dirty" companies over a 22-year period, starting in 1971. This comparison, which Winslow is currently updating, shows that running an environmental screen on the companies in a portfolio can improve the portfolio's performance.

To showcase the superior financial performance of environmentally responsible companies in this state, Winslow collaborated with the University of Massachusetts' Environmental Business and Technology Center to establish the Massachusetts Environmental Venture Index, or MEV 15, which will become a regular feature of this newsletter. The MEV 15 index charts the financial performance of 15 environmentally responsible, publicly held companies based in Massachusetts (see the table below). The index equally weights the stock prices of the 15 companies, which underwent a "green screen" evaluating their history of environmental penalties and fines, amount of toxic chemical emissions, and number of Superfund sites and oil and chemical spills. Winslow uses a similar screen in establishing its portfolios of environmentally responsible companies.

The green screen excludes tobacco and alcohol companies from the MEV 15, as well as companies with significant activities in the defense and nuclear power industries. Winslow also excludes solid waste companies, because they rely on the continued generation of wastes rather than the reduction of waste.

Each of the companies selected for the MEV 15 falls into one or more of the following categories of environmental responsibility: proactive, best in class, turnaround, and benign. Winslow does not necessarily invest in all of the companies on the MEV 15, and it recognizes that the companies on the MEV 15 index represent only a sample of a much larger universe of environmentally responsible companies in Massachusetts.

An "environmentally proactive" company develops sustainable solutions to environmental problems, such as recycling wastes, or preventing them prior to the point of generation rather than controlling the wastes at the end of the pipe. Thermo Fibertek and its 68-percent-owned subsidiary Thermo Fibergen are examples (see page 1 of this issue).

A "best-in-class" company, like Polaroid, may be in an industry that generates high volumes of pollutants and wastes, but the company has implemented an environmental program that is setting a standard for its industry group. According to the Investor Responsibility Research Center in Washington, D.C., Polaroid ranked in the top three of 36 companies in the photography and imaging industry-an industry that is highly dependent on chemicals-for reducing its use of toxic chemicals, having relatively few Superfund sites, suffering few spills, and incurring few penalties for environmental violations.

A "turnaround" company is one that has a past history of environmental problems but has taken substantial steps to address those problems. The company may have significantly reduced toxic emissions, adopted broad-scale pollution-prevention programs, or ceased making of products that are environmentally harmful. Gillette, for example, makes the MEV 15 as a turnaround company because of its success in conserving water and reducing hazardous emissions. Gillette reports that it used 96 percent less water to make razor blades at its South Boston facility during 1995 than it did in 1972. The annual savings at current water rates totals $6 million.

Companies in the "environmentally benign" category, such as Stride Rite, have a minimal impact on the environment. A benign company might not have a proactive environmental management program, but as a result of its limited use of natural resources and polluting chemicals and its generation of negligible amounts of solid waste, the company's impact on the environment is not significant.

How healthy is the MEV 15? While performance has lagged the S&P 500 so far this year (-3.2% growth in total return for the MEV 15 versus +9.8% for the S&P 500 as of March 10), the ten-year relative returns show the MEV 15 outperforming the S&P 500 through virtually all of that period (see the chart below). Recently, the S&P pulled ahead slightly-no doubt reflecting the popularity of large-cap stocks in the current bull market.

We're not surprised at the MEV 15's overall strong performance, and we expect the current performance to bounce back to traditional levels. Our green screen selects companies with reduced risk and better balance sheets arising from profitability enhancements and waste reductions such as those achieved by Gillette in South Boston. In addition, the screening process seeks companies, like Thermo Fibergen, that are selling new technology into emerging growth sectors. With many of these companies lucratively providing ecologically sustainable solutions, their earnings growth continues to be superior to that of the overall market, and this growth in turn generates superior stock returns.

Barbara Thorpe is vice president of Winslow Management, a division of Boston-based Eaton Vance Management. Winslow specializes in managing endowments for nonprofit institutions, pension funds, and high-net-worth individuals by investing in environmentally responsible companies. For further information, contact Barbara Thorpe at Tel: 800-225-6265, ext. 259, or by e-mail at bthorpe@eatonvance.com.

MEV 15 COMPANIES
Company $/Share Market Value ($Millions) Price Change (%YTD) P/E Ratio 1997
Fluor Daniel GTI 8 3/4 60.5 10.3% NM
Galileo 7 3/8 50.2 -70.6% NM
Gillette 83 3/4 46.500 7.7% 32.2
Ionics 44 1/8 739 -1.8 24.3
Millipore 43 3/8 1.900 4.8% 19.1
Molten Metal Technology 9 1/8 214 -22.3% 13.4
Opta Food Ingredients 5 5/8 61.6 -2.2% NM
Polaroid 41 7/8 1.900 -3.7% 18.8
Stride Rite 12 3/4 633 27.5% 55.4
Thermo Ecotek 14 3/4 360 -3.3% 19.4
Thermo Electron 35 5.200 -15.2 22.0
Thermo Fibertek 11 7/8 726 27.5% 25.8
Thermo Power 7 1/8 88.9 -10.2% 44.5
Whole Foods Market 21 1/4 412 -5.6% 19.3
Watts Industries 26 706 8.9% 14.9
MEV 15 25 3.970 -3.2% 25.3
S&P 500 813.65 42.300 9.8 18.7
Data as of 3/10/97; NM = Not Material; YTD = Year to Date
Source: Baseline Services

Thermo Electron: Catching Talent and Keeping It

Within six months of joining Thermo Electron fresh out of Harvard Business School in 1995, Yiannis Monovoukas found himself as the chief executive officer of start-up Thermo Fibergen. An unprecedented rise in some organizations, perhaps, but not so surprising a move at Thermo Electron.

Thermo Electron will often seek out the talent first, and find the appropriate position later. "They like to get the talent on board, because of the decentralized organization," says Monovoukas. The corporate philosophy of giving substantial autonomy to its majority-owned companies relies on finding the top scientific and management brains available and trusting them to chart the paths to growth.

Of course, Monovoukas wasn't entirely green when he joined Thermo Electron. With a Ph.D. degree in chemical engineering from Stanford University, he spent three years in California developing new materials for the automotive industry before enrolling at Harvard Business School in 1993. Prior to taking over as chief executive officer of Thermo Fibergen, Monovoukas worked in technology assessment and commercialization for the parent company.

In addition to finding the top talent, Thermo Electron Chairman and Chief Executive Officer George Hatsopoulos has made a mission of holding on to that talent as well. That mission has taken form in a strategy of developing innovative technology companies and then spinning them out to the public market - a strategy that has become a major success story. At a recent Environmental Business Conference in Boston, Hatsopoulos explained the origins of his spinout strategy. He recalled that, in the early 1980s, Massachusetts high-tech companies were suffering a "brain drain"-young, ambitious talent leaving in droves to start their own companies.

Hatsopoulos vowed that Thermo Electron would not suffer from this brain drain. When he saw a "spark" in a division, where there were "people with the ambition to build a new business," he encouraged them by spinning off their group into a separate business and selling stock, with Thermo Electron retaining the majority interest. A major goal of selling stock in the new entity is "to develop a sense of ownership, pride, and reward," he said.

Mass. Electric Study Sees Market for "Green" Power

Almost one-third of the 4,458 residential customers who were asked last year by Massachusetts Electric Co. to choose their own power suppliers for the 1997 calendar year selected "green" power suppliers, despite the availability of less expensive alternatives. The choice of power supplier was the first step in a one-year pilot study that Massachusetts Electric is sponsoring as part of its efforts to prepare for the deregulation of the electric utility industry next year. After January 1, 1998, all Massachusetts Electric customers will be allowed to choose their power suppliers rather than just purchasing power from the utility. Ordinarily, Massachusetts Electric purchases power from various suppliers and then sells the power to its customers, who have no choice in where or how the power is generated.

In the pilot study, 4,458 residents and 269 small businesses in Lawrence, Lynn, Northampton, and Worcester will receive power from a supplier of their choice during 1997. About 31 percent of the residential customers chose "green" suppliers-companies that either generate power from renewable energy sources or offer energy-conservation programs. Sixty-six percent of the residential customers chose power suppliers that offer the lowest rates, and three percent chose suppliers that either make charitable donations to their local communities or offer variable rates based on market conditions.

Small business owners were less likely than residential customers to select "green" power suppliers; about 96 percent of the 269 small business owners participating in the pilot study chose the least expensive power suppliers. The pilot study is being conducted for Massachusetts Electric by Environmental Futures Inc., a Boston-based consulting firm. For further information, contact: Shana Pyun, Environmental Futures, Tel: 617-443-1330.

MASSACHUSETTS DEVELOPMENTS

UMass-Boston Professor Wins EPA Grant for Research on "Green" Chemistry

UMass-Boston Chemistry Professor John Warner recently received a three-year, $360,000 grant from the U.S. Environmental Protection Agency's (EPA's) Office of Research and Development to continue his efforts to develop environmentally sound, or "green," production processes for the chemical manufacturing industry. Warner's research focuses on incorporating natural, biological processes, such as molecular recognition and self assembly, into chemical manufacturing procedures.

In this way, according to Warner, the chemical manufacturing industry can decrease its reliance on toxic starting materials, reduce the amount of hazardous byproducts created during the manufacturing process, and produce chemicals that are less harmful to the environment.

"The green chemistry concept recognizes that it is easier to prevent the creation of toxic pollutants than it is to dispose of them or remediate them after they have been created," Warner said. "My research is based on the idea that most chemical manufacturing procedures could be greener if they more closely resembled natural processes in living organisms," Warner added. He noted that EPA provided the grant for his green chemistry research through the Partnership for Sustainable Development-a joint EPA-National Science Foundation project that provides financial support for research on green chemistry and other pollution prevention strategies. For further information, contact: John Warner, UMass-Boston. Tel: 617-287-6165.

UMass-Amherst Professor Studies Ways to Reduce Air Pollution under Navy Grant

Dionisios Vlachos, a professor of chemical engineering at UMass-Amherst, and four UMass graduate students are studying ways to reduce the creation of air pollutants-such as carbon monoxide and nitrous oxide-during the combustion of hydrocarbon fuels. The project, which is being conducted under a three-year, $300,000 grant from the U.S. Office of Naval Research, may ultimately lead to the development of cleaner burning fuels or cleaner burning engines for Navy ships, according to Vlachos.

"First, we are looking at the potential benefits of burning high-energy fuels, such as hydrogen gas or natural gas, instead of conventional liquid petroleum fuels," Vlachos explained. "Hydrogen gas is particularly interesting from an environmental perspective, because it burns very cleanly," according to Vlachos. He noted, however, that the storage and transportation of hydrogen fuel involves serious safety risks, because the gas is highly explosive.

Vlachos and his research team are also examining ways to modify the existing engines aboard Navy vessels to achieve a more thorough combustion of conventional hydrocarbon fuels, such as gasoline and diesel fuel. "Basically, we are looking at the possibility of modifying the engines with catalytic devices-like the catalytic converters installed in most automobiles-to reduce the emissions from the engines," Vlachos said. He noted that catalytic devices turn the pollutants produced during the combustion of hydrocarbon fuels into nonhazardous compounds, such as carbon dioxide and water. For further information, contact: Dionisios Vlachos, UMass-Amherst. Tel: 413-545-6143.

Cox Trust Awards $125,000 Grant to Lowell Center

The Lowell Center for Sustainable Production at UMass-Lowell recently received a two-year, $125,000 grant from the Jessie B. Cox Charitable Trust of Boston, Massachusetts, to support the Center's efforts to promote environmentally sound systems of industrial production. According to David Kriebel, one of the Lowell Center's two codirectors, the Center will use the grant money to hire a full-time program director and establish a regional community advisory board, which will include representatives from industry, labor groups, and environmental organizations.

Together, the Lowell Center's new program director and advisory board will identify three to four Massachusetts companies that are willing to work with the Center to resolve their specific environmental and workplace safety problems. "We plan to sit down with each of the companies and define what sustainable production would mean for them," according to Kriebel.

"Then, we'll identify the gaps between the companies' current practices and what they hope to achieve, and come up with projects to bridge those gaps," Kriebel added. During each of the projects, the Center will make use of the technical expertise at UMass-Lowell to help the participating companies identify and adopt sustainable production methods, according to Kriebel.

The Lowell Center for Sustainable Production was established in 1995 as part of the Department of Work Environment at UMass-Lowell to support "economic activity that is conserving of natural resources; nonpolluting; safe and healthful for workers, neighbors, and consumers; and socially and creatively rewarding for all employees." For further information, contact: David Kriebel, Lowell Center for Sustainable Production, Tel: 508-934-3270.

House Bill Promises Startup Funding for Technology Firms

Massachusetts companies planning to develop and commercialize environmental technologies would have a new source of startup funding with the passage of a bill recently introduced into the State House of Representatives by Representative Lida Harkins (Democrat-Dover, Medfield, and Needham). If passed into law, Harkins' bill-An Act to Encourage the Growth and Establishment of Science and Technology Enterprises in the Commonwealth-would establish a $15-million Technology Enterprise Fund to provide financial assistance to emerging technology-based companies in Massachusetts, including


A recently introduced bill would provide funding for Massachusetts-based environmental technology start-ups.

companies whose funding needs have not been adequately addressed by the federal government's Small Business Innovation Research (SBIR) program. The fund would be administered by two quasi public organizations-the Massachusetts Technology Development Corp. and the Massachusetts Technology Collaborative.

Harkins' bill would also offer matching grants to Massachusetts-based academic institutions for research on technologies that will likely be commercialized by Massachusetts companies. In addition, to foster the application of any new technologies developed by Massachusetts companies, Harkins' bill would allow cities and towns throughout the state to establish "expedited" permitting processes for those technologies.

The bill has been referred to the House Science and Technology Committee, which Harkins chairs. The committee's research director, Roz Jordan, said that hearings on the bill will probably be held this spring. For further information, contact: Roz Jordan, House Science and Technology Committee, Tel: 617-722-2263.

Secretary Coxe Welcomes Formation of NJ Corporation for Advanced Technology

The New Jersey Corporation for Advanced Technology (CAT), an alliance formed late last year among New Jersey business leaders and academics to promote the growth of new environmental businesses in the state, is a "shining example of a good, proactive public-private partnership that will lead to less process and more protection," according to Trudy Coxe, Secretary of the Massachusetts Executive Office of Environmental Affairs. Speaking at CAT's recent "kick off" conference at Stevens Institute of Technology in Hoboken, New Jersey, Secretary Coxe said that, like Massachusetts' STEP program, CAT will "speed up efforts to deploy new technologies to reduce pollutants and clean our environment."

At the conference, Coxe described the recent accomplishments of several Massachusetts companies participating in the STEP program, including AIRxpert Systems, Inc. of Lexington, Massachusetts. With help from the STEP program, AIRxpert recently signed a contract with a utility in Massachusetts, and with assistance from CAT, AIRxpert hopes to sign contracts with several New Jersey utilities, Coxe said.

She also described recent projects that have been facilitated by the memorandum of understanding signed last June by California, Illinois, Pennsylvania, Massachusetts, New York, and New Jersey to promote environmental technology exchange and business development in the six states. For example, the Massachusetts Department of Environmental Protection recently arranged for SolmetX, Inc. of Billerica, Massachusetts, to meet with officials from the California Environmental Protection Agency. Following that meeting, SolmeteX has begun helping small medical facilities in San Francisco, California to reduce their silver discharges.

COMPANY UPDATES

SolmeteX, Inc. of Billerica, Massachusetts, recently completed a two-year study of its Keyle:X heavy metal-removal technology at Boston University, demonstrating that the technology can reduce mercury concentrations in treated effluent to below one part per billion, according to Owen Boyd, the company's chief executive officer. Boyd noted that, during the past few months, the company has sold several of is Keyle:X systems and has developed a mercury-removal unit, which Boyd has dubbed "Mr. Mercury." The unit is designed for use at histology labs and other facilities that regularly dispose of reagents containing mercury. According to Boyd, the Massachusetts Water Resources Authority is planning to conduct a beta test of the company's new treatment system at its Deer Island Water Treatment Facility this spring. For further information, contact: Owen Boyd, SolmeteX, Tel: 508-262-9890.

AIRxpert Systems, Inc. of Lexington, Massachusetts, has formed a marketing alliance with the New England Electric System (NEES), whereby NEES will market AIRxpert's microprocessor-based air quality monitoring system to its corporate customers. According to AIRxpert President Stephen Wallis, the company's participation on the STEP program was "instrumental" in helping to forge the marketing alliance with NEES. "In this business, reference accounts are essential," Wallis explained, adding that "the STEP program's demonstration of our system was an important reference account for us when we proposed the marketing alliance to NEES." STEP's New Jersey counterpart, the New Jersey Corporation for Advanced Technology, has decided to give AIRxpert's technology a "favorable recommendation" to several New Jersey corporations. For further information, contact: Stephen Wallis, AIRxpert, Tel: 617-862-4739.

Envirodiesel, a clean-burning diesel fuel substitute made by Twin Rivers Technologies of Quincy, Massachusetts, has received certification from EPA to be used by urban bus fleets as a compliance strategy under the Clean Air Act, according to Gene Gebolys, vice president of Twin Rivers' alternative fuel division. "Getting EPA's certification of Envirodiesel was the biggest hurdle in the regulatory process," Gebolys commented. "This is like a biotech company getting its FDA approval," Gebolys said. He noted that with EPA's certification of Envirodiesel, Twin Rivers is proceeding with pilot tests of the product in bus fleets of several cities, including Boston, New York, and San Francisco. Envirodiesel is a mixture of conventional diesel fuel and nonpetroleum oils, such as sunflower oil and soybean oil. Diesel engines funning on Envirodiesel rather than diesel fuel produce reduced amounts of particulate mater, hydrocarbon emissions, and carbon dioxide. For further information, contact: Gene Gebolys, Twin Rivers Technologies, Tel: 617-472-9200.

EPA Region 1 and the Massachusetts Department of Environmental Protection (DEP) have both determined that, when properly installed and operated, the CAST system -- a water treatment technology developed by Cellini Purification Systems, Inc. of Ludlow, Massachusetts -- meets the federal criteria for a "totally enclosed" treatment system. As a result, CAST systems installed in any of the six New England states are exempt from the permitting requirements of the Resource Conservation and Recovery Act, according to Stephen Brown, Cellini's director of engineering. In addition, CAST systems do not have to be registered with DEP under the state's air pollution regulations, according to Brown. He noted that Cellini is currently "starting up" the first CAST system to be used by the electronics industry at Winchester Electronics' facility in Watertown, Connecticut. According to Brown, Winchester Electronics purchased the system to recover and reuse rinsewater, while concentrating and reducing the amount of liquid being hauled off site. For further information, contact: Stephen Brown, Cellini, Tel: 413-589-1601.

Late last year, Thermatrix, Inc., a San Jose, California-based company participating in the STEP program, completed initial test to demonstrate that the company's patented flameless thermal oxidation technology can be used to control the emissions created by diesel engines, according to John Schofield, the company's president and chief executive officer. "The initial testing showed that our technology not only controls the volatile organic compounds in the diesel engine emissions, but that it also destroys the soot particles produced by the engines," Schofield said. He noted that Thermetrix "is now seeking strategic partners in various industries to develop our technology for use in controlling emissions from both mobile and stationary diesel engines." For further information, contact: John Schofield, Thermetrix, Tel: 408-453-0490.

MASSACHUSETTS ENVIRONMENTAL VENTURES - The Quarterly Newsletter of the Massachusetts Envirotechnology Partnership (STEP) - is published for the business community by the Environmental Business and Technology Center located at the College of Management, University of Massachusetts-Boston. The STEP program is an innovative effort begun in 1994 by the Massachusetts Executive Office of Environmental Affairs, the Department of Economic Development, and the University of Massachusetts to promote the growth of new environmental and energy-efficient technologies in Massachusetts. Inquiries and contributions for publication are welcome. Publisher: William J. Brah, Director, Environmental Business and Technology Center; Managing Editor: George Stubbs; Contributing Editors: Eric Brus and Ivan Rudnicki; Production: Lisa Jasak; Editorial Advisory Board: Eric Hayden, Dean, College of Management, University of Massachusetts-Boston; Tom Churma, Vice President, University of Massachusetts; Richard Golob, President, World Information Systems; and Gina McCarthy, Director, Massachusetts Toxics Use Reduction Administrative Council. For further information, please contact: University of Massachusetts-Boston, College of Management, 100 Morrissey Boulevard, Boston, MA 02125-3393; Tel: 617-287-7723; Fax: 617-287-7757.