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Sacramento's economic development director, Jim Rinehart, had been the project's premier city advocate. Perhaps sensing the project's imminent demise, Rinehart reminded the Council last Thursday of the work that had been done.
"A review board comprised of city staff and Sacramento State University engineering professors evaluated the proposals and brought before you, in February 2008, a recommendation to further study one such technology -- plasma arc gasification," he said. "And one company, United States Science and Technology, USST, proffers to operate a facility at no cost to the city by means of an exclusive negotiating rights agreement."
In addition to engineering analysis, the city sent two delegations from Sacramento to Utashinai, Japan, to tour its gasification plant and be briefed by the plant's general manager. Sacramento Vice-Mayor Lauren Hammond said during Thursday's meeting that Japanese facilities do not meet California's renewable energy standards, one of several reasons she could not recommend going forward with USST.
Also testifying before the Council last week was Dean Tibbs, a Ph.D. economist and president of energy consulting firm Advanced Energy Strategies Inc. (AES). AES evaluated the proposal from USST on the city's behalf. "The project does not look economically attractive," Tibbs claimed. He cited numbers crunched by his staff that suggest 32 percent of the energy being used to operate the facility would be nonrenewable. He also argued his numbers showed USST would lose $70 million of its own money.
USST had claimed it would operate at a profit within two years thanks to the sales of industrial slag -- a byproduct of the gasification process. USST told AES the slag could be sold at $400 per ton. Tibbs told the City Council that while AES was admittedly unfamiliar with the slag market, $400 per ton seemed too high an estimate and instead they assigned it $0 value in their calculations.
"In our assessment, without the $400 a ton slag, there would not be a positive cash flow until the 11th year of operation," Tibbs said.
Despite the plant not having been built, Hammond said, based on testimony from multiple Council meetings on the matter, she believed "plasma arc gasification is not a certifiably clean technology." She added that AES's estimate the facility would operate $70 million in the red means the plasma arc gasification is "not quite ready" as a viable technology.
Councilman Kevin McCarty added, "We need to cut our losses and scrap this. I think we were sold down a road that was probably not the best road."
