What changed in this filing

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Item 1. Business

2022-03-08 compared with 2021-03-10 · 147 added, 176 removed, 123 unchanged (72% of the section changed)

2 unchanged sentences

("ADES"), a Delaware company incorporated in 2011, succeeded ADA as the publicly-held corporation and ADA became a wholly-owned subsidiary of ADES.

In 2018, ADA acquired ADA Carbon Solutions, LLC ("Carbon Solutions").

We acquired Carbon Solutions to enter into the broader activated carbon ("AC") market and to expand our product offerings in the mercury control industry and other complementary activated carbon markets.

In 2018, we acquired ADA Carbon Solutions, LLC ("Carbon Solutions") as a means to enter into the broader activated carbon ("AC") market and to expand our product offerings in the mercury control industry and other applicable activated carbon markets.

This Annual Report on Form 10-K is referred to as the "Form 10-K" or the "Report." As used in this Report, the terms the "Company," "we," "us" and "our" means ADES and its consolidated subsidiaries.

We sell 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.

Our proprietary technologies and associated product offerings provide purification solutions to enable our customers to reduce certain contaminants and pollutants to meet the challenges of existing and potential regulations.

As of December 31, 2020 and 2019, we held equity interests of 42.5% and 50.0% in Tinuum Group, LLC ("Tinuum Group") and Tinuum Services, LLC ("Tinuum Services"), respectively, which are both unconsolidated entities, and both contribute significantly to our financial position and results of operations for the years ended December 31, 2020 and 2019.

As of December 31, 2021 and 2020, we held equity interests of 42.5% and 50.0% in Tinuum Group, LLC ("Tinuum Group") and Tinuum Services, LLC ("Tinuum Services"), respectively, which are both unconsolidated entities, and historically have both contributed significantly to our financial position and results of operations.

We account for Tinuum Group and Tinuum Services under the equity method of accounting.

As described further below, both Tinuum Group and Tinuum Services expect to significantly wind down their operations by the end of 2021 and we believe our Refined Coal ("RC") business will substantially cease as of December 31, 2021.

As further discussed below, in December 2020, we changed our operational management structure, which resulted in a revision in our reporting segments, as defined under accounting principles generally accepted in the United States ("U.S.

GAAP"), to two reporting segments, RC and Advanced Purification Technologies ("APT").

Historically we had two reporting segments, RC and Power Generation and Industrials ("PGI").

The reporting segments are discussed in more detail later in this section.

Customer Supply Agreement

On September 30, 2020, we and Cabot Norit Americas, Inc., ("Cabot") entered into a supply agreement (the "Supply Agreement") pursuant to which we agree to sell and deliver to Cabot, and Cabot agrees to purchase and accept from us, certain lignite-based activated carbon products ("Furnace Products").

The term of the Supply Agreement is for 15 years with 10-year renewal terms that are automatic unless either party provides three years prior notice of intention not to renew before the end of any term.

In addition to the sale by us and purchase by Cabot of Furnace Products, we and Cabot have agreed to additional terms whereby Cabot will reimburse us for certain capital expenditures we incur that are necessary to manufacture the Furnace Products.

Reimbursements will be in the form of revenues earned from capital expenditures incurred that will benefit both us and Cabot and capital expenditures incurred that will benefit Cabot exclusively.

We believe the Supply Agreement will provide material incremental volume and capture lower operating cost efficiencies of our manufacturing plant located in Louisiana (the "Red River Plant").

As these incremental volumes come on-line and after our existing inventory balances are sold, we anticipate an increase in gross margins.

Further, the Supply Agreement will expand our AC products to additional markets that are outside of coal-fired power generation.

On February 1, 2021, we and a subsidiary of Cabot Corporation ("Cabot Corporation") entered into a 5-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 we will have a first right to provide the products to Cabot for sale in the EMEA.

Acquisition of Marshall Mine

Concurrently with the execution of the Supply Agreement, on September 30, 2020, we entered into an agreement to purchase (the "Mine Purchase Agreement") from Cabot 100% of the membership interests in Marshall Mine, LLC (the "Marshall Mine Acquisition") for a nominal cash purchase price.

Marshall Mine, LLC owns a lignite mine located outside of Marshall, Texas (the "Marshall Mine").

Immediately after completion of the Mine Purchase Agreement, we independently determined to commence activities to shutter the Marshall Mine, and we will incur the associated reclamation costs.

In conjunction with the execution of the Supply Agreement and the Mine Purchase Agreement, on September 30, 2020, we entered into a reclamation contract (the "Reclamation Contract") with a third party that provides a capped cost, subject to certain contingencies, in the amount of approximately $19.7 million plus an obligation to pay certain direct costs of approximately $3.6 million (collectively, the "Reclamation Costs") over the estimated reclamation period of 10 years.

Under the terms of the Supply Agreement, Cabot is obligated to reimburse us for $10.2 million of Reclamation Costs (the "Reclamation Reimbursements"), which are payable semi-annually over 13 years and inclusive of interest.

As of September 30, 2020, we recorded an asset retirement obligation related to the Reclamation Contract in the amount of $21.3 million and a receivable related to the Reclamation Reimbursements in the amount of $9.7 million.

As the owner of the Marshall Mine, we were required to post a surety bond to ensure performance of our reclamation activities in the amount of $30.0 million under the Surety Bond Indemnification Agreement (the "Surety Agreement").

For the obligations due under the Reclamation Contract, we were required, under the Surety Agreement, to post initial collateral of $5.0 million dollars as of September 30, 2020 and to post an additional $5.0 million dollars as of March 31, 2021.

AC is a specialized sorbent material that is used widely in a host of industrial and consumer applications to remove impurities, contaminants or pollutants from gas, water and other product or waste streams.

As a result of the expiration of Internal Revenue Code ("IRC") Section 45 - Production Tax Credit ("Section 45") refined coal tax credit program effective December 31, 2021, both Tinuum Group and Tinuum Services have substantially ceased operations as of December 31, 2021, and Tinuum Group is in the process of completing reclamation activities.

See further discussion below under "Segments - RC" of this item.

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 and particle size can be specifically engineered to selectively target various contaminants to meet end-use application requirements.

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 heavy metal pollutants from coal-fired electrical generation 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.

The AC market has been and is expected to continue to be driven by increasing environmental regulations pertaining to water and air purification, especially in the mature and more industrialized areas of the world.

Additionally, we believe environmental issues will continue to be the predominant force in the AC markets of rapidly developing countries.

We see opportunities to continue to pursue diverse markets for our purification products outside of coal-fire power generation, including industrial application, water treatment plants and other end markets.

Tinuum Group provides reduction of mercury and nitrogen oxide ("NO X ") emissions at select coal-fired power generators through the production and sale of RC that qualifies for tax credits ("Section 45 tax credits") under the Internal Revenue Code ("IRC") Section 45 - Production Tax Credit ("IRC Section 45").

We benefit from Tinuum Group's production and sale of RC through our share of earnings from Tinuum Group's sales or leases of RC facilities to tax equity investors.

Both Tinuum Group and Tinuum Services expect to significantly wind down their operations by the end of 2021 due to the expected expiration of the Section 45 tax credit period as of December 31, 2021.

As such, our earnings and distributions from our RC segment will substantially cease as of December 31, 2021.

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.

Additionally, we believe environmental issues will continue to drive demand for AC in rapidly developing countries.

We see opportunities and are continuing to pursue diverse markets for our purification products outside of coal-fired power generation, including industrial applications, water treatment plants and other end markets.

In addition, we see significant opportunities emerging in the soil, sediment and groundwater treatment markets.

Increased environmental attention has been drawn to the monitoring and treatment of heavy metals, organic and inorganic compounds in groundwater to improve overall drinking water quality across North America.

Activated carbon, in various forms, has and will continue to play a key role in these remediation efforts.

Advanced Purification Technologies

In our Advanced Purification Technologies ("APT") segment, our 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 currently accounts for the majority of the mercury control consumables in the North American market.

We offer 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.

AC market may see significant growth from water purification markets, especially if future regulations are passed controlling certain chemicals in drinking water.

At present, individual states are primarily responsible for the protection of groundwater.

The existing technologies for treatment, including removal of the soil for external treatment or landfill, pumping the groundwater above surface for treatment and/or installing treatment trenches or barriers, are expensive and may have complicated life-cycle management requirements.

An emerging technology generating increasing interest by site engineering firms and owners is injecting highly engineered ACs into the subsoil, also described as "in situ" treatment, to intercept the contamination plume or to treat the groundwater.

In response to this market opportunity, in late 2021, we developed a new Colloidal Carbon Product ("CCP") platform, FluxSorb IS TM , that is currently 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 our 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.

We see opportunities to continue pursuing diverse markets for our purification products outside of coal-fired power generation, including industrial applications, water treatment plants and other markets.

We believe the Supply Agreement with Cabot, as discussed below, will drive adoption of our AC products by customers in some of those diverse end-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.

Our AC sales are generally made under requirements-based contracts ranging from one to five years.

Our chemical product sales are generally made on a purchase order by purchase order basis.

Revenues from our top three customers comprised approximately 37% of our consolidated consumables revenues for the year ended December 31, 2021, and the loss of any of these customers would have a material adverse effect on our operating results.

Cabot Supply Agreement and Related Agreements

On September 30, 2020, we and Cabot Norit Americas, Inc., ("Cabot") entered into a supply agreement (the "Supply Agreement") pursuant to which we agreed to sell and deliver to Cabot, and Cabot agreed to purchase and accept from us, certain lignite-based activated carbon products ("Furnace Products").

We believe the Supply Agreement will continue to provide material incremental sales volume and lower fixed operating costs on a per unit basis for our manufacturing plant located in Louisiana (the "Red River Plant").

Further, the Supply Agreement has expanded distribution of our AC products to additional markets outside of those we have traditionally served.

As a condition to entering into the Supply Agreement, on September 30, 2020, we entered into an agreement to purchase (the "Mine Purchase Agreement") from Cabot 100% of the membership interests in Marshall Mine, LLC (the "Marshall Mine Acquisition"), which owns a lignite mine located outside of Marshall, Texas (the "Marshall Mine"), for a nominal cash purchase price.

Immediately after completion of the Mine Purchase Agreement, we independently determined to commence activities to shutter the Marshall Mine, and we will incur the associated reclamation costs as further described below.

In conjunction with the execution of the Supply Agreement and the Mine Purchase Agreement, on September 30, 2020, we entered into a reclamation contract (the "Reclamation Contract") with a third party that provides a capped cost, subject to certain contingencies, in the initial amount of approximately $19.7 million plus an obligation to pay certain direct costs of approximately $3.6 million (collectively, the "Reclamation Costs") over the estimated reclamation period of 10 years.

Under the terms of the Supply Agreement, Cabot is obligated to reimburse us for approximately $10.2 million of the Reclamation Costs (the "Reclamation Reimbursements"), which are payable semi-annually over 13 years and inclusive of interest.

As the owner of the Marshall Mine, we were required to post a surety bond to ensure performance of our reclamation activities under the Surety Bond Indemnification Agreement (the "Surety Agreement").

As of December 31, 2021, we posted a surety bond of $16.6 million.

On February 1, 2021, we 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).

Our 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.

Raw Materials

The principal raw material we use in the manufacturing of AC is lignite coal, which is readily available.

We supply 100% of the lignite coal through our ownership of the Five Forks Mine ("Five Forks") to fulfill customer orders.

Five Forks is operated for us by Demery Resources Company, LLC ("Demery"), a subsidiary of the North American Coal Company.

We may also periodically purchase various ACs to supplement our inventory levels or to produce various products to serve AC certain markets.

We purchase various additives utilized in the production of AC.

The manufacturing of AC is dependent upon these various additives that are subject to price fluctuations and supply constraints.

In addition, the number of suppliers who provide the necessary additives needed to manufacture our ACs is limited.

We purchase these additives through supply agreements or spot purchases with the producers.

Supply agreements with these producers are generally renewed on an annual basis.

We also purchase additives that are included in certain chemical products for resale to our customers through contracts with suppliers.

The manufacturing of these consumable products is dependent upon certain discrete additives that are subject to price fluctuations and supply constraints.

In addition, the number of suppliers who provide the necessary additives needed to manufacture our chemical products are limited.

Supply agreements with these producers are generally renewed on an annual basis.

We own and operate the Red River plant which is located in Louisiana.

We also lease land in which operate a manufacturing and distribution facility located in Louisiana.

Additionally, we have sales, product development and administrative operations located in Colorado.

Refined Coal ("RC")

Through December 31, 2021, Tinuum Group provided reduction of mercury and nitrogen oxide ("NO X ") emissions at select coal-fired power generators through the production and sale of RC that qualified for Section 45 tax credits.

We benefited from Tinuum Group's production and sale of RC from our share of earnings from Tinuum Group's sales or leases of RC facilities to tax equity investors.

As noted above, 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.

As such, our earnings and distributions from our RC segment substantially ceased as of December 31, 2021, and this will have a material adverse effect on our results of operations and financial position beginning in 2022.

See the separately filed financial statements of Tinuum Group included in Item 15 - "Exhibits, Financial Statement Schedules" ("Item 15") of this Report.

Our patented M-45 TM and M-45-PC TM technologies (collectively, the "M-45 Technology") are proprietary pre-combustion coal treatment technologies used to control emissions from circulating fluidized bed boilers and pulverized coal boilers, respectively.

Our patented CyClean TM technology, a pre-combustion coal treatment process provides electric power generators the ability to enhance combustion and reduce emissions of nitrogen oxides ("NO X ") and mercury from coals burned in cyclone boilers.

Our patents related to the RC segment are not expected to have significant commercial application post the expected expiration of the Section 45 tax credit period.

Our patented M-45 TM and M-45-PC TM technologies (collectively, the "M-45 Technology") are proprietary pre-combustion coal treatment technologies used to control emissions of nitrogen oxides ("NO X ") and mercury from coals burned in circulating fluidizer bed boilers and pulverized coal boilers, respectively.

Our patented CyClean TM technology, a pre-combustion coal treatment process provides electric power generators the ability to enhance combustion and reduce emissions of NO X and mercury from coals burned in cyclone boilers.

Our 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

Our RC segment derives its revenues from license royalties ("M-45 Royalties") earned under a licensing arrangement (the "M-45 License") with Tinuum Group for their use of our proprietary chemical technologies, M-45 TM and M-45-PC TM (the "M-45 Technology") at their RC facilities to treat coal for the reduction of emissions of both NO X and mercury.

For the year ended December 31, 2020, M-45 Royalties comprised 22% of our total consolidated revenues.

Through December 31, 2021 we 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 NO X and mercury.

With the closure of all of the RC facilities as of December 31, 2021, we will no longer earn M-45 Royalties and the loss of this revenue stream will have a material adverse effect on our results of operations and financial position beginning in 2022.

For the year ended December 31, 2021, M-45 Royalties comprised 14% of our total consolidated revenues and approximately 296% of our total consolidated operating income.

M-45 Royalties are recognized based upon a percentage of the per-ton, pre-tax margin as defined in the M-45 License.

We also derive substantial earnings in the RC segment from our equity method investments in Tinuum Group and Tinuum Services.

Both Tinuum Group and Tinuum Services expect to significantly wind down their operations by the end of 2021 due to the planned expiration of the Section 45 tax credit period as of December 31, 2021, and the loss of equity earnings and M-45 Royalties will have a material adverse effect on our financial condition and consolidated operating results compared to historical periods beginning in 2022.

For 2021 and 2020, we also derived substantial earnings in the RC segment from our equity method investments in Tinuum Group and Tinuum Services.

Additional information related to major customers is disclosed in Note 21 of the Consolidated Financial Statements included in Item 8 of this Report.

Coal-fired electricity generating units use RC as one of a portfolio of tools to help comply with Mercury and Air Toxics Standards ("MATS") and other environmental regulations.

These RC facilities produce and sell RC that qualifies for Section 45 tax credits, including meeting the "placed in service" requirements (referred to as "placed in service").

The IRS has issued guidance regarding emissions reductions in the production of electricity by coal-fired electric generating units, including measurement and certification criteria necessary to qualify for the Section 45 tax credits.

The ability to produce and sell RC and generate Section 45 tax credits, expires 10 years after each RC facility was placed in service, but not later than December 31, 2021.

Two of Tinuum Group's RC facilities reached their 10-year life in 2019, and Section 45 tax credits earned from these facilities expired in December 2019.

As of December 31, 2020, Tinuum Group has built and placed into service a total of 26 RC facilities that produce RC for sale to coal-fired electricity generating units, and which are still eligible to produce RC qualifying for Section 45 tax credits.

The ability to generate Section 45 tax credits related to those remaining 26 RC facilities expires in 2021.

Once an RC facility is in operation, Tinuum Group may lease or sell it to a tax equity investor, which we refer to as an "invested" RC facility.

The tax equity investor subsequently operates the RC facility to produce and sell RC to a utility.

It is financially advantageous for Tinuum Group to lease or sell an RC facility, as the tax equity investor assumes the operating expenses for the RC facility and remits to Tinuum Group either payments to purchase or lease payments to lease the RC facility.

We benefit from equity income and cash distributions from Tinuum Group.

Tax equity investors may benefit from their investment in RC facilities through the realization of tax assets and credits from the production and sale of RC.

RC facilities that are producing and selling RC and have not been leased or sold, are referred to as "retained" RC facilities, whereby the RC is produced and sold by Tinuum Group and, as an owner in Tinuum Group, we benefit from the related Section 45 tax benefits.

As of December 31, 2020 and 2019, the Section 45 tax credits were $7.301 and $7.173 per ton, respectively, of RC produced and sold to a utility.

The value of the Section 45 tax credits is adjusted annually based on inflation adjustment factors published in the Federal Register.

As of December 31, 2020, we have earned substantial tax credits from certain retained RC facilities through our ownership in Tinuum Group, but have not been able to fully utilize them.

See Note 18 to our Consolidated Financial Statements included in Item 8 - "Financial Statements and Supplementary Data" ("Item 8") of this Report for additional information regarding our net operating losses, tax credits and other deferred tax assets.

As of December 31, 2020, Tinuum Group had 23 invested RC facilities producing RC at utility sites.

Absent an extension of the Section 45 tax credit period, we do not believe that Tinuum will enter into additional contracts for invested facilities during 2021.

As of December 31, 2020, Tinuum Group had nine facilities that are leased to affiliates of The Goldman Sachs Group (the "GS Affiliates"), and one of these GS Affiliates is also an owner of Tinuum Group.

A majority of Tinuum Group's leases of RC facilities are periodically renewed and the loss of these investors or material modification to the lease terms of these facilities would have a significant adverse impact on Tinuum Group's financial position, results of operations and cash flows, which in turn would have material adverse impact on our financial position, results of operations and cash flows.

Tinuum Services operates and maintains RC facilities under operating and maintenance agreements with owners or lessees of RC facilities.

The owners or lessees of the RC facilities pay Tinuum Services, subject to certain limitations, the costs of operating and maintaining the RC facilities plus various fees.

Tinuum Services also arranges for the purchase and delivery of certain chemical additives under chemical agency agreements that include the chemicals required for our CyClean TM and M-45 Technologies that are necessary for the production of RC.

The term of each chemical agency agreement runs concurrently with the respective RC facility's operating and maintenance agreement.

Historically, we generated substantial earnings and cash distributions from our ownership in Tinuum Group, which constructed RC facilities that were either leased or sold to tax equity investors who earned Section 45 tax credits for the production and sale of RC to utilities at their respective RC facilities.

We referred to these RC facilities as "invested RC facilities."

RC facilities that produced and sold RC and were not leased or sold, but wholly or partially owned by us or Tinuum Group, were referred to as "retained" RC facilities.

Through our direct ownership in retained RC facilities or indirect ownership through Tinuum Group, we earned Section 45 tax credits at retained RC facilities for the RC that was produced and sold to utilities.

For the years ended December 31, 2021 and 2020, we earned $0.4 million and $0.4 million of Section 45 tax credits, respectively.

As of December 31, 2021, we have cumulatively earned substantial tax credits from certain retained RC facilities, but have not been able to fully utilize them.

Through December 31, 2021, Tinuum Services operated and maintained RC facilities under operating and maintenance agreements with owners or lessees of these RC facilities.

The following table provides summary information related to the Company's investment in Tinuum Group and the related RC facilities as of December 31, 2021 and tons of RC produced and sold for the year ended December 31, 2021:

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RC tons produced and sold (000's) 64,455 144

The following tables provide summary information of Tinuum Group's RC facilities as of December 31, 2019 and tons of RC produced and sold for the year ended December 31, 2019:

The following table provides summary information related to the Company's investment in Tinuum Group and the related RC facilities as of December 31, 2020 and tons of RC produced and sold for the year ended December 31, 2020:

# of RC Facilities Not Operating Invested Retained

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RC tons produced and sold (000's) 64,982 693

(1) One RC facility was approximately 50% invested with an independent third party.

As of December 31, 2019, the remaining approximate 50% was retained by Tinuum Group, the Company and another member of Tinuum Group.

During the year ended December 31, 2020, Tinuum Group sold its interest in this RC facility.

We believe Chem-Mod, LLC and licensees of Chem-Mod's technology are Tinuum Group's principal competitors.

Competition in the RC market is based primarily on price, the number of tons of coal burned at the coal-fired electric generating units where the RC facilities are operating and the tax compliance facts associated with each RC facility.

Raw Materials

The principal raw materials used in our RC products are comprised of non-bromine based halogens.

Tinuum RC facilities are located at coal-fired power plants in the U.S.

As of December 31, 2020, Tinuum Group and Tinuum Services had operations in 16 states.

Advanced Purification Technologies

Given the downward trends in the coal-fired power generation market, the prices of competing power generation sources as well as our recognition of the unavailability of Section 45 tax credits for RC after 2021, during 2020 we executed on plans to expand our AC products and diversify into new markets.

As a result, internal changes, including changes in operating structure and the method in which the Chief Operating Decision Maker ("CODM") allocates resources, resulted in the change in reportable segments.

Our AC and chemical products are used to purify coal-fired utilities, industrials, water treatment plants, and other markets.

For the purification of air and gases, one of the uses of AC is to reduce mercury emissions and other air contaminants, specifically at coal-fired power generators and other industrial companies.

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 MATS.

However, many power generators need consumable products on a recurring basis to chemically and physically capture mercury and other contaminants.

AC has widely been adopted as the best available technology to capture mercury due to product efficiency and

effectiveness and currently accounts for over 50% of the mercury control consumables North American market.

For the purification of water, AC has been used in the treatment of drinking water, wastewater, contaminated soil and groundwater to absorb 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 in the last 10 years.

AC market may see significant growth from water purification markets, especially if future regulations are passed controlling certain chemicals in drinking water.

At present, individual states are primarily responsible for the protection of groundwater.

Coal, as a fuel source for electricity generation, continues to be a significant source of power generation, although significantly decreased from when coal was the primary power generation source for the country.

We see opportunities to continue to pursue diverse markets for our purification products outside of coal-fired power generation, including industrial applications, water treatment plants and other diverse markets.

We expect the Supply Agreement with Cabot, as discussed above, does help expand our AC products into some of those diverse end-markets.

Sales and Customers

Sales of consumables are primarily made by the Company’s employees to a range of customers, including coal-fired utilities, industrial companies, water treatment plants and other customers.

Some of our sales of AC are made under annual requirements-based contracts or longer-term agreements.

Revenues from our top three customers comprised approximately 28% of our consolidated consumables revenues for the year ended December 31, 2020, and the loss of any of these customers would have a material adverse effect on the APT operating results.

Our primary competitors for consumable 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.

Raw Materials

The principal raw material we use in the manufacturing of AC is lignite coal, which is, in general, readily available and we believe we have an adequate supply through our ownership of the Five Forks Mine, which is operated for us by Demery Resources Company, LLC ("Demery"), a subsidiary of the North American Coal Company.

We purchase additives that are included in certain chemical products for resale to our customers through contracts with suppliers.

The manufacturing of these consumable products is dependent upon certain discrete additives that are subject to price fluctuations and supply constraints.

In addition, the number of suppliers who provide the necessary additives needed to manufacture our products are limited.

Supply agreements with these producers are generally renewed on an annual basis.

We own and operate the Red River plant that is located in Louisiana.

We also lease a manufacturing and distribution facility located in Louisiana.

Additionally, we have sales, product development and administrative operations located in Colorado.

The principal raw materials used in our RC products were comprised of non-bromine based halogens.

Tinuum RC facilities were located at coal-fired power plants in the U.S.

Research and Development Activities

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Legislation and Environmental Regulations

Our products and services, as well as Tinuum Group’s production and sale of RC, are for the reduction of pollutants and other contaminants.

To the extent that legislation and regulation limit the amount of pollutants and other contaminants permitted, the need for our products increases.

Our products and services, as well as Tinuum Group’s production and sale of RC, are used for the reduction of pollutants and other contaminants.

Legislation and regulation limit the amount of pollutants and other contaminants permitted and may increase the need for our product.

Below is a summary of the primary legislation and regulation that affects the market for our products.

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Environmental Protection Agency ("EPA") final "MATS Rule" went into effect in April 2012.

The EPA structured the MATS Rule as a MACT-based hazardous pollutant regulation applicable to coal and oil-fired Electric Utility Steam Generating Units ("EGU"), which generate electricity through steam turbines and have a capacity of 25 megawatts or greater, and provide for, among other provisions, control of mercury, control of acid gases such as hydrochloric acid ("HCl") and other Hazardous Air Pollutants ("HAPs").

Approximately 1,260 units were coal-fired EGUs when the rule was enacted.

According to our estimates, the MATS Rule sets a limit that we believe requires the capture of up to 80-90% of the mercury in the coal burned in electric power generation boilers as measured at the exhaust stack outlet for most plants.

The EPA structured the MATS Rule as a Maximum Achievable Control Technology-based ("MACT-based") hazardous pollutant regulation applicable to coal and oil-fired Electric Utility Steam Generating Units ("EGU"), which generate electricity through steam turbines and have a capacity of 25 megawatts or greater, and provide for, among other provisions, control of mercury, control of acid gases such as hydrochloric acid ("HCl") and other Hazardous Air Pollutants ("HAPs").

Approximately 1,260 units in the U.S.

were coal-fired EGUs when the rule was enacted.

According to our estimates, the MATS Rule sets a limit that we believe requires the capture of 80-90% plus of the mercury in the coal burned in electric power generation boilers as measured at the exhaust stack outlet for most plants.

The MACT standards are also known as National Emission Standards for Hazardous Air Pollutants ("NESHAP").

Plants generally had four years to comply with the MATS Rule, and we estimate that, based on data reported to the EPA and conversations with plant operators, most plants were required to comply by April 2016 and implementation of the MATS Rule is now largely complete.

We estimate that 42% of the coal-fired EGUs that were operating in December 2011 when the MATS Rule was finalized have been permanently shut down, leaving approximately 527 EGUs in operation at the end of 2019.

Plants generally had four years to comply with the MATS Rule, and implementation of the MATS Rule is now largely completed.

We estimate that 52% of the coal-fired units that were operating in December 2012 when the MATS Rule was finalized have been permanently shut down, leaving approximately 518 units in operation in the U.S.

at the end of 2021.

In April 2017, a review by the U.S.

Court of Appeals for the D.C.

Circuit (the "D.C.

Circuit") of a 2016 'supplemental finding' associated with the cost benefit analysis of the MATS Rule conducted by the EPA was stayed at the request of the Trump Administration.

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However, the EPA expressly stated that the reconsideration neither removed coal- and oil-fired EGUs from the list of sources that must comply with the MATS rule, nor rescinded the MATS Rule, which has remained continuously in effect.

ADES joined a number of parties in seeking review of this EPA action before the U.S.

Court of Appeals for the D.C.

ADES joined a number of parties in seeking review of this EPA action before the D.C.

President Biden identified EPA’s withdrawal of the supplemental finding as one of the actions to be reviewed for conformity with Biden Administration policy, and in February 2021, the Biden Administration moved that the pending judicial review of the supplemental finding withdrawal be held in abeyance.

The Court has granted the administration’s motion, and this appeal also is now in abeyance.

On February 9, 2022, the EPA published a new proposed rule revoking the May 2020 withdrawal of the 2016 supplemental finding and affirming that it is "appropriate and necessary" to regulate HAP emissions from coal- and oil-fired EGUs, which is currently pending.

Circuit granted the Biden Administration’s motion, and this appeal also is now in abeyance.

The MATS Rule remains in effect.

State Mercury and Air Toxics Regulations Affecting EGUs

In addition, certain states have their own mercury rules that are similar to or more stringent than the MATS Rule, and coal-fired electricity generating units in the U.S are subject to consent decrees that require the control of acid gases and particulate matter, in addition to mercury emissions.

In addition, certain states have their own mercury rules that are similar to or more stringent than the MATS Rule.

Coal-fired electricity generating units in the U.S are subject to consent decrees that require the control of acid gases and particulate matter, in addition to mercury emissions.

Federal Industrial Boiler MACT

In January 2013, the U.S.

EPA issued the final set of adjustments to the MACT-based air toxics standards for industrial boilers, including mercury, particulate matter, and acid gas emission limits.

In January 2013, the EPA issued the final set of adjustments to the MACT-based air toxics standards for industrial boilers, including mercury, particulate matter and acid gas emission limits.

Existing boilers typically had until January 31, 2017 to comply with the rule.

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The EPA estimated that approximately 600 coal-fired boilers will be affected by IBMACT, in industries such as pulp and paper.

Our estimates, based on conversations with plant operators, suggest that most of the affected plants have or will either shut down or switch fuels to natural gas to comply with the regulation.

Our estimates, based on conversations with plant operators, suggest that most of the affected plants have either shut down or switched fuels to natural gas to comply with the regulation.

Effluent Limitation Guidelines

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It does, however, propose to establish a voluntary incentives program for the removal of certain halides.

under several (though not all) of the proposed treatment options that the EPA is considering, selenium in FGD wastewater would be regulated.

(though not all) of the proposed treatment options that the EPA is considering, selenium in FGD wastewater would be regulated.

Some halogens may impact the effectiveness of biological wastewater treatment systems that are often used for the removal of selenium.

On August 3, 2021, the EPA initiated a supplemental rule-making initiative to strengthen certain discharge limits and intends to issue a proposed rule for public comment in Fall of 2022.

Additional U.S.

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Under the CPP, states were required to prepare "State Plans" to meet state targets based on emission reductions from affected sources.

The CPP was challenged by multiple states in the U.S.

Court of Appeals for the District of Columbia Circuit ("DC Circuit").

The CPP was challenged by multiple states in the D.C.

The CPP was stayed by the U.S.

Supreme Court.

The DC Circuit held the CPP litigation in abeyance until April 28, 2017, and dismissed the case once the EPA replaced the CPP.

In July 2019, the EPA repealed the CPP and replaced it with the Affordable Clean Energy ("ACE") rule, which established guidelines for states to follow in developing plans to reduce GHG emissions from fossil fuel-fired power plants.

Circuit held the CPP litigation in abeyance until April 28, 2017, and dismissed the case once the EPA repealed the CPP in July 2019.

The EPA repealed the CPP and replaced it with the Affordable Clean Energy ("ACE") rule, which established guidelines for states to follow in developing plans to reduce GHG emissions from fossil fuel-fired power plants.

ACE also requires states to prepare State Plans and prescribes that they must be based on heat rate improvements at affected plants.

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Circuit, which vacated the ACE rule on January 19, 2021.

On February 12, 2021, EPA stated that neither the ACE or CPP regulations were in place with respect to GHGs for fossil fuel-fired power plants.

International Regulations

There are various international regulations related to mercury control.

In Canada, the Canada-Wide Standard ("CWS") was initially implemented in 2010, with increasingly stringent limits through 2020 and with varying mercury emissions caps for each province.

In Canada, the Canada-Wide Standard ("CWS") was initially implemented in 2010, with increasingly stringent limits through 2020 and varying mercury emissions caps for each province.

China and Germany both have limits for mercury emissions that are less stringent than U.S.

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In May 2017, the EU ratified the Minimata Convention on Mercury, triggering mercury control regulations with implementation starting in 2021.

Specific emissions limits are currently being developed guided by the best available technologies reference ("BREF") document for limiting stack emissions and liquid effluents from industrial processes.

Specific emissions limits for dust, nitrogen oxides (NOx), sulfur dioxide (SO 2 ), mercury and particulate matter (PM) are currently being developed guided by the best available technologies reference ("BREF") document for limiting stack emissions and liquid effluents from industrial processes.

The BREF conclusions for large coal-fired electricity generating units were adopted by the European Commission in July 2017.

Based upon the existing and potential regulations, we believe the international market for mercury control products may expand in the coming years.

We believe the EMEA Supply Agreement will help facilitate positioning our patent portfolio and existing commercial products in the EMEA region.

Based on the existing and potential regulations, we believe the international market for mercury control products may expand in the coming years.

We believe the EMEA Supply Agreement with Cabot will help facilitate positioning our patent portfolio and existing commercial products in the EMEA region.

Mining Environmental and Reclamation Matters

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The Five Forks Mine operates in Louisiana, which has achieved primacy and issues permits in lieu of the OSM.

The Marshall Mine operates in Texas, which has achieved primacy and issues permits in lieu of the OSM.

The Marshall Mine operates in Texas, which has also achieved primacy and issues permits in lieu of the OSM.

Mine operators are often required by federal and/or state laws, including SMCRA, to assure, usually through the use of surety bonds, payment of certain long‑term obligations including mine closure or reclamation costs, federal and state workers’ compensation costs, coal leases and other miscellaneous obligations.

Although surety bonds are usually noncancelable during their term, many of these bonds are renewable on an annual basis and collateral requirements may change.

As of December 31, 2020, we posted a surety bond of approximately $6.7 million for reclamation of the Five Forks Mine and $30.0 million for the reclamation of Marshall Mine.

As of December 31,

2021, we posted a surety bond of approximately $7.5 million for reclamation of the Five Forks Mine and $16.6 million for the reclamation of Marshall Mine.

As of December 31, 2021, we 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 five international patent applications that were either pending or filed relating to different aspects of our technology.

Our existing patents generally have terms of 20 years from the date of filing, with our next patents expiring beginning in 2021.

We consider many of our patents and pending patents to be critical to the ongoing conduct of our business.

provisional patents or applications that were pending, and two international patent applications that were either pending or filed relating to different aspects of our technology.

Our existing patents generally have terms of 20 years from the effective date of filing, with our next patents expiring beginning in 2022.

Seasonality of Activities

The sale of our consumable products and RC facility operation levels depend on the operations of the power generation units and industrial facilities to which the applicable consumables are provided and the location of the RC facilities, respectively.

The sale of our 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 upon the operation of the boilers.

During the period in which an outage may occur, which may range from one week to over a month, no consumables are used and no RC is produced or sold, and our earnings and Tinuum's revenues may be correspondingly reduced.

Additionally, power generating units routinely schedule maintenance outages in the spring and/or fall depending on the operation of the boilers.

During the period in which an outage may occur, which may range from one week to over a month, no consumables are used, and our sales may be correspondingly reduced.

The sale of our AC products for water purification depends on demand from municipal water treatment facilities where these products are utilized.

Depending on weather conditions and other environmental factors the summer months historically have the highest demand for PAC, as one of the major uses for PAC is for the treatment of taste and odor problems caused by increased degradation of organic contaminants and natural materials in water during the summer.

Depending on weather conditions and other environmental factors, the summer months historically have the highest demand for PAC, as one of the major uses for PAC is for the treatment of taste and odor episodes caused by increased degradation of organic contaminants and natural materials in water during the summer.

Safety, Health and Environment

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These SH&E Regulations include requirements to maintain and comply with various environmental permits related to the operation of many of our facilities, including mine health and safety laws required for continued operation of the Five Forks Mine.

As of December 31, 2020, we employed 136 personnel, all of which were full-time employees;

35 employees were employed at our offices in Colorado and 101 employees were employed at our facilities in Louisiana.

As of December 31, 2021, we employed 139 personnel, 27 in Colorado and 112 in Louisiana, all of which were employed full-time.

Available Information

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The information contained on our website shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act.

Copies of Corporate Governance Documents

The following Company corporate governance documents are available free of charge at our website at www.advancedemissionssolutions.com and such information is available in print to any stockholder who requests it by contacting the Secretary of the Company at 8051 E.

Maplewood Ave, Suite 210, Greenwood Village CO, 80111.

• Certificate of Incorporation

• Code of Ethics and Business Conduct

• Insider Trading Policy

• Whistleblower Protection Policy

• Board of Directors Responsibilities

• Audit Committee Charter

• Compensation Committee Charter

• Nominating and Governance Committee Charter

Forward-Looking Statements Found in this Report

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Words or phrases such as "anticipates," "believes," "expects," "intends," "plans," "estimates," "predicts," the negative expressions of such words, or similar expressions are used in this Report to identify forward-looking statements, and such forward-looking statements include, but are not limited to, statements or expectations regarding:

(a) the scheduled expiration of the IRC Section 45 tax credit period in 2021 and the resulting wind down of the business of, and loss of revenue from, Tinuum Group and Tinuum Services;

(b) the production and sale of RC by RC facilities through the remainder of 2021 that will qualify for Section 45 tax credits;

(c) expected growth or contraction in and potential size of our target APT markets, including the water purification, food and beverage and pharmaceuticals markets;

(d) expected supply and demand for our APT products and services;

(e) increasing competition in the APT market;

(a) expected growth or contraction in and potential size of our target APT markets, including the water purification, food and beverage and pharmaceuticals markets;

(b) the anticipated effects from the increase in pricing of our APT products;

(d) increasing competition in the APT market;

(e) the timing and effects of our review of strategic alternatives;

(f) future level of research and development activities;

(g) the effectiveness of our technologies and the benefits they provide;

(h) probability of any loss occurring with respect to certain guarantees made by Tinuum Group ("Party Guarantees");

(h) probability of any loss occurring with respect to certain guarantees made by Tinuum Group;

(i) the timing of awards of, and work and related testing under, our contracts and agreements and their value;

(j) the timing and amounts of or changes in future revenues, royalties earned, backlog, funding for our business and projects, gross margins, expenses, earnings, tax rates, valuation allowance on our deferred tax assets, cash flows, license royalties, working capital, liquidity and other financial and accounting measures;

(k) the outcome of current legal proceedings;

(j) the timing and amounts of or changes in future revenues, royalties earned, backlog, funding for our business and projects, margins, expenses, earnings, tax rates, cash flows, royalty payment obligations, working capital, liquidity and other financial and accounting measures;

(k) the amount of future capital expenditures needed for our business;

(l) awards of patents designed to protect our proprietary technologies both in the U.S.

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(a) coal will continue to be a significant source of fuel for electrical generation in the U.S.;

(b) the IRS will allow the production and sale of RC to qualify for Section 45 tax credits through December 31, 2021;

(c) we will continue as a key supplier of consumables to the coal-fired power generation industry as it seeks to implement reduction of mercury emissions;

(d) we will be able to obtain adequate capital and personnel resources to meet our operating needs and to fund anticipated growth and our indemnity obligations;

(e) Cabot will continue to purchase Furnace Products from us under the Supply Agreement in the quantities specified;

(f) we will be able to establish and retain key business relationships with current and other companies;

(g) orders we anticipate receiving will be received;

(h) we will be able to formulate new consumables that will be useful to, and accepted by, the APT markets;

(i) we will be able to effectively compete against others;

(j) we will be able to meet any technical requirements of projects we undertake;

(k) we will be able to utilize the Section 45 tax credits we have earned before they expire.

(b) we will continue as a key supplier of consumables to the coal-fired power generation industry as it seeks to implement reduction of mercury emissions;

(c) we will be able to obtain adequate capital and personnel resources to meet our operating needs and to fund anticipated growth and our indemnity obligations;

(d) Cabot will continue to purchase Furnace Products from us under the Supply Agreement in the quantities specified;

(e) we will be able to establish and retain key business relationships with current and other companies;

(f) orders we anticipate receiving will be received;

(g) we will be able to formulate new consumables that will be useful to, and accepted by, the APT markets;

(h) we will be able to effectively compete against others;

(i) we will be able to meet any technical requirements of projects we undertake.

The forward-looking statements included in this Report involve risks and uncertainties.

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technical, start up and operational difficulties;

decreases in the production of RC;

our inability to commercialize our APT technologies on favorable terms;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business