The Mysterious Mister Tien

The city of Cleveland and Cleveland Public Power made up their minds back in 2008: A revolutionary system that would vaporize trash was definitely the way to go.

The so-called "gasification plant" would fit nicely at the city's Ridge Road garbage transfer station, and it would save oodles of cash that for years has been forked over to a landfill in Mansfield. Plus, the gas that would stream from it could fire boilers that would generate free electricity for the city. The new plant would even turn useless garbage sludge into fuel pellets and decorative bricks that could be sold on the side.

And they found the perfect company to help spin their trash into gold: Kinsei Sangyo of Japan had advertised garbage-gassing units so clean and so green that only wisps of what looks like water vapor float from the stacks. Cleveland would be the first city in the U.S. to showcase the Kinsei technology — a new toy to wave in front of jealous neighbors.

So Cleveland Public Power called the only company licensed to sell Kinsei units in the U.S.: Princeton Environmental Group, based in New Jersey and headed by a man named Peter Tien. He made wonderful promises: a $180 million gasification plant would employ 90 to 120 Clevelanders. A Kinsei manufacturing facility would be built here, and Cleveland would become an epicenter for plant design and manufacturing across the country.

In order to witness the gasification majesty in action, the city paid for a junket to Asia in August 2009. For Tien, the trip marked the ideal opportunity to trot out another enviro-happy sales pitch: Could your fine city use some LED light bulbs too?

Tien, it turned out, also represented Chinese LED maker Sunpu Opto Semiconductor — and did he have a deal for Cleveland: For the low price of 10 years' worth of LED bulbs, Sunpu would build an LED factory on our shores, complete with 350 new jobs.

With visions of trash and light-bulb supremacy dancing in their heads, city officials delightedly forged ahead with Sunpu Opto. East Cleveland-based GE, which happens to specialize in light bulbs, was not as delighted. Neither were other U.S. LED companies, who were curious why they never had a shot at such a contract.

Outrage ensued, the city asked for contract bids, and in the end, Sunpu Opto didn't even try to compete — the company couldn't live up to the promises Tien had said it would. Neither could GE or anyone else, for that matter.

Yet in the midst of Cleveland's Great LED Fiasco of 2010, city leaders signed a $1.5 million no-bid contract with Tien's Princeton Environmental for preliminary designs and an EPA permit for a Kinsei gasification plant. The money is held in an escrow account, and Tien earns his cut once the EPA permit is approved.

But if the LED incident wasn't enough to sprout doubt about Tien's promises, recent gasification dealings should.

Scene obtained a string of e-mails between Cleveland Public Power and Tien indicating that trouble started last spring. Not only did Tien ask for a contract modification allowing him more time to produce the required design reports; he requested a $600,000 advance on his $1.5 million so he could pay his subcontractors.

"Transparency of process with a clear and well-developed timeline and milestones is what I need from you in order to remain confident of your ability to deliver on the contract," CPP Commissioner Ivan Henderson replied to one such request from Tien in April.

The city didn't hand over the cash, but it did extend Tien's deadlines. Now, with the EPA permit en route to approval, the city and CPP seem to have cooled to Tien's advances.

Henderson says the city's contract with Tien expires at the end of the year. And he knows that Tien wants to be the one to bring a gasifier here. "So would a lot of people," is his quick response. "We will put the project out for bids, and if he would like to bid, that's fine."

But if the EPA permit is approved and a gasifier company other than Kinsei is chosen, Tien walks away with a cool $1.5 million for his three-year affair with Cleveland, and the city will be left holding a pile of recommendations and a worthless EPA permit. (The city of Cleveland did not respond to Scene's requests for an interview with Mayor Frank Jackson for this story.)

Meanwhile, environmental groups have grown increasingly concerned that Cleveland is getting gassed in the deal.

"The city has gotten itself into this one company, this one technology. Why?" asks Sandy Buchanan, executive director of Ohio Citizen Action, a pollution watchdog group. "There are hundreds of technologies out there."

THE ANSWER MAN

Clevelanders have been scratching their heads over where the cash-strapped city will get the $180 million Tien has estimated it will take to build a gasification plant on Ridge Road.

Tien is quick with a plan. Only problem: His idea will cost more. Tien says he's negotiated a $300 million financing package if the city chooses a Kinsei plant.

"The city now has an option instead of using taxpayer dollars," says the sixtyish Tien, a Taiwanese transplant who ventured to California in 1972 armed with an engineering degree from back home. Most of those millions will pour into the local economy, creating construction and manufacturing jobs, he says. Not only that: The package includes $28 million for new garbage trucks the city would need to increase curbside recycling efforts to 100 percent.

"People ask, 'Where will the money come from?' Investment trusts," Tien says with a quickness that seems inherent to his Asian accent. But he declines to name them. "It's taken us seven years to get this far. Why would I tell anyone else how to do it?" For now, he'll say only that those involved include major financial institutions looking for a long-term opportunity outside the stock market.

According to Tien, the investment trust money will pay for everything, and the city will lease the plant for 25 years. He estimates Cleveland could profit $1 to $2 million a year on recyclables and fuel pellets and decorative bricks. While the city currently pays about $65 a ton to process trash and dump it in a landfill, Kinsei gasification will cost only $26 a ton, he says.

How much will the city's lease cost? "I don't know," Tien responds. But the fringe benefits would seem to cover any expenses.

In a slide presentation before city council in February, Tien listed among Cleveland's rewards not only the Kinsei parts manufacturing facility that would be built here, but an assurance that 14 related companies would set up shop here as a result.

Nine months later, the new Kinsei manufacturing plant has fallen out of the conversation; Tien now says Kinsei's parts will be made by existing local companies. He's also grown sketchy on details of the 14 other companies eager to move here.

"We are working with Honeywell; they will move here — we want them to," he says. "We will tell them if [they] want to work with us on this project, come to Cleveland and make it their regional headquarters."

But Tien stops short of actually naming a second — or 14th — company. "We will ask the same for people who make gasifiers, turbines, and civil engineers. Then using this project," he says, "we've created a whole new industry for the city of Cleveland" — an industry that will serve other U.S. cities that Tien claims will follow our lead.

"I'm working with three major cities now, and they will be contracted by the end of next year," he says. And which cities might those be?

"They are among the top 10 U.S. cities," is all he will say.

As for the EPA permit he submitted on the city's behalf, Tien is unable to stifle his enthusiasm: "The EPA permit has been approved!"

And with it rides his $1.5 million payday.

THE PRINCETON SHELL GAME

Why is Peter Tien doing all this?

"I'm an environmentalist, he says. "My job is to reduce emissions." And of the owner of Kinsei who developed the system, he notes, "his technology should be able to do something good for all of society. Money to him is no longer the issue; it's more humanitarian."

Unbidden, Tien interjects this: "Before I came to Cleveland, I didn't know anyone in Cleveland. I never attended any political function, never paid a dollar to any political campaign. I don't do business by buying somebody dinner."

Maybe not. But there is no shortage of holes in his grandiose claims.

"There are no plans to move Honeywell's headquarters to Cleveland," says Marie Yarroll, a spokeswoman for the Fortune 100 company. "Any claim that we are moving there is 100 percent false." After several weeks of investigating, a small cadre of Honeywell management types were unable to confirm that the New Jersey conglomerate has any connection with Tien at all.

As for Tien's exuberant claim that the EPA permit has been approved? Not quite. The EPA issued a preliminary permit just last week, but an approval or rejection hinges on a public hearing set for early January, followed by another EPA review.

"I would expect a final decision in late winter/early spring," says EPA spokesman Mike Settles.

Given his penchant for international commerce, one might expect Tien to do business from a sleek East Coast complex. But the address he listed for Princeton Environmental Group on the city contract in March 2010 is actually in an industrial park adjacent to Newark Airport. There is currently no Princeton listed among its tenants.

The Princeton website, however, lists an address and phone number belonging to a ramshackle strip building in Queens, New York, with three tenants — none of them named Princeton. But there is a firm by the name of National Logistics & Equipment, which sells alarms and surveillance gear. According to New Jersey state records, it was incorporated by Peter Tien in 2002. It's in the back. And when you call its number, Tien answers the phone.

If the number at National Logistics appears to be a reliable place to find Tien, it happens not to be the contact info he shared on his EPA permit application in March.

That number rings through to a fax machine at Dobco Inc., a New Jersey firm with a long résumé of green construction projects for governments and private businesses. Tien's original proposal to Cleveland includes Dobco as a partner in the deal — but that now seems to be off the table.

"Peter Tien left here in early September," Dobco President Michael Dobric tells Scene. "He's on his own."

Back here in the future headquarters of all things environmental and lucrative, Princeton Environmental was slated to operate a downtown office staffed with local workers by March 2010, according to contract stipulations.

On the one invoice submitted to the city so far — for a tidy $300,000, just for signing the contract — Princeton lists a Chester Avenue address. That office turns out to be a locked room in the back of an office occupied by Ralph Tyler Companies, an engineering firm.

"That's my engineering firm," Tien says, implying he hired Ralph Tyler to work on the plant designs. A sign taped to the wall shows visitors to Princeton's door. But people working on the same floor tell Scene that Princeton has no staff, no assistant, and that Tien himself is rarely seen.

Messages left for Ralph Tyler's CEO inquiring whether Tien has enlisted the company's engineering services were not returned.

On that $300,000 invoice, Tien lists National Logistics' New Jersey phone number along with the Cleveland address.

"They couldn't even bother to get a fake Cleveland phone number," says Ohio Citizen Action's Buchanan.

A PILE OF DISCREPANCIES

If it seems Peter Tien can't get his house in order, the same might be said of his assurances to Cleveland.

Told of Tien's grand $300 million financing plan and his long-term aspirations for the city, Cleveland Public Power's Henderson says, "He was never directly involved with any of those things."

The websites for Kinsei and Princeton Environmental list no U.S. cities other than Cleveland with which the company is working to build gasification plants — the plants that Cleveland manufacturers will make parts for, according to Tien's plan.

But there is one U.S. city that does document a Tien production — more of a misadventure, actually. And it isn't Houston or Chicago or L.A.

In 2007, the eastern Ohio metropolis known as Clyde (population: 6,080) struck a deal for a smaller Kinsei gasification plant that would be run by Princeton, which would in turn sell the power to the city. By the end of the year, however, Clyde City Council reversed a purchase agreement made with Tien. The city continued to entertain Tien's proposals until late 2008, when it turned instead to versions of similar waste technology made by U.S. companies.

"I understand the financials weren't there [from Princeton] as promised," says Clyde economic development manager Adam Greenslade, who was not yet working for the city at the time of the failed dealings.

Not only will Clyde not be buying gasifier parts from future Cleveland-based manufacturers, but another huge potential parts client has also fallen by the wayside.

According to Cleveland City Councilman Brian Cummins, who has been dubious of the deal all along, Tien also told city officials that the U.S. military was in line to buy gasification units that could ultimately be serviced by the manufacturers who set up shop here.

But the military's not marching to Tien's tune.

"What we were looking at was not the same situation you have in Cleveland," says a source who investigated gasification technology for the U.S. Department of Defense and who spoke to Scene on the condition of anonymity. "Ours was focused on a mobile unit for 'contingency purposes' — which basically means war. So it was a much, much smaller unit." The military ultimately chose a different provider.

"I spoke to Peter Tien," the source says. "If you end up working directly with Kinsei ... it certainly didn't feel like a fly-by-night company."

There's more evidence that Tien's notion of Cleveland as the gasifier capital of America is a somewhat distant vision. He has partnered with companies interested in building the plants stateside, but most, like Spectrum Energy of New Hampshire, are waiting to see how it works in Cleveland first — and how much it will cost us.

"We are looking to Cleveland as the model," says Spectrum President Mike Koutelis. "The question becomes 'Can you afford it?'" It will be a while, he adds, before his company embraces similar projects.

"We know what's happening in Japan. We'd like to see more in the ground in the United States first."

THE WRONG KIND OF RECYCLING

"I don't understand how intelligent people could get caught up in this," says Neil Seldman, a recycling and job creation expert, and founder of the Institute for Local Self Reliance in Minneapolis. The institute helps cities of all sizes plan mass recycling, composting, and zero-landfill waste solutions that attract businesses to communities and create jobs.

"On the surface, this deal is a phony. The economics haven't been calculated. It's coming from the developer, not a businessman; the technology hasn't been done here before," he says. "All this is silliness."

Seldman estimates that it will cost the city about $110 per ton to gasify trash — not the $26 cited by Tien. In addition, he says that while Princeton claims 90 to 120 workers will be needed to operate the plant, such a plant would likely create no more than 50 jobs.

In May, Ohio Citizen Action, Environmental Health Watch, the Earth Day Coalition, and the Northeast Ohio Sierra Club brought Seldman to Cleveland to meet with West Siders and city officials. He offered alternative solutions to gasification that he says would have Cleveland profiting more from its trash.

"The city already has a good contract for [earning] $69 a ton for its recyclables," Seldman says. But that's for what's known as a "mixed stream," where paper, plastic, aluminum, and glass are collected together. Collecting separated recyclables instead makes them more valuable. Paper uncontaminated with other materials, for example, can bring more than $200 a ton, according to Seldman.

"The only reason we went with gasification was that we didn't know these other alternatives were available," Cleveland "sustainability czar" Andy Watterson said during the meeting with Seldman. (Watterson left the post October 31 to join BrownFlynn, a company specializing in sustainability practices.)

"I offered to come back to Cleveland free of charge to discuss it," Seldman says. "I never heard from them."

One problem is that Cleveland's recycling efforts started six years ago as a mixed-stream curbside program for one-tenth of its residents. Since then, it has doubled in size, says councilman Cummins. "The city already put itself on a mixed-waste recycling stream, which doesn't mesh well with what Neil says — that single stream has more upsell."

"Why can't they go back and start a single-stream recycling program?" Citizen Action's Buchanan counters. Her group and others meet twice a month to plan their strategy for fighting the Ridge Road plant.

Tien claims that Kinsei's secret technology would reduce cancer-causing dioxin formation, mercury, and emissions to the lowest levels ever seen. "We are the only gasifier that qualifies with the EPA as a 'minor' pollution source," he says. "All the other companies would be 'major' polluters."

That is a key issue in Cuyahoga County, which the EPA says can have no additional major polluters because the dirt in our air already exceeds the agency's allowable limit.

But local environmental groups are suspicious of Tien's clean-air claims and haven't been able to evaluate them; key numbers on the EPA permit application he submitted were redacted. The EPA allowed the redactions when Kinsei argued that making those numbers public would give away the company's trade secrets.

Inquiries from Scene and the Natural Resources Defense Council led the EPA to contact Kinsei, and an unredacted EPA permit application was released in mid-November.

Among the redacted items: the amount of gas the plant would produce and the amount of steam for electricity it would generate — both key to evaluating whether the gasifier would produce enough electricity to justify its cost.

As for the environmental fallout? All of the latest gasifiers tend to be fairly clean and efficient, according to experts with the National Renewable Energy Laboratories in Colorado. Gasification engineer Richard Bain cannot say whether Kinsei's unit is any cleaner than those of other makers, because no comparative studies have been done. In general, he says, modern gasifiers are 65 to 80 percent efficient, compared to 35 percent efficiency for most coal-fired electricity.

"But the challenge you have is while we can show on paper it is more efficient, they are going to be more expensive," Bain says. In other words: The electricity gasification produces will cost more than what Cleveland currently pays to buy it — about three times more. The current plan is for the gasifier to generate about 7 percent of Cleveland's overall power needs.

But it doesn't appear the city is interested in less expensive alternatives.

In September, Cleveland Public Power asked 120 gasifier manufacturers, recycling companies, consultants, and project developers for information about their products and services — information similar to what Tien is being paid $1.5 million to provide.

"[It] is intended to get industry input on what they recommend we do next with the project," Commissioner Henderson says. "We will hire a consultant to evaluate all the responses. It is our intent to move pretty quickly going forward."

Twenty companies responded, and several claim they can meet or exceed the clean-air standards Tien says only Kinsei is capable of producing.

If the EPA approves the Kinsei permit but the city chooses another company, Tien will be $1.5 million richer and Cleveland will start all over again.

And if Cleveland remains set on using Kinsei, it has more promises from Peter Tien to look forward to.