NIST GCR 05-879 —Photonics Technologies:Applications in Petroleum Refining, Building Controls, Emergency Medicine, and Industrial Materials Analysis

EXECUTIVE SUMMARY

Photonics is a class of enabling infrastructure technologies that promises broad economic benefits by bringing together technical advances from optics and electronics to develop high-performance manufacturing processes, ultra-high-sensitivity metrologies, and new products.

Historically, U.S. photonics companies, despite a strong base in fundamental research and basic photonics technologies, tended to be financially successful when exceptional performance was critical and where market sizes were small. U.S. photonics companies are apt to be less successful when efficient mass production is required.

Recognizing the potential for broad-based economic impact from reversing these tendencies, the Advanced Technology Program (ATP) has provided cost-sharing funding for more than 120 photonics projects from the time of its inception in the early 1990s, focusing on:

• Developing photonics design tools
• Miniaturizing and integrating opto-electronic macrosystems
• Developing photonics-based metrologies for ultra-sensitive measurements
• Progressing toward cost-efficient, high-quality photonics fabrication, at scales approaching mass production

To assess the economic benefits from a portion of ATP-funded photonics projects, a cluster study approach was used to combine the methodological advantages of detailed case studies and of higher level overview studies. By using this hybrid analytical approach, the following five projects were selected for analysis:

• Capillary Optics for X-Ray Focusing and Collimating (X-Ray Optical Systems, Inc.)
• MEMS-Based Infrared (Photonic Crystal) Micro-Sensor for Gas Detection (Ion Optics, Inc.)
• Infrared Cavity Ring-Down Spectroscopy (Picarro, Inc.)
• Optical Maximum Entropy Verification (Physical Optics Corporation)
• Integrated Micro-Optical Systems (Digital Optics Corporation)

Though the five projects were not intended to be representative of ATP's total investment in photonics technologies, they did span a broad range of applications including industrial materials analysis, petroleum refining and distribution, medicine, and building controls. From initial examination, these projects appeared to have achieved important technical accomplishments and made considerable progress toward full commercialization.

Two projects that showed actual commercial deployment or highly probable, near-term prospects for commercial deployment and substantial associated economic benefits were singled out for case studies: Capillary Optics for X-Ray Focusing and Collimating, with application in the petroleum, materials analysis, and semiconductor sectors; and MEMS-Based Infrared (Photonic Crystal) Micro-Sensor for Gas Detection, with initial application in measuring CO2 levels in emergency medicine and commercial building controls.

Detailed case studies for these two projects were conducted to identify key technical accomplishments, to identify pathways to market, and to quantify clinical benefits, energy saving benefits, and efficiency benefits.

This report describes the results of those two case studies and the results of higher level analyses for three additional photonics projects. Data collection and analysis were started in 2004 and completed in early 2005.

Case Study: Capillary Optics for X-Ray Focusing and Collimating

X-Ray Optical Systems, Inc., of East Greenbush, NY, used ATP cost-share to develop high transmission efficiency optics using tiny capillary glass tubes to guide and focus X-rays. The project led to fully commercial optical products used as performance-enhancing components in industrial materials analysis as well as optical components in industrial process sensors to detect trace-level contaminants in petroleum refining and distribution.

Public benefits to industry users and the general public from this ATP cost-shared project were quantified on the basis of conservatively estimated unit sales estimates of up to 300 performance-enhancing X-ray optics and process sensors each year. Private benefits to X-Ray Optical Systems were excluded.

Public returns from this project on ATP's investment over a 20-year period (1994-2014) indicate net present values ranging from $184 to $233 million and benefits of $75 to $94 for every dollar invested. Retrospective benefit analysis alone, over the 1994-2003 period, indicates a realized net present value of $7.40 million and realized benefit-to-cost ratio of $4 of public benefits for every dollar invested by ATP.

These economic performance metrics reflect cost savings from the use of X-ray optics in industrial materials analysis, as well as in energy savings and corresponding cost savings at U.S. petroleum refineries and distribution systems.

Case Study: MEMS-Based Infrared Micro-Sensor for Gas Detection

Ion Optics, Inc., of Waltham, MA, used ATP cost-share to develop photonic crystal sensors that could be tuned to accurately, reliably, and inexpensively measure CO2 levels (the first target gas for which this technology is commercially viable) in the expired breath of emergency room patients and in commercial office buildings.
Commercial production of photonic crystal CO2 sensors is targeted for 2006 with annual sales over the next 10 years expected to ramp up to 400,000 units for emergency medicine and up to 290,000 units for commercial building controls.

Medical use of photonic crystal CO2 sensors over the next 10 years has the potential to prevent an estimated 112,000 deaths of trauma victims and of critically ill patients on their way to U.S. emergency rooms.

In addition, cost savings from avoided medical treatments, as well as energy savings (and associated cost savings) from commercial building control systems, are projected to result in net present values ranging from $143 to $175 million and public benefits of $174 to $212 for every dollar invested.

CLUSTER ANALYSIS

Based on primary research and analysis, quantitative economic benefits from the two case study projects alone as compared to ATP investments in the cluster of five photonics projects point to high public returns, including:

• Benefit-to-cost ratios on ATP's cluster investment ranging from 33:1 to 41:1 (base case versus step-out scenarios in 2004 dollars)
• Net present value of ATP's cluster investment ranging from $276 to $345 million
• Public (internal) rates of return on ATP's cluster investment ranging from 48 to 51 percent

In addition, the cluster study identified a number of qualitative public benefits (some of which may also be quantified at some future date), including reduced risk of post-emergency room infections, reduced harmful diesel emissions, improved occupant productivity in commercial office buildings, and accelerated development of advanced materials for new industrial products.

The social rate of return is an alternative, broader performance measure of the combined public and private returns. Estimates range from 43 to 51 percent and point to significant spillover gaps (the difference between the social rate of return and private returns), indicating that the value of the projects to the general public is significantly greater than their value to the companies receiving public cost-share funding.

CONCLUSIONS

It is clear from the research performed for this study that ATP's industry partners would not have developed high-risk, low-cost photonics technologies without the ATP cost-share. Technological advances, associated market opportunities, and resultant public benefits would not have been realized.

The analysis also took into account other public investments, notably from the National Science Foundation, in one of the two case study projects. Appropriate attribution for public benefits from other federal science and technology funding sources was made.

The resulting performance metrics presented in this Executive Summary and summarized in Table ES-1 specifically show the exceptional performance of ATP's investment in selected photonics projects, demonstrated via high public rates of return, quantified medical benefits, and important qualitative benefits. As other ATP-funded photonics technologies reach the marketplace, further benefits from this project cluster and from other photonics projects are expected, and improvements in performance metrics can be anticipated.

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Date created: July 12, 2006
Last updated: September 14, 2006

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