Forward-Looking Statements Found in this Report

Our expectations are based on certain assumptions, including without limitation, that:

The forward-looking statements included in this Report involve risks and uncertainties. Actual events or results could differ materially from those discussed in the forward-looking statements as a result of various factors including, but not limited to, timing of new and pending regulations and any legal challenges to or extensions of compliance dates of them; the U.S. government’s failure to promulgate regulations or appropriate funds that benefit our business; changes in laws and regulations, accounting rules, prices, economic conditions and market demand; impact of competition; availability, cost of and demand for alternative energy sources and other technologies; technical, start up and operational difficulties; failure of the RC facilities to produce RC; termination of or amendments to the contracts for sale or lease of RC facilities; decreases in the production of RC; our inability to commercialize our APT technologies on favorable terms; our inability to ramp up our operations to effectively address recent and expected growth in our APT business; loss of key personnel; potential claims from any terminated employees, customers or vendors; availability of materials and equipment for our businesses; intellectual property infringement claims from third parties; pending litigation; as well as other factors relating to our business, as described in our filings with the SEC, with particular emphasis on the risk factor disclosures contained in those filings and in Item 1A - "Risk Factors" of this Report. You are cautioned not to place undue reliance on the forward-looking statements made in this Report and to consult filings we have made and will make with the SEC for additional discussion concerning risks and uncertainties that may apply to our business and the ownership of our securities. The forward-looking statements contained in this Report are presented as of the date hereof, and we disclaim any duty to update such statements unless required by law to do so.

The following risks relate to us as of the date this Report is filed with the SEC. This list of risks is not intended to be exhaustive, but reflects what we believe are the material risks inherent in our business and the ownership of our securities as of the specified dates. A statement to the effect that the occurrence of a specified event may have a negative impact on our business, results of operations, profitability, financial condition, or the like, is intended to reflect the fact that such an event, if it occurs, would be likely to have a negative impact on your investment in ADES, but should not imply the likelihood of the occurrence of such specified event. The order in which the following risk factors are presented is not intended as an indication of the relative seriousness of any given risk.

Demand for our products and services depends significantly on environmental laws and regulations. Uncertainty as to the future of such laws and regulations, as well as changes to such laws and regulations or granting of extensions of compliance deadlines has had, and will likely continue to have, a material effect on our business.

A significant market driver for our existing products and services and those planned in the future are present and expected environmental laws and regulations, particularly those addressing the reduction of mercury and other emissions from coal-fired electricity generating units. If such laws and regulations are delayed, or are not enacted or are repealed or amended to be less strict, or include prolonged phase-in periods, or are not enforced, our business would be adversely affected by declining demand for such products and services. For example:

Federal, state and international laws or regulations addressing emissions from coal-fired electricity generating units, climate change or other actions to limit emissions, including public opposition to new coal-fired electricity generating units, has caused and could continue to cause electricity generators to transition from coal to other fuel and power sources, such as natural gas, nuclear, wind, hydroelectric and solar. The potential financial impact on us of future laws or regulations or public pressure will depend upon the degree to which electricity generators diminish their reliance on coal as a fuel source. That, in turn, will depend on a number of factors, including the specific requirements imposed by any such laws or regulations, the periods over which those laws or regulations are or will be phased in, the amount of public opposition and the state and cost of commercial development of related technologies and processes. In addition, Public Utility Commissions ("PUCs") may not allow utilities to charge consumers for, and pass on the cost of, emissions control technologies without federal or state mandate.mandates. We cannot reasonably predict the impact that any such future laws or regulations or public opposition may have on our results of operations, financial condition or cash flows.

Action by the EPA related to MATS that decreases demand for our mercury removal products could have a material adverse effect on our PGIAPT segment.

The failure of tariffs placed on U.S. imports of Chinese activated carbon to adequately address the impact of low-priced imports from China could have a material adverse effect on the competitiveness and financial performance of our PGIAPT segment.

Our PGIAPT segment faces competition in the U.S. from low-priced imports of activated carbon products. If the amountsvolumes of these low-priced imports increase, especially if they are sold at less than fair value, our sales of competing products could decline, which could have an adverse effect on the earnings of our PGIAPT segment. In addition, sales of these low-priced imports may negatively impact our pricing. To limit these activities, regulators in the U.S. have enacted an anti-dumping duty order on steam activated carbon products from China. In 2018, the order was extended for an additional five years. The amount of anti-dumping duties collected on imports of steam activated carbon from China is reviewed annually by the U.S. Department of Commerce. To the extent the anti-dumping margins do not adequately address the degree to which imports are unfairly traded, the anti-dumping order may be less effective in reducing the volume of these low-priced activated carbon imports in the U.S., which could negatively affect demand and/or pricing for our AC products.

We operate in a highly competitive marketplace. Our ability to compete successfully depends in part upon our ability to maintain a production cost of production advantage, competitive technological capabilities and to continue to identify, develop and commercialize new and innovative products for existing and future customers. IncreasedWe may face increased competition from existing or newly developed products offered by ourindustry competitors or other companies whose products offer a similar functionality as our products and could be substituted for our products, which may negatively affect demand for our products. In addition, market competition could negatively impact our ability to maintain or raise prices or maintain or grow our market position.

We compete against certain significantly larger and/or more established companies in the market for consumables and other products that provide mercury emissions reduction, water treatment and water treatment.air purification.

The amount of coal consumed for U.S.North American electricity power generation is affected by, among other things, (1) the location, availability, quality and price of alternative energy sources for power generation, such as natural gas, fuel oil, nuclear, hydroelectric, wind, biomass and solar power; and (2) technological developments, including those related to competing alternative energy sources.

Natural gas-fueled generation and renewable energy generation has been displacing and may continue to displace coal-fueled generation, particularly from older, less efficient coal-powered generators. We expect that manya significant amount of the new power plants neededgeneration necessary to meet increasing demand for electricity generation will be fueled by natural gas because thethese sources. The price of natural gas has remained at relatively low levels after a period of sharp decline,competitive for power generation and the use of natural gas is perceived as having a lower environmental impact than burning coal. Natural gas-fired plants are cheaper to construct, and permits to construct these plants are easier to obtain, and ongoing costs of natural gas-fired plants associated with meeting environmental compliance are lower. Possible advances in technologies and incentives, such as tax credits, tothat enhance the economics of renewable energy sources could make those sources more competitive withthan coal. Any reduction in the amount of coal consumed by domestic electricity power generators, whether as a result of new power plants utilizing alternative energy sources or as a result of technological advances, could reduce the demand for our current products and services, thereby reducing our revenues and materially and adversely affecting our business and results of operations.

Additionally, long-term changes in environmental regulation that threaten or preclude the use of coal or other fossil fuels as a primary fuel source for electricity production andmay result in the reduction or closure of a significant number of coal-fired electric generating units, and may adversely affect our business, financial condition and results of operations.

We may attempt to offset the increase in raw material costs or challenges in the supply of raw materials with price increases allowed in our contractual relationships or through cost reduction efforts. If we are unable to fully offset the increased cost of raw materials through price increases, it could significantly impact our business, financial condition and results of operations.

We own the Five Forks Mine, a lignite coal mine located in Louisiana, thatwhich is operated for us by Demery Resources Company, LLC.a third party. Mining operations by their nature involve a high level of uncertainty and are often affected by risks and hazards outside of our control.

Our operations and products are subject to extensive safety, health and environmental requirements that could increase our costs and/or impair our ability to manufacture and sell certain products.

Our ongoing operations are subject to extensive federal, state and local laws, regulations, rules and ordinances relating to safety, health and environmental matters, many of which provide for substantial monetary fines and potential criminal sanctions for violations. These include requirements to obtain and comply with various environmental-related permits for constructing any new facilities (or modifications to existing facilities) and operating all of our existing facilities. In addition, our AC manufacturing facilityRed River Plant may become subject to greenhouse gas emission trading schemesrequirements under which we may be required to purchase emission credits if our emission levels exceed our allocations. Greenhouse gas regulatory programs that have been adopted, such as cap-and-trade programs, have not had a significant impact on our business to date. Costs of complying with regulations could increase, as concerns related to greenhouse gases and climate change continue to emerge. The enactment of new environmental laws and regulations and/or the more aggressive interpretation of existing requirements could require us to incur significant costs for compliance or capital improvements or limit our current or planned operations, any of which could have a material adverse effect on our earnings or cash flow. We may attempt to offset the effects of these compliance costs through price increases, productivity improvements and cost reduction efforts, and our success in offsetting any such increased regulatory costs is largely influenced by competitive and economic conditions and could vary significantly depending on the market segment served. Such increases may not be accepted by our customers, may not be sufficient to compensate for increased regulatory costs or may decrease demand for our products and our volume of sales.

We acquired Carbon Solutions primarily to expandmay not be successful in achieving our market share in the mercury emissions control market, as well as to gain access to the water treatment market through Carbon Solutions' specificgrowth expectations from developing new products for this market. Our future growth may dependour existing or new markets. Further, we cannot ensure costs incurred to develop new products will result in part onan increase in revenues. Additionally, our ability to successfully integrate Carbon Solutions into our businessbring new products to the market will depend on various factors, including, but not limited to, solving potential technical or manufacturing difficulties, competition and we cannot guarantee that we will successfully integrate Carbon Solutions into our existing operations,market acceptance, which may hinder the timeliness and cost to bring such products to production. These factors or that we will achieve the desired profitability and anticipated results from the Carbon Solutions Acquisition. Failure to achieve such planned resultsdelays could adversely affect our operations and cash available to make debt principal and interest payments, dividends and stock repurchases.

We may make futurenot be successful in realizing the benefits associated with our acquisitions, or formdispositions and strategic partnerships, and joint ventures thatour business could be adversely affected.

The success of acquisitions of businesses, new technologies and products,an acquisition, disposition or arrangements with third partiesstrategic partnership is not always predictable, and we may not be successful in realizing our objectives as anticipated. The Senior Term Loananticipated, and Line of Credit contain certain covenantsour business may be adversely affected as a result.

We operate facilities, including the Red River Plant and Five Forks Mine, that limit, orare exposed to natural hazards, such as floods, windstorms and hurricanes. Extreme weather events present physical risks that may havebecome more frequent as a result of factors related to climate change. Such events could disrupt our supply of raw materials or otherwise affect production, transportation and delivery of our products or affect demand for our products.

In addition, extreme and unusually cold or hot temperatures throughout the effectU.S. could result in abnormally high loads on geographic electrical grids that could result in the failure of limiting, among other things,coal-fired power plants to produce electricity. If these plants were off-line for a significant period of time, the paymentdemand for our products could be less, which would impact our operations and financial results. Conversely, abnormally high loads on geographic electrical grids, resulting in increased demand of dividends, acquisitions, capital expenditures, the sale of assetscoal-fired power plants to produce electricity, could impact our ability to meet customer contracts and the incurrence of additional indebtedness.demands.

We rely uponon information technology ("IT") to manage and conduct business, both internally and externally, with our customers, suppliers and other third parties. Internet transactions involve the transmission and storage of data including, in certain instances, customer and supplier business information. Therefore, maintaining the security of computers and other electronic devices, computer networks and data storage resources is a critical issue for us and our customers and suppliers because security breaches could result in reduced or lost ability to carry on our business and loss of and/or unauthorized access to confidential information.

We have limited personnel and other resources to address information technology reliability and security of our computer networks and to respond to known security incidents to minimize potential adverse impact. Experienced hackers, cybercriminals and perpetrators of threats may be able to penetrate our network security and misappropriate or compromise our confidential information or that of third parties, create system disruptions or cause shutdowns. These perpetrators of cyberattacks also may be able to develop and deploy viruses, worms, malware and other malicious software programs that attack our information and networks or otherwise exploit any security vulnerabilities of our information and networks.

Techniques used to obtain unauthorized access to or sabotage systems change frequently and often are not recognized until long after beingthey are launched against a target, and we may be unable to anticipate these techniques or to implement adequate preventative measures. A breach of our IT systems and security measures as a result of third-partythird party action, malware, employee error, malfeasance or otherwise could materially adversely impact our business and results of operations and expose us to customer, supplier and other third-partythird party liabilities.

Risks related to intellectual property

We rely on a combination of patent, copyright and trademark laws, trade secrets, confidentiality procedures and contractual provisions to protect our proprietary rights. Such means of protecting our proprietary rights may not be adequate because they provide only limited protection or such protection may be prohibitively expensive to enforce. We also enter into confidentiality and non-disclosure agreements with our employees, consultants and many of our customers and vendors, and generally control access to and distribution of our proprietary information. Notwithstanding these measures, a third party could copy or otherwise obtain and use our proprietary information without authorization. We cannot provide assurance that the steps we have taken will prevent misappropriation of our technology and intellectual property, which could negatively impact our business and

financial condition. In addition, such actions by third parties could divert the attention of our management from the operation of our business.

If our technologies are alleged to infringe the intellectual property rights of others, we may be forced to mount a defense to such claims, which may be expensive and time consuming. During the pendency of litigation, we could be prevented from marketing and selling existing products or services and from pursuing research, development or commercialization of new or complimentary products or services. Further, we may be required to obtain licenses to third-partythird party intellectual property or be forced to develop or obtain alternative technologies. Our failure to obtain a license to a technology that we may require, or the need to develop or obtain alternative technologies, could significantly and negatively affect our business.

Indemnification of third-party licensees of our technologies against intellectual property infringement claims concerning our licensed technology and our products could be financially significant to us.

We have agreed to indemnify licensees of our technologies (including Tinuum Group) and purchasers of our products, and we may enter into additional agreements with others under which we agree to indemnify and hold them harmless from losses they may incur as a result of the alleged infringement of third-party rights caused by the use of our technologies and products. Infringement claims, which are expensive and time-consuming to defend, could have a material adverse effect on our business, operating results and financial condition, even if we are successful in defending ourselves (and the indemnified parties) against them.

Our future success depends in part on our ongoing identification and development of intellectual property and our ability to invest in and deploy new products, services and technologies into the marketplace efficiently and cost effectively.

The process of identifying customer needs and developing and enhancing products, services and solutions for our business segments is complex, costly and uncertain. Any failure by us to identify and anticipate changing needs, emerging trends and new regulations could significantly harm our future market share and results of operations.

Risk related to tax matters

An “ownership change”"ownership change" could limit our ability to utilize tax loss and credit carryforwards to offset future taxable income.

We have certain general business credit tax credits (“("Tax Attributes”Credits"). As of December 31, 2018,2021, we had $104.6$86.1 million of Tax Attributes,Credits, equaling 87% of our total gross deferred tax assets. Our ability to use these Tax AttributesCredits to offset future taxable income may be significantly limited if we experience an “ownership change”"ownership change" as discussed below. Under the Internal Revenue Code ("IRC') and regulations promulgated by the U.S. Treasury Department, we may carry forward or otherwise utilize the Tax AttributesCredits in certain circumstances to offset any current and future taxable income, and thus reduce our federal income tax liability, subject to certain requirements and restrictions. To the extent that the Tax AttributesCredits do not otherwise become limited, we believe that we will have available a significant amount of Tax AttributesCredits in future years, and therefore the Tax AttributesCredits could be a substantial asset to us. However, if we experience an “ownership"ownership change,”" as defined in SectionSections 382 and 383 of the IRC, our ability to use the Tax AttributesCredits may be substantially limited, and the timing of the usage of the Tax AttributesCredits could be substantially delayed, which could therefore significantly impair the value of that asset.

In general, an “ownership change”"ownership change" under SectionSections 382 and 383 occurs if the percentage of stock owned by an entity’s 5% stockholders (as defined for tax purposes) increases by more than 50 percentage points over a rolling three-year period. An entity that experiences an ownership change generally will be subject to an annual limitation on its pre-ownership change tax loss and credit carryforwards equal to the equity value of the entity immediately before the ownership change, multiplied by the long-term, tax-exempt rate posted monthly by the IRS (subject to certain adjustments). The annual limitation would be increased each year to the extent that there is an unused limitation in a prior year. The limitation on our ability to utilize the Tax AttributesCredits arising from an ownership change under SectionSections 382 and 383 of the IRC would depend on the value of our equity at the time of any ownership change.  If we were to experience an “ownership"ownership change,”" it is possible that a significant portion of our tax loss and credit carryforwards could expire before we would be able to use them to offset future taxable income.

On May 5, 2017, our Board of Directors (the "Board") approved the Tax Asset Protection Plan (the “Protection Plan”"TAPP") and declared a dividend of one preferred share purchase right (each, a “Right”"Right") for each outstanding share of our common stock. The Protection Plan TAPP

was adopted in an effort to protect stockholder value by attempting to diminish the risk that our ability to use the Tax AttributesCredits to reduce potential future federal income tax obligations may become substantially limited.

The Protection Plan,TAPP, as amended, is intended to act as a deterrent to any person acquiring beneficial ownership of 4.99% or more of our outstanding common stock without the approval of the Board. Stockholders who beneficially owned 4.99% or more of our outstanding common stock upon execution of the Protection Plan will not trigger the Protection Plan so long as they do not acquire beneficial ownership of additional shares of our common stock. The Board may, in its sole discretion, also exempt any person from triggering the Protection Plan.

Risks relatingrelated to our common stock

The market price of our common stock has experienced substantial price volatility in the past and may continue to do so. The market price of our common stock may continue to be affected by numerous factors, including:

From January 1, 20172020 to December 31, 2018,2021, the closing price of our common stock ranged from $6.98$3.76 to $12.08$12.49 per share. In June 2017, we commenced a quarterly cash dividend program and have paid out cash dividends in each succeeding quarter through DecemberMarch 31, 2018.2020. In 2017 and 2018, we executed stock repurchases in various forms that included a modified Dutch Auction tender offer in May 2017 and twoimplemented stock repurchase programs, in December 2017 and October 2018. During 2017 and 2018, we repurchased a total of 4,064,18820,613 shares of our common stock for the fiscal years 2021 and 2020 for cash of $41.7$0.2 million.

Stock price volatility over a given period may cause the average price at which we repurchase shares of our common stock to exceed the stock’s price at a given point in time. We believe our stock price should reflect expectations of future growth and profitability. Future dividends are subject to declaration by the Board, and under our current stock repurchase program, we are not obligated to acquire any specific number of shares. If we fail to meet expectations related to future growth, profitability, dividends, stock repurchases or other market expectations, our stock price may decline significantly, which could have a material adverse impact on our ability to obtain additional capital and erode investor confidence, and employee retention, andwhich could further reduce the liquidity of our common stock. We do not expect to repurchase additional shares of our common stock in the near term.

The Board first approved a $0.25 per share of common stock quarterly dividend in June 2017. During 2017 and 2018,We last paid a cash dividend on March 10, 2020.

With the ceasing of our cash-generating RC segment, it is unlikely, for the foreseeable future, that we declaredwill resume declaring quarterly dividends in the aggregate amount of $36.1 million. We intend to continue to pay quarterly dividends subject to capital availability, compliance with debt covenants and periodic determinations by the Board that cash dividends are in the best interest of our stockholders and are in compliance with all laws and agreements applicable to the declaration and payment of cash dividends by us.

Certain provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders. These include provisions that:

These provisions, alone or in combination with each other, may discourage transactions involving actual or potential changes of control, including transactions that otherwise could involve payment of a premium over prevailing market prices to holders of our common stock, or could limit the ability of our stockholders to approve transactions that they may deem to be in their best interest.

We may require additional funding for our growth plans, and such funding may require us to issue additional shares of our common stock, resulting in a dilution of your investment.

We estimate our funding requirements in order to implement our growth plans. If the actual funding requirements required to implement growth plansinitiatives should exceed thesefunding estimates significantly, or if we come across opportunities to grow through expansion plans which cannot be predicted at this time, and our funds generated from our operations from such growth initiatives prove insufficient for such purposes, we may need to raise additional funds to meet these funding requirements.

These additional funds may be raised by issuing equity or debt securities or by borrowing from banks or other resources. We cannot assure you that we will be able to obtain any additional financing on terms that are acceptable to us, or at all. If we fail to obtain additional financing on terms that are acceptable to us, we willmay not be able to implement such plans fully. Such financing, even if obtained, may be accompanied by conditions that limit our ability to pay dividends or require us to seek lenders’ consent for payment of dividends, or restrict our freedomability to operate our business by requiring lender’s consent for certain corporate actions. Further, if we raise additional funds through the issuance of new shares of our common stock, any shareholders who are unable or unwilling to participate in such an additional round of fund raising may suffer dilution of their investment.

None.

OfficesOffice and Facilities

We lease approximately 24,000 square feet of office space in Highlands Ranch,Greenwood Village, Colorado for our corporate headquarters. Also in Colorado, we lease additional office, warehouseheadquarters and laboratory space. Total combined leased space for these facilities is approximately 32,000 square feet. primary research and development laboratory.

Mining

As of December 31, 2018,2021, we owned or controlled primarily through long-term leases approximately 1,7504,425 acres of coal land for surface miningmining. Of those acres, approximately 1,975 acres are located in the Gulf Coast Lignite Region, in Natchitoches Parish, Louisiana ("Five Forks"). The majority of the Five Forks land is leased for mineral rights and right-of-use purposes that expire at varying dates over the next 30 years and contain options to renew. The remaining land is owned by us.

Under our current mining plans, substantially all leased reserves will be mined out within the period of existing leases or within the time period of assured lease renewals. Royalties are paid to lessors either as a fixed price per ton or as a percentage of the gross sales price of the mined coal. The majority of the significant leases are on a percentage royalty basis. In some cases, a payment is required payable either at the time of execution of the lease or in annual installments. In most cases, the prepaid royalty amount is applied to reduce future production royalties.

On October 31, 2018, the SEC issued new rulesThe remaining 2,450 acres (of 4,425 acres of coal land for disclosures under this Item for mining registrants. These rules amend Item 102 of Regulation S-K under the Securities Act and the Exchange Act and rescind Industry Guide 7 to direct mining registrants, and create a new subpart of Regulation S-K, which contains all of the requirements for property disclosures by mining

Based on the materiality and the vertically-integrated company guidelines contained in Regulation S-K of the Mining Disclosures,Securities Act and the Exchange Act, we have concluded that no additional disclosures related to our mining operations are required under this Item.

Item 3. Legal Proceedings

From time to time, we are involved in various litigation matters arising in the ordinary course of our business. Information with respect to this item may be found in Note 8 “Commitments14 "Commitments and Contingencies”Contingencies" to the consolidated financial statementsConsolidated Financial Statements included in Item 8 of this Report.

Item 4. Mine Safety Disclosures

The statement concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Report.

For the years ended December 31, 20182021 and 2017,2020, consumables revenue increased year over year primarily due to the Carbon Solutions Acquisition on December 7, 2018. Carbon Solutions contributed consumables revenue of $5.6higher product volumes, which comprised approximately $25.0 million of the total change in consumables revenues. Product volumes were higher in power generation primarily due to higher natural gas prices compared to the prior year, which contributed to increased utilization of coal-fired generation and increased demand for our products. In addition, product sales increased under the Supply Agreement from the prior year as we began product shipments under this agreement beginning in the fourth quarter of 2020. Total revenues also increased due to a favorable price impact of our products by approximately $1.0 million as well as favorable product mix impact on consumables revenue of approximately $4.1 million. Consumables revenue for 2021 also increased $0.9 million related to an increase in shipping and handling costs billed to our customers, driven by increases in volumes and costs to ship our products.

Our gross margin, exclusive of depreciation and amortization, increased for the year ended December 31, 2018. Excluding Carbon Solutions' consumables revenues, consumables revenues decreased year over year2021 compared to 2020 primarily due to a significant decreasethe higher product volumes, which resulted in sales to two customers, partially offsetlower fixed costs per pound of product sold. Additionally, gross margin was positively impacted by increased sales to new customers in 2018. The total pounds of our chemicals sold decreased year over year and gross margins decreased year over year primarily due to ongoingproduct price compression. Duringincreases. Offsetting these improvements for the year ended December 31, 2018, revenues2021, gross margin was negatively impacted by having to supplement the Red River production of our AC product, due to higher customer demand related to requirements-based contracts, with AC product purchases from Evaluation Teststhird party suppliers at higher costs per pound. We expect to continue to purchase inventory from third party suppliers in 2022 due to ongoing increased demand for our products and Red River Plant capacity impacted by customer and product mix.

Consumables revenue is affected by electricity demand, driven by seasonal weather and related power generation needs, as well as competitor prices related to alternative power generation sources such as natural gas. According to data provided by the U.S. Energy Information Administration, for the year over year primarilyended December 31, 2021, power generation from two significant customer contractscoal-fired power dispatch was up approximately 18.0% compared to the corresponding period in 2020. Additionally, there was an increase in total power generation from all sources of approximately 3.1% in 2021 compared to the corresponding period in 2020.

For 2022, and based on current market estimates and the expected benefits from the Supply Agreement, we believe that were completed in 2018. Cost ofboth consumables revenue and volumes will increase compared to 2021. We expect that consumables revenues and gross margin will be positively impacted by price increases announced in 2021 and our efforts to improve product mix to higher margin products through changes in our customer base. We anticipate that the product price increases will also help offset the increase

in operating costs from purchasing inventory from third party suppliers, as well as expected increases in pricing related to certain additives necessary for Carbon Solutions for 2018 was $3.4 million and excluding this amount cost of consumables revenueour manufacturing operations.

License royalties increased year over year.in 2021 compared to 2020 primarily due to an increase in the royalty rate per ton. This increase was primarily due to significant costs incurred that exceededa result of an increase year over year in rent revenues by $0.5 million on one of the Evaluation Test contracts, which was the primary negative impact on our overall consumables gross margin for 2018.

As a result of the Section 45 tax credit period ending as of December 31, 2017, all ACI system contracts were completed. During2021, both Tinuum Group and Tinuum Services ceased operations and, as such, we do not expect to earn M-45 License royalties after December 31, 2021.

For the year ended December 31, 2017,2020, we completed four ACI systems, recognizing revenuesrecognized a credit of $3.4$0.6 million andto Other cost of revenue of $2.4 million.

Additional information related to revenue concentrations and contributions by class and reportable segment can be found withinis included in the segment discussion below"Business Segments" section of this Item and in Note 613 and Note 1519 to the Consolidated Financial Statements included in Item 8 of this Report.

A summary of the components of our operating expenses, exclusive of cost of revenuerevenues items (presented above), for the years ended December 31, 20182021 and 20172020 is as follows:

Payroll and benefits expenses increased in 2018 compared to 2017year over year primarily due to restructuring expenses in connectionof $1.1 million related to the agreements with the departure of certainour executive officers and management's alignment of the business with strategic objectives during 2018,certain other key employees executed in June 2021 ("Retention Agreements") as well as the elimination of certain duplicative positions$1.3 million related to an increase in connection with the Carbon Solutions Acquisition. Duringincentive expense for the year ended December 31, 2018, we recorded net restructuring charges of $3.1 million. As of2021 compared to 2020. These increases were offset by a decrease in expenses taken during the year ended December 31, 2018, $2.22020 of $1.4 million of this expense remained accrued. Payment of accrued amounts is expected to occur during 2019 from cash on hand. There were no material restructuring expenses recorded in 2017. Additionally, payroll-related expenses increased due to the increase in headcount of personnel from the Carbon Solutions Acquisition, which resulted in an increase in average headcount of 10% for 2018 compared to 2017. We expect an increase in future recurring payroll-related expense due to the Carbon Solutions Acquisition.

Legal and professional fees expenses increased in 2018 comparedyear over year primarily due to 2017 as a result of costs incurred related to the Carbon Solutions Acquisition of approximately $4.5 million as well as an increase in legal and consulting fees of $0.9 million and $1.2 million, respectively, related to ongoing clarificationour continuing evaluation of federal income tax reform of $0.5 million. These costs were partially offset bystrategic alternatives. Offsetting these increases was $0.9 million related to a decreasereduction in costs related to outsourced shared service costs, includingwhich included legal and audit fees.general consulting contractors, and $0.5 million in outsourced IT costs specific to the completion of the integration of Carbon Solutions in 2020.

General and administrative expenses decreased in 2018 compared to 2017year over year primarily due to a $0.4decreases in product development expenses of approximately $0.6 million reserve on an asset related to a letterthe Supply Agreement, costs incurred due to the sequestration of credit drawn by a former customer that was recorded duringcertain of our employees at the year ended December 31, 2017. Additional decreases included a reductionRed River Plant in general operating expenses2020 of approximately $0.4 million, rent and occupancy related expenses of $0.3 million and other general and administrative expenses, including recruiting, travel and licenses and fees of approximately $0.7 million.

Depreciation and amortization expense decreased year over year primarily due to lower absorption from the drawdown of inventory, partially offset by increase in sales volumes for 2021, resulting in a decrease of depreciation expense of $0.2 million. Further, depreciation and amortization expense decreased by approximately $1.1 million related to a lower depreciable base for 2021 compared to 2020 as a result of an impairment charge recorded in the second quarter of 2020 which included decreases in outsourced IT costsreduced the carrying value of our property, plant and outside director expenses.equipment. Offsetting these decreases was an increase in bad debtaccretion expense incurred of $0.2 million.

As previously discussed under this Item, for the year ended December 31, 2021, we recorded a gain on change in estimate of $2.7 million related to a reduction in connection withscope of our corporate office relocation, which was completed inestimated future reclamation efforts of the first quarter of 2017. This decrease is offset by the additionMarshall Mine.

In connection with the Settlement discussed above, the Former Customer paid us the cash Settlement Amount of $2.5 million on January 27, 2021 in exchange for a full release of depreciation expenseclaims in the Litigation Matters. As a result of the Settlement, we recognized a gain of $1.1 million for the period between Acquisition Date andyear ended December 31, 2018.2020.