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James Burgess

James Burgess

James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…

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The Big Winner In The US Coal Regulations Game

The Big Winner In The US Coal Regulations Game

Overnight, the US government has created a $2-billion segment of the electric power industry that Warren Buffet has already invested more than $30 million in—and this is only the beginning.

The Obama administration’s regulatory war on the $120 billion coal-fired segment of the $360-billion power industry culminated in April in the birth of yet another industry worth $2 billion annually—Mercury Remediation.

This grandest of the administration’s rules took effect on 16 April in the form of an Environmental Protection Agency (EPA) measure to curb mercury pollution from power plants, and this summer there will be even more limits placed on greenhouse gas emissions.

The Federal mercury emission regulations add 28 states to the 22 states that already regulate mercury emissions with similar standards.

Where it is about to get interesting is in the technology required to control mercury emissions in the coal-fired power industry.

One of the biggest winners of this new federally mandated industry is one of the smaller players—Midwest Energy Emissions Corp. (MEEC), which had already seen a 2000% increase in revenues throughout 2014, and has already booked $40 million in annualized revenues from billion-dollar utility companies for 2016.

What we’re looking at here is new second generation mercury radiation technology that has undergone over 40 successful competitive field demonstrations and won five major, multi-year utility company contracts for 15 coal-fired power units.

Based in Ohio, MEEC is an environmental services company specializing in mercury emission control technologies, primarily to coal-fired utilities. The company boasts patented (25 worldwide), proprietary technology that allows coal-fired utilities to meet the EPA’s new stringent regulations cost-effectively and with minimal disruptions.

In total, MEEC has already won $100 million in existing long-term contract revenues for 2015 through 2018, and expects to reach 40-60 energy units contracted out by the end of next year. With those additional contract wins, annual MEEC revenues would likely exceed $100 million at an average $2.5 million in contract revenues per unit by end of 2018.

For years, MEEC has been investing in, testing and refining its technology in long-standing collaboration with the Energy & Environmental Research Center, which is part of the University of North Dakota. Now it’s ready to accelerate commercial acceptance of its patented mercury control technology. And for investors, timing is of the essence.

MEEC says its technology is unquestionably the most efficient, low-cost option on the market—up to 50% more efficient than anything else out there. As such, the company views itself as the biggest winner in this new multi-$billion North American compliance industry and the one who can provide the highest returns to investors.

The MEEC technology is said to carry a 50% cost advantage over that of its larger competitors. And its clients bank even more revenue by selling their fly ash to concrete companies, while other mercury emission technologies simply destroy this fallout material.

But the big potential attraction here for investors is that the company is small, so they can get in on the ground floor at the very beginning of this new $2 billion/year industry by scooping up stocks that appear to be undervalued at this point in the game.

Now that the coal regulations ball has gained major momentum, it will in all likelihood continue rolling at a fast pace into Europe and then Asia, where this technology could be the answer to a desperate coal pollution situation. China is already expected to come out with significant pollution control regulations targeting mercury in the next year or so.

The investors who are the first to notice what just happened on 16 April will be the biggest winners to cash-in on this game through small-cap, pure play pollution control technology stocks such as Midwest Energy Emissions Corp. (OTCQB:MEEC), Calgon Carbon Corporation (NYSE:CCC), Fuel Tech Inc (NASDAQ:FTEK), Advanced Emissions Solutions, Inc. (OTCMKTS:ADES) and Albemarle Corporation (NYSE:ALB).

Coal-burning utilities, such as Duke Energy Corp. (NYSE:DUK) and Southern Co. (NYSE:SO), just to name a few, have fought the new regulations tooth and nail, but now it’s inevitable.

All of this positions this small company to emerge as the big savior of the coal-fired power industry, promising 30-50% cost savings to hundreds of coal-fired power plants in a federally mandated business that is slated for major growth.

By James Burgess for Oilprice.com

Legal Disclaimer/Disclosure: MEEC is an Oilprice.com client. This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. No information in this Report should be construed as individualized investment advice. A licensed financial advisor should be consulted prior to making any investment decision. We make no guarantee, representation or warranty and accept no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Oilprice.com only and are subject to change without notice. Oilprice.com assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, we assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this Report.

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