Cost and Profit in Cutting Acid Rain. ENVIRONMENTAL ACTION
THE continual dripping of acid rain seems destined to drive the federal government to action. New legislation could eat into the profits of electrical utilities and create a boom for acid-rain cleanup companies in the 1990s.
Both President Bush and Senate Majority Leader George Mitchell (D) of Maine say the issue is a key one for them. And William Reilly, the new head of the Environmental Protection Agency (EPA), says that his top priority will be to strengthen the Clean Air Act and that he will propose legislation to reduce acid rain as part of that effort.
A law calling for lower emissions of acid-rain-causing pollutants is expected within the next year or two, increasing the operating costs of many utilities.
``It's certainly going to hurt the utilities that are coal burning,'' says John Slatter, an analyst with Prescott, Ball & Turben Inc. in Cleveland, ``because they've got to spend this money.''
Nearly all United States utilities burn coal - it's the cheapest and most-available energy resource. And coal burning, which makes nearly 60 percent of utility-produced electricity, is likely to increase, since new nuclear power plants are not being built and oil power is declining.
The problem, scientists say, is that coal burning produces sulfur dioxide (SO2) and nitrogen oxides, which combine in the atmosphere to form acid rain. Utilities, however, are not happy with some of the proposed solutions.
``A lot of legislation that has been introduced so far has been much, much too costly,'' says Diane Smiroldo, a spokesperson for the Edison Electric Institute, a research and lobbying group for the investor-owned utilities.
The EPA figures that between $16 billion and $33 billion will have to be spent over the next 20 years to cut acid-rain-causing emissions by 50 percent.
If such cuts were federally required, the nascent industry of acid-rain cleanup technologies would come to maturity. The immediate beneficiaries, according to a report issued last month by the KCI Communications Investor Resource Center in Alexandria, Va., would be companies whose technologies could be installed in existing plants (known as ``retrofitting'').
The report singled out two growth stocks to watch: the BHA Group, which ``has billed itself as a one-stop shopping place for acid rain control needs'' and thus ``is effectively outflanking most of its technically-minded competitors,'' and the Noxso Corporation, which it said was a high-potential speculation that offered ``far and away, the most potentially effective retrofit technology being developed for acid rain control.'' Four other publicly held companies - Combustion Engineering, CRS Sirrine, Industrial Resources, and McDermott International - were also identified as major investment players.
Environmentalists urge sharp cuts in sulfur dioxide and nitrogen oxide emissions. More than 20 million tons of sulfur, for example, goes into the nation's atmosphere annually.
``We're looking for a 12 million ton reduction in sulfur oxides and 6 million in nitrogen oxides,'' says Ed Barks, spokesman for the National Clean Air Coalition in Washington. ``It's pretty safe to say that's a scientific consensus.''
But the utility and coal industries reject such calls and point to efforts already under way.
``We think we've made significant progress in this country in reducing SO2 emissions,'' says David Branand, counsel and director of environmental affairs for the National Coal Association.
He cites the Reagan administration's financing of clean-coal research. Thus far, $2 billion have been spent jointly by the United States Department of Energy and the utilities on 29 clean-coal projects. Ontario Ohio Clean Fuels, for example, is working on a process that would take out 90 percent of the sulfur dioxide and 70 percent of the nitrogen oxides, leaving no waste products.
And 149 limestone scrubbers have been installed in the US to remove sulfur dioxide from the flue gas, Mr. Branand adds. But utilities like to avoid scrubbers when possible, because of their cost - about $100 million a plant.