Tuesday, January 29, 2013

Carbon Capture Developers Seek Deep Impact

The 1998 disaster movie Deep Impact stars Morgan Freeman as a popular U.S. president spearheading a high profile space mission to destroy a comet on a collision course with Earth.  Just in case the astronauts fail, the world’s leading nations band together to design and build large underground facilities to house the best and the brightest citizens until the planet recovers.

Late last year in a scheme reminiscent of the movie, a group of eight companies around the world have formed an international network for developing and building underground facilities of another sort.  However, these facilities will house the world’s worst and nastiest  -  carbon dioxide create in the combustion of fossil fuels.

The idea is to develop a cost effective way to capture and store carbon emissions at power plants so that we can go on using fossil fuels for power generation and avoid more damage to the environment.  The founding members think collaboration is the key to accelerating progress.  They are calling themselves the Test Center Network.

North American members of the group include Southern Company (SO:  NYSE), the National Carbon Capture Center in Alabama and SaskPower in Canada.  Enel (ENEL:  MI) in Italy and Germany’s E. On (EONGY:  OTC) are joined.   Norway’s Mongstad Technology Center, J-Power in Japan, and the U.K. base of DOOSAN Power Systems are the rest of the privately-held founding members.

I think the formation of an industry group to promote and develop carbon capture signals a turning point for carbon capture.  In the least it suggests the strategy has gained some respect among decision makers who have discretion over capital budgets.  That makes me wonder if there is data suggesting this crazy concept  -  a concept from the movies  -  could become economically viable.  Whether it is scientifically wise is another question.  I suspect that is not the driving force behind this ‘band of eight.’

At any rate, this could be a good time to explore investment opportunities in carbon capture, starting with the public companies in the Test Center Network: Southern Company and Enel, E. On.  Air Products and Chemicals (APD:  NYSE) is another player in carbon capture, which has recently announced progress in its initiative.  It is also worthwhile revisiting the 2007 alliance between Praxair (PX:  NYSE) and Foster Wheeler (FWLT:  Nasdaq). 

There is also a string of private companies involved in carbon capture technologies. Inventys in Canada and MAST Carbon Technologies are two that we will look in this new carbon capture series beginning in the next Small Cap Strategist post. 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.


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