General Electric (GE -0.36%) has announced a multiyear agreement with Veolia Environnement to recycle GE's onshore wind turbine blades based in the U.S. The deal involves Veolia processing blades that have been removed for upgrade purposes for use in cement production.
According to the press release, "nearly 90% of the blade material, by weight, will be reused as a repurposed engineered material for cement production." As such, GE hopes to recycle the majority of blades replaced during the upgrade process.
The deal is good news for a few reasons.
- The blades will replace raw materials used in cement manufacturing and lead to net reduction in carbon emissions.
- It will reduce the environmental impact of GE's products (the company plans to achieve carbon neutrality by the end of this year).
- It will be one solution to the problem (and the cost) of disposing of retired blades.
- GE's wind turbines are likely to be deemed more environmentally friendly considering that it now has an arrangement to recycle them, giving them an edge against competition in North America.
- Customers may be more willing to upgrade GE's wind turbines if they know GE is disposing of the blades in such a manner.
While not necessarily having a significant impact on the bottom line, the deal serves as a demonstration of GE's drive to reduce cost and waste at GE Renewable Energy. Ultimately, the aim is to get its profit margin to a level comparable to that of its peers and start generating free cash flow. That's a key part of the investment case for the stock, so investors should react positively to the announcement today.