Earlier this month, the Massachusetts Institute of Technology released a report that acknowledged an inconvenient, if not well-known, truth: Coal will remain a prominent source of the world's energy for the foreseeable future. Given that coal is already a large source of carbon dioxide in the atmosphere, this sets up a troubling dynamic for those of us who are concerned about global climate change, but who also understand that economic growth requires consumers and businesses alike to have continued access to an affordable and reliable source of energy -- which coal is.
To address this dilemma, a number of companies, including ConocoPhillips (NYSE:COP), Shell (NYSE:RDS-A), and General Electric (NYSE:GE), are now spending billions of dollars to develop "clean coal" technologies. And now, firms are manufacturing new tools to literally bury carbon dioxide.
The latter idea, often referred to as carbon sequestration, is a simple one. Instead of pumping billions of tons of CO2 into the atmosphere, where it helps trap solar radiation, companies are instead encouraged to pump the gas into the ground where it can be compressed and permanently stored.
The technology is not yet fully proven, but according to this report in EnergyBiz Insider, American Electric Power (NYSE:AEP) will begin advanced tests at a power plant in West Virginia next year and, if it is successful, will implement the technology at a facility in Oklahoma.
Because of the increased likelihood that the federal government will impose some sort of restrictions on CO2 emissions, I have recently been encouraging investors to watch for companies that are positioning themselves to prosper in a "carbon-constrained" environment.
American Electric Power appears to have taken this message to heart and is now positioning itself for this emerging reality. It is a move that will likely pay dividends for the company -- and as my colleague James Early pointed out on Wednesday, American Power already offers some very attractive real dividends.
I am not yet ready to say that AEP is a buried treasure, but I do think there is a hidden treasure in burying CO2.
Interested in clean tech-related Foolishness? Check out these articles:
- Goldman Sachs' Green Touch
- The Biggest Economic Opportunity of This Century!
- The Best ETF of 2007: PowerShares WilderHill Clean Energy
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Fool contributor Jack Uldrich owns stock in GE, but none of the other companies mentioned in this article. The Fool has a strict disclosure policy.
