It is often difficult to connect what seems like an endless stream of UN-sponsored multilateral environmental talks with actual change on the ground – let alone investable ideas for an asset manager. But look closely, and those opportunities are there.
It always seems rather surprising that the most commonly used dental filling material is 50% mercury – a highly toxic material which can cause paralysis and developmental defects among other things and for which there is no threshold below which adverse effects do not occur.i In the UK, dental amalgams along with laboratory and medical devices (for example thermometers) are responsible for over half of all emissions of mercury, but in most other parts of the world, the real culprit is coal powered electricity. According to some estimatesii, 161 deaths can be attributed to every terawatt hour (TWh) of coal-fired electricity generation.iii That might not sound like very much, but the world is estimated to use approximately 27,000 TWh per year of coal-based electricity equating to over 170,000 deaths per year globally.iv
It is largely as a consequence of these impacts that the UN has pushed for a legally binding agreement to significantly cut the environmental release of mercury. The treaty, named the Minamata Convention after the Japanese city whose citizens suffered from horrific health impacts associated with mercury poisoning (called Minamata disease), will require signatory nations to limit mercury emissions from coal-fired power plants, waste incineration, and cement factories, and phase out the use of mercury in products such as medical thermometers, fluorescent lamps, soaps, & cosmetics by 2020.
The UN agreement follows similar moves by the Environmental Protection Agency in the US to limit mercury emissions from coal-fired power plants as part of the Mercury and Air Toxics Standards (MATS). These new standards are due to be issued in the Spring of 2013.
These regulatory moves have been a long-time coming, but still represent a significant shift for the power industry. The US EPA estimate that about 40% of coal-burning power plants lack advanced pollution control equipment, and these figures will be even lower in many emerging economies now signing up to the UN agreement. Over the coming years, these facilities will have to purchase emissions measurement and control systems to bring their plants into compliance with these new standards. These technologies sit clearly within our Environmental Services theme which is focused on companies and technologies that help to conserve natural resources and reduce negative environmental impacts. Companies like Thermo Fisher Scientific, a leading supplier of mercury monitoring systems, is well-placed to benefit from these new regulations, as should Agilent which supplies mercury analysers for laboratories and other facilities testing for mercury contamination in food, water and waste.
Clearly coal remains deeply problematic, not least because of its central role in climate change. Nonetheless, after a decade of increasing coal demand for power generationv, with more demand forecast, it looks as if more coal won’t now necessarily mean more mercury and the ill-health and disease that have until now inevitably followed.
iii A terawatt hour is a substantial amount of electricity equivalent to running an average tumble dryer for 38,000 years.
iv This figure does not include the additional deaths caused by climate change to which coal-fired power generation is a major contributor.