Cleaning Up Coal (MDR, DUK).

The state of North Carolina wants utility giant Tennessee Valley Authority to reduce the pollutants from its coal burning plants. What's especially interesting about this is that the Tennessee Valley Authority, as you may have guessed, is not located in North Carolina although much of its pollution is. The case is now before the courts, and investors can benefit by knowing how a victory in North Carolina could put increased focus on companies that clean up coal.Burning coal produces sulfur dioxide, nitrogen oxides and mercury that can cause respiratory and heart problems linked to cases of premature death. In the filings, the state says reducing wind blown pollutants from TVA plants in Tennessee, Alabama and Kentucky would prevent 99 premature deaths and 19,000 asthma attacks each year in North Carolina. Clearly, any company that can provide the technology to prevent those deaths and illnesses will be in high demand. Let's dive into some of the top clean coal contenders. (To read about the legal battle, see "N.C. eager to snuff neighbors' pollution" from The Charlotte Observer.)Supercritical technologyThe engineering and energy services firm McDermott International (NYSE:MDR) through its Babcock & Wilcox division uses supercritical technology in the development of clean coal burning plants. Supercritical technology heats coal to extremely high levels to produce steam at higher temperatures than traditional coal burning plants, thus making a more efficient use of coal. McDermott is also well known for its design, fabrication and installation of off-shore drilling rigs, its sub-sea production systems, and its supports nuclear operations. MDR is 17% off its 52 week high currently trading at $55. It has a PEG ratio of 1.66 and a price-to-sales ratio of 2.29, indicating that at current prices, MDR is of good value. (Take a look at how this ratio can be influenced by certain critical factors in Use Price-To-Sales Ratios To Value Stocks.)Coal GasificationFor one reason or another many utilities, once hot on the idea of building cleaner coal burning plants, have bailed out. Duke Energy (NYSE:DUK) is pushing forward with the development of a potentially multi-billion-dollar integrated gasification combined cycle (IGCC) plant in Indiana. Although the plant costs more than a traditional coal burning plant, the process of gasifying the coal in order to remove pollutants from the environment may make it worth the difference. Duke is also nearly 17% of its 52 week high and is currently trading just north of $17. With a comparable book value of $16.94 - giving it a price-to-book ratio of almost 1 - investors may have an opportunity to buy-in here for the value of Duke's tangible assets.Cleaner Coal Plant BuildersOmnipresent General Electric (NYSE:GE) and privately held Bechtel have been chosen to build Duke's clean energy plant. In a separate alliance oil field services firm Schlumberger and GE are working on technology to capture and sequester carbon. The idea is to prevent the release of pollutants by storing carbon removed from burning coal into the ground.ConclusionCoal is currently used to produce about half of the electricity in the United States. It is also inexpensive and abundantly available in the U.S. making it a go-to source of power for years to come. While the winners of the clean coal technology are unclear, a dollar cost averaging approach in multiple directions may be the best move you can make.To learn more, read Clean Or Green Technology Investing.At the time of writing Gregory S. Davis did not own shares in any of the companies mentioned in this article. [ABSTRACT FROM PUBLISHER]