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The Best Hope for Clean Coal

Thursday, 19 Jun 2008 | 7:01 PM ET

McDermott might have a bigger stake in clean coal than anyone else.

Clean Slate?
Talking about cleaner coal, with Mad Money host Jim Cramer.

The company's business model is based solely on building, supplying and retrofitting coal plants. So if McDermott can't come up with the tech needed for clean coal, Cramer said, the company's sunk.

But he's confident McDermott's got the best clean-coal tech around. MDR makes both the flue gas desulphurization (FGD) scrubbers and circulating fluidized bed (CFB) boilers that remove sulfur from coal, and this business accounts for 85% of the company's backlog.

McDermott's working on cutting down carbon-dioxide emissions, too. Not only is the firm developing a "supercritical boiler" that might cut CO2 12% to 15%, but McDermott helps to increase the efficiency of the power plant using the boiler.

If only Washington would settle on some universal coal standards, McDermott would see a tremendous amount of business. A demand from Congress that carbon emissions be reduced further would warrant the closing of the old coal plants built during the 1950s and '60s and construction of new plants using those supercritical boilers. It would greatly reduce CO2 output, and ratchet up MDR's profits. In the meantime, McDermott makes money retrofitting these old plants through its parts and services business.

McDermott's even an offshore-drilling play, building the platforms and infrastructure necessary to make it happen. While coastal drilling isn't happening in the U.S. yet, McDermott recently started a joint venture with China to build the ships used to support that drilling.

Cramer called McDermott our best hope for cleaner coal and offshore drilling, making it twice blessed. He thinks MDR is one of the best stocks out there.

Questions for Cramer? madmoney@cnbc.com

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