The EPA Targets “Forever Chemicals” And Water Utilities Eye Big Profits - The Average Joe


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    The EPA Targets “Forever Chemicals” And Water Utilities Eye Big Profits

    Rhea Lobo

    July 9, 2024

    They say, “Nothing lasts forever” — but Teflon cookware begs to differ. Decades after becoming a kitchen staple, the chemicals used in their production, including PFAS (Per- and Polyfluoroalkyl Substances), have been linked to cancer and liver damage. Known as “forever chemicals,” PFAS are now found in nearly half of America’s tap water — and the government and utility companies are preparing to spend billions to clean up this mess.

    Washing away toxicity: Last year, manufacturers of forever chemicals like DuPont ($DD), Chemours ($CC), and Corteva ($CTVA) paid $1.18B to settle claims of water contamination. But the cleanup will cost 200x more — and America is just getting started. In April, the Environmental Protection Agency (EPA) singled out two forever chemicals as hazardous under the Superfund Law, requiring water utilities to monitor and reduce their levels in drinking water to near-zero. This move aims to help 100M+ affected Americans reduce their exposure to these harmful substances.

    • Compliance could cost utilities up to $3B annually, affecting ~6K US public drinking water providers who may currently fail to meet these new standards.
    • Bloomberg Intelligence estimates revenue from PFAS cleanup for the environmental industry could rise from under 1% in 2023 to 10% to 15% by 2027.

    H2Oh So Rewarding

    The global cleanup of forever chemicals is becoming increasingly lucrative, especially for US companies specializing in water treatment technologies. The remediation could add an additional $300B in spending by 2040 — with $200B flowing into companies like Aecom ($ACM) and Clean Harbors ($CLH). More companies are likely to benefit unexpectedly from this effort.

    • Aecom expects to earn $10B from its water services over the next decade, while Montrose Environmental ($MEG) projects that PFAS cleanup services will account for ~12% of its revenue this year.
    • In the past year, chemical treatment companies like Xylem ($XYL) and Minerals Technologies ($MTX) have seen their shares rise ~20% and ~50%, respectively, partly due to the demand for PFAS cleanup.

    Litigation to remediation: Since 1999, over 9.8K lawsuits have been filed across 140 industries, resulting in ~$16.7B in settlements related to PFAS harms. Companies historically associated with these chemicals, such as 3M and DuPont, are actively phasing them out in response to growing regulatory pressures. These evolving standards are expected to drive more water utilities to invest in remediation solutions.

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