Acid Rain Case Study

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Acid Rain:
The Southern Company (A)

Problem Statement In 1992, executives at the Southern Company have three years to formulate a robust and complex strategy that will involve massive capital outlay and substantial modifications to processes and procedures as it works to comply with provisions enacted in 1990 to the amendments of the Clean Air Act, while simultaneously ensuring they remain sustainable and profitable.
Analysis
The Southern Company is an American based electric utilities company in Alabama, Georgia, Florida, and Mississippi. It is the fourth largest in the U.S. The case surrounds the challenges the company’s Bowen plant in Georgia faces as it attempts to conform to the new 1990 Clean Air Act Amendments. The Bowen plant is a coal fired plant capable of producing enough power to serve residential, commercial, and industrial demands of over one million people. The Clean Air Act recognizes sulfur as a contributor to the acid rain problem and enacted a goal to reduce total national sulfur dioxide emissions to half of 1990 levels. The Act describes the cap and trade approach whereby companies are permitted to pollute a certain amount of sulfur dioxide compared to levels of electricity output they produce. Rainwater is naturally acidic with a pH of around 5.7. Acid rain can be defined by anthropogenic acidification caused by nitrogen compounds and sulfur dioxide, formed as particulate matter released in man-made products such as smoke stack emissions and automobiles. Environmentalists have grown more concerned about the effects of acid rain which contains lower than normal pH levels in water. The effects of the lowered pH as surface water streams into rivers and threatens aquatic species, disappearance of sensitive coral reefs, disrupts microorganisms and natural acid buffers in soil, weakens tree roots, causes leaf loss, and corrodes limestone and buildings. The case serves to examine the methods and alternatives for which sulfur



References: Reinhardt, F., (1992). Acid Rain: The Southern Company (A). HBS No. 9-792-060. Boston, MA: Harvard Business School Publishing Meyer, R., and Yandle, B., (1987) The Political Economy of Acid Rain Cato Journal, Vol. 7, No. 2. The Cato Institute

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