RE: The Clean Air Act Amendment
There is no doubt into our commitment to comply with the new regulations on the use of coal in our plants. However, there are underlying complexities that need to be addressed. While there remains the need to control industrial emissions to sustainable levels, particular challenges are experienced. Installation of pollution-control equipment is one of the projected solutions to this long-standing issue that requires agent redress to sanitize our air. The Act creates compelling reasons that make its implementation indispensable (Davidson & Joseph 57-75). Given this, it is critical to underline the business perspective of the decision to either purchase the equipment or consider other options that are provided for by the law in a bid to bring the emission levels down. It is within our understanding that the current levels of emission are high and can have die repercussions on the environment thus should be addressed as soon as possible. The factors projected for the decision making have thus been under scrutiny to establish the right course of action.
Impact of the Act on the Company
The impact of the new law runs deep to financial aspects that might prove costly to the company. With the law defining the new levels of emission, the company is bound to comply. However, critical questions remain as to the cost implications of the law. It thus creates contentious ideals within the company and the industry (Davidson & Joseph 57-75). Because previous emissions were nearly two times higher than the new levels, the company must thus reduce its emissions or opt to purchase allowances for the extra emissions as well as purchase scrubbers to help limit emissions. Because of the company’s capacity, the only viable option is to purchase allowances. It will thus inflict additional financial expenses on the company.
Possibility in complying with the laws
The company is faced with a plethora of possibilities in an attempt to comply with the laws. One of the possibilities is to purchase the scrubbers. The installation of the scrubbers could take possibly a period of more than two years thus leaving the company to grapple with the law. The installation would take up to three years to complete and start operating. In this case, the generation of the excessive allowances would only be possible if the scrubbers begin operating (Harvard Business School 1). On the other hand, the company could switch to low-sulfur coal. The strategies would bring the emissions to levels within the confines of the Act.
How to determine the least cost alternative
Uncertainties the company faces in pursuing least cost alternative
Several uncertainties impede the pursuit of least cost solution. One uncertainty manifests in the form of purchasing and selling allowances. While this option might look viable, having excess allowances would not make much economic sense since these prices would not be determined by the company but rather a market (Harvard Business School 1). Therefore, there are possibilities of engaging in an expensive endeavor without many realizations. The uncertain markets factors would make it difficult to budget for the allowances as future sales of the allowances in case they are excess would not guarantee profits due to undefined market factors.
What the company should do to respond to the Act
The company should first switch to low-sulfur coal. It is important to highlight that installing the scrubbers would moderate the working capital (Harvard Business School 1). However, it might take longer to install them thus the need to switch to low-sulfur coal as the immediate response to the Act. However, the long-term alternatives might take into considerations the use installation of scrubbers.
Problems with implementation of a compliance strategy
The implementation might lead to possible decision-making dilemmas due to the complexity of the options regarding determining cost-effectiveness. Also, the economic costs might be the issue. While it is a core necessity, market factors often override any sales motive thus would affect the allowances (Davidson & Joseph 57-75). Every element of the option leads to financial consequences, and the challenge becomes determining what would be cheaper but effective. Taking into account the business aspect of the new law, the obvious financial implications might be dire for the company if right decisions based on well-informed thoughts and serious considerations of the elementary factors that determine the long-term objectives of the company. It is thus essential to understand the dynamics of the law before making any tentative deductions. It implies that proper contextual analogy has to be conducted by the company to clear any element of doubt and limit the potential dangers that the company risks facing concerning the new laws. The essential elements should be deliberated upon in conjunction with experts to find a middle ground on the issue.
Work Cited
Davidson, Jonathan, and Joseph M. Norbeck. "Industry Responses to the Clean Air Act." An Interactive History of the Clean Air Act (2012): 57-75. Web.
Harvard Business School. Acid Rain: The Southern Company B. Harvard Business School, 1992. Print.
Harvard Business School. Acid Rain Case "A" Harvard Business School, 1993. Print.
