High energy prices are making industrial waste increasingly valuable: How Waste Management, CHAR Technologies, and Veolia Are Cashing In

Major Challenges: Industrial Waste and the CO2 Tax

The greatest potential lies in industrial waste. There have long been legitimate concerns about CO2 emissions. The Earth is warming, and at the same time, extreme weather events are becoming increasingly frequent - a trend that, according to Munich Re, will continue to rise in the coming years.
The CO2 tax is one of the paths many countries have taken. However, this drives up costs, particularly for CO2-intensive industries, and is leading many companies to rethink their strategies - but only where it makes economic sense.

War Increases the Pressure

The war in the Persian Gulf has once again increased the pressure here. Prices for many energy commodities, such as oil and coal, have risen sharply. While prices on Western stock exchanges currently stand at just over USD 104 per barrel (Brent), prices in Asia, which are likely to be more severely affected, are in some cases 30% higher. Whether the war will end quickly remains to be seen. However, many experts assume that rebuilding the oil and gas infrastructure in the Gulf will take years. Consumers should therefore continue to expect higher prices at gas stations. And flying is also likely to become significantly more expensive. On the one hand, more and more airspaces are being closed to Western companies (Russia, the Gulf region, etc.). On the other hand, according to Bloomberg, kerosene prices have risen by more than 80% since the start of the war. This will soon become noticeable in airfare prices.

High energy prices make waste increasingly valuable, especially in energy-intensive industries. This applies primarily to sectors that are difficult to electrify, such as the steel or mining industries. And these companies also pay high CO2 taxes. This presents opportunities for investors. We are therefore looking at three stocks - Waste Management, CHAR Technologies, and Veolia - that can benefit from these trends in the long term.

Waste Management: The Giant Reaps the Rewards!

Investors stand to benefit. This applies to Waste Management (WM), North America's largest waste management company. With a market capitalization of around USD 95 billion, the Houston-based group, originally founded in Chicago, is the industry leader. Its services range from collecting waste from households and commercial customers to operating its own landfills. One can no longer speak of WM as a mere waste collection company. It has transformed into a high-tech environmental services provider and energy producer that now even uses artificial intelligence for optimization (waste sorting). As a vertically integrated company, Waste Management has access to the entire value chain and owns infrastructure that cannot simply be replaced. Stock market analysts would call this a "moat."

With this performance, WM delivered a record year in 2025 - despite headwinds from higher raw material prices for recycling materials. Last year, the group generated a whopping USD 25.2 billion (+14%). Net income rose to approximately USD 2.71 billion. What is remarkable: WM's free cash flow (FCF) of approximately USD 2.94 billion (+27%) exceeded its net income. Analysts view FCF exceeding net income as a sign of strong cash generation and transparent accounting, since net income can be easily manipulated through accounting tricks, but the cash balance cannot.

Waste Management is now reaping the rewards after having invested heavily through 2024. A key growth driver going forward is likely to be its entry into the healthcare sector. Through the acquisition of Stericycle, the company is now a leading provider of medical waste disposal services. This segment accounts for about 8% of consolidated revenue. In addition, WM is significantly ramping up its investments in recycling. Billions have been and continue to be invested in facilities that convert landfill gas into Renewable Natural Gas (RNG). In 2025 alone, seven new facilities were commissioned. The goal here is to power the entire company's truck fleet with self-generated biogas. In the future, this approach is likely to help WM gain traction with energy-intensive companies seeking to reduce their CO2 tax costs. In 2026, free cash flow is expected to rise further to approximately USD 3.8 billion, as the company has moved past the phases of heavy investment in sustainability projects. In the current market environment, analysts view Waste Management as a defensive "utility-grade compounder" that is likely to be sought out as a safe haven in the event of market turbulence. The average price target among analysts is USD 254, roughly 8% above the current price. A helpful factor here is that WM plans to increase its dividend and has launched a new USD 3 billion share buyback program.

CHAR Technologies: The Specialist with Potential!

Waste Management is a generalist in waste disposal and recycling. Those who prefer to invest in specialized companies will find CHAR Technologies Inc. appealing. The Canadian firm has focused entirely on converting waste materials into valuable energy and resources. At the heart of this is a patented technology solution called High-Temperature Pyrolysis (HTP).

This is a thermochemical process in which organic material, such as biomass or waste, is decomposed at temperatures of approximately 800 degrees Celsius in the complete absence of oxygen. Since no combustion takes place, no climate-damaging emissions are produced; instead, valuable end products such as hydrogen-rich synthesis gas and solid biochar are generated. The extremely high heat destroys even stubborn pollutants like PFAS ("forever chemicals"), making the process one of the key technologies for a clean circular economy.

CHAR Technologies' business model is essentially based on two pillars. CHAR uses a special process in which organic waste, such as wood waste, biomass, and even sewage sludge, is decomposed at extremely high temperatures. This produces two main products: renewable natural gas or green hydrogen. These can be fed directly into the gas grid or used by industry as a clean fuel. In addition, solid carbon products are produced, such as CleanFyre (a coal-like substance for heavy industry) or SulfaCHAR (activated carbon for gas purification).

CHAR Technologies generates revenue from these products. The renewable gases and biochar are purchased by industrial buyers. The small-cap company also collaborates with major corporations such as the steel giant ArcelorMittal, which uses biochar as a substitute for fossil coal in steel production.

CHAR Technologies operates its own facility in Thorold, Ontario, for this process to generate long-term cash flows from production. Operations there are set to be gradually expanded. Additionally, the patented technology is licensed in markets outside North America. Partners build and operate the facilities in exchange for a license fee and ongoing profit-sharing payments, known as royalties. In addition, CHAR may charge fees for accepting and processing waste (such as sewage sludge).

The business model targets industries that are difficult to electrify, such as steel and mining. The customer benefits in several ways: they reduce costs associated with CO2 taxes and supply CO2-neutral fuels. Last but not least, CHAR Technologies has entered the market for so-called "forever chemicals" (PFAS). The high temperatures of the HTP process are capable of destroying these hazardous substances in sewage sludge, which solves many problems for municipalities and waste management companies.

The stock currently has a market capitalization of around CAD 32 million, offering investors plenty of upside potential. The opportunity: CHAR Technologies is currently on the cusp of transitioning from the pilot phase to commercial scaling of its innovations. Last year, the company was able to drastically reduce its losses to CAD -1.12 million (previous year: CAD -7.5 million).
This is also due to the first facility in Ontario, which was incorporated into a joint venture. Investors appear to be taking a liking to the business model. CHAR recently sought to raise around CAD 2 million for further growth. The offering was doubled to around CAD 4 million.

Veolia: Europe's Champion!

Veolia Environnement, in turn, is significantly larger and more diversified than CHAR Technologies. In 2022, the French conglomerate created a European champion through the acquisition of the water utility Suez, which at the time generated combined revenue of EUR 37 billion. Veolia now sees itself as the global market leader in "ecological transformation" and has positioned itself accordingly with three business divisions. In the water sector, the French company is the world's largest provider of drinking water supply, wastewater treatment, and water technologies, offering highly specialized desalination and purification systems for industry. In the waste management sector, the focus is clearly on recycling. Added to this is the rapidly growing energy segment, where the company has invested heavily in the operation of district heating networks, industrial solutions, and the production of energy from waste (biomass, landfill gas).

As a result, Veolia Environnement posted record results in 2025. Management views the acquisition of Suez in particular as a game-changer, as synergies are now expected to materialize. Revenue in 2025 amounted to approximately EUR 44.4 billion, and an EBITDA margin of just under 16% was achieved. The Group earned a net profit of EUR 1.22 billion (+10.9% year-over-year) and was also able to slightly reduce net financial debt to a stable level. The Executive Board is proposing a dividend increase to EUR 1.50 per share for the Annual General Meeting on April 23, 2026, which currently corresponds to a dividend yield of around 5%. Veolia takes a rather opportunistic approach to share buybacks. In 2025, for example, shares worth approximately EUR 400 million were repurchased, which were mainly used for employee programs. In addition, Veolia traditionally uses its own shares for strategic acquisitions. The stock is suitable for investors who want to bet on the broad waste management and recycling market and do not want to deal with currency risks, as is the case with US stocks.

With Waste Management, investors are betting on a diversified waste management company that dominates the North American market and has growth potential in recycling and medical waste. However, investors should consider the currency risk relative to the dollar. As a European alternative, Veolia Environnement stands out as a leader in water, waste management, and recycling. The dividend yield of just under 5% is certainly a compelling factor. Last but not least, investors can diversify their portfolios with CHAR Technologies. With its patented technology, the company is an attractive partner for steel and mining giants. As a year of transition lies ahead, the stock could now make its next move upward after finding a bottom.