The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Trefis) -- Alcoa ( AA) recently announced its partnership with Condexis and CO2 Solutions to develop carbon capture technology for commercial uses. As the world leader in the production and management of primary aluminum, fabricated aluminum and alumina, the U.S. Department of Energy (DOE) has endorsed this project by helping finance it. Alcoa competes with other international metals and mining giants like Rusal, Rio Tinto ( RIO), BHP Billiton ( BHP) and Chalco ( ACH).

Our price estimate for Alcoa is $17.68 and roughly in line with the stock's market price.

Alcoa has been focused on making its operations sustainable for quite some time now. The company's involvement in the carbon capture technology initiative seems to be the next step in that direction. The DOE contributed about $13.5 million to this project with other funding costs taken up by Alcoa.

The project intends to use a proprietary process employing an in-duct scrubber to reclaim the alkaline clay produced as the primary by-product of the aluminum manufacturing process. The scrubbed alkaline clay would then be combined with treated flue gas, which is a carbon-rich gas that is normally released into the atmosphere during the manufacturing process. The goal is use certain enzymes to get mineral-rich products that can be used in other industries.

Manufacturing companies around the world are struggling to find profitable ways of managing waste while they see rising costs associated with stringent environmental protection regulations. If Alcoa is able to show success in this pilot project, this would directly impact the profitability of the primary metals division, which processes raw alumina to manufacture aluminum.

We initially estimated that the division would be able to generate an EBITDA margin of close to 14% in the years to come. In a scenario where the carbon capture technology proves successful and can be implemented on a larger scale, then this margin inch higher in the coming years. If EBITDA margin increased to 17% in the next 5 years, this would imply a 10% upside for the company's stock price estimate bringing the value to nearly $18.20.

See our full analysis for Alcoa.

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