Obama carbon rule: Surprise winners, losers

Jun 02, 2014 by Jonathan Fahey
In this March 16, 2011 file photo, steam escapes from Exelon Corp.'s nuclear plant in Byron, Ill. Companies that generate electric power with anything other than coal _ and companies that produce cleaner fuels or efficiency technologies _ are likely to benefit from the Obama Administration's new proposed limits on carbon dioxide emissions from power plants. (AP Photo/Robert Ray, File)

Companies that generate electric power with anything other than coal—and companies that produce cleaner fuels or efficiency technologies—are likely to benefit from the Obama Administration's new proposed limits on carbon dioxide emissions from power plants.

The biggest U.S. natural gas producer, Exxon Mobil, will likely see higher demand for its fuel, which emits half the as coal. The biggest nuclear generator, Exelon, and biggest wind farm operator, Next Era Energy, may fetch higher prices for their carbon-free power. Companies that sell , solar panels, or energy efficiency technology—such as General Electric, Siemens, First Solar and SunPower—may also come out winners.

Coal stands to be a big loser. Last year 78 percent of carbon dioxide emissions from the electric power sector came from coal.

Electric customers will likely pay higher prices for power, though efficiency measures could reduce the impact of higher prices.

The proposed rule, announced Monday, would require a 30 percent reduction in carbon dioxide from the electric power sector from 2005 levels by 2030. The rule isn't scheduled to become final until next year and it will likely face extensive political and legal challenges.

If the rule goes through, states will have until 2018 to develop their own plans to meet the new targets. How each state decides to do this will determine how much it will help or hurt customers, power companies, and others who supply fuels or technology to the industry.

Some states will likely set up or join an existing scheme that caps the amount of emissions from the power sector, but allows power companies to trade emissions permits with each other. These schemes, known as "cap and trade" programs, have the effect of increasing the value of low-carbon and carbon-free power.

Other states may instead require big improvements in energy efficiency or heavily subsidize renewable power generation such as wind and solar.

The impact of the rule, though, may be less than advocates and opponents say. Emissions have fallen so fast since 2005 that the country is already nearly halfway to its goal. Separate clean air rules are expected to have a side effect of reducing emissions by another 5 percent by 2018. That will leave the country 12 years to reduce emissions by another 10 percent, an amount Bernstein Research's Hugh Wynne calls "eminently doable."

In this April 23, 2010 file photo, workers move a section of well casing into place at a Chesapeake Energy natural gas well site near Burlington, Pa. Companies that generate electric power with anything other than coal _ and companies that produce cleaner fuels or efficiency technologies _ are likely to benefit from the Obama Administration's new proposed limits on carbon dioxide emissions from power plants. Bernstein Research estimates that a 10 percent reduction in carbon dioxide emissions could lead to a 12 percent rise in U.S. natural gas demand. (AP Photo/Ralph Wilson, File)

WINNERS

— Nuclear Generators. If carbon-free power becomes more valuable to the marketplace, no one will benefit more than nuclear power producers such as Exelon, Entergy, Public Service Enterprise Group and First Energy.

— Natural Gas companies. Companies that produce natural gas, such as Exxon and Chesapeake Energy; or deliver it, such as Spectra Energy and Kinder Morgan; or produce power with it, like Calpine, could benefit. Bernstein Research estimates that a 10 percent reduction in carbon dioxide emissions could lead to a 12 percent rise in U.S. natural gas demand.

— Renewables. Companies that make wind turbines or solar panels, or develop or operate wind and solar farms, could benefit a couple of ways. States may encourage or subsidize construction, and clean power may become more valuable in the market.

— Electric technology companies. Companies that help make equipment and technology that helps the grid deliver power more efficiently or helps customers reduce their power could benefit. Those include ABB, Honeywell, Schneider Electric, Opower and Silver Spring Networks.

LOSERS

— Coal miners. U.S. coal production has declined in recent years, especially in higher-cost regions such as Appalachia. A 10 percent reduction in will mean a decline of 180 million tons, or 18 percent, in U.S. coal production, according to Bernstein Research. That would hurt miners such as Peabody Energy, Alpha Natural Resources and Arch Coal.

— Railroads. U.S. railroads depend on shipping coal for a significant percentage of their revenue. If utilities use less, railroads will ship less.

In this March 9, 2006 file photo, a large dozer sit ready for work at Peabody Energy's Gateway Coal Mine near Coulterville, Ill. A 10 percent reduction in carbon dioxide emissions will mean a decline of 180 million tons, or 18 percent, in U.S. coal production, according to Bernstein Research. That would hurt miners such as Peabody Energy, Alpha Natural Resources and Arch Coal. (AP Photo/Seth Perlman, File)

— Coal generators. Companies such as NRG Energy and Dynegy that generate electricity with coal-fired powered in unregulated markets may either have to pay for power plant upgrades or pollution allowances, which would reduce profits.

— Electric customers. Power prices and power bills are influenced by many factors, but environmental regulations tend to push power prices up.

COULD WIN, COULD LOSE

— Regulated electric utilities. If, as expected, regulators allow utilities to charge customers for new equipment and technology needed to reduce emissions, regulated utilities that now rely heavily on coal could benefit. Among them: American Electric Power, PPL Corp., Ameren Corp., Southern Company and Duke Energy. But if the price increases are too extreme, customers would consume less electricity in response and the companies could lose revenue.

— Unregulated electric utilities. As coal plants close or reduce their output, the lower power supply could lead to higher prices and revenues for utilities that sell power into competitive markets. However, if states help customers reduce demand for electricity with efficiency programs, or encourage the production of renewable power such as wind and solar, that could lower wholesale power prices.

Jonathan Fahey can be reached at twitter.com/JonathanFahey.

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Maggnus
4 / 5 (8) Jun 02, 2014
Hoo boy, the loon is going to have an aneurysm! Sure hope his mom has his meds close!
aksdad
2.1 / 5 (11) Jun 02, 2014
Emissions have fallen so fast since 2005 that the country is already nearly halfway to its goal.

Anyone else spot the irony in regulating U.S. CO2 emissions that were already declining without regulation? Despite population growth, CO2 emissions declined 10% back to 1994 levels.

http://www.epa.go...co2.html

The even greater irony is that this new regulation of a non-pollutant is projected to reduce global warming by only 0.018º C by 2100. In other words it's almost unmeasurable. The negative economic impact, however, can be measured. While CO2 emissions for the U.S. and European countries have declined, they're growing for India, China, Russia and other developing countries.

Since natural gas has been the key factor in reducing CO2 emissions, will the Obama administration open up federal lands to drilling? Don't hold your breath.
howhot2
3.7 / 5 (9) Jun 02, 2014
The EPA's plan to curb carbon emissions is pragmatic, smart and overdue; long overdue. I know there are a lot of workers that depend on coal to make a common wage, but are there really that many people working now of days given the mountain top removal techniques seem to be the dominate and preferred method of coal mining in the modern era. Small mining communities need to realize that the writing is on the wall for them and work to develop alternative sources of income. You would have to do that even without these new regulations because coal as a market won't last.
The only industry I see surviving long term are the coal sources used for coke in a big works steel mill.

If we don't stop the major contributors of greenhouse gasses now, man kind will have hell to pay for in the future.


Caliban
3.7 / 5 (9) Jun 03, 2014


The even greater irony is that this new regulation of a non-pollutant is projected to reduce global warming by only 0.018º C by 2100. In other words it's almost unmeasurable. The negative economic impact, however, can be measured. While CO2 emissions for the U.S. and European countries have declined, they're growing for India, China, Russia and other developing countries.

Since natural gas has been the key factor in reducing CO2 emissions, will the Obama administration open up federal lands to drilling?


Yeah, so, when you ignore all the other costs of coal production and combustion, there might be a tinge of the ironical in not having done this earlier.

On the other hand, all the sickness, pollution and environmental degradation that will cease as the result of this new rule are no laughing matter.

Tears of joy is more like it.

And there is no reason to open up any more federal or other lands for fracking, except for profit.

I'd rather breathe freely.

Lex Talonis
1.5 / 5 (8) Jun 03, 2014
OK assuming that the CO2 argument is totally a non issue - but the pollution from coal burning IS a major issue..

"The proposed rule, announced Monday, would require a 30 percent reduction in carbon dioxide from the electric power sector from 2005 levels by 2030. The rule isn't scheduled to become final until next year and it will likely face extensive political and legal challenges."

I am surprised that this banking boy glove puppet is announcing such tiny efforts, so far down the track... it's like why bother?

It fails to amuse me that this guy isn't saying that "Starting right now - our country will be using 50% renewables within 3 years."

But like most bank appointed glove puppets, he doesn't have a brain of his own.
antigoracle
1.5 / 5 (8) Jun 03, 2014
Hoo boy, the loon is going to have an aneurysm! Sure hope his mom has his meds close!

Someone sure gulped their Kool Aid down today. So much more stupid.
Caliban
4.2 / 5 (5) Jun 04, 2014
Hoo boy, the loon is going to have an aneurysm! Sure hope his mom has his meds close!

Someone sure gulped their Kool Aid down today. So much more stupid.


Yeah, buddy!

Did you enjoy that rich, realistic, artificial cherry flavor, auntiegriselda?

howhot2
4 / 5 (4) Jun 05, 2014
Speaking of the cherry pick, I stumbled across this youtube video about Solar Energy in Germany and it really spot on.

https://www.youtu...viuMCFDY

This is what the USA needs to do.
freethinking
1 / 5 (5) Jun 07, 2014
The reason US co2 has declined is that economically Obama and the Democrats have brought the economy to a level not seen since the 1970's.

With increased energy costs their plan will entail will send the US economy back even further.

Obama did say he wanted $5.00 gal gas and energy prices to spike, so this is par for the course.
Caliban
5 / 5 (3) Jun 07, 2014
The reason US co2 has declined is that economically Obama and the Democrats have brought the economy to a level not seen since the 1970's.


Wait...OH -you mean the near-fatal collapse of the financial industry, that occurred during the
Bush administration, that Obama, Congress(maybe just a little bit), and (The beasts of burden for the vast majority of the cost)the Citizen Public of the US have had to dig out from under each and every day since?

WTF is wrong with you, freithinking?

Don't bother answering --'t was a rhetorical question.

Eddy Courant
1 / 5 (5) Jun 08, 2014
The Alarmists should stop with the Steam Stacks. Oh those scary Steam Stacks! LOL
freethinking
1 / 5 (4) Jun 08, 2014
Who where in charge of the congress and the senate the last 2 years of the Bush presidency? Oh wait according to Progressives that is a rhetorical question....

Who had complete control of all three houses of government for 2 years after Bush? Oh wait according to Progressives that is a rhetorical question....

Who's parties mortgage programs was a major cause of the economic collapse? Oh wait, according to Progressives that is a rhetorical question....
MR166
1 / 5 (3) Jun 08, 2014
Basically this could be the last nail in the coffin for the US economy. The administration is proud that they have reduced unemployment to 6 plus percent. Here is how that happened. Millions stopped looking for a job and are not counted, millions have been put on disability and are not counted and finally Obamacare has turned millions of full time jobs into part time jobs creating millions of low pay jobs. What a plan! This will raise electric rates by a significant amount and force more manufactures to leave the US. This is an administration filled by activists that have absolutely no idea how to run an economy.