Will the Clean Power Plan Kill the Coal Industry?

Source: Wikimedia Commons; wy.blm.gov 

The Obama Administration has it out for coal. The EPA's new Clean Power Plan is cutting coal's cost advantage to push power beyond dirty fossil fuels. But states and corporations are fighting back, and it's still unclear who will win this bureaucratic battle. Here's what you need to know.

Cutting out coal
On June 2, the U.S. Environmental Protection Agency (EPA) announced a "commonsense plan to cut carbon pollution from power plants." While other plans have beat around the climate change bush by imposing limits on arsenic or mercury emissions, this is the first time the EPA has directly targeted carbon, the primary greenhouse gas culprit behind climate change.

Rather than impose direct caps or limits on emissions, the EPA has developed an algorithm that allows each state to balance carbon emissions with their current power generation portfolio. The Brookings Institute visualized the new plan in a series of simple equations pitting emissions rates per MW against total current generation:

Source: Brookings Institute; "E" is emissions rate and "G" is current generation

Number crunching aside, the new policy pits clean energy against dirty energy like never before. The message is clear: Start cleaning up your act by 2020 or face federal wrath.

The good, the bad, and the ugly
The proposed plan has been both lauded and loathed. For environmentalists, the Clean Power Plan marks a major win. Power plants are the single largest greenhouse gas polluters, accounting for around one-third of our nation's total emissions.

Source: EIA.gov 

If all goes as planned, "steady and responsible steps" (quoted from the EPA's press release) will put the U.S. in a significantly cleaner position by 2030:

  • Power sector carbon emissions cut by 30% from 2005 levels
  • A concurrent 25% cut in particle pollution, nitrogen oxides, and sulfur dioxide
  • An estimated $93 billion in climate and public health benefits via reduced premature deaths, child asthma attacks, and fewer missed work or school days
  • An approximately 8% drop in electricity bills due to increased energy efficiency and reduced overall electricity demand

Not a bad list -- but not everyone's elated. States and corporations are leveling lawsuits at the EPA, challenging the legal right and economic validity of such an unprecedented plan. Among the challengers are Alabama, Indiana, Kansas, Kentucky, Louisiana, Nebraska, Ohio, Oklahoma, South Dakota, South Carolina, West Virginia, and Wyoming, as well as Murray Energy, the U.S.'s largest privately held coal mining company.

West Virginia, the 38th poorest state in the U.S., has taken an especially hard line against the Clean Power Plan. Attorney General Patrick Morrisey issued a press release:

This lawsuit represents another effort by our office to invalidate the EPA's proposed rule that will have devastating effects on West Virginia's jobs and its economy. Our Office will use every legal tool available to protect coal miners and their families from the Obama Administration and its overreach.

The announcement came a day after Alpha Natural Resources announced 1,100 potential layoffs and reduced production at 11 West Virginia coal mines.

Other states and corporations are worried that their own new standards will force similar cutbacks. According to the Bureau of Labor Statistics, the coal industry directly employs 80,030 Americans with an average hourly wage of $26.15. The West Virginia Coal Association estimates that in their state alone, coal creates 20,000 direct jobs, 70,000 indirect jobs, and over $6 billion of economic growth.

Coal ain't cut yet
The EPA's new policy is well-intended. With the right push, our nation's energy portfolio can clean up its act. But critics suggest that the plan asks for too much, too fast. But with unclear legal precedent, contentious benchmarks, and corporate backlash, the plan isn't set in stone, yet.

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Read/Post Comments (5) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 16, 2014, at 2:13 PM, Tiger69 wrote:

    Coal is just great. Look at what it has done for West Virginia....

  • Report this Comment On August 17, 2014, at 2:33 AM, Paullitely wrote:

    Carbon Dioxide clearly is not controlling the earth's climate with Global Warming. Use your senses. Particularly in this very long and very cold winter that has already begun.

    Coal power plants are closing due to regulations and taxation, and cannot compete because of subsidies given to wind power.

    Last winter was long and cold so Northeast US almost had winter blackouts. With more coal plants closing, blackouts are guaranteed this winter.

    If coal plants are not profitable, and we need more power fast, how will we get them turned on? Here is how... Much higher electricity prices to adjust to cold weather happening already. Our govt is out of control for politics, ignoring the actual weather. Head in sand!!

  • Report this Comment On August 17, 2014, at 2:36 AM, Paullitely wrote:

    To understand what is happening, see paullitely.com

  • Report this Comment On August 17, 2014, at 8:23 PM, rayfrombristol wrote:

    "the Age of Fossil Fuels is fading ... smart to divest in Coal investments. "Global clean energy investment hit a record $260 billion in 2011. That's five times as much as 2004. The shift to clean energy is already happening." http://clmtr.lt/c/KZJ0fz0cMJ

  • Report this Comment On September 30, 2014, at 4:55 PM, EllieSutter wrote:

    There's so much happening with coal powered systems. The direction of investors is going towards clean energy sources, but that doesn't completely solve some of the problems of unreliability that renewable sources have. Right now, we rely quite a bit on coal powered systems though that's not to say we can't consider balancing out our sources.

    http://www.elginindustries.com/solution/industrial_equipment...

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