Will the Clean Power Plan Kill the Coal Industry?

The EPA's newest energy plan could crush the coal industry -- but it's not set in stone, yet.

Aug 16, 2014 at 1:55PM


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:

Brookings Equation

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.

Epa Poll

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.

Do you know this energy tax "loophole"?
You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Justin Loiseau has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers