The Environmental Protection Agency this week made public its draft mandating power plants cut U.S. carbon-dioxide emissions 30% by 2030 from levels of 25 years earlier. If the new limits are accepted, Archer Daniels Midland (NYSE:ADM), Cemex SAB de CV (NYSE:CX), Eastman Chemical Company (NYSE:EMN), and US Steel Corporation (NYSE:X) will be hard hit financially, as each is among the top 10 consumers of coal generated electricity.
What the new rules would mean
According to The Wall Street Journal, "Each state will have different reduction standards," but across the United States, carbon emissions from electric power plants would be 25% their 2005 levels by 2020 and 30% their 2005 levels by 2030, but individual states will be affected differently.
For example, the proposed rule would require West Virginia power plants to reduce their carbon emissions 19.7% from 2005 levels by 2020, while power plants in Colorado and Louisiana reduced their carbon output 35.3% and 39.7%, respectively.
Why the president is acting
On the eve of the EPA's draft rule announcement, The New York Times reported, "The regulation takes aim at the largest source of carbon pollution in the United States, the nation's more than 600 coal-fired power plants."
Just how bad is coal for the environment
The below pie chart comparison demonstrates how environmentally caustic coal is when compared to alternative energies, natural gas, or oil.
Industry is already saying it will not stand for this
The Edison Electric Institute, the National Association of Manufacturers, and the US Chamber of Commerce have already told the government to expect a legal fight. The Edison Electric Institute is an association of electric power producers. The National Association of Manufacturers and the US Chamber are heavy industry associations, representing the likes of Archer Daniels Midland, Eastman Chemical Company, and US Steel Corporation. (Cemex SAB de CV is a foreign based corporation in Mexico.)
Meanwhile, Senate Minority Leader Mitch McConnell has promised to introduce legislation to block the EPA's new rule, but with the Senate controlled by Democrats, passage of any such legislation would be unlikely.
The fight may be decided in the courts
The tempest in the coal mine is already boiling over. Coal companies are marshaling phalanxes of attorneys, prepping lawsuits, hoping to block the new EPA rule. The action is seen by many as the president acting unilaterally to do what Congress wouldn't when it failed to pass his cap on carbon emissions.
Kells Hetherington 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.