Coal Shares React Positively to EPA Emissions Rules
NEW YORK ( TheStreet) -- Coal industry investors appeared to be realizing President Obama's rumored "war on coal" could be a lot worse.
Coal shares were moving higher in early trading as investors saw signs of hope in new federal rules on emissions standards released by the Environmental Protection Agency on Monday.
Shares of Peabody Energy
The Obama administration is seeking the new rules under the Clean Air Act. The EPA said the rules will require a reduction in carbon dioxide emissions by U.S. power plants of 25% over 2005 levels by 2020 and 30% by 2030, according to news reports. In a press release Monday, the EPA added that new restrictions will cut particle pollution, nitrogen oxides and sulfur dioxide by more than 25% as a co-benefit.
The rules will not take effect until next year after a public comment period and would let states make the decision about how best to achieve those cuts. States can choose to implement cap-and-trade programs, carbon taxes and other incentives to help meet the goal.
Advocates said in addition to cutting emissions and limiting the worst effects of global warming, the new rules could stimulate the economy and even lower energy bills through additional efficiency in production. Critics said the new rules would eliminate coal jobs and raise prices on electricity.
While coal would be the biggest loser under such rules -- coal supplies more than a third of the U.S.'s electrical power in the U.S. -- the news is not all bad. The Obama administration has given carbon emitters a couple of key concessions, including calculating the reduction in carbon emissions from 2005, rather than the current year.
A boom in natural gas, brought about by the rise of hydraulic fracturing, or "fracking," has helped lower carbon missions by 11% nationwide, thus making it easier for states and carbon emitters to come into compliance with the new rules through basic efficiencies and updating equipment.
Importantly, the new emissions reduction requirements have the effect of blessing the fracking technology, boosting natural gas producers. Exxon Mobil
Additionally, the EPA press release indicated further concessions to states regarding compliance.
Also included in today's proposal is a flexible timeline for states to follow for submitting plans to the agency -- with plans due in June 2016, with the option to use a two-step process for submitting final plans if more time is needed. States that have already invested in energy efficiency programs will be able to build on these programs during the compliance period to help make progress toward meeting their goal.