Surprise winners, losers over Obama carbon rule
By Jonathan Fahey, AP
June 4, 2014, 12:00 am TWN
NEW YORK--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 carbon dioxide as coal. The biggest nuclear power generator, Exelon, and biggest wind farm operator, Next Era Energy, may fetch higher prices for their carbon-free power. Companies that sell wind turbines, 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."