Monday, June 2, 2014

EPA Carbon Dioxide Rules Finally Released

After much anticipation, the EPA today released its plan to reduce carbon dioxide emissions from power plants by 30% from 2005 levels by 2030.  This is something of a compromise proposal that has something for everyone but still disappoints all involved.  In other words, probably a fair compromise.

The 30% reduction will please environmentalists, but backdating the baseline to 2005 will please the utility industry.  Additionally, the individual states will have the flexibility to set up their own plans, so they will not have a scheme dictated to them from above.

Bottom line, this is a win for natural gas because utilities will have to continue to reduce their coal consumption and shutter coal-fired plants.  In reality, market forces and older environmental regulations were already doing this as utilities opt not to invest in older coal-fired plants and retire them instead.  These new carbon regulations might accelerate the process somewhat but they really don't change the big picture a whole lot.

2 comments:

Anonymous said...

So this administration took a naturally occurring process and made it their own invention? What an amazing government we have!

Robert Hutchinson said...

I think they really just took advantage of the situation to codify it to keep that "progress" going. If the market suddenly shifts back the other direction, there will not be room for industry to turn back with it. Ultimately, it's a gradual impact on the power sector that is supported by abundant and stably priced natural gas.