President Barack Obama is planning an end to the building of new coal power plants, according to Businessweek. The outlet sources people familiar with the matter. According to the report, the Environmental Protection Agency is planning on introducing rules that would force new coal plants to implement costly carbon reducing technology.
The equipment necessary to build new coal power plants under the rules would drive up the cost of building coal plants, and the cost of producing electricity from the energy source. That could mean an end to coal as a dominant force in the U.S. power industry, and it has shaken up coal on the markets today.
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New coal rules
According to the rules, which are scheduled for release on September 20, power plants would have to install carbon capturing technology on all new coal power plants. Similar rules were supposed to be introduced by the EPA last year, but the proposal was killed after intense lobbying from the coal industry.
The upcoming rules are part of a wider directive from the Obama Administration to cap the carbon emissions from power plants. The rules for new coal plants are the first step in the introduction of the wider legislation. There are several problems with the new rules, and coal companies are likely to argue those points in an attempt to have the legislation delayed or thrown out.
Carbon capture technology is not widely available commercially at the moment, according to coal industry bodies. The technology is also somewhat unproven. That’s mainly because coal plants have refused to implement it due to the expense of the procedure.
Coal stocks fall
The coming end to coal power generation, or the risk of such, is eating into the value of coal stocks on today’s market. Stock in Cliffs Natural Resources Inc (NYSE:CLF) are down about 1 percent, James River Coal Company (NASDAQ:JRCC) is down more than 4 percent, Alpha Natural Resources, Inc. (NYSE:ANR) is down around 2 percent, Peabody Energy Corporation (NYSE:BTU) is down 1 percent, and Arch Coal Inc (NYSE:ACI) is down close to 1 percent.
We won’t find out the full rules for more than a week, but it is likely that the coal industry will fight the implementation every step of the way. Having won the battle last year, it will be illuminating to see how the Obama Administration deals with the industry’s arguments this time around.