econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 21 October 2017

The Impact Of Repealing The Clean Power Plan

by Robert Rapier, Investing Daily

In the aftermath of Donald Trump's victory last November, I wrote that he was likely to target the EPA's Clean Power Plan (CPP) for repeal. Then in March, President Trump signed the Executive Order on Energy Independence, which called for a review of the CPP.


Please share this article - Go to very top of page, right hand side, for social media buttons.


I believe repeal was a foregone conclusion, and the review was really just to ensure that the repeal would hold up to legal challenges. Last week, the EPA made it official and announced the intention to formally repeal the CPP.

Today I discuss the likely impacts of the repeal.

What is the CPP?

The CPP was first proposed by the Obama Administration in June 2014. The final version of the plan, titled "Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units," was published on October 23, 2015.

The CPP required a 32% cut in utility-sector carbon emissions from 2005 levels by 2030. In addition, the EPA projected that the plan would:

  • Cut particle pollution, nitrogen oxides, and sulfur dioxide by more than 25%
  • Avoid up to 6,600 premature deaths, up to 150,000 asthma attacks in children, and up to 490,000 missed work or school days - providing up to $93 billion in climate and public health benefits
  • Shrink electricity bills roughly 8 percent by increasing energy efficiency and reducing demand in the electricity system.

In a nutshell, the CPP would have made it nearly impossible to build new coal-fired power plants in the U.S., so coal as a source of power would have been phased out in the U.S.

Many states claimed that they would be harmed by the CPP, so they sued. Leading the lawsuit on Oklahoma's behalf was Oklahoma Attorney General Scott Pruitt, who would later become President Trump's EPA Administrator. He ultimately oversaw the review and the recommended repeal.

Impact of the CPP

The CPP and similar regulations are often blamed for the demise of the coal industry in the U.S., but coal-fired power was already set for a major decline over the next two decades.

Last year the U.S. Energy Information Administration's (EIA) Annual Energy Outlook 2016 (AEO2016) projected the impact of the CPP. The EIA did predict that the CPP would boost the natural gas and renewable energy sectors, primarily at the expense of coal.

In the AEO2016 reference case, which included the CPP, 92 gigawatts (GW) of coal-fired capacity would be retired by 2030. But even without the CPP, an estimated 60 GW of coal would be retired.

Renewables and natural gas would continue to grow strongly in both cases, but with the CPP coal-fired generation in 2040 would be down 32% from 2015 (as specified by the CPP).

20161013TESeiaaeo

Electricity generation from natural gas is expected to increase steadily from 2020 to 2040 even in the absence of the CPP and is projected in both cases to become the leading power fuel source. Without the CPP, electricity generation from renewables is not expected to overtake coal-fired generation by 2040.

Conclusions

The net impact of the repeal - beyond the obvious implications of failing to curtail U.S. carbon dioxide emissions as quickly as had been projected - is slower growth rates for natural gas and renewables and a slower demise for coal. I certainly would not make major changes to my portfolio based on this repeal.

The future is still bright for natural gas and renewables, but you might be tempted to hang onto your coal stocks for a bit longer. Coal stocks are rallying on the news. As I write this the largest gainers in the portfolio are our coal holdings, and the largest decliners are some of our renewable holdings. Long-term investors shouldn't be too concerned about this, as the trends will continue in the same direction even without the CPP.

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical Investing Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.




Econintersect Investing








search_box
Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.







Keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government





























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved