This past Tuesday, President Obama announced his three-part strategy to curb US greenhouse gas (GHG) emissions, help spur international efforts on climate change, and guard the US from any further effects of climate change. His strategy is sure to thoroughly redefine how the US generates and uses electricity. Moreover, Obama added that he is looking to approve the Keystone XL pipeline – a very contentious issue — in 2013, noting that he would only do so if the pipeline doesn’t have an extreme impact on GHG emissions.
Obama’s climate policy plan has spurred conflicting reactions from the energy industry: manufacturers are concerned that slashing emissions would increase electricity prices and undermine competitiveness; while nuclear and clean-energy companies are in favor of the plan, as they will profit if GHG emissions are curbed.
Limited emissions could mean the collapse of coal, which accounts for one-third of the US’s GHG emissions. For the past few years, natural gas has been America’s favored energy source — Obama’s new regulations would push the energy industry even further towards natural gas and nuclear power, both of which produce far less carbon dioxide than coal-based power plants. Improvements in energy-efficiency and the renewable energy sector, like wind and solar power, are also likely to occur.
Obama’s plan will involve other tactics that will help reduce emissions, such as providing federal loan guarantees for cleaner fossil-fuel energy projects; new fuel-economy guidelines for trucks; a more positive alliance between the US and key economies like China, India and Brazil; and creating strong emission standards for new power plants, which must be acted out before any rules are created for established power plants.
The new regulations have been met with resistance by industry groups such as the Kentucky Coal Association, which believes that any effort to limit coal and fossil fuel-based power plants will prevent Kentucky from creating jobs, ultimately forcing Kentucky families to endure job loss, and rising bills and food prices. This is a prevailing notion among most coal companies and politicians from coal country – they believe Obama is waging a ‘war on coal’.
Energy analysts predict that, if Obama’s measures are put into action, one-third of US coal will go into retirement, a potentially hard hit to industries and consumers alike. Coal companies fear that the demise of coal may give way to unstable prices, which could undercut the coal industry’s competitive edge over other countries. Power companies often avoid depending on gas for these reasons.
The new regulations don’t need congressional approval, but will take years to be fully enacted and not likely be completed during Obama’s second term. Obama hopes to successfully limit GHG emissions by 17% by 2020, from 2005 levels.
Developed and Written by Dr. Subodh Das and Tara Mahadevan
June 26, 2013
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