The Tribune Democrat, Johnstown, PA

Local News

September 21, 2013

How other energy sources will likely profit from new coal regulations

NEW YORK — Tough new limits on the amount of heat-trapping emissions new power plants can emit will likely accelerate a shift away from coal-fired power and toward electricity generated with natural gas, wind and sunshine.

Power prices for homes, businesses and factories may eventually rise, and nuclear power could return to fashion.

The rule proposed by the Obama administration Friday will have little effect on the mix of power sources and electricity prices anytime soon because it only applies to new power plants and is likely to be challenged in court. Even so, market forces are already reshaping power marzkets in the same way the rule will.

A boom in natural gas production in the U.S. has dramatically increased supplies, sent prices plummeting and prompted a shift away from coal.

The rule requires new coal plants to be built with extremely expensive equipment to reduce carbon dioxide emissions. That will make coal look prohibitively expensive to regulators and utilities planning for the future. By comparison, natural gas-fired plants, which emit half as much carbon dioxide as coal plants, along with wind turbines and solar panels, will look like a bargain.

Jason Bordoff, director of Columbia University’s Center on Global Energy Policy, called the rule “consistent with already evolving market trends toward the use of natural gas instead of coal” and described it as “cost-effective.”

Nonetheless, it creates financial winners and losers. Here’s how the landscape could change for companies and customers:

Winners

Natural gas

Most new natural gas-fired power plants will stay within the rule’s emissions limits without requiring new equipment. That means natural-gas fired plants – already by far the cheapest power plant to build and operate – will likely remain the top choice for utilities.

As utilities rely more on natural gas to generate electricity, demand for the fuel will increase and prices could rise. That would mean more revenue for domestic natural gas drillers such as ExxonMobil and Chesapeake Energy, drilling services companies such as Halliburton and Baker Hughes, and pipeline companies such as Spectra Energy and Kinder Morgan. It will also help makers of natural-gas fired turbines such as General Electric and Siemens.

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