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Obama Administration Announces New Climate Action Plan

June 3, 2014

After years of gridlock on climate change in Washington, President Obama effectively bypassed Congress and announced a series of executive actions that set in motion the most significant part of his climate change agenda.  These mandates propose to reduce carbon pollution, help the U.S. better deal with the effects of climate change, and position the U.S. to lead the global community in climate change efforts.  A major component of these proposed actions are the new rules that will require power plants to cut their emissions.  The Wall Street Journal reported today that power plants will have to cut U.S carbon emissions 30% by 2030, based of 2005 levels.  This rule largely affects the hundreds of American fossil fuel plants.  Bearing the greatest brunt from this rule-making proposal are the roughly 600 coal-fired plants in the U.S.  Coal-fired plants produce an estimated 40% of the nation’s carbon emissions and while scientists say that the plan lacks the large scale to reduce global emissions and stop global warming, it is promising to see a major political leader have such a serious agenda towards climate change.

This is not the first time that President Obama has tried to implement and realize his climate change platform.  In 2010, the Obama administration failed to get his major climate change proposal (cap-and-trade bill) through Congress.  Having no hope for legislation, President Obama has been forced to use the only tool left in his administration’s toolbox – the Clean Air Act.  Under the 1970 Clean Air Act, the president and the EPA have the authority to regulate carbon emissions that have been deemed a danger to the public.  In the Supreme Court’s 2007 decision in Massachusetts v. EPA, greenhouse gases were labeled as a pollutant under the Clean Air Act.  This has allowed President Obama and the EPA to construct unprecedented and critical emission-reduction rules.

Chris Faulkner, the CEO of Breitling Energy, a Texas oil and gas company was quoted by the New York Times saying “The era of coal is coming to an end.  We are entering the era of natural gas.”  Analysts covering the industry have also echoed this sentiment, reassuring the rise of natural gas.  Natural gas emits about half the carbon dioxide that coal emits to produce the same given amount of power.  This paired along with the unconventional oil and shale gas boom that the U.S. is currently experiencing has brought a flood of natural gas to the market.  However, the price of natural gas has been consistently rising since 2012 as utility companies are beginning to covert from coal to natural gas to produce electricity.  While coal-burning plants will continue running, the Obama administration’s plan forcefully contracts the already gradually declining market share that the coal industry has.  President Obama’s executive actions will not only have an impact on preventing negative climate change, but it will also greatly shape the state of the American energy markets.