Framework for a Shift to Cleaner Energy

On August 3, 2015, President Barack Obama announced the Clean Power Plan, which establishes limits for carbon pollution from power plants. This rule differs from many air pollution regulations by putting a framework in place to allow for a shift to cleaner energy. The plan includes a set of "building blocks" with which individual states can use to address their emission standards and progress to become more power efficient.

The plan focuses its efforts on limiting carbon emissions from power plants, which are the largest emitters of carbon dioxide (CO2) in America. This is why the first building block of the plan, "best system of emissions reduction" asks that states, or groups of states, improve their energy processes to be as efficient as possible. States have been given a year to submit a plan to limit their carbon emissions by 32 percent below 2005 levels by 2030. Some states will be allowed to appeal to the U.S. Environmental Protection Agency for a two-year extension.

 oil

The second building block of the Clean Power Plan is that states will need to shift their reliance on coal to other sources of energy like natural gas. Basically, the plan recognizes that America is not going to stop using coal altogether, but it poses a way to limit emissions of carbon by changing the mix of energy production state by state. The plan also provides coal fired facilities with a menu of control options to reduce CO2 emissions.

The third building block of the plan is to use more renewable energy sources. The plan doesn't require only renewable energy sources, as this wouldn't be possible given the lack of steady inflows of energy from renewables like solar and wind.

 gas

The displacement of coal power by other energy types will impact both the energy industry and companies in many ways. The shift towards more reliance on natural gas usage and renewables will increase investments in these sectors. The timing of the Clean Power Plan could be extremely beneficial for the renewable sector, whose tax credits run out next year, as it could spur reinvestment once again.

Power companies may take another look at their long-term investments in power, both where their power is coming from, by energy source as well as geographically. For example, manufacturers may want to relocate to areas like Ohio and Pennsylvania where the supply of natural gas is more prevalent. Companies may also want to reconsider their long-term energy investments as well.

 solar

Another forecast on the change that the Clean Power Plan will establish is in the way states will do business. I think the current, vast differences between some states' clean energy standards will create a market between states that want to trade carbon tax credits. I also see an increased opportunity for investment to begin again in developing clean coal technologies, like FutureGen, which turns coal-burning emissions into a gaseous form so that CO2 can be removed and sequestered underground.

Overall, the impacts of the Clean Power Plan will create a new, long-lasting framework for energy producers, states, and companies to consider regarding the sustainability of their energy for many years to come.

Share
  • Steven Eget
    Steven Eget
 
Blog Recap

Sign up to receive our monthly blog recap via email

*required field