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On January 17, 2008, President Obama said, “If someone wants to build a coal power plant, they can, it’s just that it will bankrupt them…” That promise is coming into fruition now.

Last month, the EPA revealed its Clean Power Plan, which aims to lower carbon dioxide (CO2) emissions by 30% by 2030, in relation to levels from 2005. The U.S. was 10% below the standardized levels as of 2013, but is still far from the 2030 rule that the EPA is aiming to finalize and enact by 2015. The EPA has provided four recommended methods for achieving its CO2 reduction goals, all of which are aimed at either increasing efficiency and/or reducing emissions.chart(8)

The new rules will require all power plants to produce less than 1,000 pounds of CO2 per megawatt hour of power produced. Coal power plants cannot meet this requirement. The EPA’s own study said that the average U.S. coal plant emits 2,249 pounds of CO2 per megawatt hour of power produced. Even the newest, most efficient coal power plants emit 1,700 pounds of CO2 per megawatt hour.

In 2013, about 39%  of U.S. electric power generation came from coal-fired power plants. Operators of coal power plants that can’t meet the EPA’s more stringent CO2 emissions limits will be forced to close those plants and opt for alternative fuels to generate electricity.

Some states and cities are in the EPA’s path more than others. Wisconsin relies on coal for 60% of its energy, and California could lose upwards of 37,000 manufacturing jobs alone. Coal-industry town Craig, Colorado, believes they could become a modern ghost town if the 35 year old Craig plant is forced to close, as demonstrated in a video.

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The Heritage Foundation said “By 2023, the phase-out will have cost the economy nearly 600,000 jobs. Income for a family of four will drop by $1,200 per year. Gross domestic product will register a cumulative decrease of $2.23 trillion over the phase-out period.”

Natural gas power plants generally require fewer, but better educated employees to handle  specialized jobs compared to coal-fired power plants.

The effects of the new EPA carbon dioxide regulations will affect the downstream economy as well, especially considering the current economic hardships. The U.S. economy shrank by 2.9% during the first quarter of 2014, annihilating the 1.9% total annual growth it gained in 2013. On top of that, U.S. businesses and families paid $1.9 trillion per year to comply with federal rules in 2013, or one-eighth of the total economy, according to the Clyde Wayne Crews, Vice President for Policy at the Competitive Enterprise Institute.

d1A U.S. Chamber of Commerce study calculated that the new EPA regulations will cost the U.S. economy another $51 billion annually, result in 224,000 lost jobs each year, and cost every American household $3,400 per year in higher prices for energy, food and other necessities.

At an energy panel hosted by Politico earlier this month, Senator Joe Manchin from West Virginia (D) said that thanks to the new EPA regulations, “A lot of people on the lower end of the socio-economic spectrum are going to die.”

Nine states are already suing the EPA over the proposed rule, and more lawsuits are expected to follow. Natural Resources Defense Council Climate Director Peter Altman called this “the Super Bowl of climate politics.”

Representative Shelley Moore Capito from West Virginia (R) sent a letter to President Obama, saying, “I urge you to consider the impact that your administration’s existing coal plant rule will have on the people of my state of West Virginia who want to go to work, provide for their families and produce affordable energy that powers our economy. …Washington should not pick winners and losers in the energy economy.” West Virginia was producing 11.8% of the nation’s coal in 2012 from 264 mines manned by 22,786 workers, second only to Wyoming.

Although the EPA has a formula for determining the percentage decrease of CO2 required from every state, it does seem like “winners and losers” are being arbitrarily chosen sometimes. According to the Richmond Register, “Kentucky must reduce its CO2 emission rate by only 18 percent while some states such as New York must reduce theirs by as much as 40 percent.” New York produces more CO2 than Kentucky every year according to the EPA. Fox News reported that even though 72% of Mississippi’s electrical capacity already comes from clean-burning natural gas, the state will have to decrease their carbon emissions by 38% in 2030 from 2005 levels.

Meanwhile, other countries show no signs of slowing the coal burn. While the U.S. regulators are trying to restrict the use of coal, China and India, the world’s two most populous nations, are building new coal plants at a rapid pace to bring electricity to millions of their underprivileged residents.

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.