With the economy depressed, Americans drove less. Low natural gas prices prompted utilities to shutter carbon-heavy coal plants, and burn more gas for electricity. Solar and wind installations soared.
This year, coal use and carbon emissions are up -- and forecast to grow in the years ahead, putting in doubt Obama’s 2009 pledge to cut greenhouse gases 17 percent by 2020. It’s against that backdrop that he outlined yesterday a broad swath of policies to curb the use of coal, improve the efficiency of appliances and boost clean-energy investments.
“This plan begins with cutting carbon pollution by changing the way we use energy -- using less dirty energy, using more clean energy, wasting less energy throughout our economy,” Obama said in a speech at Georgetown University in Washington.
Coal-related shares, such as Peabody Energy Corp. (BTU) and Arch Coal Inc. (ACI), have fallen in recent days as word of Obama’s plans leaked out. The Stowe Global Coal index of companies that produce and sell coal, including Arch, fell to its lowest level yesterday since the depths of the recent recession in March 2009. Some renewable energy companies, such as First Solar Inc. (FSLR), based in Tempe, Arizona, rose.
The U.S. had been on a path to reaching Obama’s goal, with emissions last year down more than 12 percent from the peak in 2007, the steepest drop since the oil crisis of the late 1970s. Since 2006, no other country has cut its total carbon pollution by as much as the U.S., according to Obama.
The share of coal-fired electricity fell to 37 percent of total generation last year, from 49 percent in 2007, while the share of natural-gas generation hit 30 percent. Burning coal produces twice the carbon-dioxide emissions as natural gas.
So far this year, coal’s share of energy production is up to 40 percent, and natural gas is down to 26 percent as it price has risen, according to the U.S. Energy Information Administration. Emissions are now forecast to grow by 2.5 percent this year, and continue on a course of steady growth through 2040.
It’s that projection that has environmentalists worried. Carbon-dioxide emissions since the Industrial Revolution have led to a warming of the Earth’s temperature over the past 50 years, threatening to cause extreme forest fires, drought and coastal flooding, according to the U.S. Global Change Research Program.
“We are already paying the price of carbon pollution,” former vice president and global-warming activist Al Gore said in a blog post. “It is clear that bold and comprehensive action is needed now.”
To address the threat, Obama laid out a series of new steps yesterday. He directed the Environmental Protection Agency to cap carbon pollution from power plants. He said his administration would negotiate efficiency measures for large trucks, and pledged to cut energy use by appliances and federal buildings. The Interior Department will boost clean-energy installations on federal land, and government lenders will cut support for overseas coal projects, he said. And he pledged to expand efforts for nuclear-power generation.
The president also laid out a new standard for considering TransCanada Corp. (TRP)’s Keystone XL pipeline, which is now under review by the State Department.
“Our national interest will be served only if this pipeline does not significantly exacerbate the climate problem,” he said, a statement cheered by environmental advocates fighting the pipeline. “The net effects of climate impact will be absolutely critical to determining whether this project will go forward. It’s relevant.”
As Obama was outlining his plans, TransCanada slid 2.5 percent in Toronto trading to a seven-month low of C$44.62 ($42.41). The shares later rebounded to C$45.20, up 0.8 percent from the previous day’s close.
Obama laid out a timeline for rules on carbon emissions from power plants, a schedule that begins with a step back. The EPA will first re-propose a rule it originally offered last year that would preclude construction of new coal plants lacking expensive carbon-capture technology.
Then, over the next three years, the EPA will propose and implement rules for limiting carbon releases from existing plants, which account for 40 percent of U.S. emissions.
“The important thing is to get a schedule for completing this,” Dan Lashof, director of the climate program at the Natural Resources Defense Council, said in an interview.
“Congress is best equipped to develop a national energy policy that meets the needs of all sectors of our nation, striking an appropriate balance to protect the environment and ensure energy security,” Tim Leljedal, a spokesman for Southern, one of the nation’s top coal-burners, said in an e-mail.
First Solar, the world’s largest maker of solar power-plants, and SunPower Corp. (SPWR) stand to gain from Obama’s pledge to boost large-scale renewable installations on public land, said Sanjay Shrestha, a New York-based analyst at Lazard Capital Markets.
“We’ve got to look after our children; we have to look after our future; and we have to grow the economy and create jobs,” Obama said. “We can do all of that as long as we don’t fear the future; instead we seize it.”
To contact the reporter on this story: Mark Drajem in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jon Morgan at email@example.com