Coal Shares Jump After Supreme Court Rejects Mercury Rule

Updated on

Beleaguered U.S. coal producers were thrown a lifeline after the Supreme Court struck down the Obama administration’s rule on mercury and acid gases from power plants, saying it hadn’t considered the billions of dollars in costs before issuing the rule.

Shares of coal miners soared after the 5-4 decision was announced Monday. Peabody Energy Corp., the largest coal supplier in the U.S., climbed 9.6 percent, Arch Coal Inc. jumped

4.5 percent and Alpha Natural Resources Inc. gained 8.6 percent.

The nation’s coal producers have suffered amid the industry’s worst downturn in decades. The thermal coal used by power plants has faced increased competition from cheap natural gas. The situation has only been compounded by tougher emissions standards including the Mercury and Air Toxics Standards rule, or MATS, a 2011 Environmental Protection rule that ordered curbs to pollutants emitted from coal-fired power plants.

As a result of the rule, dozens of old coal plants have been shuttered and utilities have invested billions of dollars to install expensive scrubbers.

Monday’s ruling “could rein in aggressive anti-coal rule making by the EPA as it presses ahead with potentially more costly rules including the Clean Power Plan addressing carbon-dioxide emissions,” Paul Forward, an analyst with Stifel Nicolaus & Co., said in a note.

‘Lofty Price’

“Elitist ideas usually carry lofty price tags,” Mike Duncan, the chief executive officer of the American Coalition for Clean Coal Electricity, said in a statement. “When EPA rewrites this regulation, we can only hope it uses real costs and benefit figures rather than those pulled out of its magic bag of tricks.”

One industry group negatively affected by Monday’s ruling was producers of bromine, which is used to reduce mercury emissions. Calgon Carbon Corp. dropped 8 percent, Albemarle Corp. was down 4.8 percent, Cabot Corp. 6.7 percent and Chemtura Corp. 5.6 percent.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE