Weekend Economists Tickle the Ivories September 20-22, 2013

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11. POLLUTION RULE HURTS COAL, HELPS OTHER SOURCES

http://hosted.ap.org/dynamic/stories/U/US_OBAMA_CLIMATE_CHANGE_WINNERS_AND_LOSERS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2013-09-21-00-03-15

NEW YORK (AP) -- Tough new limits on the amount of heat-trapping emissions new power plants can emit will likely accelerate a shift away from coal-fired power and toward electricity generated with natural gas, wind, and sunshine.

Power prices for homes, businesses and factories may eventually rise, and nuclear power could return to fashion.

The rule proposed by the Obama administration Friday will have little effect on the mix of power sources and electricity prices anytime soon because it only applies to new power plants and is likely to be challenged in court. Even so, market forces are already reshaping power markets in the same way the rule will. A boom in natural gas production in the U.S. has dramatically increased supplies, sent prices plummeting and prompted a shift away from coal.

The rule requires new coal plants to be built with extremely expensive equipment to reduce carbon dioxide emissions. That will make coal look prohibitively expensive to regulators and utilities planning for the future. By comparison, natural gas-fired plants, which emit half as much carbon dioxide as coal plants, along with wind turbines and solar panels, will look like a bargain.