Businesses Brace For Climate Change Rules

Businesses are bracing for new rules expected to come out of the White House regarding climate change. So reports The Wall Street Journal.

President Barack Obama, who has vowed to make climate change a big issue in his second term, may reveal more details about his plans tonight in his State of the Union address.

Obama tried early on to get through some aggressive climate change regulations, but he couldn’t get his policies through Congress. And now, with Republicans controlling the House, his chances of getting through such legislation is even less likely. Any new rules are largely going to come through executive orders and through the Environmental Protection Agency regulations, under the auspices of the Clean Air Act. There may be mandates, for instance, to improve efficiency in the energy and transportation industries.

If the government takes strong measures to curb greenhouse gas emissions, there will be winners and losers. Companies heavily invested in carbon power sources will likely lose while those who sell alternative energy or equipment to clean up those carbon powered plants may see opportunities open up.

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And then some companies, like railway CSX Corp. or conglomerates like General Electric Co., could win on some fronts and lose on others. CSX, for instance, said in a recent quarterly filing that new rules that discourage coal-powered plants could hurt profitability. It already saw a 13% drop in revenues generated by coal traffic in the first three quarters of fiscal 2012. And yet the company said in another filing that any moves to cut gas emissions from trucks could lead to more rail traffic, which is less polluting.

A company like Exelon Corp., an operator of nuclear power plants, wants stricter environmental rules, which would ratchet up costs for its competitors. And a company like Quincy, Mass.-based Eco Power Solutions, which sells technology that helps make coal-powered plants burn cleaner, wants to capitalize on existing power plants that can’t readily turn to cleaner fuels.

Power companies that generate electricity largely through coal power, such as American Electric Power and Southern Co., may be hurt more than their competitors, as the EPA unveils its final regulations on new power plants. If the final regulations are similar to those proposed, coal generation as we know it is no longer feasible, Tom Fanning, CEO of Southern Co., said last month.

Some are afraid new climate change rules will push up the price of energy. Jeff Damir, who co-founded SwaddleDesigns LLC, a small Seattle-based company that sells baby products, said energy prices affect his raw material and shipping costs. If fuel costs rise, it erodes his profits, he said.

To read the full Wall Street Journal article cited in this story, click here

Tags: Policy

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