A climate plan businesses can like
WITH the release of President Obama's Clean Power Plan, a flood of legal challenges will begin. Already, opponents have denounced the new rule limiting carbon pollution as unconstitutional. Behind the rattling sabers, however, there's a quieter story worth noticing. Many big players in the electric power industry will gain more with the rule in place than if the courts strike it down.
In fact, many power companies have worked with the administration to get the best possible deal, and with states to discuss compliance strategies. Given their financial interests, some of these utilities may even wind up helping the government defend the rule.
The plan sends a clear market signal that low-carbon energy will be profitable. Many of the country's most powerful investor-owned utilities, including MidAmerican, Southern Company and Exelon, have made big investments in low carbon sources like wind, solar or nuclear power. Their decision to do so was driven by a mix of market opportunities, investor preferences, tax credits and state and federal air pollution standards.
In the last several years, utilities also have begun shifting away from coal toward cheaper natural gas. What they want now is a clear and predictable federal plan that will help them profit from these investments, and reward them for making more. The president's plan does just that. It limits carbon pollution at the nation's oldest and dirtiest power plants and allows them to meet those limits in a variety of ways; for example, by becoming more efficient, operating less often or investing in cleaner energy sources.
Incentives in the plan will encourage the development of renewable energy. States can award credits to companies that buy or build renewable projects, and these companies can bank them even before the compliance period for meeting emissions limits begins. The federal government will match these state credits, which will help businesses comply with those limits. With these incentives, it pays to produce clean energy. Any utility that already owns cleaner forms of energy, or hopes to build them, can profit - whether it is Southern Company constructing new nuclear reactors and steadily expanding its portfolio of renewables, or MidAmerican, a national leader in installed wind power that may look to expand its market.