An appeals court in the District of Columbia has ruled that the US Environmental Protection Agency was “unambiguously correct” in taking steps to set limits on greenhouse gas emissions. The three-judge panel unanimously upheld the EPA in a suit brought by industry associations, states, and companies, including some coal companies.
The most immediate result of the ruling — aside from appeals, of course — is that the EPA will move quickly with new regulations to cut CO2 emissions, regardless of whether or not Congress takes any legislative action. And a main target of new EPA regulation will be electricity generation from coal. Power generation created nearly three-quarters of US CO2 emissions from stationary sources in 2010.
Coal companies have long been fighting proposed EPA rules that limit greenhouse gas emissions because coal emits nearly twice the CO2 of natural gas and the cost to add equipment to reduce the emissions runs into the billions. Troubled coal miners like Patriot Coal Corp. (NYSE: PCX), Alpha Natural Resources Inc. (NYSE: ANR), Arch Coal Inc. (NYSE: ACI), Peabody Energy Corp. (NYSE: BTU), James River Coal Corp. (NASDAQ: JRCC), Walter Energy Inc. (NYSE: WLT), Consol Energy Inc. (NYSE: CNX), and Cloud Peak Energy Inc. (NYSE: CLD) have seen share prices fall as much as 90% in the past year as power plants switch to cheaper and cleaner natural gas.
The impact of the court’s ruling will also spread to other key industries that burn a lot of energy, including oil refineries, cement plants, and chemical plants. Automakers are also affected by the ruling, but the auto industry has not fought the EPA with the same fervor and have essentially agreed to improvements to cars that both reduce emissions and boost gas mileage.
Coal stocks closed at or near 52-week lows yesterday. Only James River and Consol did nbot set new lows yesterday: Patriot Coal posted a new 52-week low of $1.02; Arch posted a new low of $5.41; Alpha posted a new low of $7.46; Peabody posted a new low of $20.67; Walter posted a new low of $42.20; and Consol posted a new low of $26.41. Even the Market Vectors Coal ETF (AMEX: KOL) hit a new low of $23.29 yesterday.
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