Miracle of Miracles, Obama’s Carbon Emissions Proposal Still Hasn’t Destroyed the Economy

Future Tense
The Citizen's Guide to the Future
June 6 2014 2:49 PM

Miracle of Miracles, Obama’s Carbon Emissions Proposal Still Hasn’t Destroyed the Economy

Coal conveyors in Printer, Kentucky.

Photo by Luke Sharrett/Getty Images

What’s Wall Street’s reaction to Obama’s new proposal to attack climate change? A big fat “Meh.”

As of Friday afternoon, the stock market had reached record highs. It’s clear that, at least from the perspective of industry and business leaders, the much-feared “war on coal” isn’t going to wreck the economy. In fact, the new rules probably won’t change things much at all.


Wall Street largely shrugged off this week’s proposed EPA rules on cutting carbon pollution from the country’s power plants, mostly because they were planning on doing it anyway. According to InsideClimate News, fear of the guidelines turned out to be largely overblown.

Some company stocks had already taken a hit in anticipation of Monday's announcement, so share movements after the plan’s release could reflect only part of the market’s reaction. The increases in some stock prices could reflect a measure of relief that the impact may not be as damaging as expected.

The gradual phase-out of the dirtiest coal power plants in America is inevitable. Thanks to the booming natural gas industry and the quickly plummeting cost of solar, coal is already becoming obsolete. Those trends were in place before Obama’s rules, and aren’t likely to change that much.

Among a litany of reasons for the tepid reaction was the selection of 2005 as a baseline year for emissions reductions—that’s about when U.S. emissions peaked before the recession. According to an analysis by the Breakthrough Institute’s Alex Trembath, Michael Shellenberger, and Ted Nordhaus, the less-than-ambitious new EPA rules will barely budge the trajectory of emissions reduction the country’s been on since 2005. Forbes commentator Tim Worstall called the EPA’s 30 percent target “easily achievable.” In fact, it may even encourage utilities into a sort of “use it before they lose it” mentality. Says Worstall:

We actually saw this in Europe when similar rules were imposed. What actually happened in that coal plant owners decided to run their plants flat out while they could still emit. They made their capital back that way, by running at overcapacity, not maintaining and not upgrading. By the time that they will have to go out of service they’ll be so clapped out that there’s no economic value there anyway.

Stock prices of coal companies actually rose this week, following the EPA’s announcement. That’s likely because the industry was expecting them to be worse than they were. As of midday Friday, an equal-weighted average of seven major coal stocks has risen 0.44 percent since Monday morning.

That’s not to say coal is an especially good investment. On Friday, analysts at Goldman Sachs downgraded Peabody Energy, the world’s largest private coal producer, from a “buy” rating to a “neutral” rating. The same group of seven leading coal stocks are down 1.46 percent so far this year, compared to gains of 1.96 percent for the Dow Jones Average and 5.41 percent for the S&P 500, both of which hit new all-time highs on Friday.

Still, Wall Street as a whole is bullish on the future of Peabody—which is sometimes used as a proxy for the entire coal industry. Currently, 12 analyst agencies give it a “Buy” rating, six a “Hold” rating, and only one a “Sell” rating. After all, once American utilities stop buying coal, there's always China.

Future Tense is a partnership of SlateNew America, and Arizona State University.

Eric Holthaus is a meteorologist who writes about weather and climate for Slate’s Future Tense. Follow him on Twitter.


The Slatest

Ben Bradlee Dead at 93

The legendary Washington Post editor presided over the paper’s Watergate coverage.

The Congressional Republican Digging Through Scientists’ Grant Proposals

Renée Zellweger’s New Face Is Too Real

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

Whole Foods Is Desperate for Customers to Feel Warm and Fuzzy Again

The XX Factor

I’m 25. I Have $250.03.

My doctors want me to freeze my eggs.

The XX Factor
Oct. 20 2014 6:17 PM I’m 25. I Have $250.03. My doctors want me to freeze my eggs.

Forget Oculus Rift

This $25 cardboard box turns your phone into an incredibly fun virtual reality experience.

George Tiller’s Murderer Threatens Another Abortion Provider, Claims Free Speech

Walmart Is Crushing the Rest of Corporate America in Adopting Solar Power

  News & Politics
The World
Oct. 21 2014 3:13 PM Why Countries Make Human Rights Pledges They Have No Intention of Honoring
Oct. 21 2014 5:57 PM Soda and Fries Have Lost Their Charm for Both Consumers and Investors
The Vault
Oct. 21 2014 2:23 PM A Data-Packed Map of American Immigration in 1903
  Double X
The XX Factor
Oct. 20 2014 1:10 PM Women Are Still Losing Jobs for Getting Pregnant
  Slate Plus
Behind the Scenes
Oct. 21 2014 1:02 PM Where Are Slate Plus Members From? This Weird Cartogram Explains. A weird-looking cartogram of Slate Plus memberships by state.
Oct. 21 2014 12:05 PM Same-Sex Couples at Home With Themselves in 1980s America
Oct. 21 2014 5:38 PM Justified Paranoia Citizenfour offers a look into the mind of Edward Snowden.
  Health & Science
Medical Examiner
Oct. 20 2014 11:46 AM Is Anybody Watching My Do-Gooding? The difference between being a hero and being an altruist.
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.