The 'climate' is changing in Washington.

Author:Faircloth J.T.

Facing significant opposition it remains unlikely that major climate legislation will pass in the 113th Congress. Realizing the legislative roadblock, President Barack Obama has launched an initiative through the use of his executive powers, which may have a profound impact on the economy while avoiding a congressional confrontation.

The president's climate change effort includes new regulations that will likely force utility companies with coal-fired power plants either to invest significant sums in clean coal technology to reduce emissions or switch from coal production to alternative energies, such as natural gas, nuclear, solar and/or wind.

The plan, released in late June by the White House, details a new set of regulations intended to help combat climate change. The plan has three goals.

The first is to take steps to reduce carbon emissions though methods such as creating emissions standards for all power plants, making loans for clean coal production technology and setting fuel-economy standards for heavy-duty vehicles. The second step directs government agencies to begin preparing American infrastructure and society to handle the effects of climate change. The third step is to lead international efforts to combat climate change through expanding bilateral agreements, ending U.S. government support for new coal companies in developing countries and increasing government climate change preparation and response capabilities.

Higher Energy, Upfront Costs Likely

Despite its' lofty goals, any transition to the climate change plan may increase energy costs for end users by reducing the amount of cheap coal-powered electricity that is available. While the plan encourages both natural gas and alternative energy development, and a transition to clean coal technologies with an $8 billion loan program, energy prices could still rise if the new production does not make up for that lost from current coal-fired plants. Such energy cost increases could have an impact on any person or business that uses energy provided by one of the impacted power grids.

Higher energy costs could be offset by an increase in energy efficiency. In addition, the plan sets tighter fuel economy standards on heavy trucks starting in 2018. Increased fuel efficiency could offset increased prices over the long term.

The new plan could cause a harmful economic impact to some utilities, particularly in the short term, but it is possible that the plan will encourage a long-term...

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