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President Barack Obama often highlights his administration’s “all-of-the-above” energy strategy as a model for sustainable economic growth. But three months after the Environmental Protection Agency unveiled its landmark proposal to regulate carbon-dioxide emissions from US power plants for the first time, that all-inclusive catchphrase seems more than ever like hyperbole.
The plan sets a targeted carbon-dioxide emissions rate for each state to hit by 2030. On average, these goals represent a 30% drop from 2005 rates, but – as critics have pointed out – the benefits and sacrifices of the plan are unlikely to be shared equally.
“At the highest level, there are some clear winners and losers,” said George Favaloro, managing director of PricewaterhouseCoopers’ sustainable business practice.
The same concept applies to the rest of Obama’s overarching Climate Action Plan, announced in 2013, as well. As programs growing out of the action plan begin to bear fruit, it’s becoming increasingly apparent that some businesses will gain while others will lose.
The winners conserve
When it comes to the EPA’s plan, it’s easy to pick out some early beneficiaries. “Companies selling clean energy and energy efficiency products and services in residential, commercial and utility-scale markets are going to benefit,” Favaloro said. “You can debate what the final impact of the Clean Power Plan and other proposals will be, but there’s definitely going to be support for more renewable energy coming on line,” he added.
This could mean more business for solar power companies such as First Solar, SolarCity and SunPower, which have led a solar building boom in the US in the past two years. Traditional engineering and construction companies could benefit as well. Bechtel, for example, already has expanded into solar power plant construction.
The EPA’s power plan aligns nicely with other Obama administration climate initiatives. For example, the US Department of Energy, which has backed large-scale solar and wind projects with billions of dollars of loan guarantees, recently announced that it is enabling $4bn in loan guarantees for additional renewable energy and energy efficiency projects. This comes after the DOE’s April announcement that it plans to recharge its $16bn Advanced Technology Vehicle Manufacturing Loan program. Ford, Nissan and Tesla have used the program to improve fuel efficiency and produce electric vehicles.
Other supporting initiatives include a Department of Agriculture plan to invest $236m in improving rural electric infrastructure in eight states and a $1bn national disaster resilience competition that will be conducted through the Department of Housing and Urban Development. More than 80% of the HUD program’s funds are targeted at regions where Obama declared major disasters in 2011, 2012 and 2013.
The initiative is modeled after HUD’s Rebuild by Design competition, launched in the wake of Hurricane Sandy. The six winning Build by Design proposals – which were awarded $920m in June – aim to buoy regional infrastructure resiliency to protect New York and New Jersey against storm-related threats, especially floods and power outages. Dozens of design, architecture and construction firms and institutes are involved in the winning projects, including Bjarke Ingels Group, Interboro Partners, MIT, PennDesign and Scape/Landscape Architecture.
Additionally, the administration’s new Climate Data Initiative aims to spur the private sector to use public climate data to help make communities more resilient to climate change. Google, Intel and Microsoft are participating.
As a whole, the Obama administration’s efforts to mitigate and to prepare for the impacts of climate change are designed to have “a broad impact on the transportation, building and power sectors”, Favaloro said.
The losers litigate
But not everyone will be a winner.
Despite the Obama administration’s efforts to prepare for the effects of climate change, “the US still relatively underinvests in infrastructure”, observes Jonathan Woetzel, a director at McKinsey.
“The American economy and people deserve better infrastructure,” he said, pointing to the American Society of Civil Engineers annual infrastructure report card, which last year gave the country a mere “D+” grade. It remains to be seen whether Obama’s most recent climate-related efforts will change that, he added.
On the other hand, argues PricewaterhouseCoopers’ Favaloro, Obama’s climate initiatives could accelerate a painful process of transformation, leaving behind companies that don’t understand “what it means to build in a resilient way”.
In terms of the Clean Power Plan, some energy stakeholders, particularly those that are deeply invested in coal, could stand to lose billions of dollars. This, in turn, could accelerate coal’s replacement with natural gas, renewables and efficiency.
Companies that could be hit hardest include coal producers Alpha Natural Resources, Arch Coal and Peabody Energy; unregulated power companies with large fleets of coal plants, such as NRG Energy and Dynergy; and suppliers of coal-mining equipment, like Caterpillar, according to Moody’s Investor Service.
Regardless of the long-term effects of the EPA’s power-sector proposal, it’s increasingly clear who its first beneficiaries will be: lawyers. The EPA already faces a lawsuit filed last month by a dozen heavily coal-reliant states. Murray Energy, the largest privately held coal-mining company in the country, filed suit in March.
As such litigation illustrates, the impact of Obama’s climate initiatives will play out over time, and not for the benefit of “all of the above”. And, as similar lawsuits will undoubtedly work their way across several affected industries, it’s clear that the struggle for climate resilience will, at least to some extent, play out in the courts.
Garrett Hering is a San Francisco-based journalist covering energy, technology, business and the environment. His articles have appeared in California Energy Markets, the Seattle Post-Intelligencer, the Frankfurter Allgemeine Zeitung and elsewhere.
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