U.S. coal mining company shares dived on Monday, in the lead up to President Obama’s unveiling of his major plan for U.S. action on climate change on Tuesday afternoon, The Washington Post has reported.
Further, this week coal mining companies have been hit by unwelcome economic data about the Chinese economy, and coal investors are said to be jittery about news that the U.S. Supreme Court will review a court decision to reverse the Cross-State Air Pollution Rule. This reversal would be one of Obama’s main avenues for forcing U.S. coal-fired power plants to cut carbon pollution. As I mentioned yesterday, Obama is expected to try and heavily restrict carbon emissions from new and even existing power plants. This would eventually force many coal plants to shut down.
The Post reports that the shares of companies such as Consol Energy, Peabody Energy, Cliffs Natural Resources, Alpha Natural Resources, and Walter Energy fell between 5.8% and 8%.
One of the big questions regarding Obama’s climate action speech on Tuesday is perhaps the timeline that will be presented. Obama could stretch the timeline for significant action into the 2020s, which would no doubt draw heavy criticism from environmental groups. Obama could choose to move much sooner, which undoubtedly would impact coal companies more quickly, and serve to strongly stimulate the clean technology and renewable energy sectors – and perhaps the overall U.S. economy.
Whatever Obama comes out with on Tuesday, it’s clear investors in carbon intensive industries are bracing for a bumpy ride. At this point in human history, it may well be time to jump off that old ride. In fact, it’s well overdue. A new and far more sustainable era is fast approaching.
Image CC licensed by Jeremy Buckingham