Carbon dated

US carbon emissions crackdown is well-timed

US President Barack Obama's latest crackdown on carbon emissions is well timed.

Proposed steep cuts in power plant pollution are bad news for the coal industry, but the United States has cheap gas to fall back on. America's shale dividend will offset any costs of going greener.

Coal-fired power plants will be hit hardest by an Environmental Protection Agency plan to cut carbon dioxide emissions from existing power stations by 30 per cent from their 2005 levels by 2030.

The United States generates about 40 per cent of its electricity using coal, according to the Energy Information Administration.

Industry groups are already lining up to object, with the US Chamber of Commerce warning of a $51 billion annual hit to the economy from higher energy bills.

Even if that proves spot on, it would amount to only about 0.3 percent of annual US gross domestic product (GDP).

It also ignores the environmental and medical benefits of reducing the use of coal, which pumps out double the carbon dioxide of natural gas when burned and contributes to smog and respiratory problems.

Moreover, the United States can count on abundant natural gas to cushion any blow.

The surge in domestic gas production makes it likely the coming decade-and-a-half will offer a relatively forgiving backdrop for a shift in energy use. At about $4.50 per million British thermal units, the leading fuel substitute for coal costs less than half what it does in Europe.

The situation contrasts with, say, Germany where a rapid retreat from nuclear power, along with a push toward still-pricey renewable energy sources, has increased the burden on the economy in the absence of a cost-effective alternative.

The coal industry's lobbying clout has also declined. Last month, its five biggest companies boasted a combined market cap of less than $20 billion - small compared with the biggest oil and gas companies, many of which are backing alternatives to coal. The industry may struggle to muster concerted political opposition to the EPA.

There is, however, room for the broader criticism that Obama's new proposal may only export emissions. The logical response for a coal industry under pressure at home is to ramp up exports. Unless other countries follow the US lead and tighten their own rules, the EPA's effort could just make coal pollution someone else's problem.