Biden administration imposes sweeping regulations on power plants (NYSEARCA:XLU)

The Biden administration issued sweeping new rules this week that crack down on power plant pollution and could force many coal plants to shut down unless they undertake costly upgrades to capture smokestack emissions.

The new rules – sure to be challenged in court – mandate strict controls on carbon dioxide emissions at existing coal plants and newly built natural gas plants, setting the stage for a significant infrastructure buildout to capture and dispose of CO2 emitted at such plants in order to comply; existing gas plants are not included in the new rules.

The changes come as the industry copes with a shifting generation mix, with solar and wind projects being added to the grid, at a time when artificial intelligence, data centers and vehicle electrification are sharply driving up demand.

Utilities say more gas-fired power plants are needed for reliability and to replace coal, and some say they need aging coal plants to stay online longer than expected.

The Environmental Protection Agency said the new rules will cut 1.4B metric tons of CO2 emissions – roughly equivalent to the power sector’s 2022 emissions – and move the U.S. closer to the Biden administration’s goal of making the electricity sector carbon free by 2035.

Environmental groups praised the EPA’s action as urgently needed to protect against harmful climate change, while utilities warn the rules are unlawful, rely on technology that is “not yet ready for full-scale, economy-wide deployment,” and will threaten grid reliability and affordability.

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