The Obama administration has unveiled its latest proposal to
help curb carbon emissions.
is taking aim at power-producing plants around the country, with
the coal plants taking the brunt of the hit. As states are forced
to lower the amount of emissions that are produced, the main
focus will be on the high-carbon-emitting coal plants.
Currently accounting for 41 percent of the world's electricity
and about 40 percent in the U.S., the sweeping changes will
undoubtedly lower that figure.
Coal stocks have been preparing for this day -- as the shares
of the Market Vectors Coal ETF (NYSE:
) are down 10 percent in the last year, and a whopping 60 percent
in the last two years. While these changes will not occur
overnight, the trend is not in the favor of coal stocks.
Falling Interest Rates Boost Bond ETFs
The biggest winner from the new plan may be natural gas
stocks. The cleaner-burning fossil fuel emits just half the
carbon into the air as coal power plants. As more natural gas is
removed from the ground in the U.S., and prices remain low, it
will be an option for states to meet the new requirements. The
First Trust Natural Gas Index ETF (NYSE:
) is up 30 percent in the last year, and is trading a few
percentage points from a multi-year high.
Both solar and wind power are being touted as another
alternative to the coal-burning power plants. With only a very
small percentage of the country's energy coming from green energy
sources, there is big upside. However, the economics are not
quite there without government subsidies.
The Guggenheim Solar ETF (NYSE:
) is up 65 percent in the last year, as investors are taking a
flyer on the long-term prospects of solar energy. The First Trust
Global Wind Energy ETF (NYSE:
) has risen 50 percent over the last year, but is often
overlooked when investors consider investing in green energy
Overall, the Administration's plan is aggressive -- and will
have a major affect on the way power is generated in the U.S. in
the years ahead. That being said, because it is a plan that will
not go into effect for a few years, the trading could be volatile
in the related ETFs, as the specifics are hammered out.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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