If your company is like most, high energy costs are cutting into your bottom line at an increasing rate.
Whether it’s fuel costs, maintaining and replacing vehicles, or paying to heat, cool and light your facilities, no one’s immune from rate hikes these days.
Hold onto your hats – energy costs are about to spike even further, both in the short-term and over the next decade, barring a major breakthrough in reliable renewable fuels. The Biden EPA is making that a certainty with a flurry of regulations of greenhouse gases (mainly carbon dioxide, also methane) and hazardous air pollutants like mercury emitted by:
- truck and car tailpipes, and
- fossil fuel-fired power plant smokestacks.
On top of that, the feds are doubling down on electric vehicles (EVs) and charging stations to combat climate change. The biggest problem? The U.S. doesn’t mine a fraction of the lithium or copper needed for chips and batteries to keep pace with the government’s goal of EVs for everybody.
As expensive as EVs are, there’s a good chance now is the best time for companies to buy (Tesla recently cut prices). Not all EVs are eligible for potential $7,500 tax rebates, depending on if they’re manufactured in the U.S. and most parts are made here.
Energy sector won’t bet against the EPA
Based on previous major rules by the EPA on industry, regulated companies will assume these emission guidelines will go through and begin to comply. Case in point: 11 years ago, the EPA’s Mercury and Air Toxics Standards (MATS) that targeted coal- and oil-fired power plants went into effect.
Energy companies shut down dozens of power plants and spent billions upgrading facilities, in addition to switching to natural gas, which produces less carbon pollution. The MATS rule proved to be the most expensive environmental rule ever and doubled electricity rates in some parts of the country. Those higher rates became the new norm.
Just four years after MATS went into effect, the Supreme Court ruled EPA should’ve weighed the enormous costs of the rule, and never should’ve promulgated it. The Trump administration tried killing the rule for good but failed to do so. Not only is MATS still alive and well, but now the Biden EPA just proposed to make that rule even tougher.
This week the EPA doubled down on electric utilities with a climate change rule aimed at eliminating greenhouse gas emissions by 2040. The price of extracting and burning oil, gas and coal will go up because fossil fuels are (for now) crucial for energy production.
