Here's How Obama's Clean Power Plan Could Affect Your Portfolio

The plan has been heavily criticized by both Democrats and Republicans in Washington, D.C. who say the President is overstepping his boundaries.

However, initial attempts to block the climate change policies have failed; on Tuesday, a federal court dismised a lawsuit filed by the nation's coal companies against the Environmental Protection Agency regarding CPP, marking the first big advancement for Obama's initiative.

While this lawsuit is expected to be the first of many opposing the CPP, many traders are looking into how they can protect their portfolios once the new rules take effect.

Related Link: Piper Jaffray Upgrades Renewable Energy After New EPA Proposal

Coal A Worry

Projections for how this change will affect the power industry are uncertain, as the rules don't specifically call for a course of action – meaning that some states may choose to shut down their coal plants in order to comply, while others may work to make them more efficient.

Companies like Peabody Energy Corporation BTU that operate in the Midwest are more vulnerable to the new rules, as most of those states haven't done much to reduce carbon emissions and will likely have more difficulty meeting their targets than states like California where carbon-reduction has been a priority for some time.

Clean Energy To Gain

Obama's initiative is setting clean energy alternatives up for big gains, as more states will likely shift their reliance where possible.

Companies that contribute to wind and solar power like Brookfield Renewable Energy Partners LP BEP and Hannon Armstrong Sustnbl Infrstr Cap Inc HASI are likely to see a boost as emission targets are released.

However, those gains could take some time to materialize, as the benefit to specific sectors won't be evident until states begin releasing their individual plans to meet their emission targets.