The US Environmental Protection Agency (EPA) still has the power to fight climate change. But after a June 30 Supreme Court ruling, the agency’s options for curbing power plants’ carbon emissions are narrower, more onerous, and more expensive for power companies.
The court ruled the EPA lacked the authority from Congress to set broad, national policies designed to push the energy sector to shut down coal plants. If Congress wanted the agency to handle such a momentous decision, the court’s conservative majority reasoned, lawmakers would explicitly pass laws granting the EPA that power. But, given Congress’s habitual inability to pass meaningful legislation, it’s unlikely the body will grant the EPA new powers any time soon.
Instead, the court left intact the EPA’s authority to create narrow regulations governing individual power plants. The agency could, for instance, rule that every coal-burning power plant must include a carbon capture and storage facility. Each coal plant would then have to find a way to comply with the rule, seek an exception, or shut down.
The latter approach forces the EPA to issue more intrusive mandates governing how power plants can operate, if it hopes to reduce the country’s carbon pollution and head off the worst consequences of climate change. Ultimately, these rules will likely cost power companies more money and generate more litigation to achieve similar emissions reductions.
Goodbye carbon markets, hello federal mandates
Gone are the EPA’s Obama-era dreams of establishing a nationwide carbon market.
The agency’s 2015 Clean Power Plan, which sparked this week’s Supreme Court ruling, would have required states to reduce their carbon emissions over time. But it would have left states and power utilities to come up with their own plans for cutting carbon—and it would have created a de facto “cap and trade” market, in which less-polluting states could sell the extra room in their carbon budgets to more polluting states that were slower to cut emissions.
The Clean Power Plan never took effect. It was quickly blocked by court order in 2016 and abandoned by the Trump administration in 2019. Yesterday, the court exhumed the dead regulation and killed it again, ruling former president Barack Obama would never have had the authority to enact it.
A ‘chaotic world of regulation’ ahead
Many power companies favored the Obama administration’s free-market approach to climate regulation, which would have left them plenty of autonomy to decide how they wanted to cut carbon emissions. The Edison Electric Institute, a trade group representing the biggest US power utilities, filed an amicus brief asking the Supreme Court to preserve the EPA’s ability to set more flexible climate rules. “While it may seem counterintuitive that the Nation’s investor-owned electric companies, in particular, should favor EPA regulatory authority, the alternative could be the chaotic world of regulation by injunctive fiat,” they wrote.
But that is the world the EPA and power utilities are left with after the court’s ruling. EPA air pollution chief Joseph Goffman said his team had “identified different options for responding depending on what the Supreme Court tells us the nature and contours of our authority are,” but he has not yet revealed what specific rules the agency may now issue.
Whatever the new rules may be, they will have to be more prescriptive than the 2015 Clean Power Plan—and they will likely generate a renewed flurry of legal challenges from Republican state attorneys general and power companies. The EPA, in other words, will now have to fight climate change the hard way.