SCOTUS Rules Against Clean Power Plan in West Virginia vs. EPA: A Blow for Power Emissions Mandates but Effects Will Be Muted as the 2022 Opinion Also Said the EPA Overstepped Its Authority.

 

     The Biden administration’s overly ambitious plan for a net-zero power grid by 2035 now seems very unlikely. It was never really an obtainable goal in my opinion anyway. Power companies will continue to decarbonize and perhaps they will do better at it without being forced. Coal plants may be around a little longer, especially to boost reliability, but many will still be retired and remain under-utilized. The main reason for that is that gas plants are more cost-competitive, just as reliable in most cases, and have much lower emissions and other environmental issues.

     The case began as a result of Obama’s Clean Power Plan unveiled in 2015, when several states, led by West Virginia, challenged it in a lawsuit. The plan called for lowering carbon emissions by shifting energy sources to lower emissions in any way each state might opt to do with their existing and planned power sources. This flexibility allowed states to choose how they would lower emissions. The level mandated was nothing like what Biden’s emissions free by 2035 plan. In fact, many of the goals of Obama’s Clean Power Plan have already been met, so the headline that the court struck down the Clean Power Plan is rather insignificant. In July of 2022 SCOTUS issued a previous opinion on the case, stating that the EPA overstepped its authority in regulating power plant carbon emissions.

     Specifically, SCOTUS ruled that EPA lacked authority to regulate power plant carbon emissions by shifting power generation from higher-emitting to lower-emitting sources and that only Congress has that authority. Thus, the ruling is similar to the ruling against the ‘Chevron Doctrine’ in that it takes authority away from regulators.

     I do not think this ruling will have a strong effect on power companies and utilities decarbonization goal. In fact, it may help them to find better ways to decarbonize at a slower pace that will not make consumers and ratepayers pay more. Justice Elena Kagan, in her dissent, noted that the court just basically gave itself the ability to rule on climate issues, rather than Congress.

     The ruling will certainly affect climate regulation, but I don’t think it will affect the significant voluntary emissions reductions already in place or planned, at least not very much. Power projects take time and cost money and 2035 is just 10.5 years away. I think the power companies will be a bit relieved as coming into compliance would have been nightmarish the closer we got to 2035 and consumer costs would have risen much faster. I certainly don’t want a higher power bill .

     The EPA does have other alternatives to regulate greenhouse gas emissions such as lowering pollution limits that will also lower greenhouse gas emissions. I also disagreed with the original ruling that allowed greenhouse gases to be treated as a pollutant. Of course, one can argue that it is a pollutant or that it should be treated like one, but a greenhouse gas is clearly a different kind of pollutant. Greenhouse gases do not cause immediate or delayed harm directly to humans, but to the climate. In any case, the U.S. still uses far less coal than in the past and that trend will continue, although perhaps at a slower pace.  

     The ruling asserts the ‘major questions doctrine’ which states that Congress and not Federal Agencies have the ultimate authority in regulatory matters. According to Wikipedia”

 

“The major questions doctrine is a principle of statutory interpretation applied in United States administrative law cases which states that courts will presume that Congress does not delegate to executive agencies issues of major political or economic significance.”

“According to retired D.C. Circuit Judge Thomas Griffith and Haley Proctor, the "seminal statement" of the major questions doctrine comes from FDA v. Brown & Williamson Tobacco Corp. (2000): "[W]e must be guided to a degree by common sense as to the manner in which Congress is likely to delegate a policy decision of such economic and political magnitude to an administrative agency."”

The Chevron deference or Chevron doctrine is considered to be a narrower version of the ‘major questions doctrine. Thus, the court is being consistent by ceding authority to Congress and away from EPA in both cases.

     In the 2022 opinion the court stated that the EPA’s justification for regulating power sector carbon emissions, Section 111(d) of the Clean Air Act, “lacked the necessary evidence of congressional authorization needed to allow the expansion of the agency’s regulatory powers.”

     My own take on this ruling as well as the Chevron doctrine ruling is that these decisions will have positive effects on society in general by keeping power prices lower than they would have been, by preventing power generators from making risky generation decisions to meet ambitious decarbonization schedules that may affect reliability, and by not penalizing natural gas, thus far our greatest decarbonization enabler. Potential negative effects include less focus on decarbonization but that may not occur. It may slow down decarbonization but that can allow us to take our time and figure out what works best and what is affordable. DOE and other federal funding under the Bipartisan Infrastructure Act and IRA is enabling several new technology pilot projects in various phases along the path to commercialization. Hydrogen, CCS, geothermal, critical minerals mining and extraction, methane mitigation. If some or many of these endeavors turn out to be doable and financeable at scale, this will aid decarbonization. Even if they work as designed it will still take years or even decades before they are fully scaled up. But it should provide slow and steady decarbonization for years to come. I think that in these cases SCOTUS worked as designed by curbing the authority of federal agencies. Biden overstepped his bounds also by setting an unfeasible 2035 target. However, it can also be argued that the courts pre-emptive methods of bringing some of these cases is unprecedented, partisan, and perhaps reflective of the court's 6-3 conservative majority. "It's good to be the king."

     Having just read something about Australia’s rumored emissions reduction target of 65-75% by 2035 to Biden’s 80% (from 2005 levels, which complicates comparison and would likely decrease the percentage) by 2030. I researched this and found that we have already reduced power sector emissions by 41% from 2005 levels. That makes Australia’s much more extreme if it is from current levels. Since U.S. power sector carbon emissions peaked from 2005-2008, they have dropped by 41% and have done so fairly steadily. This should be seen as a success story. Natural gas and renewables replacing coal, and efficiency improvements have led to that success. The EIA graph below shows the trend very well. We can see that the power sector was the only sector that showed these improvements. At our current rate of lowering sector emissions, which has averaged above 2% per year since 2005, we should be at 1000 MMmt by 2030. Biden’s plan would have put us a little less than 500 MMmt by 2030. Looking at things in that context one might say that Biden’s plan only hastened the same emissions reduction result by about five years. As the graph shows we have been doing a decent job of decarbonizing our grid over the last few decades. U.S. grid-scale solar deployments are set to continue booming, CCS and hydrogen are set to develop, offshore wind is limping along, and geothermal is expanding a bit. Efficiency improvements are still happening at many scales, methane leakage is being addressed, battery deployments are growing that help to optimize solar and wind, grid upgrades are happening or are in the works, the $370 billion in the IRA set aside for clean energy tech is set to be tapped, and natural gas continues to replace coal and backup renewables. These developments will help, some before 2030, some after. Who knows, they may give us a decarbonization boost bringing us closer to Biden’s 2030 goal. But there are wildcards such as the potential for higher power demand from AI and electrification.

 

References:

Conservative Court Strikes Down Clean Power Plan. Sarah Jameson. Green Building Elements. July 4, 2024. Conservative Court Strikes Down Clean Power Plan (msn.com)

Major questions doctrine. Wikipedia. Major questions doctrine - Wikipedia

The Supreme Court’s EPA Ruling Will Delay U.S. Climate Action. Alice C. Hill and Madeline Babin. Council on Foreign Relations. July 6, 2024. The Supreme Court’s EPA Ruling Will Delay U.S. Climate Action | Council on Foreign Relations (cfr.org)

U.S. energy-related CO2 emissions decreased by 3% in 2023. Energy Information Administration. Today in Energy. April 29, 2024. U.S. energy-related CO2 emissions decreased by 3% in 2023 - U.S. Energy Information Administration (EIA)

A String of Supreme Court Decisions Hits Hard at Environmental Rules. Coral Davenport. New York Times. June 29, 2024. A String of Supreme Court Decisions Hits Hard at Environmental Rules - The New York Times (nytimes.com)