Supreme Court Ruling on EPA Regs: No near-Term Clean Energy Effects

By Christian Roselund

On 30 June, the U.S. Supreme Court delivered a ruling limiting the ability of the U.S. Environmental Protection Agency (EPA) to regulate greenhouse gases under a plan proposed during the administration of former President Obama. Legal experts say that the ruling in West Virginia v. EPA has implications for the regulatory authority of the federal government. However, CEA expects it to have no near-term effect on changes in the U.S. electricity fleet including the ongoing shift away from coal and towards solar, wind, and battery storage.

The court’s majority opinion found the EPA’s regulation of greenhouse gases in power plants via the Clean Power Plan in 2014 to be outside the scope of its authority under the Clean Air Act. This opinion found that Congress, not the EPA, has the authority to proscribe changes such as those found in the Plan. However, under the Trump Administration the Clean Power Plan was scuttled. And even if the plan had been implemented, timelines for deployment lagged real-world changes in the nation’s electricity mix.

The final version of the Clean Power Plan published in 2015 aimed to reduce CO2 emissions from power plants by 32% by 2030, compared to 2005 levels. However, in 2021 U.S. power sector emissions had already fallen to 1,551 million metric tons, a 35% reduction versus 2005 levels. This has been accomplished by a slight reduction in demand, a switch from coal to gas, and the replacement of fossil fuels with
renewable sources.

Other EPA regulations have contributed to changes in the U.S. power mix. Experts cite the Mercury and Air Toxics Standards (MATS), which went into effect in 2012, as helping to accelerate the decline of the U.S. coal fleet. However, even the removal of MATS would be unlikely to have much of an effect, as individual coal plants have either installed equipment to comply with MATS or shut down.

The primary federal policies that have affected clean energy deployment over the last ten years have been tax policies: the Investment Tax Credit (ITC) for solar and the Production Tax Credit (PTC) for wind. Research by Lawrence Berkeley National Laboratory has shown that state-level renewable energy mandates have also been a main driver of wind and solar deployment.

W. Virginia v. EPA effectively pre-empts and restricts future EPA action affecting the electricity sector, were the agency to attempt to propose such regulation. CEA estimates that the earliest any such regulation could potentially have effects is in the 2025 – 2030 timeframe, as it takes multiple years for EPA to finalize controversial, sweeping regulations like the Clean Power Plan. However, the Biden Administration had not made substantial moves to revive the Clean Power Plan or issue anything like it and is even less likely to do so now.

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Source: West Virginia et al. v. Environmental Protection Agency et al. (U.S. Supreme Court)

News coverage: Supreme Court’s EPA ruling upends Biden’s environmental agenda (Washington Post)

News coverage: The Supreme Court’s big EPA decision is a massive power grab by the justices (Vox)