Why the Supreme Court ruling on the Clean Power Plan won’t derail the Paris Agreement


Taylor Dimsdale

Taylor Dimsdale is an energy analyst for the environmental think tank E3G

Ever since the Environmental Protection Agency (EPA) first announced its intention to regulate CO2 emissions from power plants, one thing has been certain: any regulation issued would ultimately be challenged in the courts.

The latest development in the case of the Clean Power Plan, which if implemented will reduce US carbon dioxide emissions by 32% from 2005 levels by 2030, took place last week, when the Supreme Court issued a ‘stay’ or temporary hold.

The decision does not overturn the regulations, but does prevent enforcement until a lower court considers the legal challenge from a consortium of states and corporations.

Opponents of climate action have been quick to claim that the decision is a major blow to President Obama’s climate agenda, and that it casts doubt on the ability of the US to keep its international promises.

Not so fast

It is too early to say with any certainty how the drama in the courts will play out – including the looming political fight over the replacement for Justice Antonin Scalia.

But there are at least four reasons why reports of the demise of the Paris Agreement are premature.

1) The Supreme Court decision may not actually mean much

While the Court’s decision was both unusual and disappointing, it might not mean very much in the end. The lower appeals court will hear the case this summer, and it will most likely end up back at the Supreme Court sometime next year.

It is worth noting that the Court has already upheld the authority of the EPA to limit carbon from power plants under the Clean Air Act.

Whatever happens, the outcome will be decided well before the US has to deliver its international pledge to reduce emissions by 26 to 28% below 2005 levels by 2025.

2) It is likely that the US could deliver its Paris target even without the regulation

While the CPP would send an important signal to investors and would certainly help to accelerate the transition away from coal and towards renewables, coal use in the US is already falling dramatically and economic and energy trends mean that it is unlikely to recover.

Since 2005, net coal-fired electricity generation has fallen by over 21% and 184 proposed new coal plants, valued at $273bn, have been cancelled. Other existing policies like the mercury and air toxics standards are already leading to declining emissions.

According to Bloomberg New Energy Finance, the US is on track to reduce emissions by 24% below 2005 levels by 2025 even without the CPP.

3) Clean energy is on the rise

As coal exits the energy system the share of clean energy is growing rapidly despite declining fossil fuel prices.

The US was the second largest investor in clean energy in 2015 after China, with a total investment of $56 billion, which was up 8% from 2014.

In a rare show of bipartisanship, Congress recently passed an extension of investment and production tax credits for wind and solar, which will soon be the cheapest forms of energy available.

What happens with respect to capital flows in the US is likely have a far greater impact internationally than what is happening in the courts.

4) The states can still curb carbon emissions

As Congress mostly sits idle on low carbon energy policy, state level legislation and regulation rumbles on and can do a great deal to make up any shortfall of activity at the national level.

Every US state has policies and incentives to support renewables and energy efficiency, and some of the largest states by economic measures, including New York and California, already have ambitious emission reduction targets on the books.

Furthermore, states that wish to continue planning for EPA compliance may still do so, and at least five have announced they are moving ahead despite the court ruling.

UN Secretary-General Ban Ki-moon has expressed his happiness over the conclusion of the Paris climate summit. Photo: Pascal Le Segretain/Getty Images
UN Secretary-General Ban Ki-moon has expressed his happiness over the conclusion of the Paris climate summit. Photo: Pascal Le Segretain/Getty Images

Don’t underestimate the Paris Agreement

The decision last week has increased the level of uncertainty surrounding carbon regulation in the US.

It could slow down the policy process, and is a useful talking point for lawmakers or companies that want to delay progress on climate change.

But the beauty of the Paris Agreement is that it reflects the facts on the ground – specifically that a global trend towards decarbonisation of energy use is already well underway.

This momentum is strong enough that the legal process around the Clean Power Plan will most likely have a relatively limited impact on the real world.

After sitting on the sidelines of the international negotiations for years, US leadership under President Obama and Secretary Kerry did as much to help deliver the Paris Agreement as any other country.

Their efforts have helped to create an international climate regime that can weather storms such as this.