Will SCOTUS Ruling on EPA’s Clean Power Plan Derail Paris Agreement?

Last Tuesday the US Supreme Court decided, by a 5 to 4 vote, to allow states to temporarily stop preparing to implement the Obama administration's signature regulation for cutting greenhouse gas emissions until a series of lawsuits against the rules have been decided.  This casts uncertainty on climate policy actions both in the United States and internationally, as many developing countries are only willing to take climate action if the US shows leadership.  Ultimately broader trends will keep momentum on climate action growing anyway, and US action will proceed in other sectors.  But the Supreme Court decision to temporarily stop, or “stay”, the rule lays a major hurdle for the second largest emitter of greenhouse gases to overcome to achieve its Paris Agreement commitments.  (The unexpected death of Justice Antonin Scalia on Saturday does not have an immediate effect on last week’s decision.  Even if the lower courts eventually rule that the Clean Power Plan will stand, until these cases make their way through the legal system, the Supreme Court stay still stands; the court would have to vote to end the stay.)

The Clean Power Plan (CPP) is seen globally as the centerpiece of the Obama administration’s regulatory fight to limit carbon emissions and in Paris it was touted by the US as the heart of its pledge to reduce its greenhouse gas emissions by 26-28 per cent below its 2005 level by 2025. However, by November 2015, 29 states had joined a lawsuit against the federal government to prevent the CPP rules from taking effect.  Most policymakers, including EPA’s Gina McCarthy, expected that the plan would stay in force during the course of this legal fight, which was the normal precedent.  The fact that the US Supreme Court has put a stay on the implementation of the plan is considered unusual.                                               

States Started to Set Up Cap-and-Trade Systems Even as They Fought the Rule

Under the EPA rule, states would have been required to submit initial plans by September 2016 outlining how they might meet emissions reduction targets.  Although more than half of states are challenging EPA's Clean Power Plan rule in court, the vast majority nonetheless were forging ahead with plans to make the required carbon emissions cuts in case those lawsuits failed. In at least 20 of the 47 states subject to the EPA rule, policymakers or major utilities pushed for a system where power generators could purchase carbon allowances or credits across state borders as a way to meet EPA's goals to minimize the cost of compliance. Even states that enlisted in the lawsuits had begun to set up cap and trade programs.  This was seen as a promising development that could have laid the foundation for a national trading system. The Supreme Court ruling may slow down this momentum.  But in California, with the nation’s only economy-wide cap-and-trade system, both Governor Brown and The California Air Resources Board’s Mary Nichols reiterated their commitment to continue to reduce emissions.  Other regional programs like the Northeast Regional Greenhouse Gas Initiative also remain on course to reduce emissions from electric power generation.

SCOTUS Ruling Feeds Skepticism by Some Developing Countries

The overall US program to reduce greenhouse gas emissions was not regarded by many countries as especially ambitious to begin with; the Clean Power Plan was at the heart of it.  Will other countries, especially developing countries, now see the Supreme Court ruling as a reason to slow down their own efforts to turn their Intended Nationally Determined Contributions (pledges) into firm commitments?  The Paris Agreement will only come into legal force once 55 countries representing 55% of global emissions ratify the agreement in their national parliaments. The ratification will be open for signature starting in April 2016. Until then the Paris pledges – the INDCs -- are just that: Intended.

Initial reactions from developing country representatives rekindle skepticism about the US pledge.  Indian environmental activist Sunita Narain tweeted “First US destroys climate agreement; dilutes ambition by all and then even its weak #cleanpower plan struck down.” Representatives from vulnerable island countries expressed similar frustration.  And climate experts meeting in Bonn expressed concern about the ruling.

But China’s Emissions Cuts, Broader Trends and Action in Other Sectors Matter

Despite skepticism by developing countries, however, momentum to move away from fossil fuels and action in other sectors will help to keep the Paris commitments on track.  Representatives from US power plants note that larger trends -- such as coal retirements, cheap natural gas, environmental regulations, cheaper renewables and new business models – will have a larger impact on states’ climate actions than the CPP. And the CPP rule itself was only scheduled to come into effect in 2022; the US will undertake significant action in other sectors before then. The Sierra Club believes other efforts, specifically its super successful Beyond Coal program, will allow the United States to comply with its Paris Agreement pledge regardless of what the EPA does.

China is on track to meet its obligations ahead of schedule. And the controversy over the US Clean Power Plan highlights the importance of maximizing efforts to reduce greenhouse gas emissions in other sectors.  For instance, recent estimates from CGD and others show that as much as a third of global climate emissions could be offset by stopping deforestation and restoring forest land — and that this solution could be achieved much faster than cuts to fossil fuels.

The Supreme Court decision creates some temporary confusion among state planners. But the decision on whether the rule is legal or not is yet to be decided.  Hopefully the temporary stop will not push the US program off track and not lead other countries to doubt the seriousness of the US commitment.