US Supreme Court decision on US Clean Power Plan Media Release

Feb 11, 2016 - 11:00am

On 9 February the US Supreme Court "granted a stay" of the US Environmental Protection Agency's (EPA) Clean Power Plan (CPP). The Supreme Court's decision means that implementation of the plan will now be paused while the District of Columbia Circuit Court reviews the merits of the lawsuits challenging it.

The Supreme Court's decision is disappointing, but it is more a speed bump than a roadblock to accelerating modernisation of the US power system. Regardless of the decision, growth in renewable energy is expected to continue on the back of technology trends, other federal policies and state-based initiatives. The economic, political, financial and technological trends driving the global economy towards clean energy will not stopped by this unfortunate delay. 

The US Supreme Court's decision follows the EPA’s winning streak before the federal judiciary. The Supreme Court handed the EPA victories in 2013 and 2014, upholding its greenhouse-gas permit rules and ability to regulate pollution that crosses state lines. The court also rejected a plea to reconsider its 2007 decision which endorsed the agency’s ability to regulate greenhouse gases under the Clean Air Act.

On 21 January, the District of Columbia Circuit Court reviewed and denied motions to stay the CPP, and set an expedited schedule to hear lawsuits on its merits. Following this decision, opponents took the highly unusual step of asking the US Supreme Court to overturn the decision of the lower court and grant an emergency stay. On Tuesday 9 February, the Supreme Court granted those requests by a 5 to 4 vote.

It is incorrect to say that the Supreme Court’s decision means the CPP will ultimately be overturned or that this poses a significant challenge for the US’ ability to meet its emission targets. 

Key points on this:

  • Legal challenges to the CPP have always been expected. Critically, the Supreme Court's decision does not overturn the CPP, as some are reporting and suggesting. The ruling does not decide the legal merits of the case and does not currently impact the US emissions reductions commitments. The Supreme Court has already upheld the EPA’s authority to limit carbon pollution from power plants, and analysts expect the CPP ultimately to prevail in the courts.

  • It will also not prevent the US signing* the Paris Agreement at the UN Secretary General’s high-level signing ceremony on April 22. President Obama and other world leaders are expected to attend this meeting, with Prime Minister Turnbull yet to indicate his attendance.

  • The “stay” doesn’t, by itself, change the compliance** with the CCP. Even if a legal resolution is delayed until next year, the first compliance period for states under the CPP is 2022, and it will be resolved well in advance of 2025 – the timeline for the US' 26-28 per cent on 2005 level emissions reduction target.

  • Electricity generation in the US has been shifting away from coal in recent years, due to increasing cost-effectiveness of renewable energy sources such as wind and solar, the decline in natural gas prices, and the increasing stringency of regulations on conventional pollutants. While implementation of the CPP will accelerate this trend, it will continue even if the CPP is ultimately overturned. For example, the US Energy Information Administration expects continued growth in utility-scale solar power generation to increase by about 80 per cent between the end of 2015 and the end of 2017. Wind generation, which starts from a much larger base, is also expected to continue to increase. A number of analysts also expect the bipartisan supported and recently extended tax incentives for wind and solar to play a role in deploying renewable energy at large scale into the 2020s.

  • At a global level investment in renewable power generation continues to outstrip total investment in fossil fuels and nuclear combined.

* In Paris, countries “adopted” the agreement. Next countries sign it and demonstrate their intent to be bound by the agreement. After this countries are expected to act in good faith with the treaty. Next countries ratify the agreement to formally agree to be bound by it. When a certain number of countries do this it becomes international law. Domestic ratification processes vary from country to country and “entry into force” (at which point it becomes binding) of the agreement is expected to occur around 2020.

** As a practical matter, this stay means that the EPA may not continue to take any actions to implement or enforce the CPP pending the resolution of the state and industry challenge to the rule. That challenge is currently before the US Court of Appeals for the District of Columbia Circuit, which will hear oral arguments on June 2. The earliest a decision is expected from the Circuit Court is early spring. After that, the expectation is that the losing side will appeal the Circuit Court decision to the US Supreme Court. In that instance, there likely will not be a final resolution by the US Supreme Court until 2017.  Many states are continuing work in preparation for implementation of the regulations.

For more information
Brinsley Marlay | Media & Communications Manager | 02 8239 6299

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