What just happened?
On Tuesday the Supreme Court temporarily blocked the Obama administration’s effort to regulate emissions from coal-fired power plants. The vote was 5-to-4, with the court’s four liberal members dissenting, to put a temporary halt on the implementation of an Environmental Protection Agency (EPA) rule change.
Why is this significant?
As the New York Times notes, the Supreme Court had never before granted a request to halt a regulation before review by a federal appeals court:
“It’s a stunning development,” Jody Freeman, a Harvard law professor and former environmental legal counsel to the Obama administration, said in an email. She added that “the order certainly indicates a high degree of initial judicial skepticism from five justices on the court,” and that the ruling would raise serious questions from nations that signed on to the landmark Paris climate change pact in December.
In negotiating that deal, which requires every country to enact policies to lower emissions, Mr. Obama pointed to the power plant rule as evidence that the United States would take ambitious action, and that other countries should follow.
What was the EPA rule change?
In June 2014, the EPA issued a proposed rule change on “emission guidelines for states to follow in developing plans to address greenhouse gas emissions from existing fossil fuel-fired electric generating units.”
Specifically, the EPA is proposing state-specific rate-based goals for carbon-dioxide emissions from energy producers (mostly from 600 coal-fired power plants) and setting guidelines for states to follow in developing plans to achieve new state-specific goals.
Is this is an important change?
When the change was first considered, the New York Times wrote that if implemented the change “could close hundreds of the plants and also lead, over the course of decades, to systemic changes in the American electricity industry, including transformations in how power is generated and used.”
How would the rule change work?
States would be required to develop their own plans based on a range of policy options to meet the new stringent goals. They could replace their current systems with wind or solar or join state and regional “cap and trade” programs, that allow states to cap carbon emissions and buy and sell permits to trade those limits with other areas. If they don’t come up with a plan themselves, the EPA would impose one on them.
Why is the EPA even regulating carbon-dioxide in the first place?
In the 2007 case Massachusetts v. Environmental Protection Agency twelve states and several cities brought suit against the EPA to force that federal agency to regulate carbon-dioxide and other greenhouse gases as pollutants. The Supreme Court ruled 5-4 ruled that the Clean Air Act gave the EPA the authority to regulate carbon-dioxide and other emissions.
The ruling allowed the EPA to make a number of changes, such as increasing fuel-economy standards on vehicles to 54.5 miles per gallon by 2025 and effectively making it impossible for anyone to build a new coal plant in the United States.
Why is the EPA setting different targets for each state?
Basically, setting targets by states allows the EPA to target states that rely more heavily on coal-burning plants (burning coal is the largest source of energy related carbon-dioxide emissions).
How much would these new rules cost the economy?
The EPA estimates the total compliance costs of this proposal to be approximately $5.5 billion by 2020 and $8.8 billion by 2030.
However, the agency estimates the “health and climate benefits” to be a net of $28 billion to $49 billion in 2020, rising to $48 to $82 billion in 2030.
The EPA also estimates that average nationwide retail electricity prices would increase by roughly 6 to 7 percent in 2020 relative to the base case, and by roughly 3 percent in 2030 (contiguous U.S.). Average monthly electricity bills are anticipated, according to the EPA document, to increase by roughly 3 percent in 2020, but decline by approximately 9 percent by 2030. “This is a result of the increasing penetration of demand-side programs that more than offset increased prices to end users by their expected savings from reduced electricity use,” says the EPA.
Business interests disagree: The U.S. Chamber of Commerce released a report in 2014 predicting that the rules could cost the economy $1 billion a year in lost jobs and economic activity. The National Mining Association claimed they will lead to an 80 percent jump in electricity bills. The pro-coal group ACCCE conducted its own study, and concluded that the rules could run up $151 billion in additional energy costs for consumers by 2033.
Will this change have a major impact on climate change?
No. The change is equivalent to a roughly 6 percent cut in overall US emissions, a 1 percent cut in total global emissions.