SCOTUS Ruling Exposes Holes in Environmental Policy Hodgepodge
Last week in West Virginia et al. v. Environmental Protection Agency et al., the United States Supreme Court ruled that the regulatory authority granted to the Environmental Protection Agency (EPA) under the Clean Air Act does not extend to imposing a nationwide cap-and-trade system or forcing a blanket shutdown of fossil fuel power plants across the U.S. The decision predictably received strong reactions on both sides of the issue. For instance, whereas New York’s top environmental official lamented the EPA’s hobbling in its efforts to curb carbon emissions at the national level, lead plaintiff West Virginia welcomed the ruling, for the state remains free to run its coal-fired plants and put off any transition of its grid to cleaner fuel alternatives.
By depriving the EPA of the power to issue sweeping and universal regulations for all generators across the entire U.S., the controversial decision calls attention not only to the remaining patchwork of environmental policy levers for reducing emissions but also to their drawbacks. The success of cap-and-trade, for instance, seems to have varied with the politics of the states where it has been tried or floated. West Virginia, of course, opposed it vehemently and went to court to stop it, as did North Carolina in 2008. On the other hand, two years ago in a report for the UC Berkeley Goldman School of Public Policy, Alex Pfeifer-Rosenblum remarked that the cap-and-trade system implemented in California in 2013 contributed to a 13% reduction in the state’s emissions from 2004 to 2016, although he also observed that the program “is contributing to increased local pollution, primarily in…‘disadvantaged communities.’”
Carbon pricing, the practice of assessing a fee on each metric ton of carbon dioxide or carbon dioxide equivalents emitted by corporate polluters, has also encountered challenges making it far less likely to be adopted at the state or federal level anytime soon, such as lack of consensus regarding how to price carbon or even how revenues should be collected, spent, or redistributed. Fortunately, government gridlock has not stopped certain high-profile companies—such as Mitsubishi, Unilever, and Microsoft—from taking it upon themselves to implement an internal carbon tax or scheme that essentially funds other carbon-reduction efforts such as offsets or carbon capture. Indeed, the CDP reported in 2020 that more than a third of the approximately 6,000 companies that it surveyed on carbon pricing “currently use an internal carbon price or plan to implement one within the next two years.”
The Supreme Court’s ruling may have curtailed the power of the federal bureaucracy to dictate energy policy for all parts of the country, but it left the private sector free to take up the fight against climate change. It is encouraging that more firms are not content to sit back and wait for Congress to agree on the future of the energy landscape in the U.S.