Climate Change, Energy

What Scalia’s Death Means for Energy

Clean power politics are complicated by the Supreme Court and the death of Antonin Scalia.

Before I proceed, RIP to Justice Scalia. I disagree with many of his decisions, and, as a non-legal person, perhaps I lack appreciation for his interpretation of the law and of the Constitution of the United States as a stone document. I can say, though, that people I know, especially across the aisle, respected his intelligence and contribution to the profession. However, I am of the opinion that it is the responsibility of our current President of the United States to nominate a replacement. Perhaps that can be a topic for another time.

I started to write this as soon as the news broke of the decision to “stay” the Clean Power Plan. Little did I know that a few days later, a justice of the Supreme Court would pass away. I refrained from completing this in order to gather more information on the implications it might have for a decision on the Clean Power Plan–now onto the original beginning of this piece.

 

Putting a “Stay” on Climate Change

You may have heard of this thing called the “Clean Power Plan.” Long story short, the CPP was written by the EPA (2014) and enacted by the Obama administration (2015) as the first-ever national limit on carbon emissions by power plants in the United States. The intent of the CPP was to strengthen the trend of clean energy (solar, wind, hydroelectricity, biofuel, geothermal, tidal) adoption across the states by replacing reliance on fossil fuels.

The CPP is the first-ever national limit on carbon emissions by power plants in the United States.

Almost immediately after the Obama administration released the Clean Power Plan, which would be enforced in 2022, opponents revealed themselves and banded together in efforts to squash the Clean Power Plan. Among these interest groups are 29 states, led by West Virginia and Texas, and members of the utility industry.

The primary objection to the Clean Power Plan held by all of these entities is along these lines: States depend on economic activity tied to fossil fuels, and power plants will have to spend billions of dollars to begin complying with the rule. Law 360 notes:

These opposing parties…have told the court that states right now are having to write implementation plans under the Clean Power Plan and that power companies are having to make decisions right now about whether to retire coal-fired power plants, or at least whether to make new investments in them over the near term since those plants might need to be retired for Clean Power Plan compliance.

The case has risen to the attention of the Supreme Court, resulting in the following order on February 9, 2016:

The application for a stay submitted to The Chief Justice and by him referred to the Court is granted. The Environmental Protection Agency’s “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units,” 80 Fed. Reg. 64,662 (October 23, 2015), is stayed pending disposition of the applicants’ petitions for review in the United States Court of Appeals for the District of Columbia Circuit and disposition of the applicants’ petition for a writ of certiorari, if such writ is sought. If a writ of certiorari is sought and the Court denies the petition, this order shall terminate automatically. If the Court grants the petition for a writ of certiorari, this order shall terminate when the Court enters its judgment.

In simple English, the above paragraph translates to something along the lines that the Supreme Court is freezing the Clean Power Plan until the Washington D.C. Court of Appeals hears challenges from states, corporations, and industry groups on why the Clean Power Plan is unconstitutional and unfair to their interests. This could result in a ruling in favor of or against the coalition, but either way the Supreme Court would have the authority to review the decision if they saw fit. The Supreme Court, on average, takes about 1 percent of filed cases every year. However, given the nature of this case, it is fair to imagine it will be on their radar and possibly their shortlist of cases to hear. The hearings at the Court of Appeals start on June 2, 2016.

The decision to stay the CPP was met with rejoice by coal lovers throughout the states and gave them an opportunity to say that Obama’s tyranny will not stand. It also resulted in environmentalists issuing statements like “(environmental) justice will prevail, you can’t stay climate change.”

 

Real World Implications

 Wind and solar, in the near time, may not be negatively impacted by this stay. Both saw high increases in 2015 as prices continued to fall (thanks to extension of the Investment Tax Credit and Production Tax Credit). Those two programs were meant to be bridges until the Clean Power Plan came into effect in 2022, but may need to be rethought with the stay.

The outcome of the CPP is central to the US commitment to reduce carbon emissions.

 The implementation of the CPP would have led to an immediate investment of billions in replacing old, coal-reliant power plants. However, this stall tactic will halt some of that. The question now is, how many states will voluntarily move forward? Utilities across the states are looking to their state policymakers to make their own decisions.

17 states and Washington D.C., are in favor of the CPP and are willing to speak on behalf of the plan. Some states (18) will be developing their own plans in case the CPP goes through, a few (3) are waiting until a decision is made, and some (7) have straight up said “we ain’t gonna do it.”

The outcome of the CPP is central to the U.S. commitment to reduce carbon emissions. The reality, in looking at the above chart, is that states challenging the CPP and reducing carbon are the worst perpetrators and will have the most work to do in reducing the emissions from their respective states. As wonderful as it is to have western and northeastern states fighting on behalf of the CPP, many of these states already have crucial infrastructure in place to reduce emissions (due to state regulations). These states are further along in the process and will have an easier time enforcing these regulations in a policy environment that has already recognized the importance of climate change and carbon emission reductions. It is states like Montana (highest emission reduction overall required of any state) as well as West Virginia and Kentucky (heavily reliant upon coal as a source of employment) that will be dragging their feet.

It remains unclear how this development will impact post-Paris talks on climate change, but the U.S. is and must remain a leader in this effort. If the U.S. does not uphold its end of the bargain, other nations may not remain as motivated to cooperate.

  

Real Talk

Given the recent loss of Justice Scalia, the fate of this case has a number of outcomes.

A. If the Senate GOP has its way, no Supreme Court justice will be approved during Obama’s remaining time in office (almost a full year). Therefore, if the DC Court of Appeals comes to a decision quickly (i.e. before Obama’s term ends), that decision could be final for deciding the short term fate of the CPP since the Supreme Court would vote 4-4 on the validity of the case against it.

B. The case could be re-introduced, depending on how pissed off the losing side is. This pathway in the decision tree has starkly different outcomes if a Democrat wins (meaning a very liberal judge will be suggested) or if a Republican wins (in which case a Scalia-esque replacement will be suggested) the presidency. This is all contingent upon the Senate confirming whomever is nominated. Meaning, if

  1. The D.C. Court of Appeals rules in favor of the coalition (those against the CPP), and a Republican wins the presidency: Donald/Ted/Marco/John/Jeb/Ben’s suggested replacement will be a conservative who keeps the 5-4 majority against the CPP. The fate of the CPP would then shift to a state-by-state strategy to cooperate with the EPA.
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  2. The D.C. Court of Appeals rules in favor of the coalition, and a Democrat wins the presidency: Hillary/Bernie’s suggested replacement will be similar, if not identical, to Obama’s choices. The Republican-controlled Senate will then have to confirm/deny, and risk their seats in the Senate. They could either approve a nomination, or stall further and risk losing their seats. Those in favor of the EPA will counter and take the case back to the Supreme Court (which would now lean in favor of the CPP), leading to the CPP moving forward and establishing valuable precedence in the process.
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  3. The D.C. Court of Appeals rules in favor of the CPP, and a Republican wins the presidency: Donald/Ted/Marco/John/Jeb/Ben’s suggested replacement will be a conservative who keeps the 5-4 majority against the CPP. The coalition tries to resubmit a case on other grounds and will likely result in another case to repeal the CPP. Depending on how far in the process the CPP gets before this scenario plays out, its advocates may need to shift to a state-by-state strategy, but may have forced most states to submit and enact a carbon emission strategy.
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  4. The D.C. Court of Appeals rules in favor of the CPP, and a Democrat wins the presidency: again, Hillary/Bernie’s suggested replacement will be similar, if not identical, to Obama’s choices. Regardless of the Senate’s pace for approving a replacement, the CPP will move forward since the coalition will not be able to win a high profile case in a 5-4 Supreme Court that favors the CPP.
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  5. President Obama successfully submits a suggestion for replacing Scalia (possible suitors are being identified as Sri Srinivasan and Loretta Lynch), and this candidate somehow passes through the Senate: the Supreme Court would likely find itself with a liberal majority and a 5-4 vote to throw out the validity of the stay–meaning the CPP will move forward.

 

Closing Thoughts

For the sake of remaining non-partisan (though I have very strong feelings on this issue!), I will close by saying that this issue is not going away. Numerous states are moving forward with or without the CPP. Platforms that make the bottom line for adopting emerging energy technologies more cost-effective and competitive continue to develop.

That said, there are numerous interest groups with billions-deep pockets, connections, constituents and ambitions on both sides of this debacle. It is anyone’s guess how this will turn out. Win or lose, both sides of this coin see themselves surviving. This could be the House of Cards for Energy Wonks edition…stay posted (cue the House of Cards opening theme).

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