U.S. Supreme Court ruling won’t change coal’s downward trend in the power sector
Energize Weekly, July 13, 2022
The U.S. Supreme Court’s ruling limiting federal regulation of power plant greenhouse gas emissions will not do much to reverse the decline of coal-fired generation or greenhouse gas emissions, according to two analyses.
“We find that the Supreme Court’s ruling does not change the game by much,” the Rhodium Group, an economic consultant, said. The analysis concluded that the country could still meet the Biden administration target of cutting U.S. emissions 50 percent from 2005 levels by 2030.
A combination of existing regulations and private sector decisions and policies is already driving down utility sector emissions, according to industry consultant Wood Mackenzie.
“The practical effect is likely to be that over the coming decade, as over the past decade, it will be market forces, corporate strategies and state policies that shape the U.S. power sector, rather than anything coming from the federal government,” Ed Crooks, Wood Mackenzie vice chair, Americas, said in note.
The U.S. Supreme Court in a 6-3 decision, June 30, ruled that the federal Environmental Protection Agency (EPA) did not have the authority to issue broad, systemwide rules to regulate and reduce power plant greenhouse gas emissions.
“We find that while the ruling certainly makes the pathway rockier, it hasn’t necessarily put the target out of reach,” the Rhodium Group report said.
The ruling did leave in place the ability of the EPA to regulate individual power plant operations, the Rhodium Group noted.
“Going forward, EPA may have more legal certainty and can still leverage other regulatory tools that could drive significant emissions cuts in the power sector and other sectors,” the Rhodium Group analysis said.
The Biden administration has already indicated that it is considering focusing on other pollutants from coal-fired plants – such as soot, mercury and nitrogen oxides – as a way of reducing the prime greenhouse gas, carbon dioxide.
“While the Court sided with special interests trying to take the country backwards, it did not take away EPA’s ability to regulate greenhouse gases and protect people from pollution,” Gina McCarthy, the White House climate change adviser, said in a statement.
Without any additional actions, the Rhodium Group projects power sector greenhouse gas emissions dropping 25 percent and that if the climate initiatives in the 2021 federal infrastructure act, other regulations, executive actions and state and local initiatives are combined, reductions could reach 45 percent to 51 percent.
The Supreme Court ruling was on the 2015 Clean Power Plan, authored by the Obama administration, which was tied up in court challenges and then set aside by the Trump administration.
“The great irony of the Clean Power Plan, which never took effect and has been ruled illegal for being too radical in its aims, is that since it was launched the U.S. power sector has changed even more fundamentally than it envisaged,” Crooks said.
When the Clean Power Plan was issued, coal-fired plants made up 33 percent of the nation’s power generation, and while the lawsuit against the plan worked its way through the courts, coal’s share dropped to 22 percent in 2022, as both natural gas and renewable generation grew.
Just substituting cleaner-burning natural gas for coal has reduced the utility sector’s carbon emissions by 24 percent since 2012 – more than the Clean Power Plan targets, according to the American Petroleum Institute.
S&P Global Commodity Insights predicts that 145 gigawatts of coal capacity will retire this decade, with coal’s share of U.S. power generation falling from 22 percent to 5 percent in 2030.
“When you take a serious look, the fundamentals haven’t changed. In general, this is an industry on a downward trend,” Xizhou Zhou, an S&P analyst, said to E&E News.
Wood Mackenzie projects that zero-carbon sources will provide 66 percent of U.S. electricity by 2035, and 90 percent by 2050, with coal dropping out of the generation mix completely in 2040.
“Even without aggressive federal climate policy, the industry will continue to move away from coal and towards renewables,” Crooks said. “We expect nearly $2.8 trillion in investment in power generation in North America by 2050, of which less than 5 percent will be in carbon-emitting sources.”
