Supreme Court Rulings Change the U.S. Energy Game

The Supreme Court considered the meaning of the word 'modification', and upheld EPA efforts begun during the Clinton Administration to force older coal-fired power plants to install pollution-control equipment when upgrading facilities.

In simple terms, the Court rejected arguments by many electric utilities whose power plants were grandfathered into the Clean Air Act, and then maintained that if they upgraded these power plants -- they still would not have to meet Clean Air Act standards.

Renewable energy experts hailed the ruling as the first step to force baseload coal plants to invest in meeting emissions standards like all other energy sources -- and that these investments will be reflected in increased rates, making baseload renewables such as biopower, concentrated solar, geothermal and wind more competitive.

Also issued this month was a 5-4 decision where the court said the Clean Air Act gives the Environmental Protection Agency the authority to regulate the emissions of carbon dioxide and other greenhouse gases from cars. The plaintiff-states were California, Connecticut, Illinois, Maine, Massachusetts, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont and Washington. Other plaintiffs included the District of Columbia, Baltimore, New York City and a dozen environmental groups.

A number of automobile trade groups sided with the EPA's reluctance to regulate carbon, as did the states of Alaska, Idaho, Kansas, Michigan, Nebraska, North Dakota, Ohio, South Dakota, Texas and Utah.

Three of Four Major Holdings from the 5-4 Majority Opinion written by Justice John Paul Stevens that all lower courts must abide by -- supports the Clean Air Act definition -- which includes "any air pollution agent..., including any physical, chemical...substance...emitted into...the ambient air...," 7602(g) -- embraces all airborne compounds of whatever stripe. Moreover, carbon dioxide and other greenhouse gases are undoubtedly "physical [and] chemical...substance[s]." Ibid.

The fact that U.S. Department of Transportation (DOT) mandate to promote energy efficiency by setting mileage standards may overlap with EPA's environmental responsibilities in no way licenses EPA to shirk its duty to protect the public "health" and "welfare," 7521(a)(1). Pp. 25-30.

According to the industry group embracing climate change programs -- the Business Council for Sustainable Energy in Washington, DC: "The decision will impact other pending legal cases on vehicle emissions instates like California, and the dozen other states that have adopted California vehicle emissions standards, as well as a pending greenhouse gas emissions case in the U.S. Court of Appeals for the District of Columbia Circuit."

The ruling provides further impetus to the Council's federal climate change initiative to support the enactment of federal climate change legislation that provides long-term market signals for clean energy deployment and energy efficiency. In addition, it is speculated that this ruling might provide urgency around a federal climate change deal this Congress -- especially to those who would prefer a more modest approach than might be expected from a new administration.

Clean energy advocates in Washington, DC rejoiced on the ruling, particularly environmental groups and biofuels advocates which highlighted a recent study "Net greenhouse gas flux of bioenergy cropping systems using Daycent," completed by Paul Adler (United State Department of Agriculture -- USDA), Stephen Del Grosso (USDA and Colorado State University), and William Parton (Colorado State University).

The results appear in the April issue of 'Ecological Applications' and showed that when compared with gasoline and diesel, ethanol and biodiesel from corn and soybean rotations reduced greenhouse gas emissions by almost 40 percent, and reed canary grass by 85 percent. Greenhouse gas emissions were reduced by about 115 percent for switchgrass and hybrid poplar.

Senator Barbara Boxer (D-CA), said in a statement: "This decision puts the wind at our back. It takes away the excuse the administration has been using for not taking action to deal with global-warming pollution."

But according to the LA Times, "President Bush, while acknowledging Tuesday that he took 'very seriously' the Supreme Court's ruling that the Environmental Protection Agency must regulate greenhouse gas emissions from automobiles as pollution, set up a potential conflict with Congress by attaching two conditions to comply with the decision. Bush said that any regulatory program should not slow economic growth, nor should its benefits to the atmosphere be offset by mounting emissions from China, India and other growing economies".

Both rulings address forthrightly some obvious untruths. During passage of the Clean Air Act renewal, electric utilities with older coal plants pleaded for an exemption because their plants were at the last third of their life and would be retired. Congress went along with the premise, but surprise, the very same companies who pleaded for sensitivity just kept their waived plants operating beyond their useful life.

Then, as these utilities upgraded these power plants to keep them running, they claimed they were still able to pollute more than allowed by the Clean Air Act. The Court unanimously rejected this deception -- but many legal experts still conclude these utilities may still have other legal avenues to skirt the Act's pollution levels.

The Clean Air Act also defined pollutants to be regulated from automobiles, but the EPA basically decided not to regulate carbon emissions because it had impacts on fuel mileage standards and the health of the automobile industry. In a more narrow decision, the Court's majority concluded that EPA must follow the law and not take into consideration other issues not relevant to the Clean Air Act. The minority stated that EPA should have that latitude.

The rulings add momentum to Congressional action. The McCain/Lieberman Bill introduced last year seems to have the middle ground. But the newly emboldened Democratic leadership in the House and Senate has more aggressive ideas. However, the interplay between Democratic Energy and Commerce Chairman John Dingel from Michigan and that of Democratic Chairman Ed Markey of Massachusetts of the new Climate Change Committee have different views of what constitutes proactive legislation.

But from the long list of Climate Change Bills introduced in Congress this year -- there is no shortage of ideas from both political parties. And these recent Supreme Court rulings all but assure that some final action will be forthcoming, which means more good news for the growing renewable energy electricity and biofuels industries.

Scott Sklar, founder and president of The Stella Group, Ltd., in Washington, DC, is the Chair of the Steering Committee of the Sustainable Energy Coalition and serves on the Boards of Directors of the Sustainable Buildings Industry Council, the Business Council for Sustainable Energy, and the Renewable Energy Policy Project.