U.S. election fuels climate change uncertainty

U.S. election fuels climate change uncertainty

With the centerpiece of Barack Obama’s climate change strategy in limbo, what impact will a new President have on the U.S. emissions reduction target?

In order to meet its commitments at last year’s Paris climate change summit, the United States will have to reduce emissions by 26-28% from 2005 levels by 2025.

Cuts will come from initiatives including Obama’s Climate Action Plan (CAP), which will bring fuel-economy standards for medium and heavy-duty vehicles, methane emission reductions in oil and gas and the phasing out of hydrofluorocarbons.

Find out more about Eikon for energy commodities

But the most controversial is the implementation of the Clean Power Plan (CPP), which falls under CAP and is expected to contribute about six percent of emission reductions by 2025 against 2005 levels.

CPP lawsuit

After accounting for the CAP measures in place and business-as-usual reductions, a gap of approximately four percent will still need to be filled through additional measures.

Some studies show the gap could be greater, depending on the effectiveness of implementation and the additional policies that are enacted.

However in September last year, industry and 12 states filed a much-anticipated lawsuit against the CPP, questioning its constitutionality.

Their request for a stay — to halt implementation until the lawsuit is resolved —was granted by the U.S. Supreme Court (SCOTUS) earlier this year, with Justice Antonin Scalia, who passed away shortly thereafter, tipping the scales.

‘Fence line’

Issuing a stay is a harsh sign. In order to do so, the court needs to deem that implementing the regulation while the case is in the courts would cause “irreparable harm” to the plaintiffs.

The two main arguments against the CPP are:

  • The Environmental Protection Agency (EPA) cannot regulate beyond the facilities of the coal-fired power plants, i.e. fence line.
  • It is unconstitutional for the EPA to require states to reduce emissions.

Going “beyond the fence line” means the EPA cannot require the power plants to reduce emissions outside their own facilities. In drafting the plan, the EPA was prepared for legal battles against the plan and made it, in its own words, severable.

Find out more about Eikon for energy commodities

This September, the District of Columbia Circuit appeals court heard oral arguments on the case with a full bench of judges present. It is expected to issue a decision later this year or early next year.

If it is appealed by either party, SCOTUS would issue a decision in 2017 or 2018.

Coal support

SCOTUS could either decide to uphold the rule, vacate it, or keep portions of it. The outcome of the SCOTUS decision would depend in part on how the next President fills the SCOTUS seat made vacant by Justice Scalia’s death.

The Republicans have already threatened to block anyone Hillary Clinton names for SCOTUS if she is elected and the same applies to President Obama’s nominee Merrik Garland on the basis that an outgoing President should not fill a SCOTUS seat.

The SCOTUS vacancy decision aside, Donald Trump is a climate change skeptic, and has publically stated that he would pull the U.S. out of the Paris agreement, citing his view that other countries would not keep their targets.

A supporter of coal, Trump has promised to dismantle the CPP, which aims to reduce U.S. power plants’ reliance on coal.

Since it is a voluntary agreement and the U.S. has a voluntary target without penalty for non-compliance, withdrawing from it would not be necessary.

us-election-fuels-climate-change-energy-table-branded

 

Cooperation needed

The Paris agreement is a prisoner’s dilemma at its finest — cooperation from one party is essential to ensure cooperation from all 195 signatories.

So if one falters, especially with the stature of the U.S., others might be a lot less likely to comply. And that could mean the failure of decades of international climate negotiations as a result of one climate skeptic.

Climate mitigation and adaption measures would continue in the U.S. as they have before, but on state and local levels such as in the nine northeastern states under the Regional Greenhouse Gas Initiative.

Clinton is a supporter of reducing emissions to curb climate change. Her campaign website states her goal is to reduce U.S. emissions by 30 percent below 2005 within the next decade — in line with the US target.

She would support the CPP and if it is struck down, ensure that reduction measures embedded within it would survive in other forms.

How are corporations coping with the pressure and cost of reporting their ESG performance?

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s