The Supreme Court decision limiting the EPA’s power makes corporate action on climate change more important than ever

July 6, 2022, 9:54 AM UTC
The Supreme Court ruled to limit the EPA's power to regulate climate change.
Chip Somodevilla—Getty Images

The Supreme Court ruled, as expected, to limit the scope of the Environmental Protection Agency’s ability to regulate pollution last week by constraining the agency’s authority to areas explicitly approved by Congress. In doing so, the courts hobbled the EPA’s power to combat climate change, and relegated the fight to Congress.

“That’s a very big deal because [the EPA is] not going to get [authority] from Congress because Congress is essentially dysfunctional,” Harvard law professor Richard Lazarus, an expert on environmental law, told NPR.

The case at hand debated whether the EPA had authority to impose carbon emission standards on individual power plants, and the justices, in a 6-3 split, decided it did not. The conservative majority wrote that the EPA lacked congressional approval to issue such specific rules. The dissenting liberal judges, of course, disagreed.

“Today, the Court strips the [EPA] of the power Congress gave it to respond to ‘the most pressing environmental challenge of our time,’” Justice Elena Kagan wrote in her dissent.

Reaction to the verdict has largely split along party lines, too, with Democrats lamenting the decision and Republicans praising it. 

“With Biden in the White House, the radical left has re-captured the levers of environmental power and are forcing their green agenda on the nation. Today, we stopped him,” Texas Attorney General Ken Paxton, a Republican, said.

“The Republicans on the Supreme Court are not going to allow any meaningful administration efforts to combat climate change. It’s crystal clear,” said Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat. “The only way to tackle this problem is through congressional action.”

However, some members of the business and finance community are unsupportive of the idea that congressional action is the only way, or even the best way, to tackle the issue of climate change. 

Remember, the case the Supreme Court ruled on concerned the EPA’s lapsed attempt to reduce coal burning by restricting power plant carbon emissions. But the EPA’s proposed limit proved moot; utility operators ditched coal because it became too expensive anyway. So, with neither EPA nor congressional action forthcoming, market forces—and business leaders—may be one of the best bets for combating climate change. 

“It is time for the private sector and the States to step up and do what the Supreme Court has refused to do – acknowledge reality and lean into what we believe is the greatest economic opportunity of our generation. One that will create jobs, prosperity, and protect our communities,” said Peter Davidson, CEO at asset manager Aligned Climate Capital.

Eamon Barrett

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Australia floods

Areas of Sydney are enduring their fourth flood emergency in 18 months after the city's suburbs received eight months worth of rain in four days. Nearby dams have burst, houses are inundated, and a new flood-resistant bridge is nearly submerged in water. On Tuesday, officials gave evacuation orders and warnings to 50,000 residents as the premier of New South Wales warned, “This event is far from over.” BBC

Italian droughts

Italy has declared a state of emergency as a drought grips the country’s agricultural north, freeing $38 million of disaster relief funds for farmers. Italy has only received half the amount of rainfall it would get in an average year and the north’s Po River, Italy’s largest source of freshwater, has run to a 70-year low. Local authorities warn harvests could collapse 30%-40% this year. Bloomberg

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Stress test 

The European Central Bank’s major test of the banking sector’s resilience to climate change wasn’t nearly as tough as banks in the bloc had feared, Bloomberg reports. The ECB will release official results from the stress test on July 8, but bank leaders told Bloomberg even the worst-case scenarios in the ECB’s test models didn’t cause meaningful losses. Bankers are hopeful the positive result means the ECB won’t set higher reserve requirements for banks. Relatedly, the ECB said it will start adjusting its own corporate bond portfolio to favor firms with better environmental credentials. Bloomberg 


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The European Union agreed to a deal banning the sale of vehicles with combustion engines by 2035 after caveats were included in the legislation to assuage members like Germany and Italy, which had requested an amendment to allow for the use of synthetic fuels. Plug-in hybrids—vehicles with a battery motor and a supplementary gas engine—will also be permitted if manufacturers prove the hybrids meet certain emissions restrictions. The legislation could accelerate the production of electric vehicles in Europe. China is currently the world's largest market for and producer of electric vehicles. In 2020, Beijing announced plans to ban combustion engines by 2035, too. The government there also made an exception for hybrids

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