Supreme Court ruling limits EPA ability to regulate greenhouse gases

The U.S. coal industry is in long-term decline, and the recent Supreme Court ruling in the West Virginia v. Environmental Protection Agency the case will not change that.

The case focuses on a 2015 EPA regulation called the Clean Energy Plan that aims to limit greenhouse gases from power plants. The rule never went into effect, as the Supreme Court suspended it in 2016, then replaced it under President Donald Trump with weaker regulation, which in turn was overturned by a federal court in 2021.

However, the 6-3 ruling on party lines drastically limits the EPA’s ability to form new regulations that have broad economic or political implications. This is likely to include rules such as the Biden administration’s proposal to regulate emissions from the electricity sector, which will be released in late summer.

The court’s decision is part of a years-long coordinated legal effort by conservatives to undermine federal regulations. But weakening climate change policies is not enough to restore King Coal to his throne, a fact the industry has begun to recognize. “There’s no doubt that American thermal coal is a challenging market and is in secular decline,” said Glenn Kellow, CEO of Peabody Energy, the largest coal mining company in the U.S., during a earnings call l ‘last year.

The forces behind the coal fall are likely to strengthen in the coming years, but its decline could still slow as broader shocks to the economy hamper its competitors. Coal is likely to continue to lose ground, but that may not be enough to meet U.S. climate change goals.

The economy harms coal more than regulations

The reason why coal has been losing ground has more to do with the economy than with regulations. And the Supreme Court cannot change the fact that most of the nation’s coal fleet is too old, too expensive, and too inefficient to continue to operate indefinitely.

In the US, coal provides about 21 percent of electricity, but accounts for more than half of all carbon dioxide emissions from energy production, making it one of the dirtiest fossil fuels.

Its share in the electricity sector peaked in 2013 and has declined since then. The workforce in the coal industry has experienced an even more dramatic decline, falling to less than 40,000 employees in 2022, a small fraction of its all-time high a century ago.

Center on Global Energy Policy / Columbia University

However, coal production still grew for much of the 20th century, as mechanization and automation allowed fewer workers to extract more, with peak production in 2006. But by 2020, coal production in the US it fell to its lowest levels since 1965.

There are several factors behind this. Coal-fired power plants are aging, many of which were built in the 1970s and 1980s and are now approaching retirement. This year, 14.9 gigawatts of electrical capacity is expected to be removed, with 85 percent of shutdowns coming from coal generators. A decade ago, the electricity sector was the largest source of greenhouse gases in the country. Today it ranks second, 25 percent versus 27 percent in transportation, simply due to falling coal.

Another important factor in the disappearance of coal is competition, mainly cheap natural gas driven by hydraulic fracturing over the last decade. While natural gas has grown to supply most of the country’s energy, solar and wind are also on the rise. Renewables are now the fastest growing source of energy in the US. The sector, including hydropower, accounted for 20 percent of generation in 2021, and the U.S. Energy Information Administration expects it to grow to 24 percent in 2023. Wind provides 9.2 percent of electricity and solar 2.8 percent. These generators will account for most of the utility-scale growth in the coming years. In some parts of the world, building new renewable energy generators costs less than running existing coal plants.

Some regulations have also accelerated the fall of coal, that is, an Obama-era standard geared toward mercury and sulfur emissions from coal plants. In 2011, when the regulation came out, the EPA did not yet have climate regulations for existing power plants, but coal generators would have had to upgrade their pollution controls. At the time, it was not worth keeping the oldest plants in the country in operation with new and expensive equipment when gas was already much cheaper. This rule was delayed by the Supreme Court in 2015 and Trump revoked it in 2018, but it still accelerated the closure of some coal-fired power plants.

Coal retirements only accelerated under Trump, even though his cabinet was full of coal supporters, including Andrew Wheeler, a former coal lobby and head of Trump’s EPA. However, even with so many industry advocates in power, the Trump administration could not stop the inevitable. Despite its campaign to subsidize the Navajo Generating Station coal plant in Arizona, the largest in the western United States, the plant and its next coal mine still closed in 2020.

The question now is how quickly coal will decline

While the general trend is downward, coal saw a resurgence during the Covid-19 pandemic due to rising natural gas prices. This slowdown in coal falls only makes it harder for the U.S. to meet its climate change goals. Last year, President Joe Biden pledged to reduce U.S. greenhouse gas emissions by 50 to 52 percent relative to 2005 levels by 2030, but carbon dioxide pollution of the US increased.

US Energy Information Administration

Therefore, the economy alone is not a reliable way to achieve climate goals, and the shutdown rate of fossil fuel-powered generators will have to be accelerated. However, the Sierra Club has 173 coal plants remaining in the U.S. with no plans to retire. Some plant operators have even called for bailouts and utilities backed coal plants that were losing money with tariff hikes to customers.

If the United States has any chance of drastically reducing its climate pollution by 2030, each of those plants should be withdrawn by then.

Undoubtedly, activists are trying. The Sierra Club, through its Beyond Coal campaign, has been working to accelerate the fall of coal, demonstrating in local hearings and public meetings that coal energy is dangerous and harmful. The campaign has led to the shutdown of coal plants in the US and has frustrated new plants.

However, greenhouse gas emissions are not going down fast enough, and if environmental regulations weaken, dirtier energy sources may remain longer. With rising energy prices and rising inflation during an election year, tackling climate change has become a lower priority. Following the path requires a deliberate set of policies, such as a clean electricity standard, but Congress is unlikely to approve any of these measures this year. With its recent ruling to limit the EPA’s ability to regulate greenhouse gases, the Supreme Court is strangling another major avenue to limit global warming. But for the U.S. coal industry, it’s too little and too late.