Legal Challenge To Clean Power Plan Will Have Global Ramifications

The DC. Court of Appeals began hearing arguments recenlty in an historic session taken "en banc" - with a roster of 10 judges hearing a case that challenges President Obama's Clean Power plan. Specifically, some industry associations are challenging new targets for coal plants that would require a 32 percent reduction in carbon emission by 2030. More generally, the case highlights challenges to Obama's use of his executive powers to regulate the electricity industry in a way that will help the US meet international targets for reduction in carbon emissions. Obama's use of the Clean Air Act to bring his Clean Power Plan to fruition has been called "vast legal overreach" by some law professors who have said it is tantamount to burning the constitution. While it may take weeks or even months for the court to rule, the case highlights the extreme importance of keeping U.S. plans to reduce emissions on track in order to spur continued global cooperation on global warming. With the U.S. election continuing to create its own heat, there are many interlocking and swiftly moving pieces on the global climate change front. The world needs continued leadership from the U.S. and a ruling by the court that Obama had overreached would impact progress globally. The hearing comes on the heels of last November's Conference of the Parities on Climate Change in Paris (COP-21) where more than two decades of difficult and very tenuous multilateral negotiations on collective action on climate change concluded in a delicate compromise. The effectiveness of this agreement hinges on nations adhering to - and eventually ratcheting up - their nationally determined contributions (NDC). Other big emitters are living up to their commitments. India, for example, is set to ratify its COP-21 contributions next month on the historic occasion of Gandhi's birthday, October 2; just last month, China's President Xi Jinping announced the ratification of China's COP-21 commitments in a joint press conference with President Obama. China and India rank first and third, respectively, in global greenhouse gas emissions. The U.S. ranks second. Combined these three countries account for nearly one-half of all emissions. Domestically, some observers have claimed that the court case and the Clean Power Plan no longer matter because market forces are driving reductions in the power sector even absent policy constraints. What they overlook, however, is that market forces such as low natural gas prices are unpredictable and the fortuitous dynamics that have allowed substantial carbon reductions in the U.S. could change, jeopardizing further progress. Policies do matter - they signal a formal commitment that provides certainty to investors when deciding about very long-term, capital intensive bets in the energy sector and provide reassurance to our partners in the international community who judge our earnestness in tackling global climate change by the credibility of our policies. The Clean Power Plan is widely acknowledged as pivotal to achieving the U.S. Paris commitments, as it is the single policy with the largest abatement impact that Obama or any other U.S. administration has implemented to date. The international community is therefore carefully monitoring the fate of the Clean Power Plan, and if the latter were to be deemed unlawful/vacated in court, that will send a signal to other major emitters such as India and China that the U.S.' commitment to the Paris Agreement cannot be backed up by commensurate action. As we move forward in a few short weeks to flesh out the Paris Agreement in Marrakesh (COP22), a major setback in the second-largest emitter worldwide could have huge ramifications. The United States is the only signatory to the Paris Agreement whose commitments are subject to a domestic legal challenge. As a result all of us are watching and waiting for a decision that could change the course of climate change, for better or worse. Joshua Hodge is the Executive Director of the Center for Energy and Environmental Policy Research at the Massachusetts Institute of Technology.

Christopher Knittel is the William Barton Rogers Professor of Energy Economics at the Sloan School of Management at the Massachusetts Institute of Technology and the Director of the Center for Energy and Environmental Policy Research at the Massachusetts Institute of Technology.