Supporters have put pressure on his administration to make rules about power plant and car emissions, as well as how companies report climate risk. Opponents, on the other hand, are waiting for their chance to weaken the rules.
The Obama administration had hoped that this spring would be a big year for taking action on climate change. A lot of its big plans have been burned by the heat of the 2024 election season.
The Biden administration has given up on some of the most controversial parts of its climate plan because it is facing opposition from political friends and weak Senate Democrats, as well as a growing chance that a future Republican Congress will undo it. Instead, over the next few weeks, government agencies will finish up some long-awaited, much weaker climate rules: Under rules that Wall Street’s top regulator is likely to pass Wednesday, U.S. companies will have to tell investors about climate-related risks for the first time. However, the Securities and Exchange Commission (SEC) is likely to back out of its original plan to require companies to include risks linked to climate change all along their supply lines.
The Environmental Protection Agency (EPA) is starting over on a project that was started almost ten years ago. The U.S. power business will have to cut down on emissions from coal plants. But the EPA said it would wait to take action on the more than 2,000 natural gas plants that are already in operation and are now responsible for 43% of the greenhouse gas pollution in the sector.
Automakers will have to follow new rules about fumes from tailpipes that are meant to push the industry toward electric cars. However, sources say the EPA will take longer to put the new rules into place. This will mean that the sharp rise in electric vehicles won’t happen until after 2030.
The Biden government says its goals have not changed it is still set on reducing carbon emissions across the whole economy by 50% by 2030 and by 100% by 2050. Administrator of the EPA Michael Regan said that the delay in controlling natural gas power plants, for example, will give his agency time to come up with a “stronger, more durable approach” that will lead to bigger cuts in emissions over time.
For now, making sure that strong rules for coal power plants are approved now will keep them from being completely undone by Republicans in 2025, if they take over Congress. Any rules set in stone after May are subject to review by Congress, which is especially likely if former President Donald Trump wins the general election in November. But some people who want to do something about climate change are afraid that the Biden administration will miss the chance to act before the problem gets worse by slowing down some of its plans.
When asked about the Congressional Review Act, Nathaniel Keohane, head of the Center for Climate and Energy Solutions, said, “I understand the political urgency. They should be putting things in place to try to meet that deadline.” “But the clock on climate change is ticking even faster. Also, I’d like to see more urgency—not just finishing the rules by the due date, but making them tough enough to keep us on track to meet our goals.
Carrots and sticks: tax breaks and rules
By any measure, Biden has already done more to fight climate change than any other president. In 2022, he got Congress to pass the Inflation Reduction Act. Through a mix of direct funding and tax credits, that law required the federal government to spend an unusual $370 billion to cut carbon pollution.
But top environmental groups like the Rhodium Group, Energy Innovation, and Princeton University’s REPEAT Project have said that the tax breaks, grants, and other incentives in the Inflation Reduction Act will not be enough to help the US meet its carbon reduction goals under the Paris Agreement. To reach those goals, the Biden administration and many people who support climate action think that the economy will need more than just “carrots.” In this case, they mean “sticks,” or rules. “The best way to do it is to combine a lot of incentives with a regulatory path that lets the industry know where they need to go,” said Bob Perciasepe, who used to be the deputy administrator of the EPA and worked on climate projects early in President Barack Obama’s term.
The Biden government has always thought that rules and rewards would work together to let markets know that there will be a greater need for better energy. “Without this flow of capital, none of this would work,” Perciasepe said. “We need new ways to make electricity, drive cars, or do whatever.”
People who want to take action on climate change have long said that rules on corporate accounting are one of the most important things the government can do to get money flowing to companies that are fixing the problem instead of making it worse. Most big businesses that are sold on the stock market put out information about their impact on the environment. However, buyers can’t easily compare these companies because each has its idea of what’s important, such as goods with zero carbon emissions, water use, and plastics use.
“It’s a climate Tower of Babel,” said Steven Rothstein, who runs the Ceres Accelerator for Sustainable Capital Markets. Ceres is a Boston-based charity that promotes sustainable investing. In 2003, investors with Ceres met with the SEC for the first time to ask for uniform rules on climate disclosure.
Before March 2022, the SEC didn’t suggest these rules. They have been very important to Chairman Gary Gensler, who was appointed by Biden. The rules say that businesses need to talk about both the actual risks of climate change, like rising sea levels and weather, and the business risks they face because of new laws or rules that are based on climate change. Companies would also have to report their greenhouse gas pollution.
Two of the five-person nonpartisan commission are Republicans, and they have strongly opposed Gensler’s plan. Trump nominee Hester Peirce said, “We are not the Securities and Environment Commission.”
The Commission is going to vote on rules that aren’t very different from the original plan. The original proposal said that companies would have to report emissions and climate risks from not only making their goods but also getting their raw materials and using those products. The burning of fuel in cars, trucks, and power plants is an example of “Scope 3” emissions for oil and gas companies. According to the Union of Concerned Scientists, this is where up to 90% of the carbon pollution they cause comes from.
At an American Council on Renewable Energy policy meeting last week, Sen. Sheldon Whitehouse (D-R.I.), one of the Senate’s top climate action supporters, was upset that the SEC’s plan was likely to be weakened. So he said, the fossil fuel business was to blame because they spread the idea that investing based on environmental, social, and governance principles (also called “ESG”) is a far-left idea, or “woke capitalism.”
Whitehouse said, “I would fault the Biden administration for not having called this out in an effective way, even though they had the loudest voice.” “And I think that has made executive agencies and agencies that are kind of independent, like the SEC, less ambitious.”
But among the 16,000 comments the SEC got on its plan, some from Biden administration friends, like Sen. Jon Tester (D-Mont.), who is running for re-election this year and is worried about the plan. Tester worried that the changes to Scope 3 reporting rules could hurt small farmers and ranchers in a letter sent in January with Sen. Krysten Sinema of Arizona.
The SEC shouldn’t write rules that could force a family farm in eastern Montana that wants to sell wheat to a big, publicly owned brewing company to keep a close eye on the emissions that come from their activities, Tester and Sinema wrote. Sinema, who used to be a Democrat but is now an independent, dropped her tough re-election bid on Tuesday.
A study by Ceres found that most big investors who responded to the SEC’s plan wanted Scope 3 emissions to be included in climate risk disclosure. But Rothstein said that even a disclosure rule that only looks at direct emissions will help get tens of trillions of dollars worth of capital markets interested in climate change. This is important because the government is already investing billions of dollars in the Inflation Reduction Act.
Rothstein said, “The government is a key player, but we need action from both the public and private sectors to get to the market securities we need and make the transition.” He said that money managers haven’t been able to spend wisely in light of climate risks up until now because “fundamentally, you can’t manage what you can’t measure.”
Businesses, workers, and communities want to delay
Allies have also spoken out against the Biden administration’s rules on climate change set by the EPA.
The EPA made a complicated plan with different rules for each type of plant and fuel to deal with the electric power sector, which is responsible for 25% of the country’s carbon pollution. Because of market forces, cheaper natural gas, and green energy, coal plants have been closing down across the US for the past ten years. The rules are likely to speed up this process. However, the EPA saw a future for both new and old natural gas plants in a world with carbon limits. They thought that carbon capture and storage (CCS) technology or co-firing with hydrogen could help these plants survive. Some weak Senate Democrats, like Ohio Sen. Sherrod Brown, said they were worried that energy costs would go up because of reliance on technologies that were not fully developed yet.
At the same time, people of color, who have generally been the ones most affected by fossil fuel pollution, said that relying on CCS would keep that unfairness going and make the switch to better technology take longer.
Regan said on February 29 that he would delay rules on natural gas plants that are already in use. These rules would have used carbon capture technology to reduce emissions from the biggest plants. Instead, he said that the EPA would start working on “a new, comprehensive approach” for these kinds of plants that would include not only carbon but also air toxins and pollution like ozone and small particles. These kinds of chemicals are already controlled, but people who fight for environmental justice say that EPA rules are not strict enough to protect health in places where people are exposed to a lot of them over time.
“Any rulemaking to address the existing gas sector can and must achieve significant reductions in greenhouse gases while also improving local air quality and the public health of overburdened communities,” said a group led by the Deep South Center for Environmental Justice. They praised Regan’s choice to put off action on gas power plants.
The American Petroleum Institute, on the other hand, liked the wait. It plans to use the time to push for more use of natural gas, which it says is less harmful to the environment than coal, even though leaks of the strong greenhouse gas methane can cancel out those benefits. “Natural gas is the backbone of making electricity in the U.S.,” said Dustin Meyer, senior vice president for policy at API.
Some people who care about the environment think that Biden’s EPA is losing a chance to control the power sector’s biggest source of carbon pollution. “March Madness started early this year,” said Frank Sturges, an attorney for Clean Air Task Force, a group that supports CCS and works to protect the environment. “The EPA has chosen to sit on the bench instead of taking action to get rid of emissions from real gas plants.”
Vehicle emissions have become the biggest source of greenhouse gas emissions in the U.S. over the past ten years. The Biden administration has not yet made it clear to the public if it will change its plan from last year to speed up the sale of electric cars. Last month, the New York Times said that the EPA is likely to give automakers more time to cut the greenhouse gas emissions that come out of the tailpipes.
Automakers and the United Auto Workers, who are a big part of Biden’s support, both wanted this wait. This is especially true in Michigan, which is a key split state. The AFL-CIO backed Biden in June, which was the earliest it had ever weighed in on a presidential run. However, the UAW didn’t back Biden until much later. Then, in September, Biden became the first president to walk the picket line during the UAW’s six-week strike against Detroit automakers. During this time, the union pushed for a strong role for workers in the future of electric vehicles. In January, the day after the New Hampshire primary, UAW President Shawn Fain finally backed Biden. However, he still had concerns about the policy on electric vehicles.
The UAW told the EPA last year that it “fully supports the transition to a cleaner auto industry,” but it was worried that workers who make cars and items with internal combustion engines would have to do a lot of the work. Since union jobs that pay well are still hard to come by in the EV business, the union asked the EPA to set a standard for vehicle pollution that “increases stringency more gradually and occurs over a greater period.”
The EPA’s rules on vehicles were meant to be one of the main ways that the Biden climate plan cuts pollution. The goal is to make EVs a bigger part of new car sales, going from 7% to 67% by 2032. The EPA predicted that this would cut carbon dioxide pollution by almost 10 billion tons by 2055, which is the same amount of pollution that the whole U.S. economy would produce in two years. Some climate activists are worried that if the U.S. doesn’t move quickly on car emissions, it could really slow down its progress toward the goals it set in the Paris Agreement. According to Dave Cooke, senior vehicles analyst at the Union of Concerned Scientists, slowing down the rate of improvement of the biggest rule on one of the biggest sources of emissions would make it almost impossible to meet those climate goals. He said this on the S&P Global Commodity Insights podcast on Monday.
An election that could make rules less strict
Because of what Newt Gingrich did as House Speaker, the Biden team has to meet a date that is closer to now. The Congressional Review Act, which was passed as part of Gingrich’s Contract With America legislative package in 1996, makes it easy for Congress to repeal any law that was completed in the last 60 working days of the previous Congress. It only takes a simple majority, as long as the president agrees with the choice.
It is only important for the law to be followed when the opposite party wins both Congress and the White House in an election. The Congressional Review Act was only used once in its first 20 years. That was in 2001 when President George W. Bush’s Republican-led Congress decided to overturn the ergonomic rules for the workplace that were completed near the end of President Bill Clinton’s term.
Then Trump came along. He gave the go-ahead for Congress to kill 16 rules that were approved in Obama’s last year in office.
Obama’s gas rules were saved from being thrown out by the Congressional Review Act by the late Sen. John McCain. (The same thing he did with AIA.) That would have been a terrible hit to efforts to stop climate change because the Congressional Review Act pretty much says that no future government can bring back any rule that the CRA kills. In the end, Trump did get rid of Obama’s rules on methane and about 100 other environmental rules. But a few months after Biden was elected, the methane rules were reinstated by a Congress controlled by Democrats. This was one of three steps taken by Trump that were overturned by lawmakers using the CRA. Since then, Biden has worked to improve the rules on methane and other rules he brought back from Obama’s original climate plan, such as rules on power plants and the emissions from private vehicles.
However, this work has taken up most of Biden’s first time in office. The exact date of Biden’s Congressional Review Act limit is unknown because it rests on how many congressional session days are planned this year. This is mostly up to Mike Johnson, the Republican speaker of the Louisiana House of Representatives. Big rule changes are being worked on by officials to be finished by May.
He said, “You don’t want to make it easy for the next guy to roll back your stuff.” Perciasepe was a deputy at the EPA. “They have to figure out which of the most important things—not just climate—they’re going to stack up right now” and get them to the White House for approval. He said, “They’re in a tight spot.”
By law, when agencies approve rules, they have to address all problems brought up in public comments. If you don’t follow the rules properly, there is a greater chance that the courts will reject them. For the EPA, this is becoming almost guaranteed.
That’s why a lot of people think the agencies are putting off the hardest problems that are slowing down work on their climate rules, hoping to keep at least some of the climate benefits they want. But being more careful comes with its risks. For instance, Regan’s promise to take stronger action against natural gas plants in the future has a hidden catch. It can’t happen without another term for Biden.
