The End of Climate Regulation As We Know It

The Trump Administration’s repeal of the Environmental Protection Agency’s (EPA) endangerment finding dominated headlines this week. Given that the endangerment finding underpins all of the EPA’s noteworthy climate rules, this move is a big deal with significant consequences for efforts to tackle emissions as well as regulate companies.

In its announcement, the administration framed this as a big win for American industry. In reality, the effort might better be described as an ideological project that will result in marketplace confusion. Lawsuits will abound. States will try to step into the void, generating more lawsuits and more confusion. Meanwhile, companies will need to decide to what degree they respond.

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Companies that operate in a global market will continue to face regulatory pressure in many other jurisdictions in Europe, Asia, and Latin America. And they also know that a future administration may restore the endangerment finding and all the regulations that come with it.

Read more: The EPA’s Anti-Climate Move Leaves Industry Confused

In the wake of the announcement, environmental groups put out a flurry of statements condemning the move. Members of Congress joined activists in protest outside of the EPA. “We’re going to stand with you,” said Massachusetts Democratic Senator Ed Markey at the rally. “We’re going to lead this fight in the Senate against this special interest.”

With its current makeup, the Republican-majority Congress is unlikely to push back on the move. Courts, on the other hand, can throw sand in the gears of Trump’s deregulatory move, leaving everyone guessing about how this issue might finally shake out.

In watching the response to the widely anticipated news, I couldn’t help but think about the now famous Mark Carney speech in Davos last month. “The old order is not coming back,” he said. “We shouldn’t mourn it. Nostalgia is not a strategy, but we believe that from the fracture, we can build something bigger, better, stronger, more just.”

The endangerment finding was never the first-best solution to tackle climate change. Instead, it came about through a series of contortions. In the early 2000s, the Bush Administration refused to make climate policy. In response, the state of Massachusetts sued the government saying the EPA wasn’t doing its job under the Clean Air Act, a law that dates back to the 1970s when climate change was more scientific curiosity than political issue. The Supreme Court ruled that the EPA should study whether climate change harmed public health. If so, it had a legal obligation to regulate the greenhouse gases that cause it.

Unsurprisingly, in 2009, the EPA released the endangerment finding showing that, in fact, greenhouse gases did threaten public health. From that finding came a slew of regulations from tailpipe emissions standards for cars to power plant emissions rules. But every rule was promulgated under the threat of litigation and the teeth of the regulation relied on a law that was designed with a completely different purpose in mind. Importantly, climate regulation under the Clean Air Act was designed to make the existing system cleaner with sticks but offered little to create a new and better system with carrots.

And, while these rules have played an important role keeping emissions in check and protecting public health, they are not singularly responsible for the progress the U.S. has made in slowing its emissions. Economic shifts and declining cost curves have stimulated clean energy in a way that rules could not have done alone.

No one knows what will happen when Trump leaves off and, presumably, climate denial falls out of favor again. Restoring the endangerment finding would be one step for new leadership to take, but simply bringing back the old regime of climate regulation would be insufficient to the size of the challenge now at hand.

I have put this very question to many of the people I speak with: What does the next era of climate action look like in the U.S.? I have heard only limited thinking in response about what the next big policy agenda on climate may be. Trump’s assault on the system has been so fast and so aggressive that it has left climate advocates in a defensive position. But it would be unwise to assume that Trump has created a resilient status quo.

If anything, the lack of a clear set of climate plans that might be considered in a post-Trump era just means there’s an even wider range of possibilities for businesses to prepare for. In the past, industrial policy, carbon pricing, tightened rules and regulations were all in play. In the future, we could see anything from new taxation regimes fueled by populist backlash to targeted electricity tariffs. It’s also possible that Trump’s climate agenda endures given the understandable focus on other geopolitical issues and domestic challenges.

In short, in completely rupturing climate efforts, Trump has created a blank slate. No one knows exactly what’s next, but it probably shouldn’t be the exact same thing as before.

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