Legal Implications of the Paris Agreement for Fossil Fuels

Posted on January 7, 2016 by Michael Gerrard

           The Paris Agreement on climate change reached on December 12, 2015 has a heavily negotiated sentence that, when closely read, seems to call for the virtual end of fossil fuel use in this century unless there are major advances in carbon sequestration or air capture technology. That, in turn, has important legal implications.

           Article 4 Par. 1 says, “In order to achieve the long-term temperature goal … Parties aim to reach global peaking of greenhouse gas emissions as soon as possible … and to achieve rapid reductions thereafter in accordance with best available science, so as to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century.”

           In other words, what goes up should be taken back down: for every ton of greenhouse gases (GHGs) emitted from a smokestack, tailpipe or chopped tree, a ton should be removed.

The Numbers

           According to the Intergovernmental Panel on Climate Change’s Fifth Assessment Report (2014), fossil fuel use emits about 32 gigatons of carbon dioxide per year. Other sources, such as methane leakage, cement manufacture, and other industrial processes add another 5-7 gigatons carbon dioxide equivalent. Deforestation and other agriculture, forestry and other land use changes (but subtracting emissions sequestered by forest growth) add yet another 10-12 gigatons a year.  This all adds up to about 49 gigatons. However, global carbon sinks remove only about 18 gigatons per year (8.8 to the oceans, 9.2 to land, not including land use changes). 

           Thus the sinks take up about the equivalent of the non-fossil sources. In order to achieve a “balance” between emissions and sinks, we need to just about end the release of GHGs from fossil fuels, though a radical increase in sinks or reduction on non-fossil fuel emissions would provide some slack.

           Assuming that some kind of balance between emissions and sinks can be achieved, would we actually have until 2099 to decarbonize the economy, as these numbers imply is needed?  Not really. Kelly Levin, Jennifer Morgan and Jiawei Song at the World Resources Institute provide here an illuminating overview of what is required to achieve the long-term temperature goal in Article 2 of the Paris Agreement (“holding the increase in global average temperature to well below 2° C above pre-industrial levels and to pursue efforts to limit temperature increase to 1.5° C”). As the WRI post notes, a recent paper in Nature Climate Change suggests that carbon dioxide from electricity would have to be brought close to zero by 2050, and by then around 25 per cent of energy required for transportation would also need to come from electricity (up from less than one per cent now).

           There seem to be only three ways to continue to use fossil fuels for electricity in the second half of the century (and for transport by the end of the century) and still meet the temperature goal:

  1. Capture the carbon before it escapes into the air, and sequester it 
  2. Devise, and deploy on a massive scale, technologies to remove the carbon from the air, and sequester it
  3. Create new sinks, such as through the immediate halt to deforestation and a worldwide program of tree planting

           All three of these raise a question of how long the carbon will be stored; we do not know how long carbon will stay in reservoirs, and we do know that trees do not live forever, and when they burn or die they release their carbon. Moreover, the technologies of carbon capture and sequestration, and of removing carbon from the ambient air, are developing slowly and are nowhere near large scale deployment. (A price on carbon would create an economic incentive to develop and use these technologies, but politicians in most places are unwilling to impose such a price. A large-scale government-funded research effort, such as the ones that put human beings on the moon, could also produce the necessary innovation, but there has been little visible support for such an effort.) Most of the industrial carbon sequestration that now occurs goes toward “enhanced oil recovery” – squeezing oil out of depleted reservoirs – but extracting more oil is not compatible with stopping fossil fuel use.

           Finding the land for large scale tree planting would face its own challenges in a world where sea level rise, persistent drought, and extreme heat will be rendering much land unsuitable for growing food.

           So meeting the demands of society for energy means a combination of aggressive energy efficiency and conservation programs, the installation of renewable energy (and, perhaps, nuclear), and the substitution of electric or hydrogen vehicles for those using petroleum at an unprecedented pace. The Deep Decarbonization Pathways Project has set forth the colossal amount of new facility construction that would be required worldwide to achieve this.

           Legal Implications

           The Paris Agreement calls on all countries to strengthen their pledges to reduce GHG emissions, and to monitor their progress and report it to the world.  It also says that “all parties should strive to formulate and communicate long-term low greenhouse gas emission development strategies.” (Article 4 Par. 19) That looks like strategies under which every country must show how it is controlling its fossil fuel use.

           These provisions are not legally enforceable. However, many domestic laws are, and they will become a powerful tool to force early planning, or at least disclosures. One key example is the securities disclosure requirements for publicly traded companies.  On January 27, 2010, the U.S. Securities and Exchange Commission issued guidance for the disclosure of climate-related risks. It specifically calls on companies to “consider, and disclose when material, the impact on their business of treaties or international accords relating to climate change.” The Paris Agreement is clearly such an accord, and (if it is vigorously implemented) it will have material impact on many companies in the business of extracting, processing and using fossil fuels, or making things that rely on fossil fuels (such as motor vehicles, ships and airplanes). The SEC’s guidance makes clear that management’s discussion and analysis should explore known trends and uncertainties concerning climate regulation.  This includes regulation outside the U.S. that can affect the operations abroad of U.S. companies. Therefore, disclosure can be expected of the effect of severe restrictions here or in other countries on fossil fuel use, including the possibility that most fossil fuel reserves will need to stay in the ground.

           Climate disclosures have received increased attention since it was reported in November that New York Attorney General Eric Schneiderman is investigating ExxonMobil under the New York securities law, the Martin Act, over its statements about climate change, and had reached a settlement with Peabody Energy.

           This is not necessarily limited to U.S.-registered companies. For example, in April 2015 the G20 finance ministers and central bank governors asked the U.K. Financial Stability Board for advice on the financial stability implications of climate change. In November 2015 this Board proposed the establishment of a disclosure task force to develop voluntary disclosures for several climate-related risks, including “the financial risks which could result from the process of adjustment towards a low-carbon economy.”

           Going forward, impact review of energy projects under the National Environmental Policy Act and its counterparts in many states and most other developed countries should consider the phase-out of fossil fuels that is inherent in the Paris Agreement.  For example, a proposal to build or finance a coal mine, a coal-fired power plant, or a coal port should consider whether the facility would need to be closed before the end of its otherwise useful life, and whether the project would be inconsistent with the Agreement. 

           Systematic analysis and disclosure of these risks will lead responsible boards of directors to undertake serious planning to effect an orderly transition to the low-carbon world that 188 countries agreed to in Paris. These disclosures will also help investors decide what companies will thrive in such a world (such as developers of technologies for renewable energy and efficiency), and what companies are failing to prepare for the transition and thus will themselves become fossils.

WHY, WHY DO I LOVE PARIS

Posted on January 5, 2016 by Richard Ottinger

The Paris Agreement resulting from the COP21 Climate Conference was extraordinary, far better than any of the pundit “experts” expected (indeed most were predicting gloom and doom until the very last minute).  That the conference organizers could get 190 countries that had been quarreling with each other through 20 prior unsuccessful conferences, and many of which have little mutual respect, to come together to unanimously support an agreement of substance on a subject as complex, huge, costly and politically difficult as tackling climate change, is nothing less than a miracle.

Christiana Figuerez and the French negotiating team were brilliant in asking only that countries submit voluntary Independently Nationally Determine Contributions (INDCs) rather than a repeat of conference mandated so-called “binding” carbon reductions as required in the unsuccessful Kyoto Protocol, binding only on developed countries that ratified (and even then signatory Canada simply withdrew).  Their pre-conference preparatory work and skillful conference conduct was critical to its success.

The momentum that was built up as virtually all the countries, large and small, rich and poor, made meaningful submissions was such that it would have been very difficult for any of one nation to spoil the broth.

Indeed, the momentum was so great that even previously very reluctant China, India, S. Africa and Brazil agreed to mandatory verification provisions, extremely important to the effectiveness of the Agreement.

That the INDCs were not sufficient to meet the IPCC scientists’ assessment of need to reduce global temperature increases to no more than below a 2.5 Celsius degrees above pre-industrial revolution levels was to be expected.  But that the parties agreed to meet every 5 years to make further contribution pledges, again despite powerful country reluctance, was a vital success.

One little touted success was a provision to have the Agreement recognize the climate mitigation contributions of non-national organizations, states, provinces, cities, businesses and NGOs, a provision on which I and a group from Yale dubbed The Yale Dialogue, worked very hard to get included. Their inclusion is very important since many of them have already achieved much more than their national governments have been able to pledge.  Perhaps most importantly, it is they that ordinarily are the key actors in establishing energy efficiency standards and often renewable energy incentives.  The Paris Agreement doesn’t call for ratification until 2020, and progress before then will fall largely on their shoulders.

While the task before all the countries of the world to achieve the goals sought through the Agreement is daunting, the Paris Agreement has gotten the world off to a wonderfully good start.

Are Obama’s Climate Pledges Really That “Legally Durable”?

Posted on December 21, 2015 by Richard G. Stoll

In his December 16 ACOEL post Professor Robert Percival concludes that President Obama’s Paris GHG reduction pledges are most likely “legally durable.”  Two of his key points:  (1) EPA’s Clean Power Plan (CPP) – from which the bulk of the Obama pledges are comprised – will likely survive judicial review; and (2) any effort by a new President to undo the CPP would require a lengthy rulemaking process that could be rejected on judicial review.  

The CPP may ultimately survive judicial review, and any attempt by a new President to undermine the CPP may ultimately fail.  But with due respect to Professor Percival, I submit the GHG reduction pledges may be far less “legally durable” than he suggests.  

Judicial Review Prospects.

Professor Percival notes that the Supreme Court has “repeatedly upheld EPA’s authority to regulate GHG emissions.”  But EPA’s authority to regulate GHG emissions is not at issue in the challenges now pending in the D.C. Circuit.  (Consolidated under the lead case West Virginia v. EPA.) 

Rather, the issues relate to how far can EPA go with the words of the Clean Air Act (CAA) to regulate GHG emissions.  I think most would agree that EPA seeks to go pretty far with a few words in CAA 111.   One key issue is whether the words authorizing imposition of “best system” emission limits upon “stationary sources” confer authority to require owners of coal-fired stationary sources to replace their plants with solar and wind energy sources.

In my view, whether the CPP will survive in the D.C. Circuit may well depend upon the composition of the 3-judge panel selected by lot.  The 17 active and senior judges on that Court represent an amazingly wide spectrum of philosophies.  But the cases will probably then go to the Supreme Court – and there, I think EPA will have a pretty tough (but maybe not impossible) time.  Last year, the Court rejected parts of EPA’s GHG regulatory scheme in its UARG opinion.  The Court  expressed strong distaste for EPA regulations with questionable grounding in the CAA’s words  – particularly “where an agency claims to discover in a long-extant statute an unheralded power to regulate a significant portion of the American economy.”

A New President’s Prospects.

Virtually every Republican Presidential candidate has vowed to undo most or all of the CPP (assuming it has not been rejected on judicial review).  I take no position on whether he or she should do this.   But I do believe it could be done fairly quickly and in a manner likely to survive judicial review.

I direct your attention to Nat'l Ass'n of Home Builders v. EPA.  Writing for a unanimous panel in an EPA case, Chief Judge Garland (an Obama appointee – joined by Judge Rodgers, a Clinton appointee) quoted extensively from recent Supreme Court opinions.  In Part II(A) of Judge Garland’s opinion (pages 1036-38) and Part IV (page 1043), the following points come through strong and clear:

a.  A new administration is free to reverse rules issued by a prior administration based entirely upon policy preferences, even where there are no new facts or information, so long as the new administration adequately explains the basis for the reversal;

b.  There is no heightened standard of judicial review when an agency reverses course; and an agency need not convince the court that the reasons for the new policy are better than the reasons for the rejected one.

Thus the “lengthy rulemaking process” envisioned by Professor Percival need not be so lengthy.  A new administration would not need to develop a new factual record – it would merely have to carefully explain in its rulemaking the legal and policy reasons why it was undoing parts or all of the CPP.  There is no reason this could not be accomplished within a year or two, and reductions required under the CPP do not begin kicking in until 2022.

Promises, promises: how legally durable are Obama's climate pledges?

Posted on December 16, 2015 by Robert Percival

As part of a global agreement on climate change, the US has pledged, among other things, to reduce its greenhouse gas (GHG) emissions by 26%-28% compared to 2005 levels by the year 2025. But opponents of President Obama argue that he cannot keep his promises made at the Paris climate summit.

The Obama administration is confident that the US can meet its promise based on the regulatory actions already taken by the US Environmental Protection Agency (EPA) and other federal agencies to reduce GHG emissions, part of a broad Climate Action Plan announced by President Obama in June 2013.

In transportation, US fuel economy standards set by the EPA have been raised dramatically. And earlier this year the EPA issued regulations to control GHG emissions from power plants, which led to a final rule known as the Clean Power Plan.

The Clean Power Plan will require states to reduce GHG emissions from existing power plants by 32% by the year 2030. It is expected to accelerate the retirement of coal-fired power plants as electric utilities increasingly shift to natural gas and renewable sources of energy.

Yet even as US negotiators arrived in Paris for the climate summit, Obama's political foes were questioning his authority to sign an international agreement on climate change.

Senate Majority Leader Mitch McConnell argued that the US cannot meet its promises to the global community because the Clean Power Plan is "likely illegal" and will either will be struck down in court or be revoked by a new Republican president.

So how strong is the legal defense of Obama's signature climate initiatives?

Going to the Supreme Court?

Having the Clean Power Plan struck down in court seems unlikely for a number of reasons. These include the fact that the US Supreme Court repeatedly has upheld EPA's authority to regulate GHG emissions under the Clean Air Act, beginning in 2007 with its decision in Massachusetts v EPA.

On the other hand, a new president working with congressional opponents of climate action could undermine the US commitment. Let's consider the legal possibilities.

The Congressional Review Act provides special fast-track procedures that allow Congress to veto regulations issued by federal agencies within 60 legislative days of their issuance. But before such a joint resolution of disapproval can take effect, it requires either presidential approval or the override of a presidential veto by a two-thirds majority in each house of Congress.

The signature policy of Obama's climate strategy is the EPA Clean Power Plan to regulate CO2 from power plants. Opponents are already challenging it in court. haglundc/flickr, CC BY-NC

As a result, the only time this procedure has been used successfully was shortly after a change of administration. In March 2001 new President George W Bush signed a disapproval resolution blocking regulations issued at the end of the Clinton administration to protect workers from repetitive motion injuries.

Congress is trying to use the Congressional Review Act to disapprove EPA's greenhouse gas regulations, but such a vote is entirely symbolic because President Obama has promised to veto the disapproval resolution and the 60 legislative day period will end long before the 2016 election. Thus, as long as a president committed to climate action remains in office, the Congressional Review Act is not a promising option.

Dramatic versus piecemeal attacks

A new president opposed to climate action could direct EPA to repeal its regulations, but this would require the agency to undertake a lengthy rulemaking process to comply with the Administrative Procedure Act that governs how agencies adopt regulations. Any agency decision to revoke the regulations would be challenged in court and could be overturned.

The courts have played a role before in attempts to reverse regulations. When President Reagan's Department of Transportation rescinded its air bag regulations, the Supreme Court held that it had acted arbitrarily and capriciously because the decision was not supported by the factual record showing that air bags save lives.

 

There will be legal challenges to the EPA Clean Power Plan, but the Obama administration thinks it's on solid legal ground. vagueonthehow/flickr, CC BY

And when the Supreme Court in 2011 rejected state efforts to hold electric utilities liable for climate change under the federal common law of nuisance, it pointedly noted that any future EPA decision not to regulate GHG emissions would be subject to judicial review.

Working with a new president sympathetic to opponents of environmental regulation, Congress could repeal or amend the Clean Air Act, the legal foundation for EPA's regulations of GHG emissions. However, the Clean Air Act has been remarkably resistant to past legislative onslaughts. It is, after all, thanks to the Clean Air Act that the "airpocalypses" choking major cities in China and India right now do not happen in the US.

Another option for a future Congress would be to adopt targeted amendments to deprive EPA of authority to implement the Clean Power Plan and other GHG regulations if there are enough votes in the Senate to overcome a filibuster. Congress also could use the power of the purse to withhold funds for actions necessary to implement any Paris agreement, including US promises of financial aid to help poor countries adapt to climate change.

Post-Paris

The Paris climate conference is being conducted pursuant to the UN Framework Convention on Climate Change, a treaty signed by President George H W Bush in June 1992 and ratified unanimously by the US Senate on October 7 1992. President Obama believes he already has sufficient legal authority to implement any agreement made in Paris and thus he does need not to ask Congress for new approval.

There is precedent for this. In 2013 the US was able to accede to the Minimata Convention on Mercury without congressional approval because existing law already provides the president with sufficient legal authority to implement its requirements.

For decades, the principal argument by opponents of US climate action has been that the US should not act until developing countries agreed to control their GHG emissions. That argument was dramatically undermined in November 2014 when China agreed to control its emissions, in a joint announcement with the White House.

The claim that other countries will not control their emissions has now been laid to rest in Paris with a new global agreement requiring all countries to do so. Now that the entire world has recognized that all nations must act to combat climate change, it would be the height of folly for a new president and Congress to reverse course.

The Conversation

This article was originally published on The Conversation. Read the original article.