EPA’s Climate Rollback Plan Adds to Power Sector Instability
The Trump administration’s move to overturn a 16-year-old scientific finding may release U.S. utilities from greenhouse gas emissions rules, but it’s unclear to what extent it will change the trajectory of the power sector.
EPA Administrator Lee Zeldin announced plans Tuesday to revoke the so-called endangerment finding, setting the stage for a sweeping removal of climate regulations. That would include scrapping federal limits on greenhouse gas emissions from power plants.
It’s the latest policy move from the Trump administration to keep coal and gas power plants on the grid, which the administration has said is necessary to maintain electric reliability at a time when power demand is rising rapidly.
It also comes amid a period of turmoil for the power sector that has seen wind and solar energy drop drastically in cost and uneconomical coal and gas plants shutter — despite the changing tide of regulations from Washington.
“This is one in a number of steps the administration is taking to determine what power plants are built, what power plants retire and what kinds of power can continue to operate in this country,” said Catherine Hausman, an associate professor of public policy at the University of Michigan. “But market forces mean that wind and solar costs are coming down. We have enough cheap wind and solar available that there’s no economic reason to prop up inefficient old coal power plants, despite what regulations say.”
In a proposed rule Tuesday, EPA wrote that the Obama administration had “unreasonably analyzed the scientific record” in making its 2009 determination that greenhouse gases that contribute to climate change are a threat to human health and should be regulated. That determination underscored a suite of pollution rules, including attempts to force utilities to clean up emissions from coal and natural gas plants or replace them with zero-emission sources.
In an accompanying report, the Department of Energy concluded that climate change linked to greenhouse gas emissions “might be less damaging economically than commonly believed.” The report also states that U.S. policy actions will have “undetectably small direct impacts on the global climate,” although it does not examine details of power sector regulations.
Those conclusions go against the overwhelming scientific consensus — including in previous federal reports — that climate change poses a dire threat to human life and the worldwide economy and that immediate action to reduce greenhouse gas emissions is necessary to avert the worst effects. Because the U.S. is the second-largest emitter of greenhouse gases, scientists widely agree that policy action in the country is necessary.
“We stand at the threshold of a new era of energy leadership,” Energy Secretary Chris Wright said in a statement. “If we empower innovation rather than restrain it, America can lead the world in providing more abundant energy — lifting billions out of poverty, strengthening our economy, and improving our environment along the way.”
Environmental Defense Fund president Fred Krupp decried the proposal “to eliminate some of our most vital tools to protect people from the pollution that causes climate change.
“Americans are already suffering from stronger hurricanes, more severe heat waves and floods, and more frequent fires,” Krupp said in a statement. “They are watching these climate disasters get worse, the danger to their lives and health intensify, and their power and insurance bills go up.”
The administration has also rolled back pollution regulations on power plants and has used the threat of blackouts to bolster emergency orders forcing fossil fuel plants to stay online. The megalaw signed by President Donald Trump this month also slashes federal support for clean energy, which analysts say is likely to mean less wind and solar is built on the grid.
The Edison Electric Institute, the trade organization for electric utilities, said in a statement that while the group is “still reviewing the proposal and any potential implications for our sector, we support EPA establishing clear, consistent regulatory policies that drive energy infrastructure investment and strengthen America’s economic and energy security.”
“It is essential that EPA use its authority to craft flexible regulations that account for impacts to reliability and customer bills,” the group said through a spokesperson.
Although the endangerment finding was met with a flurry of lawsuits, business groups in recent years have said that it should stay in place. Speaking to POLITICO’s E&E News this year, Alex Bond, EEI’s executive director of clean energy and the environment, said that electric companies “need a consistent federal framework in place.”
The repeal could also pose legal risk to the sector. A 2011 Supreme Court decision in American Electric Power vs. Connecticut determined that because EPA had the responsibility to regulate greenhouse gases, utilities and power plants could be protected from climate nuisance cases.
In a 2022 filing with the Supreme Court, EEI wrote that undermining that protection “could subject the power industry, and public utilities more generally, to a multiplicity of tort suits, allowing myriad litigants … to attempt to dictate through all manner of injunctive relief the level of GHG-emission reductions that each stationary source must achieve.”
“This would be chaos,” the brief continued.
EEI did not respond to questions about the legal uncertainty Tuesday.
Environmental groups have already said they plan to sue the administration over the endangerment finding move, citing long-standing scientific evidence that supports the 2009 determination.
Kenneth Markowitz, an environment and natural resources partner at law firm Akin Gump Strauss Hauer & Feld, said that EPA’s move “further reinforces to the power sector this administration’s drive to not regulate GHGs anywhere across the economy.”
“Though EPA argues that revocation of both endangerment findings resolves regulatory uncertainty, it is likely to exacerbate the inconsistent environment that has complicated the regulated landscape and business planning for 15 years,” Markowitz added in an email. The lack of federal rules, he said, could open the door to more regulation on the state and local level.
Already, 24 states and the District of Columbia have 100 percent clean energy goals that will require utilities to slash their carbon emissions by a certain date, according to the Clean Energy States Alliance.
At the same time, the power sector has been on a clear trajectory away from coal plants and toward more renewable energy. Wind and solar generation outpaced coal in 2024, according to federal data, and the U.S. Energy Information Administration projects that fossil fuel consumption will continue to decline even as electricity demand rises. The EIA’s annual energy outlook published in April also found that renewable generation would continue to expand regardless of EPA policy.
Generally, power sector emissions have dropped in the previous two decades as coal generation has fallen and been replaced by renewable energy and natural gas.
Still, a surge in power demand fueled by electrification, population growth and the boom in artificial intelligence adds another wrinkle to those trends. Some utilities have said they plan to delay fossil fuel plant retirements to maintain reliability.
Hausman, the University of Michigan professor, said that because utilities are forced to look years into the future while making investments, regulations both “move the needle a bit beyond what market forces do” and provide a stable backstop for companies.
“It’s hard to predict things in the future,” Hausman said. “If you don’t know what’s going to happen with natural gas or fuel prices, knowing there are regulations in place and federal support for renewables can help close the gap and make it easier for a company to invest in clean energy.”