This week’s Supreme Court decision to curtail the Environmental Protection Agency’s ability to regulate greenhouse gas emissions may not have been unexpected, but it was still a bombshell. Not only did it kill the prospect of quick executive action on the matter, it potentially cut off a number of regulatory solutions.
The EPA had sought to rein in carbon emissions first through the Obama-era Clean Power Plan, which had been shelved after court losses, and then through Biden administration regulations. The two Democratic administrations relied on part of the Clean Air Act that authorized the EPA administrator to use their judgment to produce a list of stationary pollution sources “which may reasonably be anticipated to endanger public health or welfare.”
Carbon emissions certainly deserve to be on the list, with climate change expected to cause nearly 5 million excess deaths annually by 2100.
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Now, if anything is to be done on the matter, the court said that Congress must explicitly authorize it. Given the current state of Congress, climate legislation isn’t impossible, but it’s also not very probable.
Until that happens, the U.S. is going to become increasingly reliant on the private sector to provide climate-oriented solutions that not only limit carbon pollution but also give the country a chance at remaining competitive in a world that’s quickly moving away from fossil fuels.
“This is a race we cannot afford to lose, yet the Supreme Court has just tied weights to our feet.” Peter Davidson, CEO, Aligned Climate Capital
The good news is that the climate tech sector has become a hotbed of activity in the past few years, drawing tens of billions in investment. Despite a dearth of government action in the U.S., investors have remained bullish, in part because of the sector’s enormous potential. By 2025, climate tech could draw up to $2 trillion in investments annually by 2025, according to McKinsey.
The Supreme Court’s decision threatens to pour cold water on that, of course. While it may have tempered some enthusiasm in the short term, three climate tech investors remain optimistic that opportunity still exists and that the private sector can deliver results.
Peter Davidson, CEO of Aligned Climate Capital, was dismayed by this week’s ruling and laid out the stakes:
“Today, the Supreme Court ignored reality and put our country’s welfare and economy in peril,” he said. “In just the last few weeks, we have seen climate change bring catastrophic flooding and devastating fires to communities around the country. Today’s decision also threatens the more than 3 million Americans that work in the clean energy industry who are committed to building a cleaner and safer future.”
He continued: “As an investor, I know that the solutions to climate change are market-tested and ready to scale. Last year, more than $920 billion was invested globally in climate solutions like renewable energy, energy storage and electric vehicles. Unfortunately, U.S. investment continues to lag behind China and the EU, and today’s decision will make it even harder for us to compete with them. This is a race we cannot afford to lose, yet the Supreme Court has just tied weights to our feet.
“It is time for the private sector and the states to step up and do what the Supreme Court has refused to do — acknowledge reality and lean into what we believe is the greatest economic opportunity of our generation. One that will create jobs, prosperity and protect our communities.”
Sean O’Sullivan, managing partner at SOSV, said that society is already at war with climate change, it just doesn’t know it yet.
“We’re just a few more seasons of weather catastrophes away from a global realization about all this, and the costs will mount to hundreds of billions of dollars annually,” he said. “If we act too slowly, it will cause massive failures in our agriculture systems and break down supply chains, and many millions of people will eventually die.
“So in that context, the impact of the SCOTUS decision on the EPA is a huge setback. Sure, the U.S. Congress is where we make laws, but it’s not the best body to manage an emergency. The fact is, the 535 members of Congress easily get tangled up in special interests and political polarization, and they are not supposed to be managing the environment.”
But O’Sullivan doesn’t think the situation is hopeless, pointing out that investors have been pouring tens of billions into funding new climate tech and that entrepreneurs keep developing new ways to mitigate and adapt to climate change.
That said, he believes the government needs to do its part. “Progress could come to a screeching halt in several sectors. We need to be moving faster, not slower,” he said. “New incentives and regulations to make new solutions successful in the marketplace will be key. It’s a stretch to think the divided and deadlocked U.S. Congress will have the focus to do that.”
Andrew Beebe, managing director at Obvious Ventures, thinks the decision could drive a shift in the political winds. “While disappointing, this should serve as a reminder to some and a wake-up call to others that political action is critical. Voting, activism and legislation are powerful tools for change,” he said.
Rickard Vernet, general counsel at Pale Blue Dot, is concerned about what the ruling means for the EPA and other regulators but believes the Supreme Court decision could be a temporary setback. “This ruling seems to use unprecedented and controversial doctrine to limit the EPA’s powers and kneecap the U.S. federal government’s powers to fight climate change. The doctrine used by the court seems to open up new judicial tools for any economic interests that want to keep status quo and reject the transition to clean energy and net-zero emissions,” he said.
“However, even if the implications of the ruling are potentially very big, it’s important not to lose hope. We believe that science will prevail, and that U.S. policymakers and lawyers will find a way to continue to drive the necessary public policies based on climate expertise despite this setback.”