Jason Kroft, Jonathan Drance and Luke Sinclair -
The election of Donald Trump and his recent cabinet nominations of individuals who have been described in the mainstream U.S media climate skeptics, including Scott Pruitt (Environmental Protection Agency), Rick Perry (Department of Energy) and Rex Tillerson, the former CEO of ExxonMobil (Department of State), has many questioning the integrity of proposed domestic and international carbon pricing schemes. As a result of the election, the conversation has turned away from the recent momentum of post-Paris climate mandates, to the ramifications if the United Stated decides to abandon its climate commitments. In light of Trump’s inauguration as the 45th president of the United States, it is worthwhile to examine the outlook for carbon regulation and pricing in a post-Trump world. Many market analysts initially expect that the direction of the Trump administration on climate change will have potentially far-reaching implications. We will examine this topic and the sub-themes we identify below in follow-up blog pieces in the weeks ahead.
Federal Action and State Actors
In the United States, the federal government’s ability to influence climate change regulation is largely accomplished through the conduit of the EPA and the Clean Air Act. The new U.S. Federal government will certainly have an impact on the direction of the EPA and the administration and implementation of the Clean Air Act. Many of the obstacles that have prevented environmental regulation in the past (and which critics have cited as reasons for slow action at the federal level in the U.S. on climate change and similar matters) will work against reversing the regulation and regulatory landscape in place in the future. In a recent interview, Ms. McCarthy (the current head of the EPA under the Obama administration), stated that just as she had to provide a scientific foundation for her regulations to curb carbon dioxide emissions, the Trump administration would be required by the Clean Air Act to show that any attempt to tear up the regulations is supported by science. In other words, an onerous standard of proof can act as a double edged sword, one that makes change difficult in either direction.