The U.S. is ditching coal. The Supreme Court ruling won’t change that.

When conservative environmental lawyer Jeffrey Holmstead joined the Bracewell firm in late 2006, it represented the whole range of electric power companies, including coal-fired utilities and coal mining firms. Not anymore.

The chief executives of electric utilities, wary of the perils of climate change, are marching away from coal, as well as other fossil fuels.

“Over time it’s clear for reasons largely unrelated to regulations that the U.S. power sector is moving away from coal,” Holmstead said. “In my world it is astonishing.”

That shift in the outlook among top electric utility executives could mute the impact of Thursday’s Supreme Court decision declaring that the Environmental Protection Agency had overstepped the authority Congress gave it to limit carbon dioxide emissions at power plants.

In a 6-3 decision, the Supreme Court said it was “highly unlikely” that Congress would leave the amount of coal-based generation to the discretion of the agency. And it said the case fell under a “major questions doctrine” that required “clear congressional authorization.”

In the case West Virginia v. EPA, the court sided with more than a dozen state attorneys general and a pair of mining companies that said the now-defunct Clean Power Plan, proposed by President Barack Obama, improperly gave the EPA the ability to regulate electric utility emissions. In the dissent, Justice Elena Kagan said the justices’ opinions could endanger not only controls on carbon emissions but also a wide range of regulations throughout the government.

But outside the courtroom, reviving the fossil fuel business isn’t going to be simple.

“We don’t really see that there would be any immediate impact on our transition plans,” said Vicky Sullivan, director of climate policy at Duke Energy. “We still plan to transition out of coal by 2035 and we don’t see the Supreme Court’s decision having a material impact on that.”

Last year, Duke Energy burned coal to supply 22% of its power needs, after inching up slightly from 2020 when the pandemic hit. But Duke plans to shrink that share to 5% by 2030 and zero by 2035.

Nationwide, U.S. coal output tumbled 35% from 897 million short tons in 2015 to 578 million short tons in 2021, according to the Energy Information Administration. The Sierra Club’s anti-coal campaign claims 357 coal-fired power plants have closed down, with 173 remaining. And the unused Clean Power Plan, which was the center of Thursday’s case, was supposed to shrink coal’s share of U.S. generation to 27% by 2030; instead it fell to 21.8% by last year, according to the Environmental Integrity Project.

Richard Lazarus, a Harvard University environmental law professor, acknowledged that many companies would not alter plans – for now. “Yes, coal is going to lose in the marketplace,” he said in an email. “The utilities will not build new coal-fired power plants. That is irreversible, and why, even absent the Clean Power Plan, the U.S. met its regulatory objectives eleven years early.”

But, he warned, “the question is no longer whether the way we produce energy will be fundamentally transformed, but how quickly that will happen. And, for the climate issue now, the pace of change may well be the ballgame.”

Utility trade group Edison Electric Institute, a variety of high-tech and other companies, and the EPA itself appealed to the Supreme Court to let the agency set consistent standards after sifting through the science of climate change and making detailed regulatory choices.

“While it may seem counterintuitive that the Nation’s investor-owned electric companies, in particular, should favor EPA regulatory authority, the alternative could be the chaotic world of regulation by injunctive fiat,” Crowell & Moring partner Thomas Lorenzen wrote in the amicus brief.

Pedro Pizarro, chief executive of Edison International, the parent company of Southern California Edison, agrees – even though his utility burns natural gas, also a fossil fuel.

“It creates some uncertainty, and probably the thing that the industry needs the most is regulatory certainty,” Pizarro said. He said the court must go beyond specific regulations and reaffirm the Chevron v. Natural Resources Defense Council case, which gave deference to government agencies that possess greater expertise than Congress.

Pizarro said that he has taken issue with how long it takes to get permits in a timely way, but he said that “in the long term, we know we need to decarbonize the economy.”

There are some in the mining business who disagree, and they have been bolstered by sharply rising coal and natural gas prices.

“This case is about much more than any single or cumulative impact of the original (now obsolete) rule that got us here – but is more significantly about the limits of the U.S. Environmental Protection Agency’s authority,” said Ashley Burke, head of communications at the National Mining Association, in an email.

“The Clean Air Act does not provide the EPA with near unfettered authority to issue rules that fundamentally remake the nation’s electricity grids, causing massive electricity reliability and affordability repercussions across our economy,” she said.

Westmoreland Coal, which was part of the combined case taken by the Supreme Court, said in its brief that “the fundamental issue” was the EPA’s “asserted power to restructure entire industries by setting emission limitations.” Westmoreland said it empowered the EPA “to target any category of sources in the Nation – from refineries to factories to home kitchen ranges – for reduced utilization in service of the agency’s decarbonization objectives.”

Burke took aim at EPA Administrator Michael Regan for pushing for speedier retirement of coal plants “at the exact time that the energy crisis, skyrocketing electricity costs, and reliability and blackout concerns are showing that these plants are sorely needed.”

Some of those needs are in Europe. Ever since the Russian invasion of Ukraine, the European Union has been scrambling to sever its energy ties with Russia while accelerating its plans for renewables.

But Russia may not allow Europe to dictate its own pace. Last week, Russia cut off natural gas supplies to Germany, citing alleged technical problems. Germany on Friday declared a Level 2 gas emergency, allowing it to turn to any available energy supplies, including coal.

“Germany is in the hot spot,” said Henning Gloystein, director of global energy at the Eurasia Group. Instead of phasing out coal now, Germany will try to reactivate the equivalent of 10 coal or gas-fired power plants. Coal supplies could come from Colombia and South Africa. Prices for U.S. exports of liquefied natural gas have soared.

But the crisis in Europe will come to an end eventually, analysts say; production of hard coal in the European Union in 2021 was only 20% as large as production in 1990, according to Eurostat. And when the crisis ends, mining companies will need to deal again with declining demand for coal.

Arch Resources, for example, one of the largest coal mining firms in the United States whose share price has approximately doubled over the past year, has said it is winding down its business of thermal coal for power plants and would rely on coal suitable for making metallurgical products such as steel.

“We assume that demand for thermal coal will likely continue to decline in the U.S. as utilities continue retiring coal-fired units in their transition to other fuel sources,” said Don Marleau, senior director for metals and mining at S&P Global Ratings. “As the profit window closes on thermal coal assets, companies are deploying scarce capital to develop or acquire met coal assets.”

Instead, many electric utilities are opting for renewable energy. Duke Energy, which has quarreled with activists over rooftop solar rules, has ambitious solar and wind plans to expand renewables from 10,500 megawatts this year to 24,000 in 2030, Sullivan said. The company also hopes to double that by 2050.

“It is of course a major blow if EPA’s authority to regulate greenhouse gases from power plants is curtailed or eliminated. No question about that,” said Mary Anne Hitt, senior director of Climate Imperative, a group that gives financial and technical assistance to grantees. “But it does not give a new lease on life to the nation’s coal-fired power plants. They are too expensive and too dirty compared to all the other forms of pollution.”