The 2009 Endangerment Finding established that greenhouse gases, including carbon dioxide, pose a threat to public health and welfare. This determination enabled the Environmental Protection Agency (EPA) to regulate emissions from power plants and other major sources under the Clean Air Act. However, legal and political momentum has grown around the idea of revoking or undermining the Endangerment Finding. If successful, this could fundamentally alter the EPA's ability to regulate carbon emissions, particularly in the power sector. While debates around decarbonization dominate headlines, the implications for electricity market regulation, corporate energy procurement, and Scope 2 emissions strategies are just as significant. This article explores the potential impacts of these regulatory shifts and what businesses need to monitor.
The EPA relies on the Clean Air Act to enforce emissions regulations for power plants. Specifically, Section 111(d) of the Act allows the agency to set performance standards for existing sources of pollution, including coal- and gas-fired power plants. The Endangerment Finding provides the scientific and legal foundation for treating greenhouse gases as pollutants under this law.
Over the past decade, the EPA has issued several rules targeting carbon emissions from the power sector. These include the Clean Power Plan (CPP), which aimed to reduce emissions through a shift toward cleaner energy, and its successor, the Affordable Clean Energy (ACE) rule, which emphasized heat-rate improvements at coal plants. Most recently, the Biden administration introduced a stricter power plant emissions rule intended to accelerate the retirement of high-emitting facilities and encourage the deployment of carbon capture technologies.
These federal rules influence how utilities invest in generation assets. They shape whether companies pursue renewables, extend fossil fuel operations, or adopt new technologies. The EPA’s regulatory authority serves as a key driver behind these decisions and the broader transition in the U.S. electricity mix.
Revoking the Endangerment Finding would strip the EPA of its legal justification for regulating greenhouse gases as pollutants under the Clean Air Act. Without this foundation, any federal emissions rules for power plants could be struck down in court. This would represent a major rollback of environmental oversight at the federal level.
The immediate impact would be a regulatory vacuum regarding carbon emissions from existing power plants. Utilities would no longer be federally required to reduce emissions or implement carbon control technologies. In the absence of federal mandates, utility investment decisions may shift. Companies could slow their transition away from fossil fuels or redirect capital toward less emission-focused upgrades.
This shift introduces uncertainty into the regulatory environment. Long-term planning by utilities, developers, and corporate energy buyers could be disrupted by the lack of clear national standards. The absence of uniform federal rules may also undermine investor confidence in clean energy infrastructure projects, particularly those that rely on carbon pricing or emissions compliance mechanisms.
In a scenario where the EPA's role is diminished, state governments would likely become the primary drivers of emissions policy in the power sector. States like California, New York, and Washington already have comprehensive climate policies and emissions reduction mandates. Regional initiatives, such as the Regional Greenhouse Gas Initiative (RGGI), could also gain importance.
This transition to state-led regulation would create a patchwork of rules across the country. For utilities and businesses operating in multiple jurisdictions, this increases complexity. They would need to navigate varying emissions limits, reporting standards, and compliance costs. This regulatory fragmentation could challenge efforts to maintain consistent energy and sustainability strategies across a national footprint.
Corporate energy procurement teams may need to reevaluate their approaches based on regional emissions factors and incentive programs. Additionally, Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs) may play a larger role in grid planning and emissions forecasting, filling in some of the oversight gap left by the federal government.
Scope 2 emissions, defined as indirect emissions from purchased electricity, are directly influenced by the carbon intensity of the grid. A revocation of the Endangerment Finding could alter the pace and direction of grid decarbonization. This would impact location-based Scope 2 emissions accounting, which depends on average grid emissions in a given region.
In the absence of federal emissions regulations, utilities may adjust their investment strategies. Some may continue with decarbonization plans due to state requirements or shareholder expectations, while others may slow or reverse their clean energy transitions. As a result, corporate buyers may face more uncertainty about future emissions factors and electricity pricing.
To mitigate these risks, businesses may need to rely more heavily on market-based mechanisms, such as renewable energy certificates (RECs), power purchase agreements (PPAs), and utility green tariff programs. These tools allow companies to assert more control over their electricity emissions profile, regardless of regional grid trends.
Transparency and data access will also be crucial. Companies should monitor Integrated Resource Plans (IRPs), emissions forecasts from ISOs and RTOs, and utility decarbonization commitments to stay informed about changes in grid composition. According to the U.S. Department of Energy, utilities are increasingly incorporating decarbonization and clean energy targets into their IRPs, reflecting both state policy drivers and rising customer demand for low-carbon electricity. These signals can guide energy sourcing decisions and help maintain credible Scope 2 reduction pathways.
The potential revocation of the Endangerment Finding would represent a significant shift in federal climate policy, especially regarding power sector emissions. Without EPA oversight, the regulatory landscape would likely become more fragmented and state-driven. For utilities and corporate energy buyers, this would increase the complexity of compliance, planning, and emissions management.
Scope 2 emissions strategies may become more reliant on voluntary and market-based instruments as companies seek to maintain progress in a less regulated environment. Tracking grid emissions trends, utility investment plans, and regional policy developments will be essential.
As federal authority over carbon regulation becomes uncertain, stakeholders across the power sector will need to adapt. Flexibility, vigilance, and a strong understanding of regional energy dynamics will be key to navigating this evolving landscape.
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