Analysis by Energy Workforce SVP Government Affairs & Counsel Tim Tarpley
On Monday, a group of Republican attorneys general from 12 states sued the Biden Administration for increasing the social cost of carbon figure used to estimate the full cost of carbon emissions. The move could be precursor to a large-scale carbon tax or cap and trade system.
The suit was filed by the Missouri attorney general in the U.S. District Court for the Eastern District of Missouri and joined by Arkansas, Arizona, Indiana, Kansas, Montana, Nebraska, Ohio, Oklahoma, South Carolina, Tennessee and Utah.
The cost of carbon first appeared during the Obama Administration for use across federal agencies. The Trump Administration reduced the figure to about $8 per ton by limiting the costs to domestic only, which lowered the impact of deregulation. During his early days in office, President Biden raised the cost of carbon to $51, which is slightly higher than it was during the Obama Administration.
The lawsuit argues that only Congress — not the president — has the authority to set such social costs for the federal government. The suit also alleges that the calculation is “inherently speculative, policy-laden, and indeterminate,” and that President Biden ignored the “global benefits” of energy and agricultural production.
The outcome of the case will be important because it’s unclear if there is sufficient legislative support for a large-scale carbon pricing scheme. With narrow margins in the House and Senate, it’s unlikely such a measure could be passed.
In related news, Wells Fargo pledged to achieve net-zero greenhouse gas emissions by 2050, including in its loan portfolio.
Wells Fargo is the fifth big U.S. bank since September to announce a net-zero goal, including Morgan Stanley, Bank of America, Citigroup and Goldman Sachs. These announcements take on extra meaning as the Biden Administration indicates they will soon require carbon and ESG disclosures through the SEC for public companies.
With nearly $198 billion invested since 2016, Wells Fargo is the second largest lender to the fossil fuel industry, behind JP MorganChase. The move by banks could soon mean that private companies will feel the ESG squeeze just as tight as public companies when they look for financing from lenders.
For more information on the Council’s advocacy efforts, contact SVP Government Affairs & Counsel Tim Tarpley.