Supreme Court raises the election stakes for clean power

October 18, 2024 at 09:36 AM EDT

The Supreme Court has denied a stay requested by multiple states and trade groups suing the EPA. The decision issued on Wednesday clears the way for the Biden administration to enact tougher emissions standards for electricity generation as the case moves through the lower courts.

Had the justices agreed to a delay in the case, the legal challenge would have potentially delayed enforcement by years as the case worked through the appeals process. With the new EPA regulations now cleared for enforcement, the outcome of the November elections will be critical for energy industry groups fighting stricter pollution standards.

Justice Clarence Thomas dissented from the decision without explanation, while fellow conservative stalwart Justice Samuel Alito abstained from participating in the case — presumably due a conflict of interest related to personal investments.

Among the plaintiffs suing to block the new carbon emission limits is the National Rural Electric Cooperative Association (NRECA). The association represents almost 900 local electricity providers. NRECA CEO Jim Matheson urged in a statement following the decision that the lower courts should expedite challenges to the new rules.

Matheson argued that the new regulations are unlawful and unachievable. Failure to expedite the case “will jeopardize the reliability of the nation’s electric grid, which is already under threat from skyrocketing electricity demand,” the CEO added.

Other trade groups who joined the suit include the Midwest Ozone Group, which counts power producers Ameren AEE , Duke Energy DUK , and FirstEnergy FE among its members.

While the NRECA has attacked the EPA’s new emissions standards, they have embraced the nearly $10 billion earmarked for the Empowering Rural America program in the Biden administration’s signature Inflation Reduction Act of 2022.

Electrical utility stocks have surged in 2024 as demand expectations skyrocketed due to expanding electric vehicle sales and AI data center projects. As of Thursday, the State Street Utilities Select Sector SPDR Fund XLU was up by almost 27% year-to-date.

In a note to clients, Strategas Technical Analyst Chris Verrone that this strong bullish performance is reaching extended levels, noting that “they’re [State Street Utilities Select Sector SPDR Fund] now pushing extremes relative to trend … in roughly the 99th %-tile above the 200-day moving average (historically, continued performance has been tougher to come by from here).”

Regulatory headwinds for the broad energy sector have not yet impacted the renewable sector. As the week concludes, green energy stocks continue to extend declines with the iShares Global Clean Energy ETF ICLN down by nearly 1% for the trailing five days.

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Supreme Court raises the election stakes for clean power

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