Energy Musings - March 2, 2026
Sorry this article is so long, but there is so much happening with climate lawfare that we needed to cover to discuss the Supreme Court announcing it would hear an appeal about emissions governance.
Supreme Court: Climate Change and Climate Lawfare
Last week, the U.S. Supreme Court announced it would hear an appeal by energy companies in a Boulder, Colorado, climate case. However, they have also requested briefings on the court’s threshold jurisdiction question. The announcement was surprising, given that the court has rejected previous requests in climate cases.
The heart of the issue is whether oil and gas companies can be prosecuted under state nuisance laws for emissions released from burning their product, or should they be judged under federal laws? Is pollution a local issue or an interstate commerce issue? That difference is significant to the defendants and is the reason for their appeal to the Supreme Court. While we cannot confirm, we suspect the court’s interest grew with the dramatic change in the climate legal landscape, and as climate change is receiving greater pushback, not only in the United States but worldwide.
The global push for net-zero carbon emissions, which the 2015 Paris Climate Accord accelerated, is suddenly in turmoil. Energy actions by governments, in response to the climate change movement, are drawing rebukes for their short-sightedness and harm to constituents. Germany’s Chancellor Friedrich Merz’s admission that the nation’s closure of its nuclear power plants was a “serious strategic mistake” surprisingly gained support from Fatih Birol, head of the International Energy Agency.
In the U.S., an editorial in the Wall Street Journal dealing with the exploding power needs of data centers pointed out the disastrous policies of Democratic leaders, who have prioritized intermittent green energy over reliable fossil fuels. The editorial appeared the day after President Donald Trump proposed that companies building data centers be required to construct their own power plants, rather than connecting to the grid, which drives up wholesale power prices and increases investment in power transmission. The WSJ called Trump’s proposal “a good idea that could help accelerate innovation and ease electric rates, though it will require AI companies to sacrifice their green posturing.”
The editorial went on to state:
“Hyperscalers prefer to draw electricity from the grid, since it’s cheaper than building their own generation. It also lets them claim their data centers are running on wind and solar power, even if the grid is backed up by fossil fuels. But the Democratic Party’s drive to close nuclear, natural gas and coal plants prematurely to be replaced by solar and wind is one of the largest economic-policy mistakes in decades.
“The bill is now arriving, and AI firms that abetted the wind and solar fantasy will have to pay part of it. The U.S. can’t afford to lose to China in the race for AI, and Americans shouldn’t have to pay for the cost of tech companies’ green virtue signaling.”
The public is howling about the power bills they are receiving. Much of the rise in electricity prices is not due to fuel costs. They are largely the result of green energy policies politicians have implemented in an effort to be seen as leading the environmental push for actions to limit climate change. Newly elected Virginia Governor Abigail Spanberger has led the state back into the Regional Greenhouse Gas Initiative (RGGI), a consortium of states with clean energy mandates that require local utilities that fail to meet the annual target to purchase clean energy credits. The cost of those credits boosts retail electricity prices. RGGI restricts the number of credits available each year, pushing up their cost, so power bills will continue to rise.
In New Jersey, the newly elected governor moved to freeze electricity bills on day one. She instructed the Board of Public Utilities to use RGGI proceeds to award ratepayers $100 credits to offset anticipated higher bills this summer. She has also proposed that New Jersey regulators “pause” rate cases for local utilities. This step will reduce the profitability of utility companies, and, to the extent that they need to borrow funds to build grid assets to meet power growth, will raise the cost of their debt.
Additionally, three New England governors, Connecticut, Massachusetts, and Rhode Island, are proposing actions to roll back some of their green energy mandates, while also taking steps to restructure their electricity sector, hopefully to reduce ratepayer costs.
In Rhode Island, while the governor is proposing cost-cutting measures as part of his FY2026 budget, legislators have introduced a bill to establish a study commission on offshore wind power. Reading the bill, one understands that the study commission will confirm the conclusion that the state needs offshore wind power, regardless of its cost. Offshore wind is the most expensive renewable energy source.
A question to be investigated is whether Rhode Island Energy, the state’s primary electric utility company, should be relieved of responsibility for purchasing offshore wind power, and that authority transferred to a state organization. This is a disguised move to ensure that offshore wind will be supported, regardless of its cost. That is because Rhode Island Energy rejected a proposed power purchase agreement (PPA) with Revolution Wind 2, prompting anger from politicians.
Rhode Islanders are unaware of this outcome. In preparation for a Public Utility Commission hearing to review Rhode Island Energy’s decision, the key information – what was the cost of the power – was redacted from public view. Importantly, both the staff of the PUC and the state’s energy office agreed with the conclusion that the power was too expensive. The hearing was never held because the developer, Ørsted, announced that the validity of its offer expired the day before the scheduled hearing.
The proposed offshore wind bill smacks of the legislature’s actions to rewrite the PUC rules, eliminating the PUC’s use of cost-benefit analysis for offshore wind projects, following its rejection of the PPA contract for Block Island Wind. When the PPA was resubmitted, the PUC was forced to approve it, acknowledging that they had no alternative. Furthermore, the revised rules prevented the PUC from using cost-benefit analysis on any future offshore wind project in Rhode Island state waters.
The PUC approval enabled the $300+ million, 6-turbine, 30-megawatt project to be constructed. After nine years of operation, Block Island Wind has never delivered the promised power.
Why is the Supreme Court moving forward to hear the appeals request? Both the climate change movement and the administrative state have undergone significant changes. Likewise, the change in administrations from Biden’s to Trump’s has brought a different level of scrutiny to many government policies and to the government’s interests.
For example, the Sierra Club and Environmental Defense Fund have laid off staff as fundraising has slowed. Then there is Greenpeace’s loss in the Dakota Access Pipeline lawsuit, which will bankrupt the organization. Originally fined $667 million for harming the developer, Energy Transfer, by publishing false statements that hurt its reputation, a North Dakota judge cut the jury’s award to $345 million, with 11% interest from March 19, 2025, until the full amount is paid. The fine was assessed against multiple Greenpeace organizations, but all of them will go bankrupt. Both parties to the suit will appeal the ruling – one asking for a new trial, the other challenging the judge’s reduction of the fine.
The Supreme Court may also be considering the impact of the Environmental Protection Agency’s (EPA) rescission of the Obama-era carbon dioxide endangerment finding, which enabled the agency to regulate automobile and power-plant emissions. Couple that decision with the overturning of the Chevron Deference that allowed agencies to interpret legislation and design policies to implement their rulings broadly without review.
Importantly, the EPA stated that the Clean Air Act “continues to preempt state common-law claims and statutes that seek to regulate out-of-state emissions.” This should allow the appeals case to go forward. However, the assertion will certainly be debated in the briefings, even as litigation over the legality of the EPA’s rescission advances through the courts.
The court’s decision will revolve around whether carbon emissions are a federal issue, thereby barring states from suing over local rule violations. The issue was outlined in the U.S. government’s petition for a writ of certiorari for the case, Suncor Energy (U.S.A.) Inc., et al., petitioners, versus County Commissioners of Boulder County, et al.
“This case presents the question whether the Constitution or the Clean Air Act, 42 U.S.C. 7401 et seq., precludes claims seeking to apply one State’s law to the activities of energy companies around the world to hold those companies liable for injuries allegedly caused by global climate change. The United States has a substantial interest in the proper interpretation of the federal constitutional and statutory provisions involved. This Court has previously called for the views of the Solicitor General in cases involving similar state-law claims—including in this very case, on the issue of whether the claims could be removed to federal court… And the United States has recently brought suit to block similar attempts by several States to impose state-law liability for what they identify as the effects of climate change...”
The briefing will occur during the spring and summer, with oral argument expected in the first week of the Supreme Court’s October 2026 term. A decision is expected to be rendered by the end of 2026, or early in 2027.
It has been noticed that when the case was previously before the court in 2023, Justice Alito did not participate in the consideration. There was no reason provided for his recusal. When the order granting certiorari was published, there was no note indicating that any justice had not participated. That left some commentators wondering why Justice Alito had changed his position.
No sooner had the court decision been announced than the Substack newsletter HEATED published a column titled “Sam Alito has an oil money problem.” It noted that Justice Alito had recused himself from the earlier case but not this one. They dug into his financial disclosure forms to declare he had a conflict of interest in the outcome of the case.
Heated published the following information from Alito’s financial disclosure report for 2024.
“Here’s the breakdown of Alito’s fossil fuel investments:
• $15,001 to $50,000 in Phillips 66, a major oil refining and midstream company and named defendant in several state climate liability lawsuits.
• $15,000 or less in ConocoPhillips, a major U.S. oil and gas exploration and production company and named defendant in several state climate liability lawsuits.
• $15,001 to $50,000 in OGE Energy, a holding company for Oklahoma Gas & Electric, which generates electricity largely from natural gas and other fossil fuels.
• $15,000 or less in Woodside Energy Group, one of Australia’s largest oil and liquefied natural gas producers.
• $15,000 or less in AES Corporation, a power generation company that operates natural gas and coal-fired plants.
• $15,001 to $50,000 in Black Hills Corporation, a utility that distributes natural gas, with a significant portion of its power supply coming from fossil fuels.
• $15,001 to $50,000 in Fortis Inc, a utility holding company that owns electric and gas utilities.
• $15,001 to $50,000 in BHP Biliton PLC ADR, a global mining giant that produces metallurgical coal used in steelmaking.”
HEATED failed to note that this information came from Alito’s 2024 financial disclosure report, and he may have disposed of these holdings. High-profile professionals like Justice Alito likely rely on a financial advisor to manage their investment portfolio. Crude oil prices began a significant slide in the spring of 2025, prompting many investors to exit energy stocks. We expect that Justice Alito was one of them. But that doesn’t deter critics from painting influential people in a negative light, so they can be criticized when the court ruling goes against the environmentalists behind Heated.
Before the Supreme Court can decide the Suncor v. Boulder County case, it will need to deal with the issue of whether it has statutory and Article III jurisdiction to hear the case. Under Federal rules, the court’s statutory jurisdiction to review state-court decisions extends to the final decisions of a state’s highest court. There has already been extensive back-and-forth among the parties over whether the Colorado Supreme Court has rendered a decision, but expect more as the parties brief for oral arguments.
Climate lawfare has become an important weapon for activists, not just in the U.S. but also in Europe. Currently, TotalEnergies faces a court case in France that seeks to dictate the company’s production management decisions by a court ruling. The activists are seeking to reduce the company’s emissions by cutting its oil and gas production. This level of control is similar to the Dutch case several years ago, in which Royal Dutch Shell was mandated to reduce its oil and gas production to cut its emissions. The outcome of that case was seeing Shell abandon its Dutch headquarters, moving to London, and reincorporating in the U.K.
An estimated 60 state and local suits are pending against oil and gas companies over emissions. Energy companies have already paid penalties for prior cases. After being the pocketbook funding for local governments, it seems that fossil fuel companies are becoming more aggressive in combating lawfare. What they are hoping is that they can get the Supreme Court to determine that emissions are a commerce issue, and subject to federal, not state or local laws. That would remove these cases from the unfriendly state courtrooms where local prosecutors have a distinct “home field” advantage. We have about eight months before the climate change gladiators go to battle before the justices of the Supreme Court. However, climate lawfare is not likely to disappear from the news.