Low-Energy Fridays: How much power does the president have to shape environmental policy?

I am frequently asked how presidential candidates Donald J. Trump and Joe Biden differ on energy and environmental policy. But the better question is: How much can the president change environmental policy? Presidents—as well as presidential candidates—talk differently about their energy and environmental priorities. And, of course, outcomes are different depending on who is president. But, curiously, there is sometimes very little difference between presidents. This is because politicians often exaggerate how much impact their policies can have without congressional cooperation, though data reveals their influence is often limited.

An excellent case in point is the 2015 Clean Power Plan (CPP). Prior to pursuing the CPP, President Barack Obama famously said, “I’ve got a pen, and I’ve got a phone,” remarking on how a Republican Congress could not prevent him from implementing his policies, as he would rely on regulation to do so. A litmus test for this strategy, the CPP showed just how much—or little—ability the president has to implement the agenda they stump for on the campaign trail.

The fact sheet accompanying the CPP release boasted big benefits, including the reduction of power-sector carbon dioxide emissions to 32 percent below 2005 levels by 2030. But the regulation never fully went into effect. Unconvinced of the regulation’s legality, the Supreme Court stayed it in February 2016. Then, under President Trump, the Affordable Clean Energy rule (ACE) replaced the CPP. The ACE essentially did nothing, and the CPP was formally declared illegal in 2022 as part of the Supreme Court’s West Virginia v. Environmental Protection Agency decision. Ultimately, this meant Obama’s signature climate policy would never be implemented.

But an examination of the data reveals some interesting facts. The first is that the CPP probably would not have yielded the benefit its proponents touted because it relied on assumptions of power-sector emissions that ended up being untrue. Basically, regulators assumed that power-sector emissions would rise without the regulation (called a baseline projection) when, in reality, they would fall. And because natural gas was already replacing coal, the emissions targets would have been met anyway. Simply put, the CPP’s claimed benefits were fantasy.

The chart below shows the difference in baseline between the CPP and the ACE, the CPP’s claimed emission benefit, and the latest projected emissions for comparison. As one can see, both the baseline and claimed benefits of the CPP were worse than the ACE. Also, when compared to more recent data, both regulations were too pessimistic. Despite all the claimed benefits of the CPP—and the controversy over repealing it—the regulations had little to no impact on real-world pollution.

Sources: CPP Regulatory Impact Analysis, ACE Regulatory Impact Analysis, Energy Information Administration Annual Energy Outlook 2023

One lesson of the CPP is that, for all the power presidents have to create or undo regulation, many other variables affect energy and environmental outcomes. Notably, market conditions can make a far greater difference than regulation, as the comparatively low price of natural gas vis-à-vis coal was responsible for the United States beating the CPP targets a decade early (and without the CPP).

To put it bluntly, the Office of the President is constrained in its power, and even though presidents like to tout how much they can get done, these claims are often exaggerated.

There are substantial restrictions on what is permitted within the powers granted to regulators by Congress, which limits the scope of regulatory capability. A comparison of emission intensity improvement between President Obama and President Trump shows that, ironically, they performed roughly the same, with Trump having a slight edge. This suggests that regulatory policy changes likely matter less for environmental outcomes than is characterized in the media. (An upcoming Supreme Court decision addressing Chevron deference is likely to further winnow regulator power.)

So even though Trump and Biden (as well as fellow presidential candidate Nikki Haley) have articulated extremely different approaches to energy policy in their campaigning, it is important to remember that politicians are incentivized to exaggerate the impact of their decisions. Furthermore, the policies that make the biggest difference are rarely those that presidents can implement on their own authority.

Whoever wins the presidential race in 2024 will certainly have a big impact on energy and environmental outcomes, but the difference might not be as consequential as some think.