Alerts and Updates

Supreme Court Environmental Rulings Boost Confidence in Alternative Energy Investments

April 9, 2007

Two recent U.S. Supreme Court rulings on environmental issues give support to agencies and companies investing in renewable energy. On April 2, 2007, the Supreme Court ruled in Massachusetts v. Environmental Protection Agency that the EPA must consider regulating carbon dioxide emissions from vehicles, a ruling that could prompt the first national regulations addressing global warming. The same day, in Environmental Defense Fund v. Duke Energy Corp., the Court unanimously ruled against Duke Energy in a Clean Air Act appeal, backing federal efforts to force the installation of pollution control equipment on aging coal-fired power plants. As a result, energy companies can feel confident investing resources in alternative energy, since both rulings almost assuredly will boost the market for energy alternatives such as solar, wind, biomass and clean coal technology.

The Court's decisions were issued just prior to the release of a Gallup poll indicating that a record high number of Americans (almost 80% of respondents) favor higher emissions standards for automobiles, industrial pollution and greenhouse gases, indicating public support for stronger environmental regulations.

The Hunt for the Best Green Technology

Anticipating the next big market, certain companies are focusing their efforts on developing technology to combat global warming, and venture capitalists are heavily investing in research on green technologies like wind, solar and biofuel. (U.S. investors made more than two-thirds of all green technology investments last year.) Silicon Valley venture capitalists have shifted from the hunt for the next silicon revolution or the next great pharmaceutical drug to the hunt for energy. However, much of the technology is still in the research and development stage at this point. So while there is heavy investment in green technology, an energy technology boom could still be years away. In the interim, it is likely that a significant focus of alternative energy investment will be on utilizing coal in a manner consistent with the two Supreme Court rulings, given coal's ready availability and low cost.

Positive Confluence of Events

The combination of Democratic control of Congress and efforts by some other governmental interests, such as those of California under Governor Schwarzenegger, the growing wave of support for climate change regulation from the general public and from business leaders signals the likelihood that nationwide regulations addressing global warming will become a reality. By adding the Court's decisions into the mix, utilities, companies and government agencies investing in alternative and renewable fuels will be well positioned to take advantage of both the public interest and the legal support for those investments.

For Further Information

If you have questions about this Alert, please contact Thomas M. Berliner in our San Francisco office, Jennifer D. Cook in our Washington, D.C. office, any other members of Duane Morris' Energy, Environment and Resources Practice Group, or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.