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Alito

Justice Samuel Alito

Alito’s Leaked Opinion
Justice Samuel Alito’s leaked majority opinion in Dobbs v Jackson Women’s Health Organization, _ U.S. _ (2022) discloses that the U.S. Supreme Court is primed to overrule both Roe v Wade, 410 U.S. 113 (1973), and Planned Parenthood of Southeastern Pa v Casey, 505 U.S. 833 (1992), the two leading cases holding that the right to an abortion is protected under the United States Constitution.

Yesterday’s Chicago Tribune reported that when the U.S. Supreme Court officially hands down its opinion, twenty-six (26) states, including Texas and Florida, are either certain or likely to enact laws that either severely restrict the right to abortion or ban it outright. (“If Roe is overturned, ruling could have secondary effect on Illinois’ economy,” Chicago Tribune, June 13, 2022). The Tribune article suggests that corporations may seek to relocate their headquarters to states like Illinois, in which the right to obtain an abortion will be protected. The article concedes that it may take years for such changes, and their related economic effects, to come about.

Assuming that there’s sufficient political will, the economic effects on renewable energy from overturning Roe could occur much sooner.

That there exists any tangency at all between energy law and reproductive rights may sound unusual, but the response to Alito’s ruling should take advantage of the principles Alito himself announces in his leaked opinion. In particular, Alito stresses that our nation’s historical understanding of ordered liberty should enable the people’s elected representatives to decide how abortion should be regulated (Dobbs, pgs. 6, 31). Elected representatives in other states are likewise at liberty to respond to Dobbs by deciding how to regulate certain aspects of renewable energy.

How Renewable Energy Works
Because one electron is indistinguishable from another on the grid, electricity generated by renewable resources (wind, solar, etc.) is indistinguishable from electricity generated by a nuke or a coal-fired plant. To address this, renewable energy certificates (RECs) were developed as tradable certificates that recognize the green energy attributes of renewable electricity generation sources. One REC represents one megawatt-hour of renewable generation. RECs are tradable because they may be bought and sold separately from the actual electricity generated by the renewable system. The sale of RECs provides additional revenue for renewable generators and obviates the (nearly impossible) task of trying to schedule specific generation for specific load. The issuance and claiming of RECs is tracked, usually by the relevant transmission system operator.

A Renewable Energy Response to Dobbs
A state’s renewable portfolio standard (RPS) generally requires that electric public utilities procure a specified portion of their electricity supply requirements from renewable generation resources such as wind or solar power. These requirements may be met through a utility’s own renewable generation assets or through the purchase of RECs. A state has a lot of leeway to structure its RPS as it sees fit. A state RPS may have tiers of preferred RECs, or it may prefer RECs purchased from generation resources located within the state or in adjacent states. The RPS market is often referred to as the “mandatory market” because public utilities are required by law to purchase certain volumes of renewable energy.

The gist of the renewable energy response to Dobbs lies in two separate measures. First, in states like Illinois, where the right to abortion will be protected, RPSs would be amended to prevent RECs generated in states that restrict or prohibit abortion from being used to satisfy the RPS.

The second measure pertains to the “voluntary” market, that is, the market for the purchase of RECs by persons who are not legally required to purchase renewable energy but who nevertheless wish to support the development of renewable energy. Voluntary market purchasers may procure all or a portion of their electricity supply requirements from renewable generation. These REC purchasers “green” the electricity they actually use by buying a quantity of RECs. Buyers in the renewable energy market have the freedom to choose which RECs they buy, including choosing the state of origin of the RECs. The second response to Dobbs involves making clear to voluntary market buyers where a REC was generated, and the REC buyer can then choose whether it wishes to purchase a REC generated in one of the 26 states that are set to restrict or eliminate abortion rights. Welcome to your free market at work.

The Dormant Commerce Clause
The Dormant (or Negative) Commerce Clause is a doctrine that federal courts have inferred from the Commerce Clause of the U.S. Constitution. In a nutshell, the doctrine prohibits protectionist legislation by states.

The Sparkspread previously posted an entry on Judge Posner’s 2013 opinion in Illinois Commerce Commission v. FERC (“7th Circuit Casts Shadow Over State Renewable Portfolio Standards,” The Sparkspread, August 14, 2013), a cost allocation rate case in which Posner, when discussing RECs and RPSs, stated that the Dormant Commerce Clause would prohibit one state from discriminating against another’s renewable energy. Posner’s reasoning was wrong because he did not understand how REC markets operate and did not take into account the difference between the mandatory and voluntary REC markets.

Contrary to Posner’s position, a state’s limitations on the kinds of RECs that are acceptable for satisfaction of its own RPS do not present a dormant commerce clause issue because none of those limitations prevent a REC seller from selling its RECs in that state. In the voluntary market, any REC seller from any state can sell RECs generated anywhere in every other state. An RPS limitation on RECs from abortion-restricting states, on the other hand, pertains to the mandatory, not the voluntary market. Every state is free to determine as a policy matter what types of RECs may be used to satisfy its own RPS. A state’s elimination from its mandatory market of RECs generated in abortion-restricting states is no different than that state’s preference for, say, solar over wind RECs, or for RECs generated only in adjacent states. An RPS has nothing to say about the voluntary market, which it does not in any degree control.

I am not aware of any previous effort to address REC markets from this angle. Legislation would, of course, take time and effort to enact, but if, pursuant to Dobbs, elected representatives in 26 states see fit to restrict or eliminate a constitutional right that has been in place for nearly half a century, the elected representatives in the other 24 are equally free to express their policy preferences in their own RPSs. Alito would surely approve, no?

Energy markets tend to be exquisitely sensitive. The mere announcement of such a legislative initiative by a state would likely send through renewable energy markets a shock wave warranting measurement on the Richter scale. Expectations on REC sales would be affected, and, even more importantly, so would plans for new generation.

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