The US Supreme Court on Thursday imposed limits on the federal government's authority to issue sweeping regulations to reduce carbon emissions from power plants in a ruling that will undermine President Joe Biden's plans to tackle climate change.
The court's 6-3 ruling restricted the Environmental Protection Agency's (EPA) authority to regulate greenhouse gas emissions from existing coal- and gas-fired power plants under the Clean Air Act anti-pollution law. The Biden administration is currently working on new regulations.
“This is another devastating decision from the Court that aims to take our country backwards,” a spokesman for Mr Biden said in a statement.
“While the Court's decision risks damaging our ability to keep our air clean and combat climate change, President Biden will not relent in using the authorities that he has under law to protect public health and tackle the climate change crisis. Our lawyers will study the ruling carefully.”
The ruling is likely to have implications beyond the EPA as it raises new legal questions about any big decisions made by federal agencies.
US Department of Health and Human Services Secretary Xavier Becerra said the Supreme Court's decision is a “public health disaster” that will be detrimental to Americans.
“A failure to regulate power plant emissions will lead to increases in asthma, lung cancer, and other diseases associated with poor air quality, and in many places, those impacts are likely to fall hardest in already heavily polluted neighbourhoods,” Mr Becerra said in a press release.
The Supreme Court's conservative majority has signalled continuing scepticism towards expansive federal regulatory authority.
The justices overturned a 2021 decision by the US Court of Appeals for the District of Columbia Circuit that had struck down former Republican president Donald Trump's Affordable Clean Energy rule.
That regulation, which the Biden administration has said it has no intention to retain, would impose limits on a Clean Air Act provision called Section 111, which provides the EPA with the authority to regulate emissions from existing power plants.
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The ruling was based on what is called the “major questions” legal doctrine that requires explicit congressional authorisation for action on issues of broad importance and societal impact.
The justices in January embraced that theory when it blocked the Biden administration's vaccine-or-test policy for larger businesses, a key element of its plan to combat the Covid-19 pandemic.
The decision will constrain the EPA's ability to issue any regulations on power plants that push for an ambitious a national shift in energy policy towards renewable sources.
As such, the ruling will hamstring the Biden administration's ability to curb the power sector's emissions — representing about a quarter of US greenhouse gases.
A group of Republican-led US states, headed by major coal producer West Virginia, asked the justices to limit the EPA's ability to regulate greenhouse gas emissions from existing power plants under the Clean Air Act. Other challengers included coal companies and coal-friendly industry groups.
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Coal is among the most greenhouse gas-intensive fuels.
Democrat-led states and major power companies including Consolidated Edison Inc, Exelon Corp and PG&E Corp sided with the Biden administration, as did the Edison Electric Institute, an investor-owned utility trade group.
The Biden administration wants the US power sector decarbonised by 2035. The US, behind only China in greenhouse gas emissions, is a pivotal player in efforts to combat climate change on a global basis.
The UN on February 28 — the same day as the Supreme Court's oral arguments in the case — released a 3,675-page report calling for global action to combat climate change.
The rule proposed by Mr Trump, a supporter of the coal industry who also questioned climate change science, was meant to supplant former Democratic president Barack Obama's Clean Power Plan mandating major reductions in carbon emissions from the power industry.
The Supreme Court blocked Clean Power Plan implementation in 2016 without ruling on its lawfulness.
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
More from Aya Iskandarani
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
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Global state-owned investor ranking by size
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United States
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China
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UAE
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Japan
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Norway
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Canada
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Singapore
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Australia
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Saudi Arabia
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South Korea
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