The EPA’s Clean Power Plan: Setting the Record Straight on the Benefits and Costs

Guest Blog | May 18, 2015 | Energy Policy

In honor of Vanderbilt University’s event “The Clean Power Plan: Health, Energy Demand and Economic Effects” (taking place today and tomorrow) we are publishing this guest blog written by John Rogers, Senior Energy Analyst with Union of Concerned Scientists.  The original post can be found here You can live stream Vanderbilt’s event on Monday May 18 and Tuesday May 19 here.

If you ignore the benefits side of the cost-benefit equation, it's hard to come up with anything but bad news. But when you take a solid look at both sides of the equation, you see a pretty impressive net-positive. We’re working hard to set the record straight on disinformation about the Clean Power Plan, the first-ever national limits on carbon pollution from existing power plants under the Clean Air Act. It’s not hard to find fodder: there’s plenty of misleading stuff out there, and some of it has gotten way more airtime than it should have. To fight back, colleagues and I gave a webinar recently on the really wrong conclusions some studies have come to on the Clean Power Plan, and how they got it so far off the mark. My piece of the webinar looked at several misleading studies funded by fossil fuel and utility interests, studies that try hard to obscure the fact that the benefits of the Clean Power Plan (CPP) are likely to far outweigh the costs. I focused on exposing some of their really off-base assumptions about renewable energy and energy efficiency, two proven tools for cutting carbon cost-effectively… a fact naysayers consistently ignore or deny. Knowledge is power (and power is power) The Clean Power Plan's flexibility is great... but only if you don't ignore it.The Clean Power Plan’s flexibility is great… but only if you don’t ignore it. The first thing to be clear on is what we know about the status of renewables and efficiency.

  • Solar has been doing some amazing things lately—costs half what they were just a few short years ago,accelerating installationslarger and larger projects. Solar accounted for almost a third of the new electric generating capacity installed in 2014.
  • Wind power is a champion already, accounting for more than 4% of U.S. electricity supply, and costing less than pretty much any other option for new electricity generation.
  • And energy efficiency has been the one to beat for years, as almost always the cheapest option for meeting new electricity needs.

Ignorance is… bliss? Nope.Those great stats are why certain studies critiquing the Clean Power Plan are so surprising in how they treat renewables and efficiency, and in how wrong they get it. Here are three, and some of their problems:

  • NERA Economic Consulting – The EPA, in its analysis of the plan, used a number for the cost of energy efficiency that many efficiency experts considered high to begin with (as UCS pointed out in its comments on the draft plan). But NERA assumes costs that are much higher than even those high numbers, based on a single study from several years ago (ably refuted by ACEEE). The result is to transform savings on utility bills projected by the EPA and others into net costs. In the real world, the facts show energy efficiency investments generate net savings.
  • Beacon Hill Institute – BHI says its study “attempts to correct for some of the limitations” contained in the EPA’s own analysis, but those “corrections” turn out to be wrong. They wrongly assume states will meet the CPP only by switching from coal to natural gas, for example—completely and conveniently ignoring the range of cost-effective options that are a key part of the plan. In reality, we know most states already require utilities to ramp up renewable energy and/or energy efficiency over time. Utilities are meeting these requirements at little to no additional costs to consumers, and in many cases delivering savings.
  • U.S. Chamber of Commerce – The Chamber’s study suffered from the same affliction: they assumed that all the states would just use natural gas combined cycle plants with carbon capture and storage—a really expensive way to go about cutting carbon. But their study was actually released before the draft Clean Power Plan, which means they were only guessing what was going to be in it (and guessed wrong).

If you ignore the benefits side of the cost-benefit equation, it’s hard to come up with anything but bad news. But when you take a solid look at both sides of the equation, you see a pretty impressive net-positive. (Source: UCS) The poor treatment of clean energy and the CPP in these studies really isn’t a total surprise, though, given who funded them. NERA’s study, for example, was commissioned by several industry trade groups, including the American Coalition for Clean Coal Electricity and American Fuel and Petrochemical Manufacturers. Together, these organizations represent some of the all-time top producers of industrial carbon emissions, such as Chevron, ExxonMobil, and Peabody Energy. Remember, these are the same fossil fuel interests who have been trying to deceive us on the facts about global warming for decades.

Weighing real costs and benefits

It’s a good idea, when looking at reports or considering studies, to look under the hood, to understand the assumptions behind the findings, and where the study authors (and funders) are coming from. These anti-CPP studies give some idea of what to look for:

So go ahead, look beyond the headlines. And when you do, you’ll find, in the case of the EPA’s Clean Power Plan, that the news is a whole lot better than what some folks would have you believe. Let’s set that record straight.

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