Hot air: the overblown benefits and hidden costs of the EPA’s Clean Power Plan

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On Tuesday, the DC Court of Appeals will hear an appeal by 24 states on the EPA’s Clean Power Plan, whose implementation the U.S. Supreme Court temporarily halted last February. Among the states’ many complaints is that implementing the plan would impose significant economic burdens while providing no tangible benefits.

The EPA implausibly claims that, by 2030, the CPP will provide $20 billion in annual worldwide benefits associated with reduced CO2 emissions, plus an additional $14 to $34 billion in annual U.S. benefits from reduced air pollution—all while costing as little as $5 billion per year.

{mosads}That analysis, however, relies on a series of arbitrary and often incorrect assumptions. If enacted, the CPP will cost U.S. consumers, businesses, and taxpayers billions of dollars every year in higher electric costs in exchange for CO2 reductions that will have no measurable impacts on world temperatures and climate.

The CPP’s lack of measurable impact on world climate is documented by the EPA’s own climate model, which predicts the carbon dioxide emissions required by the CPP would reduce global temperatures in the year 2100, by, at most, 0.013 degrees Celsius. Such a miniscule change is impossible to measure physically and will have no impact on global climate. Yet the EPA nevertheless asserts the CPP will provide $20 billion in annual worldwide climate benefits by 2030. 

Almost all of the estimated economic benefits to the U.S. stem from fewer projected premature deaths from lung and heart disease, thanks to lower air pollution levels achieved by shutting down hundreds of coal-fired power plants. Except EPA has also estimated that closing these same plants is the primary source of benefits for several of the agency’s other air pollution rules, including the yet-to-be-implemented Mercury Air Toxics and Ozone Rules. This means the EPA has double-counted at least some of the same benefits it claimed for the CPP: A power plant can be shut down permanently only once.

The EPA also assumed that every death attributable to lung or heart disease at any age (whether those conditions were caused by air pollution, smoking, or plain bad luck) is “premature”—once again leading to dramatically overstated benefits.

Just as the EPA grossly overstated the benefits of the CPP, it grossly understated the costs. Its analysis assumes new wind and solar generating plants will double in total capacity and individually generate ever more electricity. Absurd as it sounds, the EPA assumed that new solar panels will be able to produce electricity as early as 4 a.m. in winter, long before sunrise, and at midnight in summer, long after sunset.  

All that new wind and solar energy, much of it generated in remote regions of the country, will need to be delivered to cities and towns. But the EPA completely ignored the cost of building the necessary transmission lines to do so. The agency also ignored the cost of maintaining the backup generation that must be available when the wind doesn’t blow and the sun doesn’t shine. 

The EPA also assumed consumers and businesses will install lots of new energy efficiency measures. But instead of measuring the actual amount consumers spend each year, the EPA averaged the costs over the expected lifetimes of these measures. So, if you spent $20 on a 20-year lifetime LED lightbulb at the local hardware store, the EPA analysis assumes you spent only $1. See if your bank agrees with that logic the next time you overdraw your checking account.

The many flaws of the EPA’s analysis of the CPP, built on a foundation of unrealistic and, in some cases, nonsensical assumptions, don’t necessarily mean that the U.S. should avoid all policies to address climate change.  But implementing the current plan will have costs that are all too real, while providing few—if any—actual benefits.

Jonathan Lesser, PhD, is the president of Continental Economics where he does consulting work with energy companies, their customers, and state government agencies. He is author of a new Manhattan Institute report “Missing Benefits, Hidden Costs: The Cloudy Numbers in the EPA’s Proposed Clean Power Plan.”


The views expressed by authors are their own and not the views of The Hill.

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