In August 2015, the U.S. Environmental Protection Agency (EPA) released the final version of its proposed Clean Power Plan (CPP), which calls for reducing emissions of carbon dioxide (CO2) from U.S. electric generating plants by 870 million tons below 2005 levels by 2030, when the EPA assumes that the CPP will be fully implemented. This paper presents the results of a comprehensive examination of the assumptions and methodology used by the EPA to estimate the costs and benefits of the CPP.
- The EPA’s cost-benefit analysis suffers from a fundamental flaw: it compares estimates of world economic benefits against a subset of U.S.-only costs.
- The EPA’s cost-benefit analysis significantly overestimates the direct benefits of CO2 reductions and co-benefits of accompanying reductions in air-pollutant emissions and significantly underestimates the specific costs of meeting future electricity demand.
- The CPP will have no physically measurable impact on world climate, estimated to be less than 0.01 degrees Celsius by the year 2100 using an EPA-sponsored climate model.
Jonathan Lesser is president of Continental Economics, has more than 30 years of experience working for regulated utilities, for government, and as a consultant in the energy industry