Environmental Protection Agency

EPA Will Reportedly Revoke Obama's Clean Power Plan

Is the plan actually necessary for bringing emissions down?



The Environmental Protection Agency reportedly plans to repeal and replace the Clean Power Plan (CPP). No doubt that sounds like a big deal: The CPP, an Obama-era initiative to cut the electric power industry's carbon dioxide emissions to 32 percent below their 2005 levels by 2030, sits at the center of the Obama administration's effort to fulfill its pledges under the Paris Agreement on climate change.

It sounds like a big deal, but it probably isn't. With or without the CPP, a different force may be pushing the power sector to reduce emissions by nearly that much: low natural gas prices.

Here's the background. In 2007, the Supreme Court ruled that the Environmental Protections Agency (EPA) has the authority to regulate carbon dioxide and other greenhouse gases under the Clean Air Act. The Obama EPA then issued a finding that current and projected "concentrations of greenhouse gases in the atmosphere threaten the public health and welfare of current and future generations." The CPP restrictions were promoted as a way to mitigate these harms.

In an unprecedented move, the U.S. Supreme Court issued in February 2016 a stay halting implementation of the CPP until lower courts had resolved the lawsuits filed by 27 states opposing the regulation. Now EPA chief Scott Pruitt has reportedly decided not to try to overturn the endangerment finding, and is instead launching a rulemaking process that aims to replace the CPP with less onerous requirements.

The Obama administration estimated that the CPP would yield $34 billion in annual climate and air pollution benefits at a cost of only $9 billion a year. In contrast, a NERA Economic Consulting study, commissioned by various industry groups, calculated that annual CPP compliance costs would average between $41 and $73 billion a year, swamping the negligible climate benefits of reducing future global warming by 0.02° Celsius. That's quite a difference, but as we know, partisans can get an econometric model to say whatever they want it to say.

But it may be beside the point. A 2016 analysis by the Congressional Budget Office compared the EPA's estimates with various other projections. M.J. Bradley & Associates, for example, calculated that even without the CPP, power sector emissions would drop by as much as 26 percent below 2005 levels, assuming that renewable energy subsidies remained in place. A new report from the International Energy Agency suggests that such subsidies aren't actually necessary, since the costs of renewable energy generation are falling so rapidly that they can out-compete conventional power production.

And in a study this year for The Energy Journal, researchers at Stanford and Purdue concluded that if low natural gas prices persist, carbon dioxide emissions in the power sector would fall 26 percent below their 2005 levels by 2030, even without the CPP.

In other words, the fate of the Obama plan may be largely irrelevant to the trajectory of carbon dioxide emissions in power sector. If so, the coming fight over the CPP will probably feature more symbolic posturing than substance.