The Costs of EPA’s Carbon Regulations Exceed the Benefits...Again

Commentary & Analysis
June 21, 2016

It was about a year ago that we posted a bit of analysis on the U.S. Energy Information Administration’s (EIA) independent look at the economic and energy market impacts of the Environmental Protection Agency’s (EPA) Clean Power Plan (CPP) proposed rule. You can probably get a hint what we found out from the title—EIA Analysis Shows EPA’s Carbon Regulations All Economic Pain for No Climate Gain. We concluded that:

No matter how one slices and dices the data, EIA‘s analysis leaves little room for doubt that EPA’s Clean Power Plan flops badly as a climate policy, even on the administration’s own terms and using the administration’s own methods, data, and exaggerated SCC.

Fast forward to the present, where EIA’s Annual Energy Outlook 2016 (AEOA2016) has just been released. It includes model runs with and without EPA’s CPP final rule. Like a year ago, we’ve gone through the data and have issued a new report titled (spoiler alert!) , EPA Clean Power Plan: EIA’s Forecast Shows Benefits Fall Well Short of Costs . . .Again, outlining the results of EIA’s latest analysis.

While there are many aspects of EIA’s analysis worthy of review, this report focuses on four main areas:

  1. EIA’s assessment of CPP demonstrates that over the 2022 to 2030 compliance period the economic costs exceed the climate and monetized ancillary benefits by $196 to $529 billion—or from $78 to $210 per ton of carbon dioxide reduced—even when using the Obama Administration’s own inflated benefits estimates;
  2. EIA’s assessment shows that, contrary to EPA’s claim, both electricity prices and electricity expenditures will be higher under CPP, with total electricity expenditures increasing $40.5 billion over the compliance period;
  3. EIA’s assessment shows that in 2030, employment will be 376,000 lower under CPP; and
  4. EIA’s assessment shows that, contrary to statements by EPA downplaying the impact of it rules on the coal industry, coal output will decline precipitously under CPP instead of rising.

In other words, there is nothing in EIA analysis of the final rule that would make us in any way change the conclusion we reached a year ago: EPA’s CPP is a bad deal for the American economy.