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Climate Change Blog

EPA’s Clean Power Plan Receives Support from Businesses and Economic Study by Environmental Group

On November 19, 2014, the Natural Resources Defense Council (“NRDC”) released an issue brief, finding that the power sector and its customers could save nearly $2 billion in 2020 and $6.4 billion in 2030 while meeting the EPA’s carbon reduction targets. According to the brief, greater reliance on renewable sources of energy and on using energy more efficiently could result in substantial savings. Two weeks later, a group of more than 200 companies sent a letter to the President in support of EPA’s proposed Clean Power Plan.  The list of businesses includes household names and Fortune 500 companies such as Kellogg’s, Starbucks, Ikea, Nike, and Mars. It also included a large number of clean energy or environmentally-oriented businesses.  Notably, the list does not include any major energy companies or electric providers.

Cost Studies
The NRDC issue brief identifies what it considers to be “two central shortcomings” in the Clean Power Plan’s calculations: “First, EPA overestimated the cost of deploying increased amounts of energy efficiency by nearly double current projections.” For example, NRDC believes that EPA overestimated the cost of compliance with the Clean Power Plan. “Second, the agency used outdated cost and performance estimates for renewable electricity generation that were nearly 50 percent more expensive than current experience shows.” NRDC used what it characterized as a “simplified supply curve” to determine energy efficiency savings. 

NRDC claims that using more accurate and up-to-date data reveals that the Clean Power Plan will produce net benefits of up to $50 billion in 2020 and up to $84 billion in 2030. According to NRDC, these benefits will exceed EPA’s estimates by $9 billion in benefits in 2020, and an additional $15 billion in benefits for 2030. NRDC’s figures also include the health and environmental benefits that NRDC believes the Plan will create. NRDC reports that the energy efficiency savings in 2030 could total 140 terawatt-hours more beyond what EPA had projected, and that renewable generation could be 171 terawatt-hours higher than EPA’s projections.  NRDC also criticizes EPA for failing to make “even deeper carbon reductions at a much lower cost than its projections suggested were attainable.”

The NRDC issue brief runs counter to reports from other organizations, such as the one released earlier this year by NERA Economics. As discussed in this previous post, the NERA study found that the total costs of EPA’s Clean Power Plan Proposal could total $366 billion or more over a 15-year period. While the NERA report found that the Clean Power Plan Proposal would cause electricity rates to increase an average of 12% to 17% nationwide, a separate report by the Analysis Group indicated that over time, programs to control carbon emissions from the electricity sector can achieve long-term benefits of lower electricity bills and overall economic benefits to the states. Yet another analysis by the Electric Reliability Council of Texas (“ERCOT”) concluded that “[t]he Clean Power Plan will also result in increased energy costs for consumers in the ERCOT region by up to 20% in 2020, without accounting for the costs of transmission upgrades, procurement of additional ancillary services, energy efficiency investments, capital costs of new capacity, and other costs associated with the retirement or decreased operation of coal-fired capacity in ERCOT.” As these studies demonstrate, the predicted impacts of the Clean Power Plan vary widely between reports.

Letter From Businesses
Like the NRDC brief, the letter from more than 200 businesses also applauds the Clean Power Plan’s emphasis on energy efficiency and renewable energy. The letter cites a 2012 study by Ceres, Calvert Investments, and the World Wildlife Fund, which found that 60% of Fortune 100 and Global 100 companies have set a renewable energy goal, a greenhouse gas reduction goal, or both. While the NRDC study focused on trying to quantify the cost of EPA’s proposal in economic terms, the letter emphasizes the general impact that climate chance would have on businesses. According to these businesses, “tackling climate change is one of America’s greatest economic opportunities of the 21st century.” The letter also concludes by stating that “climate change poses real financial risks and substantial economic opportunities and we must act now.”

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