Wednesday, December 13, 2017

Analysis of Clean Power Plan overestimates benefits, underestimates costs: Economist

Government analysis of the Environmental Protection Agency’s (EPA) Clean Power Plan is deeply flawed, overestimating the benefits and underestimating the costs, an economist commissioned to carry out his own study of the plan said.

The study, published ahead of a court hearing into the legality of the plans, did an independent cost-benefit analysis of the plan, and concludes the EPA’s own deep dive into its impact was “sloppy.”

“My conclusion is there may be an agreement to have some sort of carbon policy, say a carbon tax,” Dr. Jonathan Lesser, president of Continental Economics and author of the study, told EP News Wire. “But from a cost-benefit perspective, it makes no sense.”

Lesser, commissioned by the conservative Manhattan Institute to write the study, added: “There are no greater benefits, and there are more costs.”

The introduction of the Clean Power Plan, announced last year, has been delayed by legal action, The U.S. Supreme Court ordered the stay ahead of a D.C. Circuit Court judgment.

The full bench of the U.S. Court of Appeals for the D.C. Circuit, minus two judges who recused themselves, will hear oral arguments Sept. 27.

Twenty-seven states, and many power companies, particularly those involved in the production and use of coal, oppose the plan. Apart from the EPA, supporters include 18 states, and next generation energy companies.

Lesser said he believes the arguments will center on legal minutia contained in the Clean Power Act and the plan, rather than the costs and benefits.

But Lesser said: “There are no climate benefits in the plan from CO2 emissions. The Clean Power Plan will have no measurable impact on climate so it cannot have billions of dollars in benefits.”

Specifically, the air quality benefits estimated by the EPA wrongly determined the reduction in premature deaths from lung and heart disease, Lesser said.

“Any death that is prevented they attributed to a reduction in air pollution, including a 95-year-old grandmother who smokes three packs a day and dies of lung cancer," he said. "That was considered a premature death.”

They agency also underestimated costs associated with energy efficiency, Lesser said. He cited the example of a LED light bulb, which while it may cost $20 to buy and will last 10 years, the plan only counted the first year not the entire cost.

The plan estimates no efficiencies in coal fire power plants and also assumed electricity could be generated by solar panels at midnight during the summer time, and 4 a.m. in the winter, Lesser said.

“That does not exist — I wish it did — it is sloppy analysis,” Lesser said.

President Obama and the EPA announced the Clean Power Plan on Aug. 3, 2015.

The EPA described it as a “historic and important step in reducing carbon pollution from power plants that takes real action on climate change.”

The agency added that “the final Clean Power Plan is fair, flexible and designed to strengthen the fast-growing trend toward cleaner and lower-polluting American energy.”

The standards are strong and achievable, and goals are customized for states to cut carbon pollution, the EPA argued.

The EPA claims the plan will provide annual benefits worth $20 billion and that other various “co-benefits” could be worth an additional $14 billion to $34 billion. The agency claims the costs will be $9 billion each year.

Yet a study by NERA Economic Consulting for an industry group estimated the Clean Power Plan will cost $41 billion annually.


Organizations in this story

U.S. Environmental Protection Agency (EPA) 1200 Pennsylvania Ave NW Washington, DC - 20460

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