New Study Confirms Major Economic Costs from EPA’s Proposed Carbon Regulations
Washington, D.C. – New analysis from NERA Economic Consulting projects significant negative economic impacts resulting from the Environmental Protection Agency’s proposed “Clean Power Plan” to regulate CO2 emissions from existing fossil-fuel power plants under section 111(d) of the Clean Air Act.
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NERA projects that the costs to comply with EPA’s proposed plan could total $366 billion, or more, in today’s dollars. The analysis also finds that 43 states will have double-digit electricity price increases, with 14 states potentially facing peak year electricity price increases that exceed 20 percent. Despite these significant costs, EPA’s proposal would have a meaningless effect on global climate change: atmospheric CO2 concentrations would be reduced by less than one-half of a percent, equating to reductions in global average temperature of less than 2/100th of a degree, and sea level rise would be reduced by 1/100th of an inch—equal to the thickness of three sheets of paper.
NERA also projected that EPA’s Clean Power Plan could cost consumers and businesses a staggering $41 billion or more per year, far outpacing the costs of all Clean Air Act rules for power plants in 2010 ($7 billion) and the annual cost of the Mercury and Air Toxics Standards rule ($10 billion). Much of NERA’s cost projection is based on consumers having to spend more than $500 billion to reduce their use of electricity. The NERA analysis also finds that the proposal could shutter 45,000 megawatts or more of coal-based electricity, which is more than the entire electricity supply of New England.
EPA’s proposal sets state CO2 emission rate targets for 49 states based on four EPA “building blocks.” The new analysis is based on combinations of building blocks that states might use to comply with the EPA targets.
A number of national organizations that are concerned about higher energy prices support the new NERA research, including: the American Farm Bureau Federation, American Fuel & Petrochemical Manufacturers, Association of American Railroads, Consumer Energy Alliance, Electric Reliability Coordinating Council, National Mining Association and the American Coalition for Clean Coal Electricity.
“EPA’s proposal creates major questions about the reliability and affordability of electricity across the country while not doing much to address the problem it seeks to solve,” said the American Farm Bureau Federation. “Merely reducing fossil fuel emissions without producing a measurable impact on world temperature or climate cannot be regarded as a success. Instead, EPA’s plan will affect all Americans negatively, and farmers and ranchers will be especially hard hit because of the energy intensive nature of producing food, feed and fiber.”
“As economic indicators remain weak and American families struggle just to keep up, President Obama owes the nation a rational explanation as to why he’s determined to jeopardize their welfare,” said American Fuel & Petrochemical Manufacturers President Charlie Drevna. “This Administration knows that proposed new regulations will have little to no environmental benefit, but will raise costs for every single American consumer, and unfortunately those that can least afford it will bear a disproportionate brunt.”
“America’s rail industry shares concerns about the far-reaching impact the EPA’s proposals would have on the country’s energy market and the economy in general,” said Edward R. Hamberger, President and CEO of the Association of American Railroads. “At a time when the economy is gaining strength, and with freight railroads playing a key role, the very real potential of coal generation declining by as much 71 percent, double-digit electricity price increases, and 30 percent hikes in natural gas would undermine the nation’s competitiveness, unnecessarily harm all industries that rely on competitive energy prices, and frankly, is the last thing the U.S. can afford at this time of fragile economic growth.”
“Although EPA continues to claim that its proposed regulations will not hurt electricity consumers, this important study shows just how significant the impacts of these rules would be if the proposal is adopted,” said Michael Whatley, executive vice president at the Consumer Energy Alliance. “As the voice of American energy consumers, CEA continues to urge the agency to work with states, utilities and electric cooperatives to ensure that any carbon control regime will not cripple the economy with either blackouts or price spikes.”
“The proposed rule on existing power plants is likely to produce very little if any environmental or health benefits,” noted Scott Segal, director of the Electric Reliability Coordinating Council, a diverse group of power companies serving millions of consumers nationwide. “However, as NERA’s data clearly demonstrates, the rule will come at extraordinary cost to consumers including businesses, households, and individuals living on fixed incomes or at or near the poverty level. The rule will also have profound effects on electric reliability, as our regional transmission organizations have reported.”
“This analysis is further confirmation that it would be irresponsible for any state to implement EPA’s costly power plan. Asking Americans to pay more in return for less energy and fewer jobs is not a plan that provides them the economic security they deserve,” Hal Quinn, president and CEO of the National Mining Association, said.
“The president’s regulatory crusade to be a global leader on climate change is plagued with problems. For starters, it is exorbitantly expensive and will result in marginal global benefits. Then there is the inescapable fact that the proposed rule will drive up energy costs and threaten to idle America’s burgeoning manufacturing renaissance. Finally, adding insult to injury, other world leaders are rejecting the president’s plan as they fear putting their own countries into an economic tailspin. I have one thing to say to the president – pull this rule before irrevocable consequences hit American people and businesses,” said Mike Duncan, president and CEO of the American Coalition for Clean Coal Electricity.
See the press release here.
- On October 16, 2014