Rescinding Clean Power Plan a Positive Step Toward Free Market for Electricity

This article was printed in the December issue of POWER magazine.

The Environmental Protection Agency (EPA) in early October announced it would rescind yet another signature Obama administration policy: the electricity regulation known as the Clean Power Plan (CPP).

As with President Trump’s Paris climate agreement withdrawal announcement earlier in 2017, the CPP decision has been met with acrimony. But producers and consumers of electricity alike—which is to say, all of us—should rejoice to be rid of this deal, which was rotten even on its own terms.

According to a study by NERA Economic Consulting, under the CPP, 23 states could have experienced retail electricity rate increases of 10% to 20%; seven states could have seen rates jump 20% to 30%; and 10 states could have experienced increases of a whopping 30% or more.

Higher Electricity Costs

The CPP’s overall cost of at least $29 billion annually is three times higher than the cost of EPA’s Mercury and Air Toxics (MATS) rule, which was deemed an EPA overreach by the Supreme Court in 2015. The late Antonin Scalia, writing for the majority in the MATS case, Michigan v. EPA, stated, “It is not rational, never mind ‘appropriate,’ to impose billions of dollars in economic costs in return for a few dollars in health or environmental benefits.” He added, “EPA must consider cost—including cost of compliance—before deciding whether regulation is appropriate and necessary.”

On that standard, one would expect CPP must have presented a wide suite of benefits to outweigh those high costs. But one would be wrong.

Despite the “Clean Power Plan” moniker, the CPP would not have done much to clean up our environment. That’s because its main target wasn’t pollutants such as sulfur oxides, nitrous oxides, or ozone, but rather the perfectly safe carbon dioxide—a gas each of us emits with every breath, and that is necessary and beneficial for plant life.

Given the rhetoric surrounding the CPP, many Americans would be surprised to learn that we have drastically reduced our air pollution over the past half-century. According to EPA, despite our gross domestic product growing by 246% since 1970, we’ve cut our emissions of the six common air pollutants by an average of 70%. So what was the CPP really after?

The purpose of the CPP was to nudge the economy away from carbon-intensive fuel sources and toward others on the premise of anthropogenic global warming. As President Barack Obama expressed on a number of occasions, the plan would, by design, have made the use of coal more expensive in order to coerce utilities to use less-carbon-intensive options. According to estimates produced by the Obama administration’s EPA, the plan would have reduced the electricity sector’s greenhouse-gas emissions approximately 25% below 2005 levels by 2020, and 30% by 2030.

Little Effect on Global Warming

But inconveniently for CPP backers, execution of the plan would have had a negligible effect on global warming.

Climate scientists Pat Michaels and Chip Knappenberger of the Cato Institute used a climate model emulator that was developed with the support of EPA to determine that complete adoption of the CPP would have resulted in a temperature reduction of less than two one-hundredths of a degree Celsius by the year 2100.

That’s not even enough to make you zip your jacket.

The Clean Power Plan’s defenders treat it as if it were a seawall holding back a tide of environmental ills. In reality, “Clean Power Plan” was a misnomer. The plan entailed few environmental benefits, while pushing significant costs onto energy consumers.

Beyond its concrete implications, the plan wasn’t cooperative federalism as EPA claimed, but coercive federalism and a misapplication of the Clean Air Act. The CPP for the first time would have seen EPA regulating not specific sources, or “inside the fence,” but establishing emissions guidelines for entire states. Fortunately, the current administration’s EPA takes a more restrained view on the role of the federal government, which will allow for more local application of knowledge and innovation.

The rescinding of this plan, though, is not the end of the CPP debate. Legal challenges to this EPA decision are sure to follow. What’s more, rescinding the plan does nothing to address its underlying basis: the 2009 EPA Endangerment Finding that requires the agency to take action under the Clean Air Act to curb emissions of carbon dioxide and other greenhouse gases. As long as the Endangerment Finding stands, decarbonization schemes will be on the table.

While not a panacea, the rescinding of the Clean Power Plan is a positive step toward freeing energy producers to supply the indispensable value of electricity to American families and businesses in the most efficient manner possible.

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