INTEREST OF AMICI CURIAE
Citizens Utility Board, Consumers Union, and Public Citizen, Inc. are nonprofit organizations that represent the interests of utility ratepayers and consumers. They file this brief to address the costs and benefits of the EPA’s Clean Power Plan—especially for consumers and low-income communities—and to rebut claims made by petitioners and their amici.
INTRODUCTION AND SUMMARY OF ARGUMENT
Because of “the complex nature of economic analysis typical in the regulation promulgation process,” those who seek to overturn agency rules face a “high” burden, Nat’l Wildlife Fed’n v. EPA, 286 F.3d 554, 563 (D.C. Cir. 2002), and must overcome the “special deference” accorded agency decisions based on “complex scientific data within the agency’s technical expertise,” Nat’l Ass’n for Surface Finishing v. EPA, 795 F.3d 1, 7 (D.C. Cir. 2015). Given that uphill climb, one might have expected the challengers here to attempt a careful rebuttal to the EPA’s analysis of the costs and benefits of its plan for American consumers.
Instead, they chose a very different strategy: unrestrained alarmism. Rather than grapple with available data on economic, environmental, and social effects, their briefs predict doom. On their account, nothing short of “economic disaster” will follow if the plan is implemented; “[t]housands of businesses . . . will suffer,” and be forced to “lay off workers or close their doors entirely.” Local Bus. Br. 23– 24. The plan, they say, “offers no solution” to rising energy costs, which will disproportionately affect low-income communities. 60Plus Br. 12. The result will be “immediate” and “adverse,” id. at 4—electricity costs will rise, “affordable power sources” will vanish, businesses will shutter, Local Bus. Br. 23, and, indeed, “30,000 premature deaths” will follow directly “from the Rule,” Pet. Br. on Procedure 71.
These doomsday claims rest on little more than one industry-funded (and discredited) study, stray commentary from a vice-chairman of a utilities commission in Ohio (a state that has, in fact, found success with analogous cleanpower programs embraced by the EPA’s plan), and the possibility that “one coalfired plant” in South Dakota might shut down. Local Bus. Br. 24. That is not enough. Evidence and data—not hyperbole and anecdote—should inform decisions on the reasonableness of an agency’s rule.
As this brief explains, the available data reveal a very different picture: The EPA’s final Clean Power Plan leverages energy-efficiency opportunities to achieve greenhouse-gas emission reductions in a way that directly benefits consumers, lowincome households, and other electricity ratepayers. Employing a framework of flexible, state-driven reforms, the plan establishes a set of benchmarks on national carbon-dioxide emissions for existing coal- and gas-fired power plants and allows each state to determine, for itself, the best approach to meeting those benchmarks. And, it gives states flexibility to consider cost and other factors before deciding how to structure an emissions-reduction plan by identifying the best system of emission reduction.
A wealth of empirical evidence over the past decade shows that clean-power programs improve access to affordable electricity, reduce greenhouse-gas emissions, and increase energy efficiency for utilities, businesses, and consumers alike. At scale, a robust clean-power program, like the EPA’s plan, can aggregate these effects to dramatically reduce greenhouse-gas emissions and drive energy costs down.
- The empirical claims made by petitioners and their amici are either greatly overstated or lacking in evidentiary support.
The challengers have embraced an extreme position on the impact of the EPA’s plan. They contend that it will “reconfigur[e] the nation’s power sector in an extremely short period of time,” and, as a result, “raise the cost of operations for countless businesses.” Local Bus. Br. 24. What’s more, they say, “consumers will see their electricity rates rise as affordable power sources close and utilities are forced to build expensive new plants.” Id. at 23; see also Nev. Br. 28 (predicting that “electricity rates will skyrocket”). Another set of amici claims that the plan will have an “immediate adverse impact on many fixed- and low-income heads of
household,” largely through real-time increases in electricity rates. 60 Plus Br. 4. And they attack the plan for doing “virtually nothing to counteract the harsh economic realities that low- and fixed income families will face if the Plan goes into effect.” Id. at 11. No serious evidence supports these claims.
- Petitioners and their amici cite no serious empirical evidence that consumer costs will meaningfully increase.
For their claim that consumer electricity costs will dramatically rise, the challengers rely on the thin reed of a discredited, industry-funded study that is both outdated and flawed. See Local Bus. Br. 23; 60Plus Br. 6; Nev. Br. 28–29 (citing study of Nat’l Energy Research Assocs., Energy and Consumer Impacts of EPA’s Clean Power Plan (2015)). For example, the study’s cost analysis includes the funds that utilities would spend on allowances—trading emissions credits within the electric system—as part of its total, economy-wide analysis of the impact passed on to ratepayers. But, because some will sell and some will buy these allowances, the net costs of this part of the program passed on to consumers should be zero. In the words of one researcher, “[i]ncluding allowance costs in its total expenditures is just plain bad accounting and ignores basic economic and energy market principles.”
Indeed, before any other changes are made to the analysis, just backing out allowance costs from the study’s calculations results in a precipitous drop in the additional expenditures that the study predicts consumers will see reflected in their bills (relative to a scenario without a Clean Power Plan), from $24 billion to $12 billion annually.
The challengers’ industry-funded study, unlike the EPA’s final analysis, also uses “outdated cost figures” for both renewable-energy sources and energyefficiency programs, which artificially “drive the total costs of compliance.” To wit: the study uses data from the U.S. Energy Information Administration’s Annual Energy Outlook 2015, which other analysts have more recently noted overstates the costs of wind and solar and underestimates the cost-effectiveness of energyefficiency programs. By relying on high cost estimates for compliance, and lowballing the benefits of investment in energy-efficiency programs—which quickly pay for themselves in lower energy use—the challengers’ study distorts the costbenefit analysis of the Clean Power Plan. Using more recent data from the Lawrence Berkeley National Laboratory, researchers have concluded that “energy sector expenditures between 2022 and 2033 would be $41 billion less with the Clean Power Plan than without.”
That same flaw also infects the challengers’ conclusion that, under the EPA’s plan, customers will see higher utility bills. The challengers’ analysis considers only potential energy prices but fails to take into account that consumers will also be able to manage these costs through expanded energy-efficiency measures implemented as a result of the Clean Power Plan—measures that will cut the amount of energy customers use. Again using updated data from the Berkeley Lab, analysts estimate that customers would spend less—0.8 to 1.2 percent less—if the Clean Power Plan were implemented.8
The challengers’ claim that wholesale market energy prices in some states will be far higher under the EPA’s plan—as much as 39 percent higher in Ohio, they claim—fares no better. Local Bus. Br. 24. The Ohio analysis, although presented as evidence about the direct effect of the plan on ratepayers, was in fact far narrower. It is an incomplete projection of how just one building block of the proposed rule—the new emissions requirements for natural-gas units—might affect the market. This outdated, partial prediction is not nearly enough to support the assertion that “the Rule will raise the cost of operations for countless businesses” and “force businesses to close.” Local Bus. Br. 24. To the contrary, Public Citizen’s recent state-by-state projection of the rule shows marginal short-term cost and significant long-term gain for consumers. In Ohio, under one compliance scenario, although bills are projected to increase 3.2 percent ($33 annually) over the base scenario in 2020, they will ultimately decrease by 6.7 percent in 2025 and by 14.1 percent in 2030, in part because of decreased usage. Even per-unit electricity rates that utilities charge consumers are projected to be 1 percent lower in 2025, assuming the Clean Power Plan is implemented. And Ohio, building on its extensive experience with clean-energy investment, is indeed “already well on the way to achieving the Clean Power Plan pollution limits.”
Ultimately, the challengers rely on outlier projections of the consumer-cost impacts. The EPA’s own Regulatory Impact Analysis for the rule—based on “a state-of-the-art, peer-reviewed” integrated planning model 13 —predicts that consumer electricity bills will rise modestly in the very short term, but then fall quickly. By 2030, the EPA projects, the Clean Power Plan will lower bills by at least 7 percent.14 Independent analyses confirm this projection: initiatives taken to meet the rule’s requirements could, by 2030, reduce household electric bills by as much as 20 percent across the board.15
- Petitioners and their amici fail to show that low-income consumers will be substantially burdened by the plan. The challengers’ concerns that the EPA’s plan will harm low-income households—“whose pressing survival needs today,” they argue, “eclipse any potential benefit,” 60 Plus Br. 2—are contradicted by both the rule itself and the available data on the impact of similar clean-power programs already in effect across the country (as further described in Part II below).
To begin, the EPA’s plan specifically focuses attention on the energy-usage needs of low-income communities. As the rule explains, “[t]he federal government is taking significant steps to help low-income families and individuals gain access to
[renewable energy] and demand-side [energy efficiency].” 80 Fed. Reg. 64,662, 64,676 (Oct. 23, 2015). The final rule “ensures that bill-lowering measures such as demand-side [energy efficiency] continue to be a major compliance option.” Id. at 64,676–77. The plan also expressly “require[s] states to demonstrate how they are meaningfully engaging all stakeholders, including workers and low-income communities, communities of color, and indigenous populations living near power plants and otherwise potentially affected by the state’s plan.” Id. at 64,668. Given this mandate, the claims of petitioners’ amici that the EPA has failed to “reflect on the profound implications” for “economically disadvantaged and minority families,” 60Plus Br. 11, rings hollow.
A major element of the EPA’s plan—an early action-program known as the Clean Energy Investment Program—explicitly focuses on ensuring that the power program’s benefits reach low-income Americans. As the EPA put it, “[t]o help support states in taking concrete actions that provide economic development, job and electricity bill-cutting benefits to low-income communities directly, the EPA has designed the [program] specifically to target the incentives it creates on investments that benefit low-income communities.” 80 Fed. Reg. at 64,670.
Under the Clean Energy Incentive Program, states can opt in and commit to working on projects designed to invest in renewable-energy sources (wind and solar) and demand-side energy-efficiency projects in low-income communities. To encourage participation, the program comes with “matching” funds in the form of allowances: For every megawatt-hour of avoided generation that comes from the energy-efficiency investments, states will receive two matching “credits”—which can be sold on the allowance market. The American Council for an EnergyEfficient Economy has calculated that this program could represent $1.2 billion worth of investment in projects in low-income communities. Such incentives would help encourage cost-effective energy-efficiency upgrades for multifamily rental housing—where many low-income Americans live. A 2009 study estimated that economically feasible energy-efficiency upgrades could reduce usage in these buildings by nearly 60 percent. It is, therefore, demonstrably untrue that EPA’s Plan “does virtually nothing,” 60Plus Br. 7, for low-income families.
Ample evidence undermines the challengers’ claim that the EPA’s efforts are little more than a “patchwork” solution, only available to a few communities.
60Plus Br. 14. It is, of course, true that states must opt in to the Clean Energy Incentive Program, but staying out would leave significant money on the table. And the benefits of the program are not, as the challengers claim, only available to the few states “that buy-in to a federal plan for emission reductions, rather than fashioning their own.” 60Plus Br. 14. “[E]ligible projects” under the program, in fact, include both initiatives begun under state-authored plans as well as projects in states that fail to submit a final plan to the EPA altogether. 80 Fed. Reg. at 64,830.
The program also addresses an obvious current problem for low-income households: the startup costs of energy-efficiency and renewable-energy programs. For instance, the rule explicitly includes support for initiatives that target “increasing solar energy systems in federally subsidized homes” and installing “solar systems for others with low incomes.” Id. at 64,676. Recent research has found that low-income homes face particular barriers to implementing energyefficiency measures: The average low-income home would require $910 in upgrades (half of the household’s annual non-core budget). But retrofitting a house “typically reduce[s] heating and cooling bills by 32 percent.”22 That can
mean the difference between working lights and a power shut-off for a low-income family—“a customer who is able to reduce an electric bill through energy efficiency is more likely to avoid nonpayment and disconnection.”
Petitioners’ amici claim that energy-efficiency investment programs will not reduce burdens on low-income consumers because “purchases of energy-efficient products do not always translate into the promised energy savings.” 60Plus Br. 13
(citing Abdukadirov, Mercatus Ctr. at George Mason Univ., Expert Commentary: Debate over Furnace Efficiency Standards Heats Up (2015)). But that claim wrongly assumes that these low-income homeowners would foot the bill for any energy efficiency investments; in many programs—including those cited by the challengers—participants received direct financial assistance for upgrades. The EPA’s plan provides many similar avenues for subsidizing upgrades. See 80 Fed. Reg. at 64,916–18. Absent the challengers’ incorrect assumption, the balance sheet looks entirely different: the result will be direct reductions across-the-board in electricity usage—and hence in monthly bills—for participating families.
The EPA’s focus on investment in low-income communities draws directly from successful state-run programs accomplishing much the same thing, providing states with significant models to copy or expand. For instance, the rule highlights a
Maryland program that has successfully helped fund installation of energy- efficiency materials, like lighting retrofits, in low-income households. Id. at 64,917. So, too, with a New York State program that has successfully provided assistance, including no-cost energy-efficiency upgrades, to 100,000 people statewide. Id. And the EPA’s plan relies on—and leverages—other federal programs that assist lowincome households, including initiatives to help install solar energy in federally subsidized housing and training to help low-income Americans gain access to jobs in the green-energy sector. Id. at 64,918–19.
What’s more, the challengers are mistaken when they question whether the plan’s allowance-trading components—including initiatives like the Clean Energy Incentive Program—“will ever translate into actual dollars in the pockets of families in need,” even in the near term. 60Plus Br. 15. States that have participated in analogous emissions-reduction programs, like the Regional Greenhouse Gas Initiative, have successfully invested proceeds from cap-and-trade sales into lowincome communities—with significant direct benefits. For example, Delaware invested 61 percent of its proceeds through 2013 in home weatherization and heating assistance for low-income residents. And Maryland has supported energyefficiency upgrades for 11,880 low- to moderate-income households and returned funds directly to ratepayers—nearly $40 million in general relief, and more than $100 million specifically to help 215,800 low-income households pay their energy bills. States are encouraged to follow these models under the EPA rule—meaning that more allowance-sale proceeds will be funneled directly and immediately to low-income consumers’ electricity bills.
The EPA carefully considered these state programs—and their benefits to low-income communities—in crafting its rule. The plan’s flexible final form was specifically designed to “give states the opportunity to ensure that communities”—particularly those already vulnerable to the threats of climate change—“share in the benefits of a clean energy economy.” An independent study concludes that the final rule will allow for state-level plans that share those benefits: “Based specifically on our detailed analysis of states’ experience . . . and the design of a wide array of programs that insulate lower-income consumers,” it concludes that “the impacts on electricity rates and bills from well-designed [carbon-dioxide] pollution control programs will be modest in the near term, especially for low-income customers.”
Ultimately, what the challengers fail to acknowledge is that low-income communities now are more likely to be negatively affected by the current energysector status quo. The EPA “analyzed the communities in closest proximity to power plants and found that they include a higher percentage of communities of color and low-income communities than national averages.” 80 Fed. Reg. at 64,670. It took this problem seriously, and its plan specifically contemplates “a reduction in the adverse health impacts of air pollution on these low-income communities and communities of color.” Id. And the projected health benefits of the EPA’s plan are clear: Every dollar spent on compliance costs is expected to be offset by four dollars in health benefits.
The challengers, though, are right about one thing: The “problems of energy costs are very real, and very serious” for low-income families. 60Plus Br. 15. That is precisely why the EPA’s Clean Power Plan must be implemented. Under both the EPA’s analysis and independent projections, average electricity bills in 2030 will be far lower under scenarios in which the EPA’s rule goes into effect. Refusing to shift America’s energy infrastructure towards cleaner, more affordable energy would only leave low-income Americans with higher costs over time—for electricity and for preventable adverse health effects.
II. The EPA’s Clean Power Plan will improve efficiency and reduce electricity costs.
Contrary to petitioners’ and their amici’s predictions of exorbitant costs and “economic disaster,” Local Bus. Br. 24, the EPA’s carefully calibrated plan promises to drive electricity costs down for consumers and ratepayers while accomplishing substantial cuts to greenhouse-gas emissions.
Indeed, researchers studying the effects of energy-efficiency programs have drawn one “central conclusion”: that a “comprehensive and innovative” energyefficiency plan can deliver significant economic savings and achieve major reductions in greenhouse-gas emissions. How substantial? Using only current energy-efficiency technology, recent projections are that a robust domestic clean power program, “executed at scale,” would “yield gross energy savings worth more than $1.2 trillion,” and “reduce end-use energy consumption” by “roughly 23 percent of projected demand”—a result that would remove “1.1 gigatons of greenhouse gases” from the atmosphere every year. Americans have already recognized the economic value of these initiatives: investment in energy-efficiency programs has grown 25 percent per year between 2006 and 2011, and overall clean-energy investment reached a record high $329 billion in 2015.
A. State clean-power programs have resulted in lower costs to consumers while dramatically reducing harmful carbon-dioxide emissions.
Today, most states—from Maine to Texas—have adopted statewide standards designed to promote energy-efficiency and renewable-energy solutions. Under these plans, states require utility companies “to meet a growing portion of their load with eligible forms of renewable electricity” while reducing or capping their reliance on coal- and gas-fired power plants.
Most state programs were implemented in the early 2000s and, over the past decade, the results have been remarkable. In 2013 alone, these renewable-energy plans reduced overall greenhouse-gas emissions by 59 million metric tons. And new, utility-added renewable-energy sources netted consumers up to $1.2 billion in savings on electricity bills. Most states with these portfolio standards in place have also preemptively and proactively set limits on how much in compliance costs can be passed on to consumers—capping the amount passed through at under five percent of average retail rates in more than a dozen states. As the cost of renewable-energy sources continues to fall, these programs’ balance sheets will only look better and better for consumers.39
The impact at the state and county level has been no less significant. Consider, for example, Illinois’s Energy Efficiency Portfolio Standard, which requires large utilities to reduce electricity consumption by two percent per year, particularly through energy-efficiency programs focused on end users. See 220 Ill. Comp. Stat. 5/8-103(b). Six years in, the program has saved 76 billion kilowatthours, the equivalent of powering 4.7 million homes.40 And the state’s real-time energy-pricing program—a component of its overarching clean-power plan— “generated over $4,000,000 in net benefits” for customers of Chicago’s main utility, the Commonwealth Edison Company. Downstate, the Ameren Illinois Company expects a net savings of nearly $6 million through 2020 for its customers.41 Aligning the state program with the EPA’s plan means that, over the lifetime of the energyefficiency investments, consumers in Illinois can expect to save “a total of $806 million on electric bills.”
Standards: Compliance Costs and Related Issues 18 (Nov. 17, 2014) http://1.usa.gov/1UWZz7G
- Camila Stark, et al., Joint Inst. for Strategic Energy Analysis, Renewable Electricity:
Insights for the Coming Decade v (2015), http://1.usa.gov/1SCaRLj.
- of David Kolata, Exs. in Support of Movant Respondent-Intervenors’ Resps. in Opp’n to Mots. for Stay, Dkt. 1587530, at JA B499. 41 Id. at JA B501.
Other states have found—as a result of their own clean-power
requirements—that it can be substantially cheaper for utilities to rely on renewable energy sources rather than traditional power plants. After Austin Energy (a utility in Texas) purchased 150 megawatts of solar energy for less than five cents per kilowatt hour, it immediately realized that there were direct cost-benefits to using renewable energy to power the grid: the utility estimated that the same amount of energy obtained through new natural-gas-fired generation would cost seven cents per kilowatt-hour; coal would cost ten cents; and nuclear thirteen cents. No matter how you slice it, the utility understood that solar energy “compares favorably” to all other traditional energy sources—and was able to pass on those cost savings directly to customers.
Michigan’s Public Service Commission, too, found that “the most recent new utility-scale wind power contracts cost about half the price of new coal generation,” and concluded that “a combination of renewable energy and energy efficiency is cheaper than any other new fossil fuel generator, including combinedcycle natural gas units.” 44 In fact, one Michigan utility, DTE Energy, was able to lower consumer electricity rates by 6.5 percent in 2014 after increasing reliance on renewable-energy sources. And MidAmerican Energy (an Iowa utility)—which will soon derive 39 percent of its energy from wind—recently announced a significant benefit of its $1.9 billion investment in new wind power: Iowans who buy their energy from the utility will save $10 million a year on their electricity bills.
Even major energy companies understand the value of renewable investment. In 2014, Xcel Energy announced its plan to add substantial amounts of wind energy to its portfolio “at prices below fossil fuel alternatives.” In committing to “reduce carbon dioxide emissions” by “invest[ing] in a cost-effective clean energy strategy,” the company made clear that it “know[s] how to make clean energy work” for customers. As part of its strategy, Xcel provided its customers with “$75 million in incentives in 2013 to encourage energy efficiency through more than 90 electricity saving programs and more than 45 natural gas programs,” leading customers to save enough electricity “to power more than 121,000 homes” and gas to “fuel more than 17,000 homes.”
B. States have an array of cost-effective tools to meet the plan’s emission standards.
States are also quite unlikely to be forced to “restructure” their existing energy-efficiency and renewable-energy frameworks (as the challengers claim). Local Bus. Br. 19. One of the key features of the EPA’s plan is its flexibility. States have considerable freedom—and time—to determine how best to meet the plan’s compliance requirements. 80 Fed. Reg. at 64,666. This flexibility makes sense: Research has shown that there is no one-size-fits-all approach for implementing an effective and cost-efficient clean-power program. To the contrary, “states have a long track record of using various regulatory and other policy tools to encourage utility programs and investments that minimize the cost of electric service.” The EPA’s plan reinforces this understanding.
A model for some of the successful, diverse approaches available to states for cost-effective emission reductions can be found in the Northeast states’ Regional Greenhouse Gas Initiative—the nation’s first cap-and-trade carbon dioxide emission-control program. Beginning in 2010, ten northeastern and mid-Atlantic states banded together to reduce emissions from large-scale fossil-fuel power plants.
Under the program, carbon-dioxide allowances are auctioned, and the proceeds are used to reduce customers’ electric bills and support energy-efficiency efforts.
The results are compelling: By June 2014—just four years into the program—revenues from carbon-dioxide allowances totaled $1.4 billion. States within the Initiative received a proportional amount of this revenue based on their share of the cap on carbon and used it, among other things, to invest in energyefficiency programs, credit customers’ electricity bills, fund state-government operations, invest in renewable-energy installation, and fund education programs. What’s more, in the program’s first three years, allowance auctions generated about $33 per person in net economic benefits, and the revenue produced by the program more than “offset the modest increase in electricity prices” and “led to myriad positive economic spillover effects.” Although the emission allowances marginally increased electricity prices in the short term (by less than one percent), over time—as states began to invest the allowance proceeds in energy-efficiency programs—lower electricity use and cost reduced “consumer payments for electricity.” Between 2012 and 2014, the overall savings to consumers’ energy bills totaled $460 million.
States have also developed a number of different, often distinctly local, incentive programs and policies designed to promote energy efficiency and renewable energy. Nearly half of all states have put electricity-efficiency savings targets in place—programs that “regularly save customers” twice as much as the initial investment. As a result of these programs, the EPA has predicted that, in some states, electricity demand could soon begin to fall, even as local economies continue to grow.
States have also created locally sensitive incentive programs to encourage the construction of more energy-efficient buildings—with significant potential long term benefits for controlling energy demand and saving occupants money, even as populations and economies grow. In North Carolina, for example, a statewide program gives counties and cities the power to provide rebates for permit fees to builders whose plans meet certain energy-efficiency guidelines. By delegating decision-making power over incentives, the program allows jurisdictions to come up with locally sensitive programs—such as an exemption from zoning restrictions. Similarly, dozens of states have implemented programs to provide property-tax relief to eligible properties that invest in energy-efficiency upgrades or on-site renewable-energy generation, such as solar panels.
Many more states—27 in all—have imposed standards that regulate and encourage energy efficiency for utility companies. And, around the country, hundreds of programs (nearly 250) offer low-interest loans to implement energy efficiency upgrades. This figure includes programs run by local governments and utilities that allow customers (both commercial and residential/homeowners) to borrow money at low (or even no) interest for energy-efficiency measures, including weatherization, purchasing solar photovoltaic systems, and more. Under the EPA’s plan, states remain free to press forward with these programs.
The EPA’s plan also safeguards preexisting state efforts to address other emission-related concerns. The EPA’s emission-budget trading program is “a familiar option for the power sector”—building on states’ past decades of experience regulating nitrogen oxides and other pollutants that power plants emit. As the EPA explained in its final rulemaking, this action “continue[s the] approach” that the agency has used to establish other flexible, state-specific pollution reduction programs. 80 Fed. Reg. at 64,678. For example, in the EPA’s view, this plan and the Cross-State Air Pollution Rule, which regulates silicon and nitrogen oxides emissions, “are complementary. Compliance with one helps facilities comply with the other.” Id. at 64,921. The EPA thus expects that the rule will allow states to build off of the hard work they’ve already begun—using initiatives in place under existing programs to help meet the benchmarks set by the Clean Power Plan.
C. The EPA’s plan will reinforce changes to the electric grid and benefit consumers.
- It is no secret that traditional sources of electricity—mainly coal and oil— are in decline. As older power sources break down or run their course, states and utilities are increasingly opting to replace them with new (and cheaper) renewable energy sources. As we explain, the beneficial impact on emissions reductions andcost-savings to consumers in those states that have pushed to increase reliance on renewable-energy sources has been substantial. The EPA’s plan capitalizes on this trend by encouraging all states to accomplish what many already have.
For starters, both coal’s and oil’s share of overall electricity have dropped significantly in the last decade. Coal’s share has “slipped from 49% in 2007 to only
34% in 2015.” And petroleum has dropped from its high point in the late 1970s—when it represented more than 20 percent of U.S. energy generation—to just 1 percent in 2015. That decrease is expected to continue apace. Given current trends and the “relative flexibility” of the Clean Power Plan, the retirement of coal-fired plants—as part of an overall reduction in reliance on coal—is not expected to affect electricity reliability. As the costs associated with renewable energy continue to fall, more and more renewable energy will be used to replace failing coal-fired power sources. As one recent report observed, residential photovoltaic solar panels are a growing and affordable source of energy—the pace
of additions in total capacity increased tenfold between 2010 and the third quarter of 2015. Research both by the EPA and independent sources confirms that “the projected rate of change in coal-fired generation is consistent with recent historical declines in coal-fired generation.”
Given the historical and empirical data surrounding ongoing shifts in the electric grid, the EPA’s plan is sound. A report by the Analysis Group found that the rule establishes reasonable emissions-reduction targets that are in line with recent historical data. Looking at reductions in carbon-dioxide totals and emission rates from 2005 to 2013, the group concluded that “the reasonable pace of change . . . required by the Clean Power Plan is not only possible in theory, but has been achieved in practice.”
Indeed, many states have already found that switching to different generation sources can have a remarkable effect on emissions rates. Florida, for instance, achieved 4.6 percent annual emissions reductions, largely by switching to natural gas from coal- and oil-fired power plants. And Minnesota’s growth in renewable generation led to a 3.2 percent annual reduction in emissions. Ohio, too, has reduced emissions 2.6 percent per year over the historical baseline, even in a
period when it experienced significant economic growth. All of these states achieved emissions cuts well above what the EPA’s plan will require.
These states’ experiences are not outliers. Quite the opposite: Because these states possess a diversity of relevant characteristics—from fuel mixes to industrial consumption to growth in renewables—their experiences demonstrate that states have already driven substantial emissions reductions nationwide. As researchers have observed, these reductions took place “without any nationwide policy to reduce . . . emissions” by “integrat[ing]” renewable energy sources “into electricity grid operations as a matter of course without significant impacts to reliability or electricity prices.”
Under the EPA’s plan, other states should have little difficulty following suit. Of the 27 states that have challenged the EPA’s plan here, recent research found that 21 of them could meet the emissions targets set through 2024 using only “existing generation, investments already planned within each state, and implementation of respective existing state policies.” At least 18 of these states could comply all the way through 2030 with these sources. Even looking only at projects that were already well on their way to realization (plants in operation or construction, or at least that have been permitted), 16 states could meet the first three years of targets with just those projects already in place. For the few states that could not meet reduction targets through existing or already planned investments, the “analysis indicates that very modest efforts taken after the deadline for submitting state plans would be sufficient to close the gap.” The reasonable emissions-reductions goals in the EPA’s plan take advantage of these ongoing changes to the electric grid.
- The EPA’s plan to encourage all states to follow a similar approach will not only trigger significant emissions reductions, but also benefit end-user consumers. New renewable-energy generation sources have become increasingly cost-effective over the past few years; installation costs have fallen significantly, and
the generating efficiency of solar and wind technology has improved considerably. Going forward, then, not only are costs associated with new renewables unlikely to impose major burdens on consumers, but states are wellpositioned to efficiently increase their investment in emissions-free, renewable-energy sources.
Consider the results of a Public Citizen study focused on projected electricity costs under the EPA’s plan. Using EPA data to project a state-by-state timeline for electricity costs under the final rule, Public Citizen observed that, although retail electricity rates may rise slightly, “the key question is what effect the Clean Power Plan will have on what [consumers] actually pay, which means their electricity bills.” On that question, it found that household bills are projected to fall by 2025 in nearly every state, and in every state by 2030. “For consumers focused on costs,” the report concludes, because the EPA’s plan will “spur improvements in energy efficiency so that people use less electricity,” the “net result is that electricity bills will fall, not rise.” Other research makes the same point: Overall reductions in monthly household electric bills from the EPA’s plan are projected to be between 5 percent and 20 percent in 2030. That conclusion is in line with the EPA’s own projection that, by 2030, the average American family will see about $7 in savings on its monthly electric bill because of the plan. The Clean Power Planwill help, not hurt, consumers.
For the foregoing reasons, the Court should deny the petitions.