Joshua Linn, Dallas Burtraw and Kristen McCormack:
On February 9, 2016, the Supreme Court issued a surprising decision to halt implementation of the Environmental Protection Agency’s Clean Power Plan until the resolution of the rule’s legal challenges. The court did not explain its action, but one of the central arguments for the stay was that the rule would impose large, immediate, and irreparable costs to the coal sector. We analyze these claims in a recent paper and conclude that the stay was unjustifiable based on economic harm to the coal sector.
This conclusion is based on an analysis of prevailing trends in the electric power sector and an understanding of the timing and flexibility for complying with state emissions targets. Recent developments in the electricity sector have caused a dramatic shift away from coal and toward cleaner generation sources. Since 2007, shale gas development in the United States has expanded, leading to lower natural gas prices. At the same time, technological progress and policies supporting renewable energy have reduced the cost and improved the performance of wind and solar power—and other environmental regulations have raised the cost of coal-fired generation. The Clean Power Plan will continue this shift away from coal as a generation fuel, but the rule is by no means the most important source of pressure on the coal sector.
These trends, along with the 2008–2009 economic recession, have contributed to the decade-long reduction in carbon emissions depicted in the figure. The Clean Power Plan will continue the path of lower emissions, although at a less rapid pace than has been observed in the last decade. Our modeling shows that the overall cost of the policy will be low. Indeed, our analysis and that of MJ Bradley & Associates suggest that costs will be close to zero through the mid-2020s—and will be far outweighed by the public benefits of the policy. …
The claims of large, immediate, and irreparable costs to the coal sector during the ongoing judicial review of the Clean Power Plan are not supported by economic reasoning. To the extent that these claims played a prominent role in the Supreme Court’s decision to stay the rule, the stay appears unjustified. However, we anticipate that the stay, by itself, will have little effect on the coal industry or US emissions. Using the stay to push back compliance deadlines (which would also be economically unjustified) could slow international momentum to curb greenhouse gas emissions and have a detrimental—and very real—effect on the global climate.
via www.rff.org
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