EIA Reaffirms Climate Momentum, Contrary to Chamber's Claims

Credit: EIA AEO 2016, Early Release: Annotated Summary of Two Cases

(This post has also been published in Mark Drajem's Bloomberg Government newsletter.)

A deeply flawed report released by the Chamber of Commerce misrepresents the EPA's and EIA's analysis of the Clean Power Plan.


The EPA found that the Clean Power Plan will have climate and health benefits four times its costs. The U.S. Chamber of Commerce would like you to believe that EPA cooked the books. That's ridiculous. In reality, EPA’s cost-benefit analysis follows sound economic practices and likely underestimates the health and climate benefits of power sector pollution reductions. In particular, climate researchers have argued that the cost of future climate damages has been dramatically underestimated.


Here’s the real news from the EIA analysis: Meeting the CPP carbon targets will be even easier and less costly than EPA projected just last year when it issued the plan. As a result of the extension of renewable tax credits and strong expected growth in wind and solar energy, the power sector will be well-positioned to meet or even exceed the CPP targets. Many other independent analysts have reached the same conclusion.



However, EIA’s analysis is, if anything, conservative because it underestimates the potential for energy efficiency gains. Recent analysis from MJ Bradley & Associates reaffirms EPA’s finding that strong investments in energy efficiency could result in lower electricity bills for households. Moreover, EIA’s findings of the impact on GDP and employment are highly sensitive to state policy decisions, including how to distribute the value of carbon allowances. The CPP represents a significant economic opportunity for states, and by returning allowance value to customers and strengthening investments in clean energy and energy efficiency, policymakers can bolster economic growth and create jobs.


The economic benefits of smart carbon policies have already been demonstrated in the real world. The nine Northeastern and Mid-Atlantic states that make up the Regional Greenhouse Gas Initiative (RGGI) have committed to auctioning off carbon allowances and reinvesting revenues in clean energy and energy efficiency. As a result, since 2009, RGGI has generated significant economic benefits, including about $3 billion in value added to the regional economy, more than 30,000 new job-years of work, and consumer energy bill savings of $395 million, all while helping participating states cut carbon pollution by more than 37 percent.


Far from the Chamber’s dire claims, the Clean Power Plan will build on and accelerate existing market trends towards a lower-carbon electricity system. Smart states and power companies will continue to move ahead and take steps to maximize the economic, climate, and health benefits of this transition.

Related Issues
Renewable Energy

Related Blogs