Last week the Supreme Court put a hold on the Clean Power Plan. Importantly, the legal stay does not prevent states from moving ahead with formulating compliance plans as the legal merits of the plan are argued. And the Wolf Administration is demonstrating leadership by pressing forward with plans to comply with the Clean Power Plan and continuing its robust engagement process with stakeholders. A new UCS analysis released today shows that well designed power sector policies—including a carbon trading program with auctioned allowances—would generate $804 million on average per year that could be invested in Pennsylvania’s economy to benefit all citizens.
UCS analysis: CPP is achievable and beneficial
The new UCS analysis shows how Pennsylvania can comply with the Clean Power Plan by implementing a carbon trading program and strengthening its renewable energy and energy efficiency policies. Moving forward with these policies will generate significant economic and public health benefits regardless of the temporary stay on the Clean Power Plan.
We examined the economic and environmental impacts of Pennsylvania complying with the Clean Power Plan (CPP) by joining a mass-based trading system for carbon allowances, while simultaneously strengthening state policies for renewable energy and energy efficiency. We dubbed this suite of policies the Clean Energy Compliance Pathway (or “Clean Path”) Case, and found that it provides significant environmental, economic, and health benefits for the state, with minimal impacts on residential electricity bills. We found that the policies in the Clean Path Case would:
- Generate an average of $804 million annually from the sale of carbon allowances that could be invested in Pennsylvania’s economy;
- Lead to $4.3 billion invested in energy efficiency improvements to benefit Pennsylvania’s consumers;
- Reduce the typical Pennsylvania resident’s electricity bills more than 3 percent by 2030 for an annual savings of $54;
- Spur 10,700 megawatts of new wind and solar capacity in Pennsylvania by 2030 to generate more than $10 billion in new capital investment;
- Avoid 131 million tons of carbon dioxide emissions through 2030; and
- Yield health and economic benefits worth an estimated $4.5 billion cumulatively through 2030 by avoiding carbon dioxide, sulfur dioxide, and nitrogen oxide pollution.
The Clean Path Case assumes that Pennsylvania adopts the Clean Power Plan’s mass-based targets, including both new and existing fossil-fired power plants. It also assumes that Pennsylvania strengthens both its current targets for renewable energy in the Alternative Energy Portfolio Standard (AEPS) to 13 percent of electricity sales in 2022, growing to 20 percent in 2030, as well as its energy efficiency targets in Act 129 (increasing gradually to 1.5 percent of statewide electricity sales per year).
More details on our methodology can be found in the report, as well as in the technical appendix.
Meeting the CPP targets lowers electricity bills
The clean energy growth in Pennsylvania spurred by the Clean Path Case is not only achievable, but also affordable. The Clean Path Case (which focuses on new renewable energy projects, energy efficiency programs, and carbon trading) leads eventually to modest customer savings over business as usual (which we call the Reference Case). By 2025, the average monthly electricity bill for a typical household under the Clean Path Case is virtually unchanged.
Ultimately the Clean Path Case leads to financial savings, given that the cost to operate most renewable energy facilities is much lower than fossil-fuel plants, and energy-efficient buildings and appliances cost less to operate. Thus in 2030, the clean energy policies lead to 3.4 percent lower electricity bills for a typical residential customer, saving the household nearly $54 in that year.
The Clean Path Case leads to consumer electricity bills in 2030 that on average are 3.4 percent lower than in the Reference Case. Energy efficiency helps consumers save electricity, and more renewable energy helps diversify the electricity mix and limit potential impacts from increases in natural gas prices.
Pennsylvania can—and should—continue to lead
We applaud Governor Wolf’s commitment to creating a robust and commonsense pathway to comply with the Clean Power Plan. The Secretary of the Department of Environmental Protection, John Quigley, said:
“The rule’s in effect, the rule hasn’t gone away. We, at least currently, see a path to submitting [a state plan] on Sept. 6. … It’s clear that renewables are the future. What the Clean Power Plan is calling for is really good business.”
They recognize that the Supreme Court’s decision cannot slow down the growing impacts of climate change, like heat waves and heavy precipitation, which are being felt in Pennsylvania and around the world.
First Energy, one of the state’s electric utilities, committed to continuing to engage on compliance, saying in a statement, “While the legal challenges are addressed, we will work with our states if they chose to continue development of their compliance plans.”
Our analysis shows that a robust set of policies would raise much-needed revenue that could be invested in Pennsylvania’s economy and building a clean energy future for coal dependent communities in southwestern Pennsylvania; double down on the state’s commitment to energy efficiency and renewable energy; and simultaneously cutting carbon emissions that contribute to rising sea levels and other climate impacts.