Cost of EPA’s Climate Plan? Minor Compared to the Benefits

August 6, 2015 | 4:58 pm
John Rogers
Energy Campaign Analytic Lead

The first-ever national limits on carbon pollution from existing power plants have just become final. That’s great news for finally getting a grip on carbon from the U.S. power sector. But what’s it going to cost us?

The good news is that cutting carbon turns out to be not just affordable, but smart: the Clean Power Plan’s public health and climate benefits, worth an estimated $34 billion to $54 billion in 2030, far outweigh the estimated costs of $8.4 billion.

Quantifying the benefits

If you ignore the benefits side of the cost-benefit equation, it's hard to come up with anything but bad news. But when you take a solid look at both sides of the equation, you see a pretty impressive net-positive.

First let’s take a look at the benefits. And, in the case of the Clean Power Plan (CPP), there are plenty, particularly related to climate and health.

Climate – Addressing climate change is what the CPP is fundamentally about. To calculate the benefits from carbon reductions under the Plan, we just need to look at the tons of carbon that states will be doing away with, times what it’s worth to avoid the damage globally caused by each ton of carbon pollution (the social cost of carbon).

When you do that math, you come up with some pretty inspiring figures: The EPA’s thorough analysis found that the CPP will bring carbon benefits worth $20 billion in 2030.

Health – While cutting carbon may be the focus of the CPP, it turns out there are plenty of co-benefits, from other pollutants that get reduced when you focus on carbon. The EPA’s analysis looked at just two pieces: soot and smog. Even with just those two, estimates for health benefits in 2030 are $12-$34 billion.

All the reductions in premature deaths, heart attacks, asthma attacks, and more mean that, as EPA puts it, “for every dollar invested through the Clean Power Plan, American families will see up to $4 in health benefits.”

And there are plenty of other health benefits that EPA didn’t quantify, from curbing toxic emissions like mercury, for example. Adding those in would make the CPP numbers look that much better.


But what about my electricity bill?

The carbon and health benefits are impressive, but, since the focus is the power sector, the accounting wouldn’t be complete without looking at what the CPP means for electricity bills. Turns out there’s good news here, too.

The costs for complying with the CPP, the EPA estimates, will be $1.4-$2.5 billion in 2020, and $5.1-$8.4 billion in 2030. Just to put that in perspective: that’s versus $201 billion that would have been spent on generation in 2030 without the CPP. Even the high end of the cost numbers is just 4% of that figure.

As for the bill impacts: the EPA estimates that while bills might increase slightly on average over the near term, over the long term average bills will get lower, saving you $7/month in 2030. That’s thanks to investments in energy efficient appliances, lighting, motors, and more in our homes and businesses, which mean we can do more with every kilowatt-hour of electricity.

The actual cost-benefit equation for each of us, though, depends a lot on how our state or region decides to rise to the occasion. The EPA’s analysis looked at “illustrative plan approaches,” but part of the beauty of the CPP is the flexibility to pick from a menu of options for cutting carbon—improved power plant efficiency, renewable energy, nuclear power, or energy efficiency, for example—with different advantages and cost implications.

With its latest model legislation, the American Legislative Exchange Council (ALEC) is continuing its efforts to undermine clean energy and roll back renewable electricity standards.

We know that the more states rely on renewable energy and energy efficiency to meet their Clean Power Plan targets, the more their residents will benefit from cleaner air and a bigger boost to the clean energy economy.

What it all adds up to

So put that all together, and what do you end up with? A really attractive accounting picture, all while cutting a big chunk of carbon out of our power sector’s emissions.

One more reason to ♥ the Clean Power Plan.

About the author

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John Rogers is energy campaign analytic lead at the Union of Concerned Scientists with expertise in clean energy technologies and policies and a focus on solar, wind, and natural gas. He co-managed the UCS-led Energy and Water in a Warming World Initiative, a multi-year program aimed at raising awareness of the energy-water connection, particularly in the context of climate change, and motivating and informing effective low-carbon and low-water energy solutions.