Clean Power Plan: is "the cost. justified by the public health benefits alone"?
NOVEMBER 12, 2015
This is a repost considering yesterday's assertion that NERA's analysis of the Clean Power Plan may be "guilty of 'confirmation' and/or 'allegiance' biases and a few comments : Just checking on the Sunstein tweet , this is from EPA's Regulatory Impact Analysis ( PDF ): The answer is yes. By 2030, the co-benefits are estimated to be about 3 times greater than costs (climate benefits are estimated to be 7 times the costs. via www.env-econ.net. What is striking about NERA's analysis is the claim that the Clean Power Plan would not yield any benefits. I clicked through to the report and found a powerpoint describing their electricity sector model but nothing that explained the claim that there are zero benefits. The $300 billion in costs are summarized by this line from the key findings slide: Energy sector expenditure increases range from $220 to $292 billion (spending from 2022 through 2033, brought to a present value in 2016 ) As libert says, expenditures are only a proxy that may overstate social costs: Note: the $300 billion figure comes from the point where the NERA report claims that "energy sector expenditures" will increase by $300 billion, which is obviously not a welfare effect because it (a) ignores offsetting changes in other sectors and (b) counts transfer payments as costs. For welfare, NERA cites as $64-$79 billion change in "losses to U.S. consumers" This is closer to a welfare measure, but omits environmental benefits as well as effects on non-US consumers, and is therefore still an overstatement of costs. It appears as if the clean coal industry contracted with NERA to estimate the cost of the Clean Power Plan after deciding that it would yield no benefits. I'm no climate scientist, but it seems to me that any individual climate policy will have limited benefits. It is when the individual climate policies are added up that we see climate change mitigation benefits.