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August, 30, 2016 The Clean Power Plan: Your 3 Point Primer

Announced in August 2015, the Clean Power Plan is the signature policy of the Obama Administration to accelerate the clean energy transition. If implemented, the Plan will be the first to set a national limit on CO2 emissions from power plants, aiming to reduce power plant CO2 emissions 32% below 2005 levels by the year 2030. To achieve this, the Plan sets individual CO2 reduction goals for each state based upon their unique circumstances. For states to reach their goals, they are each required to submit a plan based on a flexible framework of four “building blocks” from which they can mix and match to reduce their emissions. The building blocks include 1) increasing existing coal plant efficiency, 2) converting coal generation to natural gas, 3) switching to carbon free electricity sources like renewables and nuclear, and 4) improving energy efficiency.   


So besides the Plan itself, what are the 3 things you should know about it?



1) The Supreme Court issued a “hold” on the Plan in February, but it sounds worse than it is

While this news frustrated supporters, it was not, in fact, a ruling against the Plan but an arguably prudent decision that does not necessarily do much harm. As Ken Kimmell, President of the Union of Concerned Scientists, explains here, it will give a complex piece of legislation time to work it’s way through the legal system while not actually stopping states from implementing it in the meantime. In addition, the Union of Concerned Scientists found that even without the Clean Power Plan, most states are already on track to meet their Clean Power Plan goals through existing clean energy commitments. Of course, some argue this only proves the Clean Power Plan is a weaker piece of legislation than advertised and does not really accomplish much. On the other hand, I would remind folks the power of signals. The mere existence of the Clean Power Plan signals to the world the US is getting real about climate change and could only have helped grease the Paris Treaty negotiations in December. In addition, as has been said before, once goals are set, it is much easier to set higher goals. As to when the Plan is expected to work it’s way through the legal system, Kimmell estimates that to happen around next summer.



2) The Clean Power Plan will produce $65 billion in net benefits

As is so often the frustrating case with anything clean energy or environmentally related, opponents of the Clean Power Plan argue it is too expensive. They say it will cost consumers money. They say it will damage the economy. The same old arguments. The same wrong analyses. In fact, the Union of Concerned Scientists (can you tell they care about this?) did some debunking here of several studies funded by the Koch brothers and others. The Environmental Protection Agency estimates health and climate benefits of between $55 and $93 billion. In addition they estimate implementation costs of between $7.3 and $8.8 billion. Thus, expected net benefits are from $46 to $84 billion, with $65 billion as the middle point.


So what will some of these benefits look like? The EPA estimates that by 2030 the Clean Power Plan will avoid +4,500 premature deaths, prevent 145,000 asthma attacks in children, and yes, lower electricity bills by 8 percent. 


Just as a side tangent – it sometimes feels like the anti-crowd willingly ignore externalities. Either that or they don’t quite understand how externalities actually translate into real, tangible value in society. But let me assure you, externalities are very real. So just as a reminder, climate and weather disasters cost the US economy $100 billion in 2012 alone. Meanwhile, poor health and resulting lost productivity costs the US economy $576 billion each year.



3) Support for the Clean Power Plan is broader and deeper than you might think

While it is somewhat depressing that a national poll earlier this year found 70% of voters had not heard of the Clean Power Plan, it is highly encouraging that once those same voters learned more, 70% were in favor of it.


In addition, a group of 360 companies, including Adidas, Calvert Investments, eBay, Gap, General Mills, Levi Strauss, L’Oreal, Mars, Nestle, Northface, Staples, Unilever and many more, sent a letter to the National Governors Association  to voice their support.    


The above represents an evolution in the national psyche regarding climate change and a clean energy transition. It is becoming ever clearer to ever more Americans that a transition to clean energy, and a rapid one at that, is not only the right decision but the smart decision.  



The so what is that while the Clean Power Plan may technically be on hold, the momentum beneath and behind clean energy is so overwhelming it might not even matter. The Clean Power Plan is being implemented anyway. Improving economics and growing support from an evolving popular understanding and an increasingly engaged business community ensure that whether the Clean Power Plan is temporarily on hold, or even held up by lawsuits, those that oppose the Plan are now fighting against the tide and thus are fighting only to delay the inevitable.



In searching for smart thoughts on the Clean Power Plan, I kept finding myself back at the Union of Concerned Scientists. Being that they provide such smart analysis and useful information, I can think of no better place to stay apprised of the Clean Power Plan situation than at the Union of Concerned Scientists blog here

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