THE ECONOMIC IMPACTS OF THE CLEAN POWER PLAN: HOW STUDIES OF THE SAME REGULATION CAN PRODUCE SUCH DIFFERENT RESULTS

The paper analyzes four prominent studies of the Clean Power Plan (CPP)—conducted by the EPA, NERA Economic Consulting, Synapse Energy Economics, and M.J. Bradley & Associates—to explain why they produce conflicting results regarding electricity bills. By comparing these studies against a range of independent expert forecasts and empirical data, the authors find a strong correlation between the optimism or pessimism of a study's underlying assumptions and its final economic conclusions. Specifically, studies assuming higher costs for solar and wind power and less interstate cooperation tend to project higher compliance costs, while those assuming rapid technological progress and high energy efficiency savings project lower costs or even decreases in electricity bills.

• There is a strong correlation between the optimism or pessimism of a study's assumptions and its overall results; for example, the NERA study used pessimistic assumptions and found that the CPP would increase electricity bills, while the MJB&A study used optimistic assumptions and found it would reduce bills.
• The NERA study's assumptions for the capital costs of utility-scale solar and wind power in 2022 were the highest among the four reviewed studies and the highest of the 10 expert forecasts compiled by the authors.
• Regarding demand-side energy efficiency (EE), NERA's assumed levelized cost of saved energy (LCSE) of 7.2 cents per kWh is higher than any of the empirical estimates compiled by the authors.
• All four reviewed CPP studies assume a significant drop-off in new energy efficiency savings in the absence of the regulation, which likely underestimates baseline savings and incorrectly attributes more EE savings to the CPP.
• Assumptions about the degree of interstate cooperation significantly influence cost estimates, as larger compliance regions can utilize the lowest-cost emissions reduction opportunities; the Synapse and MJB&A studies assumed higher levels of cooperation than the EPA or NERA studies.
• Future natural gas prices are unlikely to be a primary driver of the differences between the four studies, as their assumptions were similar to each other and fell within the range of expert forecasts.
• Economic impact studies of the CPP generally omit the economic benefits of reduced air pollution, such as increased workforce participation and reduced medical expenditures, which could significantly offset compliance costs.

APA

KAUFMAN, N., & KRAUSE, E. (2017). THE ECONOMIC IMPACTS OF THE CLEAN POWER PLAN: HOW STUDIES OF THE SAME REGULATION CAN PRODUCE SUCH DIFFERENT RESULTS. World Resources Institute. https://wriorg.s3.amazonaws.com/s3fs-public/The_Economic_Impacts_of_the_Clean_Power_Plan.pdf

Chicago

KAUFMAN, NOAH, and ELEANOR KRAUSE. THE ECONOMIC IMPACTS OF THE CLEAN POWER PLAN: HOW STUDIES OF THE SAME REGULATION CAN PRODUCE SUCH DIFFERENT RESULTS. World Resources Institute, 2017. https://wriorg.s3.amazonaws.com/s3fs-public/The_Economic_Impacts_of_the_Clean_Power_Plan.pdf.

Wikipedia

{{cite report |last1=KAUFMAN |first1=NOAH |last2=KRAUSE |first2=ELEANOR |title=THE ECONOMIC IMPACTS OF THE CLEAN POWER PLAN: HOW STUDIES OF THE SAME REGULATION CAN PRODUCE SUCH DIFFERENT RESULTS |publisher=World Resources Institute |date=January 2017 |url=https://wriorg.s3.amazonaws.com/s3fs-public/The_Economic_Impacts_of_the_Clean_Power_Plan.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kaufman2017economic, author = {KAUFMAN, NOAH and KRAUSE, ELEANOR}, title = {{THE ECONOMIC IMPACTS OF THE CLEAN POWER PLAN: HOW STUDIES OF THE SAME REGULATION CAN PRODUCE SUCH DIFFERENT RESULTS}}, institution = {World Resources Institute}, year = {2017}, month = jan, url = {https://wriorg.s3.amazonaws.com/s3fs-public/The_Economic_Impacts_of_the_Clean_Power_Plan.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }