The Supreme Court's Stay of the Clean Power Plan: Economic Assessment and Implications for the Future

Date01 October 2016
10-2016 NEWS & ANALYSIS 46 ELR 10859
The Supreme
Court’s Stay of
the Clean Power
Plan: Economic
Assessment and
Implications for
the Future
by Joshua Linn, Dallas Burtraw, and
Kristen McCormack
Joshua Linn is a Senior Fellow, Dallas Burtraw is the
Darius Gaskins Senior Fellow, and Kristen McCormack
is a research assistant, all at Resources for the Future.
e Clean Power Plan (CPP) is expected to play an
important role in reducing U.S. greenhouse gas emis-
sions. In February 2016, responding to appeals from
some of the aected industries and states, the U.S.
Supreme Court issued a stay suspending implemen-
tation of the CPP until after the judicial review pro-
cess. Industry groups stated the CPP will pose large
and “irreparable” costs to the coal sector during the
period of judicial review. However, modeling suggests
that because of prevailing market, technological, and
policy trends, the CPP will result in near-zero costs
beyond current trends until 2025, in part because of
the plan’s built-in exibility. ese factors and lessons
from option theory suggest the stay is economically
unjustiable based on claims of irreparable economic
harm to the coal sector. If implementation of the rule
proceeds, current trends imply the stay will have little
eect on industry’s ability to follow the current com-
pliance schedule.
The United States has pledged to reduce its green-
house gas (GHG) emissions by more than one-
quarter between 2005 and 2025. is pledge helped
spark like-minded emissions reduction pledges from China
and 195 other countries at the 2015 United Nations cli-
mate negotiations in Paris.
Emissions reductions from the electric power sector
under the Clean Power Pla n (CPP) constitute a key part
of the U.S. eort to meet its commitment. e power sec-
tor is the largest source of U.S. GHG emissions, account-
ing for nearly one-third of emissions in 2013. Emissions
reductions from the electr icity sector are expected to
account for about 47% of the economywide carbon diox-
ide (CO2) emissions reductions from 2005 levels needed
to meet the U.S. pledge for t he year 2025. e CPP is
expected to account for about one-third of the electric
power sector reductions.1
e CPP has been the most visible of President Barack
Obama’s climate initiatives. Environmental groups and
some businesses argue for aggressive U.S. leadership in
achieving sustained global emissions reductions that would
reduce the costs of climate change. ese groups claim that
the power sector oers some of the least expensive oppor-
tunities for reducing emissions. Meanwhile, many business
groups counter with the claim that the CPP w ill signi-
cantly ha rm the U.S. economy. ey argue that the CPP
will raise the cost of generating electricity a nd cause harm
to the coal industry through furt her closures of coal mines,
bankruptcies of coal producers, and retirements of coal-
red electricity generators.
Along with these public campaigns, there has been
intense legal drama over the CPP. Over one-half of the
states and many business groups have sued t he U.S. Envi-
ronmental Protection Agency (EPA) to block the CPP, and
18 states and the District of Columbia, as well as environ-
mental and public health groups and some electricity com-
panies, have led briefs in support of the CPP. In 2015,
states and business groups that opposed the ru le requested
that the court halt EPA’s implementation of the regula-
tion while the courts resolve the legal challenges. Business
groups claimed that the CPP would cause a “f undamental
restructuring of the power sector” and “immediate, irrep-
arable harm” to power plant and coal mine owners and
employees, electricity consumers, and t he broader public2;
1. U.S. E I. A. (EIA), A E O (2016);
U.S. D’  S, 2014 U S C A R
2. U.S. Chamber of Commerce. v. EPA, Motion for Stay of EPA’s Final Rule
(D.C. Cir. Oct. 23, 2015),les/con-
Authors Note: e authors appreciate comments from Carrie
Jenks, Kate Konschnik, and Nathan Richardson. is research was
supported by RFF’s Center for Electricity and Climate Economics.
Copyright © 2016 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®,, 1-800-433-5120.

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