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

• Date: 01 October 2016

10-2016 NEWS & ANALYSIS 46 ELR 10859

A R T I C L E S

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.

Summary

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

(2014).

2. U.S. Chamber of Commerce. v. EPA, Motion for Stay of EPA’s Final Rule

(D.C. Cir. Oct. 23, 2015), https://www.edf.org/sites/default/les/con-

tent/201.10.23_cc_111d_motion_for_stay.pdf.

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®, http://www.eli.org, 1-800-433-5120.