Abby L. Harvey
GHG Monitor
12/19/2014
Various parameters and variables exist within the means by which the Environmental Protection Agency measured the potential benefits of its proposed carbon emissions standards for existing coal fired power plants that could affect the credibility of the EPA analysis, a group of experts said during a webinar hosted by Resources for the Future and the Electric Power Research Institute this week. The experts attributed questions over the EPA’s calculated benefits to the models used by the agency. “Recognizing the kind of heroic nature of these estimates, as well as the importance of these estimates in doing cost/benefit analysis, I think that current estimates are pretty reasonable, but that said, I think there’s lots of opportunity for review. One of the things that I think we agree is incredibly important is expert review,” Billy Pizer, a Professor at the Sanford School of Public Policy, said during the webinar.
One key issue addressed is the use of the social cost of carbon, a standard “comprehensive estimate of climate change damages and includes, but is not limited to, changes in net agricultural productivity, human health, and property damages from increased flood risk,” according to the EPA website. The EPA has estimated that its proposal, which would set state-specific carbon emission reduction goals and require states to develop action plans to meet those goals, would result in benefits worth $55-93 billion per year in 2030 in avoided costs.
The social cost of carbon is “very important,” Steven Rose, Senior Research Economist at EPRI, said during the webinar. “It’s a representation of damages to society so in that regard alone you should be concerned about it. … It’s hard to understand what exactly the current estimates represent and in that way it’s hard to interpret them in terms of how to respond. It’s also hard to think about how they reflect current understanding. Some sort of very technical clarity is needed.”
Estimate of Ancillary Benefits Tricky
Some of the participants in this week’s webinar also questioned some of the other estimated benefits of the EPA’s proposal, known as the Clear Power Plan, such as reduction of other pollutants In one example, the EPA takes into account other policy measures that were in place when the rule was proposed, however, other additional measures have since been proposed that would change the final calculation. “They reasonably captures the utility, environmental policies that are on the books, now there are some big ones that are coming, the biggest is probably the new ozone regulation that EPA is just starting an effort on, once this happens, that’s going to take away some of the benefits that EPA is now attributing to the CPP. This isn’t a problem in their analysis, I think they did the right thing, but that’s what’s coming and will eat into the benefits,” said Alan Krupnick, Co-Director of RFF’s Center for Energy and Climate Economics.
