On Monday we submitted our comments to the EPA on its draft Clean Power Plan. Roughly two million people told the EPA they support the plan, which aims to cut carbon emissions from power plants 30 percent by 2030 from 2005 levels. We strongly support the plan, and we think the agency should make it much stronger and even more consumer friendly. Contrary to the conventional wisdom, we can advance those two goals at the same time. Fighting climate change is good for consumers. Fighting it more aggressively—with a focus on low-cost solutions—is even better. The short version of our recommendations is that the Clean Power Plan should use much more energy efficiency and renewables, much less natural gas (if any), and likely no nuclear power.
We care about climate change because it will be devastating to consumers—to all Americans, that is—and especially to the poor, the elderly, and other vulnerable populations. We also care about protecting consumer budgets—again particularly those of low-income households. Consumers usually pay for upgrades or other changes in electricity infrastructure on their utility bills, and for this reason opponents of climate change policy have been arguing that the Clean Power Plan will hurt consumers. Cutting carbon emissions will cost money, they argue, straining household budgets.
We found the opposite. The strongest tools to reduce carbon emissions from power plants are actually the least expensive and the most beneficial to consumers. If the EPA were to craft the rule using a simple organizing principle—cut carbon incrementally by using the lowest-cost strategy to displace the most carbon-intensive electricity generation—the rule would be much stronger and less expensive. Here are the key points:
- Treat efficiency and renewables as replacing fossil-fuels, in order of the most carbon intensive. The proposal assumes that new natural gas generation will replace coal. But it treats energy efficiency and renewables as merely adding to the pool of available power rather than displacing coal or natural gas. That doesn’t make sense. The point of boosting efficiency and renewables is to displace fossil fuels—and in fact that’s what usually happens in the market because fossil-fuel generation usually has higher operating costs. This simple common sense change would strengthen the rule a great deal.
- Strengthen the efficiency targets significantly. Energy efficiency is by far the lowest-cost way to cut carbon emissions, but the EPA overestimates its cost by 60 to 100 percent. It also sets its targets too low. The agency expects us to increase efficiency by just 1.5 percent annually even though the best states are already pursuing gains of 2 percent or more. And it considers only utility efficiency programs like weatherization of homes, leaving out things like 1building codes and appliance standards. Boost the efficiency targets, and you get a much more powerful, less expensive rule.
- Strengthen the renewables targets significantly. As UCS has demonstrated, the EPA makes similar mistakes with renewables. States can add nearly double the amount of renewables that the proposal projects, at much lower cost.
- Curb the use of natural gas. The plan’s reliance on natural gas is misplaced for multiple reasons. First, because of methane emissions, switching from coal to natural gas may not have any climate benefit for more than 100 years. We need to fix the problem well before then. Second, the proposal’s reliance on natural gas will lead to more environmentally hazardous fracking, which the EPA should not be encouraging, and put additional pressure on natural gas prices, which are already projected to rise 23 percent by 2030, straining household budgets. Finally, the EPA underestimates the cost of using natural gas to replace coal because it overlooks that we need to phase out natural gas soon too. Natural gas emits less carbon than coal, but still very significant amounts, and we need to reduce carbon emissions to zero as quickly as possible. The real cost of switching to natural gas is the cost of the current change plus the expense of moving to renewables in a few years. We would save a lot of money by going straight to renewables.
- Curb (likely eliminate) the use of nuclear power. Nuclear power is usually an exorbitant boondoggle that consumers get stuck subsidizing through their electricity bills. The EPA’s proposal gets the cost of nuclear power wrong in nearly every way. It underestimates the costs of subsidizing existing nuclear plants that can’t make money. It omits the multi-billion-dollar cost of completing nuclear generators currently under-construction. (These projects nearly always run way behind schedule and cost billions more than budgeted; we would save a lot of money by scrapping them even mid-construction.) It also fails to account for the cost of storing nuclear waste, a problem we still haven’t solved but which will cost billions, and ignores the possibility of catastrophic accidents. As of late 2012, Tokyo Electric Power Co. was estimating that the cleanup from the Fukushima disaster would cost up to $137 billion. It’s hard to find space for nuclear power in sound climate policy when every other option is cheaper and efficiency and renewables can accomplish so much.
The Clean Power Plan already represents a significant step in fighting climate change, and it will make consumers far better off. For those reasons, we told the EPA that we strongly support the plan. But we need to do better—and we can.