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Insights from Modeling the Proposed Clean Power Plan

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The Bipartisan Policy Center’s (BPC) Energy Project explores national- and regional-level impacts of the U.S. Environmental Protection Agency’s proposed Clean Power Plan in its new economic analysis. The analysis, based on economic modeling of the electricity sector, explores the impacts of various policy choices for state consideration in developing state plans. In particular, the study compares single state versus multi-state implementation, rate-based versus mass-based compliance, and the policy treatment of new natural gas plants. The analysis also investigates how the availability of end-use energy efficiency and expectations for future natural gas prices could influence how the electricity sector responds to the Clean Power Plan.

Among other things, BPC’s analysis finds:

  1. Clear benefits to multi-state collaboration and linked trading approaches that allow access to lower cost emission reduction options and allow flexibility to adapt to changing circumstances;
  2. Significant cost impacts related to a state’s choice of energy efficiency policies;
  3. Benefits to including new sources in state implementation policies; and
  4. Real impacts as a result of different rate-to-mass conversion methodologies.

The analysis highlights that electricity-sector impacts could vary widely depending on the details of the final rule and compliance decisions made by state policy makers. As a result, BPC plans to release an updated modeling analysis of the Clean Power Plan after it is finalized this summer.

KEYWORDS: ENVIRONMENTAL PROTECTION AGENCY, GREENHOUSE GASES, 111(D) REGULATIONS, CLEAN POWER PLAN

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Environmental Regulation