Author Archives: Rama Zakaria

Underhanded maneuvers to repeal the Clean Power Plan put Americans’ lives and health at risk

(EDF’s Ben Levitan co-authored this post)

Environmental Protection Agency (EPA) Administrator Scott Pruitt says he will sign a proposal tomorrow to repeal the Clean Power Plan – America’s only nationwide limits on carbon pollution from fossil fuel power plants.

If the proposal matches what we’ve already seen in a leaked draft, it would be one of the most deeply harmful and reckless actions an EPA Administrator has ever taken. It would cost thousands of American lives, harm public health in myriad other ways, and lead to years of costly delays in combating the urgent threat of climate change.

Administrator Pruitt would have to go to great lengths to obscure and ignore these harmful consequences. When EPA issued the Clean Power Plan in 2015, it estimated that the plan would create up to $54 billion in annual benefits, including:

  • The prevention of up to 3,600 premature deaths every year
  • The prevention of 90,000 childhood asthma attacks every year
  • The prevention of 300,000 missed school and work days every year.

By comparison, EPA concluded that the annual costs would be much lower. And in the two years since the Clean Power Plan was issued, new analyses – including this one from New York University’s Institute for Policy Integrity – have concluded that compliance with the Clean Power Plan has become dramatically cheaper as a result of the plummeting costs of clean energy.

Yet the draft proposal for repealing the Clean Power Plan seems to rely on a significantly higher costs estimate, and much lower benefits. How is that possible?

A careful look at the numbers shows that the Administrator Pruitt’s EPA cooked the books for this proposal. They used discredited methodologies to artificially inflate costs, and to mask the consequences for our climate and obscure the thousands of lives that could be lost as a result of their repeal of the Clean Power Plan.

Here are four tactics that Administrator Pruitt has employed in the leaked proposal to inflate the costs and hide the benefits of the Clean Power Plan:

1. Disregarding lives saved by the Clean Power Plan

EPA’s original analysis of the Clean Power Plan found that it would avoid thousands of premature deaths each year by reducing particulate matter pollution – yielding up to $34 billion in annual health benefits in 2030.

According to the American Lung Association, particulate matter pollution causes permanent damage to lung development in children, aggravates asthma and other respiratory problems, increases hospitalizations, and increases deaths from heart and lung diseases including lung cancer.

The Clean Power Plan would reduce exposure to this pollution across the country – avoiding these health harms and premature deaths.

Administrator Pruitt’s draft proposal assumes away those benefits by asserting – contrary to established medical research – that there is zero health impact from reducing particulate matter pollution below certain “threshold” levels. The proposal also suggests that EPA can count only the climate benefits associated with carbon pollution, with no consideration to any health benefits at all.

This claim that there is a “threshold” level of particulate pollution below which it does not harm human health is directly contradicted by the American Heart Association and was completely discredited many years ago by an expert panel convened by EPA under the George W. Bush Administration. It also runs contrary to EPA’s long-standing practice.

As EPA itself recently explained in a court brief:

The best scientific evidence, confirmed by independent, Congressionally-mandated expert panels, is that there is no threshold level of fine particulate pollution below which health reductions are not achieved by reducing exposure.

Ignoring the deaths and harm to Americans’ health that would result from repealing the Clean Power Plan is unconscionable. The plain truth is that undoing the Clean Power Plan would deprive Americans of billions of dollars in health benefits and put then at increased risk for premature death.

2. Artificially inflating the costs of the Clean Power Plan

EPA originally anticipated that parties would comply with the Clean Power Plan in part through investments in demand-side energy efficiency, “a highly cost-effective means” for reducing carbon pollution from the power sector.

Demand-side energy efficiency measures help consumers save electricity, resulting in lower electric bills for hard-working Americans, less pollution, and a more reliable electric grid. Investments in energy efficiency are largely offset by the electricity savings that result.

Yet the upside-down accounting in the draft proposal adds those energy efficiency investments to the costs of the Clean Power Plan without deducting the electricity savings those investments yield. This makes it look like the power sector is paying for both energy efficiency and the electricity that it no longer needs to produce. Therefore, this upside-down accounting includes billions of dollars of imaginary electricity costs – for electricity that will never be generated or purchased.

The draft proposal adds the cost of this imaginary electricity to its estimate of Clean Power Plan benefits — to represent the “benefit” of not having to purchase electricity that was never produced in the first place. When comparing costs and benefits, this imaginary electricity is a net wash ­– but it enables EPA to inflate its estimate of the plan’s costs by up to $19.3 billion in 2030.

The draft proposal also uses a higher discount rate of 7 percent for energy efficiency investments – providing no meaningful justification for a choice that further inflates costs by $6.2 billion.

The cumulative effects of adding the cost of imaginary electricity and using a higher discount rate increases costs by up to $25.5 billion in 2030.

3. Shortchanging the benefits of reducing carbon pollution

Administrator Pruitt’s proposal aggressively undercuts the social cost of carbon. That's the estimate of damages that climate pollution causes for our families and communities – from more intense hurricanes and heat waves, more wildfires, and the many other threats of climate change.

By using an unrealistically low figure, the proposal severely undervalues the benefits of the Clean Power Plan’s carbon reductions.

The original Clean Power Plan utilized an estimate of the social cost of carbon developed over many years by experts from a dozen federal agencies who used the best available science and repeatedly considered public input.

The draft proposal for repealing the Clean Power Plan has new, misleading values that use unsound methods rejected by independent experts to yield a lower estimate of the Plan’s benefits.

The draft proposal simply ignores important categories of carbon reduction benefits

The new proposal claims to count only the domestic U.S. impacts of carbon pollution, even though this pollution causes worldwide harm. A recent report by the National Academy of Sciences affirmed the importance of counting global benefits, explaining that the benefits of reducing carbon pollution would be dangerously undervalued if every country used a domestic-only social cost of carbon.

The draft proposal’s “domestic-only” cost estimate also ignores significant harms to the U.S. that arise from climate change impacts in other countries – including “global migration, economic destabilization, and political destabilization,” and “[l]ower economic growth in other regions [that] could reduce demand for U.S. exports, and lower productivity [that] could increase the prices of U.S. imports.”

For these reasons, the National Academy of Sciences concluded earlier this year that:

Climate damages to the United States cannot be accurately characterized without accounting for consequences outside U.S. borders.

Administrator Pruitt’s approach flies in the face of that expert advice.

The draft proposal short-changes our children by discounting pollution reduction benefits for future generations

The new proposal also uses a sharply lower value for the benefits that today’s carbon reductions provide to future generations.

The original Clean Power Plan “discounted” the future benefits of carbon reductions at a rate of three percent per year, based upon the findings of the inter-agency working group.

But the new proposal uses discount rates as high as seven percent, without any justification – a value that is much higher than recommended by the National Academy of Sciences or the economics literature.

The cumulative effects of ignoring global impacts and increasing the discount rate are dramatic. In the original Clean Power Plan, EPA estimated climate benefits of $20 billion in 2030 (using a three percent discount rate). The draft proposal to repeal the Clean Power Plan estimates climate benefits of just $0.5 billion in 2030.

Click to enlarge

 

4. Ignoring how low-cost clean energy means the Clean Power Plan will be even more affordable

In the two years since EPA finalized the Clean Power Plan, the plan’s goals have become even more achievable and low-cost than originally projected – thanks to electricity sector developments including the sharply declining costs of renewable energy.

But the new draft proposal has made no attempt to update its economic analysis, and does not appear to acknowledge that recent studies of the Clean Power Plan have found compliance costs are now much lower than EPA originally estimated.

Instead, Administrator Pruitt is proposing to repeal this life-saving, economically beneficial public health protection before even bothering to properly consider the latest data.

The recent report from the Institute for Policy Integrity highlights the falling costs of complying with the Clean Power Plan and points to several power sector developments that explain this trend.

The report presents several recent economic analyses conducted by independent, non-governmental entities that estimate substantially lower compliance costs than EPA projected in 2015. For instance, a June 2016 analysis by M.J. Bradley & Associates, using the same electric sector model as EPA but updating several inputs, finds that compliance would cost up to 84 percent less than EPA originally estimated.

EPA recognized and evaluated many of these precise studies as part of its Clean Power Plan deliberations. Yet for the sake of repealing the Clean Power Plan, Administrator Pruitt has decided to ignore these studies.

America deserves better

The Clean Power Plan is the most significant step the U.S. has ever taken to address the crisis of climate change. Once fully implemented, it will provide enormous public health benefits – making Americans safer, healthier, and more productive.

If Administrator Pruitt is intent on rolling back a life-saving protection for human health and the environment, the American people at least deserve an honest evaluation based on the best available data.

Unfortunately, it looks like he’s using underhanded maneuvers and deceptive accounting gimmicks to justify rescinding the Clean Power Plan instead – and the consequences for the health and safety of Americans will be all too real for decades to come.

Posted in Clean Power Plan, Economics, Energy, Health, News| Comments are closed

New report: Yes, we can have both clean air and reliable electricity

A new report by M.J. Bradley & Associates – based on an extensive review of data, literature, and case studies – shows that coal-fired power plants are retiring primarily due to low natural gas prices, and that the ongoing trend towards a cleaner energy resource mix is happening without compromising the reliability of our electric grid.

The report follows a highly-publicized order by Secretary of Energy Rick Perry for a review of the nation’s electricity markets and reliability. Perry wanted to determine whether clean air safeguards and policies encouraging clean energy are causing premature retirements of coal-fired power plants and threatening grid reliability.

The Department of Energy (DOE) just released that long-anticipated review — a baseload study that actually confirms that cheap natural gas has been the major driver behind coal retirements.

Now the M.J Bradley report affirms that finding, and offers even more evidence to support it and demonstrate that electric reliability remains strong.

The M.J Bradley report confirms conclusions by multiple studies which demonstrate that, of the three main factors responsible for the majority of the decline in coal generation, the increased competition from cheap natural gas has been by far the major contributor – accounting for 49 percent of the decline.

The two other factors are reduced demand for electricity – accounting for 26 percent – and increased growth in renewable energy – accounting for only 18 percent.

Several case studies featured in the M.J. Bradley report offer further proof that coal retirements are driven by economic factors – specifically low natural gas prices:

For example, PSEG President and COO Bill Levis – referring to the shutdown of Hudson Generating Station — said, “the sustained low prices of natural gas have put economic pressure on these plants for some time.PSEG Senior Director of Operations Bill Thompson also pointed to economic reasons, not environmental regulations, as basis for the decision to retire the plant.

Florida Power & Light (FPL) cited economics and customer savings as the primary reasons for its plans to shut down three coal units. According to FPL, the retirements of Cedar Bay and Indiantown are expected to save its customers an estimated $199 million. FPL President and CEO Eric Silagy said the decision to retire the plants is part of a “forward-looking strategy of smart investments that improve the efficiency of our system, reduce our fuel consumption, prevent emissions and cut costs for our customers.” Retirement of FPL’s St. John River Power Park would add another $183 million in customer savings.

According to the M.J. Bradley report, the overall decline in U.S. coal generation is primarily due to reduced utilization of coal-fired power plants, rather than retirements of those facilities.

Most recently retired facilities were older, smaller units that were inefficient and relatively expensive to operate. On average, coal units that announced plans to retire between 2010 and 2015 were 57 years old – well past their original expected life span of 40 years.

Meanwhile, existing coal plant utilization has declined from 73 percent capacity factor in 2008 to 53 percent in 2016. At the same time, the utilization of cheaper natural gas combined-cycle plants has increased from 40 percent capacity factor to 56 percent.

As a result, M.J. Bradley estimates that less than twenty percent of the overall decline in coal generation over the past six years can be attributed to coal plant retirements, with reduced utilization of the remaining fleet accounting for the rest of the decline.

Implications of coal retirements for electric grid reliability

As coal plants retire and are replaced by newer, cleaner resources, there have been concerns about potential impacts on the reliability of our electric grid. (Those concerns were also the topic of DOE’s baseload study.)

M.J. Bradley examined the implications of coal retirements and the evolving resource mix, looking at extensive existing research including their own reliability report released earlier this year.

These studies conclude that electric reliability remains strong.

These studies also found that flexible approaches to grid management, and new technologies such as electric storage, are providing additional tools to support and ensure grid reliability.

In order to understand that conclusion, consider two factors that are used to assess reliability:

  • Resource adequacy, which considers the availability of resources to meet future demand, and is assessed using metrics such as reserve margins
  • Operational reliability, which considers the ability of grid operators to run the system in real-time in a secure way to balance supply and demand – and is defined in terms of Essential Reliability Services, such as frequency and voltage support and ramping capability.

As many studies have already indicated, “baseload” is an outdated term used historically to describe the way resources were being used on the grid – not to describe the above factors that are needed to maintain grid reliability.

Here is what M.J. Bradley’s report and other assessments tell us about the implications of the evolving resource mix for grid reliability:

There are no signs of deteriorating reliability on the grid today, and studies indicate continued growth in clean resources is fully compatible with continued reliability

In its 2017 State of Reliability report, the North American Electric Reliability Corporation (NERC) found that over the past five years the trends in planning reserve margins were stable while other reliability metrics were either improving, stable, or inconclusive.

NERC’s report also found that bulk power system resiliency to severe weather continues to improve.

According to a report by grid operator PJM, which has recently experienced both significant coal retirements and new deployment of clean energy resources:

[T]he expected near-term resource portfolio is among the highest-performing portfolios and is well equipped to provide the generator reliability attributes.

DOE’s own baseload study acknowledges that electric reliability remains strong.  A wide range of literature further indicates that high renewable penetration futures are possible without compromising grid reliability.

Cleaner resources and new technologies being brought online help strengthen reliability

Studies show that technologies being added to the system have, in combination, most if not all the reliability attributes provided by retiring coal-fired generation and other resources exiting the system.

In fact, the evolving resource mix that includes retirement of aging capacity and addition of new gas-fired and renewable capacity can increase system reliability from a number of perspectives. For instance, available data indicates that forced and planned outage rates for renewable and natural gas technologies can be less than half of those for coal.

Studies also highlight the valuable reliability services that emerging new technologies, such as electric storage, can provide. Renewable resources and emerging technologies also help hedge against fuel supply and price volatility, contributing to resource diversity and increased resilience.

Clean energy resources have demonstrated their ability to support reliable electric service at times of severe stress on the grid.

In the 2014 polar vortex, for example, frozen coal stockpiles led to coal generation outages – so wind and demand response resources were increasingly relied upon to help maintain reliability.

And just last year, close to 100 megawatts of electric storage was successfully deployed in less than six months to address reliability concerns stemming from the Aliso Canyon natural gas storage leak in California.

Regulators and grid operators can leverage the reliability attributes of clean resources and new technologies through improved market design

A 2016 report by DOE found that cleaner resources and emerging new technologies are creating options and opportunities, providing a new toolbox for maintaining reliability in the modern power system.

The Federal Energy Regulatory Commission (FERC) has long recognized the valuable grid services that emerging new technologies could provide – from its order on demand response to its order on frequency regulation compensation, FERC recognized the value of fast and accurate response resources in cost-effectively meeting grid reliability needs. More recently, FERC’s ancillary service reforms recognize that, with advances in technologies, variable energy resources such as wind are increasingly capable of providing reliability services such as reactive power.

Grid operators are also recognizing the valuable contributions of cleaner resources and emerging new technologies, as well as the importance of flexibility to a modern, nimble, dynamic and robust grid. For instance, both the California Independent System Operator and the Midcontinent Independent System Operator (MISO) have created ramp products, and MISO also has a dispatchable intermittent resource program.

It will be increasingly important for regulators, system planners, and grid operators to continue assessing grid reliability needs, and leveraging the capabilities of new technologies and technological advancements, in the future. It is also important to continue market design and system operation and coordination efforts to support the emerging needs of a modern 21st century electric grid.

The facts show clearly that we shouldn’t accept fearmongering that threatens our clean air safeguards. Instead, working together, America can have clean, healthy air and affordable, reliable electricity.

Posted in Energy, News, Policy| Read 1 Response
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