An Economic Assessment: The Supreme Court’s Stay of the Clean Power Plan

WASHINGTON—Researchers from Resources for the Future (RFF) today published a discussion paper that takes a close look at the economics and implications of the Supreme Court’s February decision to stay implementation of the Clean Power Plan.

The Clean Power Plan is the Obama administration’s main regulation for reducing greenhouse gas emissions from one of the largest emitters, electrical power plants. Environmental groups and some businesses argue that emissions reductions will reduce the costs of climate change. Meanwhile, many business groups claim that the Clean Power Plan will significantly raise the cost of generating electricity and cause further harm to the coal industry.

Over half of the states have sued the US Environmental Protection Agency to block the Clean Power Plan, and 18 states and the District of Columbia have filed briefs in support of the rule. On January 21, 2016, the DC Circuit Court of Appeals denied a request to stay, or suspend, implementation of the Clean Power Plan. But on February 9, to the surprise of many, the Supreme Court reversed this decision and issued the stay by a vote of 5—4, suspending implementation of the rule, a process that could continue through late 2017.

In the new RFF paper, out today—An Economic Assessment of the Supreme Court’s Stay of the Clean Power Plan and Implications for the Future—Senior Fellows Joshua Linn and Dallas Burtraw and Research Assistant Kristen McCormack examine the overall costs and impacts of the stay. They find:

• The overall costs of the Clean Power Plan are likely to be low because of existing market, technological, and policy trends that would prevail even in the absence of the plan. Despite the low overall costs, the Clean Power Plan could ultimately impose substantial costs on the coal sector.
• Because of the electricity sector trends, flexibility and time frame of the Clean Power Plan, and economic incentives to delay decisions as much as possible, it is highly unlikely that the plan would impose any costs—much less large or irreversible costs—during the time frame of litigation.

The authors conclude that the Clean Power Plan does not meet the economic conditions for irreparable harm to the coal sector. They also note, however, that there may be a possible effect of delaying the Clean Power Plan on international efforts to reduce greenhouse gas emissions. As one of the world’s largest emitters, the United States has played a pivotal role in the recent international momentum, as evidenced in the 2015 United Nations climate negotiations in Paris. If the United States were to delay its emissions reduction schedule, other countries may similarly delay their reductions, magnifying the global costs of a delay in the United States.

Read the full paper: An Economic Assessment of the Supreme Court’s Stay of the Clean Power Plan and Implications for the Future.