Journal Article

The Supreme Court’s Stay of the Clean Power Plan: Economic Assessment and Implications for the Future

Summary

The Clean Power Plan is expected to contribute substantially to US greenhouse gas emissions reductions, but the Supreme Court has halted its implementation. However, the conditions supporting a stay based on economic harms to the coal sector are not met.

Key Findings

  • Because of market, technological, and policy trends that are independent of the Clean Power Plan, combined with compliance flexibility, the economic conditions supporting a stay based on economic harms to the coal sector are not met.
  • The same factors mitigate concerns about large increases in electricity prices and harms to the broader economy until at least the mid-2020s.
  • The gradual phasing of the emissions reductions and the flexibility to reduce emissions by a wide range of approaches are well within the confines of the Clean Air Act.
  • Existing trends suggest that the costs to the public of pushing back the Clean Power Plan deadlines likely far outweigh the benefits to the coal sector.
  • Claims of irreparable harm arise frequently in environmental litigation. Our economic framework for analyzing the potential irreparable harm under the Clean Power Plan is applicable in other contexts.

Abstract

The Clean Power Plan is expected to play an important role in reducing US greenhouse gas emissions. On February 9, 2016, responding to appeals from the affected industries and states, the Supreme Court issued a "stay" suspending implementation of the Clean Power Plan until after the judicial review process. Industry groups stated the plan will pose large “irreparable” costs to the coal sector during the period of judicial review. However, modeling suggests that because of prevailing market, technological, and policy trends, the Clean Power Plan will result in near-zero costs beyond current trends until 2025, in part because of the plan’s built-in flexibility. These factors and lessons from option theory suggest the stay is economically unjustifiable based on claims of irreparable economic harm to the coal sector. If implementation of the rule proceeds, current trends imply the stay will have little effect on industry’s ability to follow the current compliance schedule.