“Report on the Proposed Changes to the Federal Mercury and Air Toxics Standards (MATS)”

Washington, DC—New research from Resources for the Future (RFF), Harvard University, and four other academic institutions finds that an Environmental Protection Agency (EPA) proposal that could eventually allow more mercury pollution from power plants relies on a flawed cost-benefit analysis. The report was authored by members of the External Environmental Economics Advisory Committee (E-EEAC), an independent organization providing the best available economic advice to the EPA.

Earlier this year, the EPA published a regulatory proposal to revise the Supplemental Cost Finding for the Mercury and Air Toxics Standards (MATS) rule, which deemed the regulation of air pollutants from coal- and oil-fired power plants no longer “appropriate and necessary.” The E-EEAC report authors write, “While the EPA acknowledges the co-benefits associated with reductions in PM2.5 and SO2 emissions, it claims that co-benefits should not be given equal weight to the target pollutant benefits ([hazardous air pollutants] emissions reductions) in making the appropriate and necessary finding.”

The new report addresses two major aspects of how the impacts of the regulation are analyzed: the way the co-benefits (benefits other than the main focus of the regulation) are accounted for, and the way the analysis is updated to reflect new research and data. Notably, MATS has co-benefits amounting to tens of billions of dollars in public health benefits due to the associated reduction in particulate matter.

The key findings of the report are as follows:

1. The EPA’s 2018 cost-benefit memo does not follow best practices for economic analysis with its omission of co-benefits of the MATS rule.
2. The 2018 EPA benefit-cost memo underestimates the public health benefits of reducing mercury emissions.
3. The 2018 EPA benefit-cost memo fails to account for significant power sector changes since 2011.
4. A new retrospective and prospective benefit-cost analysis could better represent the impacts of the MATS rule.

“When economists conduct a cost-benefit analysis of a government policy, we need to look at everything that changes because of that rule. We know we are better off as a society if we look at everything that changes and find that the positive impacts outweigh the negative impacts,” said report coauthor Joseph E. Aldy, a Harvard professor and RFF university fellow.

“When it comes to controlling air pollution, the market doesn’t work on its own,” Aldy said. “I can’t go to the corner drugstore and buy good air quality. But if I could, I wouldn’t be shopping for protection from mercury only. I would want better air quality all around—healthier air, period. We need to look at the entire picture of air quality. Americans want good public health measures in place, and they are willing to pay for them. And the best evidence suggests the MATS rule is a good deal.”