Economic Assessment of the Clean Power Plan

Proposed in 2014, the Clean Power Plan (CPP) seeks to limit CO2 emissions from coal-fired power plants, a prime contributor to climate change. To inform policy discussions guiding formulation of the Plan, the Energy Foundation hired IEc to analyze the net employment and output impacts of the proposed CPP. The study represents the most comprehensive analysis of the CPP’s economic influence, and addresses the following topics:

• Design, manufacture, and installation of renewable generation capacity;
• Changes in electricity and other energy prices;
• Changes in the electricity generation mix;
• Productivity impacts associated with power plant heat rate improvements;
• Redirected household and business expenditures due to increased demand-side energy efficiency;
• The employment and output effects associated with household and business energy efficiency expenditures;
• Household expenditures crowded out by energy efficiency expenditures; and
• Changes in investments for air pollution control devices for criteria pollutant and mercury controls.

To capture these countervailing influences, IEc, in collaboration with the Inforum Group at the University of Maryland, applied the LIFT macroeconometric model of the U.S. economy. The analysis incorporated compliance strategies for the four major components of the CPP: improved power plant efficiency; re-dispatch to less carbon-intensive generation; expanded use of zero-carbon generating capacity such as renewables; and expanded use of energy efficiency.