Anderson Economic Group Work

Four Plausible Scenarios that Could Emerge From Court Ruling on the EPA’S Clean Power Plan

Anderson Economic Group identifies several scenarios for future carbon regulation in seven states

EAST LANSING, Mich., Monday, September 26, 2016—Released today— Anderson Economic Group (AEG) released Four Plausible Scenarios that Could Emerge from Court Ruling on the EPA’s Clean Power Plan, which presents regulatory scenarios that the electric power industry in several states might face after legal challenges to the U.S. Environmental Protection Agency’s Clean Power Plan (CPP) are resolved. This release comes the day before the U.S. Court of Appeals will hear oral arguments on the case against the CPP final rule.

The report finds at least four plausible scenarios of carbon regulation following a ruling on the CPP final rule. These scenarios include: leaving the final rule intact; delaying implementation and re-setting emissions goals; amending the CPP to provide an emissions credit for new sources; and replacing the CPP with a statutory national tradable permit scheme.

“Possible outcomes of a CPP ruling extend beyond simply upholding the rule or striking it down,” said Alex Rosaen, Public Policy Director at AEG and co-author of the report. “There are a number of ways that federal carbon regulation could play out. Businesses and consumers would benefit most from a carbon strategy that holds up under many scenarios.”

To illustrate the potential carbon limits under each scenario, the report relies on the mass-based goals outlined in the CPP final rule. AEG presented these scenarios for several states: California, Texas, New York, Florida, Ohio, Illinois, and Wisconsin. Depending on the state, an upheld or delayed CPP could require emissions targets that range from 34% below historic emissions to 3% above historic emissions. Should the courts affirm the CPP, states that participate in existing carbon trading programs, such as California and New York, might choose to harmonize their compliance plans with these programs.

AEG’s prior experience in evaluating the EPA’s CPP final rule includes a study on the impact of CPP compliance options on Michigan’s economy. AEG’s analysis of the effects of the CPP relies on the Sectoral Business Decision Model™ (SBDM), which projects paths for state-level economic, emissions, and power generation variables. The model uses long-standing relationships among these variables, as well as well-demonstrated responses to price changes, to project future values. Supported Intelligence, a software and data analytics firm, developed, licenses, and maintains the SBDM.

About Anderson Economic Group and Supported Intelligence

AEG has provided independent analysis of tax, business climate, and other policy issues for numerous states, universities, large corporations, businesses, trade associations, labor unions, cities, and counties since 1996. A large number of reports, including AEG’s study on the impact of Clean Power Plan compliance on Michigan’s economy, are available on the company web site: AEG has offices in East Lansing, Michigan and Chicago, Illinois

SI provides powerful, innovative, and reliable software and analytical services to help people make better decisions. SI is dedicated to harnessing recent advances in technology and analytical methods to improve decision making across multiple departments and industries. SI developed the SBDM to help interested parties analyze the impacts of Clean Power Plan compliance options in individual states and over multiple years. For more information, see SI is based in East Lansing, Michigan.

CONTACT: Anderson Economic Group, LLC
(517) 333-6984