An Economic Assessment of the Supreme Court's Stay of the Clean Power Plan and Implications for the Future

Resources for the Future Discussion Paper 16-21

33 Pages Posted: 12 Oct 2016

See all articles by Joshua Linn

Joshua Linn

Resources for the Future

Dallas Burtraw

Resources for the Future

Kristen McCormack

Resources for the Future

Date Written: October 1, 2016

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.

Keywords: climate change, Clean Air Act, Clean Power Plan, compliance flexibility, electric power sector, judicial review

JEL Classification: Q54, D92, Q41

Suggested Citation

Linn, Joshua and Burtraw, Dallas and McCormack, Kristen, An Economic Assessment of the Supreme Court's Stay of the Clean Power Plan and Implications for the Future (October 1, 2016). Resources for the Future Discussion Paper 16-21, Available at SSRN: https://ssrn.com/abstract=2849501 or http://dx.doi.org/10.2139/ssrn.2849501

Joshua Linn (Contact Author)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Dallas Burtraw

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States
202-328-5087 (Phone)

Kristen McCormack

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

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