Washington, D.C. – Today, the U.S. Energy Information Administration (EIA) released its analysis of the Clean Power Plan’s proposed rule. Although this report provides helpful analyses, the results need to be considered in the proper context and not misconstrued for political purposes. Below is a clarification of what the analysis clearly presents.

Key Findings from the Report

• The Clean Power Plan substantially reduces carbon pollution. The report states, “The projected power sector emissions level in 2030 ranges from 1,553 to 1,727 million metric tons across the cases, reflecting a reduction of between 29 percent and 36 percent relative to the 2005 emissions level of 2,416 million metric tons.” (p. 14)

• The Clean Power Plan has the potential to lower electricity bills for consumers. The report states, “By 2040, total electricity expenditures in the CPP case are slightly below those in the AE02015 Reference case, as decreases in demand more than offset the price increases.” (p. 21)

• Renewable energy sources play an important role in compliance with the Clean Power Plan. The report states, “In the Base Policy case, cumulative additions of renewable electricity generation capacity through 2040 increase by 174 gigawatts, or 160 percent, as compared with the underlying AEO2015 Reference case.” (p. 35) “Wind power plays an important role in Clean Power Plan compliance, with wind electricity generation capacity more than tripling over 2013 levels by 2040 in the Base Policy case (205 gigawatts in 2040 vs. 61 gigawatts in 2013).” (p. 36) “The Base Policy case projects 136 gigawatts of installed solar electricity generating capacity in 2040, an increase of 76 gigawatts over the underlying AEO2015 Reference case.” (p. 37)

 What the Report DOES: EIA’s report…

• Acknowledges that the final Clean Power Plan rule will likely differ from the proposed rule and cause substantially different analytical results. The report states, “The Clean Power Plan is still a proposed rule as of the date of this report; the final rule may differ from the proposed rule in material ways.” (p. 9)

• Assumes various interpretations of the proposed rule. The report states, “The proposed Clean Power Plan Rule under section 111(d) is complex and subject to varying interpretation even before consideration of decisions that will be made by states to implement the rule that is finally promulgated.” (p. 10)

• Assumes a different alternate compliance phase-in path than EPA does. The report states, “EPA's Goal Computation Technical Support document included an appendix with calculated annual goals for each state, illustrating a potential path to meeting the interim goals. The cases in in this analysis use an alternate phase-in path.” (p. 66)

• Uses EIA’s National Energy Modeling System (NEMS), which underestimates renewable energy potential and innovation. In an April 16 hearing, Senator Cantwell highlighted the underestimated potential of renewable energy sources: “I should note that I do have an ongoing concern that EIA continually underestimates the potential of renewable energy in these Annual Energy Outlook reports.”

What the Report Does NOT Do: EIA’s report…

• Does not analyze many benefits of the proposed rule. The report states, “This analysis focuses on the implications for the energy system and the economy of reducing CO₂ emissions under the proposed Clean Power Plan. It does not consider any potential health or environmental benefits from reducing CO₂ emissions from existing electric generating units covered by the proposed Clean Power Plan. It is not a cost-benefit analysis.” (p. 8)

• Does not represent a suitable model for conducting reliability analyses. The report states, “As the NEMS Electricity Market Module (EMM) is not a suitable model for conducting reliability analyses, this report does not provide a reliability assessment of the Clean Power Plan.” (p. 59) The model produces its results by ensuring there is enough generation capacity in each region to meet projected peak demand and an assumed reserve margin, thus reliability is assumed by the model.

• Does not assume continuation of many renewable energy policies. The report states, “The Reference case projections developed in NEMS and published in the Annual Energy Outlook2015 generally reflect federal laws and regulations and state renewable portfolio standards (RPS) in effect at the time of the projection. The Reference case does not assume the extension of laws with sunset provisions.” (p. 4) Therefore, any law with a specific sunset date gets phased out at that date, such that renewable energy tax credits are assumed to expire.

• Does not consider all of the flexibility of the various approaches for compliance. The report states, “For this report, EIA constructed cases in NEMS that represent compliance with the proposed Clean Power Plan, including EPA's proposed carbon intensity targets during the interim and final compliance periods, enforced at the NEMS Electricity Market Module (EMM) region level.” (p. 4) “The discussion of EIA's analysis presents results in terms of the compliance options used to meet the regionalized Clean Power Plan targets.” (p. 5) The model chooses compliance approaches, but in the proposed Clean Power Plan, states are given the flexibility to choose what goes into their plans, which ensures that states have the flexibility to choose the best set of cost-effective reductions for them. 

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