Is Energy Independence a Cover for Coal?

To date, U.S. President Donald Trump has signed 38 executive actions, including 17 executive orders. Many of these actions have, arguably, thrown his presidency into one of the shakiest starts of any administration in modern American history. Of all the actions and orders in Trump's 80+ days in office, none may have more far-reaching or long-lasting impact than the proposed 'Energy Independence' executive order.

The crux of the order calls for a "rewrite" of what it refers to as the "so-called" Clean Power Plan, or CPP, the cornerstone of U.S. commitment to climate action. 

Trump may sign the order as early as this week, sources told the World Resources Institute. 

WRI provided TriplePundit with an early draft copy of the order. What casual readers may not catch is that the economic rationale for the rollback is based on research funded by the coal lobby.

The text begins with a stated goal of establishing “a policy directive to reduce U.S. dependence on other countries for energy.” Supporting this benign cover statement is the argument that the CPP will "cost up to $39 billion a year" -- causing "double-digit electricity price increases," and all for "meaningless environmental impacts."

It is an argument Noah Kaufman, a climate economist for WRI, says is based on faulty assumptions.

These assumptions clearly target the EPA generally and, specifically, the Clean Power Plan. The order cites research from NERA Economic Consulting as the basis for its claim that the CPP constitutes such a threat of "irreparable harm" to the American economy. Falling in line with that narrative is Trump’s cabinet: Former ExxonMobil CEO Rex Tillerson at State, former Texas Gov. Rick Perry at Energy, and, of course, former Oklahoma Attorney General Scott Pruitt at EPA.

But Kaufman, a former NERA employee, called the consulting firm's findings into question.

Examining assumptions

As part of a joint project with RTI International, WRI released a working paper called: The Economic Impact of the Clean Power Plan: How Studies of the Same Regulation Can Produce Such Different Results.

Seeking to "add clarity to the debate over the economic effects of regulation like the CPP," Kaufman teamed up with WRI public policy expert Eleanor Krause to look in detail at the four principal studies projecting the economic impact of the CPP.

Kaufman and Krause reviewed one study by the EPA and three by private consulting firms Synapse Energy Economics,  MJ Bradley & Associates and NERA. Results varied.

“Of the four studies, only one study showed electricity bills increasing unequivocally as a result of the CPP," Kaufman wrote in a WRI blog post. "And it was funded by an advocacy group representing American coal producers."

At the heart of this discrepancy lay the assumptions upon which each study used to arrive at its economic forecast, including:

• Future costs of solar and wind electricity


• Future costs of demand-side, energy-efficiency programs


• Future natural gas prices


• Cooperation among states in achieving their emissions targets

Low-balling renewable energy

Kraus and Kaufman found that the NERA study, funded by the American Coalition for Clean Coal Electricity, an advocacy group for U.S. coal producers, relied on "assumptions at or above the top of the range of expert forecasts or empirical estimates of the costs of clean energy available in late 2015 when the studies were conducted," Kaufman wrote.

"In other words, the study assumed that the rapid advances in clean technologies like solar and wind energy prior to 2015 would not continue into the future, a hypothesis that has already been proven wrong."

Indeed, the Energy Information Agency's Power Monthly reports consistently underestimated the rapid growth of renewable energy. Month after month, year after year, these pessimistic projections proved inaccurate.

In contrast, the two other privately-funded studies Kaufman and Kraus analyzed show that "electricity bills would unequivocally fall on account of the CPP." The EPA study concludes that electricity costs will initially rise, then fall.

So, which is it?

Torture numbers, and they’ll confess to anything

- Gregg Easterbrook

In the paper, Kaufman and Kraus suggest that none of the studies they examined offer "conclusive evidence about the costs of the CPP." They instead call these conclusions "'canaries in the coal mine,' in that the optimism/pessimism with respect to these assumptions is suggestive of the optimism/pessimism regarding the many additional assumptions that are inputs to any CPP study."

"Our findings suggest that modeling can be used to justify forecasts of highly positive or negative economic effects of climate regulations," Kaufman explained, "depending on assumptions made with respect to technological progress, commodity prices, and policy implementation."

In other words: It's possible to model pre-conceived notions of America's energy future into forecasts of CPP's impact, and using such forecasts is anathema for making sound public policy decisions.

"Going forward," Kaufman and Kraus concluded, "policymakers, judges, and the general public should be wary of estimates regarding the effects of regulations like CPP on the economy, because the results of these studies may reflect the optimism or pessimism of the study assumptions as opposed to the inherent attributes of the regulation."

This approach seems especially cogent given the disconnect between claims made by the Trump administration and economic indicators within the U.S. renewable energy sector.  As with most important policy decisions, transparency is essential -- and lacking, WRI concluded.

Covering all the bases

Making sure not to leave any doubt of its intent, the draft order ends by proposing a cursory repeal of four additional Obama-era executive orders:

• EO 13693 - Planning for Federal Sustainability in the Next Decade


• EO 13690 - Establishing a Federal Flood Risk Management Standard


• EO 13677 - Climate-Resilient International Development


• EO 13653 - Preparing the United States for the impacts of Climate Change

Last year the Supreme Court issued a stay temporarily halting progress on the Clean Power Plan. The order calls for Attorney General Jeff Sessions to "ask the courts to hold in abeyance [a suspension] or remand litigation regarding the listed rules while these administrative proceedings are underway."

As mentioned at the outset, TriplePundit reviewed an early and "speculative" draft of the proposed Energy Independence executive order. The final wording remains to be seen. We can only guess if the irony of a phrase like “meaningless environmental impacts” is intended or entirely lost on its authors.

What is clear is that the executive order as written makes claims based on faulty, pessimistic assumptions -- putting the nation's credibility, energy future and independence at risk.

You can read the studies the World Resources Institute examined in full here:

• NERA


• Synapse Energy Economics


• MJ Bradley


• EPA

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Image credit: Emilian Robert Vicol, courtesy Flickr. Graph courtesy of World Resources Institute