The 4 accounting tricks Pruitt used to justify EPA's Clean Power Plan repeal

This post was co-authored by Ben Levitan, an EDF attorney.

The projected climate and health benefits from the Clean Power Plan weigh heavily in favor of reducing carbon pollution from our electricity sector – but in his agency’s proposal this week to repeal the plan, Scott Pruitt used four deceptive accounting tricks to change those numbers.

His goal: to mask the consequences the repeal will have for our climate and for the thousands of lives that could be cut short as a result of the Clean Power Plan’s demise.

Here are the four key tactics the U.S. Environmental Protection Agency employed under Pruitt to inflate the costs and hide the benefits of the plan:

1. Ignores up to $34B in projected health benefits

The EPA’s original analysis of the Clean Power Plan found that it would avoid thousands of premature deaths each year by reducing particulate matter pollution as a co-benefit of reducing carbon – yielding up to $34 billion in annual health benefits by 2030.

Pruitt’s draft proposal assumes away those benefits by asserting – contrary to established medical research – that there is zero health impact from reducing particulate matter pollution below certain “threshold” levels.

The proposal also suggests that the EPA can count only the climate benefits associated with carbon pollution, with no consideration of any other health benefits.

This claim that there is a “threshold” level of particulate pollution below which human health is no longer affected directly contradicts the American Heart Association, and the idea was completely discredited by an expert panel convened by the EPA under the George W. Bush administration.

It also runs contrary to the EPA’s own long-standing practice [PDF].

2. Artificially inflates plan’s costs by up to $25B

The EPA originally anticipated that the electricity sector would comply with the Clean Power Plan in part through investments in demand-side energy efficiency, which also directly reduces electricity bills for families and businesses.

Except, the upside-down accounting in Pruitt’s proposal adds those energy efficiency investments to the costs of the Clean Power Plan – without deducting the electricity savings those investments yield.

This makes it look like the power sector is paying for both energy efficiency and the electricity that it no longer needs to produce. Pruitt’s accounting gimmick includes billions of dollars of imaginary electricity costs – for electricity that will never be generated or purchased.

It also relies on the higher discount rate of 7 percent, as opposed to 3 percent,  for energy efficiency investments – providing no meaningful justification for a choice that further inflates costs by $6.2 billion. The higher discount rate means a lower present-day value of future savings, and therefore higher costs of saved energy.

These deceptive accounting tricks, according to Pruitt’s proposal, increase the cost of the Clean Power Plan by as much as $25.5 billion by 2030.

3. Undervalues true cost of carbon by nearly $20B

The social cost of carbon is the estimate of damages that climate pollution causes for families and communities. It factors in the cost from more intense hurricanes, heat waves, wildfires, flooding and many other threats  climate change poses.

The Clean Power Plan utilized an estimate [PDF] of the social costs of carbon developed over many years by experts from a dozen federal agencies who used the best available science as well as public input.

But Pruitt’s proposal uses an unrealistically low figure that heavily discounts the costs of climate change – even though the National Academy of Sciences and leading experts have concluded that the approach Pruitt uses severely undervalues the costs of climate change in the United States and abroad.

By hiding the costs of climate change in this way, Pruitt’s proposal vastly understates the benefits of reducing carbon pollution under the Clean Power Plan.

4. Ignores lower costs from clean energy trend

In the two years since the EPA finalized the Clean Power Plan, its goals have become even more achievable and cost-effective than originally projected – thanks to electricity-sector developments such as the sharply declining costs of renewable energy.

But Pruitt’s proposal to repeal the plan has made no attempt to update its economic analysis, and does not appear to acknowledge that recent studies [PDF] of the Clean Power Plan have found compliance costs are now much lower than his agency originally estimated.

The EPA recognized and evaluated [PDF] many of these precise studies as part of its Clean Power Plan deliberations. Yet, for the sake of repealing the plan, Pruitt has chosen to downplay their findings.

By not reflecting the best available data – and by using discredited methods to revise and falsify the plan’s health and climate benefits – Pruitt’s proposal is fundamentally flawed. We hope, in the end, facts and reason will prevail.