President Donald Trump has long vowed to erase former President Barack Obama’s restrictions on coal plants, and then announced he was pulling out of the Paris climate accord, so it's no surprise he plans to eliminate the rule. | Jack Gruber/Getty Images EPA's climate rule withdrawal will include big changes to cost calculations

The Trump administration will consider fundamentally limiting the way the federal government counts benefits from curbing climate change and air pollution in an upcoming proposal to rescind former President Barack Obama’s signature climate regulation, according to multiple sources familiar with recent drafts.

In nixing the Clean Power Plan, EPA will suggest changing the benefits it counts, which would bolster its arguments that the rule’s economic burdens would outweigh its gains from cleaner air, reduced illnesses and greater energy efficiency.


President Donald Trump has long vowed to erase Obama’s restrictions on coal plants, and then announced he was pulling out of the Paris climate accord, so it's no surprise he plans to eliminate the rule. But the fine print will have big implications for the inevitable yearslong legal fights to come. It could anger environmental advocates while satisfying some industries and conservative states.

“It may seem like inside baseball, but this is going to set the tone,” said John Larsen, a director at the analysis firm Rhodium Group. “We haven’t seen the details of any sort of regulatory plan from this administration yet on climate.”

Morning Energy newsletter The source for energy and environment news — weekday mornings, in your inbox. Email Sign Up By signing up you agree to receive email newsletters or alerts from POLITICO. You can unsubscribe at any time. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

EPA could release its withdrawal proposal in the coming days, while leaving the door open to eventually replace the rule with one that would pose minimal costs but provide few climate benefits, as POLITICO reported last month.

Among other changes, Trump’s EPA will drastically alter how it uses the social cost of carbon, a metric for assigning a monetary value to curbing emissions. The agency will decline to consider any social or economic benefits the rule creates outside the United States — unlike the Obama administration, which included worldwide impacts in its calculations.

And it will count far fewer of the health benefits that might have come from reducing air pollutants that cause premature deaths, heart attacks and asthma hospitalizations.

Taken together, the sources say, the recalculations eliminate tens of billions of dollars of the rule’s benefits, which Obama’s EPA had contended would outweigh the costs of enforcing a faster shift away from coal-fired power. The new numbers could be meant to aid EPA Administrator Scott Pruitt’s legal case for scrapping the rule.

The rule’s supporters are already accusing Trump and Pruitt of promoting fake math. They say the administration is ignoring the reality that power companies are making the transition to green energy even faster than Obama anticipated.

“Like so many things, they seem to be completely ignoring what’s happening in the real world,” Janet McCabe, who led EPA’s air office under Obama, said of Trump’s team. “Every other story is about how costs are coming down, about how emissions are reducing, about how power companies are making choices to close their coal plants or run them less because they’re so expensive.”

David Doniger, climate director for the Natural Resources Defense Council, said that “the courts are going to look very, very hard at this kind of cooking of the books.”

“There are two kinds of ways to get the law wrong, to play fast and loose with science and facts or with the economics, and you can lose for either or both reasons,” he said.

But EPA spokeswoman Liz Bowman said that if anyone's numbers were questionable, it was Obama's.

“While it appears you are writing a piece based on rumors about CPP, the facts are that the Obama administration’s estimates and analysis of costs and benefits was, in multiple areas, highly uncertain and/or controversial," she said in an email Thursday night.

The businesses and states that opposed Obama’s regulation say it’s about time EPA reconsidered the costs. For example, it’s reasonable to count only the rule's U.S. benefits since Americans would be paying the costs, said Jeff Holmstead, an industry lawyer who was EPA’s air administrator under former President George W. Bush.

The math surrounding the rule has long been a political lightning rod.

The Obama-era EPA said the rule would be a net gain for society because shifting to cleaner energy sources would slow climate change and reduce pollution-related illnesses, among other benefits. In contrast, studies financed by conservative groups estimated that the regulation would cost the economy hundreds of billions of dollars during the same time frame.

The rule sought to cut the U.S. power industry’s carbon pollution 32 percent by 2030, compared with 2005 levels — and as of two years ago, the country was more than halfway there. The regulation was the centerpiece of Obama’s pledge that the U.S. would fulfill its part of the 2015 Paris climate agreement.

Trump has since announced he’s pulling the United States out of Paris, unless he can “negotiate” a more favorable deal, and he’s ordered EPA to undo a host of Obama-era regulations, chief among them the Clean Power Plan.

He has also directed his agencies to recalculate Obama’s math on the social and economic impacts of climate change.

In a March executive order, Trump disbanded an interagency team that had been working on revising the social cost of carbon.

He also told his agencies to revert to White House guidance from 2003, which directed regulators performing cost-benefit analyses to “focus on benefits and costs that accrue to citizens and residents of the United States.” Any look at international implications should go into a separate report, the George W. Bush-era guidance said.

That “America First” approach to regulation is a big departure from Obama’s methods, which considered the worldwide effects of reducing U.S. carbon pollution, but it will help Trump’s EPA justify repealing the rule.

In the Clean Power Plan, the Obama administration had estimated that each metric ton of carbon dioxide imposes about $40 of costs on society. That means the plan would yield about $30 billion in global climate benefits by 2030 — but only $2 billion to $7 billion in domestic gains, less than the rule’s estimated cost, according to the think tank Brookings.

Experts who support the international strategy say going back is misguided. Michael Greenstone, the chief economist for Obama’s Council of Economic Advisers in 2009 and 2010, told lawmakers in March that using a social cost of carbon that incorporates only U.S. benefits is "essentially asking the rest of the world to ramp up their emissions."

Noah Kaufman, an economist for World Resources Institute’s climate program, said that “because climate change is a global problem, it requires a global solution.”

“If countries try to solve it only for themselves, not taking into account how U.S. emissions affect the global community, and the global community doesn’t consider how it affects us … you’re just never going to solve the problem,” Kaufman said.

EPA will also refuse to count many of the health benefits that the Obama administration estimated would arise as side effects of reducing carbon emissions, the sources said. Specifically, Obama’s regulators accounted for the fact that levels of sulfur dioxide, nitrogen dioxide and particulate matter — pollutants already regulated by other EPA rules — would decline along with the greenhouse gases.

In contrast, Trump’s EPA won’t count those ancillary reductions if the pollutants were already below levels that the agency has deemed safe in other standards.

Environmental advocates say that logic is wrong, because further curbing those pollutants means people will be even healthier. But Holmstead said that while it’s legitimate for EPA to look at the other pollutant reductions the rule might achieve, the agency shouldn’t count them to offset costs.

The changes to the cost-benefit analysis will come in a regulatory impact analysis that aims to highlight a wide range of cost estimates for the rule. The analysis will accompany EPA’s proposed rule for rescinding the Clean Power Plan and its advanced notice of proposed rulemaking on options to replace the regulation.

Obama's critics estimate the rule would force consumers to pay $200 billion more by 2030 and saddle electricity customers with double-digit price hikes in many states, according to a study contracted by the conservative American Energy Alliance’s Institute for Energy Research.

The Obama-era EPA and many academic institutions and think tanks have argued that the rule would cost far less, between $5 billion and $8 billion in 2030 by the agency’s previous calculations. Plus, they have said, the social benefits of reducing carbon levels, slowing climate change and ratcheting down illness-causing air pollution would far offset the costs, achieving $26 billion to $45 billion in net benefits by 2030.

Advocates say costs are already proving to be even lower than expected as power companies move away from coal on their own.

The Institute for Policy Integrity at New York University School of Law this week released a paper compiling multiple studies that have found that Clean Power Plan compliance costs have fallen dramatically since the rule came out in 2015. That included an analysis from the American Petroleum Institute that estimated lower costs than EPA’s original expectations.

“The takeaway from this should be, if we’re going to do anything with the Clean Power Plan right now, given these trends we should be strengthening the goals,” said Jack Lienke, an author of that paper and regulatory policy director for the institute. “Emissions can be reduced much more cheaply. That’s a reason to set more aggressive targets, not to weaken targets or repeal them altogether.”