Chapter 5
The Benefits Outweigh the Costs
The Clean Power Plan will save billions by avoiding climate-related damage to health and property.
“Climate inaction is costing us more money, in more places, more often”
— U.S. Environmental Protection Agency administrator Gina McCarthy, unveiling the Clean Power Plan to cut carbon pollution from power plants
Billions of dollars in property damage. Crop losses. Water shortages. Increased disease. Human suffering.
These are among the “potentially calamitous” costs of climate change.
By the U.S. Environmental Protection Agency’s estimates, the Clean Power Plan will deliver annual benefits between $55 billion and $93 billion by 2030 from avoided climate-related damage to human health and property — far outweighing its estimated $8.8 billion annual cost.
NRDC analysis, however, suggests that the plan will actually produce a savings rather than a cost for the electricity system. That analysis projects a savings of between $6.4 billion and $9.4 billion annually in 2030 rather than the estimated $7.3 billion to $8.8 billion cost, for the electric power industry to meet carbon-reduction targets.
Industrial costs for investing in energy efficiency and cleaner energy sources, such as solar and wind, are likely to be less than the EPA projects, according to the NRDC analysis. The EPA also underestimated the potential growth for low-cost energy efficiency and cleaner energy sources.
Not only will the Clean Power Plan save billions by avoiding climate-related damage to health and property, but electricity customers will also benefit from lower electric bills, projected to drop by about 8 percent by 2030, according to the EPA.
If utilities invest heavily in energy efficiency to meet carbon-reduction targets, electricity customers would save $37 billion in 2020 alone, an NRDC study found. For the typical household, that’s an average savings of about $103 annually.
Severe weather is the no. 1 cause of power outages in the United States.
A March 2015 report by DBL Investors, a San Francisco–based venture capital firm, found that states generating more electricity from cleaner energy sources — such as South Dakota (wind) and California (solar) — have shown lower average retail electricity prices than states producing less electricity from renewable sources.
Public Citizen, a consumer advocacy group, said that Clean Air Act regulations “historically have proved far more beneficial and less costly than what is forecast when they are created,” noting that “the total benefits of Clean Air Act rules from 1970 to 1990, for instance, were 43 times greater than the costs.”
Consider the costs of inaction.
Climate change could cost the U.S. economy billions of dollars, from lower crop yields in the Midwest to massive property losses from rising sea levels on the East and Gulf coasts, warned a 2014 report by a bipartisan business-focused group called the Risky Business Project; the organization is cochaired by former New York Mayor Michael Bloomberg, former Treasury Secretary Henry Paulson, and Tom Steyer, a clean energy philanthropist and founder of NextGen Climate Action.
Seeing a clear and present danger in climate change, a growing majority of small business owners want government to address the threat, according to a poll commissioned by the American Sustainable Business Council, which represents more than 200,000 businesses nationwide.
“Climate change poses tremendous risks — insurance premiums will skyrocket, electricity prices will soar, jobs will be lost, food and transportation costs will dramatically rise, and taxes will likely increase in order to pay for needed infrastructure upgrades,” Richard Eidlin, director of public policy for the American Sustainable Business Council, wrote in the San Jose Mercury News.
Nearly one-third of companies surveyed by University of Notre Dame researchers reported having experienced climate change impacts that hurt their bottom lines, and more than 70 percent said they are at least “somewhat concerned” that climate change will have a material impact on their businesses.
“We must act now. The longer we wait, the more painful — and expensive — the consequences will be.”
Two-thirds of respondents expressed concern over increased operational and capital costs and reported they had already experienced cost increases or thought they were a likely outcome, according to a May 2015 report on the survey, conducted by Notre Dame’s Global Adaption Index with Four Twenty Seven, a climate risk and adaptation consulting firm based in San Francisco.
“We know climate change has the potential to impact our business,” the clothing company Gap, Inc. reported. “In fact, we have likely already experienced it. In 2010, cotton prices hit a nearly two-decade high…Volatile climate patterns in key cotton-producing regions played a role.”
The fishing and tourist industries could suffer from ocean acidification — the result of oceans absorbing the growing amounts of carbon dioxide. Change in the water’s chemistry makes it more difficult for some creatures with calcium carbonate shells or skeletons, including mollusks, crabs, and corals, to grow their shells and survive.
“Ocean acidification has already cost the oyster industry in the Pacific Northwest nearly $110 million and jeopardized about 3,200 jobs,” said Julia Ekstrom, a former NRDC scientist and the lead author of a February 2014 article on the topic in the journal Nature Climate Change. Coastal communities from Maine to the Chesapeake Bay to the Louisiana bayou face similar risks of economic harm, according to the article.
Then there are the enormous costs from extreme weather.
An NRDC study found that when all federal spending on droughts, storms, floods, and forest fires were added up in 2012, the U.S. Climate Disruption Budget was nearly $100 billion — more than Washington D.C. spent on education or transportation.
In 2012, Superstorm Sandy caused about $67 billion in damage and 159 deaths, according to the National Oceanic Atmospheric Administration. It damaged or destroyed at least 650,000 housing units and 250,500 insured vehicles. More than 300,000 business properties were also affected, according to the reinsurance firm Aon Benfield.
In addition, the New York City subway system suffered the worst damage in its 108-year history. The New York Stock Exchange experienced a historic two-day closure as a result of the storm, the longest closure since the blizzard of 1888.
Superstorm Sandy was a cruel reminder of how destructive coastal storms can be in our dense urban environment.
“Sandy was a cruel reminder of how destructive coastal storms can be in our dense urban environment — storms that, with climate change, are expected to increase in intensity,’’ said a 2013 report calling for a nearly $20 billion plan ordered by then-Mayor Michael Bloomberg to prepare New York City for extreme weather and rising seas.
Miami Beach is spending hundreds of millions of dollars on pumps to keep rising sea levels from flooding streets even on sunny days. Other coastal areas are bracing for similar impacts.
“Severe weather is the no. 1 cause of power outages in the United States and costs the economy billions of dollars a year in lost output and wages, spoiled inventory, delayed production, inconvenience, and damage to grid infrastructure,’’ stated a 2013 report by the White House Council of Economic Advisers and the U.S. Department of Energy’s Office of Electricity Delivery and Energy Reliability. It forecasts the number of outages caused by severe weather to rise “as climate change increases the frequency and intensity of hurricanes, blizzards, floods, and other extreme weather events.”
The White House Council of Economic Advisers also warned that the cost of addressing climate change will rise by about 40 percent each decade in which action is delayed — and failing to act would risk substantial economic damage.
“We must act now,” says Rhea Suh, NRDC’s president. “The longer we wait, the more painful — and expensive — the consequences will be.”
From Clean Power: The Case for Carbon Pollution Limits
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