Beacon Hill Institute Analyzed An Imaginary Proposal To Massively Inflate The Clean Power Plan's Projected Costs And Deny Its Projected Benefits

Beacon Hill Institute Alleged That Clean Power Plan Will Have Far Greater Costs, Far Smaller Benefits Than EPA Predicted. Upon announcing the Clean Power Plan, the EPA released a detailed regulatory impact analysis of the proposal. The EPA found that once the plan is fully implemented in 2030, its annual compliance costs would be $7.3-8.8 billion, while its total annual climate and health benefits would be worth $55-93 billion. By contrast, the Beacon Hill Institute's national study claimed that in 2030 the Clean Power Plan will cost $19.5 billion annually and produce annual benefits worth just $3.5 billion. [EPA Regulatory Impact Analysis of the Clean Power Plan, June 2014; EPA Fact Sheet: Clean Power Plan Overview, accessed on 4/10/15; Beacon Hill Institute, January 2015]

But BHI Admitted Their Study Did Not Actually Examine EPA's Plan. In a blog post, the Natural Resources Defense Council's (NRDC) Laurie Johnson pointed out that the BHI studies do not actually analyze the Clean Power Plan. Johnson explained that while the EPA plan “sets limits on a very specific industry, the electricity system,” the Beacon Hill Institute instead “applies a back-of-the-envelope calculation to an economy-wide carbon tax analysis done by the Department of Energy's Energy Information Administration.” In response to NRDC, BHI defended its studies -- but tellingly did not deny that they fail to address the Clean Power Plan itself:

In order to analyze the effects of the CPP, it is necessary to determine the cost of achieving the reduction in carbon emissions aimed for the EPA. Because the EIA analyzes a scenario in which carbon emissions are reduced by about the amount intended by the EPA, its analysis provides a useful benchmark for the cost of achieving the intended reductions in emissions. This cost, put by the EIA at $10 per tonne of carbon eliminated, helps get us to an estimate of the cost of the EPA rules on the economy. [NRDC's Switchboard, 2/24/15; Beacon Hill Institute, 3/13/15]

Media Fact-Checkers Previously Declared It “False” To Cite A Study That Didn't Analyze EPA's Actual Plan. The BHI study is reminiscent of another study attacking the Clean Power Plan by the U.S. Chamber of Commerce. The Chamber study was published before the Clean Power Plan was released and analyzed an imaginary proposal that was nothing like what EPA ultimately laid out, but that didn't stop critics from frequently citing the Chamber study to attack the EPA proposal after it was unveiled. PolitiFact noted that the Chamber acknowledged its “estimates are not based on the [EPA] goals as announced,” and determined that the Chamber's numbers were “false.” The Washington Post's Fact Checker blog similarly noted that the Chamber had admitted its figures “do not apply at all to the EPA rule as written,” and awarded “four Pinocchios” to Republican officials who cited it to criticize the EPA. [PolitiFact, 6/2/14; The Washington Post, 6/3/14]

Environmentalists, Economists Highlighted Other Major Problems With BHI's Research Methods

Union of Concerned Scientists: BHI Ignored Savings From Energy Efficiency. The Union of Concerned Scientists criticized the BHI studies of the Clean Power Plan for “assum[ing] that states will not choose to use renewable energy and energy efficiency to cost effectively meet their targets”:

BHI wrongly assumes that states will not choose to use renewable energy and energy efficiency to cost effectively meet their targets for reducing carbon pollution under the EPA's proposal. In reality, many states already choose to require utilities to meet targets for increasing renewable energy and improving energy efficiency, policies that will count towards compliance. By excluding energy efficiency from its analysis, BHI is simply ignoring savings on electricity bills projected by the EPA, and those delivered by actual energy efficiency programs in the real world. [Union of Concerned Scientists, 3/12/15]

NRDC: BHI Used Lowball Estimate For Social Cost Of Carbon. The National Resources Defense Council noted that Beacon Hill used an implausibly low estimate for the social cost of carbon (SCC), which measures the economic damages associated with increased carbon dioxide emissions and was used by the EPA to estimate the Clean Power Plan's climate-related benefits. While the EPA -- with input from economic experts and other federal agencies -- has estimated that the SCC is approximately $40 per metric ton of carbon pollution, the Beacon Hill Institute used a SCC of just $10 per metric ton of CO2. Both the EPA and United Nations Intergovernmental Panel on Climate Change (IPCC) have noted that even the $40/metric ton figure likely underestimates the true social cost of carbon. As the EPA explained: “The models used to develop SCC estimates do not currently include all of the important physical, ecological, and economic impacts of climate change recognized in the climate change literature because of a lack of precise information on the nature of damages and because the science incorporated into these models naturally lags behind the most recent research.” However, when challenged on its use of a low SCC by NRDC, the Beacon Hill Institute resorted to a form of climate science denial, stating: “Many economists argue that the social cost of carbon should be assumed to be zero due to the uncertainty as to the level of warming that is induced by CO2 emissions, and the level of harm that said warming would produce.”   [NRDC's Switchboard, 2/24/15; EPA Fact Sheet: Social Cost of Carbon, November 2013; Beacon Hill Institute, 3/13/15]

NRDC: BHI Ignored Co-Benefits From Reducing Other Pollutants. BHI's Paul Bachman admitted to The Guardian that its studies excluded the “co-benefits” of the Clean Power Plan, which the EPA describes as “ancillary emission reductions ... of SO2 [sulfur dioxide], NO2 [nitrogen dioxide], and directly emitted PM2.5 [fine particulate matter], which would lead to lower ambient concentrations of PM2.5 and ozone.” The NRDC explained the significance of these “co-benefits”:

BHI's net “cost” calculation (quotes because the CPP actually has a high net benefit, not cost) is dramatically inflated because it removes “co-benefits” from reducing carbon pollution emissions. These are all the lives saved, heart attacks avoided, asthma attacks avoided (and many more benefits) due to reductions in other pollutants on top of the carbon pollution reduction--that also happen to decline when you reduce carbon pollution. [The Guardian, 2/23/15; EPA Regulatory Impact Analysis of the Clean Power Plan, June 2014; NRDC's Switchboard, 2/24/15]

Beacon Hill Studies Used Highly Flawed Economic Model. As the Iowa version of the Beacon Hill Institute study noted, “Beacon Hill used their State Tax Analysis Modeling Program (STAMP) to estimate the economic effects of the CPP regulations.” But the STAMP model is deeply flawed, as documented in a 2013 report by economists at Synapse Energy Economics that examined how the American Legislative Exchange Council (ALEC) used STAMP to estimate the economic impacts of renewable energy standards. The report noted that STAMP “misses reality by a mile” by assuming “an imaginary world of full employment” where new jobs can only be created “by cutting taxes or electric rates,” and that "[a]rbitrary judgments are used where data are not available, boosting estimates of job losses." As one of the Synapse report's authors, Tuft University's Frank Ackerman, explained in Grist: “STAMP has never seen a government program that it liked or a tax cut that it disliked. Those who want an objective analysis of the costs and benefits of renewable energy, however, will need to look elsewhere.” [Public Interest Institute, February 2015; Synapse Energy Economics, 1/4/13; Grist, 2/23/13] 

Reports Part Of Coordinated Campaign Connected To Fossil Fuel Interests

BHI Is Jointly Releasing Clean Power Plan Studies With Members Of The State Policy Network. So far, the Beacon Hill Institute has jointly released state-based reports with the following organizations, all of which are members of the State Policy Network (SPN). [State Policy Network directory, accessed 4/8/15]

• Iowa: Public Interest Institute, February 2015
• Louisiana: Pelican Institute for Public Policy, February 2015
• New Mexico: The Rio Grande Foundation, January 2015
• North Carolina: The Civitas Institute, January 2015
• South Carolina: Palmetto Promise Institute (formerly Palmetto Policy Forum), February 2015
• Virginia: Thomas Jefferson Institute for Public Policy March 2015
• Wisconsin: MacIver Institute for Public Policy, January 2015

BHI And State Policy Network Both Have Financial Ties To Oil Billionaire Koch Brothers. The Washington Post reported that both BHI and SPN “have received donations from foundations funded by the Koch brothers.” As Politico reported, a 2013 Center for Media and Democracy analysis of the State Policy Network's IRS filings found that “its think tanks' combined revenue in 2011 topped $83 million, in large part with funding from conservative money groups like the Donors Trust and Donors Capital Fund, which receive large donations from groups tied to the Koch brothers and other prominent conservatives.” The Center for Public Integrity has reported that oil is the “core of the Koch business empire,” and that it is in the Koch brothers' “commercial interest” to oppose policies -- such as the Clean Power Plan -- that would reduce America's dependence on carbon-based energy sources. [The Washington Post, 11/24/12; Politico, 11/13/13; Center for Media and Democracy, November 2013; Center for Public Integrity, 4/6/11]

BHI's Director Denies Scientific Consensus That Human Activities Are Primary Cause Of Global Warming. The Guardian reported that BHI director David Tuerck told the newspaper “he had mixed views on climate change,” and quoted Tuerck as saying: “I am not certain that those emissions are significant enough to offset other factor changing the climate.” However, according to the United Nations' Intergovernmental Panel on Climate Change (IPCC), “It is extremely likely that human influence has been the dominant cause of the observed warming since the mid-20th century.” The IPCC defines “extremely likely” as having 95-100% probability. NASA similarly notes: “Most climate scientists agree the main cause of the current global warming trend is human expansion of the 'greenhouse effect' -- warming that results when the atmosphere traps heat radiating from Earth toward space.” [The Guardian, 2/23/15; IPCC, 2013; NASA.gov, accessed 4/10/15]

BHI Was Repudiated By Its Own Host University For Seeking To Undermine A Climate Change Initiative. The Guardian reported the Beacon Hill Institute, which is based in the economics department of Suffolk University in Boston, issued a grant proposal to carry out research that would help “pare back or repeal” the Regional Greenhouse Gas Initiative (RGGI), a program by northeastern states to reduce their carbon pollution. Suffolk University responded that the grant proposal's goals “were inconsistent with Suffolk University's mission,” and that the only reason the proposal wasn't rejected is that it “did not go through the university's approval process.” [The Guardian, 12/5/13]

BHI Previously Released Koch-Funded Studies Used By Fossil Fuel Front Group In Campaign Against State Renewable Energy Standards. The Huffington Post reported how BHI studies were similarly released in states across the country in 2012 as part of a nationwide campaign against states' renewable energy standards:

[T]he Washington Post reported ALEC's board of directors adopted a Heartland-crafted model bill that would repeal state standards requiring utilities to ramp up their use of renewable energy. The model legislation, the “Electricity Freedom Act,” claims these requirements--currently on the books in 29 states and the District of Columbia--will dramatically drive up electricity rates.

[...]

To make its case, ALEC--whose members include major coal, oil and electric utility industry companies--cites analyses by Suffolk University's Beacon Hill Institute commissioned by the Koch-funded American Tradition Institute and “free-market” state think tanks associated with the Koch-funded State Policy Network. The analyses examine current or proposed standards in more than a dozen states, including Colorado, Kansas, Michigan, Minnesota and New Jersey. The studies were partly funded by, you guessed it, the Koch brothers. [Huffington Post, 12/7/12]

BHI Studies Funded By Rick Berman, The “Dr. Evil” Of Corporate Front Groups

Reports Funded By Rick Berman's Employment Policies Institute. The Guardian reported that the recent BHI studies were funded by the Employment Policies Institute, a group run by Richard Berman, a corporate lobbyist known as “Dr. Evil,” whose front groups “have launched attack ads against the EPA, environmental groups, fishermen and sportsmen, and green building organisations.” As CBS' 60 Minutes documented, Berman is infamous for being the “arch-enemy” of government efforts to reduce the use of “products like caffeine, salt, fast food and the oil they fry it in,” and for opposing “Mothers Against Drunk Driving, animal rights activists, food watchdog groups and unions of every kind.” [The Guardian, 2/23/15; CBS, 60 Minutes, 2/25/11]

Berman Solicited Secret Funding From Oil And Gas Industry Executives For Anti-Environmental Campaign. The New York Times reported that Berman solicited up to $3 million from oil and gas industry executives for a campaign against environmental protections, with the promise that their involvement would remain hidden:

Mr. Berman solicited up to $3 million from oil and gas industry executives to finance an advertising and public relations campaign called Big Green Radicals.

[...]

Mr. Berman repeatedly boasted about how he could take checks from the oil and gas industry executives -- he said he had already collected six-figure contributions from some of the executives in the room -- and then hide their role in funding his campaigns. [The New York Times, 10/30/14]

BHI's Sham Studies Have Been Covered In Several States

BHI Studies Have Been Released In Seven States So Far. The Beacon Hill Institute (BHI) has so far released a national report and seven state reports alleging that the Environmental Protection Agency's carbon pollution standards will increase electricity prices and cost jobs. The state-based reports have been released in Iowa, Louisiana, New Mexico, North Carolina, South Carolina, Virginia, and Wisconsin. [Memo from Energy & Policy Institute and Center for Media and Democracy, 2/23/15]

BHI Studies Will Be Released In Nine Other States. A spokesman for Suffolk University told The Guardian that BHI studies will be released in a total of 16 states. States where the studies have not yet been released include Minnesota, Mississippi, Nevada, Tennessee, Rhode Island, Washington, Ohio, Alaska, and Utah. [The Guardian, 2/23/15]

11 Newspapers Have Published Op-Eds Citing BHI's Clean Power Plan Studies. At least 11 newspapers already published op-eds promoting the Beacon Hill Institute studies. The op-eds were authored by state Representatives, executives from groups in the State Policy Network, and in one case National Review contributing editor Quin Hillyer. The op-eds appeared in the following states and publications:

• New Mexico: Las Cruces Sun-News, 2/8/15; Farmington Daily Times, 2/7/15; Silver City Sun-News, 2/8/15
• Wisconsin: La Crosse Tribune, 2/19/15; Milwaukee Journal Sentinel, 2/15/15; Chippewa Herald, 2/6/15 via Nexis; Dunn County News, 2/6/15; Superior Telegram, 3/27/15
• North Carolina: The News & Observer, 2/10/15
• Louisiana: The Advocate, 2/22/15; Greater Baton Rouge Business Report, 2/23/15

Most Recent BHI Study Released In Virginia. Watchdog.org, the conservative news site run by the Franklin Center, reported on the latest Beacon Hill report, which was released in Virginia jointly with the Thomas Jefferson Institute for Public Policy. The Virginia study was also amplified by two other conservative news sites, Townhall.com -- which reprinted the Watchdog.org post -- and the Daily Caller. [Watchdog.org, 4/1/15; Townhall, 4/1/15; Daily Caller, 4/1/15]