This issue brief analyzes the 2025 proposal by the U.S. Environmental Protection Agency (EPA) to repeal the Carbon Pollution Standards (CPS) for fossil-fired power plants. The authors evaluate the economic and environmental consequences of this deregulatory move, particularly in the context of the One Big Beautiful Bill Act (OBBBA). The stated goals of the repeal are to lower costs and meet rising electricity demand, but the brief argues these benefits may be illusory. Using the Haiku simulation model, the researchers updated demand projections to reflect the latest economic data. The study aims to reveal the "hidden costs" that an official cost-benefit analysis might overlook, such as unabated greenhouse gas emissions.
The findings suggest that the proposed repeal would actually fail a traditional cost-benefit test even before factoring in climate damages. This is largely due to updated electricity demand forecasts and changes in tax credits under the OBBBA. Repealing the standards is expected to slow the reduction of U.S. greenhouse gas emissions and lead to a resurgence in coal-fired power generation. The authors argue that the deregulatory agenda does not align with the economic realities of the modern power sector. Consequently, the repeal could lead to higher overall costs for society and households despite the administration's stated objectives.
The numeric analysis indicates that repealing the CPS would lead to an increase in coal generation of 169–456 TWh by 2040. This represents a generation level 4.8 to 8.7 times higher than would occur with the standards in place. The brief was published in August 2025 following the EPA's June proposal. The study utilized updated data to show that the repeal fails a traditional cost-benefit test when considering the integration of the OBBBA and new demand forecasts. These statistics highlight the significant shift in the U.S. energy trajectory that the repeal would trigger.
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