Koch-Supported Group Offers Skewed Argument Against Clean Power Plan

The Beacon Hill Institute uses misleading information in reports aimed at derailing EPA plan to reduce carbon emissions, environmentalists say.

The Mitchell Power Station, a coal-fired power plant built along the Monongahela River in New Eagle, Pennsylvania, was shut down last year. Through its Clean Power Plan, the U.S. EPA and the Obama administration have been taking major steps to get coal-fired power plants into compliance with carbon regulations. Credit: Jeff Swensen/Getty Images

A conservative think tank connected to the political network overseen by Charles and David Koch is publishing a series of misleading reports attacking the Obama administration's plan to reduce carbon emissions from power plants, according to advocates of clean energy.

The free-market Beacon Hill Institute, the research arm of the Suffolk University economics department in Boston, argues that the Clean Power Plan will mean exorbitant increases in electricity rates, cause over $8 billion in losses to the economy by 2040 and have "grave effects" on the reliability of the nation's electricity supply.

But the reports, whose findings have been published in op-eds and cited by a member of Congress, are based on questionable and at times bizarre assumptions, environmental groups say. According to the Union of Concerned Scientists, the analyses:

  • Depend on a thoroughly debunked economic model.

  • Ignore the impact of renewables on the energy market.

  • Undervalue the cost of burning carbon to society.

  • Fail to recognize the health effects and other benefits of adopting the Clean Power Plan.

David Tuerck, executive director of the Beacon Hill Institute, said the report was intended to determine the impact of "the inevitable increase in electric rates on the economy."

The Environmental Protection Agency estimates the Clean Power Plan will provide climate and health benefits between $55 billion and $93 billion per year in 2030. Tuerck said the EPA's study and a handful of other reports that show the Obama administration's carbon pollution strategy can boost the economy in the long run "can't possibly be correct." Tuerck is a former chairman of Suffolk University's economics department, where he remains an economics professor.

So far the projections have been published on seven states––IowaLouisianaNew MexicoNorth CarolinaSouth Carolina, Virginia and Wisconsin. Reports for at least nine other states are expected in the coming months.

The 24-year-old Beacon Hill Institute has six staff members. Between 2012 and early 2014, its staff secured close to $600,000 dollars in grants, according to university records. Of that, at least $196,000 was directly from the Kochs, the billionaire oil industry brothers and GOP donors, or through Koch-affiliated organizations. 

To study the Clean Power Plan, the Beacon Hill Institute received $41,500 in funding from the Employment Policies Institute, according to a donor list released by Suffolk University and first reported on by the Guardian. The institute is headed by Richard Berman, a Washington lobbyist for tobacco, alcohol and fossil fuel industries. The donor list recorded Tuerck as having received the money specifically to study the economic impacts of EPA rules on states.

Tuerck acknowledged that his institute conducted the study primarily because it had received funding to examine state-level effects of the Clean Power Plan. He would not confirm the funding source.

The Reports

Environmental groups––including the Natural Resources Defense Council and the Union of Concerned Scientists––say the reports use misleading tactics to exaggerate the costs of the Clean Power Plan. For instance, the Environmental Protection Agency has suggested states look at four strategies to cut carbon pollution, but the Beacon Hill Institute's analysis considers only two. The study's authors evaluate the costs of switching from coal to natural gas, but overlook the potential long-term benefits of increasing energy efficiency and adding renewable energy capacity.

"One could argue that the benefits of energy efficiency measures are zero," the report noted. Households and businesses are more likely to spend their money on other items "that they value most" instead of installing equipment to save energy, it found.

"We know that's not the case," said Rachel Cleetus, lead economist and climate policy manager at the Union of Concerned Scientists. "There are a lot of win-win situations. If you look at any carbon reduction analysis [energy efficiency is] considered the most cost effective option."

The institute's analysis also omits the benefits of carbon reduction policies. Typically, an EPA analysis of any regulation looks at both the direct and indirect impacts. In this case, slashing carbon emissions will also result in a reduction of other pollutants and improve health of residents near power plants. It will provide at least $32 billion in health and climate side benefits by 2030, the EPA found.

But the institute's analysis fails to take these benefits into account.

Similarly, the analysis fails to adequately account for the social cost of carbon emissions, critics say. The social cost of carbon is a measurement of the price society ultimately pays for the damages caused by carbon emissions––such as public health costs, property damage from extreme weather events and loss of agricultural productivity.

The EPA estimates the social cost of a ton of carbon emitted into the atmosphere in 2030 to be anywhere between $17 and $170, but Beacon Hill pegs the cost at $10, citing the price of a potential carbon tax from an Energy Information Administration (EIA) study.

"We felt that the [price] we picked was closest to what the EPA regulations would do," Tuerck said.

Ties to the Koch Network

The seven state reports released so far have been distributed mainly through the State Policy Network, a conservative nonprofit that funds state-level free market think tanks. In the past, the network operated by receiving funding from Charles and David Koch's foundations and then distributed some of the money to its member organizations, the Center for Media and Democracy, a watchdog organization, found.

These member groups, such as the Civitas Institute in North Carolina and John K. MacIver Institute for Public Policy in Wisconsin, have published and promoted Beacon Hill's reports on the Clean Power Plan.

Often the publication of these reports is followed by an op-ed or letter to the editor in a local newspaper, written by a staff member of the state policy group, touting their findings.

The strategy has proved successful in the past.

Between 2012 and 2014, the institute released about a dozen studies on state renewable energy portfolio standards, concluding that the effort to shift to cleaner energy is a net drag on state economies. Those studies were then cited by numerous state legislators to support overturning local renewable energy laws. In Ohio, for example, Sen. Kris Jordan repeatedly cited a Beacon Hill Institute study while demanding that the state's clean energy mandate be repealed. The state currently has a freeze on the 2008 law requiring it to produce more energy from fossil-free sources.

That same strategy is expected to play out with the institute's most recent study on carbon regulation. In fact, last month, U.S. Rep. Steve Scalise (R-Louisiana) cited the Beacon Hill Institute's report during a committee hearing and claimed that the "EPA regulations are...an attack on American jobs by President Obama."

"It's part of bigger picture strategy of industry in trying to roll back clean energy policies and label carbon policies as all pain no gain," said David Anderson, an outreach coordinator at the Union of Concerned Scientists.

'No Bogeyman in the Closet'

Environmental watchdog groups and local activists say that maintaining ties with Beacon Hill is hurting the university's reputation.

"It boggles my mind to think that as an alumna my name is associated with this entity that is really bringing down the reputation of the university as a whole," said Kalin Jordan, who graduated from Suffolk in 2009 and has been campaigning to get the university to refuse funding from the Koch brothers since 2013.

The institute benefits from its association with the well-recognized Suffolk University. When its research is presented by state legislators, its ties with Suffolk provides credibility and leads people to believe the institute is non-partisan, Jordan said.

When Congressman Scalise was questioning EPA administrator Gina McCarthy at a hearing earlier this year, he said, "I'm not sure if you are familiar with the study that just came out. Definitely with Suffolk University!" Later, he referred to the report as the "Suffolk University study."

At one point, the Koch brothers' funds went toward paying Benjamin Powell, a former faculty member in Suffolk's economics department and researcher at the Beacon Hill Institute from 2007 to 2012. Powell, who has since joined Texas Tech University, said he "had complete freedom and authority" in writing policy studies and that the funding from the Kochs did not influence his research.

"As far as I can tell there's no bogeyman in the closet," he said.

Suffolk University spokesman Greg Gatlin declined to comment on Powell's salary "as matter of policy." He said the university "maintains the highest reputation for excellence, as it has for more than 100 years, and we have no data or evidence that would suggest anything to the contrary."

Beacon Hill's arrangement with Suffolk is hardly unique in academic circles. Universities routinely receive funding for research from industry groups and sometimes establish tie-ins with policy think tanks. The influential and conservative Hoover Institute at Stanford, for instance, receives funding both from outside donors and from its endowment.

John Berg, a professor of political science and director of environmental studies at Suffolk, who has been moderately critical of the Beacon Hill Institute, said accepting funding from the Kochs is "problematic depending on the magnitude of the money."

But, Berg said, it's also a question of academic freedom. However many times Beacon Hill's research is debunked, deemed out of line with reality, or seen as serving a right-leaning agenda, the institute has a right to exist, he said.

"They're producing research using a model they believe in and to fund it they're finding people who like the model," he said.

Correction: An earlier version of the story incorrectly stated that all six staff members were full time employees.

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