Last month the Obama administration released the finalized Clean Power Plan — the first ever carbon emissions standard for existing power plants and arguably the most significant piece of U.S. legislation addressing global climate change to date. The CPP aims to reduce carbon dioxide emissions to 32 percent of 2005 levels by 2030 — a promising feat for a government that has otherwise shown reluctance in addressing the issue on both domestic and international fronts.
The policy serves as Obama’s centerpiece claim going into Paris in December for the 21st Conference of the Parties — a massive convergence intended to achieve international consensus on global greenhouse gas reductions. The United States has certainly lagged behind its European counterparts, earning a “poor” ranking of 44 on the 2015 Germanwatch climate change performance scale (a minor setback since 2014). That ranking, which is evaluated based on emissions, efficiency, renewable energy and aggregate data pulled from over 250 climate policy assessments, stands a fair chance of improvement if the CPP goals are fully realized.
While Obama’s flagship energy policy bodes well for the nation’s committed leadership in climate change mitigation, its immediate implications at the state level are still largely unknown. This piece grasps at these uncertainties by exploring what the CPP entails for the University and Virginia at large, addressing obstacles the state faces in fulfilling its federal requirements. Of equal importance is the role our University can play in the state compliance process.
And finally — as stakeholders in a cleaner, more efficient energy economy, University students ought to be attuned to this discussion moving forward.
What are the policy’s implications for University energy practice?
The CPP applies strictly to major existing power providers such as Dominion Power and Appalachian Power, which will have to hasten their shift to cleaner alternatives such as solar and wind in order to meet the federal quota.
In developing its plan due by September 2016, Virginia can choose between rate-based and mass-based emissions reductions targets, amounting to 934 pounds of CO2 per net megawatt hour or 27,433,111 tons of CO2 from fossil fuel-fired electricity units, respectively. Given that the latter option directly targets the fossil fuel-laden technologies most stifling our state’s progress toward a greener energy economy, it merits our support. After all, with our own commitment of reducing University emissions down to 75 percent of 2009 levels by 2025, any clean-up attempt at the supply source constitutes a collective win.
Although the federal policy will not directly influence our energy policy here on Grounds, the costs of compliance for major utilities could cause an increase in market price. The University, which, according to Paul Zmick, senior associate director of energy and utilities, purchases all of its electricity from Dominion Power, can buffer against market price instability by strengthening its internal production capacity, i.e., by installing energy technologies that displace grid energy supply with that of its own. Current University momentum toward internalizing energy supply, however, shows this shift is occurring irrespective of potential CCP price effect.
As Zmick and Jeffrey Sitler, associate director for environmental resources, point out, a greater appeal to bolstering internal production capacity is the projected savings that come with more efficient energy practices. For instance, Zmick has organized an effort to identify economic opportunities for cleaner energy reliance such as combined heat and power along with alternative generation on Grounds, beginning with natural gas as a necessary (albeit far from ideal) transition fuel.
By exploring opportunities in heat recovery, geo-exchange, solar thermal and other forms of combined heat and power, Energy & Utilities hopes to generate significant savings while further decoupling the University from the grid. One combined heat and power method, for example, would harness “waste heat” generated from our own plant in order to more efficiently meet the Health Center’s year-round high heating demands. In contrast, Dominion’s power generators are often isolated and thus poorly positioned to similarly channel excess heat into neighboring facilities — dependence on the conventional centralized model comes with more costs than one would expect.
That 55 percent of our own emissions derive from the dirty inefficiencies of the conventional Dominion model provides real incentive for us to break away from the grid and start producing our own, cleaner megawatts here at home — especially given our own carbon reductions goals. The strategic and integrated efforts of our Sustainability and Utilities offices unquestionably position the University as a leader in the ongoing state-wide shift towards a greener energy economy.
What does that energy transition look like under Virginia CPP compliance?
When it comes to the CPP, Virginia is better off than the vast majority of other states. As a recent analysis from the World Resource Institute concludes: “Because of the flexibility of the CPP framework and planned changes to Virginia’s power mix, Virginia is well-positioned to meet — and beat — the carbon pollution standards for the state’s power plants.”
Virginia, for instance, is positioned to tack on nearly 40,000 energy efficiency jobs under the CPP. Even within the next five years it could augment its solar capacity by nearly 1000 percent, generating over 14,000 jobs in that sector alone. Yet there is hope for states that have yet to begin adapting to alternative energy technologies.
William Shobe, director of the Center for Economic and Policy Studies and an environmental economics professor, points out that optimally positioned states such as Virginia can help disadvantaged states more smoothly meet their quotas. Such help can be given through either regional trading regimes or a federal allowance auction that converts reduced emissions into “trading ready” assets.
Coal dependent states can voluntarily purchase reductions from those with low compliance barriers, affording the former more time to adapt local power plants. If our own compliance measures lead to an increase in market price, then revenue from emission exports in turn could be rebated to Virginia consumers, namely low income families facing the brunt of higher costs.
The federal interstate trading regime happens to be the default rule for states that fail to comply, and interestingly, the most economically efficient option. “Trading works best the more states participate,” Shobe said. “So setting the default to be trading has the greatest potential for saving money in achieving the standards.” Non-compliers thus win out either way; the bill effectively allows politically opposed actors to achieve optimal outcomes without having to wave their political views.
Ultimately all states must comply, either by their own means or through the federal default route. According to Deputy Secretary of National Resources Angela Navarro, who is charged with coordinating the implementation of the CPP, it is within the state’s interest to devise its own path to compliance. A strong plan would bolster the current statewide momentum toward cleaner energy and help make Virginia a national leader under these new regulations. But if the economic efficiency of compliance hinges on states’ participation in emissions trading, then states will have to be cognizant of its economic benefits and properly equipped to fit that model into their proposed plans. Several obstacles prevent Virginia from realizing this truth.
What obstacles does Virginia face?
When Del. Ron Villanueva, R-Virginia Beach, introduced his Virginia Coastal Protection Act in 2014, the bill stalled at the General Assembly. That severe threats of coastal flooding failed to impel the General Assembly into taking climate mitigative action bodes poorly for the Governor’s final CPP plan. Virginia compliance developers will therefore have to make their proposed route more palatable to our state representatives if CPP implementation is to roll out smoothly.
Will Cleveland of the Southern Environmental Law Center, who shared a panel with Navarro at the Law School last Wednesday, emphasizes the importance of consulting major energy providers such as Dominion because these firms will ultimately have to bear the greatest cost of compliance. Given Dominion Power’s immense political clout, one would think any proposal to the General Assembly buttressed with its support would stand a fair chance of making it through the state legislature. The company’s short-term interests in expanding state natural gas and nuclear infrastructures, however, suggests its cooperation with left-leaning agencies such as the Southern Environmental Law Center will not come without contestation.
An initial cost assessment report produced by the Virginia Center for Coal and Energy Research, however, suggests the effects of political opposition at the legislative level run deeper than the Senate floor. In his corrective analysis, Shobe states, “...the report is almost certainly worse than no study at all because it misstates likely costs, analyzes irrelevant options, and gives short shrift to the cases that really matter.” While VCCER is the logical go-to for the Virginia Department of Mines Minerals and Energy, the General Assembly’s request for a strictly cost-based analysis delivered a result that nevertheless aligned with its own anti-CPP agenda. In other words, because Virginia’s conventional mechanism for analyzing energy policy effectiveness remains tightly tethered to the coal industry (hence the name), its results were inevitably biased.
The predominant legal apparatus for approving cleaner energy investments is also stacked against implementation of an efficient CPP plan. Just last week the Virginia State Corporate Commission denied Dominion’s request to construct its first utility-scale solar project in Virginia, claiming the proposal failed to factor in cheaper market alternatives such as natural gas. If the ultimate aim of the CPP is to eliminate carbon emissions by facilitating a transition away from all fossil fuels, then the corporate commission clearly lacks the incentive structure necessary for meeting these goals. To prioritize pipelines over solar cells is to miss the core purpose of the federal bill.
How can our University help?
Many of the barriers to a smooth CPP compliance process boil down to politics. But as Shobe’s findings demonstrate, the current avenues within Virginia for assessing federal energy policy are as outdated as conventional energy practice itself. In order to generate a compliance plan that facilitates a transition away from dirty energy while minimizing costs involved, the state needs to bring in the proper expertise.
That the Department of Mines Minerals and Energy published the VCCER analysis despite its improper methods and erroneous conclusions makes this point clear. According to Shobe, "You need people trained in how to build environmental markets, how to do cost benefit analysis, how to look at the tradeoffs we make when we decide whether to do it ourselves or buy the emission reductions from other states.”
University faculty who have dedicated their careers to understanding the complexities of these sorts of environmental economic challenges are an invaluable resource to Virginia’s compliance board. Other academic institutions across the state such as George Mason, William and Mary, Virginia Commonwealth University, Washington and Lee, University of Richmond, Virginia Tech and Old Dominion are similarly equipped with untapped technical expertise.
Incorporating Virginia faculty into compliance analysis would also allow for the political and methodological diversity crucial for a more balanced assessment. There currently exists no independent organization in Virginia serving to reinforce state compliance with an economically rigorous evaluation of different analyses. Universities, however, could help fill that role.
Finally, students can and should participate in this discussion. Acute awareness of the ongoing transformation of our energy economy has the power to replace attitudes of indifference with more proactive forms of engagement, be they through modifying daily consumptive decisions to penning letters to editors and public representatives.
Electricity is something most of us too often take for granted. When our daily energy usage becomes a recurring reminder of a far more fascinating shift in our wider political and economic systems, then the world just becomes that much cooler.
Light bulbs after all are not magical orbs, but outlets of a vast interconnected electrical infrastructure that can either serve to protect our biosphere or continue to tear that earth apart.
Will Evans is an Opinion columnist for The Cavalier Daily. He can be reached at w.evans@cavalierdaily.com.
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