Clean Economy Act’s Future Challenged By Land Use, Cost, Energy Reliability Concerns

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There is a growing recognition that the Virginia Clean Economy Act (VCEA) as written is going to fail. Those who strongly believe in its goal of ending the use of hydrocarbon fuels, and those who consider that idea nothing but fool’s gold, both see major problems on the horizon.

There is also a large middle group that would like to see less reliance on hydrocarbons, and greater reliance on wind and solar for generating needed electricity but see danger in totally abandoning reliable natural gas. Sadly, most Virginians are not paying any attention at all. They should.

The growing concerns of both VCEA’s fans and its detractors are the reason an effort is underway to review this law and to consider possible amendments, potentially in time for a vote by the 2025 General Assembly. The first step in this review was a series of meetings in the spring where a broad list of known problems was discussed. In reviewing those discussions, it is possible to discern what changes are most likely being considered.

The legislator chairing this effort, Senator David Marsden, D-Fairfax, had staff produce a 38-page summary of what was said in those meetings, with no attribution to individuals or companies. It was probably meant to stay with the participants, but it is too important not to share.

Land use issues dominate the discussion. Advocates for the rapid expansion of solar power in Virginia are finding growing resistance to the needed permits from neighbors and local regulators as new and more extensive projects are proposed. They want to break down those barriers, and legislation to do that has already been proposed, but there is recognition that these steps would be unpopular and could spark backlash. Someone in the industry told Marsden:

Local opposition to solar and energy storage is a singular threat to our business plan and the achievement of VCEA goals. This threat stands out even in comparison with other “high visibility” threats, including interconnection costs and delays, federal tariffs on solar panels, and elevated interest rates…

A local government representative mentioned that by their count, about 181 square miles of Virginia are already covered by solar panels, an area larger than several counties and almost all cities. Elsewhere in the discussions, the prediction was VCEA would require solar fields covering 3% of the entire state, about 1,200 square miles (think Virginia Beach, Chesapeake, Suffolk, Norfolk, and Portsmouth combined).

The advocates can be dismissive of those who stand opposed. Somebody said:  It goes beyond NIMBY – it’s also cultural (older white rural communities are against the VCEA; in other areas people are younger and diverse probably from somewhere else and religiously and ethnically they are very different) …

Marsden has designated one of these environmental groups as the official defender of the Virginia average consumer in his negotiations. In a recent conversation, he was unapologetic about that decision. Asked about the Office of the Attorney General, designated by state law to represent consumers, he replied they were not invited and “would get their chance later in the process.”

The advocates for the VCEA also see that the rapid growth in electricity demand coming from all the new data centers is creating pressure to maintain existing generation resources. The catch phrase was that data center growth can and should be “managed” to protect VCEA. Whether and how to do that will be a big debate, especially considering that in some areas, like Loudoun County, over half of the county revenue is from their data centers.

The state and local rules, as they now exist, can also impede construction of the needed power lines to connect all these new projects, plus a growing number of small community-based projects. Zoning, project siting, and local authority will be front and center in this debate.

Utilities were frank in their concern that strict compliance with VCEA is going to lead to both supply and reliability issues. Compliance with the law has already shut down most of Virginia’s coal generation, but under the law, natural gas also must disappear within a few decades. Many in the industry want a clearer path to keeping natural gas in service, and that will be a huge debate in the process. From the utility summary:

Forced retirement (of hydrocarbons) is a challenge in the VCEA. The needs of our customers are growing, but the VCEA requirements are permanent. It’s one thing to not use those resources but to have them on demand to use them when needed; but this is very different from retiring them forever. It makes it very difficult to hold onto the plan.

The business representatives at the meeting and the utilities were aligned in seeing VCEA as it exists as a threat to energy affordability and reliability down the road. Plenty of warnings have come from national groups charged with maintaining reliability and from our own regional transmission organization. From the business community summary:

As private businesses we have our own goals, and some are related to environmental impact. But business wasn’t given a seat at the table to make sure the VCEA met their needs. In a larger macro sense, the bottom line is the bottom line. There is not a lot of upside here for us. The math is the math. We have to pass these extra costs on to our customers. However, incentives will help us absorb a lot of the costs.

Incentives? Those would be cash payments or tax advantages that also have a financial impact on people, but hit them as taxpayers, not as customers. Unfortunately, subsidies of some sort are more likely to emerge from these negotiations than any agreement to relent, and to allow the utilities and electric cooperatives to keep natural gas generation in the mix for decades to come.

There are other issues. The conflicting interests are strong enough that a compromise, consensus proposal for the 2025 General Assembly may not emerge. The process may only feed into the 2025 Virginia election cycle, punted to a new governor and House of Delegates. The fate of VCEA, the Regional Greenhouse Gas carbon tax, and the California electric vehicle mandate may all three be decided then.

Steve Haner is a Senior Fellow for Environment and Energy Policy. He can be reached at [email protected].

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A Refresher on the Virginia Clean Economy Act, Now Back Under a Legislative Microscope

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A senior Democratic state senator is leading an effort to review and possibly revise the 2020 Virginia Clean Economy Act (VCEA), which orders the future elimination of hydrocarbon fuels (oil, natural gas, and coal) used in making electricity. His goal is to conduct a stakeholder process and bring legislation to the 2025 General Assembly.

Before delving into what those changes might look like (or what we might propose the changes look like), it is helpful to understand what the current law requires. To use a common colloquialism of the Assembly, “what do the bill do?”

The final version approved in 2020 was long and written mainly to be read by utility lawyers and regulators. The vote was largely along party lines, but one Republican in the House and one in the Senate joined with Democrats in approving it. Two years later, when the Republicans regained control of the House of Delegates, a repeal of the entire statute passed the House but stalled in the Senate, where Democrats remained in control.

The law applies to the two large, investor-owned electric utilities serving Virginians. It makes no demands on the rural electric cooperatives or the Kentucky utility serving part of far Southwestern Virginia.

The dominant utility, Dominion Energy Virginia with 2.6 million customers, is directed under the VCEA to steadily reduce its reliance on coal or natural gas to produce electricity within the state’s boundaries, with the goal of eliminating those fuels by 2045. So, in 20 years Dominion’s many gas and coal facilities are supposed to disappear. In the case of coal generation, they largely already have or will soon disappear, except for Dominion’s large West Virginia coal plant and a small plant in Wise County.

Appalachian Power Company serves about 500,000 customers in Western Virginia and under the VCEA is ordered to eliminate its use of hydrocarbons by 2050. This goal is less of a problem for Appalachian Power because it is down to one natural gas plant inside the state, Clinch River, and plans to close those two generator units in 2025 and 2026. Appalachian also uses Virginia hydropower, but mostly imports electricity from outside Virginia’s boundaries, where coal is still a major fuel.

The law includes language that allows the SCC to keep a gas facility open for longer, or even to approve a new hydrocarbon generator, if the regulator deems it to be necessary to maintain reliable electricity services. In fact, Dominion sought such an approval in its most recent integrated resource plan application, but the SCC failed to approve that plan.

One part of the VCEA authorized the Virginia Air Pollution Control Board to enter a multistate cap and trade program to reduce carbon dioxide emissions from power plants. Supporters of the Regional Greenhouse Gas Initiative view the language as a mandate and are litigating Governor Glenn Youngkin’s decision to exit RGGI last year.

Both power companies face a fixed schedule of rising renewable power use under the VCEA, but if they are not using sufficient qualifying renewable power (mostly wind or solar), they can satisfy the law by purchasing renewable energy credits generated by other companies. Failure to meet the goals by either method will result in a huge financial penalty of $45 per megawatt hour (4.5 cents per kWh), which it is allowed to recover from customers.

The VCEA as it now reads is compatible with nuclear power.  Under the VCEA, nuclear power is not considered “renewable” per se, but the amount of nuclear electricity generated can reduce the need for Dominion to produce from renewable sources. There is no impediment to adding more nuclear capacity, and both utilities are considering that.

Under traditional rules of utility regulation, any future power plant would need to be reviewed by the State Corporation Commission and determined to be “in the public interest.” The VCEA short circuits that process by simply declaring massive future wind, solar, and battery projects to be automatically in the public interest:

  • 16,100 megawatts of solar or onshore wind generation.
  •  5,200 megawatts of offshore wind generation (the project Dominion is now building uses half of that advance approval, with another 2,600 MW to go.)
  • 2,700 megawatts of energy storage capacity, mainly batteries which will be charged by solar and wind facilities, and which will provide some coverage when those intermittent energy sources are not working.

Dominion is directed to plan and seek approval of up to 24,000 MW of wind, solar, or battery power by 2035, with Appalachian to add another 1,000 MW by then. The law only requires the projects to be proposed and applied for, but with most deemed “in the public interest” a big hurdle is avoided. There is no “in the public interest” designation for an amount of new nuclear power, however.

Both utilities have a long way to go to meet the renewable project goals of the VCEA. Appalachian Power has 575 MW approved. Dominion has about 2,800 MW of solar capacity approved, and 170 MW of battery capacity, along with the 5,200-megawatt offshore wind project currently under construction.  Meeting the VCEA goals will require tens of thousands more acres of land covered by solar panels, given Virginia is proving unsuitable for onshore wind projects.

Under the law, both utilities submit annual plans to the SCC seeking approvals for additional solar, wind, and battery projects. The law states that 65% of the projects will be utility-owned and 35% can be from outside suppliers through power purchase deals, which is usually less expensive to consumers. The outside suppliers can be outside of Virginia but must be within the PJM electricity transmission region.

One of the most aggressive provisions of the law requires both utilities to reduce their sales of electricity, using their 2019 sales amount as a baseline. Dominion is required to shrink 5% from that by next year and Appalachian must shrink by 2%. This was included in the law before the incredible growth spurt of Virginia’s data center industry which accounted for 24 percent of Dominion’s electricity sales in 2023.

The VCEA also created the Percentage of Income Payment Program, or PIPP, intended to subsidize the electricity bills of low-income households. Four years later, PIPP is just getting underway, and under the law as it now reads, those PIPP households will also be spared from paying for the Dominion offshore wind project.

This will raise the bill for the wind project for everybody else.

Those are the highlights. More details are in a VCEA summary (here) passed out at one of the first stakeholder meetings. Which of the provisions discussed above may be targeted for change will be the topic of another column.

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Virginia Climate Data Shows No Crisis

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One standard response when the Thomas Jefferson Institute challenges the wisdom of electricity carbon taxes or electric vehicle mandates is, are we not worried about the looming climate crisis? The simple answer is no. Data that undercuts the entire alarmist narrative are easy to find.

The premise for the 2020 Virginia Clean Economy Act, which the 2025 Virginia General Assembly may revisit, is the expressed concern over catastrophic climate change. It is a constant refrain with many of our political leaders from the current president down to county supervisors. But what if the entire premise is false or badly overblown?

This year, a major and constant media drumbeat has been that 2023 was the hottest year on record and that 2024 will be hotter. In Virginia, 2023 was unremarkable. Even the summer months, the focus of the fear-mongering about rising heat-related fatalities, showed no alarming trend. For the data just go to a website managed by the National Oceanographic and Atmospheric Administration (NOAA).

Here is the chart showing average summer temperatures in Virginia from 1895 to 2023, June through September. The trend line NOAA tracks is about 1 degree Fahrenheit of rise per century, but based on data elsewhere is between 1- and 2-degrees Fahrenheit. The data shows an overall slight warming trend, but multiple summers up to a century ago were as warm or warmer than the most recent.

The same 1–2-degree Fahrenheit per century rise shows up when you track the Virginia average for the full year, and the average highs and lows. With that website, you can pick any start date you want and get any trend line you want, up or down. For us, the longer the data set, the more reliable. That website does report more rapid temperature rises in a few other states, but most are in the 1-2 degrees F per century range, and most recent highs were matched by highs decades ago.

Another standard claim is that the slight warming underway, which may or may not be driven by using hydrocarbon fuels, is also leading to worsening rainfall. NOAA tracks that on the website, too, and there is a rise in the trend line reported at 3 inches per century. Rain is very much a beneficial aspect of the climate, especially for farmers.

Whether or not 3 inches per year more on average than a century ago is too much of a good thing for Virginia is something you need to decide, but to us it is not worrisome. That website shows nationwide rainfall rising from 1895-2023 at a rate of less than 2 inches per century.

NOAA also tracks the coastal tide gauges that report relative sea level rise. The word “relative” is important because the measurement includes changes in sea level and also any changes in the land beside the sea. In Hampton Roads, the shore is subsiding, and that makes the relative sea level rise appear much greater than the water level itself could account for.  In Alaska, there are places where the land rises so much that the sea is receding.

The alarmist media usually ignores the impact of subsiding or rising land levels. It avoids actual tidal readings in reports and focuses on forward-looking models, with the models themselves based on the highest of the temperature rise predictions. Exaggeration feeds exaggeration.

The Virginia tidal gauge with the longest record is at Sewell’s Point in Norfolk, illustrated below. The combination of sea level rise and subsidence there produces a relative change of less than 5 millimeters (about 0.2 in) per year, or about 1.6 feet per century. Most of the scary predictions of future inundation are based on models showing massive acceleration, to multiple feet per year, but year after year the tide gauges fail to show it.

Look at some of the islands where NOAA is tracking the tides, places without subsidence, and the changes measured are quite slow. It is less than one foot per century in Hawaii, Midway, Guam, Puerto Rico, and Bermuda. Look at the per-century changes in places along California’s coast. The scary predictions of seas rising rapidly have been around for decades now but are not panning out in the data.

The seas have been rising for thousands of years and even at this actual slow rate, coastal vulnerabilities are growing. The next hurricane hitting Virginia will do significant damage. But weather is not climate change, and the mitigations and preparations needed to protect our coastal cities have nothing to do with the use of hydrocarbon fuels. (If you need to suddenly evacuate, take the gasoline car, and leave the EV in the driveway. Power may be out for a long time.)

There is no evidence of any climate-driven crisis, certainly not in Virginia. There is little evidence of any climate change at all. Drastic steps to rapidly eliminate use of hydrocarbon fuels in power plants, cars or homes are not justified by those fears.

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Youngkin Should Make Reliability, Low Cost Top Goals for Coming Clean Economy Act Review

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Governor Glenn Youngkin recently flew to Louisiana to join other Republican governors in criticizing President Joe Biden’s energy policy, especially the president’s hostility to hydrocarbon fuels. Youngkin and the rest gathered at an oil refinery to make their point that oil and gas should not go away in the decades to come.

Energy realism begins at home. Right here in Virginia Youngkin has a golden opportunity to fix Virginia’s broken energy policy and to maintain energy choice in our state economy. The 2025 General Assembly may revisit the Virginia laws meant to eliminate natural gas electricity. Youngkin should make it clear early that he will only sign a bill that protects energy reliability, preserves consumer choice, and prevents major cost increases.

Youngkin is celebrating some energy policy wins that are good news for Virginia consumers. The state is now out of the Regional Greenhouse Gas Initiative, a carbon tax meant to punish the use of coal or natural gas in making electricity. Prior carbon tax payments made by our dominant electricity provider are now fully reimbursed and the cost has disappeared from monthly bills.

We got out in the nick of time. Yet another RGGI carbon allowance auction was held on June 5th and the carbon tax rose to $21.03 per ton, a new record. In the March 2021 auction, Virginia’s first, the tax was $7.60 per ton. When Virginia Democrats voted to put Virginia under RGGI, the tax was standing at less than $6, and nobody except the Thomas Jefferson Institute spoke honestly about how it would likely increase.

Last week, Youngkin announced that he and Attorney General Jason Miyares have concluded Virginia is not legally obligated to adopt the most recent California air emissions regulations for light-duty vehicles. The now abandoned rules would have controlled the mix of new vehicles sold, with a rising requirement that a percentage of them be all-electric. A legal challenge is likely.

Exiting the RGGI and California Advanced Clean Car interstate compacts were huge and positive steps. But the larger challenge to Virginia consumers is the 2020 Virginia Clean Economy Act (VCEA), which also seeks to drive hydrocarbon fuels out of the electricity market within a few years. Even more broadly restrictive on Virginia’s economy is the clean energy policy enshrined in state law which demands changes in agriculture, transportation, and energy in homes and offices.

During the 2024 General Assembly, legislators sidestepped most efforts to either strengthen or weaken the clean energy mandates. Key Senate Democratic leaders instead discussed plans to revisit and revise the full VCEA later in 2024. That effort is fully underway, with more transparency than is usually the case when the legislature meddles in energy policy.

Unfortunately, nobody on the inside is focused on protecting the average residential user or the small business customer. Senator David Marsden, D-Fairfax, has grabbed control of the effort (not actually authorized by a study resolution) and he recently told stakeholders that an activist environmental legal agency, The Southern Environmental Law Center (SELC) will be the official protector of consumers.

The SELC in Charlottesville as the retail consumer advocate in the closed-room negotiations? The utilities themselves will have more concern for the ratepayer impact of the massive switch to solar, wind, and battery power. Marsden’s designation of SELC as speaking for ratepayers is a flashing warning sign of what may emerge.

If there is going to be a revision of the VCEA, ratepayer concerns about reliability and cost need to lead the agenda. VCEA is composed of deadlines to eliminate coal and natural gas at power plants, mandates for the construction of expensive wind, solar, and battery projects, and required purchases of “renewable energy certificates,” which create no electrons for Virginia homes or businesses.

One way or another, all those costs land on customers. If the rapid conversion to unreliable wind and solar power means Virginia faces periods of energy shortage, especially if the expanding energy demands of the tech industry and their data centers match expectations, people will feel the pinch at home as their power is metered or included in unscheduled rolling blackouts.

The panel of stakeholders Marsden announced in late May is dominated, however, by the utilities, the anti-carbon fuel environmentalists, lobbyists for companies that will reap billions in revenue building wind, solar, and battery installations, and gigantic industrial players who are also pledged to some version of net-zero or zero-carbon energy.

Local governments are at the table because the solar industry is complaining it cannot get enough locations approved. Bills were introduced in 2024 to override local zoning and neighbor complaints and force approval of about ten times as many solar farms as have already been built — miles and miles of panels. VCEA requires it. Many farmers are eager to convert to a crop of electrons.

The Youngkin Administration is represented in Marsden’s effort through the Department of Energy. But it remains an advocate for Youngkin’s “all of the above” rhetoric, which commits Virginia to the continued expansion of weather-dependent generation. For example, it may continue to support the expansion of offshore wind beyond what is already planned. It is actively chasing all forms of federal funding, a trail of breadcrumbs leading Virginia away from reliable energy.

“All of the above” is a fine political slogan but is a mushy energy policy. A real energy policy is going to demand some actual choices and standing up to bullies. A real energy policy will make reliability the priority. A real energy policy will require substantial natural gas generation to continue well into the 21st century at the very least and need far less wind or solar. If enough of the current legislators do not understand that the voters should pick some new ones.

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Virginia Declares Independence from California EV Mandates

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Virginia Governor Glenn Youngkin (R) and Attorney General Jason Miyares (R) announced today that Virginia will no longer comply with the California air regulations that will restrict and eventually eliminate the sale of gasoline and diesel vehicles. The announcement is sure to set off a political and legal firestorm as fierce as last year’s exit from a regional carbon tax compact. “Once again, Virginia is declaring independence – this time from a misguided electric vehicle mandate imposed by unelected leaders nearly 3,000 miles away from the Commonwealth,” the release quotes Youngkin. “The idea that government should tell people what kind of car they can or can’t purchase is fundamentally wrong. Virginians deserve the freedom to choose which vehicles best fit the needs of their families and businesses. The law is clear, and I am proud to announce Virginians will no longer be forced to live under this out-of-touch policy.” As with the Regional Greenhouse Gas Initiative, the decision to join in California’s vehicle regulatory scheme was implemented under former Governor Ralph Northam (D). The 2021 legislature, on mainly party-line votes with Democrats in the majority, authorized Northam and the Air Pollution Control Board to adopt the necessary regulations, which were agreed to at the end of that year. The Thomas Jefferson Institute issued early warnings about the implications of the EV Mandate, which was opposed 64-33% in a poll conducted for the Institute by Mason-Dixon Polling, and was the subject of one of our educational social media campaigns. The California regulatory scheme Virginia aligned itself with dates back to 2012 and was called Advanced Clean Cars I. During the first year of Youngkin’s and Miyares’ term, however, California deeply amended the regulatory scheme and adopted Advanced Clean Cars II. It was the ACC II rules that set the requirement that internal combustion vehicles would disappear from new car lots by 2035. Unlike many other states, Virginia has not amended its current regulation to incorporate the new version, and the old ACC I rules expire at the end of 2024. Leaving the California regime returns Virginia to regulation under the federal Environmental Protection Act, which is also proposing to limit the sale of gas vehicles, but so far is not seeking to eliminate them. Under the federal Clean Air Act, California is the only state allowed to set air emissions standards more stringent than federal rules, but all other states are allowed to choose whether to follow California or comply with the EPA. More than a dozen states are following California. Some have also adopted its rules for heavier vehicles, but Virginia never did. In a formal advisory opinion, Miyares states that nothing in state law requires the Air Board to update the regulations it adopted in 2021 to remain aligned with California. As with the statute on RGGI, the operative verb in the key sentence is “may” and Miyares writes: “The use of the word “may” – as opposed to “shall” – in a law evinces discretionary intent.” Perhaps the bill authors in 2020 and 2021 never contemplated that their party would lose the Governor’s Mansion, so they were comfortable leaving the discretion with the executive branch. The statute on adopting the California air rules does include more instances of the word “shall” and will lend itself to a sharper argument over mandate versus discretion. As with the dispute over RGGI, the bottom line is this issue will be back in front of the voters when a new governor and new House of Delegates are chosen in 2025. The parallel, less restrictive EPA regulation will also likely go away with Republican success in federal elections in 2024. A second Biden Administration would push them through. As the saying goes, elections have consequences. This decision will have major consequences for the nation’s automobile manufacturers and their Virginia dealers. The California regulatory scheme is another version of cap and trade, where manufacturers earn credits for electric vehicles that they sell in the various states aligned with California. How many gas-powered vehicles they can sell is determined by how many of those credits they earn. If a lawsuit comes to challenge this decision, the automobile manufacturers may join with the environmental community to bring it.  Tesla makes only electric vehicles and is thus able to sell its unused ACC II credits for major revenue. The pending lawsuit over RGGI was brought by a group making money off that scheme, and the manufacturers also have a big pecuniary interest. The original 2021 bill to join ACC I was supported by the Virginia Auto Dealers Association, which cited concerns that its members would not be able to get as many EVs to sell if the state is not part of the California compact. That may prove to be the case, although in the three years since the projections of public demand for EVs have not been met. They were less than 10% of Virginia sales last year. Early in the Youngkin Administration, the question of how Virginia would react to the adoption of ACC II was raised. Virginia Mercury reported at the time that the Attorney General’s Office was of the opinion the update would happen, apparently automatically. That is more grist for some courtroom mill. In most other states that are part of the California compact, the new version of the regulations have already been adopted or are in the process of being adopted. The National Caucus of Environmental Legislators has tracked that, and noted that “states will need to initiate rulemaking to adopt the new, more stringent regulations.”  As for Virginia, it included a link to that Virginia Mercury article indicating Virginia didn’t need to. As of earlier this week, the state Department of Environmental Quality website indicated that compliance was plugging along, with no reference to any complications caused by California’s new version.
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