By Steve Haner

The North Carolina legislature has retreated from its aggressive targets to reduced hydrocarbon-fueled electricity in the state, eliminating the goal of being 70% carbon free by 2030.  Strong Republican majorities in both chambers supported Senate Bill 266 last week, but so did some Democratic legislators.

That smattering of Democratic support could weigh on Democratic Governor Josh Stein as he considers a veto.  The final version of the bill leaves in place the ultimate target of the full elimination of carbon dioxide emissions by 2050, and there are other important regulatory changes in the bill, touted by supporters as the Power Bill Reduction Act.

This follows a decision in Maryland, approved by its Democratic governor, to authorize additional use of natural gas for generation in that state.  There are glimmers of energy sanity in both Virginia’s northern and southern neighbors.  Virginia retains its laws mandating expensive wind and solar energy buildouts and prohibiting new natural gas.   The weather in the next two weeks is going to prove again that reliable hydrocarbon plants keep the air conditioning running, not solar.

North Carolina’s legislature passed the emissions reduction targets in 2021, one year after the Virginia General Assembly placed similar mandates in the Virginia Code.  The North Carolina target for 2030 of 70% is far more aggressive than those for that year in the Virginia Clean Economy Act (VCEA). 

An Associated Press report on the North Carolina bill indicated North Carolina and Virginia are the only two southern states among the 18 states with laws mandating electricity emission reductions targets or deadlines. 

Under VCEA, Virginia’s major utility, Dominion Energy Virginia, must reach a carbon free target of 49% by 2032, with the smaller Appalachian Power’s targets on a slower timeline.  In Dominion’s case, its nuclear reactors count as non-carbon sources, so the 49% target is just for the other forms of generation, coming from non-nuclear sources.

The Virginia non-CO2 target rises higher year by year.  Failure to meet the goals internally carries financial costs to the utility, which are simply passed on to its customers.  The North Carolina law has only the 2030 and 2050 targets. 

Even before this recent action by its legislature, North Carolina’s carbon emission regulations did not include a prohibition on building new natural gas generation, and the North Carolina Utilities Commission (NCUC) had approved additional natural gas assets in its most recent integrated resource plan.   But advocates for removing the 2030 target argued it was creating a major constraint on the choices available to North Carolina’s power provider.  Reliability and low cost were being sacrificed, even though its law makes them the paramount considerations.  

Dominion, on the other hand, is having to battle to get permission to plan any new natural gas generation, both in its pending integrated resource plan and in an application for a certificate of public convenience and necessity for a gas-powered Chesterfield facility.  To get permission for new gas use the utility must prove that energy reliability is threatened and gas is the only choice to maintain it.  Other hurdles are created by the VCEA, which is hostile to all hydrocarbon fuels.

The free-market John Locke Foundation in North Carolina was a major proponent of the legislation now pending with its governor.  It argued that the looming 70% target was forcing the utilities and the utilities commission to make more expensive choices, adding billions to ultimate consumer costs.   It backed that up by paying for its own generation model, less expensive to consumers but also not constrained by the 70% 2030 target, which it presented to NCUC and to the legislature.

“When the General Assembly passed the Carbon Plan law (House Bill 951) in 2021, we warned that it could work only by strict adherence to the law’s least cost and reliable guardrails,” wrote Jon Sanders of the Locke Foundation.  “Early Carbon Plan orders have strayed far from affordable and reliable resources, and it turns out the modeling was aimed at reaching the plan’s interim goal of 70 percent reduction in CO₂ emissions regardless of affordability and reliability.”

The Locke Foundation’s alternative, however, also eliminated coal and natural gas by 2050 and replaced them with nuclear plants.  The legislation just passed also makes is easier for the utility to finance future nuclear plants by charging consumers for them during construction, something already allowed in Virginia.

In Virginia, the integrated resource plan presented by the Dominion did not really include a low cost, “what if we just ignored carbon targets” alternative. But as was pointed out by critics, its generation models also ignored the hard target of 2045 set by the VCEA for the elimination of all hydrocarbon plants.  Dominion set only a 15-year time window on its models and cost estimates and offered no outline for how it would transition five years later.  The integrated resource plan case before the State Corporation Commission appears to completed, and simply awaiting a final decision.