Proposed CO2 Regs Will Harm Virginia’s Economic Competitiveness

Image credit: Department of Environmental Quality
Image credit: Department of Environmental Quality

by James A. Bacon

Proposed federal regulations to cut future carbon dioxide emissions from electric power plants would put Virginia at a significant competitive advantage by giving the state no credit for its progress in reducing CO2 over the past ten years, asserts the state Department of Environmental Quality (DEQ) in a letter response to the Environmental Protection Agency (EPA).

Even back in 2005, Virginia power plants emitted less CO2, a greenhouse gas, per unit of energy produced than those of other many states, thanks to the state’s reliance upon nuclear power. Since 2005, Virginia power companies have phased out older coal-fired plants and substituted natural gas. Although natural gas is a fossil fuel that emits CO2, it is much cleaner burning than coal and produces less CO2 per unit of energy.

In 2005, coal accounted for 46% of Virginia’s electric generation; by 2012, coal had fallen to 20%.  Virginia reduced carbon “pollution” by 39% between 2005 and 2012, the seventh best performance nationally. In 2012 Virginia ranked 15th among the 50 states for the rate of carbon “pollution” from all electric generating sources.

Rather than credit Virginia for recent progress or how much citizens spent to get there, argues the DEQ letter, the EPA Proposed Emission Guidelines bases its performance targets on a state’s electric generating system as it exists now. States the letter:

EPA’s approach fails to recognize the achievements made by many states, including Virginia, that have reduced CO2 emissions by making significant investments in zero and low carbon emitting generation, such as nuclear power, and rewards states that have not done so by giving them substantially higher CO2 emission reduction targets.

Source: Division of Environmental Quality

All of Virginia’s neighboring states have electric generating systems that are more carbon-intensive than Virginia’s, but all have emission rate goals substantially higher than Virginia’s final goal of 810 [pounds per Megawatt house]. In fact, the Proposed Emission Guidelines would require greater reductions in megawatt hours or carbon intensity from affected units in Virginia than from similar units in either Kentucky of West Virginia, even though those states generated approximately twice the amount of electricity on a megawatt hour basis from fossil fuel than did Virginia in 2012.

“The disparity in state goals,” writes the DEQ, “leaves Virginia at a competitive disadvantage to its neighbors and numerous other states because they will be able to comply with the Proposed Emission Guidelines more cost effectively. … Such states could use their competitive advantage over Virginia to keep their state electric rates or taxes relatively lower in order to lure away existing Virginia businesses and render Virginia less competitive in the quest for new business.”

Governor Terry McAuliffe says he supports the EPA’s goal of reducing carbon emissions to combat global warming. But he says the proposed regulations could be “more equitable,” according to the Times-Dispatch.

Bacon’s bottom line:  Not only are onerous new environmental regulations being imposed by executive fiat, not based upon anything contemplated by Congress when it enacted the Clean Air Act… Not only are these regulations being enacted  on the basis of claims that runaway global warming (a) is occurring, (b) will prove to be an unmitigated catastrophe and (c) that re-engineering the U.S. economy by reducing CO2 emissions is the best way to deal with it… but the state-by-state implementation of the regulations will punish Virginia for its previous efforts to be environmentally virtuous.

Virginia, like the United States, faces many environmental challenges. As a society, I believe, we should steadily increase our investment in environmental protection. But we also need to prioritize that investment to accomplish the most good per dollar spent. I’m far from convinced that spending billions of dollars — the proposed EPA regs could cost Virginians an estimated $5 billion — will generate anything tangible for Virginia or its environment. If these regulations go through, they will be a tragedy of the first order.

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15 responses to “Proposed CO2 Regs Will Harm Virginia’s Economic Competitiveness”

  1. Tysons Engineer Avatar
    Tysons Engineer

    So let me understand. The regulation has only a percent reduction based on some year for each state? It doesnt set a per capita goal for CO2 based on total kW?

  2. well first, just like with the SCC issue – I’d like to know who the top folks are at DEQ are these days…. are they industry folks turned regulators?

    second, this walks and talks like a scheme to essentially kill the standards by allowing different states to argue different standards while others would litigate it and industry would help.

    So I’m more than a little suspicious …. and don’t buy the basic premise …

    The people who live downstream of a dirty coal plant and are damaged by it – don’t get “credit” for people who live downstream of the nukes.

    If you look at the proposed regulations – it is MORE than JUST CO2. It INCLUDES Mercury and other pollutants that demonstrably harm people.

    and what DEQ is essentially arguing is that because some people in Va are not harmed by coal pollution – it’s okay to harm others.

    wrong. wrong . wrong and cynically so.

    here’s an example of DEQ these days:


    The Virginia Department of Environmental Quality said it failed to notify the public in a timely, accurate and consistent manner about a company’s application to apply a waste called industrial sludge in several counties.”

    this is not protecting the public .. this is protecting industry…

    how do we know they’re not doing the same thing with the coal plants?

    1. Steve Haner Avatar
      Steve Haner

      Larry, the news release with the DEQ letter that I first saw came from the Governor’s Office. Does he count as “top folks?”

      DEQ is good at what it does. The SCC is good at what it does. DEQ (and by association the Governor, I guess) is right that the proposed regulation holds Virginia to a much higher standard than other states and the result will be putting Virginia at a competitive disadvantage. And the SCC is right that meeting that standard will require major capital expenditures that will increase rates higher than they would be under the most cost-effective option.

  3. NoVaShenandoah Avatar

    I hate to say that by now I do not believe what industry says, and I am very suspicious of watchdog organizations that parrot the industry line.

  4. Appreciate your summary of the issue, but not sure what the chart means – are the columns properly labeled?

    Would like to know on what basis the EPA set the goals. It would be helpful in assessing fairness. Personally I’m in the camp of believing that the EPA follows the law and doesn’t do things just to upset landowners and the economy – in other words the EPA is not in a conspiracy against property owners and business. It doesn’t seem logical that EPA would set goals that are biased against a particular state.

    Also the EPA is just doing the job given it by law. CO2 has been determined to be a pollutant because it affects the local and global environment. This has been litigated in the federal courts – Virginia, Texas and so on have challenged this and lost. Are you saying that the EPA and the executive branch should not enforce the law?

    The EPA, most scientists, many politicians, and most individuals understand that it is a good idea for the future to regulate CO2. The law says it should be regulated. Unless the law is changed, and I hope it is not, you’ll have to live with it. That is not to say that there are not different and possibly better approaches to getting to the goals – I think the market-based approach of carbon trading would be efficient and would result in innovations that would be valuable for the economy and the environment – but that has been tossed on to the heap by the anti-everything-environmental Republicans.

    1. Richard wrote, “Would like to know on what basis the EPA set the goals. It would be helpful in assessing fairness.”

      I think part of the problem is that no matter what basis the EPA chose, someone would feel that they’re not getting a “fair” deal. Let’s say we picked a methodology that treats Virginia better. Then high CO2-emission states would call foul because the regulations made them cut more than Virginia cut, meaning that they would be punished more. I’m not especially sympathetic to the EPA, but even Solomon couldn’t devise an approach that would make everyone happy.

      He also wrote, “The EPA, most scientists, many politicians, and most individuals understand that it is a good idea for the future to regulate CO2. ”

      I’m more willing to trust the scientists about the science than I’m willing to trust them about the public policy. Warmists like to wrap their entire ideological agenda under the mantle of science, when only the climatology part is a scientific endeavor. What to do about global warming — whether to spend money curtailing CO2 or to spend it adapting to higher temperatures and sea level rise — is a matter of economics and moral philosophy.

      1. James. Your article and now your response avoid and obfuscate the issues which is a typical response for you and those who are denying the facts for political gain. Basically you admit that the EPA probably does have a legitimate basis for its standards and treatment of Virginia and that it is not a matter of fairness – shouldn’t you just say that and tell Dominion and the state to stop whining? And then you say it’s all about the alarmists/warmists telling you what to do and the issue is a matter of “economics and moral philosophy”. Do you even hear how ridiculous that sounds? What pollution can’t be justified by that? No it’s a matter of US law that is constitutional and “real” as confirmed by the Roberts court and that is implemented by the EPA. I don’t understand these constant attacks on the legitimacy or the actions of the EPA except that it is crassly political.

        1. Richard, you accuse me of obfuscating the issues in a way that is “crassly political.” Do you level the same charge against the Department of Environmental Quality? Do you level the same charge against the McAuliffe administration?

          The point of my post is to observe that Virginia is getting hosed by the EPA rules. Do you deny that?

          1. Well that was the point of my original response. On what basis does DEQ and McAuliffe believe VA is being hosed, other than they have goals that seem greater than neighboring states? Are the goals really different – or is everyone being held to the same standard that has resulting in different goals? I know (it’s my belief based on logic and experience) that there is another reason for the disparity in treatment,and it may not even be a disparity, more likely the application of a single standard to different states. I’m interested in knowing what the standard is and what your view as a state government expert is of that standard.

            Of course I would review what the DEQ and the governor say with skepticism as they are advocates for their constituents, VA power companies and businesses, and if they can get better treatment for their constituents, they’ll try to get it.

    2. Richard, I regret to say that I must disagree with you on your point, “the EPA follows the law and doesn’t do things just to upset landowners and the economy – in other words the EPA is not in a conspiracy against property owners and business.”
      A separate section of the EPA has released a draft rule that (in my judgement and that of many others) stretches the definition of “navigable waters” past the breaking point. Draft rule “EPA-HQ-OW-2011-0880” extends the authority of the EPA (granted to it by the Clean Water Act) over “navigable waters” to include adjacent and tributary waters, without limitation. So, the EPA would have the authority to tell my brother what to do with the storm drainage pond in his backyard (which only has water in it four to five days a year after a heavy rain) under the Clean Water Act, since his pond drains into a creek, which drains into another creek, etc. until the water ends up in the Missouri River, which is navigable 100 miles down stream. If you want to see some of the backlash against the EPA, look at the Farm Bureau’s comments on the proposed Rule:
      Given that type of regulatory overreach by a section of the EPA, I am inclined to be suspicious of claims by the other sections of the EPA that they are above suspicion, and that their motives are as pure as the driven snow. “Once burnt, twice shy”.
      (Which is not too say that DEQ is perfect either.)

      1. Gotta love the farm bureau. They piss and moan about the EPA and the definition of navigable waters. What they don’t say is that the temporary marshlands and storm ponds collect some of the 12 million tons of agricultural pollution that does run into navigable waters. They don’t say that because the agricultural pollution that goes into those non-navigable waters runs into navigable waters and pollutes what the EPA was created to protect. According to the Farm Bureau pollution of non-navigable water that washes into navigable water is A – OK. Why? Because of what the Farm Bureau perceives as a loophole that prevents the EPA from stopping the pollution of navigable waters if the offending substances started their journey in non-navigable waters.

        Meanwhile, the pollution that starts in temporary wetlands and storm ponds often does make its way to navigable waters where it causes economic harm and damages the livelihood of those who live and work next to those navigable waters. So much for pseudo-conservatives and their selective view of property rights.

        1. TooManyTaxes Avatar

          SCOTUS affirmed back in 2006 that “navigable waters” constituted only relatively permanent bodies of water such as found in streams, oceans, lakes and rivers. For an adjacent wetland to be considered a navigable water, it must have a continuous surface connection to the other body of water. Not every stream, storm pond or tributary qualifies. The 2006 case involved the Clean Water Act.

        2. Don, follow your reasoning. The end result of the EPA Rule would be that every homeowner in the US would be required to obtain a Federal permit (issued by the EPA) prior to fertilizing their lawn or garden. You may accept that end result as a good end state, I do not.
          I use the word potential because the EPA, in their discussions on this topic, say, “we will exercise restraint in requiring that the Rule be adhered for these intermittent water sources. The draft EPA Rule says the Clean Water Act now applies to all waters in the US (something that the US Congress definitely did not say during the Congressional debate on the Clean Water Act), but that the EPA regulators will issue restraint in applying the Rule. Forgive me if I do not accept that statement at full face value.
          Seeing how Federal Agencies continually push the boundaries of their authority and jurisdiction, I do not accept as a matter of fact that everything done by the Federal Regulatory Agencies is done without flaws and issues. Which is why I read some of the proposed rules with skepticism.

  5. I am not sure about the strength of the relationship between the cost of electricity and the level of economic growth.

    Virginia has the 19th cheapest residential electrical price, the 5th cheapest commercial electricity price and the 23rd cheapest industrial electricity price in the 50 US states + DC. In fact, over the last year the cost of electricity for industrial use in Virginia rose 7.5%. That increase was 4.0% in Virginia’s region and 1.8% at the national level.

    Jim – if you are worried about rising electricity prices chasing away industrial concerns you might want to ask Dominion why we are only minimally competitive when it comes to industrial use electricity costs and why those minimally competitive prices are rising so fast.

  6. LifeOnTheFallLine Avatar

    How will Virginia’s economic competitiveness fare when ocean acidification wipes out life in the Chesapeake Bay?

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