A new, comprehensive analysis by West Virginia’s environment agency of the Obama administration’s rule to limit power plant carbon emissions determined that the coal-heavy state can feasibly comply with the Clean Power Plan. But for it to do so, its Legislature must change a law it passed last year restricting the state from using carbon trading to comply.
"Although there are at least two scenarios in which compliance with the EPA’s 111(d) rule is feasible from an economic standpoint, compliance with this rule is not feasible from a legal standpoint," stated the report, released Wednesday by the West Virginia Department of Environmental Protection (DEP).
"Presently state law prohibits the state plan option projected to have the least impact," DEP’s report adds, noting that "this problem can be fixed" if the law is changed.
U.S. EPA’s Clean Power Plan, which was stayed by the Supreme Court in February, would require West Virginia to reduce its carbon emissions rate 37 percent from 2012 levels by 2030.
According to DEP’s detailed, 109-page report, which includes an examination of the Paris climate agreement and the results of several economic models, West Virginia likely must utilize some form of a carbon trading regime to feasibly meet U.S. EPA’s Clean Power Plan requirements, should the courts uphold the rule.
The report stated that based on modeling conducted by the Center for Business and Economic Research at Marshall University and Energy Ventures Analysis, "it appears that West Virginia could comply with the 111(d) rule with the least possible disruption to the state’s economy by adopting a mass-based compliance plan and participating in a national, or otherwise similarly robust, market for trading allowances."
However, a West Virginia law passed last year, H.B. 2004, would prohibit the state environment agency from pursuing a Clean Power Plan compliance strategy involving carbon trading. Rather, the law would only allow emissions reductions that can be achieved at the power plant.
The same law required DEP to conduct "a comprehensive analysis of the effect of the Section 111(d) Rule on the state, including, but not limited to, the need for legislative or other changes to state law." DEP’s feasibility report was produced in accordance with H.B. 2004.
Coal-fired electricity is a significant part of West Virginia’s economic base, and the state’s leaders are among the fiercest opponents of the Clean Power Plan. The state attorney general, Patrick Morrisey (R), is leading a 24-state lawsuit to kill the federal rule.
Morrisey press secretary Curtis Johnson said in an email that the attorney general’s office is reviewing DEP’s feasibility study, but "any further comment will come at the conclusion of our review."
The ‘most negatively impacted’ state
H.B. 2004 also mandates that the West Virginia Legislature approve the state’s carbon emissions reduction plan before it is submitted to EPA. DEP’s report found this could be an issue, as well, stating, "should the 111(d) rule be upheld, West Virginia may have difficulty developing a timely state plan submission due to all of the legislative approvals required."
"Over three successive legislative sessions, WVDEP would have to obtain legislative approval of the changes in state statutes that are necessary to develop a state plan, approval of legislative rules that will comprise the enforceable portion of the state plan, and approval of the state plan itself," stated the report. "Very little time will be available to engage stakeholders and the public in order to develop a consensus around a state plan approach before a plan must be proposed."
The report included a diagram that plots out a potential timeline for the Legislature to alter the law and allow DEP to develop a state plan to comply with the Clean Power Plan.
However, West Virginia’s environment agency cannot be characterized as a Clean Power Plan supporter. In the report, DEP noted that it "voiced opposition to the proposed rule on a wide variety of legal, technical and practical grounds," adding, "nearly all of the WVDEP’s objections to the proposed 111(d) rule apply with equal force" to the final rule.
The West Virginia environment agency also took issue with EPA’s forecasted health benefits under the Clean Power Plan, arguing that because the rule is intended to transition away from coal, the state "can expect to be one of the places that is most negatively impacted by this transition."
"The potential increase in poverty carries with it the negative health impacts associated with poverty," the environment agency stated in the report. "These impacts are difficult to quantify but are nonetheless real. EPA fails to acknowledge these non-air quality health impacts in its [best system of emissions reduction] determination."
However, DEP’s report suggests there is a path for West Virginia to make the required emissions reductions while mitigating the economic consequences of EPA’s climate rule, but only if restrictions under current state law are lifted.
DEP’s report stated that choosing a state Clean Power Plan compliance option that economic models show "most closely approximate business as usual — either of the options with national [carbon] trading — may enable the state … to avoid the employment and associated impacts" related to Clean Power Plan implementation.
A coal state at the mercy of others
Documents obtained by ClimateWire in January showed that major power companies operating in West Virginia, including American Electric Power Co. Inc., FirstEnergy Corp. and Dominion, advised West Virginia DEP that carbon trading would be the most economically feasible way for the state to comply with the Clean Power Plan, raising similar concerns about the state’s current law (ClimateWire, Jan. 21).
DEP senior policy adviser and counsel Thomas Clarke, who worked on the report, said there are "many variables" that could influence the economic outcome of various Clean Power Plan compliance strategies that West Virginia can adopt, such as the price of natural gas.
But Clarke acknowledged that his agency’s report largely squared with utilities’ conclusion that carbon trading is the least economically disruptive way for the state to meet EPA’s emissions reduction goals.
"Of course the better options, according to that analysis, are going to have less impact" on the state’s economy, Clarke said.
Clarke also stressed the report’s conclusion that West Virginia’s individual compliance approach to the Clean Power Plan can only do so much to shield the state’s coal industry from the climate regulation’s larger impacts. How other states choose to comply with the Clean Power Plan will have a significant impact on the state because 85 percent of the coal mined in West Virginia is sent outside its borders.
"What we can control with the state plan is the 15 percent of the coal production that is burned in our state," said Clarke. "The rest of it is sort of beyond our control and in the hands of other states and what happens internationally."
The West Virginia Legislature did make some small changes to the law this year, which environmental groups hoped would give the state more leeway in preparing for Clean Power Plan compliance (ClimateWire, April 7).
But Jim Kotcon, conservation chairman of the West Virginia chapter of the Sierra Club, said in an email that the agency "appears to be taking a very narrow view of some of the changes to state statutes made this year."
"I think that those changes give WV-DEP a lot more flexibility to develop a [state implementation plan], but WV-DEP appears to be reading the language in the most restrictive way possible."
Kotcon also faulted the state environment agency for its analysis of disadvantaged communities under the Clean Power Plan, charging that the agency "ignored EPA’s mandate to proactively include disadvantaged communities and largely avoided any effort to reach out to representatives from these communities in developing this feasibility report" in its analysis.
State Sen. Gregory Boso (R), chairman of the West Virginia Senate’s Energy, Industry and Mining Committee, did not respond to an emailed request for comment in time for publication. Clarke said yesterday that his agency had not yet heard back regarding the report from any member of the West Virginia Legislature.
This story also appears in EnergyWire.