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Enviros fear natural gas loophole in Clean Power Plan

This story was updated Tuesday, Oct. 18.

RICHMOND, Va. — Environmental groups are worried a technicality could undermine the carbon-cutting goals of the Clean Power Plan in Virginia and beyond.

The state's major utility, Dominion, recently defended a plan to comply with U.S. EPA's climate rule that would not lower overall emissions. Green groups, meanwhile, urged a carbon action team assigned by Gov. Terry McAuliffe (D) to seek deeper greenhouse gas reductions.

They worry Dominion plans to build a large fleet of carbon-emitting natural gas plants and still meet the requirements of the Clean Power Plan.

"We cannot look at doing the bare minimum. ... We need this administration to act and actually reduce the pollution we're putting into the air," Michael Town, director of Virginia's League of Conservation Voters, said at a meeting on the state Capitol campus.

"If we choose to go down a path where we're going to let the status quo take over, for the next 50 years we're going to be burning fossil fuels," he said.

Natural gas plants emit carbon at a lower rate than coal plants. So depending on their fuel mix, utilities around the country could theoretically add more gas plants to their portfolios and reduce carbon rates while increasing overall emissions. Some states may see that as a way to leave room for economic growth that might require more cheap power.

Green groups have long warned of that possibility, but their concerns are becoming more acute as companies dig into options.

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"There's definitely a worry there," said Liz Perera, climate policy director for the Sierra Club.

Virginia offers a window into growing pains other states may face as they try to meet federal climate rules. Similar debates could reach governors' offices and air agencies around the country if the Clean Power Plan moves forward. Officials will have to vigilantly weigh environmental goals versus costs to make sure they're getting the best balance for consumers.

An 83% emissions rise?

Virginia's GOP-controlled Legislature prohibited spending on Clean Power Plan work, so the governor assigned a group to look more broadly at carbon-cutting options.

Dominion thinks the state should focus on reducing the power sector's carbon intensity or rate, rather than overall carbon levels. With rate-based plans, some companies could build large amounts of natural-gas-fired power — a future environmental groups are fighting tooth and nail.

Power companies around the country are looking to natural gas as a cheap way to comply with the Clean Power Plan. PJM Interconnection, the Mid-Atlantic grid organization, noted in a presentation in Richmond last week that its states sit on top of two shale plays that have delivered inexpensive gas that has driven the market. This year, natural gas use is overtaking coal use in the power sector for the first time. Utilities are buying natural gas production companies and asking regulators to sign off on large pipelines that environmental groups are opposing because they think they will lock the country into gas use.

The Sierra Club challenges utilities step by step — when they write long-term plans relying on natural gas, when they seek to build individual plants and when they propose pipelines. In an ongoing legal saga, the Southern Environmental Law Center recently filed a motion with federal regulators opposing Dominion's route for the 600-mile Atlantic Coast Pipeline that would stretch from West Virginia to North Carolina.

In Virginia, LCV wants the state to cut overall carbon levels from existing and new plants 40 percent by 2030. EPA's targets, by comparison, would allow those levels to increase by 2 percent by then.

Environmental groups charged that using Dominion's rate-based plan instead and relying more on natural gas would increase carbon emissions 83 percent (ClimateWire, Oct. 5). Dominion had previously confirmed the data behind those calculations but later realized they were incomplete.

Still, the rate-based proposal the company says would be best for consumers would raise emissions 1 percent by 2041, while the strategy environmental groups prefer, to cap carbon from all power sources, would cut emissions 35 percent.

Dominion predicts demand will rise 58 percent during that time, and the company argues a 1 percent emissions increase is very low with that in mind.

Dominion's numbers suggest the more effective carbon cap would be more than twice as expensive, totaling $12.8 billion rather than $5.1 billion (ClimateWire, Oct. 6).

Officials nationwide will have to sift through that kind of data if the rule overcomes legal challenges and the Supreme Court lifts a stay on implementation.

States could also cap emissions from existing power plants but leave out new ones, another option environmental groups oppose. Even states that cap all emissions might increase what they produce in-state by engaging in carbon trading to keep coal and gas plants online and buy credits from companies that build zero-carbon power elsewhere (ClimateWire, Feb. 18).

Debating rate-based plans

Concerns about rate-based plans are not new, but they could become more pressing. Ivy League carbon economists noted in a paper on the draft rule in 2014 that "a state ... could potentially meet the EPA's requirement without lowering emissions" (ClimateWire, Nov. 17, 2014).

PJM suggests carbon levels would decline more and stay lower if its 14 states capped emissions. With carbon rates, emissions would decline at a slower speed until 2030 but then rise significantly.

Nonetheless, a handful of states, mainly in the southeast and western United States, may consider rate-based targets as a way to leave room for population and industry growth.

"It could be attractive to states to consider opting for a rate-based program to encourage economic growth in that state by adding new gas plants," said Maria Robinson, associate director of energy policy and analysis at the green business group Advanced Energy Economy. "It depends on what Virginia's end goal is, whether Virginia's primary goal is to reduce emissions or keep costs down, and it's really about balancing those two concerns."

Building new plants and creating jobs within a state might be tempting, for the economic value and the optics. But it could lead to much higher emissions, including in areas where vulnerable communities have historically dealt with more pollution.

Amlan Saha, vice president of the consulting firm MJ Bradley & Associates, noted states that might favor rate-based plans could still cap emissions in order to trade with neighbors.

"It is not a very straightforward calculus," he said.

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