The Clean Economy Act Will Make VA a Top U.S. Climate Leader

As a landmark week begins in Richmond, Virginia is poised to make climate change history: passage of the Virginia Clean Economy Act in 2020 would vault Virginia into the very top tier of American states tackling climate change. That's a resounding close of the just-ended "lost decade" of inaction, as the Old Dominion decisively enters a new era.

And there’s not a moment to lose.

That’s why the Clean Economy Act is designed to help meet the IPCC’s urgent challenge by entirely eliminating Virginia’s power plant carbon pollution by 2050. That's right -- if signed into law, this bill would ensure Virginia's power sector produces zero carbon emissions. Only a very few other elite states in the nation (like California, Hawaii, New York, and Washington) have established similarly visionary climate leadership for the power sector. Indeed, by taking the additional step of ensuring no power plant smokestack carbon emissions beyond 2050, the Clean Economy Act represents one of America's single-strongest climate policies. 

The Clean Economy Act’s high ambition of zero in-state carbon emissions by 2050 is matched by its strategic, elegant design: by relying first and foremost on a rigorous “Energy Efficiency Resource Standard,” the Act will reduce not just carbon, but also Virginia’s bloated electric bills. Concurrently, the Act will steadily increase renewables as a percentage of our energy mix to 100%, via a “Renewable Portfolio Standard” that smartly prioritizes our native solar and wind, offshore and on, to drive the clean energy job growth exploding elsewhere in the nation. Just as crucial, the Act is equity-centric, ensuring our low-income citizens see significantly expanded access to energy efficiency—through reinvestment of RGGI carbon revenues—to reduce their inequitable energy burden.

By those three measures, the Clean Economy Act meets—with flying colors—NRDC’s “Three E’s” criteria for the climate action Richmond leaders must deliver in 2020: Efficiency-first, Equity-centric, and Emissions-zero.

The Act doesn't just meet the IPCC’s 2050 target and NRDC’s own “Three E’s” policy design criteria: it also enshrines in statute Governor Northam’s own call for zero-carbon emissions by 2050. For that very reason, Dominion Energy’s succinct and positive response to Gov. Northam’s zero-carbon goal should be the very same for the Clean Economy Act: “challenge accepted.”

The Clean Economy Act Is an Opportunity for Dominion Energy to Decisively Turn the Climate Corner

Dominion would certainly be wise to re-up for the Clean Economy Act their previous “challenge accepted” commitment to Gov. Northam. First, Dominion could ditch their last-in-the-nation energy efficiency program performance and instead deliver true customer-service to Virginians with efficiency programs that lower bills. That would reverse Dominion’s steady (and soon-to-accelerate) drumbeat of carbon-intensive cost hikes, to reduce statewide average electric bills that are now the 6th-highest in the continental United States. Efficiency investment would also avoid Dominion’s planned $29 per month bill increases in the next few years, which will single-handedly swell Virginia’s electric bills up a few more slots, possibly to even be the very highest electric bills in America.

In addition to delivering bill savings, the Clean Economy Act presents a timely opportunity for Dominion Energy to pivot away from relentless Wall Street-oriented high-ticket items like the stalled and unwanted Atlantic Coast Pipeline, unneeded peaker plants fueled by gas imported from out-of-state, and white-elephant pork projects. Instead, the Clean Economy Act presents Dominion a good faith opportunity to return to its roots back home in Virginia, by expanding clean homegrown Virginia resources like efficiency and offshore wind, partnering with Virginians to expand rooftop solar options, and rebooting its confused “grid modernization” package to be less an overearnings-spenddown strategy, and more the customer-focused clean energy vehicle it could be.

In short, the Clean Economy Act is Dominion’s opportunity to decisively hit the reset button and solve, rather than worsen, the climate change and extreme weather already lapping at the shores of its native state.

So, with so much for everyone to like (including, hopefully, Dominion), what exactly is in the Clean Economy Act?

The First E: Energy Efficiency, to Lower Carbon and Bills

The Clean Economy Act would mercifully end the SCC’s just-keep-on-building-power-plants approach that oversaw Dominion’s costly and unnecessary $7 billion dollar construction bonanza of the past decade.

Instead, the Clean Energy Act right-sizes Virginia’s energy sector by joining the majority of states in America—the first of which was Texas, over a generation ago—in establishing a robust “Energy Efficiency Resource Standard.” That commonsense, widely-proven tool simply requires electric monopolies deliver a minimum amount of energy efficiency savings to their customers each year. That means, rather than blindly plowing Virginian ratepayer dollars in more-expensive, polluting steel-in-the-ground, to pump out more and more power into a leaky economy, we instead invest in tuning up that economy, to burn energy more smoothly, cheaply, and cleanly. That means everything from simply upgrading our lighting across the state to LEDs, to better insulating office towers, churches, and schools, to better constructing our homes to be more weathertight. 

Dominion and APCo should embrace these energy-sipping upgrades as a powerful customer service measure and investment opportunity: our electric monopolies are protected from any competition, and thus need not over-rely on simply pumping out more and more “product” into an inefficient Virginia economy in order to stay in business. Indeed, they’re the only game in town. Instead, efficiency can be a foundational component of both their energy mix and investment strategy, to deliver not just carbon reductions and investment returns, but also better service to the everyday Virginians laboring under some of the highest electric bills in America. To help get the monopolies’ attention on the still-untapped win-win investment opportunity of efficiency, the Clean Economy Act would smartly rewards electric monopolies with prudent “performance incentives” for hitting or exceeding their required annual savings targets.

And our electric monopolies will certainly be able to hit the Act’s robust annual efficiency targets if they try: since many other states and utilities already have, then so can we. Indeed, Virginia's electric monopolies will be assisted by the unique fact that Virginia buildings are, on average, more “electrified” than in the rest of the nation. That high rate of “electrification” in buildings ("electrified" buildings rely exclusively on electricity as an energy supply for heating, cooking, and cooling, rather than on gas or fuel oil) means there are even more efficiency-improvement opportunities in buildings, compared to states that utilize more gas- or oil-fueled appliances.

In short, the Act’s “energy efficiency resource standard” will finally convert Virginia from an efficiency laggard to efficiency leader.

The Clean Economy Act Prevents Unnecessary New, Climate-changing Gas Plants

Just as importantly, the Act’s efficiency provisions act as a de facto gas plant moratorium on Dominion: the Act disallows electric monopolies from building unneeded new carbon-based power plants, if they cannot first clear the high bar of demonstrating that (1) they’ve already met the annual efficiency requirements and (2) that the proposed gas plant’s supposed “need” cannot be met by simply tapping all available, cost-effective energy efficiency savings. (Additionally, no gas plants may be approved under the Clean Economy Act until the DEQ issues a finding of whether or not the SCC should approve any carbon-emitting plants that would be doomed to shutter by 2050, under the Act’s binding zero-carbon-by-2050 statewide emissions limit.)

These provisions will halt additional gas plants by Dominion in Virginia, for two reasons. First, given Virginia’s unique potential to dramatically expand its untapped efficiency reserves, that resource will meet our energy needs for the foreseeable future, all while the cost of solar, wind, and "peaker" batteries continue to fall. Second and more importantly, Virginia sits in the midst of a historic glut of new, excess gas generation, both here in Virginia and across our regional electric grid (known as “PJM”), making it very hard, even today, for Dominion to show a genuine “need” to build a plant (much less in a more efficient Virginia under the Clean Economy Act).

Indeed, Dominion acknowledged this market reality when it recently cancelled an RFP for new generation. Its single new peaker plant proposal currently-outstanding is highly speculative and very unlikely to be approved, even absent the Clean Economy Act: Dominion’s sole rationale for building the plant – an illusory need to “balance” variable renewable output—is a hollow, paper-thin pretense to put yet more unneeded steel in the ground. Virginia’s still-nascent renewables sector is far from a scale that actually needs “balancing.” Moreover, any future grid “balancing” needs – should PJM (not Dominion) determine they actually exist—can already be met by an asset Dominion customers already paid for a long time ago: the world’s largest battery, located right here in Virginia.

In sum, it’s already very hard to justify more fossil plant builds in Virginia or even elsewhere in PJM, on top of the 7 gigawatts we’ve invested in in the past decade. If that weren’t enough, the Clean Economy Act’s efficiency-first requirements will serve as the final nail in the coffin for new carbon-emitting generation in Virginia.

However, that’s cold comfort.

Because it is not new plants that pose the gravest climate threat in Virginia’s energy sector. The greater and immediate threat by far is Virginia’s existing carbon-based power fleet.

Which Brings Us to the Climate Leadership Lynchpin of the Clean Economy Act, the "Second E" of Emissions-Zero by 2050

The Clean Economy Act’s bold requirement that we slash our state power plant carbon to zero aligns Virginia’s energy sector with the IPCC’s clarion call for zero-carbon-by-2050. (Technically, the Clean Economy Act is even stronger than what the IPCC calls for: the IPCC calls for the less stringent “net zero” by 2050, while the Clean Economy Act calls for absolute zero, full stop.)

While certainly bold, the 2050 target of zero carbon pollution is also imminently achievable, due to three key design components: efficiency, RGGI, and renewables.

With efficiency newly-established by the Act’s “Energy Efficiency Resource Standard” as our state’s bedrock, first-order energy resource, Virginia will directly reduce carbon for the lowest upfront investment (investment that is, moreover, offset by both direct bill savings and avoided supply-side fuel and generation costs). Efficiency improvements are both immediate and long-lasting, to bend Virginia’s “demand curve” downward and establish the long-term glidepath to the 2050 zero-carbon power sector goal. Efficiency also boosts the carbon-reducing effectiveness of renewables: every MW of solar and wind added to an energy efficient system supplies a “bigger slice” of clean electricity to displace carbon-emitting resources, within a smaller (more efficient) overall “pie” of demand.

Second, the Clean Economy Act’s 2050 target is also in long-term alignment with Virginia’s existing 30%-by-2030 RGGI-linked reduction requirement (the RGGI carbon limit kicks in for Virginia power plants next year). The Clean Economy Act essentially extends Virginia’s decade-long RGGI carbon trajectory beyond 2030 by two decades, to also meet the IPCC’s 2050 goal.

The 3rd shrewd design component to achieve a carbon-zero power sector in 2050 is the Clean Economy Act’s strong “Renewable Portfolio Standard,” another tried-and-true policy already utilized by most American states. The percentage of clean, renewable wind and solar must steadily increase in Virginia from the current modest single digits, up to 100% by 2050.

In addition to that nation-leading ambition, the Clean Economy Act smartly prioritizes the sensible development of in-state clean energy, to secure clean energy jobs and grow energy innovation here at home. Similar to the cost reductions of efficiency, the Act also requires that Dominion develop Virginia’s offshore wind resources in a transparent, least-cost manner.

That will help ensure the Clean Economy Act does not exacerbate the energy burden experienced by low-income Virginians.

Which Brings Us to the Third “E”: Equitable Climate Action

The Clean Economy Act meets NRDC’s third “Three E” standard for climate action in Virginia: it ensures climate action lessens inequities and avoids new ones.

The Act most notably does so by tripling electric monopoly investment in efficiency programs aimed at their low-income customers. That is sorely needed: according to the Virginia Poverty Law Center, our low-income neighbors in Virginia feel more acutely our sixth-highest-in-the-continental-U.S. statewide electric bills, with a much higher percentage of their paychecks going out the door each month to our increasingly expensive electric companies.

The Act also ensures that the majority of RGGI carbon allowance revenues are invested for the benefit of low-income Virginians. Projections show that Dominion will receive about $120 million in RGGI revenue annually, beginning in 2021. The Act will direct most of that revenue toward low-income energy efficiency projects instead, such as in multi-family buildings and in public housing, as well as to other areas in need of efficiency upgrades, like local public school buildings. This more equitable use of RGGI revenue will drive benefits for those who need it most -- low-income communities that are often least-equipped to navigate the impacts of a changing climate.

In addition to other equity measures, the Clean Economy Act also protects against unanticipated electric cost increases and buttresses our state’s nascent commitment to ensure no disparate impacts are unintentionally placed upon any environmental justice community.

*****

In these ways, the Clean Economy Act is a nation-leading, visionary policy.

With the leadership in place to deliver it to his desk, and the stroke of Governor Northam’s pen, Virginia will vault from climate laggard to a Top 5 national—even global—climate leader, through a targeted, equitable use of time-tested efficiency and renewable policies.

But, There Is Always a “But”

Not to spoil the party, but transportation—not energy—is now the largest driver of climate change in Virginia. Given the wasted decade that just ended and President Trump’s mindless coddling of fossil fuels, bold climate action—on ALL fronts, including transportation—can no longer wait.

Make no mistake: the Clean Economy Act, in cleaning up Virginia’s power plants, is unassailably visionary, vaulting Virginia up among the nation’s top 5 states in zeroing out power plant carbon pollution on the IPCC’s 2050 timeline. In a state already impacted by climate change, and with far more drastic dislocations already on the way, the urgency of passing the Act—in 2020—simply cannot be overstated. Progress in the halls of power in Richmond has been far too-long stymied by big polluter special interests, and it is no longer acceptable for Dominion Energy to be Virginia’s single biggest climate changer, when it should be our biggest climate solver.

So, the all-out effort needed to ensure the Clean Economy Act overcomes the usual naysayers to land on Governor Northam’s desk, and soon, is of paramount importance. Neither we, nor the climate, can afford to leave 2020 without having decisively cleaned up Virginia’s energy sector for the long haul.

However, it’s equally important that all Virginians and their leaders in Richmond recognize that the Clean Economy Act, as bold as it is, is just the beginning of Virginia’s national and global climate leadership.

That climate leadership will mean extending the efficiency focus of the Clean Economy Act to the higher-polluting transportation sector as well, by improving the fuel economy and thus net costs of Virginia’s transportation fleet, and continuing Virginia’s commitment to the regional Transportation and Climate Initiative (TCI).

That is the next, crucial phase of Virginia’s national climate leadership, after the legislature sends the visionary Clean Economy Act to Gov. Northam in 2020.

Let’s get started . . . today.

About the Authors

Walton Shepherd

Virginia Policy Director, Climate & Clean Energy Program

Join Us

When you sign up you'll become a member of NRDC's Activist Network. We will keep you informed with the latest alerts and progress reports.