Carbon Trading Program Could Yield Significant Rewards for Virginia
WASHINGTON (January 14, 2016)—Virginians could reap significant economic benefits by implementing a carbon trading program, along with stronger renewable energy and energy efficiency standards, to comply with the Environmental Protection Agency’s Clean Power Plan, according to a Union of Concerned Scientists (UCS) study released today.
“Virginia has a relatively modest emissions reduction target compared to other states around the nation,” said Jeremy Richardson, study author and senior energy analyst at UCS. “State officials would be smart to realize that shifting to cleaner energy doesn’t take much. The Clean Power Plan offers an opportunity to raise hundreds of millions of dollars a year by auctioning off carbon emission permits. This money could in turn be used for things like helping towns deal with increased coastal flooding, developing clean energy, and investing in economically distressed coal communities.”
The UCS study analyzed how Virginia’s economy, air quality and public health would be affected by a variety of policy changes, including making mandatory the state’s now-voluntary renewable energy standard—which encourages utilities to produce 8 percent of electricity sales from renewable sources by 2025—and increasing the standard to 16 percent by 2030. The study also evaluated the outcome if Virginia made its energy efficiency goal mandatory, rather than voluntary, and continued the requirement through 2030. The voluntary energy efficiency standard calls for a 10 percent electricity savings relative to 2006 levels by 2022.
The study found that enacting the stronger policies and creating a carbon trading program would:
- Generate an average of $251 million annually from the sale of carbon allowances that could be invested in Virginia's economy;
- Lead to $3.4 billion invested in energy efficiency improvements to benefit Virginia consumers;
- Reduce the typical Virginia resident's electricity bills 4 percent by 2030 for an annual savings of $62;
- Spur 6,252 megawatts of new wind and solar capacity in Virginia by 2030 to generate $3.7 billion in new capital investment;
- Avoid 78 million tons of carbon dioxide emissions through 2030; and
- Yield health and economic benefits worth an estimated $2.7 billion cumulatively through 2030 by avoiding carbon dioxide, sulfur dioxide and nitrogen oxide pollution.
“Virginia is playing catch up to other states, like neighboring North Carolina, when it comes to renewables,” said Richardson, pointing out that it lags behind many states in renewable energy development. “But with well-designed policies, it can easily be transformed from a laggard to a leader.”
Last year, most of the state’s electricity generation came from nuclear power (41 percent) and natural gas (28 percent), with the remainder (27 percent) coming from coal. Only 2.8 percent came from renewable sources other than hydropower. According to a recent U.S. Department of Energy analysis, Virginia had the economic potential to derive between 48 to 118 percent of its electricity sales in 2014 from renewable energy—led primarily by utility-scale solar and wind.
Based on the report’s findings, UCS recommends that the Virginia Department of Environmental Quality develop a compliance plan for the Clean Power Plan that includes carbon trading and that the General Assembly endorse a carbon trading program with auctioned allowances to raise revenues, as well as stronger renewable energy and energy efficiency standards.
This week, legislation was introduced in the Virginia General Assembly, House Bill 351, which includes a carbon cap and trade program with auctioned allowances and proposes to spend a majority of the revenues on investments in building resilience to coastal flooding, which is a growing risk for Virginia as sea levels rise. A corresponding Senate bill is expected to be introduced shortly.
Click here to view a related blog post on this analysis by Richardson.