COMMENTS ON PROPOSED CO2 BUDGET TRADING PROGRAM

Richard H. Ball, Ph.D.[1]

 

Summary

 

The proposed regulation program has the potential for an important step toward reducing CO2 emissions in the Virginia electric power sector.  That is very important to reducing the impacts of global climate change, ocean acidification, and the local environmental impacts of fossil fuel combustion.  However, the degree those objectives are realized depends greatly on the details about which EGUs are covered, the magnitude of the cap, and other program details.  In my remarks, I particularly focus on the choice of a baseline value for the Cap as of 2020 and also note some of the effects of the criteria for inclusion of EGUs.

 

I offer some quantitative analysis of factors that should influence the choice of a 2020 Baseline and criteria for EGU coverage.  I believe that choosing a baseline as high as 33 or 34 MMT of CO2, as suggested for comment in the proposed regulation, would be much too high and lead to much less reduction in Virginia CO2 emissions by 2030 than is feasible and desirable.  For example, the ICF/DEQ Policy scenarios show very low reductions in CO2 emission reductions (9% for Case 2, as shown in Appendix C, and even less for Case 1).  Emissions have already been coming down since 2016 and most projections indicate that a trend in that direction is likely to continue in that direction even in the absence of the proposed regulation.  I offer several lines of evidence for that, including calculations of actual 2017 emissions in Virginia for overall electric power emissions and emissions specifically from likely EGUs covered by the ED 11 regulation. If the Virginia ED 11 Baseline is set in the range of about 30 to 34 MMT of CO2, the program might fail to achieve CO2 reductions that are substantially greater than what would happen even in the absence of the ED 11 program.  

 

My conclusion from the scenario analyses in the Appendices is that it would be feasible to achieve reductions under a Base Cap of 28 MMT with an aggressive, but feasible Solar or wind expansion program and phasing out a substantial amount of higher ED 11 CO2 carbon sources along with considerable natural gas generation while maintaining a steady level of total Virginia generation.   It also implies that it makes little sense to continue expanding natural gas generating sources since they are likely to be constrained in their generation.   A steady level of generation would be consistent with an aggressive program of Energy Efficiency measures, which might be implemented as a result of new legislation enacted and signed in the 2018 session of the Virginia General Assemblye.  

 

RGGI forwarded their comments and recommendations to Virginia earlier today, which include an important paragraph:[i]

 

“Virginia has proposed a starting 2020 state budget of 33-34 million tons. The RGGI states recognize the importance of Virginia’s allowance budget in establishing the stringency of Virginia’s program and its impact on the overall stringency of the regional program. The RGGI states’ considerations are informed by our track record of successfully reducing emissions faster than expected at the time of RGGI’s initial program design. Due in part to Virginia’s newly planned investments in complementary programs such as energy efficiency and clean and renewable energy; Virginia is likely to have similar opportunities to achieve greater reductions than expected. As such, the RGGI states encourage Virginia to take this into account when setting an allowance budget. Virginia could realize a measure of climate leadership by adopting a lower starting allowance budget than currently set forth in proposed regulation. Setting Virginia’s initial budget at an appropriately ambitious level is particularly important given the nature of the consignment auction to private entities.”

Hence RGGI expects Virginia to reduce its Baseline cap, although they did not specify a particular value.

 

In the Scenarios and analysis I present in the Appendices, I have borrowed results on the likely list of ED 11 EGUs that will be covered under ED 11 and the associated estimated generation, and CO2 emissions from the comments submitted by the Virginia Chapter of the Sierra Club.[ii]

 

Another conclusion is that the ICF modeling results published by DEQ in the autumn contained some out-of date assumptions due to subsequent events.  In Appendix C I conclude that:

 

“The ICF results were furnished in autumn, 2017 before actual 2017 results for Virginia were known and before SB 966 was passed in the 2018 Session of the General Assembly, and before the announcement of retirement plans for a number of EGUs, so those factors could not be reflected in the modeling.  In particular, CO2 emissions by 2020 EGU-covered units in 2017 was overestimated in the ICF modeling as 32 MMT CO2, compared with the Sierra Club’s estimate of 29 million tons based on actual 2016 data.   Those factors also may have led to overestimation of subsequent modeled results for 2020 through 2030.  Hence I look at likely emission reductions for other Baseline Cap values than just 33 MMT under several different policy assumptions.”

 

I appreciate the opportunity to provide comments on the proposed ED 11 regulations and endorse the efforts that DEQ has undertaken.

My APPENDICES Would not fit or come out right, so I will EMAIL separately to DEC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[ii] COMMENTS OF THE VIRGINIA CHAPTER OF THE SIERRA CLUB

ON PROPOSED CO2 BUDGET TRADING PROGRAM, April 9, 2018

[iii] State Air Pollution Control Board, Nov. 16, 2017

 

 

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