Twilight of an Era in Alexandria

Eric Terran, a 39-year-old architect, is doing something that almost no one in the City of Alexandria is doing anymore: building a detached, single-family residence. Last year he purchased a lot zoned for single-family residential for $230,000, and now he’s erecting a 3,300-square-foot house on it, reports Michael Neibauer with the Washington Business Journal.

Construction of detached, single-family dwellings has almost come to an end in Alexandria, where the inventory of lots is fast disappearing. As Neibauer notes:

Alexandria ended fiscal  2016 with 9,131 single-family detached homes, the exact number it counted at the close of fiscal 2015. In fact, only 12 new homes — not including tear-downs, which do not add to the city’s inventory — have been built since 2010. Save for infill and tear downs, Alexandria is largely built out.

I have no doubt that Neibauer has done his reporting and knows what he’s talking about, but his numbers don’t quite jive with Alexandria’s building permit data, seen above, which I took from the Homefacts.com website. According to that data set, permits issued for single-family housing since 2010 numbered in the hundreds. Admittedly, the overwhelming majority of permits was for 5+ unit, multi-family dwellings, which is broadly consistent with what Neibauer is saying.

Rather than get hung up on explaining the statistical discrepancy, however, I want to focus on the larger truth, which is the transformation of development patterns in Alexandria. The overwhelming preponderance of new housing construction in the city consists of multi-family housing — apartments and condominiums. Indeed, 2013 and 2014 showed new housing construction running at a torrid pace — faster than at any time since 2001.

I’m not intimately familiar with Alexandria, but I did visit downtown several months ago and observed a lot of recent mixed-use development. My superficial impression is that Alexandria is allowing developers to build a lot of the right stuff. The new development is preserving the walkability that made Old Town Alexandria and environs such a special place.

In 2010, the city achieved an all-time population high of 140,000, and has added population since then. As the city continues to grow, new houses like Eric Terran’s will become an endangered species. Newcomers will be living in apartments and condos.

Update: Michael Neibauer contacted me to explain the discrepancy I alluded to. Eric Terran is building a detached single-family dwelling. Although there are many “single-family dwellings” being built in Alexandria, they are row houses — not detached single-family dwellings.

Reform Redistricting, Dampen Toxic Politics

PowerPoint slide presented in Richmond Circuit Court Monday in a redistricting lawsuit pursued by OneVirginia2021

PowerPoint slide presented in Richmond Circuit Court Monday in a redistricting lawsuit pursued by OneVirginia2021. Image credit: Richmond Times-Dispatch.

Given a choice between a House District 72 configured as it is today or the community-based district like the alternative displayed above, who, besides the political party that drew the district to its advantage, would not prefer the latter?

Imagine a country where the voters selected their representatives, not one in which representatives selected their voters. Is there any doubt that elections would become more competitive? Is there any doubt that elected officials would be less ideological, more pragmatic and more inclined to work across party lines?

The United States is becoming more polarized, and that polarization is turning toxic. Two forces are driving this phenomenon. One is the rise of alternative media which allows people to seek news and commentary that confirms their partisan biases without fear of contradiction. The other is the proliferation of computer-aided redistricting which stifles the need for politicians to appeal to voters with different viewpoints.

Here in Virginia, state government can’t do anything about the media, which rightly enjoys freedom of the press. (Fortunately, media is less overtly partisan on a local level than it is in Washington, D.C.)

But we do have the power to change the way we do redistricting. We should do so quickly — before Richmond replicates the partisan hell that is the nation’s capital.

For-Profit Colleges and the Student Debt Apocalypse

Graduates from for-profit colleges account for a disproportionate share of student loan defaults.

Graduates from for-profit colleges account for a disproportionate share of student loan defaults.

Tressie McMillan Cottom worked as an enrollment officer at two for-profit technical colleges before she went on to earn a PhD., join the faculty of Virginia Commonwealth University, and write a book, “Lower Ed: The Troubling Rise of For-Profit Colleges in the New Economy.”

Cottom says that for-profit colleges get one important thing right: They invest resources in the front-end process of helping students enroll: everything from applying for financial aid to having their textbooks waiting for them on the first day of class. But she, like many other critics of for-profit education, is concerned by the high indebtedness and high default rate of students. Those who attend for-profit colleges represent only 26% of all borrowers but account for 35% of federal loan defaults.

The high default rate is a sign of the trouble graduates have finding quality, high-paying jobs, Cottom told Karin Kapsidelis, higher ed writer for the Richmond Times-Dispatch. For-profit colleges are a varied lot. While some deliver value for the students’ investment, others are marketing machines designed to enroll students and collect revenue with little heed to results. “The profit motive changes everything. It means that instead of helping students, you’re selling students.”

The industry took off when the financial sector figured out how to make money from it, Cottom says. Wall Street underwrote for-profit educational enterprises to “monetize” peoples’ aspirations and their faith in education as the way to improve their lives.

Writes Cottom in the introduction to her book:

Lower Ed refers to credential expansion created by structural changes in how we work, unequal group access to favorable higher education schemes, and the risk shift of job training, from states and companies to individuals and families, exclusively for profit. Lower Ed is the subsector of high-risk post-secondary schools and colleges that are part of the same system as the most elite institutions. In fact, Lower Ed can exist precisely because elite Higher Ed does. The latter legitimizes the education gospel while the former absorbs all manner of vulnerable groups who believe in it: single mothers, downsized workers, veterans, people of color, and people transitioning from welfare to work.

Bacon’s bottom line: No question, the high default rate is a huge problem — student indebtedness is creating a new class of Americans who have little hope of paying back their tuition and, as the law stands now, little chance of discharging their debts through loan forgiveness or bankruptcy like overextended homeowners can do. But I am concerned by how many people, including, Ms. Cottom, it seems, blame the problem on for-profit institutions and the profit motive.

As the Kapsidelis story points out, for-profit colleges account for 35% of all federal loan defaults. But 65% can be traced to non-profit colleges! The driving force behind high defaults isn’t the for-profit status of the school, I would suggest, but the socioeconomic status of the student. Students from poor families are more likely to drop out and default on their debt than students from better-off families. Historically Black Colleges and Universities (HBCUs), which are non-profit, have high default rates, too, as do institutions that cater primarily to lower-income whites and Hispanics.

For-profit institutions are motivated to accept marginal students in order to fill seats and generate revenue. But guess what, so are many non-profit institutions. They, too, have expenses to cover, salaries to pay, and bonds to finance.

The problem, I would suggest, isn’t for-profit versus non-profit, it’s the erosion in lending standards. Anyone who wants a student loan can get one. Because the repayment risk is transferred to the federal government, the college (be it for-profit or non-profit) has no skin in the game. If a college student is unprepared for college, defaults after dropping out, or fails to find a job, the institution suffers no ill consequence. Why would we expect any other result?

 

Has Rate Freeze Benefited Virginia Customers?

There's no evidence that the electricity rate freeze has hurt Virginians.

Rate freeze —

Are the electric power companies ripping off rate payers under the guise of a rate freeze? Some think so. The electric utility industry came under fire during the 2017 General Assembly session when Sen. Chap Petersen, D-Fairfax, submitted a bill to un-do the freeze in base electric rates enacted in the 2015 session. Although his bill never made it through the General Assembly, Petersen has appealed to Governor Terry McAuliffe to implement it as an amendment.

In an op-ed piece published in the Richmond Times-Dispatch this morning Mark Webb, Dominion’s senior vice president for corporate affairs, argued that the freeze is working as designed and is a good deal for rate payers.

Legislators wanted to protect customers from a potential price hike tied to environmental costs. Since then a Dominion residential customer has paid $1,100 less per year for electricity than those in the Mid-Atlantic.

Were the rates frozen after big increases? Not at all. Dominion residential rates are only about 4 percent higher than they were in 2008. Don’t you wish that was the case with your other household expenses?”

Meanwhile, the reliability of service has improved, Webb writes, and industrial rates have declined 16% over the same period. Virginia’s lower electric rates are significantly lower than Maryland’s and Washington, D.C.’s. Maryland residential customers pay 25% higher rates than Dominion customers, while industrial customers pay 49% more. D.C. residents and industrial customers pay an even bigger premium.

Dominion’s lower rates have been an economic boon for Northern Virginia, Webb says. “No wonder large electric users such as data centers overwhelmingly locate in Virginia instead of D.C. or Maryland.”

(Webb’s op-ed made no mention of the neighboring state of North Carolina, however, where the average electric rate is lower — 10.29 per kilowatt hour in December 2016 compared to 10.72 cents in Virginia.)

Webb then goes one step further, contending that the General Assembly’s re-regulation of electric power energy in 2008 has worked out well for Virginians, too. “Since Virginia’s landmark legislation reregulated utilities a decade ago,” he writes, “electric rates have been remarkably stable and well below the national and regional averages.”

Bacon’s bottom line: I was curious. What are the numbers? How have electricity rates fared compared to national averages (a) since reregulation and (b) since the rate freeze? I checked data compiled by the U.S. Energy Information Administration for “Average Retail Prices for Electricity” for answers.

Between 2008 and 2016, the average residential rate per kilowatt hour for retail customers nationally increased 11.7%, significantly higher than the 4% rate for Dominion customers that Webb cites. So, Dominion has out-performed the national average since reregulation. But rate-freeze critics have not disputed the fact.

A more pertinent question is what has happened to electricity rates since July 2015 when the freeze went into effect. As critics have noted, base rates cover only ongoing operating costs, not the cost of fuel, which is adjusted through fuel adjustment clauses, or the cost of new capital projects, which is incorporated into the rate structure through rate adjustment clauses. In theory, overall rates can climb higher while base rates stay locked in place.

But that has not happened. Between July 2015 and December 2016 (the most recent month available), the average price of electricity in Virginia decreased 8% to 10.72 cents per kilowatt hour. That compares to a 5.9% decline in electric rates nationally between July 2015 and November 2016, according to the Energy Information Administration.

Out-performing the national average since mid-2015 would seem to buttress Dominion’s case, but it still doesn’t end the argument. Former Attorney General Ken Cuccinelli has argued that the rate freeze locks into place hundreds of millions of dollars in excess profits, with the implication that if Virginia electricity rates would be even lower if they hadn’t been frozen. Webb side-stepped that issue in his op-ed piece, and the EIA numbers don’t address it.

The Northam/Perriello Rural Poverty Plan

Let there be higher wages! Ralph Northam (left) and Tom Perriello on the campaign trail in Northern Virginia where they promoted a $15 minimum wage.

Let there be higher wages! Ralph Northam (left) and Tom Perriello on the campaign trail in Northern Virginia where they promoted a $15 minimum wage. (Photo credit: Washington Post)

Both Democratic candidates for governor, Ralph Northam and Tom Perriello, have endorsed a statewide $15-per-hour minimum wage, a sign, says the Washington Post, of how much momentum the national “Fight for $15” is achieving. (Virginia hews to the federal minimum wage of $7.25 per hour, which has not increased since 2009.)

Perriello backed the $15 minimum wage shortly after declaring his candidacy, and Northam followed the next day. Both candidates reiterated their support earlier this week when aligning themselves with striking workers at Reagan National Airport. Reports the Post:

“I would challenge anyone out there to go try to support themselves and support their families on $7.25 an hour,” Northam said Wednesday after his meeting with workers. “It is impossible. You can’t do it.” He said he would push to raise the minimum wage as governor by campaigning to unseat Republican lawmakers opposed to it.

“We know we have a long way to go,” Perriello told a wheelchair handler during his Thursday visit, wearing a purple Fight for $15 scarf. “This is about the dignity of work, but it’s also about economic growth in our community.”

Bacon’s bottom line: Economists have haggled endlessly for decades over the effects of the minimum wage, with neither side dealing a knockout blow. But it’s safe to say that the minimum wage would have the greatest impact on labor markets in areas where prevailing wages are the lowest — and in Virginia, those are rural areas.

Start by asking the following question: Why not raise the minimum wage to $30 an hour? Or $100 an hour? Because, even liberal economists will concede, employers will lay off workers who don’t deliver $30 or $100 in economic value. At some point the wages lost by those who lose their jobs will exceed the wages gained by those who received a pay raise. At that point the minimum wage becomes indisputably destructive. The question is at what hourly wage that threshold is crossed.

It is conceivable that a $15 minimum wage will work in the Washington metropolitan area in the sense that wage gains for lower-income workers will exceed the wages lost from employees who lose their jobs. That’s because Washington is already a high-cost-of-living, high-wage labor market, and the differential between prevailing market wages and the $15-per-hour minimum wage is relatively modest. The picture is very different in economically depressed Southside and Southwest Virginia communities where one of the few competitive advantages in the economic-development arena is a lower cost of living and a lower wage base.

The Virginia Employment Commission publishes labor market profiles of the Southwest Virginia Workforce Investment Area here and the Northern Virginia Workforce Investment Area here. Below, I extracted the average weekly wages for the largest occupational categories in Southwest Virginia (excluding government and mining/oil and gas/extraction).

For purposes of comparison, someone earning the current minimum wage and working 40 hours a week would earn $290 per week, while a $15-per-hour minimum wage would equate to $600 per week.

Clearly, such a minimum wage would have a greater impact on SW Virginia workers than NoVa workers where the average weekly wage (and by implication the average hourly wage) is 50% to 75% higher. On the plus side, the pay of SW Virginians would jump more… if they could hang onto their jobs. And there’s the rub. How many could hang onto their jobs after such a massive disruption to labor markets? While some SW businesses might survive by laying off marginal employees, one has to ask, others couldn’t even stay in business. Would a Pizza Hut franchise be able to keep the doors open if its cost of labor doubled? If not, how many business owners, store managers and others earning above the minimum wage also would lose their jobs?

Beyond the immediate impact, what would be the consequences for long-term job development? Would any corporation consider investing in SW Virginia, a region in which 11% of the workforce has an 8th grade education or less and another 12% has “some” high school, if the minimum wage were $15?

The idea of a $15-per-hour minimum wage was born in affluent urban areas with a high cost of living. It is totally inappropriate for poor rural areas with low living costs, low wage structures and high unemployment. I can think of no economic policy that would be more disastrous for Virginia’s rural regions.

Solar as Economic Savior for Wise County?

After Wise County coal mines close, what comes next?

After Wise County coal mines close, what comes next?

When I covered the coalfields beat for the Roanoke Times in early 1980s, Virginia coal companies employed more than 25,000. The number has dwindled to one-tenth that number today. Not only has the number of miners plummeted, but so has employment in the industries that supply them with everything from timbers, rock dust and roof bolts to heavy trucks and continuous mining machines.

Wise County, where Virginia’s coal industry took root more than a century ago, is desperately trying to diversify its economy. In an irony of ironies, it is looking to solar energy. But it has run into a regulatory tangle.

As described by the Roanoke TimesWise County has robust broadband connections, courtesy of the Virginia Tobacco Commission, which it is trying to parlay into technology investment. It has secured one big victory so far, which it hopes to build upon. The Mineral Gap Data Center, under construction at the Lonesome Pine Regional Business and Technology Park, will create 30 jobs. But many energy-hungry data-center companies are demanding renewable power, and Wise County is served by Old Dominion Power, a subsidiary of Kentucky Utilities Company, which derives only one percent of its electricity from renewables.

As it happens, a solar company wants to locate in Wise: Energix Renewable Energies, the largest renewable energy company in Israel. The company has signed a non-binding memorandum of understanding to build a 20-megawatt solar facility in Wise. Here’s the catch: Energix wants to sell excess power back to Old Dominion Power, and Old Dominion Power isn’t interested. “Our generation portfolio is meeting our customers’ needs at this time and we do not currently have the need for additional generation capacity,” the utility says, as quoted by the Times.

Now the Wise County Industrial Development Authority wants Governor Terry McAuliffe to intervene. Although it is too late for the General Assembly to introduce new bills this year, McAuliffe can propose amendments, and Wise County is asking him to propose one that would require Old Dominion to buy solar power from Energix and re-sell it to other companies in the business park. Whether McAuliffe can find a germane bill upon which to attach such an amendment, even if he were inclined to do so, is an open question.

Bacon’s bottom line: I am totally sympathetic to Wise County’s desire to diversity its economy, and building a data center/solar power industry cluster sounds like a plausible idea. Data center jobs would be highly paid by local standards, and both data centers and solar facilities would shore up the local tax base. But giving Wise County what it wants would potentially unravel Virginia’s electric utility regulatory structure. Perhaps the electric utility regulatory structure needs unraveling. But thought needs to be given to what to replaces it, and a ginning up a last-minute gubernatorial amendment is not the venue for contemplating a major overhaul.

In the meantime, there is nothing to stop Energix from selling its surplus electricity into the wholesale electricity market maintained by PJM Interconnection. Of course, the price likely would be lower. But Energix cannot reasonably expect to charge the full retail rate for electricity when it is not responsible for maintaining the electric grid that distributes the electricity.

Alternatively, a data-center company seeking to locate in Wise County could purchase renewable power from outside Wise County. For example, Amazon Web Services isn’t purchasing green energy from Loudoun County solar farms — it’s importing solar energy from the Eastern Shore. Half a loaf would be better than none.

While Wise County has a weak case in the context of the current regulatory structure, it is equally clear that the rigidity of that regulatory structure is not helping economic development there. The more instances we hear like this, the more political pressure will build to revisit Virginia’s utility regulatory framework.

In Defense of Out-of-State Students

There are reasons to value foreign and out-of-state students over and above the tuition revenue they bring in.

There are reasons to value foreign and out-of-state students over and above the tuition revenue they bring in.

As recently as the 1990s, the Commonwealth of Virginia did something that would be considered unthinkable in today’s political environment — it subsidized 25% of the tuition of out-of-state students enrolled in Virginia’s public colleges and universities. Legislators believed there was a value to attracting bright young people to the Old Dominion.

In two-and-a-half decades, says Peter Blake, director of the State Council of Higher Education for Virginia (SCHEV), public policy has done a U-turn: Now legislators demand that out-of-state students underwrite the education of Virginians. Students from beyond the state line pay in tuition about 160% of what it costs to educate them.

The treatment of out-of-state students has always been a prickly public policy issue, especially at Virginia’s elite, highly selective universities that turn away many Virginians. Every slot given to an outsider is one less for a Virginian. As tuition at state institutions of higher education has ratcheted ever higher over the years, making the cost of college increasingly burdensome, out-of-staters are valued for the revenue they generate.

But there are non-pecuniary reasons for recruiting non-Virginia talent. Students from other parts of the country and even overseas bring diverse perspectives that enrich the educational experience of home-grown students — what economists call the “peer” effect. They also tend to have higher SAT scores, which boosts the average SATs for the student body, lending prestige to an institution.

And now they bring in more tuition revenue than they cost. Indeed the impulse to recruit out-of-state students is so strong that universities reduce tuition through the back door — by providing financial aid to lower income students — to entice less-affluent students. The average amount of aid granted to out-of-staters exceeds the average amount awarded to in-state students at every public four-year institution by a wide margin, inspiring bills in the General Assembly to cap or limit that aid in the hope of providing tuition relief for Virginians. State law already prohibits colleges from using revenue from in-state tuition to fund aid to out-of-staters, but measures proposed (but not yet passed) by the legislature would enact even tighter limits.

The logic for capping aid to out-of-state students is self-evident: It would free up resources to make higher education more affordable for Virginians. (I discussed this issue in the previous post.)

Reasons for supporting financial aid to out-of-staters are more subtle. Think of higher education as an industry and degrees as a product, suggests Blake. “Higher ed is a great export product.” Out-of-state students pump money into the Virginia economy.

Another advantage is that many out-of-state students stay in Virginia. Some 20% stick around at least 18 months, according to a study conducted several years ago. Higher ed is a great tool for recruiting human capital to the state, says Blake. “Virginia’s economy doesn’t end at the border.”

Virginia is part of a complex, inter-connected national economy, adds Tod Massa, SCHEV research director. “We can’t think strictly in isolationist terms.”

More Fun with Higher-Ed Numbers: Financial Aid

Financial aid per student at Virginia's public, four-year colleges is higher for out-of-state students than in-state. But given high out-of-state tuition, their need is greater.

Financial aid per student at Virginia’s public, four-year colleges is higher for out-of-state students than in-state. But given high out-of-state tuition, their need is greater.

Last month I published tables showing that public Virginia colleges and universities give considerably more financial aid per student to out-of-state students than in-state students. While acknowledging that out-of-state students pay higher tuition & fees and may have greater need for assistance, I raised the question, “Shouldn’t it be the other way around? Shouldn’t Virginia universities be giving more assistance to Virginia students?”

Nothing is ever as simple as it seems. Peter Blake, director of the State Council of Higher Education for Virginia (SCHEV) invited me for a sit-down meeting to discuss the topic of financial aid with his staff experts. In light of what I learned, the story gets more complicated. I’m not sure the bottom line changes, but it’s always good to understand what goes into the data.

The figures I published last month represented “gross” financial aid provided by Virginia institutions from their own funds (not including federal grants and loans or private scholarships). But that “gross” number lumps together several types of assistance. It includes loans that students must repay (which, though helpful, is not as beneficial as a grant or scholarship). It includes work arrangements, in which students actually earn their aid. And it includes athletic scholarships and waivers for military personnel. In terms of impact, the latter two categories of aid are the most important.

As a rule, universities hand out athletic scholarships to recruit top talent regardless of where the athlete is from. “If you’re trying to get the best athletes, you’re residency blind,” says Lee Andes, SHEV’s assistant director for financial aid. Because out-of-state students pay higher tuition than in-state, an athletic scholarship for an out-of-state student is more valuable, and it inflates the numbers for out-of-state aid. But athletic scholarships are doled out by coaches, not admissions officers.

Also, federal law mandates that colleges across the country provide in-state tuition to military personnel, even if their official domicile is in another state. For accounting purposes, these tuition breaks are classified as “waivers,” and they are counted as out-of-state financial aid.

For purposes of comparing in-state versus out-of-state financial aid, SCHEV calculates what it calls “net” Cost of Attendance (COA). Taking into account aid that college admissions have discretion over, SCHEV excludes scholarships, military waivers, loans and work.

Let’s walk through the numbers step by step so you understand where they come from. First we have the Gross Cost of Attendance. This “sticker price” is usually what you see quoted. Here is the breakdown by public, four-year institutions for the Gross Cost of Attendance for one year:

Just as many auto buyers don’t pay the full asking prices, many college students don’t either. Here’s the annual Net Cost of Attendance at each institution after adjusting for institutional financial aid. (These are average numbers. Some students will pay the full freight and others will pay significantly less, generally based upon their financial need.)

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Newly Scrupulous Legislators Reporting Fewer Gifts

The giving of gifts to members of the General Assembly — or perhaps I should say the acceptance of them — has declined precipitously since 2013 when former Governor Bob McDonnell was indicted in a scandal best remembered by favor-seeker Jonnie Williams paying for his daughter’s wedding reception. Although McDonnell was ultimately cleared by U.S. Supreme Court of breaking the law, his political career was finished. Lawmakers took note. The graph above shows the declining value of gifts reported by legislators, courtesy of the Virginia Public Access Project based on the latest public filings.

The most dramatic drop occurred in the category of “gift items” — objects of value — followed by invitations to sporting events and hunting, fishing and outdoor activities. Even “meals/receptions” were down sharply, which I find surprising, for that would be one category the acceptance of which could be defensible. If you’re an elected official, it’s one thing to attend a UVa basketball game or a theatrical production, true diversions, and quite another to go to dinner or a reception, during which you spend the whole time talking to lobbyists — not much different from your day job.

Be that as it may, all such gifts are down sharply.

Another VPAP infographic shows the breakdown of gifts between Republicans and Democrats. The largesse flows heavily in the favor of Democrats. The imbalance would be even more pronounced if one took into consideration the fact that Republicans are more numerous, especially in the House, than Democrats. It’s hard to know what to make of this, though. My hunch is that Republicans, scalded by the example of McDonnell, a fellow Republican, are more acutely worried about how gifts might be perceived by the public than Democrats are.

All told, says VPAP, fewer than half of the 140 General Assembly members accepted meals, gala tickets or other gifts valued at more than $50 in the last eight months of 2016. Whatever the gifts and whatever the party affiliation, that’s a big improvement. Let’s hope legislators’ new-found scruples reflect lasting lessons learned.

Following the Least-Cost Pathway to CO2 Cuts

The least-cost pathway concept acknowledges that as annual electric-sector emissions of CO2 approach zero tons per person, the cost per ton reduced increases.

The least-cost pathway concept acknowledges that as annual electric-sector emissions of CO2 approach zero tons per person, the cost per ton reduced increases. (Image source: IHS Markit)

Global greenhouse gas emissions have increased steadily as China, India and other countries bring new coal-powered electric plants online, but the United States has bucked the trend. In the U.S. electric power sector, CO2 emissions declined 20% between 2007 and 2015.

One might think that California, which is re-restructuring its electric power system to reduce carbon emissions, played a major role in that accomplishment. But it didn’t. In fact, even as the Golden State boosted wind and solar output from 2 percent to 14 percent of in-state electricity production over that period, CO2 emissions held steady. The reason: The share of natural gas-fired generation grew from 50 percent to 60 percent.

Explains IHS Markit, a purveyor of market intelligence and analysis: “This was needed to back up and fill in for intermittent renewables, replace output from prematurely closing nuclear plants, and offset declining hydroelectric generation.”

The economics of CO2 reduction are complex, and not all CO2 reduction strategies are created equal — either in terms of cost or in terms of emissions reduced. As IHS Markit notes in a Wall Street Journal advertorial today, there are more cost-efficient ways to cut greenhouse gases than mandating renewables. “The reductions achieved via [California’s] wind and solar mandates cost 10 times more than the ones achieved through its cap-and-trade programs.”

The idea that cutting greenhouse gas emissions is a compelling national goal is far from universally accepted. Not everyone embraces the more cataclysmic predictions of temperature rise, not everyone believes that an atmosphere richer in CO2 will lead to universally baleful effects, and not everyone agrees with the proposition that cutting CO2 emissions is the best way to respond to a warming climate. But let’s set those reservations aside for a moment and assume that combating global warming and cutting CO2 emissions is a global imperative, and that we’ve all got to do our bit to turn the tide.

IHS Markit employs a concept it calls “the least-cost pathway” to CO2 reduction, which ranks CO2 reduction strategies for the electric power industry by cost-effectiveness — essentially by dollars-per-ton of CO2 saved.

The lowest-cost approach is replacing coal, which emits a large volume of CO2 per unit of electricity generated, with natural gas, which emits about half the volume. That approach is so cost-effective that it has already occurred on a large scale, driven largely by market forces (and Environmental Protection Agency rules that cracked down on emissions of toxic metals from the combustion of coal).

Thanks to the fracking revolution, which has expanded the supply of natural gas and pushed down the price, U.S. electric utilities have shifted dramatically from coal to gas. That’s the reason U.S. CO2 emissions have declined so dramatically. While this approach has not totally run its course, the rate of gas-for-coal substitution is likely to slow significantly, as only the newest, cleanest, most cost-efficient coal plants remain in operation.

Extending the life of aging nuclear power plants is somewhat more expensive, and building new nuclear facilities is significantly more expensive. On the positive side, nukes have zero carbon emissions and they provide a reliable base-load capacity. IHS Markit sums up the pros and cons: “Nuclear power plant extension is cost-effective early on, and new nuclear plants become cost-effective as the curve moves into deeper reduction.”

Energy efficiency is part of the equation, says IHS Markit. However, “encouraging efficiency investments beyond what consumers would do themselves involves increasing costs.”

As for wind and solar, they, too, are part of the solution. “But not as the primary source of generation. … Wind and solar costs are not reaching grid parity when the need to align power output to when consumers want electricity is taken into account. Battery technologies are improving but are still not a cost-effective way to manage variations in electricity demand.”

The comparative economics get murkier when we look into the future. Will natural gas prices increase, and by how much, as the most productive wells are depleted and exports of Liquified Natural Gas soak up excess supply? Will the cost of solar panels and battery technologies continue to decline as in the past, or will the pace of innovation slow? Will the price of building new nuclear plants remain breathtakingly high, or will some combination of new technologies (mini-nukes, anyone?) and relaxation of excessive safety regulations bring down the cost?

As IHS Markit concedes, there is little consensus. Still, the market-intelligence company provides a useful framework for looking at Virginia’s energy future: We should pursue the least-cost pathway to CO2 emissions.

The devil is in the details, of course. We can haggle endlessly over the cost-effectiveness of any given approach. But the idea makes more sense than pre-supposing that any particular approach — coal, gas, extending old nukes, building new nukes, wind, solar, energy conservation — is the way to go. Different energy sources have their own place in the fuel mix as Virginia’s electric power sector moves up the least-cost pathway.