By Steve Haner
There is a growing recognition that the Virginia Clean Economy Act (VCEA) as written is going to fail. Both those who strongly believe in its goal of ending the use of hydrocarbon fuels, and those who consider that idea nothing but fool’s gold, see major problems on the horizon.
There is also a large middle group that would like to see less reliance on hydrocarbons, and greater reliance on wind and solar for generating needed electricity but see danger in totally abandoning reliable natural gas. Sadly, most Virginians are not paying any attention at all. They should.
The growing concerns of both VCEA’s fans and its detractors are the reason an effort is underway to review this law and to consider possible amendments, potentially in time for a vote by the 2025 General Assembly. The first step in this review was a series of meetings in the spring where a broad list of known problems was discussed. In reviewing those discussions, it is possible to discern what changes are most likely being considered.
The legislator chairing this effort, Senator David Marsden, D-Fairfax, had staff produce a 38-page summary of what was said in those meetings, with no attribution to individuals or companies. It was probably meant to stay with the participants, but it is too important not to share.
Land use issues dominate the discussion. Advocates for rapid expansion of solar power in Virginia are finding growing resistance to the needed permits from neighbors and local regulators as new and more extensive projects are proposed. They want to break down those barriers, and legislation to do that has already been proposed, but there is recognition that these steps would be unpopular and could spark backlash. Someone in the industry told Marsden:
Local opposition to solar and energy storage is a singular threat to our business plan and the achievement of VCEA goals. This threat stands out even in comparison with other “high visibility” threats, including interconnection costs and delays, federal tariffs on solar panels, and elevated interest rates…
A local government representative mentioned that by their count, about 181 square miles of Virginia is already covered by solar panels, an area larger than several counties and almost all cities. Elsewhere in the discussions the prediction was that VCEA would require solar fields covering 3% of the entire state, about 1,200 square miles (think Virginia Beach, Chesapeake, Suffolk, Norfolk and Portsmouth combined).
The advocates can be dismissive of those who stand opposed. Somebody said: It goes beyond NIMBY – it’s also cultural (older white rural communities are against the VCEA; in other areas people are younger and diverse probably from somewhere else and religiously and ethnically they are very different) …
Marsden has designated one of these environmental groups as the official defender of the Virginia average consumer in his negotiations. In a recent conversation, he was unapologetic about that decision. Asked about the Office of the Attorney General, designated by state law to represent consumers, he replied they were not invited and “would get their chance later in the process.”
The advocates for the VCEA also see that the rapid growth in electricity demand coming from all the new data centers is creating pressure to maintain existing generation resources. The catch phrase was that data center growth can and should be “managed” to protect VCEA. Whether and how to do that will be a big debate, especially considering that in some areas, like Loudoun County, over half of the county revenue is from their data centers.
The state and local rules, as they now exist, can also impede construction of the needed power lines to connect all these new projects, plus a growing number of small community-based projects. Zoning, project siting, and local authority will be front and center in this debate.
Utilities were frank in their concern that strict compliance with VCEA is going to lead to both supply and reliability issues. Compliance with the law has already shut down most of Virginia’s coal generation, but under the law, natural gas also must disappear within a few decades. Many in the industry want a clearer path to keeping natural gas in service, and that will be a huge debate in the process. From the utility summary:
Forced retirement (of hydrocarbons) is a challenge in the VCEA. The needs of our customers are growing, but the VCEA requirements are permanent. It’s one thing to not use those resources but to have them on demand to use them when needed; but this is very different from retiring them forever. It makes it very difficult to hold onto the plan.
The business representatives at the meeting and the utilities were aligned in seeing VCEA as it exists as a threat to energy affordability and reliability down the road. Plenty of warnings have come from national groups charged with maintaining reliability, and from our own regional transmission organization. From the business community summary:
As private businesses we have our own goals, and some are related to environmental impact. But business wasn’t given a seat at the table to make sure the VCEA met their needs. In a larger macro sense, the bottom line is the bottom line. There is not a lot of upside here for us. The math is the math. We have to pass these extra costs on to our customers. However, incentives will help us absorb a lot of the costs.
Incentives? Those would be cash payments or tax advantages that also have a financial impact on people, but hit them as taxpayers, not as customers. Unfortunately, subsidies of some sort are more likely to emerge from these negotiations than any agreement to relent, and to allow the utilities and electric cooperatives to keep natural gas generation in the mix for decades to come.
There are other issues. The conflicting interests are strong enough that a compromise, consensus proposal for the 2025 General Assembly may not emerge. The process may only feed into the 2025 Virginia election cycle, punted to a new governor and House of Delegates. The fate of VCEA, the Regional Greenhouse Gas carbon tax and the California electric vehicle mandate may all three be decided then.
First published by the Thomas Jefferson Institute for Public Policy.
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