As the U.S. Environmental Protection Agency (EPA) moves forward with standards to reduce emissions from existing power plants—which are due to be finalized in June 2015—many states are wondering how they will comply. WRI’s fact sheet series, Power Sector Opportunities for Reducing Carbon Dioxide Emissions, examines the policies and pathways various states can use to cost-effectively meet or even exceed future power plant emissions standards. This post explores these opportunities in Virginia. Read about additional analyses in this series.

New WRI analysis finds that Virginia can decrease its emission rate—the carbon-intensity of its power generation—by 32 percent below 2012 levels in 2020 and 37 percent below 2012 levels in 2030. This would put Virginia on a path to meet EPA’s proposed standards for existing power plants. Virginia can get most of the way to its proposed target by taking advantage of existing infrastructure, such as increasing its use of natural gas. Increasing use of energy efficiency and renewables can help close the small gap that remains.

Virginia’s Power Sector Is Getting Cleaner, But Emissions Are Expected To Grow

Over the last decade, natural gas has been rapidly replacing coal-fired power in Virginia. Since 2005, coal-fired generation in the state has decreased 56 percent, and as of 2013, 25 percent of the state’s coal capacity had been slated for retirement. While total electricity generation has decreased by 5 percent, natural gas generation today is almost three times what it was in 2005.

Looking forward, Virginia’s grid is expected to continue to get cleaner—the carbon dioxide (CO2) emission rate of its power sector is projected to decrease by 8 percent from 2012 to 2020 and 13 percent by 2030. Still, total power sector CO2 emissions are expected to increase to 55 percent above 2012 levels by 2020 and 56 percent above 2012 levels by 2030. This is because Virginia’s electricity demand is expected to grow by 44 percent between 2012 and 2020 (largely due to Dominion Power’s expectation that their demand will rise by roughly 50 percent over this same time period).

How Virginia Can Meet Future Emissions Standards

As we discussed in a blog post in June, EPA’s Clean Power Plan offers broad flexibility in how states can comply with their standards. States can use many strategies to lower their CO2 emission rates, including greater utilization of natural gas and renewables, improved energy efficiency, and other options.

Our analysis finds that Virginia can meet almost 80 percent of EPA’s emission rate target for the state between 2020 and 2030 with its planned coal retirements, as well as using available infrastructure, including:

  • Using more combined heat and power (CHP). Virginia can build more CHP systems—which use waste heat to generate electricity more efficiently than the average power plant—at sites like universities, hospitals, and manufacturing facilities.

  • Using more gas. Virginia’s most efficient natural gas plants—combined cycle (NGCC) units—generated much less electricity than they were capable of producing in 2012. Running existing and planned NGCC plants at 75 percent can help the state meet its emission rate target.

Virginia can get the rest of the way to its target by using more clean energy:

  • Improving energy efficiency Virginia currently has a voluntary goal to reduce electricity use by 10 percent below 2006 levels by 2022, and studies have identified a large amount of energy efficiency opportunities that can also save customers money. Virginia can adopt efficiency measures that achieve 1.3 percent annual electricity savings to help meet its emission rate target.

  • Increasing use of renewable energy Virginia generated only 3 percent of its electricity from renewable sources in 2012, most of which was from hydro and biomass sources, leaving considerable wind and solar potential untapped. Ensuring that all Virginia’s investor-owned utilities generate 15 percent of their electricity from renewable sources by 2025 (the level established by the state’s voluntary renewable program) can help Virginia meet its emission rate target.

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Clean Energy Can Bring Economic Benefits to Virginia

Because the state has historically done little to promote energy efficiency, many low-hanging opportunities still remain, leaving the door open for big savings. Virginia’s 2014 Energy Plan noted that robust energy efficiency policies could increase the gross state domestic product by $286 million and create 38,000 jobs by 2030. Georgia Tech and the Nicholas Institute found that a 7.5 percent reduction in electricity use by 2020 (generally in line with the assumptions in our analysis) would lead to $1.8 billion in electricity savings in that year, shaving $325 off the average household’s annual energy bill. Another study found that Virginia could achieve 19 percent electricity savings in 2025 with annual savings of $2.2 billion. To take advantage of this potential, Virginia could increase its spending cap on efficiency programs and establish incentives for utilities to pursue energy efficiency (which 30 states already do).

Virginia could also benefit its customers with more renewable development. Neighboring North Carolina’s renewable target will lead to $173 million in cost savings after 2026, before which it is expected to have minor impacts on electricity rates. Meeting the 15 percent by 2025 voluntary goal for investor-owned utilities can help Virginia achieve its aim of becoming a manufacturing, operational and supply chain hub for offshore wind development in the mid-Atlantic region, creating jobs and other economic benefits for the state in the process. Virginia could also spur more renewable development through financial incentives or an enforceable renewable energy target.

Virginia Can Build Off Progress Made to Date

While Virginia has taken some steps to scale up renewable energy and energy efficiency, the state has fallen behind its neighbors. But Virginia has the opportunity to build on its progress and achieve cost-effective emissions reductions going forward while bringing economic benefits to the state and even becoming a clean-energy leader in the region. By taking advantage of available infrastructure and clean energy resources, Virginia can put itself in a good position to comply with EPA’s proposed standards for existing power plants and help prevent the worsening impacts of climate change.