POWER SECTOR OPPORTUNITIES FOR REDUCING CARBON DIOXIDE EMISSIONS: VIRGINIA

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1 Fact Sheet POWER SECTOR OPPORTUNITIES FOR REDUCING CARBON DIOXIDE EMISSIONS: VIRGINIA MICHAEL OBEITER, KRISTIN MEEK, AND REBECCA GASPER CONTACT Michael Obeiter Senior Associate Climate and Energy Program Kristin Meek Associate Climate and Energy Program Rebecca Gasper Research Analyst Climate and Energy Program Disclaimer: This Fact Sheet contains preliminary research, analysis, findings, and recommendations. It is intended to stimulate timely discussion and critical feedback and to influence ongoing debate on emerging issues. Its contents may eventually be revised and published in another form. WHAT WILL CO 2 STANDARDS MEAN FOR VIRGINIA? President Obama announced a national climate plan in June 2013, and directed the U.S. Environmental Protection Agency (EPA) to set carbon pollution standards for the power sector. EPA issued proposed standards for existing power plants on June 2, 2014, and after they are finalized in June 2015, states will implement their own plans for achieving those reductions. In this fact sheet, WRI examines tools Virginia can use to reduce power plant emissions and comply with EPA s proposed standards. HOW VIRGINIA CAN REDUCE POWER SECTOR EMISSIONS Virginia has already reduced carbon dioxide (CO 2 ) emissions from its power sector by 40 percent between 2005 and 2012 (the most recent year for which we have emissions data for Virginia), 1 due in large part from using more natural gas and less coal to generate electricity, as well as lower overall electricity demand. This has resulted in a 34 percent decrease in the state s emission rate a measure of the carbon-intensity of its electricity generation when including only non-hydro renewables and 6 percent of existing nuclear generation, consistent with EPA s proposed Clean Power Plan. However, this downward trend in CO 2 emissions is not expected to continue. According to reference projections from Dominion Power and Appalachian Power (APCO), two of the largest investor-owned utilities in the state, as well as the Energy Information Administration s (EIA) Annual Energy Outlook 2012 (AEO 2012), December

2 Box 1 What s Ahead for the Power Sector? The power sector is the leading source of carbon dioxide (CO 2 ) emissions in the United States, but also offers some of the most cost-effective opportunities to reduce those emissions. Despite recent decreases in power sector emissions due to the recession, increasing competition from renewable energy and the low price of natural gas current projections show that, absent policy action, emissions will increase in the coming decades. 2 New Power Plants: On September 20, 2013, EPA proposed CO 2 emissions standards for new power plants. 3 These standards will provide a backstop ensuring new power plants produce significantly lower CO 2 emissions per megawatt-hour of power generation than the average existing coal plant, requiring coal plants to achieve emission rates of 1,000 1,100 pounds of CO 2 per megawatt-hour (lbs. per MWh), large natural gas plants to achieve 1,000 lbs. per MWh, and smaller natural gas plants to achieve 1,100 lbs. per MWh. 4 However, because new coal plants are unlikely to be built even in the absence of the standards due to relatively low natural gas prices, among other factors 5 it is unlikely that the new power plant standards will have a significant impact on near-term CO 2 emissions. Existing Power Plants: EPA has proposed standards that make use of the flexibility granted by the Clean Air Act. 6 After the standards are finalized in June 2015, states will need to develop implementation plans. Under the terms of the proposal, states could take advantage of several different measures that would lower the carbon intensity of its power generation mix such as fuel switching, dispatch of existing low-carbon power plants, increased generation by renewable sources, and energy efficiency, among other options. emissions are expected to increase to 55 percent above 2012 levels by 2020 and 56 percent above 2012 levels by 2030 (see Figure 1). 7 The projected rise in emissions is due to a 44 percent projected increase in demand 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), with a 30 percent increase in coal generation and a 92 percent increase in natural gas generation over that time. However, the state s power sector CO 2 emissions intensity is projected to decrease by 8 percent from 2012 to 2020 and 13 percent by WRI analysis shows that Virginia has many opportunities to continue to reduce carbon pollution from its power sector and can put itself in a strong position to meet EPA s proposed emissions standards for existing power plants. Because Virginia s renewable portfolio standard (RPS) 8 and energy efficiency goals are voluntary, we did not adjust the reference case to include any additional renewable generation or energy efficiency measures beyond what Dominion Power and APCO included in their integrated resource plans. However, the baseline does include the utilities planned coal plant retirements as well as planned natural gas additions. Virginia can decrease its power sector CO 2 emissions to 2 percent below 2012 levels in 2020 and 26 percent below 2012 levels in In doing so, it can decrease its emission rate by 32 percent below 2012 levels in 2020 and 37 percent below 2012 levels in 2030, which would put Virginia on a path to meet EPA s proposed standards for existing power plants in the state. 10 Virginia can get most of the way to achieving the emission rate in EPA s proposal by taking advantage of existing infrastructure, including increasing the use of combined heat and power (CHP), as well as increasing generation at its existing and planned natural gas combined cycle fleet. Utilizing more energy efficiency and renewable sources can help close the small gap that remains. 11,12 Virginia can meet almost 80 percent of EPA s emission rate target for the state between 2020 and 2030 with its planned coal plant 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. 2

3 Power Sector Opportunities for Reducing Carbon Dioxide Emissions: Virginia Figure 1 Business-as-Usual Greenhouse Gas Emissions from Virginia s Power Sector 50 Million Metric Tons of CO 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 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, including: Improving energy efficiency. Virginia currently has a voluntary goal to reduce electricity consumption by 10 percent below 2006 levels of consumption by However, electric generation in the state is actually projected to increase by 63 percent over this time period, due mostly to Dominion Power s high demand expectations. Fortunately, studies have identified a large potential for energy efficiency to be tapped to curb this demand growth. Virginia can adopt measures and policies that achieve 1.3 percent annual energy savings to help meet its emission rate target. Increasing use of renewable energy. Virginia s investor-owned utilities may participate in the state s voluntary renewable portfolio standard program, which has a goal that by 2025, 15 percent of electricity sold (based on 2007 sales, excluding the average annual percentages of nuclear generation from ) is from renewable sources. 14 However, Virginia generated only 3 percent of its electricity from renewable sources in 2012, most of which was from hydro and biomass sources. The state has considerable untapped wind and solar potential, and ensuring that Virginia s investor-owned utilities generate 15 percent of their electricity from renewable sources by 2025 can help Virginia meet its emission rate target. OPPORTUNITIES IN DETAIL Increasing CHP at Commercial and Industrial Facilities. According to ICF International, Virginia ranks 13th in terms of state technical potential for CHP, with the potential to add around 2.5 gigawatts (GW) of new CHP for a total technical potential of 4.2 GW. 15 As of July 2013, Virginia had around 1.7 GW of installed CHP capacity, about 40 percent of its technical potential. 16 Virginia has a grant program for clean energy manufacturers; 17 however, the state has the opportunity to take additional steps to encourage additional CHP deployment, such as establishing a mandatory energy efficiency standard, net metering policies, interconnection standards, and additional incentives. 18,19 Ramping up CHP capacity on a path to achieve 25 percent of additional technical potential for new CHP by 2030 (for a total of 60 percent of total technical potential) could help Virginia meet its emission rate target. December

4 Figure 1 Virginia Carbon Dioxide Reduction Opportunities for Power Sector Compliance Under The Clean Air Act 2500 Reference Case Emission Rate Emission Rate After Utilizing Available Infrastructure Proposed EPA Standard Pounds of CO 2 Per Megawatt-Hour Note: EPA has proposed a national emissions standard for existing power plants, with state-specific targets based on each state s emissions reduction opportunities. This figure depicts EPA s interim ( ) and final (2030) emissions targets for Virginia (884 and 810 lbs. per MWh, respectively). While our estimates are generally comparable with EPA s standards, the underlying methodologies differ slightly. See endnote 11 for additional explanation. Utilizing Slack Natural Gas Capacity. According to EIA data, the capacity factor of Virginia s existing combined cycle natural gas (NGCC) fleet was 69 percent in 2012 meaning that these plants generated close to the amount of electricity that they are capable of producing. 20 However, Dominion Power has proposed to more than double its current NGCC capacity by 2020, with the possible addition of a new NGCC plant by Appalachian Power also plans to increase its NGCC fleet over time. Running the existing fleet as well as these new additions with a capacity factor of 75 percent could help Virginia meet its emission rate target. Together with the state s planned coal retirements and by increasing the use of CHP at commercial and industrial facilities, Virginia can meet almost 80 percent of EPA s target for the state between 2020 and ,23,24 (See Box 3 for additional information on Virginia s power sector.) Energy Efficiency Opportunities. Virginia currently has a voluntary goal to reduce electricity consumption by 10 percent below 2006 levels by The state is currently looking to see if this goal could be achieved earlier; the state s Board on Energy Efficiency (established by the 2014 Energy Plan) is developing a strategic plan to achieve the voluntary goal of reducing energy consumption by 10 percent below 2006 levels by 2020, accelerating the 2007 Virginia Energy Plan goal by two years. 26 However, electric generation in the state is actually projected to increase by 44 percent over this time period ( ), due mostly to Dominion Power s high demand expectations. 27 Historically, the state has done little to promote energy efficiency in 2014, the American Council for an Energy- Efficient Economy (ACEEE) gave Virginia its lowest score (0 out of 20) for utility and public benefits programs and policies. 28 This means that a lot of low-hanging opportunities still remain that the state could take advantage of to curb this demand growth. One recent study examined Dominion Power s 2012 integrated resource plan and found that it was not taking advantage of the large amount of efficiency available. Specifically, the authors noted that Dominion could sustain efficiency savings of 1.3 percent of energy sales per year, which is within the range of energy savings that other utilities have achieved cost-effectively in recent years. 29 In fact, this analysis found that the investments Dominion would need to make to achieve this level of savings is far less than what 4

5 Power Sector Opportunities for Reducing Carbon Dioxide Emissions: Virginia would be spent on building two of the utility s planned NGCC units. If the state started achieving this level of savings beginning in 2015, business-as-usual electricity demand would decrease by 7 percent in 2020 and 13 percent in This is within the range of potential electricity savings identified by Georgia Tech and the Nicholas Institute, which found that a 7.5 percent reduction in energy consumption by 2020 would lead to $1.8 billion in electricity savings in that year, with the average household saving $325 on their annual energy bill. 30 A separate study by ACEEE found that Virginia could achieve 19 percent electricity savings in 2025 with annual savings of $2.2 billion. 31 Virginia s 2014 Energy Plan noted that robust energy efficiency policy in Virginia could increase the gross state domestic product by $286 million and increase employment by 38,000 jobs by 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). 33 Adopting measures and policies that achieve 1.3 percent annual energy savings would help the state meet its emission rate target. 34 Renewable Energy Opportunities. Virginia s investorowned utilities may participate in the state s voluntary renewable portfolio standard program, which has a goal that by 2025, 15 percent of electricity sold (based on 2007 sales, excluding the average annual percentages of nuclear generation from ) is from renewable sources. 35 This voluntary goal currently allows participating utilities to purchase renewable energy credits for compliance purposes (including credits generated from qualifying research and development) and to receive double credit for solar, onshore wind, and animal waste fuel sources, and triple credit for offshore wind sources. Renewable generation comprised only 3 percent of Virginia s total electric generation in 2012, which is a slight decrease from the previous three years. 36 About half of the state s renewable generation comes from hydro sources, with the remainder coming mostly from wood or other biomass-based sources. Virginia has potential to add more solar or wind energy all of its neighbors have some installed wind capacity, 37 and North Carolina has over 600 MW of installed solar PV while Virginia has only 8 MW. 38 Carolina s renewable target will not have an appreciable impact on electricity rates for customers through 2026, after which clean energy use would lead to $173 million in cost savings. 39 Virginia can take additional action going forward, such as establishing financial incentives or setting an enforceable renewable energy target. By ensuring that the state s investor-owned utilities generate 15 percent of their electricity from renewable sources by 2025,Virginia can help the state meet its emission rate target 40 as well as generate positive short- and long-term economic and environmental benefits for the state. For example, as part of Virginia s 2014 Energy Plan, the state is aiming to become the ideal manufacturing, operational and supply chain hub for offshore wind development in the mid-atlantic region provid[ing] support and resources to accelerate development of Virginia s offshore wind resources, 41 which would create jobs and other economic benefits. Box 2 About This Series In Can The U.S. Get There From Here?, WRI identified four key actions the Obama Administration must take in the absence of congressional action in order to meet the U.S. commitment to reducing greenhouse gas (GHG) emissions by 17 percent below 2005 levels by These actions include setting performance standards for existing power plants, reducing consumption of hydrofluorocarbons, reducing fugitive methane emissions from natural gas systems, and increasing energy efficiency. Of these four actions, the greatest opportunity for reductions comes from the power sector. In his Climate Action Plan, President Obama directed EPA to work expeditiously to finalize carbon dioxide (CO 2 ) emission standards for new power plants and adopt standards for existing power plants. As states prepare to comply with these standards, it will be necessary to understand available opportunities for reducing CO 2 emissions from the power sector. This series of fact sheets aims to shed light on these opportunities by illustrating the CO 2 emissions reduction potential from measures in a variety of states. We show how these emissions savings stack up against the reductions that could be required under EPA s proposed standards. This series is based on WRI analysis conducted using publicly available data. See the appendix for additional information on our methodology and modeling assumptions. 42 Increasing its use of wind, solar, and other renewable sources could lead to cost-savings for customers. For example, a recent study found that neighboring North December

6 OUTLOOK FOR VIRGINIA While Virginia has taken some steps to scale up renewable energy and energy efficiency, the state has fallen behind its neighbors. However, Virginia has the opportunity to build on its progress and achieve deeper, cost-effective emissions reductions going forward. By taking advantage of available infrastructure and underutilized clean energy resources, Virginia can put itself in a good position to comply with the proposed EPA standards for existing power plants. This type of action can also lead to increased investment and other economic benefits throughout the state, and could actually position the state as a clean-energy leader. Box 3 Virginia Power Sector Profile Until the 1980s, most new capacity being built in Virginia was powered by coal or nuclear sources. Since then, natural gas and some coal comprised the bulk of new capacity additions. 43 The majority of Virginia s renewable fleet consists of hydroelectric power stations built before Since 2005, coal-fired generation in the state decreased 56 percent as overall electricity demand decreased by 5 percent. Over the same time period, natural gas generation more than tripled. Nuclear energy comprised 42 percent of in-state generation in 2012, while natural gas and coal sources comprised 34 percent and 19 percent, respectively. While renewables made up 18 percent of Virginia s generating capacity in 2012, this capacity generated only 3 percent of total electricity. About half of this renewable generation comes from hydro sources, with the remainder coming mostly from wood or biomass-based sources. The trend of diminishing coal use may continue as the state s aging coal plants are retired. As of 2013, 1,501 megawatts (MW) of coal capacity (25 percent of total coal capacity) had been slated for retirement, 44 while another 1,887 MW (32 percent of total coal capacity) were recently identified as uneconomic compared to existing natural gas combined cycle plants. 45 In 2012, Virginia contributed 1 percent of total U.S. CO 2 emissions in the power sector and 1 percent of electricity generation, with a state CO 2 emissions intensity of 1,377 lbs. per MWh when including only non-hydro renewables and 6 percent of existing nuclear generation, consistent with EPA s proposed Clean Power Plan. However, Virginia has already made strides in reducing its emissions intensity, primarily due to decreased coal use and increased natural gas use. Our analysis shows that by decreasing its use of coal and increasing its use of CHP and existing natural gas combined cycle units, as well as increasing its use of energy efficiency and renewable energy, Virginia could further reduce the carbon intensity of its power sector to around 937 lbs. per MWh by Virginia Generation and Generating Capacity by Fuel, New Electric Generating Capacity Additions by Fuel Type Percent Capacity (MW) Capacity Generation BOTH CHARTS USE THE FOLLOWING LEGEND: Coal Natural Gas Oil Other Fossil Nuclear Hydro Other Renewables Source: U.S. Energy Information Administration Form EIA-860 and Annual Energy Review Source: U.S. Energy Information Administration Form EIA-860, which includes existing electric generating units at plants with at least 1 MW capacity (electric utilities, independent power producers, and combined heat and power plants) that are connected to a power grid. Data represents installed summer capacity. 6

7 Power Sector Opportunities for Reducing Carbon Dioxide Emissions: Virginia ENDNOTES 1. Annual Energy Review, U.S. Energy Information Administration, Accessible at: < 2. According to the Energy Information Administration s 2014 Annual Energy Outlook reference case, CO 2 emissions from the power sector will be 13 percent below 2005 levels by 2020 and only 7 percent below 2005 levels by See U.S. Department of Energy/Energy Information Administration Energy-Related Carbon Dioxide Emissions by Sector and Source, United States, Reference Case. In U.S. DOE/EIA. Annual Energy Outlook Washington, D.C.: Government Printing Office. Accessible at: < 3. For more information, see: < 4. A supercritical pulverized coal unit emits about 1,768 lbs. CO 2 per MWh while a natural gas combined cycle unit emits about 804 lbs. CO 2 per MWh (National Energy Technology Laboratory, Cost and Performance Baseline for Fossil Energy Plants Volume 1: Bituminous Coal and Natural Gas to Electricity. Exhibit ES-17 CO2 Emissions Normalized by Net Output, Revision 21, September 2013 < netl.doe.gov/energy-analyses/pubs/bitbase_finrep_rev2.pdf>). 5. U.S. Department of Energy/Energy Information Administration Electric Generating Capacity, Reference Case. In U.S. DOE/EIA Annual Energy Outlook Washington, D.C.: Government Printing Office. Accessible at: < For more details, see also: < and sites/default/files/seeingisbelieving_working_paper.pdf>. 6. For more information, see: < 7. Dominion Power and Appalachian Power accounted for 80 percent and 2 percent of Virginia s generation in 2012, respectively. We relied on their projections of electricity generation by fuel type found in their annual integrated resource planning reports. Both utilities serve customers in neighboring states, so we apportioned each utility s generation projections to Virginia based on the proportion of electricity generated in each of their service states by fuel type as reported in EIA s Form 923 in Because EIA does not produce state-level projections, we relied on regional projections of annual electricity generation growth rates by fuel from AEO 2012 for the remaining electricity generated in Virginia. Because neighboring states have varying policies that will affect future in-state generation differently, these regional projections may not fully capture all the relevant trends that are expected to occur within a state s power sector. 8. Virginia s RPS goal currently allows for investor-owned utilities to purchase renewable energy credits for compliance purposes and to receive double credit for solar, onshore wind, and animal waste fuel sources, and triple credit for offshore wind sources. Utilities may also receive credit for qualified investments in renewable energy research and development programs within the state (see: < legp504.exe?000+cod >). For purposes of this analysis, we assume that in the face of new CO 2 standards, all renewable electricity generated for compliance with the state s RPS goal occurs in-state. 9. On November 6, 2014, EPA released guidance on translating a rate-based goal to a mass-based equivalent. Because EPA recognizes that there are numerous ways to complete this translation, and because EPA would need to approve any methodology the state uses, we did not include a mass-based conversion in our analysis; See: < carbon-pollution-standards/fact-sheet-clean-power-plan-technicalsupport-document>. 10. Due to slight differences in calculating Virginia s emission rate, the range of these reductions would likely meet EPA s proposed standards for existing power plants in the state. See endnote 11 for more information. 11. EPA s target for Virginia is an emission rate (a measure of the carbon intensity of the state s electricity generation) of 810 pounds per Megawatt-hour (lbs./mwh) by 2030, a reduction of 38 percent below its 2012 emission rate of 1,302 lbs./mwh. While our estimates are generally comparable with EPA s standards, the methodologies differ slightly. For example, EPA uses emissions factors based on the egrid database to estimate CO 2 emissions from generation and nameplate capacity to estimate potential generation from natural gas combined cycle units. We base our emissions factors off of state-specific emissions and generation data from EIA and use summer capacity in our natural gas combined cycle estimates. While we include the net emissions benefit of avoided electricity due to CHP use (similar to EPA), we do not add the useful thermal output in the denominator. 12. Note that WRI analysis indicates that additional natural gas capacity, along with the increases in energy efficiency and renewable energy discussed below, allow Virginia to be less dependent on coal-fired generation to meet its electricity needs. Therefore, we do not include supply-side efficiency at coal-fired power plants as one of the emission reduction opportunities in this analysis. 13. Virginia Acts of Assembly. April 4, Accessible at: < state.va.us/cgi-bin/legp504.exe?071+ful+chap0933+pdf> Session. H February 14, Accessible at: < virginia.gov/cgi-bin/legp604.exe?131+ful+chap0002>. 15. ICF International Effect of a 30 Percent Investment Tax Credit on the Economic Market Potential for Combined Heat and Power. Accessible at: < 16. ICF CHP database. Accessible at: < Database of State Incentives for Renewables and Efficiency. Clean Energy Manufacturing Incentive Grant Program. Accessible at: < Code=VA46F&re=0&ee=0>. 18. In 2014, Virginia ranked second to last on the American Council for an Energy-Efficient Economy s State Energy Efficiency Scorecard rating based on its adoption of measures to encourage deployment of CHP systems. Beyond those mentioned above, other measures the state could take include offering financial incentives, technical support and guidance, and other supportive programs and policies. See: < >. 19. If the state ramped up CHP capacity on a path to achieve 25 percent of additional technical potential for new CHP by 2030 (for a total of 60 percent of total technical potential), it could reduce CO 2 emissions by 2 percent below business-as-usual levels by 2020 and 4 percent by WRI estimates based on data from U.S. Energy Information Administration, EIA-923 Generation and Fuel Data, < electricity/data/eia923/>; and EIA-860 Annual Electric Generator Data, < 21. Dominion Virginia Power Integrated Resource Plan. Accessible at: < NGCC units are designed to be operated up to 85 percent capacity (see: < but actual maximum capacity factors may differ among units. We assume a conservative maximum capacity factor of 75 percent. Because the majority of NGCC units are located in the northern December

8 and eastern part of the state, increasing the output from these existing units may cause transmission bottlenecks; potential transmission constraints should be studied further. Natural gas pipeline constraints may also occur, leading to price spikes. The state will also need to consider both the near- and long-term potential cost differences between natural gas and coal as it weighs different options for complying with future GHG standards. 23. We did not account for the increases in methane associated with the increased production of natural gas due to a higher demand for the fuel. Going forward, industry should work with EPA to reduce methane leakage rates from natural gas systems. For additional information, see: < 24. Running the existing fleet as well as these new additions with a capacity factor of 75 percent would cut power sector CO 2 emissions by 24 percent in 2020 compared to business-as-usual levels Commonwealth of Virginia Department of Mines, Minerals, and Energy, October , Virginia Energy Plan, Accessible at: < Plan/VEP2014.pdf>. 27. Dominion, 2014 Dominion Virginia Power Integrated Resource Plan, Accessible at: < 28. Annie Gilleo, Anna Chittum, Kate Farley, Max Neubauer, Seth Nowak, David Ribeiro, and Shruti Vaidyanathan. American Council for an Energy-Efficient Economy. October The 2014 State Energy Efficiency Scorecard. Accessible at: < files/publications/researchreports/u1408.pdf>. 29. David Schlissel, Jeffrey Loiter, and Anna Sommer. Changing Course: A Clean Energy Investment Plan for Dominion Virginia Power. Accessible at: < 30. Marilyn Brown, Etan Gumerman, Xiaojing Sun, Youngsun Baek, Joy Wang, Rodrigo Cortes, Diran Soumonni. Energy Efficiency in the South: Appendices, Georgia Tech and Nicholas Institute for Environmental Policy Solutions, Accessible at: < sites/default/files/energy%20efficiency%20in%20the%20south%20 Appendices_0.pdf>. 31. American Council for an Energy-Efficient Economy, Summit Blue Consulting, ICF International, and Synapse Energy Economics. September Energizing Virginia: Efficiency First. Accessible at: < aceee.org/sites/default/files/publications/researchreports/e085.pdf>. 32. Commonwealth of Virginia Department of Mines, Minerals, and Energy, October , Virginia Energy Plan, Accessible at: < Plan/VEP2014.pdf>. 33. Annie Gilleo, Anna Chittum, Kate Farley, Max Neubauer, Seth Nowak, David Ribeiro, and Shruti Vaidyanathan. American Council for an Energy-Efficient Economy. October The 2014 State Energy Efficiency Scorecard. Accessible at: < files/publications/researchreports/u1408.pdf>. 34. Adopting measures and policies that achieve 1.3 percent annual energy savings would reduce emissions by 10 percent compared to business-as-usual projections in Session. H February 14, Accessible at: < virginia.gov/cgi-bin/legp604.exe?131+ful+chap0002>. 36. EIA Annual Energy Review. 37. U.S. Energy Information Administration, State Renewable Electricity Profiles, Accessible at: < Solar Energy Industries Association, State Solar Policy, Accessible at: The Economic, Utility Portfolio, and Rate Impact of Clean Energy Development in North Carolina, RTI International and La Capra Associates, February 15, 2013, Accessible at: < ncsea_2013_update_final.pdf>. 40. By strengthening the existing RPS program to ensure that the state s investor-owned utilities generate the full 15 percent of their electricity from renewable sources by 2025, the state could reduce its power sector CO 2 emissions by 1 percent below business-as-usual projections in 2020 and 9 percent by Commonwealth of Virginia Department of Mines, Minerals, and Energy, October , Virginia Energy Plan, Accessible at: < Plan/VEP2014.pdf>. 42. World Resources Institute Power Sector Opportunities For Reducing Carbon Dioxide Emissions. Appendix A: Detailed Overview of Methods. Washington, DC: World Resources Institute. Accessible at: < 43. Unless otherwise indicated, we relied upon the U.S. Energy Information Administration Annual Energy Review and Form EIA-860 for data reported in Box Union of Concerned Scientists, Coal Generators Announced for Retirement or Conversion, December 2013, assets/documents/clean_energy/coal-generators-announced-retirement_formatted.pdf 45. Union of Concerned Scientists, Coal Generators Identified as Ripe for Retirement (Compared to Existing NGCC), December 2013, Compared-to-Existing-NGCC_formatted.pdf 46. World Resources Institute Power Sector Opportunities For Reducing Carbon Dioxide Emissions. Appendix A: Detailed Overview of Methods. Washington, DC: World Resources Institute. Accessible at: < 8

9 POLICY FRAMEWORK AND INTERACTION This analysis assumes the existing policies and other reduction opportunities listed above are fully implemented. Depending on the combination of measures actually implemented by Virginia, each will have different impacts on the generation mix and resulting emissions. For example, increasing the use of existing combined cycle natural gas plants results in fewer emissions reductions in this analysis than would be the case if it were considered in isolation, because implementation of the RPS decrease the amount of coal-fired generation that would otherwise be available to shift to natural gas. The emissions reductions presented in the text are a result of each policy in combination with all other policies. When considering measures that make better use of existing in-state infrastructure, we first increased CHP capacity and increased utilization of existing natural gas capacity compared to the reference case. When considering the new clean energy measures, we applied the gains in energy efficiency to the reference case, and then applied the expanded renewable generation to the resulting adjusted demand, followed by the measures that make better use of existing in-state infrastructure. For consistency with EPA s approach, we count 6 percent of the state s nuclear generation (the amount that EPA credited in developing the state s standard) in our calculation of the state s emission rate. Equally as important is the policy framework, which will define how each of these measures counts toward compliance under EPA s standards. We assumed that the emissions reductions from each measure would count directly toward the standard. State measures may be counted differently when estimating its emission rate for compliance, thus actual compliance levels could potentially be greater or less than what was modeled. See the appendix for additional information on our methodology and modeling assumptions. 46 ABOUT WRI WRI is a global research organization that works closely with leaders to turn big ideas into action to sustain a healthy environment the foundation of economic opportunity and human well-being. Copyright 2014 World Resources Institute. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivative Works 3.0 License. To view a copy of the license, visit 10 G Street, NE Washington, DC