Reaching Net Zero Emissions In Virginia Could Increase State GDP More Than $3.5 Billion Per Year

When Governor Ralph Northam signed the Virginia Clean Economy Act (VCEA) into law this April, the state joined the vanguard of U.S. states enacting ambitious policy to transition from fossil fuels to a clean energy economy. But while the VCEA would decarbonize Virginia’s power sector by 2050, it will still fall short of the emissions reductions needed for a safe climate future.

New modeling using the Virginia Energy Policy Simulator (EPS), developed by Energy Innovation and Rocky Mountain Institute, estimates the VCEA will reduce power sector emissions nearly 100% and cut economy-wide emissions 35% by 2050 compared to business-as-usual. While the VCEA puts Virginia on the path to significant decarbonization, it does not cover the rest of the state’s economic sectors, and falls short of the Intergovernmental Panel on Climate Change’s recommended pathway to limit warming to 1.5° Celsius for a safe climate future.

Fortunately, a more ambitious policy package that implements climate policies across the transportation, buildings, industrial, land, and agricultural sectors could put Virginia on a 1.5°C pathway and generate massive economic benefits: By 2050, this scenario could achieve net-zero emissions, generate more than 12,000 job-years, and increase state GDP by more than $3.5 billion per year.

Virginia’s power sector decarbonization is underway. What about other sectors?

Virginia’s second-largest source of emissions is the electricity sector. Before the VCEA was enacted, the state’s power sector emissions were projected to grow from roughly 30 million metric tons of carbon dioxide-equivalent (MMT CO₂e) in 2019 to about 35 MMT CO₂e in 2050.

The VCEA will spur significant electricity sector emissions reductions by requiring the state’s investor-owned utilities to decarbonize, including requiring Dominion to achieve 100 percent carbon-free electricity by 2045 and Appalachian Power to achieve 100 percent carbon-free electricity by 2050. It also requires closing nearly all coal-fired power plants by 2024 and most natural gas, biomass, and petroleum-fired power plants by 2045.

The VCEA would also supercharge Virginia’s renewable energy industry with targets for 5,200 megawatts (MW) of offshore wind by 2034, 3,100 MW of energy storage capacity by 2035, and significant energy efficiency growth. For context, Virginia currently has 2,300 MW of installed renewable energy capacity, according to the U.S. Energy Information Administration.

But while the VCEA delivers significant electricity sector reductions, Virginia’s emissions are more complex than just power plants, and the state’s other major emitting economic sectors must also be addressed. Transportation is the largest current source of statewide emissions, followed by industry and buildings as the third- and fourth-largest greenhouse gas contributors. By cutting electricity sector emissions the VCEA creates an important foundation for economy-wide decarbonization, creating a compound emissions reduction impact of electric vehicles and buildings.

But even with the VCEA in place, Virginia must accelerate its electricity sector decarbonization target and implement climate policy in these other economic sectors to put itself on a path to a safe climate future.

A 1.5°C policy pathway to cover electricity, transportation, buildings, industry

Modeling of the VCEA and 1.5°C pathway was conducted using the open-source and peer reviewed Virginia EPS computer model, which allows users to estimate climate and energy policy impacts on emissions, the economy, and public health. The model uses publicly available data to estimate annual emissions, infrastructure, and economic impacts of policies through 2050, accounting for how policies like a clean electricity standard and electric vehicle sales target interact with one another. EPS models have been developed for more than a dozen countries and several subnational regions including California, and the Virginia EPS is the first of 20 planned state-level EPS models being developed by Energy Innovation and Rocky Mountain Institute.

The illustrative 1.5°C pathway outlines one set of policies Virginia could use to achieve emissions reductions in line with this target, while generating massive economic growth. This policy package would reduce economywide emissions 63% below 2005 levels by 2030 and achieve net-zero emissions before 2050, putting the state on a path broadly consistent with limiting warming to 1.5°C. And in addition to the economic benefits, the scenario would reduce harmful air pollution, creating health benefits for Virginians.

To achieve transportation sector decarbonization, the Virginia EPS relies on a strong electric vehicle sales standard, requiring all new passenger cars sold to be electric by 2035, and all new trucks to be electric by 2045. This standard aligns with California’s transportation sector policies and the multi-state Memorandum of Understanding on moving to zero emissions medium and heavy duty vehicles that 17 states follow. The scenario also includes investing in alternatives to passenger car travel, with supportive land use and transportation policies that empower people to use public transit or walk and bike, resulting in a 20% passenger car travel reduction by 2050.

In the buildings sector, a sales standard requiring all newly sold building equipment to be electric by 2030 would shift gas space and water heating systems to all-electric heat pumps, which are already commercially available and common in many parts of the U.S. Strong efficiency standards (potentially state standards on new equipment sales, a utility rebate program, or a statewide energy efficiency resource standard) further improve the efficiency of newly sold building equipment.

The Virginia EPS 1.5°C pathway builds on the VCEA to deepen and accelerate electricity sector decarbonization through a carbon-free electricity standard that covers the entire electricity sector (including municipal and cooperative utilities) and targets 100% clean power by 2035 (instead of 2045 to 2050 for different utilities). The VCEA’s offshore wind, energy storage, and power plant closure requirements are also included along with additional policies to expand the transmission system, spur demand response, and add even more storage for valuable grid flexibility.

Virginia’s industry sector emissions come from sources including energy combustion, leaking heating and cooling equipment refrigerants, and natural gas system leakage from production to consumption, and methane leakage from coal mines and water or waste management. To reduce energy-related emissions, the scenario requires industrial facilities electrify all end-uses where possible, to switch to a zero-carbon fuel (in this case hydrogen) for all others by 2050, and for the hydrogen to be produced through the zero-carbon process known as electrolysis. Policies promoting more efficient use of industrial materials and improved industrial energy efficiency achieve additional reductions.

For non-energy combustion industrial emissions, the Virginia EPS includes standards requiring natural gas utilities, water and waste management facility operators, and coal mine operators to capture leaking methane. Appliance manufacturers are required to switch to low global warming potential refrigerants. The remaining industry sector emissions are addressed using carbon capture and sequestration.

Finally, implementing land use and agricultural policies like requiring anaerobic digesters to capture manure emissions or land afforestation, creates additional emissions reductions in non-energy sectors.

Reaching net zero Virginia emissions could generate massive economic, health benefits

Transitioning to a low-carbon economy may seem challenging, but Virginia could achieve emissions reductions in line with a safe climate future using proven policies and existing technologies that have been successfully implemented in other states and nations, while generating wide-reaching economic and health benefits. The Virginia EPS 1.5°C pathway could generate tens of thousands of jobs statewide as new infrastructure is built, homes are upgraded, and factories begin retooling. By 2050, this scenario would generate more than 12,000 job-years and increase Virginia’s GDP by more than $3.5 billion per year.

Moving away from fossil fuels also improves air quality by reducing particulate matter emissions and other pollutants that harm human health – this scenario avoids more than 16,000 asthma attacks per year by 2050.

Virginia is among America’s leaders on ambitious policy to transition from fossil fuels to a clean energy-based economy, but requires careful planning for a rapid and equitable transition. The economic benefits of the low-carbon transition are enormous, and continuing the momentum begun by the VCEA can ensure Virginia captures the significant benefits of a low-carbon future