Last week, UVA Professor William Shobe, Ph.D. released a report that assessed the methodologies, assumptions and conclusions in a report critical of the Clean Power Plan. Virginia’s Center for Coal and Energy Research (CCER) produced a report as part of the Governor’s Energy Plan that concluded that a large amount of money would be needed to change the energy infrastructure in Virginia to comply with the Clean Power Plan, and the consequences of this change would be negative. In his critique of the CCER report, Dr. Shobe concluded the following:

“The study fails to provide even-handed treatment of uncertainties, emphasizing only those uncertainties that serve to overstate compliance costs. Finally, the study focuses its analysis only on unrealistic, high-cost options for compliance, while giving only the most cursory and dismissive treatment of the options that most observers believe will form the core of cost-effective compliance options. In short, the report is almost certainly worse than no study at all because it misstates likely costs, analyzes irrelevant options, and gives short shrift to the cases that really matter.”

Dr. Shobe outlined the errors the report made:

  • The report double counts compliance costs by $400 million annually. Instead of looking at different purchase options, they combined two purchase options to produce an unrealistic high price.
  • Overestimates negative economic impacts of regulations in the Virginia coal markets. The study assumes that 100% of the coal mined in Virginia goes straight to power plants, but in actuality only 1/3 stays in Virginia and the rest is exported.
  • Uses incorrect economic analysis in estimating total economic and job loss. The model they used assumes that the people do not adjust to economic circumstances and that there are no economic benefits elsewhere in the economy. Simply incorrect.
  • Assumes unrealistically low capacity factors for Virginia’s new natural gas power plants in Warren and Brunswick counties. They do not include realistic capacity factors, and if they did it would show that these plants would reduce the compliance gap while emitting 6 million tons less of CO2 per year.
  • Fails to provide a full analysis of the option of building the third reactor at the North Anna Nuclear Power Station. Building this plant will bring Virginia into compliance with federal emission regulations. The option of building this plant was not included in any scenario.
  • Overestimates rate of growth in electricity demand. The CCER report assumes a 1.51% annual growth rate in electricity demand, which is much higher then the recent recorded demand. A more realistic growth rate should have been used, or at least factored into one scenario option. At the least the report should have stated that is used a high growth rate scenario.
  • Does not analyze any cases of corporation between states, even this situation is known to lower compliance costs. The report provided an incomplete treatment of options by not including multi-state corporations.
  • Misinterprets analysis provided by the EPA’s regulatory impact analysis. This demonstrated a lack of expertise in the economic and climate policy side of the issue.
  • Incorrectly characterizes the results of a U.S. GAO report on the EPA’s use of “social cost of carbon” estimates. They were not qualified to make this criticism because the GAO actually found that the EPA followed the appropriate guidelines in its analysis.

It is clear that the Center for Coal and Energy Research looked at this issue as one-sided. Dr. Shobe emphasized the importance of correct analysis on this issue because it could spark debate that leads in the wrong direction. Correct analysis, with multiple scenario options (because the future is never certain) is critical in Virginia, as the state assesses its future in energy infrastructure development.

The article has since been removed from the UVA website.