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No detour to net-zero: NC climate efforts unaffected by court's EPA ruling

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While the U.S. Supreme Court’s July 1 decision limiting the federal government’s authority to regulate greenhouse gas emissions from power plants dealt a blow to President Joe Biden’s national climate goals, it likely will have little impact on North Carolina, experts say.

That’s because the N.C. General Assembly did on a state level what the Supreme Court ruled in West Virginia v. EPA that Congress had not: establish detailed standards for reducing the level of carbon dioxide released into the atmosphere by the energy sector.

The high court’s six conservative justices ruled that the 1970 Clean Air Act did not give the Environmental Protection Agency explicit authority to regulate carbon emissions from the nation’s power plants. The responsibility to establish such federal standards, the majority argued, falls solely with the legislative branch.

“The ruling really underscores the need for states to take the lead on climate change,” said Gudrun Thompson, a senior attorney with the Southern Environmental Law Center.

In an uncharacteristic display of North Carolina bipartisanism, legislation passed by the Republican-led General Assembly and signed by Democratic Gov. Roy Cooper in October 2021 did just that by requiring the N.C. Utilities Commission to “take all reasonable steps” to reduce carbon emissions from the state’s electricity production by 70% in 2030 and reach “net-zero” status by the middle of the century.

Stan Meiburg, who spent nearly four decades at the EPA — the last three years as acting deputy administrator from 2014 to 2017 — called the state’s across-the-aisle efforts to combat climate change “a very big deal.”

“It says in North Carolina, there are Republicans who are concerned enough about climate change and are willing to depart from some perceived orthodoxy,” added Meiburg, now the director of Wake Forest University’s graduate programs in sustainability. “I thought that was a very encouraging sign.”

Cooper, when he signed the climate legislation last year, acknowledged that the measure united unlikely allies.

“Making transformative change is often controversial and never easy, especially when there are different points of view on big, complex issues,” the governor said. “But coming to the table to find common ground is how government should work.”

The electricity-generation sector is the second largest producer of greenhouse gases in North Carolina, so the state’s commitment to reducing emissions from power plants is critical to efforts to minimize rising temperatures that climate scientists say are already fueling more destructive storms, heavier rainfall, increased flooding and extreme droughts.

‘As Duke goes ...’

Duke Energy, North Carolina’s largest utility, submitted a proposal in May outlining how it would meet the state’s 2030 and 2050 emissions requirements.

That so-called carbon plan has generated its share of opposition from environmental groups, largely because of its increased reliance on natural gas as the company continues to retire coal-fired units.

Among those critics is the Southern Environmental Law Center, which along with the N.C. Sustainable Energy Association is planning to submit an alternative Duke carbon plan on behalf of the Natural Resources Defense Council, Southern Alliance for Clean Energy and Sierra Club.

That proposal would “achieve our state’s carbon-reduction goals at least cost to ratepayers by rapidly phasing out expensive, polluting fossil fuels, ramping up clean renewable energy and maximizing low-cost energy efficiency — all while centering equity and environmental justice,” said the SELC’s Thompson.

The utilities commission has until the end of the year to approve Duke’s submitted carbon plan, incorporate elements of multiple proposals or come up with its own roadmap for the company’s journey to net-zero emissions.

“That strategic decision has been made and as Duke goes, so does the rest of the state,” Wake Forest’s Meiburg noted.

But he also predicted that market forces and investor influence will inspire climate action elsewhere, including in red states.

A steady national shift to emission-free vehicles is one example of consumer-driven behavior that ultimately will have an outsized climate impact.

In the U.S., transportation generates 27% of greenhouse gas emissions, the largest of any sector, according to the EPA. As the cost of electric vehicles continues to fall and more charging stations come online, plugging in is becoming the practical choice for many drivers, especially as gasoline prices remain high.

In North Carolina, Cooper has set a goal of having at least 1.25 million registered emission-free vehicles in the state by 2030. As of March 31, about 28,000 fully electric were registered in North Carolina, according to the N.C. Department of Transportation. Nearly 170,000 hybrids also are operating in the state.

Federal tax credits for the purchase of new electric vehicles range from $2,500 to $7,500, depending on battery capacity.

‘Pressure and scrutiny’

A growing number of U.S. companies, particularly those that are answerable to stockholders, aren’t waiting for government mandates to aggressively shrink their own carbon footprints and increase corporate transparency through what is known as Environmental, Social and Governance (ESG) disclosures. Those reports often include progress toward targets for reducing greenhouse gas emissions.

“It creates a certain amount of incentive and pressure and scrutiny, even if people aren’t satisfied with the ESG targets that are being met,” Meiburg said of the voluntary disclosures. “And just the fact that the companies will make them public offers up the opportunity for someone to say, ‘Are you really meeting this commitment?’”

Proposed new rules from the U.S. Security and Exchange Commission are aimed at eliminating any such doubt about climate-related information.

If approved, they would require companies to provide a broad accounting of their greenhouse gas production including so-called Scope 3 emissions, which are generated “upstream” in the pre-production supply chain and “downstream” with the distribution and use of finished projects. Emissions tied to electricity used in a company’s production process also falls under the same umbrella.

“Having a set of rules for disclosure that comes out of the SEC does make companies sit up and pay attention,” Meiburg explained. “Investors will judge whether their investment in your company is responsible.”

Paying for carbon

North Carolina may soon have another powerful carbon-cutting tool.

Officials with the N.C. Department of Environmental Quality are drafting rules that would clear the way for the state’s entry into the Regional Greenhouse Gas Initiative.

RGGI, an initiative involving 11 eastern states, requires power producers to essentially pay for their emissions by buying carbon dioxide allowances. The “cap-and-invest” process serves as a financial incentive for electric utilities to move away from the use of fossil fuels, and generates funding for states to invest in programs that improve energy efficiency and accelerate the shift to renewable energy.

The first two quarterly allowance auctions this year have generated more than $600 million. Virginia, the only North Carolina neighbor in RGGI, took in more than $150 million of those funds.

However, as North Carolina looks to become part of the initiative under Democratic Gov. Roy Cooper, Virginia’s Republican governor, Glenn Youngkin, is calling on his commonwealth to withdraw from RGGI over fears that continued membership will lead to higher energy prices.

That has not been the case so far.

An Environmental Defense Fund study concluded that in RGGI’s first decade, electric rates in member states fell 5.7% but increased in the rest of the country.

The initiative has been successful in reducing emissions while generating $5.3 billion in revenue since 2008, the SLEC’s Thompson added.

“It really is a valuable program that has a lot of proven benefits,” she said.

The state’s Environmental Management Commission will eventually decide on North Carolina’s entry into RGGI. Wake Forest’s Meiburg served as chairman of the panel when it voted 9-3 in July 2021 to start the process of joining the initiative.

“I was in favor of whatever measure would produce carbon reductions in North Carolina as quickly and as efficiently and as cheaply as possible,” he said this week. “RGGI was one option, and I think it’s a good system.”

With state-mandated emissions reductions already in place, however, “the question is, would all the regulatory work be worth it?” Meiburg added.

John Deem covers climate change and the environment in the Triad and Northwest North Carolina. His work is funded by a grant from the 1Earth Fund and the Z. Smith Reynolds Foundation.

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