North Carolina’s bipartisan climate bill is significant, albeit with some loopholes

North Carolina passed a bipartisan climate bill on October 12, 2021 that will require state-owned electricity producers to reduce greenhouse gas emissions by 70 percent by 2030, putting them on path to carbon neutrality by 2050. 

While North Carolina is not the first state to pass such legislation (16 other states have passed some form of climate legislation), its accomplishment is significant because of the bipartisan effort to pass the bill. North Carolina Democratic governor Roy Cooper and the Republican-held legislature worked together to pass House Bill 951, otherwise known as the “Energy Solutions for North Carolina.” 

At the passing of the bill, Governor Cooper said: “This is a new beginning. Putting real and enforceable carbon reduction targets into the law, North Carolina is working to reduce the effect of climate change on marginalized populations, while putting our state at the forefront of the clean energy economy and the jobs that it brings.”

What is in North Carolina’s new law?

North Carolina’s new law mandates carbon neutrality for electric power by 2050, with a 70 percent reduction by 2030 below 2005 levels.

The law does not include a cost cap that other carbon and clear electricity mandates across the country have. Cost control instead is done by requiring the state’s utilities commission to determine a resource plan by the end of 2022. The resource plan must achieve the least cost path towards carbon reduction by considering generation, grid upgrades, storage, energy efficiency, demand-side management, and emerging renewable technologies. All of this is subject to a biennial revision. 

Flexibility is permitted in the law for the timing for utility commission to satisfy carbon reduction targets. The reduction deadlines can be exceeded only by more than two years if the commission approves construction of at least one wind or nuclear facility or if the commission determines an extension is otherwise required to preserve grid reliability.

The law advances North Carolina’s energy generation market, but limits access to independent power producers 

The law will encourage North Carolina to build up its renewable energy infrastructure, something it already does well. The southern state, a regulated energy market state, ranked second in the nation behind California in 2019 in the amount of total installed solar power generating capacity (4,700 megawatts) and actual solar generation.

The Tar Heel State is a leader in nuclear energy as well. According to data from the US Energy Information Association (EIA), nuclear power provides 32 percent of in-state electricity generation, as of 2019. The state was also sixth in the country in electricity net generation from nuclear power that same year, producing about 5 percent of the nation’s total. 

Despite North Carolina’s notable achievements in solar and nuclear power production, its new carbon reduction law is expected to limit independent power producers’ access to standalone energy storages. The law is the first known instance, according to a commentary piece in Energy News Network, to require 100 percent utility ownership of standalone energy storages. 

However, solar power is the exception to this. Independent producers will have a 45 percent ownership share of solar energy through power purchase agreements. 

It pushes North Carolina’s carbon reduction goals

Energy Solutions for North Carolina is a milestone energy bill that pushes North Carolina to reduce its greenhouse gas emissions significantly from its electricity grid by 2030, and completely by 2050. Ranking in the top 15 of net carbon dioxide emitters in the country (14th according to the latest data from the EIA), North Carolina, through the new law, binds itself to decarbonisation targets. 

Reaching across the aisle to pass a significant climate policy

This bill passing with support from a Democratic governor and a Republican legislature makes it one of the most significant climate bills in a purple or red state. Climate issues are predominantly a platform on which Democrats run, but North Carolina’s House Bill 951 shows that a bipartisan breakthrough is possible. In this case, North Carolina’s GOP legislature determined that decarbonization of the electric power sector is a critical issue and of a fundamental public interest that is worth the potential cost, provided that grid reliability is maintained.

Governor Cooper had this to say about the two parties coming together to pass such an important climate bill: “This bipartisan agreement sets a clean energy course for North Carolina’s future that is better for the economy, better for the environment, and better for the pocketbooks of everyday North Carolinians. I am encouraged that we have been able to reach across the aisle to find a way forward that will update our energy systems while saving people money and doing our part to slow climate change.”

Two state Republican leaders stated their thoughts towards Energy Solutions for North Carolina, one citing the opportunities for growth and the other citing a path to low energy costs for domestic and business customers. 

“North Carolina is a growing state, attracting businesses and families from all over. That growth depends on a stable supply of reliable and affordable energy. After months of policy negotiations, we reached an agreement that will signal to businesses and families here now or considering a move here that North Carolina’s leaders are committed to pro-growth energy policies,” said Senate Leader Phil Berger of Rockingham County.

“We have a responsibility to be good stewards of our natural resources while also maintaining low costs for citizens and businesses, and this bill achieves each of those goals. It is absolutely crucial for our state and for our national security that we prioritize energy independence now,” said House Speaker Tim Moore of Cleveland County. 

Criticism: neither stringent nor specific enough to tackle pollution

While many acknowledge the law as a great achievement, critics of the law, including environmental groups, say it falls short on specifics and lacks penalties for falling short on targets. One group says the law gives the utilities commission enough “wiggle room” to delay reaching 2030 targets. 

One of the loopholes, as explained by environmental group Appalachian Voices, is where the law says the utilities commission will play a prominent role in the review of its own carbon reduction plan every two years. 

The group said too that a provision of the law changes the way the state sets its electricity rates. Utilities will be allowed to propose multi-year rate plans that have the potential for larger rate increases. 

This has two adverse effects, critics claim. The first is that the manner in which rates will be established will benefit one of the largest utility companies in the country, Charlotte-based Duke Energy. The second is that the law fails to support low-income customers to address the expected higher bills. 

House Bill 951 is a prototype climate law for red states

Through compromises and trade-offs, and though it did not win over certain environmental groups, North Carolina succeeded in passing a significant carbon reduction bill through a bipartisan government. This bipartisan achievement demonstrates that pro-climate legislation is possible in purple or swing states. Perhaps predominantly red states will be encouraged to work out their own climate and carbon reduction bills. 

If you are wanting to reduce your business’ carbon footprint while procuring a secure and reliable supply of energy, give us a call at +1 972 331 0039 or contact us via the web.

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