University of Virginia Study Finds 11 Major Flaws in Coal Center’s Energy Analysis Relied Upon by Gov. McAuliffe and Legislature

University of Virginia Study Finds 11 Major Flaws in Coal Center’s Energy Analysis Relied Upon by Gov. McAuliffe and Legislature

Gov. McAuliffe announces Energy Plan (photo: Craig Carper)

In a study released last week, energy expert Dr. William Shobe of the University of Virginia dismantles the key, state-sanctioned analysis of how Virginia should meet the requirements of the federal Clean Power Plan to reduce carbon emissions.

That analysis, produced last fall by a team led by Dr. Michael Karmis, director of the Center for Coal and Energy Research at Virginia Tech, is part of the Virginia Energy Plan and is relied upon by Gov. Terry McAuliffe and the legislature as they make decisions about the state’s energy future.

“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,” writes Shobe.

A professor of public policy and director of the Center for Economic and Policy Studies, Dr. Shobe’s research focuses on climate change, greenhouse gas markets, and auction design. Shobe was part of the team that designed the Regional Greenhouse Gas Initiative for nine Northeast states, a cap-and-trade program to reduce carbon emissions that has generated $1.3 billion in economic benefits and 14,000 job-years over the past three years.

“Old Boy” Selection Process

Is Karmis Too Conflicted to Analyze How Virginia Can Respond to Fed’s Clean Power Plan?

Michael Karmis, Ph.D

Last fall, we questioned why Dr. Karmis – who is an international consultant to the coal industry – had been chosen by the McAuliffe Administration’s Dept. of Mines, Minerals & Energy (DMME) to write a 199-page analysis of how Virginia should best meet the requirements of the federal Clean Power Plan.  By repeatedly evading my basic questions about how and why he was chosen, Karmis and DMME only heightened suspicions about what appears to be an “old boy” selection process heavily influenced by the fossil fuel industry.

But now it is clear that the process was more than unseemly: the sloppy, coal-friendly conclusions of Karmis’ report are contributing to Virginia status as an also-ran in clean energy development.

Notable problems Shobe found with Karmis’ analysis include:

  • Double counts compliance costs by about $400 million annually because the authors added together two different estimates of compliance costs.
  • Made a calculation mistake that cut the estimated benefits of emission reductions by more than 40%.
  • Used inappropriate and incomplete economic analysis in estimating total economic costs and associated job losses, inflating cost and job losses.
  • Misinterpreted, on at least two occasions, analysis provided by the EPA in the EPA’s regulatory impact analysis of its proposed rule.

(For a full list of errors, click here.)

In addition to reviewing Karmis’ analysis, Professor Shobe makes useful recommendations to ensure state agencies such as DMME, the Dept. of Environmental Quality, and the State Corporation Commission are able to properly assess studies presented to them.

An Impartial Coal Expert? 

Virginia is having a critical conversation about Clean Power Plan compliance options and strategies. Citizens must ask themselves: should the Commonwealth’s policymakers continue to rely upon an energy analysis produced by coal expert Michael Karmis that we now know is utterly flawed?

Last November, I concluded a post by asking whether Dr. Karmis was too conflicted to write a document the governor and legislature would depend upon as an unbiased, informed look at how the state can best respond to the Clean Power Plan. By submitting a report with flawed methodology, basic factual errors and biased conclusions in favor of the coal industry, it seems the answer regarding Dr. Karmis’s conflicts is a resounding yes.

 

Scott Peterson is executive director of the Checks and Balances Project, a national watchdog blog that seeks to hold government officials, lobbyists, and corporate management accountable to the public. Funding for C&BP comes from pro-clean energy philanthropies and donors.

Is Virginia Tech’s Coal Center Director Evading Questions to Shield Donors?

Is Virginia Tech’s Coal Center Director Evading Questions to Shield Donors?

(Photo credit: Kingsport Times News)

Professor Michael Karmis is evading basic questions about whether clean energy experts were consulted in his critical cost-benefit analysis of how Virginia can meet its federal Clean Power Plan (CPP) goals.  This raises the possibility that Dr. Karmis, director of the Virginia Center for Coal and Energy Research, is shielding donors from legitimate public scrutiny.

The cost-benefit analysis was mandated by the legislature, is relied upon by the Governor, and is included in the Virginia Energy Plan. As we’ve reported before, Karmis is a curious choice to author this foundational document. The Clean Power Plan gives states wide flexibility on how to meet standards. Logically, such an analysis should consider a variety of solutions to cut power plant pollution, including fast-growing renewable energy sources that have created 290,000 jobs in neighboring mid-Atlantic states in recent years.

Is Virginia Tech’s Coal Center Director Evading Questions to Shield Donors?Yet, Karmis’s Coal Center is heavily oriented to only one, highly-polluting energy source – coal. The Center’s website lists a number of significant players in the coal industry as Sponsors that provide “generous financial contributions.” High ranking members of those same companies serve on the Center’s Advisory Board. Of its eight in-house “experts,” seven have strong financial ties to the coal industry – but none to clean energy sources.

State law mandated that Karmis’s Center be consulted, but not be the lead author of the analysis – a big difference in the level of power a coal-centric perspective would have in driving the process.

Evasion of Basic Questions

On Oct. 9, Karmis told me by phone in my only conversation with him, just as he was about to leave for a “site visit” to a West Virginia coal mine, that he had consulted renewable energy experts, but was unable to say who they were due to a nondisclosure agreement (NDA) signed with Virginia’s Dept. of Mines, Minerals and Energy (DMME). Professor Karmis said that if DMME’s Energy Director Al Christopher, who “coordinated” the study, gave him permission to tell me who he consulted with, then he would be “glad to tell you.” Unfortunately, several subsequent attempts to obtain that permission from Mr. Christopher went unanswered. Here’s an example:

email Scott re permission

The Plot Thickens

A Freedom of Information Act request sent to DMME on Sept. 29, 2014, produced records showing that an unusual non-disclosure agreement was the result of a request from a Mr. Hayes Fromme to Mr. Christopher. Fromme is an advisor to the Secretary of Commerce and Trade, and the McAuliffe Administration’s point person in creating the Energy Plan. The purpose was to prevent “outside people seeing the study prior to release.”

email Hayes requests NDA

Professor Karmis, on the other hand, could see reasons of his own for a non-disclosure agreement. In the following Sept. 15 email, Karmis’s top aide John Craynon explains Professor Karmis had “already had a contact” about the cost-benefit analysis his Coal Center and hand-picked consultants were producing and wanted an NDA to “minimize what we need to say.”

email re Karmis wants NDA

In response to a FOIA I sent to Virginia Tech on Oct. 3, the justification for not providing me with the information I requested was the non-disclosure agreement.

email VT Norris re NDA

Major Questions Remain

Is Professor Karmis shielding his Center’s coal industry donors from scrutiny about their involvement with the analysis of how Virginia can meet its Federal Clean Power Plan goals? If so, this is a highly inappropriate action.

It raises important questions about who hired Dr. Karmis to author the document, if others were allowed to bid, and how much Professor Karmis’s Coal Center was paid?  More on that soon.

Scott Peterson

Executive Director

Questions Multiply Around Virginia’s Hiring of Coal Advocate to Write Key Energy Study

The Christopher- Karmis Mystery Continues

Dr. Michael Karmis

Dr. Michael Karmis

In my recent post, “Is Coal Center Too Conflicted to Analyze How Virginia Responds to Fed’s Clean Power Plan?” I raised questions about who in Virginia government chose a professional coal advocate to conduct a cost-benefit analysis of how Virginia should best meet the Clean Power Plan standards.

The advocate in question is Virginia Tech’s Michael Karmis. He runs the Center for Coal and Energy Research and has extensively consulted with the coal industry. His Center is sponsored by:

VCERC sponsors 11.3.14

The Center’s “Advisory Board” includes the Virginia Dept. of Mines, Minerals and Energy Director Mr. Conrad Spangler, along with the major players in the state’s fossil fuel industries, including:

Of its eight staff experts, all appear to be closely tied to the coal industry. Neither Dr. Karmis, nor anyone else on the Center’s staff have any discernable experience with energy efficiency and renewable energy sources, which have in recent years created 290,000 jobs in neighboring Mid-Atlantic states.

Foundation Document but No Analysis of Renewables

The cost-benefit analysis that Dr. Karmis was hired is a foundation document for informing how the state will respond to the federal Clean Power Plan standards (CPP). The Governor, his staff, and the Virginia legislature will heavily rely on its findings over the next year, and they were already included in the State Energy Plan, released on Oct. 1, 2014.

In Section 3 of the analysis, Commercially Available Technology (page 49), renewables are not included:

  • Improving the Efficiency of [coal] Power Generation (p.51)
  • Carbon Capture, Utilization and Storage Technology Assessment (p.63)
  • CCUS in VA (pg. 72)
  • Energy Efficiency Technology (p.74)

On pages 94-95, Dr, Karmis writes:

“There have not been adequate studies or analysis to demonstrate the practicality of such expansion [of renewable power generation] within Virginia, and few efforts are currently ongoing which can be used as positive examples of the capability of the Commonwealth to meet demand using renewable sources. A study conducted by Virginia Tech in 2005 assessed various sources of renewable power for Virginia, and concluded that… cost and applicability for Virginia must await a detailed assessment.”

Critics have said that this finding clashes with the business world realities of rapidly dropping prices for solar and wind energy.

Questions

The selection of Dr. Karmis begs some straightforward questions:

  • Who made the decision to hire Dr. Karmis?
  • Doesn’t Virginia have someone with experience in a range of energy sources and efficiency expertise to conduct this critical cost-benefit analysis?
  • Was anyone else considered for the task of writing this vitally important study?
  • What was Dr. Karmis paid, if anything, to do this study?
  • Were there clean energy experts that Dr. Karmis consulted with?
  • And, does the coal lobby’s money that heavily underwrites Dr. Karmis’ “Center” and his salary make him too conflicted to write an objective analysis?

After doing some initial research, calling the British Gas number and getting some info, on Oct. 9, I contacted Dr. Karmis by phone in his office to ask him the questions above. He was between meetings and was only able to speak with me for very short period of time. Dr. Karmis told me that he had consulted renewable energy experts in producing the cost-benefit analysis, but he could not tell me who they were because there was a non-disclosure agreement. If Al Christopher, director of energy of Virginia’s Dept. of Mines, Minerals and Energy DMME), gave him permission, he would be glad to tell me. Karmis told me Christopher had “coordinated” the study.

dmme_logoI had sent Freedom of Information Act requests to DMME and Virginia Tech in pursuit of these and other questions. In response, DMME sent me emails and other records that I am in the process of analyzing. The response from VT was disappointing.

I caught up with Mr. Christopher in Richmond on Oct. 14, prior to Gov. McAuliffe’s unveiling of the Energy Plan. Christopher said that state law required that Dr. Karmis write the cost-benefit analysis, and that I should look at the statute, which I’ve posted here. The law in Section 1 A says only that Dr. Karmis’ Coal Center be “consulted,” not that Dr. Karmis should write the entire cost-benefit analysis – a big difference.

I sent Mr. Christopher an email asking for a clear answer about whether or not Dr. Karmis was free to answer my question about which renewable energy experts Dr. Karmis had consulted, but have received no reply.

Christopher email snip 10.14.14

I have also asked Mr. Christopher in a follow-up email to tell me where in the law he was “required” to hire Dr. Karmis to write the cost-benefit analysis, but again with no reply.

This morning, I left a message at Mr. Christopher’s office to confirm he received my emails. I have not received a reply to any of my emails to him or my voice mail. I will continue to press for answers.

 

Scott Peterson

Executive Director