Emboldened Virginia governor asks lawmakers to support carbon cap

Source: Benjamin Storrow, E&E News reporter • Posted: Monday, January 29, 2018

Virginia Gov. Ralph Northam (D) is seeking legislative approval to join the Regional Greenhouse Gas Initiative, a nine-state cap-and-trade program.

Such a plan would have been doomed to fail only months ago. With little prospect of getting past Virginia’s Republican-dominated General Assembly, Northam’s predecessor and political patron, Terry McAuliffe, proposed joining the compact via executive order.

But a decisive Democratic victory in November changed the political calculus in Richmond. Democrats won 15 House seats, reducing the Republican majority in the lower chamber from 29 seats to 1.

The shift has emboldened Northam. In an address to lawmakers earlier this month, he spoke about the dangers posed by climate change to Virginia and offered RGGI as a potential solution.

“As a native of the Eastern Shore, a scientist and a resident of Hampton Roads, I can tell you personally that, no matter what politicians in Washington say, climate change is real. Sea levels are rising. It affects us every day,” Northam said. “For anyone who has trouble believing that, come visit Tangier Island with me sometime and meet the people whose way of life is already being altered by this global crisis.”

Putting the question to the Legislature comes with potential benefits and risks. Proponents of the plan say it will allow the state Legislature to have a say in how the money generated by RGGI’s auctions are allocated. Under the executive action approach, the State Corporation Commission would direct utilities on how to spend the money.

A bill calling for Virginia to join RGGI seeks to use 35 percent of the revenue on climate resilience measures, 30 percent on energy efficiency, 20 percent on renewable energy and 10 percent for coal communities in southwest Virginia.

An even bigger selling point for passing legislation includes the promise that a future governor would be hard pressed to withdraw from the carbon program.

“I think the governor very much wants to make this a partnership with the General Assembly,” said Del. David Bulova, a Democrat who co-sponsored the bill. “He’s clearly committed to reducing carbon emissions. The other element of this is making this work for the whole state.”

The proposal comes at a time of great change in Virginia’s energy sector. Dominion Energy Inc., the largest utility in the commonwealth and a major political power in Richmond, recently announced it was placing nine old fossil fuel units on reserve status. That includes four coal units and four more that were converted from gas to coal. The move coincides with a wider shift away from coal to natural gas in Virginia.

RGGI membership isn’t the most ambitious energy bill in Richmond this year. That would be a bill to undo a five-year rate freeze for Dominion. The freeze was passed on the premise that the Clean Power Plan, former President Obama’s plan to cap carbon emissions from power plants, would drive up energy costs.

Now, with President Trump rolling back the federal rule, Virginia lawmakers and Dominion are calling to end the freeze. The debate largely lies in how much power to give state regulators when they revisit the power company’s rates.

Stephen Haner, a longtime Richmond lobbyist who has represented large industrial consumers, reckons RGGI will become a bargaining chip in the larger debate over state regulators’ authority to set Dominion’s rates.

“With the governor’s support and the change in the House, its prospects are improved,” Haner said. “There are still some legislators who are very opposed to that [RGGI] and skeptical that they are going to raise prices.”

The RGGI bill still faces an uphill climb. While Republicans have a one-seat majority in both the Senate and House of Delegates, they boast a two-seat majority on most committees and subcommittees. The GOP has been historically hostile to the idea of capping carbon in Virginia. One Republican delegate who made several proposals to tackle carbon emission was defeated in the Democratic wave in November.

Dominion, for its part, has been coy on the subject.

“While our work to lower emissions is on-going, we are in the process of evaluating Virginia’s proposal to determine the full costs and benefits to Virginia residents,” the company said in a statement. “We expect to fully meet whatever regulatory requirements that result.”

The bill’s proponents are still optimistic. The House bill has a Republican co-sponsor in Del. Gordon Helsel, who represents a low-lying area around Hampton Roads.

RGGI boosters also have considerable leverage. Northam has promised to proceed with McAuliffe’s executive order regardless of what the Legislature decides.

State Sen. Lynwood Lewis, a Democrat and co-sponsor of the bill, likes to remind skeptical colleagues of that fact.

“Why would we not want a say for where the revenue goes?” he said.

Whether that wins over any of his Republican colleagues will determine the success of Northam’s legislative gambit.