Virginia report lays groundwork for state’s exit from regional emissions trading group

Source: By Robert Walton, Utility Dive • Posted: Sunday, March 20, 2022

Dive Brief:

  • Virginia Gov. Glenn Youngkin, R, says a new report from the state’s Department of Environmental Quality (DEQ) proves that participation in the Regional Greenhouse Gas Initiative (RGGI) is “a bad deal” for residents and is considering emergency regulations to withdraw from the 11-state carbon trading network.
  • The report concludes RGGI is “a direct tax on households and businesses” and is raising the state’s electricity prices. Clean energy advocates, however, counter that the report illustrates the regional carbon trading network helps states reduce emissions and can help Virginia meet its clean energy targets.
  • Experts question whether Youngkin can withdraw Virginia from RGGI through executive action, and some say it must be done through legislation. Republican-led efforts in Virginia’s General Assembly to withdraw the state have so far stalled.

Dive Insight:

The report sent March 11 to Youngkin includes a draft proposed emergency regulation to begin withdrawing Virginia from RGGI, as well as correspondence informing the group of the decision.

“This letter notifies RGGI, Inc., of the Governor’s intent to withdraw the Commonwealth of Virginia from RGGI upon the conclusion of an appropriate legislative or regulatory process,” the unsigned and undated letter says. It is addressed to RGGI Executive Director Andrew McKeon.

RGGI did not respond to a request for comment.

Virginia joined RGGI in 2021 and advocates say it has already helped the state to address climate change.  Participation “has already generated more than $220 million to support climate change mitigation projects in the Commonwealth,” Virginia’s previous attorney general, Mark Herring, concluded in January before the Youngkin administration took office.

Herring, while attorney general, also issued an official opinion that the governor “may not repeal or eliminate, through an executive order or other action, the enacted statutes and regulations” relating to Virginia’s RGGI participation.

Youngkin appears to be “exploring the possibility of withdrawing from RGGI through regulation,” said Southern Environmental Law Center Senior Attorney Nate Benforado. But a 2020 law requires Virginia’s participation, he said.

“In our view, you can’t simply repeal the regulation and still be in compliance with the statute,” Benforado said. “The statute requires participation. So until that statute changes, Virginia has to keep participating.”

Benforado also questioned the study’s conclusions.

The DEQ report concludes that RGGI “fails to achieve its goal as a carbon ‘cap-and-trade’ system because it lacks any incentive for power-generators to actually reduce carbon-intensive gas emissions.” A focus on the rate of emissions per megawatt hour of generation, Benforado said, misses the point.

“From a climate perspective, that rate doesn’t really mean anything,” Benforado said. “What is important is the actual greenhouse gases that are put into the air. And the data shows how well RGGI works at reducing actual emissions.”

Virginia lawmakers set a 2045 net-zero target for the state’s electric system, and the DEQ report says that some type of emission reduction program will be needed to hit that goal.

“In the absence of any such program, emissions may not reduce sufficiently to achieve these goals,” the report notes.

In the meantime, RGGI appears to be growing. Along with Virginia, member states include: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont. Pennsylvania is expected to join in the second quarter of this year, and North Carolina has considered particpation as well.