Dominion Energy's coal-fired Chesterfield Power Station is the largest fossil-fuel power plant in Virginia. (Ryan Kelly)

Despite state budget language that remains in place and could cripple the program, the State Air Pollution Control Board approved a new carbon rule Friday that links Virginia to a network of carbon-trading states.

“We have full authority to move forward at this point,” said David Paylor, director of the Department of Environmental Quality. “The governor is considering all options.”

Gov. Ralph Northam has until May 3 to veto budget language that prohibits the use of state money to join the Regional Greenhouse Gas Initiative or spend proceeds from RGGI without legislative approval.

It’s unclear what Northam might do. His office did not provide details and only said he still has time to take action on legislation, including the budget.

“I think if the budget language stays, then it’s pens down,” Cindy Berndt, head of regulatory affairs for DEQ, told the board, which went into closed session over lunch to get legal advice. After some public comment, the board approved the amended rule 5-2 with language to make a swift comeback if the budget stops the immediate linking to RGGI.

Air board member Roy Hoagland said he thinks the carbon rule is a good first step in dealing with the effects of global warming, but he still thinks the state could have made it stronger.

“I think it’s far past time for Virginia to get serious about regulating carbon dioxide,” he said. “Climate change and sea level rise is going to smack us harder than we could ever imagine.”

Chairman Richard Langford and member William Ferguson voted against approving the rule. Neither of their concerns were related to the board’s authority to make the rule.

“I”m not against the reductions,” Langford said. “But I just think we’re going to get them anyway. … Coal is going away whether we have RGGI or don’t have RGGI.”

Linking to RGGI is the major crux of the carbon rule approved by the air board. The multi-state market-based program allows nine states to buy and sell carbon allowances to support renewable energy investments.

Under Virginia’s rule, power plants that run off fossil fuels and generate more than 25 megawatts of power are required to hold a carbon allowance for each ton of carbon dioxide to be released. Allowances are to be issued by the state based off electrical generation capacity. Then the plants consign those allowances to the RGGI auction to get revenue and use the RGGI market to purchase any additional allowances required.

That would allow Virginia, as a state, to cap emissions at 28 million tons in 2020. That’s the same amount that would happen outside of RGGI, according to Mike Dowd, director of the DEQ’s air division.

The cap would decrease three percent each year until 2030, when carbon emissions would be just under 20 million tons, DEQ estimated. The number of allowances issued will also fall. That requires power plants to either cut emissions or purchase more allowances.

During the General Assembly session, Republican Del. Charles Poindexter, R-Franklin, tried to limit the ability of administrative bodies in the state — like the air board — to join RGGI. Northam vetoed that bill and another by Poindexter that would have prevented Virginia from joining the Transportation and Climate Initiative, another regional entity seeking to curb transportation emissions.

“These tools include the ability to adopt regulations, rules and guidance that mitigate the impacts of climate change by reducing carbon pollution in the commonwealth,” Northam said in a statement when he vetoed the RGGI bill. “In addition, allowing energy producers to comply with regulation through credit trading would lessen costs to producers and consumers while generating revenue that could be spent to make Virginia more resilient to extreme weather events, sea level rise and flooding.”

Power plants that will be covered under Virginia’s draft carbon regulation, which was approved by the State Air Pollution Control Board Friday. (Virginia Department of Environmental Quality presentation, October 2018)

Two items that remain in the budget, though, restrict the use of state funds for RGGI and spending any money that comes from the program without General Assembly approval.

DEQ staff couldn’t find a way to write the carbon rule around the budget language and instead included a provision that would allow the RGGI program to begin as soon as the language is lifted, should it be codified.

“In the event the allocation of conditional allowances by the department as required … has not occurred by Jan. 1, 2020, the program will be considered to be operating and effective as of the calendar year following the date on which the department allocates the conditional allowances as it corresponds to the schedule of (the rule),” the provision states.

It allows immediate implementation of RGGI without a new board approval process.

“If the budget language goes into effect, we hope it would be removed in the next session and we would be able to integrate into the RGGI program immediately without going into a prolonged administrative, regulatory process,” Dowd said.

The department probably wouldn’t allocate RGGI allowances until the state was able to join the network since they wouldn’t be able to enforce the limits, Dowd said.

Poindexter attended the board meeting to encourage members to vote against the rule. He called the board’s decision a “political move” that circumvents the appropriate approval process.

“I do feel the aggravated parties across the board — from legislature to business to individuals — would have the right to sue if you take this action,” he told the board. Attorney General Mark Herring has opined that the board has the authority to adopt the rule. 

“Taking action, to me, at this point in time, is a little bit contrary to majority views of what the law says. I understand the passion, I understand the hard work that people put into this proposal and I understand where they’re coming from. It’s really not an argument about climate change, it is an argument about law and peoples’ representatives and how we do business in Virginia.”

RGGI participation would be a tax on businesses, which would cause the state to lose its business-friendly reputation, Poindexter said. And, he said, it’s hard to know the measurable results of joining a network like RGGI in the context of global warming.

“I see nothing in the proposal that tells me how much the temperature is going to stay the same or go down,” he said.

Secretary of Natural Resources Matthew Strickler said in a press release that joining RGGI will protect public health, safety and the economy.

“Today’s historic vote sets the Commonwealth on a path to slow global warming, and signals to clean energy businesses that Virginia is poised for a significant expansion of solar and wind power,” Strickler said in the release.

Environmental groups also applauded the rule, which makes Virginia the first state in the South to cap carbon.

“Today’s vote is historic and takes us in the right direction in the fight to address climate change, protect public health, and to accelerate our transition to a clean energy economy,” said Mike Town, executive director of the Virginia League of Conservation Voters.

Several other groups called the rule ambitious and historic and pressured Northam to quickly veto the budget lines that could stop Virginia’s membership.

“We now reiterate our calls on Gov. Northam to veto the harmful budget language passed by the House of Delegates that attempts to prevent this important rule from moving forward,” Town said. “Virginians elected Northam to do the right thing for clean air and climate action; he has that opportunity in front of him and we expect him to follow through.”