Youngkin administration outlines plan to withdraw Virginia from carbon market by regulation

Gov. Glenn Youngkin’s administration announced their newest plans for how they intend to withdraw Virginia from a regional carbon market Wednesday, a move critics say is not allowed by law, would drain important state programs of funding and would hurt the fight against climate change.

Acting Secretary of Natural and Historic Resources Travis Voyles said at a State Air Pollution Control Board meeting that the administration plans to withdraw Virginia from the Regional Greenhouse Gas Initiative through changes to the regulations that govern the state’s participation in the market. 

The regulatory process typically takes 18 to 24 months from start to finish, after which the air board will vote on repealing the regulation. 

The move is a pivot from the approach outlined in an executive order Youngkin issued at the start of his term. That plan called for a two-track approach that would first repeal the regulation through an emergency provision and then eliminate it permanently through the normal regulatory process.

The full regulatory process “will allow for public comment … provides some certainty and times well with the contractual period,” Voyles told the Virginia Mercury after the meeting.

Virginia’s three-year contract with RGGI, Inc., the body that coordinates the market, ends next year.

RGGI is a carbon reduction market involving 10 other Mid-Atlantic and New England states in which energy producers must buy allowances for the carbon they emit, and a cap is placed on overall carbon emissions. 

The proceeds of purchasing those allowances are then returned to the state. In Virginia, they’re funneled into flood assistance and low-income energy efficiency programs. Virginia has received some $379 million in RGGI proceeds to date.

Under state law, electric utilities are permitted to pass on the costs of RGGI participation to ratepayers. The Youngkin administration has said those increased costs, which averaged $2.39 per month for Dominion residential customers, are a burden on ratepayers. Dominion has since stopped charging customers a specific fee for RGGI participation.

“RGGI is a bad deal for Virginia,” Voyles said, adding that the state can’t control the market costs for allowances, which have increased.

But groups like the Southern Environmental Law Center continue to say the Youngkin administration can’t withdraw Virginia from RGGI by changing regulations because the regulations were the result of legislation passed by the General Assembly in 2020.

“That’s not consistent with the law,” SELC attorney Nate Benforado said. 

From 2010 to 2020, before Virginia joined RGGI, power plant emissions did not decrease, Benforado stated, referencing a March report on the program that the Department of Environmental Quality completed at Youngkin’s request. Emissions dropped over 30% with RGGI participation, he added.

“Virginia needs RGGI,” Benforado said.

Board response 

Reactions from the seven-member board differed among the four appointees made by Youngkin, a Republican, and the three appointees made by former Gov. Ralph Northam, a Democrat.

Northam appointee Hope Cupit, president and CEO of SERCAP, an organization that helps low- to moderate-income people in the southeastern U.S, asked whether it was constitutional to override the RGGI law passed by the General Assembly through regulations. 

Cupit has previously said she received an email from an attorney with the Office of the Attorney General saying the air board doesn’t have the authority to withdraw Virginia from RGGI. A lawsuit seeking to force the release of that email under the state’s Freedom of Information Act is still awaiting an order from a judge in Charlottesville Circuit Court.

She also noted the benefits of flood protection programs funded by RGGI given recent flooding in Buchanan County.

“We feel forgotten sometimes,” said Cupit, who lives in Bedford. 

Another Northam appointee, retired pulmonologist Lornel Tompkins, said one year’s worth of data on Virginia’s participation in RGGI is not enough to determine its effectiveness. She also questioned why the RGGI fee was being attacked, versus other fees utility customers pay, and said costs could be lower in the long run.

“Why are we not going after the General Assembly to change the rules, rather than taking away something from the state or the commonwealth which is turning out by some factors to be a positive?” Tompkins said.

Conversely, Youngkin appointee David Hudgins, executive director for the Virginia Energy Consumer Trust, an advocacy group skeptical of renewables, said he was concerned about RGGI’s impact on the state’s ability to appeal to business because of rising energy costs. Virginia has previously been able to attract businesses from the Northeast by touting its lower electricity rates, he said.

“If we get affiliated (with) the Northeast, southern states are going to start sending their economic development teams up here because our cost structure is changing and reflecting more of the Northeast than we do with the people to the south,” Hudgins said.

Another Youngkin appointee, retired attorney Jay Holloway, asked whether RGGI actually caps carbon emissions because it allows producers to buy allowances beyond the cap.

But Michael Dowd, director of DEQ’s Air and Renewable Energy Division, clarified that allowances can only exceed the cap by a certain percentage.

“There is a cap, in a general sense, because it is a regional cap. There is a finite number of allowances for sale,” Dowd said.

Environmental outcry 

Several environmental groups rallied outside the meeting’s location at the Community College  Workforce Alliance in Richmond, with rallies also held throughout the state in Roanoke, Harrisonburg, Woodbridge, Abingdon and Virginia Beach.

In Richmond, activists displayed caricatures of Youngkin and former Environmental Protection Agency chief Andrew Wheeler while chanting “RGGI is the law.” 

Wheeler, who is serving as an adviser to Youngkin, was appointed to his current position after Senate Democrats stymied his nomination to be secretary of natural and historic resources. The Democrats’ move led to Republicans blocking 11 other Northam-era appointments, including two air board members.

Leah Jones, a coordinator with Virginia Interfaith Power & Light, a group focused on climate and environmental justice, called RGGI “an important stepping stone for our state to provide funds to those affected by energy burden and severe flooding while also providing an incentive … to act on climate and reduce Virginia’s carbon emissions.”

Jones and five other public speakers spoke in support of RGGI during Wednesday’s meeting. Virginia Manufacturers Association executive director Brett Vassey spoke against it, calling RGGI a tax and accusing it of being redundant given Virginia’s emission reduction efforts through the Virginia Clean Economy Act.

While the Virginia Clean Economy Act sets aggressive carbon reduction goals for the state’s regulated utilities, it does not apply to non-utility power producers, who generate more than a quarter of the state’s carbon emissions subject to RGGI.