Legislative commission objects to withdrawal from regional carbon market

A legislative oversight commission voted 5-4 Monday to object to actions taken by Gov. Glenn Youngkin’s administration earlier this month to repeal regulations governing Virginia’s participation in a regional carbon market.

All Democrats on the Joint Commission on Administrative Rules voted in favor of the objection, while all Republicans voted against it. 

The commission is charged with reviewing proposed regulations to see if they are consistent with the law. Its objection will be filed with the Virginia registrar and the State Air Pollution Control Board. 

The vote followed action by the State Air Pollution Control Board Dec. 7 to start the process of withdrawing Virginia from the Regional Greenhouse Gas Initiative, a multistate carbon market that requires power producers to purchase allowances for every ton of carbon they emit. 

Proceeds from the allowance purchases are returned to participating states, which in Virginia’s case has resulted in $523 million for flood resilience and energy efficiency programs since January 2021. 

Republican Gov. Glenn Youngkin’s administration has described RGGI participation as a disguised tax because the costs incurred by the state’s regulated electric utilities like Dominion and Appalachian Power are passed on to ratepayers. (Non-utility merchant generators, which are responsible for about a quarter of Virginia carbon emissions tracked by RGGI, bear the remaining costs.) 

Acting Secretary of Natural and Historic Resources Travis Voyles defended the administration’s withdrawal on the grounds that the 2020 law that led to Virginia’s participation says the director of the Department of Environmental Quality is “authorized to establish, implement, and manage an auction program to sell allowances into a market-based trading program consistent with the RGGI program.”  

The use of the word “authorize,” said Voyles, provides discretion to the department to participate or not participate in RGGI.

Commission chair Creigh Deeds, D-Bath, however, said the first line of the code section states that the following provisions of the article “shall be incorporated by the department, without further action by the board.” 

“I think the mandatory outweighs the discretionary,” he said.

Voyles said Deeds’ interpretation was “mostly right” in that the law sets up the regulatory system for RGGI participation, but argued DEQ is responsible for any additional steps to implement the program. 

No Republican members of the committee questioned the legality of the administration’s efforts to leave the program. But Del. William Wampler, R-Washington, noted higher energy costs in other states participating in RGGI, such as Connecticut. 

And in response to a question from Del. Roxann Robinson, R-Chesterfield, about whether a reduction in carbon emissions in Virginia can be directly related to RGGI, Voyles said “it’s very hard” to attribute one to the other. Instead, he said recent reductions can be attributed to federal energy regulatory systems in place in the state and the Virginia Clean Economy Act, another 2020 Democrat-backed law that aims to decarbonize the electric grid by midcentury.

Southern Environmental Law Center Senior Attorney Nate Benforado, a leading proponent of RGGI participation, disputed that, pointing to data from a report issued by Youngkin’s administration that found carbon emissions fell from 32.8 million tons in 2020 to 28.6 million tons in 2021, a 12.8% difference. 

The pool of available emissions allowances shrink every year under RGGI, he argued. Furthermore, he said, RGGI requirements also apply to Virginia’s non-utility electricity producers, which are not subject to the Virginia Clean Economy Act.

“I don’t think we should jump ship at this point,” Benforado said.

All but one of several guest speakers spoke in favor of RGGI and the funding it provides to efforts across the entire state.

Last week, Republican Gov. Glenn Youngkin included in his 2023-24 budget proposal $100 million in each year for the Resilient Virginia Revolving Loan Fund, a pool of money that could serve as an alternative to RGGI funding now being channeled into flood resilience programs.

The administration has not identified an alternative state source of funding for existing low-income energy efficiency programs currently funded by RGGI dollars.

Youngkin spokesperson Macaulay Porter pointed to federal sources for weatherization efforts. Those include annual appropriations of $4.4 million from the U.S. Department of Energy and $14 million for the Low Income Home Energy Assistance Program, or LIHEAP, from the Secretary of Health and Human Service, plus $65 million to Virginia’s Department of Housing and Community Development from the Infrastructure Investment and Jobs Act.

This story was updated with funding sources for weatherization efforts.