Virginia air board approves withdrawal from regional carbon market
Youngkin continues to call RGGI participation a hidden tax, environmental groups considering litigation
Acting Secretary of Natural and Historic Resources Travis Voyles presents to the state Air Pollution Control Board. (Charlie Paullin/ Virginia Mercury).
The State Air Pollution Control Board took its final step to withdraw Virginia from a regional carbon market, sending the action to Republican Gov. Glenn Youngkin’s office for final action, despite a majority of public commenters continuing to oppose the move.
Following a 30-minute closed session to discuss possible litigation against the decision, the board voted 4-3 to adopt the regulation withdrawing the state from the Regional Greenhouse Gas Initiative. All Youngkin appointees voted in support of the measure, while all three appointees of former Democratic Gov. Ralph Northam voted against it.
The market, known as RGGI, requires electricity producers to buy allowances in quarterly auctions for every ton of carbon they emit. In Virginia, existing state law requires the proceeds from the sales, which have totaled more than half a billion dollars since the state began participating in auctions in 2021, to go toward flood resiliency and energy efficiency efforts.
Secretary of Natural and Historic Resources Travis Voyles on Wednesday reiterated the Youngkin administration’s argument that the allowance costs passed on by the state’s electric utilities to customers constitute a hidden tax. Dominion Energy, Virginia’s largest electric utility, previously added a separate charge to customer bills for the allowance costs, which increased monthly residential bills by $2.39 on average. The company briefly suspended the fee but is now seeking to reinstate it.
“Mr. Chairman and members of the board, that is called a tax,” said Voyles.
The administration began the process of withdrawing Virginia from RGGI through regulatory approval last year, though opponents say legislative change is needed. The action by the board Wednesday sends the withdrawal regulation to the administration, which then must publish it in the Virginia Register. Thirty days after publication, the regulation will go into effect.
“Today’s common sense decision by the Air Board to repeal RGGI protects Virginians from the failed program that is not only a regressive tax on families and businesses across the Commonwealth, but also does nothing to reduce pollution,” said Youngkin in a press release following the vote.
Voyles told the Mercury after the meeting that the publication of the regulation in the register occurs at the discretion of the administration, but that it will likely happen “sooner rather than later.” Officials have said part of the intent of pursuing the pullout through the regulatory process was to line up the withdrawal with the end of the state’s contract with RGGI, Inc., the nonprofit that oversees the operation of the market, which is set to expire at the end of this year.
The publication of the regulation in the register is expected to trigger the filing of legal challenges to the withdrawal.
Board member Hope Cupit, a Northam appointee, on Wednesday questioned Senior Assistant Attorney General Ross Phillips on the legality of the move. Phillips said he wouldn’t provide a legal analysis during the meeting, but pointed to a section of state code that says the board “may establish, implement, and manage an auction program to sell allowances to carry out the purposes of such regulations or may in its discretion utilize an existing multistate trading system.”
Voyles had also said in his presentation that nothing in the 2021 law that established Virginia’s participation in RGGI prevented a withdrawal from it.
Whether or not a judge would impose a stay against enactment of the regulation during a potential legal challenge is unclear, said Nate Benforado, a senior attorney with the Southern Environmental Law Center, in an interview with the Mercury.
“Does this really sound like a law that was written, that envisions a world in which we are not in RGGI?” Benforado told the air board during a public comment period of the meeting. “That punted the decision to participate in RGGI or not to [the Department of Environmental Quality] or to this board? Absolutely not.”
Board member Staci Rijal, another Northam appointee, also asked for data showing that RGGI participation hasn’t reduced emissions or improved air quality in Virginia.
Mike Dowd, director of DEQ’s Air and Renewable Energy Division, answered by saying carbon emissions from electricity generated in Virginia have decreased by 6.6 million tons since 2020, but because Virginia imports more electricity from other states than it generates, carbon emissions linked to electricity used in Virginia have increased by 3.7 million tons over that period.
Several Democratic members of the General Assembly, including Sen. Ghazala Hashmi, D-Richmond, and Del. Rip Sullivan, D-Arlington, spoke in opposition to the withdrawal Wednesday.
“The existence of other federal and state statutes, like the VCEA, is not a reason to leave RGGI,” said Sullivan, referring to the Virginia Clean Economy Act, another Democrat-backed law from 2020 that requires the state’s electric grid to be carbon free by 2050.
“All of these efforts working together will be necessary for us to reach our goals, and RGGI plays a vital role,” Sullivan said.
Other Virginia residents who spoke Wednesday in support of remaining in RGGI noted the need to combat climate change and the impact of RGGI’s carbon emission cap on the state’s independent electricity producers, which generate about 30% of Virginia emissions covered by the program.
Not everyone opposed the withdrawal. Representatives of the Virginia Manufacturers Association, Virginia Chamber of Commerce and Virginia Oil and Gas Association all spoke in support of the move.
“The impact on small industrials is over $1,500 per month. That’s not a small amount of money,” said VMA President and CEO Brett Vassey, who contended replacement funding for state programs currently being funded by RGGI dollars could come from a potential new program modeled after the Water Quality Improvement Fund. “We have to be competitive in the global economy. Our electricity rates are the way that we are able to produce and compete.”
In total, the state received 6,607 written comments on the proposal, with 599 supportive of the withdrawal, 1,853 against it and the remainder duplicative or off-topic, Voyles told the Air Board.
At a press conference held in the middle of the meeting with the Virginia chapters of the Sierra Club and NAACP, Del. Candi Mundon King, D-Prince William, took issue with the administration’s criticism of the use of RGGI dollars to fund programs rather than return them to utility ratepayers in the form of rebates.
“A $10 check might be helpful to some folks, but I can almost guarantee you they would like long-term, sustainable situations that improve their quality of life, the air they breathe, the water that they drink, that their homes aren’t being flooded out every year,” said King.
This article was updated with corrections to Virginia Manufacturer’s Association Brett Vassey’s comments on where replacement funding could come from.
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