One of Gov. Glenn Youngkin’s priorities at the beginning of his governorship is ending Virginia’s participation in a carbon credit program, but the pathway to eave is still unclear and could hit a roadblock if legislative action is needed.
The Regional Greenhouse Gas Initiative, also known as RGGI, seeks to gradually reduce the commonwealth’s carbon impact over several years by capping the amount of emissions allowed in the state. It also limits the amount of emissions allowed by individual entities and forces them to buy a limited number of carbon credits if they need to emit more; the number of available credits decreases gradually over several years. If an entity surpasses its allotted carbon emissions, it will face hefty fines.
Most of the carbon credits are bought by the state’s power utilities and in the first year of the program, about $228 million worth of carbon credits were purchased. Some of these costs are passed down to ratepayers. According to the State Corporations Commission, RGGI will cost about $5.9 billion between 2019 and 2043 and eventually lead to rate increases between $84 and $144 annually.
During the campaign, Youngkin pledged to end Virginia’s participation in the compact, which has 11 states currently participating. He expressed his intent to leave the compact through an executive order, but then-Attorney General Mark Herring, some Democratic lawmakers and environmental groups argued that he did not have that executive authority. After being sworn in as governor, he signed an executive order that directs the Director of the Department of Environmental Quality to re-evaluate the costs and benefits of the program, but did not sign anything to end the state’s participation.
“Reliable and affordable access to electricity is imperative to the health and safety of all Virginians,” the executive order read. “Our hospitals, schools, businesses, and homes all rely on this essential service. And the unpredictable and rising cost of electricity poses a significant and immediate threat to our Commonwealth and its citizens. In 2019, alone, over 100,000 Virginian households required Energy Assistance with a cost of $46 million to the Commonwealth.”
The executive order directs the department to notify RGGI of the governor’s intent to withdraw from the compact, either by legislative approval or through regulatory action. Youngkin spokesperson Macaulay Porter said the executive order lived up to the governor’s campaign promise.
“The Governor-elect promised he would remove RGGI because of the unfair burden it places on Virginia taxpayers,” Porter told The Center Square. “On Day One, he issued an executive order to do just that.”
If Youngkin takes the legislative path, he might not have the votes in the Democratic-controlled Senate.
Jacqueline Woodbridge, the communications director for the Senate Democrats, told The Center Square she does not believe Youngkin has the authority to end the state’s participation without legislative approval. If such legislation makes its way into the Senate, she said Democrats would not support it.
The Southern Environmental Law Center issued a statement, which argued the governor would need a new law to remove the state from the compact. SELC Senior Attorney Nate Benforado said any attempt to leave the compact without the legislature would be illegal.
“This strongly supported and successful program cannot be undone by a simple pen stroke,” Benforado said. “The General Assembly gets to decide the laws in Virginia, and the Executive Order—which asks state officials to develop an illegal repeal—is a dead end. But for a new Governor who has pledged to help Virginia communities struggling with climate change, this is a shocking and troubling first action out of step with what Virginia communities need.”
Stephen Haner, a senior fellow for state and local tax policy at the free-market Thomas Jefferson Institute, disagreed with that assessment. He told The Center Square it’s a regulatory issue. According to Haner, the General Assembly authorized the state’s participation in the program, but nothing in the law says Virginia is obligated to participate.
“The requirement that power companies must pay a carbon tax was actually imposed by a state regulation, so the proper path to repealing it is to repeal the regulation,” Haner said. “With that, the state can drop out of the compact quickly, perhaps in a matter of months. Unfortunately, the tax will probably remain on electric bills until the utilities have fully recouped what they had to pay to buy carbon allowances.”
Dominion Energy, the commonwealth’s largest power utility, is seeking state approval to halt its next scheduled rate increase amid the uncertainty of Virginia’s participation in RGGI. If Virginia leaves RGGI, the energy company would not need to impose the increase.
This article was originally posted on Youngkin could hit roadblock on RGGI exit if legislative approval needed