Va. won’t cap CO2 with 9 other states — for now

By Benjamin Storrow | 05/03/2019 08:00 AM EDT

Gov. Ralph Northam (D) signed a budget yesterday barring Virginia from participating in the Regional Greenhouse Gas Initiative, a cap-and-trade program encompassing power plants in nine Northeastern states.

Virginia Gov. Ralph Northam (D) won’t veto language that prevents the state from participating in the Regional Greenhouse Gas Initiative.

Virginia Gov. Ralph Northam (D) won’t veto language that prevents the state from participating in the Regional Greenhouse Gas Initiative. Northam/Facebook

Gov. Ralph Northam signed a budget yesterday barring Virginia from participating in the Regional Greenhouse Gas Initiative, a cap-and-trade program encompassing power plants in nine Northeastern states.

The move amounted to a stunning reversal for Northam, a Democrat who has made RGGI membership the signature environmental issue of his tenure. The governor campaigned on the issue, featured it in his inaugural speech to the General Assembly and vetoed two bills that would have prohibited the state from joining the program.

State regulators, in a vote last month, approved a regulation that would have paved the way for Virginia to link with the program (Climatewire, April 22).


Now, Virginia’s participation in RGGI will have to wait at least a year, if not longer.

Republican lawmakers inserted language into the budget prohibiting the state from making expenditures related to the program. In the weeks leading up to his decision, political insiders around Richmond, Va., debated whether Northam could use his line item veto to strike the RGGI language without rejecting the entire budget. Environmentalists pushed the governor to neutralize the language, but the governor ultimately declined.

In a statement, Northam lamented the "disappointing and out-of-touch provisions that will harm Virginians with respect to fighting climate change."

He called RGGI "a critical avenue for reducing carbon emissions in the Commonwealth and addressing the negative effects of climate change, which is impacting the health and safety of people who live, work, and vacation in our great state."

Ofirah Yheskel, a spokeswoman for the governor, said the language in this year’s budget does not restrict the governor when he proposes a new budget to the Legislature in 2020. And she said work on other efforts to address climate change would continue, including the development of a rule to reduce methane emissions, a regional cap-and-trade program for the transportation sector and efforts to address sea-level rise.

"At this time, we do not see the need for costly, drawn-out litigation," Yheskel said in an email. "The speedier remedy for these out-of-touch provisions is the election of Democratic majorities in November."

Virginia will hold elections in the fall. Democrats were emboldened after nearly taking the General Assembly from Republicans in 2017, but their prospects have been clouded after Northam and Lt. Gov. Justin Fairfax (D) became embroiled in personal scandals. Northam has faced calls to resign for a racist photo in his medical school yearbook, while Fairfax is battling allegations of sexual assault.

At least one prominent Virginia Democrat seemed to hope Northam would veto the RGGI language in the budget. Former Gov. Terry McAuliffe (D) initially proposed the idea of joining RGGI.

"On 5/16/17, I signed Executive Directive 11, paving the way for VA to be 1st southern state to join the Regional Greenhouse Gas Initiative," McAuliffe wrote in a tweet posted hours prior to Northam’s announcement. "The GOP has snuck language into VA budget to reverse that historic action. This attack on the environment must be stopped."

The decision threatened to expand a gulf between Northam and environmentalists. Many greens criticized Northam’s decision to remove two members of the state Air Pollution Control Board after it delayed a vote last year on Dominion Energy Inc.’s permit for a compressor station along a proposed natural gas pipeline. And many called on him to resign over the racist photo in his medical school yearbook.

Walton Shepherd, policy director at the Natural Resources Defense Council, labeled the move "a disastrous retreat. In choosing not to veto the measure, Gov. Northam is showing his subservience to big polluters and climate deniers."

Others worried the governor opened the door for lawmakers to use the budget as a vehicle to block a range of gubernatorial priorities.

"If the General Assembly wants to impose or prevent a regulatory action, the way to do that is through legislation and not the budget," said Will Cleveland, an attorney at the Southern Environmental Law Center. "The governor had an opportunity to keep this from happening. Who knows how it would have played out, but the General Assembly will ultimately bear the blame. This should never have been in there in the first place."

Republican lawmakers, for their part, hailed the decision, saying it represented an acknowledgement of the constitutional limits of Northam’s office.

State regulators designed the program to avoid legislative involvement.

Power companies operating in RGGI participate in regular auctions where they buy and sell carbon credits. Those auction generate revenue that RGGI states require be spent on programs like energy efficiency. But the Republicans who control the General Assembly were never likely to approve any expenditures resulting from the program. So Virginia regulators designed a system to allocate carbon allowances to utilities and direct the use of any revenues toward emission reduction programs.

"I hope the governor’s deference today will make future governors think twice before attempting to trespass on legislative prerogatives," House Speaker Kirk Cox (R) told the Virginia Mercury, a news website.

For RGGI, Northam’s decision represents a setback that could dampen enthusiasm to grow the program. Pennsylvania regulators recently recommended that Gov. Tom Wolf (D) follow Virginia’s lead and implement a RGGI-like program (Climatewire, April 30). Pennsylvania, like Virginia, has a Democratic governor and Republican Legislature.

A RGGI spokeswoman did not immediately respond to a request for comment.

New Jersey, an original member that left under former Gov. Chris Christie (R), is in the process of rejoining the cap-and-trade system. That looks likely to continue, given that the program has the backing of the Democratic governor, Phil Murphy, and Democratic majorities in the state Legislature.

But Virginia represented a far greater prize. It would have been the first state to join the program since its inception in 2009 and the first Southern state to adopt cap and trade. It also represented a large pool of emissions. The 33.6 million tons of carbon emissions reported by Virginia power plants in 2016 was more than any other RGGI state, including New York.

And where emissions from power plants in RGGI states decreased in recent years, Virginia’s power plants have pumped out more CO2. The 33.6 million tons of carbon posted in 2016 marked a 33% increase over 2012 and the fourth consecutive year of rising emissions, according to the most recent U.S. Energy Information Administration data. A series of old coal and natural gas plants have since been retired.

In joining RGGI, Virginia would have agreed to cap emissions at 28 million tons in 2020 and reduce carbon levels by 30% over the next decade.

Dominion Energy, the state’s largest utility and a powerful political force in Richmond, adopted a quiet public posture on the proposal but opposed it in regulatory filings with the state.

The Richmond-based utility did not respond to a request for comment.