The Virginia Legislature’s Joint Commission on Administrative Rules on Monday heard testimony from Republican Gov. Glenn Youngkin’s administration elaborating on how and why it plans to withdraw the state from the Regional Greenhouse Gas Initiative, or RGGI.
Youngkin will add $200 million to a state revolving fund to partly compensate for more than twice that amount lost in carbon allowances sold at auction as Virginia withdraws from RGGI, an administration official told lawmakers as he defended the decision criticized by Democrats and environmentalist advocates.
Travis Voyles, acting deputy secretary of natural and historic resources, said that the administration has the authority to quit RGGI because the law authorizes, rather than requires, the auction.
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 RGGI,” he said.
“‘Authorized’ is not a mandate,” he said.
Voyles was responding to Sen. Creigh Deeds, the Democratic chairman of the commission who questioned if the Virginia Air Pollution Control Board has the authority to vote on exiting RGGI.
Deeds said the legislation also states the Air Pollution Control Board’s director “shall” seek to sell 100% of all carbon allowances issued each year.
“The air board only has the authority granted to it by the General Assembly,” Deeds said. He told Voyles, who had earlier said that the General Assembly directed the DEQ to “jam through” a RGGI membership, “You yourself called that ‘jamming something through.’”
Opponents of the withdrawal argue that the state’s participation in RGGI was enshrined in law and the executive branch lacks the authority to leave the program.
Southern Environmental Law Center Senior Attorney Nate Benforado, who spoke to the commission in opposition to the withdrawal, said in recent comments to Utility Dive that he anticipates a legislative effort to withdraw once the legislature convenes in January. The legislature is split, with a Republican majority in the House of Delegates and Democrats running the Senate.
A 2021 legislative effort to exit RGGI failed.
Voyles told lawmakers that the governor’s recently announced plan to invest an additional $200 million in a state revolving fund would compensate for income the state has received from selling carbon allowances at auction – approximately $452 million so far.
Voyles said depositing additional tax dollars into the Resilient Virginia Revolving Fund would provide a “transparent” and “sustainable” funding source that is the “first immediate step” to recouping the money that would be lost in a RGGI withdrawal.
“RGGI is actually not a sustainable funding source,” he said. “It’s not a transparent funding source because of the fluctuation that we've seen in the prices over the year, but it's also not a sustainable funding source. The RGGI program is intended to have an end,” he said, referring to the cap-and-trade program’s goal of lowering carbon emissions until they reach net zero.
The governor has been advancing an exit of RGGI through the Virginia Air Pollution Control Board, which earlier this month voted 4-1 to advance the proposal to public comment and will take a final vote once that comment period closes. The Youngkin administration is aiming for a December 2023 withdrawal.
Delegate Roxann Robinson, a Republican, said Virginia reduced carbon emissions from 47 million tons to 30 million tons before joining RGGI. She asked Voyles if RGGI had advanced the lowering of carbon emissions in the state, or if participation in RGGI hinged more on a question of funding.
“The way that it is implemented here means Virginia does not have a direct incentive to further reduce greenhouse gas emissions,” Voyles said. “It is described as a cap-and-trade program, but in Virginia, there is no cap, and there is no incentive on the utilities to actually make the changes that are occurring, potentially, in other states.”
Voyles cited testimony from Dominion Energy, the largest utility in the state, that RGGI is not a “driver” for the company’s energy decisions.
However, when Benforado addressed the commission, he said there is evidence that RGGI states are “markedly better in terms of economic growth and emissions reductions than the rest of the country.”
Benforado cited a DEQ report from March that said emissions had remained “fairly constant” in the state between 2010 and 2020, but “early data” indicate that emissions dropped 12.8% in 2021 after the state joined RGGI.
“If you look at the first half of 2022 versus the first half of 2021, we're seeing an 11% drop,” he said. “So the early returns are looking great. RGGI appears to be working in Virginia to drive down emissions.”