Virginia Gov. Glenn Youngkin, a Republican, is drawing a sharp contrast between his energy initiatives and those of California Gov. Gavin Newsom, a Democrat, saying he remains committed to withdrawing Virginia from a multistate climate pact and pulling away from California’s vehicle emission goals.
Youngkin’s executive order calling on Virginia to “reevaluate” its participation in the Regional Greenhouse Gas Initiative details the increased costs faced by Virginia ratepayers under it.
The Republican governor’s order notes that Dominion Energy, Virginia’s largest public utility, estimates the climate initiative could cost ratepayers between $1 billion and $1.2 billion over the next few years.
“Democratic legislatures here in Virginia really have just ceded away our authority in the energy sphere to California and to northeastern states,” Travis Voyles, Virginia’s acting secretary of Natural and Historic Resources, told The Daily Signal in a phone interview.
“The current legislation would basically just cut, copy, and paste the California model, and that’s not a model we want to implement here in Virginia,” Voyles said. “There needs to be a reality check.”
The Virginia General Assembly in 2021 passed a law adopting California’s vehicle emission standards. Last August, as part of those standards, California’s Air Resources Board voted to phase out gas-powered automobiles beginning in 2035.
Last year, Republicans in the Virginia Legislature attempted to pass legislation to reverse a portion of the Virginia Clean Economy Act incorporating California’s emission standards.
However, the effort stalled in the Virginia Senate, where Democrats have a majority. Republicans, who gained control of the House of Delegates in the 2021 election, are expected to make another push for the policy change in the 2023 legislative session, which convened Jan. 11.
How Virginia Got Into Climate Pact
Youngkin, a former executive at the Carlyle Group equity firm, was elected Virginia governor in November 2021. During his campaign, he described the state’s submitting to the climate regulations as a “bad deal” for Virginia residents and business owners.
After taking office in January 2022, Youngkin signed an executive order initiating a regulatory process to withdraw Virginia from the Regional Greenhouse Gas Initiative, widely known as RGGI, which sets limits on carbon dioxide emissions from power companies in the Northeast and mid-Atlantic regions.
Youngkin’s Democrat predecessor as governor, Ralph Northam, had Virginia enter the climate initiative in 2020 with approval from the state Senate and House of Delegates, both controlled by Democrats at the time.
Under Northam, Virginia became a full participant in the climate initiative’s cap-and-trade regulations beginning in January 2021.
Eleven other states participate in the initiative, in which government regulators impose an upper limit or “cap” on the amount of carbon dioxide emissions that power plants may emit. The initiative also creates “allowances” within interstate auctions that may be traded back and forth among companies subjected to the emission caps, so that some plants may emit more.
The other states that are part of RGGI are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont.
Pennsylvania is a special case, since it has not participated in any interstate auctions. That’s because former Gov. Tom Wolf, a Democrat, took executive actions last year to have Pennsylvania join RGGI, which led to litigation that has delayed the state’s full participation.
Industry and labor groups have filed suit challenging the Pennsylvania executive’s ability to act unilaterally on climate change policy, as have state senators who have raised similar objections involving the separation of powers.
The Commonwealth Foundation, a free-market think tank based in Harrisburg, released an analysis that shows the carbon taxes attached to the climate initiative could result in a 114% hike in electricity bills for Pennsylvania residents.
‘A Regressive, Direct Tax’
The potential fallout to consumers from higher energy costs is a motivating factor for Virginia’s governor as well.
“Our overall view is that RGGI is a very regressive and direct tax on Virginia consumers,” said Voyles, Youngkin’s point man on the issue. “Our contract with RGGI Inc., the entity that runs RGGI, runs out in December 2023. We will not be renewing the contract. The Commonwealth of Virginia pays RGGI Inc. over a half a million dollars each year to set up the functionality of this tax.”
Once the contract is terminated, the Youngkin administration will officially remove the initiative from the books, Voyles explained.
Virginia’s Air Pollution Control Board, a division of the Department of Environmental Quality, voted 4-1 on Dec. 7 to support regulatory changes that would enable Virginia to leave the program.
The air pollution board includes four appointess of Republican Youngkin and three appointees of Democrat Northam. Two members abstained, arguing that the board couldn’t act in the absence of legislation.
Disputes over the future direction of regulatory policy have been front and center during the legislative session of the Virginia General Assembly that began Jan. 11 and runs through March.
The state Senate voted Tuesday along party lines to reject a bill from state Sen. Richard Stuart, a Westmoreland Republican, that would sever Virginia’s ties to the multistate climate agreement.
Democrats and environmental activists who support RGGI continue to argue that only the General Assembly has the authority to withdraw Virginia from the initiative.
The Virginia chapter of the Sierra Club, for instance, is one of several environmental advocacy groups that released public statements touting the benefits of the climate initiative while challenging Youngkin’s moves.
No Meaningful Effect on Temperatures
But Voyles told The Daily Signal that current law provides Virginia’s governor with sufficient latitude to act.
“If you look back at the Clean Energy and Community Flood Preparedness Act, it authorized the administration to establish, implement and manage the auction program that we’re looking at for RGGI,” Voyles told The Daily Signal, adding:
We view that language as an authorization, but not a mandate. After the legislation was passed, there was a regulatory process, and we are using that same regulatory process to remove us from the program. In fact, we are using a much more transparent process than the previous administration did. They rushed the whole process through and skipped a lot of steps.
What about climate change? The Sierra Club and other proponents of RGGI claim that the multistate initiative bolsters the most vulnerable communities on the “front lines” of a rising sea level iff the coast of Virginia driven by shifts in global temperatures.
But reducing greenhouse gas emissions in Virginia, or in all 12 RGGI states combined, will not result in a meaningful change in global temperatures, Katie Tubb, an energy policy analyst with The Heritage Foundation, told The Daily Signal in an email. (The Daily Signal is Heritage’s multimedia news organization.)
Tubb cited climate modeling by The Heritage Foundation to drive this point home.
“Emissions growth is happening in developing countries where hundreds of millions of people have nowhere near the access to reliable energy that Americans enjoy and the high standards of living, health, and economic opportunity it enables,” Tubb said in the email, adding:
Until you solve their energy problem, you don’t move the needle on greenhouse gas emissions, if that’s what you’re concerned about—and in that sense, RGGI is self-defeating. These energy-poor countries can’t afford to replicate a cap and trade program (with dubious environmental benefits) that functions as a regressive tax on energy. When you increase the price of energy, you increase costs throughout the economy with particular negative impacts on the poorest among us.
For Virginians, 91% of their electricity comes from natural gas (87%) and coal and oil (4%), according to the EIA. That means the vast majority of Virginians’ electricity would be hit with extra RGGI costs. So, to get rid of a costly, ineffective policy is good leadership.
Targeting Burdensome Rules
Youngkin’s decision to have Virginia exit the climate agreement by the end of 2023 fits into a larger reform effort, Voyles said, pointing to the state’s new Office of Regulatory Management as a critical component.
“A big focus there is looking at regulatory burdens that are on Virginia and to look at ways we can achieve regulatory reductions across the board, but especially in the energy sector,” Voyles said.
In October, Youngkin rolled out a new energy plan that he said “harnesses nuclear, natural gas, renewables, and new energy sources to satisfy the increasing energy needs of the commonwealth.” At the same time, the governor said he is pursuing increased use of nuclear energy with the goal of making Virginia “the world’s leading nuclear innovation hub.”
One big problem with Virginia’s joining the multistate RGGI pact, Voyles said, is that Dominion Energy has a “utility monopoly” in the state. This has resulted in a kind of “forced transition” that doesn’t account for certain effects on Virginia residents, he said:
The way RGGI has been implemented in Virginia, there’s really no incentive on the utilities to look at that energy transition, take it seriously, and take into account the costs, because they can just pass those costs along to consumers in Virginia. The previous administration left us with no mechanism in place to address these changes. For example, solar and wind are heavy discussion topics here in Virginia, but we need to be smart about it in terms of its environmental impact and to have the right balance with agriculture and forestry.
Voyles didn’t rule out offshore wind projects that could support economic development in the state’s Hampton Roads area, but expressed concern about the cost.
“We need to be sure about how this is going to affect the bottom line, so that it does not increase energy bills,” he said.
Proponents of the climate initiative have signaled they would pursue litigation to keep Virginia in the multistate agreement. But Voyles said he views the air pollution board’s Dec. 7 vote as a “great step forward” along the path to regulatory relief, adding:
The fact that RGGI operates as a direct tax on consumers is reason enough by itself to have serious doubts about our future participation in RGGI, and it is clear the [Youngkin] administration has the authority to take this commonsense action to provide relief to all Virginians. A regressive and direct household energy tax tied to participation in RGGI is not necessary to fund important programs on resiliency and energy efficiency.
The administration will continue to work with the General Assembly and stakeholders to provide direct funding and coordination for flood resiliency in a way that is transparent and not a hidden tax on Virginians. This will ensure Virginia will have a long-term comprehensive funding strategy to sustain flood resilience efforts.
‘Begging the Question’
Gordon Tomb, a senior fellow with the Commonwealth Foundation, said he expects Youngkin’s deregulatory efforts to produce reverberations in Pennsylvania if the Virginia governor is successful.
Tomb points out that the Keystone State is home to large swaths of the Marcellus Shale, a geological formation of shale rock that harbors substantial oil and gas deposits. “Obstructionists” who support energy-hindering regulatory measures such as RGGI prevent Pennsylvania from realizing its full potential as a vital national and international resource for oil and gas resource, he told The Daily Signal.
“Pennsylvania is in the heart of the Appalachian Basin containing the second-largest natural gas deposit in the world,” Tomb said in an email. “This amazing resource—nearly 1,000 trillion cubic feet—is being underutilized because of resistance to its development, including the construction of pipelines to move gas to domestic and foreign markets.”
Since greenhouse gas emissions already have fallen in Pennsylvania in response to competition in electricity markets that enabled providers to invest in natural gas infrastructure, Heritage’s Tubb said, it’s not clear why the state shold be part of the multistate initiative.
“This begs the question of what the real purpose of RGGI is, other than raising revenue for the state,” she said.
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