As the public comment period winds down on a draft rule to limit carbon emissions from Virginia power plants, Gov. Ralph Northam intends to veto a bill passed by General Assembly Republicans that would thwart his attempt to link to a network of carbon-trading states.
A spokesman for Northam, a Democrat, said the governor will veto House Bill 1270 by Del. Charles Poindexter, R-Franklin, which would prohibit the governor or a state agency from establishing a carbon dioxide cap-and-trade program or adopting a regulation that “brings about the participation by the commonwealth in a regional market for the trading of carbon dioxide allowances.”
Poindexter’s bill, which passed the GOP-controlled House and Senate on party-line votes, was aimed at the Regional Greenhouse Gas Initiative, a cooperative effort among nine Mid-Atlantic and Northeastern states to cut power plant carbon emissions. Northam must act on the bill by April 9.
Republicans, who also defeated a bill that would have made Virginia a full-fledged RGGI member, saw the rule as an overreach by the executive branch and feared it could lead to spiking electric bills.
It’s not been a secret that the draft rule, which has its roots in a working group convened by former Gov. Terry McAuliffe, another Democrat, has been an exercise in finding a path to regulate carbon without the assent of the Republican-controlled legislature.
Under the proposal, which hasn’t been opposed by the state’s largest and politically powerful utility, Dominion Energy, power plants will be assigned carbon allowances based on their output. Those generators will then consign those allowances to the Regional Greenhouse Gas Initiative auction, where they also will buy any additional allowances they need to meet their obligations. The utilities keep any proceeds, with the expectation that they pass those on to ratepayers.
The “consignment auction” framework avoids the state collecting the revenue from the allowance sales, which would trigger General Assembly approval.
“I’m very concerned about the allowances that occur in these cap-and-trade and RGGI-type schemes,” Poindexter told a legislative committee last month. “That money goes somewhere, and someone, not us, decides on where it is spent and how it is spent.”
Sen. Frank Wagner, the Virginia Beach Republican who successfully spearheaded a massive overhaul of utility regulation during the last session that will make it tougher for regulators at the State Corporation Commission to lower utility base rates and issue customer refunds, fretted about electric rates in RGGI states on the Senate floor.
“It’s very clear that it’s been used, RGGI’s been used, as a money-making capacity for the states, it’s a new source of income if you will,” said Wagner, who argued Virginia could reduce emissions on its own. “It has little to do, I believe, with actually reducing greenhouse gas emissions.”
Environmental groups and state officials have called the specter of electric-rate increases unfounded.
“There have been a lot of analyses done about whether any increases in price in the Northeastern states are attributable to RGGI,” said Angela Navarro, a deputy secretary of natural resources in Northam’s administration. “RGGI really isn’t the driver. ... Our own analysis shows that impacts are pretty close to status quo.”
While carbon dioxide emissions from Virginia’s electric-generating units fell by 21 percent between 2005 and 2014, they still account for about 30 percent of the state’s overall CO2 emissions, according to a report issued last year by the working group convened by McAuliffe. Virginia would become the first Southern state to cap carbon dioxide, which scientists concur is a main driver of global climate change.
The last public hearing on the rule concluded Monday, and the Virginia Department of Environmental Quality hopes to present the final version to the State Air Pollution Control Board for adoption later this year. The draft rule would apply to fossil-fuel plants that generate more than 25 megawatts and includes two potential starting levels for the state’s carbon cap: 33 million or 34 million tons, beginning in 2020. That cap then decreases by 3 percent each year.
Virginia’s power plants put out nearly 34 million tons of carbon dioxide in 2016, up from 31 million in 2011, according to the DEQ.
In a rally Monday at Capitol Square, environmental groups pushed Northam’s administration to eliminate exemptions in the current version for power plants that use biomass — mainly plants that burn wastewood. They also called for a lower emissions cap, a longer term for the program and more environmental justice components, which aim to address disproportionate impacts of pollution on low-income and minority communities.
“Obviously we’re going to hear a lot from stakeholders,” said Navarro, who spoke at the Monday rally. “To work the way it should, we look at all the comments that come in and then they may recommend changes to the rule before it’s finalized.”
Public comment on the proposed rule ends April 9.