A Regulatory Path to End the RGGI Carbon Tax

The states currently in the Regional Greenhouse Gas Initiative compact.

by Steve Haner

First published today by the Thomas Jefferson Institute for Public Policy.

Governor Glenn Youngkin (R) will proceed to remove Virginia from the Regional Greenhouse Gas Initiative carbon tax compact by the same route Virginia entered it: he will push to repeal the underlying regulation.

As with much else in his promised “Day One” agenda, it will actually take time. What he gave Virginia on Day One was an executive order outlining the coming steps, which still must follow the letter of Virginia’s administrative process rules. Regulations are created, amended and repealed routinely.

His administration will also notify the RGGI organization of Virginia’s intent to withdraw, a step contemplated and allowed under the governing memorandum of understanding.

It was a vote of the Air Pollution Control Board, citing authority over airborne carbon dioxide emissions, that implemented the cap and trade rules that require electric power producers to buy carbon allowances. That allowance cost is then passed on to power customers, in the case of Dominion Energy Virginia customers, directly on every month’s bill.

The Virginia General Assembly authorized (that’s the key word) Virginia’s participation in the regional compact that auctions the allowances, but no law says Virginia must belong. What everybody keeps tiptoeing around is whether the repeal vote must be taken by the same Air Pollution Control Board. Maybe not.

On paper, the members appointed or reappointed under previous Democratic Governor Ralph Northam have fixed terms to complete, and Youngkin can replace only two of the seven members come July 1. Need he wait years for a majority? Four years ago Northam fired two air board members out of the blue, right on the eve of a key regulatory vote involving the Atlantic Coast Pipeline.

A recent air board permit vote against the Mountain Valley Pipeline, unrelated to RGGI but totally related to the overall War on Fossil Fuels, will also have some Youngkin supporters clamoring for rapid change on that body.

Participation in RGGI, an interstate compact that reaches from Virginia up to New England, was first proposed through regulatory action starting under Governor Terry McAuliffe (D). Under full Democratic control, the 2020 General Assembly passed legislation which stated the Department of Environmental Quality was “authorized” to implement the program and start charging power companies for the allowances.

RGGI defenders will be scouring the code and precedents seeking to argue the bills passed actually require participation. If so, a fresh Assembly vote would be needed to reverse course, and the Virginia Senate remains under Democratic control. Be resigned to the fact some judge will probably get the question, eventually.

Since Youngkin’s initial pronouncement, supporters of the tax scheme have attacked the straw man of “repeal by executive order,” something he never actually said he would do. The lame duck Attorney General even issued an opinion that stated the legally obvious, and completely ignored the other possible path of regulatory repeal. He offered a half-answer to satisfy half-wits.

As the struggle unfolds, Virginia’s electricity producers will continue to participate in the auctions to buy carbon allowances (the next one is in March).  The tax added onto Dominion bills will remain, although the company recently told the State Corporation Commission to put on hold its request for an increase in the tax rate. If RGGI remains in force, that rate hike request will be reinstated. (It wasn’t set to happen until September anyway.)

This is mainly about Dominion and its Virginia customers. Repeal of RGGI, however, would lower costs for a handful of other generation firms or manufacturers, some of them locked into contracts that have prevented them from passing the cost on in prices.

Virginia is sitting on the largest mountain of free cash flow in its history. Every tax source is bursting at the seams in the forecasts. Even the outgoing Northam Administration proposed billions in tax cuts. But the $228 million that the state extracted from its citizens under RGGI last year, expected to be $300 million this year, is suddenly crucial to the survival of Planet Earth and the Human Race.

While the administration is working to end the tax, the General Assembly should find funding for the flood mitigation projects being paid for with the dollars. Hurricanes and storm surges are real threats, even if the sea never rises another inch, and Virginia is not ready. Massive federal infrastructure funding is pending and may be sufficient for this and other purposes.

But RGGI taxes are not the only potential source of funding, nor will any of those mitigations in themselves do anything to change relative sea levels or change rainfall patterns. The constant claims that RGGI is a tool in the fight against climate change are nonsense.

Other laws passed by the Democrats when they held control do far more to force Virginia away from using fossil fuels, but without the addition of a tax consumers can see. Frankly, they will cost consumers far more over time then the RGGI taxes will. Amending or repealing them is far more important to Virginia’s economic future than dealing with RGGI.

Those laws will also be under attack in the 2022 General Assembly, but in their case, it will take legislative action to change direction, and the shrinking group of ostensibly sensible Democrats will need to decide if Virginia really can prosper in an all-electric economy tied to unreliable wind and solar sources.

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22 responses to “A Regulatory Path to End the RGGI Carbon Tax”

  1. LarrytheG Avatar

    Looks like there are some laws involved that EOs cannot change?

    We all knew that “DAY 1” was more a theme than a guaranteed promise, and all it means is that it will take “longer” and may require the GOP to take control of the Senate also – something that could be interesting given the redistricting.

    Also, it is reported that Youngkin has asked Aubrey Lane and other Northam financial advisors to stay on. HOLY MOLY!!

    Methinks that some on the “right” might be to Youngkin right, and he is at risk for being labeled a CINO! Remember, you heard it here, first!

    1. Stephen Haner Avatar
      Stephen Haner

      The Democrats in the Senate are digging in on the same trench line their counterparts lost in 2021. Dumb. I predict some of them will figure out that the voters are ignored at their peril. The process of repealing a reg involves public comment, etc. so every chance to continue to remind voters it is a) a tax, 2) which will grow like Topsy and 3) doesn’t actually do anything about “saving the planet.”

  2. Old Matt Avatar

    STFU you ghoul. If you allow all the poor and working class to be killed off by climate change who will serve you at your bad food restaurants? I guess you will still be able to complain about wage inflation and no one wanting to work anymore because all the workers are dead, so its a wash.

    Also the SAPCB is all Democrat appointees, so wish in one hand and poop in the other…..

    1. Stephen Haner Avatar
      Stephen Haner

      Could you possibly be that stupid? Whatever…There it is folks, the best argument the other side has to offer….I guess he missed the part about firing the Air Board (the Guv has already fired the Parole Board.)

      1. Old Matt Avatar

        Killing the poor in service of pollution and a little bit more shareholder value is the goal, I don’t hear you denying it.

      2. Nancy Naive Avatar
        Nancy Naive

        Uh Steve… he’s being sarcastic. Hostile, not snarky, but sarcastic. That’s a real troll.

        Now, let me help you remove that grappling hook from your lip. First, cut the barb off…

  3. Eric the half a troll Avatar
    Eric the half a troll

    You like to contend that RGGI-related rate increases do nothing to curb greenhouse gases but that is not necessarily true. Increases in per kWh rates paid by the end user will be weighed by that same end user against dropping renewable generating alternatives and will provide added incentive for homeowners to invest (or contract with companies who will invest) in distributed generation (PV and wind on residential and commercial properties). It is already happening and this would only accelerate that transition.

    1. Nancy Naive Avatar
      Nancy Naive

      When you reach a certain age, global destruction becomes an SEP. Too busy contemplating a comfortable, more personal, demise.

    2. Stephen Haner Avatar
      Stephen Haner

      Well, here at least is someone honest enough to admit that the purpose is to raise the price (as opposed to denying that customers pay it.) I’ll give you another one, as RGGI with its declining pool of allowances creates a major barrier to developing any new fossil fuel generation, no matter how efficient. Dominion, bless their twisted little hearts, loves that aspect, knowing it can bid up the allowance price and just pass the costs along, crushing potential competitors.

      Hell, if the United States stopped emitting power plant and vehicle CO2 today, totally ended it, the temperature needle wouldn’t move one way or the other. Likewise the existing sea level patterns. No more, no fewer storms. China, Russia, India, Indonesia, other growing economies continue to double down on fossil fuels and you people want to commit meaningless economic suicide.

      1. Nancy Naive Avatar
        Nancy Naive

        I like the way you just tacitly admitted that the needle can be moved while all the while claiming that it isn’t moving, or if it is moving, then it’s natural.

        1. DJRippert Avatar

          Until the politicians in Virginia exercise control over India, China, Indonesia, etc Steve’s comment is valid. WE cannot move the needle. However, WE can screw ourselves economically while the needle doesn’t move, which appears to be the plan from the left.

          1. LarrytheG Avatar

            are you looking at per capita use? Those countries use 1/4 what we use per capita.

            Would you have them use even less?

          2. Stephen Haner Avatar
            Stephen Haner

            A billion Chinese, a billion Indians, and you wanna focus on per capita? Don’t do MY taxes with that mind for math….

          3. Nancy Naive Avatar
            Nancy Naive

            We #2 in total carbon emissions. China is number one at twice what we emit. India and Indonesia aren’t in the same order of magnitude.

      2. LarrytheG Avatar

        on the issue of cost – no question, higher costs will lead to more conservation and could even pay for itself and more. Items that are high costs up-front become more appealing and if there is a subsidy, even more so.

        Even if you don’t believe in carbon reduction, the dynamics still work the same.

        We’re seeing this right now with the increased costs of natural gas. It’s driving changes to conserve and use less …. and heckfire..used to be Conservative was a word related to conservation…

        1. DJRippert Avatar

          I could live with your theory if the TAXES collected through RGGI were offset through lower taxes elsewhere on a one-for-one basis. However, that’s not the plan. The plan is just to TAX more.

          1. LarrytheG Avatar

            how about if those taxes subsidize purchase of more energy efficient things?

      3. Eric the half a troll Avatar
        Eric the half a troll

        “Well, here at least is someone honest enough to admit that the purpose is to raise the price…”

        Don’t put words in my mouth, I said nothing about “purpose”. I was outlining impacts.

  4. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    Thanks for clarifying the posture of RGGI. Without getting into the merits of RGGI (I don’t feel I have enough knowledge to argue it either way), I have two comments:

    1. Your reference to Northam “firing” two APCB members is a little misleading. According to the article you linked to, the terms of those members had expired months earlier. The Governor just had not gotten around to reappointing them or appointing someone new. The analogy to Youngkin “firing” the Parole Board is not apt here, either. By law, the Parole Board members serve at the pleasure of the Governor. I know that McAuliffe replaced at least one Parole Board member mid-term and I think Northam may have, as well.
    2. You are correct that the statute giving the APCB the legal power to enter into the RGGI compact uses the word “authorized”. Literally, this is a grant of power, but not a mandate to take action. Generally speaking, however, government agencies interpret their being “authorized” to do something is an expression of the General Assembly’s will that it be done. Further muddying the water is the next sentence of that Code section that says, “The Director shall seek…” One could argue that the following words are implied, “If the Board enters into such compact….” But those words are not in the statute.

    In summary, the Governor will not have a majority on the APCB for a year or so. After that, upon the first official step of the Board to repeal the regulation, the Southern Environmental Law Center will file suit in court. Youngkin needs to persuade one Democrat in the Senate to support the repeal of the statute.

    1. Stephen Haner Avatar
      Stephen Haner

      Watching the Democrats maneuver to protect this growing and unpopular tax as the public grows more and more angry will be very entertaining. I will be fueling the fire! And you will note in this column and my earlier one I indicated this would not be a straight line easy-peasy operation. (And don’t forget the “notwithstanding” clause in the budget bill….)

      Just read through the Air section under DEQ again. Just the Code, not in the know about any relevant court cases. Looks like an “at pleasure” board to me. Members don’t even need legislative confirmation as I read it.

  5. Moderate Avatar

    In today’s misinformation and reinterpret happenings and research to suit yourself time, it’s hard for most people to know what is truth. This has never been easy for most people to understand and now that it’s political, it’s worse.

    I keep seeing ways that solar and wind can handle this. The key battle is whether Dominion controls everything and owns and earns from everything or others own some of it.

  6. […] previously reported, Youngkin has laid out a path to repeal RGGI through the regulatory process.  That will take time under the best of circumstances, and during that time the tax on […]

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