Is the Goal Cutting CO2 or Imposing a Tax?

While it would have been a popular step with his political base, and one he was expected to take, Governor Ralph Northam may have been smart to pass on seeking to veto state budget language preventing Virginia membership in the Regional Greenhouse Gas Initiative. 

Nothing in the budget language prevents the Air Pollution Control Board from moving forward with caps on carbon dioxide emissions from Virginia’s larger electrical generating plants. It will just have to be a Virginia-only program, one possibly less flexible (and less politically rewarding) than membership in that northeastern regional compact. There will be no opportunity to buy credits from Rhode Island to exceed your emission goals.

And the budget now contains language elsewhere making it crystal clear that if some future General Assembly does join RGGI, the revenues generated thereby will be a tax and the future General Assembly will be free to spend it at will. When RGGI membership was first proposed by Governor Terry McAuliffe, we were promised that any revenues related to the carbon credits would flow back to ratepayers to keep the cost impacts negligible.

Thanks to this new language (here, see paragraph E at the end), that option is out the window.  On that point, the Republicans may have been too clever by half. I never thought Northam would veto that.

McAuliffe’s comic opera run for President is over, and that may have played a role, given he wanted to campaign on this. Sadly, its too late to stop the McAuliffe Memorial gold-plated wind turbines we will all get to overpay for, “testing” well-proven technology that makes no sense at that small scale.

A governor’s authority to veto budget language has a long and contentious history, and had he vetoed either of these a high-risk trip to court was likely. There is no clear line-item veto in our system. But wouldn’t it be nice to think that the Governor took to heart the warnings of the State Corporation Commission staff that the cost impacts could run into the billions, with the tax on CO2 a major component of those costs?

During the debate over the RGGI regulation, supporters responded to that charge by saying the SCC was considering costs that would accrue anyway. Dominion is already running its coal plants less often, possibly moving more quickly toward retiring them. Exactly! Thank you! Joining RGGI is unnecessary to meeting the goal of diminishing coal use and related CO2 emissions. That trend line started long ago and is being driven by (ahem) market forces – customers who demand non-fossil fuel generation, and the dropping cost of alternative forms of generation.

Coal is on the way out. It needs to be a deliberate process and rushing the plant retirements in Virginia is environmentally meaningless even if you believe every carbon atom is a devilish poison. What the environmentalists don’t want to accept is that natural gas is far preferable to coal, needs to be expanded, and a gas-nuclear-renewable mix is the best future for the state. And nuclear is on a knife edge over cost.

The environmental movement is predictably angry with the Governor’s decision, as reported in the Richmond Times-Dispatch. The Twitterverse lit up. But they will likely get much of the carbon reduction they seek and have only lost the other thing they sought – the hundreds of millions of dollars in annual revenue to be extracted from you and me by the carbon auction fees. That gives the movement a huge pile of money to play with in other states, and they had their spending plans in Virginia ready to go.

The disputed and certainly debatable SCC staff white paper noted correctly that Virginia’s integrated utilities have little in common with the power companies in the other RGGI states, which do not own generation that ratepayers are required to pay off in full. They participate in vigorous regional markets for power from independent generators, a future that is not sought by Dominion Energy Virginia. Wouldn’t it be nice to think the Governor considered that incompatibility, as well?

Taking a step as important a joining such a regional compact, and the related one proposed on transportation, both with huge customer cost impacts, should not be a unilateral gubernatorial act. The General Assembly bills that required super majority votes for approval went too far, but Virginia should join or not by legislative action, signed or not by a governor.

The Governor has also guaranteed that RGGI membership will be yet another issue to put before the voters in dozens of legislative races in November, and that process has already started. Fine. That’s as it should be. The election will be decided long before any court case over these vetoes would have been, and we all know what’s coming if the Democrats prevail.

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12 responses to “Is the Goal Cutting CO2 or Imposing a Tax?

  1. Well you got it half right : “Coal is on the way out. It needs to be a deliberate process and rushing the plant retirements in Virginia is environmentally meaningless even if you believe every carbon atom is a devilish poison. What the environmentalists don’t want to accept is that natural gas is far preferable to coal, needs to be expanded, and a gas-nuclear-renewable mix is the best future for the state. ”

    You can go one step further and reduce the burning of gas by “burning solar/wind” when it is available. Every kilowatt from solar/wind is a kilowatt NOT generated from ANY fossil fuels.

    What is that not part of your solution?

    also: ” And nuclear is on a knife edge over cost.”

    well… perhaps even worse, read this ” Nuclear-Bailout Bills in Pennsylvania, Ohio Take Heat Over Cost
    Supporters say plants provide zero-emission power; consumers, industry groups decry price tag”

    Bills in Pennsylvania and Ohio to prop up troubled nuclear-power plants face growing opposition from businesses and advocacy groups, who say the plans are too costly and would unfairly tip the scales in energy markets.

    Four nuclear plants are slated for early retirement in the two states. Exelon Corp. has warned that it would close its Three Mile Island Generating Station in Pennsylvania in September if it doesn’t get government aid. ”

    okay – so let me ask a hypothetical question: ” Would YOU support RGGI if the money went to subsidize Nuclear?

    how about it? 😉

  2. As soon as you add Dominion Virginia to a consortium of honestly run electricity companies in the NorthEast you expose Dominion and the General Assembly / Governor that Dominion bought and paid for.

    “The disputed and certainly debatable SCC staff white paper noted correctly that Virginia’s integrated utilities have little in common with the power companies in the other RGGI states, who do not own generation that ratepayers are required to pay off in full.”

    One other difference … I’m guessing that the integrated utilities in those states are not allowed to make unlimited campaign contributions to the politicians who (ostensibly at best) regulate them.

  3. According to prior press reports, there was heated discussion within the Governor’s office as to whether a veto of the RGGI restrictive language would be constitutional. In its spin, the Govenor’s office has cited Supreme Court precedents that would not allow it. The authority of the Governor to veto free-standing language, such as the RGGI provision, is not clear-cut and a case could be made that the language could be eliminated from the act without affecting its other purposes, which is the constitutional standard.

    I suspect that the Governor is betting on the Democrats getting a majority in the General Assembly and decided there was no need to get into a lengthy court battle.

    As I have said before, regardless of the merits of the issue, the legislature should be allowed to weigh in on something as far-reaching as this agreement would be.

    • I think you are onto something, Dick. If the Dems regain the GA, the issue is all theirs to decide upon. Will a Democratic legislature issue a mandate to join RGGI? It’s an interesting question to ponder.

  4. Virginia is already among the lowest states for CO2 emissions, due to heavy reliance on nukes and importing of power from other states, and relatively small dependence on coal. We are not exactly like the other northeast RGGI states, who use a lot of natural gas piped directly to their homes for heat (which is presumably not counted by RGGI). Virginia tends to have elec heat pumps, which requires more elec use. However, if you look at Virginia’s overall energy used in the homes, we are quite energy efficient. So I do not see the merit of Virginia commiting to electric CO2 reductions on the same basis as the other RGGI states. Also at the moment, conservation is already making huge progress in reducing electricity needs (LED light bulbs etc).

    The issue is enviromentalists want to prevent Virginia from ever building another natural gas power plant. But we face an unknown future with our nuke fleet and so on, so who knows what we might want to do? Also they want to prevent Dominion from acting to reduce elec imports by generating more power in Virginia. But if that reduced coal use in West Virginia, that could be a win-win.

    The fact that Gov Northam capitulated sounds a little like when Gov TMac capitulated on the Dominion rate freeze. Dominion may realize the future is uncertain, and they are not prepared to go to zero CO2 like the progressives want to mandate on us.

  5. In a New York minute.

  6. I think depicting this as something that only liberals or progressives or environmentalists want is not the reality:

    That means those of you who see this as attempts by a minority to impose something the majority is against – are just plain wrong. You guys are the ones in the minority on this!

    In terms of what should “count” against Virginia – it should be whatever generation that produces electricity used by Virginians no matter the state boundaries. We own that impact and as the poll shows, MOST OF US want to move away from fossil fuel and to generation that is cleaner and less polluting.

    I had asked earlier if one would support RGGI if the money went to subsidize nukes which are “clean” and the answer puzzles me.

    It’s NOT about “zero CO2” to the vast majority who want reductions – reducing emissions is NOT “zero”… most are pragmatic enough to accept that we will gradually and incrementally reduce emissions – we’re not looking to put people into caves… we’re looking for something that is eminently doable – the very same way we saw dramatic reductions in car pollution and similar folks fought against it on the same premise by claiming we wanted zero pollution.

    I think that probably separates those of us from those who want less pollution and those who want cheaper power even if it is polluting.

    or … I’ll stand corrected if I got that wrong but do look at the polls on this when we say it’s “progressives”. It’s way more than just that group.

  7. Larry, thank the Lord above the country is not run by polls. Don’t really care about that. The only thing polls measure is the effectiveness of the MSM in embedding whatever message it happens to be pushing at that time, and usually they are pretty good at shaping public opinion. The “Pollution from CO2 causes catastrophic global warming and bad weather ” BS has been effectively sold. That don’t make it true.

    You are way off my point that “joining RGGI” and “ordering power companies to reduce emissions” are independent and severable goals, and there is no need for VA to join RGGI. My secondary point is that a major and expensive decision like that should be made by the General Assembly and not just by a gubernatorial edict, an executive order and reg. If the D’s win the GA as I expect, I expect they will make the Big Mistake and join RGGI, but then it will be done in regular order.

    You might be surprised to know (and you would if you paid attention) that I had no deep problem with the proposed EPA Clean Power Plan 2.0. The first iteration was silly, but it got better after feedback. Again, my reasoning is the same, the market forces pushing against coal are huge and will eventually retire just about every coal plant in due course. So it would have been an exercise in the inevitable.

    Why shouldn’t carbon taxes be used to prop up nuclear plants? Because it’s bad economics to cross-subsidize like that. But if I thought you wanted a serious discussion on that point, and wouldn’t revert to knee jerk opposition to nuclear, it’s worth talking about. The problem is the premise – imposing carbon taxes.

    • Yeah but that’s not saying much, Steve, Virginia progressives hated Clean Power Plan becuase the progressives wanted ban of all fossil fuels, whereas CPP allowed use efficient of natural gas. CPP rate-based-option conceptually allowed Virginia to install quite a lot efficient nat gas power plants. The Va. enviro commuinity was having none of that, and wanted the rate-based option killed, which Gov TMac pretty much was on target to kill that option…I guess TMac is lucky it blew over. We never got that far , but now we are unincumbered by CPP and the progressives can push for their strict Virginia mandates without EPA interference, and maybe without much GA interference in the near future.

  8. Pingback: Dominion Seeks To Add Carbon Tax In Fuel Factor - Bacon's Rebellion

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