No Appeal Filed on RGGI Regulation, Now In Force

Virginia’s participation in the Regional Greenhouse Gas Initiative (RGGI) is now fully authorized under a new state regulation, and the deadline to appeal that regulation has now passed with no appeal filed.  The text of the regulation is here.

Language inserted by General Assembly Republicans into the current state budget merely puts RGGI membership and its related carbon tax on hold.  It did not overturn the regulation, which went into effect June 26. The outcome of the November election will likely determine whether that roadblock remains in place beyond next summer, when the current budget provisions expire.  

The Virginia Manufacturers Association and the Virginia Coal and Energy Alliance had opposed the regulation and filed notices of intent to appeal it to the Richmond Circuit Court. Both groups confirmed Friday and Monday that no appeals would be filed after all. “Ultimately, we believe Congress and the General Assembly should develop statutory guidelines on carbon regulation.  No citizen board should be doing this on its own authority,” said Brett Vassey, president of the manufacturer’s group.

Vassey declined to provide any further explanation of the decision against filing an appeal, allowed at this stage under the state’s Administrative Process Act. Brooks Smith, an attorney at Troutman Sanders and registered lobbyist for the Virginia Coal and Energy Alliance, confirmed no appeal was filed by that group but also declined any further comment.

The citizen board mentioned is the Air Pollution Control Board within the Department of Environmental Quality, which adopted the regulation with the support of governors Terry McAuliffe, who asked for it, and Ralph Northam, who signed it. The drafters of the final version anticipated a delay for some reason and included a provision (set out below) to keep the regulation alive until Virginia can join a future RGGI carbon credit auction.  The auctions are held quarterly.

9VAC5-140-6045. CO2 Budget Trading Program implementation. In the event the allocation of conditional allowances by the department as required by 9VAC5-140-6190 B has not occurred by January 1, 2020, the program will be considered to be operating and effective as of the calendar year following the date on which the department allocates the conditional allowances as it corresponds to the schedule of 9VAC5-140-6190 A. Permitting and compliance dates, including the due date for a permit as required by 9VAC5-140-6150, shall be adjusted to be in force six months after the date the department allocates the conditional allowances. Any excess emissions tonnage identified by the new program implementation date may be addressed through program review and regulatory action as necessary to ensure compliance with the final compliance date. The department will notify the board and each affected CO2 budget source accordingly.

Smith’s coal industry clients are a main target of the regulation, which seeks to rapidly reduce the reliance of Virginia’s electricity generation plants on fossil fuels. Virginia’s participation in RGGI starts with a cap of 28 million tons of CO2 emissions from the covered facilities, to be reduced by 30 percent over ten years.  Vassey’s industrial members are the largest electricity customers and would feel the higher prices which some (but not all) expect RGGI to cause.  The state’s two investor-owned utilities also belong to VMA.

RGGI is an interstate carbon dioxide cap and trade compact of Northeastern states from Maine to Maryland. New Jersey had been a member, dropped out, and is now back in as of June, with its stated goal being 100% carbon-free electricity by 2050.  Here is New Jersey Governor Phil Murphy’s announcement on returning to RGGI last month, decrying all the lost carbon tax revenue since former Governor Chris Christie withdrew from RGGI.

The most recent RGGI auction was held June 5, with a price for CO2 allowances set at $5.62 per ton, up slightly from the previous auction and the highest price since $7.50 at the end of 2012.  Virginia’s regulation calls for the revenue from the purchase of allowances to return to utilities and eventually back to ratepayers, but another new provision in the state budget designates it as state general fund revenue. Most other RGGI states spend the money on various programs, cementing its status as a carbon tax.

The General Assembly votes which inserted and then sustained the RGGI roadblock in the budget were straight party line, as were the votes on two vetoed bills that would have prevented any participation in RGGI without direct legislative approval. Election rhetoric from both sides since indicates no softening of the positions. All 140 seats in the General Assembly are on the ballot in about 100 days.

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16 responses to “No Appeal Filed on RGGI Regulation, Now In Force”

  1. Something will have to give. As I recall, the current Virginia carbon output is about 33 million tons. Dominion stated that it plans to reduce its carbon emissions by only about 1% a year through 2050. The two merchant generating stations in Charles City County are expected to add about 10 million tons of CO2 per year.

    At 33 million tons, Virginia would add about 40% to the output of all of the other nine RGGI states (not including NJ).

    The positive outcomes from RGGI occurred from spending the proceeds from the allowance auctions on projects such as energy efficiency and distributed solar incentives. These projects resulted in about $2.3 billion in cumulative energy savings and an estimated $14 billion in reduced health care costs during the first 8-9 years of RGGI.

    Currently, Virginia does not plan to use the proceeds from the CO2 allowance auctions in this way.

  2. LarrytheG Avatar

    Burning gas instead of coal is only marginally better according to some and as bad or worse according to others but very few of us are planning to go “off grid” and stop using electricity because it’s generated from fossil fuels.

    I’ve said before and say it again – about 70% of citizens want to reduce fossil fuels and replace it with wind/solar – as much as we reasonably can – and not at all what the opponents are saying.

    What that means is that we “burn” solar and wind – WHEN WE CAN – because every kilowatt that comes from solar/wind is a kilowatt that does not come from fossil fuels.

    We can do this. We can power all of Virginia with a square about 30 miles on a side or 6 of them 5 miles on a side or 30 of them one mile on a side.

    Drive through Virginia especially on the non-interstate roads – and you’ll see mile after mile of unused land – fallow land, no longer farmed, cleared land that has been timbered and in Western Virginia, land that has been coal-mined. It’s land that could be used to reduce burning fossil-fuels and help the property owner pays the taxes on it and have money left over for their own needs.

    Instead, we CHOOSE to engage in endless partisan culture wars rather than actually do something.

    1. You are correct, burning natural gas incurs as much CO2 emissions as burning coal — the chemical process per calorie of heat extracted is the same — PLUS there are unburned natural gas losses in the field due to fracking/drilling losses directly into the air and compressor-station emissions and miscellaneous leaks from the pipelines (those gas losses are raw methane, CH4, which is worse than CO2 in terms of climate impact). So natural gas consumption has a greater impact than coal — although this is offset in part by the greater efficiency of modern NGCC generation (more mWh produced per unit of CO2 emitted).

      RGGI is a tax on carbon emissions only; it does not take into account the methane extraction/transportation losses associated with natural gas. So to that extent natural gas impacts are understated.

  3. The best way to use solar is in the distribution system in brownfield locations. It improves resiliency and reliability and avoids the need to spend money for distribution and transmission congestion and does not take up open land.

    It is these types of installations that are being obstructed by regulations and legislation in Virginia. In other states, without the obstructions, distributed energy makes up nearly 50% of the solar installations. Giving Virginia consumers freedom of choice would reduce their energy costs from what it would be solely under the thumb of their local utility.

    Obviously, we have to protect the utilities with new regulatory schemes, but favoring a few energy companies by restricting the freedom of their customers seems like a path that will eventually harm all parties.

  4. Steve Haner Avatar
    Steve Haner

    I expect no marginal benefits from Virginia entering RGGI, none whatsoever. The generation mix is changing anyway. Eventually people will figure out 1) virtue signaling is foolish when the rest of the world continues to use fossil fuels and 2) the full vision of the Utopians cannot be achieved under any circumstances (well, maybe with fusion someday….) and 3) it ain’t the CO2….

    1. LarrytheG Avatar

      The “rest of the world” uses far less energy per person than we do ……..

      Conservatives have typically been opposed to environmental measures – so no surprise.

      They oppose on the front – tooth and nail – then on the back after success – they claim they were in favor all along. I expect the same on this except already more than 70% support burning less fossil fuels and reducing CO2 – so that includes some moderate Conservatives also but the hard core right is pretty much where they always have been on environmental issues – oppose on the front – johnny-come-lately later on.

      1. Steve Haner Avatar
        Steve Haner

        The “rest of the world” is aware of that fact and is building power plants as fast as humanly possible to catch up to our lifestyle, many of them coal-fired.

    2. In terms of direct economic marginal benefits I agree with you. In terms of advancing the ball towards national carbon-emissions legislation to replace this patchwork of state efforts, it makes political sense to take this step, both because it signals to the rest of the nation how many people want this, and because it will make the eventual transition to a national carbon tax that much easier, and because it will in fact deter fossil fuel consumption relative to the alternatives on the grid. Meanwhile, TomH is right, simply dumping these RGGI revenues into the General Fund is not sending any economic signal to encourage other cleanup efforts and is going to prove difficult to undo.

  5. The main thing that happened over last 10-years is low natural gas prices which reduced CO2 emissions in the RGGI states. Now we hear RGGI gets credit for the reduced CO2 emissions and each member state has made billions in funny money due to reduced healthcare and avoided energy costs. Love the accounting.

  6. Peter Galuszka Avatar
    Peter Galuszka

    As I have opined in print elsewhere, I think RGGI is a good idea and am surprised that Virginia hasn’t joined before. Sure it won’t solve the CO2 problem but neither will doing nothing. One of the things you will see more of is states getting together on a regional basis to take on GHG issues. They have do. Trump, who has no clue on the environment, is gutting federal agencies that might help. As for Virginia coal lobbyists complaining about RGGI, I say so what? They are being displaced by gas anyway whose price is about the lowest per million BTUs than it ever has been. The coal people never mention metallurgical coal which is not subject to CO2 rules and that part of Virginia’s coal industry isn’t doing badly.

  7. Steve Haner Avatar
    Steve Haner

    Setting aside the issues, this is three news beats here on BR in a few days, none of them drawing any attention from the MSM. First the story about Dominion seeking to shut down its competitors, then the new Rider T1 costs on coming bills, and finally this “dog didn’t bark” story on the expected RGGI appeal. I really don’t want to spend all my time on these issues, but somebody has to…

    Hey, reporters out there – the SCC has set a hearing date next week on the Dominion challenge to the CSPs and their request for an injunction. Shame on you if I’m the only reporter in the courtroom that day!

    1. Raspberries! Or crickets.

  8. LarrytheG Avatar

    FYI – it looks like Moody’s BELIEVES in Global Warming!

    From WSJ:

    ” Moody’s Corporation has purchased a controlling stake in a firm that measures the physical risks of climate change, the latest indication that global warming can threaten the creditworthiness of governments and companies around the world.”

    ” The purchase is the latest in a series of moves by rating agencies to better account for the effects of climate change on the ability of governments to pay back the money they borrow by issuing bonds. Global warming can threaten that ability in a variety of ways.

    Sudden shocks such as floods, wildfires or storms can hurt businesses and send residents fleeing, taking away the tax revenue that governments use to pay their debts. And longer-term threats — such as rising seas or higher temperatures — can make those places less desirable to live in, hurting property values and, in turn, the amount raised by taxes.

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      Yes, “FYI – it looks like Moody’s BELIEVES in Global Warming!

      From WSJ:

      ” Moody’s Corporation has purchased a controlling stake in a firm that measures the physical risks of climate change …”

      These are the very same kind of folks who helped bring on Sub-prime debacle.

  9. Steve Haner Avatar
    Steve Haner

    Which is it with you, Larry? Global warming or climate change? Not the same you know – yet the terms get interchanged when convenient….(we go to climate change in the fall, right?) Moody’s just sees a chance to make a buck off the chumps, the very essence of capitalism 🙂

  10. […] first step but not a done deal, with litigation one possible route for opponents.  Virginia’s on-hold membership will likely be determined by the General Assembly elected next […]

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