By Heather Barden

The Regional Greenhouse Gas Initiative (“RGGI”), established in 2005, is a joint cap-and-trade program that aims to reduce carbon dioxide emissions from the power sector in participating states.[1] Currently 12 states participate in RGGI: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Virginia.[2] Power plants within the 12 states are required to meet pre-established regional caps or acquire RGGI carbon dioxide “allowances” for every ton of carbon dioxide they emit over the pre-established cap. [3] In addition, allowances that are not needed can be traded in a cap-and-trade program.[4] This cap-and-trade program essentially incentivizes plants to reduce their emissions and improve their bottom line.[5] Since RGGI’s inception, the annual average of carbon dioxide emissions from RGGI electric generation sources has decreased by approximately 48%.[6] Moreover, the initiative has helped raise over $ 4 billion for local communities.[7]

Virginia joined RGGI after Governor Northam signed the Clean Energy and Community Flood Preparedness Act into law on January 1, 2021.[8]

Today, Virginians have already begun to see the fiscal benefits of participating in RGGI. Since Virginia joined the market, it has received $302 million in auction revenues.[9] Of that $302 million, $15.2 million has been devoted to helping families make repairs they need to receive weatherization services.[10] Additionally, in its first fiscal year, RGGI provided nearly $114 million in revenue for low-income energy efficiency housing programs in Virginia.[11] These programs help to tackle the high energy burdens low-income households face in Virginia.[12] Moreover, the latest RGGI report from the Department of Environmental Quality (“DEQ”) shows a decrease in actual emissions in 2021 compared to prior years.[13] Note, the agency states it cannot directly attribute the reduction in emissions in 2021 to RGGI since 2021 has been the first year of Virginia’s participation in the program.[14]

Even with the fiscal and environmental benefits of the program already being seen, Governor Youngkin announced plans to withdraw Virginia from RGGI in August.[15] In September, Governor Youngkin told 13News Now that the Clean Energy and Community Flood Preparedness Act authorized but did not mandate Virginia to be in a program like RGGI. He further stated that “it was a regulatory process that led us to RGGI.” [16]

Critics disagree on whether the administration can withdraw the state from RGGI by way of the regulatory process. Groups like the Southern Environmental Law Center (“SELC”) say that the DEQ cannot withdraw from RGGI by way of the rulemaking process because the agency’s regulations were the direct result of legislation passed by the General Assembly.[17] On September 8, 2022, Virginia lawmakers sent a letter to the members of the Virginia Air Pollution Control Board stating that only a change in the law that passes both chambers of the General Assembly and is signed by the Governor can end the state’s involvement in RGGI.[18] Essentially critics of Governor Youngkin’s directive contend that the state’s membership in RGGI is mandated by law.

So can DEQ, by way of a regulatory rule, remove the state’s participation in RGGI?

The use of the word “authorize” here is meant to provide statutory authority for an agency to act in a way that is consistent with legislative intent.[19] The statutory language authorizes DEQ to “establish, implement, and manage an auction program to sell allowances into a market-based trading program consistent with the RGGI program and this article.”[20] Furthermore, the Fiscal Impact Statement created by the Department of Planning and Budget regarding SB1027, summarizes the bill by stating it “[d]irects the Department of Environmental Quality to incorporate into regulations previously adopted by the State Air Pollution Control Board certain provisions establishing a carbon dioxide cap and trade program to reduce emissions released by electric generation facilities…”[21] The intent of the General Assembly was to curb the state’s carbon dioxide emissions from its electric generating facilities. To fulfill this intent, the General Assembly directed and authorized DEQ to create a program consistent with RGGI for the state to be able to participate in RGGI.

Ultimately, state law requires Virginia to participate in RGGI and directs and authorizes DEQ and other state agencies to implement policies and regulations in accordance with the law. The General Assembly codified the state’s commitment to reducing carbon emissions from electric generating facilities in 2021. Only the passage of a new law will be able to end Virginia’s involvement in RGGI.

 

[1]  Regional Greenhouse Gas Initiative (RGGI), Center for Climate and Energy Solutions, https://www.c2es.org/content/regional-greenhouse-gas-initiative-rggi/#:~:text=RGGI%20was%20established%20in%202005,dioxide%20emissions%20allowances%20in%202008.

[2] The Regional Greenhouse Gas Initiative: An Initiative of Eastern States of the US, RGGI, Inc., www.rggi.org (last visited Nov. 3, 2022).

[3] RGGI 101 Fact Sheet, RGGI, Inc. (2021).

[4] Id.

[5] Matthias Ruth et al., Economic and Energy Impacts From Participation in the Regional Greenhouse Gas Initiative: A Case Study of the State of Maryland Energy Policy, 36 Energy Pol’y  2279, 2279 (2008).

[6] Regional Greenhouse Gas Initiative (RGGI), supra note 1.

[7] Id.

[8] Va. Code Ann. §10.1-1330 (B).

[9] Sarah Vogelsong, Youngkin Says RGGI Won’t Cut Emissions. Critics Say His Own Report Shows He’s Wrong, Va. Mercury (Mar. 8, 2022), https://www.virginiamercury.com/2022/03/18/youngkin-says-carbon-market-wont-work-to-cut-emissions-critics-say-his-own-report-shows-hes-wrong/

[10] Weatherization Corrects Environmental Injustices: Virginians are Solving Energy Problems Thanks to RGGI Money, S. Env’t L. C. (Jan 1, 2022), https://www.southernenvironment.org/news/weatherization-corrects-environmental-injustices-virginians-are-solving-energy-problems-thanks-to-rggi-money/?gclid=EAIaIQobChMIg8-LrKGS-wIVjIzICh1O6wnREAAYAiAAEgIpE_D_BwE.

[11] Regional Greenhouse Gas Initiative, Virginia Energy Efficiency Council, https://vaeec.org/rggi/ (last visited Nov. 3, 2022).

[12] Id.

[13] Va. Dep’t of Env’t Quality, Virginia Carbon Trading Rule and Regional Greenhouse Gas Initiative (RGGI) Participation: Costs and Benefits 12 (2022).

[14] Id. at 14.

[15] Charlie Paullin, Youngkin Administration Outlines Plan to Withdraw Virginia from Carbon Market by Regulation, Va. Mercury (Sept. 1, 2022), https://www.virginiamercury.com/2022/09/01/youngkin-administration-outlines-plan-to-withdraw-virginia-from-carbon-market-by-regulation/.

[16] Preston Stegger, Youngkin Argues He Can Withdraw Virginia from RGGI Under Current Law, 13’s News Now (Sept. 23, 2022), https://www.13newsnow.com/article/news/politics/virginia-gov-glenn-youngkin-rggi-withdrawal-regulation/291-52e91121-525e-47e4-859f-858a0529d7e2.

[17] Charlie Paullin, supra note 15.

[18]  Preston Stegger, supra note 16.

[19] See Va. Code Ann. § 2.2-601 (4).

[20] Va. Code Ann. §10.1-1330 (B) (emphasis added).

[21] Commonwealth of Va. Dep’t of Planning and Budget, 2020 Fiscal Impact Statement for SB 1027, 2020 Reg. Sess., at 1 (Feb. 20, 2020), chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://lis.virginia.gov/cgi-bin/legp604.exe?201+oth+SB1027FH1122+PDF.