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Virginia’s newly elected GOP governor turning his back on Democrat-backed climate policies

25 January 2022 Amena Saiyid

Virginia's newly elected Republican Governor Glenn Youngkin and his cabinet are taking steps to move away from the commonwealth's pro-climate stance espoused by Democrats and the Biden administration to one embraced by a 20-state coalition led by its Republican neighboring state of West Virginia.

Since taking office on 15 January, Youngkin's actions have indicated intentions to both reduce federal oversight on climate-related matters and to withdraw from a voluntary regional compact that seeks to introduce market-based client incentives.

These include Virginia's 19 January announcement of its withdrawal from a coalition of 23 states that successfully challenged and overturned the Trump administration's 2019 power plant GHG regulation known as the Affordable Clean Energy (ACE) rule in a federal appeals court in the District of Columbia. The court ruled in January 2021 that the ACE rule unlawfully constrained the US Environmental Protection Agency's (EPA) nationwide authority to curb GHGs through heat rate improvements inside boilers and other equipment inside coal-fired power plants.

Virginia is now supportive of efforts by the West Virginia-led coalition of 20 states, which is seeking the US Supreme Court's opinion not just on the limits of EPA's authority to limit carbon emissions. These include EPA allowing a variety of approaches such as generation shifting and carbon trading, but also on resurrecting ACE.

West Virginia's delegation in Congress has taken upon itself the task of blocking key elements of the Biden administration's agenda, including regulation of power plant GHG releases, vaccine mandates, and passage of the $1.7-trillion Build Back Better Act that included $500 billion for clean energy and climate programs.

Virginia's about-face on the Supreme Court challenge came as no surprise, as two weeks earlier Youngkin appointed former EPA Administrator Andrew Wheeler to serve as his Secretary of Natural Resources.

Wheeler, who President Donald Trump appointed in 2019 to head EPA, repealed the nation's first power plant GHG regulation, known as the Clean Power Plan (CPP), which would have resulted in a 30% cut in emissions and replaced it with ACE, which would have reduced CO2 emissions by less than 1%.

Youngkin, a Republican, was elected to govern Virginia after eight years of Democratic rule. In his first week in office, Youngkin has directed the state's environmental and natural resource agencies to initiate the process of withdrawing the state from the Regional Greenhouse Gas Initiative (RGGI), the 11-state carbon trading program stretching from Maine to Maryland that Virginia joined a year ago.

Local and national environmental groups—such as the Natural Resources Defense Council, Virginia League of Conservation Voters (VaLCV), and Progress Va—have decried Youngkin's actions, especially his nomination of Wheeler.

Michael Town, VaLCV executive director, said Wheeler's nomination makes it "plainly clear that environmental protections are under attack in Virginia, and we are prepared to fight to defend them."

However, former EPA Chief of Staff Mandy Gunasakera was quick to point out that Wheeler signed and finalized numerous GHG reducing regulations, including the first-ever regulations for aircraft (which the Biden administration let stand despite challenges), power plants, and oil and natural gas wells.

"People may differ on the specifics, but that's a fact," said Gunasakera, who is now a principal with Section VII Strategies, a Washington DC-based boutique energy and environmental consulting firm.

Including the appointment of Wheeler, she added, "I view each of these actions and appointments as a clear indication that Virginian resources will be wisely spent to tangibly improve public health and the local environment."

Lee Francis, VaLCV deputy director, said Youngkin is "playing partisan politics" with his environmental rollbacks. "From vowing to single-handedly pull Virginia out of RGGI, to appointing an anti-environmental zealot to lead Virginia's environmental agencies, Governor Youngkin has shown just out of touch he is with the state he was elected to lead. A vast majority of Virginians want to see their leaders address climate change, expand clean energy, and protect our environment, not dismantle protections that safeguard clean air and water and keep communities safe," Francis told Net-Zero Business Daily in a 25 January email.

Virginia, West Virginia on the same page

Andrew Ferguson, the state's solicitor general, informed the Supreme Court in a 19 January letter, that the new administration has reversed its view that the EPA's repeal of CPP was unlawful. Virginia is now of the view, Ferguson wrote, that Section 111(d) of the Clean Air Act did not grant EPA authority to issue CPP, and its repeal was therefore required.

Noting that "the narrow text of Section 111(d) is not a clear Congressional statement authorizing the broad assertion of regulatory power embodied in the CPP," Ferguson cited a recent Supreme Court decision overturning Biden's vaccination mandate, arguing that "Congress does not usually 'hide elephants in mouseholes.'"

However, US Solicitor General Elizabeth Prelogar noted in the government's opening brief filed 18 January that Section 111 of the Clean Air Act requires EPA to establish emissions standards for stationary sources of air pollution that "may reasonably be anticipated to endanger public health or welfare."

That provision of the law also authorizes EPA to set standards of performance for new as well as existing stationary sources of pollution, and those standards are based on the best system of emissions reductions, she added.

More importantly, Prelogar said, the fears about CPP are unfounded because the regulation never took effect and the emissions reductions were achieved by market forces alone leading electric utilities to shutter coal-fired power plants.

The ACE rule didn't take effect either, due to the court order vacating it, and the Biden administration not challenging that ruling.

EPA had given states under ACE until 8 July 2022 to write plans to implement the rule, but an IHS Markit survey of all 50 states in December 2020 found that only 18 of them, including West Virginia, were in the process of writing plans to adopt the Trump-era regulation.

Three states—North Dakota, Maryland, and Virginia—said they were holding off on writing their plans until they had more certainty about what Biden planned to do with the rule.

Although coal is the primary energy resource that is produced in Virginia, gas is the main source of power generation in the state.

According to the US Energy Information Administration, gas accounted for 3.731 GWh of electricity generation in October 2021, followed by nuclear power contributing about 2.45 GWh, and then coal barely eking out 92,000 MWh.

No power plant regulation on the books

In the decision at issue before the Supreme Court, Prelogar said the US Court of Appeals for the District of Columbia Circuit "not only overturned the ACE rule, but also vacated the repeal of the CPP regulation, while staying the vacatur indefinitely pending further rulemaking because the rule was obsolete. "As a result, no regulation currently applies," Prelogar said.

She emphasized that the emissions reductions contemplated under CPP were achieved in a short period of time as a result of "significant generation shifting" due to "market-based forces."

According to Prelogar, the petitioners' real concern is that EPA might incorporate some features of the CPP into a future rulemaking under Section 111(d), as Virginia's Ferguson noted in his letter to the Supreme Court.

But, Prelogar said, "the contours of such a rule are uncertain."

She reiterated that EPA would issue a new Section 111(d) rule "after taking into account all relevant considerations, including changes to the electricity sector that have occurred during the last several years."

Virginia relying on RGGI, state law for reductions

A year ago, a Virginia Department of Environmental Quality (DEQ) spokeswoman told Net-Zero Business Daily it would reduce GHG emissions across the state in the absence of the ACE rule by relying on a state law, the Virginia Clean Economy Act (VCEA), and RGGI. VCEA required Virginia's two main electricity providers, Dominion Energy and Appalachian Power, to become carbon-free by 2045 and 2050, respectively.

Youngkin's gubernatorial predecessors, the Democrats Ralph Northam and Terry McAuliffe, were instrumental in bringing Virginia into the RGGI program.

In the absence of a nationwide trading program, which Republicans in US Congress have thwarted time and again, RGGI has filled a vacuum for some states looking for market-oriented air pollution reduction programs that involve trading carbon reduction credits.

The nine RGGI states that participated from 2009-2019 experienced a reduction of over 90 million short tons of annual power sector carbon emissions, even as the regional economy grew.

RGGI took effect in Virginia in January 2021 after a state law authorized its participation. Virginia's participation in RGGI was designed to garner a 30% reduction in CO2 emissions from fossil fuel-fired power plants by 2030. The proceeds from auctioning of allowances distributed under this program were to be directed to the Virginia Community Flood Preparedness Fund and energy efficiency programs.

"Both VCEA and RGGI go well beyond ACE," the Virginia DEQ spokeswoman said.

However, Youngkin has decided to withdraw the commonwealth from RGGI, which raised more than $200 million in revenue for the state. He abandoned his original plan to withdraw the state from RGGI on his first day in office through an executive order, following an opinion issued by former Attorney General Mark Herring on his way out the door.

Herring said the Virginia Constitution is clear that the governor has the power to uphold laws, not to suspend them. As a result, the governor "may not repeal or eliminate, through an executive order or other action, the enacted statutes and regulations pertaining to the Commonwealth's participation in the Regional Greenhouse Gas Initiative and/or a market-based trading program like the Regional Greenhouse Gas Initiative, or do away with the requirement that electricity producers hold carbon dioxide allowances that equal the amount of their carbon dioxide emissions."

So Youngkin signed an executive order giving the newly appointed Wheeler and VDEQ Director Michael Rollband 30 days to "re-evaluate Virginia's participation in the Regional Greenhouse Gas Initiative and immediately begin regulatory processes to end it."

RGGI withdrawal a top priority

Announcing his legislative priorities at the start of the Virginia General Assembly session, Youngkin threw his support behind budget amendments that would withdraw the state from RGGI.

RGGI, Youngkin said, would allow utilities to pass on the costs of purchasing carbon allowances to their ratepayers. Dominion Energy, he noted, has already informed the State Corporation Commission, which regulates utilities in Virginia, that "RGGI will cost ratepayers between $1 billion and $1.2 billion over the next four years."

While the benefits have not materialized, the costs of participation in RGGI have "skyrocketed," Youngkin said.

Dominion Energy spokesman Rayhan Daudani did not dispute Youngkin's contention that RGGI fees are paid to the state by the RGGI program and collected from utility customers.

Since 2018, Daudani said Dominion Energy has maintained that Virginia's linkage to RGGI program "would result in a financial burden on its customers with no real mitigation of GHG emissions regionally."

Despite steps taken by Youngkin to move Virginia away from GHG reduction programs, Daudani said Dominion Energy remains committed to net-zero methane and carbon emissions by 2050 across the company's footprint. It also will keep moving forward on building the largest offshore wind project in the nation (Dominion Coastal Virginia Offshore Wind), transforming the nation's grid, relicensing its nuclear units, and adding more energy storage and solar energy, he said.

Posted 25 January 2022 by Amena Saiyid, Senior Climate and Energy Research Analyst

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