Pennsylvania stakeholders commended action on Wednesday by the Virginia State Air Pollution Control Board to repeal its Regional Greenhouse Gas Initiative (RGGI) regulation, a move they say is needed in the commonwealth, as well.
“Congratulations to VA workers & employers who will be saved from the oppressive #RGGI Carbon Tax,” tweeted the Power PA Jobs Alliance Wednesday afternoon. “Next up, hopefully @GovernorShapiro will follow his lead before the $5.8 BILLION regulatory tax wipes out thousands of union jobs and dozens of reliable, base load power plants. It’s not too late for @GovernorShapiro to fix this insanity.”
Pennsylvania State Sen. Gene Yaw (R-23) also applauded the Virginia Air Board’s action yesterday.
“Today’s decision by Virginia’s Air Board to repeal RGGI is a glaring example of yet another state to recognize that RGGI is nothing but an oppressive carbon tax,” Yaw tweeted on Wednesday evening. “In Pennsylvania, the threat of RGGI has driven fossil fuel plants out of existence, halted the construction of new natural gas power plants, and handcuffed businesses from making further investments with an uncertain regulatory future.”
Even if implemented in Pennsylvania, RGGI would have virtually no positive effect on the environment, Yaw added.
“This ongoing energy transition has had a detrimental impact on the reliability of Pennsylvania’s electric grid, making blackouts and restrictions on when and how we can use electricity inevitable,” said the senator. “It is my hope that Pennsylvania’s newest administration will soon realize the devastating impact RGGI will have on our economy, our environment and our residents and rightfully follow suit.”
Pennsylvania Gov. Josh Shapiro’s proposed state budget for the fiscal year starting July 1 estimates $663 million in revenue will be generated for the state through RGGI enforcement. The Democrat-led Pennsylvania House of Representatives passed its version of a state spending plan earlier this week and included what Republicans called a $663 million energy tax. The budget is currently under consideration in the Republican-controlled Senate.
Partisan vote rules
In Virginia, the State Air Pollution Control Board’s narrow 4-3 vote along party lines to withdraw Virginia from the regional carbon market sends the action to Republican Virginia Gov. Glenn Youngkin, who will approve it.
“Today’s common-sense decision by the Air Board to repeal RGGI protects Virginians from the failed program that is not only a regressive tax on families and businesses across the commonwealth, but also does nothing to reduce pollution,” Youngkin said on Wednesday.
RGGI requires power-producers in Virginia to purchase carbon offsets from auctions managed by the interstate compact and funds collected by the sale of the offsets are spent on Virginia government programs.
The cost of the offsets are fully passed on to power customers who have zero choice due to the state’s regulated utility model, according to the governor’s office, which called participation in RGGI a direct tax on all households and businesses that quashes any incentive for power producers to reduce carbon emissions.
“The Office of the Attorney General has confirmed the State Air Pollution Control Board has the legal authority to take action on the regulatory proposal using the full regulatory process — and [on June 7], the board voted to do just that — furthering Virginians access to a reliable, affordable, clean and growing supply of power,” said Youngkin.
Comments for & against
The Air Board’s vote, as directed by Youngkin’s Executive Order 9, was opposed by numerous Virginia residents, Democratic members of the General Assembly, the state’s Sierra Club chapter, and the NAACP, among others.
For instance, Virginia Delegate Rip Sullivan, a Democrat, said during a pre-vote board hearing that the existence of other federal and state statutes, like the Virginia Clean Economy Act (VCEA), is not a good enough reason to leave RGGI. The Democrat-backed 2020 VCEA law requires Virginia’s electric grid to be carbon free by 2050. “All of these efforts working together will be necessary for us to reach our goals, and RGGI plays a vital role,” Sullivan said.
Nevertheless, the Air Board’s action also received kudos from representatives of the Virginia Manufacturers Association (VMA), the Virginia Chamber of Commerce, and the Virginia Oil and Gas Association, who all spoke in favor of the RGGI withdrawal.
“The impact on small industrials is over $1,500 per month. That’s not a small amount of money,” VMA President and CEO Brett Vassey said during the pre-vote hearing. “We have to be competitive in the global economy. Our electricity rates are the way that we are able to produce and compete.”
The VMA on June 7 also submitted formal comments concerning the RGGI rule — entitled “Proposed Regulation for the Amendment and Repeal of 9 VAC 5-140 Regulation for Emissions Trading” — in support of Youngkin’s efforts “to reveal the ineffectiveness for the reduction of CO2 and the overly burdensome costs of RGGI.”
The VMA said it has been an active opponent of Virginia joining RGGI since its inception, “foreshadowing the cost burden and ineffectiveness on Virginians,” according to its comments.
For instance, in a summary of its complaints, the VMA said the RGGI is unnecessary and redundant to decarbonize Virginia’s electricity generation, and noted that CO2 emissions in Virginia have steadily dropped, the comments say.
Additionally, RGGI does not operate like a Clean Air Act regulation and contravenes the Code of Virginia, according to VMA, which also said RGGI is an economically harmful and non-transparent tax on electric utility consumers. “This will harm Virginia’s economic competitiveness,” the group said.
In fact, according to Youngkin, prior to RGGI, electricity generation increased while CO2 per MWh was almost cut in half in Virginia over the last 10 years.
The Virginia General Assembly adopted legislation in 2020 that authorized but did not mandate the Air Board to adopt regulations requiring Virginia’s participation in RGGI. As such, Gov. Youngkin signed Executive Order 9 in January 2022 to direct the State Department of Environmental Quality to examine the impact of RGGI and start the process of ending Virginia’s participation.
The Youngkin administration claims that this “standard regulatory process for removal from RGGI” will provide stability and an orderly withdrawal, which will provide greater regulatory certainty and help prevent market fluctuations impacting consumers.
“While Virginians will see a lower energy bill in due time because we are withdrawing from RGGI and are one step closer with today’s vote, we need to ensure Virginia has a reliable, affordable, clean and growing supply of power by embracing an all-of-the-above energy plan that includes natural gas, nuclear, renewables and the exploration of emerging sources to satisfy the growing needs of commonwealth residents and businesses,” said Youngkin. “We’re working every day to reduce costs to hardworking Virginians — like the RGGI carbon tax — and make Virginia the best place to live, work and do business.”