Virginia Regulatory Town Hall
Department of Environmental Quality
Air Pollution Control Board
Regulation for Emissions Trading [9 VAC 5 ‑ 140]
Action Repeal CO 2 Budget Trading Program as required by Executive Order 9 (Revision A22)
Comment Period Ended on 10/26/2022
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10/13/22  4:06 pm
Commenter: Brian Armstrong

Do not repeal the CO2 Budget Trading Program

Please do not repeal the CO2 Budget Trading Program as required by EO-9. The arguments presented in EO-9 are poor and appear to be a politically motivated misrepresentation of the findings of the DEQ and Virginia General Assembly. Virginians support climate action by huge margins and benefit from programs like RGGI that grow our economy, protect public health, and help our communities.

The “Virginia Carbon Trading Rule and RGGI Participation Costs and Benefits” published by the DEQ March 11, 2022 as directed by EO-9 provides bullets that align with the Executive Order talking points but does little to substantiate the Governors arguments. While benefits are in the title, the document does not quantify any benefits such as improved public health outcomes due to reduced emissions which would be standard in any environmental cost benefit analysis. Mr. Wheeler should be intimately familiar with this short coming given his previous experience at the EPA.

The document also does not quantify the costs to rate payers of the next best alternative to RGGI for achieving the mandate of the VCEA. The document does helpfully state “this study and report shows that the combination of participation in RGGI along with the specific mandates of the VCEA including the closure of most of the remaining coal and biomass electric generating facilities in Virginia, along with specific renewable energy generation targets and standards, is expected to lead to a carbon free power sector in the 2045- 2050 timeframe. This supports the requirements of both the VCEA and statutory goal of net-zero carbon emissions economy-wide by 2045.” The report also provides the admission that “the social cost of carbon as required by VCEA has not been fully incorporated in the SCC process to date, but will be going forward, and may change future cost/benefit analyses.” The DEQ recognizes the statutory requirements under the VCEA and recognizes that RGGI is key cost-effective component of a net-zero carbon strategy. 

Further underscoring this point, the “Modeling Decarbonization: Report Summary and Policy Brief for Virginia Governor’s Office Administration and Policymakers (Chapter 1194, 2020) To the General Assembly of Virginia Senate Document No. 17 January 1, 2022, published just weeks before EO-9, stated the following “economic theory and a considerable body of empirical evidence shows that market-based emission controls such as RGGI are most likely to achieve the least cost emission reduction pathway.”  The report also concedes that “while the emissions data and impact of RGGI participation by Virginia is limited and inconclusive, the RGGI region has a long track record of emission reductions since the beginning of the program.”

In addition to the justification of EO-9 being devoid of considerations for either the benefits or the costs there are additional arguments that are presented as reasons to withdraw from RGGI which are misplaced.  For example, “fees are passed through to utility-captive rate payers.” While the statement is true, it applies to any potential fees including fuel surcharges which in 2023 may equal or exceed the rate impact of RGGI. It may be a valid argument for retail choice to allow for competition to Dominion, but that is not being considered here.

Another statement, “the imposition of the RGGI “carbon tax” fails to offer any incentive to change behavior,” is simply false. The simplest reasoning is to acknowledge that not all power generators located in Virginia are owned by Dominion Energy. These independent power producers are not able to pass on their costs unless they are recovered in the competitive wholesale market. 

Another argument presented for a reason to repeal is “other states return the RGGI proceeds to consumers through rebates, while Virginia has opted to use the proceeds for separate and unrelated grant programs resulting in an effective tax increase on all ratepayers.” This is not a valid reason to withdraw from the program. A principled response to this critique would be to provide leadership and work with the General Assembly to modify the allocation of the auction proceeds.

The Governor stated, “It’s easy to embrace ambitious green regulations when you pretend there’s no cost.” A more accurate characterization is it’s even easier to embrace polluting the atmosphere when ignore the cost, not by pretending, but by actively pursuing scraping a market-based solution for pricing carbon emissions.

CommentID: 189600