Virginia regulators approve carbon cap-and-trade plan

By SARAH RANKIN Markets Associated Press

Virginia would regulate carbon emissions from power plants and become the first Southern state, its officials say, with a carbon cap-and-trade program under a proposal that won preliminary approval from state regulators Thursday.

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It's the most recent example of a state taking steps to address climate change as President Donald Trump's administration rolls back his predecessor's efforts to do so. Democratic Gov. Terry McAuliffe directed his administration in May to develop the regulation, saying Virginia "cannot afford to sit idly by."

"Virginia is uniquely vulnerable to the threat of climate change and many of our residents are already experiencing its impacts," McAuliffe said in a statement Thursday. "We do not have the luxury of waiting for Washington to wake up to this threat - we must act now."

The proposal approved unanimously by the Virginia Air Pollution Control Board would cap emissions from most power plants starting in 2020 and then require a 30 percent reduction over a decade. Eligible carbon emitters would have to participate in the Regional Greenhouse Gas Initiative, a cap-and-trade program among nine Northeastern and mid-Atlantic states, said Michael Dowd, director of the air and renewable energy division of the Department of Environmental Quality.

California also has a cap-and-trade program but no other Southern state does, Dowd said. In a statement after the plan was unveiled last week, Southern Environmental Law Center attorney Will Cleveland said the proposal "makes Virginia the first Southern state to tackle climate change head-on."

Neighboring Maryland, which is below the Mason-Dixon line, also participates in RGGI. So does Delaware.

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Dowd told the board Thursday that the proposal would cover about 33 electric generating plants across Virginia.

The majority belong to Dominion Energy. Spokesman David Botkins said the company hasn't yet fully evaluated the proposal but expects "to fully meet whatever regulatory requirements that result."

At Appalachian Power, the state's other large regulated monopoly, spokesman John Shepelwich said the company is still reviewing the proposal and will be participating in the public comment process.

Environmental groups hailed the board's vote.

"The Air Board chose to protect Virginia's families and most vulnerable communities, to advance a thriving clean energy economy and to elevate Virginia as a national and global leader," Kristie Smith, policy and campaigns manager of the Virginia Conservation Network, said in a statement.

Republican legislative leaders, meanwhile, said the proposal would constrain economic growth and hurt poor and working class Virginians by raising energy prices. They also said McAuliffe's administration had exceeded its authority and suggested the governor, who has been flirting with a possible run for president in 2020, was just making a bid to a national audience.

"It's clear, as McAuliffe winds down his term and looks ahead to his own political future, he has his mind less on Virginia and more on Iowa, New Hampshire and Nevada," said House GOP Caucus Chairman Tim Hugo.

Republican State Sen. Ben Chafin said Virginia is competing with other Southern states for business and will have a harder time if it's the only one with such "draconian" carbon limits. He said he thought the Legislature would look for ways to challenge the proposal when it reconvenes in January.

Based on preliminary modeling, Dowd said Thursday that under this plan, increases for ratepayers by 2031 would be less than 2 percent above what they could expect if the plan were not adopted.

McAuliffe, who been unable to score major wins with the GOP-controlled General Assembly, has increasingly turned to executive action to further his policy goals.

Virginia Attorney General Mark Herring issued a legal opinion saying the air board had the authority under current law to set a statewide emissions cap on new and existing power plants. But Cleveland, with the SELC, said Thursday that he expects a fight over the proposal in the courts and the Legislature.

Thursday's vote is just the first step in a long process. The plan is now subject to public comment and possible changes. The board will have to vote again on a final version.

DEQ spokesman Bill Hayden said that could take a year.

McAuliffe's May announcement came amid speculation that Trump would withdraw from the Paris climate accord, which set a target of limiting global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) — or 2 degrees at the most — by the end of the century.

Trump has since promised to leave the pact, and he has moved to revoke the Obama-era Clean Power Plan, which aimed to reduce carbon dioxide emissions at existing power plants by about one-third by 2030.

The president has also appointed officials such as EPA Administrator Scott Pruitt who question the scientific consensus that carbon released into the atmosphere from burning fossil fuels is the primary driver of global warming.