Virginia’s Democratic Governor Terry McAuliffe has directed the state Department of Environmental Quality (DEQ) to begin rulemaking to establish a statewide cap-and-trade program to reduce emissions of carbon dioxide (CO2) from fossil-fuel power plants.
Should the rulemaking become final, Virginia will become the third state entity to use the cap-and-trade approach to regulate CO2, following the Northeast’s Regional Greenhouse Gas Initiative (RGGI) and California’s Cap-and-Trade Regulation. McAuliffe’s Executive Directive 11—Reducing Carbon Dioxide Emissions from Electric Power Facilities and Growing Virginia’s Clean Energy Economy—instructs that the DEQ propose abatement mechanisms that provide for a “corresponding level of stringency to limits on CO2 emissions imposed in other states with such limits.”
“The threat of climate change is real, and we have a shared responsibility to confront it,” said McAuliffe in a statement. “Once approved, this regulation will reduce carbon dioxide emissions from the Commonwealth’s power plants and give rise to the next generation of energy jobs. As the federal government abdicates its role on this important issue, it is critical for states to fill the void.”
Work Group Recommendation
Directive 11 follows McAuliffe’s issuance of Executive Order 57 in June 2016, which directed the state’s Secretary of Natural Resources Molly Ward to convene a work group and recommend concrete steps to reduce carbon pollution from Virginia’s power plants. The first recommendation in the work group’s final report is that “the Governor consider taking action via a regulatory process to establish a ‘trading-ready’ carbon emissions reduction program for fossil fuel fired electric generating facilities that will enable participation in a broader, established multi-state carbon market.” (See the report here.) McAuliffe promptly agreed with this recommendation.
AG Affirms Legality
McAuliffe also asked state Attorney General Mark Herring to provide an official advisory opinion on whether a cap-and-trade regulation would raise legal issues. In a response letter, Herring noted that the state already regulates carbon pollution and greenhouse gases (GHGs) as part of its Clean Air Act Prevention of Significant Deterioration (PSD) program. Those regulations require that major stationary sources being constructed or undergoing a modification apply for a permit and that the source utilize the best available control technology for GHGs.
Herring goes on to say that it is “well-settled” that GHGs fall within the definition of air pollution and that the state’s authorities to regulate these emissions are not limited to establishing and maintaining a PSD permitting system. “Based on these authorities, I conclude that the [Virginia State Air Pollution Control Board] has the authority to establish a statewide cap on GHG emissions for all new and existing fossil fuel electric generating plants as a means of abating and controlling such emissions,” concluded Herring.
Solar Industry Growing
In his directive, McAuliffe emphasizes that any plan to reduce power-plant CO2 emissions must factor in the capacity of renewable energy to assume a larger role in energy generation. This is happening in Virginia, says McAuliffe, primarily with solar energy. Since the beginning of McAuliffe’s administration in 2014, the state has seen an increase from just 17 megawatts (MW) of solar installed to more than 1,800 MW of solar currently in service or under development.
“Revenues in the rapidly growing clean energy sector have risen from $300 million to $1.5 billion between 2014 and 2016,” said McAuliffe’s office. “In the last year alone, solar installations have risen nearly 1,200 percent. The number of Virginians employed by the solar industry rose 65 percent to 3,236—twice the number of jobs supported by coal.