Virginia air board approves withdrawal from regional carbon market

The State Air Pollution Control Board took its final step to withdraw Virginia from a regional carbon market, sending the action to Republican Gov. Glenn Youngkin’s office for final action, despite a majority of public commenters continuing to oppose the move.

Following a 30-minute closed session to discuss possible litigation against the decision, the board voted 4-3 to adopt the regulation withdrawing the state from the Regional Greenhouse Gas Initiative. All Youngkin appointees voted in support of the measure, while all three appointees of former Democratic Gov. Ralph Northam voted against it.

The market, known as RGGI, requires electricity producers to buy allowances in quarterly auctions for every ton of carbon they emit. In Virginia, existing state law requires the proceeds from the sales, which have totaled more than half a billion dollars since the state began participating in auctions in 2021, to go toward flood resiliency and energy efficiency efforts.

Secretary of Natural and Historic Resources Travis Voyles on Wednesday reiterated the Youngkin administration’s argument that the allowance costs passed on by the state’s electric utilities to customers constitute a hidden tax. Dominion Energy, Virginia’s largest electric utility, previously added a separate charge to customer bills for the allowance costs, which increased monthly residential bills by $2.39 on average. The company briefly suspended the fee but is now seeking to reinstate it.

“Mr. Chairman and members of the board, that is called a tax,” said Voyles.

The administration began the process of withdrawing Virginia from RGGI through regulatory approval last year, though opponents say legislative change is needed. The action by the board Wednesday sends the withdrawal regulation to the administration, which then must publish it in the Virginia Register. Thirty days after publication, the regulation will go into effect.