State Air Pollution Control Board Approves Draft Rule to Cut CO2 Emissions

November 21, 2017

On Thursday, November 16, 2017, the Virginia State Air Pollution Control Board unanimously approved draft rules to regulate carbon dioxide emissions from power plants and to link Virginia to the Regional Greenhouse Gas Initiative (RGGI) carbon trading network.

The draft regulations came after over a year of hearings and study prompted by Governor McAuliffe’s Executive Order 57, which directed the Virginia Secretary of Natural Resources to “convene a Work Group, chaired by the Secretary, to study and recommend methods to reduce carbon emissions from electric power generation facilities.” This workgroup was made up of the Secretary of Natural Resources, the Secretary of Commerce and Trade, the Director of the Department of Environmental Quality (DEQ), the Director of the Department of Mines, Minerals and Energy (DMME), and the Deputy Attorney General for Commerce, Environment, and Technology. This group facilitated extensive stakeholder engagement, including six in-person meetings and a three month public comment period, before compiling the recommendations and submitting a final report to the Governor on May 12, 2017.

Finding that the Work Group’s most important recommendation was the establishment of regulations limiting the total amount of carbon dioxide emitted from electric power facilities, on May 16, 2017, the Governor issued Executive Directive 11 directing the DEQ to “[d]evelop proposed regulations for the State Air Pollution Control Board’s consideration to abate, control, or limit carbon dioxide emissions from electric power facilities.”

The approved draft rule establishes a new carbon dioxide cap of 33 million or 34 million tons, beginning in 2020. This cap will decrease 3 percent each year until 2030. Under this new rule, fossil-fuel plants that generate more than 25 megawatts will receive state allowances that permit certain levels of emissions. According to the Governor’s office and DEQ, this will affect approximately 33 power plants and will reduce Virginia’s carbon dioxide emissions by 30 percent between 2020 and 2030.

Beyond the new cap, the draft rule also links Virginia to the RGGI network, a 9-state carbon cap and trade program that establishes regional emission caps and issues tradeable carbon allowances. Participating states sell their emissions allowances through quarterly auctions and in turn invest the proceeds in various energy efficiency, renewable energy, and/or other consumer benefit programs. The DEQ expects that joining the RGGI market will increase average residential bills by about 1 percent, commercial bills by 1.1-1.4 percent, and industrial bills by 1.3-1.7 percent by 2031. Despite this slight increase, however, RGGI states have seen approximately 3.6 percent higher economic growth than non-RGGI states since the program began.

With the approval of the State Air Pollution Control Board, the draft rule now will undergo a 60-day public comment period before the final rule is drafted. Michael Dowd, Director of the Air Division of the DEQ and author of the new regulation, expects the final rule to be ready for board approval by summer 2018.

VACo Contact: Chris McDonald

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