As Republicans threaten two years of climate legislation, Democrats go on defense

With Republican Gov. Glenn Youngkin moving to withdraw Virginia from a regional carbon market and a new Republican majority in the House of Delegates pledging to amend a sweeping decarbonization law passed in 2020, Democrats are going on defense to protect what they see as their party’s signature environmental achievements of the past two years. 

“I don’t see any appetite for amendments” among Senate Democrats, said Sen. Jennifer McClellan, D-Richmond and one of the patrons of the 2020 Virginia Clean Economy Act. On both that law and the Democrats’ carbon market legislation, “we will hold the line,” she said. 

In the House, Del. Rip Sullivan, D-Fairfax and the House patron of the VCEA, described his “top three priorities” for the session as simply “defense, defense and defense.”  

Over two years of party control in Richmond, Democrats pushed through a wide-ranging package of laws aimed at combating climate change by decarbonizing the electric grid and transportation. 

Most prominent was the Virginia Clean Economy Act, a comprehensive plan for transitioning the state’s two largest electric utilities, Dominion Energy and Appalachian Power Company, to 100 percent renewable and nuclear energy by midcentury. Besides setting targets for the development of large quantities of wind, solar and storage, the VCEA requires the utilities to source an increasing percentage of their energy from renewable resources, sets closure dates for remaining coal plants and establishes binding energy efficiency targets. 

Both VCEA and 2020’s Clean Energy and Community Flood Preparedness Act also directed Virginia to join the Regional Greenhouse Gas Initiative, or RGGI, an 11-state carbon market that requires power producers to purchase carbon allowances at auction and then redistributes the proceeds to the states. 

In Virginia, the law authorizing participation in RGGI earmarks 50 percent of all auction proceeds for low-income energy efficiency programs and 45 percent for a statewide flood protection fund. 

But Republican ascendancy in the 2021 elections put both of the Democrats’ signature environmental laws in peril. 

Party members are split between skepticism of and hostility to the Clean Economy Act and RGGI participation. During his campaign, Youngkin criticized the VCEA sharply; after his election, his first major environmental move was to announce he intends to withdraw Virginia from the market, although his authority to do so without legislation is disputed. (His second was to nominate former Trump Environmental Protection Agency chief Andrew Wheeler for Virginia’s top environmental post, an appointment that McClellan described as “antithetical to the work that we have done in the past two years.”) 

Much of Republicans’ opposition to both laws is on cost and reliability grounds: VCEA and RGGI, they say, impose too much of a financial burden on the state’s captive ratepayers and could endanger the electric grid. 

“In broad terms, big-picture terms, I’m concerned that it is so sweeping and so comprehensive that we haven’t sufficiently grappled with its costs to ratepayers,” said Del. Lee Ware, R-Powhatan. 

Instead of relying on renewables and nuclear to support the grid, party leaders, echoing Youngkin’s rhetoric on the campaign trail, are arguing Virginia’s energy plans should favor an “all of the above” approach.

 “We know that we want to get to a clean economy and use renewable energy, but the sun doesn’t shine every day and the wind doesn’t blow every day,” House Majority Leader Terry Kilgore, R-Scott, said during a news conference on the first day of the 2022 session. “So you’ve got to have that backup power plant with natural gas or coal or refuse coal.”  

Particularly galling to Republican lawmakers is an estimate released in 2020 by the State Corporation Commission, the body that regulates Virginia’s electric utilities, that the VCEA could cost residential customers an additional $800 annually by 2030. 

Democrats have consistently disputed that estimate, arguing that Dominion in particular has failed to present a least-cost proposal for complying with the new law. One analysis released this week by Virginia Advanced Energy Economy, a clean energy business group that was one of the main architects of the VCEA, found that the law would save the average residential customer almost $34 annually. 

While some Republicans would like to see the VCEA scrapped entirely — for the second year running, Del. Nick Freitas, R-Culpeper, is carrying a “Repeal VCEA” bill — the House caucus is taking a narrower approach. 

“We’re going to be making some amendments to the Virginia Clean Economy Act,” said Kilgore. “Are we going to go with a wholesale rollback? I’d say not, but we are going to try to address some issues that could lower folks’ power rate.” 

Key proposals include Ware’s House Bill 73, which among other amendments would get rid of offshore wind cost provisions seen by many lawmakers on both sides of the aisle as overly favorable toward Dominion, as well as renewable buildout targets. One recent study of VCEA implementation by the University of Virginia’s Weldon Cooper Center for Public Service found that those targets could cost ratepayers more than $250 million per year by 2035 compared to a “least-cost” scenario. House Bill 839 from Del. Tony Wilt, R-Rockingham, would prohibit electric utilities from recovering the costs of solar, wind and storage facilities from ratepayers after July 2022 unless the utility could prove they were necessary for reliability or the lowest-cost option. 

Others seek to extend the life of Virginia City Hybrid Energy Center, a Dominion plant fueled largely by coal in Wise County, outside the utility’s territory, that is currently operating at a loss. Company estimates say running the plant through 2029 would cost ratepayers roughly $472 million. 

At least some of the proposals are likely to clear the House. While Democrats in that chamber also described little appetite for amendments — Sullivan said he would look at any proposals with “a skeptical eye only because I worry about mischief that could happen” — Republicans hold a majority and have made reducing energy costs one of their top-line goals for the session. 

The Senate, where Democrats hold a narrow 21-19 edge, will prove more of a challenge.

“Senate Democrats are committed to fighting climate change and building an economy independent of fossil fuels,” said caucus chair Mamie Locke, D-Hampton. “We will stand firm on any threats to the Virginia Clean Economy Act and Virginia’s participation in the Regional Greenhouse Gas Initiative.”

Sen. Monty Mason, D-Williamsburg, said he thought “some adjustments” could be made to the RGGI law, citing a change sought by independent power producer LS Power to reduce the financial impacts to generators with pre-existing power contracts. But “as far as the Clean Economy Act goes, that was one of the most heavily negotiated, widest array of stakeholders involved in a bill that I’ve ever seen,” he said. “I’ll look at anything, but that was negotiated so heavily.” 

Several lawmakers indicated Youngkin’s out-of-the-gate pledge to withdraw Virginia from RGGI and choice of Wheeler for Secretary of Natural Resources — an appointment they have told The Hill they intend to block — have increased their wariness of Republican energy proposals.

“Once the governor made his announcements, we knew we would be on heavy defense. … That was the shot across the bow,” said McClellan.

Mason too pointed to Youngkin’s RGGI promise as a complicating factor: “It’s hard to make adjustments when the governor’s throwing down the gauntlet.”