New York — The Democratic Party winning control of both chambers of Virginia's General Assembly in Tuesday's elections paves the way for the state to join a regional emissions cap-and-trade program, thus tightening that oversupplied market, and could have natural gas pipeline development implications.
Virginia Democrats took control of the House of Delegates and State Senate for the first time since 1994.
"The voters have spoken, and they have elected landmark Democratic majorities in both the Senate and the House of Delegates," Governor Ralph Northam said in a Tuesday evening statement.
"I am proud of my fellow Democrats and inspired by our shared victory," Northam said.
Listing a set of issues important to Democratic voters, Northam included investing in clean energy and taking bold action to combat climate change.
Virginia wrote and finalized a regulation to cap carbon dioxide emissions earlier this year, but the budget did not allocate any money for it.
The regulation is designed to cap emissions from 32 fossil fuel-fired power plants with more than 25 MW of generation capacity starting in 2020, and then require a 30% emissions reduction over the next 10 years.
"With the election results, we are very hopeful the Assembly will fully fund Governor Northam's carbon regulations," Will Cleveland, senior attorney with the Southern Environmental Law Center, said in a phone call Wednesday.
There could be a separate regulation to join the Regional Greenhouse Gas Initiative and the revenue would flow to the state for use in energy efficiency and sea level rise mitigation rather than to the utilities, Cleveland said.
The RGGI states are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont. New Jersey is set to rejoin the compact January 1, 2020, after withdrawing in 2012 under the administration of Republican Chris Christie.
"A Virginia entrance into RGGI would likely tighten balances in the currently oversupplied market," Jeff Berman, director of clean energy analysis with S&P Global Platts Analytics, said.
The Democratic victory last night makes this entrance more likely, and thus supports higher RGGI market prices, Berman said.
Analysts at consultant Clearview Energy Partners agree, saying in a research note they think Democrats are likely to resuscitate Northam's effort to join RGGI next year.
And while the legislature would be unlikely to block such efforts, Northam may now seek legislative approval to directly join the RGGI carbon market, potentially joining as soon as 2021, Clearview said.
Offshore wind power development could also get a boost from the Democrat-controlled legislature.
There is broad interest in simultaneously retiring the fossil-fueled generation fleet due to climate concerns and replacing it with zero-carbon resources, and while there is some question of what that balance will be, offshore wind will be a part of it, Cleveland said.
ATLANTIC COAST PIPELINE
The legislative shift could also have implications for Dominion Energy's Atlantic Coast Pipeline, but much of the uncertainty surrounding the 600-mile, 1.5 Bcf/d natural gas transportation project is currently unfolding at the federal court level.
Governor Northam in September issued Executive Order 43 telling the Department of Mines, Minerals and Energy to develop an action plan to generate 30% of Virginia's power from renewable energy resources by 2030 and produce 100% of the state's power from carbon-free resources by 2050.
You cannot accept the challenge of hitting those targets and commit to using a natural gas pipeline beyond 2050, Cleveland said, adding that being 100% carbon free by 2050 and building ACP are "mutually incompatible."
There could be increased risk of the legislature taking action that could frustrate the project in 2020 and beyond, but Clearview thinks such actions would be more likely if ACP continues to struggle with its permits.
There is a case involving the US Fish and Wildlife Service environmental permits that is currently pending in the US Court of Appeals for the 4th Circuit, as well as a case involving the US Forest Service over the pipeline's proposed Appalachian Trail crossing that has reached the US Supreme Court.
"Sound energy policy isn't a partisan issue," Rayhan Daudani, Dominion Energy spokesman, said.
"Over the course of our company's 100-year history, we've had an excellent record of working with both parties to meet our customers' needs, and we look forward to working with the newly elected and returning legislators in the coming session," Daudani said.
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