Should Virginia join the carbon-trading club?

Source: Daily Climate

Virginia has made some modest steps toward reducing total carbon emissions, but it could be doing more — and should. The question is how.

The worst approach is, thankfully, off the table. In one of the few sensible things it has done over the past year, the Trump administration scrapped the Clean Power Plan — a top-down, heavy-handed, overly complex gift to federal bureaucrats that would have done shockingly little to mitigate global warming.

The best approach involves a refundable carbon tax, which would force polluters and those who use their products to internalize formerly nonmonetary social costs inflicted by power generation, transportation, and so on. The tax would raise the cost of goods and services, but the cost to consumers could be offset either by a corresponding reduction in taxes elsewhere, or by remitting the proceeds to citizens directly.

While that would offer the most efficient way to address the greenhouse effect, it faces steep political obstacles, and might need to be applied nationally to work properly.

That leaves the remaining option: a cap-and-trade system. Several Northeastern states have established one, known as the Regional Greenhouse Gas Initiative, or RGGI. The system sets a cap on total carbon emissions and requires power companies to purchase emission allowances, or credits, which they can resell among one another.

Because large generators tend to be more efficient and operate at greater economies of scale, they generally can bring emissions down below the level set by their allowances — and then sell the remaining allowances to smaller, more carbon-intensive generators. The smaller operators come out ahead because the allowances cost them less than the price of reducing their emissions.

As the carbon ceiling slowly ratchets down, the price of carbon allowances slowly rises, giving everyone an incentive to reduce emissions. But the system affords generators more flexibility and uses market forces to maximize efficiency.

Last week Virginia’s Air Pollution Control Board approved a new rule that would bring Virginia into the RGGI market. The proposal has been written in a way that skirts the General Assembly, where any talk of environmental regulation runs into Republican opposition. That might not matter as much come January, when the GOP finds its numbers in the House of Delegates much reduced, but the air board could not have predicted the huge Democratic gains on Nov. 7.

Joining RGGI through executive fiat is likely to invite legal challenge, and the challenge conceivably could succeed. In that case, Gov.-elect Ralph Northam and Democrats in the General Assembly should push legislation to join RGGI through statute. In fact, they probably should do so anyway; a legislative solution is preferable to an executive edict.

Either way, Virginia ought to join RGGI. In the absence of a national carbon tax, it represents the most efficient way to go about the necessary business of cutting carbon emissions.

http://www.dailyclimate.org/t/8012241853015237609