CLOSUP Student Working Paper Series Number 30 April 2018
Virginia’s Road to RGGI: A Case Study of State-Level Cap-and-Trade Adoption Joe Cianciola, University of Michigan
This paper is available online at http://closup.umich.edu Papers in the CLOSUP Student Working Paper Series are written by students at the University of Michigan. This paper was submitted as part of the Winter 2018 course PubPol 495 Energy and Environmental Policy Research, that is part of the CLOSUP in the Classroom Initiative. Any opinions, findings, conclusions, or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the view of the Center for Local, State, and Urban Policy or any sponsoring agency
Center for Local, State, and Urban Policy Gerald R. Ford School of Public Policy University of Michigan
Joe Cianciola Professor Sarah Mills Public Policy 495 25 April 2018 Virginia’s Road to RGGI: A Case Study of State-Level Cap-and-Trade Adoption Abstract In the global fight against climate change, cap-and-trade programs remain one of the most effective means of greenhouse gas mitigation at policymakers’ disposal. Within the United States, several sub-national cap-and trade programs have emerged with varying degrees of success, the most noteworthy being the multi-state Regional Greenhouse Gas Initiative (RGGI). Recently, the state of Virginia began the process of joining RGGI through executive action, a process which has illustrated both barriers to and catalysts of state-level climate policy adoption. Utilizing Kingdon’s multiple streams framework, I conduct a case study to uncover the internal dynamics of the RGGI adoption process in Virginia. Ultimately, I find that partisan polarization surrounding environmental issues represents the largest barrier to state-level climate policy enactment. Additionally, I emphasize the importance of dedicated climate policy entrepreneurs to the adoption process and highlight the potential weakness of unilateral executive-driven policy adoption.
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Introduction Climate change mitigation is perhaps the most intractable issue facing mankind in the 21st century. Since the dawn of the Industrial Revolution, human activity has resulted in the release of unprecedented levels of greenhouse gases (GHGs) into the atmosphere, contributing significantly to climate change (Christoff & Eckersley, 2013). The rise in global temperatures associated with climate change will only increase if anthropogenic GHG emissions continue along current trends, resulting in “severe droughts, floods, and storms causing crop failures . . ., dramatic water shortages . . ., sea level rise of over seventy meters, causing the displacement of millions of people . . . , [and] the extinction of a significant percentage of the planet’s marine and terrestrial species”(Christoff & Eckersley, 2013, p. 75). It is therefore vital that governments – be they state, local, or national – enact policies which will result in the reduction of GHG emissions. One of the most promising policies in this realm is a market-based approach to emissions reduction known as ‘cap-and-trade’. Under such a system, a government sets a regulated cap on the maximum allowable level of GHG emissions, either for a particular industry or for an entire economy. The government distributes emissions allowances totaling the amount of the cap to GHG-emitting firms, either for free or through an auction process. Firms may then buy and sell their allowances on an emissions market, creating financial incentives for firms to further lower their GHG footprint (Keohane & Dudek, 2018). At the federal level, the United States has failed to make meaningful progress on an emissions trading policy. The closest pass came in 2010, when a bill to establish a national cap-
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and-trade system passed in the House but ultimately failed in the Senate, effectively bookending national efforts at emissions reduction for the foreseeable future (Weiss, 2013). However, over the last decade, several regional cap-and-trade programs have emerged, suggesting that the future of US climate policy may lie at the sub-national level. The most prominent of these programs to emerge were the Midwestern Green House Gas Reduction Accord (MGGRA), the Western Climate Initiative (WCI) and the Regional Green House Gas Initiative (RGGI). Yet even these regional initiatives have proved vulnerable. Partisan polarization and a lack of design flexibility contributed to a partial collapse of the WCI, a full collapse of the MGGRA, and the exit of New Jersey from the RGGI (Rabe, 2016). Fortunately, not all contemporary action on cap-and-trade has been negative. This past January, Democratic Virginia Governor Ralph Northam reaffirmed the intention of his predecessor to bring the state into the RGGI. This development, if successful, would be consequential for a number of reasons; it would mark the first state to join RGGI since the program’s initial adoption phase, as well as the first southern state to enter a cap-and-trade agreement. In an era where many states appear poised to lead the fight against climate change, Virginia could serve as a model test case, perhaps paving the way for a broader expansion of cap-and-trade. However, in the early stages of adoption, it appears that the same circumstances which doomed the durability of other states’ commitments to cap-and-trade are at play in Virginia, suggesting that the Commonwealth’s involvement in RGGI could be tenuous from the outset. As a case study of state climate policy adoption, I seek to explore the factors which are shaping Virginia’s ongoing linkage with RGGI. 3
Literature Review Politics of Climate Policy Matisoff (2008) takes an explorative approach to analyze how politics and power relations play out in the adoption of cap-and-trade policy. The article compares the politics of four attempts at cap-and-trade: the US acid rain program, the EU Carbon Trading System, The Regional Greenhouse Gas Initiative, and the Massachusetts Emissions approach. The author conducted this comparative analysis using an “arenas of power� typology which examines how costs and benefits associated with a policy are distributed, looking specifically at allowance trading mechanisms within proposed cap-and-trade systems. Two types of mechanisms exist: free allocation, where tradeable emissions allowances are initially given to firms for free, or auction-based allocations, where emissions allowances are initially auctioned off to the highest bidder. Environmental and Public Interest groups tend to favor the auction system, which immediately imposes costs on polluters and generates revenue for climate policies. The author found that the narrow distribution of costs and wide distribution of benefits associated with cap-and-trade policy makes free allocation the dominant model. Further, he finds that adoption of an auction-based allocation model requires a committed, powerful policy entrepreneur who can overcome the power of interest groups who prefer the free allocation system. While Matisoff demonstrated how politics and power relations influenced one aspect of the design of cap-and-trade agreements, he did not explore the political factors which influenced the initial decision for adoption of cap-and-trade.
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Cook (2010) explored this gap by researching what makes states more or less likely to initially adopt climate policies–specifically, energy efficiency and renewable portfolio standards. In seeking to answer this question, the author looked at two policy adoption theories; the internal determinants theory, which suggests that state policy adoption is a function of internal characteristics, and regional diffusion theory, which suggests that policies spread to neighboring states with similar characteristics. Ultimately, the author found that internal factors drove the adoption of climate change policies more so than regional diffusion. Additionally, the results suggested that the most important determinants of adoption were citizen liberalism, the strength of carbon-emitting industry, renewable energy potential, and air quality; liberal states with higher per-capita emissions, more renewable potential, and less carbon-emitting industry were more likely to adopt climate policies. However, Cook’s analysis of state adoption lacked insight into political dynamics within the executive and legislative branches of states. Rabe (2016) examined these dynamics within established cap-and-trade programs while pursuing the question of why certain cap-and-trade programs in the United States have endured and why others have collapsed (Rabe 2016). The research focused on three regional cap-and-trade programs which emerged in the 2000’s and met differing fates; the Midwestern Greenhouse Gas Reduction Accord (which fully collapsed), the Western Climate Initiative (which faced partial collapse but has endured), and the Regional Green House Gas Initiative (which has been largely successful). The researchers carried out a systematic qualitative approach to analyzing the durability of each initiative, examining three factors: political resilience, design flexibility, and ability to build constituent support. They found that plans which included 5
horizontal cooperation in crafting the policy across states and vertical political buy-in within state executive and legislative branches were more likely to remain intact. Additionally, they found that designing plans flexibly to adapt to economic changes and building supportive constituencies through allocating revenues to publicized climate-linked projects also were key in creating long-term durability. However, Rabe did not dive deeply into these political factors within an individual state, nor did he examine why these political factors emerged during the initial adoption process. Multiple Streams Methodology The existing literature on the politics of climate policy lay a foundation for a case study on state adoption of cap-and-trade; however, they do not provide an adequate theoretical framework with which to organize such a case study. For this purpose, I turn to Kingdon’s multiple streams theory. In his 1984 book Agendas, Alternatives, and Public Policies, Kingdon presents a framework for understanding the process by which certain issues emerge on institutional agendas, and the factors which influence whether a policy solution is adopted. Kingdon argues that policy adoption typically occurs when multiple independent factors, or ‘streams’ intersect to create a ‘policy window’. These are the problem stream, the political stream, and the policy stream. Multiple streams theory has been utilized by political scientists for decades as a sound methodological basis for research on agenda setting and policy adoption, at both the national (Solecki & Shelley, 1996) and state (Brown, 2007) level. These publications applied multiple
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streams theory to the analysis of federal environmental policy and state education policy, respectively. Perhaps the most relevant application of multiple streams theory to my research purpose is Yusuf et al. (2016), a case study of climate policy adoption within the state of Virginia. Using Kingdon’s framework, the authors examine the policy landscape in Virginia surrounding sea level rise and explore the question of why Virginia has failed to enact a state policy to address the issue. Ultimately, the authors found that the Virginia legislature’s inaction on sea level rise was due to multiple factors; the lack of urgency to address the issue on behalf of the public and legislators, a lack of consensus on the effectiveness of possible policy solutions, and the partisan divide that surrounds issues of climate change. While the bodies of literature around the politics of state climate policy adoption and the dynamics of cap-and-trade programs are respectively broad, a gap exists in the intersection of these two issues. More specifically, existing research demonstrates that state adoption of cap-and-trade programs has been characterized by partisan polarization, and that this partisan polarization, along with other factors, has often led to state withdrawal or collapse. However, no research explores the dynamics of politics and power relations in the adoption process of a cap-and-trade policy within a single state. I seek to fill this research gap through a multiplestreams case study, exploring how internal factors shaped the RGGI adoption process in Virginia.
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Background & Methods Background In June of 2016, Virginia Governor Terry McAuliffe (D) issued Executive Order 57, directing the state Secretary of Natural Resources to convene a carbon pollution ‘working group’. This group’s purpose was to evaluate options under the state’s existing authority to reduce carbon pollution from Virginia’s power plants and provide an official recommendation to the Governor (“Governor McAuliffe Signs”, 2016). The findings of this working group, presented to Governor McAuliffe in May of 2017, recommended that the state develop regulations limiting the total amount of carbon dioxide emitted from electric power facilities. Subsequently, Governor McAuliffe issued Executive Directive 11, directing the Department of Environmental Quality to develop a proposed regulation to limit carbon dioxide emissions through market-based mechanisms, ensuring that the regulation could operate in a multi-state allowance trading program like RGGI. After a 6-month drafting process, the Department of Environmental Quality released a draft of the proposed regulation in November of 2017 (“Virginia DEQ”, 2017). That same month, Democrat Ralph Northam won Virginia’s gubernatorial race, ensuring continuity in executive branch support for cap-and-trade for the foreseeable future. On January 8th, 2018, the regulation was officially published in the Virginia Register, marking the beginning of a ninety-day public comment period, after which the draft will be finalized prior to taking affect in Summer 2018. (“Regulation for Emissions”, 2018)
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Methods The dynamics of Virginia’s adoption of cap-and-trade policy represents an atypical case study as defined by Seawright & Gerring (2008). Virginia is the first lone state to attempt to join RGGI since the program’s inception, and other than New York, it is poised to be the only state to enter into RGGI through unilateral executive action (Zullo, 2017). In analyzing Virginia’s ongoing adoption process, I seek to unearth the causal mechanisms which are driving executive-dominated action in Virginia’s adoption of cap-and-trade. As noted earlier, I utilize Kingdon’s multiple streams framework to guide my research and will accordingly organize my results and analysis into three ‘streams’: the problem stream, the political stream, and the policy solution stream. The problem stream refers to the identification of an issue as one that requires government intervention. The process of problem identification may occur suddenly with a focusing event which draws attention to the issue – for example, a plane crash which brings about demand for federal airline regulations (Kingdon, 1984, p. 104). The process of problem identification may also be brought on by indicators which bring attention to the magnitude or changing nature of the problem – for example, a study detailing the spread of a disease in a certain state (Kingdon, 1984, p. 206). Problem identification is often dependent on ideology – for instance, the divide between liberals and conservatives on whether access to healthcare should be a right (Kingdon, 1984, p. 116). In this section, I explore how the issue of carbon emissions became viewed as a salient problem in need of government intervention by certain Virginia stakeholders while failing to garner the attention of others. I analyze previous literature
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on ideological polarization surrounding climate policy both nationally and within the state of Virginia. Additionally, I look to Virginia newspapers, climate research publications, and statements by Virginia politicians to determine how views surrounding carbon emissions and climate change evolved over time. The policy stream deals with the process by which solutions to policy problems are generated. For any given policy area there exists “policy communities� comprised of specialists and experts, both inside and outside of government. Within these communities are policy entrepreneurs, individuals who invest their resources into advocating for a particular policy solution (Kingdon, 1984, p. 123). In this section, I discuss how RGGI served as an existing model of a policy solution to address the issue of carbon emissions and analyze how the solution made it on to the agenda of key Virginia officials. I also identify the Chesapeake Climate Action Network and Delegate Ron Villanueva as policy entrepreneurs who helped advance RGGI onto the policy agenda. The political stream involves the political conditions necessary for an issue to make it onto the governmental agenda. This stream includes changes of administration, ideological or partisan distributions in the legislative and executive branches, and the influence of interest groups (Kingdon, 1984, p. 170). In this section, I examine how these political factors have shaped the RGGI adoption process. I look at the distribution of partisan power within the Virginia legislature and executive branches across the last several administrations, as well as legal questions which have arisen surrounding unilateral executive action on emissions regulation. I also examine recent efforts in the Virginia Legislature to both block and facilitate Virginia’s entrance into RGGI; I analyze the text of these bills, vote counts, and sponsors to build 10
a profile of the role of partisanship in Virginia’s cap-and-trade debate. I also explore the role of interest groups in affecting Governor McAuliffe’s position on climate issues, referencing previous literature regarding interest group influence, research on the carbon-emitting power industry in Virginia, and newspaper coverage of the RGGI process. When these three streams merge – i.e. under the right political conditions, a problem becomes identified as one ripe for government action, and a feasible solution is present – a policy window opens, increasing the likelihood of policy adoption. I conclude my analysis by summarizing how the problem, policy, and political streams surrounding RGGI adoption in Virginia ultimately converged. Results & Analysis Problem Stream The identification of carbon emissions in the state of Virginia as a problem in need of government intervention fits two patterns identified by Kingdon; the process was dependent on ideology, and it was aided by the presence of both focusing events and indicators. The issue of carbon emissions fits within the climate change policy realm – i.e. high levels of carbon emissions are generally viewed as problematic insofar as they exacerbate climate change. Accordingly, patterns surrounding the problem identification process of carbon emissions largely mirror those surrounding climate policy, both at the national level and in Virginia. More specifically, there exists a strong ideological and partisan divide in the identification of climate change and carbon emissions as salient problems in need of addressing. 11
Within the scientific community, there exists a broad consensus that anthropogenic climate change is real, and that unless governments implement aggressive climate policies, mankind will face grave consequences (Christoff & Eckersley, 2013). Despite this overwhelming evidence, Republicans and conservatives in the United States tend to be skeptical of the claims of climate scientists, and of environmental issues more broadly (Jaques, Dunlap & Freedman, 2008). Republican legislators generally oppose government measures to address climate change, in line with the Party’s opposition to government regulation and strong support of the fossil fuel industry. Consequently, Democrats and progressives have generally led climate policy efforts at the national level (Jaques et al., 2008). Cook (2010) found that this partisan divide is also translates to the carbon emissions debate, as demonstrated by national votes on cap-andtrade legislation. Evidence suggests that the partisan divide on climate policy problem identification is also present in Virginia; in a recent survey of Virginia Legislators regarding sea level rise, Yusuf et al. (2016) found that Republican legislators were far less likely than Democrats to view the issue as one that should be addressed by state government. As I will discuss further in my analysis of the political stream, this ideological divide necessitated that the problem identification of carbon emissions would fall solely along party lines in Virginia, save for one key exception – the pioneering work of Republican representative Ron Villanueva. Ideology is not the only factor in the problem identification process; while Democratic politicians are generally more supportive of climate change mitigation policies, it is not a guarantee that Democrats will prioritize climate issues. The constraints of the legislative calendar necessitate that politicians focus on issues they deem the most important. Thus, as 12
Kingdon notes, the process of problem identification often requires a focusing event which brings attention to the problem, and/or indicators which quantify the magnitude of the problem (Kingdon, 1984, p. 206). In the case of Virginia, recurring coastal flooding accompanied by scientific research helped bring the threat of climate change onto the policy agenda of key stakeholders. Over the past several years, a number of research institutions have released reports detailing the current and future impact of climate change on the state of Virginia. For instance, the Chesapeake Climate Action Network released a report in July of 2014 which found that the rate of sea level rise on Virginia’s coast is close to the fastest in the nation, with estimates of up to a 7-foot increase by then end of the century. These patterns pose grave risk to Virginia’s coastal communities; for example, the Hampton Roads region “is second [in the U.S.] only to New Orleans as home to the most people at greatest risk from flooding caused by rising sea levels.” (“Safe Coast Virginia”, n.d.). Stakeholders who played a large role in the RGGI adoption process have referenced Virginia’s unique vulnerability to climate change as influential to their advocacy for RGGI, referring to either empirical research or personal experience. Delegate Ron Villanueva of Virginia Beach, when first announcing his legislative proposal to link Virginia to RGGI, mentioned that “[r]ising sea levels fueled by climate change now represent one of the single biggest risks to [my constituent’s] safety in coastal Virginia” (“Republican Delegate Unveils”, 2014). Similarly, former Governor Terry McAuliffe, upon announcing his intention to enter Virginia into RGGI through executive action, stated that “climate change threatens the Commonwealth of Virginia, from our homes and businesses to our critical military installations 13
and ports. Rising storm surges and flooding could impact as many as 420,000 properties along Virginia’s coast that would require $92 billion of reconstruction costs” (“Executive Directive 11”, 2017). Finally, current Governor Ralph Northam referenced first-hand experience when reaffirming his predecessor’s commitment to RGGI: "As a native of the Eastern Shore, a scientist, and a resident of Hampton Roads, I can tell you personally that, no matter what politicians in Washington say, climate change is real. . . For anyone who has trouble believing that, come visit Tangier Island with me sometime and meet the people whose way of life is already being altered by this global crisis" (“Governor Elect Northam Announces”, 2018). These statements demonstrate how reports on climate change and coastal flooding published in the 2010’s brought the issue of climate change to the attention of the policymakers who would ultimately act to bring Virginia into RGGI. However, their action would meet steep opposition from Republicans, illustrating the established pattern of partisan polarization surrounding climate policy. Policy Solution Stream As Kingdon (1984) notes, “the chances for a problem to rise on the governmental agenda increase if a solution is attached to the problem"(p. 204). While Virginia’s vulnerability to climate change may have helped bring the issue of carbon emissions to the attention of key stakeholders, a viable policy proposal was still needed to make the issue actionable. The Regional Green House Gas Initiative filled this role, serving as an existing model of an effective means of carbon emissions reduction which could viably be applied in Virginia. 14
RGGI formally launched in 2009, becoming the first multi-state cap-and-trade system in the United States. As of 2014, the year RGGI was first proposed in Virginia, C02 emissions had dropped by over 35% across the nine participant states. Proceeds from RGGI auctions yielded $2.5 billion in revenue, 67% of which were invested in clean energy projects within the region. Additionally, electricity prices across the region had decreased by 2% on average since the program took effect (“The Regional Greenhouse Gas Initiative”, 2016). Included in the RGGI covenant were provisions allowing any state to join RGGI, given they enacted legislation or regulations which complied with all RGGI requirements. (“RGGI Memorandum of Understanding”, 2005) However, the existence of an effective policy solution alone is not enough to bring it on to the governmental agenda. Dedicated policy entrepreneurs – individuals or entities who devote their time and resources to a specific policy area – must effectively advocate for their solution. As Kingdon (1984) noted, policy entrepreneurs “hook solutions to problems, proposals to political momentum, and political events to policy problems” (p. 211). The most important policy entrepreneur in Virginia’s RGGI adoption process was the Chesapeake Climate Action Network (CCAN). Founded in 2002, CCAN is a nonprofit organization devoted to fighting climate change in Maryland, Virginia and Washington D.C (“Chesapeake Climate Action”, n.d.). The group was present at every step in the lead up to RGGI adoption process; publicly linking RGGI to the broader issue of climate change, partnering with policymakers, and engaging in political pressure campaigns.
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In July of 2014, CCAN became the first entity to publicly advocate for RGGI in Virginia, with the release of a report entitled “Safe Coast Virginia” (“Governor Elect Northam Announces”, 2018). The report, which highlighted the threats climate change posed to Virginia and quantified the environmental and economic benefits the state would receive from RGGI membership, received coverage in several major Virginia newspapers (Newspaper articles). CCAN built upon the coverage their report received to attract political support for RGGI. The group was influential in advocating for the Virginia Coastal Protection Act – the first legislative proposal to enter Virginia into RGGI. This influence was demonstrated by CCAN Policy Director Dawone Robinson’s appearance alongside the main bill sponsor, Delegate Ron Villanueva, at a December 2014 press conference announcing the legislation (“Republican Delegate Unveils”, 2014). When it became clear that a legislative solution would be unfeasible with a Republicancontrolled legislature, CCAN engaged in a public campaign to pressure Governor McAuliffe into entering RGGI through executive action. In April of 2016, the organization released a “Carbon Pollution and Clean Power” report card, giving Governor McAuliffe a D+, citing his failure to carry out most of the progressive climate policies he promoted during his campaign. The report card qualified that the Governor could bring up his grade by “exercising his full legal authority to . . . implement a plan for Virginia that reduces greenhouse gases for existing and future power plants” (“Grading the Governor”, 2016). While there is no direct evidence that CCAN’s report heavily influenced Governor McAuliffe, it is telling that less than two months after its release, the Governor signed Executive Order 57, initiating the process of entering Virginia into RGGI. 16
Republican Delegate Ron Villanueva also served as a key policy entrepreneur in the RGGI adoption process. Influenced by his coastal community’s acute vulnerability to climate change, Villanueva became the only Virginia Republican to break with the party orthodoxy on climate issues and endorse Virginia’s entrance into RGGI. Villanueva was also the first legislator to introduce a bill to enter Virginia into RGGI, and he re-introduced the legislation three times between 2015 and 2017. While he was ultimately unsuccessful in gaining a legislative victory, his sustained efforts ensured that the potential benefits of RGGI adoption stayed in the public consciousness, as evident by contemporaneous newspaper coverage of the legislation (“Republican Delegate Unveils”, 2014; DiGangi, 2016). This coverage likely contributed to Governor McAuliffe’s decision to join RGGI; as Kingdon notes, “media attention to an issue affects politicians’ attention, partly because members follow mass media like other people, and partly because media affects their constituents” (Kingdon, 1984, p. 61). Political Stream By the time that problem streams and policy streams surrounding climate change and carbon emissions had merged in 2014, the political make-up of Virginia all but ensured that the state’s only hope for joining RGGI would lie in unilateral executive action. Prior to the election of Democratic governor Terry McAuliffe in November of 2013, Republicans held a trifecta in Virginia: control of the Governorship and majorities in both houses of Virginia’s bicameral legislature. Following McAuliffe’s election, Democrats briefly held control of the state Senate; however, the retirement of a Democratic State Senator in June of 2014 rendered Senate control back to Republicans (“Party Control of Virginia”, n.d.). From June of 2014 until the end of his four-year term, Governor McAuliffe presided over a divided 17
government in which Republicans narrowly controlled both houses of the Virginia legislature, a trend which continued following the election of Democratic governor Ralph Northam in November of 2017 (see Figure 1). Figure 1: Party Control of Virginia State Government. (n.d.). Retrieved April 17, 2018, from https://ballotpedia.org/Party_control_of_Virginia_state_government
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This division of political power all but guaranteed that a legislative entrance into RGGI would be impossible. Attempts by legislators to enter into RGGI during this time period illustrated the previously discussed partisan polarization on climate policy issues. Delegate Ron Villanueva introduced his RGGI bill in the Virginia House of Delegates three times between January of 2015 and January of 2017, but the GOP majority killed the bill in committee each time it was proposed, not once allowing it to be brought to the House floor for a vote (“HB 2205”, 2015; “HB 351”, 2016; “HB 2018”, 2017). Similarly, Democratic State Senator Bill McEachin, who co-sponsored Del. Villanueva’s RGGI initiative in the Senate, saw his version of the bill die in Republican-controlled committee three times over three consecutive years (“SB 1428”, 2015; “SB 571”, 2016; “SB 1471”, 2017). The steadfastness of the Republicans in their blocking of debate highlighted the caucus’ categorical rejection of government intervention on issues relating to climate change.
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The legislative might of Virginia Republicans thus thrust any potential action towards RGGI membership into the hands of the Democratic Governor. While Governor McAuliffe did eventually initiate the process of unilaterally entering Virginia into RGGI, environmentallyminded individuals may question why his first action did not come until June of 2016, over two years after he took office, and well over a year after the first legislative RGGI initiative failed. Several factors may explain McAuliffe’s reticence: opposing pressure from a powerful carbon energy sector and ambiguity regarding the legality of unilaterally entering RGGI. Though Governor McAuliffe pledged during his campaign to promoting clean energy and fighting climate change, his actions during the first half of his term suggest that pressure from the carbon-emitting power sector led him to temper his climate policy agenda (“Grading the Governor”, 2016). The carbon industry is relatively powerful in Virginia, as fossil fuels, in the form of natural gas and coal, account for the majority of Virginia’s electricity generation (“Virginia: State Profile”, 2017). Kingdon notes that interest groups representing powerful industries play a large role in the political agenda setting process (Kingdon, 1984, p. 61), a claim which is supported by McAuliffe’s reluctance to alienate the carbon industry. While McAuliffe did support some modest climate policies early in his term, such as enacting energy efficiency standards in government buildings and securing federal funding for sea-level rise adaptation, he sided with the state’s largest electricity provider, Dominion Power, on several plans to extend the reach of the fossil fuel industry in Virginia. For instance, in September of 2014, he approved construction of Dominion’s $5.1 Billion ‘Atlantic Coast’ natural gas pipeline, as well as endorsing Dominion’s plans to construct a new 1,600-megawatt gas-fired power plant (“Grading the Governor”, 2016). 19
McAuliffe’s trend of siding with the carbon-emitting power sector likely contributed to his initial inaction on RGGI. Contemporaneous newspaper coverage demonstrates that Dominion Power opposed the initiative, which would lead to lower demand for output from power plants and thus hurt their bottom line (“How Should Virginia”, 2015). For example, in a January 2016 article regarding a legislative proposal to join RGGI, Dominion Spokesman David Botkins stated that “We do have some concerns, because it would raise electric rates considerably in Virginia” (DiGangi, 2016). Another possible explanation for McAuliffe’s late action on RGGI is a lack of certainty as to whether the executive branch could legally enter into the program without legislative approval. RGGI membership can potentially yield significant changes to a state’s energy sector and economy, and the RGGI adoption process involves extensive rulemaking and decisions regarding appropriations. As such, most RGGI member states initially entered the program with buy-in from both the executive and legislative branches. While one other state – New York – joined RGGI through unilateral executive action, every state’s constitution is unique in its provisions on executive authority; what’s constitutional in New York may not be constitutional in Virginia. Indeed, McAuliffe's first action towards joining RGGI, Executive Order 57, was taken to determine whether the executive branch could unilaterally regulate carbon emissions under existing state law (“Governor Terence R. McAuliffe's”, 2017). While the Department of Environmental Quality and the state Attorney General ultimately concluded in May of 2017 that McAuliffe did have the authority to enter Virginia into RGGI, (“Executive Directive 11”, 2017) a
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number of stakeholders in the political and policy arenas disputed – and continue to dispute – this claim. Virginia-based Attorney Jay Holloway, who works with the Williams Mullen law firm's Environment and Natural Resources Group, argued in a November 2017 article in the Roanoke Times that “[t]he attorney general's opinion takes a position on the code and more importantly the regulation that I think is flawed . . . [current law] doesn't allow the air board to move forward with this type of CO2 program” (Zullo, 2017). Virginia Republicans also question the legal authority of the executive branch to enter into RGGI, with the chairman of the Republican Party of Virginia denigrating the plan as “regulatory overreach” (Zullo, 2017). The Republicancontrolled legislature went as far as passing a bill in March of 2018 which explicitly prohibits the governor from entering into RGGI without legislative approval (“HB 1270”, 2018). While the Governor’s veto power means that this prohibitive measure will not become law, the lack of legislative support and legal questions surrounding RGGI signify that the program could face legal challenges in Virginia courts following its implementation.
Coupling the Streams Ultimately, the ongoing RGGI adoption process in Virginia was initiated by an unconventional convergence of the problem, policy, and political streams. Reports on climate change and coastal flooding published in the 2010’s brought the problem of climate change – and by proxy, carbon emissions – to the attention of key Virginia politicians, though partisan polarization surrounding climate policy prevented the issue from attracting broad bipartisan 21
support. In the policy stream, the Chesapeake Climate Action Network served as the primary policy entrepreneur, coupling the problems of climate change and carbon emissions to the existing solution of RGGI, and lobbying Delegate Villanueva to introduce legislation to enter Virginia into the multi-state program. In the political stream, consistent Republican control of the Virginia legislature prevented a legislative adoption of RGGI, leaving the initiative’s fate in the hands of the executive branch, controlled by Democratic Governor Terry McAuliffe. Though McAuliffe had signaled his support for addressing climate change during his campaign, he softened his progressive environmental positions during the first half of his administration, owing largely to pressure from the state’s powerful carbon-emitting power industry. However, media coverage of Delegate Villanueva’s sustained legislative efforts to join RGGI along with CCAN’s public rebuke of McAuliffe for his lack of action on climate change likely prompted Governor McAuliffe to sign Executive Order 57 in June of 2016, beginning the regulatory process of entering Virginia into RGGI. Conclusion There were a number of limitations on my research design which affected the scope and efficacy of my results. First, the time constraints of the project necessitated that I limit the breadth of my primary source material. I chose the sources which I thought would best illustrate Virginia’s RGGI adoption process, but I was not exhaustive in my research; there were 22
hundreds of public comments, hours of legislative hearings, and dozens of research studies which could have provided further clarity that I simply did not have time to review. Additionally, there were times where the lack of an existing source for a key component of my research required me to make inferences regarding the motivations of various actors. For instance, I was unable to find a source detailing Governor McAuliffe’s rationale for waiting two years before initiating the RGGI adoption process and had to infer his motivations from other source materials. These inferences may have been inaccurate or may have oversimplified the motivations of certain actors. Finally, my research into the dynamics of the RGGI adoption process is limited in that the process is ongoing. The draft regulation’s public comment period will not run its course until April 9th, and the final regulation will not take effect until sometime this summer. My research will not be able to incorporate any changes made to the final RGGI regulation during this period, nor will it be able to analyze any potential court challenges which ensue following the regulation’s enactment. Despite these limitations, my results carry implications which may be useful for statelevel policymakers seeking to enact cap-and-trade legislation, or climate policy more broadly. Perhaps the most potent take-away is one that has been heavily supported by previous research: partisan polarization represents the largest barrier to state-level climate policy 23
enactment. Accordingly, maintaining Democratic control of legislatures and governorships should be the top priority of state-level climate policy advocates. Additionally, my analysis demonstrated that strong, dedicated policy entrepreneurs who tie problems to solutions, mobilize the public, and effectively lobby politicians are vital to the success of any climate policy initiative. Finally, the RGGI process in Virginia demonstrated the potential weakness of unilateral executive action on climate policy. Such action typically results in less comprehensive policies which are easier to reverse and more likely to prompt legal challenges than policies which achieve legislative buy-in. Looking forward, state-level policymakers and policy entrepreneurs can incorporate these lessons when pursuing their climate policy goals, and help the United States meet the climate imperatives of the 21st century.
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