The Nickel Report

On Sunday, April 12, Virginia Governor Ralph Northam signed into law the Virginia Clean Economy Act and the Clean Energy and Community Flood Preparedness Act. These two new laws will require Virginia to transition to 100 percent carbon-free energy by 2050 and join the Regional Greenhouse Gas Initiative (RGGI), among other things.

The South Coast Air Quality Management District’s (SCAQMD or the District) Regional Clean Air Incentives Market (RECLAIM) made history as California’s first emissions cap-and-trade program. But the District’s decision to sunset the program has resulted in significant uncertainty surrounding RECLAIM’s transition for local communities and industry alike.

Widely acclaimed at its 1993 inception, the program was intended to promote more efficient emissions reductions by allowing facilities to meet their annual cap either by adopting pollution controls directly or by purchasing RECLAIM trading credits (RTCs) from other facilities able to install controls at lower cost and achieve emissions below their caps. In its early years supporters praised RECLAIM as a success, pointing to significant reductions across the South Coast Air Basin. But in more recent years, the US Environmental Protection Agency (EPA) and other stakeholders criticized RECLAIM as falling short of expectations, pointing to periods of RTC price spikes reducing the program’s coverage and a subsequent glut of RTCs from plant closures that critics claim lowered the incentive for pollution reductions at remaining RECLAIM facilities.

Since President Trump’s election, his Administration has emphasized cooperative federalism and has opened the door for more state responsibility.  California is walking through that door, and has positioned itself, according to its elected officials, at the vanguard of the so-called “resistance” to the Administration and its policies, real and perceived.  This is particularly clear on environmental, energy, and natural resource matters.  Last week illustrates the growing divide between California and the federal government in these areas.

[caption id="attachment_154" align="alignnone" width="300"] Photo by Alfonso Cuchi[/caption]

From the look of things, California is gearing up for a fight.

During the campaign, President-Elect Trump promised to redirect EPA’s focus away from climate change, with a greater emphasis on clean air and clean water. As part of this pledge, he vowed to dismantle the Obama Administration’s Clean Power Plan (CPP) and roll back EPA regulations, which he sees as hampering U.S. competitiveness.

California sees things differently. On January 4, California’s Legislature announced it had hired Eric H. Holder Jr., President Obama’s former U.S. Attorney General, as outside counsel to lead the state’s legal challenges to the incoming administration on a number of fronts, including the environment. In a joint statement, the Legislature explained, “With the upcoming change in administrations, we expect that there will be extraordinary challenges for California in the uncertain times ahead. . . . This is a critical moment in the history of our nation. We have an obligation to defend the people who elected us and the policies and diversity that make California an example of what truly makes our nation great.”