Virginia is closer to withdrawing from a regional carbon market at the end of the year following Republican Gov. Glenn Youngkin’s completion of a review of new regulations aimed at removing the state from the Regional Greenhouse Gas Initiative.

Youngkin finished his review July 7 and submitted the proposed regulation to the Virginia Register this week, meaning it will become effective at the end of August pending no other changes or holdups.

The regulation was proposed by Youngkin’s administration in the fall and approved by the State Air Pollution Control Board June 7. It will be published in the Register on July 31, triggering a 30-day public comment period before it becomes effective on Aug. 30. The regulation calls for Virginia to leave the market Dec. 31, which is the end of the state’s current three-year contract to participate in it.

The 12-state market, known as RGGI, requires electricity producers to buy allowances to emit carbon. In Virginia, utilities are allowed to recover the cost of those allowances. For Dominion, that meant residential customers paid an average monthly fee of $2.39 as part of their electric bills to cover participation costs. Following Youngkin’s initial announcement that he planned to withdraw Virginia from RGGI, Dominion suspended the fee, but it has since sought to reinstate it. The utility’s regulators, the State Corporation Commission, are recommending approval of a modified version of its request.

Youngkin has sought Virginia’s withdrawal from RGGI since his election, calling the fee that customers pay a “hidden tax.” 

Democrats and environmental groups, however, have argued that RGGI is a key part of Virginia’s efforts to reduce carbon emissions linked to climate change and have lauded the over $500 million that the state has received from allowance revenues. Under state law passed by Democrats during two years of control of state government, those proceeds are funneled into state flood resilience and energy efficiency programs.

The publication of the regulation in the Virginia Register is when environmental groups like the Southern Environmental Law Center say a legal challenge of the withdrawal could be filed. A broad group of critics have said that withdrawing Virginia through regulatory changes is illegal and that legislation is needed.