The key climate policy stories that bear watching in the Mid-Atlantic region in 2022 make up a short but high-impact list that includes offshore wind, how quickly the region’s investor-owned utilities will decarbonize and Glenn Youngkin.

The clean energy landscape in the Mid-Atlantic region got a major shake-up in November when Republican Youngkin edged out Democrat Terry McAuliffe as Virginia’s next governor, and Republicans captured a majority in the state’s House of Representatives. Youngkin released no major policy statements on energy during or after the campaign, beyond isolated statements that he would not have signed the Virginia Clean Economy Act (VCEA) and, once in office, would pull the state out of the Regional Greenhouse Gas Initiative (RGGI), which functions as a multistate carbon market.

Passed in 2020, the VCEA mandated the state’s utilities to decarbonize, Dominion Energy by 2045 and Appalachian Power by 2050, while also calling for 5,200 MW of offshore wind, and 16,000 MW of solar and onshore wind. Clean energy advocates quickly noted that repeal of the law is unlikely as long as Democrats retain their majority in the Senate.

Youngkin’s claim that he can take the state out of RGGI via an executive order is on similarly shaky ground; the legislature approved Virginia’s participation in RGGI in 2020, and again, the Senate would be a firewall for any move to leave. (See Youngkin Vows to Pull Va. from RGGI.)

Still, as governor, Youngkin has the power to slow down the state’s move toward clean energy — via executive orders and appointments to the Energy and Environmental Quality departments. However, outgoing Gov. Ralph Northam successfully promoted the VCEA and clean energy in general as a job creator and a draw for businesses to locate in the state, and the sector continues to have significant momentum.

Youngkin’s election also means the Mid-Atlantic now has another Republican governor in addition to Maryland’s Larry Hogan, who has a relatively positive record on climate. Under Hogan, Maryland has been part of the U.S. Climate Alliance of states committed to net-zero or similar major cuts in carbon emissions. Virginia is also a member, so any action by Youngkin to leave the alliance would also send a strong signal of where he wants to take the state.

New Jersey’s gubernatorial election was also a squeaker, but in that contest Gov. Phil Murphy, the Democratic incumbent, edged out a victory. Some in the state immediately started speculating whether the close election might push Murphy to moderate his strong clean energy policies.

The governor quickly put such ideas to rest by signing an executive order committing the state to cutting its carbon emissions 50% under 2006 levels by 2030 and backing up that goal with more than $33 million in state funds to purchasing medium- and heavy-duty (MHD) electric vehicles. (See Murphy Toughens NJ Emission-reduction Goals.)

Murphy has been particularly focused on vehicle electrification, especially in the MHD sector where electrification can help the state clean up the heavy-duty traffic and emissions coming out of its ports.

The Offshore Hub Competition

Offshore wind was one of the biggest Mid-Atlantic stories in 2021 and will continue to a major force in the region’s energy sector for the coming years, generating clean power, economic growth and jobs as the industry builds a supply chain up and down the coast.

The U.S. lags far behind the United Kingdom and Europe in offshore development, and the technology is particularly important because of its potential to provide more consistent, reliable power than solar or onshore wind, especially during cold winter months.

President Joe Biden has set a goal of 30 GW of offshore wind on both U.S. coasts by 2030, and last year saw fierce competition among East Coast states vying to turn their Atlantic ports into manufacturing and operational hubs for the thousands of megawatts of massive offshore turbines now in development.

Certainly, Youngkin will be hard-pressed to oppose Virginia’s leading edge in offshore wind development, with the first phase of the state’s Coastal Virginia Offshore Wind (CVOW) project — a 12-MW pilot — up and running 27 miles off Virginia Beach.

The next phase of the project, which is wholly owned by Dominion Energy, will add more than 2,600 MW of turbines, stretching from 27 to 35 miles offshore. The project still has to pass muster with the Virginia State Corporation Commission. According to the CVOW website, customers will pay for the $9.8-billion project with expected rate increases of about $4 per month, “though this figure will initially be less and will vary from year to year.”

Dominion is also building the nation’s first Jones Act-compliant vessel to be used for offshore wind operations. A federal law, the Jones Act requires ships that move goods between U.S. ports to be built, owned and operated by U.S. citizens or permanent residents. Both Dominion and Ørsted, which is partnering with the utility on CVOW, have leased space at the Portsmouth Marine Terminal to develop assembly and staging facilities for the project.

New Jersey is not far behind, with the state’s Board of Public Utilities (BPU) thus far selecting three projects totaling 3,758 MW for development off the southern New Jersey coast. More solicitations are in the works as the state moves toward Gov. Murphy’s 2035 goal of 7,500 MW. In September, state officials also broke ground on an offshore wind hub on the South Jersey coast, with European and U.S. manufacturers slated to open manufacturing and staging facilities in the area. (See NJ Breaks Ground On Offshore Wind Hub.)

The major challenge ahead for all these projects, located in federal waters, will be securing approvals from the Bureau of Ocean Energy Management, which has announced reviews of CVOW and at least two of the New Jersey projects. As the projects move through federal approval, they could encounter opposition from environmental and business stakeholders, particularly the fishing industry. At the state level, cost allocation issues could emerge both for the projects themselves and associated transmission.

More broadly, transmission will be another key issue to watch this year, specifically where the undersea cables to be laid for the wind farms will come ashore, where they will connect with the grid and what kind of upgrades will be needed to handle the hundreds of thousands of megawatt-hours of power the turbines will generate.

Under a state agreement approach, New Jersey is working with PJM to incorporate the integration of its offshore wind into the grid operator’s planning process. Again, the competition to work on these projects will be fierce; the BPU and PJM are reviewing 80 proposals they received from a solicitation, with decisions expected in the second half of 2022 on which projects, if any, will move forward.

North Carolina and Maryland are also looking to get in on the action, developing projects and ports, but not at the scale of Virginia and New Jersey. The coming year should provide some signals on how fast the industry and its supply chain can scale.

Which Way to Net Zero?

On the flip side of offshore wind is the question of how fast Mid-Atlantic utilities can end their dependence on coal-fired generation as they work toward decarbonizing the electricity they supply to their customers. All major Mid-Atlantic utilities have committed to achieving net-zero emissions, in most cases by 2050, but each has different paths and different regulatory terrains to navigate. The role of nuclear power in achieving clean energy goals also remains a topic of heated debate.

For example, Public Service Enterprise Group (PSEG) in New Jersey announced in June that it had pushed up its target for net-zero to 2030. But the utility is decarbonizing by selling its fossil fuel assets, rather than taking them offline, and has pushed hard for the state to subsidize its three nuclear plants through its zero-emission credits (ZECs) program. The BPU approved an extension of the credits in April. The plants currently provide about 90% of New Jersey’s carbon-free energy.

The New Jersey Office of Rate Counsel, the state’s consumer advocate, has repeatedly filed appeals to roll back PSEG’s ZECs, which it will likely continue under the new leadership of Brian Lipman. (See Veteran Litigator Appointed Head of NJ Rate Counsel.)

Meanwhile, in North Carolina, Duke Energy had attempted to slow-walk its retirement of coal and natural gas, filing an integrated resource plan that would keep 3,050 MW of coal-fired power online until 2035, while also adding 9,600 MW of new natural gas generation. The IRP, which covered both Duke Energy Progress and Duke Energy Carolinas, was submitted in both North and South Carolina.

The plan faced strong opposition from clean energy advocates who have criticized Duke’s methodology for scheduling coal plant closures and called for the utility to hold technology-neutral “open-source” solicitations. (See NCUC Debates Best Path for Duke Coal Retirements.) In a November order, the North Carolina Utilities Commission accepted Duke’s short-term resource mix, but the final approach to coal retirements in North Carolina will be influenced by HB 951, signed by Gov. Roy Cooper in October, which requires the state to reduce carbon emissions 70% by 2030.

Under the law, the NCUC will be responsible for formulating a carbon plan by the end of 2022, which will be a primary focus for the coming year, with plenty of hearings and debate ahead. Another major point for debate will be the new law’s provisions on performance-based rate making, under which Duke might only have to file rate cases every three years and be allowed automatic rate increases in between, providing it meets performance standards to be set by the commission.

With a Democratic governor and Republican legislature, North Carolina will be ripe for a robust debate on utility business models and IRP methodologies in the year ahead.

The Pennsylvania RGGI Debate

Pennsylvania’s energy discussions last year were dominated by discussions about whether the state should join RGGI, as Gov. Tom Wolf and state agencies faced off with the legislature over the adoption of official rules for the carbon market. The state’s long association with fossil fuels — most recently, the booming natural gas industry in the Marcellus Shale — would make its participation in RGGI a strong statement and potential model for other states with historic ties to the fossil fuel industry.

In March, the Pennsylvania Department of Environmental Protection published its rulemaking requiring fossil fuel generators in the state to obtain emission allowances under RGGI.  (See Pa. Releases Rulemaking to Join RGGI.) That decision was then backed by the state’s Environmental Quality Board in July, and the Pennsylvania Independent Regulatory Review Commission in September.  (See PA Backs Final Rule for RGGI Entrance and Pa. RGGI Regulations Approved by IRRC.)

But the state legislature continually challenged the RGGI rulemaking, with the Senate Environmental Resources and Energy Committee voting in August to send a letter to regulators protesting the state’s entrance into RGGI. (See Pa. Senate Committee Disapproves of RGGI Entry Again.) The Senate took further steps to block RGGI, passing a disapproval resolution in October, followed by a 130-70 disapproval vote in the Pennsylvania House in December.

Wolf said the legislative votes to block RGGI had been due by the end of October, arguing that the rule was therefore approved by default. But the Legislative Reference Bureau, which is responsible for publishing state rules, has refused to print the RGGI regulation, siding with the Republicans’ interpretation of the law.

In a letter issued to the bureau in December, DEP Secretary Patrick McDonnell said the dispute could result in “time-consuming litigation” if the bureau does not reconsider and publish the rule, and that it had “no legal authority” to substitute its own interpretation of the statute.

Wolf is expected break the standoff by vetoing the RGGI disapproval resolution, and the legislature currently does not have enough votes to overcome the veto.