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On Thursday, Governor Ralph Northam announced he would not veto a Republican budget provision that blocks Virginia from joining the Regional Greenhouse Gas Initiative (RGGI).

Environmental groups had pushed for Northam to veto a budget measure that blocks any state spending for Virginia’s participation in the RGGI, a multi-state initiative to curb greenhouse gases linked to climate change.

The RGGI seeks to cut carbon dioxide pollution from power plants, but Republican lawmakers were openly hostile to the interstate compact, arguing it amounted to a tax and would prevent the state from attracting business. Dominion Energy, a power player in Virginia politics, also opposed the RGGI, telling state officials that it would be a disadvantage for the state.

Had Northam vetoed the measure, it likely would have led to a legal battle over his veto power, which is limited by a Virginia Supreme Court ruling that a governor can’t veto a budget condition without vetoing the funding tied to it. This means that the state wouldn’t have had any funding to implement its involvement in the RGGI.

The RGGI allows energy producers in nine participating states across the Mid-Atlantic to trade emissions reductions for cashable credits, while also giving them the ability to buy credits in case they need to surpass their cap and emit more carbon dioxide.

Northam said he was “disappointed” that the Republican measure made it into the final budget, but said he would still try to find a way to achieve the state’s pollution reduction goals.

This was cold comfort for environmental groups, who criticized Northam’s decision and questioned his dedication to fighting climate change.

Virginia would have become the first southern state to enact a significant climate program. Instead, the state remains on the outside looking in.