Virginia may ditch a regional carbon cap-and-invest program

RGGI has helped boost climate resilience and cut emissions in the state, but its Republican governor wants to leave the program. Activists aren’t sure he can.
By Katie Myers

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Protestors with signs supporting RGGI are gathered outside the department of environmental quality
Advocates support RGGI at the Department of Environmental Quality office in Dale City, Virginia. (Jordan Seurattan/Virginia Conservation Network)

This story was first published by Grist.

After a blazingly hot stretch of summer in early July 2022, the skies broke open over Buchanan County, Virginia. Floodwaters damaged almost 100 homes and destroyed miles of road in the rural, predominately low-income mountain towns that dot the region. In the wake of the devastation, local officials spent $387,000 compiling a flood-preparedness plan. The multistep blueprint analyzed inundation risks and recommended potential risk-reduction projects.

To develop the proposal, the county tapped the Community Flood Preparedness Fund, a state program that makes hundreds of millions of dollars available for disaster risk analysis and mitigation. They were among the first to do so after money for such things became available in 2021 through proceeds from a carbon-offset program called the Regional Greenhouse Gas Initiative, or RGGI. But those plans, and the fund, are now in doubt because Virginia Governor Glenn Youngkin (R) wants to withdraw from the initiative despite the fact it has provided $657 million for flood preparedness and energy-efficiency programs and reduced the state’s carbon emissions by almost 17 percent.

Critics of such a move say that, beyond curtailing the significant emissions reductions RGGI has already incurred, pulling out will reduce the funding available to help communities prepare for increasingly common extreme weather. It is, they say, a huge mistake and, what’s more, illegal. A group of four Southern environmental nonprofits, led by the Southern Environmental Law Center, filed suit on August 21 to stop it.

Repealing this regulation is just outside of their authority,” said Nate Benforado, a senior attorney with the center. If they disagree with it, they have to take it to the General Assembly, and they’ve tried to do that and it hasn’t been successful.”

RGGI, often pronounced Reggie,” is a collaborative cap-and-invest effort that links 12 states stretching from Maine to Virginia. Power plants in those states must acquire one carbon-emission allowance for every ton of CO2 emitted, with the permissible level of emissions declining over time. Ninety percent of the allowances are sold through quarterly auctions, generating money states can invest as they choose. The program reportedly has slashed power-plant emissions across the region by half and raised nearly $6 billion.

Virginia joined the program two years ago, following the state legislature’s vote to require participation. Of the $657 million the state has raised, 45 percent has gone toward the Community Flood Preparedness Fund to help communities with resilience planning and municipal projects. (At least a quarter of the fund’s annual allocations go to low-income communities.) The remainder has financed home weatherization for low-income residents, reducing their utility bills through simple, but often expensive, home improvements.

But Youngkin says the rate increases utilities instituted to cover the costs of participation in the initiative create a financial burden for low-income Virginians. RGGI remains a regressive tax which does not do anything to incentivize the reduction of emissions in Virginia,” his office told 13th News Now. (The governor’s office did not respond to Grist’s request for comment.) Virginians will see a lower energy bill in due time because we are withdrawing from RGGI through a regulatory process.”

The appointed Air Pollution Control Board, of which four of seven members were personally named by Youngkin, voted in June to withdraw from the program by repealing the Community Flood Preparedness Act that made Virginia a part of RGGI in 2020. If the decision stands, the move will take effect on December 30. Environmental groups said the proper procedure would have been to introduce a legislative bill and have lawmakers decide. One poll found that 66 percent of Virginians support staying in RGGI; to go against them, Youngkin’s critics argue, is a fundamentally anti-democratic move. A comment period for the withdrawal remains open until Wednesday.

Beyond that criticism, Benforado calls Youngkin’s move frustrating given the progress made under the initiative. Virginia’s monopoly utilities are required to zero out their carbon by 2050,” he said. RGGI is the tool that will help us get there.”

RGGI funds have boosted resiliency efforts 

Municipalities all over Virginia have used the flood-resiliency funds to shore up infrastructure, draft evacuation plans and restore blighted wetlands. Local governments are on the front lines of the climate crisis,” said Mary-Carson Stiff, the executive director of the nonprofit Wetlands Water Watch, which worked with Buchanan County on its flood-resiliency plan. And they are on their own to come up with resources [and] to come up with plans and to fund strategies to protect against losses.”

In a 2020 report, the organization noted that most of the state’s rural communities do not have any flooding or other climate resilience plans to speak of. Proponents of RGGI say that before Virginia joined, there was almost no money available in the state for disaster preparation and planning, which can be time- and labor-intensive, and requires hiring specialists and conducting environmental studies.

Stiff says Virginia’s use of funds raised through the initiative has been fairly forward-thinking. We’re unique in the other participating RGGI states where our auction proceeds are being spent on grant programs that are actually reducing greenhouse gas emissions,” she said.

Youngkin’s claim that Virginia ratepayers underwrite the cap-and-invest effort echoes an argument Dominion Energy, the state’s biggest utility, has made. It has said in public comments that the costs it had incurred under RGGI made it necessary to raise rates. It has proposed a rider of $2.29 on top of recent increases caused by fluctuating natural-gas prices.

Mayor Justin Wilson (D) of Alexandria, which has benefited from RGGI-funded flood-resiliency projects such as a redesigned downtown waterfront and storm drain expansion, says people were already paying dearly for the impacts of greenhouse gas emissions, and that the Community Flood Preparedness Fund has been a godsend. Flooding costs Virginians $400 million per year, according to some estimates.

I’ve stood in the homes of residents that have seen their livelihoods destroyed,” said Wilson. The impacts of these storm events are a tax on the community.”

Youngkin has promised alternative sources of funding for flood preparedness and weatherization, and he has proposed a $200 million revolving loan fund with a similar purpose. Wilson said he’ll believe there’s a contingency plan when he sees it. All the while, small floods that would have been unusual a couple of decades ago are happening with greater frequency, and his city is struggling to keep up. We have billions of dollars of investment we are gonna have to make,” the mayor said.

Meanwhile, on the other end of the state, Buchanan County’s flood-resilience planning may be complete, but officials must find money for the improvements it outlines. On the anniversary of last summer’s inundation, flood survivors were still repairing their homes, mourning the woman who had died, wondering where the next resources for them were going to come from, and nervously looking at silt-filled and waste-dammed creeks as summer rain began to fall.

Katie Myers is a climate solutions fellow at Grist.