COMMENTS OF THE CENTER FOR CLIMATE AND ENERGY SOLUTIONS

This document constitutes the comments of the Center for Climate and Energy Solutions (C2ES) on the Commonwealth of Virginia Office of the Governor Executive Order Number Nine (2022), “Protecting Ratepayers from the Rising Cost of Living Due to the Regional Greenhouse Gas Initiative.”

C2ES is an independent, nonprofit, nonpartisan organization working to secure a safe and stable climate by accelerating the global transition to net-zero greenhouse gas emissions and a thriving, just, and resilient economy. Through the Climate Innovation 2050 Initiative, C2ES has worked closely with more than four dozen leading companies to examine the decarbonization challenges facing the United States and develop pathways toward decarbonization, including through developing Getting to Zero: A U.S. Climate Agenda, a comprehensive policy agenda to decarbonize the U.S. economy by 2050.

The views expressed here are those of C2ES alone and do not necessarily reflect the views of members of the C2ES Business Environmental Leadership Council (BELC) or, companies that contributed to the C2ES publications referenced here.

Statement of position

Virginia’s participation in the Regional Greenhouse Gas Initiative (RGGI) is key to reaching the state’s target of 100 percent clean electricity by 2050 under the Clean Economy Act.  Without complementary policy like RGGI, compliance costs to meet this target will be higher. Nationally, RGGI is crucial to achieving net-zero economywide greenhouse gas emissions by midcentury, a necessary target to avoid the most catastrophic effects of climate change both in the United States and globally.

Support for carbon pricing

Carbon pricing is an efficient and cost-effective way to reduce emissions because it creates accountability for environmental costs while allowing flexibility in how companies meet their obligations. Specifically with cap-and-trade programs like RGGI, policymakers can identify the proper emissions target and allow the cap to determine the most efficient price to achieve that level of abatement. Rising carbon prices increasingly unlock investments in mitigation that would have seemed uneconomical in the absence of a carbon price.

Importantly, carbon pricing programs generate significant revenue that can be used to offset energy price increases for lower-income households and further support investments in technologies and programs that reduce emissions. In the case of RGGI, much of this revenue has been reinvested either in direct bill assistance for consumers or in energy efficiency measures that directly save households and businesses money.

The benefits of implementing market-based programs rather than standalone command-and-control regulatory programs are that they provide greater compliance flexibility for covered entities and allow the market to determine the lowest-cost means of producing the greatest emissions reductions.[1]

Past revenue generation in RGGI

Over the history of its operation, RGGI has demonstrated success in both reducing emissions in participating states while producing economic benefits and creating jobs. Between 2009 and 2020, RGGI states reduced their power sector emissions 50 percent from 2008 levels, a rate significantly higher than the nation’s aggregate power sector emissions reductions of 39 percent during the same period.[2]

During the first three compliance periods, from 2009–2017, RGGI is estimated to have yielded a net benefit of $4.7 billion and more than 40,000 job years to the participating states.[3]

In 2020 alone, RGGI invested $196 million across all participating states in energy efficiency, clean and renewable energy, beneficial electrification, greenhouse gas abatement, and direct bill assistance. These investments delivered more than $37 million to 720,000 households and 38,000 businesses in direct bill assistance in 2020 and an estimated $2 billion in energy bill savings over their lifetime for 65,000 households and 800 businesses.[4]

Benefits of Virginia’s participation in RGGI

Since Virginia’s first auction in 2021, Virginia has received more than $452.2 million in proceeds from the quarterly sale of allowances.[5] Half of the revenue is directed toward low-income energy efficiency programs and 45 percent to a new Community Flood Preparedness Fund to assist communities affected by flooding and sea level rise.

Energy efficiency programs like the Weatherization Assistance Program have demonstrated histories of success in reducing customers’ annual energy costs by an average of 12 percent, making this funding central to reducing low-income customers’ energy bills, rather than raising them.[6]

Support for community resilience is also increasingly urgent, as the impacts of climate change including sea level rise and more frequent and severe extreme weather compound. From 2017 through 2021, the total costs for weather and climate-related disaster events totaled over $788 billion, more than one-third of the total disaster cost of the last 43 years.[7] With 70 percent of the state’s population residing in coastal Virginia, funding for flood preparedness through RGGI will offer significant relief to a large portion of the state.[8]

Conclusion

Virginia’s participation in the Regional Greenhouse Gas Initiative is central to meeting midcentury decarbonization targets. Continuing particpation in RGGI will not only help Virginia reduce emissions, but also support communities and households by raising revenue to bolster community resilience and home energy efficiency. Given the benefits RGGI has brought to the 11 other participating states, and the significant emissions reductions it has delivered, Virginia should remain a participant in the program.

Endnotes