|Repeal CO 2 Budget Trading Program as required by Executive Order 9 (Revision A22)
|Ended on 3/31/2023
The Climate Action Alliance of the Valley (CAAV) has been, and remains, an opponent of the current attempt to withdraw Virginia from the Regional Greenhouse Gas Initiative (RGGI). We have outlined our reasons in three open forum pieces published in the Daily News Record, dated January 26, 20221, March 25, 20222, and February 15, 20233, and in a June 21, 2022 letter to the Virginia Air Pollution Control Board (VAPCB) Chair signed by CAAV and 20 other organizations.4 We incorporate into these comments and reiterate by reference the information in these four documents, as well as our previous recommendations and conclusions.
In CAAV’s opinion pieces, we outlined reasons for our position. In summary:
The General Assembly established RGGI participation through legislation; it has thus far declined to repeal or otherwise amend that law to remove Virginia from RGGI. Regulatory action cannot overcome the legislative mandate for Virginia’s participation. DEQ surely understands, as the author of the RGGI regulations implementing the statute, that its authority to regulate comes from legislation, not merely from Executive Action such as the Governor has taken. The history of Virginia’s joining RGGI demonstrates that reality. RGGI auction proceeds must, by law, be used for flood resilience and for energy efficiency programs to reduce energy costs for low and moderate income residents. 45% of proceeds go towards Virginia's Community Flood Preparedness Fund (CFPF), and 50% of proceeds go towards building low?income energy efficiency and weatherization.5
RGGI is working as intended.
An argument that RGGI proceeds are a utility or carbon “tax” is inaccurate. DEQ, which drafted the regulation implementing the passed legislation, is well aware that, during RGGI’s quarterly auctions utilities buy carbon offset credits. Under Virginia’s “regulated monopoly utility” model, large utilities can pass along those expenses to their customers, as they can for virtually all of their project and operating costs. They can, and do, receive a healthy profit as well. RGGI effectively requires those for-profit utilities to help all Virginians mitigate the adverse effects of the carbon they emit. It also incentivizes them to reduce their reliance on fossil fuels, thus encouraging a transition to fuels that do not emit carbon or other greenhouse gases.
RGGI exists to enable reduction in Virginia’s carbon emissions and address some harms that its communities and already disadvantaged populations face. RGGI employs a proven, market?based cap?and-invest method requiring power producers like Dominion Energy to purchase allowances for their carbon emissions during quarterly auctions, thereby accelerating the deployment of carbon-free energy production through renewable sources like wind and solar.
RGGI funding is addressing Virginians’ energy burden through energy efficiency home improvements. According to the Nature Conservancy’s February 6, 2023 fact sheet, and based on a just-released study by Virginia Commonwealth University, this burden is considered high if above 6% and severe if above 10% of household income. There are over 154,000 low-income households in Census tracts where average low?income energy burden is severe (across much of rural Southwest and Southside Virginia, Northern Neck, and Eastern Shore). Cost-effective energy efficiency upgrades can cut low?income electricity bills by about 30%. The over $260 million RGGI proceeds thus far provided for low-income energy efficiency and weatherization programs for the first two years (2021-2022); this funding dwarfs all of the other available funding for low?income energy efficiency programs in the state. If Virginia withdraws from RGGI, there is no replacement funding for the low?income energy efficiency programs that RGGI provides.
Staying in RGGI at least through 2030 could upgrade 130,000 homes, saving $89 million annually with average annual savings of $676 per household, sustaining more than 2,000 jobs. Flooding damages will cost the state $79.1 billion if left unchecked. RGGI ensures that power plant owners steadily reduce reliance on fossil fuels, protecting customers from these volatile commodities. There is a pressing need for this funding for all these reasons.
In addition, RGGI is assisting Virginia communities in increasing their preparedness for, and resilience in the face of, increasing and recurrent flooding that is happening as a result of the climate emergency. If not addressed, flood damages “from 2020 to 2099 will result in a $79.1 billion decline in economic output,” according to a report by Old Dominion University researchers.11 To date, applications have sought $137 million and $97.7million has been awarded across three grant rounds of the CFPF. Over two years of Virginia’s participation, RGGI has generated over half a billion dollars for crucial resilience projects in the state. In total, $235.6M has been allocated (in perpetuity) to the CFPF. RGGI is the sole source of revenue for the CFPF, the only dedicated state funding source for critical flood resilience planning and project implementation, and it prioritizes nature-based solutions. Significantly, 25% of proceeds from the CFPF are set aside for low-income geographies. The CFPF funds capacity-building and planning initiatives that most federal grant programs do not. These initial steps are necessary in order to pursue larger funding sources for project implementation.
The massive flooding in Buchanan County illustrates why investments in flood prevention and resilience are more cost-effective than funding each flooding event, particularly when federal emergency management funds are denied to community residents. An illuminating illustration of the anticipated costs of flood repairs and restoration is the Wetlands Watch chart that appears below.12 The Governor’s recent budget amendment report proposed a nearly 10X expansion over the biennium of the Resilient Virginia Revolving Loan Fund (established in the last session using $25M from the CFPF). Unfortunately, that program has yet to issue a single loan or grant, or even had its operations outlined. Projected expenditures total in excess of $97 million. If RGGI funds aren’t used to reduce these expenses, another source must be found. The logic of withdrawing from RGGI and eliminating its funding for flood preparation and resilience is questionable. RGGI funds can address the potential problems on a prioritized basis before flooding happens. Without those funds, costs like these will only escalate and they will be borne by Virginia taxpayers. Far better to develop ways to greatly reduce the need for after flooding cleanup.
CAAV believes the law and RGGI’s beneficial results, both those already obtained and those to come, invalidate the attempt to withdraw Virginia from RGGI via regulation. Two VAPCB members abstained from voting during the December 2022 meeting on the Notice of Intended Regulatory Action (NOIRA) because of their concern that the Board could not legally vote to end Virginia’s participation via regulation. The current Virginia Attorney General’s representative at that meeting provided no rationale that such action would be legal.13 The purpose of the VAPCB14 and DEQ’s role and responsibilities15 strongly argue against either entity supporting this proposed regulatory change. Public opinion to date has been overwhelmingly in favor of Virginia’s continued RGGI participation. The Administration, DEQ, and the VAPCB would do well to heed the voices of Virginians, who want the RGGI benefits to continue. The proposed regulation is contrary to the best interests of the state and its residents.
Chair, Climate Action Alliance of the Valley
 Virginia Carbon Trading Rule and Regional Greenhouse Gas Initiative (RGGI) Participation, Costs and Benefits, DEQ (Mar. 11, 2022), https://www.deq.virginia.gov/home/showpublisheddocument/13813/ 637829669069026180 at 9-10
 Abt Associates, Analysis of the Public Health Impacts of the Regional Greenhouse Gas Initiative (Jan. 11, 2017), https://www.abtassociates.com/insights/publications/report/analysis-of-the-public-health-impacts-of-the-regional-greenhouse-gas
 Kaicey Baylor, ODU researchers release new flooding costs report for Virginia, 13 News Now (Sept. 15, 2022), https://www.13newsnow.com/article/money/economy/odu-researchers-new-flooding-costs-report/291-059df778-b823-42c3-bf20-72b73f7ffb45