After a tight vote by the state’s Air Pollution Control Board, Virginia has moved one step closer to exiting the Regional Greenhouse Gas Initiative and fulfilling an executive order issued by Gov. Glenn Youngkin the day he took office.
In theory, the board’s 4-3 vote on June 7 to repeal Virginia’s participation in the initiative, known as RGGI, opens the way for Youngkin, a Republican, to finalize a withdrawal by the end of this year. But legal challenges from environmentalists and others appear likely: Many argue that a board reporting to the governor cannot reverse a binding 2020 decision by the state General Assembly to enlist Virginia in the program.
RGGI (pronounced reggie) is a cooperative agreement in which 11 Eastern states take part in a market mechanism to reduce greenhouse gas emissions and arrest climate change. Under the accord, fossil-fuel-powered electricity generators with a capacity greater than or equal to 25 megawatts must purchase “allowances” commensurate with the emissions from their plants, giving the utilities an incentive to decrease those emissions over time. An overall limit, or cap, on the states’ emissions is reduced year by year as the allowances are traded within the market.
When state lawmakers brought Virginia into RGGI in 2020 under the Clean Energy and Community Flood Preparedness Act, they added two major provisions: 50 percent of the money had to be spent on energy efficiency programs in low-income communities, and another 45 percent had to go toward helping communities adversely affected by sea-level rise and flooding.
So far, the initiative has generated over $650 million for the state, helping strapped Virginians make upgrades to their homes and allowing communities to gird their defenses against rising seas and flooding.
Home weatherization experts, environmentalists and legal analysts say that a cutoff in funds could reverse progress across the Commonwealth.
“It’s just a disaster of a decision,” said Nate Benforado, a senior attorney with the Southern Environmental Law Center.
Youngkin tasked the Air Pollution Control Board with reviewing Virginia’s participation in RGGI in 2022. A public comment period followed. When the board convened for a final vote on June 7, the air quality index in parts of Richmond was at an “unhealthy” level due to smoke from the Canadian wildfires traveling down the East Coast.
“We have tools to address the downstream results that we’re seeing” from climate change, said Benforado. “RGGI is one of those tools,” he continued. “It is a proven solution.”
Since Virginia adopted RGGI in 2020, the state’s power plant emissions have dropped by 16.8 percent, according to data from the Environmental Protection Agency. Under Youngkin, Virginia’s Department of Environmental Quality disputes that these emissions reductions can be attributed to RGGI.
But there is no question that millions of dollars in RGGI allowances paid by the state’s two largest utility providers, Dominion and Appalachian Power, have been channeled to infrastructure projects in low-income areas across Virginia. To date, $295.6 million has gone to sea-level mitigation and flood protection programs, and $328.5 million to low-income energy efficiency projects.
One of those projects is the Weatherization Deferral Repair Program, which funds, among other programs, home repairs for low-income households so they can qualify for federal funds to increase the energy efficiency of their houses or apartment units. Those who qualify for the deferral program get the repairs they need paid for by RGGI.
Chase Counts, senior director of operations with Community Housing Partners Energy Solutions, a nonprofit that provides weatherization and energy efficiency services across Virginia, estimates that as recently as 2020, one in five of the homes his organization surveyed were eligible for federal assistance but could not receive funding because of structural issues.
Once Virginia joined RGGI, “we have been able to serve just over 500 households that we wouldn’t have otherwise been able to,” Counts said.
He recalled how one client, Kris Van Zandt, a Walmart employee living in the north central town of Gordonsville, needed his entire roof replaced so his house would qualify for a solar panel incentive program offered by his utility provider, Dominion. Community Housing Partners Energy Solutions replaced his roof with money from the Weatherization Deferral Repair Program, at no cost to Van Zandt.
“I was almost in disbelief that they were even doing this,” said Van Zandt, who said he would have needed to take out decades’ worth of loans to finance the project on his own. Since installing the solar panels and making other energy efficiency improvements, Van Zandt estimates that he has been able to save $50 to $70 dollars a month on his utility bill, depending on the season. “I hope this program can get out to more people,” he said.
A study commissioned by the Nature Conservancy and published in January by Virginia Commonwealth University estimated that if Virginia remained in RGGI through 2030, up to 131,000 low-income households across the state could receive energy efficiency upgrades, saving homeowners and renters an average of $540 a year on their utility bills and as much as $676 annually by 2030.
Without funding from RGGI, “we would go back to 2020, where we’re deferring one in five households” seeking upgrades, Counts said.
Lena Lewis, an energy and climate policy manager at the Virginia chapter of the Nature Conservancy, said that, for now, many low-income households in the Commonwealth cannot afford the upfront costs of making their homes more energy-efficient. They are “stuck in this cycle of paying too much for their energy,” Lewis said.
“You need something to disrupt that cycle, and that’s what the RGGI funds can do.”
In pushing for Virginia’s withdrawal from RGGI, the Youngkin administration has pointed out that monthly Dominion bills in Virginia have increased by an average of $2.39 since the state joined the initiative—evidence, it says, of the program’s detrimental impact on consumers.
Benforado countered that it was Virginia’s General Assembly, not RGGI, that authorized Dominion and Appalachian power to pass those costs on to consumers. The Youngkin administration is “certainly right to question those decisions, but if you want to change it, you go to the General Assembly and convince them to change the law,” he said.
Benforado also said that the fluctuating price of fossil fuels has played a greater role in Dominion’s rate increases than RGGI’s requirements have.
Youngkin’s office did not respond to a request for comment on the June 7 vote or its implications.
On the other front, sea-level-rise mitigation and interior flooding projects, RGGI has paid out just under $300 million since 2021, an unparalleled source of continuous funding, according to Skip Stiles, the executive director of the nonprofit organization Wetlands Watch. The money has gone toward communities dealing with encroaching waters along the state’s shoreline and flood prevention infrastructure in Virginia’s central and western regions, home to many rural and low-income residents.
Stiles, whose group counsels communities and local governments on the tools at their disposal to conserve wetlands and deal with rising seas and flooding from other events, estimates it will take tens of billions of dollars in funding to adequately prepare for the water-related effects of climate change in Virginia.
Before RGGI, if someone wanted to embark on a project to combat sea-level rise along Virginia’s coast, “you basically sat there with your plans, waited for a disaster to hit, and then got disaster funding to build your project” from the federal government, Stiles said.
Since Virginia entered RGGI, coastal communities have received funding to build critical infrastructure. Norfolk, for instance, has received more than $26 million since 2021 for projects including a risk management analysis, shoreline stabilization, and flood protection barrier systems. “It’s really made a change along the coast,” Stiles said.
Inland, where flooding from increasingly severe storms is an equal worry, RGGI income is just as essential, proponents say: Stiles estimated that communities in central and western Virginia are a decade behind the economically prized coastal areas in planning for natural disasters. “You get inland, and they don’t even have plans” for flood control projects, he said.
For now, much of the RGGI money spent in rural areas is being used to study the effects of flooding on those inland communities. Tangible projects like moving houses away from rivers, raising roads and installing river barriers “will come along later,” Stiles predicted, provided that Virginia maintains its RGGI membership.
Without money from RGGI, “we go backwards about 10 years,” he said.
The Youngkin administration also cites its own proposed funding increase for the state’s revolving loan program, “a suite of federal programs” and Virginia’s Clean Economy Act—signed into law in 2020 under Youngkin’s Democratic predecessor, Ralph Northam—as viable funding alternatives to RGGI. The Clean Economy Act requires Dominion Energy and Appalachian Energy rely wholly on renewable energy sources by 2045 and 2050, respectively. If either company fails to meet its renewable targets, they must make a “deficiency payment,” part of which gets used to fund job training and renewable energy programs in “disadvantaged communities.”
The law does not specify the size or timing of those payments, and either company could choose to purchase renewable energy certificates instead.
Counts acknowledged that other means of funding are available for some of the kinds of work that RGGI subsidizes but contends that they cannot match the size of RGGI’s coffers. For example, he said, Virginia had access to $270,000 for weatherization repairs from the federal Weatherization Readiness Fund last year, whereas the Weatherization Deferral Repair Program gets $15 million annually from RGGI.
“You could point to other programs as being available, but it’s just apples and oranges at that scale,” Counts said.
Stiles doesn’t see the Youngkin administration’s proposed increase in funding to the state revolving loan program, which was established last year by the General Assembly and will require recipients to pay back any money they receive for “projects for resilience purposes,” as a fully viable alternative to RGGI, either.
“You can’t raise roads with this money,” Stiles said. “And we have a route down here where you get fish as roadkill.” He was referring to flooding along roads in Norfolk and other coastal areas in Virginia.
Lower-income Virginians, he pointed out, are less likely to possess the equity necessary to qualify for a loan, and money distributed in a state-run revolving loan program is more likely to get moved to politically expedient projects. “It’s not really a solution,” Stiles said.
The Clean Economy Act, approved, like RGGI, in 2020 by the Virginia General Assembly, wouldn’t be enough to rein in the state’s power-sector emissions without RGGI working alongside it, said Benforado of the Southern Environmental Law Center. He noted that about 30 percent of Virginia’s power sector emissions come from producers other than Dominion and Appalachian Power.
To keep independent producers’ emissions down, “RGGI is all we’ve got,” he said.
Virginia has until Dec. 31, when its initial contract agreement with RGGI expires, to officially exit RGGI. Nonetheless, the statute that brought Virginia into RGGI “was not discretionary,” Benforado said. “The law says, very clearly, Virginia is required to participate in a market-based trading program.”
The same day Virginia’s Air Pollution Control Board held its vote, RGGI released an updated tally of its proceeds: During the most recent round of auctions, Virginia raised over $67 million from caps on fossil fuel emissions. With that new money on the books, Virginia had officially brought in over half a billion dollars by participating in the market-based initiative.
Stiles highlighted the paradox of the Air Pollution Control Board’s vote coinciding with the latest cash influx from RGGI.
“I’m looking at those numbers—a half a billion dollars to reduce energy use for low-income folks and to fix flood projects,” he said. “Where were we going to get that money if it weren’t for RGGI?”
