Governor Glenn Youngkin’s pledge to remove Virginia from the Regional Greenhouse Gas Initiative (RGGI) was approved on June 7 by the state’s Air Pollution Control Board, raising the prospects that Virginia’s ratepayers may soon be rid of an onerous RGGI-related carbon tax.
“Today’s common-sense vote by the Air Board to repeal RGGI protects Virginians from the failed program that is not only a regressive tax on families, but also does nothing to reduce pollution,” Youngkin, a Republican, said in a statement after the vote.
Now that Youngkin’s proposal has cleared the Air Pollution Control Board, it will move to an executive review period, after which it is expected to be posted in the Virginia Register. Once it is posted in its final form, environmental groups favorable to RGGI are expected to file lawsuits challenging the governor’s move. The state’s administrative procedures, coupled with the threatened lawsuits, mean Virginia’s exit from RGGI will still take some time.
RGGI is a regional compact among 12 mid-Atlantic and Northeast states to reduce greenhouse-gas emissions from power plants. As part of RGGI’s cap-and-trade program, participating states require power plants of a certain capacity to purchase allowances, also called credits, to emit carbon dioxide (CO2). Virginia joined RGGI in 2021 under Governor Ralph Northam (D).
Trumpeted as a way for Virginians to combat climate change, participation in RGGI, however, contains a legal stipulation that has come back to haunt the program. The 2020 law that “authorized,” but did not mandate, Virginia to join the compact included language saying the costs of allowances purchased through RGGI would be deemed “environmental compliance costs” that may be recovered from ratepayers from the state’s largest utilities, Dominion Energy and Appalachian Power.
RGGI’s Carbon Tax
In this way, what was sold as a cap-and-tax plan became a cap-and-tax scheme.
“The imposition of the RGGI ‘carbon tax’ fails to offer any incentive to change behavior,” a 2022 Youngkin administration report noted. “Current law allows power generators, such as Dominion Energy, to pass on all their costs for the carbon credits.”
Dominion Energy imposed, but later removed, the surcharge from its Virginia customers’ monthly bills. But despite the Air Pollution Control Board’s recent decision, the surcharge could be reimposed as early as September 1, 2023, and run for 12 months while the courts decide the fate of Youngkin’s action. As noted by Steve Haner of the Thomas Jefferson Institute for Public Policy, “the tax will still be on electricity bills and very visible” while the litigation sorts itself out.
Current RGGI participants are New York, New Jersey, Massachusetts, Connecticut, Rhode Island, Vermont, Maine, New Hampshire, Pennsylvania, Delaware, and Virginia. Participating states decide individually how they will disburse the funds raised by periodic auctions of RGGI allowances. “In Virginia most proceeds from the sale of allowances – which have reached nearly $590 million so far – are divvied up between efforts to assist localities affected by recurrent flooding and sea-level rise and a state-administered account to support energy efficiency programs for low-income individuals,” the Associated Press noted.
The division of the spoils is designed to create support for the program by assuring a flow of cash to carefully selected constituencies. In the case of the energy efficiency programs for low-income people, however, whatever benefits – if any – they derive from the program must compete with the higher monthly power bills resulting from the RGGI carbon tax.
A Dog Chasing Its Tail
Other than redistributing money coerced from third parties, forcing people to pay higher electricity bills, and keeping the “climate change” beat going, what exactly have RGGI and like-minded schemes accomplished?
“Worldwide, despite feverish efforts to reduce the use of fossil fuels, the CO2 in the atmosphere keeps rising, even as U.S. emissions have been dropping for decades, long before RGGI came to Virginia,” the Thomas Jefferson Institute’s Haner points out.
* This article was originally published here
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