What's at stake if RGGI disappears in Virginia? - The Chesapeake Bay Journal

What’s at stake if RGGI disappears in Virginia? | Climate Change | bayjournal.com

Jocelyn Chan of Harrisonburg, VA, with her children, 4-year-old Janelle and 16-month-old Christopher, play on the back porch of their home, which received a new HVAC system through a state program funded by the Regional Greenhouse Gas Initiative.

Jocelyn Chan used to dread the winter.

When temperatures dipped, her home heating oil bill would skyrocket. She was paying $500 every couple of months or so for more oil and not even completely filling the tank. Doing so, she said, would have been more than she could afford as a single mother raising two preschool-age children.

From Facebook, the Harrisonburg, VA, resident learned about a local nonprofit that helps low-income families improve the efficiency of their homes. The organization inspected her home and found that the drafty, 70-year-old structure needed a new heating system and a lot more insulation.

There was good news: Chan qualified for state funding that would cover the cost of the upgrades. And the contractor could start right away.

“I couldn’t have been more grateful,” said Chan, a piano technician at James Madison University.

The work was completed in March. She’s glad she learned about the program when she did.

Barring a last-minute change of heart or a judge’s order, Republican Gov. Glenn Youngkin’s administration plans to sever the state’s ties to the Regional Greenhouse Gas Initiative at the end of this year. The market, known as RGGI (pronounced “Reggie,”) is a cap-and-trade market currently composed of 12 states. Under the market, power plants purchase allowances for carbon dioxide emissions during quarterly auctions. That raises revenue that participating states use to finance flood resiliency and energy efficiency projects.

The regional “cap” on emissions is gradually reduced over time, leading to lower emissions, backers say. Utilities are allowed to pass on the costs of the allowances to ratepayers through higher electric bills.

RGGI funding led to the creation of a new housing-assistance program in Virginia that made it possible for Chan to get the help she needed, said Everett Brubaker, a business development specialist for CHP Energy Solutions, the nonprofit that oversaw her project.

“RGGI is helping make sure the benefits of energy efficiency and lower emissions are reaching those most in need,” Brubaker said, adding that his organization alone has served about 500 households under the effort , called the Weatherization Deferral Repair program.

Youngkin made withdrawing from RGGI one of the central planks of his 2021 campaign. His opposition has centered on utility customers facing higher monthly bills — an average of $2.39 for households and $1,554 for industrial facilities as of 2022 — to pay for the allowances. The governor has called the program a “ regressive” tax on families and businesses while rejecting research suggesting that the effort is yielding pollution reductions.

With its narrow majority of Youngkin appointees, the State Air Pollution Control Board voted in June to end the state’s RGGI participation when the contract lapses at the end of this year. That was in spite of the overwhelming support for the effort among the 6,600 public comments received by the state during the repeal process.

Protesters outside the Virginia State Capitol in Richmond on Aug. 28, 2023, call on the Youngkin administration to back off efforts to end the state’s involvement with the Regional Greenhouse Gas Initiative. (Jen Lawhorne)

In response to a Bay Journal request for comment, Youngkin’s office emailed a statement from Secretary of Natural and Historic Resources Travis Voyles: “The Office of the Attorney General confirmed the [Air Board] has the legal authority to take action on the regulatory proposal using the full regulatory process — and the Board voted to do just that — furthering Virginians’ access to a reliable, affordable, clean and growing supply of power,” it read, in part. “Virginians will see a lower energy bill in due time because we are withdrawing from RGGI through a regulatory process."

Environmentalists are fighting back. Three environmental groups were joined by a trade group of energy-conservation professionals in a lawsuit filed in August, seeking to overturn the administration’s decision. Like many critics of the administration’s move, they argue that Youngkin has no authority to unilaterally pull out of a program that was previously approved by legislative action.

“We will be doing everything we can, as quickly as we can, to enforce the law and maintain this successful program,” said attorney Nate Benforado of the Southern Environmental Law Center, which filed the action in Fairfax Circuit Court on behalf of the Association of Energy Conservation Professionals, Virginia Interfaith Power and Light, Appalachian Voices and Faith Alliance for Climate Solutions.

Advocates say that RGGI is more than worth the extra heft on utility bills. They point to data suggesting that since the program’s inception in 2009, member states have reduced carbon emissions by 50%, almost twice as fast as the national average. Virginia has realized a 17% reduction since joining in 2021, according to data from the U.S. Environmental Protection Agency.

Wearing shirts proclaiming “RGGI is Law,” supporters of the Regional Greenhouse Gas Initiative listen to presentations at Virginia’s Air Pollution Control Board hearing on June 7, 2023, in Richmond. The board voted 4–3 to end the state’s participation in the program. (Jen Lawhorne)

In addition to the environmental benefits, public health experts say that the emissions reductions also may curb health problems related to poor air quality, such as asthma and bronchitis.

And RGGI’s supporters emphasize that the revenue it generates is being invested back into the communities that paid into the effort. The market has raised about $6 billion overall so far for participating states, including $730 million for Virginia.

“That’s money that just keeps coming in, and it’s really going to work for Virginia,” said Lee Francis, deputy director of the Virginia League of Conservation Voters.

In the Chesapeake Bay region, Delaware, Maryland, New York, Pennsylvania and Virginia count themselves among RGGI’s members. Here’s a look at what’s at stake if Virginia disappears from that list on Jan. 1, 2024.

Housing help

State and federal programs aimed at helping low-income families weatherize their homes grew out of the energy crisis of the 1970s. Weatherization services can include installing LED lighting, insulation and weatherstripping. The efforts have proven environmental and economic benefits, supporters say.

“This is not a welfare program,” said Billy Weitzenfeld, executive director of the Association of Energy Conservation Professionals. “It’s probably one of the better uses of tax dollars because of the outcomes that can be measured.”

When lawmakers passed the RGGI law in 2020, they mandated that half of the proceeds go toward making new and existing low-income housing more energy efficient. State and federal sources have typically supported those programs to the tune of about $55 million per year. In 2022, Virginia hauled in an additional $150 million for efficiency funds through the RGGI auctions.

Energy costs are typically higher for low-income families, averaging 8.6% of their gross household income compared with 3% for the balance of the nation’s income groups, according to the U.S. Department of Energy. Inefficient housing is one of the key contributors to those higher costs, research shows.

The RGGI-backed upgrades are forecast to result in up to $676 per home in annual energy cost savings by 2030, according to a Virginia Commonwealth University analysis. Buttoning up those homes benefits all of society by leading to less energy consumption and lower overall greenhouse gas emissions, advocates say.

The RGGI funding promotes greater energy efficiency through two programs.

Under a program geared toward new multifamily developments like apartments, developers who incorporate energy-efficient building practices are offered forgivable, no-interest loans of up to $2 million or 10% of construction costs, whichever is less. In its first two years, the program dispensed nearly $30 million in loans for the construction of about 2,400 housing units statewide.

A sign outside Jocelyn Chan’s home in Harrisonburg, VA, promotes weatherization programs in Virginia.

The RGGI funding also enabled officials to create a new program to address one of the biggest gaps in weatherizing existing homes. For years, about 25% of Virginia applicants to the federal Weatherization Assistance Program were turned away because their homes needed major health or safety repairs, such as mold remediation or new roofs.

“The last thing you want is to put more installation in the attic just to suck up the water,” said Kerri Walker, vice president of energy conservation programs for Project:HOMES, a Richmond-based nonprofit that oversees repair projects.

Now, once work is completed under the state’s new fund, called the Weatherization Deferral Repair program, homeowners are ready to step into the federally backed counterpart. Brubaker estimated that his organization has shepherded 500 homes through the repair program since its inception, with another 500 in the queue.

In Chan’s case, she needed to replace her failing oil-fired heating system under the repair program before she could get new insulation. She now has a heat pump, a cleaner and more efficient alternative.

It remains unclear if funding will be available for deferred homes after the Jan. 1 exit date for RGGI. The Virginia Department of Housing and Community Development, which oversees the RGGI funding in the state, didn’t address the question in its response to a list of Bay Journal questions.

Walker said she hopes Virginia will at least allow organizations like hers to spend down the millions of dollars that have yet to be allocated to the program. “After so many years of trying to help people more effectively, we were starting to get it,” she said. “Now, we’re battling to keep a really essential program alive.”

Shoring up resilience

Unlike the efficiency side of the equation, the Youngkin administration has attempted to replace funding for the other major RGGI-backed initiative, climate resilience — that is, helping communities prepare for a wetter future. But many environmentalists and civic leaders are skeptical that a RGGI alternative will prove to be as consistent and reliable.

The administration’s move represents a step backward, said Mary-Carson Stiff, executive director of Wetlands Watch and one of RGGI’s strongest backers.

“We’ve never seen such progress before,” Stiff said. “We really need to have the resources continue flowing to our communities.”

Climate change is ramping up the urgency for action, experts say. Virginia faces a flooding threat from rising seas along much of its 5,000 miles of coastline. In the state’s southeastern quadrant, home to the populous Hampton Roads region, the land is also sinking, an artifact from the last Ice Age’s glacial retreat. The area is often described as second only to New Orleans as the part of the country most vulnerable to sea level rise.

Inland portions of the state also can expect to see increased flooding from stronger, more frequent storms. Between 1958 and 2012, the amount of precipitation during the heaviest storms surged by 27%, the EPA estimates.

By law, 45% of RGGI’s proceeds are earmarked for what is known as the Community Flood Preparedness Fund, Virginia’s only dedicated statewide pot of money for resilience planning and construction. The market has raised more than $320 million for the program so far.

That money has flowed to communities across the state. Examples include $118,000 for Albemarle County to develop a comprehensive flood resilience plan, $5.4 million for Petersburg to hire a certified floodplain manager and improve stormwater infrastructure in its Lakemont neighborhood, and $5.9 million for Alexandria for efforts that include increasing flood protection in the low-income Arlandria neighborhood.

Public officials participate in a groundbreaking ceremony Aug. 18, 2023, for the Lake Hampton stormwater project in Hampton, VA. The project is funded in part by the Regional Greenhouse Gas Initiative. (City of Hampton)

In Hampton, a city on the James River near its mouth at the Chesapeake Bay, a $9 million RGGI investment is helping to launch a slate of long-awaited flood-fighting endeavors. In August, the city broke ground on the first of three projects designed to store and filter 8.5 million gallons of stormwater in the Newmarket Creek watershed.

Hampton Mayor Donnie Tuck said the community would have struggled to afford the $34 million effort without the money from RGGI. He added that he hopes Youngkin reconsiders his plan.

“I understand the desire to try to lower energy costs for all of Virginia,” Tuck said, “but I think we miss out when we think about the value [of the program] and the potential loss to this region.”

Youngkin has touted a state revolving loan fund as a RGGI replacement for resilience projects. The legislature set aside an initial round of $25 million for the fund last year and another $100 million in the budget that was finalized this September.

Stiff, the Wetlands Watch director, said she is pleased that there is a funding outlet available to communities struggling with floods and rising water. But she still prefers RGGI because those dollars were furnished as grants. Many localities are simply too small to afford to pay back large loans, she argued.

Another strike against the loan fund is that it relies on lawmakers having the political will to fund it from year to year, Stiff said. By contrast, RGGI funds refill the state’s coffers four times a year when auctions are held.