Youngkin flood funding meant as step toward replacing RGGI

A budget proposal to fund flood and sea level rise projects is an alternative to the Regional Greenhouse Gas Initiative that Gov. Glenn Youngkin wants Virginia to leave, his top natural resources official says.

Youngkin’s budget amendments include a $200 million deposit into the new Resilient Virginia Revolving Loan Fund for flooding prevention projects.

It will be a first step toward addressing sea level rise and other climate change challenges, replacing funding that now comes from the RGGI cap-and-trade system to reduce carbon emissions, acting Secretary of Natural Resources Travis Voyles told the Joint Commission on Administrative Rules.

The administration is working on proposals to expand the fund’s financial base and operations, beyond that initial $200 million deposit, Voyles said.

Since Virginia joined RGGI, the state has received some $523 million in proceeds from RGGI’s auctions of credits that allow electric generating plants to exceed pre-set limits on how much carbon dioxide they emit.

Some $235 million has gone into the Community Flood Preparedness Fund, which finances flood control efforts, including measures to address sea level rise. The rest goes for energy-efficiency programs, such as better insulation for homes so they can reduce heating and air conditioning costs.

Voyles said expansion of the revolving loan fund would be worked out in the next few months.

The idea is to have funding lined up for after the state leaves RGGI, which the administration aims to do by the end of next year, when its current three-year contract expires.

“This will be a more transparent way of financing resiliency,” Voyles said.

Youngkin has argued that RGGI is an indirect tax on Virginia’s electricity users because the state’s utility regulation law allows electric monopolies to pass on all the costs they incur buying emission credits through RGGI.

Having the elected members of the General Assembly vote on funding resiliency is a more accountable and transparent way of paying for this work, Voyles said.

And because utilities can pass on the cost, they have no incentive to reduce greenhouse gas emissions, he said.

Appropriating resiliency funds through the state budget will also make funding more predictable than relying on RGGI, Voyles said.

But Nate Benforado, senior attorney for the Southern Environmental Law Center, challenged the administration’s arguments that RGGI isn’t working.

“RGGI is a steady, steady, steady” source of resiliency monies, he said.

Benforado also challenged the administration’s claims that RGGI hasn’t been effective in reducing carbon emissions.

After Virginia joined RGGI, the state saw a 12.8% drop in carbon emissions in 2021 and an 11% reduction in the first half of this year, he said.

He said the high cost of electricity that Youngkin says is the reason Virginia should leave RGGI has to do with the many riders, including this year’s 12.2% increase to cover sharply rising natural gas and other fuel costs.

That increase amounts to $14.93 a month for a typical residential customer using 1,000 kilowatt hours of electricity, but the State Corporation Commission also approved a plan for additional increases to cover expenses that the 12.2% jump did not.

There is no current rider for RGGI, although at one point earlier this year Dominion Energy proposed a rider that would have amounted to $2.39 a month on a 1,000 kilowatt-hour bill.

The resiliency fund was created earlier this year.

Its job is to make loans or grants to local governments to finance or refinance the cost of any resilience project or to local governments to provide low-interest loans or grants to individuals, including buying out homeowners in flood zones as well as improvements to protect property from flooding or sea level rise.