On January 15 new Virginia Governor Glenn Youngkin signed an executive order to begin the process of removing the state from the Regional Greenhouse Gas Initiative (RGGI).

RGGI is a cap and trade style pollution mitigation program in which 11 states host auctions for emissions allowances which companies in the participating states must purchase in order to be allowed to generate emissions. The funds generated from the program are used for a variety of purposes in the participating states, including aiding with efficiency retrofits on old buildings, assistance to low income ratepayers, renewable energy investment, carbon abatement, and a variety of similar environmental investments.

Executive Order No. 9 begins the regulatory process necessary to remove Virginia from RGGI.

Youngkin’s order cites rising energy costs and the repercussions that these costs have for Virginia residents as the main driver of the exit. The order refers to the state’s $46 million per year expense in providing energy assistance to households that cannot afford high energy prices, pointing out that it is illogical to participate in a program like RGGI that raises energy costs while many in the state are already struggling to pay their energy bills. Adding to energy costs would only raise government expenditures on energy assistance and burden struggling families with higher energy bills.

Even though RGGI proceeds are sometimes used to help mitigate the impact of rising energy rates on lower income families, the imposition of a cost and the later amelioration of that expense is still costly for those customers. People benefit more from lower costs overall than by being reimbursed later on for a higher upfront cost.

While the RGGI program has done little to impact the amount of carbon emitted by its participating states, it has succeeded in imposing additional costs on energy transactions. In 2021, the first year of the state’s participation in the program, the total cost of RGGI allowances sold in Virginia was $227 million, costs which energy companies ultimately pass onto their ratepayers. Virginia energy company Dominion Energy stated that RGGI would cost its ratepayers between $1 and $1.2 billion over the course of the next four years.

There is some debate over whether executive action can remove the state from RGGI on its own, or whether action by the legislature is also necessary, but this action at the very least signals the administration’s view of exit from RGGI as a priority and takes the first steps to review the costs and benefits of participation.

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