Gov.-elect Glenn Youngkin announced his intention to make energy more affordable for Virginians by withdrawing Virginia from the controversial 11-state Regional Greenhouse Gas Initiative.
He recently told the Hampton Roads Chambers of Commerce he’ll remove Virginia from the initiative by executive action once he enters office in January.
“RGGI describes itself as a regional market for carbon, but it is really a carbon tax that is fully passed on to ratepayers. It’s a bad deal for Virginians. It’s a bad deal for Virginia businesses,” Youngkin said. “I promised to lower the cost of living in Virginia, and this is just the beginning.”
On the merits, Youngkin is correct. A timely withdrawal from this flawed carbon market, which isn’t inherently market-based, will benefit all Virginians given its vast shortcomings.
The most notable problem with RGGI is its overall negligible impact on carbon emissions. In 2019, the Congressional Research Service observed that nine partner states “account for approximately 7% of U.S. CO2 emissions and 16% of U.S. gross domestic product” and called carbon emissions reductions “arguably negligible” at best.
When those numbers are broken down, it only accounts for a measly 1.4% in total U.S. emissions reductions. And even this reduction is largely attributable to the transition from coal to natural gas in the state.
Not only will RGGI membership fail to reduce carbon emissions in a meaningful way, it will raise costs for Virginians. The CATO Institute assessed electricity demand between non-RGGI and RGGI-participating states and concluded the former added more wind and solar generation than the RGGI states while having lower electricity price increases during the same time.
When the market sets prices, demand for renewable energy naturally happens, and consumers pay lower prices for clean energy. Ultimately, the CATO Institute found “no added reductions in CO₂ emissions, or associated health benefits, from the RGGI program.”
Virginia’s continued participation in RGGI will result in residents paying more for their electricity bills. According to recent State Corporation Commission filings, participation in the RGGI program will raise energy costs to $4.37 a month, or $52.44 per year, if enacted on Sept. 1. When paired with the new — and costly — Virginia Clean Economy Act, the net-zero law slated to raise energy bills $800 a year by 2030, this spells disaster for Virginians currently paying more to heat and power their homes.
Additionally, as Youngkin aptly noted, RGGI levies a carbon tax on all carbon-intensive goods. This added cost associated with carbon emissions is meant to disincentivize producers and consumers from making and using carbon-intensive goods, respectively.
But here’s the catch: Virginia’s economy, still reeling from the COVID-19 pandemic, could suffer setbacks and lose its No. 1 Top State for Business ranking if discouraged from producing carbon-based goods. Due to the demands required of RGGI, Virginia businesses could ultimately shift their operations out-of-state — or worse, overseas. That’s terrible for our state’s economy.
RGGI proponents are similarly dishonest about the impact of carbon taxes on consumers. The nonpartisan Tax Foundation says these taxes don’t just affect producers; the costs are ultimately passed down to consumers who purchase carbon-intensive goods. When prices of goods and services increase under a carbon tax, taxpayers’ incomes reflexively diminish as well.
Virginians would see diminished purchasing power because they already pay a premium on electricity and gas. Worse, carbon taxes would disproportionately hurt lower-income Virginia households since they rely and depend on carbon-intensive goods and energy sources for sustenance. Electricity costs would skyrocket in more economically depressed regions of the commonwealth, including southwestern Virginia. According to the U.S. Energy Information Agency, Virginia’s electric grid is primarily powered by natural gas (61%), nuclear energy (29%) and coal (4%). The reality is demand for solar and wind isn’t here yet.
Youngkin’s critics allege he’ll upend environmental policy. But he’s on-record pledging to pursue practical all-of-the-above energy policies, coastal resiliency, and fight sea-level rise and flooding.
Virginia shouldn’t rely on RGGI membership to achieve its emissions goals. Instead, our state can continue to innovate and develop technology — including carbon capture — without embracing more burdensome taxes and regulations.
Gabriella Hoffman is a visiting fellow with Independent Women’s Forum, host of the District of Conservation podcast, and serves as CFACT Communications Administrator. She lives in Alexandria.
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January 5, 2022