Pennsylvania Senate Republicans have a like-minded lawmaker in Virginia who also thinks that the Regional Greenhouse Gas Initiative (RGGI) is a poor choice for his state’s residents and businesses.
Virginia Gov. Glenn Youngkin, who assumed office Jan. 15, on that same day signed Executive Order No. 9 calling for a re-evaluation of the state’s participation in the RGGI and to “immediately begin regulatory processes to end it.”
To get the process underway, the order tasked the Virginia Department of Environmental Quality (DEQ), in coordination with the state’s Secretary of Natural and Historic Resources, to conduct a report reevaluating the costs and benefits of participation in the RGGI. The DEQ released its report March 11.
“This report reveals that RGGI is in reality a carbon tax passed on to families, individuals and businesses throughout the Commonwealth,” Youngkin said in a statement issued March 15. “It’s a bad deal for Virginians.”
Pennsylvania Senate Republicans agree and are railing against Gov. Tom Wolf’s efforts to enter the RGGI by Executive Order through regulation. They say Wolf’s plan has bypassed the normal legislative process and would make Pennsylvania the only state to attempt to enter RGGI without legislative approval.
In their ongoing battle, Pennsylvania State Republicans in February filed a request with the state’s Commonwealth Court asking it to intervene in the Wolf administration’s lawsuit to force Pennsylvania into the initiative, and sent a Feb. 24 letter to the Independent Fiscal Office (IFO) requesting an audit of the modeling used to justify Pennsylvania’s entry into the RGGI.
The IFO, in fact, will discuss the results of its analysis regarding RGGI’s economic impacts during a joint hearing being held on March 21 at 1 p.m. (EST), by the Pennsylvania Senate Environmental Resources and Energy Committee and the Community, Economic and Recreational Development Committee. Additional panels will include testimony from businesses and labor groups, such as the Pennsylvania Chamber of Business and Industry, the Pennsylvania Manufacturers’ Association, and Boilermakers Local 154, among others.
Meanwhile, in Virginia, Youngkin appears to be taking the same route as Wolf, albeit to leave — not enter — the RGGI. In Youngkin’s Executive Order No. 9, in fact, he also required the DEQ to notify the Regional Greenhouse Gas Initiative Inc. of both its review and the governor’s intent to withdraw from the RGGI, either by legislative or regulatory action.
“Costs are soaring for Virginia families and as governor, I pledged to address over-taxation and Virginia’s high cost of living,” Youngkin said. “That’s why I signed Executive Order No. 9 to direct the DEQ to examine the impact of RGGI and start the process of ending Virginia’s participation.”
The Virginia DEQ said its report is based on new information that points to higher costs for residential and industrial ratepayers due to participation in RGGI, and that “the benefits of RGGI participation have not been realized.”
“Most of this cost increase information comes from the state’s largest regulated utility, Dominion Energy, in rate increase filings before the State Corporation Commission to recover the costs of compliance with the carbon-trading rule that includes the cost of purchasing emissions allowances to cover their CO2 emissions,” according to its report. “However, the availability of new information is limited since Virginia has just completed its first year of participation.”
The DEQ’s report, which focused its evaluation on the program areas of ratepayer impacts, allowance prices and emissions trends, provides several conclusions and findings regarding RGGI.
For instance, because of the captive nature of their ratepayers, the ability for power generators in Virginia to fully pass on costs to consumers, and the fact that the Code of Virginia dedicates RGGI proceeds to grants programs, participation in RGGI is in effect a direct carbon tax on all households and businesses, the DEQ found.
In addition, the Virginia DEQ determined that consumers are unable to avoid the pass-through of these costs because they do not have the opportunity to switch electric providers.
Among other conclusions, the report found that the imposition of the RGGI “carbon tax” also fails to achieve its goal as a carbon “cap-and-trade” system because it lacks any incentive for power generators to actually reduce emissions, due to the ability to pass through costs to consumers.
“Hardworking Virginians are having to do more with less as inflation steals a historic amount from their paychecks and the failed Biden administration energy policies are costing Virginians more at the pump and in their homes,” Youngkin said. “We’re working every day to cut energy taxes and reduce costs — like the RGGI carbon tax — and make Virginia the best place to live, work and do business.”