Virginia joins Regional Greenhouse Gas Initiative (RGGI)

July 15, 2020

After years of legislative efforts and debate, Governor Northam has announced that Virginia is finally set to officially join the Regional Greenhouse Gas Initiative, becoming the first southern state to enter the collaborative program.

The Regional Greenhouse Gas Initiative, or RGGI, is a market-based program amongst several Northeastern and Mid-Atlantic states with the goal of reducing greenhouse gas emissions from power plants while also encouraging new economic growth, particularly in the environmental, renewable energy, and energy efficiency sectors. Currently, there are 10 RGGI members: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont. Pennsylvania is currently working on a final regulation (expected by July 31, 2010) that will allow them to join RGGI as well.

Simply put, RGGI is a cap-and-trade program that targets pollution from fossil fuel power plants. Members states agree to a cap on carbon dioxide emissions, and power plants in those states in turn must reduce their pollution loads to meet this cap or are required to obtain allowances through quarterly auctions. Participating states can then use the proceeds of these auctions to invest in various renewable energy or energy efficiency projects or initiatives. According to recent studies, since the program was launched in 2009, RGGI has resulted in a net economic benefit of over $4.7 billion while carbon dioxide emissions have dropped by as much as 45% in participating states.

In Virginia, proceeds of allowance auctions will be used to invest in community flood preparedness, coastal resilience, and energy efficiency programs. According to the Northam Administration, the Department of Housing and Community Development (DHCD) and the Department of Mines, Minerals and Energy (DMME) will administer approximately 52% the proceeds for energy efficiency programs for low-income citizens, while 45% will be invested in flood prevention and resiliency programs and the final 3% will be used by the Department of Environmental Quality (DEQ) for climate planning efforts.

While the General Assembly has debated the merits of RGGI for years, the enabling legislation that structures Virginia’s RGGI participation was only passed this legislative session, while the final regulation (the Virginia Carbon Rule) was just signed on June 25, 2020. Now, Virginia is set to become a fully participating member of RGGI on January 1, 2021.

VACo Contact: Chris McDonald, Esq.

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