This map shows Virgnia's electric generating plants that use fossil fuels. Courtesy of Stephen D. Haner.

“You have a minute to chat about the consequences of leaving RGGI?”  That was the short email from a National Public Radio reporter who calls regularly, and RGGI is short for the Regional Greenhouse Gas Initiative.  I assumed he wanted to talk about carbon emissions or climate change but, no, he wanted to talk about Southwest Virginia. 

Somehow the debate over RGGI has become entangled in the flooding issues in the hills and hollows where my mother’s family has deep roots.  His contention was that folks out there recovering from another recent spate of downpours (and they are nothing new) are counting on funds from RGGI to pay for repairs and rebuilding.

The discussion only added to my deep commitment to end Virginia’s participation in the regional compact, which has imposed a carbon tax on electricity generators that is then passed along to utility customers.  The tax began in 2021 and collected $228 million from Virginians.  The 2022 take is yet to be determined but will likely exceed $300 million.

Even the supporters of the tax in the Virginia General Assembly never intended the money to be spent on flood recovery.  It was designated instead for flooding prevention, well, half of it was.  As taxpayers, we already subsidize flood recovery though the flood insurance program and then with federal funds. Yes, as reported, there is no state pot for disaster relief. 

If the Virginia General Assembly wants to start taking Virginia taxpayer funds for that purpose, it should consider a bill and take a vote.  Then somebody in state government will get to share the thorny problem faced by federal authorities, deciding which disasters qualify and how to divide too few funds among so many claims.  

The advocates of the RGGI carbon tax split the proceeds between flood prevention and low-income energy efficiency projects, politically popular causes on their own.  If funds are diverted to disaster recovery, another pressing need will pop up and demand yet another split in the funds.  Or worse, demands will grow to force the tax being paid by energy users to go even higher to cover more government spending.  

Right now the tax amount is set by an auction for carbon dioxide allowances among the energy firms using coal, oil or natural gas in the 11 RGGI states.  In Virginia, that basically means Dominion Energy Virginia.  Appalachian Power Company has one small plant, Clinch River, in Virginia and its plants to the west do not pay into RGGI.  Your power bills in that region may also include some RGGI tax for purchased power, but not much, not compared to Dominion’s territory.  [Disclosure: Dominion is one of our donors but donors have no say in news decisions. See our policy.]

It is easy to see the attraction you have toward using a tax that your part of the state does not pay but let us at least be honest about that.  RGGI is mainly paid by Dominion customers, with a bit more paid by the rural cooperative customers dependent upon their two shared generation plants. 

If RGGI does not go away, then Southwest Virginia flood mitigation or prevention programs certainly should be considered along with applications from other parts of Virginia.  But no tax could ever collect enough money to prevent flooding in a region with that geography or rebuild the damages from the next Camille or Juan.  

Imposing the carbon tax and emissions trading scheme of RGGI on Virginia doesn’t provide any environmental benefits, either.  The move away from coal and toward renewables was underway long before 2021 and will continue apace if Virginia leaves the compact.  That is why the debate is always focused on the money, and public support created with promises of cash.  The advice always holds, follow the money. 

Stephen D. Haner

Stephen D. Haner is Senior Fellow for State and Local Tax Policy for the Thomas Jefferson Institute for Public Policy. He resides in Henrico County.