The Poplar Creek Homes project in Halifax County created 16 duplexes, with 32 affordable and energy efficient units, with help from the Regional Greenhouse Gas Initiative.
The project, which was a collaboration between the town of South Boston and a local nonprofit called Southside Outreach Group, received about $270,000 from this carbon cap-and-trade program, said Earl Howerton, executive director of the nonprofit.
“That was just a portion of the funding, because the total project cost roughly about $8 million,” Howerton said. “But it was a needed project, because right now in rural Virginia, there’s a great need for housing. There’s a shortage.”
There was a 130-person waitlist for units when the housing project had its grand opening in June, Howerton said.
Poplar Creek Homes isn’t the only project in Southwest and Southside that received funding from RGGI, pronounced “Reggie.” But Virginia is in the process of pulling out of the program, and it’s unclear where this funding stream will go if that happens.
RGGI is a multistate effort to reduce greenhouse gas emissions. The program places a limit on electricity sector emissions among the 11 states in the Mid-Atlantic and Northeast that participate.
These states set an enforceable cap on the amount of carbon pollution that electric companies can emit and sell pollution permits up to that cap during quarterly auctions. Companies must buy permits for every ton of carbon they emit.
The money generated from the auctions goes toward regional economic projects, like weatherization of homes, energy efficient and affordable housing, and flood resilience projects.
Virginia formally joined RGGI in January 2021. About a year later, Gov. Glenn Youngkin took office and pledged to withdraw the state from the program, which he said raised the cost of living for Virginians and did not offer any incentive to lower carbon emissions.
In June, Virginia’s Air Pollution Control Board voted to withdraw the state from RGGI, pushing forward Youngkin’s plan. The target date for official withdrawal is the end of the calendar year.
Depending on who you ask, this is either a good thing for Virginians’ wallets or a bad thing for the environment and statewide initiatives that were funded by RGGI.
Let’s take a look at those projects in Southwest and Southside that received funding from RGGI.
RGGI-funded projects in Virginia
As of July 12, Virginia has brought in $655 million in RGGI auction fees, according to Irina Calos, communications team lead at the Virginia Department of Environmental Quality.
Of that, $295 million has gone to the Department of Conservation and Recreation and $341 million to the Department of Housing and Community Development. The DEQ also gets 3% of the auction proceeds, which has amounted to $19 million.
The funds allocated to DCR went into the agency’s Community Flood Preparedness Fund, which was established to support regions in the state to reduce the impacts of flooding.
The fund, which is funded solely by RGGI, has so far provided about $97 million for 96 projects, mostly related to flood resiliency, across the state. Fourteen of these projects, which received almost $4.5 million, are in Southwest and Southside.
Buchanan County and Tazewell County, which experienced severe flooding last year, received $387,500 and $332,505, respectively.
Both counties are using the money for capacity building, or equipping community officials and residents with the skills to better respond during a crisis, according to their grant applications.
The money allocated to the Department of Housing and Community Development was distributed between two initiatives: the Weatherization Deferral Repair program and the Affordable and Special Needs Housing program.
The weatherization program completed 475 projects statewide, using about $6.7 million in RGGI funds. Of that, 147 projects were completed in Southwest and Southside with almost $1.7 million. Projects include addressing problems like leaky roofs, mold, non-functioning or unsafe HVAC units, water damage and electrical or plumbing problems.
The housing program helped create 5,141 affordable housing units with $87.5 million in RGGI money statewide. Southwest and Southside saw 473 affordable housing units created, with $6.7 million from RGGI funding. The $270,000 that went to Poplar Creek Homes came from this program.
Where does RGGI stand now?
Following the Air Pollution Control Board’s vote, the proposal to withdraw Virginia from RGGI advanced to an executive review period. It is eventually expected to meet a legal challenge.
The Virginia Conservation Network, a coalition of more than 150 environmental nonprofits throughout the state, and other environmental groups are challenging the legality of Youngkin’s effort to withdraw from RGGI.
Virginia’s participation in the program was written into law by the legislature and can only be undone by legislative action, said Nicole Duimstra, director of communications for the Virginia Conservation Network.
“It really is illegal for the governor or the DEQ or the Air Board to override legislative mandates,” Duimstra said. “Through multiple years of bipartisan legislation in the General Assembly, we Virginians have confirmed our participation in RGGI, so it is still law. We’re still participating.”
Duimstra also said that she has not heard of any alternative ways to fund these weatherization and flood resilience projects, should Virginia officially withdraw from RGGI.
“This program, especially its flood funding, does help localities throughout the state. Rural, urban, small, big, mountainous, coastal,” Duimstra said. “I think you would actually find a lot of nonpartisan support for where this money is going.”
If Virginia does withdraw from RGGI in December, it would be more difficult for localities, especially in rural parts of the state, to accomplish essential projects, she said.
“It would strip away a lot of the really critical funding that local governments need, especially in smaller regions, to protect the disproportionately harmed, under-resourced, small rural communities that don’t have the capacity to address the flood risk or weatherization of homes on their own,” Duimstra said.
However, there is some RGGI money that hasn’t been disbursed yet, according to Alexis Carey, public relations director for the Department of Housing and Community Development.
The department has about $121 million in unobligated funds and is waiting on a final budget from the General Assembly before disbursing it, Carey said.
Del. Chris Head, R-Botetourt County, said that Virginia should be funding programs like flood resiliency.
But such needs should be “directly funded by the governor and the General Assembly with taxes collected by and controlled by leaders elected by Virginians,” he said in a June editorial in the Richmond Times-Dispatch.
“Virginia has taxpayers. And Virginia taxpayer money should be used to solve Virginia problems,” he said in an interview. “Being in RGGI is nothing more than a feel-good thing for people that want to say we’re doing something.”
Head and Youngkin have said that RGGI raised energy costs for Virginia residents, because companies pass down the price of participating in the program to customers.
Youngkin, who has acknowledged climate change and is enthusiastic about expanding nuclear power generation in Virginia, took issue with the language of the 2020 law that made the state a participant in RGGI.
The law says that the cost of pollution permits purchased through RGGI will be considered environmental compliance costs, meaning that it may be recovered from ratepayers by Dominion Energy, Appalachian Power or other companies.
“The imposition of the RGGI ‘carbon tax’ fails to offer any incentive to change behavior. Current law allows power generators such [as] Dominion Energy, to pass on all their costs, essentially bearing no cost for the carbon credits,” said a 2022 administration report.
Dominion’s residential customers in Virginia saw an average of $2.39 added to their monthly bill between Jan. 1, 2022, and June 30, 2022, to offset the cost of participating in RGGI, according to Dominion spokesperson Aaron Ruby.
From July 1, 2022, to the present, Dominion suspended the monthly RGGI charge, Ruby said. But the State Corporation Commission recently granted approval for the utility to reinstate the charge at roughly $4.44 per month starting Sept. 1.
The Associated Press reported that as of June 7, when the Air Pollution Control Board voted to withdraw from RGGI, Dominion had incurred about $490 million in compliance costs and had recovered about $267 million from customers.
Appalachian Power spokesperson Teresa Hall said the exact dollar amount added to an individual customer’s bill is unavailable, because RGGI costs are packed into the company’s Environmental Rate Adjustment Clause, which includes more than just RGGI jurisdictional costs.
In 2021, Appalachian Power incurred $341,000 in RGGI costs, Hall said. In 2022, that number was $275,000, and in 2023 so far, it’s about $180,000.
“[RGGI] raised rates and made electricity cost more,” Head said. “There’s really nothing else that this did.”
But Duimstra said that RGGI was indeed helpful in lowering carbon pollution. Virginia has decreased its carbon emissions by 5.5 million tons since joining RGGI, she said.
And across all the states participating in the program, emissions from power plants have dropped 50% since RGGI was founded 18 years ago, which is double that of non-RGGI states, according to the Virginia Conservation Network.
“RGGI works,” she said. “It’s achieving the goals that it set out to and I think it’s actually achieving more than we even initially thought.”
And Duimstra added that the Virginia Conservation Network and other environmental organizations are “actively looking for all opportunities to defend Virginia’s participation and RGGI and will continue to do so.”