Virginia budget deal includes funding for carbon credit program
(The Center Square) – The Virginia budget deal, which passed both chambers of the General Assembly, maintains funding for the carbon trading compact called the Regional Greenhouse Gas Initiative, according to the office of former House Minority Leader Eileen Filler-Corn, D-Fairfax.
The initiative, also known as RGGI, intends to reduce the commonwealth’s carbon footprint by capping the amount of emissions that can be emitted annually and gradually lowering that cap over the next several years. It also sets rules for how much carbon entities can emit and forces entities to buy carbon credits if they plan to go over that limit. The number of credits will also gradually decline.
If an entity goes over its carbon emissions cap, it would face fines. About $228 million worth of carbon credits were bought in the first year of the program, most of which were bought by the state’s power utilities. These costs are often passed down to ratepayers, which the State Corporations Commission estimates will cost about $5.9 billion between 2019 and 2043. The commission estimates that program will eventually increase rate costs by somewhere between $84 and $144 every year.
Former Gov. Ralph Northam entered into the compact after receiving authorization from the General Assembly, which was fully controlled by Democrats at the time. Gov. Glenn Youngkin has pledged to remove Virginia from the compact, but his office did not say whether he will make any changes to the budget.
“The Governor is reviewing the budget and as energy costs increase, Governor Youngkin is committed to lowering the cost of living and withdrawing from RGGI, which is a hidden tax that drives up energy costs on Virginia consumers,” Youngkin spokesperson Macaulay Porter told The Center Square.
Republican leadership has also opposed participation in RGGI, but neither House nor Senate Republicans provided comments to The Center Square about its inclusion in the budget. A spokesperson for the Senate Republicans told The Center Square that the Senate did not include Republicans in the final budget negotiations.
The free-market Thomas Jefferson Institute has spoken against Virginia participating in RGGi. However, Stephen Haner, a senior fellow for state and local tax policy, and the institute told The Center Square that if the state participates, its funding should be out in the open.
“While it remains, it should be in the budget and out in the open,” Haner said. “There should be no hidden taxes or spending. When the revenue source goes away, soon we hope, so will the related spending. Other dollars can cover those if the Assembly wishes.”
The governor has said he can take executive action to end Virginia’s participation in RGGi, but he will likely face a legal challenge from Democrats if he does so. Democratic lawmakers have claimed that the governor cannot leave the compact without legislative approval.
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