Virginia Judge Pauses State’s Return To RGGI During Youngkin’s Appeal

A judge in Floyd County Circuit Court ruled from the bench last week that Virginia does not need to return to the Regional Greenhouse Gas Initiative, the carbon market known as RGGI, as the state appeals a November decision by the court saying the state must rejoin the interstate effort. 

The latest decision is a loss for environmental advocates who wish to lower emissions and utilize hundreds of millions of dollars in revenue the state previously received through RGGI membership for energy efficiency and flood preparedness efforts. But Judge Designate Randall Lowe’s ruling was a victory for Republican Governor Glenn Youngkin as the decision delays any potential reinstatement of what Youngkin calls a “regressive tax” on Virginians.

“Since this Administration ended the RGGI tax, Virginians have been spared hundreds of millions of dollars in RGGI taxes,” said Peter Finocchio, Youngkin’s press secretary. “If Democrats had their way and forced us back into RGGI, Virginians would face over $500 million in RGGI compliance costs next year alone.”

Nate Benforado, senior attorney for the Southern Environmental Law Center, who represented the plaintiffs, the Association of Energy Conservation Professions, said he’s prepared to fight Youngkin’s appeal. 

“This may be a long battle, but we are ready for it,” said Benforado. “Virginia should get back in RGGI. The state’s unlawful removal is already harming its clean energy transition and putting the most vulnerable communities at even more risk.”

RGGI is a multi-state compact that requires electricity producers to purchase allowances for the carbon emissions they produce above RGGI-established limits, with the amount of those allowances decreasing to 0 by 2050 to reduce greenhouse gas emissions and the release of pollutants. 

The revenues are returned to the states, where, in Virginia, they have amounted to about $830 million since Virginia’s Department of Environmental Quality joined in 2021. Becoming part of RGGI came after Democrats passed the Clean Energy and Community Flood Preparedness Act in 2020, requiring membership. Under the law, 50 percent of the revenue from RGGI allowances paid by electricity producers, including utilities, is directed to energy efficiency programs, 45 percent goes toward a flood preparedness fund, and 5 percent covers administration costs. 

As part of the plan, utilities that produce electricity are given authority to recover those allowance costs paid to the state from their ratepayers. For customers of Dominion Energy, the state’s largest utility, that led to a monthly fee of about $2.39, later increased to about $4.44, on typical residential bills.

Youngkin has called that fee a “tax” on Virginians while saying the program doesn’t reduce emissions. Environmental groups point to a state report showing emissions had been reduced under RGGI and the program benefitted ratepayers by helping counter climate change caused primarily by burning fossil fuels.

Following over a year of regulatory steps, the Virginia State Air Pollution Control Board approved Youngkin’s regulation to withdraw the state from RGGI, effective Dec. 31, 2023. Environmental groups filed a lawsuit over the move and won in November when Lowe ruled that Youngkin acted in violation of the law by leaving the program the state legislature said Virginia should be in.

“We’re disappointed to find ourselves at this point despite the November ruling,” said Chase Counts, the Association of Energy Conservation Professions’ executive director. “We, and a great number of other Virginians, see the benefits of being part of RGGI and want to be back in the program.” 

The Latest Arguments

Lowe granted the suspension of his November decision last week by allowing the Virginia Attorney General’s Office to post a bond, allowed under Virginia law, pending its appeal. 

He did not rule in favor of the Office of Attorney General’s other arguments for a stay, premised on a return to RGGI causing “regulatory chaos” both for those who need to purchase allowances and for regulatory agencies, and that they could succeed on appeal.

In response, Grayson Holmes, another senior attorney with the Southern Environmental Law Center, said “the chaos began when Respondents took this illegal action in the face of official warnings and advice, and it is now Respondents’ job to rectify the fallout from their illegal action.”

The stay could last “potentially for years,” Holmes added, if appeals end up at the Supreme Court of Virginia. Holmes said the Youngkin administration’s “unlawful action” has eliminated the sole source of funds for a state home weatherization program. 

What’s Next

As Youngkin’s appeal proceeds, with a hearing likely by the end of 2025 or in early 2026, Virginia will be holding elections for governor, lieutenant governor and attorney general, all currently held by Republicans. Also up for election are all seats in the House of Delegates, which Democrats currently control with a 51-49 majority; they currently control the Senate by a 21-19 majority. 

Democrats are hopeful former U.S. Rep. Abigail Spanberger, who previously held the evenly split seventh congressional district, can lead the party back to the governor’s mansion over Lt. Gov. Winsome Earle-Sears, backed by Youngkin, who is limited by Virginia law to serving a single term. 

As a result of Virginia’s withdrawal from RGGI under Youngkin, carbon dioxide emissions, which had initially dropped 22 percent from 2021 to 2023, increased by 20 percent in 2024, noted Holmes, the Southern Environmental Law Center attorney.

Benforado, his colleague, said “Virginia has lost out on several hundred million dollars” in revenue for 2024. “The first 2025 auction was [Wednesday], so that’s another batch of proceeds we’ll be missing,” Benforado said, referring to a sale of RGGI allowances. 

Use of Funds

This year, Youngkin proposed creating a new state-level disaster relief program funded with about $102 million the state received in December 2023 from RGGI, but hadn’t been allocated to the energy efficiency and community flood preparedness accounts, as required by law. 

In response, Democrats introduced language into the proposed state budget directing Virginia to rejoin RGGI, despite the appeal, and give certain lawmakers standing to sue the governor when the law or spending rules aren’t being followed.

But the House and Senate proposal now use $50 million in surplus for disaster relief and preparedness, and $50 million for the Community Flood Preparedness Fund, or Flood Fund, while leaving the $102 million in RGGI revenues in a Virginia DEQ account unspent. 

“Unfortunately, we also know that Helene will not be the last disaster we face in Virginia.”

— Emily Steinhilber, Environmental Defense Fund

According to an Inside Climate News review of Department of Conservation and Recreation announcements involving the Flood Fund, about $175 million remains to be doled out prior to additions from the December auction.

Those funds, said Emily Steinhilber, director of climate resilient coasts and watersheds in Virginia for the Environmental Defense Fund, “were set up through RGGI as a way to help communities prepare for storms like Helene. This pre-disaster hazard mitigation spending is critical, and distinct, from investments in flood recovery. 

“Unfortunately, we also know that Helene will not be the last disaster we face in Virginia,” Steinhilber said, referring to the hurricane that devastated parts of southwest Virginia last fall. 

A review of announcements from the Department of Housing and Community Development regarding use of the energy efficiency directed funds shows that there is about $132 million unspent for the states’ Weatherization Deferral Program (WDR) and for the Affordable and Special Needs Housing Program, which just announced $139 million in awards that use a combination other funding sources..

Chelsea Harnish, executive director of the Virginia Energy Efficiency Council, said those WDR funds, unlike Low Income Home Energy Assistance Program (LIHEAP) funds, help low-income participants make homes ready for energy efficiency upgrades. And the LIHEAP funds, she acknowledged, are also at risk of getting held up under Trump’s desire to freeze federal spending, which is tied up in court now.

“If DHCD has been given money, then they have an obligation to spend it on what lawmakers and the code tells them it should be spent on,” Harnish said, referring to RGGI revenues.

Correction: This story was updated March 14, 2025, to correct the spelling of Peter Finocchio’s name.