As state leaves climate alliance, Virginia considers alternative funding source

As Virginia prepares to pull out of an 11-state pact to reduce greenhouse gas emissions — an agreement that would help communities with flooding caused by climate change — a state official has advocated an alternative source of funding for that aid.

But that source isn’t designed for the same thing,

says an analyst at the Environmental Defense Fund.

The Community Flood Preparedness Fund — sometimes called the flood fund — under the Regional Greenhouse Gas Initiative is Virginia’s sole statefunded program dedicated to climate resiliency projects and planning. Leaving RGGI is a priority of Gov. Glenn Youngkin, and on Dec. 15 the Air Pollution Control Board

voted to begin that process, with exit by the end of 2023.

The state’s acting secretary of natural and historic resources, Travis Voyles, advocated using the Resilient Virginia Revolving Loan Fund when he met Dec. 19 in Richmond with an oversight panel called the Joint Commission on Administrative Rules. That fund would be a more transparent way to finance climate resiliency projects, he said, reflecting Youngkin’s view, and is the first step in replacing funding from the greenhouse gas initiative.

This loan fund, however, is focused on helping individuals adapt their homes and businesses to flood risks. The existing funding source finances community-scale projects, said Grace Tucker, an analyst for the Environmental Defense Fund who focuses on Virginia coasts and watersheds.

The flood fund, she said in an email interview, is “particularly important” because reducing flood risks upstream cuts the risk to communities downstream. Though the revolving loan fund that Voyles advocates does provide aid to low- and moderate-income homeowners, she said, it does not require as much money to go to low-income areas.

“It doesn’t have the same CFPF requirement for 25% of funds to be distributed to low-income geographies,” she said, “or the same natural resource protections by prioritizing nature-based flood risk reduction solutions.”

The loan fund that Voyles advocates was created to have a broader applicability, he said in an interview. The administration has discussed requiring that a specific percentage of the money go to lower-income people, he said. The plans for how to administer and manage the fund are set to come out in 2023, he said, and the administration anticipates the program will launch before the end of the year to provide a smooth transition.

The loan fund includes aid for home, commercial and industrial upgrades; flood mitigation; and assistance for families to move out of floodplains. The fund was jumpstarted by $25 million from the Regional Greenhouse Gas Initiative; an additional $200 million is included in a 2022-24 budget amendment Youngkin submitted to the General Assembly on Dec. 15. Half of that $200 million is allocated to the program; half is conditional, based on available funds.

The flood fund is financed by proceeds from carbon auctions under the greenhouse gas initiative, more than $235 million so far. In this cap-and-trade setup, the auctions sell emissions allowances; electric-power generators must buy them to offset carbon dioxide emissions they produce over a set limit. Virginia also uses proceeds from the auctions to finance a low-income energy assistance program.

Youngkin opposes the greenhouse gas initiative because he says it requires energy producers to pass on the costs of allowances to customers, raising their bills.

Voyles said the administration is focused on providing a “more transparent” view of flood funds by changing how the money is collected. He called RGGI a “backdoor tax” in energy bills that is passed on to ratepayers and said the money should come directly from tax revenue instead.