Scientists agree – we’ve got to do something about greenhouse gases that are driving climate change. Some economists like the idea of a cap and invest system, where— for example -- pollution is capped at a certain level by the Regional Greenhouse Gas Initiative or RGGI – a coalition of 11 states including Virginia. Companies that pollute must buy emission allowances at quarterly auctions.
“The firms that find it really easy to reduce their emissions won’t need to buy as many, and the firms who find it really expensive to reduce their emissions will buy the larger share," says Bill Shobe, a professor of public policy at UVA. He explains that each state gets a certain number of allowances and can use proceeds from their sale in whatever way it wants. Virginia got more than $220 million in the first year alone – funds it’s used to prevent future floods and promote conservation.
“Half the money goes for energy efficiency – spending for low-income households, and half goes for communities that are at greater risk of flooding.”
Shobe says the program also reduced emission of greenhouse gases. But what about claims it’s costing consumers too much? The international expert on energy economics argues we can pay now – or pay even more later.
“If you weren’t doing anything about climate change, then you would have lower costs of electricity and higher costs of flooding and other damages from increasing temperatures. Climate change is going to be a very expensive problem in particular for Virginia.”
He notes that one state, New Jersey, did drop out of the coaltion when its Republican governor insisted the program was a bad deal for consumers.
"Then Governor Chris Christie decided he wanted to run for president, and he thought it would be politically beneficial to pull out of RGGI, so he did."
But as Christie was leaving office two candidates running to succeed him agreed that a cap and invest system was actually the most effective, least expensive way to cut greenhouse gases.
"New Jersey went right back in, and both the Democrat and the Republican were in favor of doing that," Shobe concludes.
He says RGGI has pushed Virginia utilities to invest more in solar power, and – in so doing – reduced greenhouse gas emissions here. If the Air Pollution Control Board votes to leave RGGI, environmental groups are expected to challenge that decision in court.