Climate 411

New federal policies can supercharge Virginia’s energy and climate goals

Mom helping young son charge electric car

Photo Credit: Getty Images

It’s the beginning of a new year and this year – despite some opposition – can be the year Virginia turns the corner to embrace a clean energy economy future.

Virginia has already taken critical steps in its clean energy transition to make communities more resilient and to address climate change. Steps like joining the Regional Greenhouse Gas Initiative (RGGI) – a multistate program under which power companies pay for the pollution they create – passing legislation like the Virginia Clean Economy Act to establish a 100% clean energy standard and commit to a zero-carbon-emissions electricity grid by 2050 and having deployed nearly $100 million in RGGI funds for flood risk reduction from Roanoke to the Eastern Shore in less than two years, with more to come.

Major federal legislation recently passed in the form of the Bipartisan Infrastructure Law (BIL) and the Inflation Reduction Act (IRA) will supercharge those efforts with increased funding for infrastructure projects, clean energy initiatives and tax incentives, climate resilience, and other programs that address the climate crisis and create good jobs. In 2021 there were already 92,315 Virginians employed in clean energy jobs. Clean energy jobs outnumber fossil fuel jobs and young people overwhelmingly want to work in industries that are serious about addressing the climate crisis.

Virginia is only beginning to see the funding opportunities flowing from these unprecedented federal investments. Here are three examples highlighting how the BIL and IRA are having an impact:

1. Electric Vehicles and charging stations

The IRA makes buying electric vehicles (EVs) easier and cheaper, with thousands of dollars in tax credits to buy new and used EVs. The bill also includes tax credits for electric heavy duty trucks, like the ones produced at the Volvo Trucks New River Valley Plant. Switching to zero and low-emission vehicles will help lower air pollution from Virginia’s highways and roads and save Americans money at the pump.

To support the increase in EVs on the road, the Commonwealth is planning an EV charging network with stations along busy transportation corridors across the state, funded with $5 billion from the BIL.

An additional $106 million from the BIL could fund over 883 DC Fast Chargers. Using these resources to build a robust EV charging network will increase EV vehicle adoption in Virginia, driving down climate pollution and creating jobs.

2. Clean School Buses

A popular BIL program is the EPA’s Clean School Bus Program, which has awarded nearly $30.8 million to 11 school districts in Virginia to replace existing diesel school buses with 78 electric models. Electric buses reduce air pollution inside and outside a bus, making them safer for children and communities by emitting little to no greenhouse gas emissions and making black diesel fumes a thing of the past.

Demand for the program and its electric buses is so high it has spurred the EPA to increase funding to nearly $1 billion.

3. Cleaning up our electric grid

Virginia’s electric power sector will also benefit from federal investments. The IRA modified and extended tax credits for renewable energy projects, like deployment of wind farms and solar arrays, and states with strong, binding pollution limits like RGGI will have greater incentives to use these tax credits to their advantage.

Once-in-a-generation federal investments will help build the clean, reliable and affordable power grid of the future. It only takes one extreme weather event like the unexpected and unplanned deep freeze in Texas a year ago to wreak havoc on older, existing power grids.

Virginia’s clean energy future

Virginia cannot afford to miss this opportunity to leverage federal dollars for necessary electric power sector investments, to be a climate leader and grow jobs in the clean economy.Smart state policies will work in tandem with the federal investment programs, increasing their impact. Analysis from EDF shows that federal programs like the IRA will spur at least 10 times the amount of investment from the private sector.

It is encouraging to see many state agencies recognizing the opportunity and engaging to secure federal funds to invest in Virginia – proving that investing wisely in the clean economy to benefit all Virginians does not need to be a partisan issue. This is an all-hands-on-deck moment and we need the Governor, legislature, business leaders, and local officials all working in unison to ensure these crucial funds are accessible and easy to apply for, especially for businesses, counties, towns, schools, and other community organizations. Virginia’s clean energy future depends on it.

Also posted in Climate Change Legislation, News, Policy / Comments are closed

The auction results are in: Washington state’s cap-and-invest program is off to a strong start

This blog was co-authored by Delia Novak, Western States Climate Policy Intern, U.S. Region

Today, the Washington State Department of Ecology (ECY) released the results from Washington’s first cap-and-invest auction held last Tuesday, February 28. The results of this auction indicate long-term confidence in the program from covered entities and are an encouraging sign of what’s to come from the Evergreen State. Additionally, the ECY summary report shows that the auction operated smoothly, with oversight and regulatory mechanisms in place to ensure the integrity of the auction and ease of interface for bidders.

This inaugural quarterly auction marks a critical milestone for Washington’s cap-and-invest program, which sets the most ambitious limit — or cap — on climate pollution of any state in the nation through mid-century. Put simply, it’s where the rubber meets the road on progress toward the state’s climate goals. During the auction, Washington’s major polluters purchase emissions allowances to cover their climate pollution. The requirement to hold one allowance for every ton of greenhouse gas pollution emitted creates a strong incentive for polluters to find ways to reduce their emissions as the number of available allowances shrinks over time in line with the declining pollution limit. This is also the first time that Washington’s cap-and-invest program has raised revenue from the sale of allowances — revenue that will be invested in Washington’s communities to slash pollution and build climate resilience. (For more background on Washington’s cap-and-invest program and auction process, check out our recent blog.)

February auction results

At the auction, administered by the Department of Ecology, participating facilities submitted their bids for allowances. Each regulated business that emits over 25,000 metric tons of carbon annually is required to hold one allowance for every ton of greenhouse gas that it emits. Here are the results, released today:

  • All 6,185,222 current vintage allowances offered for sale were purchased. This was a sold out auction!
  • The auction settled at a price of $48.50, $26.30 above the $22.20 floor price. This was well below the price ceiling of $81.47.
  • The February auction generated almost $300 million USD ($299,983,267 to be precise), which will be invested in efforts to further decrease Washington’s climate pollution and increase resilience to climate change.

(Wondering more about how auctions work in Washington? Check out our 2023 FAQ on auctions.)

What these results mean

The results of this auction are a strong vote of confidence from participating polluters and businesses, demonstrating trust in the longevity of this program and its potential to make a meaningful impact on reducing Washington’s emissions. The final settlement price, $48.50, is a positive indicator for the future of Washington’s cap-and-invest program. It demonstrates strong demand for allowances, but stays well below the program’s predetermined price ceiling. Moreover, by selling out of allowances, Washington is increasing the proceeds that can be invested back into communities — nearly $300 million from this first auction alone.

Essentially, this auction shows that regulated businesses are taking this market seriously: there was strong demand for allowances, demonstrating confidence that this program — and the ambition of Washington’s climate policy — are here to stay.

What’s next

Over the next two years, these auctions are projected to generate $1.7 billion in revenue, which will then be invested in efforts to further reduce Washington’s climate pollution. The Climate Commitment Act requires more than one-third of the revenue to be invested in environmental and economic benefits for disproportionately-impacted communities. As for the remaining revenue, the Washington Legislature will determine how to allocate it for climate and clean energy projects that can unleash more good-paying clean energy jobs, strengthen climate resilience and build healthier communities. The proposed spending for auction revenue will likely be coming out in late March.

As Washington looks to continue securing cost-effective pollution reductions through its cap-and-invest program, it could pursue linking programs with the Western Climate Initiative (WCI), which currently includes cap-and-trade programs in California and Quebec. Linkage between Washington’s market and the joint California-Quebec emissions market could bring about key benefits for all participating markets, including bringing down (and generally stabilizing) allowance prices for covered polluters and businesses in Washington and enabling deeper cuts in climate pollution.

When carbon markets link, the common carbon price across linked systems expands allowance trading partnerships and reduces price fluctuations. This results in a more efficient system with a greater pool of available opportunities to reduce emissions, which means more savings across the board. As we saw when California and Quebec linked, program linkage was able to deliver more regional emission reductions at lower costs than either jurisdiction would have achieved alone. Economic modeling published by Washington’s Department of Ecology indicated that linkage with the Western Climate Initiative could cause a significant drop in the initial prices of allowances in a new system like Washington’s.

This inaugural auction shows that Washington’s program is off to a strong start, though it’s important to remember that this is only the beginning. We’ll learn more as trends in the auction results develop over time — especially as regulated businesses face compliance deadlines and continue to implement their pollution reduction strategies. For more in-depth analysis on Washington’s auctions, stay tuned to this blog series for quarterly auction updates from EDF.

Also posted in Carbon Markets, Cities and states, Economics, Greenhouse Gas Emissions, Policy, Science / Comments are closed

Western Climate Initiative auction underlines upcoming opportunities to strengthen the program

California landscape

Photo Credit: Canva

This blog was co-authored by Delia Novak, Western States Climate Policy Intern, U.S. Region

Results of the latest Western Climate Initiative auction were released today, and while the solid demand for allowances indicates a stable market, there are hints of uncertainty about next steps for the cap-and-trade program. Now that the California Air Resources Board has a new Climate Change Scoping Plan in place, the state has key opportunities this year to strengthen this marquee climate program and to consider joining forces with other states.

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Also posted in California, Carbon Markets, Cities and states, Greenhouse Gas Emissions, Policy / Comments are closed

Washington state is holding its first cap-and-invest auction. Here’s what to expect.

Photo of the Asgard Pass in Washington state.

Photo Credit: Getty Images

Blog co-authored by Kjellen Belcher, Manager, U.S. Climate

Washington state is getting ready for an exciting development in its new nation-leading climate program, the Climate Commitment Act, which is slated to deliver healthier air, more clean energy jobs and a safer climate future for communities.

After experiencing costly and historic wildfires, heat waves and flooding — all within the past few years — Washington communities are ready for this cap-and-invest program to fast-track the transition to a stronger and more equitable, clean economy. Now, the program will take a major step forward with Washington’s first allowance auction to be held on February 28.

Here’s what you should know about the program and how the allowance auction works. Read More »

Also posted in Carbon Markets, Cities and states, Economics, Greenhouse Gas Emissions, Health, News, Policy / Comments are closed

Making the most of our climate investments: 4 lessons learned from new research

Photo Credit: Canva

This blog was co-authored by Morgan Rote, Director, U.S. Climate.

In the last year, the U.S. secured historic investments from the Infrastructure Investment and Jobs Act (IIJA), Inflation Reduction Act (IRA), and CHIPs and Science Act that position our country to drive transformational progress on emissions, energy security and jobs in clean energy and manufacturing. Getting those laws through Congress to President Biden’s desk was no easy feat — they’ve been decades in the making — and the next chapter may be just as challenging: implementing those clean energy and innovation investments swiftly and fairly across the nation.

To ensure these laws make the impact we need this decade, federal agencies like the Department of Energy need to design, build and evaluate programs that maximize this funding. Two reports commissioned by EDF offer valuable insights and recommendations on how to best design and evaluate clean energy and innovation programs.

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Also posted in Cities and states, Innovation, Policy / Read 1 Response

Minnesota’s 100% clean electricity bill could start a new era for climate action in the state

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This legislative session, Minnesota state leaders wasted no time getting to work on a strong clean electricity bill that achieves 100% carbon-free electricity by 2040, reduces health-harming air pollution, builds more good-paying jobs and sets the stage for economy-wide, climate action.

Pro-climate leaders have pushed for years to reclaim Minnesota’s early lead on climate action, when it passed the strongest renewable energy standard in the country back in 2007. Now, with pro-climate trifectas across the state’s Senate, House and governor’s office, as well as strong voter support for climate action, they have a major opportunity — and a mandate to get it done.

Here’s why legislators and Governor Waltz should seize this moment to get Minnesota on the path to 100% clean electricity and leverage this policy to put in place strong limits on climate pollution capable of meeting the state’s climate goals.

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Also posted in Carbon Markets, Cities and states, Health, Jobs, Policy / Comments are closed