On 16 May 2017, Virginia Governor Terry McAuliffe directed the Department of Environmental Quality to formulate a regulation limiting CO2 emissions from power plants. The proposed regulation would allow for the use of market-based mechanisms and the trading of allowances with other states. The stringency of the regulation should also be comparable to similar regulations in place in other states.

The directive is based on the recommendations of an interministerial working group established by the Governor in June 2016, which proposed the establishment of a ‘trading-ready’ emissions reduction program that would enable participation in a broader multi-state carbon market like the Regional Greenhouse Gas Initiative (RGGI).

The Department has until 31 December 2017 to propose a regulation to the Air Pollution Control Board. However, given the Governor will have served the maximum term limit, any subsequent steps towards implementing the suggested regulations will depend on the results of the state election in November 2017.