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Virginia ETS moves closer to approval

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On 19 April 2019, the Virginia State Air Pollution Control Board approved the regulation for a proposed emissions trading system, which is a pre-condition for linking to the Regional Greenhouse Gas Initiative (RGGI) by 2020 as planned. The regulation is based on a September 2018 revised draft regulation from the Virginia Department of Environmental Quality (DEQ). It incorporates October 2018 amendments from the Air Pollution Control Board as well as changes following a second round of public comments from 4 February to 6 March 2019.

Amendments to the revised draft that have been implemented in the regulation include an exemption from the cap-and-trade scheme for biomass-fired generation sources, the removal of post-2030 cap provisions (which are due to be decided by all RGGI states in a future program review), and the addition and modification of terminology to ensure consistency with RGGI’s 2017 Model Rule.

To ensure Virginia can participate in the RGGI program, the regulation includes a 2020 cap of 28 million short tons CO2e, declining by three percent per year to 19.6 million short tons CO2e in 2030, as well as a cost containment reserve (CCR) and an emissions containment reserve (ECR). In contrast to RGGI, Virginia intends to distribute its allowances through consignment auctions. In this mode of allocation, covered entities (i.e. electric utilities) are consigned allowances that they have to auction.

Before the regulation can go into effect by 2020 it must be submitted for executive review to Virginia’s Department of Planning and Budget, the Secretary of Natural Resources, and Governor Ralph Northam. After approval by the Governor, the regulation will be granted permission to be published and 30 days after publication the regulation would come into effect. The timeline could be impacted by requests for changes from the Governor, as well as by potential legal challenges.

ETS Jurisdiction