Virginia finalizes ETS regulations and officially joins RGGI
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On 8 July 2020, the Regional Greenhouse Gas Initiative (RGGI) formally welcomed Virginia as the newest participating state in the mandatory cap-and-trade program covering the power sector starting 2021. Virginia’s inclusion in the group of linked ETSs increases the regional emissions cap coverage by almost 30%.
Virginia’s regulation was originally finalized in April 2019, but implementation was suspended following a legislative maneuver from opponents of the program. Legislation passed under a new legislative majority this year and allowed the process to continue but required some changes to the regulation, which has now been finalized.
Since Virginia first began developing its ETS regulation in May 2017, it has worked closely alongside other RGGI states to align on program design. RGGI members have now found Virginia’s final rule to be consistent with the RGGI Model Rule and final state regulations, as well as its starting CO2 allowance budget and emissions reduction trajectory to be sufficiently stringent.
Virginia joins ten other mid-Atlantic and Northeastern states in participating in quarterly auctions as part of a program in which allowances may be used for compliance by covered entities in any other participating state. Covered emissions in Virginia’s ETS will be capped at 27.2 million short tons CO2e in 2021, to decline annually by three percent to 19.6 million short tons CO2e in 2030. Stability mechanisms such as a cost containment reserve (CCR) and an emissions containment reserve (ECR) are also included.
Legislation passed during the 2020 state General Assembly session allows revenue from the auctions to be directed to the Virginia Community Flood Preparedness Fund and energy efficiency programs for low-income households.
"Virginia is sending a powerful signal that our Commonwealth is committed to fighting climate change and securing a clean energy future," said Governor Ralph Northam about the finalization of the state’s participation in RGGI. “This initiative provides a unique opportunity to meet the urgency of the environmental threats facing our planet, while positioning Virginia as a center of economic activity in the transition to renewable energy.”