The State of Virginia is proposing to join the Regional Greenhouse Gas Initiative (RGGI), a carbon trading program currently including states across the Northeastern U.S. Including Virginia energy producers in RGGI will greatly expand the scope of the carbon market, thereby improving market efficiency, competitiveness, and lowering carbon abatement costs.
Our comments to Virginia on its proposal offer two suggestions to ensure that Virginia’s addition to RGGI creates a competitive permit trading market. First, Virginia’s Department of Environmental Quality should inform the public thoroughly about the state’s forecasted CO2 emissions and the assumptions underlying its forecasts. This will help stakeholders assess if permits allocated to Virginia match Virginia’s expected emissions. Second, Virginia’s State Corporation Commission should ensure that regulated power producers do not receive a windfall from Virginia’s unique consignment auction process.
These comments follow our initial recommendations to RGGI on Virginia’s potential addition to the program.