9VAC5-140-7210: CO2 allowance allocations

A. The department will allocate the Virginia CO2 Budget Trading Program base budget CO2 allowances to the Virginia Auction Account.

B. For allocation years 2021 through 2030, the Virginia CO2 Budget Trading Program adjusted budget shall be the maximum number of allowances available for allocation in a given allocation year, except for CO2 CCR allowances.

C. In the event that the CCR is triggered during an auction, the department will allocate CO2 CCR allowances, separate from and additional to the Virginia CO2 Budget Trading Program base budget set forth in 9VAC5-140-7190 to the Virginia Auction Account. The CCR allocation is for the purpose of containing the cost of CO2 allowances. The department will allocate CO2 CCR allowances as follows:

1. On or before January 1, 2021, and each year thereafter, the department will allocate CO2 CCR allowances equal to the quantity in Table 140-5A.

Table 140-5A

CO2 CCR Allowances from 2021 Forward

2021

2.716 million tons

2022

2.632 million tons

2023

2.548 million tons

2024

2.464 million tons

2025

2.380 million tons

2026

1.148 million tons

2027

2.212 million tons

2028

2.128 million tons

2029

2.044 million tons

2030 and each year thereafter

1.960 million tons

2. CCR allowances allocated for a calendar year will be automatically transferred to the Virginia Auction Account to be auctioned. Following each auction, all CO2 CCR allowances sold at auction will be transferred to winning bidders' accounts as CO2 CCR allowances.

3. Unsold CO2 CCR allowances will remain in the Virginia Auction Account to be re-offered for sale at auction within the same calendar year. CO2 CCR allowances remaining unsold at the end of the calendar year in which they were originated will be made unavailable for sale at future auctions.

D. In the event that the ECR is triggered during an auction, the department will authorize its agent to withhold CO2 allowances as needed. The department will further authorize its agent to convert and transfer any CO2 allowances that have been withheld from any auction into the Virginia ECR account. The ECR withholding is for the purpose of additional emission reduction in the event of lower than anticipated emission reduction costs. The department's agent will withhold CO2 ECR allowances as follows:

1. If the condition in 9VAC5-140-7420 C 1 is met at an auction, then the maximum number of CO2 ECR allowances that will be withheld from that auction will be equal to the quantity shown in Table 140-5B minus the total quantity of CO2 ECR allowances that have been withheld from any prior auction in that calendar year. Any CO2 ECR allowances withheld from an auction will be transferred into the Virginia ECR account.

Table 140-5B

ECR Allowances from 2021 Forward

2021

2.716 million tons

2022

2.632 million tons

2023

2.548 million tons

2024

2.464 million tons

2025

2.380 million tons

2026

1.148 million tons

2027

2.212 million tons

2028

2.128 million tons

2029

2.044 million tons

2030 and each year thereafter

1.960 million tons

2. Allowances that have been transferred into the Virginia ECR account shall not be withdrawn.

E. The adjustment for banked allowances will be as follows. On March 15, 2021, the department may determine the adjustment for banked allowances quantity for allocation years 2021 through 2025 through the application of the following formula:

TABA = ((TA – TAE)/5) x RS%

Where:

TABA is the adjustment for banked allowances quantity in tons.

TA, adjustment, is the total quantity of allowances of vintage years prior to 2021 held in general and compliance accounts, including compliance accounts established pursuant to the CO2 Budget Trading Program but not including accounts opened by participating states, as reflected in the CO2 Allowance Tracking System on March 15, 2021.

TAE, adjustment emissions, is the total quantity of 2018, 2019, and 2020 emissions from all CO2 budget sources in all participating states, reported pursuant to CO2 Budget Trading Program as reflected in the CO2 Allowance Tracking System on March 15, 2021.

RS% is Virginia budget divided by the regional budget.

F. CO2 Budget Trading Program adjusted budgets for 2021 through 2025 shall be determined as follows: on April 15, 2021, the department will determine the Virginia CO2 Budget Trading Program adjusted budgets for the 2021 through 2025 allocation years by the following formula:

AB = BB – TABA

Where:

AB is the Virginia CO2 Budget Trading Program adjusted budget.

BB is the Virginia CO2 Budget Trading Program base budget.

TABA is the adjustment for banked allowances quantity in tons.

G. The department or its agent will publish the CO2 trading program adjusted budgets for the 2021 through 2025 allocation years.