Western Climate Initiative offers cap-and-trade
July 27, 2010
GRANTS PASS, Ore. (AP) – A coalition of seven western states and three Canadian provinces on Tuesday offered its most detailed strategy yet for controlling greenhouse gas emissions blamed for climate change, saying they hope it will stand as a model for national systems in the United States and Canada.
At the core of the Western Climate Initiative is a cap-and-trade system that would go into effect in January 2012, gradually ramping down emissions levels. The system, which gives financial incentives to reduce carbon emissions, would start with power plants, then extend to large industrial producers and transportation.
The goal is to cut greenhouse gas emissions in the next 10 years to levels 15 percent below those in the year 2005.
Building on a less detailed strategy issued two years ago, the plan comes as Congress has been unable to produce a climate bill to address the same issues.
The document includes the first details of how the carbon auction would work, and it recommends that offsets from programs that store carbon would be limited to a fraction of total emissions. There would be a floor price on emissions, and the auction would be open to anyone.
Art Sasse, a spokesman for Pacificorp, which serves about 1.7 million electricity customers in the northwestern U.S., said the utility had not seen enough specifics about the plan to comment.
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So far, only two states – California and New Mexico – and three provinces – Quebec, Ontario and British Columbia – are writing regulations in anticipation of joining the Western regional carbon auction when it begins in 2012, said Michael Gibbs, California’s deputy secretary for climate change and co-chairman of the initiative.
The two states and three provinces account for 70 percent of the emissions produced by the signers of the strategy, creating enough liquidity to get the cap-and-trade system up and running, said Robert Noel de Tilly, climate change adviser for Quebec’s Ministry for Sustainable Development, Environment and Parks.
An economic analysis estimated that fuel savings would offset the cost of investing in new more energy-efficient equipment to meet limits on carbon production, Gibbs said.
Not all of the states in the climate group are enthusiastic. The Utah Legislature has passed a resolution urging Republican Gov. Gary Herbert to pull out, and Arizona passed a law barring the state government from adopting a regional cap-and-trade without legislative approval.
The other states in the coalition are Montana, Oregon, Utah and Washington.
California Gov. Arnold Schwarzenegger said the coalition’s plan is an important step toward reducing dependency on oil, increasing energy security, and creating jobs and investment.
“Action continues to be needed at the national and international levels to address clean energy and climate change, but California and the rest of the Western Climate Initiative partners are not waiting to take action,” Schwarzenegger said in a written statement.
Jim Whitestone of the Ontario Ministry of Environment said the coalition hopes the cap-and-trade system will serve as a model for the United States and Canada governments.
President Barack Obama on Tuesday pledged to keep pushing for broad climate legislation, and the White House expressed fresh hope the Senate and House might strike a deal on a sweeping energy plan this year.
Robert Stavins, professor of business and government at Harvard University and director of the Harvard Environmental Economics Program, said he did not anticipate Congress taking action that soon, and he was skeptical anything could be achieved in the next two years if Republicans gain seats in the House and Senate. Republicans have strongly opposed creating a cap-and-trade system for carbon.
“Hence, it’s not surprising that sub-national entities, such as states, will move forward on their own,” Stavins said in an e-mail. “The state model will be less effective and more costly for what is achieved than a national cap-and-trade system would be, but it may be the second-best approach.”
The strategy also called for linking up with other carbon markets in the East and Midwest, an approach Stavins said would make them more efficient.
Western Climate Initiative: http://www.westernclimateinitiative.org