A growing number of American states are looking at ways to reduce greenhouse gas emissions in the absence of federal climate change legislation, with a northeastern scheme for trading carbon becoming a model.
The proponents of the Regional Greenhouse Gas Initiative, a market-based emissions reduction scheme adopted by nine northeastern states from Maine to Maryland, are touting their programme as a way to cut greenhouse gases and boost economic growth.
“I’ve been hearing from a lot of states lately, asking: ‘How would this programme work? If we were interested in joining what would the mechanism be, how would caps be set, how would money flow?’,” says Collin O’Mara, Delaware’s environment and energy secretary and chair of RGGI (pronounced “Reggie”).
The agency is expected soon to start the process of applying the rule to the US’s 600 existing coal-fired plants, which produce more than one-quarter of the US’s emissions.
With no prospects for passing climate change legislation through Congress, the Obama administration has been using regulation to try to meet the president’s pledge to cut the US’s greenhouse gas emissions by 17 per cent compared with 2005 levels by 2020.
Opponents say that the rules will force existing coal-fired plants to close, while environmentalists contend that more aggressive regulation is needed to counteract global warming.
Regardless, the EPA will set targets for reductions but will probably leave states with a lot of flexibility on how these are met, analysts say.
That is leading some states – including Colorado and Illinois – to look closely at schemes like RGGI.
The scheme, introduced in 2009, applies only to power plants and was the first cap-and-trade type scheme in the country, auctioning emissions permits. California, another environmentally conscious state, followed suit with regulations aimed at reducing the state’s greenhouse gas emissions from all sources.
RGGI’s members say the scheme has been more successful than even they anticipated, and should serve as an example to the rest of the country.
“We’ve seen a dramatic reduction in emissions across the region, while at the same time we’ve seen an increase in productivity and an increase in energy production,” Mr O’Mara says.
“The lesson is that we can still support a healthy robust economy while improving energy efficiency,” he says.
Emissions from power plants in the RGGI area were a third lower than the limit in the first three years, while they were 45 per cent below the cap in 2012, although this was partly because the depressed economy reduced demand for electricity.
The Analysis Group, an independent Boston-based think-tank, meanwhile concluded that the scheme had given a $1.6bn boost to the regional economy and created 16,000 new jobs.
Massachusetts, which the American Council for an Energy-Efficient Economy has named the most energy-efficient state for the second consecutive year, has received similar inquiries directly, says Rick Sullivan, the state’s energy secretary.
“Other states that are setting their own policies see that RGGI is up and running and tried and true, and has shown good results,” Mr Sullivan says. “We would welcome new members.”
RGGI member states have also been urging the EPA to bear their system in mind while formulating the new rule for existing coal-fired power plants – to make sure the rule complies with the RGGI system, rather than the other way around.
“If the federal rule mirrors the RGGI approach, including a cap and trade system, it will make it easier for states to adopt RGGI in concert with compliance with the federal rule,” says Paul Bledsoe, a former Clinton administration climate change official.
“But if the federal rule is more prescriptive, there may not be the same sort of overlap with the RGGI process, and I think the jury is still out on this,” he says.
The EPA said it was “continuing to review the more than two million comments the agency received on the carbon pollution standard for new power plants”.
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