Cash-strapped states in search of new revenue may establish their own “cap-and- trade” program for greenhouse gases covering more than half the U.S. economy if Congress doesn’t set up a federal emissions market.
“Plan A is we get a federal cap-and-trade program,” Judi Greenwald, a vice president at the Arlington, Va.-based Pew Center on Global Climate Change, said by phone. State-enforced greenhouse-gas limits “can be a credible Plan B.”
Ten Northeastern states already have a cap-and-trade program for power plants and raised $432.8 million from carbon-dioxide-permit sales since September 2008. Two other regional coalitions are planning cap-and-trade programs for 2012, and one participating state, California, predicts it might earn as much as $4 billion a year from the sale of pollution rights.
With backers of cap-and- trade legislation that passed the U.S. House of Representatives in June struggling to round up support in the Senate, the states are discussing the “nuts and bolts” of linking regional programs to form a single carbon market, Illinois Environmental Protection Agency Director Doug Scott said in an interview. “Most people recognize that the larger the program, the better, in terms of cap and trade,” he said.
Twenty-three states are active members of the Northeast’s Regional Greenhouse Gas Initiative, the Midwestern Greenhouse Gas Reduction Accord and the Western Climate Initiative. Together these regional cap-and-trade programs would cover 53 percent of the U.S. economy and 49 percent of the population, according to Commerce Department data.
The regional cap-and-trade programs offer the states a new revenue source as the U.S. economy emerges from the worst recession since the Great Depression. States are working to close $250 billion of deficits and “won’t fully recover from this recession until late in the next decade,” the National Governors Association said earlier this month.
Under cap-and-trade, the government would create a limited number of carbon-dioxide permits, or allowances, which could be bought and sold on a market. To enforce emission-reduction targets, fewer allowances would be made available over time.
