Western States, Provinces Set Climate Emissions Trading Program

The program recommendations met with support from environmental groups and criticism from the coal industry.

The WCI partners say the program is expected to encourage growth in new green technologies, help build a strong clean energy economy, and reduce dependence on foreign oil.

The cap-and-trade program is one element of a regional effort by the governors and premiers of U.S. states and Canadian provinces to promote environmental sustainability and economic growth by reducing greenhouse gas emissions

The partner governments include seven U.S. states: Arizona, California, Montana, New Mexico, Oregon, Quebec, Utah, and Washington; and four Canadian provinces: British Columbia and Manitoba in the west, and Ontario and Quebec in the east.

Together, the seven states and four provinces represent over 70 percent of the Canadian economy and 20 percent of the U.S. economy.

The carbon reduction strategy will cover nearly 90 percent of the region's emissions, including those from electricity, industry, transportation, and residential and commercial fuel use.

The coal-fired Hunter power plant in Utah emits greenhouse gases into the atmosphere. (Photo by Utah Geological Survey)

The cap-and-trade program will require emitters to cut their pollution by setting a limit, or cap, on emissions and then allowing the market to identify the least costly ways to achieve the limit.

Through collaboration and consultation with stakeholders, the partner governments decided to recommend reducing air pollutants, diversifying energy sources, and advancing economic, environmental, and public health objectives while avoiding localized or disproportionate environmental or economic impacts.

The Western Climate Initiative partner governments have agreed to begin reporting emissions in 2011 for emissions that occur in 2010.

The first phase of the cap-and-trade program will begin on January 1, 2012, with a three-year compliance period.

The second phase will begin in 2015, when the program is expanded to include transportation fuels and residential, commercial and industrial fuels not already covered in the first phase.

"This landmark action by a diverse coalition of Democratic and Republican governors as well as Canadian premiers is a powerful signal to the world that now is the time for dramatic action to stem global warming," said Derek Walker, director of the California Climate Initiative at Environmental Defense Fund. "This bold leadership will strengthen California's economy and make the region a hub of clean technology and green job growth."

Ontario's coal-fired Lambton power plant (Photo courtesy Ontario Power Generation)

Other environmentalists were pleased, but warned that many details have yet to be worked out, including whether emissions allowances are given to polluters for free, or whether they are auctioned off with the revenues spent in the public interest.

The agreement unveiled today requires that, at least, 25 percent of the allowances be auctioned by 2020 and encourages states to go further.

"The smartest, cheapest way to tackle global warming is to make companies pay for every ton of pollution and use the revenue to ease the transition to a clean energy economy," said Jeremiah Baumann, an advocate for Environment Oregon.

"This will prevent windfall profits, save consumers money and accelerate the transition to a clean energy economy," he said. "We look forward to working with state officials to pursue that goal."

The American Coalition for Clean Coal Electricity, an industry association, today expressed concern about the regional nature of the Western Climate Initiative cap-and-trade program.

"By focusing on such programs, there is a strong chance the state and/or regional mandates will conflict with future federal mandates, in essence double taxing states where local mandates reside. This would result in increased economic hardship for working families and businesses in WCI states," said the coalition.

"There are better ways states and regions can continue environmental progress and address climate change concerns without harming the economy," the coalition stated.

"Such strategies include increasing energy efficiency programs and funding advanced clean coal technology that can achieve real and measurable reductions in greenhouse gas emissions without putting western states' economies at risk."

The coalition supports "the timely adoption of a mandatory federal program to reduce greenhouse gas emissions."

The coal coalition says that investments in technology are "the only way to ensure that mandatory emissions reduction programs do not come at the expense of reducing energy security or making residential and business customers to pay unnecessarily higher costs for energy."

To read the Western Climate Initiative emissions trading recommendations, click here.

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