NEW YORK - Seven northeastern U.S. states said on Tuesday they had agreed on a model rule that would create the country's first market for heat-trapping carbon dioxide by curbing emissions at power plants.
The agreement, called the Regional Greenhouse Gas Initiative, is relatively weak compared to the European Trading Scheme, the emissions trading program set up by the European Union to meet its obligations under the Kyoto Protocol on global warming.
But one expert said it was a landmark agreement that may help force the federal government to take action on reducing greenhouse gases.
"It's a good first step, but the road is pretty long, and we are going to need substantive greenhouse gas reductions," said Peter Fusaro, a carbon markets expert and the CEO of Energy & Environment Capital Management LLC in New York. "The limits are mild, pretty negligible," he added.
States in the western U.S. such as California are also trying to form regional regulations on greenhouse gas emissions. Fusaro said both regions hope that companies that could face emissions reductions on each coast would lobby for national regulation.
The RGGI would cap carbon dioxide emissions at about current levels at power plants from 2009 until 2015. Emissions at the plants would then be gradually reduced by 10 percent by 2019.
The first round of the Kyoto pact requires developed countries to cut greenhouse emissions by 5.2 percent of 1990 levels from 2008 to 2012.
The northeastern states have been working to regulate emissions because the U.S. federal government places no mandatory limits on the gases most scientists believe cause global warming.
In 2001, President George W. Bush withdrew from the Kyoto Protocol, saying that it would hurt the economy and unfairly left rapidly developing countries without emissions limits in its first round.
Most scientists believe greenhouse gases are causing global warming that could lead to catastrophic consequences such as stronger storms, heat waves and flooding as warmer temperatures melt glaciers.
The RGGI was initiated in 2003 by fellow Republican New York Gov. George Pataki.
Massachusetts and Rhode Island dropped out of the group late last year, saying the agreement could boost electricity rates. The RGGI said in a statement on Tuesday that homeowners would pay at most an additional $21 annually and would eventually save money as the plan helps power plants become more efficient.
Many Massachusetts legislators expect the state will rejoin the pact when Gov. Mitt Romney, also a Republican, leaves office. Romney is not seeking reelection in 2006.
The states participating in RGGI are Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York and Vermont. Maryland recently adopted legislation requiring the state to join RGGI by June 2007. The states now each have to approve the model rule.
Several bills in the U.S. Congress seek to create a national greenhouse emissions market.
Copyright 2006 Reuters News Service