The Heat Is Online

Seven US States (Minus Massachusetts) Sign CO2 Pact

Seven U.S. States Sign CO2 Plan in Break with Bush

Reuters News Service, Dec. 21, 2005


NEW YORK  Seven northeastern U.S. states have signed the country's first plan to create a market for heat-trapping carbon dioxide by curbing emissions at power plants, New York Gov. George Pataki said Tuesday.

In a break with fellow Republican President Bush, Pataki helped create the Regional Greenhouse Gas Initiative, in which participating states agree to curb emissions starting in 2009, with cuts in emissions starting in 2016.

Bush pulled out of the Kyoto Protocol on global warming in 2001, saying it would hurt the U.S. economy. He backs voluntary, not mandatory, cuts in production of greenhouse gases that most scientists believe warm the earth.

Environmentalists and growing ranks of carbon dioxide brokers hope one day the northeastern states will link with western states such as California to create a national greenhouse gas emissions market.

Pataki, who initiated RGGI in 2003, is widely thought to be aiming for the Republican nomination for the 2008 presidential election.

"In the face of the Bush administration's adamant refusal to cut heat-trapping pollution, this is a bold act of bipartisan leadership," said Dr. Peter Frumhoff, a climate expert at the Union of Concerned Scientists.

Pataki said in a statement Monday that RGGI will curtail CO2 emissions and spur development of new technologies to reduce U.S. dependence on foreign oil.

Other members of the RGGI are Connecticut, Delaware, Maine, New Hampshire, New Jersey, and Vermont. Membership is open to other U.S. states.

The states in early 2006 will issue for public review a draft of a memorandum of understanding on the plan that they signed on Monday. Each state then must proceed with required legislative or regulatory approvals to adopt the program.


The United States, the world's largest producer of greenhouse gases, created the idea of emissions markets but lags other rich nations in developing them.

The Kyoto pact, ratified by 156 nations, created a greenhouse gas market in the European Union earlier this year. In that market, industrial plants that have cut carbon emissions can sell credits to those that have not. A similar Kyoto-created market will open in Canada next year.

U.S. emissions brokers said RGGI should create a vibrant market by allowing power plants to mostly invest in clean energy projects, such as methane burning at landfills and wind farms.

"Essentially everybody (power plants) under RGGI will be short credits," said Andy Ertel, president of Evolution Markets, a New York based emissions broker. "That will lend itself to being more of a project-oriented market rather than a domestic version of the European Union's market, in which participants trade a lot of pure allowances for carbon."

Stakeholders' short positions in RGGI will be created by a rule in which at least 25 percent of a state's CO2 allowances will be dedicated to energy efficiency and new clean energy technologies.


Under RGGI, emissions of CO2 from power plants in the seven states beginning in 2009 would be capped at current levels of about 121 million tons until 2015.

The states would then slowly reduce emissions, aiming for a 10 percent reduction by 2019.

Massachusetts and Rhode Island quit the program earlier this month, saying it would raise power prices.

But some utilities, perhaps wanting to prepare for future carbon regulations, applauded the plan. KeySpan Corp. and Public Service Enterprise Group support the RGGI, while Dominion Resources Inc. and NRG Energy have come out against it.

The RGGI's own studies suggest that the plan could boost electricity bills by as much as $30 a year, but that bills could be eventually cut through increased efficiency of clean energy projects.