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“We believe a carbon fee is also fairer. Everybody pays the same rate. But the worst emitters pay more on an absolute basis and those who have already made improvements pay less. Companies will win or lose based on their ability to innovatively invest to reduce carbon emissions—not on how successful they are in lobbying Congress for free allowances.

“Our proposed fee is also fair to consumers, as we propose recycling most of the gross receipts back to consumers (e.g., a carbon allowance). This will benefit low-income consumers, who typically do not use much energy, and it will increase the costs to higher income consumers, who typically consume much more energy. So, unlike cap-and-trade, which is highly regressive, our carbon fee is progressive.”

 

Not only have individual states set GHG emission goals, but regional initiatives have sprung up—the Regional Greenhouse Gas Initiative (RGGI) in the Northeast, the Western Climate Initiative (WCI) and the Midwestern Greenhouse Gas Accord (MGGA). Word’s out that another group may be forming in the Southeast.

RGGI WCI

Connecticut Arizona

Delaware British Columbia

Maine California Maryland Manitoba

Massachusetts New Mexico

New Hampshire Oregon

New York Utah

New Jersey Washington

Rhode Island

Vermont

MGGA
Illinois
Indiana
Iowa
Kansas
Manitoba
Minnesota
Michigan
Ohio
South Dakota

State GHG regulations abound

In the void left by federal non-action, states are developing comprehensive climate change legislation at a rapid pace. Speaking at the Clean Tech Investor Summit, Terry Tamminen, formerly the Secretary of the California Environmental Protection Agency and currently an advisor to Gov. Schwarzenegger, said that state groups have proliferated very quickly. The number has grown from three states with climate change regulations to 27.

“A year ago, there was RGGI [Regional Greenhouse Gas Initiative] and now there are the Western Governors and eight states in the Midwest,” said Tamminen. “Without giving away too much that is confidential, look for one more trading block focused around the Southeast.”

RGGI is a cooperative effort between 10 eastern states to establish a cap-and-trade program. According to the Paul Hastings report, RGGI is the closest to implementing its cap-and-trade regulator model. Caps of CO2 emissions begin at 1990 levels from 2009 through 2014, and move up to reduce emissions 10 percent below that level by 2018.

Each RGGI member has to create market-based regulations that cap total CO2 emissions from fossil fuel-fired power facilities and provide for trading of emission allowances throughout the Northeast. A portion of the allowances will be auctioned and a portion will be

granted to existing facilities at no cost. Carbon offsets may be used in limited circumstances and can be expanded if carbon prices become overly burdensome. Currently, RGGI’s first allowance auction is scheduled for June 2008 and the entire program is slated to take effect by 2009.

The Western Climate Initiative (WCI) and Midwestern Greenhouse Gas Accord (MGGA) intend to regulate all GHG gases from various economic sectors, rather than controlling only CO2 from power generation facilities.

The WCI is a collaboration between western states, Canadian provinces and Mexican states. A regional reduction goal of 15 percent from 2005 levels by 2020 has been established. All members of the WCI have joined The Climate Registry, a non-profit corporation that is developing standard protocols for reporting greenhouse gases to enable carbon trading markets. Five subcommittees are analyzing the technical aspects of creating a cap-and-trade program. WCI has not declared its target implementation year.

Under the MGGA, emissions must be reduced by 16 million tons. The group expects to have a model rule developed by August 2008 and intends to be fully implementational by 2010.

Some states are acting independently. After he vetoed an energy bill in 2007 that he thought did not go far enough, Florida Gov. Charlie Crist issued three executive orders. One directed the Florida Department of Environmental Protection to aggressively cut greenhouse gas emissions statewide—by 2017, down to 2000 levels; by 2025, down to 1990 levels; and by 2050, 80 percent below that.

So far, five coal plant projects proposed in Florida have been cancelled. In an article in the January/February issue of Public Power, Barry Moline, executive director of the Florida Municipal Electric Association, wrote, “For new generation options, utilities are now officially confused. …The governor and state regulators have created a cloud of regulatory confusion where no one can determine if even something as simple as a gas-fired combined-cycle power plant has a chance of receiving approval.”

 

California, ever the innovator

California was the first state to limit statewide global warming pollution. AB 32, a market-based regulatory initiative called the Global Warming Solutions Act, passed in September 2006 and requires a 25 percent reduction in GHGs by 2020.

In the implementation stage at this point, various state agencies are developing a series of plans and a reporting system. The California Air Resources Board will begin enforcing limits on emissions starting in 2012. AB 32 also requires CARB to institute a mandatory emissions reporting and tracking system to monitor and enforce compliance with the emissions limit.

In January 2007, the California Public Utilities Commission adopted an interim GHG Emissions Performance Standard. The EPS is a facility-based emissions standard that requires all new long-term commitments for baseload generation to serve California consumers to be with power plants that have emissions no greater than a combined-cycle gas turbine plant. The level is established at 1,100 pounds of CO2 per MW. “New long-term commitment” refers to new

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