Capping carbon: cap-and-trade and carbon tax policies are growing in appeal as states look to cut greenhouse gas emissions.

Author:Andersen, Glen
 
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States have long been leading the federal government in their efforts to tackle climate change, passing legislation to require greenhouse gas reductions as far back as 2006. As they continue and expand their efforts, states are hoping that federal actions build on what they've already done.

The debate also is gearing up in Washington, D.C., over how to reduce greenhouse gases and at what cost. Sponsors in Congress hope to have major climate legislation to the president by the end of summer.

One thing both state and federal efforts are almost certain to have in common are market-based incentives, which use pricing to drive emission reductions. Ten northeastern states--Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont--already have a system called carbon cap and trade through the Regional Greenhouse Gas Initiative. It places a limit on the amount of greenhouse gas emissions in a region and requires utilities to pay for the pollution they emit.

"While we considered other regulatory options for addressing electricity generation, a cap-and-trade approach offers maximum flexibility for the regulated community and resulted in emissions reductions at lower costs," says New Jersey Assemblyman Upendra Chivukula.

New Jersey was one of the first states to set enforceable greenhouse gas reduction targets, and officials there see cap and trade as an integral part of its comprehensive greenhouse gas reduction plan. But it's not the main focus.

"The cap-and-trade program is projected to contribute 23 percent" to the state's 2020 reduction target, says Chivukula, who chairs the Assemby's Telecommunications and Utilities Committee. Energy efficiency, renewable energy, a low-emissions-vehicles program and other efforts will make up the rest of the reductions.

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Twenty states are seeking a 50 percent to 80 percent decrease in greenhouse gas emissions by 2050. Seven of them, including New Jersey, have made these targets mandatory. The goals are based on research that suggests an 80 percent reduction in global emissions by 2050 is needed to avoid catastrophic climate change scenarios.

The goal of cap and trade is to ensure the environmental and societal costs of climate change are included in the price tag of activities that emit greenhouse gases. These costs could include the loss of land because of rising seas, a reduction in the availability of fresh water, and lower crop yields, according to reports by the National Academy of Sciences and the U.S. Environmental Protection Agency.

REGIONAL INITIATIVE

The 10 states in the greenhouse initiative were the first to get a carbon cap-and-trade program running. Their goal--and that of cap-and-trade programs in general--is to reduce carbon dioxide emissions from power plants, which generate more than one-quarter of the region's greenhouse gases.

Under the program, power plants...

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