Cap, Trade and Skeletons

Did Waxman-Markey’s ancestors really deliver on their promises? 10

“REGGI” ... the new kid on the block: Under the Regional Greenhouse Gas Initiative, ten Northeastern U.S. states agreed to slash carbon dioxide emissions from power plants by 10 percent from averaged 2002-04 levels by 2018.

“It’s modest,” said REGGI Corp. executive director Jonathan Schrag. The UN’s best estimates are that greenhouse gases need to be reduced by 80 percent by 2050 to stem climate change.

To meet the cap, all large power plants in the 10 states are assigned a credit for each ton of CO2 they are allowed to emit under the cap. The main difference between REGGI and other trading programs is that it relies on auctions of the type that President Obama originally wanted at the national level, requiring polluters to buy credits, with proceeds returned to public coffers.

“The auction component is a major innovation,” said Scrag. “I think it’s a significant advantage if you are able to return to the public the benefits, the value of capturing the price of CO2 emissions.”

Indeed, REGGI’s emission reductions may be modest, but the economic benefits have proved sizeable, with more than $260 million generated by June 1. Despite hard times, the states are sticking to their commitment so far to use auction proceeds for environmental programs.

But are greenhouse gas emissions being reduced to the set levels? In fact, the target is so modest that emissions were already below the cap in 2008, and are again so far in 2009, years ahead of schedule. As in Europe, that may be due to increased energy efficiency and warmer winter weather rather than carbon trading.

With fresh reports on the more rapid pace of melting glaciers and other ecological calamities, and the low price of carbon on the REGGI market, critics argue the cap should be tightened. But Schrag said while that was a valuable lesson learned for future stages, the 10 states had agreed up front not to change the rules mid-course, and they’re sticking to that.

“They have committed to review the program at the end of 2011,” said Schrag.

Environmental justice advocates have the same concerns in the Northeast as in the Southwest and Europe, noting the power plants are still sited in poor neighborhoods that can least afford the public health impacts.

Schrag said member states are taking steps to ensure such concerns are addressed, although not the way activists might advocate. Maryland is subsidizing electric bills for low income ratepayers, Massachusetts is creating so-called “green” jobs in poor neighborhoods, and nearly all the states are setting up energy efficiency and weatherization programs to help reduce costly heating bills and use of polluting fuels.

The REGGI member states have made it clear they want to be folded into a the national cap-and-trade program proposed by Waxman and Markey. In the meantime, Schrag said, it’s an important pilot program that builds on the shoulders of the acid rain and EU programs, and which can guide the federal government and western states such as California as they put programs in place.

“We are pioneering. We are the first mandatory, fully operating carbon trading system in the country,” he said. “But I think it’s important to appreciate the innovations that have gone forward from the very early cap-and-trade programs, building upon the experience in Europe and with acid rain, and to adapt those programs to the new challenges of greenhouse gas regulation.”

Janet Wilson is a senior fellow at USC Annenberg’s Institute for Justice and Journalism, and a veteran environmental reporter based in California.

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  1. ClaudeB Posted 6:25 pm
    28 Jun 2009

    Clifford, that's the point. The idea was to reduce SO2 and NOx levels. If, by substituting their fuel source, they reduced overall emissions at the lowest cost possible for them, that's exactly the point. The economy is all about incentives and profit is the biggest of all.
    1. Clifford Wells's avatar

      Clifford Wells Posted 7:16 pm
      28 Jun 2009

      Hard to explain this, but Bunker C and high-sulfur coal was rarely if ever used, and only for "emergency" uses.  These were not normal emissions in the least.  What happened was that during the fuel crisis of the 70s and early 80s, facilities were allowed to amend their permits to use high sulfur fuels in case of a national emergency.  So a unit might go from 20,000 TPY to 35,000 TPY and the upper number became the "allowable" under which you could trade.  Hey, nice to be able to trade off 15,000 tons of SO2 credits at 70 dollars per ton, and not do a darn thing! I don't have a lot of good to say about the concept, no matter how good it sounds.  If it works so well, why are CO2 emissions not being significantly reduced in Europe?  Were folks trading phoney date plam tree and airline miles for credits that were used for extra in Eastern Europe?  From a practical standpoint, such Ponzi schemes never really worked as well as they were advertised. The alternative seems to be a carbon tax.  Excuse me, since when did a tax every help anybody?  I believe in helping the needy and stuff, but with a carbon tax?  You must be crazy.  The way to limit CO2 is by restricting CO2 and other greenhouse gas emissions in terms of grams per mile, pounds per million BTU, pounds per therm or million cubic feet of natural gas, grams per kilowatt-hour, kilograms per tonne of fuel, or whatever rate-based measure you can find.  Plain and simple. that's how you do it. 
  2. Tr2828 Posted 6:20 am
    29 Jun 2009

    Look at the picture is being güvenlik kabini used gasoline in the  United States.
  3. OrganicCat Posted 8:06 am
    29 Jun 2009

    I think it's clearly evident that event slow changes get pushed back by the party of No.  Hard pushes are necessary for many reasons, one of which is because we can't sustain ourselves at our current level of consumption of resources and another (more obvious one) is that things get watered down so much that if we tried to implement "little" changes they'd be watered down into non-existence.  Larger pushes get changed into what we have here, not what we want, but better than nothing.  Could they try a more bi-partisan effect, maybe reducing the changes a LITTLE bit?  Probably, but in my (admittedly bias) opinion, we don't have the time to squabble over the pork and beans of it, we need to do it in a rational, efficient manner taking the vast majority of scientific evidence into account.As for the electrical comment, I kindly ask that you show evidence that electrical technology is somehow not up to standard for being able to replace current technology at the drop of a hat.  The only thing holding those technologies back are the money grubbing companies making billions off their old technology.  Fat lot of good that did them (like GE).
  4. bmengr Posted 5:32 am
    08 Jul 2009

    We don't have to perfectly account for carbon emissions at the beginning.  Why not start with the easiest measure, which would require permits to sell fuel, give credit for carbon capture, and include the effects of large-scale agricultural activities?  Fine tuning the system could give bonuses for actions that will reduce carbon emissions in the future or take into account smaller actions (and the prospect of a cap being implemented could encourage people to use current, uncapped energy to make more solar, wind, etc devices).From the consumer's perspective, the costs are just built in, so there's no paperwork to be done.  When you pump your gas, the seller will have arranged for permits to cover its use.I'm certainly worried about the potential giveaway of billions of dollars worth of carbon permits to the energy industry, given corruption trends. If we imagine that it is politically possible to have a 100% auction system, however, there would be no reason for companies to pretend to be worse than they are, and thus there wouldn't be a "bunker coal" situation.  Two problems solved at once!  If money from the auction were distributed equally to all American citizens and maybe permanent residents, those consuming the least would come out ahead and there would be better incentives to reduce all around. It will be important to have the infrastructure in place for taking more dramatic action if it does turn out to be needed, or increase the cap if the earth is doing 'ok' and the models start looking more livable.  There's no reason auctions couldn't be held quarterly or even more often, and this would allow a rapid response to actual results.Cap and trade will increase costs or some people, but it will also reduce the extent to which the costs of consumption are externalized and produce a system that is more fair to those who use less.  The tradeoffs between different consumer choices will shift, so that a decision that is best for the environment is more likely to also be better for the purchaser's bottom line.  Hopefully water usage and trash production will also factor in somehow, so that these metrics don't worsen.Remember, we're not just talking about climate change.  Ocean acidification will probably cause the elimination of shellfish, reduce fish production, and kill off reefs - all within the lifetimes of most people here.   Personally, I like being able to eat fish.

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