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California to Link Up with RGGI for Uniform Greenhouse Gas Market

In order to more efficiently reduce greenhouse gas emissions, California Gov. Arnold Schwarzenegger and New York Gov. George E. Pataki have agreed to explore ways to link California’s future greenhouse gas emission credit market and the Northeastern and Mid-Atlantic states’ Regional Greenhouse Gas Initiative (RGGI) upcoming market.

RGGI is a cooperative effort by Northeast and Mid-Atlantic states to design a regional cap-and-trade program designed to achieve a 10% reduction in greenhouse gas emissions form power plants by 2019.

The RGGI program will implement the nation’s first mandatory cap-and-trade program for carbon dioxide emissions. In addition to New York, other states signing the agreement to implement RGGI include: Connecticut, Delaware, Maine, New Hampshire, New Jersey, and Vermont. The State of Maryland also has adopted legislation to join RGGI by June 2007.

Earlier this year, a model set of regulations to implement RGGI were finalized. New York and the other six states who are participating in RGGI are able to use this model to draft the necessary regulations or legislation to implement this program in their own state. New York plans to propose its draft regulation in the next few months.

RGGI uses a flexible, market-based cap-and-trade system. Each state will issue one emissions credit or allowance for each ton of CO2 emissions allowed under the regional cap. These emissions credits will be traded as commodities.

Last month, Governor Schwarzenegger signed AB 32, California’s landmark greenhouse gas emissions legislation that established a program of regulatory and market mechanisms to achieve real, quantifiable, cost-effective reductions of greenhouse gases. (Earlier post.)

AB 32 requires the California Air Resources Board (CARB) to develop regulations and market mechanisms that will ultimately reduce California’s greenhouse gas emissions by 25% by 2020. Mandatory caps will begin in 2012 for significant sources and ratchet down to meet the 2020 goals.

The two governors discussed ways to link the two efforts to create a uniform carbon trading system.

Gov. Schwarzenegger also announced an executive order directing California Secretary for Environmental Protection Linda Adams to coordinate state climate change policy. The executive order, which will formally be signed on Tuesday, also instructs the secretary to work with the California Air Resources Board to seek to develop a framework that allows California to work together with RGGI. Such an arrangement would help build a large, robust carbon trading market.



If Deval Patrick wins the Massachusetts' corner office, look for Massachusetts to join RGGI as well.

All told, if CA's merge is successful and MA joins, then over 25% of the population will be under a RGGI umbrella. Who joins next? Maybe OR and/or WA. After that, it's tough. NJ isn't nearly as pro-environment politically as the Northeast or MD. Neither is PA, perhaps due to their coal.

Get enough states in on the deal, and there will be momentum to push a similar bill through tUS senate and House, and we might find a national movement within the next 5 years or so.

Better late than never. In the mean time, maybe write a letter to your *state* senator and rep and encourage them to join the RGGI pact.


Cap and trade, combined with sound investment, and smart startup/initial capital expenditure govt. tax credits, is the way to go. A stable timeframe, and phased in standards are also important. Linking this to the Euro Union's (and possibly Japanese and others in the future) carbon trading markets, also help via increased market size.


"NJ isn't nearly as pro-environment politically as the Northeast or MD. Neither is PA, perhaps due to their coal."
_Partly correct. NJ also has many oil refineries; it is the Louisiana of the NorthEast. Much of the crude/refined products on, Suezmaz tankers, from Europe, Middle East, and North Africa, ends up at NJ refineries. Most are situated near or at the mouth of the Delaware River, or on the NJ side of New York harbor. On top of that, NJ is home to many petrochemcal and pharmaceutical plants. There are also some reminant energy intensive industrial operations. In Pennsylvania, heavy industry is still around, even after bankrupcy of much of Big Steel, and shifting operations of other industries overseas. Coal is another big part of it, but so is electricity. Coal feed these multi-gigawatt plants, and thus powering much of the NorthEast. Some of the coal also go down the Ohio River Valley (mostly via rail), to feed power plants, and make coke/chemicals.


I fail to see how this will work, given the fact that almost all Kyoto signatories are not meeting their targets. How is this initiative any different?


Once the NE & California states link up... they don't really need to worry about other places.

They can simply create a rule about imported electricity.. mandating that in-state operations cannot skirt the emissions cap by buying out of state dirty power.

I think California has already done this.




California mandated in 2002 that state utilities must get 20% of their supplies from renewable sources by 2010.

Result? Goverment red tape and only 241MW built, and over $300 million collected from ratepayers intended to finance these projects sitting unspent. This despite broad bipartisan support for renewable energy in California.

The Texas statue was 10 paragraphs. The California one? 13 pages. Since 1999 Texas has built over 2000MW.

The only thing truly renewable in this state is bureaucracy. It would be very ironic if we end up having to buy renewable energy from less regulated states to meet the mandates because our own red tape.


An interesting article Cervus. So the energy crisis has resulted in the pendulum swinging too far the other way. I agree they need to simplify it. However I don't think that means dropping the cap and trade scheme since clearly a lot of companies would do well in the renewable market if it was streamlined.


I fail to see how this will work

What's your solution?


Pronouncements about New Jersey's lack of environmental zeal are premature: I believe its solar policy is one of the most aggressive in the not very sunny US Northeast.


As has been mentioned, there is only complacency and panic.


I stand by my comments about NJ relative to its northern neighbors. I'm not saying that The Garden State is working hard to dump toxins in the air willy-nilly, I'm simply recognizing the petro/chemical industry in New Jersey as having some clout. If you look at multi-state environmental initiatives in the past 30 years, NJ is never a leader -- sometimes it follows along with CA, NY, and NewEngland, sometimes it doesn't.

Don't be offended. If you'd like for NJ to play along, write your state lege.

As for Cerv, correlation doesn't imply causality. At the time that the legislation went through in CA and TX, CA was way ahead. In a sense, CA had already plucked the "low hanging fruit". It was only natural that a state that hadn't to that point built many wind mills still had plenty of good spots left. In fact, based on wind, land usage, population densitites, etc, TX is better for wind generation than CA anyway.

Maybe all those pages of regulations are scaring away attorneys and businessmen, but I doubt it. If the regulations are the problem, it sure isn't the column inches that are the problem -- there must be something more specific. What is it? What are the pros and cons? After all, local zoning is beurocratic, but nearly all homeowners are glad that a parking garage/commercial space/chemical factory can't be built next door.


The fact that Texas has built so much wind power will be completely negated by coal plants if current plans go through. California is taking the right approach by effectivelybanning future coal plants both in and outside the state that feed into California.



plz :

Nice chart (CO2 emissions by state, 1990-2001). It's interesting that blue states are pretty flat, and red states show tremendous growth.

My guess is that it has to do with population migration: the population in the Northeast and Great Lakes has remained pretty constant; the South has grown quite a bit.

Still, I feel like the red states could do a much better job of controlling this growth with mass transit, better zoning, and other smart growth initiatives. That, and creating some green energy initiatives, recognizing the impact of the auto and implement CA emissions standards and higher gas taxes, etc.

Even if the red states were doing a better job with public policy, I'd bet you'd still see CO2 growth there due to population changes. I may play with that data and normalize on population, etc. Interesting stuff.

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