Northeast CO2 on auction block

The Associated Press
Posted Sept. 25, 2008, at 9:20 p.m.

NEW YORK — Greenhouse gases went on sale Thursday as 10 Northeastern states, including Maine, held the nation’s first auction of pollution credits aimed at curbing global warming.

“It is time really to turn the tide on global warming,” said New York Gov. David Paterson, who opened the auction by ringing the ceremonial bell at the New York Mercantile Exchange. “And we hope that we’ve done this today.”

The Regional Greenhouse Gas Initiative, also known as RGGI, puts a price on carbon dioxide pollution, giving power plants a financial incentive to cut emissions.

Auction proceeds will go toward energy conservation and renewable energy programs in each of the 10 participating states.

Sale of Maine’s roughly 6 million carbon “allowances” over the next year is expected to generate anywhere from $12 million to $30 million. Special rules under development would allow the state to pump the first wave of that money directly into emergency weatherization funds as winter closes in.

Steve Hinchman, staff attorney with the Maine chapter of the Conservation Law Foundation, said the auction couldn’t be more timely.

Maine planned to sell approximately 850,000 allowances Thursday, which is estimated to raise between $1.2 million and $4.4 million for energy conservation programs, depending on the allowance price. The remaining allowances will be set aside for future auctions.

Increasing home energy efficiency will help reduce one of the other large sources of carbon dioxide emissions, he said.

“This is a perfect example of how to spend RGGI money to cut down on global warming,” Hinchman said.

The other states participating in RGGI are: New York, Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, Rhode Island and Vermont.

The Northeast effort, which is widely viewed as a possible model for federal regulations, limits the total amount of carbon that power plants in the 10 states can pump out of their smokestacks at the current level — 188 million tons. Maine’s share of that is roughly 6 million tons.

Electric power generators must pay for allowances covering the amount of carbon they emit, and the initiative will provide a market-based auction and trading system in which the generators can buy, sell and trade the emissions allowances.

The initiative covers more than 200 fossil fuel power plants, requiring that the owners of those plants pay for the carbon dioxide they emit.

It will gradually reduce carbon emission limits in a series of steps, until it is 10 percent below the current level a decade from now. The companies that don’t reduce emissions can buy allowances from companies that have, creating a financial incentive to reduce pollution because the more environmentally friendly plants won’t have to buy as many credits and because they can sell any they don’t need.

Dale Bryk, senior attorney at the Natural Resources Defense Council, said, “This new energy plan is straightforward, highly cost-effective and creates a clean energy pathway for the rest of the country to follow. It is the shape of things to come.”

Not all of the participating states were expected to sell allowances during Thursday’s first-ever sale. Like other states, Maine planned to sell a portion of its total allowances and reserve the rest for the other five auctions, according to Jim Brooks, director of the air quality bureau at the Maine Department of Environmental Protection.

Results from Thursday’s auction will not be announced until Monday. Brooks said that because Thursday’s sale was the first, he and others expected there to be some “jitters” and uncertainty about the price of an allowance. Overall, participating officials expect the price to fall somewhere between $2 and $5 an allowance.

“We’re not expecting a lot of oscillation,” Brooks said.

Gov. John Baldacci said Thursday’s auction shows what states can accomplish by working together. But he used the auction to repeat calls for more federal action on climate change. Both presidential candidates, Republican John McCain and Democrat Barack Obama, have expressed support for cap-and-trade programs for greenhouse gases.

“I believe that this issue needs to move forward at the federal level,” Baldacci said in a statement. “We recognize the gravity of the threats posed by climate change and other states are already supporting a cap-and-trade system to reduce emissions of greenhouse gases. We must move forward to address global warming not just in the Northeast but throughout the United States.”

Carbon dioxide trading already exists in Europe. Some carbon dioxide allowances also are being traded in the United States on a voluntary basis through the Chicago Climate Exchange. But the Northeast effort is the nation’s first mandatory effort to limit carbon dioxide.

The initiative took five years to bear fruit. George Pataki, New York’s governor at that time, brought together nine other governors five years ago to develop a regional strategy to limit carbon dioxide emissions from power plants.

Other regional greenhouse gas coalitions, such as the Western Climate Initiative and the Midwestern Greenhouse Gas Accord, are in earlier stages of development.

Thursday’s auction was run by World Energy, an operator of online green exchanges.

Reporter Kevin Miller contributed to this article.

http://bangordailynews.com/2008/09/25/news/northeast-co2-on-auction-block/ printed on August 23, 2014