States to EPA: Keep Cap-and-Trade Alive

LONG BEACH, CA - OCTOBER 1: The AES Corporation 495-megawatt Alamitos natural gas-fired power station stands on October 1, 2009 in Long Beach, California. The Obama administration has announced that rather than wait for Congress to act, it has authorized the Environmental Protection Agency to move forward on enacting new regulations on greenhouse gas emissions emitted from hundreds of power plants and large industrial facilities. The move could both force lawmakers to try to reach an agreement on regulating greenhouse gases and bolster US credibility as negotiators prepare for United Nations talks in Copenhagen to produce an international agreement to combat manmade climate change in December. The proposed regulations would take effect as early as 2011.
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Ben Geman
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Ben Geman
Dec. 2, 2013, 12:57 p.m.

Cap-and-trade le­gis­la­tion is long dead in Con­gress, but North­east­ern states are press­ing the En­vir­on­ment­al Pro­tec­tion Agency to keep the concept alive else­where.

The Re­gion­al Green­house Gas Ini­ti­at­ive — nine states that have a re­gion­al power-plant emis­sions cap — want EPA to let them use the sys­tem to meet fed­er­al car­bon-emis­sions rules for ex­ist­ing plants.

And the rules that EPA will float in draft form next June should let oth­er states take the same road, RGGI ar­gues in a new let­ter to the agency.

“Our ex­per­i­ence with RGGI demon­strates that re­gion­al co­oper­a­tion can achieve the most cost-ef­fect­ive emis­sion re­duc­tions, en­able a trans­ition to a lower-emit­ting and more-ef­fi­cient power sec­tor, and cre­ate eco­nom­ic be­ne­fits and jobs across the United States,” its Monday let­ter to EPA says. “We urge EPA to re­cog­nize these mul­tiple be­ne­fits of RGGI, al­low our states to use RGGI as a com­pli­ance mech­an­ism, and en­cour­age oth­er states to fol­low suit by par­ti­cip­at­ing in RGGI or oth­er re­gion­al pro­grams.”

The state in the RGGI, such as New York and Mary­land, have already cut their joint elec­tri­city-sec­tor emis­sions by more than 40 per­cent since 2005, ac­cord­ing to the let­ter, which cred­its the cap-and-trade sys­tem and oth­er green-en­ergy pro­grams.

Cap-and-trade will en­sure the re­gion­al power sec­tor emis­sions are 50 per­cent be­low 2005 levels in 2020, adds RGGI, which was es­tab­lished in 2005. Its pol­lu­tion cap took ef­fect about five years ago.

In ad­di­tion to the RGGI states, Cali­for­nia has im­ple­men­ted its own cap-and-trade pro­gram for green­house-gas emis­sions from a wider ar­ray of in­dus­tri­al sources.

The RGGI let­ter is one of sev­er­al re­cent ef­forts to en­cour­age EPA to give states lots of run­ning room when craft­ing rules for ex­ist­ing plants — per­haps the most far-reach­ing piece of Pres­id­ent Obama’s second-term cli­mate plan.

Un­der the Clean Air Act sec­tion EPA is us­ing, called 111(d), fed­er­al reg­u­lat­ors set en­force­able guidelines and states craft plans to meet them.

In Novem­ber, a group of state power reg­u­lat­ors — called the Na­tion­al As­so­ci­ation of Reg­u­lat­ory Util­ity Com­mis­sion­ers — passed a res­ol­u­tion call­ing for “suf­fi­ciently flex­ible com­pli­ance path­ways or mech­an­isms that re­cog­nize state and re­gion­al vari­ations to achieve the most cost-ef­fect­ive emis­sions re­duc­tions in each state.”

And Ad­ele Mor­ris, a Brook­ings In­sti­tu­tion eco­nom­ist and cli­mate ex­pert, is press­ing EPA to give states the op­tion of meet­ing the stand­ards with an ex­cise tax on car­bon emis­sions from power plants.

The early po­s­i­tion­ing re­flects the reach of the up­com­ing EPA rules. Power plants—es­pe­cially coal-fired power plants—are the largest single un­reg­u­lated source of U.S. car­bon emis­sions.

EPA Ad­min­is­trat­or Gina Mc­Carthy, speak­ing at the lib­er­al Cen­ter for Amer­ic­an Pro­gress Monday, said EPA would give states “sig­ni­fic­ant flex­ib­il­ity” un­der the rules.

As EPA gets closer to is­su­ing draft rules, look for more ef­forts by states to win plenty of lee­way from the reg­u­lat­ors.

And RGGI, for its part, is us­ing its new let­ter to EPA as more than just a sales pitch for cap-and-trade.

The north­east­ern states also want cred­it for what they’ve already done.

“EPA should avoid any ap­proach that im­poses in­equit­able or dis­pro­por­tion­ate bur­dens on early mover states and fails to re­cog­nize their sub­stan­tial pro­gress,” the let­ter said.

Clare Foran contributed to this article.
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