[LINK] Greenhouse cap-and-trade systems

[stephen at melbpc.org.au]

It appears the US carbon cap-and-trade systems are apparently working .. 

"Regional Cap-and-Trade Effort Seeks Greater Impact by Cutting Carbon
Allowances. MIREYA NAVARRO www.nytimes.com.au January 26, 2012" (snip)


Adjusting to shifts in the economy, states in the cap-and-trade system 
known as the (US) Regional Greenhouse Gas Initiative have slashed the 
number of allowances that electric power companies can buy to offset 
their emissions.

The decision, made last week, was intended to shore up the pioneering 
program as it undergoes its first comprehensive review this year. 

While the program has been judged a success by most of the participating 
states, in the Northeast and Mid-Atlantic, an oversupply of the 
allowances — in essence, permits to pollute — has limited the program’s 
impact. 

The program, the nation’s first cap-and-trade system, sets a ceiling on 
carbon dioxide emissions from electric power providers and requires the 
companies to pay for their heat-trapping emissions by buying the 
allowances in online auctions held four times a year. Companies that 
pollute less can benefit by selling off allowances to other companies. 

Because of a switch to natural gas from coal by many utilities and a 
limping economy, however, both the demand for electricity and the plants’ 
emissions have been lower than expected since the program was first put 
into effect in 2009, with allowances going unsold. 

On Jan. 17, New York, Connecticut, Delaware, Massachusetts, Rhode Island 
and Vermont announced that they were permanently eliminating 72 percent 
of the unsold carbon allowances, or a total of 67 million. Each allowance 
amounts to one ton of carbon dioxide emissions.

The reduction is widely viewed as a prelude to a major change expected by 
the end of the review period this summer: the potential tightening of 
emissions ceilings for electric power providers, which are currently set 
to reduce emissions by 10 percent by 2018. 

But emissions have already dropped by more than 30 percent below the cap. 

“Lowering the number of allowances in the program sounds like the 
direction the states want to go in,” said Ashley Lawson, a senior analyst 
with Thomson Reuters Point Carbon, a carbon-market research firm. 

Ms. Lawson said that while the regional initiative had so far proved 
itself as a working cap-and-trade model, the oversupply of allowances led 
to a lower price for them, easing the pressure on electricity providers 
to emit even less. 

Since they began, the sales of carbon allowances have nonetheless 
produced almost $1 billion in revenue for the 10 original participating 
states. 

Still, as political winds shifted nationally, with many Republican 
candidates denouncing cap-and-trade in the 2010 midterm elections, the 
program came under fire from critics who argued that the initiative 
imposed additional costs on electric utilities that were then passed on 
to consumers. Among them was Gov. Chris Christie of New Jersey, who 
pulled his state out of the program last year, and also contended that it 
did not reduce emissions. 

Officials from supporting states vehemently countered that the benefits 
of the program far outweighed any costs, and an independent study 
released last November backed them up. 

The study, commissioned by four nonprofit foundations and conducted by 
the Boston consulting firm Analysis Group, concluded that the regional 
initiative had saved consumers money over all, and created jobs. 

States have often used proceeds from the program to improve energy 
efficiency in offices and homes and to promote renewable energy 
installations, the report pointed out. 

Although there were differences in how individual states applied the 
money — New York and Massachusetts heavily invested in energy efficiency 
programs, while New Jersey used most of the money to offset a shortfall 
in the state budget — carbon dioxide emissions in the initiative’s 10-
state region were 6 percent lower than they would have been without the 
program, said Susan F. Tierney, one of the study’s authors. 

As the program goes forward with 9 states instead of 10, some power 
companies say that the sweet spot will be lowering emissions without 
imposing too great a financial burden. 

“My hope is that it will be strengthened because we need to address 
greenhouse gas emissions, but we need to do it in a responsible way so it 
doesn’t impact utility customers, especially in this economy,” said Bob 
Teetz, vice president of environmental services for National Grid, an 
electrical and gas company. 

Some environmental groups are advocating changes that would broaden the 
program to include other industrial and commercial sources of greenhouse 
gas emissions, and link it to similar programs like the cap-and-trade 
system being planned by California and some Canadian provinces. 

A boost may come from the Environmental Protection Agency’s plans for new 
performance standards to limit greenhouse gas emissions from power 
plants. One way for states to comply with the new rules could be to join 
the initiative or a similar program authorized by the agency. 
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Cheers,
Stephen