July 24, 2008

States, Provinces in Pacific Northwest Put Together Emissions Strategy

By Michael Milstein, The Oregonian, Portland, Ore.

Jul. 24--SALEM -- Your daily routine -- switching on a light, cooking a meal, driving down the street -- would generate less greenhouse gases under a first-of-its-kind regional strategy to curb global warming unveiled Wednesday at the Capitol.

The strategy emerged from the Western Climate Initiative, an alliance of Western states -- including Oregon and Washington -- and Canadian provinces trying to jump ahead of any federal move to regulate greenhouse gases.

Large utility companies and factory owners would feel the effects first, followed by fuel distributors, as they face limits on their greenhouse gas emissions. Individual Oregonians would not feel the limits firsthand but probably would see changes in how their power is generated.

State officials who unveiled the approach in Gov. Ted Kulongoski's offices said the draft strategy's mandates may push power rates and fuel prices up slightly. But Oregonians should see lower bills in the end because the strategy promotes conservation measures that should reduce energy use, they said.

The basic premise is to cap greenhouse gas emissions and then gradually lower the cap over time. Each major emitter -- a power plant, for instance -- would get credits allowing it to release a certain amount of gases, such as carbon dioxide.

If the plant reduced emissions, it could sell its credit to another plant that couldn't meet its limits. Likewise, if the plant had trouble meeting its limit, it could buy credits from another one that had reduced its emissions. The idea is to allow flexibility as to where the reductions occur, so they're as cost-effective as possible.

Each state and province in the alliance will work out certain details of the cap-and-trade system on its own, but some elements will be consistent:

Large greenhouse gas emitters such as power plants and factories would be regulated under the strategy by 2012. In Oregon, this would include fewer than 10 utility companies and about 50 companies total, including large plants and lumber mills.

Vehicle and home heating fuels, including gasoline and natural gas, would come under regulation by 2015. Cap-and-trade systems for greenhouse gases in Europe, for example, have not included transportation emissions, which are responsible for about 40 percent of greenhouse gases produced in Oregon.

Each state gets a share of emissions allowances and decides for itself whether to hand them out to major emitters or auction them. Auctioning the allowances could generate revenue that could help pay for energy efficiency measures or help low-income residents cope with energy prices.

Greenhouse gas emitters could meet up to 10 percent of their obligation to reduce emissions by purchasing offsets, usually by funding projects that capture or eliminate emissions elsewhere. For instance, an offset might involve planting trees that soak up carbon dioxide.

Although Kulongoski has advocated a cap-and-trade system, he has not yet endorsed the regional strategy, said David Van't Hof, the governor's sustainability and renewable energy adviser. State officials are seeking public comment about the draft approach and hope to release a final version in September, he said.

The Legislature would probably consider enacting the system into law in its 2009 session.

Van't Hof said he expects criticism of the plan for being too weak or too strong. For instance, some environmental groups said Wednesday that the plan waits too long to limit greenhouse gas emissions from transportation fuels.

The Western Climate Initiative includes Oregon, Washington, California, Utah, Arizona, New Mexico and Montana, and British Columbia, Manitoba, Ontario and Quebec. Several other states and provinces, including several Mexican states, are observers.

The more states and provinces involved, the more cost-effective the plan will be, Van't Hof said. "At the end of the day, we're creating a market, not rules and regulations."

The federal government is widely expected to pursue limits on greenhouse gas emissions, advocated by both major presidential candidates. But Van't Hof said the states are moving forward because it's unclear whether or when the federal government will act. Even if it does, he said, states may gain advantages by acting first.

For example, some federal proposals have provided special incentives for states that have enacted their own systems, he said. "The early actors are going to be winners."


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