Nine states plan to cut greenhouse gas emissions-NYT

NEW YORK (Reuters) – Officials in nine Northeastern U.S.
states have come to a preliminary agreement to cap and later
reduce greenhouse gas emissions from power plants, the New York
Times reported on Wednesday, citing a confidential draft
proposal.

If the agreement is made final, it would be the first of
its kind in the United States. The United States refused to
sign the Kyoto Protocol, a greenhouse gas reduction plan that
has been adopted by more than 150 other countries.

Connecticut, Delaware, Maine, Massachusetts, New Hampshire,
New Jersey, New York, Rhode Island and Vermont came together in
2003 to form a coalition, known as the Regional Greenhouse Gas
Initiative, in order to explore a market-driven cap-and-trade
system for carbon dioxide emissions in the absence of mandatory
emissions reductions at the national level.

Under the plan, carbon dioxide emissions would be capped at
150 million tons a year, about equal to the average emissions
in the highest three years between 2000 and 2004, the paper
said. In 2015 reductions would be required, which would reach
10 percent in 2020.

Representatives for the nine states were not immediately
available for comment.

Once a final agreement is reached, the legislatures of the
nine states will have to ratify it, which is considered likely,
the Times said.

Scientists believe that carbon dioxide and other greenhouse
gases cause global warming that is affecting coastal areas,
icebergs and wildlife. Around 40 percent of U.S. carbon dioxide
emissions come from fossil fuel power plants.

An emissions control program would likely cause higher
energy prices for power company customers in the Northeast. The
Times said that officials hope to offset rising prices with
subsidies and support for the development of new technology.

These subsidies would be paid for through the sale of
emission allowances to power producers, the paper said.

In cap-and-trade markets, businesses must either trim
emissions under set limits or buy credits from companies that
have complied with those limits.

Companies that would be affected by emissions limits in the
Northeastern states include AES Corp., Public Service
Enterprise Group Inc., Dominion Resources Inc., Pepco Holdings
Inc., Dynegy Inc. and NRG Energy Inc.

NRG said that anything less than a national emissions
reduction program “will serve only to introduce skewed
incentives into the marketplace while having a diluted effect
at best on reducing overall CO2 emissions.”

PSEG also raised concerns about the possibility that the
plan might include the sale of allowances to power plants, as
opposed to being distributed to companies based on their
previous emissions.

“That in effect would be taxing emissions from a specific
segment of the economy,” said PSEG spokesman Neil Brown.
“Achieving the targets would be economically challenging in and
of itself without adding a surcharge for emissions allowances.”