March 21, 2009

Concerns Over Obama Administration’s Climate Policy

Many U.S. states plan to proceed with their own global warming emission control programs until the White House and Congress pass a credible federal market mechanism such as "cap-and-trade" to meet President Obama's targets for greenhouse gas cuts, Reuters reported.

Obama's federal system environmental policy may overshadow regional markets that trade air pollution credits aimed at cutting emissions that heat the planet.

The federal program might never happen, or be too weak to help reduce the chances of catastrophic droughts, floods and heat waves from global warming, according to many state officials.

Michael Gibbs of the California Environmental Protection Agency said there is no guarantee that Obama's federal program will in fact come into existence.

Gibbs, the top state official working with the Western Climate Initiative, a group of 11 U.S. states and Canadian provinces that plan to start trading in 2012, warned that states need to continue to press ahead.

Emissions limits set to increase over time were established in ten Eastern U.S. states in January. Power companies are required to obtain permits to pollute and sell excess permits to companies that lag their own targets. Experts say the system was designed to push companies to conserve energy or switch to cleaner fuels such as natural gas.

The group, known as the Regional Greenhouse Gas Initiative, said New York is the biggest polluter so far. Peter Iwanowitz, the state's Climate Change Director, said he welcomed federal action as long as New York had room to be tougher and experiment.

"We would always want the option to sort of break off and do it ourselves," he said.

Along the same lines as California's goal and international plans, Obama wants to cut carbon emissions to 1990 levels by 2020 and 80 percent below that by 2050.

While Congress has been working toward a climate bill to be set in place by the year's end, many interest groups are already lining up to soften the targets or to prevent a plan from moving ahead.

Duke Energy Corp spokesman Tom Williams said the industry is already wary of inconsistency.

"It ought to be passed at the federal level and not have a patchwork of regulation at the state level," he said.

Some regions have different opinions on specific reduction targets, how many greenhouses gases they track and whether to regulate transportation as well as industry.

While certain systems offer credits for cutting pollution outside the region, such as saving an endangered rainforest, others limits so-called offsets. Additionally, the Western plan includes Canadian, and potentially Mexican, provincial and state governments.

The Eastern plan's biggest gift to global carbon markets has been proving that polluters, speculators and environmentalists will buy tradable permits in auctions. Meanwhile, the Western group may give away a substantial number of credits to polluters. The revenues can help customers deal with costs of carbon regulation.

The first three quarterly RGGI auctions have currently raised some $263 million for the states.

National auctions could raise $646 billion from 2012 to 2019 and fund clean energy investments and tax cuts, according to Obama's budget plans.

However, many fear that it will be no easy task allowing states to set more stringent standards than the federal system without the needed adjustments to the rules.

The current system would allow a California power producer that meets tough state efficiency standards to simply sell unneeded credits out of state"”so total U.S. carbon output would not be affected.

Environmentalists suggest that states set local premiums, requiring companies to buy 1.1 tons of federal credit for every ton of pollution allowance needed.

There are no unmanageable state-federal conflicts, according to Dereck Walker, director of Environmental Defense's California Climate Change office.

"Let's not be naive. Congress is going to want to put their strong stamp on federal policy ... they don't want to just take things at the state level," he said.

The tougher the federal plan, the more likely Washington will argue that it preempts the states, said Derek Murrow, the director of policy analysis at Environment Northeast.

"But that doesn't mean states will be willing to give up the role to be laboratories for innovation," he added.


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