Market News

 February 27, 2007
Western states form climate pact

 Washington D.C., USA (GLOBE-Net) --A group of five US states have formed a regional pact to reduce greenhouse gas emissions, planning a cap and trade system in the latest move by state and local governments to fill the void left by federal inaction on climate change.

Under the Western Regional Climate Action Initiative, Oregon, California, Washington, New Mexico and Arizona will develop a regional goal for emissions within six months, corresponding with individual state goals.

Within eighteen months, the states will design a "market-based multi-sector mechanism", likely to be a cap and trade program, to support the regional goal. California Governor Arnold Schwarzenegger said in a statement that the agreement "sets the stage for a regional cap-and-trade program, which will provide a powerful framework for developing a national cap and trade program".

BC Premier Gordon Campbell has already expressed interest in joining the pact or working with the U.S. states, the Premier’s office reports. The province just released its plan to reduce greenhouse gas emissions, improve energy efficiency, and promote clean energy development in the province.

See: BC releases energy and emissions reduction plan

Any emissions trading market formed by the Western states is likely to be linked to the Regional Greenhouse Gas Initiative (RGGI), a mandatory cap-and-trade program which will be introduced in 2009 by a group of seven Northeast States.

California's recently adopted Global Warming Solutions Act, which pledges to lower greenhouse gas emissions to 1990 levels by 2020, will create a carbon market linked with the RGGI, and Schwarzenegger has also discussed the possibility of an international trading system with British Prime Minister Tony Blair.

To support such a market, the five western states will establish a GHG registry to enable tracking, management, and crediting of emissions reductions.

In signing the Memorandum of Understanding for the initiative, the governors noted that scientific evidence indicates the west will suffer from the impacts of climate change, including drought, forest fires, and heat waves. Climate change will have severe environmental and economic impacts, but the states hope to realize significant benefits in those areas by taking action now, says the statement.

The states pledged to promote clean and renewable energy and energy efficiency, while advocating for national climate policies to support the region. They will also identify ways of adapting to expected climate change.

A copy of the Western Regional Climate Action Initiative agreement can be found here (PDF).

Many of the states involved have developed their own plans in the past to reduce greenhouse gas emissions or promote renewable energy, strategies which will be supported and enhanced by the regional effort. The states have also signed climate agreements in the past, but this is the first to plan an emissions target; in 2003, California, Oregon and Washington created the West Coast Global Warming Initiative, and in 2006, Arizona and New Mexico launched the Southwest Climate Change Initiative.

US states and other groups increasingly are undertaking coordinated actions on environmental issues. "In the absence of meaningful federal action, it is up to the states to take action to address climate change and reduce greenhouse gas emissions in this country," said Arizona Governor Janet Napolitano.