NEW YORK — Power plants in the U.S. Northeast who may face rules to cut carbon dioxide emissions could be allowed to save costs by methods such as planting trees and tapping landfills for methane, according to a draft plan by Northeastern states who have signed the country's first regional greenhouse gas plan.

Seven states signed the plan in December to create a cap and trade CO2 emissions market called the Regional Greenhouse Gas Initiative. The states -- New York, New Jersey, Vermont, New Hampshire, Maine, Connecticut and Delaware -- hope to cap emissions from power plants at 1990 levels of about 121 million tons of CO2 through 2014 and then reduce it 10 percent below that level in 2018.

The 2018 target released Thursday is two years quicker than the RGGI had previously planned.

In the cap and trade market the RGGI envisions, the states would hand power plants CO2 emissions targets. If the plants cut emissions under those limits -- by switching from coal to cleaner-burning natural gas for example -- they would earn credits, or allowances, that they could sell to plants that chose not to cut emissions.

Massachusetts Governor Mitt Romney, a Republican, backed out of the plan late last year saying it would boost electricity rates.

The RGGI draft model on Thursday said the plan would cost homeowners about $3 to $16 more per average home in 2015, a reduction from the group's earlier predictions.

SAFETY VALVES

In a market set up by the Kyoto Protocol, the European Emissions Trading Scheme, carbon dioxide allowances are selling for about $25 per tonne.

The RGGI estimates its CO2 allowances would cost far less, and it has set up "safety valves" if prices get too high. If the price of the emissions allowances rose above set limits, power plants could get credit for reducing emissions by other methods outside the RGGI region.

Methods include planting trees or capturing and burning methane gas at landfills. Methane is about 20 times more potent a greenhouse gas than carbon dioxide.

According to the draft of the model rule, power plants could seek such offsets for five percent of their reported emissions if the price of CO2 allowances exceeded $7 a ton for 12 months, following an initial 14-month market settling at the beginning of the compliance period.

If after two years prices were above $10 per ton, plants could seek offsets from around the world to cover as much as 20 percent of their emissions. Offsets could be expanded to methods set up by emissions trading programs other parts of the world, such as the ETS, or exchanges being considered in Canada and other places.

Public comments will be accepted on the draft of the plan until May 22, when it will then be sent back to the states to approve it.

Lawmakers in Massachusetts, which emits more CO2 than any of the seven states in the plan, are trying to create a state law that would require it to rejoin the program.

Source: Reuters