Master, standardized GHG agreements emerging in growing US market

Master, standardized GHG agreements emerging in growing US market

Washington (Platts)--10Oct2006

"Standardized" and "master" agreements for greenhouse gas emissions trading
are likely to emerge nationwide, following the lead of two states and a
seven-state region adopting programs to reduce carbon dioxide, the main gas
targeted by advocates of global warming theory.

This comes none too late because speakers and attendees at an American Coal
Council-sponsored seminar Monday morning agreed it's only a matter of time
until GHG reduction becomes a part of federal environmental policy.

California, Massachusetts and a seven-state consortium in the Northeast have
adopted GHG reduction measures, and several bills are competing at the
congressional level, most notably from senators Jeff Bingaman of New Mexico
and John McCain of Arizona.

Congressional discussions on CO2 policy now are at about the same level that
discussions on sulfur dioxide emissions regulations were in 1987 and 1988,
Matt Most, director of fuels and emissions at Edison Mission Marketing and
Trade, told attendees at the San Antonio seminar.

Because the US is in the early stages of developing a master or standardized
trading agreement, the current best approach for developing a master contract
is using education to highlight issues relevant to a GHG contract, and to
discuss their early implications, Gary Payne, chairman of the Environmental
Markets Association and senior emissions trader at Dominion.

Looking ahead, he expected more states to join the seven-state Regional
Greenhouse Gas Initiative. And federal policy will come into play not far down
the road, regardless of whether the post-Bush administration is Republican or
Democrat, Payne predicted.

"When everybody sits down at the table to hash all this out, they're going to
hand out credits [for a trading program], and it's going to be big money,"
Payne said. "I want to be at the head of the table" with big utilities, such
as American Electric Power, that are already planning to take part in GHG
programs.

As for SO2 emissions cuts, those measures became federal policy with the now
well-used emissions cap-and-trade program that became effective in two phases;
the first round of emissions cuts took effect in 1990 and the second round, in
2000.

The European Union trading scheme serves as one type of master agreement for
GHG emissions trading, and three examples can be viewed at www.ieta.org.

-- Steve Hooks, steve_hooks@platts.com

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