A group of Midwestern states and Manitoba plan to launch a carbon
cap-and-trade program by 2010 as part of a broad plan to reduce greenhouse gas
emissions and boost the production of renewable energy, they said Thursday.

Illinois, Iowa, Kansas, Manitoba, Michigan, Minnesota and Wisconsin will
participate in the cap-and-trade program, while Indiana, Ohio and South Dakota
will act as observers of the program.

The states and Manitoba plan to develop the rules for the program and set
carbon reduction goals within 12 months, according to the Midwestern
Greenhouse Gas Accord, which is set to be signed later Thursday at a meeting
of the Midwestern Governors Association in Milwaukee.

The GHG cap-and-trade program was developed with input from utilities and
environmental groups. It was spurred in part by the failure of the federal
government to develop a national climate change strategy, Wisconsin Governor
Jim Doyle, co-chair of the Midwest climate and energy summit, said.

Doyle envisions the Midwestern system allowing for trading between
regional systems like the Regional Greenhouse Gas Initiative in the Northeast
and proposals for California and the West.

"Rising energy prices, increasing dependence on imported energy, growth
in domestic and global demand for energy, and mounting concern over how to
address climate change while sustaining and enhancing economic growth and job
creation pose serious challenges to the Midwest's energy future," according to
a separate, wide-ranging pact on energy security and climate stewardship,
which will also be signed later Thursday.

Missouri, Nebraska and North Dakota are expected to join the other states
and Manitoba in signing the broader pact, which includes a pledge to ramp up
the Midwest region's use of renewable energy to 20% by 2020, 25% by 2025 and
30% by 2030.

Also, the states and Manitoba are to impose a moratorium on the
construction of new coal-fired power plants without carbon capture and
sequestration equipment after 2020. Existing plants will all use CCS
technology by 2050, according to the pact.

The states and Manitoba will work together to develop new regulations to
allow carbon to be shipped across state borders, the pact said. They will also
seek to build an interstate pipeline by 2012 to ship carbon, it added.

Under the pact, the Midwestern region will seek to have five operating
integrated gasification combined cycle plants. The region will launch a
regional study to see what new transmission is needed allow renewable
resources reach key markets and all the signees have pledged to cut
electricity use by 2% a year by 2015 through increased energy efficiency.