Aug 27, 2010 -- STATE DEPARTMENT RELEASE/ContentWorks



It began in 2007, when the governors of Arizona, New Mexico, California, Washington state and Oregon acknowledged that climate change was already wreaking havoc in their states.

A hotter and drier climate was causing "prolonged droughts, excessive heat waves, reduced snow packs, increased snowmelts, decreased spring runoffs, altered precipitation patterns, more severe forest and rangeland fires, widespread forest diseases and other serious impacts," the governors wrote in a document that formed the Western Climate Initiative (WCI) -- a program poised to become the most comprehensive greenhouse gas emissions cap-and-trade market in the United States so far.

The WCI has signed up a total of 11 U.S. states and Canadian provinces that collectively pledged to cut greenhouse gas emissions by 15 percent below 2005 levels by 2020 through carbon dioxide emissions trading and various clean energy policies. Last month, the WCI released a project blueprint, spelling out the mechanics of the cap-and-trade plan and its long-term goals.

Onboard for carbon trading, for now, are the states of California and New Mexico in the United States and British Columbia, Ontario and Quebec in Canada. The five jurisdictions are home to 64 million people.

"The initiative was started by a group of governors who felt that in the absence of action on the federal level it was important to move forward on the state level," said Patrick Cummins, WCI's project manager. "The states and provinces that are moving ahead today comprise about 70 percent of emissions in the WCI, so even though they're not all moving ahead, it's significant."

Under the WCI cap-and-trade system, each state or province would issue greenhouse gas pollution allowances that companies can sell for a profit on the open market if they reduce their emissions below the cap. Companies unable to reduce emissions would buy the extra allowances and incur extra costs as a result. This provides an incentive for investments in clean energy and technology, allowing the cap to be tightened over time.

The first such state initiative in the United States, the Regional Greenhouse Gas Initiative (RGGI), consisting of 10 East Coast states, is only capping carbon dioxide emissions from electric utilities at this time. The WCI plans to begin with power companies and other industrial carbon dioxide sources in 2012, and to expand the cap to the transportation sector by 2015.

While the scope of the carbon markets and other state climate programs will be limited, they add up. A 2009 study by Environment America (PDF, 1.17MB), an environmental group, concluded that existing state-sponsored climate initiatives would reduce U.S. greenhouse gas emissions by 7 percent by 2020.

America's clean-energy revolution, the report proclaimed, is "led by the states."

"You have to look at the Western Climate Initiative in the context of other climate projects that are coming online," said Andrew Light, a climate change specialist and senior fellow at the Center for American Progress, a Washington-based policy research group. "All these state programs will go quite a way toward meeting the commitment the United States made in Copenhagen to cut emissions by 17 percent."

NOVEMBER ELECTIONS A WILD CARD

State programs do face some challenges, however.

Political concerns, coupled with the prolonged economic recession, have slowed activities for several WCI states. Each WCI partner needs approval from its state legislature to join the cap-and-trade market, and legislators in several states have delayed such legislation for fear it may raise energy prices.

The outcomes of November midterm elections in the United States also could affect states' climate initiatives. No state is being watched more closely than California, the single largest WCI partner with more than 36 million people and a gross domestic product of $1.8 trillion.

A leading candidate for the California governor's post has said she will immediately suspend the state's sweeping climate change law for a year if elected. California's 2006 Global Warming Solutions Act requires that emissions be reduced to 1990 levels by 2020. The state will use cap-and-trade and a number of new measures, such as new regulations on landfills and motor vehicle fuels, to reach that goal.

The Republican gubernatorial candidate in California, Meg Whitman, says the new law may cost her state jobs and that she would want to study its economic implications before allowing it to take effect in 2011.

In a separate measure, California voters will decide in a referendum whether to suspend the climate law until the state's high unemployment rate -- now at 12.3 percent -- drops below 5.5 percent for four consecutive quarters to show a sustained strong job market. A group collected enough signatures to put the measure before voters, claiming it will save 1 million California jobs if approved.

If California opts out of the WCI cap-and-trade market, the program faces an uncertain future, Light said. But Cummins said the cap-and-trade provisions, while central to the initiative, are only one of several parts of WCI's plan to cut emissions.

"If that ballot initiative passes, it would certainly be a setback and a delay, but it's not something we're spending a lot of time planning for now," Cummins said. "Our expectation is that they'll stay in. But we're also looking at energy efficiencies and transportation goals to find a broader appeal that will attract more states. There are many people in the United States who believe that we do need to move toward a low-carbon economy. But it's like any environmental policy -- it's an incremental process that takes time."

(This is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://www.america.gov)

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