Ken Silverstein | Sep 21, 2010

With national climate initiatives in neutral, the states are now advancing the cause. The western, Midwestern and northeastern regions are taking the lead. While the movement in those areas is relatively modest, it could still pave the way for the federal government to follow suit if they prove successful.

Indeed, the key question is how much luck they will have with their carbon reduction plans that center largely on cap-and-trade - a program that sets pollution limits and one that allows companies that achieve positive results to profit. Those credits can then be banked or sold to those entities that are unable to do so, which may find then it cheaper to install new technologies rather buy credits.

In the Northeast, where the Regional Greenhouse Gas Initiative has been in place since December 2005, utilities are switching from coal-fired facilities to those that run on natural gas. More efficient generation has combined with a stagnant economy to cut the region's carbon levels.

Here, the aim of the 10 states in the mandatory program is to reduce carbon levels by 10 percent by 2018. The focus is solely on the power sector. Thus far, the process has raised $432 million through auctions, which has been dispersed to the states so that they can deploy energy-saving techniques and greener forms of generation.

Now, the Western Climate Initiative has gotten 11 states and Canadian provinces on board. The goal is to cut the level of greenhouse gas emissions by 15 percent from 2005 levels and before 2020. After 2015, the agreement would incorporate the transportation sector along with the utility industry.

California and New Mexico have already inked the agreement, along with British Columbia, Ontario and Quebec. Together, they comprise 70 percent of the emissions in the region, although California's promise is up in the air if a new gubernatorial administration disagrees. In all cases, the state legislatures must sign off - something that many are timid to do in an economically erratic time. 

Global warming poses the threats of "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 Western governors wrote.

The debate, no doubt, is mired in contention. Not only is the country still reeling from the Great Recession but critics of such emissions schemes say that they clamp down on business and cost jobs. Proponents counter that such views are shortsighted, maintaining that the evolution toward a greener environment will spawn a host of next-generation jobs while also reducing the level of harmful pollutants. 

Geographical Gaps

The issue of mandatory carbon reductions peaked after the House passed its bill last summer. And while the Senate drew up its own version, the opposition was so intense that it was never introduced on the floor there.

Several issues stand in the way of the legislation becoming law. Beyond the questions about the cost of such proposals and the number of jobs they might potentially put at stake are those pertaining to relevant technologies. Critics say that those would capture and bury carbon emissions are not yet commercial - something that the bill's supporters say should induce utilities to go green.

While Congress debates this issue, the U.S. Environmental Protection Agency is moving forward with writing rules to force utilities to cut their greenhouse gases. Now, the pressure is on lawmakers to either write their own legislation or to curb EPA's authority that has been given to it by the U.S. Supreme Court. Odds are that the U.S. Senate, led by members from coal-producing states, will enact laws that cause EPA to hold off.

"There's a fundamental difference between CO2 and the other pollutants," says Jeff Holmstead, former head of EPA's air office, who spoke to this writer earlier. "People have generally assumed you could take cap-and-trade and scale it up to CO2. The biggest difference is that when cap-and-trade was implemented for acid rain, it was to get power plants to install pollution controls.

"All of industry collectively aims to put in pollution controls for all types of releases with the biggest plants but to do so in a realistic time period. Most folks do not believe it is possible to phase out current power plants and put in new ones in the kind of time frame -- at a reasonable cost -- that people are talking about," adds Holmstead. 

Enter the regional approaches put forth by the western, northeastern and Midwestern governors: They, in essence, will become a microcosm for national leaders to follow or in which to make incremental improvements.

Under the Midwest Greenhouse Gas Reduction Accord, a long term goal of cutting carbon levels by 60-80 percent below current emissions and by mid Century has been agreed upon. The agreement, signed on Nov. 15, 2007 by six states and the Canadian Province of Manitoba, would use a cap-and-trade system.

"This agreement fills a geographic gap in regional climate action, sending a clear message that the U.S. states are increasingly united behind efforts to reduce our emissions," says Eileen Claussen, head of the Pew Center on Climate Change.

The evolution toward carbon constraints is occurring. But it is happening more methodically than what some had hoped. The states, in effect, have become the labs by which the national leadership will make its ultimate evaluations.

So what do you think? Please share your thoughts by posting a quick comment below, or by sending me a longer reply to energybizinsider@energycentral.com.

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