Green states line up behind U.S. climate bill

Fri Jun 26, 2009 6:00pm EDT

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(For a Factbox of regional efforts, click [ID:nN26348293])

* States to help with EPA efforts, federal auctions

* States, regions group to support bill when hits Senate

By Timothy Gardner and Peter Henderson

NEW YORK/SAN FRANCISCO, June 26 (Reuters) - States that have set the U.S. agenda on addressing greenhouse gas emissions are lining up behind a federal climate bill, fearing signs of dissent would weaken a plan with several hurdles left to jump.

Nearly half the U.S. states have moved toward curbing greenhouse gas emissions and want the federal government to learn from their experience in creating systems to cap emissions and trade pollution credits.

The U.S. House of Representatives on Friday was considering a climate change bill, widely known as Waxman-Markey after its sponsors, that would create a national system to cap greenhouse gas emissions and allow trade of such credits.

The government would issue a declining number of permits to companies, which could sell them to each other as needed, and carbon emission would drop 17 percent by 2020 and 83 percent by 2050, from 2005 levels.

Supporters hail it as the first substantial national step to ease global warming. Republicans in Congress have attacked the legislation, saying it would increase consumer prices as companies are forced to switch to more expensive alternative fuels. The bill's future in the Senate is uncertain this year.

The federal "cap-and-trade" plan pre-empts any similar state scheme from 2012 to 2017, but leaves states the option of resuming trade of pollution credits after that date.

State leaders on Friday broadly supported the federal bill.

Laurie Burt, the commissioner of the Massachusetts Department of Environmental Protection, called the federal bill "an excellent start in the right direction" that gave states room to act if the national effort did not do a good job.

"In some ways, the states can keep the federal government's feet to the fire to make sure that we're achieving the goals that we are anticipating," said Burt.

"What we need is something strong enough, progressive enough so that we can join it, and that doesn't prevent us from moving ahead on those areas where we feel California or the other Western states have a reason to do more," said Mary Nichols, California's chief climate change official. The bill appears to do so, she said.

STATES MEET

Members of the Eastern U.S. 10-state Regional Greenhouse Gas Initiative, the Midwestern Greenhouse Gas Reduction Accord, which joins six U.S. states with Canada's Manitoba, and the 11-state-and-four Canadian province Western Climate Initiative met for the first time in Washington this week. They were lobbied by U.S. Environmental Protection Agency officials.

"It was emphasized that it is going to be really important for the states to be engaging with the Senate to ensure that it doesn't get weakened unacceptably," said Patrick Cummins, project manager for the Western market.

Cummins said there would be plenty for states to do even without their own cap-and-trade systems. "EPA is going to be handed a massive job," he added, "and they are going to need the help of the states."

The Eastern market has already been operating a cap-and-trade system and member states would lose a direct revenue stream of hundreds of millions of dollars if the federal plan were passed. The regional carbon market auctions almost all its pollution permits for power plants instead of giving most of them away as the federal bill would do.

The auctions have raised $366.5 million for state alternative energy and energy efficiency funds since kicking off in September 2008.

The federal bill sponsored by Democratic Representative Henry Waxman would allow holders of RGGI allowances to convert them into federal allowances, which means the states will likely hold auctions until the federal plan begins.

"The fact that the federal bill does allow for conversion of RGGI allowances into federal allowances means that the RGGI market will not collapse" in the years to 2012, said Seth Kaplan, senior attorney for the Conservation Law Foundation in Boston.

Even the environmental group Greenpeace, which says the Waxman bill is too weak, agreed a federal plan should eclipse regional ones.

"It's hard to imagine that states would go so much far beyond the federal government, and the chaos it would create could lead to problems," said spokesman Daniel Kessler.

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