AUGUSTA (AP) – Seven Northeast states have agreed to set up a first-of-its-kind system designed to cut greenhouse gas emissions from power plants, governors around the region said Tuesday.

The so-called cap-and-trade system to reduce carbon dioxide emissions would cover electric generating units with a capacity of 25 megawatts or more, according to New York Gov. George E. Pataki.

Emissions of carbon dioxide would be capped at current levels – about 121 million tons annually – from 2009 to 2015. Incremental reductions over four years would then aim to curb emissions by 10 percent by 2019.

“Under this program, we will use a market-based system to curtail harmful CO2 emissions and spur the development of innovative technologies that will reduce our dependence on foreign energy, strengthen our economy, and take meaningful steps in the fight against climate change,” Pataki said in a statement.

Other states signing the regional memorandum of understanding for a Regional Greenhouse Gas Initiative are Connecticut, Delaware, Maine, New Hampshire, New Jersey and Vermont.

A news conference that had been planned for last Thursday to announce a pact was canceled amid expressions of concern by some southern New England state officials over its potential economic effects. Rhode Island and Massachusetts balked at signing the agreement.

Numerous environmental activists praised the pact Tuesday.

A number of business leaders also hailed the accord.

“The Regional Greenhouse Gas Initiative marks an important step forward for the northeastern states in their efforts to address climate change,” said Theodore Roosevelt IV, managing director of Lehman Brothers Inc. and chairman of Strategies for the Global Environment.

“These states know from their experience with the sulfur dioxide and nitrogen oxides trading programs that cap-and-trade programs can reduce emissions at lower costs to both industry and government,” Roosevelt said.

“We’re not opponents of the idea, but we can’t support something so poorly designed,” said Anthony Buxton, counsel to the Industrial Energy Consumer Group, representing Maine’s largest consumers of electricity.

Buxton complained that state-of-the-art power generators and states that have made substantial advances in combatting pollution would effectively be penalized under the plan for having taken action already.

He also said market effects could pass on unnecessarily higher rates to consumers.

According to Pataki’s office, estimates project that average household bills could increase by approximately $3 to $21 annually.

The Regional Greenhouse Gas Initiative has been working since 2003. Its plan calls for states to issue one allowance, or permit, for each ton of CO2 emissions allowed by the cap. Companies that do not have enough allowances to cover CO2 emissions must either reduce their emissions or purchase allowances from sources able to keep their emissions below their prescribed cap, officials said.

The agreement would let power plants claim offsetting emission reduction projects – such as landfill gas recovery, reforestation, and methane capture from farming or natural gas transmission facilities – to account for up to 3.3 percent of overall emissions.

“By including offsets, we are providing power plant owners the flexibility to meet their commitments in the most cost-effective way possible,” said Robert Scott, head of the New Hampshire Department of Environmental Services Air Program.

Maine, which is the first state to measure and track greenhouse gas emissions from state energy use, already has cut state government’s emissions by 8 percent in two years, citing a larger renewable power purchase, improved fleet fuel economy and lower energy usage in state buildings, Gov. John Baldacci said Tuesday.

“Maine is leading by example to protect our energy and environmental resources, and RGGI is another crucial step,” Baldacci said.

There were similar pronouncements across the Northeast.

“This historic agreement represents the first significant step toward reducing greenhouse gas emissions in this nation,” Delaware Gov. Ruth Ann Minner said in a statement, adding that the program could serve as a national model.

“New Jersey has taken a lead role in shaping a visionary and historic agreement to combat global warming,” Acting Gov. Richard J. Codey said. “In the absence of federal leadership, these states have come together to take real steps to cut carbon dioxide emissions.”

Last week, Connecticut Gov. M. Jodi Rell said she would sign the multistate agreement.

Vermont Gov. Jim Douglas said he wished the proposed system had been supported more broadly, expressing disappointment that two states originally involved had decided to not participate.

“Over the past few weeks, Vermont and the other states have worked hard to address the concerns of Massachusetts and Rhode Island so that we could have a nine-state agreement,” Douglas said in a statement.

Drafters of the plan envision participating states issuing a model regulation for public review early next year, with individual states then moving forward to create the program.

In Maine, Buxton predicted the plan being presented would not survive.

“It’s because we simply could not get a reflection of reality,” he said.

Copy the Story Link