MONTPELIER, Vt. (AP) – Ten northeastern states hoping to crack down on power plants and other large-scale greenhouse gas emitters announced plans Monday for a carbon dioxide allowance auction, to be held Sept. 10.

The participating states in the Regional Greenhouse Gas Initiative – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont – want to sell allowances as part of a cap-and-trade program to take effect beginning Jan. 1, 2009.

Some legislative approvals are still pending in the states before the first-of-its-kind auction – on behalf of all 10 – is held, officials said.

Under RGGI, governments would cap the amount of carbon dioxide that factories and plants are allowed to discharge annually and then the companies would have to buy enough allowances to cover their emissions, with excess allowances sold at a profit on the secondary market.

The states have set a cap – effectively a CO2 emissions budget – of about 188 million tons, which is the amount of carbon dioxide power plants expect to discharge in 2009.

Starting in 2015, the cap would be reduced by 2.5 percent annually, ultimately resulting in a 16 percent emissions reduction from projected “business as usual” amounts, according to RGGI.

“It’s the first time states have gotten together and sold credits like this,” said George Crombie, secretary of the Vermont Agency of Natural Resources. “It’s noteworthy because what the eastern states are doing is setting the foundation for a national cap-and-trade system for the United States.”

Utility companies are expected to be the prime audience.

“If they want to use our air to dispose of their wastes, they’ll need pollution allowances,” said RGGI chairman Pete Grannis, who is New York state’s environmental conservation commissioner.

Some actually like the idea, he said.

“Some companies that now produce power through clean energy see this as a way to equalize things. They’ll be able to produce their power without having to buy as many pollution allowances to do it. There’ll be winners and losers. The whole purpose of this is to encourage companies to clean up their act and produce their energy with fewer greenhouse gases,” said Grannis.

Steve Costello, a spokesman for Central Vermont Public Service, said that utility supports the goals of the greenhouse gas-reduction effort.

“In our view, market-based cap-and-trade programs … have proven to be very efficient and cost-effective mechanisms for securing reductions of pollutants while causing a minimum of economic dislocation,” said Costello. “We enthusiastically support the goals of RGGI, and believe it will have a significant impact on all of these gases.”

Grannis called the auctions pioneering events.

“It’s probably the first anywhere in the world where pollution allowances are auctioned up front, as opposed to being traded on the open market,” he said.

AP-ES-03-17-08 1914EDT

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