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Should EPA Mirror The Carbon Pollution Standards Set By The Northeastern States?

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Final federal rules for existing coal plants and how much carbon dioxide they can emit are forthcoming. And one such regional organization is encouraging the U.S. Environmental Protection Agency to follow its lead, which the nine northeastern states say could become a national model.

The added spotlight is coming as EPA Administrator Gina McCarthy prepares to travel to China next week, which along with the United States, are the two biggest emitters of greenhouse gases that most scientists say is the cause of global warming. With this, the Regional Greenhouse Gas Initiative says that its participating members have reduced their heat-trapping emissions by 40 percent between 2005 and 2012.

It has done so by, primarily, by requiring renewable portfolio standards and by implementing a cap-and-trade system, which is something that EPA could empower others to do. Such a free-market mechanism limits the amount of relevant releases for utilities. Those companies that can’t meet the standards must buy credits. The aim is to get facilities to implement new pollution control technologies or to switch to low-carbon fuels.

“Our experience with the Regional Greenhouse Gas Initiative demonstrates that regional cooperation can achieve the most cost-effective emission reductions, enable a transition to a lower-emitting and more efficient power sector and create economic benefits and jobs across the United States,” the organization writes, in a letter to McCarthy.

McCarthy, indeed, endorses the metaphorical pipeline to make the conversion from a society that depends on fossil fuels to one that uses increasing amounts of renewable energy. Similarly, she told the Center for American Progress this week that China, which is developing an economy on which 1.3 billion people depend, must also be just as determined.

In September, the Obama administration revised its proposals to reduce carbon dioxide levels. To that end, all future coal plants would need to be as clean as combined cycled natural gas units. Technically speaking, those coal plants could emit no more than 1,100 pounds of carbon per megawatt hour, a significant drop from their current levels of 1,850 pounds. The practical implication is that those units would need to incorporate carbon capture and sequestration technologies, which at present are distant and expensive.

Just which states support those regulatory endeavors is a function of what fuel sources they depend to power their local economies. McCarthy favors giving flexibility to coal-producing states that include Indiana, Kentucky, Ohio, Pennsylvania and West Virginia, all of which are the targets of complaints from the northeastern states that are upwind.

With that, though, the Regional Greenhouse Gas Initiative wants EPA to learn from its successes: It has a declining cap and a corresponding change in the cost of carbon allowances, all of which creates market signals to support fuel switching and on-site efficiency. Meantime, the auction system there provides monies to develop renewable technologies.

The utilities supporting the pact as a compliance framework are Calpine Corp., Consolidated Edison , Exelon Corp, National Grid and NextEra Energy. The nine signatories: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont while New Jersey pulled out in 2011.

The results, according to the Analysis Group: Not only have carbon dioxide emissions nosedived but the regional economy has also grown by more than $1.6 billion in economic value. Consumers, meanwhile, have saved $1.1 billion in electricity bills, and 16,000 new jobs have been created region-wide.

California, furthermore, is operating the world’s second biggest cap-and-trade program, after Europe. In January, it began selling carbon credits and has since raised hundreds of millions. Ninety percent of the credits will be given away for two years. However, by 2016, all will be sold, affecting roughly 600 industrial facilities and 85 percent of the state’s emission sources. By 2020, the state’s carbon emissions are supposed to be at 1990 levels.

Critics, however, are saying that the trading schemes are nothing more than a tax on electricity. That hurts everyone, especially businesses -- with some fearing that critical California companies could move across state lines.

Skeptics point to Europe, which began its emissions trading scheme in January 2005 with 27 participating nations. Prices have fallen in the European Union’s carbon market from about $30 a ton in 2011 to about $4 a ton today. Such a small cost means that utilities have little incentive to wean themselves from dirtier sources. The demand for permits that would drive up carbon prices and force those industrials to rethink their energy paradigms is thus falling.

That’s because of weak economic growth and because the European Union started off by giving away too many credits, say experts. Now, the EU has a surplus of carbon allowances. As for China, it is crafting much stronger coal regs. China’s coal-burning is to peak at 4 billions tons by 2015, say news reports. After that, it will begin a gradual descent, relying instead on hydro, nuclear and renewables.

Here in this country, carbon dioxide emissions are falling mainly because of the switch from coal-fired electricity to natural gas-fueled power. But the technologies to burn more green energy are also improving, and those prices are dropping.

While the Obama administration hopes to facilitate that growth with tougher environmental regulations, other parts of the world are struggling with such goals. The intent is thus to expand the global economy in the cleanest and most reliable fashion -- a delicate balancing act given the political and financial realities.