Tuesday, March 17, 2015

Think Tanks Suggest Less Formal Multi-State Carbon-Trading to Meet EPA Goals

Coal power plant (Credit: forbes.com) Click to Enlarge.
Visceral politics and administrative hurdles could keep many states from using regional cap-and-trade programs to cut carbon emissions under U.S. EPA's Clean Power Plan, but there might be a less controversial alternative.

A policy brief released today by Duke University's Nicholas Institute for Environmental Policy Solutions suggests that states adopt "common elements" that would allow them to participate in cross-state carbon trading systems to reduce power-sector emissions of the planet-warming gas.

A state could develop an individual plan to meet its own emissions target -- rather than a multi-state plan to reach a joint target -- and allow electric generators to trade compliance credits with generators in other states, the paper explains.  States wouldn't need to enter formal groups as long as they shared common plan elements, like definitions of carbon-reducing measures.

"States wouldn't necessarily have to mandate market-based approaches or even endorse the approaches," said Jonas Monast, lead author of the brief and director of the climate and energy program at the Nicholas Institute.  "What it would require is the states using a common definition of what a compliance instrument is and ensuring that somehow the credits are verified and tracked."

States could tailor the programs to their own political needs.  They could cap emissions and freely distribute credits or auction them off to power producers to fund government programs, for example.

The proposal offers more specifics on a concept many states have been contemplating for months:  how they could collaborate formally or informally to try to reduce the costs of implementing the Clean Power Plan.

A 'bottom up' plan
"What this plan is doing is trying to identify ways to leave some of these politically controversial decisions to the power plant operators as opposed to leaving them solely to the state regulators," Monast said.

Robert Stavins, a Harvard University economist and well-known cap-and-trade advocate, called the Nicholas Institute idea "cap-and-trade from the bottom up, rather than the top down."

Read  more at Think Tanks Suggest Less Formal Multi-State Carbon-Trading to Meet EPA Goals

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