Regional Cap and Trade System Gears Up to Fight Global Warming

Facing a continued vacuum of leadership at the federal level over a real response to the threat of global warming, many states and Canadian provinces have been working hard to address emissions on their own. The Western Climate Initiative (WCI), which represents one-fifth of the U.S. economy and most of Canada’s, is gearing up to slash the region’s greenhouse-gas emissions.

The goal is to ensure that emissions by 2020 will be 15 percent lower than 2005 levels. But as the Christian Science Monitor points out, many of the details of the WCI are still being worked out.

The "cap" part means a limit will be placed on the amount of greenhouse gases that can be emitted regionwide. Each year, the limit will be ratcheted lower. The "trading" comes from allowances, which means the ability to release a metric ton of greenhouse gas. Clean companies can sell excess allowances to others in the single unified market.

Still, each state has yet to decide how allowances are parsed. Many greens hope they are auctioned off, but industry, unsurprisingly, wants them handed out based on past pollution data. Millions of dollars are at stake, and how this part is handled could affect not only how the system gets going, but also what happens to revenue, whether it is invested in green technology or simply shifted from one coffer to another.

It will be very interesting to see how the market evolves, how effective it ultimately is, and how it may spur or intersect with any actions at the federal level, particularly with the new administration.

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