Northeastern States Agree to Landmark CO2 Cap-and-Trade Plan

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Seven northeastern states announced last week that they would participate in the nation"s first carbon dioxide emissions trading program in order to limit greenhouse gases from power plants. Analysts point out that the new agreement is relatively weak in comparison to a similar plan already underway in Europe, but agreed that it is a step in the right direction nonetheless.

The new northeastern U.S. plan, called the Regional Greenhouse Gas Initiative, proposes to cap carbon dioxide emissions from power plants in the region at current levels between 2009 and 2015, at which point emissions would be gradually cut back by 10 percent before 2019. In contrast, the Kyoto Protocol on global warming, which most European countries have ratified but the U.S. has refused to sign, requires developed countries to cut carbon dioxide emissions by 5.2 percent of 1990 levels between 2009 and 2012.

“It’s a good first step, but the road is pretty long, and we are going to need substantive greenhouse gas reductions,” says Peter Fusaro, a carbon markets expert at New York-based Energy & Environment Capital Management LLC. “The limits are mild, pretty negligible.”

Participating states include Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York and Vermont, although Maryland and Massachusetts are also expected to join eventually.

Fusaro adds that the new agreement could pave the way for federal action on greenhouse gases, especially if some western states follow with similar proposals.