Western states plan cap-and-trade by 2012

Plans for a US-wide carbon emissions cap-and-trade scheme may be on the back burner following the recent defeat in the Senate of the Lieberman-Warner Act, but the setback does not seem to have deterred state governments from pursuing the development of regional schemes.

A group of seven US states and four Canadian provinces, working together under the title of the Western Climate Initiative, last week unveiled draft plans for a carbon cap-and-trade scheme to come into effect in 2012.

The draft document, which will be discussed at a meeting of the group in San Diego tomorrow, outlines how the coalition aims to use a cap-and-trade mechanism to reach its stated target of cutting emissions by 15 per cent on 2005 levels buy 2020.

Under the proposals, energy producers and heavy industrial firms emitting more than 25,000 tonnes of CO2 equivalent a year will be included in the scheme and will be required to report their emissions from 2011 ahead of the scheme formally beginning in 2012. The scheme will then be extended from 2015 to include emissions from transportation and other fuels.

The draft document also gave the group's members – California, Arizona, Montana, New Mexico, Oregon, Utah, Washington, British Columbia, Quebec, Ontario and Manitoba – the freedom to introduce further fiscal measures to reduce carbon emissions, such as carbon taxes.

The plan was broadly welcomed by green and business groups, but some expressed concern about the lack of detail included in the 10-page document. Critics noted that the draft offered no clear signal on the level at which emission caps would be set, how they would be distributed between the different states and the extent to which carbon credits would be auctioned or distributed free to polluters.