Cap-and-Trade System For Emissions Faces Major Hurdle

An attempt by ten Northeast states to implement a cap-and-trade system for reducing greenhouse gas emissions in the region has run into problems as a result of lower than expected carbon output. The Regional Greenhouse Gas Initiative, or RGGI, set out in 2004 to place a total emissions cap of 188 million tons annually for more than 200 utility plants. And, as the cap-and-trade system goes, the utilities would be required to buy a permit or financial allowance to emit, thereby creating a financial incentive to keep output low.

Problem is, that 188 million ton cap is, so far, well above actual output (see nytimes.com graphic). Carbon emissions from the ten participating states decreased to a total of 164.5 millions tons in 2006 and an estimated 172.4 million tons in 2007. The drop has been attributed to everything from an increase in natural gas use to a faltering economy and mild weather. And while the decrease is certainly good news, it goes without saying that so long as output is below the cap, there is simply no demand for emission allowances -- and therefore no financial incentive to reduce emissions any further. It certainly doesn't bode well for the upcoming CO2 allowance auction at the end of this month.

Our Voter's Survival Kit on Climate Change outlines many of the problems we face as a country in dealing with the effects of climate change -- and offers some options on how to tackle the problem.

Our Confidence in U.S. Foreign Policy Index indicates that while the public is somewhat on the fence about what the U.S. can do to combat global warming, many (61 percent in our spring edition) believe international cooperation can make a difference. Yet 58 percent give the U.S. a grade of C or worse for working with other countries to reduce global warming. And while nearly three-quarters (72 percent) of Americans worry about global warming, just 39 percent say they worry "a lot," ranking lower than many other foreign policy concerns (fuel prices, for example, or casualties in Iraq).