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A Cooler Future on the Horizon
Nine eastern states move to cap global warming pollution from power plants.

Photo of the Ravenswood Power PlantIn the Eastern United States, nine states, from Delaware to Maine, emit as much global warming pollution as all of Germany and make up the world's third-largest economy. Europe, however, has mandatory limits on carbon dioxide pollution, as well as an emissions trading system to mitigate the costs of compliance. Here in the United States, no such thing exists, and on a national level plans have yet to materialize. And yet the stakes have gotten so high that a group of pioneering Eastern states are not waiting for the federal government to act. They are establishing a system similar to Europe's, commonly referred to as cap-and-trade.

The Regional Greenhouse Gas Initiative is the first of its kind in the United States and involves an unprecedented level of cooperation among state governments, industry, and environmental groups coordinated by NRDC. The cap-and-trade system applies only to power plants, which will have to work collaboratively to find the cheapest way to keep greenhouse gas emissions below a regional limit.

"Companies in the Northeast will reduce their carbon risk now," says Dale Bryk, a senior attorney at NRDC and adviser to the group of nine governors who established the system. "They'll learn how to comply with new regulations at the lowest possible cost. And this will give them a competitive advantage in what will inevitably be a carbon-regulated world."

For the cap-and-trade system to succeed, each state has to adopt internal rules consistent with those of every other state. In essence, what the nine governors have said to one another is this: If we all make comparable commitments to reduce emissions, then we can trade. Each power plant will be required to have a permit, or an "allowance", for every ton of carbon dioxide it emits, but it can buy allowances if that's cheaper than reducing emissions by improving efficiency, for example. NRDC is pushing for a requirement that would force plants to pay for each allowance (rather than getting them for free), in effect making regulating carbon emissions simply another cost of doing business. That decision will be made next year.

The plan will go into effect by 2009 and is expected to cap emissions initially at current levels, about 145 million tons a year. Each year, the total number of allowances will decrease, and the companies that devise the most economical ways to reduce their emissions will benefit most financially -- a built-in incentive to invest in newer, cleaner technologies.

In the end, a system like this will succeed only if electricity demand is met and costs stay down, and several states have conducted studies showing that they can do this. Investment in efficiency reduces the amount of energy each consumer needs to operate home appliances, for example, so while the number of consumers may grow, the overall amount of energy used will not increase. "Plants won't have to run more, so it will be cheaper for them to meet future caps," Bryk says.

As mandatory limits to greenhouse gas emissions loom nearer, states outside of the Northeast are looking to get in on the trading game. The trading system is designed to allow non-contiguous states to join: New Mexico and Arizona are already planning emissions reduction strategies. And on the western seaboard, the governors of California, Washington, and Oregon are negotiating a program comparable to that of the Eastern states.

Made in China

As China's hunger for energy continues to soar, literally, into the atmosphere, the country's need to curb global warming pollution becomes increasingly urgent -- for both China and the rest of the planet. Energy efficient building design is one critical way to curb energy consumption. This past summer, a Beijing office building designed with the help of NRDC received a LEED (Leadership in Energy and Environmental Design) Gold rating from the U.S. Green Building Council. The rating is the second-highest granted by the council -- a proud achievement for the first certified green building in China. The structure, a test project coordinated by NRDC, the U.S. Department of Energy, and the Chinese Ministry of Science and Technology, was meant to introduce modern green buildings to China. It uses 70 percent less energy than a comparable traditional structure, and if just 25 percent of China's office buildings were retrofitted with such energy-saving measures, the greenhouse gas reductions would cut the predicted growth in emissions by 5 percent over the next five years.

Also Inside NRDC
The View from NRDC

City by City

At the U.N. World Environment Day celebration in San Francisco this June, mayors from more than 50 cities worldwide, including Istanbul, London, Moscow, and Rio de Janeiro, signed an historic agreement pledging to foster sustainable urban living. An empty gesture? To the contrary, says Jacob Scherr, director of NRDC's international program, who sees the gathering as an important step in creating a global political network that will take a grassroots approach to international problem solving. "Mayors are on the frontlines of the world's environmental problems," says Scherr. NRDC helped draft the 21 specific actions outlined in the accord, including a pledge to reduce greenhouse gas emissions 25 percent by 2030 -- that step alone could significantly cut global warming pollution since cities are responsible for some 75 percent of the world's greenhouse gas emissions. The mayors also agreed to mandate a ratings system for green buildings; require the use of renewable energy sources; support organic food production; and reduce toxic chemicals in the urban setting. Up next: Mayors of 20 of the world's largest cities have been invited to London this October to focus on measures to counter climate change.

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Photo: Richard Miller

OnEarth. Fall 2005
Copyright 2005 by the Natural Resources Defense Council