RGGI

The economy is quickly becoming everyone’s favorite excuse for not regulating carbon emissions.

First, California started hemming and hawing about implementing AB32, a statewide law that would regulate greenhouse gas emissions, citing concerns that any additional regulations on businesses could crush those that are barely hanging on in the down economy.

Now, Arizona has pulled out of the Western Climate Initiative's cap-and-trade program, and Utah may follow suit.

In a little-noticed vote late last Friday, the New York Senate passed a groundbreaking measure that will leverage $112 million of proceeds from carbon auctions to kick-start a state-wide $5 billion energy efficiency effort that will pay for itself.

Called the Green Job/Green New York Act, the measure will finance upfront costs for one million homeowners to weatherize their houses, and let them repay the loans from the energy savings realized over time. The act, which makes funding available for job training, is also expected to create up to 16,000 new jobs.

What makes the green victory especially unusual and significant is that it was made possible by state Sen. Thomas Morahan (photo at right), a Republican who bucked his party to support the bill, opening the gates for a flood of bipartisan votes for passage.

"We needed a Republican vote to get it passed, and Morahan was the first to announce his support," said Dan Cantor, the executive director of the Working Families Party, which spearheaded the legislative effort. "He showed that he was going to make his decision on the merits of the bill, not party politics."

While the bill is a triple victory that simultaneously combats climate change, lowers energy costs for homeowners, and creates thousands of new jobs, it also provides a model for other states to emulate, and has larger national implications.

The policy design provides an alternative mechanism for providing consumer benefit from carbon revenues that federal lawmakers, wrestling with climate legislation, must now consider.

In addition, the almost unanimous support the bill received from New York's Republican lawmakers undermines the wisdom and validity of a ferocious national campaign being mounted by their right-wing brethren to halt the progress of green jobs legislation everywhere.

Part II of a three-part series on cap-and-trade looking at the successes, failures and lessons the U.S. government can learn from three programs already in place.

The Regional Greenhouse Gas Initiative, a program to regulate carbon dioxide emissions in 10 Northeastern and Mid-Atlantic states, is proving a mandatory cap-and-trade program to address greenhouse gas emissions can work in the United States.

The program’s goals are modest — only one greenhouse gas is regulated and only power plants of at least 25 megawatts are covered. Emissions are capped at current levels through 2014, then the cap is reduced by 2.5 percent annually for four years until emissions are cut 10% by 2018.

Still, the fact 10 states overcame their differences to create a single compliance market to reduce carbon dioxide emissions is a “remarkable achievement,” says Judi Greenwald, vice president for innovative solutions at the Pew Center on Global Climate Change.

Also significant is that the system is working; the market has established a price for carbon dioxide emissions and power companies are willing to pay for allowances to emit.

“From a political perspective, it demonstrates that you actually can design and implement a cap-and-trade program in the U.S.,” Greenwald says. “A lot of people want to see a home-grown example. I think it’s very important that it’s working well and it’s working here.”

With the economy now in crisis, an industry effort to derail the Western Climate Initiative appears to be making some inroads.

In the past few weeks, legislators in three of the WCI's seven partner states – Arizona, Washington and Utah – have taken actions that threaten to undermine the initiative's goal of reducing carbon dioxide and other greenhouse gas emissions to 15% below 2005 levels by 2020.

So far, each state’s governor is still committed to remaining in the initiative, leaving it intact for now, but the pressure is on.