September 24th, 2008

Carbon Trading Coming to the US This Fall

Posted by Jessica Jensen

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NPR did an excellent piece today on the up-coming introduction of a carbon auction this fall in the Eastern United States.  Ten states in the East have joined together to form the Regional Greenhouse Gas Initiative (RGGI). These states are taking a big step to create a market for carbon trading.  Companies in those states that are major polluters, like big power companies, will have to buy allowances for their carbon emissions in this new auction.  Read on to learn more about this important step towards market-based carbon emissions controls.

NPR, All Things Considered, September 24, 2008– On Sept. 25, several Eastern states will make history by holding an auction. They’re selling allowances to emit greenhouse gases into the atmosphere. If you’re a big power company in those states, you’ll have to buy an allowance for every ton of gas that goes up your smokestack.

It’s a big step toward a carbon market in the United States. It means slapping a price on the biggest greenhouse gas, carbon dioxide. If you put it up in the atmosphere, you’ll have to pay. If you get rid of it, you can make money. Economists call it the “market-based” way to make people do things they don’t necessarily want to do.

Ten states in the East have joined together to start the process. Jonathan Schrag is in charge of this group, called the regional greenhouse gas initiative (RGGI). They’re organizing the first market-based, mandatory program to control greenhouse gases, starting with companies that make electricity. “Every ton that they emit starting Jan. 1, 2009, they’ll need to have an allowance to show for that,” says Schrag.

Companies must buy the allowances at the auction — enough to cover the amount of carbon dioxide they think they’ll emit. The states get to keep the auction money, says Shari Wilson, who runs the Department of the Environment in Maryland.

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