Republican Gubernatorial Gains and US Carbon Trading Programs

The Midterm gubernatorial elections of 2010 have important implications for regional market based mechanisms of greenhouse gas reductions. Although these programs spur innovation in the clean energy economy and create green jobs, some Republican governors have already indicated that they are planning to withdraw from these agreements.

The three major carbon trading programs in the US are the
Regional Greenhouse Gas Initiative (RGGI), the Western Climate Initiative (WCI) and the Midwestern Greenhouse Gas Reduction Accord (Midwestern Accord).

RGGI is a carbon trading program that involves Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont, it went into effect in 2008. There is one observer state (Pennsylvania), and four Canadian provinces are also observers (Québec, New Brunswick and Ontario).

RGGI is a successful regional initiative to reduce greenhouse gas emissions. RGGI is implementing a cap and trade system for CO2 emissions from power plants in the member states. Emission permit auctioning began in September 2008, and the first three-year compliance period began on January 1, 2009. Proceeds will be used to promote energy conservation and renewable energy. The system affects fossil fuel power plants with 25 MW or greater generating capacity. Since 2008, the program has generated more than $700 million for renewable energy and efficiency programs.

The governor races for states participating in the Regional Greenhouse Gas Initiative (RGGI) have mostly gone to the Democrats. Although the Democrats won seven of the ten states involved in RGGI program (Connecticut, Delaware, Maryland, Massachusetts, New Hampshire, New York, and Vermont), they lost Maine. New Jersey did not have a gubernatorial election this year, but the current Rebuplican governor (Chris Christie) supports RGGI.

Lincoln D. Chafee is Rhode Island’s new Governor, he is a Republican turned independent and he has a long track record of environmental accomplishments. Sheila Dormody, president of the Environment Council of Rhode Island said, “we will have a good environmental leader in the new governor.”

WCI, is a regional cap-and-trade compact between California, New Mexico, Utah, Washington, Oregon, Montana, Arizona (although Arizona rescinded its partnership agreement on February 5, 2010), and four Canadian provinces (British Columbia, Manitoba, Ontario, and Quebec). WCI was established in 2007 and scheduled to go into effect in 2012.

The observers are Alaska, Colorado, Idaho, Kansas, Nevada, Wyoming, the province of Saskatchewan and the Mexican states of Baja California, Chihuahua, Coahuila, Nuevo Leon, Sonora and Tamaulipas.

WCI is an initiative to combat climate change caused by global warming, independent of their national governments. WCI is a collaboration of independent jurisdictions working together to identify, evaluate, and implement policies to tackle climate change at a regional level. This is a comprehensive effort to reduce greenhouse gas pollution, spur investment in clean-energy technologies that create green jobs and reduce dependence on imported oil.

The governor races in Western Climate Initiative states are roughly split with 3 of 5 races going to Republican governors. While California and Oregon have voted for a Democrat in the statehouse, Republicans won in New Mexico, Utah, and Arizona.

The newly elected Republican governors in Arizona and Utah have already began working to end their state’s involvement with the carbon trading program.

The Midwestern Greenhouse Gas Reduction Accord (Midwestern Accord) is a regional agreement by six governors of states in the US Midwest and the Premier of one Canadian province to reduce greenhouse gas emissions to combat climate change.

Signatories to the Accord are the US states of Minnesota, Wisconsin, Illinois, Iowa, Michigan, Kansas, and the Canadian Province of Manitoba. Observers of the Accord are Indiana, Ohio, and South Dakota, as well as the Canadian Province of Ontario.

The Midwestern Accord was signed on November 15, 2007. In June 2009, the Midwestern Greenhouse Gas Reduction Accord Advisory Group finalized its draft.

The Midwestern Accord establishes greenhouse gas reduction targets and develops a market-based and multi-sector cap-and-trade mechanism to help achieve those reduction targets. It includes a system to enable tracking, management, and crediting for entities that reduce greenhouse gas emissions. The Midwest accord also develops and implements additional steps as needed to achieve the reduction targets, such as a low-carbon fuel standards, regional incentives and funding mechanisms.

In the 2010 midterms, Minnesota, went to a democratic governor, while Illinois, Iowa, Kansas, Michigan and Wisconsin all went to Republican governors.

Judging by the number of Republican governors, RGGI looks as though it will survive, while the participation of all the member states in the proposed Western Climate Initiative is in doubt. It can be expected that the Midwest Accord will suffer now that Midwestern governors are predominantly Republican.

Despite the influx of Republican governors, these trading agreements are crucial to preserve any hope of eventually implementing a federal carbon trading program.