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It’s Everywhere but Washington

Last month we outlined various state efforts to reduce greenhouse gas emissions in a piece called “It’s the States, Stupid”.  We were cleverly going to call this second installment “It’s the States, Stupid: Part II”, but realized that that was not really accurate, as international efforts will also begin to regulate U.S. GHG emissions. Collectively, this can all be summed as “carbon regulation creep”.

First, the states, where Colorado and Minnesota both expanded their respective renewable energy requirements and, in Nevada, the legislature and the state’s biggest utility agreed to almost entirely eliminate coal-fired power generation by 2020.  That power will be replaced by any other kind of generation, of which more than 1/3 (350 MW) will be renewables.

Potentially more important is CARB’s approval of regulations linking California’s cap & trade market with Quebec’s. America’s largest state economy and Canada’s second-largest province are creating a single market for both CO2 emission allowances and offset credits.  This is another example of what happens when there is no coherent national policy for addressing CO2: states take matters into their own hands, and the longer this continues, the more state programs will expand and the more states will become wedded to their own programs (and, where generated, the revenues they produce).

Apropos of international developments, in November, to avoid confrontation over its plan to require airlines to purchase ETS allowances for emissions for flights to and from Europe (and not just the portion of CO2 emitted within European airspace), the EU punted the issue over to the International Civil Aviation Authority (ICAO).  The ICAO has since been mired in argument, which will be resolved (or not) at its September meetings.  However, on June 3, the International Air Travel Association (IATA, the airlines trade association) “strongly endorsed” the idea of a single, global “market-based mechanism” for aviation CO2 emissions.  While IATA would like that mechanism to apply only after 2020, and only to emissions above a 2018-2020 baseline, they have accepted putting a price on all aviation emissions, including emissions by U.S. carriers in U.S. airspace.

IATA’s proposal has a rather utopian set of conditions attached, but even with the caveats, it is significant milestone for major American businesses to sign up to a global proposal such as this.

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