Week 13 Cap & Trade

This a loose tie to sustainability planning but for the purpose of this article and a sustained climate is entity at hand, and my personal opposition to cap & trade programs made me pick this and apply to the context of the assignment as best as I could.

http://www.nytimes.com/2009/03/07/science/earth/07pollute.html

The focus of this article New York’s intention to examine a possible increase in the free allowance for CO2 emissions that it affords its power plants to produce without cost under a 10 state regional “Carbon-Trading Pact” known as the “Regional Greenhouse Gas initiative” (RGHGI). Under the Pact each state issues its own tradable permits or allowance for CO2 pollution produced, which most of the states auction off. This decision by New York has been met with complicating opinion from stakeholders and environmentalist.

The RGHGI is an example of a regional planning initiative with the region being the 10 states that engaged in the pact. It appears that the spirit of the pact was to allow member states of this functional region to collectively control CO2 emission through a mandatory market mechanism, under the polluter pays principle. As wheeler points out (in principle), any regional planning effort is administered through a weak planning institution (Wheeler, Pg. 151). In the case of the RGHGI, or any other market based system, participation and compliance by member would be more effectively facilitated through a collective administrative body with the regulatory teeth to ensure conformance by its members.

In concept the RGHGI could be effectively administered at the regional level. If the 10 member states represented a common airshed, which is probably the case, then such an effort would allow for the equalizas tion of regional externalities to be control on a market scale and states to work toward achieving emission targets. The results of such efforts could be more efficient end use production of energy, reinvestment of funds secured by the states into communities, market incentives to explore more carbon friendly and renewable energy sources, and diversification of energy portfolios. All of these will result in a more sustainable energy plan for the region if administer in accordance with the spirit of the pact.

Wheeler points out that regional planning often do not have any governmental authority or police power to back-up or enforcement compliance. (Wheeler, Pg. 133) In the article, New York is intending to expand free allowance to its power plants. While most concede that New York’s action will have no impact to other members or the pact it outlines a fundamental weakness in addressing planning issues with public health or economic ramification at a level with little or no enforcement authority.

If such an initiative was enacted at the state level then an agency of the state could ensure compliance with the terms of the pact, and offer emission targets for those entities that had less of a capacity to compete in an open market. The article points out the New York power plants have already engaged in production agreements, which they have to meet thus forcing them to purchase more emission rights and absorb the cost burden. If the plants could no longer afford to absorb those cost a regional pact would offer little incentive to try however a state regulatory mandate would apply sanction for non-compliance.


Note: Cap & Trade is a complex mechanism, which this review has simplified for the purpose of attaching it a mechanism for energy sustainability planning.