Regional Greenhouse Gas Initiative Research Articles

Dynamic Competition under Cap and Trade Programs

Greenhouse gases (GHG), like carbon dioxide (CO2), which are released in the atmosphere due to anthropogenic activities like power production, are now accepted as the main culprits for global warming. The Regional Greenhouse Gas Initiative (RGGI), an initiative of the north-east and mid- Atlantic States of the US for limiting the emission of GHG, has proposed a regional cap-and-trade program for CO2 emissions for power plants. This forthcoming emissions market is expected to have a major impact on the developing deregulated wholesale electricity markets. Our goal is to model and study the interaction of these two markets and to assess the impact of the emissions market on wholesale electricity prices.

Integrating Forest Carbon Sequestration Into a Cap-and-Trade Program to Reduce Net CO2 Emissions

Problem: Most research on planning to mitigate climate change has focused on reducing CO2 emissions from coal-fıred power plants or the transportation sector. The contribution of forests to lowering net CO2 emissions has largely been overlooked. U.S. forests already offset about one eighth of the nation's annual CO2 emissions and have the potential to offset more, all at a relatively low cost. It will not be easy to integrate forest carbon sequestration into a cap-and-trade program to reduce net CO2 emissions, however. Purpose: I explore what forest land use planning, forestry management practices, and land preservation strategies would be required to integrate forest carbon seques-tration into a cap-and- trade program, and explain the role planning and planners can play in promoting forest carbon seques-tration. Methods: The Regional Greenhouse Gas Initiative is a 10-state cap-and-trade program to reduce greenhouse gas emissions from coal-fıred power plants in the northeastern United States. It provides a case study of how forest carbon sequestration can be included in a cap-and-trade program. Meanwhile, California has devised certifıable carbon credits from forestland. I analyze both approaches and generalize from them. Results and conclusions: To promote forest carbon sequestration through a cap-and-trade program will require ensuring the permanence of CO2 reductions, minimizing leakage from forestland conversion, and obtaining prices for carbon offsets that are high enough to induce forestland owners to participate in the program and offer them for sale. The capital needed to purchase and monitor permanent forest conservation easements as well as to provide a stream of annual income for timberland owners may require a national system of carbon credits. Ideally, the easements would be set up in advance through investments by govern-ment or nonprofıts, so that landowners will be ready to sell credits when they are demanded. Takeaway for practice: A cap-and-trade system could be a cost-effective way to lower net CO2 emissions if it included certifıable, tradable credits from forestland preservation and management, and if the price of carbon credits were high enough to induce forest landowners to offer credits. To promote forest carbon sequestration, planners in rural areas should work with the local, state, and federal governments and nonprofıt land trusts to zone forestland at low densities, to preserve forest land through acquiring conservation ease ments, and to fashion forest management plans that ensure long cycles of timber harvesting. Planners in metropolitan areas should promote tree planting and tree retention ordinances to protect, expand, and manage urban forests to absorb greenhouse gases. Research support: None.

Call for Papers on Engineering Management for Sustainable Development

Being one of the greatest challenges of our time, climate change has become a top priority for governments, businesses, and the general public. In Copenhagen, both developed and developing countries made strong commitments on mitigating and adapting to climate change. And the United States officially pledged to cut its greenhouse gases emissions by 17% of the 2005 level by 2020. Many state and local governments have adopted even more aggressive reduction targets to tackle climate change. For example, Assembly Bill 32, passed in 2006, requires the state of California to reduce greenhouse gas emissions by 25% by 2020. Meeting emission reduction commitments poses significant challenges for federal and state governments and businesses across the economy. Although federal climate and energy policy is still in the early stage, it is becoming clear that both regulatory and market-based approaches at the federal and regional levels should be implemented to limit greenhouse gases emissions from stationary and mobile sources. In December 2009 the Environmental Protection Agency’s ruling that greenhouse gases—mainly carbon dioxide—endanger public health and welfare paved the way for new regulations on carbon dioxide emissions. In addition, more than 20 states have developed or are developing innovative market mechanisms to provide adequate incentives for regional emission reductions and renewable energy production, including the Regional Greenhouse Gas Initiative RGGI , Western Climate Initiative WCI , and Midwestern Greenhouse Gas Reduction Accord MGGRA , in addition to volunteer carbon markets, e.g., the Chicago Climate Exchange CCX . The impact of emerging climate regulations and markets on the engineering management community is significant. It goes beyond the life cycle of project execution and covers all aspects of engineering management practices. This special issue aims to advance the research and practice in this field. The goals of this special issue are threefold: 1 to report recent development in engineering management theory and practices to combat climate change; 2 to discover the latest research directions and thinking; and 3 to publish cutting-edge scholarship that contributes to the body of knowledge, promotes professional practices, and influences public policies.

Regional Initiatives: Scaling the Climate Response and Responding to Conceptions of Scale

In the absence of a coherent national policy to address global climate change, there was an emergence of new scales of environmental governance in the United States. They include regional initiatives that configure binding agreements between individual states within the United States that in some instances also involve cross-border collaborations with Canadian provinces. There are currently three such initiatives: the Northeastern Regional Greenhouse Gas Initiative, the Western Climate Initiative, and the Midwestern Regional Greenhouse Gas Reduction Accord. Combined, they include twenty-four states representing over half of the U.S. economy and four Canadian provinces representing almost three quarters of the Canadian economy. These initiatives are an interesting and unprecedented experiment in environmental governance. As such, they inform current conceptualizations of scale within human geography. They also evidence the need for geographers to enter into public debates on climate change governance and engage in a reconceptualization of the nature of sovereignty.

The role of energy efficiency spending in Maryland’s implementation of the Regional Greenhouse Gas Initiative

What are the economic consequences of increased state spending on electricity consumption efficiency? The State of Maryland faces this question in deciding how much of its CO 2 allowances auction proceeds (under the Regional Greenhouse Gas Initiative) to devote to such programs. Starting at a base of 25% of the proceeds, we consider the energy savings, emissions reductions, employment, and other impacts of increasing that percentage to 50% and 100%. A series of models – Haiku, JHU-OUTEC, and IMPLAN – are used for the analysis. We conclude that increasing the state’s expenditures on energy efficiency programs would result in a decline in electricity consumption in the state and a corresponding decline in expenditures on electricity. Program implementation would lead to net positive growth in statewide economic activity and include growth in both jobs and wages.

Strategies for carbon dioxide emissions reductions: Residential natural gas efficiency, economic, and ancillary health impacts in Maryland

As part of its commitments to the Regional Greenhouse Gas Initiative (RGGI), the State of Maryland, USA, auctions emission permits to electric utilities, creating revenue that can be used to benefit consumers and the environment. This paper explores the CO 2 emissions reductions that may be possible by allocating some of that revenue to foster efficiency improvements in the residential sector’s use of natural gas. Since these improvements will require changes to the capital stock of houses and end use equipment, efficiency improvements may be accompanied by economic and ancillary health impacts, both of which are quantified in this paper.

Special Issue on Experimental Methods in Environmental, Natural Resource, and Agricultural Economics

Nearly two decades ago, Jason Shogren spoke at the Northeastern Agricultural and Resource Economics Association (NAREA) annual meeting about how the burgeoning field of experimental economics might be useful in addressing questions of interest to environmental and resource economists (Shogren 1993). At the time he spoke, in 1992, experimental economics was a niche field that primarily focused on nonmarket valuation techniques, social dilemma games, bargaining experiments, and testing game-theoretic models. As demonstrated in this special issue of the Agricultural and Resource Economics Review (ARER), things have certainly changed in ways that would have been hard to predict two decades ago, including the 2002 Nobel Prize awarded to Vernon Smith, the 2009 Nobel Prize awarded to Elinor Ostrom, publication of a field journal dedicated to experimental economics, and significant expansion in the range of topics and methodological approaches. The changes that have occurred during the field's rapid growth, which started in the mid- 1990s and continues today, are evident in this issue's 14 papers that were written by 40 researchers from 27 institutions located in 9 countries on 5 continents. This special issue of ARER features primarily the papers presented at a methods workshop that sought to introduce young scholars to experimental economics techniques and to showcase examples of high quality research that addressed environmental, natural resource, and agricultural economics issues. Tim Cason and Shogren, two leaders in the field, delivered invited presentations. This workshop, which followed the NAREA annual conference, was held in Burlington, Vermont, on June 9th and 10th, 2009. Financial support for the workshop and for publication of these papers in ARER was provided by the U.S. Environmental Protection Agency, the Farm Foundation, and the U.S. Department of Agriculture's Economic Research Service. The papers in this special issue not only contribute to the classic experimental economics literature, but also illustrate how far the field has grown since the early 1990s. The papers cover a wide range of topics, from emissions auctions under the Regional Greenhouse Gas Initiative (Shobe et al. 2010) to managing a multispecies fishery (Anderson 2010), and use a variety of methods, including traditional laboratory experiments, field experiments, and hybrid approaches, such as Knapp and Murphy's (2010) field-in-thelab approach. What is common in these studies is the use of what Shogren, Parkhurst, and Hudson (2010) refer to as an experimental mindset which seeks to better understand the behavior of individuals, businesses, and organizations within the context of various institutional settings. Shogren, invited to return as a keynote speaker for this workshop, notes how experimental methods have expanded from controlled laboratory settings with undergraduate students to include field experiments, neuroeconomics, and virtual reality. He discusses how behavioral economics has grown as a field and is now not only challenging parts of the traditional rational choice framework, but is also influencing economic policymakers at the highest levels. In addition to this methodological growth, the application of experimental methods to environmental and natural resource issues also underwent significant expansion in the mid- to late 1990s. Shogren's 1992 talk roughly coincided with two significant events in environmental policy that helped broaden experimental research to include more applied policy issues. The 1989 Exxon Valdez spill substantially expanded the existing literature on nonmarket valuation techniques, particularly regarding hypothetical bias and the development of calibration techniques to mitigate its effects. A key component of the 1990 Clean Air Act Amendments was the implementation of the U.S. Environmental Protection Agency's sulfur dioxide emissions trading program, one of the world's first successful large-scale cap-and-trade programs, leading to a surge in experimental research related to the design of emissions trading programs and, more broadly, on laboratory testbedding of new environmental policy initiatives. …

Auctioning greenhouse gas emissions permits in Australia*

The allocation of permits is an important design aspect of an emissions trading scheme. Traditionally, governments have favoured the free allocation of greenhouse gas permits based on individual historical emissions (‘grandfathering’) or industry benchmark data. Particularly in the European Union (EU), the free allocation of permits has proven complex and inefficient and the distributional implications are politically difficult to justify; auctioning emissions permits has therefore become more popular. The EU is now moving to auction more than 50 per cent of all permits in 2013, and in the US the Regional Greenhouse Gas Initiative (RGGI) has begun auctioning more than 90 per cent of total allowances. Another case in point is the Australian proposal for a Carbon Pollution Reduction Scheme (CPRS), which provides for auctioning a significant share of total permits. This paper discusses the proposed Australian CPRS’s auction design. A major difference to other emissions trading schemes is that the CPRS plans to auction multiple vintages of emissions permits simultaneously.

LIMITED CAP-AND-TRADE PROGRAM

A CARBON DIOXIDE cap-and-trade program has operated for more than a year in the northeastern U.S., generating $494 million in 2008 and 2009 for energy-saving projects in the 10 states involved. Many say the auction process has been a success so far, but others caution that it is too soon to call it a viable means to limit emissions of climate-changing gases. In the program, called the Regional Greenhouse Gas Initiative (RGGI), operators of fossil-fuel-fired electric power plants must buy rights to emit carbon dioxide from an interstate agency. Excess rights can be traded or sold on exchanges, but the amount participants can buy each year is capped and gradually ratcheted down. Operators and participants in the trading program say it works and proves that a national cap-and-trade scheme can function without significantly increasing energy costs. In fact, admirers call RGGI a model for a national cap-and-trade program. However, RGGI has operated only since September ...

The Life-altering Impacts of Climate Change: The Precipitous Decline of the Northeastern Sugar Maple and the Regional Greenhouse Gas Initiative’s Potential Solution

The Life-altering Impacts of Climate Change: The Precipitous Decline of the Northeastern Sugar Maple and the Regional Greenhouse Gas Initiative’s Potential Solution

Estimating the Impact of Electric Vehicle Charging on Electricity Costs Given Electricity-Sector Carbon Cap

A model estimates the short-run effect of plug-in hybrid electric vehicle (PHEV) charging on electricity costs, given a cap on carbon dioxide (CO2) emissions that covers only the electricity sector. In the short run, cap-and-trade systems that cover the electricity sector increase the marginal cost of electricity production. The magnitude of the increase in cost depends on several factors, including the stringency of the cap in relation to the demand for electricity. The use of PHEVs, which also has the potential to decrease net greenhouse gas emissions, would increase demand for electricity and thus would increase the upward pressure on marginal costs. The model described examines this effect for the New England electricity market, which as of January 2009 operates under the Regional Greenhouse Gas Initiative, a cap-and-trade system for CO2. The model uses linear optimization to dispatch power plants to minimize fuel costs given inelastic electric demand and constraints on nitrogen oxide and CO2 emissions. The model is used to estimate costs for three fleet penetration levels (1%, 5%, and 10%) and three charging scenarios (evening charging, nighttime charging, and twice-a-day charging). The results indicate that PHEV charging demand increases the marginal cost of CO2 emissions as well as the average and marginal fuel costs for electricity generation. At all penetration levels the cost increases were minimized in the nighttime-charging scenario.

The Regional Greenhouse Gas Initiative: Emission Leakage and the Effectiveness of Interstate Border Adjustments

We use theoretical and numerical general equilibrium models to analyze the Regional Greenhouse Gas Emission Initiative (RGGI), a cap-and-trade scheme to limit carbon dioxide emissions from electricity generators across ten states in the northeast U.S. Although RGGI’s economic impacts are small, they induce substantial increases in power exports from unconstrained states which result in emission leakage rates of more than 50%. Harmonized taxes of 2-7% on electricity sales in participating states can neutralize leakage and increase aggregate abatement without significant adverse income effects. These results suggest that setting electricity tariffs in conjunction withthe emission cap might improve RGGI’s environmental performance.

Foresty offsets in emissions trading systems: a link between systems?

An important aspect in the linking of different emissions trading schemes is the degree to which these systems allow (or ban) external offset project categories. The EU Emission Trading Scheme (EU ETS) currently allows the use of credits from energy and industry projects developed under the Kyoto Protocol’s Joint Implementation (JI) and Clean Development Mechanism (CDM) but excludes the use of carbon credits from forestry projects for compliance in the EU ETS. Forestry credits generated by the CDM have a limited lifetime and expire at the end of a project’s crediting period, or earlier if the carbon stock for which the credits have been issued ceases to exist. According to the recently adopted amendment of the EU ETS Directive forestry credits will remain to be excluded until 2020. The present article reviews how the New South Wales Greenhouse Gas Abatement Scheme (Australia), the Regional Greenhouse Gas Initiative (US) and the voluntary scheme of the Chicago Climate Exchange integrate forestry offsets into the respective system and how they deal with the risk of losing stored and credited biomass. By comparing the results of different scenarios this article shows how differences in the treatment of forestry offsets could impact the efforts to link various emission trading systems in future.

Does a regional greenhouse gas policy make sense? A case study of carbon leakage and emissions spillover

The Regional Greenhouse Gas Initiative (RGGI) is a state-level effort by ten northeast states in the U.S. to control CO 2 emissions from the electric sector. The approach adopted by RGGI is a regional cap-and-trade program, which sets a maximal annual amount of regional CO 2 emissions that can be emitted from the electric sector. However, incoherence of the geographic scope of the regional electricity market is expected to produce two undesirable consequences: CO 2 leakage and NO x and SO 2 emissions spillover. This paper addresses these two issues using transmission-constrained electricity market models. The results show that although larger CO 2 leakage is associated with higher allowance prices, it is negatively related to CO 2 prices if measured in percentage terms. On the other hand, SO 2 and NO x emissions spillover increase in commensurate with CO 2 allowance prices. Demand elasticity attenuates the effect of emissions trading on leakage and emissions spillover. This highlights the difficulties of designing a regional or local climate policy.

Carbon Offsets: Growing Pains in a Growing Market

There’s a market growing in the United States, but unlike markets that trade in tangible commodities, this one trades in the absence of something no one wants: greenhouse gases in the atmosphere. Hundreds of companies make it possible for individuals, organizations, businesses, and even events such as rock music festivals to proclaim themselves carbon-neutral by paying someone else to reduce their emissions. Worried about your carbon footprint? No problem. For fees of US$2–50 per ton of “avoided emissions,” an offset provider will funnel your money into an activity or technology that keeps greenhouse gases out of the atmosphere. The question is, are offset buyers really getting what they paid for?

Constitutional Implications of Regional CO2 Cap-and-Trade Programs: The Northeast Regional Greenhouse Gas Initiative as a Case in Point

I. INTRODUCTION II. THE RGGI III. PREEMPTION IV. COMPACT CLAUSE V. THE DORMANT COMMERCE CLAUSE A. Offsets B. Leakage VI. CONCLUSION I. INTRODUCTION For eight years the Bush administration avoided addressing global warming, first denying its existence, then denying its anthropogenic contributions, and finally denying the government's legal ability to combat it. There is a new administration, however, and Presidential candidate Obama campaigned in favor of a national cap-and-trade program. Nevertheless, there are many matters of critical importance on the U.S. Congress' plate, and as of this writing Senate Majority Leader, Harry Reid, was hoping to take up climate change legislation by the end of the summer of 2009. The chances of passage even then are not clear. Economic woes and Republican opposition could still do it in. This political reality suggests that existing and proposed regional cap-and-trade programs may have continuing importance. Consequently, the constitutional implications of these programs are worthy of consideration. The Regional Greenhouse Gas Initiative (RGGI) is already in effect in ten northeastern and mid-Atlantic states, (1) while the Western Climate Initiative and Mid-western Regional GHG Reduction Accord are still far from operational. This Article considers three possible constitutional issues with regard to a regional cap-and-trade program, focusing on the RGGI: preemption, the Compact Clause, and the Dormant Commerce Clause. II. THE RGGI The RGGI is a cooperative undertaking of ten states (2) that began in 2005 with a Memorandum of Understanding. (3) In 2006 the RGGI developed a Model Rule. (4) Each state undertook to cap overall C[O.sub.2] emissions from electrical generating plants in the state in accordance with the RGGI Model Rule. (5) In essence, beginning in 2009 and lasting until 2014, the cap is set at the estimated amount of emissions in 2008. Thereafter, the cap is decreased by 2.5 percent each year until 2018, for a total decrease in emissions of 10 percent from the 2008 baseline. Each fossil-fuel-fired electric generating unit serving a generator of twenty-five MW or larger must possess sufficient for its emissions in any compliance period. Most of these are sold at auction, and the purchasers can freely trade them on the market. Those who need more to cover their emissions will need to buy them; those that possess more than they need may sell them. The money generated by the auctions will be used to fund energy conservation, energy efficiency, and clean energy programs. The RGGI also allows for the assignment of allowances to generating facilities for certain types of projects that reduce or sequester greenhouse gas emissions in areas outside of electrical generation. Currently, only five types of projects can qualify for offset allowances. (6) Generally no more than 3.3 percent of a facility's can be offset allowances. (7) There are strict application and verification processes to qualify an offset. An offset project may be located in any state, not just a RGGI state, if the other state has a cooperating regulatory agency that has entered into a Memorandum of Understanding with the RGGI states to provide oversight of the offset projects in that state. The RGGI is implemented by each state enacting its own laws, which must conform to the RGGI Model Rule, to govern the generating facilities in its state. (8) RGGI, Inc., a nonprofit corporation, was created to provide technical and administrative services to the RGGI states. The allowance auctions are performed by World Energy Solutions, Inc., which operates online exchanges for energy and green commodities, and Potomac Economics, which performs monitoring and competitive assessment of wholesale electricity markets in the United States, oversees the auction. III. …

The Changing Climate of Cooperative Federalism: The Dynamic Role of the States in a National Strategy to Combat Climate Change

I. INTRODUCTION II. CLIMATE CHANGE: A GLOBAL AND LOCAL PROBLEM WITH GLOBAL AND LOCAL SOLUTIONS A. State and Local Greenhouse Gas Emission Reductions Can Have State- and Local-Specific Benefits B. Uneven Emissions of Greenhouse Gases Across States Create Uneven Incentives, Responsibilities and Opportunities Across States C. State and Local Efforts to Combat Climate Change Have Other Benefits III. RGGI AND OTHER NEW YORK STATE CLIMATE INITIATIVES A. RGGI: A Pioneering Cap-and-Trade Program for the Power Sector B. New York's Multiprong Approach to Addressing Climate Change IV. THE CASE FOR FEDERALISM: APPLICATION TO GLOBAL CLIMATE CHANGE A. Climate Change and the Dynamics of Cooperative Federalism B. Collective Benefits of State and Local Government Action to Combat Climate Change 1. States as Laboratories and the Need for Ongoing Innovation 2. State and Local Programs Can Reduce the Cost of Meeting a Federal Cap 3. Enabling Further Action in the Future C. State and Local Governments Should be Able to Incur Additional Burdens and Reap Additional Benefits D. Treatment of State and Regional Cap-and-Trade Programs V. CONCLUSION AND RECOMMENDED ELEMENTS OF FEDERAL LEGISLATION I. INTRODUCTION The federal government must work with, not against, states to reduce greenhouse gas emissions. President Barack Obama January 26, 2009 In the past decade, state and local governments have assumed the mantle of leadership in addressing climate change in the United States. State and local leadership has laid the foundation for an effective, efficient, and economically beneficial American climate change and clean energy strategy. Indeed, a silver lining of the federal inaction on climate change over the past eight years has been that it fostered the development of innovative and pioneering efforts by state and local governments to combat climate change. One prime example of this dynamic is the Regional Greenhouse Gas Initiative (RGGI). As Congress and the federal government's executive branch finally begin to seriously consider a meaningful national climate change policy, it is critical to heed President Obama's recognition that a national approach to addressing climate change will need to include a variety of programs at each level of government. Climate change is undoubtedly unique amongst policy challenges in both its magnitude and its scope. It is both a global and local crisis, and it has both global and local solutions and impacts. Given the magnitude of the climate change crisis, our national response to climate change must be collective in nature and incorporate all levels of government in the most effective manner. The federal government cannot address the transcendent challenges of climate change alone; it must enlist states and municipalities as partners in developing and implementing the policies that are needed to address climate change. By complementing a federal program with programs and policies at the state and local levels, we will be better able to achieve our climate and energy goals at the lowest collective cost and the greatest overall benefit. Complementary state and local level programs, operating alongside a federal program, can reduce the cost of reducing greenhouse gas (GHG) emissions. Moreover, innovative and aggressive state programs have already provided a model for federal action, and will continue to do so in the future. State and local governments are generally more able than the federal government to respond quickly to new scientific and technological developments. New York and other states have been implementing well-structured and successful climate change programs for a number of years. …

Climate Change Action in Connecticut: Linking Energy, the Environment and the Economy

I. INTRODUCTION II. BACKGROUND III. CONNECTICUT'S SUCCESS WITH THE REGIONAL GREENHOUSE GAS INITIATIVE (RGGI). A. RGGI Is Different From Other Environmental Programs B. RGGI Sector Expansion C. Challenges and Opportunities IV. KEY CLIMATE INITIATIVES IN CONNECTICUT A. Clean Cars B. Clean Car Labeling C. Green Buildings D. State Government Leading by Example. E. Climate Change Adaptation V. CONCLUSION I. INTRODUCTION The State of Connecticut is fortunate to have in place forward-thinking leadership that sees the dramatic environmental and economic risks associated with ignoring climate change and the opportunity associated with meeting climate goals by moving the state's economy in a direction that supports green technology, green jobs and a vibrant sustainable environment that produces the quality of life envisioned by all who live, work and play in New England. Over the past eight years, Connecticut and other leadership states have put this type of commitment into action and to lead climate policy development in the United States. The states have produced dynamic plans and programs to begin to address climate change while the federal government has been less than helpful and, at times, even obstructionist. As a result, our nation today stands at a crossroad, with the international community clearly waiting for a more comprehensive and unified approach from our country, one of the largest emitters of greenhouse gases (GHGs) on our Earth. The federal government now seems poised to act and understands, just as do the states, we will need to adopt a suite of policies and programs that transcends the jurisdiction of any single government agency if we are to reduce GHG emissions to levels that sound science tells us are necessary to avert the most devastating impacts associated with global climate change. Even though state action on climate is couched in terms of each state's own economic self-interest, states certainly understand the larger ramifications associated with a dramatically altered climate. While state action is prefaced in terms of protecting coastlines, agriculture, infrastructure and local habitat and biodiversity, we also understand that climate change brings serious threats to our national security from governments that will be destabilized by the reasonably foreseeable effects of dangerous climate change. These effects include increased drought in areas that already suffer from unstable food supply systems and sea level rise that could displace tens of millions of people. Against this backdrop, states have followed the bumper sticker slogan, think globally, act locally ... and regionally. II. BACKGROUND Connecticut's leadership role on climate issues traces its roots to ongoing communication and dialogue with our sister New England states and the eastern Canadian provinces. We have a long history of working together to address and resolve common environmental issues. Starting in the 1980s, the New England governors (NEG) and eastern Canadian premiers (ECP) recognized the harmful effects of acid rain on the region's forests and the negative impact on its economy. The NEG/ECP passed a joint resolution calling for the elimination of emissions contributing to those effects. As a result, states and provinces acted to reduce emissions of nitrogen oxides (NOx) and sulfur oxides (SOx). Those steps later served as a model for regional and federal action. In 2000, the NEG/ECP, citing findings in the United Nations Intergovernmental Panel on Climate Change (IPCC) Third Assessment Report, commenced regional discussions on global warming and its environmental impact. A March 2001 NEG/ ECP workshop on the science and impacts of climate change provided a framework for a climate change action plan. In August 2001, the NEG/ECP signed the Climate Change Action Plan 2001. …

Massachusetts Takes On Climate Change

I. INTRODUCTION II. A CHANGE IN THINKING: INTEGRATING ENERGY AND THE ENVIRONMENT IN THE SAME SECRETARIAT III. MASSACHUSETTS' ACTIONS TO REDUCE GHG EMISSIONS AND INCREASE ENERGY EFFICIENCY: NEW LEGISLATION A. Green Communities Act 1. Increased Energy Efficiency 2. Renewable Energy 3. Building Codes 4. The Green Communities Program B. The Global Warming Solutions Act C. Massachusetts Environmental Policy Act (MEPA) Greenhouse Gas Footprint D. The Oceans Management Act. E. The Clean Energy Biofuels Act F. The Green Jobs Act IV. MASSACHUSETTS' ACTIONS TO REDUCE GHG EMISSIONS AND INCREASE ENERGY EFFICIENCY: POLICY INITIATIVES A. Making a Difference at the Local Level B. State Leading by Example C. Decoupling Electricity Rates from Sales D. Regional Initiatives to Reduce Greenhouse Gas Emissions V. CONCLUSION I. INTRODUCTION Climate change is the most serious environmental challenge of our time. After years of inaction, bold solutions are needed. Efforts to lower the greenhouse gas (GHG) emissions that contribute to climate change must focus on reducing our demand on carbon-intensive electricity generation and fuels, and on increasing our supply of renewable energy. Massachusetts has been a leader in the fight against climate change by implementing a unique set of policies and groundbreaking legislation that will significantly reduce GHG emissions through early deployment of energy efficiency, renewable energy and new technology measures. By closely integrating energy and the environment in all climate initiatives, Governor Deval Patrick, in partnership with the state legislature, has established a strong and comprehensive framework to tackle the immediate need to reduce GHG emissions and, at the same time, promote a clean and green energy economy. Massachusetts' proactive programs and hands-on experience will be highly relevant as the new Obama Administration and Congress design a comprehensive national program to address climate change. The increasing concerns about the consequences of climate change, volatile fuel prices and the carbon dependency of the electricity sector led Governor Patrick to take a fresh approach to environmental protection, especially the intersection between energy and the environment. In January 2007, upon taking office, Governor Patrick took a bold step to make Massachusetts the first state to recognize the interdependence of energy and the environment, combining the state's environmental agencies and energy agencies into one cabinet level secretariat, the reconstituted Executive Office of Energy and Environmental Affairs. (1) In 2008, five key environmental laws were approved by the state legislature and signed by the Governor: the Green Communities Act, the Global Warming Solutions Act, the Oceans Management Act, the Clean Energy Biofuels Act and the Green Jobs Act. Each of these laws, together with several new groundbreaking policies, brings together the state's energy and environmental agencies to help Massachusetts achieve its goal of addressing climate change. In addition to these state initiatives, Massachusetts is participating in several regional partnerships to reduce GHG emissions. Most notable is Massachusetts' participation in the Regional Greenhouse Gas Initiative (RGGI), a voluntary, ten-state cap-and-trade program for C[O.sub.2] emissions that launched in 2008 the first-in-the-nation auction of carbon emission allowances. (2) Massachusetts has also initiated a regional effort to develop a low-carbon fuel standard with eleven northeastern and mid-Atlantic states. (3) Massachusetts' strong state, local and regional initiatives serve as excellent examples of what is possible for a federal climate change program in partnership with the states. II. A CHANGE IN THINKING: INTEGRATING ENERGY AND THE ENVIRONMENT IN THE SAME SECRETARIAT Massachusetts has always been a leader when it comes to innovative energy and environmental policy. …

Carbon Markets in North America

This paper outlines some of the highlights and issues surrounding carbon markets in North America. Carbon markets are a new branch of environmental finance. The issues covered include US Federal and State carbon policy, climate change legislation and trading systems. A particular focus will be on the Regional Greenhouse-Gas Initiative, the first mandatory cap-andtrade scheme to be set up in the US, as well as other similar initiatives in the US. The paper will also discuss carbon trading and investments and the growing role of carbon as an impetus for investments in low-carbon technologies. A general overview of carbon finance and Clean Development Mechanism (CDM) projects will be provided, as well as a general review of expert opinion on how the cost of carbon impact will affect other energy resources. Finally, the paper will conclude with a short assessment of the potential role of agriculture and forestry in reducing carbon emissions.