Northeast States Pledge to Impose CO2 Cap

Published September 1, 2003

The governors of 10 northeastern states have pledged to join a regional cap-and-trade program to limit greenhouse gas emissions.

The agreement, announced on July 24 by New York Republican Governor George Pataki, is the first regional pact to challenge the federal government’s decision to seek a scientific consensus before imposing costly new energy limitations on the U.S. economy.

The Republican governors of Connecticut, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont joined the Democratic governors of Delaware, Maine, New Jersey, and Pennsylvania in formulating the agreement. Additionally, Maryland Republican Governor Robert Ehrlich has sent a letter to Pataki expressing interest in joining the pact in the future.

Pataki announced an agreement in principle, but questions remain about specific components of the plan. Although the states have agreed to a cap-and-trade approach, they must still agree on the level of maximum allowable CO2 emissions. Also, the states have yet to agree whether carbon sequestration will count against CO2 emissions. New Hampshire and Massachusetts already have enacted CO2 caps and will likely seek retroactive credits for past emission-reduction programs.

Scott Segal, executive director of the Electric Reliability Coordinating Council, criticized the northeastern governors for ignoring market forces.

The most logical means of meeting emission-reduction goals, according to Segal, is for power plants to switch from coal to natural gas. However, natural gas is already in short supply due to infrastructure problems and restrictive drilling prohibitions. A mandated switch from coal to natural gas will further spike natural gas prices, which have risen by as much as 700 percent during the past three years.

According to the Environmental Protection Agency, 79 power plants in the 10 northeastern states are powered at least in part by coal.

The Bush administration expressed concern over the ramifications of the northeastern pact. “We welcome innovation by the states, however, we would be concerned about mandatory approaches that could stifle growth or cost American jobs,” said Dana Perino, spokeswoman for Council on Environmental Quality Chairman Jim Connaughton. “We’d also be concerned about approaches that would affect the affordability of energy, especially for those on low or fixed incomes.”

Brian Mannix, a senior research fellow at George Mason University’s Mercatus Center, expressed concern over the constitutionality of such a pact. Mannix quoted Article 2, Section 10, which reads, “No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of Delay.”

The U.S. produces approximately 25 percent of global human carbon dioxide emissions. The 10 northeastern states produce less than 10 percent of human carbon dioxide emissions. Any emission reductions that might result from the pact would cut only a small fraction of carbon dioxide emissions in the member states.

“Some economists say the impact of a piecemeal, state-by-state approach may be symbolic at best, and that if pollution cuts were big enough to affect climate, they could even slow economic growth,” reported the Philadelphia Inquirer. “Once such cost is ‘leakage,’ meaning that industries and jobs could simply cross the border to a state with no greenhouse gas rules.”

In Europe, nations have built their marginally effective CO2 reduction programs around increases in nuclear and natural gas power. However, liberal environmentalist groups in the U.S. have opposed nuclear power and new natural gas wells, making CO2 cuts more difficult and costly.

James M. Taylor is managing editor of Environment & Climate News. His email address is [email protected].

For more information …

on the impact of state greenhouse gas emission control programs, see “State Greenhouse Gas Programs: An Economic and Scientific Analysis,” a February 2003 Heartland Policy Study. The document and an executive summary are available, in both HTML and PDF formats, on the Heartland Web site at Click on the Policy Studies link.