BEYOND REGIONALISM

A regional plan to cut greenhouse gas emissions could be finalized this week, further highlighting the failure of Congress and the White House to adopt a national policy on reducing the U.S. contribution to climate change.

The Regional Greenhouse Gas Initiative, which includes Maine, New Hampshire, Vermont, Rhode Island, Massachusetts, Connecticut, New York, New Jersey and Delaware, aims to cut greenhouse gas emissions by 10 percent by 2020. It would do so with a cap-and-trade system for greenhouse gases that rewards efficient use of fossil fuels and provides incentives for innovation. A cap-and-trade system works by governments setting a cap, or limit, below the current emission level from a specific source, power plants, for example. The emissions amount is divided into credits, which companies can trade, buying or selling based on their levels of efficiency and demand.

The RGGI model is not the brainchild of a liberal Democrat, but of Republican New York Gov. George Pataki, who encouraged Northeast states to work together to reduce greenhouse gas emissions when it became clear the federal government was not going to set national standards for doing so.

Not surprisingly, businesses in the region warned that such a system would sharply raise energy costs, harming companies and consumers. In September, a group of New England businesses known collectively as the New England Council said a plan such as RGGI could boost electricity rates by 23 percent.

A study sponsored by the Northeast states and released this week showed the RGGI plan would raise electricity rates only between 0.3 and 6.9 percent in 15 years.

This prompted Massachusetts Gov. Mitt Romney, a Republican who had been lukewarm to the plan, to endorse it. “I’m convinced its good business,” he said, noting that the initiative would spur the development of emissions reduction technology that Massachusetts companies can sell to other states and countries as the emphasis on combating climate change grows.

This has been the experience in Europe where greenhouse gas reductions have been required for years and where a carbon trading market began operating in January. Companies have found that they have saved money by reducing their energy use, the easiest way to reduce emissions. Money has flowed to entrepreneurs who have developed technologies to cut greenhouse gases.

Having Gov. Romney on board is important because all nine states must sign on for it to take effect and he appeared to be the last holdout. His support dealt a large blow to the White House argument that reducing greenhouse gas emissions is bad for the economy.

With RGGI in place, along with a similar program in California, pressure is mounting on Washington to develop a national plan to reduce emissions.