2- Keep Up - | Page 9/22/2008 States Aim to Cut Gases by...

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| P a g e 9 / 2 2 / 2 0 0 8 States Aim to Cut Gases by Making Polluters Pay By FELICITY BARRINGER and KATE GALBRAITH Published: September 15, 2008 From the NY Times The program is due to get off the ground in nine days, but already there are worries that it may fail to reduce pollution substantially in the Northeast, undermining a concept that is being watched carefully by the rest of the country, by Congress and by European regulators. The Regional Greenhouse Gas Initiative, or RGGI, will cap emissions for 233 plants. By putting a price on the carbon dioxide they emit, it gives plants a financial incentive to clean themselves up, with the proceeds channeled to energy-saving and renewable energy programs in each state. The states will set their own limits, with each issuing tradable permits, or allowances, for carbon pollution. On Sept. 25, utilities will start bidding at auction for allowances, which they can later sell — mimicking the so- called cap-and-trade programs that effectively reduced acid rain in the 1990s. The concept has been praised by environmentalists and state officials. But the emissions cap was based on overestimates of carbon dioxide output, which has dropped sharply from 2005 to 2006 and is on a lower trajectory than anticipated. So auction demand may be weak at the start, with millions of allowances the states planned to sell not immediately needed. And with the cap on emissions most likely to be higher, at least initially, than the plants’ actual carbon-dioxide output, it may be many months before utilities have an incentive to cut pollution. As traders watched the RGGI dynamic evolve, the already low price of carbon futures fell by about 40
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2- Keep Up - | Page 9/22/2008 States Aim to Cut Gases by...

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