State on team to cut greenhouse gases

After years watching from the sidelines while industrialized countries around the world tackled globe-warming greenhouse gases, Washington and six other Western states on Tuesday became the first in the U.S. to propose a comprehensive approach to the problem.

The states, along with four Canadian provinces, unveiled a plan designed to cut their greenhouse gases 15 percent below 2005 levels by 2020.

It would put Washington near the forefront of climate-change politics in the country and would provide a test for regulations much like the ones environmentalists and the two major presidential candidates want nationwide.

"This is the road to the new economy," said state Ecology Department Director Jay Manning. "This is the road to energy independence. This is the road to a clean, green economy."

It also means major emitters — from oil refineries to power plants to cement factories — would have to either ratchet down their pollution or to pay to keep polluting.

But the plan laid out Tuesday skirts some of the trickiest details, leaving those to individual states, which so far have not adopted the regulations.

So Washington's governor and Legislature will face the controversial task of crafting rules that will determine who profits and who pays in the campaign against climate change.

"While there's much more work to do, this today is a very good start," Gov. Christine Gregoire said at a news conference Tuesday.

Gregoire, a Democrat seeking re-election this year, has issued an executive order setting a goal of cutting greenhouse gases to half of the 1990 levels by 2050. But on Tuesday she didn't commit to details for the new proposal, saying that would be up to discussions with a broad range of stakeholders.

Her Republican opponent, Dino Rossi, issued a statement saying he was concerned the deal might not credit Washington enough for abundant hydropower that doesn't produce greenhouse gases.

"We should not be entering an agreement that could put our state at an economic disadvantage," he said.

Harnessing their hopes

California, Oregon, Washington, Montana, Arizona, New Mexico and Utah are all part of the initiative, as are the Canadian provinces of British Columbia, Manitoba, Ontario and Quebec.

Overall, the states and provinces hope to harness the free market's pursuit of profit, using a strategy known as "cap-and-trade."

Think of it like a company that issues shares of stock. In this case, the state of Washington would put a cap on the total amount of greenhouse gases it will allow in a year, and then distribute "shares" of pollution.

A polluter, such as a factory, could either puff out greenhouse gases to match the shares it had, or buy more shares from another polluter with some to spare. As the years passed, the cap would go down, meaning fewer shares of pollution to go around.

The approach was successfully used to cut acid rain causing pollution from Midwest power plants in the 1990s. Northeast states are now starting a cap-and-trade program limited to power plants.

The Bush administration has opposed mandatory limits, warning they will hurt the economy. But presidential candidates Sens. John McCain and Barack Obama each back cap-and-trade.

In the Western effort, interest groups already are disputing how to manage it, a debate with millions of dollars — and potentially the program's success — at stake.

One major question is whether the state should give out the pollution shares free, or sell them to the highest bidder in an auction. The regional agreement says only that at least 10 percent of the shares should be auctioned in 2012, rising to 25 percent in 2020. But states can decide whether to go higher.

Lessening the impact

Environmentalists are pressing states to auction most or all of the pollution shares. They argue it would reward companies that pollute less, and generate money for governments to do things such as promoting energy efficiency.

Giving away the pollution shares would reward big polluters who haven't tried to cut greenhouse gases so far, and create windfall profits for companies that can easily reduce their pollution and sell their shares, said KC Golden, policy director for Climate Solutions, a Seattle-based environmental group.

But several Washington business representatives said they favor giving them out for free, to lessen the regulation's impact.

"If you make the cost of compliance too costly, you end up driving businesses out of business," said Grant Nelson of the Association of Washington Business.

Collins Sprague of Avista, a Spokane-based private electricity and natural-gas utility, said he feared the market in pollution shares could be vulnerable to manipulation, artificially driving up costs.

To allay those fears, he said, companies should get credit for projects that cut greenhouse gases, even if it's not at one of their own factories.

Known as offsets, they can be attractive to companies as a cheaper alternative to buying pollution shares or cutting their own pollution.

European countries have made extensive use of offsets, paying for upgrades to factories in China, for example, rather than more costly fixes to their own operations.

But questions have emerged about whether these offsets are bogus. And environmentalists caution that relying too heavily on them could slow progress toward the real goal — creating an economy that produces much less carbon.