America’s first ever auction of greenhouse gas emission allowances took place on September 25th as part of a ten-state Regional Greenhouse Gas Initiative (RGGI). It is hoped that regular C02 auctions will boost the forestry industry and attract developers of forestry projects to the States.
“Ten states, from Maryland to Maine, are already implementing their own regional cap and trade, undertaking the nation’s most serious effort yet to tackle climate change,” said US Congressman Lloyd Dogget earlier in the month. “And California has joined six other states and four Canadian provinces in a similar effort,” he added.
RGGI has been designed as a framework within which states are able to draft specific environmental regulations, according to Sarah Woodhouse Murdock, Boston-based eastern US region climate change programme manager for the Nature Conservancy.
Pre-compliance trading for the RGGI initiative started in February, and the compliance period will commence in January 2009. The next auction is scheduled for December 2008.
Undeniably the new initiative has experienced some teething problems, such as a widespread perception that too many allowances have been allocated. “It’s a repeat of EU ETS I (the first round of the European Union’s Emissions Trading Scheme), where governments gave away more allowances than there were emissions,” said one European developer of forestry projects.
Some states have also been slow to finalise their rules and regulations within the RGGI framework. Murdoch admits that many states were not ready to participate in September’s auction. However, Murdoch is positive about the outcome of the next auction: “Hopefully by December most all of the states will be ready to participate,” she said.
The RGGI initiative created five offset categories that would be recognised under the programme. The five categories are: afforestation (tree-planting), methane capture, capture of emissions from transmission lines, agriculture waste digestion and green building initiatives that result in more efficient use of natural gas.
The afforestation rule includes baseline requirements along with specifications for permanence, additional growth and other concerns. “Each state adopted that model rule,” Murdock says. “There was no flexibility in the offset provisions for the states. It was kind of an up or down for them. That made sure that each state’s rules on the offsets were consistent with each other.”
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