Sunday, 5 October 2008

Carbon Auctions Start in the US

It seems to have gone generally unnoticed, but on September 25th the US launched its first ever auction of Carbon Dioxide allowances as the Regional Greenhouse Gas Initiative (RGGI) got under way.

The RGGI (apparently pronounced "Reggie") is a joint effort by a number of north eastern US states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont) to run their own cap-and-trade reduction system for CO2 emissions from power plants. It is expected that RGGI will be extended in the future to cover other companies and other types of emissions.

It seems that all the allowances available were sold and raised nearly $40m towards investments in the means to reduce CO2 emissions and increase energy efficiency, as well as alternative energy technologies.

It's pretty momentous because now there is a real price on carbon in the US. The price will become more significant over time (whoever runs the scheme) and will have to be built into the cost base of an increasing number of businesses. This is the power of legislation.

Newsday.com quotes Tony Blair (ex UK PM) as saying: “The Regional Greenhouse Gas Initiative is an extremely important part of the overall US effort to address climate change. It represents an acknowledgment on the part of US states that climate change is an urgent problem, and more importantly, it demonstrates the will to take action to solve it". It's a shame, then, that the UK government has thus far demonstrated a lot more talk than action, particularly when it comes to CO2 emissions in the public sector. (And Blair's example of jetting round the world doesn't help). Hopefully the Climate Change Bill currently going through Parliament will change things.

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