In this Emerging Issues Commentary, Steven Jones of the Marten Law Group discusses the Western Climate Initiative (WCI), a collaboration among 13 western states, five Canadian provinces and six Mexican states to develop a regional strategy to reduce greenhouse gas emissions. In May 2008, the WCI released its consolidated draft recommendations on its regional cap-and-trade program and is currently accepting public comments on these recommendations in anticipation of a late July stakeholder meeting.

After providing background information on the WCI, Mr. Jones reviews the elements of the WCIs proposed cap-and-trade program including the scope of the programs coverage, requirements for emissions reporting and verification, procedures for allocating allowances, the compliance period, and recommendations for utilizing offsets. The WCI expects to finalize its cap-and-trade program in September 2008, and Mr. Jones cautions that because of the scope of its coverage is so broad, the program could have significant economic impacts. 

“While members of Congress and the two presumptive Presidential candidates continue to spar over climate policy, the states are continuing to move forward with their own plans,” Mr. Jones writes.  “Most recently, the Western Climate Initiative (WCI) issued plans for a regional greenhouse gas (GHG) cap-and-trade system to be rolled out in August of this year. The announcement of the design recommendations fulfills a commitment made on August 22, 2007, when members of the WCI announced plans to reduce GHG emissions, in the aggregate, by 15 percent below 2005 levels by 2020. . . .

“When it becomes operational, the WCI program will be the second active regional GHG trading program in North America. The first such program was developed by the Regional Greenhouse Gas Initiative (RGGI), a multi-state cooperative effort created in 2005 aimed at reducing GHG emissions in the Northeast from fossil-fueled power plants,” Mr. Jones writes.  “In April of this year, RGGI announced that it will hold its first regional auction of carbon dioxide emissions allowances on September 10, 2008, with a second auction scheduled for December 17, 2008. . . .

“The RGGI program has a very narrow scope, i.e., coal-fired power plants. By contrast, the WCI has stated a policy preference that its program be much broader,” Mr. Jones writes.  “The Scope Subcommittee evaluated seven different design options, ultimately recommending that the program begin with a scope consisting of the electricity sector, other large fossil fuel stationary combustion sources, industrial process and waste management emissions, as well as emissions from the production and processing of fossil fuels.”

Subscribers to www.lexis.com may read much more about this issue by purchasing Mr. Jones’ entire expert commentary at Marten Law Group: Western Regional Cap-and-Trade System Takes Shape.