Economic Fears Put Pressure on Western Climate Initiative

With the economy now in crisis, an industry effort to derail the Western Climate Initiative appears to be making some inroads.

In the past few weeks, legislators in three of the WCI's seven partner states – Arizona, Washington and Utah – have taken actions that threaten to undermine the initiative's goal of reducing carbon dioxide and other greenhouse gas emissions to 15% below 2005 levels by 2020.

So far, each state's governor is still committed to remaining in the initiative, leaving it intact for now, but the pressure is on.

A glance at the WCI's loudest detractor, the Western Business Roundtable, shows where that pressure is coming from. The roundtable's members include Arch Coal, Peabody Coal, Shell Oil and the Western Fuels Association. Their organization, run by a Colorado-based public relations and lobbying firm, recently sent out a 157-page report accompanied by a statement that declared the WCI plan "could prolong recession" and "chase away tens of billion of dollars in high-tech investment."

Derek Walker, Director of the Climate Initiative for the Environmental Defense Fund, says polluting industries that had gotten used to doing as they pleased under the Bush administration are getting scared:

"What you're seeing are the opposition who are still caught in the Bush administration mindset of 'Don't do anything.' They are feeling more and more like their chance to block climate action is slipping though their hands. It's like a hail Mary at the end of the first half trying to score a touchdown."

Arizona is one WCI member that could be vulnerable. In January, Gov. Janet Napolitano resigned to become U.S. Secretary of Homeland Security, and Arizona Secretary of State Jan Brewer took the reins. Less than two months later, Republicans got a bill through the House Environment Committee intended to bar any state officials other than the governor and legislature from continuing talks with the WCI.

Brewer, through spokesperson Paul Senseman, says, "We've decided to remain members of WCI to monitor of the process and see what proceeds with discussions."

But Brewer's continued commitment carries a wait-and-see caveat. Senseman said:

"Arizona intends to see what cap and trade proposals may be presented at WCI and to decide whether or not they are workable solutions or if they aren't realistic expectations that aren't going to be met."

In Utah, the House of Representatives adopted a non-binding resolution last month that presses Gov. Jon Huntsman, Jr., to back out of the initiative.

Huntsman, a well-respected Republican, has said he is still committed to the plan. EDF's Walker notes that the resolution itself can't affect Utah's participation in WCI: "In Utah, the resolution was not picked up by the Senate and it has no force of law. It serves a rhetorical function as an expression of defiance from the House."

In Washington state, Gov. Chris Gregoire's plan for reducing the state's carbon emissions is also hitting some rough patches in the legislature. One Senate committee gutted the plan by making emissions reductions voluntary rather than mandatory.

Janice Adair, special assistant to the director of the Department of Ecology and United States co-chair of the WCI, says negotiations with lawmakers over the governor's proposal are still ongoing.

Whatever the final legislation looks like, Adair says, Washington's governor has three objectives: "They are to continue our efforts to reduce greenhouse gases, to keep us at the WCI table and to keep our voice at the federal table, which we think we get by being part of WCI."

The majority of the Washington legislature wants to stay involved in WCI, Adair says, but she says the lack of detail in the initiative is causing some jitters. "They have a desire to know more about the details before they authorize their environmental agency to go out and write rules that will affect the economy of the state in three years," she said.

The WCI is the second oldest of three regional climate groups in the United States, including the six-state Midwest Greenhouse Gas Reduction Accord and the Northeast's 10-state Regional Greenhouse Gas Initiative.

The Regional Greenhouse Gas Initiative is the only one of the three so far with a working cap-and-trade system. It launched its first emissions permit auction in 2008, but the group suffered a blow last week when New York Gov. David Patterson agreed to let New York power plants release more greenhouse gases for free. The companies had been expected to pay for their emissions under the pact.

Despite the challenges from industry and concerns about the weak U.S. economy, WCI is forging ahead.

California recently became the first state to approve its plan for reducing greenhouse gas emissions.

The WCI also issued a new work plan that sets its agenda for the next 18 months. Under the work plan, the WCI's members will develop a reporting system for greenhouse gas emissions, suggest methods for allotting "allowances," identify the main components of a regional cap-and-trade market, and design an offset system, among other things.

EDF's Walker notes that the federal government will likely also come out with a plan for reducing carbon emissions.

"The state efforts will be important in terms of creating models for what can be done in Washington. The federal government policy will be a floor below which states cannot go, so it prevents a race to the bottom. But there are a lot of states out there that recognize the value of a race to the top."

 

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