West­ern States Agree to Cut Green­house Gas­es:

Five West­ern gov­er­nors agreed yes­ter­day on a plan to cut their states’ emis­sions of gas­es linked to glob­al warm­ing and to estab­lish a region­al car­bon-trad­ing sys­tem, though they stopped short of say­ing how dras­ti­cal­ly they will seek to reduce green­house gases.

The gov­er­nors — [from] Cal­i­for­nia,… Ari­zona, Ore­gon, New Mex­i­co and Wash­ing­ton — said that with­in six months they will set a region­al tar­get for low­er emis­sions. A year after that, they pledged, they will devise a region­al cap-and-trade sys­tem allow­ing pol­luters to buy and sell green­house gas pol­lu­tion credits.

These states join a group of North­east­ern states which have been orga­niz­ing a sim­i­lar com­pact, and New Mex­i­co had already joined the Chica­go Cli­mate Exchange, com­mit­ting to a grad­ual decrease in net green­house gas emis­sions based on trade­able credits. 

These region­al pacts are good starts, they show the pow­er of the mar­kets and encour­age states and busi­ness­es to think about new ways of doing business.

The prob­lem is that they can also encour­age free-load­ers to relo­cate out-of-state, near enough to con­tin­ue sup­ply­ing exist­ing cus­tomers with­out being sub­ject to the rules. This is why a nation­al sys­tem of cap-and-trade is important.

As Reed Hundt points out, the oth­er impor­tant change we need is a seri­ous review of fed­er­al, state, and local reg­u­la­tions. One shift that his anal­o­gy to the telecom­mu­ni­ca­tions sec­tor makes clear is to decou­ple the trans­mis­sion net­work from the gen­er­a­tors. Right now, util­i­ties own the lines and the gen­er­a­tion. They can buy pow­er from oth­er sources, but con­sumers cannot. 

With­out that sort of change, it’s impos­si­ble for the aver­age con­sumer to make any real com­mit­ment to clean ener­gy (short of installing solar cells, geot­her­mal, or a wind farm in the back­yard). Add on a renew­able port­fo­lio stan­dard for the own­er of the trans­mis­sion grid, and cap and trade for good mea­sure, and you’ve got pres­sure at mul­ti­ple lev­els oper­at­ing to encour­age real inno­va­tion in pow­er generation.