New York Allowance Giveaway Strains Regional Greenhouse Gas Initiative

March 10, 2009

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By agreeing to increase power plants’ free allowances for carbon-dioxide emissions, New York Governor David Patterson has broken with the Regional Greenhouse Gas Initiative, a pact signed last year by 10 Northeast states.

From Maryland to Maine, the states last fall agreed to cap power plant emissions and make them pay for polluting under the Regional Greenhouse Gas Initiative, a carbon-trading pact. Most of the allowances are state-auctioned.

Power producers have been vocal in their complaints, and Patterson has relented somewhat. According to the New York Times, the state’s Department of Environmental Conservation, in a preliminary review, determined there were too few free allowances. A spokesman for the governor indicated that even if the state reopened the regulations, the state’s next three auctions would not be affected because a public comment period would be in effect.

The number of allowances for compact member states’ carbon emissions is capped, so Patterson’s effort should not result in increased emissions, but the carbon-trading market could be affected.

Power plants have raised concerns about paying for allowances on grounds that they had previously fixed prices to sell power well before carbon-trading was in place, the article noted.

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