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Western U.S. States, British Columbia Agree on Carbon

The governors of Oregon and Washington agreed to put a price on emissions and adopt fuel standards, bringing their efforts to cut greenhouse-gas pollution closer to those of California and British Columbia.

Under an accord signed yesterday by leaders of the three western U.S. states and the Canadian province, Oregon will build on existing programs to set a price for carbon and Washington will impose emissions limits and establish a market to meet those caps. British Columbia and California will maintain their current efforts, and all four will link up “where possible” to offer consistency.

The agreement falls short of creating a regional carbon market sought by California. The state began a cap-and-trade program when the U.S. government couldn’t come up with a national system in 2010. A movement to create a market across the western U.S. and parts of Canada collapsed two years ago after some states sought other ways to cut emissions.

“This is not a revolution,” California Governor Jerry Brown, a 75-year-old Democrat, said at a news briefing in San Francisco where the state and provincial leaders signed the agreement. “You are witnessing an historic, small, but powerful step. It’s only the beginning. You watch. Next year and the year after that and the year after that, this will spread until finally we get a real handle and grasp on what is the world’s greatest existential challenge.”

China Entrants

Brown said the group will “soon be joined by provinces on the coast of China,” noting that a meeting has been scheduled with leaders from that country in January.

Washington and Oregon agreed to adopt low-carbon fuel standards, and the four governments said they’ll “harmonize” greenhouse-gas reduction targets for 2050. They’ll also support the integration of regional electricity grids to connect power markets and expand access to renewable resources, according to the plan.

California’s carbon market was “designed with an eye toward potential inclusion within a larger regional trading program,” the state Air Resources Board said in a May 2012 proposal to permit links with other governments. The state and Canada’s Quebec province have already aligned programs and plan to tie in emissions markets beginning next year so polluters can trade carbon allowances across their jurisdictions.

Trading Programs

Under their programs, a set number of allowances, each permitting the release of a metric ton of carbon, are issued through a combination of free allocations and auctions. That pool of permits shrinks over time to reduce emissions, and polluters with more allowances than they need can sell them.

British Columbia is working with California and Quebec to develop a complementary cap-and-trade system. The province already has a carbon tax.

Washington, Oregon, California and British Columbia were part of a group of western states and Canadian provinces that formed in 2007 to create a regional market for greenhouse-gas emissions. The group effort, known as the Western Climate Initiative, ended in 2011 when California, British Columbia and Quebec agreed to move forward with emissions-trading systems and the other states decided to pursue non-market-based approaches.

To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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