7 Western states, 4 Canadian provinces have plan to cut emissions

Your carbon emissions will soon be good in Quebec.

This week, officials from California, six other Western states and four Canadian provinces released the draft of a plan to set up a vast market for greenhouse-gas emissions that aims to ease the burden of the war on global warming.

Starting in 2012, according to the plan, the members of the Western Climate Initiative would issue annual permits to firms that emit carbon dioxide and other greenhouse gases. The total supply of permits would ratchet down over time, giving companies two options: cut their own emissions or buy permits from other firms that have made deep emissions cuts and thus have permits to sell.

In addition to California, the Western Climate Initiative includes Oregon, Washington, Arizona, New Mexico, Montana, Utah, and the provinces of Quebec, Ontario, British Columbia and Manitoba.

Economists say a carbon market minimizes the societal cost of cutting emissions by allowing entrepreneurs and executives, not bureaucrats, to find the cheapest ways to curb greenhouse gases.

California officials are counting on that market magic to shrink the state's carbon footprint by 35 million metric tons by 2020. That's a fifth of the total reductions mandated under California Assembly Bill 32, the global-warming law passed in 2006. For comparison, 1 million metric tons of carbon dioxide is what about 180,000 average vehicles emit in a year.

"We believe that cap and trade is the most effective. . . strategy for meeting our reduction goals," said Linda Adams, secretary of the California Environmental Protection Agency.

While the everyday emissions generated by burning gasoline or using electricity will be covered under the cap, consumers won't play in the market. Saving energy at home won't give you credits to sell.

Instead, carbon transactions will happen well upstream from consumers, at the level of gasoline distributors and power-plant owners.

Putting a price on carbon emissions is expected to add to the price of a gallon of gasoline or a kilowatt-hour of electricity. However, according to analyses by the California Air Resources Board, the state's global warming plan ultimately will save consumers money by improving efficiency and reducing overall demand for electricity and motor fuel.

The members of the Western Climate Initiative are expected to adopt a final version of the cap-and-trade program in November.

The general idea of a carbon market enjoys broad support among both industry and environmental groups. But they differ on key details, including whether companies should pay for each year's carbon permits, and whether firms should be allowed to purchase "carbon offsets" to meet their emissions obligations.

Environmental groups are pushing for a requirement that a large fraction of emissions allowances be auctioned to industry, with the revenue supporting investments in technology, utility rebates for low-income consumers and other programs.

Industry groups want the opposite, saying that an auction would amount to a multibillion-dollar tax that would be passed on to consumers.

Wednesday's draft plan proposes to auction some allowances but doesn't say how many.

The draft also proposes a controversial plan to allow polluters to meet all of the 2020 reduction targets by purchasing "carbon offsets."

By buying offsets, companies unable to cheaply reduce their own carbon footprint save money by paying others -- outside the cap -- that can.

The global market in offsets has exploded in recent years, but its credibility remains shaky.

"We've seen study after study showing that a lot of these offsets are not real ... that it's been a huge waste of money," said Erin Rogers, spokeswoman for the Union of Concerned Scientists.

E-mail The Bee's Jim Downing at jdowning(at)sacbee.com.

(Distributed by Scripps Howard News Service, www.scrippsnews.com.)