American states trade right to pollute

Over 200 power plants in the north eastern USA now have to bid for the right to emit pollution.

Ten US states have signed up to the Regional Greenhouse Gas Initiative (RGGI), and six of those states held the first carbon aution last week.

The right to emit carbon dioxide sold at the auction for $3.07 per ton.

With 12.5 million tons of emission rights being sold, the auction raised a total of $38.6 million that will be invested into energy efficiency and renewable energy projects.

Every state in the RGGI has the right to put carbon allowances up for auction - the less carbon a state emits, the more allowances it can auction.

At the auction on 25th September Connecticut raised $4.2 million; Maine $2.7 million; Maryland $16.4 million; Massachusetts $13.3 million, Rhode Island $1.3 million and Vermont $621,000.

All power stations fired by fossil fuels that produce more than 25 megawatts of electricity are legally obliged to take part in the scheme - a total of 225 power plants which together emit 188 million tons of greenhouse gases per year.

Older power stations with less efficient technologies have to purchase more carbon credits than new, more efficient operations.

It is hoped that carbon trading will enable the RGGI states to reduce carbon emissions 10% by 2018 compared to 2009 levels.

The scheme is expected to cost an extra $1 per month on the average energy bill, although some officials predict that as carbon emissions decrease and renewable technology investment increases, then bills will actually go down.

Brad Heavner, director of Environment Maryland, said the ’scare mongers’ who said carbon trading would push up the price of electricity beyond affordability have been ‘proven wrong’.

Politicians across America will be watching the scheme carefully, with California and other western states likely to start a similar programme in 2012, and Florida also considering cap-and-trade action to reduce its carbon emissions.