New York State Governor Andrew Cuomo on Thursday ordered state agencies to begin work with other states and jurisdictions to develop a North American carbon market.
The governor announced plans for New York to engage with its partners in the Regional Greenhouse Gas Initiative (RGGI) as well as California and the Canadian provinces of Quebec and Ontario, which participate in the Western Climate Initiative (WCI) market, to explore the possibility and bringing other states into the expanded partnership.
Linking the two carbon markets would maximise their impact, according to a statement issued by the governor’s office.
RGGI launched in 2009 and is made up of the power sectors of nine north-eastern states.
California’s economy-wide market started in 2013 and last year linked to Quebec’s market. Ontario is in the process of designing its own emissions trading scheme, which will eventually link to California’s and Quebec’s under WCI.
Ontario and Quebec are also listed as RGGI observers, meaning they can participate in policy discussions without being obliged to formally join or make emissions reductions.
Cuomo also on Thursday signed the Under2MOU pact, an agreement among states, provinces and cities worldwide that commits to keeping global temperature rises under 2C.
New York earlier this year committed to cutting greenhouse gas emissions by 40% below 1990 levels by 2030, and 80% by 2050.
LINKING CHALLENGES
“It could be quite a challenge to link the two markets, as RGGI only covers power generation,” said Grace Relf, a carbon broker at New York-based Karbone.
“In addition, the RGGI states might see their market as a potential model for a national program, and they may not wish to change in order to link to California’s market.”
However, New York’s 2030 GHG reduction target may require the state to regulate transport emissions more tightly, as could be the case with some other RGGI members.
Bringing the sector under the regional cap-and-trade scheme would bring RGGI closer into line with California’s market, which sets economy-wide reduction targets.
Washington, another member of WCI, recently re-launched efforts to build a state-wide cap-and-trade system that could link to California, and Ontario last month signed an agreement with Quebec to enhance links between the two provinces’ markets, which will include coordinating carbon offset methodologies.
By Alessandro Vitelli – news@carbon-pulse.com
