N.Y. Gov considers change in 10-state carbon pact
NEW YORK (Reuters) - New York's governor is considering giving, rather than auctioning, a greater amount of permits that allow power plants to emit carbon dioxide in a regional climate pact and environmentalists charge it would cut millions of dollars in revenues to develop clean energy.
"Like with all new complex programs, we reserve the right to make changes to the program once we have actual experience with implementation," said Governor David Paterson's deputy press secretary Morgan Hook.
New York was the founding member of the 10-state Regional Greenhouse Gas Initiative, which early this year became the first pact in the country to regulate emissions of the main greenhouse gas, carbon dioxide.
As part of the agreement, the states agreed to supply polluters with 188 million permits, each of which allowed the emission of one ton of the pollution over three years.
So far the majority of the tradable permits have been sold in quarterly auctions, while the rest have been given to polluters.
The most recent auction in December brought the states nearly $107 million for clean energy and energy efficiency programs.
The pact seeks to cut overall emissions by limiting carbon pollution. That gives power plants an incentive to cut emissions so they can sell unused permits to plants that have not cut pollution.
New York gave away 1.5 million permits, but had requests from industry for more than 6 million allowances. At the price permits went for in December's auction, giving away 6 million permits could save power plants nearly $17 million.
Environmentalists charge that giving away more allocations would cut revenues for clean energy and send the wrong signal on emissions regulations to Washington.
President Barack Obama says he wants the United States to adopt a cap-and-trade program and to auction 100 percent of the allowances in such a market mechanism. His budget released last week estimated the government would receive $646 billion from such a program from 2012 to 2019. Obama has proposed the proceeds would go toward investing $15 billion annually in clean energy technology and tax credits.
Environmentalists said Paterson had been pressured by power producers, looking for cost savings, to give away more of the credits.
Hook confirmed that Paterson had met with the head of a power industry group but has made no commitment to increase the number of free allowances. Should more permits be given away, Hook said it would not significantly cut the amount of money raised as the majority of allowances would still be auctioned.
Any changes to the way New York participates in the plan would not affect the next auction, which is slated to take place March 18, or the following two in June and September.
"The real losers will be the citizens of New York who will potentially be denied the conservation and renewable energy benefits that would be funded from the sale of carbon allowances that the governor would apparently prefer to give away to polluters," said James Van Nostrand, the director of the Energy and Climate Center at Pace Law School.
(Editing by Christian Wiessner)