US states put price on carbon pollution

Ten states in the northeastern United States are participating in the country's largest effort to put limits on carbon dioxide (CO2) emissions by making utilities companies pay for each tonne they emit.

The highly anticipated programme will start on September 25, when utilities will start bidding at auction for allowances, which they can
later sell. But some have expressed concerns that the emissions caps are set too high to substantially reduce pollution.

Once the auction is complete, the caps are set to begin on January 1, 2009, in the states of New York, New Jersey, Delaware, Maryland, Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. The trading scheme would hold carbon emissions at 188 million tonnes annually through 2014, and then to reduce them by 2.5% each year through 2018.

The concept of tradeable permits has been widely praised by environmentalists and state officials alike. However, the total number of permits overestimates the firms’ actual CO2 production, the New York Times reported, which has declined steeply from 2005 to 2006 and is on a lower trajectory than anticipated.

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